Element Solutions Inc Announces 2024 First Quarter Financial Results
-
Net sales of
$575 million , approximately flat on a reported basis or a 1% increase on an organic basis from the first quarter of 2023 -
Reported net income of
$56 million , compared to$43 million in the same period last year -
Adjusted EBITDA of
$127 million , an increase of 13% from the first quarter of last year on a reported basis and 17% on a constant currency basis -
First quarter 2024 cash flows from operating activities of
$58 million and free cash flow of$39 million
Executive Commentary
President and Chief Executive Officer
First Quarter 2024 Highlights (compared with first quarter 2023)
-
Net sales on a reported basis for the first quarter of 2024 were
$575 million , relatively flat over the first quarter of 2023. Organic net sales increased 1%.-
Electronics: Net sales increased 3% to
$349 million . Organic net sales increased 4%. -
Industrial & Specialty: Net sales decreased 4% to
$226 million . Organic net sales decreased 3%.
-
Electronics: Net sales increased 3% to
-
First quarter of 2024 earnings per share (EPS) performance:
-
GAAP diluted EPS was
$0.23 , as compared to$0.18 for the same period last year. -
Adjusted EPS was
$0.34 , as compared to$0.30 for the same period last year.
-
GAAP diluted EPS was
-
Reported net income for the first quarter of 2024 was
$56 million , as compared to$43 million for the first quarter of 2023, an increase of 30%.- Net income margin increased by 220 basis points to 9.7%.
-
Adjusted EBITDA for the first quarter of 2024 was
$127 million , as compared to$112 million for the first quarter of 2023. On a constant currency basis, adjusted EBITDA increased 17%.-
Electronics: Adjusted EBITDA was
$84 million , an increase of 15%. On a constant currency basis, adjusted EBITDA increased 20%. -
Industrial & Specialty: Adjusted EBITDA was
$43 million , an increase of 9%. On a constant currency basis, adjusted EBITDA increased 11%. - Adjusted EBITDA margin increased by 260 basis points to 22.1%. On a constant currency basis, adjusted EBITDA margin increased by 290 basis points.
-
Electronics: Adjusted EBITDA was
Updated 2024 Guidance
The Company now expects full year 2024 adjusted EBITDA to be in the range of
Conference Call
To listen to the call by telephone, please dial 888-510-2346 (domestic) or 646-960-0111 (international) and provide the Conference ID: 3799230. The call will be simultaneously webcast at www.elementsolutionsinc.com. A replay of the call will be available after completion of the live call at www.elementsolutionsinc.com.
About
More information about the Company is available at www.elementsolutionsinc.com.
Forward-Looking Statements
This release is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995 as it contains "forward-looking statements" within the meaning of the federal securities laws. These statements will often contain words such as "expect," "anticipate," "project," "will," "should," "believe," "intend," "plan," "assume," "estimate," "predict," "seek," "continue," "outlook," "may," "might," "aim," "can have," "likely," "potential," "target," "hope," "goal," "priority," "guidance" or "confident" and variations of such words and similar expressions. Examples of forward-looking statements include, but are not limited to, statements, beliefs, projections or expectations regarding ongoing investment in high-value technologies and innovation for electronics applications driving value proposition and profitability; continued recovery in the electronics end markets; demand acceleration in the second half of 2024, including strong demand in electronics and margin progress; non-GAAP effective tax rate; full year 2024 guidance for adjusted EBITDA, constant currency adjusted EBITDA growth and free cash flow; second quarter 2024 guidance for adjusted EBITDA; incremental FX headwind; near term growth outlook; longer-term opportunities; and improving traction with advanced electronics innovators and pipeline of solutions to solve emerging customer pain-points. These projections and statements are based on management's estimates, assumptions or expectations with respect to future events and financial performance, and are believed to be reasonable, though are inherently uncertain and difficult to predict. Such projections and statements are based on the assessment of information available as of the current date, and the Company does not undertake any obligations to provide any further updates. Actual results could differ materially from those expressed or implied in the forward-looking statements if one or more of the underlying estimates, assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the war between
