ESI 10-K & 10-Q changes, risk factors and insider trading

The following discussion of "risk factors" identifies the material factors that may adverselyhave affecta material adverse effect on our business, financial condition or results of operations. Potential investors should carefully consider these risks and the other information in this 20242025 Annual Report when evaluating our business. This discussion is not all inclusive and additional risks that are currently unknown to us or that we currently consider to be immaterial may also impair our business operations and cause our future results to differ from our expectations.

We may be unable to compete successfully in the competitive markets in which we operate. In these markets, we encounter competition from numerous and varied competitors in all areas of our businesses. Some of our competitors have longer operating histories, greater resources, greater brand recognition and a larger base of customers than we do. As a result, we may lose business, customers and market shares if we are unable to devote greater resources to the research and development, manufacturing, formulation, promotion, sale or support of our products, withstand adverse changes in economic conditions or prices of raw materials, and/or maintain competitive pricing. In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers; each of which could limit our ability to generate sales, acquire necessary raw materials and/or significantly increase costs.

•political uncertainties, war, terrorism and other instability risks and their impact on the global economy, market conditions and supply chain operations, including risks caused by the war in Ukraine, the Israel-Hamas conflictUkraine and other hostilities in the Middle East, and the increasedcountervailing tariffs andimposed tradeby restrictionsforeign betweengovernments China and theon U.S. products;

•natural disasters, extreme weather events, regional or global health concerns, such as outbreaks of COVID 19 or its variantsconcerns;

•governmental regulations and/or sanctions affecting the import and export of products, including global trade barriers, additional taxes, countervailing tariffs, tariff increases, cash repatriation restrictions, retaliations and boycotts between the U.S. and other countries, including Mexico, Russia and China;

In addition, changes in policies by the U.S. or foreign governments could negatively affect our operating results, supply chain and competitive position due to changes in duties, tariffs, trade regulations, employment regulations, taxes, or limitations on currency or fund transfers. Tariffs and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have institutedimposed and may continue to impose new tariffs, trade restrictions and export restrictions, which may negatively impact end-user demand or arerestrict consideringour imposingability retaliatoryto measuressell on certain U.S. goods.products. If we are unable to successfully manage these and/or any of the risks listed above, we could experience a loss of sales and profitability and/or an impairment or loss of assets, any of which could have a material adverse impact on our business, financial condition or results of operations.

Our business involves complex operations. As a result, our success depends to a significant degree on the skills, experience and efforts of our executive management and other key personnel as well as their ability to provide uninterrupted leadership and strategic direction. In addition, due to the specialized and technical nature of our business, our future performance depends upon our ability to attract, develop and retain skilled employees, such as specialized research and development and sales and service personnel, in order to maintain our efficient production processes, drive innovation in our product offerings and maintain our deep customer relationships. The failure to attract and retain key personnel, or effectively manage succession, could have ana material adverse material impacteffect on our business, financial condition or results of operations.

Although our business is not materially dependent upon any single customer, the loss of one or more key customers may impair our results of operations for the affected earnings periods. In addition, there is limited available manufacturing capacity that meets our quality standards and regulatory requirements. If we are unable to arrange for sufficient production capacity among our suppliers or contract manufacturers, or if our suppliers or contract manufacturers encounter production, quality, financial or other difficulties (for example, labor or geopolitical disturbances or natural disasters), we may be unable to meet our customers' demands. Finally, we rely on independent distributors to distribute our products and to assist us with the marketing and sale of certain of our products. There can be no assurance that our distributors will focus adequate resources on selling our products to end users, or will be successful in selling our products, which could materiallyhave adverselya affectmaterial adverse effect on our business, financial condition or results of operations.

With respect to acquisitions, we may be exposed to successor liability relating to actions taken before the acquisition date. The due diligence we conduct in connection with an acquisition, the controls and policies we implement and any contractual guarantees or indemnities that we receive from the sellers of acquired companies or assetsassets, or any third-party insurance we may procure, may not be sufficient to protect us from, or compensate us for, actual liabilities. Acquisitions also involve compliance and reputational risks as well as risks relating to differing levels of management and internal control effectiveness, systems integration, impairment charges relating to recorded goodwill and intangible assets, significant accounting charges, completion fees and integration expenses. Sizable acquisitions may also require a material increase in funding to address capital expenditures, working capital requirements and employee retention.

