Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 23, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-36272 | |
Entity Registrant Name | Element Solutions Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-1744899 | |
Entity Address, Street Name | 500 East Broward Boulevard, Suite 1860 | |
Entity Address, Postal Zip Code | 33394 | |
Entity Address, City | Fort Lauderdale, | |
Entity Address, State | FL | |
City Area Code | 561 | |
Local Phone Number | 207-9600 | |
Title of each class | Common Stock, par value $0.01 per share | |
Trading symbol(s) | ESI | |
Name of each exchange on which registered | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 242,063,821 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Central Index Key | 0001590714 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net sales | $ 575 | $ 574.4 |
Cost of sales | 330 | 346.6 |
Gross profit | 245 | 227.8 |
Operating expenses: | ||
Selling, technical, general and administrative | 149.1 | 148.9 |
Research and development | 18.1 | 12.5 |
Total operating expenses | 167.2 | 161.4 |
Operating profit | 77.8 | 66.4 |
Other (expense) income: | ||
Interest expense, net | (13.9) | (11.7) |
Foreign exchange gains | 7.9 | 4.9 |
Other (expense) income, net | (2.3) | 0.3 |
Total other expense | (8.3) | (6.5) |
Income before income taxes and non-controlling interests | 69.5 | 59.9 |
Income tax expense | (13.5) | (16.9) |
Net income | 56 | 43 |
Net income attributable to non-controlling interests | 0 | (0.1) |
Net income attributable to common stockholders | $ 56 | $ 42.9 |
Earnings per share | ||
Basic (in dollars per share) | $ 0.23 | $ 0.18 |
Diluted (in dollars per share) | $ 0.23 | $ 0.18 |
Weighted average common shares outstanding | ||
Basic (in shares) | 241.8 | 241.1 |
Diluted (in shares) | 242.5 | 241.8 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 56 | $ 43 |
Foreign currency translation: | ||
Other comprehensive (loss) income before reclassifications, net of tax expense (benefit) of $5.4 and $(3.0) for the three months ended March 31, 2024 and 2023, respectively | (46.3) | 10.9 |
Total foreign currency translation adjustments | (46.3) | 10.9 |
Derivative financial instruments: | ||
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $4.7 and $(3.0) for the three months ended March 31, 2024 and 2023, respectively | 15.2 | (1.5) |
Reclassifications, net of tax benefit of $1.9 and $0.0 for the three months ended March 31, 2024 and 2023, respectively | (7.2) | (8.1) |
Total unrealized income (loss) on qualified hedging derivatives | 8 | (9.6) |
Other comprehensive (loss) income | (38.3) | 1.3 |
Comprehensive income | 17.7 | 44.3 |
Comprehensive income attributable to non-controlling interests | 0 | (0.1) |
Comprehensive income attributable to common stockholders | $ 17.7 | $ 44.2 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Foreign currency translation: | ||
Before reclassification adjustment, tax expense (benefit) | $ 5.4 | $ (3) |
Derivative financial instruments: | ||
Before reclassification adjustment, tax expense (benefit) | 4.7 | (3) |
Reclassification adjustment, tax expense (benefit) | $ 1.9 | $ 0 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Cash & cash equivalents | $ 286.3 | $ 289.3 |
Accounts receivable, net of allowance for doubtful accounts of $11.8 and $12.6 at March 31, 2024 and December 31, 2023, respectively | 459 | 461.8 |
Inventories | 319.1 | 298.9 |
Prepaid expenses | 25.1 | 32.5 |
Other current assets | 146.3 | 115 |
Total current assets | 1,235.8 | 1,197.5 |
Property, plant and equipment, net | 295.5 | 296.9 |
Goodwill | 2,302.3 | 2,336.7 |
Intangible assets, net | 840 | 879.3 |
Deferred income tax assets | 112.9 | 120.5 |
Other assets | 125.7 | 143.2 |
Total assets | 4,912.2 | 4,974.1 |
Liabilities and stockholders' equity | ||
Accounts payable | 132.9 | 140.6 |
Current installments of long-term debt | 11.5 | 11.5 |
Accrued expenses and other current liabilities | 196.5 | 217.3 |
Total current liabilities | 340.9 | 369.4 |
Debt | 1,918.9 | 1,921 |
Pension and post-retirement benefits | 26.5 | 28.1 |
Deferred income tax liabilities | 102.9 | 108.9 |
Other liabilities | 183.7 | 202.4 |
Total liabilities | 2,572.9 | 2,629.8 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Common stock: 400.0 shares authorized (2024: 267.0 shares issued; 2023: 266.2 shares issued) | 2.7 | 2.7 |
Additional paid-in capital | 4,201.4 | 4,196.9 |
Treasury stock (2024: 25.0 shares; 2023: 24.6 shares) | (349.4) | (341.9) |
Accumulated deficit | (1,146.8) | (1,183.3) |
Accumulated other comprehensive loss | (384.2) | (345.9) |
Total stockholders' equity | 2,323.7 | 2,328.5 |
Non-controlling interests | 15.6 | 15.8 |
Total equity | 2,339.3 | 2,344.3 |
Total liabilities and stockholders' equity | $ 4,912.2 | $ 4,974.1 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Allowance for doubtful accounts, current | $ 11.8 | $ 12.6 |
Stockholders' equity | ||
Common shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common shares issued (in shares) | 267,000,000 | 266,200,000 |
Treasury shares (in shares) | 25,000,000 | 24,600,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net income | $ 56 | $ 43 |
Reconciliations of net income to net cash flows provided by operating activities: | ||
Depreciation and amortization | 40.3 | 39.1 |
Deferred income taxes | (5.4) | (0.4) |
Foreign exchange gains | (7.8) | (7.3) |
Incentive stock compensation | 4.1 | 4.4 |
Other, net | 3.7 | 2.2 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | (4.8) | (2.6) |
Inventories | (23.9) | (29.1) |
