ESI - Earnings call transcript Q4 2024

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Operator

Good morning, ladies and gentlemen, and welcome to the Element Solutions Fourth Quarter and Full Year 2024 Financial Results Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Varun Gokarn, Vice President, Strategy and Integration. Please go ahead.

Varun Gokarn

Good morning, and thank you for participating in our fourth quarter and full year 2024 earnings conference call. FD, webcasting Regulation conference with accordance we this are call. In in will section be replay the made A website. available Investors company's of the

today's future the make our During are and based financial will uncertainties. statements and statements are we reflect expectations subject assumptions that risks of results. certain These current which future company's forward-looking about on performance events, and views call, to

not supplemental material to recent risk the financial measures. has predictions. earnings information that Please our a release, release, SEC most slides filings GAAP. to and for pleasure for U.S. It from is on refer definitions comparable GAAP now that actual of Please accordance introduce Gliklich. prepared discussion measures Today's cause slides Ben of factors been my could our and CEO, differ financial results website our supplemental with materials to include non-GAAP earnings refer to to and the reconciliations in these expectations

Benjamin Gliklich

good original you portfolio and built Thank in longer-term record a over end EBITDA our improved Varun, above an year for results, have full incremental XXXX. the that despite our We the everybody. company year headwind delivered had Solutions and of outperformance. positioned for outstanding you, guidance adjusted Element range produced joining. morning, We material high Thank FX year. the

electronics niches capabilities. in the record of We new million. outperformed businesses. grew in XX% our driving our investing meaningfully each the to improved constant in company penetrating fastest-growing vectors a EBITDA The emerging multiple across margins $XXX Adjusted markets, currency in industry, and

invest the more while to were a of of spending backdrop. electronics that XX% automotive cash our therefore, generally and industry It record select a which CapEx results of adjusted consumer to across having generally we niches Only on was and in fifth converted million large These the well. product portion than suberant a a $XXX of in flow and year flow, despite goods opportunities of out were years. strong, X cash in more was was more past is free than prior not market EBITDA soft. Free as growth

growth market's in western business heavy expectation importantly, meaningful and low the backdrop, headwinds industrial levels year, XXXX, construction, Notwithstanding our bought in to our well position for activity financial that more automotive our from made machinery but came MSI entering longer-term of we manufacturing. in below outperformance. the progress continuing we commitments business and met

of critical electronics solutions We're leading-edge a hardware. for supplier

are needs and margins road our product the to critical our markets Our maps hard worked in key their prior and close specifiers back emerging increasingly strengthening. relationships by informed with markets bring high-performance computing the to in to and It are high. technologists

those assembly, points shown and mix basis set at about in positive industrial utilization progress we're EBITDA through a weak record discipline see period new of levels improvement margins greater in and back to path so of facility our from further high-value in we've XXX here. we mix from a over that. price margin in volume and With XXXX, just We've and accomplished expansion niches driven And electronics.

In of we that to rest take structure advantage our the million. tax with $XXX enhance contributed such assets, proceeds. Solutions the Graphic business growth should of of but transaction margins This McDermott is to September, good the to XXXX, businesses. an also it our to sell announced steps and and were and In cash took almost we for all focus we a agreement net We conversion than portfolio. lower flow weaker able

It's adjustments. closing expected the close and to customary first quarter, conditions in subject to

while founded it ESI. we key a believe growth metrics better balance that as as a that last is portfolio with all through Cary? excited more take to the to been relevant financials better in And to is and about we're more This we what sheet and since positioned quarter business we're position all good record so detail. were the do the fourth we year are say able now even also Carey XXXX, that left we is year you will full pleased in here for with year across longer-term for has success.

