Executive Summary

Record quarter: Net sales $656.1M (+2% reported, +5% organic), adjusted EBITDA $146.9M (record; +3% YoY) and adjusted EPS $0.41; Electronics reached record revenue, marking a sixth straight quarter of high-single-digit organic growth .
Guidance raised: FY25 adjusted EBITDA narrowed to $545–$550M (from $530–$550M in Q2; from $520–$540M in Q1); FY25 adjusted FCF ~ $280M. Q4 adjusted EBITDA implied at ~$135–$140M as smartphone seasonality normalizes and EV remains soft while AI/data center demand stays robust .
Versus S&P Global consensus, ESI beat revenue and adjusted/“Primary” EPS; EBITDA comparison depends on definition (S&P EBITDA actual differs from company adjusted EBITDA), see Estimates Context [GetEstimates]* .
Strategic catalyst: Announced ~$500M acquisition of Micromax (Celanese unit), expected to be >5% accretive to adjusted EPS and contribute ~$40M adjusted EBITDA on a full-year basis post-close (target Q1’26), deepening solutions for data centers/advanced electronics; ESI will fund with cash and modest debt, keeping leverage comfortably below its 3.5x ceiling .

What Went Well and What Went Wrong

What Went Well
- Electronics strength and mix: Electronics organic +7% on AI/data center and smartphone prebuild; segment sales +11% to $465.2M; record segment revenue. Circuitry grew 13% organically, benefiting from high-layer-count server boards (pulse plating) and seasonal smartphones .
- Margin resiliency ex-metals: Adjusted EBITDA margin +30 bps to 22.4%; excluding ~$125M pass-through metals in Assembly, margin would have been ~28% (+100 bps YoY) per CFO .
- Industrial & Specialty profit improvement: Despite flat organic sales, adjusted EBITDA +3% and margin +420 bps YoY to 23.7% on procurement/productivity/portfolio actions and Energy Solutions strength .
What Went Wrong
- Power electronics softness tied to EV: Semi power electronics volumes weighed on Semiconductor Solutions; management still sees share gains and broader application pull in 2026 .
- FX and intercompany FX noise: GAAP showed FX losses (-$11.0M in Q3) and FX adjustments were a notable non-GAAP add-back; S&P EBITDA vs company adjusted indicates definition differences matter for comparability .
- Industrial volumes still below prior peaks: Underlying industrial demand remains sluggish in Western markets; growth is mix/price/productivity-led rather than volume-driven .

Financial Results

Consolidated performance: sequential and YoY trend

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($M)	$593.7	$625.2	$656.1
GAAP Diluted EPS ($)	$0.40	$0.20	$0.16
Adjusted EPS ($)	$0.34	$0.37	$0.41
Adjusted EBITDA ($M)	$128.4	$136.0	$146.9
Adjusted EBITDA Margin (%)	21.6%	21.7%	22.4%
Cash from Operations ($M)	$26.0	$72.6	$100.1
Adjusted Free Cash Flow ($M)	$30.1	$58.8	$84.1

Commentary: Q3 delivered broad sequential improvements across revenue, adjusted EPS, adjusted EBITDA, margins, and cash generation. Electronics mix (AI/data centers, smartphones) offset EV-related weakness in power electronics and continued industrial softness .

Segment breakdown (Q3 2025 vs Q3 2024)

Segment	Net Sales ($M)	YoY %	Adjusted EBITDA ($M)	YoY %	Adjusted EBITDA Margin (%)
Electronics	$465.2	11%	$101.5	3%	21.8% (vs 23.5% LY)
Industrial & Specialty	$190.9	(16)%	$45.4	3%	23.7% (vs 19.5% LY)
Total	$656.1	2%	$146.9	3%	22.4% (vs 22.1% LY)

Notes: Industrial & Specialty reported decline was largely divestiture-related (-17% impact); organic net sales were flat YoY .

KPIs and balance sheet

KPI	Q3 2025
Cash & Equivalents ($M)	$594.3
Total Debt ($M)	$1,636.2
Net Debt ($M)	$1,041.9
Debt mix	~100% fixed-rate at 9/30/25
Net leverage	~1.9x at Q3; pro forma year-end ~2.5x including Micromax (below 3.5x ceiling)
Pass-through metals sales	~+$125M in Assembly; ex-metals margin ~28% (+100 bps YoY)

Q3 2025 results vs S&P Global consensus

Metric	Consensus	Actual	Delta
Revenue ($M)	646.5*	656.1	+$9.6 (+1.5%)*
Primary (Adjusted) EPS ($)	0.397*	0.41	+$0.013 (+3.3%)*
EBITDA ($M)	144.6*	146.9 (Company adjusted) / 139.4 (S&P actual)*	+2.3 vs Co. adj / (5.2) vs S&P*

Notes: S&P Global’s EBITDA actual (139.4) differs from company adjusted EBITDA (146.9) due to definitional differences; investors should compare like-for-like when assessing “beat/miss” on EBITDA [GetEstimates]* .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	$520–$540M (Q1 guide) → $530–$550M (Q2 update)	$545–$550M	Raised to high end
Adjusted Free Cash Flow	FY 2025	—	~ $280M	Introduced/maintained
Adjusted EBITDA	Q3 2025	$140–$145M (guided in Q2)	Actual $146.9M (delivered above range)	Beat guidance
Adjusted EBITDA	Q4 2025	—	~ $135–$140M (implied on call)	New quarterly color
Dividend	Q3 2025	—	$0.08 per share (paid 9/15/25; record 9/2/25)	Maintained quarterly dividend

