Fourth Quarter and

Full Year 2020

Earnings Presentation

February

2021

Legal Notices

SAFE HARBOR

Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Such discussion and 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, and relate in this presentation, without limitation, to capital investments in 2021; FY 2021 cash flow outlook, including cash interest, cash taxes and net capex; interest savings; full year 2021 financial guidance, including guidance related to adjusted EBITDA, adjusted EPS and free cash flow; additional considerations relating to adjusted EBITDA growth in Q1 2021 and first half of 2021 and FX tailwind for the full year of 2021; converting tailwinds into earnings growth; earnings growth allowing continued deleveraging in 2021; long-term outperformance and sustainability efforts.

These projections and statements reflect management's estimates, assumptions and 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 to management as of the current date, and management 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 these forward-looking statements include, but are not limited to, the duration of the pandemic; the efficacity, availability and/or public acceptance of vaccines targeting COVID-19; the impact of variants of COVID-19 that may affect its spread or virulence or the effectiveness of vaccines on the virus; the impact of actions taken or that might be taken by governments, businesses or individuals to contain or reduce its repercussions and mitigate its economic implications; evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; decreased consumer spending levels; reduction or changes in customer demand for the Company's products and services; the Company's ability to manufacture, sell and provide its products and services, including as a result of travel restrictions, closed borders, operating restrictions imposed on its facilities or reduced ability of its employees to continue to work efficiently; increased operating costs (whether as a results of changes to the Company's supply chain or increases in employee costs or otherwise); collectability of customer accounts; additional and prolonged devaluation of other countries' currencies relative to the U.S. dollar; the general impact of the pandemic on the Company's customers, employees, suppliers, vendors and other stakeholders; the Company's ability to realize the expected benefits of its cost containment and cost savings measures; business and management strategies; outstanding debt and debt leverage ratio; shares repurchases; expected returns to stockholders; and the impact of acquisitions, divestitures, restructurings, refinancings, impairments and other unusual items, including the Company's ability to raise and/or retire new debt and/or equity and to integrate and obtain the anticipated benefits, results and synergies from these items or other related strategic initiatives. Additional information concerning these and other factors that could cause actual results to vary is, or will be, included in the periodic and other reports of Element Solutions filed with the Securities and Exchange Commission. Element Solutions undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

NON-GAAP FINANCIAL MEASURES

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company uses the following non-GAAP financial measures: EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share (EPS), adjusted common shares outstanding, free cash flow, free cash flow on an adjusted basis, financial guidance related to adjusted EBITDA, adjusted EPS and free cash flow for the full year of 2021, adjusted EBITDA growth for Q1 and the first half of 2021, net debt to adjusted EBITDA ratio and organic net sales growth. The Company also evaluates and presents its results of operations on a constant currency basis. The definitions and reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the footnotes and appendix of this presentation and in the Company's earnings release dated February 24, 2021 (the "Release"), a copy of which can be found on the Company's website atwww.elementsolutionsinc.com. This presentation should be read in conjunction with the Release.

Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance of 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 separate from items that may have a disproportionate positive or negative impact on its financial results in any particular period. 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 reports in accordance with GAAP. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures included herein and in the Release, and not to rely on any single financial measure to evaluate the Company's businesses.

In addition, this presentation includes FY 2020 cash flow uses and FY 2021 outlook. This data is provided for informational purposes only and is not necessarily, and should not be assumed to be, an indication of the results that may be achieved in the future.

Full Year 2020 Highlights

Operational Excellence

In the context of a significant COVID-19 impact…

Maintained R&D and Capex investment levels

Prudent Capital Allocation

&

9%

2%

Strategic acquisition of DMP launching new

sustainability platform for wastewater

treatment and recycling systems

Growth in

Constant currency

Adj. EPS*

adj. EBITDA* growth

Five Cent

5%

$249M

per share quarterly dividend initiated in Q4 2020

Free cash flow*

$56M

Free cash flow*

growth year-on-year1

Of share repurchases

at an average price of $9.74 per share

2.9x

Net debt to Adj. EBITDA* at year-end

Expanded adjusted EBITDA* margin

Committed to preserve employment

* These financial measures, on this slide and on subsequent slides, are not prepared in accordance with GAAP. For definitions, discussions of adjustments and reconciliations, please refer to the appendix of this presentation

1. Assumes growth over 2019 free cash flow on an adjusted basis of $238 million, which excludes the impact of the Arysta divestiture and assumes the Company's current capital structure had been in place as of January 1, 2019.

Fourth Quarter 2020 Financial Results

Constant Currency*

Organic*

($ in millions)

Q4 2020

Q4 2019

YoY

YoY

YoY

Net Sales

$537 $455 18%

Electronics

343 272 26%

Industrial & Specialty

193 183 6%

GAAP Diluted EPS

$0.12 $0.29

16%

23% 5%

10%

16% 1%

Adj. EBITDA*

$126

$102

23%

% margin

23.5%

22.5%

100 bps

20%

80 bps

Electronics

81

63

% margin

23.5%

23.0%

30% 50 bps

25% 40 bps

Industrial & Specialty

45

40

% margin

23.3%

21.7%

13% 160 bps

11% 130 bps

Adj. EPS*

$0.31

$0.22

41%

  • Organic net sales* increased 10% year-over-year, driven by growth in high-end electronics end-markets and sharp recovery in industrially oriented businesses

  • Constant currency adj. EBITDA* growth of 20% and adj. EBITDA* margin expansion of 80 bps

    • o Mix benefit from growth in higher margin businesses

    • o Cost management initiatives and reduced travel

  • Q4 2020 adj. EPS* of $0.31 reflects lower interest expense due to bond refinancing and fewer shares outstanding

Note: Totals may not sum due to rounding or due to varying sizes of the two reportable segments

* See non-GAAP definitions and reconciliations in the appendix

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Element Solutions Inc. published this content on 24 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2021 21:38:00 UTC.