The specialty chemicalchemicals industry is subject to constant and rapid technological change, product obsolescence, price erosion, evolving standards, finite product lifecycles, raw material price fluctuations, and changes in product supply and demand. For example, the electronics end markets, such as mobile devices, particularly smartphones and tablets, is characterized by rapidly changing market conditions, frequent product introductions and intense competition based on features and price; all of which could impact our sale volumes and margins. In the automotive industry, demand for our products and services may be affected by technological advances, changing automotive OEM specifications and other factors beyond our control that impact production levels of our customers, such as interest rates, fuel prices, shifts in vehicle mix, consumer confidence, regulatory and legislative oversight requirements and trade agreements. In addition, technological changes in our customers’ products, processes or preferences, such as sustainable products, may make certain of our specialty chemicals unnecessary or obsolete. Customers also have found, and may continue to find, alternative materials or processes, which no longer require our products.

The unavailability or increased prices of raw materials could have a material adverse impact on our business, financial condition or results of operations. We use a variety of specialty and commodity chemicals in our formulation processes, and such formulation operations depend upon obtaining adequate supplies of raw materials on a timely basis from numerous suppliers in various countries. We typically purchase our major raw materials under existing supply agreements or on an as-needed basis from outside sources. The availability and prices of raw materials may be subject to curtailment or change due to, among other things, the financial stability of our suppliers, new laws and regulations, protectionist nationalistic trade policies and practices, such as tariffs, changes in exchange rates and worldwide price levels. In some cases, we are limited in our ability to purchase certain raw materials from other suppliers due to minimum purchase requirements contained in certain of our supply agreements. Our responsible sourcing practices could also affect the sourcing, pricing, and availability of certain conflict minerals we use in our products. If only a limited pool of our suppliers can demonstrate that they are compliant with the applicable rules, we may not be able to obtain the conflict minerals we need in sufficient quantities or at competitive prices. Further, if we are unable to price our products competitively to timely reflect volatility in prices of raw materials or if we do not accurately estimate the amount of raw materials needed for a specific geographic region, our margins could be adversely affected.

Moreover, we are regularly examined by various tax authorities throughout the world. The final resolution of tax audits and any related litigation may differ from our historical provisions and accruals resulting in additional tax liabilities, which may have an adverse impact on our tax provision, net income and cash flow. Although we believe our tax estimates and accruals are reasonable, there can be no assurance that the tax authorities will agreeagree, and we may have to engage in litigation to achieve the results reflected in such estimates and accruals, which may be time-consuming and the costs incurred significant. There can be no assurance that we will be successful or that any final determination will not materially and adversely affect our business, financial condition, results of operations and cash flows.

Our products and manufacturing processes are also subject to numerous ongoing reviews by certain governmental authorities. Governmental, regulatory and societal demands for increasing levels of product safety (such as chemical composition, packaging and labeling) and environmental protection (such as the management, movement and disposal of hazardous substances) are resulting in increased pressure for more stringent regulatory control with respect to the chemical industry. Such regulations include the European Union's REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals), which mandatemandates compliance obligations and restrictions on certain chemicals; REACH-like regimes, which have now been adopted in several other countries; the E.U. Poison Center Notification (PCN); the U.S. Toxic Substances Control Act (TSCA); the U.S. and E.U. conflict minerals regulations; as well as the emerging ESG regulations in the E.U. and globally, such as the Corporate Sustainability Reporting Directive (CSRD), its transposition in E.U. countries, and the E.U. Taxonomy for sustainable activities. Any of these regulations and changes in our regulatory environment, particularly in, but not limited to, the U.S., the E.U. and China, may require significant resources and data management systems and ledlead us to re-design our products or supply chain to ensure compliance with the applicable standards or use different types or sources of materials, which could have an adverse impact on the efficiency of our manufacturing process, the performance of our products, add greater testing lead-times for product introductions or other similar effects. Any of these changes could materially alter our market share and reputation, or otherwise have a material adverse effect on our business, financial condition and results of operations.

In the offshore oil industry, we are subject to the hazards inherent in the offshore oil production and drilling industry. Our offshore business produces water-based hydraulic control fluids for major oil companies and drilling contractors to be used for potentially hazardous offshore deepwater production and drilling applications. Offshore deepwater oil production and drilling are subject to hazards that include blowouts, explosions, fires, collisions, capsizing, sinking and damage or loss to pipeline, subsea or other facilities from severe weather conditions. Those hazards could result in personal injury and loss of life, severe damage to, or destruction of, property and equipment, pollution or environmental damage and suspension of operations. A catastrophic occurrence at a location where our products are used may expose us to substantial liability for personal injury, wrongful death, product liability orliability, commercial claims.claims and reputational damage. To the extent available, we maintain insurance coverage that we believe is customary in this industry. Such insurance does not, however, provide coverage for all liabilities, and there can be no assurance that our insurance coverage will be adequate to cover claims that may arise, or that we will be able to maintain adequate insurance at rates we consider reasonable. The occurrence of a significant offshore deepwater oil production or drilling event that results in liability to us that is not fully insured could have a material adverse effect on our financial condition or results of operations.

