Please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures. We reported a record quarter yesterday that demonstrates ongoing success with our strategy of penetrating the highest value, fastest-growing subsegments in our addressable markets. Sales in our electronics segment grew 15% organically as activity accelerated across our supply chain in support of the ongoing AI infrastructure build-out. Technical requirements in data center hardware and other high-performance electronics continue to increase, and our businesses provide critical enabling solutions across thermal management, power density, and advanced packaging applications, to name a few.

This dynamic, combined with resilience in the higher-end mobile market, led to double-digit organic net sales growth in all of our electronics verticals. We're increasing investments to better serve our customers, whether in inventory to support volume growth, additional manufacturing capacity for certain high-growth product lines, or innovation to remain on the leading edge. Our investment in OpEx and CapEx is customer-led and supports durable growth trends. As a predominantly asset-light formulation business with low maintenance capital requirements, we're uniquely positioned to selectively target efficient investment ahead of industry inflection points.

The pipeline for this capability continues to grow despite our limiting commercial activities to ensure the supply chain can keep up with demand. Their results in the quarter and forecasts for the year are tracking favorably to our expectations, with both growing revenue organically this quarter by double-digits. Organic net sales grew 10%, and constant currency adjusted EBITDA increased 21% year-over-year. Underlying year-on-year growth in adjusted EBITDA would have been in the mid-teens when excluding this benefit, as well as the impact of acquisitions and prior period divestitures.

What went well
  • Reported a record first quarter with organic net sales up 10%, constant-currency adjusted EBITDA up 21% year over year, and adjusted EPS up 21%.
  • Electronics organic growth of 15% was the strongest since early 2021, with all verticals up double digits: assembly +12%, circuitry +17% (record HPC/AI server-board sales), and semiconductor +18%.
  • Largely recovered the Q4 2025 metals-hedge timing headwind through sales of finished goods at higher metal values, and adjusted EBITDA margin (on the new ex-pass-through-metals basis) improved 170 basis points to 27.8%.
  • The Micromax and EFC acquisitions closed and started well, both growing revenue double digits organically (EFC posted a record first quarter of $19 million); pro forma for a full quarter of Micromax, adjusted EBITDA would have been $170 million.
  • Raised full-year 2026 adjusted EBITDA guidance to $665-$685 million with high-teens adjusted EPS growth, supported by continued electronics strength and an expanding Southeast Asia footprint.
What went wrong
  • Free cash flow was negative in the seasonally slowest quarter, as the high level of growth and higher metals prices magnified working capital investment.
  • Specialties grew only 1% organically and industrial solutions was flat year over year, hurt by softer Americas automotive production (particularly customers in Mexico), with management remaining cautious on European industrial demand.
  • Higher interest costs tied to the recent acquisitions partly offset EPS growth, and net leverage was elevated at 3.4x (3.1x on a pro forma trailing-twelve-month basis).
  • Management flagged a more complex macro backdrop - inflationary pressure, metal-price swings and geopolitical risk - and raised the CapEx outlook to $75-$100 million as growth investments trended above the prior $75 million guide.

More on Element Solutions Inc

Reported 2026-04-29 · figures from the Element Solutions Inc Q1 2026 earnings call.

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