Element Solutions (NYSE:ESI) reported record second-quarter revenue, adjusted EBITDA and adjusted earnings per share as demand tied to artificial intelligence infrastructure and high-performance computing drove broad growth across its electronics portfolio.
The company said organic net sales increased 15% year over year in the second quarter, while constant-currency adjusted EBITDA rose 33%. Adjusted EPS increased 27%, according to Chief Executive Officer Ben Gliklich. Excluding pass-through metals, adjusted EBITDA margin expanded 120 basis points from a year earlier to 27.8%.
Electronics growth led by semiconductors and AI demand
Electronics segment organic sales rose 20%, with each vertical recording double-digit growth. Semiconductor Solutions grew 31% organically, Assembly Solutions increased 18%, and Circuitry Solutions advanced 15%.
Management attributed the performance to sustained spending on AI infrastructure, data centers and other high-performance computing applications. The company cited demand for semiconductor packaging, advanced printed circuit board chemistries, thermal interface materials, engineered assembly materials and power-electronics applications.
Chief Financial Officer Carey Dorman said volume growth accounted for roughly 60% to two-thirds of the semiconductor business’s more than 30% organic growth during the quarter, with the remainder coming from price and mix, including higher precious-metal prices affecting certain products.
Semiconductor Solutions benefited from improved order patterns in power electronics, momentum in thermal-interface materials for high-power AI GPUs and CPUs, and demand for advanced packaging solutions from outsourced semiconductor assembly and test providers in Asia. Dorman said both the power-electronics and wafer-plating businesses recorded volume growth in the high teens.
Gliklich said Element Solutions is seeing high utilization and capacity additions among customers in advanced portions of the electronics supply chain, including leading-edge semiconductor foundries, circuit-board fabricators, device assemblers and electronics manufacturing services providers.
“At the more advanced end, we’re seeing very high utilization rates,” Gliklich said. “That is supporting substantial capacity additions at all of our major customers.”
Investment continues in Cuprion and acquired businesses
The company is increasing investment in Cuprion, its active copper technology intended to address customer needs in thermal management, power delivery and copper plating on difficult substrates. Element Solutions said its initial Fremont, California, plant is sampling and qualifying material with customers.
During the quarter, the company identified opportunities to increase output from the initial facility and expanded plans for a second Fremont site. It also progressed work toward a third site in Connecticut. Gliklich said the company’s expected active-copper capacity by the end of 2027 increased materially during the second quarter.
While management did not quantify expected 2027 Cuprion revenue, Gliklich said customer demand should translate into material revenue and profit contribution that year, with a more substantial outlook for 2028 based on planned capacity.
Recent acquisitions also contributed to results. Micromax added approximately $130 million in reported quarterly sales, about two-thirds of which was metals-related, though it is excluded from the company’s organic-growth calculation. Management said the business is performing ahead of its plan, supported by volume and pricing, but expects some modest sequential softening in the second half as it takes a more conservative view of its earnings cadence.
EFC Gases & Advanced Materials contributed $16 million of second-quarter revenue. Management described the business as lumpier than Element Solutions’ other operations but said commercial activity remains healthy and it expects a substantially larger second half. Gliklich said the company has greater confidence than it did a quarter earlier in EFC’s ability to generate $30 million for the full year.
Specialty segment navigates mixed conditions
In the Specialty segment, Industrial Solutions grew organic sales 3%, aided by a modest return to growth in European industrial markets, global surcharges and price increases tied to rising raw-material costs. The business has been restructuring its go-to-market and supply-chain strategy over the past year.
Offshore Energy Solutions grew organic sales 1%, slower than the first quarter, due to timing effects and disruption associated with the war in Iran, management said.
Raw-material and logistics inflation remains a consideration for the second half. Dorman said pressure has primarily come from oil-derived materials, including ethylene- and propylene-based products, particularly affecting industrial and offshore operations. Gliklich said the company does not have a major concentration in any single non-metal raw material.
Management said lower metals prices would not be expected to have a material effect on profit dollars because the company generally does not earn margins on metals.
Guidance raised as company targets lower leverage
Element Solutions raised its full-year adjusted EBITDA outlook to a range of $690 million to $710 million. The guidance reflects first-half trends and execution of company initiatives, while accounting for one-time metal-hedge gains recognized in the first half of 2026 that were associated with costs recorded in the second half of 2025.
The company expects third-quarter adjusted EBITDA of approximately $180 million. Management expects demand conditions to remain sequentially similar to the first half, offset by potential pressure from raw-material and logistics inflation that may not be immediately recovered through pricing and sourcing actions.
For the fourth quarter, Element Solutions expects normal seasonal effects and fewer operating days around holidays to result in a modest decline from third-quarter levels. The company now expects full-year adjusted EPS growth of approximately 20%.
Adjusted free cash flow was $74 million in the second quarter. Capital expenditures totaled $28 million during the quarter and more than $50 million year to date. The company increased its full-year capital expenditure expectation to roughly $100 million, at the high end of its prior range, to support projects including Cuprion, thermal interface materials, plant consolidation and Industrial Solutions supply-chain initiatives.
Net leverage stood at 2.9 times on a pro forma basis including Micromax and EFC. Dorman said Element Solutions expects to reduce leverage to roughly 2.5 times by year-end, supported by earnings growth and anticipated cash generation.
Solstice transaction remains subject to approvals
Management also reiterated its rationale for the proposed merger with Solstice Advanced Materials, which remains subject to shareholder and regulatory approvals and customary closing conditions. The company declined to take analyst questions on the transaction.
Gliklich said the combination would expand the companies’ electronics capabilities across chip and printed-circuit-board fabrication, packaging and assembly, while creating a broader offering in thermal management and front-end copper interconnect formation. He said the companies have identified more than $180 million in potential cost synergies and have begun integration planning.
He acknowledged that Element Solutions’ stock reaction to the announcement had been disappointing, saying the companies must demonstrate that they can execute operationally and culturally on the opportunity.
About Element Solutions (NYSE:ESI)
Element Solutions Inc is a global specialty chemicals company that develops and supplies highly engineered chemistries to performance-driven end markets. The company’s solutions serve customers across the electronics, energy, transportation, consumer and industrial sectors, with a particular emphasis on electronics chemicals, metal plating, and industrial coatings additives.
In the electronics market, Element Solutions provides a range of plating and surface-treatment chemistries used in the manufacture of printed circuit boards, semiconductor devices, and advanced display technologies.
