UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q

_______________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36272

Element Solutions Inc

(Exact name of Registrant as specified in its charter)

Delaware

37-1744899

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

500 East Broward Boulevard,

Suite 1860

33394

Fort Lauderdale,

Florida

(Zip Code)

(Address of principal executive offices)

Registrant’s telephone number, including area code: (561) 207-9600

_______________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ESI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding at October ~~20, 2022: 242,085,552~~19, 2023: 241,516,314

TABLE OF CONTENTS


		Page

	Glossary of Defined Terms	i
	Forward-Looking Statements	ii
	Non-GAAP Financial Measures	ii

Part I.	Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations
	Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	1
	Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss
	Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	2
	Condensed Consolidated Balance Sheets
	September 30, ~~2022~~2023 and December 31, ~~2021~~2022	3
	Condensed Consolidated Statements of Cash Flows
	Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	4
	Condensed Consolidated Statements of Changes in Stockholders' Equity
	Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	5
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2930
Item 4.	Controls and Procedures	2930

Part II.	Other Information

Item 1.	Legal Proceedings	3031
Item 1A.	Risk Factors	3031
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3031
Item 3.	Defaults Upon Senior Securities	3031
Item 4.	Mine Safety Disclosures	3031
Item 5.	Other Information	3031
Item 6.	Exhibits	3132

Signatures		3233

GLOSSARY OF DEFINED TERMS


Terms						Definitions
Element Solutions; We; Us; Our; the Company						Element Solutions Inc, a Delaware corporation, and where the context requires, its subsidiaries or operating businesses.
~~Add-on Term Loans~~						Incremental term loans entered into on September 1, 2021, under the Credit Agreement, in an aggregate principal amount of $400 million through a corresponding increase in the Company's existing senior secured term loans B. All references to "term loans" in this Quarterly Report include the Add-on Term Loans.



~~Coventya~~						~~Coventya Holding SAS and its subsidiaries.~~
~~Coventya Acquisition~~						~~Acquisition of Coventya on September 1, 2021.~~
Credit Agreement						Credit Agreement, dated as of January 31, 2019, as amended from time to time, among, inter alia, Element Solutions and MacDermid, Incorporated, as borrowers, certain subsidiaries of Element Solutions and the lenders from time to time parties thereto.
EBITDA						Earnings before interest, taxes, depreciation and amortization.
Exchange Act						Securities Exchange Act of 1934, as amended.
GAAP						U.S. Generally Accepted Accounting Principles.
~~HKW~~						~~H.K. Wentworth Limited and its subsidiaries.~~
~~HKW Acquisition~~						~~Acquisition of HKW on May 5, 2021.~~
HSO						HSO Herbert Schmidt GmbH & Co. KG, Dipl.-Ing. W. Schmidt GmbH and HSO Hong Kong Holding Limited and its subsidiary.
HSO Acquisition						Acquisition of HSO on January 26, 2022.
Kuprion Acquisition
						Acquisition of Kuprion, Inc. on May 19, 2023.
Quarterly Report						This quarterly report on Form 10-Q for the three and nine months ended September 30, ~~2022.~~2023.
RSUs						Restricted stock units issued by Element Solutions from time to time under its Amended and Restated 2013 Incentive Compensation Plan.
SEC						Securities and Exchange Commission.
~~2021~~ViaForm Distribution Rights						The rights to sell the Company's ViaForm® electrochemical deposition products in certain markets directly to customers.
WACC						Weighted average cost of capital
2022 Annual Report						Element Solutions' annual report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, filed with the SEC on February ~~23, 2022.~~22, 2023.
3.875% USD Notes due 2028						Element Solutions' $800 million aggregate principal amount of 3.875% senior notes due 2028, denominated in U.S. dollars, issued on August 18, 2020.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements that can be identified by words such as "expect," "anticipate," "project," "will," "should," "believe," "intend," "plan," "assume," "estimate," "predict," "seek," "continue," "outlook," "may," "might," "aim," "can have," "likely," "potential," "target," "hope," "goal," "priority" or "confident" and variations of such words and similar expressions. Many of the forward-looking statements include, but are not limited to, statements, beliefs, projections and expectations regarding the ~~expected benefits of the Coventya Acquisition; the~~ continuing economic impact of the coronavirus (COVID-19) and its variants on the global economy, our business, financial results, customers, suppliers, vendors and/or stock price, including the impact of related governmental responses; the efficacy of vaccines and treatments targeting COVID-19 and its variants; secular ~~trends; increasing commercial activity~~trends and ~~opportunities~~expected growth of our businesses; the expected benefits of the reacquired ViaForm Distribution Rights and the Kuprion Acquisition; deferred payments related to the ViaForm Distribution Rights and the Kuprion Acquisition; the ongoing conflict between Russia and Ukraine and the evolving nature of the conflicts in ~~printed~~the Middle East as well as actions in response thereto and ~~in-mold electronics;~~their impact on market conditions and the global economy; capital requirements and need for and availability of financing; probability of achievement of the performance target related to certain performance-based RSUs; the impact of new accounting standards and accounting changes; share repurchases; our dividend policy and dividend declarations; our hedging activities; timing and outcome of environmental and legal matters; tax planning strategies and assessments; the impact of tax law changes; impairments, including those on goodwill and other intangible assets; price volatility and cost environment; inflation and fluctuations in foreign exchange rates; our liquidity, cash flows and capital allocation; funding sources; capital expenditures; debt and debt leverage ratio; pension plan contributions; ~~off-balance sheet arrangements and~~ contractual obligations; general views about future operating results; expected returns to stockholders; risk management programs; future prospects; and other events or developments that we expect or anticipate will occur in the future.

Although we believe these forward-looking statements are based upon reasonable assumptions regarding our business and expectations about future events, financial performance and trends, there can be no assurance that our actual results will not differ materially from any results expressed or implied in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Part I, Item 1A, Risk Factors, of our ~~2021~~2022 Annual Report. Certain of these risks may be amplified by the invasion of Ukraine by Russia, the sanctions (including their duration) and other measures being imposed in response to this conflict as well as any escalation or expansion of economic disruption or the conflict’s current scope. In addition, as we operate in a very competitive and rapidly changing environment, new risks may emerge from time to time. Any forward-looking statement included in this Quarterly Report is based only on information currently available and speaks only as of the date on which it is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Please consult any further disclosures on related subjects in our SEC filings.

The invasion of Ukraine by Russia in early 2022 and the sanctions and other measures being imposed in response to this conflict have increased the level of economic and political uncertainty. While none of Russia, Ukraine or Belarus constitutes a material portion of our business and we do not have physical assets in these countries, a significant escalation or expansion of economic disruption or the conflict's current scope could disrupt the global supply chain and increase our costs as well as amplify certain risks discussed in Part I, Item 1A, Risk Factors, of our 2022 Annual Report.

In addition, while progress has been made to contain the COVID-19 pandemic, it remains a global challenge. The ultimate extent of the impact of COVID-19 and/or its variants on our business or our future results of operations, financial condition and/or expected cash flows remains unknown as COVID-19 and its variants continue to spread. The long-term impact of the pandemic will depend on numerous and evolving factors that ~~are~~remain highly uncertain, vary by market and cannot be quantified at this time, such as the scope, severity and duration of the pandemic.

Non-GAAP Financial Measures

This Quarterly Report contains non-GAAP financial measures, such as ~~Adjusted EBITDA and~~ operating results on a constant currency and organic ~~basis.~~basis and Adjusted EBITDA. Non-GAAP financial measures should not be considered in isolation from, a substitute for, or superior to, performance measures calculated in accordance with GAAP. For additional information on these non-GAAP financial measures, including definitions, limitations and reconciliations to their most comparable applicable GAAP measures, see "Non-GAAP Financial Measures" in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in Part I, Item 2, and Note 12, Segment Information, to the unaudited Condensed Consolidated Financial Statements, both included in this Quarterly Report.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(dollars in millions, except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales	Net sales	$	618.5	$	616.2	$	1,975.6	$	1,752.9	Net sales	$	599.3	$	618.5	$	1,759.8	$	1,975.6
Cost of sales	Cost of sales	396.6		371.7		1,240.9		1,028.9		Cost of sales	357.4		396.6		1,061.6		1,240.9
Gross profit	Gross profit	221.9		244.5		734.7		724.0		Gross profit	241.9		221.9		698.2		734.7
Operating expenses:	Operating expenses:									Operating expenses:
Selling, technical, general and administrative	Selling, technical, general and administrative	131.4		163.5		431.3		447.8		Selling, technical, general and administrative	149.9		131.4		445.8		431.3
Research and development	Research and development	11.3		12.5		38.2		36.8		Research and development	12.9		11.3		54.3		38.2
Goodwill impairment										Goodwill impairment	80.0		—		80.0		—
Total operating expenses	Total operating expenses	142.7		176.0		469.5		484.6		Total operating expenses	242.8		142.7		580.1		469.5
Operating profit		79.2		68.5		265.2		239.4
Operating (loss) profit										Operating (loss) profit	(0.9)		79.2		118.1		265.2
Other (expense) income:	Other (expense) income:									Other (expense) income:
Interest expense, net	Interest expense, net	(12.3)		(13.8)		(39.6)		(39.6)		Interest expense, net	(13.3)		(12.3)		(37.0)		(39.6)
Foreign exchange gain (loss)		0.9		(0.6)		2.9		22.2
Other income (expense), net		2.0		(0.9)		5.2		(8.2)
Foreign exchange (loss) gain										Foreign exchange (loss) gain	(5.3)		0.9		8.6		2.9
Other income, net										Other income, net	3.1		2.0		1.8		5.2
Total other expense	Total other expense	(9.4)		(15.3)		(31.5)		(25.6)		Total other expense	(15.5)		(9.4)		(26.6)		(31.5)
Income before income taxes and non-controlling interests		69.8		53.2		233.7		213.8
(Loss) income before income taxes and non-controlling interests										(Loss) income before income taxes and non-controlling interests	(16.4)		69.8		91.5		233.7
Income tax expense	Income tax expense	(16.5)		(17.3)		(60.4)		(16.5)		Income tax expense	(15.3)		(16.5)		(53.4)		(60.4)
Net income from continuing operations		53.3		35.9		173.3		197.3
Net (loss) income from continuing operations										Net (loss) income from continuing operations	(31.7)		53.3		38.1		173.3
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		—		1.8		2.0		Income from discontinued operations, net of tax	—		—		2.9		1.8
Net income		53.3		35.9		175.1		199.3
Net (income) loss attributable to non-controlling interests		(0.1)		0.1		(0.6)		0.1
Net income attributable to common stockholders		$	53.2	$	36.0	$	174.5	$	199.4
Net (loss) income										Net (loss) income	(31.7)		53.3		41.0		175.1
Net income attributable to non-controlling interests										Net income attributable to non-controlling interests	(0.1)		(0.1)		—		(0.6)
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(31.8)	$	53.2	$	41.0	$	174.5

Earnings per share
(Loss) earnings per share										(Loss) earnings per share
Basic from continuing operations	Basic from continuing operations	$	0.22	$	0.15	$	0.70	$	0.80	Basic from continuing operations	$	(0.13)	$	0.22	$	0.16	$	0.70
Basic from discontinued operations	Basic from discontinued operations	—		—		0.01		0.01		Basic from discontinued operations	—		—		0.01		0.01
Basic attributable to common stockholders	Basic attributable to common stockholders	$	0.22	$	0.15	$	0.71	$	0.81	Basic attributable to common stockholders	$	(0.13)	$	0.22	$	0.17	$	0.71

Diluted from continuing operations	Diluted from continuing operations	$	0.22	$	0.15	$	0.70	$	0.79	Diluted from continuing operations	$	(0.13)	$	0.22	$	0.16	$	0.70
Diluted from discontinued operations	Diluted from discontinued operations	—		—		0.01		0.01		Diluted from discontinued operations	—		—		0.01		0.01
Diluted attributable to common stockholders	Diluted attributable to common stockholders	$	0.22	$	0.15	$	0.71	$	0.80	Diluted attributable to common stockholders	$	(0.13)	$	0.22	$	0.17	$	0.71

Weighted average common shares outstanding	Weighted average common shares outstanding									Weighted average common shares outstanding
Basic	Basic	244.7		247.6		246.4		247.5		Basic	241.5		244.7		241.4		246.4
Diluted	Diluted	245.0		248.0		247.2		248.0		Diluted	241.5		245.0		241.8		247.2

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

(Unaudited)

(dollars in millions)

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income $ 53.3 $ 35.9 $ 175.1 $ 199.3

Other comprehensive loss
Foreign currency translation:
Other comprehensive loss before reclassifications, net of tax expense of $5.4 and $5.8 for the three months ended September 30, 2022 and 2021 and $7.8 and $9.7 for the nine months ended September 30, 2022 and 2021, respectively (107.4) (28.9) (233.8) (47.1)
Total foreign currency translation adjustments (107.4) (28.9) (233.8) (47.1)
Derivative financial instruments:
Other comprehensive income (loss) before reclassifications, net of tax expense of $4.3 and $0.8 for the three months ended September 30, 2022 and 2021 and $16.0 and $3.6 for the nine months ended September 30, 2022 and 2021, respectively 15.1 (0.8) 43.7 0.3
Reclassifications, net of tax expense of $0.0 for the three and nine months ended September 30, 2022 and 2021, respectively (0.9) 4.8 6.9 13.7
Total unrealized gain arising on qualified hedging derivatives 14.2 4.0 50.6 14.0
Other comprehensive loss (93.2) (24.9) (183.2) (33.1)
Comprehensive (loss) income (39.9) 11.0 (8.1) 166.2
Comprehensive loss attributable to non-controlling interests 0.1 2.4 1.6 2.4
Comprehensive (loss) income attributable to common stockholders $ (39.8) $ 13.4 $ (6.5) $ 168.6


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net (loss) income	$	(31.7)	$	53.3	$	41.0	$	175.1

Other comprehensive loss
Foreign currency translation:
Other comprehensive loss before reclassifications, net of tax expense of $0.6 and $5.4 for the three months ended September 30, 2023 and 2022 and $0.6 and $7.8 for the nine months ended September 30, 2023 and 2022, respectively	(21.8)		(107.4)		(80.4)		(233.8)

Total foreign currency translation adjustments	(21.8)		(107.4)		(80.4)		(233.8)




Available-for-sale debt securities:
Other comprehensive loss before reclassifications, net of tax expense of $0.0 for the three and nine months ended September 30, 2023, respectively	—		—		(1.0)		—

Total unrealized loss on available-for-sale debt securities	—		—		(1.0)		—
Derivative financial instruments:
Other comprehensive income before reclassifications, net of tax (benefit) expense of $(0.7)and $4.3 for the three months ended September 30, 2023 and 2022 and $(1.6) and $16.0 for the nine months ended September 30, 2023 and 2022, respectively	7.3		15.1		20.5		43.7
Reclassifications, net of tax expense of $0.0 for the three months ended September 30, 2023 and 2022 and $0.0 for the nine months ended September 30, 2023 and 2022, respectively	(10.8)		(0.9)		(28.6)		6.9
Total unrealized (loss) gain on qualified hedging derivatives	(3.5)		14.2		(8.1)		50.6
Other comprehensive loss	(25.3)		(93.2)		(89.5)		(183.2)
Comprehensive loss	(57.0)		(39.9)		(48.5)		(8.1)
Comprehensive loss attributable to non-controlling interests	—		0.1		0.5		1.6
Comprehensive loss attributable to common stockholders	$	(57.0)	$	(39.8)	$	(48.0)	$	(6.5)

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)


		September 30,		December 31,			September 30,		December 31,
		2022		2021			2023		2022
Assets	Assets					Assets
Cash & cash equivalents	Cash & cash equivalents	$	234.0	$	330.1	Cash & cash equivalents	$	329.6	$	265.6
Accounts receivable, net of allowance for doubtful accounts of $12.4 and $12.2 at September 30, 2022 and December 31, 2021, respectively		467.6		492.2
Accounts receivable, net of allowance for doubtful accounts of $14.0 and $14.4 at September 30, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowance for doubtful accounts of $14.0 and $14.4 at September 30, 2023 and December 31, 2022, respectively	449.5		455.8
Inventories	Inventories	309.9		274.4		Inventories	322.8		290.7
Prepaid expenses	Prepaid expenses	35.2		29.4		Prepaid expenses	31.3		38.5
Other current assets	Other current assets	131.9		88.4		Other current assets	166.3		138.1

Total current assets	Total current assets	1,178.6		1,214.5		Total current assets	1,299.5		1,188.7
Property, plant and equipment, net	Property, plant and equipment, net	263.4		278.1		Property, plant and equipment, net	279.2		277.2
Goodwill	Goodwill	2,326.2		2,526.3		Goodwill	2,281.5		2,412.8
Intangible assets, net	Intangible assets, net	804.1		956.7		Intangible assets, net	889.6		805.5
Deferred income tax assets	Deferred income tax assets	50.1		81.5		Deferred income tax assets	49.8		51.5
Other assets	Other assets	247.3		81.3		Other assets	169.2		168.0

Total assets	Total assets	$	4,869.7	$	5,138.4	Total assets	$	4,968.8	$	4,903.7
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Accounts payable	Accounts payable	$	158.4	$	138.4	Accounts payable	$	143.8	$	132.2
Current installments of long-term debt	Current installments of long-term debt	11.9		12.7		Current installments of long-term debt	11.5		11.5
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	183.7		264.1		Accrued expenses and other current liabilities	221.4		200.7