Carey Dorman

industrial Thanks, by Ben. digits led organically by high-end Net in you On Slide semiconductor of Asia. the demand mid-double verticals in grew and Growth can at increased Solutions see quarter and our at summary XX%. sequential a fourth improvement sales Circuitry electronics X% we in X, results. portfolio, the driven our solutions XX% was saw as

electronics which has assembly material board same the throughout complex are consumer more electronics solutions. requiring in more Our modestly. more and technologies grew XXXX. industrial business, exposure, circuit divergence We saw Emerging

thermal are in a advanced consumer packaging solutions, the We complex overall. market driving solutions, electric the AI period materials market, those they data Chinese the process board high of These business orbit whether and serve the or are earth key a demand center provider printed of satellite reliability electronics low vehicle market. sluggish chemistries circuit multilayer

continue, We as overall a to of market. expect that the percentage gaining emerging applications are though electronics these

outperformance intimacy come. of our the the to and years that benefit seat them customer-led capabilities these in iterative innovation The serve our table give valuable us at with is that to our should drive a markets further

our prior margins adjusted quarter. was constant million $X quarter the grew flat period. On in EBITDA despite range the currency line, fourth X% roughly the EBITDA an with in guidance FX Adjusted year-on-year incremental headwind to bottom

generated eased, of to business margins points. headwind metals higher basis pass-through most assembly costs our input our of roughly XX While in company a year-on-year have

have been XX EBITDA Excluding representing margin net sales from margin metals, expansion. adjusted these bps of XX%, passive would our

X%, discuss by remain we demand markets industrial sales electronics, driven results. sources Overall of on land grew financial as even organic European year full emerging soft. X, Slide On

the segment currency basis, electronics Our XX% X% Industrial adjusted X%. year-on-year. business organically while a grew On constant EBITDA declined speciality improved and

costs. currency electronics input reflecting easing product favorable growth XXX points as from discipline margins EBITDA improved price as adjusted Constant and mix well basis high-end

$XXX XX% for is of up went This EBITDA pass-through year. but we very our our result, for further strong roughly improvement. the impact room the in adjusted million Solutions a sales margin metal see business, of Excluding Assembly

roughly million EPS. Currencies $XX XXXX, adjusted shortly. to $X.XX be headwind EBITDA, Concurrent will adjusted a Foreign was volatile. rates as year-on-year in headwinds to exchange Ben a FX continue to cover headwind additional present translation

detail broader year improvements share Slide Next, Semiconductor of utilization, organic we on advanced new steady in on Solutions fab results. additional reflected and in full X, applications. organic packaging fab growth ramps XX% growth

into robust, are advanced was Demand for stacking, and supporting critical this to applications. XXXX, particularly nodes our demand and logic carry DRAM Vifor which memory expect AI we for products

customers to see electronics to power technology growth We the market win light off. throughout paying in new also for vehicle continue as strong efforts

continue into semiconductor the exceeding business a first trajectory made hyperscalers million a a has revenue with large In XX% marked Circuitry for solutions milestone of at growth. here. XXXX, from the center Solutions growth benefiting and by XX% investments data should grown $XXX CAGR double-digit from organically AI grew XXXX, time. with X-year and in This

Additionally, products. of growth the certain driven electric for our vehicles final a China, finished demand of market-leading in

estimated X%. as circuitry which meaningfully XXXX, Western outpaced global of estimated OEMs as in meter of smartphone X% growth well square growth Overall, is PCB among lower

and remain continue below We business smartphones strong own peak as even performance levels. prior its expect can growth this

industrial other verticals electronics. significant more our reliability attachment exposure and Our business and supply high than we Solutions automotive customers as end has to broader technologies alloys and electronic consumer Assembly markets, markets automotive industrial for

flat Europe. declines essentially XXXX automotive volume meaningful in was and in Global saw

in benefited sales improvement and half. business business the second consumer, markets, grew year, mobile single-digit the However, the and segment demand X% in our X% in particularly for from net Organic with Asia. Specialty end low fell improvement in computing year-over-year. organically This full year-on-year Industrial

of the margin had X/X date pricing mix, expansion markets. strong, year by the Drilling however, declined which business on well. lower Industrial soft this segment organically the production earnings Energy rationalization. did, growth deliver back driven industrial facility X% end almost from cost of Solutions, of surcharges top we grew line commodity and and is opportunity to drive price as Solutions this remained X% European and in and activity inflation organically. It have