The U.S. Foreign Corrupt Practices Act of 1977, the United Kingdom Bribery Act 2010 and similar anti-bribery/anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or for other unfair advantages. Under these laws, companies may also be held liable for actions taken by third-parties acting on their behalf, such as strategic or local partners or representatives. Our policies mandate compliance with these anti-bribery/anti-corruption laws, including the requirements to maintain accurate information and internal controls. However, in certain of the jurisdictions where we conduct business, we face a heightened risk for corruption, extortion, bribery, pay-offs, theft and other improper practices.practices, including via third-party distributors over whom we may have limited or no control. There can be no assurance that our internal control policies and procedures will protect us from acts committed by our employees or agents. Failure by us or our intermediaries to comply with applicable anti-bribery/anti-corruption laws may result in civil and/or criminal penalties or other sanctions, including disgorgement of profits and contract suspensions or cancellations,cancellations; any of which could damage our reputation and have a material adverse effect on our business, financial condition or results of operations.

We have operations, assets and/or generate sales in countries all over the world, including countries that are or may become the target of trade and economic restrictions from the U.S. and/or other countries, which we refer to collectively as “Economic Sanctions Laws.” Economic Sanctions Laws are complex and change withover time as international relationships and confrontations between and among nations evolve. For example, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. State Department monitorsmonitor trade restrictions and economic sanctionssanctions. These agencies coordinate, administer and imposeenforce penalties upon U.S. persons and/or entities and, in some instances, non-U.S. entities, for conducting activities or transacting business with certain countries as well as governments, entities, or individuals subject to Economic Sanctions Laws. We have established policies and procedures to support our compliance with Economic Sanctions Laws, and we believe we do not unlawfully conduct business in any sanctioned or restricted countries. However, given the breadth of our international operations and the scope of our sales globally, including via third-party distributors over whom we may have limited or no control, coupled with the complexity and ever-changing nature of Economic Sanctions Laws driven by geopolitical events, there can be no assurance that our controls and procedures have prevented in the past or will prevent at all times in the future a violation of these laws. Failure to comply with Economic Sanctions Laws, or allegations of such failure, could lead to investigations and/or actions being taken against us which could materially and adversely affect our reputation and have a material adverse effect on our business, financial condition or results of operations.

Our Credit Agreement, the indenture governing our 3.875% USD Notes due 2028 and other debt agreements contain restrictive clauses, which may limit our operational and financial flexibility, including, among other things, our ability to grant liens, pay cash dividends, enter new lines of business, repurchase our shares of common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. In addition, our Credit Agreement contains customary remedies, including the right of the lenders to take action with respect to the collateral securing outstanding loans, that would apply should we default or otherwise be unable to satisfy our debt obligations. To the extent an event of default occurs, we may not be able to borrow under the Credit Agreement andand, therefore, may not be able to pursue certain business initiatives or certain transactions that might otherwise be advantageous, meet extraordinary capital needs, finance future operations, plan for or react to market conditions, or otherwise take actions that we believe are in the best interest of our businesses. As a result, our business prospects, financial condition or results of operations may be adversely impacted.

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Our Credit Agreement provides for senior secured credit facilities in an initial aggregate principal amount of $1.42 billion,facilities, consisting of term loans B-3 of $1.04$1.29 billion maturing in 2030 and a revolving facility of $375$500 million maturing in 2027.2031. At DecemberFebruary 31,18, 2024,2026, we had $1.04 billion outstanding under the term loans and full availability of our unused borrowing capacity of $368$373 million, net of letters of credit, of borrowing capacity under theour revolving facility. We and our subsidiaries may incur significant additional indebtedness in the future. Although our Credit Agreement and the indenture governing our 3.875% USD Notes due 2028 contain restrictions with respect to the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and indebtedness incurred in compliance with these restrictions could be substantial. In addition, subject to specified conditions, without the consent of the then-existing lenders, we may add certain incremental term loans or revolving credit facilities, or increase commitments under our revolving credit facility, by up to the sum of (x) the greater of (i) $460 million and (ii) 100% of our consolidated EBITDA, less certain amounts of indebtedness, and (y) an unlimited amount of secured or unsecured incremental debt if, on a pro forma basis, our total first lien net leverage ratio does not exceed certain levels (as described in the Credit Agreement).

As a result of our historical acquisitions, as of December 31, 2024,2025, we had approximately $2.86$2.90 billion of intangible assets and goodwill. Under GAAP, we review our intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. ForAdditionally, example,goodwill consideringis Graphicssubject Solutions' lower than expected results, we conductedto an interim impairment test onat thisleast reportingannually. unit in the third quarter of 2023 which resulted in an impairment charge of $80.0 million. Other indicatorsIndicators that may signal that an asset has become impaired include changes in our strategy for our overall business or use of acquired assets, unexpected negative industry or economic trends, decreased market capitalization relative to net book values, prolonged decline in the value of our stock price, unanticipated competitive activities, change in consumer demand, loss of key personnel and/or acts by governments and judicial courts. To the extent any of our acquired assets do not perform as anticipated, the value of such assets may be negatively affected. As a result, we may be required to record impairment charges, which could be substantial and negatively impact our results of operations and financial position.

