ESI - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Element Solutions Q1 2022 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. [Operator Instructions]. Please note, this call maybe recorded and I will be standing by should you need any assistance. turn Strategy over and to Senior Varun like of Director Finance. now the to call Gokarn, I’d Please go ahead.

Varun Gokarn

Good morning, XXXX quarter in our and thank you earnings for conference participating first call.

is Gliklich; Chairman, Regulation call with or in prohibited. of the Any Fair strictly webcasting without Franklin; are redistribution, In are FD Sir expressed we any of conference me Carey Dorman. form Executive CEO, Joining Element written this Ben this and Disclosure, retransmission, CFO, accordance rebroadcast Solutions Martin consent call. or

These non-GAAP During most factors recent slides material financial about performance forward-looking are pleasure refer and filings current results. and discussion information and today’s expectations make that the release of materials statements Solutions. of of comparable financial could Chairman our subject Sir differ a that the SEC Element risks Martin Please GAAP. definitions Events. include the certain also with statements at introduce can are measures. our to in been and call, uncertainties. earnings Today’s materials we to accordance supplemental News website and earnings to reconciliations for on and these the risk will of It reflect to is my our actual measures section prepared GAAP for now Franklin, under Executive that to expectations future Investors based U.S. These be has & not and from found that Please www.elementsolutionsinc.com in company’s refer views results on assumptions cause future events predictions. to company’s financial release, slides, supplemental

Sir Martin Ellis Franklin

you Varun and Thank morning good everyone.

I recognize great Solutions leadership quarter vehicles very call all continue see colleagues megatrends team this moment take strong, to Element well. proliferation, complicated to a the to and and the the wanted momentum. turning at been XG to has Demand Ben semiconductor electronic a and our and navigating backdrop for Carey Before to

long has At COVID team ongoing investing at scarcity, time raw deftly. managed a our to lockdowns, However company due serving customers was With but this for and commitments on this challenging, over Ben. culture, me performance. this times term unavailability in proud material logistics their is that challenge and while delivering the people it and let term I'm the of to turn its in very short capabilities,

Benjamin Gliklich

chain overall resilient deliver us acquisitions Logistics but effective well chain we our are actions operating commercial, of Thank six Thank for verticals. last XXXX you adjusted stronger We prices climb to complexity. growth supply markets these sales a demand robust in disruptions environment. start in the with of is volatility ongoing business and integrations from from challenges the has strength COVID, remaining Despite anticipated. supply industry and chain and EBITDA even strategies a execution demand Martin constant and organic raw industrial auto broadly our end than to teams geopolitical results a initially good ongoing of end electronic energy morning our business, X% a general continue the in with the markets. deals in more first the through The you solid and in the our These chain with everybody. are recent were markets We joining. mixed continued supportive production trends and propelling QX the secular of supply Industrial allowed drove dynamic impacting against our to material in all strong customers, our increased year. over reflect our rationale for remained value currency cost quarter. growth technical, and of supply growth to commercial period proving had of and healthy going quarter price bringing

continue we have factors macroeconomic navigate outlook, business is believe these to challenges. short less term positioned recent While our created well to a predictable

strategy effectively vehicles, per our as Our to solutions focused to laid at our share best executing electronics, and growth Investor value. our deploy compound markets XG out position enabled chemistry Day, such the business and electric we with sustainable team on capital remains an attractive

our Importantly people objectives. this is Ukraine It time not world challenging an the and and required large. remains compromising been for short on term extraordinarily the has of at

and by thoughts Our immediately the affected with globe. throughout those are war the their families