continue expected are XXXX. trends These into to

of Solutions the cash record flow sheet Slide free year, in Moving on Element the in was flow of $XXX to balance cash quarter. X. a $XXX the million generated million fourth on which

was management. to fairly thanks working modest to relative primarily adjusted inventory growth, investment EBITDA Our improved capital our

well We've growth spent manufacturing highlighted management we significant spent in over capital on several progress executed improve key million We high-value electronics opportunity is in footprint. due that and and XXXX the $XX money and against We of investments it. our strategic working course behind to broad power a very CapEx and to opportunities. believe desire this in 'XX manufacturing research

the now more We spend roughly sheet leverage capital expect structure the Net ended in rate year basis, maturities than X.Xx below slot a with and position. On cost transaction X%. XXXX. have leverage fixed net or We January been of strong was as our is XXXX. would million debt We balance $XX pro a no our have XXXX, XXXX. XX% closed through year-end. X.Xx, borrowing had and in graphics effective forma CapEx our to If X, is until of at

in result, turn call beyond. And capacity capital to Ben? As I substantial XXXX our to the deploy Ben that, and a to will have with we back discuss outlook.

Benjamin Gliklich

to and drive anticipate and storage packaging-related In execute high-performance wafer set. and well our Carey. data you into the last saw continues to against of We the you, XXXX, should should executed Demand opportunity our advanced as or a Thank year we This level expect well relevant trends in computing and us lines. product backdrop we XXXX, applications. continuation better. grow

high-value electronic of and gains We our in market with the power market semiconductor our we solutions to continue differentiated extend to markets continue. our EV growth share expect penetration and

volume organic on overall. longer-term the There a upside would at expect the segment growth cycle is other smartphones and both be our in which also stronger our manufacturing devices, for Electronics single-digit potential industry be could our computing we XXXX to Altogether, That electronics for high target. plan. growth refresh

side, production for more the On is uncertain. global industrial IMS outlook the

expect to risk of potential We tariffs from there's a impact environment demand. on some the XXXX, though similar

and to to continue XXXX. this We another industrial market relative business year of activity in win expect in outperformance

balanced again [indiscernible] once growth should volume from business offshore Our both and in benefit

to EBITDA major anticipate impacts X We nonoperational adjusted year-over-year.

a contribution million impact modest the from includes business graphics which First, a will account and adjusted the sale EBITDA February. in for of $XX January roughly

U.S. ending translational stronger based drive headwinds on rates. will $XX be dollar million the January would Second, which year-over-year roughly

range. for midpoint for dynamics we when our year adjusted at full single-digit growth EBITDA high the of guiding these XXXX, to Overall, accounting are

includes expect $XXX which EBITDA QX million, million adjusted headwind. of FX roughly $X We a approximately

any adjusted allocation. guidance $X.XX does capital Our full year from approximately not of EPS include benefit

delivering in measure To but positioning and outsized also only outperform and goals, growth by improve to the that XXXX, value definition creation. deepest this penetrate our us financial year to markets. Slide end, available continuing long-term X, continue of will reflected success therefore, our level, on for as high Just not gain a we on share aim year. our of to the at success for pools execute our We we've fastest-growing, to profit and by

continue In the we order wafer copper customers active long to semiconductor to supply for level such advanced technologies for must make products. emerging the chains and do as term, and assembly and cuprion, our other and packaging or with that progress

we to capacity earnings complementary opportunities deploy accelerate tuck-in and sheet growth expect also share as repurchase. balance through through our adjusted acquisitions Finally, share to per appropriate

team, our to our world to We the who of have the please and With chain important long-term our people of immensely technology the XXXX in of success customer our The intimacy. XXXX deep playbook on I'm are our for team. and open excellent grateful the capable to questions. will our and supply continues those be and our drivers the technology is in beyond. line conviction trajectory our operator, on deliver That are that, most which business people, around our for business, the pillars responsible our dedicated conviction for relies grow. and this, pillars and

Operator

question [Operator with line of comes Instructions] Your first from Spector Josh the UBS.