Further, requirements for tracking and reporting ESG matters continue to multiply, and our processes and controls for reporting across our operations and supply chain are evolving in accordance with multiple disparate standards, in the U.S. and in foreign countries. These new disclosure requirements, which include climate bills in California, the EU's recently adopted CSRD, its transposition in E.U. countries, the E.U. Taxonomy for sustainable activities, and any final rules that may be approved by the SEC, may negatively impact our business by diverting time, focus and resources. As the interpretation and guidance related to these new requirements evolve over time, significant revisions may need to be made to our methodologies for reporting ESG data, previously reported ESG metrics, our existing sustainability goals, reported progress in achieving such goals, or our ability to achieve them in the future. Evolving environmental and climate laws or regulations could also lead to new or additional investment in product designs, incremental operating expenses and increased environmental expenditures in order to ensure compliance. We expect these ESG disclosure and regulatory trends to continue, and the ultimate cost related to reporting and, where required, compliance could be material.

Upon stockholders' approval on June 4, 2024,Under our 2024 Plan replaced our 2013 Plan, under which no further awards can be granted. However, outstanding awards under our 2013 Plan continue to vest in accordance with their terms and those of the 2013 Plan. Under our new 2024 Plan, an additional 10,000,000 shares were reserved for issuance in connection with the vesting of equity-based awards to be granted to our officers, other employees and directors. ThisNo further awards can be granted under our 2013 Plan, which was replaced by our 2024 Plan. However, outstanding awards under our 2013 Plan continue to vest in accordance with their terms and those of the 2013 Plan. In addition, the number of shares willreserved beunder our 2024 Plan is periodically increased by the number of shares subject to awards under our 2013 Plan which are forfeited, cancelled, expired or otherwise terminated.

The issuance of additional shares upon satisfaction of the applicable vesting conditions under the 2013 Plan or the 2024 Plan could result in a stockholder's percentage ownership being diluted. At December 31, 2024,2025, the aggregate equity-based awards outstanding under both plans werewas as1,996,366 follows:RSUs with each RSU representing a contingent right to receive one share of our common stock or, for performance-based RSUs, multiple shares depending upon the underlying performance metrics and our performance during the applicable performance period.

Our stock price may experience substantial price volatility as a result of many factors, including, without limitation, coverage or sentiment in the media or the investment community; speculation; announcement of acquisitions or divestitures; quarterly financial results and comparisons to estimates by the investment community or financial outlook provided by us; issuance of additional debt or equity; changes in key personnel or business strategy; material litigation or governmental investigations; and expectations regarding capital allocation, including any future sharesstock repurchases and/or any future dividend payments, or any determination to cease repurchasing stock or paying dividends. General or industry specific market conditions, stock market performance or macroeconomic and geopolitical factors unrelated to our performance may also affect the price of our stock. Further, in the past, market fluctuations and price declines in a company's stock have led to securities class action litigation, which could have a substantial cost and divert management time and resources regardless of their outcome.

Our operations are conducted almost entirely through our subsidiaries, and our ability to generate cash to meet our debt obligations or to pay dividends, if any, is highly dependent on the earnings of, and receipt of funds from, our subsidiaries through dividends or intercompany loans, in particular from MacDermid, Incorporated. As a result, we are dependent on the income generated by our subsidiaries, and to some degree on our ability to repatriate earnings from our foreign operations effectively, to meet our debt service obligations, expenses and operating cash requirements or to pay dividends or repurchase shares of our common stock. For example, the amount of dividends, if any, which may be paid to us by our subsidiaries depends on many factors, including our subsidiaries' results of operations and financial condition, limits on dividends or otherwise under applicable law and their constitutional documents, documents governing their indebtedness, and other factors which may be outside our control. If our subsidiaries are unable to generate sufficient cash flows or if we are unable to repatriate earnings effectively, or if we are unable to do so without incurring substantial costs, we may be unable to service our debt obligations, pay our expenses and/or meet our operating cash requirements or to make future dividend payments or sharesstock repurchases, if any.