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||
|
Three Months Ended |
||||||
(dollars in millions, except per share amounts) |
2024 |
|
2023 |
||||
Net sales |
$ |
575.0 |
|
|
$ |
574.4 |
|
Cost of sales |
|
330.0 |
|
|
|
346.6 |
|
Gross profit |
|
245.0 |
|
|
|
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 |
|
56.0 |
|
|
|
43.0 |
|
Net income attributable to non-controlling interests |
|
— |
|
|
|
(0.1 |
) |
Net income attributable to common stockholders |
$ |
56.0 |
|
|
$ |
42.9 |
|
|
|
|
|
||||
Earnings per share |
|
|
|
||||
Basic |
$ |
0.23 |
|
|
$ |
0.18 |
|
Diluted |
$ |
0.23 |
|
|
$ |
0.18 |
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
||||
Basic |
|
241.8 |
|
|
|
241.1 |
|
Diluted |
|
242.5 |
|
|
|
241.8 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||
|
|
|
|
||||
(dollars in millions) |
2024 |
|
2023 |
||||
Assets |
|
|
|
||||
Cash & cash equivalents |
$ |
286.3 |
|
|
$ |
289.3 |
|
Accounts receivable, net of allowance for doubtful accounts of |
|
459.0 |
|
|
|
461.8 |
|
Inventories |
|
319.1 |
|
|
|
298.9 |
|
Prepaid expenses |
|
25.1 |
|
|
|
32.5 |
|
Other current assets |
|
146.3 |
|
|
|
115.0 |
|
Total current assets |
|
1,235.8 |
|
|
|
1,197.5 |
|
Property, plant and equipment, net |
|
295.5 |
|
|
|
296.9 |
|
|
|
2,302.3 |
|
|
|
2,336.7 |
|
Intangible assets, net |
|
840.0 |
|
|
|
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 |
|
|
|
1,921.0 |
|
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 |
|
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 |
|
|
|
(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 STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
|
||||||
(dollars in millions) |
2024 |
|
2023 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
56.0 |
|
|
$ |
43.0 |
|
Reconciliation 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 |
|
(19.0 |
) |
|
|
(9.1 |
) |
Proceeds from disposal of property, plant and equipment |
|
— |
|
|
|
0.5 |
|
Acquisitions, net of cash acquired |
|
(3.9 |
) |
|
|
— |
|
Other, net |
|
— |
|
|
|
(3.0 |
) |
Net cash flows used in investing activities |
|
(22.9 |
) |
|
|
(11.6 |
) |
Cash flows from financing activities: |
|
|
|
||||
Repayments of borrowings |
|
(2.9 |
) |
|
|
(2.9 |
) |
Dividends |
|
(20.0 |
) |
|
|
(19.4 |
) |
Payment of financing fees |
|
(2.1 |
) |
|
|
— |
|
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 |
) |
|
|
1.0 |
|
Net (decrease) increase in cash and cash equivalents |
|
(3.0 |
) |
|
|
13.4 |
|
Cash and cash equivalents at beginning of period |
|
289.3 |
|
|
|
265.6 |
|
Cash and cash equivalents at end of period |
$ |
286.3 |
|
|
$ |
279.0 |
|
ADDITIONAL FINANCIAL INFORMATION (Unaudited) |
|||||||||||
I. SEGMENT RESULTS |
|
|
|
|
|
|
|
|
|
||
|
Three Months Ended |
||||||||||
(dollars in millions) |
2024 |
|
2023 |
|
Reported |
|
Constant Currency |
|
Organic |
||
|
|||||||||||
Electronics |
$ |
349.2 |
|
$ |
339.6 |
|
3% |
|
5% |
|
4% |
Industrial & Specialty |
|
225.8 |
|
|
234.8 |
|
(4)% |
|
(3)% |
|
(3)% |
Total |
$ |
575.0 |
|
$ |
574.4 |
|
0% |
|
2% |
|
1% |
|
|
|
|
|
|
|
|
|
|
||
Net Income |
|
|
|
|
|
|
|
|
|
||
Total |
$ |
56.0 |
|
$ |
43.0 |
|
30% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Adjusted EBITDA |
|||||||||||
Electronics |
$ |
83.9 |
|
$ |
72.7 |
|
15% |
|
20% |
|
|
Industrial & Specialty |
|
43.1 |
|
|
39.6 |
|
9% |
|
11% |
|
|
Total |
$ |
127.0 |
|
$ |
112.3 |
|
13% |
|
17% |
|
|
|
Three Months Ended |
|
Constant Currency |
||||||
|
2024 |
|
2023 |
|
Change |
|
2024 |
|
Change |
Net Income Margin |
|
|
|
|
|
|
|