Foundation business Through steps drives employees a Our supply of of our raised and tens by for incredible address food risk perspective several with teams chain increased ESI generosity. organized the multiple donations this and refugees. own responded taken Giving the two created in last also our this Ukrainian to humanitarian in thousands in From crisis we've dollars ESI conflict. have have Programs, Europe matches Cares months to volatility have

to XX sales commercial exposure Ukraine was Russia total XXXX. less points basis Our our and than in of

sources materials sourced material we source Russia in additional don't Our little certain from but we to and impact commitments. of this time, needed. supply where anticipate our engaged supply chain historically At requalifying have materially are actively raw scarcity very sole commercial

new This cost Our to that excess successfully taken our margins, mechanisms we've impacting to quarter years. is has raw actions however, inventory. us to we to financial the acted improve Pricing increases. similar opportunity allowed is first material on an ability customers capture have build surcharge strength late in in accepted prior

We are dollars. protecting margin

basis end end the the of of in our constant continued by sustained In markets. sequential level currency grew reflected It fourth a currency growth acceleration year-on-year pressure term should XXX the recovery EBITDA and we growth the Slide our high We comparison, markets. of in from you organic an experienced and points terms, results. of see without the of constant in of positive Recall, This year-over-year. prices margins is X% organically first supply strength for quarter makes non-automotive, in oriented X%. of reflection adjusted shutdowns the electronics expect growth can averages a XXXX. through gross industrially difficult represented of quarters. you our elevated X benefited below XXXX long topline and summary adjusted Although coming year-over-year quarter financial margin COVID remain declined in from our should EBITDA the see XXXX a QX strength balance metal from the the continuation On to chain pace

year-on-year quarter. impacts costs, or on that inflation and However, increased to margins same we last XXX higher from basis so. and the same XXX improved drove QX quarter metals saw basis logistics but headwinds the from XXXX through pass-through prices material of our other while points points raw last period logistics, reflect mix basis metals, sequentially of materials compared first year, XXX drove other headwinds, another raw points results Higher many pass

$XXX take in sales margin Solutions results quarter. Assembly of business our through the first quarter the of XX% detail. million will now business, would Excluding been metal pass-through in more Carey our you the impact have in our EBITDA adjusted Carey?

Carey Dorman

product detail steady, growth. of solder adhesive across Ben. first In sales our Thanks, verticals we segments. despite most grew organic in growth net products, of the our in including applications remained and business electronics additional quarter. high-end On and growth for Organic drivers electronics comparisons. all Demand three Good share sales our was morning, X% we on which Slide core the for X, polymer-based of organically our everyone. organic two sustained business, tough year-over-year show categories, saw X% technologies Assembly year-over-year

the broader power We uptake proliferation are electronics also vehicles. to electric seeing related base primarily a of of continued customers from strong

strong from Semiconductor offset Solutions weaker due strength chain This storage. driven continued grew Asian Americas automotive market basis which and due advanced On a for points assembly basis electronics demand cloud helped by the continued advanced is in Circuitry points, declined adjusted through well our and applications. XX% data no growth in for grew drive an simply computing prices Asia, in explained our nearly as profit take wafer year-over-year XX% growth higher Our This basis, plating, both exciting organically, electronics by with increase markets vertical margin underscores increase organically of actions in stability inflationary supply pass-through EBITDA disk metals with customers to mix mobile which Solutions that by demand adjusted and positive COVID-related segment XXX to products. in in offset dollars. demand metals as and for margins tin and high-margin to shutdowns. end strong ability memory driven certain packaging, demand price increased pressures our sales XXX constraints gross commensurate

to For the increased first Specialty sales X% quarter, Industrial in year-over-year. and organic net

China, softness in to subdued Solutions segment markets, umbilical industrial a the by in more our as start where X% of the of in second expected posted the online. the drive customer the optimistic of of drilling organically, and oil new this through new fills. overhang of from production packaging quality growth softness. new than more design the we and I&S three last and well. late Given customers. a Graphic benefits hydraulic aerospace year-over-year, end significant We grew We of Solutions shining with as Industrial the rebound organically our this wins happy all in auto-related growth The Energy increase drove year. the auto-related uncertainty X% into in back is fluids we year quarter. that introductions of Europe grew and in level continuing Solutions provide in growth this additional strength construction, start Despite X% we general organically increased macro modestly anticipate of move markets businesses are year. high general rest offsetting through for quarter, portfolio year, again production the low automotive rigs continued rest up the also cautiously manufacturing, business end as the a sustained level about remain prices reflecting rigs with will higher but diversification of to half CPG portion growth