Natural or human-induced disasters, such as earthquakes, tsunamis, floods, hurricanes, cyclones or typhoons, fires, power or water shortages, telecommunications failures, terrorist acts, civil unrest, conflicts or wars, and epidemics, pandemics or other health crises, such as the COVID 19 pandemic,crises could seriously harm our operations as well as the operations of our customers and suppliers. Among other impacts, these events could limit our ability to access the quantity and quality of raw materials we need and/or increase the price of these materials as worldwide supply and demand may be seriously impacted. In addition, extreme weather, natural disasters or other unexpected events could result in physical damage to, and closure of, one or more of our manufacturing or sale facilities, temporary or long-term disruption in our supply chain and/or disruption of our ability to deliver products and services to our customers and/or increase the risk of chemical spills, other discharges or releases of toxic or hazardous substances or pipeline ruptures, all of which could in turn adversely affect our operations, financial condition, reputation and/or stock price. Current or future business continuity plans and insurance arrangements may not provide protection against property damage, loss of business or increased costs that may arise from such events, particularly if these are catastrophic in nature or occur in combination. We believe climate change serves as a risk multiplier increasing both the frequency and severity of natural disasters that may affect our worldwide business operations. Further, the long-term effects of climate change on general economic conditions are unclear, and changes in the supply or demand of our products, or available sources of the raw materials we use in our manufacturing processes, may affect the availability or cost of our products.

Element Solutions, incorporated in Delaware in January 2014, is a leading global specialty chemicals technology company whose businesses supply a broad range of solutions that enhance the performance of products people use every day. Developed in multi-step technological processes, these innovative solutions enable customers' manufacturing processes in severalmultiple keyhigh-value industries, including consumer electronics, power electronics, semiconductor fabrication, high-performance computing, communications and data storage infrastructure, automotive systems, industrial surface finishing, consumer packagingfinishing and offshore energy. Our product innovation and product extensions are expected to continue to drive sales growth in both new and existing markets while expanding margins through a consistent focus on increasing customer value propositions.

Our operations are organized into two segments: Electronics and Industrial & Specialty.Specialties. In 2024,2025, we achieved net sales of $2.46$2.55 billion, to which our Electronics and Industrial & SpecialtySpecialties segments contributed approximately 64%70% and 36%,30%, respectively.

Electronics – The Electronics segment researches, formulates and sells specialty chemicals and material process technologies for all types of electronics hardware,hardware from complex printed circuit board designs to advanced semiconductor packaging. In high-performance datacenters, mobile communications, computers, automobiles and aerospace equipment, its products are an integral part of the electronics manufacturing process and the functionality of end-products. The segment's "wet chemistries" for metallization, surface treatments and solderable finishes form the physical circuitry pathways and its "assembly materials," such as SMT, pastes, fluxes and adhesives, join those pathways together. The segment provides specialty chemical solutions through the following businesses: Assembly Solutions, Circuitry Solutions and Semiconductor Solutions.

Industrial & SpecialtySpecialties – The Industrial & SpecialtySpecialties segment researches, formulates and sells specialty chemicals and material process technologies that enhance surfaces or improve industrial processes in diverse industrial sectors from automotive trim to transcontinental infrastructure and from high-speed printing to high-design faucets. Its products include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids infor offshore energy production. TheseThe fully consumablesegment's products are used in the aerospace, automotive, construction, consumer electronics, consumer packaged goodselectronics and oil and gas production end-markets. The segment provides specialty chemical solutions through the following businesses: Industrial Solutions, Graphics Solutions and Energy Solutions. On February 28, 2025, we completed the sale of our flexographic printing plate business, MacDermid Graphics Solutions.

•Portfolio Optimization - On SeptemberFebruary 1,28, 2024,2025, we agreedcompleted tothe sellsale of our flexographic printing plate business, MacDermid Graphics Solutions, for approximately $325$320 million.million, net of disposed cash. MacDermid Graphics Solutions constituteswas substantially all of our Graphics Solutions businessreported within ourthe Industrial & SpecialtySpecialties segment. The transactionsale is expected to closeresulted in thea first quartergain of 2025,$66.5 subject to customary closing conditions and adjustments.million.

We mayregularly pursue targeted and opportunistic acquisitions in our existing or adjacent end-markets that seek to strengthen our current businesses, expand and diversify our product offerings, and enhance our growth and strategic position. We expect to achieve commercial and distribution efficiencies by expanding into related categories that can be marketed through our existing distribution channels or provide us with new distribution channels for our existing products. To the extent we pursue future acquisitions, we expect that acquisition candidates would demonstrate a combination of attractive margins, strong cash flow characteristics, niche leading positions and consumable products that generate recurring revenue. We believe the diversity of the niche end-markets we serve will enable us to continue our growth and maintain strong cash flow generation throughout economic cycles and mitigate the impact of a downturn in any single market. We will only pursue aan acquisition candidate when it is deemed to be fiscally prudent and meets our acquisition criteria. We anticipate that any future acquisitions would be financed through a combination of cash on hand, availability under our Credit Agreement and/or new debt or equity offerings.