|
|
Total |
9.7% |
|
7.5% |
|
220bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
|
|
|
|
|
|
|
|
Electronics |
24.0% |
|
21.4% |
|
260bps |
|
24.4% |
|
300bps |
Industrial & Specialty |
19.1% |
|
16.9% |
|
220bps |
|
19.3% |
|
240bps |
Total |
22.1% |
|
19.5% |
|
260bps |
|
22.4% |
|
290bps |
II. CAPITAL STRUCTURE |
||||||||
(dollars in millions) |
|
|
Maturity |
|
Interest Rate |
|
|
|
|
|
|
|
|
2024 |
|||
Instrument |
|
|
|
|
|
|
|
|
Term Loans |
(1) |
|
|
|
SOFR plus 2.00% |
|
$ |
1,147.1 |
Total First Lien Debt |
|
|
|
|
|
|
|
1,147.1 |
Senior Notes due 2028 |
|
|
|
|
3.875% |
|
|
800.0 |
Total Debt |
|
|
|
|
|
|
|
1,947.1 |
Cash Balance |
|
|
|
|
|
|
|
286.3 |
Net Debt |
|
|
|
|
|
|
$ |
1,660.8 |
Adjusted Shares Outstanding |
(2) |
|
|
|
|
|
|
244.5 |
Market Capitalization |
(3) |
|
|
|
|
|
$ |
6,107.6 |
Total Capitalization |
|
|
|
|
|
|
$ |
7,768.4 |
(1) |
|
(2) |
See "Adjusted Common Shares Outstanding at |
(3) |
Based on the closing price of the shares of |
III. SELECTED FINANCIAL DATA |
|
|
|
||
|
Three Months Ended |
||||
(dollars in millions) |
2024 |
|
2023 |
||
Interest expense |
$ |
16.4 |
|
$ |
13.3 |
Interest paid |
|
24.2 |
|
|
21.3 |
Income tax expense |
|
13.5 |
|
|
16.9 |
Income taxes paid |
|
14.2 |
|
|
12.7 |
Capital expenditures |
|
19.0 |
|
|
9.1 |
Proceeds from disposal of property, plant and equipment |
|
— |
|
|
0.5 |
Non-GAAP Measures
To supplement its financial measures prepared in accordance with GAAP,
Management internally reviews these non-GAAP measures to evaluate performance and liquidity on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to the Company’s business and believes that these non-GAAP measures provide investors with an additional perspective on trends and underlying operating results on a period-to-period comparable basis. The Company also believes that investors find this information helpful in understanding the ongoing performance of its operations as well as their ability to generate cash separate from items that may have a disproportionate positive or negative impact on its financial results in any particular period or that are considered to be associated with its capital structure. These non-GAAP financial measures, however, have limitations as analytical tools, and should not be considered in isolation from, a substitute for, or superior to, the related financial information that
The Company provides full year 2024 guidance for adjusted EBITDA and constant currency adjusted EBITDA growth and second quarter 2024 guidance for adjusted EBITDA only on a non-GAAP basis. Reconciliations of such forward-looking non-GAAP measures to GAAP are excluded in reliance upon the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K due to the inherent difficulty in forecasting and quantifying, without unreasonable efforts, certain amounts that are necessary for such reconciliations, including adjustments that could be made for restructurings, refinancings, impairments, divestitures, integration and acquisition-related expenses, share-based compensation amounts, non-recurring, unusual or unanticipated charges, expenses or gains, adjustments to inventory and other charges reflected in reconciliations of historic numbers, the amount of which, based on historical experience, could be significant.
Constant Currency:
The Company discloses net sales and adjusted EBITDA on a constant currency basis by adjusting results to exclude the impact of changes due to the translation of foreign currencies of its international locations into
The impact of foreign currency translation is calculated by converting the Company's current-period local currency financial results into
Organic Net Sales Growth:
Organic net sales growth is defined as net sales excluding the impact of foreign currency translation, changes due to the pass-through pricing of certain metals and acquisitions and/or divestitures, as applicable. Management believes this non-GAAP financial measure provides investors with a more complete understanding of the underlying net sales trends by providing comparable net sales over differing periods on a consistent basis.