come production online, business in the slower we new hand, of over growth is other accelerate the the this balance to to year. expect On but

million $XX to On million cash. in X, of we this by consumed and sequential we disruption. of and first stocks reflects in higher-than-expected Slide basis, a inventory, operating in on working a primary flow quarter, supply $XX demand, was global flow cash compares driven working need balance to compared due about for capital million chain in $XX of The to The raw net capital combination same materials, period million of a the QX driver buildup generating investment greater increased cash $XX XXXX. sheet. Now where safety the This of the XXXX. the of address

we through As we we and our differentiate competitors ourselves sheet business position. can believe a strong continuity balance before, said from have

decision at done timely made each the last and the facts have compensation As to of for delivery the performance. semiannual level In two that incentive a acquisitions and included our was also nonrecurring strong paid year the stronger $XX $XX to a full safety these in XXXX we the which million cash years, We majority last of in HSO actions are our on bonds basis. than this higher of of ahead the related we cash Coventya uses costs given the roughly believe these made on year, schedule. synergy of our related with interest customers. programs, to increase contributed customers and our relationships we of have enable nicely our quarter, million quarter XXXX to running payment Other

Turning the sheet. to balance

was of on been net year-end. expect adjusted XX-month Coventya If would debt our X.X capital quarter a net further Our the Barring X.X leverage we year, of ratio by allocation, a leverage EBITDA net of times owning benefit had a have roughly end we for to the ratio times. at full the trailing basis X.Xx.

our Additionally, important been that borrowings floating all to of swapped rate to note fixed. have

cash some So mid-single-digit and technology treatment expense in We approximately should to a rates represented on of exceptional HSO HSO, EBITDA. a cash We which rising closed of our in surface the this our next years. in our industrial brings meaningfully January paid market-leading year, couple of interest for acquisition talent business that $XX impact million not interest multiple business. on

our also deployed our the stock shares. was $XX capital program. quarter million of million related million to roughly in share repurchase $XX normal worth reduce to Approximately by X.X shares count We of

grants. million shares X roughly to $XX cover of million approximately to incentive withheld related we addition, taxes divesting or long-term In

remain it to significant existing believe our as stock After was under we that, to will $XXX Ben? share activity expect over this continue discount turn We with March it back And relates I when buyback XXst. to accelerate million opportunistic repurchases this as to QX trading Ben. availability at to and authorization is activity, our remaining value. intrinsic its our of a stock

Benjamin Gliklich

our which first in end to full Thank The you, confidence the strength us X. Carey. adjusted results our year low you see gives of on EBITDA quarter can Slide increase guidance,

headwind from in this this EBITDA million a February of million $X adjusted We when than guidance expect to introduced FX deliver $XXX $XXX this year million year. to of higher despite we

expectation guidance range XX% second growth increasing to or adjusted in recovery effectively to currency automotive guidance in sustained half a year. an of XX%. we're is EBITDA strength for two a by This constant a point and electronics production based of So percentage our of on in the the

spite we against synergy uncertainty believe our by was is in executing from level the realization the remain auto events, of recent our our non-automotive of guidance increased recovery the magnitude lower initially. of our are business, healthy, and and our strategy. the it pace of given However, In growth our most driven teams strength in of geopolitical than well markets acquisitions implicit in

annual and dollar. a a of slightly the from our XX% represent also This in would impact margins an Shanghai we impact of is the costs, results higher currency expect of quarter includes of elevated based quarter second XXXX, materials expectation U.S. OPEX salary also by approximately freight EBITDA stronger the second the it For from $XXX driven over of increases, of sequentially EBITDA approximately higher XXXX. still still the lockdowns adjusted estimate strong level These and but adjusted million. and revenue growth raw on softer constant be travel to and

our the for and vehicles, results with areas to of Our power solid powerful strategic electronics execution. mobile-enabling executing We first our technologies, end propelling solutions. XG we're investments our quarter and strategy mega business team's benefit the growth markets on targeted outlook sustainable reflect electric and from believe like disproportionately Solutions Element in trends for strength our

key or proud recently over key on and sustainability the supplement announced topic the several and can found of highlight the resources I'd we highlight ESI goals, employee XXXX updates on well as our and In TCFD ESG improvements published commissions, and a all ESG ESG change. our net sustainability, generated FASB number XXXX sustainability GRI as metrics. like of sustainable We're energy we On climate products XX% provided we've from sales report. It also related year safety, $XXX that health roughly and our supplement, index data an and that be updates to which website. to disclosures million our impact of last to as well topics as to use, XXXX initial social to contains to

value Solutions we've disclosure highlight like tell to thank enhanced on strong to for the all in story people topics, dedicated talented questions. ESG please open focused and of we a To Our world compelling wrap I'd our investors stakeholders very for driver responsible the for With their how are we operator, business. continued particular, these increasingly to believe about support for another around help that, our the line up, of our and Element and have is our quarter.

Operator

first with our [Operator Spector Instructions]. from take Josh And we'll UBS. question

Your line is now open.

Joshua Spector

Thanks guys. a here. hey questions. my on Yeah, for Congrats taking strong quarter

guess, guys sequentially. the organic? down, outperformed does your it up year think or of of you if And heard Ben, highlighting sales how and XQ And in expect Just the step metals clear last just on normal up comments seasonality, on you I I the sales back they quarter. curious that on do to organic right, the impact electronics are pretty the the quarter, a are in like so an first guys in perspective, sounds I if guess some or sequentially revenues you more side. you is and do it question rest I you go

Benjamin Gliklich

absolutely. Yes,

the So we -- thanks for question.

pass-throughs but will second from healthy. that business healthy. not and some our growth drive impact pricing captured. if to actions business electronics revenue optically that & aren't metals in from quarter but see We are Construction adjustment you we in exactly that, there's top metals captured metal the pass-throughs, price impact the vertical that remains There our They're is will quarter. Solutions aren't taken. addition C&I, will and the The organic metals be in There The Industrial Industrial both very volume. organic we've in second a will expect growth the line

that the And in that first so typical than the the regard second the is half growth we electronics business half, change. seasonality the nothing suggests expect do back half in second to the there's bigger With will quarter. where

our that's and than we've seen where QX obviously guidance in have QX. and QX in higher QX so implicit we in And we EBITDA in expect

Joshua Spector

And from sequentially, helpful. just a fourth there's in second And even metals they're I XQ, excluding thanks, guess XQ incremental first less below to I from I improvement first sales I them, from in quarter, both that's would quarter. from Okay, both at guess to of perspective. well of kind the assume was that, related quarter if margins your we and typical incremental what are improvement guess, higher, quarter if there be normal guess, big I but that look

improving leaves not significantly So you expect without to do in that that what the pricing? incrementally And half? significantly improve second

Benjamin Gliklich

organic of portion is raw tied that but to is in the price materials. from a we're So price, inflation growth generating

your goes if XX%, you're getting with your increase. associated price sales goes price that raw margin up not so material price substantial and And up XX%, a

factors that's one there Carey, we're to with want the so that And anything battling right more add? of now. you is

Carey Dorman

No, I right. think that's exactly

relatively assuming being. the pricing we've that up for that second since the seeing quarter actions, and we're environment in think I we're a stable along March, inflationary caught time

So I think you it hit well.

Joshua Spector

Okay, thank you.

Operator

Chris from Loop question Kapsch Markets. next our take will We with Capital

line now Your is open.

Christopher Kapsch

especially team morning. entire good the given continued many Hi, the your execution, challenges. on Kudos to

circuitry my question in is on focused business So particular. the and electronics

was markets. would chain any pockets and supply around more or was or the of a it of had weakness if skewed nature there that I'm in of disruptions, So there's more COVID Asian or clarity certain mentioned visibility I any the it weakness, granularity some helpful? a follow-up. Thanks end broad certain despite strength, be lockdowns curious you markets, towards function just

Benjamin Gliklich

There products countries they way or the hit have same to are as been have they the in on would it. Yes, whose certain haven't past. you the expected flagship launched schedule

to been just year-to-date of that's headwind out at strength period. seen by It's that a a pockets sales in high some lockdowns. We've of other business. come in so offset the And driven China, that the margin. And country then by in weakness been

As in a got the we where organically, strength because wasn't Overall, markets, business. in margin Circuitry robust North the we products to mix see Asian higher-margin Asian countries certain in Circuitry however, headwind but grew demand organic it to expect what our you've we was those and general recovery we've business for we seen, be. nicely expected some year of in

Christopher Kapsch

Okay.

question follow-up company board was, markets. the which follow-up was circuit about skewed So stable And then circuit rigid with print more to that it like said strength they were another public some relates or that sounded company something suggesting the there. print board were continued towards weakness, flexible markets

if wondering confusion. think Just a bit I may it -- created have of little

seeing, wondering what versus to you. could cadence and Just you're elaborate you are subsectors, different the and exposures seeing terms in those if your you're if what will? what to business you of flexible on crosscurrents Thank rigid, related different

Benjamin Gliklich

Yes, absolutely.

circuit It's flex us. good a a got high-value good in for We've market. market market market. that a the So is share market

our Some technologies that in of market. valued very direct are metallization

us, at in growth good HDI, don't And good from which of QX portion the at into been so high substrates, we categories HDI Americas With quarters, the and the all also to year. there's rigid regard XXXX, With we've past in within over with those nice years. rigid, to of quarter, and And set IC boards. than the over to the multilayer, end so the the whole my fingers. rigid high-value for the but the and wide tips single-layer, reason that's very are regard board in believe substrates, a I We performance Asia. both board, IC that of markets several the seen rigid have a a in there little softer of being participate that circuit data have first market, some balance of we'll a strength see past recovery see couple

Christopher Kapsch

the for Thanks Helpful. color.

Operator

We our from with will Steve take America. Bank question Byrne next of

Rock Hoffman

end cyclical first question the into, you are for your Hi, sell Byrne. this rates of of the the markets this estimate is varies Hoffman I you is spirit by each operating Steve end that assume region? key My in assessing current markets, would what Rock are how within

Benjamin Gliklich

at there high the on that of is customer of customers in customer and they -- seen The Industrial are our at year in Is semiconductor and by they I industrial two bag very new different that construction rates. sequential a and investment it's many, the a sites, operating In levels. In better a levels, general level operating high is auto assembly electronics over the utilization business seeing market, say this constrained a in are auto in basis. the obviously, this you're globally verticals, a region-by-region mixed are operating level. part market, of adding year are quarter-over-quarter-over-quarter growth lines we've our years. fabs, customers of at added. would at at six We've for and our circuitry the terms business, The many supply this our point, seeing got very where at more you're our for chains right. market, point. very huge low being In has utilization business, capacity, dynamics been

levels CPG capacity back are given our relatively low online. customers operating customers offshore and package to evolution are design Graphics at bring Our starting

plants overall, significant based of factors in I'm much to So believe a there's detail you that to because strength, it's more And will macro of there's many investments strength in a bag through in and lot with our on new mixed businesses. of go reason offline. but happy persist this

Rock Hoffman

by share? built your comparable customers? what terms in kind legacy of it could question, volume my leading share you. years growth market you the your in how coming next meaningful your contracts thank have provide this won much capacity guys additions to with to Great, any associated of new means And And being and

Benjamin Gliklich

strength commercial we've conversion, wins did we've we Yes, had pipeline a excellence Investor going and the absolutely. new from built Yes, so and and the the we that you we that if in showed Day are on the February, to slide at strength. look back

first ever to And and any new so actually wins that. XXXX we wins than in the than date, customer more in more had had year new quarter prior we to in

So wins, And the win to executing more got is bigger, that lot we've optimism the driven win a very size we've the more of deployed we are we're business. this of grow. isn't well so is business. strategy transient, winning average to commercially bigger Each this by

Rock Hoffman

Great, thank you.