Accounts payable | 0.7 | 18.6 |
Accrued expenses | (14.5) | (22.3) |
Prepaid expenses and other current assets | 6.7 | 2.7 |
Other assets and liabilities | 3.1 | 5.2 |
Net cash flows provided by operating activities | 58.2 | 53.5 |
Cash flows from investing activities: | ||
Capital expenditures | (19) | (9.1) |
Proceeds from disposal of property, plant and equipment | 0 | 0.5 |
Acquisitions, net of cash acquired | (3.9) | 0 |
Other, net | 0 | (3) |
Net cash flows used in investing activities | (22.9) | (11.6) |
Cash flows from financing activities: | ||
Repayments of borrowings | (2.9) | (2.9) |
Dividends | (20) | (19.4) |
Payment of financing fees | (2.1) | 0 |
Other, net | (7.7) | (7.2) |
Net cash flows used in financing activities | (32.7) | (29.5) |
Effect of exchange rate changes on cash and cash equivalents | (5.6) | 1 |
Net (decrease) increase in cash and cash equivalents | (3) | 13.4 |
Cash and cash equivalents at beginning of period | 289.3 | 265.6 |
Cash and cash equivalents at end of period | $ 286.3 | $ 279 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Total Stockholders' Equity | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Non- controlling Interests |
Common Stock, Beginning Balance (in shares) at Dec. 31, 2022 | 265,062,533 | |||||||
Beginning Balance at Dec. 31, 2022 | $ 2,349.1 | $ 2,332.5 | $ 2.7 | $ 4,185.9 | $ (334.2) | $ (1,223.8) | $ (298.1) | $ 16.6 |
Treasury Stock, Beginning Balance (in shares) at Dec. 31, 2022 | 24,272,748 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 43 | 42.9 | 42.9 | 0.1 | ||||
Other comprehensive income (loss), net of taxes | 1.3 | 1.3 | 1.3 | |||||
Exercise/ vesting of share based compensation (in shares) | 947,755 | 352,586 | ||||||
Exercise/ vesting of stock-based compensation | (7.3) | (7.3) | $ (7.3) | |||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 19,191 | |||||||
Issuance of common stock under Employee Stock Purchase Plan | 0.4 | 0.4 | 0.4 | |||||
Dividends | (19.5) | (19.5) | (19.5) | |||||
Equity compensation expense | 4.4 | 4.4 | 4.4 | |||||
Changes in non-controlling interests | (0.1) | (0.1) | ||||||
Common Stock, Ending Balance (in shares) at Mar. 31, 2023 | 266,029,479 | |||||||
Ending Balance at Mar. 31, 2023 | 2,371.3 | 2,354.7 | $ 2.7 | 4,190.7 | $ (341.5) | (1,200.4) | (296.8) | 16.6 |
Treasury Stock, Ending Balance (in shares) at Mar. 31, 2023 | 24,625,334 | |||||||
Common Stock, Beginning Balance (in shares) at Dec. 31, 2023 | 266,179,100 | |||||||
Beginning Balance at Dec. 31, 2023 | $ 2,344.3 | 2,328.5 | $ 2.7 | 4,196.9 | $ (341.9) | (1,183.3) | (345.9) | 15.8 |
Treasury Stock, Beginning Balance (in shares) at Dec. 31, 2023 | 24,600,000 | 24,644,755 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | $ 56 | 56 | 56 | |||||
Other comprehensive income (loss), net of taxes | (38.3) | (38.3) | (38.3) | |||||
Exercise/ vesting of share based compensation (in shares) | 837,317 | 324,502 | ||||||
Exercise/ vesting of stock-based compensation | (7.5) | (7.5) | $ (7.5) | |||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 16,661 | |||||||
Issuance of common stock under Employee Stock Purchase Plan | 0.3 | 0.3 | 0.3 | |||||
Dividends | (19.5) | (19.5) | (19.5) | |||||
Equity compensation expense | 4.2 | 4.2 | 4.2 | |||||
Changes in non-controlling interests | (0.2) | (0.2) | ||||||
Common Stock, Ending Balance (in shares) at Mar. 31, 2024 | 267,033,078 | |||||||
Ending Balance at Mar. 31, 2024 | $ 2,339.3 | $ 2,323.7 | $ 2.7 | $ 4,201.4 | $ (349.4) | $ (1,146.8) | $ (384.2) | $ 15.6 |
Treasury Stock, Ending Balance (in shares) at Mar. 31, 2024 | 25,000,000 | 24,969,257 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.08 | $ 0.08 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | 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. Element Solutions businesses provide products that, in substantially all cases, are consumed by customers as part of their production process, providing the 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 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 unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management uses estimates and assumptions that may affect the reported amounts of 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, 2024. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements and related notes included in its 2023 Annual Report. Certain prior year amounts have been reclassified to conform to the current year’s presentation. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The major components of inventory, on a net basis, were as follows: (dollars in millions) March 31, 2024 December 31, 2023 Finished goods $ 186.2 $ 176.2 Work in process 45.9 37.5 Raw materials and supplies 87.0 85.2 Total inventories $ 319.1 $ 298.9 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | PROPERTY, PLANT AND EQUIPMENT, NET The major components of property, plant and equipment, net were as follows: (dollars in millions) March 31, 2024 December 31, 2023 Land and leasehold improvements $ 50.5 $ 51.7 Buildings and improvements 184.7 168.5 Machinery, equipment, fixtures and software 342.1 334.3 Construction in process 54.4 66.7 Total property, plant and equipment 631.7 621.2 Accumulated depreciation (336.2) (324.3) Property, plant and equipment, net $ 295.5 $ 296.9 |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The changes in the carrying amount of goodwill by segment were as follows: (dollars in millions) Electronics Industrial & Specialty Total Balance at December 31, 2023 $ 1,298.7 $ 1,038.0 (1) $ 2,336.7 Foreign currency translation and other (21.0) (13.4) (34.4) Balance at March 31, 2024 $ 1,277.7 $ 1,024.6 $ 2,302.3 (1) Includes accumulated impairment losses of $127 million. Intangible Assets, Net The major components of intangible assets, net were as follows: March 31, 2024 December 31, 2023 (dollars in millions) Gross Carrying Accumulated Net Book Gross Carrying Accumulated Net Book Customer relationships $ 960.9 $ (511.9) $ 449.0 $ 978.4 $ (505.9) $ 472.5 Developed technology 297.2 (213.0) 84.2 410.0 (316.2) 93.8 Trade names 94.5 (32.3) 62.2 95.9 (30.9) 65.0 Reacquired distribution rights 187.0 (10.4) 176.6 187.0 (7.3) 179.7 Other — — — 0.8 (0.5) 0.3 Indefinite-lived trade name 68.0 — 68.0 68.0 — 68.0 Total $ 1,607.6 $ (767.6) $ 840.0 $ 1,740.1 $ (860.8) $ 879.3 For the three months ended March 31, 2024 and 2023, the Company recorded amortization expense on intangible assets of $30.2 million and $29.6 million, respectively. In the first quarter of 2024, one of the product qualification milestones agreed to as part of the Kuprion Acquisition was achieved. As a result, the Company made a payment of $3.9 million, which was recognized as research and development expense in the Condensed Consolidated Statement of Operations as the technology did not yet meet the accounting definition of an asset. The payment was included in "Acquisitions, net of cash acquired" in the Condensed Consolidated Statements of Cash Flows as a cash outflow from investing activities. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The Company’s debt obligations consisted of the following: (dollars in millions) Maturity Date Interest Rate March 31, 2024 December 31, 2023 Term Loans (1) 2030 SOFR plus 2.00% $ 1,137.6 $ 1,140.2 Senior Notes - $800 million (2) 2028 3.875% 792.8 792.3 Total debt 1,930.4 1,932.5 Less: current installments of long-term debt 11.5 11.5 Total long-term debt $ 1,918.9 $ 1,921.0 (1) Term loans, net of unamortized discounts and debt issuance costs of $9.5 million and $9.8 million at March 31, 2024 and December 31, 2023, respectively. The effective interest rate was 3.2% and 3.3% at March 31, 2024 and December 31, 2023, respectively, including the effects of interest rate swaps and net investment hedges. See Note 6, 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 $7.2 million and $7.7 million at March 31, 2024 and December 31, 2023, respectively. The effective interest rate was 4.1% at March 31, 2024 and December 31, 2023, respectively. Credit Agreement The Company is a party to the Credit Agreement, which provides for senior secured credit facilities in an initial aggregate principal amount of $1.53 billion, consisting of term loans B-2 of $1.15 billion, maturing in 2030, and a revolving credit facility of $375 million, maturing in 2027. The Company's outstanding term loans bear interest at a per annum rate based on an adjusted one-month SOFR (as described in the Credit Agreement) plus a spread of 2.00%. The Company is required to pay a commitment fee on any undrawn portion of the revolving credit facility which is not material. Guarantees, Covenants and Events of Default The obligations of the borrowers (the Company and its subsidiary, MacDermid, Incorporated) under the Credit Agreement are guaranteed, jointly and severally, by certain of their domestic subsidiaries and secured by a first-priority security interest in substantially all of their assets and the assets of the guarantors, including mortgages on material real property, subject to certain exceptions. 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 borrowings under the revolving credit facility 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 borrowers are required 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 March 31, 2024, the Company was in compliance with the debt covenants contained in the Credit Agreement and had full availability of its unused borrowing capacity of $369 million, net of letters of credit, under the revolving credit facility. 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 to, in certain cases, the payment of an applicable make-whole 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 March 31, 2024 and December 31, 2023, there were no material amounts outstanding under such facilities, respectively. The Company had letters of credit outstanding of $5.8 million and $6.2 million at March 31, 2024 and December 31, 2023, respectively, of which $5.8 million and $6.2 million at March 31, 2024 and December 31, 2023, respectively, reduced the borrowings available under the various facilities. At March 31, 2024 and December 31, 2023, the availability under these facilities totaled approximately $392 million, respectively, net of outstanding letters of credit. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL INSTRUMENTS | 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 derivative contracts are used to manage the risks associated with changes in the conditions of those markets. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company regularly monitors its derivative positions and the credit ratings of its counterparties and does not anticipate nonperformance on their part. All derivatives are recognized in the Consolidated Balance Sheets at fair value. Realized gains and losses on foreign currency forward contracts, commodity derivative contracts and the net periodic payments from interest rate swaps and cross-currency swaps are reflected as "Cash flows from operating activities" in the Condensed Consolidated Statement of Cash Flows. 