The following table reconciles GAAP net sales growth to organic net sales growth for the three months ended
|
|
Three Months Ended |
||||||||||
|
|
Reported Net Sales Growth |
|
Impact of Currency |
|
Constant Currency |
|
Change in Pass-Through Metals Pricing |
|
Acquisitions |
|
Organic Net Sales Growth |
Electronics |
|
3% |
|
2% |
|
5% |
|
0% |
|
(1)% |
|
4% |
Industrial & Specialty |
|
(4)% |
|
1% |
|
(3)% |
|
—% |
|
0% |
|
(3)% |
Total |
|
0% |
|
2% |
|
2% |
|
0% |
|
(1)% |
|
1% |
NOTE: Totals may not sum due to rounding. |
For the three months ended
Adjusted Earnings Per Share (EPS):
Adjusted EPS is a key metric used by management to measure operating performance and trends as management believes the exclusion of certain expenses in calculating adjusted EPS facilitates operating performance comparisons on a period-to-period basis. Adjusted EPS is defined as net income adjusted to reflect adjustments consistent with the Company's definition of adjusted EBITDA. Additionally, the Company eliminates amortization expense associated with intangible assets, incremental depreciation associated with the step-up of fixed assets and incremental cost of sales associated with the step-up of inventories, as applicable, recognized in purchase accounting for acquisitions.
Further, the Company adjusts its effective tax rate to 20%, as described in footnote (7) under the reconciliation table below. This effective tax rate, which reflects the Company’s estimated long-term expectations for taxes to be paid on its adjusted non-GAAP earnings, is consistent with how management evaluates the Company’s financial performance. The Company also believes that providing a fixed rate facilitates comparisons of business performance from period to period. This non-GAAP effective tax rate is lower than the average of the statutory tax rates applicable to the Company’s jurisdictional mix of earnings, primarily because it reflects tax benefits derived from
The resulting adjusted net income is then divided by the Company's adjusted common shares outstanding. Adjusted common shares outstanding represent the shares outstanding as of the balance sheet date for the quarter-to-date period and an average of each quarter for the year-to-date period plus shares issuable upon exercise or vesting of all outstanding equity awards (assuming a performance achievement target level for equity awards with targets considered probable).
The following table reconciles GAAP "Net income" to "Adjusted net income" and presents the number of adjusted common shares outstanding used in calculating adjusted EPS for each period presented below:
|
|
Three Months Ended |
|||||||
|
|
|
|||||||
(dollars in millions, except per share amounts) |
|
2024 |
|
2023 |
|||||
Net income |
|
$ |
56.0 |
|
|
$ |
43.0 |
|
|
Net income attributable to non-controlling interests |
|
|
— |
|
|
|
(0.1 |
) |
|
Reversal of amortization expense |
(1) |
|
30.2 |
|
|
|
29.6 |
|
|
Adjustment to reverse incremental depreciation expense from acquisitions |
(1) |
|
0.3 |
|
|
|
0.4 |
|
|
Restructuring expense |
(2) |
|
2.3 |
|
|
|
2.3 |
|
|
Acquisition and integration expense |
(3) |
|
1.7 |
|
|
|
3.9 |
|
|
Foreign exchange gains on intercompany loans |
(4) |
|
(6.8 |
) |
|
|
(5.6 |
) |
|
Kuprion Acquisition research and development charge |
(5) |
|
3.9 |
|
|
|
— |
|
|
Other, net |
(6) |
|
2.2 |
|
|
|
1.0 |
|
|
Tax effect of pre-tax non-GAAP adjustments |
(7) |
|
(6.8 |
) |
|
|
(6.3 |
) |
|
Adjustment to estimated effective tax rate |
(7) |
|
(0.4 |
) |
|
|
4.9 |
|
|
Adjusted net income |
|
$ |
82.6 |
|
|
$ |
73.1 |
|
|
|
|
|
|
|
|||||
Adjusted earnings per share |
(8) |
$ |
0.34 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|||||
Adjusted common shares outstanding |
(8) |
|
244.5 |
|
|
|
243.9 |
|
(1) |
The Company eliminates the amortization expense associated with intangible assets and incremental depreciation associated with the step-up of fixed assets recognized in purchase accounting for acquisitions. The Company believes these adjustments provide insight with respect to the cash flows necessary to maintain and enhance its product portfolio. |
(2) |
The Company adjusts for costs of restructuring its operations, including those related to its acquired businesses. The Company adjusts these costs because it believes they are not reflective of ongoing operations. |
(3) |
The Company adjusts for costs associated with acquisition and integration activity, including costs of obtaining related financing, legal and accounting fees and transfer taxes. The Company adjusts these costs because it believes they are not reflective of ongoing operations. |
(4) |
The Company adjusts for foreign exchange gains and losses on intercompany loans because it expects the period-to-period movement of the applicable currencies to offset on a long-term basis and because these gains and losses are not fully realized due to their long-term nature. The Company does not exclude foreign exchange gains and losses on short-term intercompany and third-party payables and receivables. |