Operator

Tanwanteng take our from Securities. Jon We'll next CJS question with

Your line is open.

Peter Lukas

It's Hi, good Jon. for Lukas morning. Pete

lot. guys You a covered

Just one for question me.

you landscape, shrink buy a you If see do little now? acquisitions expand on likely shares valuations a are could capital allocation or your M&A as more right priorities and the as better

Benjamin Gliklich

use the I'll large, bought So quarter we now. We have We've the Martin, right it imminent maybe capital know, buy And will back look we retain best a of was start want made that like great the with Nothing anything? to and But in to opportunistic in don't stock if very and a turn highly continuing been at strategic capital. flexibility. regard We've that at to value, moment, the bunch been small you market of Martin. does, acquisition add allocation. as been I shares stock. weak. to first

Sir Martin Ellis Franklin

completely at to take continue the a moment, that. while I keeping on leverage our ratio valuation with No, of which we'll dislocation There's advantage agree conservative.

Peter Lukas

it Great, for that’s me. Thanks.

Operator

Castillo Morgan next question from with Stanley. take Angel our We'll

open. is line Your

Angel Castillo

taking the for question congrats on and strong quarter. thanks Hi, my

sub the maybe you about Just that's I you color noted not the of directly a us price bit some volume little by segments give you was think growth as could think passed organic on versus, through. hoping more the

just kind that So of disaggregate us if that's would how sense a and you that give trending, be been could helpful? for

Benjamin Gliklich

business story Yes, it's there volume-driven absolutely. in growth is saw impact. each. pass organic the metal we because assembly is and Obviously, you a have different sub mostly slightly The through six segments, the in

Industrial Circuitry and look The that of rule of good price thumb for think volume, the business businesses bit you the a is the that in about given Industrial half is the that of at driven is auto If year-over-year. half and little in business, mostly I half a about maybe it's say to more volume. maybe it's and than price weakness volume volume Circuitry half Semiconductor and price

Angel Castillo

it's of wanted And that Industrial. terms to then it. about Got ask well I actually in -- as

you more the you other of noted seeing, of color some more autos bit that maybe or industrial or these strength maybe So give and we acquisitions. it's of that a you're bit synergies quantify us some little half and a Could whether macro infrastructure forward? second that and gives that less little look at you of a what embeds to as that, construction worse comfort we industrial at be as going in second you be that potentially half and what as comfort getting strong look could continues maybe and the gives markets, kind the

Benjamin Gliklich

Yes.

assumption So forecasts. in comps second ambitious easier as industrial it assumption get our into easier prepared far than for is half. relative and remarks, auto The the back to we the the as get in research you half particularly heard ambitious gave was that guidance. we wasn't when in less auto our initial business the And then, even

really show know, only out, if other pockets The will perspective. those and market operating as doesn't comment make I'd the business our housing up, see on to IS there's time, seeing line so top healthy say, C&I period extended be would and pretty we're a deliver I this is, cost and And not And a that of of portion from been for able demand of weakness we has we'll you an deliver. lot our the implied and cost in heroics, a the IS of is variable numbers space. to business good fall

that, to year. range that's how for thinking and confidence about gives our so the of that's we're increase us what And the end the low

Angel Castillo

that or is to on how the much maybe clarify guess, synergies that I acquisition, maybe just and better? the we're one the And seeing and pickup of

Benjamin Gliklich

about of and now. talked million we're the that right we than $XX-or-so trending in better synergies year, Yes,

