ESI earnings analysis
What we found in ESI's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Element Solutions posted a strong Q2, with $977.9 million of revenue, 15% organic growth, and $183.5 million of adjusted EBITDA, supported by AI, data-center and advanced-packaging demand as well as the Micromax and EFC acquisitions. Profitability was mixed: adjusted EBITDA margin expanded to 27.8%, but reported gross margin fell to 34.2% and operating margin to 11.6% because of pass-through metals and unfavorable product mix. Liquidity remains adequate according to management, although six-month operating cash flow fell to $33.0 million amid metals-driven working-capital needs and debt reached $2.12 billion.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Organic growth remained robust
- Q2 net sales reached $977.9 million, up 56% reported and 15% organically from $625.2 million a year earlier. Sequentially, revenue increased from $840 million in Q1 2026 to $977.9 million in Q2 2026.
- Electronics demand accelerated
- Electronics sales rose to $767.0 million from $439.4 million, with 20% organic growth. Semiconductor Solutions delivered 31% organic growth to $115.3 million, while Circuitry Solutions grew 15% organically to $154.1 million on AI and data-center demand.
- Adjusted EBITDA and mix improved
- Adjusted EBITDA increased 35% to $183.5 million, and adjusted EBITDA margin expanded 120 basis points to 27.8% from 26.6%. Electronics adjusted EBITDA rose 47% to $141.5 million.
- Earnings exceeded consensus
- GAAP net income increased 63% to $77.3 million from $47.5 million; GAAP diluted EPS was $0.32, versus $0.23 in Q1 2026 and $0.20 in Q2 2025. Adjusted EPS of $0.47 exceeded the $0.43 consensus estimate.
- Acquisitions and end markets supported growth
- Management attributes growth to Asian volume gains in Assembly Solutions, continued AI/data-center investment in Circuitry Solutions, and advanced-packaging demand in Semiconductor Solutions. Micromax contributed $30.0 million to Electronics adjusted EBITDA.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Revenue growth came with margin dilution
- Reported gross margin fell 840 basis points year over year to 34.2%, while operating margin declined 350 basis points to 11.6%. Electronics margin excluding pass-through metals fell 240 basis points, principally from lower-margin precious-metals product mix.
- Working capital and leverage increased
- Six-month operating cash flow declined to $33.0 million from $98.6 million as higher metals prices increased working-capital investment. Net debt was $2.12 billion at June 30, including $1.28 billion of term debt, $800 million of notes due 2028, and $50.0 million drawn on the revolver.
- Solstice closing, valuation and fee risk
- The new Solstice transaction may not close by July 6, 2027, with a potential regulatory-related extension to January 5, 2028. If the merger agreement is terminated in specified circumstances, ESI could owe a $376.0 million termination fee; consideration includes $10.00 cash plus 0.5 Solstice shares per ESI share, making value sensitive to Solstice's share price.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.32
- Gross margin
- 34.2%
- Operating margin
- 11.6%
- Segment
- Electronics net sales: $767.0 million, up 75% reported and 20% organic year over year.
- Segment
- Specialties net sales: $210.9 million, up 14% reported and 3% organic year over year.
What they said about what is next.
The 10-Q provides no numeric revenue or EPS outlook. Management expects full-year 2026 capital expenditures of approximately $100 million and states that available liquidity should meet requirements for at least the next 12 months.
The filing reads better than the one before it.
What came before.
- 10-Q · April 29, 2026
- Element Solutions Inc. reported Q1 2026 net sales of $840 million, significantly higher than the $716 million consensus estimate, reflecting a 41% increase year-over-year. Adjusted EPS came in at $0.41, beating…
- 10-K · February 18, 2026
- Element Solutions presents a strategy focused on customer-driven innovation, niche market leadership and disciplined capital allocation. In 2025 the company reported net sales of $2.55 billion with Electronics ~70% and…
- 10-Q · July 31, 2025
- Element Solutions reported Q2 net sales of $625.2 million, up $12.5 million (+~2.0%) versus Q2 2024, while diluted EPS fell to $0.20 from $0.38 a year ago. The company generated a cash build (cash & equivalents $529.9…
- 10-Q · April 30, 2024
- Element Solutions reported quarterly net sales of $575.0 million (up $0.6 million vs Q1 2023's $574.4 million) with gross profit rising to $245.0 million (gross margin 42.6%) and operating profit of $77.8 million…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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