Joshua Spector

markets I segment. So 'XX. comp electronics your to relative mean had a you of I your electronics compared in to strong XXXX, clearly, obviously view on first, ask wanted of weaker performance a your just

outperformance? a about be to while. when X-year been look basis, should advanced Obviously, able So performed accelerate new about you do it we've see you're you forward, similar a And markets? view it? of Does to that we talking kind that packaging on do you meaningfully outperformance of how talking wins. relative level a Or for think you

Benjamin Gliklich

Yes. Thanks for question, the Josh.

were relevant single square remarks. X%. few right, an low points, And we and prepared X%, our meters single went from in up high X%, digits, a was electronics just up maybe the now business our that So data PCB smartphones in up through perspective. digits

year outperformed we market. this in, within modest the it, call So recovery electronics

we year, as outperformed Last the way units on down well.

product and XXXX the better market. and you've back, really electronics at from dislocated and a for we Element think in us Solutions of subsegments record And I better had of peak. where its a So that's do our way EBITDA MSI penetrating period seen in that's stronger weaker step fastest-growing Taking hardware do a is periods. periods the prior

are prior meters square below Smartphones their of peak. way PCB are peak, their off prior

a And the subsegments of complex of has are secular so and over clearly developed Rolling in that the outpace to we've incumbency of multiyear the continue grown the market, the markets value market. highest level period. should subsegments element those the that underlying forward, growing in electronics and consumables outperformed overall the

we have I continue. level conviction so have we a know And a high of think should that -- level that this of high I outperformance

Operator

of comes the Markets. the from question Lodaya next line Your Capital Bhavesh BMO with

Bhavesh Lodaya

in pretty short cycle is nature. Your business

your is trending. are maybe you customer or guess in some would early I the some you product where it's around development see for cycles. of communication year So you maybe the color Could add to how still

you're the As the scenarios think and the about of higher end we building to as EBITDA end in lower what range?

Benjamin Gliklich

-- right out, many business, you're a the of sell the going of short to XXXX. going Well, to to cycle the they're course units how over right? course point it's they're customers' over sell many don't how Yes. know products customers Our

regard. so has the supply that limited And chain in visibility

is each indicators. we units expect for and guidance, when key the The I units, what at and PCB we clear in capacity. So those What's beginning year really expectations enough it's sit so of MSI, square there's of the -- not leading on that edge, that's smartphone here meter, whether think articulated basis the the forth. from we of give

coming replacement of uncertainty the huge demand we more used the is to smartphones, and should investment like market. in -- get those the some and and And things advanced for the cycle to that obviously, there in forth, to the market legacy high capacity industrial be there's so online, devices, industrial where huge and better end, you edge, accelerated leading in be chips what expect there's some of continue, so an health

should demand us. can a there is be impact help FX the Obviously, And markets. in industrial end weakening or low the from tariffs a

is robust we the areas I year. our highest good feel edge value spend going pretty in be leading continue the think that at for to all to

Bhavesh Lodaya

And follow-up, that but your so Are as a talks impact just also within clearly about North amount America. in Asia been seeing a of of you there's in significant business? so any from tariffs not far

Benjamin Gliklich

No. Not yet.

a We a where in automotive Asia supply capacity seeing lot the investment of chain out manufacturing into We're Japan. real There's suppliers haven't We're America seen on in Mexico. discussion. realignment PCB been moving in there's Obviously, fab an impact. over going years seeing Southeast China. past capacity North to moving and several of is

call is that months, and dramatic But of new, it, haven't seen X we the we're from past, benefiting any changes. None that. over

Operator

line Your next question Research. the from Parkinson comes Wolf of with Chris

Christopher Parkinson

Great.

upside from what that where would be we appreciate But surprise could the for guidance. X recovery monitoring macro points now of you're factors soon 'XX right or can in of at any sit investors think you're look you you data expect see would potentially enough? effort Ben, the terms I seeing So of And to throughout all risks potentially meaningful not year? in embedding the in progressing today, the how what be X you're that what terms what

Benjamin Gliklich

biggest I has past single that's the FX. it variable Chris. most call volatile been the over the Yes. for the months question, Thanks Well, been -- several

January. has in So rates. we've bit high since today the using a X $XX the of bit It's months. the end weakened a as $XX past a as million was million as year-over-year got about end of It little headwind lower dollar January

end tailwind. $XX back of the million to go a And was it September, if you

seen So currency past a swing several the million from just we've months. over $XX

the that to. a so And us. you single When market point for is look the biggest units, at I'd variable or critical is organic market automotive

are from So are not units as high-value from beneficial in unit West. China made while that unhealthy electric of the a perspective, necessarily mix in right? it's being low-value And overall se, made types vehicles standpoint, per opposed to the an vehicles not

would a in units. Western in So some be tailwind recovery smartphone health automotive

be While we core into emergence relevant and that have would would how contemplated not given growth they and thing they're to years computing be cycle if tailwind. less guide. as expected going growth and a point today, mentioning market I industrial The replacement were gets several to our of what's a our as in volume would above in again, Bhavesh risk, that still was is just high-performance they're weaker, And that the to risk than ago I much units production.

Christopher Shaw

your When that comment very bit portfolio. China 'XX exposure little I just . as for in on perhaps trends follow-up. across I markets OEs, non-China look smartphone thinking about of EV longer-term a between And your the That's your quick about basically we think And even helpful. be how as well for at and those -- should a and mix and a

Benjamin Gliklich

Yes, sure.

we Western we smartphones smartphones. more from in saw in from in benefit ex those skews But we some OEMs. still in domestic but ex-Chinese and than smartphones a Chinese the -- towards in is more have mix -- growth OEMs, value units So have in value bit Chinese a XXXX, Chinese

good really earnings electric in to of electric adopted XXXX automotive Chinese ex and progress OEM are EVs them, high-end power seeing using rolling units electronics our is in vehicles from which been out as growth our has nice Chinese and a driver high-end in Chinese we've we're China. EVs, a the but where real technology also technology. vehicles markets, tailwind in both got And in in EV or Chinese ex better we're With regards penetration OEMs, particular, and broader automotive making general, OEM, really

Operator

from of comes Seaport Harrison line Partners. question with Michael next the Your Research

Michael Harrison

better in give curious the more you of advanced expectations that are guys as growing are little color more I'm assembly color trailing you where maybe on a boards year. next growing quickly, a just you're some seeing similar if market. not the could have of And a TCB on whereas us maybe bifurcation that expectations edge where little for business bit hoping kind your side your position things, bit faster, Was a

Benjamin Gliklich

Absolutely.

So question, The meters and them our both order, year. great digits last and square and it's business mid-single speak our I'll It's business, it's great in grew right? a PCB assembly to circuitry observation. a

Our Circuit last X business grew percent XX-ish year.

that and circuit boards that complex more electronics for that lower-tech And into packaging explains consumer compute. in had into IC so higher or high-performance boards divergence units growth far that's boards what than value, server substrates, circuit legacy the advanced go go an less so cars, application

that's XXXX where high-end in end And we industrial the to we continue same market is market a healthy. that position, with circuit have and and that low The along suffering is outperformed XXXX, disproportionate why we right? expect board substantially so So that's production. trend in weak

market expect XXXX so in expect We and to to again. continue, that that once outperform we

The business. bit electronics materials a assembly different business into is that board where broader selling assembly market set our go a than circuit we're the of

assembly business, the by growth the its driven to so exposures. still from grow rate that's we and the our really drive were assembly business same But as pretty didn't profit growth, And profit circuitry business. able significant to

Again, portfolio. dollars think our technology the the we in came in this that metal where And the profit of because assembly that that's would increased assembly segment our once improved percent continue prices and And about applications our business in But profit again to in growth XXXX. higher are again, market. product expect improved to course in year. of metal that because from value the over because higher ex we need of

Michael Harrison

you years? then talk And they work bit shape. potential have good M&A you sheet and to market? the in more in reasonable seeing the pretty are targets more valuations the year being to And you of this some getting little referenced out balance couple capital and about there put a maybe the been right. All Can than past

Benjamin Gliklich

Yes, absolutely.

in So take good the since founded graphic into you the coming from consideration it's as here. pretty proceeds our Element as balance would sheet we been is sale, be soon which when

sheet table. so to deploy foot to on M&A that balance is are compound the for earnings. Tuck-in on the we front And looking opportunities

of types of that just pass the businesses quality in businesses high are like for really aren't we're The out business. There market. looking that sort many that our bar

at to the values the activate I relationships find of course some nurturing to time. be out meet expect we're to all criteria. attractive try reasonable do should our over that the so we that tuck-ins able And And year

capacity a do in paydown can have for debt still of repurchase, of XXXX share it we that bit we with limited sheet towards always what compounding per as But don't eye incremental I an the with is, we're over beyond balance value. think terms

Operator

from of line John comes question the Roberts next with Your Mizuho.

John Ezekiel Roberts

electronics one your to DuPont's you your packaging going Entegris And just just X. segments. X Do One and peers, electronics is stuff like packaging about maybe has the consolidated portfolio segments of place. consolidation wafer pulling spend think segments all its to have together advanced to maybe X level in I think within

Benjamin Gliklich

question, John. interesting I an It's hadn't that. thought about

to have We server bifurcation in what segment our of investor substrate end, we've electronic in done as to that market further it about market what markets. as in what higher-end we more we the even back legacy clarify with and went have verticals. have in some market board have out versus we tried in a and circuitry just front end, have education through Within there's with one the assembly. And electronics circuitry, we we actually IC X break we've business,

any So what less. to see within I around more think I do resegment. anything, we'll providing desire we And be than don't rather clarity if verticals our

John Ezekiel Roberts

run then Okay. have running you long you'll past. relatively with frame a leverage? higher And leverage low in comfortable time mind you've with the in secondly, been lot a Do how

Benjamin Gliklich

have no in always hole We've had opportunistic to that a would our a capital will It -- -- burn pocket. our been be guys regard with capacity we say allocation. I

very rush with will are and to going here, available. it capital and opportunities We regard desire We're deployment to have from capital. thoughtful to on about no be depend to prudent deploy what

there. the we want leverage a ceiling X.Xx that targeted run have we business doesn't while to mean leverage And of

it provides comfortable us. today to very as and flexibility we're the our it with sheet So is balance

Operator

CJS Your line of with John comes from next question Tang the Securities.

Jonathan Tanwanteng

for question one Just me.

of year. Are one experiencing factoring growth EV large customer? larger One expectations? markets do legacy your entering And a sales you you customers basis net EV the on your into weaker in significantly that is considering those that end expect

Benjamin Gliklich

Yes.

Electronics of business I electric very good think a So with new OEMs job market vehicle Western Power you're Chinese to, winning our OEMs. both electric which is continues referring done grow. vehicle business, what John, and emerging electric The has to vehicle

our so are we by units And to grow should see nicely electronics it. lost business potentially absorbed XXXX. be power could The that in as continue customer by any being one others

think it whatever And that so I guidance light specifically you're holds our of in dynamics to. is referring

Operator

next question Steve of Your from comes with Bank Byrd America.

Rock Hoffman Blasko

bit Hoffman products? This about Could Rob you expect pace to Coperion's more more speak and for a commercial Byrne. on copper is Coperion become you when Steve

Benjamin Gliklich

Yes.

in around XXXX have Coperion for we're Chief effort that has success copper, continuing slides to The been through you as criteria XXXX. amongst customer roof. these is Coperion would active our it commercialization of the chain technologies, success how demand commercially and emerging in one a which in for seen improve makes, gain is and them and So traction supply is defining the product our capability exceptional,

And is product performing. on grow to continues the and applications working we're of the projects number

chain. Our for is quarters several next energy next over couple the is supply on past several on the quarters of the and quarters

in indicative using and well. revenue So to quarter. the reasonable production in expect active viability EBITDA the performance active that's is active copper. grows building And unchanged. and know-how time which been have developing pull confidence as our moving product And contribution customers copper. XXXX, copper always high-volume active and and line capacity of manufacturing XXXX I for That's along and the supporting reasonably our for market our copper in that every for their our has a for process applications

Rock Hoffman Blasko

a gained to household shift And as Or follow-up, is parts a products surface other surfaces there share? have types? auto within metallized and

Benjamin Gliklich

a in painted sell business, and great materials finished finish it's and So functional in our towards anti-corrosion protective So right? decorative improve performance that we functional right? question, Yes, right? decorative treatment, surface and automotive, Solutions Industrial

We're that you're so chrome change the grills painted as grills looking black opposed And seeing road. seeing more on though. to actually

our when our business the results you XXXX, are finishes talk quite OEMs was so a coming in saying and look back. softer decorative And customers, did at bit fashion business When trend our anti-corrosion are you for that because our to of changing. that example, chrome well,

And XXXX. lines XXXX after saying in so are booked they're their fully in we've weak a got year several with customers pretty that plating

And for the see so us be in a I'm and that the it trend business. but of reversing will the we the and in not how years, business reversing next material tailwind couple that's that couple growth trend over support will over sure of next years. XXXX, industrial

Operator

Your next with question of Securities. comes from the Trust line Pete Osterland

Peter Osterland

point, So for wanted through input improvements? to expectations cost your ask expecting continue for you costs on this self-help year. any And this to first, potential I Are on just to is drive at else whether growth? expansion mix margin there anything noteworthy seeing you're

Benjamin Gliklich

Yes.

mix continue should that activities. should to raw continue working on productivity, material to some ongoing always been deflation help There's So facility we're help. rationalization and

XXX year. real any that to in that's And business. see margin improvement benefit should I including we wouldn't course expansion materially that's have. the another the another we in continue over lever And not the industrial of ex metal expansion basis so higher but points from on volumes of XXXX, margin facility utilization also driven count by

Robert Koort

than was just the higher you're for it. XXXX. called average Got as same 'XX, And for about be CapEx it in out follow-up, guiding to that a historically you and then

the prioritizing and year on tie the So for just projects they longer-term color you if give how some your for to you're wondering capital could growth. upcoming plans was

Benjamin Gliklich

Yes.

capacity number electronics. that XXXX. centric completion, we were had material So as a Carey is Most building said, our India, did research much bit we which in were center pushed some pleased projects we notably, as doubled There to some We're XXXX. to our IT Argomax, have which big the invest as ability silver projects. that and is in a power in in we higher used nearing large for

substantial niches As that still several these been there biggest us, million tick support to for we're just couple working growth consider we about. But project years longer-term that penetrating. point of here. to rate on that $XX that of out the a them we're sales, Coperion in high-value XXXX, even investment we are X% a higher run other. of talked around if I'd $XX is is we've is to But long-term the project substantial million for look We

Carey Dorman

Pete, to add just that. I would

we're other funding customers that's that thing been ticking and win customers' longer-term in contracts. equipment that for and The to is investing lock-in about up our excited

want to trend is moving see keep So positively, we and that that going.

Benjamin Gliklich

them growth expansion contracts helping of projects That's is are for our products. long-term value in we by another way at support projects can . do. exchange finance high-returning those high-value customers' that we high

Operator

Your next Silver the with question of CL line King. from comes David

David Silver

a had question, R&D spend. I your I about guess,

So could you areas I line I that than, in your you're above top we where somewhat should up charge, R&D know, the XX%. be was line resources then your spends the that's I if year-over-year, wondering to don't of maybe putting there. Coperion growth? growth work to just some more you XX%, And guess, exclude, rate if of highlight penciling kind

Carey Dorman

David. Thanks,

where $X there purchase we Coprion to as million as that's number significant. Obviously, the just one in the initial XXXX spend there about XXXX price, but not made some number. is clarify think point, in So a is XXXX well. It's

that think a when as I make slightly of R&D tick So those adjustments, seeing you are we sales. up percentage