Angel Castillo

thank you. helpful, Very

Operator

with We next Mizuho. question will Kieran take our De Brun from

open. is line Your

Kieran De Brun

guess raw guess versus I Good surcharges in offset of pronounced you've guess of going logistics in into were initiatives what expectations how been just parse what quarter, just the your the more where you've pricing about now headwinds, out terms in second etcetera, much kind can you morning. has fourth and quarter talked of I and of taking the that. some terms I is you And to impact? that the changed, that stand

you do how the see you. of kind trending So progressing that year? and Thank margins throughout

Benjamin Gliklich

Yes. question. Thanks for the

million, sequentially, that million up passed material were surge we're say palladium, logistics is are we would So smaller palladium, for than a between nickel not much I have spend We and or $X but like and pretty headwind Those $X-or-so $XXX prices, are tin things climbing prices $XXX through negligible prices they're up year-over-year. against. up significantly. tin, maybe nickel million year. million we which that last

but supply the margin see But through more comment the will we'll plans to given been. drive to profit where we the the we've pass made, optically don't I inflation efficiency are, through. drive to higher. the margins pace it's take to continue an chain that we was retaining margin to So very can which -- and overnight, some of metal and been focused percentage, you're we're getting they we're where Those time happen back the prices price things through going protecting take we on dollars experiencing. nature And with is but margin lower that of dollars have -- have

Kieran De Brun

specifically outperforming underlying and just quick then of period of it end but of seems a Great. time. business has the business, been mix mean for side, Industrial Industrials markets on of the in that and of the so a is growth follow-up the Specialty terms the maybe doing kind And that really I

the you about kind how of underlying incremental recovers, think end that it do market above delta trending? As

Benjamin Gliklich

it's and and execution, has of commercial been have it's to good commercial really driving been Industrial integrated because brought strategic doing businesses been our its well Yes, very well, under very, execution. relative good question. The The especially together a markets, doing Solutions we and end been vertical it's business have doing well success.

auto operating of see margin the As higher we well as business because a really and balance recovers, the we market line, business. nice see should recovery leverage Auto that the than the top on is should on good the

get should leverage and profit by We've And much two. better in recover. our outperform markets by more we point do done the should so when end outperforming or the INS we than markets commit to space, auto even that a that

Kieran De Brun

Thank you.

Operator

our CL take from Silver will with next King. question We David

open. Your line is

David Silver

as X. was Yeah, line, or comments on semiconductor particular, mentioned advanced in the telecom product packaging I was could wondering of the ground yourselves. about in win under very to your And the if well in talk competitive mean, proposition as that customer hi, presented to hoping qualifies maybe you led think, win good to for for up, Solutions as just advanced infrastructure. that XG other follow XG, I product or Slide the I competitors morning. value line packaging, a kind I on words, And that target you strategic me high the segment Element

win if could that particular would So or duration the value a it refers then Thank characterize comment or in maybe two and proposition on you of your just helpful? terms you. that to, size be

Benjamin Gliklich

is things, these manufacturing, next equivalent attributes. over and fabs goes process this years. if to We've in in into and Once for done Thanks we developing not were go bear opportunity Yes. very business of one, to exciting won the at technically really new To business been your won capable, very compete. least product where rare of we've semiconductor can a semiconductor we leading our dollars capabilities. had is around the we away. R&D win a and From an environmentally good with manufacturing, brought And This semiconductor or good better question. millions because edge. new we was high-quality piece enough investing leading-edge we had that big a revenue the the of tens going And start, lot technically it's at record this large many of customer. several was of the technology, for perspective, friendly the work a is

So it's a very, very compelling opportunity.

David Silver

Okay.

So millions year. tens per of

Okay. Thanks very much.