In 2024,2025, approximately 77%79% of our net sales originated outside of the U.S. and were denominated in numerous currencies, including the euroChinese yuan and Chinese yuan.euro. Therefore, fluctuations in foreign exchange rates in any given reporting period may positively or negatively impact our financial performance. Foreign exchange translation negativelyhad impactedan immaterial impact on our 20242025 net sales performance by approximately 2%.performance.

The preparation of financial statements in conformity with GAAP requires us to make estimates that may significantly impact our reported financial results and accompanying disclosures. We base our estimates, assumptions and judgments on historical experience, current conditions as well asand other factors that we consider reasonable. Estimates relate to matters that are inherently uncertain and actual results may differ from these estimates and such differences could be material to our financial statements.

In 2024,2025, the estimated fair value of each of our reporting units was considered to be substantially in excess of their respective carrying value.

To supplement our financial results presented in accordance with GAAP in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, we present certain non-GAAP financial measures, such as operating results on a constant currency and organic basisbasis, Adjusted EBITDA and Adjusted EBITDA.EBITDA margin. Management internally reviews these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to our business. We believe these non-GAAP financial measures, which are each further described below, provide investors with an additional perspective on trends and underlying operating results on a period-to-period comparable basis. We also believe that investors find this information helpful in understanding the ongoing performance of our operations separate from items that may have a disproportionate positive or negative impact on our financial results in any particular period or are considered to be associated with our capital structure.

We define Adjusted EBITDA as EBITDA, excluding the impact of additional items included in GAAP earnings which we believe are not representative or indicative of our ongoing business or are considered to be associated with our capital structure. Management believes Adjusted EBITDA providesand Adjusted EBITDA margin provide investors with a more complete understanding of the long-term profitability trends of our business and facilitates comparisons of our profitability to prior and future periods.

Net sales for 20242025 increased 5%4% on a reported basis, 7%3% on a constant currency basis and 4%6% on an organic basis. Electronics' consolidated results were positively impacted by $59.7$64.4 million of pass-through metals pricing and $8.1 million of acquisitions and Industrial & Specialty'sSpecialties' consolidated results were positivelynegatively impacted by $0.5$139 million of acquisitions.divestitures.

•Assembly Solutions: net sales increased 8%16% on a reported basis and 1%8% on an organic basis. Pass-through metals pricing had a positive impact of 8% on reported net sales. Foreign exchange had aan negativeimmaterial impact of 2% on reported net sales. The increase in organic net sales was primarily due to higher paste and flux volumes from increased consumer electronics demand improvement in consumer, mobileAsia and computerthe end markets, offset by weakness in broader industrial and automotive end markets.Americas.

•Circuitry Solutions: net sales increased 11%12% on a reported basis and 12%10% on an organic basis. Foreign exchange had a negativepositive impact of 1%2% on reported net sales. The increase in organic net sales was primarily due to increased demand in thecontinued AI and data center endinvestment markets,driving electricdemand vehiclesfor inmetallization China and the mobile phone end market.solutions.

•GraphicsSemiconductor Solutions: net sales increased 2%14% on a reported basis and 3%13% on an organic basis. Foreign exchange had a negativepositive impact of 1% on reported net sales. The increase in organic net sales was primarily due to increased demand in Asia for flexographicwafer platesplating and newadvanced businesspackaging material solutions, as well as growth in Latinpower Americaelectronics partiallyfrom offsetnew byEV lower newspaper net sales.customers.

•Energy Solutions: net sales increased 8% on a reported basis and 8%7% on an organic basis. Foreign exchange had ana immaterialpositive impact of 1% on reported net sales. The increase in organic net sales was primarily due to price improvement and a continuedan increase in drillingproduction volumes from competitive wins and energyongoing productionpricing activity from higher utilization rates.actions.

Electronics' gross profit for 20242025 increased 17%10% on a reported basis and 18%9% on a constant currency basis. The constant currency increase in gross profit was primarily driven by higherbroad-based netorganic sales, favorable product mix fromvolume growth inacross higherall marginthree products,Electronics particularly in Asia, and lower raw material costs.businesses. The increasedecrease in gross margin was primarily due to favorablethe productnegative miximpact from growth inof higher marginprices products,for thepass-through recaptured margin on ViaForm Distributions Rightstin and lower raw material costs.silver.

Industrial & Specialty'sSpecialties' gross profit for 20242025 increaseddecreased 6%7% on a reported basis and 8%7% on a constant currency basis. The MGS Transaction had a negative impact of $43.1 million, or 11%, on constant currency increase in gross profitprofit, which was primarilythe drivenprimary bydriver lower raw material costs inof the Industrial Solutions business combined with higher net sales in the Graphics Solutions and Energy Solutions businesses.decrease. The increase in gross margin was primarily due to growththe sale of the lower margin Graphics Solutions business and continued price discipline and raw material deflation in our higher margin Energy Solutions business, favorable product mix and lower commodity surcharge-based revenue in ourthe Industrial Solutions business.