Total current liabilities	Total current liabilities	354.0		415.2		Total current liabilities	376.7		344.4
Debt	Debt	1,886.8		1,894.2		Debt	2,027.8		1,883.8
Pension and post-retirement benefits	Pension and post-retirement benefits	29.7		36.1		Pension and post-retirement benefits	34.6		36.7
Deferred income tax liabilities	Deferred income tax liabilities	122.9		140.0		Deferred income tax liabilities	104.4		121.2
Other liabilities	Other liabilities	171.6		152.1		Other liabilities	179.1		168.5

Total liabilities	Total liabilities	2,565.0		2,637.6		Total liabilities	2,722.6		2,554.6
Commitments and contingencies (Note 9)	Commitments and contingencies (Note 9)					Commitments and contingencies (Note 9)
Stockholders' equity	Stockholders' equity					Stockholders' equity

Common stock: 400.0 shares authorized (2022: 265.0 shares issued; 2021: 261.9 shares issued)		2.7		2.6
Common stock: 400.0 shares authorized (2023: 266.2 shares issued; 2022: 265.1 shares issued)						Common stock: 400.0 shares authorized (2023: 266.2 shares issued; 2022: 265.1 shares issued)	2.7		2.7
Additional paid-in capital	Additional paid-in capital	4,180.6		4,166.6		Additional paid-in capital	4,197.7		4,185.9
Treasury stock (2022: 22.2 shares; 2021: 15.2 shares)		(299.7)		(159.2)
Treasury stock (2023: 24.6 shares; 2022: 24.3 shares)						Treasury stock (2023: 24.6 shares; 2022: 24.3 shares)	(341.9)		(334.2)
Accumulated deficit	Accumulated deficit	(1,217.1)		(1,331.9)		Accumulated deficit	(1,241.2)		(1,223.8)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(378.4)		(197.4)		Accumulated other comprehensive loss	(387.1)		(298.1)
Total stockholders' equity	Total stockholders' equity	2,288.1		2,480.7		Total stockholders' equity	2,230.2		2,332.5
Non-controlling interests	Non-controlling interests	16.6		20.1		Non-controlling interests	16.0		16.6
Total equity	Total equity	2,304.7		2,500.8		Total equity	2,246.2		2,349.1
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	4,869.7	$	5,138.4	Total liabilities and stockholders' equity	$	4,968.8	$	4,903.7

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(dollars in millions)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	175.1	$	199.3	Net income	$	41.0	$	175.1
Net income from discontinued operations, net of tax	Net income from discontinued operations, net of tax	1.8		2.0		Net income from discontinued operations, net of tax	2.9		1.8
Net income from continuing operations	Net income from continuing operations	173.3		197.3		Net income from continuing operations	38.1		173.3
Reconciliations of net income from continuing operations to net cash flows provided by operating activities:
Reconciliations of net income to net cash flows provided by operating activities:						Reconciliations of net income to net cash flows provided by operating activities:
Depreciation and amortization	Depreciation and amortization	122.0		120.7		Depreciation and amortization	124.7		122.0
Deferred income taxes	Deferred income taxes	3.9		(37.4)		Deferred income taxes	(8.1)		3.9
Foreign exchange gain	Foreign exchange gain	(1.0)		(13.1)		Foreign exchange gain	(10.5)		(1.0)
Incentive stock compensation	Incentive stock compensation	12.8		33.8		Incentive stock compensation	10.6		12.8
Goodwill impairment						Goodwill impairment	80.0		—
Other, net	Other, net	10.7		11.1		Other, net	25.8		10.7
Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Accounts receivable	Accounts receivable	(23.3)		(59.0)		Accounts receivable	(6.6)		(23.3)
Inventories	Inventories	(63.1)		(78.5)		Inventories	(37.2)		(63.1)
Accounts payable	Accounts payable	32.1		41.6		Accounts payable	13.3		32.1
Accrued expenses	Accrued expenses	(47.9)		13.2		Accrued expenses	(8.0)		(47.9)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(22.0)		(15.8)		Prepaid expenses and other current assets	3.4		(22.0)
Other assets and liabilities	Other assets and liabilities	(2.1)		(9.2)		Other assets and liabilities	(3.7)		(2.1)
Net cash flows provided by operating activities	Net cash flows provided by operating activities	195.4		204.7		Net cash flows provided by operating activities	221.8		195.4
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(32.8)		(27.7)		Capital expenditures	(36.3)		(32.8)
Proceeds from disposal of property, plant and equipment	Proceeds from disposal of property, plant and equipment	3.4		—		Proceeds from disposal of property, plant and equipment	1.4		3.4
Acquisition of business, net of cash acquired		(22.6)		(536.5)
Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(188.6)		(22.6)
Other, net	Other, net	(9.9)		14.0		Other, net	(2.7)		(9.9)
Net cash flows used in investing activities	Net cash flows used in investing activities	(61.9)		(550.2)		Net cash flows used in investing activities	(226.2)		(61.9)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Debt proceeds, net of discount		—		398.0
Debt proceeds						Debt proceeds	150.0		—
Repayments of borrowings	Repayments of borrowings	(11.9)		(6.7)		Repayments of borrowings	(8.6)		(11.9)

Repurchases of common stock	Repurchases of common stock	(113.5)		(1.7)		Repurchases of common stock	—		(113.5)
Dividends	Dividends	(59.2)		(42.1)		Dividends	(58.1)		(59.2)
Payment of financing fees	Payment of financing fees	—		(5.1)		Payment of financing fees	(1.0)		—
Other, net	Other, net	(27.0)		(6.2)		Other, net	(7.7)		(27.0)
Net cash flows (used in) provided by financing activities		(211.6)		336.2
Net cash flows provided by (used in) financing activities						Net cash flows provided by (used in) financing activities	74.6		(211.6)

Net cash flows provided by (used in) operating activities of discontinued operations		1.8		(0.4)
Net cash flows provided by operating activities of discontinued operations						Net cash flows provided by operating activities of discontinued operations	2.9		1.8

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(19.8)		(2.9)		Effect of exchange rate changes on cash and cash equivalents	(9.1)		(19.8)
Net decrease in cash and cash equivalents		(96.1)		(12.6)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	64.0		(96.1)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	330.1		291.9		Cash and cash equivalents at beginning of period	265.6		330.1
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	234.0	$	279.3	Cash and cash equivalents at end of period	$	329.6	$	234.0

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(dollars in millions, except share amounts)


Three Months Ended September 30, 2022		Common Stock			Additional Paid-in Capital				Treasury Stock						Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity		Non- controlling Interests				Total Equity
		Shares	Amount				Shares			Amount
Balance at June 30, 2022		265,013,065	$	2.7			$	4,176.4		19,221,388			$	(244.9)					$	(1,250.6)					$	(285.4)					$	2,398.2		$	17.0		$	2,415.2
Net income		—	—		—				—		—				53.2		—				53.2		0.1				53.3
Three Months Ended September 30, 2023																													Three Months Ended September 30, 2023	Common Stock						Additional Paid-in Capital					Treasury Stock						Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity				Non- controlling Interests				Total Equity
																														Shares			Amount						Shares			Amount
Balance at June 30, 2023																													Balance at June 30, 2023	266,130,782			$	2.7					$	4,194.4		24,641,709			$	(341.8)					$	(1,189.9)			$	(361.9)			$	2,303.5			$	16.2	$	2,319.7
Net (loss) income																													Net (loss) income	—			—			—					—		—				(31.8)		—				(31.8)				0.1				(31.7)
Other comprehensive loss, net of taxes	Other comprehensive loss, net of taxes	—	—		—				—		—				—		(93.0)				(93.0)		(0.2)				(93.2)		Other comprehensive loss, net of taxes	—			—			—					—		—				—		(25.2)				(25.2)				(0.1)				(25.3)
Exercise/ vesting of share based compensation		851	—		—				266		—				—		—				—		—				—
Exercise/ vesting of stock-based compensation																													Exercise/ vesting of stock-based compensation	10,107			—			—					3,046		(0.1)				—		—				(0.1)				—				(0.1)
Issuance of common stock under Employee Stock Purchase Plan	Issuance of common stock under Employee Stock Purchase Plan	21,610	—		0.3				—		—				—		—				0.3		—				0.3		Issuance of common stock under Employee Stock Purchase Plan	20,180			—			0.3					—		—				—		—				0.3				—				0.3
Repurchases of common stock		—	—		—				3,018,851		(54.8)				—		—				(54.8)		—				(54.8)

Dividends ($0.08 per share)	Dividends ($0.08 per share)	—	—		—				—		—				(19.7)		—				(19.7)		—				(19.7)		Dividends ($0.08 per share)	—			—			—					—		—				(19.5)		—				(19.5)				—				(19.5)

Equity compensation expense	Equity compensation expense	—	—		4.1				—		—				—		—				4.1		—				4.1		Equity compensation expense	—			—			3.0					—		—				—		—				3.0				—				3.0
Changes in non-controlling interests	Changes in non-controlling interests	—	—		(0.2)				—		—				—		—				(0.2)		(0.3)				(0.5)		Changes in non-controlling interests	—			—			—					—		—				—		—				—				(0.2)				(0.2)
Balance at September 30, 2022		265,035,526	$	2.7	$	4,180.6			22,240,505		$	(299.7)			$	(1,217.1)	$	(378.4)			$	2,288.1	$	16.6			$	2,304.7
Balance at September 30, 2023																													Balance at September 30, 2023	266,161,069			$	2.7		$	4,197.7				24,644,755		$	(341.9)			$	(1,241.2)	$	(387.1)			$	2,230.2			$	16.0			$	2,246.2

Three Months Ended September 30, 2021 Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated
Deficit Accumulated Other Comprehensive (Loss) Income Total
Stockholders'
Equity Non-
controlling Interests Total Equity
Shares Amount Shares Amount
Balance at June 30, 2021 261,885,181 $ 2.6 $ 4,146.9 14,326,433 $ (139.4) $ (1,337.1) $ (203.0) $ 2,470.0 $ (1.7) $ 2,468.3
Net income (loss) — — — — — 36.0 — 36.0 (0.1) 35.9
Other comprehensive loss, net of taxes — — — — — — (22.6) (22.6) (2.3) (24.9)
Exercise/ vesting of share based compensation 13,651 — — 4,300 (0.1) — — (0.1) — (0.1)
Issuance of common stock under Employee Stock Purchase Plan 15,621 — 0.3 — — — — 0.3 — 0.3
Repurchases of common stock — — — 83,992 (1.7) — — (1.7) — (1.7)
Dividends ($0.06 per share) — — — — — (14.9) — (14.9) — (14.9)
Acquisition of non-controlling interest with Coventya Acquisition — — — — — — — — 39.6 39.6
Equity compensation expense — — 12.6 — — — — 12.6 — 12.6
Balance at September 30, 2021 261,914,453 $ 2.6 $ 4,159.8 14,414,725 $ (141.2) $ (1,316.0) $ (225.6) $ 2,479.6 $ 35.5 $ 2,515.1


Three Months Ended September 30, 2022	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at June 30, 2022	265,013,065	$	2.7	$	4,176.4	19,221,388	$	(244.9)	$	(1,250.6)	$	(285.4)	$	2,398.2	$	17.0	$	2,415.2
Net income	—	—		—		—	—		53.2		—		53.2		0.1		53.3
Other comprehensive loss, net of taxes	—	—		—		—	—		—		(93.0)		(93.0)		(0.2)		(93.2)
Exercise/ vesting of stock-based compensation	851	—		—		266	—		—		—		—		—		—
Issuance of common stock under Employee Stock Purchase Plan	21,610	—		0.3		—	—		—		—		0.3		—		0.3
Repurchases of common stock	—	—		—		3,018,851	(54.8)		—		—		(54.8)		—		(54.8)
Dividends ($0.08 per share)	—	—		—		—	—		(19.7)		—		(19.7)		—		(19.7)
Equity compensation expense	—	—		4.1		—	—		—		—		4.1		—		4.1
Changes in non-controlling interests	—	—		(0.2)		—	—		—		—		(0.2)		(0.3)		(0.5)
Balance at September 30, 2022	265,035,526	$	2.7	$	4,180.6	22,240,505	$	(299.7)	$	(1,217.1)	$	(378.4)	$	2,288.1	$	16.6	$	2,304.7

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(dollars in millions, except share amounts)


Nine Months Ended September 30, 2022		Common Stock			Additional Paid-in Capital				Treasury Stock						Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity		Non- controlling Interests				Total Equity
		Shares	Amount				Shares			Amount
Balance at December 31, 2021		261,937,509	$	2.6			$	4,166.6		15,195,525			$	(159.2)					$	(1,331.9)					$	(197.4)					$	2,480.7		$	20.1		$	2,500.8
Nine Months Ended September 30, 2023																													Nine Months Ended September 30, 2023	Common Stock						Additional Paid-in Capital					Treasury Stock						Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity				Non- controlling Interests				Total Equity
																														Shares			Amount						Shares			Amount
Balance at December 31, 2022																													Balance at December 31, 2022	265,062,533			$	2.7					$	4,185.9		24,272,748			$	(334.2)					$	(1,223.8)			$	(298.1)			$	2,332.5			$	16.6	$	2,349.1
Net income	Net income	—	—		—				—		—				174.5		—				174.5		0.6				175.1		Net income	—			—			—					—		—				41.0		—				41.0				—				41.0
Other comprehensive loss, net of taxes	Other comprehensive loss, net of taxes	—	—		—				—		—				—		(181.0)				(181.0)		(2.2)				(183.2)		Other comprehensive loss, net of taxes	—			—			—					—		—				—		(89.0)				(89.0)				(0.5)				(89.5)
Exercise/ vesting of share based compensation		3,040,841	0.1		—				1,033,035		(24.0)				—		—				(23.9)		—				(23.9)
Exercise/ vesting of stock-based compensation																													Exercise/ vesting of stock-based compensation	1,038,192			—			—					372,007		(7.7)				—		—				(7.7)				—				(7.7)
Issuance of common stock under Employee Stock Purchase Plan	Issuance of common stock under Employee Stock Purchase Plan	57,176	—		1.0				—		—				—		—				1.0		—				1.0		Issuance of common stock under Employee Stock Purchase Plan	60,344			—			1.0					—		—				—		—				1.0				—				1.0
Repurchases of common stock		—	—		—				6,011,945		(116.5)				—		—				(116.5)		—				(116.5)

Dividends ($0.24 per share)	Dividends ($0.24 per share)	—	—		—				—		—				(59.7)		—				(59.7)		—				(59.7)		Dividends ($0.24 per share)	—			—			—					—		—				(58.4)		—				(58.4)				—				(58.4)

Equity compensation expense	Equity compensation expense	—	—		13.1				—		—				—		—				13.1		—				13.1		Equity compensation expense	—			—			10.8					—		—				—		—				10.8				—				10.8
Changes in non-controlling interests	Changes in non-controlling interests	—	—		(0.1)				—		—				—		—				(0.1)		(1.9)				(2.0)		Changes in non-controlling interests	—			—			—					—		—				—		—				—				(0.1)				(0.1)
Balance at September 30, 2022		265,035,526	$	2.7	$	4,180.6			22,240,505		$	(299.7)			$	(1,217.1)	$	(378.4)			$	2,288.1	$	16.6			$	2,304.7
Balance at September 30, 2023																													Balance at September 30, 2023	266,161,069			$	2.7		$	4,197.7				24,644,755		$	(341.9)			$	(1,241.2)	$	(387.1)			$	2,230.2			$	16.0			$	2,246.2

Nine Months Ended September 30, 2021 Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated
Deficit Accumulated Other Comprehensive (Loss) Income Total
Stockholders'
Equity Non-
controlling Interests Total Equity
Shares Amount Shares Amount
Balance at December 31, 2020 261,330,127 $ 2.6 $ 4,122.9 14,229,280 $ (137.7) $ (1,473.2) $ (194.8) $ 2,319.8 $ (1.7) $ 2,318.1
Net income (loss) — — — — — 199.4 — 199.4 (0.1) 199.3
Other comprehensive loss, net of taxes — — — — — — (30.8) (30.8) (2.3) (33.1)
Exercise/ vesting of share based compensation 528,061 — 2.0 99,753 (1.8) — — 0.2 — 0.2
Issuance of common stock under Employee Stock Purchase Plan 56,265 — 0.8 — — — — 0.8 — 0.8
Repurchases of common stock — — — 85,692 (1.7) — — (1.7) — (1.7)
Dividends ($0.17 per share) — — — — — (42.2) — (42.2) — (42.2)
Acquisition of non-controlling interest with Coventya Acquisition — — — — — — — — 39.6 39.6
Equity compensation expense — — 34.1 — — — — 34.1 — 34.1
Balance at September 30, 2021 261,914,453 $ 2.6 $ 4,159.8 14,414,725 $ (141.2) $ (1,316.0) $ (225.6) $ 2,479.6 $ 35.5 $ 2,515.1


Nine Months Ended September 30, 2022	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2021	261,937,509	$	2.6	$	4,166.6	15,195,525	$	(159.2)	$	(1,331.9)	$	(197.4)	$	2,480.7	$	20.1	$	2,500.8
Net income	—	—		—		—	—		174.5		—		174.5		0.6		175.1
Other comprehensive loss, net of taxes	—	—		—		—	—		—		(181.0)		(181.0)		(2.2)		(183.2)
Exercise/ vesting of stock-based compensation	3,040,841	0.1		—		1,033,035	(24.0)		—		—		(23.9)		—		(23.9)
Issuance of common stock under Employee Stock Purchase Plan	57,176	—		1.0		—	—		—		—		1.0		—		1.0
Repurchases of common stock	—	—		—		6,011,945	(116.5)		—		—		(116.5)		—		(116.5)
Dividends ($0.24 per share)	—	—		—		—	—		(59.7)		—		(59.7)		—		(59.7)
Equity compensation expense	—	—		13.1		—	—		—		—		13.1		—		13.1
Changes in non-controlling interests	—	—		(0.1)		—	—		—		—		(0.1)		(1.9)		(2.0)
Balance at September 30, 2022	265,035,526	$	2.7	$	4,180.6	22,240,505	$	(299.7)	$	(1,217.1)	$	(378.4)	$	2,288.1	$	16.6	$	2,304.7

See accompanying notes to the Condensed Consolidated Financial Statements

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. BACKGROUND AND BASIS OF PRESENTATION

Background

Element Solutions was incorporated in Delaware in January 2014 and its shares of common stock, par value $0.01 per share, trade on the New York Stock Exchange under the ticker symbol “ESI.”

Element Solutions is a leading global specialty chemicals company whose businesses supply a broad range of solutions that enhance the performance of products people use every day. Developed in multi-step technological processes, these innovative solutions enable customers' manufacturing processes in several key industries, including consumer electronics, power electronics, semiconductor fabrication, communications and data storage infrastructure, automotive systems, industrial surface finishing, consumer packaging and offshore energy. ~~Our~~Element Solutions' businesses provide products that, in substantially all cases, are consumed by customers as part of their production process, providing usthe Company with reliable and recurring revenue streams as the products are replenished in order to continue production. Element Solutions delivers its products to customers through its sales and service workforce, regional distributors and manufacturing representatives.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with ~~GAAP.~~ GAAP and include the accounts of Element Solutions and all of its controlled subsidiaries. The Company consolidates the income, expenses, assets, liabilities and cash flows of its subsidiaries from the date it acquires control or becomes the primary beneficiary. All intercompany accounts and transactions have been eliminated upon consolidation.

In preparing the ~~opinion~~unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management uses estimates and assumptions that may affect the reported amounts of ~~management,~~assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Management applies judgment based on its understanding and analysis of the relevant circumstances, including historical experience and future expectations. These judgments, by their nature, are subject to an inherent degree of uncertainty and, accordingly, actual results could differ significantly from these estimates and assumptions.

These unaudited Condensed Consolidated Financial Statements reflect all adjustments that are normal, recurring and necessary for a fair statement of the Company's financial position, results of operations and cash flows for interim periods, but are not necessarily indicative of the results of operations that may be expected for the year ending December 31, ~~2022.~~2023. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements and ~~the~~ related notes included in ~~the Company’s 2021~~its 2022 Annual Report.

The process of preparing the Company’s unaudited Condensed Consolidated Financial Statements requires the use of estimates that affect the reported amount of assets, liabilities, net sales and expenses. These estimates include assumptions and judgements based on historical experience, current conditions, future expectations and other factors the Company considers to be reasonable. These estimates are reviewed on an ongoing basis and revised as necessary. Actual amounts may differ materially from these estimates.

In the ~~second~~first quarter of ~~2022,~~2023, the Company transferred operational responsibility of its Films business from its ~~Industrial~~Graphics Solutions business within its Industrial & Specialty segment to its Circuitry Solutions business in its Electronics segment. ~~This change was made in response~~The financial results of this business are not material to the ~~increasing commercial activity~~Company's Consolidated Financial Statements. In addition, the Company transferred certain product lines between its Assembly Solutions business and ~~opportunities we anticipate in printed and in-mold electronics.~~its Semiconductor Solutions business, both of which are part of its Electronics segment, to align more closely with its current business structure. Historical information has been reclassified to ~~include the Films business in the Electronics segment~~reflect these changes for all periods presented in the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

Certain ~~other~~ prior year amounts have also been reclassified to conform to the current year’s presentation.

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

2. ACQUISITIONS

ViaForm Distribution Rights

On June 1, 2023, the Company terminated a long-standing distribution agreement related to its ViaForm® electrochemical deposition products for $200 million, including $170 million paid at closing and a deferred payment of $30.0 million which remains contingent upon satisfaction of certain conditions during the applicable transition period. Following the transition period, the Company expects to manage all aspects of the ViaForm® product line in-house, which it believes will result in a more efficient supply chain and improved customer outcomes for leading semiconductor fabricators. This deferred payment is expected to be paid in the fourth quarter of 2023 and, as such, is included in the Condensed Consolidated Balance Sheets as "Accrued expenses and other current liabilities." The transaction did not meet the accounting definition of a business which precluded any goodwill from being recognized and allowed the Company to capitalize $0.5 million of transaction costs. The financial results of this transaction are included in the Company's Semiconductor Solutions business within its Electronics segment.

In connection with the transaction, the Company recognized a reacquired distribution right intangible asset of $187 million, which will be amortized over 15 years, and a receivable of $13.5 million which will be settled in inventory and cash at the conclusion of the transition period and is included in the Condensed Consolidated Balance Sheets as "Other current assets." The amount paid, including future consideration, is deductible for tax purposes.

Kuprion Acquisition

On May 19, 2023, the Company completed the Kuprion Acquisition for $15.9 million, net of cash, with potential additional payments in various installments, which are not to exceed $259 million in aggregate, to be made upon the achievement of certain milestones associated with product qualification and revenue through December 31, 2030. The Company acquired Kuprion, Inc. to complement its next-generation nano-copper technology to the semiconductor, circuit board and electronics assembly markets. As the acquisition did not meet the accounting definition of a business and the technology acquired is still in development with no alternative future use, $15.7 million was expensed to research and development in the Condensed Consolidated Statements of Operations. Any potential earn-out payments to be paid based on milestones will be recognized when probable and estimable and either expensed as additional research and development expense, if the technology did not yet meet the accounting definition of an asset, or capitalized as a developed technology intangible asset. The Company does not expect payments associated with the contingent consideration to be material for the remainder of 2023. Kuprion, Inc. is included in the Company's Semiconductor Solutions business within its Electronics segment. The amount paid, including future consideration, is not deductible for tax purposes.

3. INVENTORIES

The major components of inventory, on a net basis, were as follows:


(dollars in millions)	(dollars in millions)	September 30, 2022		December 31, 2021		(dollars in millions)	September 30, 2023		December 31, 2022
Finished goods	Finished goods	$	181.7	$	153.3	Finished goods	$	192.7	$	164.4
Work in process	Work in process	26.7		33.4		Work in process	36.5		25.9
Raw materials and supplies	Raw materials and supplies	101.5		87.7		Raw materials and supplies	93.6		100.4
Total inventories	Total inventories	$	309.9	$	274.4	Total inventories	$	322.8	$	290.7

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

3.4. PROPERTY, PLANT AND EQUIPMENT

The major components of property, plant and equipment were as follows:


(dollars in millions)	(dollars in millions)	September 30, 2022		December 31, 2021		(dollars in millions)	September 30, 2023		December 31, 2022
Land and leasehold improvements	Land and leasehold improvements	$	49.8	$	54.8	Land and leasehold improvements	$	50.1	$	52.0
Buildings and improvements	Buildings and improvements	155.0		162.0		Buildings and improvements	165.9		163.9
Machinery, equipment, fixtures and software	Machinery, equipment, fixtures and software	288.4		290.6		Machinery, equipment, fixtures and software	315.7		299.8
Construction in process	Construction in process	45.3		37.7		Construction in process	55.0		50.3
Total property, plant and equipment	Total property, plant and equipment	538.5		545.1		Total property, plant and equipment	586.7		566.0
Accumulated depreciation	Accumulated depreciation	(275.1)		(267.0)		Accumulated depreciation	(307.5)		(288.8)
Property, plant and equipment, net	Property, plant and equipment, net	$	263.4	$	278.1	Property, plant and equipment, net	$	279.2	$	277.2

For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded depreciation expense of ~~$10.6~~$11.8 million and ~~$9.6~~$10.6 million, respectively. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded depreciation expense of ~~$31.5~~$31.4 million and ~~$28.7~~$31.5 million, respectively.

4.5. GOODWILL AND INTANGIBLE ASSETS

~~HSO Acquisition~~

On January 26, 2022, the Company completed the HSO Acquisition for approximately $23 million, net of cash. HSO is a multi-national developer of technology and chemistry for decorative and functional surface finishing with a focus on environmentally sustainable products, especially in the field of plating on plastics. HSO is included in our Industrial Solutions business line within our Industrial & Specialty segment and was not material to our unaudited Condensed Consolidated Financial Statements. In connection with this acquisition, the Company recorded approximately $11.7 million of finite-lived intangible assets, primarily customer relationships.

Goodwill

The changes in the carrying amount of goodwill by segment were as follows:


(dollars in millions)	(dollars in millions)	Electronics		Industrial & Specialty			Total		(dollars in millions)	Electronics		Industrial & Specialty			Total
Balance at December 31, 2021		$	1,292.2	$	1,234.1	(1)	$	2,526.3
HSO Acquisition		—		7.1			7.1

Balance at December 31, 2022									Balance at December 31, 2022	$	1,304.0	$	1,108.8	(1)	$	2,412.8
Transfer of Films business (2)	Transfer of Films business (2)	80.4		(80.4)			—		Transfer of Films business (2)	7.9		(7.9)			—
Goodwill impairment									Goodwill impairment	—		(80.0)			(80.0)
Foreign currency translation and other	Foreign currency translation and other	(111.6)		(95.6)			(207.2)		Foreign currency translation and other	(43.2)		(8.1)			(51.3)
Balance at September 30, 2022		$	1,261.0	$	1,065.2		$	2,326.2
Balance at September 30, 2023									Balance at September 30, 2023	$	1,268.7	$	1,012.8		$	2,281.5

(1) Includes accumulated impairment losses of $46.6 million.

(2) Goodwill was reallocated using a relative fair value approach and assessed for impairment both before and after the allocation. See Note 1, Background and Basis of Presentation, to the unaudited Condensed Consolidated Financial Statements for further information.

Goodwill is tested for impairment at the reporting unit level in the fourth quarter of each year or when events or changes in circumstances indicate that goodwill might be impaired. During the third quarter of 2023, given the lower-than-expected results of the Graphics Solutions reporting unit, the Company determined that it was more likely than not that the fair value of this reporting unit was less than its carrying value. As a result, the Company conducted an interim goodwill impairment test using the same quantitative methodologies used for its 2022 annual goodwill impairment test (as described in Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements to the 2022 Annual Report). This quantitative test confirmed that goodwill was impaired and the Company recorded an $80.0 million impairment charge in the Condensed Consolidated Statement of Operations to reduce the carrying value of this reporting unit to its estimated fair value. This impairment charge was primarily driven by the reduction of the expected long-term cash flows for the business due to profit margin pressures from raw material inflation across the packaging supply chain, the recent loss of a significant newspaper customer, and a higher WACC as compared to the assumptions used for the 2022 annual goodwill impairment test.

As of September 30, 2023, following the impairment, the goodwill assigned to the Graphics Solutions reporting unit was approximately $129 million. After recording the impairment, its carrying value was equal to its estimated fair value.

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Intangible Assets

The major components of intangible assets were as follows:


		September 30, 2022						December 31, 2021							September 30, 2023						December 31, 2022
(dollars in millions)	(dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value		(dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	Customer relationships	$	933.0	$	(403.2)	$	529.8	$	1,131.3	$	(506.7)	$	624.6	Customer relationships	$	952.2	$	(478.1)	$	474.1	$	967.5	$	(434.1)	$	533.4
Developed technology	Developed technology	391.4		(256.4)		135.0		429.0		(247.4)		181.6		Developed technology	398.8		(299.5)		99.3		408.9		(277.0)		131.9
Trade names	Trade names	92.5		(21.2)		71.3		102.2		(19.7)		82.5		Trade names	93.6		(28.5)		65.1		96.0		(23.8)		72.2

Reacquired distribution rights														Reacquired distribution rights	187.0		(4.2)		182.8		—		—		—
Other														Other	0.6		(0.3)		0.3		—		—		—
Indefinite-lived trade name	Indefinite-lived trade name	68.0		—		68.0		68.0		—		68.0		Indefinite-lived trade name	68.0		—		68.0		68.0		—		68.0
Total	Total	$	1,484.9	$	(680.8)	$	804.1	$	1,730.5	$	(773.8)	$	956.7	Total	$	1,700.2	$	(810.6)	$	889.6	$	1,540.4	$	(734.9)	$	805.5

For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded amortization expense on intangible assets of ~~$29.2~~$32.7 million and ~~$31.9~~$29.2 million, respectively. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the Company recorded amortization expense on intangible assets of ~~$90.5~~$93.3 million and ~~$92.0~~$90.5 million, respectively.

5.6. DEBT

The Company’s debt obligations consisted of the following:


(dollars in millions)	(dollars in millions)	Maturity Date	Interest Rate	September 30, 2022		December 31, 2021		(dollars in millions)	Maturity Date	Interest Rate	September 30, 2023		December 31, 2022
Term Loans (1)		2026	LIBOR plus 2.00%	$	1,106.6	$	1,113.0
Term Loans A (1)								Term Loans A (1)	2026	SOFR plus 1.75%	$	149.2	$	—
Term Loans B (1)								Term Loans B (1)	2026	SOFR plus 2.00%	1,098.2		1,104.5
Senior Notes - $800 million (2)	Senior Notes - $800 million (2)	2028	3.875%	790.5		789.4		Senior Notes - $800 million (2)	2028	3.875%	791.9		790.8

Other				1.6		4.5

Total debt	Total debt			1,898.7		1,906.9		Total debt			2,039.3		1,895.3
Less: current installments of long-term debt	Less: current installments of long-term debt			11.9		12.7		Less: current installments of long-term debt			11.5		11.5
Total long-term debt	Total long-term debt			$	1,886.8	$	1,894.2	Total long-term debt			$	2,027.8	$	1,883.8

(1) Term loans, net of unamortized discounts and debt issuance costs of ~~$10.3~~$8.0 million and ~~$12.6~~$9.5 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The effective interest rate was ~~1.6%~~2.8% and ~~2.1%~~1.6% at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, including the effects of interest rate swaps and net investment hedges. See Note 6,7, Financial Instruments, to the unaudited Condensed Consolidated Financial Statements for further information regarding the Company's interest rate swaps and net investment hedges.

(2) Senior notes, net of unamortized debt issuance costs of ~~$9.5~~$8.1 million and ~~$10.6~~$9.2 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The effective interest rate was 4.1% at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Credit Agreement

~~The~~On June 1, 2023, the Company ~~is a party to the~~amended its Credit Agreement ~~which provides for senior secured credit facilities in an aggregate initial principal amount of $1.48 billion, consisting of a revolving credit facility~~and borrowed U.S. dollar denominated term loans A in an aggregate principal amount of ~~$330~~$150 million ~~maturing in 2024 and~~under an incremental term loan facility. The new term loans A have identical terms as the term loans B, ~~in an aggregate principal amount~~including a maturity date of ~~$1.15 billion maturing in 2026.~~

~~The Company's outstanding term loans bear interest at~~January 2026, except for a per annum rate based on an adjusted one-month LIBOR (as described in the Credit Agreement) plus a spread of 2.00%. The Company is required to pay a commitment fee in respect of any undrawn portion of the revolving credit facility of 0.50% per annum, subject to a step-down to 0.375% based on the Company’s first lien net leverage ~~ratio.~~ratio covenant, their SOFR spread adjustment and the lack of required quarterly principal payments. Proceeds of the transaction were used to finance a portion of the reacquired ViaForm Distribution Rights.

Guarantees, Covenants and Events of Default

The ~~Company's~~ obligations of the borrowers (the Company and its subsidiary, MacDermid, Incorporated) under the Credit Agreement are guaranteed, jointly and severally, by certain of ~~the Company’s~~their domestic subsidiaries and secured by a first-priority security interest in substantially all of ~~the~~their assets ~~of the co-borrowers, namely the Company~~ and ~~its subsidiary, MacDermid, Incorporated, as well as~~ the assets of the guarantors, including mortgages on material real property, subject to certain exceptions.

910

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

~~Covenants, Events of Default and Provisions~~

The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including limitations on additional indebtedness, dividends, and other distributions, entry into new lines of business, use of loan proceeds, capital expenditures, restricted payments, restrictions on liens on the assets of the borrowers or any guarantor, transactions with affiliates, amendments to organizational documents, accounting changes, sale and leaseback transactions and dispositions. Subject to certain exceptions, ~~to the extent~~ the borrowers ~~have total outstanding~~are required to maintain a first lien net leverage ratio not to exceed 5.0 to 1.0 under the term loan A facility and any borrowings under the revolving credit facility in an aggregate amount greater than 30% of the commitment amount, ~~under the revolving credit facility, the Company's first lien net leverage ratio should not exceed 5.0 to 1.0,~~ subject to a right to cure.

The Credit Agreement requires the borrowers to make mandatory prepayments of borrowings, subject to certain exceptions, as described in the Credit Agreement. In addition, the Credit Agreement contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, failure to make payment on, or defaults with respect to, certain other material indebtedness, bankruptcy and insolvency events, material judgments and change of control provisions. Upon the occurrence of an event of default, and after the expiration of any applicable grace period, payment of any outstanding loans under the Credit Agreement may be accelerated and the lenders could foreclose on their security interests in the assets of the borrowers and the guarantors.

At September 30, ~~2022,~~2023, the Company was in compliance with the debt covenants contained in the Credit Agreement and had full availability of its unused borrowing capacity of ~~$324~~$369 million, net of letters of credit, under the revolving credit facility. The Company is required to pay a commitment fee on any undrawn portion of the revolving credit facility which is not material.

Senior Notes

3.875% USD Notes due 2028

The indenture governing the 3.875% USD Notes due 2028 provides for, among other things, customary affirmative and negative covenants, events of default and other customary provisions. The notes accrue interest at a rate of 3.875% per annum, payable semi-annually in arrears, on March 1 and September 1 of each year, and will mature on September 1, 2028, unless earlier repurchased or redeemed. Pursuant to the indenture, the Company has the option to redeem the 3.875% USD Notes due 2028 prior to their maturity, ~~(subject~~subject to, in certain cases, the payment of an applicable make-whole ~~premium),~~premium, or to repurchase them by any means other than a redemption, including by tender offer, open market purchases or negotiated transactions. The 3.875% USD Notes due 2028 are fully and unconditionally guaranteed on a senior unsecured basis by generally all of the Company’s domestic subsidiaries that guarantee the obligations of the borrowers under the Credit Agreement.

Lines of Credit and Other Debt Facilities

The Company has access to various revolving lines of credit, short-term debt facilities and overdraft facilities worldwide which are used to fund short-term cash needs. At September 30, ~~2022~~2023 and December 31, ~~2021, respectively,~~2022, there were $0.3 million and no amounts outstanding under such ~~facilities.~~facilities, respectively. The Company had letters of credit outstanding of ~~$6.0~~$5.9 million and ~~$5.9~~$6.0 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, of which ~~$6.0~~$5.9 million and ~~$5.5~~$6.0 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, reduced the borrowings available under the various facilities. At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the availability under these facilities totaled approximately ~~$346~~$392 million and ~~$354~~$391 million, respectively, net of outstanding letters of credit.

6.7. FINANCIAL INSTRUMENTS

Derivatives and Hedging

In the normal course of business, the Company is exposed to risks relating to changes in interest rates, foreign currency exchange rates and commodity prices. Derivative financial instruments, such as interest rate swaps, net investment hedges, foreign currency exchange forward contracts and commodities ~~futures~~derivative contracts are used to manage the risks associated with changes in the conditions of those markets. All derivatives are recognized in the Condensed Consolidated Balance Sheets at fair value. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company continually monitors its derivative positions and the credit ratings of its counterparties and does not anticipate nonperformance on their part.

1011

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Interest Rate and Cross-Currency Swaps

The Company uses interest rate swaps and cross-currency swaps to reduce its exposure to interest rate risk and foreign currency risk. The Company has designated ~~the~~its interest rate swaps as cash flow hedges and ~~the~~its cross-currency swaps as net investment ~~hedges.~~ hedges of the foreign currency exposure of a portion of its net investment in certain euro functional subsidiaries. These swaps, as amended from time to time, effectively convert the Company's term loans under the Credit Agreement, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through their respective expiration dates.

In June 2023, the Company entered into interest rate swaps and cross-currency swaps to effectively convert the $150 million of incremental term loans A from U.S. dollar denominated debt obligations into fixed-rate euro-denominated debt through January 2026.

In March 2023, the Company terminated and replaced $360 million of its interest rate swaps and cross-currency swaps with swaps that mature in January 2026; which date is concurrent with the maturity date of the Company's term loans to which they relate. The fair value of the interest rate swaps on the date of termination was $6.8 million and the amount recorded in "Accumulated other comprehensive loss" is being amortized as a reduction to "Interest expense, net" in the Condensed Consolidated Statements of Operations from March 2023 through January 2024. The fair value in "Accumulated other comprehensive loss" for the terminated cross-currency swaps will remain until the hedged net investment is sold or liquidated.

The total notional value of the interest rate swaps and cross-currency swaps held at September 30, 2023 and December 31, 2022 was approximately $1.26 billion and $1.11 billion, respectively. As of September 30, 2023, $357 million in notional value matures in January 2024, $391 million in January 2025 and $507 million in January 2026.

The proceeds from these contracts are reflected as "Cash flows from operating activities" in the Condensed Consolidated Statement of Cash Flows. Changes in the fair value of interest rate swaps are recorded in "Accumulated other comprehensive loss" and reclassified to "Interest expense, net" in the Condensed Consolidated Statements of Operations as the underlying hedged item affects earnings. Changes in the fair value of cross-currency swaps are recorded in "Foreign currency translation" in "Accumulated other comprehensive loss." These cross-currency swaps effectively convert the Company's term loans under the Credit Agreement, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through the expiration of the swaps.

In 2021, the Company entered into interest rate swaps to effectively fix the floating rate of the interest payments associated with the $400 million Add-on Term Loans through January 2025. These contracts were designated as a cash flow hedge. The Company also entered into cross-currency swaps, as amended on April 1, 2022, to effectively convert the $400 million Add-on Term Loans, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through January 2025. The Company designated these contracts as a net investment hedge of the foreign currency exposure of a portion of its net investment in certain euro functional subsidiaries.

In 2019, the Company entered into interest rate swaps to effectively fix the floating rate of the interest payments associated with the initial $750 million term loans under the Credit Agreement through January 2024. These contracts were designated as a cash flow hedge. The Company also entered into cross-currency swaps to effectively convert the $750 million term loans, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through January 2024. The Company designated these contracts as a net investment hedge of the foreign currency exposure of a portion of its net investment in certain euro functional subsidiaries.

The net result of these hedges, excluding the reduction to interest expense from the terminated interest rate swaps discussed above, ~~hedges, which expire in January 2024 and 2025, respectively,~~ is an interest rate of approximately ~~1.6%~~2.8% at September 30, ~~2022,~~2023, which could vary in the future due to changes in the euro and the U.S. dollar exchange rate. The ~~market value of the cross-currency swaps was a net asset of $151 million at September 30, 2022 and $25.2 million at December 31, 2021.The market~~fair value of the interest rate swaps was a net asset of ~~$48.5~~$40.5 million and $47.3 million at September 30, 2023 and December 31, 2022, ~~and~~respectively. The fair value of the cross-currency swaps was a net ~~liability~~asset of ~~$18.1~~$73.1 million and $70.4 million at September 30, 2023 and December 31, ~~2021.~~2022, respectively.

For the three and nine months ended September 30, ~~2022, the Company's~~2023, these interest rate swaps and cross-currency swaps were deemed highly effective. The Company expects to reclassify a ~~$27.0~~$30.5 million benefit from "Accumulated other comprehensive loss" to "Interest expense, net" in the Condensed Consolidated Statements of Operations within the next twelve months.

Foreign Currency

The Company conducts a significant portion of its business in currencies other than the U.S. dollar and certain subsidiaries conduct business in currencies other than their functional currency, which is typically their local currency. As a result, the Company’s operating results are impacted by foreign currency exchange rate volatility.

At September 30, ~~2022,~~2023, the Company held foreign currency forward contracts to purchase and sell various currencies to mitigate foreign currency exposure primarily with the U.S. dollar, euro and British pound. The Company has not designated any foreign currency exchange forward contracts as eligible for hedge accounting and, as a result, changes in the fair value of foreign currency forward contracts are recorded in the Condensed Consolidated Statements of Operations as "Other income, ~~(expense),~~ net." The total notional value of foreign currency exchange forward contracts held at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 was approximately ~~$91.7~~$88.7 million and ~~$64.6~~$105 million, respectively, with settlement dates generally within one year. The ~~market~~fair value of the foreign currency forward contracts was an $0.4 million net current asset and a ~~$1.1~~$0.3 million net current liability at September 30, ~~2022~~2023 and ~~a $0.1 million net current liability at~~ December 31, ~~2021.~~2022, respectively.

1112

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Commodities

As part of its risk management policy, the Company enters into commodity derivative contracts for the purpose of mitigating its exposure to fluctuations in prices of certain metals used in the production of its finished goods. The Company held derivative contracts to purchase and sell various metals, primarily tin and silver, for a notional amount of ~~$47.2~~$57.3 million and ~~$56.1~~$45.7 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The ~~market~~fair value of the metals derivative contracts was a ~~$0.7 million~~ net current asset of $3.4 million and a net current liability of $2.5 million at September 30, ~~2022~~2023 and ~~a $1.1 million net current liability at~~ December 31, ~~2021.~~2022, respectively. Substantially all contracts outstanding at September 30, ~~2022 had~~2023 have delivery dates within one year. The Company has not designated these derivatives as hedging instruments and, accordingly, records changes in their fair values in the Condensed Consolidated Statements of Operations as "Other income, ~~(expense),~~ net."

Realized gains and losses on derivative contracts are accounted for ~~as "Operating activities"~~ in the Condensed Consolidated Statements of Cash ~~Flows.~~Flows as "Operating activities".

Fair Value Measurements

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis:


(dollars in millions)	(dollars in millions)	Balance sheet location	Classification	September 30, 2022		December 31, 2021		(dollars in millions)	Balance sheet location	Classification	September 30, 2023		December 31, 2022
Asset Category	Asset Category							Asset Category
Foreign exchange contracts	Foreign exchange contracts	Other current assets	Level 2	$	0.2	$	0.1	Foreign exchange contracts	Other current assets	Level 2	$	0.6	$	0.2
Metals contracts	Metals contracts	Other current assets	Level 2	5.4		1.2		Metals contracts	Other current assets	Level 2	3.8		2.5
Interest rate swaps	Interest rate swaps	Other current assets	Level 2	27.0		—		Interest rate swaps	Other current assets	Level 2	30.5		32.7
Cross-currency swaps	Cross-currency swaps	Other current assets	Level 2	28.5		22.2		Cross-currency swaps	Other current assets	Level 2	38.7		26.1

Interest rate swaps	Interest rate swaps	Other assets	Level 2	21.5		6.6		Interest rate swaps	Other assets	Level 2	10.0		14.6
Cross-currency swaps	Cross-currency swaps	Other assets	Level 2	122.1		5.8		Cross-currency swaps	Other assets	Level 2	36.0		44.3

Available-for-sale debt securities	Available-for-sale debt securities	Other assets	Level 3	10.2		—		Available-for-sale debt securities	Other assets	Level 3	14.1		11.5
Total	Total			$	214.9	$	35.9	Total			$	133.7	$	131.9

Liability Category	Liability Category							Liability Category
Foreign exchange contracts	Foreign exchange contracts	Accrued expenses and other current liabilities	Level 2	$	1.3	$	0.2	Foreign exchange contracts	Accrued expenses and other current liabilities	Level 2	$	0.2	$	0.5
Metals contracts	Metals contracts	Accrued expenses and other current liabilities	Level 2	4.7		2.3		Metals contracts	Accrued expenses and other current liabilities	Level 2	0.4		5.0
Interest rate swaps		Accrued expenses and other current liabilities	Level 2	—		15.1

Interest rate swaps		Other liabilities	Level 2	—		9.6

Cross-currency swaps	Cross-currency swaps	Other liabilities	Level 2	—		2.8		Cross-currency swaps	Other liabilities	Level 2	1.6		—

Total	Total			$	6.0	$	30.0	Total			$	2.2	$	5.5

The fair values of Level 1 and Level 2 derivative assets and liabilities are determined using pricing models based upon observable market inputs, such as market spot and futures prices on over-the-counter derivative instruments, market interest rates and consideration of counterparty credit risk. Level 3 investments are valued using a probability weighted methodology based on possible outcomes of potential liquidity events. Significant assumptions include the enterprise valuation, the timing and type of liquidation events and the risk-free interest rate.

There were no significant transfers of financial instruments between the fair value hierarchy levels for the three and nine months ended September 30, ~~2022.~~2023.

The carrying value and estimated fair value of the Company’s long-term debt totaled ~~$1.90~~$2.04 billion and ~~$1.75~~$1.95 billion, respectively, at September 30, ~~2022.~~2023. At December 31, ~~2021,~~2022, the carrying value and estimated fair value totaled $1.90 billion and ~~$1.93~~$1.80 billion, respectively. The carrying values noted above include unamortized discounts and debt issuance costs. The estimated fair value of long-term debt is measured using quoted market prices for similar instruments at the reporting date

multiplied by the gross carrying amount of the related debt, which excludes unamortized discounts and debt issuance costs. Such instruments are valued using Level 2 inputs.

~~7. STOCKHOLDERS’ EQUITY~~ELEMENT SOLUTIONS INC AND SUBSIDIARIES

~~Repurchases of Common Stock~~

As part of its stock repurchase program, the Company repurchased approximately 3.0 million shares of its common stock for $54.8 million during the three months ended September 30, 2022, resulting in an aggregate of approximately 6.0 million shares repurchased for $116.5 million during the nine months ended September 30, 2022. The repurchases were funded from cash on hand and allocatedNotes to ~~treasury shares. The remaining authorization under the Company's stock repurchase program was approximately $616 million at September 30, 2022.~~

Shares withheld by the Company to satisfy tax withholding requirements related to the vesting of RSUs are not considered share repurchases under our stock repurchase program. During the nine months ended September 30, 2022, the Company withheld approximately 1.0 million shares in connection with vesting events for a value of approximately $24.0 million, which is included in "Other, net" in the Condensed Consolidated Financial Statements

(Unaudited)

Non-Recurring Fair Value Measurement

As a result of the goodwill impairment test conducted in the third quarter 2023, the Industrial & Specialty segment recorded an impairment charge of $80.0 million to reduce the carrying value of the Graphics Solutions reporting unit to its estimated fair value. This measurement was performed on a non-recurring basis as of August 31, 2023 using significant unobservable inputs (Level 3). See Note 5, Goodwill and Intangible Assets, to the unaudited Condensed Consolidated Financial Statements ~~of Cash Flows as a cash outflow from financing activities.~~for further information.

8. EARNINGS PER SHARE

Basic and diluted earnings per share are based on the weighted average number of shares of the Company's common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, assumes the issuance of all potentially dilutive share equivalents using the treasury stock method.

A computation of earnings per share and weighted average shares of the Company's common stock outstanding ~~from continuing operations~~ for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 is as follows:


											Three Months Ended				Nine Months Ended
		Three Months Ended September 30,				Nine Months Ended September 30,					September 30,				September 30,
(dollars in millions, except per share amounts)	(dollars in millions, except per share amounts)	2022		2021		2022		2021		(dollars in millions, except per share amounts)	2023		2022		2023		2022
Net income		$	53.3	$	35.9	$	173.3	$	197.3
Net (income) loss attributable to non-controlling interests		(0.1)		0.1		(0.6)		0.1
Net income attributable to common stockholders		$	53.2	$	36.0	$	172.7	$	197.4
Net (loss) income from continuing operations										Net (loss) income from continuing operations	$	(31.7)	$	53.3	$	38.1	$	173.3
Net income attributable to non-controlling interests										Net income attributable to non-controlling interests	(0.1)		(0.1)		—		(0.6)
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(31.8)	$	53.2	$	38.1	$	172.7

Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	244.7		247.6		246.4		247.5		Basic weighted average common shares outstanding	241.5		244.7		241.4		246.4
Denominator adjustments for diluted EPS:	Denominator adjustments for diluted EPS:									Denominator adjustments for diluted EPS:

Number of stock options and RSUs	Number of stock options and RSUs	0.3		0.4		0.8		0.5		Number of stock options and RSUs			0.3		0.4		0.8
Denominator adjustments for diluted EPS	Denominator adjustments for diluted EPS	0.3		0.4		0.8		0.5		Denominator adjustments for diluted EPS	—		0.3		0.4		0.8
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	245.0		248.0		247.2		248.0		Diluted weighted average common shares outstanding	241.5		245.0		241.8		247.2

Earnings per share from continuing operations attributable to common stockholders:
(Loss) earnings per share from continuing operations attributable to common stockholders:										(Loss) earnings per share from continuing operations attributable to common stockholders:
Basic	Basic	$	0.22	$	0.15	$	0.70	$	0.80	Basic	$	(0.13)	$	0.22	$	0.16	$	0.70
Diluted	Diluted	$	0.22	$	0.15	$	0.70	$	0.79	Diluted	$	(0.13)	$	0.22	$	0.16	$	0.70

For the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the following securities were not included in the computation of diluted shares outstanding because either the effect would be anti-dilutive or the applicable performance targets were not yet met for awards contingent upon such measures:


							Three Months Ended		Nine Months Ended
		Three Months Ended September 30,		Nine Months Ended September 30,			September 30,		September 30,
(shares in millions)	(shares in millions)	2022	2021	2022	2021	(shares in millions)	2023	2022	2023	2022

Shares issuable upon vesting of RSUs and exercise of stock options	Shares issuable upon vesting of RSUs and exercise of stock options	3.5	3.6	3.6	3.7	Shares issuable upon vesting of RSUs and exercise of stock options	3.3	3.5	3.7	3.6

9. CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS

Environmental Matters

The Company is involved in various claims relating to environmental matters at current and former plants and waste management sites. At certain of these sites, the Company engages or participates in remedial and other environmental compliance activities. At other sites, the Company has been named as a potential responsible party pursuant to the federal Superfund Act and/or state Superfund laws comparable to the federal law for site remediation. After analyzing each individual site, considering the number of parties involved, the level of its potential liability or contribution relating to the other parties, the

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

nature and magnitude of the hazardous waste involved, the method and extent of remediation, the potential insurance coverage, the estimated legal and consulting expense with respect to each site and the time period over which any costs would likely be incurred, the Company estimates the clean-up costs and related claims for each site. The estimates are based in part on discussions with other potential responsible parties, governmental agencies and engineering firms.

The Company accrues for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current laws and existing technologies. The accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. The Company's environmental liabilities, which are included in the Condensed Consolidated Balance Sheets as "Accrued expenses and other current liabilities" and "Other liabilities," totaled ~~$13.9~~$11.3 million and ~~$13.1~~$11.6 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, primarily driven by environmental remediation, clean-up costs and monitoring of sites that were either closed or disposed of in prior years. While uncertainty exists with respect to the amount and timing of its ultimate environmental liabilities, the Company does not currently anticipate any material losses in excess of the amount recorded. However, new information about the sites, such as results of investigations, could make it necessary for the Company to reassess its potential exposure related to these environmental matters.

As of the date hereof, the Company believes it is not practicable to provide an estimated range of reasonably possible environmental losses in excess of its recorded liabilities, and, as a result, the Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact that may be associated with these matters.

Legal Matters

From time to time, the Company is involved in various legal proceedings, investigations and/or claims in the normal course of its business. Although it cannot predict with certainty the ultimate resolution of these matters, which involve judgments that are inherently subjective, the Company believes that their resolutions, to the extent not covered by insurance, will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or cash flows.

10. INCOME TAXES

The Company's quarterly income tax provision is measured using an estimate of its consolidated annual effective tax rate, which includes the impact of foreign withholding tax accruals and uncertain tax positions, adjusted for discrete items, within the periods presented. The comparison of the Company's income tax provision between periods can be significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items.

For the three months ended September 30, ~~2022,~~2023, the Company recognized income tax expense of ~~$16.5 million, as compared to $17.3 million in the same period for 2021. For the nine months ended September 30, 2022, the Company recognized income tax expense of $60.4~~$15.3 million, as compared to $16.5 million in the same period for ~~2021.~~

~~The three and~~2022. For the nine months ended September 30, ~~2021 included~~2023, the Company recognized income tax expense of $53.4 million, as compared to $60.4 million in the same period for 2022. Income tax expense includes a ~~non-recurring $3.8 million~~U.S. tax benefit provided with respect to foreign earnings and ~~$55.2 million benefit, respectively, associated with~~ the ~~release~~impact of ~~valuation allowances. This benefit did not repeat~~changes to the level and mix of earnings, offset by an increase in foreign withholding tax accruals for the three and nine months ended September 30, ~~2022~~2023.

The effective tax rate for the three and nine months ended September 30, 2023 was adversely impacted by expenses, which will not be able to be deducted on the Company's 2023 tax return but which reduced the Company's pre-tax income, including a goodwill impairment of $80.0 million in the third quarter of 2023 and the recognition of $15.7 million of research and development costs associated with the ~~release~~Kuprion acquisition in the second quarter of ~~valuation allowances previously recorded against certain U.S. tax attribute carryforwards, primarily consisting~~2023; both of ~~net operating loss carryforwards~~which did not impact expenses in ~~certain states and interest deduction carryforwards.~~the prior year period.

11. RELATED PARTY TRANSACTIONS

The Company is party to an Advisory Services Agreement with Mariposa Capital, LLC, an affiliate of one of its founder directors, whereby Mariposa Capital, LLC is entitled to receive an annual fee of $3.0 million and reimbursement for expenses. This agreement is automatically renewed for successive one-year terms unless either party notifies the other in writing of its intention not to renew no later than 90 days prior to the expiration of the applicable term. Amounts paid under this agreement are recorded in the Condensed Consolidated Statements of Operations as "Selling, technical, general and administrative" expense.

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

12. SEGMENT INFORMATION

The Company's operations are organized into two reportable segments: Electronics and Industrial & Specialty. These segments represent businesses for which separate financial information is utilized by the chief operating decision maker (or CODM) for purposes of allocating resources and evaluating performance. See Note 1, Background and Basis of Presentation, to the unaudited Condensed Consolidated Financial Statements for information about the ~~segment change~~transfer of the Company's Films business and other transfers of product lines that occurred in the ~~second~~first quarter of ~~2022.~~2023.

The Company allocates resources and evaluates the performance of its operating segments based primarily on net sales and Adjusted EBITDA. Adjusted EBITDA for each segment is defined as EBITDA, as further adjusted for additional items included in earnings which the Company believes are not representative or indicative of each of its segments' ongoing business ~~including unrealized gains/losses on metals derivative contracts,~~ or are considered to be associated with the Company's capital structure. Adjusted EBITDA for each segment also includes an allocation of corporate costs, such as compensation expense and professional fees.

Results of Operations

The following table summarizes financial information regarding each reportable segment’s results of operations, including disaggregated external net sales by product category:


											Three Months Ended				Nine Months Ended
		Three Months Ended September 30,				Nine Months Ended September 30,					September 30,				September 30,
(dollars in millions)	(dollars in millions)	2022		2021		2022		2021		(dollars in millions)	2023		2022		2023		2022
Net sales:	Net sales:									Net sales:
Electronics	Electronics									Electronics
Assembly Solutions	Assembly Solutions	$	197.1	$	212.6	$	659.4	$	606.7	Assembly Solutions	$	191.2	$	192.5	$	548.7	$	645.5
Circuitry Solutions	Circuitry Solutions	124.7		131.9		394.4		377.6		Circuitry Solutions	109.1		126.5		318.8		399.7
Semiconductor Solutions	Semiconductor Solutions	65.9		67.1		212.7		188.6		Semiconductor Solutions	66.7		70.4		194.9		226.6
Total Electronics	Total Electronics	387.7		411.6		1,266.5		1,172.9		Total Electronics	367.0		389.4		1,062.4		1,271.8
Industrial & Specialty	Industrial & Specialty									Industrial & Specialty
Industrial Solutions	Industrial Solutions	176.8		148.5		549.2		417.1		Industrial Solutions	177.7		176.8		534.2		549.2
Graphics Solutions	Graphics Solutions	37.8		41.0		111.6		115.7		Graphics Solutions	35.9		36.1		107.5		106.3
Energy Solutions	Energy Solutions	16.2		15.1		48.3		47.2		Energy Solutions	18.7		16.2		55.7		48.3
Total Industrial & Specialty	Total Industrial & Specialty	230.8		204.6		709.1		580.0		Total Industrial & Specialty	232.3		229.1		697.4		703.8
Total net sales	Total net sales	$	618.5	$	616.2	$	1,975.6	$	1,752.9	Total net sales	$	599.3	$	618.5	$	1,759.8	$	1,975.6

Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
Electronics	Electronics	$	91.2	$	95.9	$	293.8	$	287.1	Electronics	$	90.4	$	90.9	$	239.4	$	293.0
Industrial & Specialty	Industrial & Specialty	42.3		34.7		124.9		113.1		Industrial & Specialty	43.7		42.6		123.1		125.7
Total Adjusted EBITDA	Total Adjusted EBITDA	$	133.5	$	130.6	$	418.7	$	400.2	Total Adjusted EBITDA	$	134.1	$	133.5	$	362.5	$	418.7

1516

ELEMENT SOLUTIONS INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table reconciles "Net (loss) income attributable to common stockholders" to Adjusted EBITDA:


											Three Months Ended				Nine Months Ended
		Three Months Ended September 30,				Nine Months Ended September 30,					September 30,				September 30,
(dollars in millions)	(dollars in millions)	2022		2021		2022		2021		(dollars in millions)	2023		2022		2023		2022
Net income attributable to common stockholders		$	53.2	$	36.0	$	174.5	$	199.4
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(31.8)	$	53.2	$	41.0	$	174.5
Add (subtract):	Add (subtract):									Add (subtract):
Net income (loss) attributable to non-controlling interests		0.1		(0.1)		0.6		(0.1)
Net income attributable to non-controlling interests										Net income attributable to non-controlling interests	0.1		0.1		—		0.6
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		—		(1.8)		(2.0)		Income from discontinued operations, net of tax	—		—		(2.9)		(1.8)
Income tax expense	Income tax expense	16.5		17.3		60.4		16.5		Income tax expense	15.3		16.5		53.4		60.4
Interest expense, net	Interest expense, net	12.3		13.8		39.6		39.6		Interest expense, net	13.3		12.3		37.0		39.6
Depreciation expense	Depreciation expense	10.6		9.6		31.5		28.7		Depreciation expense	11.8		10.6		31.4		31.5
Amortization expense	Amortization expense	29.2		31.9		90.5		92.0		Amortization expense	32.7		29.2		93.3		90.5
EBITDA	EBITDA	121.9		108.5		395.3		374.1		EBITDA	41.4		121.9		253.2		395.3
Adjustments to reconcile to Adjusted EBITDA:	Adjustments to reconcile to Adjusted EBITDA:									Adjustments to reconcile to Adjusted EBITDA:
Inventory step-up	Inventory step-up	—		4.3		0.5		6.5		Inventory step-up	—		—		—		0.5
Restructuring expense	Restructuring expense	2.9		1.3		6.1		5.2		Restructuring expense	2.1		2.9		6.3		6.1
Acquisition and integration expense	Acquisition and integration expense	2.2		7.1		6.2		10.3		Acquisition and integration expense	5.0		2.2		13.3		6.2
Foreign exchange loss (gain) on internal debt		2.5		0.6		3.2		(22.8)
Foreign exchange loss (gain) on intercompany loans										Foreign exchange loss (gain) on intercompany loans	6.5		2.5		(7.6)		3.2
Goodwill impairment										Goodwill impairment	80.0		—		80.0		—
Kuprion Acquisition research and development charge										Kuprion Acquisition research and development charge	—		—		15.7		—
Adjustment of stock compensation previously not probable										Adjustment of stock compensation previously not probable	—		—		—		1.3

Adjustment of stock compensation previously not probable		—		7.6		1.3		21.2
Unrealized loss (gain) on metals derivative contracts		2.3		(0.9)		(2.0)		(2.3)
Other, net	Other, net	1.7		2.1		8.1		8.0		Other, net	(0.9)		4.0		1.6		6.1
Adjusted EBITDA	Adjusted EBITDA	$	133.5	$	130.6	$	418.7	$	400.2	Adjusted EBITDA	$	134.1	$	133.5	$	362.5	$	418.7

1617

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of Operations section should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related notes included in this Quarterly Report, and the Consolidated Financial Statements, related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations section and other disclosures contained in our ~~2021~~2022 Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking ~~statements. Factors that might cause~~statements as a ~~difference include,~~result of several factors, including, but ~~are~~ not limited to, those discussed in "Forward-Looking Statements” of this Quarterly Report, and in Part I, Item 1A, "Risk Factors" of our ~~2021~~2022 Annual Report.

Overview

Our Business

Element Solutions, incorporated in Delaware in January 2014, is a leading global specialty chemicals company whose businesses supply a broad range of solutions that enhance the performance of products people use every day. Developed in multi-step technological processes, these innovative solutions enable customers' manufacturing processes in several key industries, including consumer electronics, power electronics, semiconductor fabrication, communications and data storage infrastructure, automotive systems, industrial surface finishing, consumer packaging and offshore energy. Our businesses provide products that, in substantially all cases, are consumed by customers as part of their production process, providing us with reliable and recurring revenue streams as the products are replenished in order to continue production. Our customers use ourproduct innovation ~~as competitive advantages, relying on us to help them navigate through fast-paced, high-growth markets. Our product development~~ and product extensions are expected to continue to drive sales growth in both new and existing markets while expanding margins through a consistent focus on increasing customer value propositions.

We ~~generate revenue from~~believe the ~~development, formulation and sale~~majority of our ~~chemistry solutions globally.~~businesses hold strong positions in the high-growth markets we serve. Our extensive global teams of specially trained scientists and engineers develop our products, and our expert sales and service organizations ensure our customers' needs are met every day. Our continuous focus on customer-centric innovation serves as a catalyst to drive changes to existing formulations and opportunities in adjacent markets within our industry. We believe that our customers place significant value on the consistency and quality of our brands, on which we capitalize through significant market share, customer loyalty and supply chain access. In addition, operational risks and switching costs make it difficult for our customers to change suppliers which allows us to retain customers and maintain our market positions.

Our customers use our innovation as a competitive advantage, relying on us to help them navigate through fast-paced, high-growth markets. To that end, we draw upon our broad and longstanding intellectual property portfolio and technical expertise, while working closely with both customers and original equipment manufacturers on an ongoing basis to develop proprietary solutions tailored to their manufacturing needs. We ~~also~~ leverage these close relationships to ~~execute our growth strategy~~win qualifications and specifications into their supply chains as well as to identify opportunities for new ~~products.~~ products; all of which provide potential additional revenue streams.

Our ~~specialty chemicals~~strategy is based on a balance of operational excellence and ~~processes are seen as integral to customer product performance. We believe that our customers place significant value~~prudent capital allocation. Our operating teams focus on the ~~consistency~~strong execution of customer-led product development, superior technical sales support and ~~quality of our brands, on which we capitalize through significant market share, customer loyalty and~~continuous supply chain ~~access. Lastly, operational risks~~optimization. Our senior leadership aims to foster an environment of accountability and ~~switching costs make it difficult~~success for our ~~customers to change suppliers which allows us to retain customers~~operating teams while also evaluating and ~~maintain our market positions.~~executing on high-return capital allocation opportunities that can drive improvements in long-term shareholder value.

Our Operations

Our operations are organized into two segments: Electronics and Industrial & Specialty, which are each described below:

Electronics – ~~The~~Our Electronics segment researches, formulates and sells specialty chemicals and ~~materials~~material process technologies for all types of electronics hardware, from complex printed circuit board designs to advanced semiconductor packaging. In mobile communications, computers, automobiles and aerospace equipment, its products are an integral part of the electronics manufacturing process and the functionality of end-products. The segment's "wet chemistries" for metallization, surface treatments and solderable finishes form the physical circuitry pathways and its "assembly materials," such as solders, pastes, fluxes and adhesives, join those pathways together.

1718

~~The segment~~Electronics provides ~~specialty chemical~~ solutions through the following businesses:


Assembly Solutions						As a global supplier of ~~solder~~surface mount technologies ("SMT"), fluxes, thermal management materials, coatings, resins, cleaners and other attachment materials for the electronics assembly industry, we develop innovative materials that join electronic circuits in high volume device manufacturing. Our high-performing interconnect materials are used to assemble consumer electronics from circuit boards, discrete electronic components, connectors and integrated circuit substrates. We believe our growth in this business will be driven by the increasing use of electronics in consumer, automotive, telecommunications, memory, medical, aerospace and other markets.
Circuitry Solutions						As a global supplier of chemical formulations to the electronics industry, we design and manufacture proprietary liquid chemical processes ~~("baths")~~ and materials used by our customers to manufacture printed circuit boards and memory storage devices. Our product portfolio is focused on specialized consumable chemical processes and materials, such as surface treatments, circuit formation, primary metallization, electroplate, surface finishes and flexible/formable films. We believe our growth in this business will be driven by demand in wireless mobile devices, internet infrastructure computers, and the increasing use of electronics in automobiles.
Semiconductor Solutions						As a global supplier to the semiconductor industry, we provide advanced copper interconnects, die attachment, sintered silver material, adhesives, wafer bump processes and photomask technologies to our customers for integrated circuit fabrication and semiconductor packaging. We believe our growth in this business will be driven by advanced electronics packaging, necessary to meet the growing needs of high performance computing, the internet of things, 5G communications and the increasing content and complexity of electronics in automotive applications.

Industrial & Specialty – ~~The~~Our Industrial & Specialty segment researches, formulates and sells specialty chemicals and process technologies that enhance surfaces or improve industrial processes in diverse industrial sectors from automotive trim to transcontinental infrastructure and from high-speed printing to high-design faucets. Its products include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids in offshore energy production. These fully consumable products are used in the aerospace, automotive, construction, consumer electronics, consumer packaged goods and oil and gas production ~~end markets.~~end-markets.

~~The segment~~Industrial & Specialty provides ~~specialty chemical~~ solutions through the following businesses:


Industrial Solutions						As a global supplier of industrial metal and plastic finishing chemistries, we primarily design and manufacture chemical systems that protect and decorate surfaces. Our high-performance functional coatings improve resistance to wear and tear, such as hard chrome plating of shock absorbers for cars, or provide corrosion resistance for appliance parts. Our decorative performance coatings apply finishes for parts in various ~~end markets~~end-markets, such as automotive interiors or jewelry surfaces. As part of our broader sustainable solutions platform, we also provide both chemistry and equipment for turnkey wastewater treatment and recycle and reuse solutions. Our industrial customer base is highly diverse and includes customers in the following ~~end markets:~~end-markets: appliances and electronics equipment; automotive parts; industrial parts; plumbing goods; construction equipment and transportation equipment. We believe our growth in this industry will be primarily driven by increased worldwide automobile production with elevated fashion elements and higher content per vehicle as well as general economic growth.
Graphics Solutions						As a supplier of consumable materials used to transfer images on to consumer packaging materials, our products are used to improve print quality and printing productivity. We produce and market photopolymers through an extensive line of flexographic plates that are used in the consumer packaging and printing industries. Photopolymers are molecules that change properties upon exposure to light. Flexography is a printing process that utilizes flexible printing plates made of rubber or other flexible plastics. We believe growth in this business will be driven by consumer demand and market shifts favoring the use of package imaging technologies that, like ours, offer a lower total cost of ownership to customers.
Energy Solutions						As a global supplier of specialized fluids to the offshore energy industry, we produce water-based hydraulic control fluids for major oil and gas companies and drilling contractors to be used in offshore deep-water production and drilling applications. We believe our growth in this business will be driven by continued capital expenditures in energy exploration and production.

~~Recent Developments~~

~~HSO Acquisition~~

On January 26, 2022, we completed the HSO Acquisition for approximately $23 million, net of cash. HSO is a multi-national developer of technology and chemistry for decorative and functional surface finishing with a focus on environmentally sustainable products, especially in the field of plating on plastics. HSO is included in our Industrial Solutions business line within our Industrial & Specialty segment.

~~Russia and Ukraine Conflict~~

portion of our business and we do not have physical assets in these countries, a significant escalation or expansion of economic disruption or the conflict's current scope could disrupt the global supply chain and increase our costs.

Recent Accounting Pronouncements

Our recent accounting pronouncements have not changed materially from the summary disclosed in Note 3, Recent Accounting Pronouncements, to the Consolidated Financial Statements included in our ~~2021~~2022 Annual Report.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with GAAP in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, we present certain non-GAAP financial measures, such as operating results on a constant currency and organic basis and Adjusted EBITDA. Management internally reviews these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to our business. We believe these non-GAAP financial measures ~~which are each further described below,~~ provide investors with an additional perspective on trends and underlying operating results on a period-to-period comparable basis. We also believe that investors find this information helpful in understanding the ongoing performance of our operations separate from items that may have a disproportionate positive or negative impact on our financial results in any particular period or are considered to be associated with our capital structure.

These non-GAAP financial measures, however, have limitations as analytical tools and should not be considered in isolation from, a substitute for, or superior to, the related financial information that we report in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements and may not be completely comparable to similarly titled measures of other companies due to potential differences in calculation methods. In addition, these measures are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-GAAP financial measures. Investors are encouraged to review the definitions and reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures included in this Quarterly Report and not to rely on any single financial measure to evaluate our business. Below is a more detailed description of these non-GAAP measures.

Constant Currency

We disclose operating results, from net sales through operating profit and Adjusted EBITDA, on a constant currency basis by adjusting results to exclude the impact of changes due to the translation of foreign currencies of our international locations into U.S. dollars. Management believes this non-GAAP financial information facilitates period-to-period comparison in the analysis of trends in business performance, thereby providing valuable supplemental information regarding our results of operations, consistent with how we internally evaluate our financial results.

The impact of foreign currency translation is calculated by converting our current-period local currency financial results into U.S. dollars using the prior period's exchange rates and comparing these adjusted amounts to our ~~prior-period~~prior period reported results. The difference between actual growth rates and constant currency growth rates represents the estimated impact of foreign currency translation.

Organic Net Sales Growth

Organic net sales growth is defined as net sales excluding the impact of foreign currency translation, changes due to the pass-through pricing of certain metals and acquisitions and/or divestitures, as applicable. Management believes this non-GAAP financial measure provides investors with a more complete understanding of the underlying net sales trends by providing comparable net sales over differing periods on a consistent basis.

For a reconciliation of GAAP net sales growth to organic net sales growth, see "Net Sales" within the "Results of Operations" section below.

Adjusted EBITDA

We define Adjusted EBITDA as EBITDA, excluding the impact of additional items included in GAAP earnings which we believe are not representative or indicative of our ongoing business ~~including unrealized gains/losses on metals derivative contracts,~~ or are considered to be associated with our capital structure.

Management believes Adjusted EBITDA provides investors with a more complete understanding of the long-term profitability trends of our business and facilitates comparisons of our profitability to prior and future periods.

For a reconciliation of "Net (loss) income attributable to common stockholders" to Adjusted EBITDA and more information about the adjustments made, see Note 12, Segment Information, to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

2021

Results of Operations

Three and nine months ended September 30, ~~2022~~2023 compared to three and nine months ended September 30, ~~2021~~2022


																					Three Months Ended						% Change						Nine Months Ended								% Change
		Three Months Ended September 30,						% Change			Nine Months Ended September 30,						% Change				September 30,											September 30,
(dollars in millions)	(dollars in millions)	2022			2021			Reported	Constant Currency	Organic	2022			2021			Reported	Constant Currency	Organic	(dollars in millions)	2023			2022				Reported		Constant Currency		Organic				2023				2022		Reported		Constant Currency		Organic
Net sales	Net sales	$	618.5		$	616.2		0%	9%	5%	$	1,975.6		$	1,752.9		13%	20%	6%	Net sales	$	599.3		$	618.5		(3)%		(3)%		(3)%		$	1,759.8			$	1,975.6			(11)%		(9)%		(6)%
Cost of sales	Cost of sales	396.6			371.7			7%	17%		1,240.9			1,028.9			21%	29%		Cost of sales	357.4			396.6			(10)%		(11)%				1,061.6				1,240.9				(14)%		(13)%
Gross profit	Gross profit	221.9			244.5			(9)%	(2)%		734.7			724.0			1%	7%		Gross profit	241.9			221.9			9%		10%				698.2				734.7				(5)%		(3)%
Gross margin	Gross margin	35.9		%	39.7		%	(380) bps	(410) bps		37.2		%	41.3		%	(410) bps	(440) bps		Gross margin	40.4		%	35.9		%	450 bps		490 bps				39.7		%		37.2		%		250 bps		260 bps
Operating expenses	Operating expenses	142.7			176.0			(19)%	(13)%		469.5			484.6			(3)%	1%		Operating expenses	242.8			142.7			70%		68%				580.1				469.5				24%		24%
Operating profit		79.2			68.5			16%	27%		265.2			239.4			11%	18%
Operating (loss) profit																				Operating (loss) profit	(0.9)			79.2			(nm)		(nm)				118.1				265.2				(55)%		(50)%
Operating margin	Operating margin	12.8		%	11.1		%	170bps	180bps		13.4		%	13.7		%	(30)bps	(20)bps		Operating margin	(0.2)		%	12.8		%	(nm)		(nm)				6.7		%		13.4		%		(670)bps		(610)bps
Other expense, net	Other expense, net	(9.4)			(15.3)			(39)%			(31.5)			(25.6)			23%			Other expense, net	(15.5)			(9.4)			65%						(26.6)				(31.5)				(16)%
Income tax expense	Income tax expense	(16.5)			(17.3)			(5)%			(60.4)			(16.5)			(nm)			Income tax expense	(15.3)			(16.5)			(7)%						(53.4)				(60.4)				(12)%
Net income from continuing operations		53.3			35.9			48%			173.3			197.3			(12)%
Net (loss) income from continuing operations																				Net (loss) income from continuing operations	(31.7)			53.3			(nm)						38.1				173.3				(78)%
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—			—			(nm)			1.8			2.0			(10)%			Income from discontinued operations, net of tax	—			—			(nm)						2.9				1.8				61%
Net income		$	53.3		$	35.9		48%			$	175.1		$	199.3		(12)%
Net (loss) income																				Net (loss) income	$	(31.7)		$	53.3		(nm)						$	41.0			$	175.1			(77)%

Adjusted EBITDA	Adjusted EBITDA	$	133.5		$	130.6		2%	11%		$	418.7		$	400.2		5%	11%		Adjusted EBITDA	$	134.1		$	133.5		0%		2%				$	362.5			$	418.7			(13)%		(10)%
Adjusted EBITDA margin	Adjusted EBITDA margin	21.6		%	21.2		%	40bps	40bps		21.2		%	22.8		%	(160)bps	(160)bps		Adjusted EBITDA margin	22.4		%	21.6		%	80bps		110bps				20.6		%		21.2		%		(60)bps		(30)bps

(nm) Calculation not meaningful.

2122

Net Sales

Net sales in the third quarter of ~~2022 remained flat~~2023 decreased 3% on a reported basis, ~~and increased 9%~~3% on a constant currency basis and 5%3% on an organic basis. Electronics' consolidated results were ~~negatively~~positively impacted by ~~$18.3~~$1.4 million of pass-through metals pricing and negatively impacted by $0.3 million of acquisitions and Industrial & Specialty's consolidated results were positively impacted by ~~$41.9~~$1.1 million of acquisitions.

The following table reconciles GAAP net sales growth to constant currency and organic net sales growth:


													Three Months Ended				% Change
		Three Months Ended September 30,				% Change							September 30,
(dollars in millions)	(dollars in millions)	2022		2021		Reported Net Sales Growth	Impact of Currency	Constant Currency	Pass-Through Metals Pricing	Acquisitions	Organic Net Sales Growth	(dollars in millions)	2023		2022		Reported Net Sales Growth	Impact of Currency	Constant Currency	Pass-Through Metals Pricing	Acquisitions	Organic Net Sales Growth
Electronics:	Electronics:											Electronics:
Assembly Solutions	Assembly Solutions	$	197.1	$	212.6	(7)%	7%	0%	9%	—%	9%	Assembly Solutions	$	191.2	$	192.5	(1)%	1%	1%	(1)%	—%	0%
Circuitry Solutions	Circuitry Solutions	124.7		131.9		(5)%	6%	1%	—%	—%	1%	Circuitry Solutions	109.1		126.5		(14)%	1%	(12)%	—%	—%	(12)%
Semiconductor Solutions	Semiconductor Solutions	65.9		67.1		(2)%	4%	3%	—%	—%	3%	Semiconductor Solutions	66.7		70.4		(5)%	(1)%	(6)%	—%	0%	(6)%
Total	Total	387.7		411.6		(6)%	7%	1%	4%	—%	5%	Total	367.0		389.4		(6)%	1%	(5)%	0%	0%	(5)%

Industrial & Specialty:	Industrial & Specialty:											Industrial & Specialty:
Industrial Solutions	Industrial Solutions	176.8		148.5		19%	16%	35%	—%	(28)%	7%	Industrial Solutions	177.7		176.8		1%	(2)%	(1)%	—%	(1)%	(2)%
Graphics Solutions	Graphics Solutions	37.8		41.0		(8)%	5%	(3)%	—%	—%	(3)%	Graphics Solutions	35.9		36.1		(1)%	(3)%	(4)%	—%	—%	(4)%
Energy Solutions	Energy Solutions	16.2		15.1		8%	7%	15%	—%	—%	15%	Energy Solutions	18.7		16.2		15%	(4)%	11%	—%	—%	11%
Total	Total	230.8		204.6		13%	13%	26%	—%	(21)%	6%	Total	232.3		229.1		1%	(2)%	(1)%	—%	0%	(1)%

Total	Total	$	618.5	$	616.2	0%	9%	9%	3%	(7)%	5%	Total	$	599.3	$	618.5	(3)%	0%	(3)%	0%	0%	(3)%

NOTE: Totals may not sum due to rounding.

Electronics' net sales in the third quarter of ~~2022~~2023 decreased 6% on a reported basis and ~~increased~~ 5% on an organic basis.

•Assembly Solutions: net sales decreased 7%1% on a reported basis and ~~increased 9%~~remained relatively flat on an organic basis. Pass-through metals pricing had a ~~negative~~positive impact of 9%1% on reported net sales. Foreign exchange had a negative impact of 7%1% on reported net sales. Organic net sales were relatively flat as growth in automotive customers was offset by demand weakness in China.

•Circuitry Solutions: net sales decreased 14% on a reported basis and 12% on an organic basis. Foreign exchange had a negative impact of 1% on reported net sales. The ~~increase~~decrease in organic net sales was primarily due to ~~continued growth~~demand weakness in ~~power electronics.~~the memory disk end market globally and lower raw material surcharges in the third quarter of 2023 when compared to the same period in 2022.

•~~Circuitry~~Semiconductor Solutions: net sales decreased 5% on a reported basis and 6% on an organic basis. The reacquired ViaForm Distribution Rights and the Kuprion Acquisition had a relatively flat impact on organic growth which excludes the impact of ViaForm sales for the third quarters of 2022 and 2023 as the transition from our prior distributor negatively impacted trends which we believe were not indicative of the underlying end-market for these products. Foreign exchange had a positive impact of 1% on reported net sales. The decrease in organic net sales was primarily due to lower demand for precious metal based products, partially offset by growth in power electronics and plating chemistries for high-end electronics end markets.

Industrial & Specialty's net sales in the third quarter of 2023 increased 1% on a reported basis and decreased 1% on an organic basis.

•Industrial Solutions: net sales increased 1% on a reported basis and decreased 2% on an organic basis. Acquisitions had a positive impact of 1% on reported net sales. Foreign exchange had a positive impact of 2% on reported net sales. The

decrease in organic net sales was primarily due to lower demand from American and European construction and industrial manufacturing as well as lower raw material surcharges in the third quarter of 2023 when compared to the same period in 2022, partially offset by an equipment sale for a new production line under a multi-year chemistry sales agreement with an automotive customer which contributed approximately 5% to organic net sales.

•Graphics Solutions: net sales decreased 1% on a reported basis and 4% on an organic basis. Foreign exchange had a ~~negative~~positive impact of 6%3% on reported net sales. The decrease in organic net sales was primarily due to lower newspaper net sales and rationalization of lower margin customers partially offset by the contribution of new customer wins.

•Energy Solutions: net sales increased 15% on a reported basis and 11% on an organic basis. Foreign exchange had a positive impact of 4% on reported net sales. The increase in organic net sales was primarily due to cost inflation driven pricing actions and ~~new business wins, partially offset by demand weakness in China and Korea and softness in the memory disk end market, which is expected to continue through the end of the year.~~

•~~Semiconductor Solutions:~~ ~~net sales decreased 2% on a reported basis and~~ increased 3% on an organic basis. Foreign exchange had a negative impact of 4% on reported net sales. The increase in organic net sales was primarily due to growth in advanced packaging and wafer-plating chemistries partially offset by demand weakness in China.

~~Industrial & Specialty's net sales in the third quarter of 2022 increased 13% on a reported basis and 6% on an organic basis.~~

•~~Industrial Solutions:~~ net sales increased 19% on a reported basis and 7% on an organic basis. The Coventya and HSO Acquisitions had a positive impact of 28% on reported net sales. Foreign exchange had a negative impact of 16% on reported net sales. The increase in organic net sales was primarily due to cost inflation driven pricing actions, partially offset by softness in construction and industrial manufacturing markets and lower automotive production.

•~~Graphics Solutions:~~ net sales decreased 8% on a reported basis and 3% on an organic basis. Foreign exchange had a negative impact of 5% on reported net sales. Organic net sales declines reflect softening demand in North America and Europe which resulted in our customers extending the replacement cycle for flexographic plates.

•~~Energy Solutions:~~ net sales increased 8% on a reported basis and 15% on an organic basis. Foreign exchange had a negative impact of 7% on reported net sales. The increase in organic net sales was primarily due to increased global drilling activity and cost inflation driven pricing actions.energy production activity.

Year to date, net sales ~~increased by 13%~~decreased 11% on a reported basis, ~~20%~~9% on a constant currency basis and 6% on an organic basis. Electronics' consolidated results were ~~positively~~negatively impacted by ~~$54.7~~$73.5 million of pass-through metals pricing and ~~$13.5~~positively impacted by $1.1 million of acquisitions and Industrial & Specialty's consolidated results were positively impacted by ~~$170.5~~$3.8 million of acquisitions.

The following table reconciles GAAP net sales growth to constant currency and organic net sales growth:


													Nine Months Ended				% Change
		Nine Months Ended September 30,				% Change							September 30,
(dollars in millions)	(dollars in millions)	2022		2021		Reported Net Sales Growth	Impact of Currency	Constant Currency	Pass-Through Metals Pricing	Acquisitions	Organic Net Sales Growth	(dollars in millions)	2023		2022		Reported Net Sales Growth	Impact of Currency	Constant Currency	Pass-Through Metals Pricing	Acquisitions	Organic Net Sales Growth
Electronics:	Electronics:											Electronics:
Assembly Solutions	Assembly Solutions	$	659.4	$	606.7	9%	6%	15%	(9)%	—%	6%	Assembly Solutions	$	548.7	$	645.5	(15)%	3%	(12)%	11%	—%	(1)%
Circuitry Solutions	Circuitry Solutions	394.4		377.6		4%	4%	9%	—%	—%	9%	Circuitry Solutions	318.8		399.7		(20)%	3%	(18)%	—%	—%	(18)%
Semiconductor Solutions	Semiconductor Solutions	212.7		188.6		13%	3%	16%	—%	(7)%	9%	Semiconductor Solutions	194.9		226.6		(14)%	1%	(13)%	—%	(1)%	(14)%
Total	Total	1,266.5		1,172.9		8%	5%	13%	(5)%	(1)%	7%	Total	1,062.4		1,271.8		(16)%	2%	(14)%	6%	0%	(8)%

Industrial & Specialty:	Industrial & Specialty:											Industrial & Specialty:
Industrial Solutions	Industrial Solutions	549.2		417.1		32%	14%	46%	—%	(41)%	5%	Industrial Solutions	534.2		549.2		(3)%	2%	(1)%	—%	(1)%	(2)%
Graphics Solutions	Graphics Solutions	111.6		115.7		(4)%	3%	0%	—%	—%	0%	Graphics Solutions	107.5		106.3		1%	0%	1%	—%	—%	1%
Energy Solutions	Energy Solutions	48.3		47.2		2%	4%	6%	—%	—%	6%	Energy Solutions	55.7		48.3		15%	1%	16%	—%	—%	16%
Total	Total	709.1		580.0		22%	11%	33%	—%	(29)%	4%	Total	697.4		703.8		(1)%	1%	0%	—%	(1)%	0%

Total	Total	$	1,975.6	$	1,752.9	13%	7%	20%	(3)%	(10)%	6%	Total	$	1,759.8	$	1,975.6	(11)%	2%	(9)%	4%	0%	(6)%

NOTE: Totals may not sum due to rounding.

Year to date, Electronics' net sales ~~increased 8%~~decreased 16% on a reported basis and 7%8% on an organic basis.

•Assembly Solutions: net sales ~~increased 9%~~decreased 15% on a reported basis and 6%1% on an organic basis. Pass-through metals pricing had a ~~positive impact of 9% on reported net sales. Foreign exchange had a~~ negative impact of ~~6% on reported net sales. The increase in organic net sales was primarily due to strong demand from power electronics customers and continued growth across most core assembly end markets.~~

•~~Circuitry Solutions:~~ net sales increased 4% on a reported basis and 9% on an organic basis. Foreign exchange had a negative impact of 4% on reported net sales. The increase in organic net sales was primarily due to growth in the memory disk business in the first half of the year and pricing actions.

•~~Semiconductor Solutions:~~ ~~net sales increased 13% on a reported basis and 9% on an organic basis. The HKW Acquisition had a positive impact of 7%~~11% on reported net sales. Foreign exchange had a negative impact of 3% on reported net sales. The ~~increase~~decrease in organic net sales was primarily due to ~~strong~~lower SMT volumes due to demand ~~and new customer wins~~weakness in ~~advanced packaging chemistries for high-end electronics end markets.~~Asia, primarily China, partially offset by growth in automotive customers.

~~Year to date, Industrial & Specialty's~~•Circuitry Solutions: net sales ~~increased 22%~~decreased 20% on a reported basis and ~~4% on an organic basis.~~

•~~Industrial Solutions:~~ net sales increased 32% on a reported basis and 5% on an organic basis. The Coventya and HSO Acquisitions had a positive impact of 41% on reported net sales. Foreign exchange had a negative impact of 14% on reported net sales. The increase in organic net sales was primarily due to growth in construction and industrial manufacturing markets in Europe and the Americas; partially offset by lower automotive production and reduced activity in China.

•~~Graphics Solutions:~~ ~~net sales decreased 4% on a reported basis and remained flat~~18% on an organic basis. Foreign exchange had a negative impact of 3% on reported net sales. ~~Organic~~The decrease in organic net sales ~~reflect~~was primarily due to lower demand from mobile phone market customers, primarily in Asia, and the memory disk end market globally.

•Semiconductor Solutions: net sales decreased 14% on a reported and organic basis. The reacquired ViaFormDistribution Rights and the Kuprion Acquisition had a net positive impact of 1% on organic growth which excludes the impact of ViaForm sales for the third quarters of 2022 and 2023 as the transition from our prior distributor negatively impacted

trends which we believe were not indicative of the underlying end market for these products. Foreign exchange had a negative impact of 1% on reported net sales. The decrease in organic net sales was primarily due to lower demand for advanced packaging chemistries in the mobile phone and high-end electronics end markets and precious metal based products partially offset by strong demand from power electronics customers.

Year to date, Industrial & Specialty's net sales decreased 1% on a reported basis and remained relatively flat on an organic basis.

•Industrial Solutions: net sales decreased 3% on a reported basis and 2% on an organic basis. Acquisitions, primarily the HSO Acquisition, had a positive impact of 1% on reported net sales. Foreign exchange had a negative impact of 2% on reported net sales. The decrease in organic net sales was primarily due to lower demand from European construction and industrial manufacturing markets as well as lower automotive production in China and India when compared to the same period in 2022, partially offset by an equipment sale for a new production line under a multi-year chemistry sales agreement with an automotive customer in the third quarter of 2023 which contributed approximately 2% to organic net sales.

•Graphics Solutions: net sales increased 1% on a reported basis and 1% on an organic basis. Foreign exchange remained relatively flat. The increase in organic net sales was primarily due to the contribution of new customer wins and cost inflation driven pricing actions partially offset by ~~softening demand, which resulted in our customers extending the replacement cycle for flexographic plates.~~rationalization of lower-margin customers.

•Energy Solutions: net sales increased 2%15% on a reported basis and 6%16% on an organic basis. Foreign exchange had a negative impact of 4%1% on reported net sales. The increase in organic net sales was primarily due to increased ~~global~~energy production activity and ~~drilling activity.~~cost inflation driven pricing actions.

Gross Profit


																			Three Months Ended						% Change				Nine Months Ended								% Change
		Three Months Ended September 30,						% Change		Nine Months Ended September 30,						% Change			September 30,									September 30,
(dollars in millions)	(dollars in millions)	2022			2021			Reported	Constant Currency	2022			2021			Reported	Constant Currency	(dollars in millions)	2023			2022				Reported		Constant Currency				2023				2022		Reported		Constant Currency
Gross profit	Gross profit																	Gross profit
Electronics	Electronics	$	134.0		$	159.4		(16)%	(11)%	$	459.7		$	470.3		(2)%	1%	Electronics	$	148.6		$	134.1		11%		13%		$	424.6			$	459.8			(8)%		(5)%
Industrial & Specialty	Industrial & Specialty	87.9			85.1			3%	15%	275.0			253.7			8%	18%	Industrial & Specialty	93.3			87.8			6%		5%		273.6				274.9				0%		1%
Total	Total	$	221.9		$	244.5		(9)%	(2)%	$	734.7		$	724.0		1%	7%	Total	$	241.9		$	221.9		9%		10%		$	698.2			$	734.7			(5)%		(3)%

Gross margin	Gross margin																	Gross margin
Electronics	Electronics	34.6		%	38.7		%	(410) bps	(460) bps	36.3		%	40.1		%	(380) bps	(420) bps	Electronics	40.5		%	34.4		%	610 bps		640 bps		40.0		%		36.2		%		380 bps		390 bps
Industrial & Specialty	Industrial & Specialty	38.1		%	41.6		%	(350) bps	(370) bps	38.8		%	43.7		%	(490) bps	(510) bps	Industrial & Specialty	40.2		%	38.4		%	180 bps		240 bps		39.2		%		39.1		%		10 bps		40 bps
Total	Total	35.9		%	39.7		%	(380) bps	(410) bps	37.2		%	41.3		%	(410) bps	(440) bps	Total	40.4		%	35.9		%	450 bps		490 bps		39.7		%		37.2		%		250 bps		260 bps

Electronics' gross profit in the third quarter of ~~2022 decreased~~2023 increased by ~~16%~~11% on a reported basis and 11% on a constant currency basis. The constant currency decrease in gross profit and gross margin was primarily driven by the pass-through metals pricing in our Assembly business as a decline in metal prices meant we sold at a metals price that was lower than our cost of inventory, higher logistics costs and negative product mix due to lower volumes from high-margin circuitry customers in China and Korea. Higher raw material prices also contributed to the decrease in gross margin. The majority of the lower gross profit from the pass-through of declining metals prices was offset by gains associated with our metals derivative contracts recorded as "Other income (expense), net" in the Condensed Consolidated Statements of Operations.

~~Industrial & Specialty's gross profit in the third quarter of 2022 increased by 3% on a reported basis and 15%~~13% on a constant currency basis. The constant currency increase in gross profit was primarily driven by ~~the contribution of $12.9 million from the Coventya Acquisition, partially offset by higher~~lower raw material and logistics costs. The ~~decrease~~increase in gross margin was primarily due to ~~higher~~the recaptured margin on ViaForm Distributions Rights, lower raw material ~~prices~~costs and favorable product mix.

Industrial & Specialty's gross profit in the third quarter of 2023 increased by 6% on a reported basis and 5% on a constant currency basis. The constant currency increase in gross profit was primarily driven by lower logistics ~~costs.~~

costs, partially offset by declines in the Graphics Solutions business. The increase in gross margin was primarily due to lower logistics costs in the Industrial Solutions business as well as growth in our higher margin Energy Solutions business.

Year to date, Electronics' gross profit decreased by 2%8% on a reported basis and 5% on a constant currency basis. The constant currency decrease in gross profit was primarily driven by lower net sales across all businesses. The increase in gross margin was primarily due to lower pass-through metals pricing in the Assembly Solutions business, the recaptured margin on ViaForm Distributions Rights and the impact of inflationary price increases.

Year to date, Industrial & Specialty's gross profit remained relatively flat on a reported basis and increased 1% on a constant currency basis. The constant currency increase in gross profit was primarily driven by lower raw material costs in the ~~increased net sales~~Industrial Solutions business and growth in ~~most~~the Energy Solutions business, ~~lines~~ partially offset by ~~higher logistics costs.~~declines in the Graphics Solutions business. The ~~decrease~~increase in gross margin was primarily due to ~~increased net sales of products containing pass-through metals~~lower logistics costs and growth in our ~~Assembly business,~~ higher ~~raw material prices and logistics costs.~~margin Energy Solutions business.

Operating Expenses


	Three Months Ended						% Change		Nine Months Ended						% Change
	September 30,								September 30,
(dollars in millions)	2023			2022			Reported	Constant Currency	2023			2022			Reported	Constant Currency
Selling, technical, general and administrative	$	149.9		$	131.4		14%	13%	$	445.8		$	431.3		3%	5%
Research and development	12.9			11.3			15%	14%	54.3			38.2			42%	43%
Goodwill impairment	80.0			—			(nm)	(nm)	80.0			—			(nm)	(nm)
Total	$	242.8		$	142.7		70%	68%	$	580.1		$	469.5		24%	24%

Operating expenses as % of net sales
Selling, technical, general and administrative	25.0		%	21.2		%	380 bps	360 bps	25.3		%	21.8		%	350 bps	330 bps
Research and development	2.2		%	1.8		%	40 bps	40 bps	3.1		%	1.9		%	120 bps	110 bps
Goodwill impairment	13.3		%	—		%	(nm)	(nm)	4.5		%	—		%	(nm)	(nm)
Total	40.5		%	23.1		%	1,740 bps	1,700 bps	33.0		%	23.8		%	920 bps	870 bps

(nm) Calculation not meaningful.

~~Year to date,~~During the third quarter of 2023, we recorded an impairment charge in our Industrial & ~~Specialty's gross profit increased by 8% on a reported basis and 18% on a constant currency basis. The constant currency increase in gross profit was primarily driven by the contribution~~Specialty segment of ~~$59.0~~$80.0 million ~~from the Coventya Acquisition. The decrease in gross margin was primarily due to higher raw material prices, particularly attributable~~related to our Graphics ~~business,~~Solutions reporting unit. See Note 5, Goodwill and ~~logistics costs, as well as unfavorable product mix from weaker automotive production.~~

Intangible Assets,
to the unaudited Condensed Consolidated Financial Statements for further information.

~~Operating Expenses~~
Three Months Ended September 30, % Change Nine Months Ended September 30, % Change
(dollars in millions) 2022 2021 Reported Constant Currency 2022 2021 Reported Constant Currency
Selling, technical, general and administrative $ 131.4 $ 163.5 (20)% (14)% $ 431.3 $ 447.8 (4)% 1%
Research and development 11.3 12.5 (10)% (6)% 38.2 36.8 4% 6%
Total $ 142.7 $ 176.0 (19)% (13)% $ 469.5 $ 484.6 (3)% 1%
Operating expenses as % of net sales
Selling, technical, general and administrative 21.2 % 26.5 % (530) bps (560) bps 21.8 % 25.5 % (370) bps (400) bps
Research and development 1.8 % 2.0 % (20) bps (30) bps 1.9 % 2.1 % (20) bps (20) bps
Total 23.1 % 28.6 % (550) bps (590) bps 23.8 % 27.6 % (380) bps (420) bps

Operating expenses in the third quarter of ~~2022 decreased 19%~~2023 increased 70% on a reported basis and 68% on a constant currency basis. Excluding the goodwill impairment charge discussed above, operating expenses in the third quarter of 2023 increased 14% on a reported basis and 13% on a constant currency basis. The constant currency ~~decrease~~increase was primarily driven by ~~$19.0 million~~timing of ~~lower~~ incentive compensation ~~costs,~~accruals as the prior year period reflects a ~~combination~~greater reduction of the accrual than the current year ~~accrual reflecting recent business performance~~period and ~~the prior year reflecting above target performance, and a $7.6~~$3.2 million ~~stock compensation adjustment for certain significant performance-based RSUs recorded in~~higher amortization expense associated with the ~~third quarter of 2021, partially offset by $13.2 million of operating expenses related to the Coventya and HSO Acquisitions (which include the impact of amortization from~~ purchase accounting ~~and restructuring costs of $5.1 million) and $1.7 million of higher travel expenses.~~for the reacquired ViaForm Distribution Rights.

Year to date, operating expenses ~~decreased 3%~~increased 24% on a reported basis and 24% on a constant currency basis. Excluding the goodwill impairment charge discussed above, year to date operating expenses increased 1%7% on a reported basis and 8% on a constant currency basis. The constant currency increase was primarily driven by ~~$50.3~~$15.7 million of ~~operating expenses~~research and development costs associated with the purchase accounting related to the ~~Coventya~~Kuprion Acquisition, higher personnel costs and ~~HSO Acquisitions (which include the impact of amortization from purchase accounting and restructuring costs of $17.7 million) and $6.6 million of~~ higher travel expenses. ~~These increases were partially offset by $29.2 million of lower incentive compensation costs, a combination~~See Note 2, Acquisitions, to the Condensed Consolidated Financial Statements for further discussion of the ~~current year accrual reflecting recent business performance~~research and development costs associated with the prior year reflecting above target performance, and $19.9 million of lower stock compensation expense for certain significant performance-based RSUs as compared to the 2021 period when the vesting of such awards became probable.Kuprion Acquisition.

Other (Expense) Income


											Three Months Ended				Nine Months Ended
		Three Months Ended September 30,				Nine Months Ended September 30,					September 30,				September 30,
(dollars in millions)	(dollars in millions)	2022		2021		2022		2021		(dollars in millions)	2023		2022		2023		2022
Other (expense) income	Other (expense) income									Other (expense) income
Interest expense, net	Interest expense, net	$	(12.3)	$	(13.8)	$	(39.6)	$	(39.6)	Interest expense, net	$	(13.3)	$	(12.3)	$	(37.0)	$	(39.6)
Foreign exchange gain (loss)		0.9		(0.6)		2.9		22.2
Other income (expense), net		2.0		(0.9)		5.2		(8.2)
Foreign exchange (loss) gain										Foreign exchange (loss) gain	(5.3)		0.9		8.6		2.9
Other income, net										Other income, net	3.1		2.0		1.8		5.2
Total	Total	$	(9.4)	$	(15.3)	$	(31.5)	$	(25.6)	Total	$	(15.5)	$	(9.4)	$	(26.6)	$	(31.5)

Interest Expense, Net

~~Interest~~For the three months ended September 30, 2023, interest expense, net ~~reflects~~ increased ~~interest costs associated with the $400~~$1.0 million ~~Add-on Term Loan, which was borrowed on September 1, 2021, offset by the impact of the weakening of the Euro, as compared~~primarily due to the ~~U.S. dollar, as our~~ interest ~~rate and cross-currency swaps have effectively converted our U.S. dollar denominated Term Loans into fixed-rate euro-denominated debt. See Note 6,~~ ~~Financial Instruments,~~ ~~for further discussion~~applicable under the $150 million incremental term loans A incurred in the second quarter of ~~these derivative instruments.~~

~~Foreign Exchange Gain (Loss)~~

2023. For the nine months ended September 30, ~~2022,~~2023, interest expense, net decreased $2.6 million driven primarily by higher interest income partially offset by the applicable interests related to the $150 million incremental term loans A incurred in the second quarter of 2023.

Foreign Exchange (Loss) Gain

For the three and nine months ended September 30, 2023, the fluctuations in foreign exchange (loss) gain ~~decreased~~were primarily ~~due to~~driven by the remeasurement of ~~euro-denominated~~ intercompany ~~balances.~~

loans.

Other Income, ~~(Expense),~~ Net

For the three and nine months ended September 30, 2023, other income, net included $3.5 million ($0.1 million of realized losses and $3.6 million of unrealized gains) and $2.1 million ($3.7 million of realized losses and $5.8 million of unrealized gains), respectively, of net gains associated with metals derivative contracts. For the three and nine months ended September 30, 2022, other income, net included $3.1 million ($5.4 million of realized gains and $2.3 million of unrealized losses) and $7.0 million ($5.0 million of realized gains and $2.0 million of unrealized gains), respectively, of net gains associated with metals derivative contracts, respectively. For the three and nine months ended September 30, 2021, other expense, net included $0.9 million ($1.8 million of realized losses and $0.9 million of unrealized gains) and $7.7 million ($10.0 million of realized losses and $2.3 million of unrealized gains) of net losses associated with metals forward contracts, respectively. Thesecontracts. The metal derivative contracts primarily ~~represent hedges on our~~relate to inventory associated with pass-through metals pricing in our Assembly Solutions business. See Note 6,7, Financial Instruments, to the unaudited Condensed Consolidated Financial Statements for further discussion of these derivative instruments.

Income Tax

The comparison of the Company's income tax provision between periods can be significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items. See Note 10, Income Taxes, to the unaudited Condensed Consolidated Financial Statements for further information.

Segment Adjusted EBITDA Performance


																			Three Months Ended						% Change				Nine Months Ended								% Change
		Three Months Ended September 30,						% Change		Nine Months Ended September 30,						% Change			September 30,									September 30,
(dollars in millions)	(dollars in millions)	2022			2021			Reported	Constant Currency	2022			2021			Reported	Constant Currency	(dollars in millions)	2023			2022				Reported		Constant Currency				2023				2022		Reported		Constant Currency
Adjusted EBITDA:	Adjusted EBITDA:																	Adjusted EBITDA:
Electronics	Electronics	$	91.2		$	95.9		(5)%	2%	$	293.8		$	287.1		2%	7%	Electronics	$	90.4		$	90.9		(1)%		1%		$	239.4			$	293.0			(18)%		(15)%
Industrial & Specialty	Industrial & Specialty	42.3			34.7			22%	38%	124.9			113.1			10%	22%	Industrial & Specialty	43.7			42.6			3%		2%		123.1				125.7				(2)%		1%
Total	Total	$	133.5		$	130.6		2%	11%	$	418.7		$	400.2		5%	11%	Total	$	134.1		$	133.5		0%		2%		$	362.5			$	418.7			(13)%		(10)%

Adjusted EBITDA margin:	Adjusted EBITDA margin:																	Adjusted EBITDA margin:
Electronics	Electronics	23.5		%	23.3		%	20 bps	20 bps	23.2		%	24.5		%	(130) bps	(130) bps	Electronics	24.6		%	23.3		%	130 bps		150 bps		22.5		%		23.0		%		(50) bps		(20) bps
Industrial & Specialty	Industrial & Specialty	18.4		%	16.9		%	150 bps	160 bps	17.6		%	19.5		%	(190) bps	(170) bps	Industrial & Specialty	18.9		%	18.6		%	30 bps		70 bps		17.7		%		17.9		%		(20) bps		0 bps
Total	Total	21.6		%	21.2		%	40 bps	40 bps	21.2		%	22.8		%	(160) bps	(160) bps	Total	22.4		%	21.6		%	80 bps		110 bps		20.6		%		21.2		%		(60) bps		(30) bps

For the three months ended September 30, ~~2022,~~2023, Electronics' Adjusted EBITDA decreased 5%1% on a reported basis and increased 2% on a constant currency basis. The constant currency increase was primarily driven by lower operating expenses that more than offset the reduction in gross profit. Industrial & Specialty's Adjusted EBITDA increased 22% on a reported basis and 38% on a constant currency basis. The Coventya Acquisition had a positive impact on Industrial & Specialty's Adjusted EBITDA including synergies, which was partially offset by higher logistics costs and raw material prices and unfavorable product mix.

~~For the nine months ended September 30, 2022, Electronics' Adjusted EBITDA increased 2% on a reported basis and 7%~~1% on a constant currency basis. The constant currency increase was primarily driven by higher gross profits. Industrial & Specialty's Adjusted EBITDA increased ~~10%~~3% on a reported basis and ~~22%~~2% on a constant currency basis. The ~~Coventya Acquisition had~~constant currency increase was primarily driven by growth in the Energy Solutions business and lower logistics costs partially offset by declines in the Graphics Solutions business.

For the nine months ended September 30, 2023, Electronics' Adjusted EBITDA decreased 18% on a ~~positive impact~~reported basis and 15% on a constant currency basis. The constant currency decrease was primarily driven by lower gross profits. Industrial & Specialty's Adjusted EBITDA ~~including synergies, which~~decreased 2% on a reported basis and increased 1% on a constant currency basis. The constant currency increase was primarily driven by growth in the Energy Solutions business and easing cost pressures partially offset by ~~higher logistics costs and raw material prices and unfavorable product mix.~~declines in the Graphics Solutions business.

Liquidity and Capital Resources

Our primary ~~source~~sources of liquidity during the nine months ended September 30, ~~2022 was~~2023 were the proceeds from the term loans A transaction and available cash generated from ~~operations and cash on hand.~~operations. Our primary uses of cash and cash equivalents were to ~~repurchase shares of our common stock under our stock repurchase program,~~fund the reacquired ViaFormDistribution Rights and the Kuprion Acquisition, pay cash dividends, capital expenditures, fund operations including working capital pay cash dividends, purchase shares of our common stock withheld by us to satisfy the tax withholding requirements related to the vesting of RSUs and to fund the HSO Acquisition as well as capital expenditures and debt service obligations. A portion of our interest rate swaps and cross-currency swaps associated with our term loans mature in January 2024. Expiration of these hedges could result in a material increase to interest expense. Our first significant debt principal payment of approximately ~~$1.08~~$1.23 billion, related to the maturity of our outstanding term loans under the Credit Agreement, is not due until 2026.

In the third quarter of ~~2022,~~2023, we paid a cash dividend of 8 cents per share. We currently expect to continue to pay a cash dividend on a quarterly basis; however, the actual declaration of any cash dividends as well as their amounts and timing, will be subject to the final determination of our Board of Directors based on factors including our future earnings and cash flow generation.

We believe that our cash and cash equivalents and cash generated from operations, supplemented by our availability under our lines of credit, including our revolving credit facility under the Credit Agreement, will be sufficient to meet our working capital needs, interest payments, capital expenditures, potential dividend payments and other business requirements for at least the next twelve months. However, working capital cycles and/or future repurchases of our common stock and/or acquisitions may require additional funding, which may include future debt and/or equity offerings. Our long-term liquidity may be influenced by our ability to borrow additional funds, manage interest rates, renegotiate existing debt and/or raise new equity or debt under terms that are favorable to us.

We may from time to time seek to repurchase our equity and/or to retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, applicable restrictions under our various financing arrangements and other factors.

During the nine months ended September 30, ~~2022,~~2023, approximately 75% of our net sales were generated from non-U.S. operations, and we expect a large portion of our net sales to continue to be generated outside of the U.S. As a result, our foreign subsidiaries will likely continue to ~~hold~~generate a substantial portion of our cash. We expect to manage our worldwide cash requirements based on available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We may transfer cash from certain international subsidiaries to the U.S. and/or other international subsidiaries when we believe it is cost effective to do so.

We continually review our domestic and foreign cash profile, expected future cash generation and investment opportunities, which support our current designation of a portion of these funds as being indefinitely reinvested, and reassess whether there are demonstrated needs to repatriate a portion of these funds being held internationally. If, as a result of our review, we determine that all or a portion of the funds require repatriation, we may be required to accrue additional taxes. Of our ~~$234~~$330 million of cash and cash equivalents at September 30, ~~2022, $206~~2023, $256 million was held by our foreign subsidiaries. During the nine months ended September 30, 2022, domestic cash was primarily used for repurchases of shares of our common stock under our stock repurchase program, payment of cash dividends, the purchase of shares of our common stock withheld by us to satisfy the tax withholding requirements related to the vesting of RSUs, funding of the HSO Acquisition and satisfaction of our debt service obligations.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:


							Nine Months Ended
		Nine Months Ended September 30,					September 30,
(dollars in millions)	(dollars in millions)	2022		2021		(dollars in millions)	2023		2022

Cash provided by operating activities	Cash provided by operating activities	$	195.4	$	204.7	Cash provided by operating activities	$	221.8	$	195.4
Cash used in investing activities	Cash used in investing activities	$	(61.9)	$	(550.2)	Cash used in investing activities	$	(226.2)	$	(61.9)
Cash (used in) provided by financing activities		$	(211.6)	$	336.2
Cash provided by (used in) financing activities						Cash provided by (used in) financing activities	$	74.6	$	(211.6)

Operating Activities

The ~~decrease~~increase in net cash flows provided by operating activities of ~~$9.3~~$26.4 million was primarily driven by ~~higher~~lower annual incentive compensation payments ~~primarily in the first quarter~~and improved management of ~~2022 that were associated with our 2021 performance,~~working capital, partially offset by ~~improved levels of working capital and higher~~lower cash operating profits (net income adjusted for non-cash items).

Investing Activities

During the nine months ended September 30, 2023, we paid approximately $170 million in connection with the reacquired ViaForm Distribution Rights and $15.9 million in connection with the Kuprion Acquisition. During the nine months ended September 30, 2022, we paid approximately $23 million in connection with the HSO Acquisition.

Financing Activities

During the nine months ended September 30, ~~2021,~~2023, we borrowed $150 million of incremental term loans A under our senior credit facility to finance the reacquired ViaForm Distribution Rights. We paid ~~$486~~$58.1 million ~~in connection with the Coventya Acquisition, $50.9 million in connection with the HKW Acquisition~~of cash dividends on shares of our common stock and ~~received $19.0~~$7.7 million for shares of our common stock withheld by the ~~sale~~Company to satisfy the tax withholding requirements related to the vesting of ~~a dormant facility~~RSUs included in ~~New Jersey.~~

~~Financing Activities~~

"Other, net." During the nine months ended September 30, 2022, we paid approximately $114 million in aggregate for the repurchase of shares of our common stock under our stock repurchase program, $59.2 million of cash dividends on shares of our common stock and $24.0 million for shares of our common stock withheld by the Company to satisfy the tax withholding requirements related to the vesting of RSUs included in "Other, net." During the nine months ended September 30, 2021, we borrowed $400 million of Add-on Term Loans to finance the Coventya Acquisition and received net proceeds of $393 million after considering discounts and fees and paid $42.1 million of cash dividends on shares of our common stock.

Financial Borrowings

Credit Facilities and Senior Notes

At September 30, ~~2022,~~2023, we had ~~$1.90~~$2.04 billion of indebtedness, net of unamortized discounts and debt issuance costs, which primarily included:

•$~~1.11~~1.25 billion of term debt arrangements outstanding under our term loans; and

•$~~791~~792 million of 3.875% USD Notes due 2028.

Availability under our revolving credit facility and various lines of credit and overdraft facilities totaled ~~$346~~$392 million at September 30, ~~2022~~2023 (net of ~~$6.0~~$5.9 million of stand-by letters of credit which reduce our borrowing capacity).

Covenants

At September 30, ~~2022,~~2023, we were in compliance with the customary affirmative and negative covenants, events of default and other customary provisions of the Credit Agreement as well as with the covenants included in the indenture governing our 3.875% USD Notes due 2028.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The quantitative and qualitative disclosures about market risk required by this item have not changed materially from those disclosed in our ~~2021~~2022 Annual Report. For a discussion of our exposure to market risk, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in our ~~2021~~2022 Annual Report.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Based on management's evaluation (with the participation of our CEO and CFO), as of the end of the period covered by this Quarterly Report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes to Internal Control Over Financial Reporting

Based on management's evaluation (with the participation of our CEO and CFO), there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2930

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in legal proceedings, investigations and/or claims that are incidental to the operation of our businesses. In particular, we are involved in various claims relating to environmental matters at a number of current and former plant sites and waste management sites. See Note 9, Contingencies, Environmental and Legal Matters, to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for more information and updates.

Item 1A. Risk Factors

There have been no material changes in the risk factors from those set forth in Part I, Item 1A, Risk Factors of our ~~2021~~2022 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Recent Purchases of Equity Securities by the Issuer and Affiliated Purchases~~

~~The following table provides information about purchases by the Company during the three months ended September 30, 2022 of equity securities of the Company:~~

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Repurchase Program
Approximate Dollar Value of Shares that May Yet be Purchased Under the Repurchase Program(1) (in millions)
July 1 - July 31 910,292 $ 17.92 910,292 $ 654
August 1 - August 31 625,059 $ 19.45 625,059 $ 642
September 1 - September 30 1,483,500 $ 17.71 1,483,500 $ 616
Total 3,018,851 $ 18.13 3,018,851
~~(1)~~ In November 2021, our Board of Directors increased the authorization under the Company's stock repurchase program to $750 million. The program does not require the repurchase of any specific number of shares and shares repurchases are made opportunistically at the discretion of the Company. The program does not have an expiration date but may be suspended or terminated by the Board at any time.

Shares withheld by the Company to satisfy tax withholding requirements related to the vesting of RSUs are not considered share repurchases under our stock repurchase program and, therefore, are excluded from the table above.None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

3031

Item 6. Exhibits

The following exhibits are filed or furnished as part of this Quarterly Report:


Exhibit Number			Description
3.1(a)			Certificate of Incorporation dated January 22, 2014 (filed as Exhibit 3.1 of Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-192778) filed on January 24, 2014, and incorporated herein by reference)
3.1(b)			Certificate of Amendment of Certificate of Incorporation dated June 12, 2014 (filed as Exhibit 3.1 of the Current Report on Form 8-K filed on June 13, 2014, and incorporated herein by reference)
3.1(c)			Certificate of Amendment of Certificate of Incorporation dated January 31, 2019 (filed as Exhibit 3.1 of the Current Report on Form 8-K filed on February 5, 2019, and incorporated herein by reference)
3.2			Amended and Restated By-laws dated April 25, 2023 (filed as Exhibit 3.2 of the ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed on ~~February 5, 2019,~~April 27, 2023, and incorporated herein by reference)




31.1*			Principal Executive Officer Certification ~~Pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted~~ pursuant to ~~the~~ Section 302 of the Sarbanes-Oxley Act of 2002
31.2*			Principal Financial Officer Certification ~~Pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted~~ pursuant to ~~the~~ Section 302 of the Sarbanes-Oxley Act of 2002
32.1**			Principal Executive Officer and Principal Financial Officer Certifications ~~Pursuant~~pursuant to 18 U.S.C. Section 1350 as adopted pursuant to ~~Section 906 of~~ the Sarbanes-Oxley Act of 2002
101.SCH**			Inline XBRL Taxonomy Extension Schema Document
101.CAL**			Inline XBRL Extension Calculation Linkbase Document
101.DEF**			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101. INS**			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documents
104**			Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibits 101)

* Filed herewith.

** Furnished herewith.

3132

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this October ~~27, 2022.~~26, 2023.


			ELEMENT SOLUTIONS INC

			By:			/s/ Michael Russnok
						Michael Russnok
						Chief Accounting Officer
						(Principal Accounting Officer)

3233


Three Months Ended September 30, 2021	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at June 30, 2021	261,885,181	$	2.6	$	4,146.9	14,326,433	$	(139.4)	$	(1,337.1)	$	(203.0)	$	2,470.0	$	(1.7)	$	2,468.3
Net income (loss)	—	—		—		—	—		36.0		—		36.0		(0.1)		35.9
Other comprehensive loss, net of taxes	—	—		—		—	—		—		(22.6)		(22.6)		(2.3)		(24.9)
Exercise/ vesting of share based compensation	13,651	—		—		4,300	(0.1)		—		—		(0.1)		—		(0.1)
Issuance of common stock under Employee Stock Purchase Plan	15,621	—		0.3		—	—		—		—		0.3		—		0.3
Repurchases of common stock	—	—		—		83,992	(1.7)		—		—		(1.7)		—		(1.7)
Dividends ($0.06 per share)	—	—		—		—	—		(14.9)		—		(14.9)		—		(14.9)
Acquisition of non-controlling interest with Coventya Acquisition	—	—		—		—	—		—		—		—		39.6		39.6
Equity compensation expense	—	—		12.6		—	—		—		—		12.6		—		12.6

Balance at September 30, 2021	261,914,453	$	2.6	$	4,159.8	14,414,725	$	(141.2)	$	(1,316.0)	$	(225.6)	$	2,479.6	$	35.5	$	2,515.1


Nine Months Ended September 30, 2021	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity		Non- controlling Interests		Total Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2020	261,330,127	$	2.6	$	4,122.9	14,229,280	$	(137.7)	$	(1,473.2)	$	(194.8)	$	2,319.8	$	(1.7)	$	2,318.1
Net income (loss)	—	—		—		—	—		199.4		—		199.4		(0.1)		199.3
Other comprehensive loss, net of taxes	—	—		—		—	—		—		(30.8)		(30.8)		(2.3)		(33.1)
Exercise/ vesting of share based compensation	528,061	—		2.0		99,753	(1.8)		—		—		0.2		—		0.2
Issuance of common stock under Employee Stock Purchase Plan	56,265	—		0.8		—	—		—		—		0.8		—		0.8
Repurchases of common stock	—	—		—		85,692	(1.7)		—		—		(1.7)		—		(1.7)
Dividends ($0.17 per share)	—	—		—		—	—		(42.2)		—		(42.2)		—		(42.2)
Acquisition of non-controlling interest with Coventya Acquisition	—	—		—		—	—		—		—		—		39.6		39.6
Equity compensation expense	—	—		34.1		—	—		—		—		34.1		—		34.1

Balance at September 30, 2021	261,914,453	$	2.6	$	4,159.8	14,414,725	$	(141.2)	$	(1,316.0)	$	(225.6)	$	2,479.6	$	35.5	$	2,515.1


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Repurchase Program	Approximate Dollar Value of Shares that May Yet be Purchased Under the Repurchase Program(1) (in millions)
July 1 - July 31	910,292	$	17.92	910,292	$	654
August 1 - August 31	625,059	$	19.45	625,059	$	642
September 1 - September 30	1,483,500	$	17.71	1,483,500	$	616
Total	3,018,851	$	18.13	3,018,851