Please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures. Before we review this record quarter, I'd like to reiterate our rationale for the announced agreement to merge with Solstice Advanced Materials. This proposed transaction unites our complementary competencies to better meet customer demands for scaled, broad strategic supply partners, while also increasing avenues to prudently invest our cash flows for growth and unlocking compelling synergies. Together, we stand to build an even stronger electronics portfolio across chip and PCB fabrication, packaging, and assembly, while accelerating investment in the commercialization of new advanced materials and other growth priorities.

The combined company will be a market leader in profit growth and cash flow generation with multiple high-growth businesses. As today's results show, our organic path has tremendous momentum, and combining our business with Solstice should provide an incremental lever to deliver greater value than we otherwise would have. Turning to our second quarter results, Element Solutions posted a record quarter as organic growth accelerated in our electronics portfolio and the specialties business continued to deliver bottom-line growth despite a mixed backdrop. There are significant opportunities for our teams to improve value and use manufacturing processes, particularly as pockets of the electronic supply chain have become constrained relative to accelerating demand.

In the second quarter, we delivered double-digit organic sales growth for the third quarter in a row and margin expansion when excluding the impact of pass-through metals. Our profitable growth is happening alongside increasing investment in people, technology, and plans to support the future. Sales in our Electronics segment grew 20% 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 business provides critical enabling solutions across thermal management, power density, and advanced packaging applications, to name a few.

What went well
  • Delivered record quarterly revenue, adjusted EBITDA and adjusted EPS, with organic net sales up 15%, constant-currency adjusted EBITDA up 33% year over year, and adjusted EPS up 27% - a third straight quarter of double-digit organic growth.
  • Electronics organic net sales grew 20% with every vertical up double digits, led by Semiconductor Solutions at +31% (thermal interface materials for AI GPUs/CPUs and advanced packaging from Asian OSATs), assembly +18%, and circuitry +15%.
  • The Micromax (about $130 million of reported sales) and EFC integrations ran ahead of plan and contributed meaningful adjusted EBITDA growth, while Industrial Solutions returned to 3% organic growth on early European recovery and price/surcharge actions.
  • Generated $74 million of adjusted free cash flow (up sequentially and year over year), raised full-year 2026 adjusted EBITDA guidance to $690-$710 million with roughly 20% adjusted EPS growth, and lowered pro forma net leverage to 2.9x (targeting ~2.5x by year-end).
  • Announced an agreement to merge with Solstice Advanced Materials, citing over $180 million in actionable cost-synergy potential and a stronger combined electronics portfolio, and raised the Cuprion copper-technology capacity outlook for year-end 2027.
What went wrong
  • Offshore Energy Solutions grew only 1% organically, slower than Q1, on timing impacts and some disruption from the war in Iran.
  • Significant sequential non-metal raw material inflation pressured the specialty segment, and above-target incentive compensation accruals added more than $10 million of OpEx, holding ex-metals adjusted EBITDA margin at 27.8% versus a near-30% level otherwise.
  • Management acknowledged the stock's reaction to the announced Solstice merger was disappointing and that the deal still requires shareholder and regulatory approvals, framing integration as the first test of execution.
  • The company flagged raw material and logistics inflation risk that may not be recaptured immediately through pricing and sourcing actions, alongside continued working capital investment to support volume growth.

More on Element Solutions Inc

Reported 2026-07-28 · figures from the Element Solutions Inc Q2 2026 earnings call.

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