Operating expenses for 2024 decreased 7% on a reported basis and 6% on a constant currency basis. Excluding the goodwill impairment charge discussed above, operating expenses for 20242025 increased 4%5% on a reported basis and 5% on a constant currency basis. The constant currency increase was primarily driven by $19.8a 2025 executive share grant for $37.1 million in the fourth quarter of 2025, higher incentive compensation costs, primarily due to higher accruals associated with increased expectations for strong full year financial results, $12.2$6.1 million of higher research and development costs relatedassociated with our Kuprion ActiveCopper applications and $4.0 million of non-recurring costs associated with the MGS Transaction in 2025; partially offset by $22.7 million of lower operating expenses due to the MGSsale Transaction,of higherMacDermid personnelGraphics costsSolutions and $3.9 million of research and development costs associated with contingent consideration for the Kuprion Acquisition incurred in the first quarter of 2024. This was partially offset by a 2023 expense of $15.7 million for research and development costs associated with the purchase accounting related to the Kuprion Acquisition. See Note 4, Acquisitions, to the Consolidated Financial Statements for further information regarding the Kuprion Acquisition research and development costs.

Interest expense, net increaseddecreased $7.0$2.9 million primarily due to higher interest income partially offset by a higher effective interest rate on our term loans B-2 (which werelower outstanding fromterm Decemberloan 18,principal 2023 through October 15, 2024balance when thecompared term loans B-2 were fully prepaid) when consideringto the impactprior of our interest rate swaps and cross currency swaps, partially offset by higher interest income.year.

Foreign exchange (losses) gains

For the year ended December 31, 2024,2025, the fluctuations in foreign exchange (losses) and gains were primarily driven by the remeasurement of intercompany loans.loans and working capital balances.

The income tax expense for 20242025 totaled $44.8$74.6 million, as compared to $13.0$44.8 million in 2023.2024. Our tax expense for 20242025 was lowerhigher than the U.S. statutory tax rate primarily driven by a $7.7 million multi-year settlement, an increase in non-deductible GAAP expenses for a 2025 executive share grant, withholding taxes, valuation allowances on foreign tax credits and the impact of changes to the geographical mix of earning. These are partially offset by a continued U.S. benefit related to claiming foreign tax credits consistent with our election in the fourth quarter of 2023, release of valuation allowances and deductions for FDII, with offsets from withholding taxes, tax attribute expirations and the impact of changes to the geographical mix of earnings.FDII.

The rate for 2024 also includes a benefit associated with the release of valuation allowances of $40.8 million previously recorded against certain U.K. tax attribute carryforwards, primarily consisting of net operating loss carryforwards and interest carryforwards. The valuation allowances were released as the Company expects improved profitability in its U.K. business and a shift to a three-year cumulative income position. The Company determined there was sufficient positive, objectively verifiable evidence to conclude that it is more likely than not that, as of December 31, 2024, select U.K. net deferred tax assets will be realized. These expectations are based on actual results, management's assessment of projected future taxable income, and expected utilization of net operating losses and tax carryforwards During the third quarter of 2024, an internal restructuring of the Graphics business was completed which resulted in the recognition of a capital gain of $208 million. ThisThe gain was offset by capital losses generated in 2024 totaling $10.1 million and capital loss carryforwards of $198 million. The capital gain provided income of the appropriate character to support the release of a valuation allowance on the amount of the capital loss carryforward utilized. The remaining unused capital loss carryforward with a full valuation allowance expired at the close of 2024. The capital gain also resulted in a higher interest expense deduction andand, consequentiallyconsequentially, a lower deduction for FDII and lower utilization of certain foreign tax credits carryforwards before expiration. In addition, theThe gain on the internal restructuring resulted in a step-up in tax basis and the Company recorded a deferred tax asset of $22.5 million on the excess of stock tax basis over book basis due to the subsequent held for sale classification.classification offset with a full valuation allowance. As ofnoted the balance sheet date there is no objectively verifiable evidence supporting income of appropriate character to realize this tax benefit, therefore a valuation allowance has been recorded againstabove, this deferred tax asset.asset Due toand the statuscorresponding ofvaluation allowance were realized and released in connection with the MGS Transaction it is reasonably possible the status of this deferred tax assets and related valuation allowance are subject to change due to one or more future confirming events.Transaction.

DuringAlso, during 2024, the Company finalized the 2023 consolidated U.S. federal income tax return along with prior years amended federal corporate income tax returns related to crediting foreign taxes including the return-to-provision true-up of foreign tax credits, valuation allowances and prior year one-time benefit.