(5) |
The Company adjusts for research and development costs associated with contingent consideration related to the acquisition of |
(6) |
The Company's adjustments consist primarily of highly inflationary accounting losses for its operations in |
(7) |
The Company uses a non-GAAP effective tax rate of 20%. This rate, which reflects the Company's estimated long-term expectations for taxes to be paid on its adjusted non-GAAP earnings, is consistent with how management evaluates the Company's financial performance. The Company also believes that providing a fixed rate facilitates comparisons of business performance from period to period. This non-GAAP effective tax rate is lower than the average of the statutory tax rates applicable to the Company's jurisdictional mix of earnings, primarily because it reflects tax benefits derived from |
(8) |
The Company defines "Adjusted common shares outstanding" as the number of shares of its common stock outstanding as of the balance sheet date for the quarter-to-date period and an average of each quarter for the year-to-date period, plus the shares issuable upon exercise or vesting of all outstanding equity awards (assuming a performance achievement target level for equity awards with targets considered probable). The Company adjusts the number of its outstanding common shares for this calculation as it believes it provides a better understanding of its results of operations on a per share basis. See the table below for further information. |
Adjusted Common Shares Outstanding at
The following table shows the Company's adjusted common shares outstanding at each period presented:
|
|
||
|
|||
(amounts in millions) |
2024 |
|
2023 |
Basic common shares outstanding |
242.1 |
|
241.4 |
Number of shares issuable upon vesting of granted Equity Awards |
2.4 |
|
2.5 |
Adjusted common shares outstanding |
244.5 |
|
243.9 |
EBITDA and Adjusted EBITDA:
EBITDA represents earnings before interest, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA, excluding the impact of additional items included in GAAP earnings which the Company believes are not representative or indicative of its ongoing business or are considered to be associated with its capital structure, as described in the footnotes located under the "Adjusted Earnings Per Share (EPS)" reconciliation table above. Adjusted EBITDA for each segment also includes an allocation of corporate costs, such as compensation expense and professional fees. Management believes adjusted EBITDA and adjusted EBITDA margin provide investors with a more complete understanding of the long-term profitability trends of the Company's business and facilitate comparisons of its profitability to prior and future periods.
The following table reconciles GAAP "Net income" to "Adjusted EBITDA" for each of the periods presented:
|
|
Three Months Ended |
|||||||
|
|
|
|||||||
(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) |
|
2.3 |
|
|
|
2.3 |
|
|
Acquisition and integration expense |
(3) |
|
1.7 |
|
|
|
3.9 |
|
|
Foreign exchange gains on intercompany loans |
(4) |
|
(6.8 |
) |
|
|
(5.6 |
) |
|
Kuprion Acquisition research and development charge |
(5) |
|
3.9 |
|
|
|
— |
|
|
Other, net |
(6) |
|
2.2 |
|
|
|
1.0 |
|
|
Adjusted EBITDA |
|
$ |
127.0 |
|
|
$ |
112.3 |
|
NOTE: For the footnote descriptions, please refer to the footnotes located under the "Adjusted Earnings Per Share (EPS)" reconciliation table above. |
Free Cash Flow:
Free cash flow is defined as net cash flows from operating activities less net capital expenditures. Net capital expenditures include capital expenditures less proceeds from the disposal of property, plant and equipment. Management believes that free cash flow, which measures the Company’s ability to generate cash from its business operations, is an important financial measure for evaluating the Company's liquidity. Free cash flow should be considered as an additional measure of liquidity to, rather than as a substitute for, net cash provided by operating activities.
The following table reconciles "Cash flows from operating activities" to "Free cash flow" for the periods presented and the Company's free cash flow outlook for the full year 2024:
|
Three Months Ended |
|
|
|
||||||
|
|
|
|
Outlook |
||||||
(dollars in millions) |
2024 |
|
2023 |
|
|
2024 |
||||
Cash flows from operating activities |
$ |
58.2 |
|
|
$ |
53.5 |
|
|
|
|
Capital expenditures |
|
(19.0 |
) |
|
|
(9.1 |
) |
|
|
~(50)-(60) |
Proceeds from disposal of property, plant and equipment |
|
— |
|
|
|
0.5 |
|
|
|
~0 |
Free cash flow |
$ |
39.2 |
|
|
$ |
44.9 |
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240429043020/en/
Investor Relations Contact:
Senior Director, Strategy and Finance
1-203-952-0369
IR@elementsolutionsinc.com
Media Contact:
Collected Strategies
1-212-379-2072
esi@collectedstrategies.com
Source: