Element Solutions (ESI) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 2026 results with net sales of $840 million, up 41% year-over-year and 10% organically, driven by double-digit organic sales growth and strong margin expansion in electronics, supported by the acquisitions of EFC and Micromax.

• Adjusted EBITDA rose 26% to $162 million, with margin expanding to 27.8% from 26.1% year-over-year.

• Adjusted EPS increased 21% to $0.41, reflecting strong electronics demand but offset by higher interest costs from acquisitions.

• Net income declined 43% to $56 million, impacted by higher interest expense, increased operating costs, and the absence of prior-year divestiture gains.

• Integration of EFC and Micromax is progressing well, both contributing positively to results.

Financial highlights

• Q1 2026 net sales were $840 million, up 41% year-over-year; Electronics segment contributed $634 million, up 61%.

• Organic net sales grew 10% year-over-year; electronics segment organic net sales up 15%, specialties up 1%.

• Adjusted EBITDA margin improved to 27.8%, up 170 bps year-over-year.

• Free cash flow was negative $74 million due to working capital investments and higher metals prices; CapEx was $25 million in Q1, trending above prior guidance.

• Net income margin declined to 6.7% from 16.5% year-over-year.

Outlook and guidance

• Raised full-year 2026 adjusted EBITDA guidance to $665–$685 million, reflecting Q1 strength and continued electronics momentum.

• Q2 2026 adjusted EBITDA expected in the range of $155–$170 million; full-year adjusted EPS growth projected in the high teens.

• CapEx guidance increased to $75–$100 million for 2026, supporting growth and efficiency projects.

• Expect to reduce net leverage ratio by half a turn by year-end, assuming no further capital deployment.

• FY 2026 adjusted EPS guidance assumes no incremental capital allocation; FX tailwind for FY 2026 remains positive but $5 million lower than previous guidance.