R&D investments most increase seeing more to a been people working and we're mentioned making lab in those facilities mentioned the I leases. India, as integrated and Ben prepared new some We're some on of in labs. added costs remarks, people in our R&D in As on That's being we've cost. those

forward. I up of growth we don't than As as to sort expect go the tick overall more inflation though, trend, sales that

note to it's these technical levels, think think part spend, and R&D development though of important we R&D at when in we we up expense that I our GAAP, reported which broader our -- on at spend. look shows as really S&T our our about even it's service

numbers and look we points And for we R&D, business a the together, put that's sufficient so really have. and when you those think see couple you higher at it's the we of percentage how X spend,

Benjamin Gliklich

Yes.

product R&D. of they application a needs out, doing to rightly Carey are in also where folks and service centers are local development we're As our customization points captured customer local technical part meet our critical and

The with envelope, than our we slightly other sales of R&D have was businesses. higher percent make point R&D the that I'd because a other graphics less general the business the graphics leaving intensive will is business

modest And our intensity adequate change. our to investment But the so R&D growth outsized been for businesses this R&D future. for for has a that's more than support

David Silver

then there for some of And issues. and you think about one when last China. me. have currency in some thinking and one -- think there, amount there's Okay. made don't some I then, your issues. about business AI know, there's tariff comments And But I'm There's I you business the issues scattered the do Great. I

you're for just your thinking speak broadly But could about about speaking, business how China you maybe XXXX.

factor for So other some or economic currency issues there? the and the activity that year into maybe your there planning full

Benjamin Gliklich

Yes, absolutely.

in the So low lot year we Revenue A good up had by market. a XXXX was that in export driven in teens. China. the of was

Chinese the then smartphone Chinese local the by and driven was that market was automotive healthy. market of Some

is China buy Our business. manufacture sell a products, locally. and business We in local

so don't directly. impact And our tariffs P&L

significant high-end trends as customers China, our are there's an in we there tariffs. we a associated and our is vehicle all our penetrating tailwind and market is might in the technology of see inflation because into suffer earnings that customers business with in electric it be nicely. customers' tariffs continuing. XXXX growth. demand We're see Where see as should is look That our XXXX. of EVs seeing for acceleration we The adopting But risk

manufacturing diversifying supply are we're Thailand markets corporations and have and seeing outside activity the capacity and people At time, with Indonesia of companies with Vietnam of already commercial us. both our people a welcome And and lot for multinational Chinese on-the-ground higher-margin same and where presence into building chains customers in are for we technical markets are can an in China, India. those they're those markets

we And we're so of seeing share a a quite bit tailing trend And and opportunity. a there. see as that's view that growth significant that off, don't market we

story for in XXXX. good a was us China so And

We our be the and At to XXXX. a way share expect it time, vector same geopolitics are value longer the term. growth driving over in

Operator

comes Goldman question line of Fisher Sachs. next the Your Duffy from with

Unknown Analyst

million $X And in that smooth? that? does next there hit on Is the a over million is year graphics, that Or well? million XX Just $X as mean it a seasonality then the roughly that's there's month. months, $XX

Benjamin Gliklich

on $X I Yes. The $X and graphics somewhere that quarter the would to count of towards business out across presumably. quarter is first first the between million say year, not flat million guide, contribution next line year. our in will fall

Joshua Spector

Yes.

you Okay. it B? fruition, So the plan something Or our and Is some M&A the to And with should want and in think about do where just then if share to model, more how even come this I the buyback? -- is do of we how buybacks? mean, are you systemic buyback? roughly, guys thinking more doesn't about opportunistic count

Benjamin Gliklich

don't Yes. the never our that up don't We us. buyback what We'll change and the yet. still We've been the have see graphic with approach to expect from imminently. formulaic to I to market proceeds sales serves

us feels interested think address XXXX. to I in early in that. to to So reasonable But expect be repurchase . it's it

Operator

back I Gliklich for will now call Ben over turn to the closing remarks.

Benjamin Gliklich

look many very seeing to All We for Rebecca. the a months day. everybody, in Thanks, right. forward road. good the Thank of you you on much, to and Have come weeks joining.

Operator

Ladies call. and you joining. concludes that today's gentlemen, all Thank for

may now disconnect. You

Element Solutions (ESI) 19 Feb 252024 Q4 Earnings call transcript