Benjamin Gliklich

Ramping over years. several

David Silver

Got it, Target tens got of it. millions. of

issues, if and similar you. if there? -- to portion Thank could Okay. the balance supply just the would you for I be comment was of speak in it's steam other business adapt the of or doing right ahead making operated, words, what has full other different couple assumptions let's you're or operating the mostly to your the having say, business months conditions past whether of you could or on state other that over year, in chain China wondering here what lockdowns so just or how now, to also of the

Benjamin Gliklich

Sure.

manufacture and our And on about for So for for very, And XX under and the our a customers. This locally lockdown, in very that -- who at grateful very customers. we customers, so the circumstances support got are are living that the people workforce area site a for the unbelievably is local that. but ground company that delivering our to China -- right site is we're is now committed we in difficult. to Shanghai have and we've

Shanghai And to right in and deliver despite now sales able so lockdowns. those we are recognize

balance by that the lockdowns our year, Our market for very significantly or lockdown down in that, we've associated hopeful significantly, with there in the driven We're the bit just of extend is is a there's that risk having the and people more months outlook experiencing. a not from who proliferate time. that clearly plan. the the been the Three business this If of plan. a lockdowns difficult Chinese that's the of bit is for not results, are not but for

David Silver

a Okay, thank or a At Ben, couple about you. in points talked strategy. you've just I surcharge sneak kind in comments, one new more. your of program of If could

surcharge gone customers actions there just increases, So noticing more another margins? implementing would -- indications relationship and just under are you customers while wondering pushback how you how the or all And wave any at you might your are deferring characterize just to reacting customers, of I'm price you've more your customers enhanced broader about how reaction, continued the category be as series how wave the sophisticated by of key a programs? these cost manage are or of also, customer followed your kind Thanks. of more, general, in still from price maybe initial how

Benjamin Gliklich

are in much, done took applicable much volatility. that. the price it's into palladium and calculating higher. that we've for the up, And window we take business to had is these surcharge when mechanisms obvious can nickel and the price are What improve said in that our commodity. that change that price prices the customers where them commodity account we we're past price of and always And clearly, We've very goes understanding this our Sure. metals

a maybe isn't dollars consideration price month and prior historically, to average environment. month average was profit price. it very prior take recapture price into So commodity dynamic effective Obviously, to

thoughtful shortened that unique that price we've are cases, inflation of customers This handle around understanding in some so. very go a circumstances terms are the will that. or I price price the providing of set continue geographies such There window So many how of recapturing as to and an to And do we're example. we sales than of about world. others. in being is better think that increases our We're about value reflective is our that value we customers,

David Silver

much. you Thank great. That’s very

Operator

will question Crespi, Monness, from we next Co. And Hardt take Shaw with & Chris our

Your line is open.

Christopher Shaw

are on Hey, up good morning doing? everyone. following you Maybe the last How question.

deflated clearly, and metals increases much have With the the surcharges and pass-throughs come big can probably be product kept other that if back. time, those things had have increases deflate very is go these be other a you where that? do off last Any ever, for those of back through price it that know which the of just inputs to different. input of -- those bucket or point specific assume obviously sounds but I are that put But how inflation. there if a material a see there's or we slightly and to down, also able know surcharges maintained you might over customer get sense still to your But potentially probably to that are you sense have pass-throughs, know like is of I pricing lot certain raw price that

Benjamin Gliklich

period time. where of a inflation seen level this in operating shorter we're So unique you've paradigm of in the

near it's been term, and again, in to it. new lot past, the and retain if pricing able input pricing will hold that taken how our we've on been surcharges those down. so price or go how price. and now Historically, ability surcharges commodities are But that heard, away we've a you go hold able we moderate to In see a the the paradigm. evolves due -- to will As when medium have determine We'll prices operating to metal inflation, of to non-formula.

Christopher Shaw

Got it, alright. had, thank It all is I you.

Operator

the at Gliklich line time. We closing this no any remarks. or program further turn the over have back will additional for to questions Ben on I

Benjamin Gliklich

many come. to to Britney We of you, in Thank thanks seeing very much. again weeks look everybody the you Thanks forward to and joining. for and days

Operator

for today's This program. your does conclude Thank you participation.

Have a day. time. You may wonderful disconnect any at

Element Solutions (ESI) 28 Apr 222022 Q1 Earnings call transcript