MIAMI – Element Solutions reported second quarter net sales for the Electronics segment increased 51% to $382 million. Organic net sales increased 25%.

Adjusted EBITDA for Electronics was $91 million, an increase of 56%. On a constant currency basis, adjusted EBITDA increased 46%.

Total net sales were $587 million in the second quarter, up 52% year-over-year, an increase of 30% on an organic basis. The company posted net income of $79 million, compared to $2 million in the same period last year. Adjusted EBITDA was $133 million, up 47% year-over-year on a constant currency basis.

Second quarter cash from operating activities was $80 million, and free cash flow was $72 million.

Element Solutions expects 2021 adjusted EBITDA between $505 million and $520 million.

“Element Solutions had a terrific second quarter,” said president and CEO Benjamin Gliklich. “We continued to execute against our growth strategy, driving strong organic performance and deploying capital prudently to compound earnings per share. This quarter was a record on the top-line — and included our first month with net sales in excess of $200 million — since we founded Element Solutions. Our teams have been navigating supply chain constraints and raw material shortages attentively to meet the robust demand in our end-markets. While Covid continues to impact our business, as well as those of our customers and suppliers, it has not stopped us from executing our strategy effectively. We announced two highly strategic acquisitions in the second quarter of 2021 that we believe will allow us to provide a wider array of world-class solutions to our customers, growth opportunities for our people, and accelerated earnings growth for our shareholders. We are incredibly grateful to our people who have enabled this execution in a challenging environment.

“We expect demand to remain strong through the third quarter in our key end markets and a return to a more typical second half seasonal pattern with a stronger third quarter and deceleration in the fourth quarter. While the impact of increasing logistics costs will continue into the third quarter, year-to-date pricing actions associated with raw material inflation should help support margins. In that context, we expect adjusted EBITDA in the third quarter of 2021 to be between $125 million and $130 million. We are increasing our full-year 2021 adjusted EBITDA guidance range to $505 million to $520 million reflecting our recent outperformance and continued strength in our markets.”

On May 5, the company completed the HKW acquisition for $50.9 million, net of cash, subject to post-closing adjustments. On June 11, the company announced its planned acquisition of Coventya Holdings for a purchase price expected to be approximately €420 million, subject to adjustments. This acquisition is expected to close in September, subject to customary closing conditions.

Element Solutions expects to fund this acquisition with $400 million of add-on debt to its existing term loans and cash on hand. The add-on transaction, which was priced and allocated on June 23, is expected to close concurrently with the Coventya acquisition, subject to the finalization and execution of its definitive documentation.

On June 29, the company also entered into forward starting swaps to effectively convert the $400 million of anticipated add-on debt into fixed-rate euro-denominated debt through their maturity in January 2025. The forward starting swaps are expected to become effective when the add-on transaction closes.

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