Element Solutions Inc. · NYSE:ESI
Element Solutions — Q4 2023 Earnings Presentation
18 slides from Element Solutions's earnings presentation, Feb 21, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings Presentation
Fourth Quarter and Full Year 2023 Earnings Presentation Enabling Technology. Growing Sustainably.
Slide 2: Legal Notices
Legal Notices SAFE HARBOR Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statement
Slide 3: Full Year 2023 Highlights
Full Year 2023 Highlights Proving our resilient Positioning Improving our operating model for the recovery balance sheet 20.7% 200 bps Adj. EBITDA* margin YoY Gross margin expansion Extended term loan Maintained YOY maturities to 2030 $334M Cash from Operations Drive customer intimacy with Mitigated
Slide 4: Fourth Quarter 2023 Financial Results
Fourth Quarter 2023 Financial Results Constant Currency* Organic* ($ in millions) Q4 2023 Q4 2022 YoY YoY YoY Net Sales $573 $574 0% (1%) (3%) Electronics 352 339 4% 4% (1%) Industrial & Specialty 221 234 (6%) (7%) (7%) GAAP Diluted EPS $0.32 $0.05 Adj. EBITDA* $120 $108 11% 11% % margin 20.9% 18.8%
Slide 5: Full Year 2023 Financial Results
Full Year 2023 Financial Results Constant Currency* Organic* ($ in millions) FY 2023 FY 2022 YoY YoY YoY Net Sales $2,333 $2,549 (8%) (7%) (5%) Electronics 1,415 1,611 (12%) (10%) (7%) Industrial & Specialty 919 938 (2%) (2%) (2%) GAAP Diluted EPS $0.48 $0.75 Adj. EBITDA* $482 $527 (8%) (6%) % margi
Slide 6: Full Year 2023 Segment Details
Full Year 2023 Segment Details Market Commentary Electronics Net Sales ($ in millions) Net Sales Organic Key Drivers ($ in millions) Growth* Weak Asia and consumer electronics markets, offset by strong demand for high-reliability Assembly $726 (2%) alloys in automotive applications Circuitry $424 (1
Slide 7: Balance Sheet and Cash Flow Considerations
Balance Sheet and Cash Flow Considerations Key Cash Flow Items Balance Sheet Management • FY 2023 free cash flow* of $282 million • Net debt to adj. EBITDA ratio* of 3.4x on a LTM basis as of December 31, 2023 ▪ Q4 2023 free cash flow* of $95 million • Successful refinancing of term loans in Q4 2023
Slide 8: 2024 Financial Guidance
2024 Financial Guidance As of February 2024 FY Adj. EBITDA* Q1’24 Adj. EBITDA* $510M - $530M $120M - $125M Free Cash Flow* Additional Considerations ▪ FX Headwind (at end of January rates): $280M to $300M ▪ $5M in Q1 ▪ $10M year-over-year ▪ Cash interest: approximately $65M ▪ Full year guidance impl
Slide 9: Appendix
Appendix Enabling Technology. Growing Sustainably.
Slide 10: Reconciliation to Adjusted Share Counts
Reconciliation to Adjusted Share Counts (amounts in millions) FY 2023 FY 2022 Q4 2023 Q4 2022 (Average) (Average) Basic common shares outstanding 242 241 242 244 Number of shares issuable upon vesting of granted Equity Awards 1 2 2 2 2 Adjusted common shares outstanding 244 243 244 247 Note: Totals
Slide 11: Net Income (Loss) Reconciliation to Adjusted EBITDA
Net Income (Loss) Reconciliation to Adjusted EBITDA ($ millions) Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Net income (loss) $43 $30 $(32) $77 $118 Add (subtract): (Income) loss from discontinued operations, net of tax — (3) — 1 (2) Income tax expense (benefit) 17 21 15 (40) 13 Interest expense, net 1
Slide 12: Net Income Reconciliation to Adj. EBITDA
Net Income Reconciliation to Adj. EBITDA ($ millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Net income $56 $65 $53 $13 $188 Add (subtract): Income from discontinued operations, net of tax — (2) — — (2) Income tax expense 20 24 17 25 86 Interest expense, net 14 13 12 12 51 Depreciation expense 11 1
Slide 13: GAAP Net Income Reconciliation to Adjusted EPS
GAAP Net Income Reconciliation to Adjusted EPS ($ millions, except per share amounts) Q4 2023 Q4 2022 FY 2023 FY 2022 Net income $77 $13 $118 $188 Loss (income) from discontinued operations, net of tax 1 — (2) (2) Net income attributable to the non-controlling interests (0) (0) (0) (1) Reversal of a
Slide 14: Net Debt to Adj. EBITDA Ratio Reconciliation on a Trailing Twelve Month Basis
Net Debt to Adj. EBITDA Ratio Reconciliation on a Trailing Twelve Month Basis ($ millions) FY 2023 Net income $118 Add (subtract): Income from discontinued operations, net of tax (2) Income tax expense 13 Interest expense, net 49 Depreciation expense 43 Amortization expense 124 EBITDA 345 Adjustment
Slide 15: Quarterly Results Overview
Quarterly Results Overview 2022 2023 ($ millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Sales Electronics $442 $441 $389 $339 $340 $356 $367 $352 Industrial & Specialty 239 236 229 234 235 230 232 221 Total Net Sales $680 $677 $619 $574 $574 $586 $599 $573 Total Net Income $56 $65 $53 $13 $43 $30 ($32) $77 Ad
Slide 16: Organic Net Sales Growth Reconciliation
Organic Net Sales Growth Reconciliation Three Months Ended December 31, 2023 Change in Pass- Reported Net Constant Organic Net Sales Impact of Currency Through Metals Acquisitions Sales Growth Currency Growth Pricing Electronics 4% 0% 4% (4)% (1)% (1)% Industrial & Specialty (6)% (1)% (7)% —% 0% (7)
Slide 17: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (dollars in millions) 2024 Q4 2023 Q4 2022 2022 2023 Outlook Cash flows from operating activities $112 $101 $296 $334 ~$330-360 Capital expenditures (16) (15) (48) (53) ~(50)-(60) Proceeds from disposal of property, plant and equipment — 1 5 1 — Free cash flows $95 $87
Slide 18: Non-GAAP Definitions
Non-GAAP Definitions Adjusted Earnings Per Share (EPS): Adjusted EPS is a key metric used by management to measure operating performance and trends, as management believes the exclusion of certain expenses in calculating adjusted EPS facilitates operating performance comparisons on a period-to-perio