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
AI/data center demand	Q1: Strong traction in high-end electronics, semis; AI/data centers cited . Q2: 5th straight quarter high-single-digit electronics growth; server/memory improving	AI/data centers a key driver; circuitry +13% organic; pulse plating for high-layer server boards; memory disk acceleration	Strengthening
Smartphones	Limited color; seasonal dynamics implied	Seasonal prebuild supported Electronics to record revenue; expecting end-of-season ramp in Q4	Positive in Q3; seasonal moderation ahead
EV/power electronics	Q1 diversified power electronics; semis strong	Power electronics down YoY on EV dynamics; share gains and broader applications expected into 2026	Near-term headwind; medium-term opportunity
Tariffs/trade	Q1/Q2: Mitigating tariffs via localized footprint; FX favorable later in year	Continued mitigation; FX ~+$3M tailwind in Q3, similar expected in Q4 at current rates	Managed
Kuprion commercialization	Q1 noted; investment ramping	Mid-scale site on track year-end; meaningful sales/profits into next year; Q4 qualification milestones	Executing toward 2026 ramp
M&A (Micromax)	—	~$500M deal; >5% EPS accretive; ~$40M EBITDA contribution full-year post-close; fits between assembly/circuitry	Inorganic growth lever activated
Industrial/offshore	Q1: Industrial soft; actions to drive profit	Industrial margin up; offshore energy continues to grow; sustainable but may not stay peak into 2026	Improving profitability
FX/metals	Q2: FX benefit expected; metals pass-through impacted margins	Ex-metals adj. EBITDA margin ~~28% (+100 bps YoY); FX +~~$3M	Margin quality improved ex-metals

Management Commentary

Strategic: “We’re reporting record results and announcing Micromax… Our ability to balance both organic operational excellence and prudent capital allocation… deepens my conviction in our bright future.” — CEO Benjamin Gliklich .
Execution drivers: “Electronics segment [posted] its 6th consecutive quarter of high single-digit organic revenue growth… data center driven demand and seasonal uplift from smart phone pre-builds pushed… to record revenue… We grew earnings in Industrial & Specialty… through procurement, productivity and portfolio optimization.” — CEO .
Forward look: “We are narrowing our full year 2025 adjusted EBITDA guidance to the highest end of our prior range… Micromax… should add meaningfully to earnings growth in 2026… including Kuprion commercialization… and additional potential acquisitions.” — CEO .
Margin quality: “Excluding ~$125M of pass-through metal sales in assembly solutions, our adjusted EBITDA margin would have been 28%, a 100 bps improvement YoY.” — CFO Carey Dorman .
Balance sheet/capacity: “Net leverage… 1.9x… effective interest rate ~4%… Fund Micromax with cash and modest debt; pro forma year-end ~2.5x, below our 3.5x ceiling.” — CFO .

Q&A Highlights

Micromax synergy and growth: “This is a complementary capability… modest customer overlap… substantial OEM/specifier overlap… expect >5% adjusted EPS accretion; ~$40M EBITDA full-year post-close” — CEO/CFO .
Kuprion: “Mid-scale site… operational at the end of the year… meaningful sales and profits into next year… qualification milestones in Q4.” — CEO .
Semiconductors: “Wafer-level plating grew double-digits with runway… power electronics weaker on EVs, but share gains and broader applications (network infra, data centers) support growth into 2026.” — CFO/CEO .
Industrial outlook: “Industrial solutions surprised positively vs expectations; momentum in electronics into Q4 remains strong.” — CEO .
Reporting and regulatory: Micromax expected standalone reporting; minimal antitrust risk given complementary tech/market positions — CEO .

Estimates Context

S&P Global consensus vs actuals (Q3 2025):
- Revenue: $646.5M consensus vs $656.1M actual — beat +$9.6M (+1.5%)* [GetEstimates]* .
- Primary (Adjusted) EPS: $0.397 vs $0.41 — beat +$0.013 (+3.3%)* [GetEstimates]* .
- EBITDA: $144.6M consensus vs 139.4M S&P actual — miss; note company-reported adjusted EBITDA was $146.9M (record), reflecting definitional differences [GetEstimates]* .

Values marked with * are retrieved from S&P Global. Differences between S&P’s EBITDA actual and company “adjusted EBITDA” reflect methodology/definition variances; compare like-for-like for signal.

Key Takeaways for Investors

Electronics momentum intact; AI/data center and smartphone seasonality drove a record quarter; EV-related power electronics remains a modest headwind but with share-gain potential into 2026 .
Quality of earnings improved: ex-metals margins expanded (+100 bps YoY), and cash conversion strengthened (CFO $100.1M; adj FCF $84.1M) .
Guidance moving to the top of the range (FY25 adj. EBITDA $545–$550M) with Q4 implied at $135–$140M; setup into 2026 supported by Kuprion commercialization and Micromax addition .
Micromax is strategically accretive (>5% EPS; ~$40M EBITDA), expands ESI’s portfolio into high-spec inks/pastes for advanced electronics; funding preserves balance sheet flexibility (pro forma leverage ~2.5x at YE) .
For near-term trading, the revenue/EPS beat and guide raise are positives; investors should be mindful of Q4 seasonal smartphone normalization and EV softness, offset by continued AI/data center strength .
Medium-term thesis: structurally higher exposure to fast-growing electronics niches, improving industrial profitability, disciplined capital allocation, and pipeline of organic/inorganic growth drivers .

Appendix: Non-GAAP notes — Adjusted EPS uses a fixed 20% non-GAAP tax rate; adjustments include amortization, FX on intercompany loans, M&A/divestiture items, and other items as detailed in reconciliations . Organic net sales exclude FX, metals pass-through, and M&A/divestiture impacts .

Element Solutions Inc (ESI)·Q3 2025 Earnings Summary