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 its interest rate swaps as cash flow hedges and its cross-currency swaps as net investment hedges of the foreign currency exposure of a portion of its net investment in euro functional subsidiaries. These swaps effectively convert the Company's outstanding term loans, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through their respective expiration dates. The total notional value of the interest rate swaps and cross-currency swaps was $1.15 billion at March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, approximately $389 million in notional value matures in January 2025 and the remaining balance in December 2028. The net result of these hedges is an interest rate of approximately 3.2% at March 31, 2024 on the term loans B-2, which could vary in the future due to changes in the euro and the U.S. dollar exchange rate. Changes in the estimated 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. The fair value of the interest rate swaps was a net asset of $24.0 million and $11.9 million at March 31, 2024 and December 31, 2023, respectively. Changes in the estimated fair value of cross-currency swaps are recorded in "Foreign currency translation" in "Accumulated other comprehensive loss." The fair value of the cross-currency swaps was a net asset of $27.7 million and $4.8 million at March 31, 2024 and December 31, 2023, respectively. For the three months ended March 31, 2024, these interest rate swaps and cross-currency swaps were deemed highly effective. The Company expects to reclassify a $24.2 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 March 31, 2024, 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 (expense) income, net." The total notional value of foreign currency exchange forward contracts held at March 31, 2024 and December 31, 2023 was approximately $110 million and $93.9 million, respectively, with settlement dates generally within one year. The fair value of the foreign currency forward contracts was a $0.2 million net current asset and a $0.7 million net current liability at March 31, 2024 and December 31, 2023, respectively. Commodities 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 $74.7 million and $63.8 million at March 31, 2024 and December 31, 2023, respectively. The fair value of the metals derivative contracts was a net current liability of $1.9 million and $1.2 million at March 31, 2024 and December 31, 2023, respectively. Substantially all contracts outstanding at March 31, 2024 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 (expense) income, net." 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) Balance sheet location Classification March 31, 2024 December 31, 2023 Asset Category Foreign exchange contracts Other current assets Level 2 $ 0.3 $ 0.2 Metals contracts Other current assets Level 2 0.9 0.5 Interest rate swaps Other current assets Level 2 24.2 19.9 Cross-currency swaps Other current assets Level 2 33.7 5.9 Interest rate swaps Other assets Level 2 — 4.3 Cross-currency swaps Other assets Level 2 — 9.6 Available-for-sale debt securities Other assets Level 3 11.2 14.2 Total $ 70.3 $ 54.6 Liability Category Foreign exchange contracts Accrued expenses and other current liabilities Level 2 $ 0.1 $ 0.9 Metals contracts Accrued expenses and other current liabilities Level 2 2.8 1.7 Cross-currency swaps Accrued expenses and other current liabilities Level 2 — 0.9 Interest rate swaps Other liabilities Level 2 0.2 12.3 Cross-currency swaps Other liabilities Level 2 6.0 9.8 Total $ 9.1 $ 25.6 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 months ended March 31, 2024. The carrying value and estimated fair value of the Company’s long-term debt totaled $1.93 billion and $1.88 billion, respectively, at March 31, 2024. At December 31, 2023, the carrying value and estimated fair value totaled $1.93 billion and $1.89 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. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE A computation of weighted average shares of the Company's common stock outstanding and earnings per share for the three months ended March 31, 2024 and 2023 is as follows: Three Months Ended March 31, (dollars in millions, except per share amounts) 2024 2023 Net income $ 56.0 $ 43.0 Net income attributable to non-controlling interests — (0.1) Net income attributable to common stockholders $ 56.0 $ 42.9 Basic weighted average common shares outstanding 241.8 241.1 Denominator adjustments for diluted EPS: Number of stock options and RSUs 0.7 0.7 Denominator adjustments for diluted EPS 0.7 0.7 Diluted weighted average common shares outstanding 242.5 241.8 Earnings per share attributable to common stockholders: Basic $ 0.23 $ 0.18 Diluted $ 0.23 $ 0.18 For the three months ended March 31, 2024 and 2023, 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: Three Months Ended March 31, (shares in millions) 2024 2023 Shares issuable upon vesting of RSUs and exercise of stock options 3.6 3.7 |
CONTINGENCIES, ENVIRONMENTAL AN
CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS | 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 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 $11.2 million and $11.3 million at March 31, 2024 and December 31, 2023, 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. 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. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 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 March 31, 2024, the Company recognized income tax expense of $13.5 million resulting in an effective tax rate of 19%, as compared to $16.9 million and an effective tax rate of 28% in the same period for 2023. Income tax expense for the three months ended March 31, 2024 includes a continued U.S. benefit related to claiming foreign tax credits consistent with our election in the fourth quarter of 2023, a benefit from a U.S. tax deduction related to Foreign Derived Intangible Income ("FDII”), the negative impact of U.S. global intangible low-taxed income (“GILTI”), the impact of changes to the level and mix of earnings and a benefit from the ability to utilize prior period losses in the United Kingdom based on improved profitability in the current year. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 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 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. Effective April 11, 2024, the advisory fee was decreased from an annualized amount of $3.0 million to $2.0 million. Amounts paid under this agreement are recorded in the Condensed Consolidated Statements of Operations as "Selling, technical, general and administrative" expense. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 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 for purposes of allocating resources and evaluating performance. 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 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 March 31, (dollars in millions) 2024 2023 Net sales: Electronics Assembly Solutions $ 167.5 $ 173.5 Circuitry Solutions 111.8 106.7 Semiconductor Solutions 69.9 59.4 Total Electronics 349.2 339.6 Industrial & Specialty Industrial Solutions 166.5 180.7 Graphics Solutions 37.0 34.9 Energy Solutions 22.3 19.2 Total Industrial & Specialty 225.8 234.8 Total net sales $ 575.0 $ 574.4 Adjusted EBITDA: Electronics $ 83.9 $ 72.7 Industrial & Specialty 43.1 39.6 Total Adjusted EBITDA $ 127.0 $ 112.3 The following table reconciles "Net income" to Adjusted EBITDA: Three Months Ended March 31, (dollars in millions) 2024 2023 Net income $ 56.0 $ 43.0 Add (subtract): Income tax expense 13.5 16.9 Interest expense, net 13.9 11.7 Depreciation expense 10.1 9.5 Amortization expense 30.2 29.6 EBITDA 123.7 110.7 Adjustments to reconcile to Adjusted EBITDA: Restructuring expense 2.3 2.3 Acquisition and integration expense 1.7 3.9 Foreign exchange gains on intercompany loans (6.8) (5.6) Kuprion Acquisition research and development charge 3.9 — Other, net 2.2 1.0 Adjusted EBITDA $ 127.0 $ 112.3 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 56 | $ 42.9 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BACKGROUND AND BASIS OF PRESE_2
BACKGROUND AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with 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. |
Basis of Presentation | In preparing the unaudited Condensed Consolidated Financial Statements in conformity with GAAP, management uses estimates and assumptions that may affect the reported amounts of 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, 2024. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements and related notes included in its 2023 Annual Report. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Inventory Disclosure [Abstract] | |
Schedule of Major Components of Inventory | The major components of inventory, on a net basis, were as follows: (dollars in millions) March 31, 2024 December 31, 2023 Finished goods $ 186.2 $ 176.2 Work in process 45.9 37.5 Raw materials and supplies 87.0 85.2 Total inventories $ 319.1 $ 298.9 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Major Components of Property, Plant, and Equipment | The major components of property, plant and equipment, net were as follows: (dollars in millions) March 31, 2024 December 31, 2023 Land and leasehold improvements $ 50.5 $ 51.7 Buildings and improvements 184.7 168.5 Machinery, equipment, fixtures and software 342.1 334.3 Construction in process 54.4 66.7 Total property, plant and equipment 631.7 621.2 Accumulated depreciation (336.2) (324.3) Property, plant and equipment, net $ 295.5 $ 296.9 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the Carrying Amount of Goodwill by Segment | The changes in the carrying amount of goodwill by segment were as follows: (dollars in millions) Electronics Industrial & Specialty Total Balance at December 31, 2023 $ 1,298.7 $ 1,038.0 (1) $ 2,336.7 Foreign currency translation and other (21.0) (13.4) (34.4) Balance at March 31, 2024 $ 1,277.7 $ 1,024.6 $ 2,302.3 |
Schedule of Major Components of Intangible Assets | The major components of intangible assets, net were as follows: March 31, 2024 December 31, 2023 (dollars in millions) Gross Carrying Accumulated Net Book Gross Carrying Accumulated Net Book Customer relationships $ 960.9 $ (511.9) $ 449.0 $ 978.4 $ (505.9) $ 472.5 Developed technology 297.2 (213.0) 84.2 410.0 (316.2) 93.8 Trade names 94.5 (32.3) 62.2 95.9 (30.9) 65.0 Reacquired distribution rights 187.0 (10.4) 176.6 187.0 (7.3) 179.7 Other — — — 0.8 (0.5) 0.3 Indefinite-lived trade name 68.0 — 68.0 68.0 — 68.0 Total $ 1,607.6 $ (767.6) $ 840.0 $ 1,740.1 $ (860.8) $ 879.3 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule Debt and Capital Lease Obligations | The Company’s debt obligations consisted of the following: (dollars in millions) Maturity Date Interest Rate March 31, 2024 December 31, 2023 Term Loans (1) 2030 SOFR plus 2.00% $ 1,137.6 $ 1,140.2 Senior Notes - $800 million (2) 2028 3.875% 792.8 792.3 Total debt 1,930.4 1,932.5 Less: current installments of long-term debt 11.5 11.5 Total long-term debt $ 1,918.9 $ 1,921.0 (1) Term loans, net of unamortized discounts and debt issuance costs of $9.5 million and $9.8 million at March 31, 2024 and December 31, 2023, respectively. The effective interest rate was 3.2% and 3.3% at March 31, 2024 and December 31, 2023, respectively, including the effects of interest rate swaps and net investment hedges. See Note 6, 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 $7.2 million and $7.7 million at March 31, 2024 and December 31, 2023, respectively. The effective interest rate was 4.1% at March 31, 2024 and December 31, 2023, respectively. |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis: (dollars in millions) Balance sheet location Classification March 31, 2024 December 31, 2023 Asset Category Foreign exchange contracts Other current assets Level 2 $ 0.3 $ 0.2 Metals contracts Other current assets Level 2 0.9 0.5 Interest rate swaps Other current assets Level 2 24.2 19.9 Cross-currency swaps Other current assets Level 2 33.7 5.9 Interest rate swaps Other assets Level 2 — 4.3 Cross-currency swaps Other assets Level 2 — 9.6 Available-for-sale debt securities Other assets Level 3 11.2 14.2 Total $ 70.3 $ 54.6 Liability Category Foreign exchange contracts Accrued expenses and other current liabilities Level 2 $ 0.1 $ 0.9 Metals contracts Accrued expenses and other current liabilities Level 2 2.8 1.7 Cross-currency swaps Accrued expenses and other current liabilities Level 2 — 0.9 Interest rate swaps Other liabilities Level 2 0.2 12.3 Cross-currency swaps Other liabilities Level 2 6.0 9.8 Total $ 9.1 $ 25.6 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | A computation of weighted average shares of the Company's common stock outstanding and earnings per share for the three months ended March 31, 2024 and 2023 is as follows: Three Months Ended March 31, (dollars in millions, except per share amounts) 2024 2023 Net income $ 56.0 $ 43.0 Net income attributable to non-controlling interests — (0.1) Net income attributable to common stockholders $ 56.0 $ 42.9 Basic weighted average common shares outstanding 241.8 241.1 Denominator adjustments for diluted EPS: Number of stock options and RSUs 0.7 0.7 Denominator adjustments for diluted EPS 0.7 0.7 Diluted weighted average common shares outstanding 242.5 241.8 Earnings per share attributable to common stockholders: Basic $ 0.23 $ 0.18 Diluted $ 0.23 $ 0.18 |
Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share | For the three months ended March 31, 2024 and 2023, 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: Three Months Ended March 31, (shares in millions) 2024 2023 Shares issuable upon vesting of RSUs and exercise of stock options 3.6 3.7 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, By Segment | 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 March 31, (dollars in millions) 2024 2023 Net sales: Electronics Assembly Solutions $ 167.5 $ 173.5 Circuitry Solutions 111.8 106.7 Semiconductor Solutions 69.9 59.4 Total Electronics 349.2 339.6 Industrial & Specialty Industrial Solutions 166.5 180.7 Graphics Solutions 37.0 34.9 Energy Solutions 22.3 19.2 Total Industrial & Specialty 225.8 234.8 Total net sales $ 575.0 $ 574.4 Adjusted EBITDA: Electronics $ 83.9 $ 72.7 Industrial & Specialty 43.1 39.6 Total Adjusted EBITDA $ 127.0 $ 112.3 The following table reconciles "Net income" to Adjusted EBITDA: Three Months Ended March 31, (dollars in millions) 2024 2023 Net income $ 56.0 $ 43.0 Add (subtract): Income tax expense 13.5 16.9 Interest expense, net 13.9 11.7 Depreciation expense 10.1 9.5 Amortization expense 30.2 29.6 EBITDA 123.7 110.7 Adjustments to reconcile to Adjusted EBITDA: Restructuring expense 2.3 2.3 Acquisition and integration expense 1.7 3.9 Foreign exchange gains on intercompany loans (6.8) (5.6) Kuprion Acquisition research and development charge 3.9 — Other, net 2.2 1.0 Adjusted EBITDA $ 127.0 $ 112.3 |
BACKGROUND AND BASIS OF PRESE_3
BACKGROUND AND BASIS OF PRESENTATION (Details) | Jan. 31, 2014 $ / shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Common stock par value (in dollars per share) | $ 0.01 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 186.2 | $ 176.2 |
Work in process | 45.9 | 37.5 |
Raw materials and supplies | 87 | 85.2 |
Total inventories | $ 319.1 | $ 298.9 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET - Major Components of Property, Plant, and Equipment (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Property, plant and equipment | ||
Total property, plant and equipment | $ 631.7 | $ 621.2 |
Accumulated depreciation | (336.2) | (324.3) |
Property, plant and equipment, net | 295.5 | 296.9 |
Land and leasehold improvements | ||
Property, plant and equipment | ||
Total property, plant and equipment | 50.5 | 51.7 |
Buildings and improvements | ||
Property, plant and equipment | ||
Total property, plant and equipment | 184.7 | 168.5 |
Machinery, equipment, fixtures and software | ||
Property, plant and equipment | ||
Total property, plant and equipment | 342.1 | 334.3 |
Construction in process | ||
Property, plant and equipment | ||
Total property, plant and equipment | $ 54.4 | $ 66.7 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 10.1 | $ 9.5 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Changes in Carrying Amount of Goodwill by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Goodwill | ||
Beginning balance | $ 2,336.7 | |
Foreign currency translation and other | (34.4) | |
Ending balance | 2,302.3 | |
Accumulated impairment losses | $ 127 | |
Electronics | ||
Goodwill | ||
Beginning balance | 1,298.7 | |
Foreign currency translation and other | (21) | |
Ending balance | 1,277.7 | |
Industrial & Specialty | ||
Goodwill | ||
Beginning balance | 1,038 | |
Foreign currency translation and other | (13.4) | |
Ending balance | $ 1,024.6 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets | ||
Accumulated Amortization | $ (767.6) | $ (860.8) |
Intangible Assets, Gross (Excluding Goodwill) | 1,607.6 | 1,740.1 |
Intangible assets, net | 840 | 879.3 |
Trade names | ||
Finite-Lived Intangible Assets | ||
Indefinite lived intangible assets | 68 | 68 |
Customer relationships | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 960.9 | 978.4 |
Accumulated Amortization | (511.9) | (505.9) |
Net Book Value | 449 | 472.5 |
Developed technology | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 297.2 | 410 |
Accumulated Amortization | (213) | (316.2) |
Net Book Value | 84.2 | 93.8 |
Trade names | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 94.5 | 95.9 |
Accumulated Amortization | (32.3) | (30.9) |
Net Book Value | 62.2 | 65 |
Reacquired distribution rights | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 187 | 187 |
Accumulated Amortization | (10.4) | (7.3) |
Net Book Value | 176.6 | 179.7 |
Other | ||
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 0 | 0.8 |
Accumulated Amortization | 0 | (0.5) |
Net Book Value | $ 0 | $ 0.3 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Finite-Lived Intangible Assets | ||
Amortization of expense of intangible assets | $ 30.2 | $ 29.6 |
Research and development | 18.1 | $ 12.5 |
Kuprion | ||
Finite-Lived Intangible Assets | ||
Research and development | $ 3.9 |
DEBT - Summary of Debt and Capi
DEBT - Summary of Debt and Capital Leases Outstanding (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Debt Instrument | ||
Total debt | $ 1,930,400,000 | $ 1,932,500,000 |
Less: current installments of long-term debt | 11,500,000 | 11,500,000 |
Total long-term debt | 1,918,900,000 | 1,921,000,000 |
Term loan B, Notes maturing 2026 | Domestic Line of Credit | ||
Debt Instrument | ||
Debt face amount | 1,150,000,000 | |
Total debt | 1,137,600,000 | 1,140,200,000 |
Unamortized premiums, discounts and debt issuance costs | $ 9,500,000 | $ 9,800,000 |
Effective interest rate (percent) | 3.20% | 3.30% |
Term loan B, Notes maturing 2026 | Domestic Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument | ||
Spread on variable rate (percent) | 2% | |
USD Senior Notes, Due 2028 | Senior Notes | ||
Debt Instrument | ||
Debt face amount | $ 800,000,000 | |
Stated interest rate (percent) | 3.875% | |
Total debt | $ 792,800,000 | $ 792,300,000 |
Unamortized premiums, discounts and debt issuance costs | $ 7,200,000 | $ 7,700,000 |
Effective interest rate (percent) | 4.10% | 4.10% |
DEBT - Credit Agreement (Detail
DEBT - Credit Agreement (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Domestic Line of Credit | Term loan B, Notes maturing 2026 | |
Line of Credit Facility | |
Debt face amount | $ 1,150,000,000 |
Domestic Line of Credit | Term loan B, Notes maturing 2026 | Secured Overnight Financing Rate (SOFR) | |
Line of Credit Facility | |
Spread on variable rate (percent) | 2% |
Revolving Credit Facility | |
Line of Credit Facility | |
Maximum borrowing capacity | $ 1,530,000,000 |
Revolving Credit Facility | Line of Credit | |
Line of Credit Facility | |
Maximum borrowing capacity | $ 375,000,000 |
DEBT - Guarantees, Covenants an
DEBT - Guarantees, Covenants and Events of Default (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Senior Notes | |
Debt Instrument | |
Covenant, outstanding borrowings leverage threshold (percent) | 30% |
Covenant, first lien net leverage ratio | 5 |
Line of Credit | Revolving Credit Facility | |
Debt Instrument | |
Current borrowing capacity | $ 369 |
DEBT - USD Notes (Details)
DEBT - USD Notes (Details) | Mar. 31, 2024 |
Senior Notes | USD Senior Notes, Due 2028 | |
Debt Instrument | |
Stated interest rate (percent) | 3.875% |
DEBT - Lines of Credit and Othe
DEBT - Lines of Credit and Other Debt Facilities (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Revolving Credit Facility | ||
Debt Instrument | ||
Reduction in borrowings | $ 5.8 | $ 6.2 |
Line of Credit | ||
Debt Instrument | ||
Outstanding letters of credit | 5.8 | 6.2 |
Lines of Credit and Revolving Lines of Credit | Line of Credit | ||
Debt Instrument | ||
Remaining borrowing capacity | $ 392 | $ 392 |
FINANCIAL INSTRUMENTS - Derivat
FINANCIAL INSTRUMENTS - Derivatives and Hedging (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Derivative Instruments, Gain (Loss) | ||
Gain (loss) to be reclassified during next 12 months | $ 24.2 | |
Domestic Line of Credit | USD Term Loan | ||
Derivative Instruments, Gain (Loss) | ||
Effective interest rate (percent) | 3.20% | 3.30% |
Commodities Investment | ||
Derivative Instruments, Gain (Loss) | ||
Derivative liability, current | $ (1.9) | $ (1.2) |
Cross-currency swaps | ||
Derivative Instruments, Gain (Loss) | ||
Derivative notional amount | 1,150 | 1,150 |
Derivative asset | 27.7 | 4.8 |
Cross-currency swaps | Debt Expiry in January 2025 | ||
Derivative Instruments, Gain (Loss) | ||
Derivative notional amount | 389 | |
Interest Rate Swaps | ||
Derivative Instruments, Gain (Loss) | ||
Derivative asset | 24 | 11.9 |
Foreign Exchange Forward | ||
Derivative Instruments, Gain (Loss) | ||
Derivative notional amount | $ 74.7 | 63.8 |
Derivative remaining maturity | 1 year | |
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) | ||
Derivative notional amount | $ 110 | 93.9 |
Derivative remaining maturity | 1 year | |
Derivative asset, current | $ 0.2 | |
Derivative liability, current | $ (0.7) |
FINANCIAL INSTRUMENTS - Schedul
