Element Solutions (NYSE:ESI) reported record third-quarter revenue, adjusted EBITDA and adjusted earnings per share, supported by continued demand for electronics products tied to artificial intelligence infrastructure, advanced semiconductor packaging and high-performance circuit boards. The company also raised its full-year adjusted EBITDA outlook to approximately $720 million.
Chief Executive Officer Ben Gliklich said the company’s Electronics segment remains a major driver of growth, with the business on pace to generate as much adjusted EBITDA in 2026 as the entire company produced in the prior year. He said demand has accelerated across the supply chain supporting AI infrastructure, particularly in thermal management, power density and advanced packaging applications.
“Underlying demand in the high-end electronics market remains strong,” Gliklich said, adding that the company expects its established positions in faster-growing, higher-value market niches to support future performance.
Electronics Growth Broad-Based
Chief Financial Officer Carey Dorman said organic net sales rose 13% companywide in the third quarter, while constant-currency adjusted EBITDA increased 29% year over year. Electronics organic net sales grew 18%, with every vertical within the segment posting double-digit organic growth.
- Semiconductor Solutions organic sales increased 24%.
- Assembly Solutions organic sales rose 16%.
- Circuitry Solutions organic sales increased 16%.
Electronics adjusted EBITDA margins, excluding pass-through metals, improved 50 basis points from a year earlier to 28.2%. Dorman attributed the improvement primarily to product mix, including growth in higher-value electronics offerings, as well as contributions from Micromax.
In Semiconductor Solutions, Element Solutions cited improved order patterns for power electronics products and increased momentum for thermal-interface materials used in high-power applications such as AI graphics processing units and central processing units. The company also said demand remained strong for advanced packaging products used by Asian outsourced semiconductor assembly and test providers.
Circuitry Solutions benefited from demand for board metallization products serving AI infrastructure and high-performance computing. Gliklich said industry forecasts for printed circuit board volume growth in 2026 have risen from about 6% at the start of the year to more than 10%, despite softness in consumer electronics. He said Element Solutions’ Circuitry Solutions business has outperformed expected market growth by more than 500 basis points year to date.
Micromax contributed nearly $140 million of reported sales during the quarter, about two-thirds of which was related to metals, according to Dorman. He said the acquired business is performing ahead of plan and generated significant revenue and adjusted EBITDA growth. EFC Gases and Advanced Materials contributed $23 million in revenue, up 45% sequentially and 19% year over year, reflecting demand in semiconductor manufacturing, satellite and electrical-infrastructure applications.
Specialties Faces Uneven Conditions
The company’s Specialties segment faced more mixed conditions. Industrial Solutions organic sales grew 3%, primarily because of price increases tied to raw-material cost inflation, while global volumes were roughly flat. Automotive demand modestly improved in Asia and Europe, but other industrial end markets remained soft.
Offshore Solutions organic sales declined 13%, reflecting project delays and an equipment failure at a large customer that temporarily shut down the customer’s facility. Dorman said the impact was a few million dollars of revenue in the quarter and that the site has returned online. He said the company expects sales to resume most likely in the fourth quarter, with a full recovery expected by the first quarter of 2027.
The company also said it won business for what it described as its first, and the industry’s first, deep-offshore carbon-capture installation. Management characterized the account as a small current contributor in a nascent market.
Investment, Cash Flow and Capital Allocation
Adjusted free cash flow was $135 million in the third quarter, rising materially both sequentially and from the prior year. Element Solutions spent $30 million on capital expenditures in the quarter, bringing year-to-date investment to $83 million. The company now expects approximately $110 million in full-year capital expenditures, or less than 3% of expected full-year sales.
The investments include manufacturing capacity for engineered preforms, thermal-interface materials and Kuprion ActiveCopper products, as well as local Electronics laboratory operations in India and Southeast Asia. The company broke ground on a new EFC facility in Texas late in the third quarter.
Gliklich said Element Solutions achieved two customer qualification milestones for ActiveCopper during the quarter. The company currently produces the product in Fremont, California, is developing a second site in Connecticut and is planning a third site. He said the business could contribute material EBITDA by 2028.
Net leverage stood at 2.7 times on a pro forma basis at quarter-end, including full contributions from Micromax and EFC. Element Solutions returned almost $60 million to shareholders during the quarter through dividends and the repurchase of about 1.1 million shares. Gliklich said the company’s capital-allocation approach remains unchanged, with continued emphasis on organic investment, bolt-on acquisitions and opportunistic share repurchases.
Solstice Termination and Organizational Changes
Gliklich also addressed the mutual termination of the proposed Solstice transaction at the end of August. He said management received investor feedback favoring the company’s standalone plan, which had been outlined at its May investor day, over alternatives that could introduce complexity and execution risk.
“We’re doubling down on the culture of entrepreneurship, operational excellence, and prudent capital allocation,” Gliklich said.
The company is decentralizing its Electronics organization into more autonomous business units aligned with customers. Matt Liebowitz has been named chief operating officer and will oversee Electronics and Specialties business units. Dorman will become president in addition to remaining chief financial officer, with oversight of business functions. Rick Fricke will become an adviser to the company and its Electronics businesses.
For the fourth quarter, the company’s outlook assumes continued AI-driven electronics investment, normal seasonal patterns and sequential improvement at EFC. Management said the full-year guidance implies adjusted EPS growth of more than 20% in 2026, based on current exchange rates and stable metals prices.
About Element Solutions (NYSE:ESI)
Element Solutions Inc (NYSE: ESI) is a specialty chemicals company that develops and produces materials used in electronics manufacturing and a range of industrial applications. Its products are designed to support processes such as printed circuit board fabrication, semiconductor packaging, electronic assembly, metal finishing, and surface treatment.
Through its electronics-focused businesses, including MacDermid Alpha Solutions, the company supplies solder materials, electronic assembly chemicals, circuit board materials, and semiconductor packaging solutions.