FINANCIAL INSTRUMENTS - Schedule of Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Recurring | ||
Asset Category | ||
Total | $ 70.3 | $ 54.6 |
Liability Category | ||
Total | 9.1 | 25.6 |
Level 2 | Recurring | Metals contracts | ||
Asset Category | ||
Derivative asset | 0.9 | 0.5 |
Liability Category | ||
Derivative liability | 2.8 | 1.7 |
Level 3 | Recurring | ||
Asset Category | ||
Available-for-sale debt securities | 11.2 | 14.2 |
Foreign exchange contracts | Level 2 | Recurring | ||
Asset Category | ||
Derivative asset | 0.3 | 0.2 |
Liability Category | ||
Derivative liability | 0.1 | 0.9 |
Interest rate swaps | ||
Asset Category | ||
Derivative asset | 24 | 11.9 |
Interest rate swaps | Level 2 | Recurring | ||
Liability Category | ||
Derivative liability | 0.2 | 12.3 |
Interest rate swaps | Level 2 | Recurring | Other current assets | ||
Asset Category | ||
Derivative asset | 24.2 | 19.9 |
Interest rate swaps | Level 2 | Recurring | Other assets | ||
Asset Category | ||
Derivative asset | 0 | 4.3 |
Cross-currency swaps | ||
Asset Category | ||
Derivative asset | 27.7 | 4.8 |
Cross-currency swaps | Level 2 | Recurring | Other current assets | ||
Asset Category | ||
Derivative asset | 33.7 | 5.9 |
Cross-currency swaps | Level 2 | Recurring | Other assets | ||
Asset Category | ||
Derivative asset | 0 | 9.6 |
Cross-currency swaps | Level 2 | Recurring | Accrued expenses and other current liabilities | ||
Liability Category | ||
Derivative liability | 0 | 0.9 |
Cross-currency swaps | Level 2 | Recurring | Other liabilities | ||
Liability Category | ||
Derivative liability | $ 6 | $ 9.8 |
FINANCIAL INSTRUMENTS - Fair Va
FINANCIAL INSTRUMENTS - Fair Value Measurements, Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term debt, fair value | $ 1,930 | $ 1,930 |
Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term debt, fair value | $ 1,880 | $ 1,890 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Net income from continuing operations | $ 56 | $ 43 |
Net income attributable to non-controlling interests | 0 | (0.1) |
Net income attributable to common stockholders | $ 56 | $ 42.9 |
Basic weighted average common shares outstanding (in shares) | 241.8 | 241.1 |
Denominator adjustments for diluted EPS: | ||
Number of stock options and RSUs (in shares) | 0.7 | 0.7 |
Denominator adjustments for diluted EPS (in shares) | 0.7 | 0.7 |
Diluted weighted average common shares outstanding (in shares) | 242.5 | 241.8 |
Earnings per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ 0.23 | $ 0.18 |
Diluted (in dollars per share) | $ 0.23 | $ 0.18 |
EARNINGS PER SHARE - Anti-dilut
EARNINGS PER SHARE - Anti-dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Shares issuable upon vesting of RSUs and exercise of stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Weighted-average securities not included in computation of diluted shares outstanding (in shares) | 3.6 | 3.7 |
CONTINGENCIES, ENVIRONMENTAL _2
CONTINGENCIES, ENVIRONMENTAL AND LEGAL MATTERS (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Commitments and Contingencies Disclosure [Abstract] | ||
Reserves for environmental matters | $ 11.2 | $ 11.3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 13.5 | $ 16.9 |
Effective tax rate (percent) | 19% | 28% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Mariposa Capital - Advisory Services Agreement - USD ($) $ in Millions | 3 Months Ended | ||
Apr. 11, 2024 | Apr. 10, 2024 | Mar. 31, 2024 | |
Related Party Transaction | |||
Automatic renewal period | 1 year | ||
Agreement renewal period | 90 days | ||
Subsequent Event | |||
Related Party Transaction | |||
Related party transaction expense | $ 2 | $ 3 |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2024 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
SEGMENT INFORMATION - Financial
SEGMENT INFORMATION - Financial Information by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information | ||
Net sales | $ 575 | $ 574.4 |
Total Adjusted EBITDA | 127 | 112.3 |
Electronics | ||
Segment Reporting Information | ||
Net sales | 349.2 | 339.6 |
Total Adjusted EBITDA | 83.9 | 72.7 |
Electronics | Assembly Solutions | ||
Segment Reporting Information | ||
Net sales | 167.5 | 173.5 |
Electronics | Circuitry Solutions | ||
Segment Reporting Information | ||
Net sales | 111.8 | 106.7 |
Electronics | Semiconductor Solutions | ||
Segment Reporting Information | ||
Net sales | 69.9 | 59.4 |
Industrial & Specialty | ||
Segment Reporting Information | ||
Net sales | 225.8 | 234.8 |
Total Adjusted EBITDA | 43.1 | 39.6 |
Industrial & Specialty | Industrial Solutions | ||
Segment Reporting Information | ||
Net sales | 166.5 | 180.7 |
Industrial & Specialty | Graphics Solutions | ||
Segment Reporting Information | ||
Net sales | 37 | 34.9 |
Industrial & Specialty | Energy Solutions | ||
Segment Reporting Information | ||
Net sales | $ 22.3 | $ 19.2 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliation of Adjusted EBITDA to Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting [Abstract] | ||
Net income | $ 56 | $ 43 |
Add (subtract): | ||
Income tax (expense) benefit | 13.5 | 16.9 |
Interest expense, net | 13.9 | 11.7 |
Depreciation expense | 10.1 | 9.5 |
Amortization expense | 30.2 | 29.6 |
EBITDA | 123.7 | 110.7 |
Adjustments to reconcile to Adjusted EBITDA: | ||
Restructuring expense | 2.3 | 2.3 |
Acquisition and integration expense | 1.7 | 3.9 |
Foreign exchange gains on intercompany loans | (6.8) | (5.6) |
Kuprion Acquisition research and development charge | 3.9 | 0 |
Other, net | 2.2 | 1 |
Adjusted EBITDA | $ 127 | $ 112.3 |