Electronics' Adjusted EBITDA for 20242025 increased 14%6% on a reported basis and 16%5% on a constant currency basis. The constant currency increase was primarily driven by higherthe grossbroad-based profits related to favorable product mix and growthincrease in sales across the Circuitry and Semiconductor Solutions businesses.segment.

Industrial & Specialty'sSpecialties' Adjusted EBITDA for 20242025 increaseddecreased 5% on a reported basis and 8%4% on a constant currency basis. The MGS Transaction had a negative impact of $26.4 million, or 15%, on constant currency increaseAdjusted was primarily driven by higher gross profits related to lower raw material costs and growth in our higher margin Energy Solutions business.EBITDA.

Our primary sources of liquidity during 20242025 were the proceeds from the syndicationMGS ofTransaction our new term loans B-3 of approximately $1.04 billion as well asand available cash generated from operations. Our primary uses of cash and cash equivalents were to prepay approximately$200 $1.14 billionmillion of debtour outstanding,outstanding payterm cashloans dividends andB-3, fund operationsoperations, including working capital and capital expenditures.expenditures, pay cash dividends and repurchase shares of our common stock under our stock repurchase program. Our first significant debt principal payment of approximately $800 million is related to the maturity of our 3.875% USD Notes due 2028. In the fourth quarter of 2024,2025, we paid a cash dividend of 8 cents per share. We currently expect to continue to pay a cash dividend on a quarterly basis; however, the actual declaration of any cash dividends, as well as their amounts and timing, will be subject to the final determination of our Board of Directors based on factors including our future earnings and cash flow generation.

The expected long-term rate of return on assets assumption is developed with reference to historical returns, forward-looking return expectations, the Domestic Pension Plans and Foreign Pension Plans' investment allocations, and peer comparisons. We used a long-term rate of return on plan assets of 7.0%6.7% and 3.1%3.9% for our Domestic Pension Plans and Foreign Pension Plans, respectively, to determine our net periodic pension expense for 2024.2025. The discount rate used to value the pension obligation was developed with reference to a number of factors, including the current interest rate environment, benchmark fixed-income yields and expected future pension benefit payments. Discount rates of 5.6%5.3% and 3.1%3.5% were established for the Domestic Pension Plan and Foreign Pension Plans, respectively, at December 31, 2024,2025, compared to rates of 5.0%5.6% and 3.1% established for those respective plans at December 31, 2023.2024. We evaluate the Pension Plans' actuarial assumptions on an annual basis, including the expected long-term rate of return on assets and discount rates. A one percent increase in the discount rate would increase the pension plan expense by approximately $0.7 million and decrease the pension benefit obligation by approximately $14.0$13.9 million, whereas a one percent decrease in the discount rate would decrease the pension plan expense by approximately $0.9 million and increase the pension benefit obligation by approximately $16.7$15.9 million.

The Domestic Pension Plans were overfunded by $5.0 million at December 31, 2025 compared to $2.3 million at December 31, 2024 compared to underfunded by $8.2 million at December 31, 2023.2024. The increase in the funding position in 2025 was primarily driven by $11.0$1.3 million of actuarial gainsloss due to changes in plan assumptions and experience and a $7.1$12.0 million return on plan assets partially offset by $8.4$8.7 million of interest costs.

ThereIn haveaddition been no material changes into the risk factors from those set forth in Part I, Item 1A, Risk Factors of our 2025 Annual Report.Report, you should consider the following risk factors before investing in our securities.

We disclose certain financial measures and Adjusted EBITDA,EBITDA on a constant currency basis by adjusting results to exclude the impact of changes due to the translation of foreign currencies of our international locations into U.S. dollars. Management believes this non-GAAP financial information facilitates period-to-period comparison in the analysis of trends in business performance, thereby providing valuable supplemental information regarding our results of operations, consistent with how we internally evaluate our financial results.

Three and six months ended MarchJune 31,30, 2026 compared to three and six months ended MarchJune 31,30, 2025

Net sales in the firstsecond quarter of 2026 increased 41%56% on a reported basis and 10%15% on an organic basis. Electronics' consolidated results were positively impacted by $101$107 million of pass-through metals pricing and $64.8$129 million of acquisitions and Specialties' consolidated results were negativelypositively impacted by $5.6$16.1 million of divestitures net of acquisitions.

Electronics' net sales in the firstsecond quarter of 2026 increased 61%75% on a reported basis and 15%20% on an organic basis. Net sales from pass-through metals were $256$317 million and $101$113 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

•Assembly Solutions: net sales increased 68%67% on a reported basis and 12%18% on an organic basis. Pass-through metals pricing had a positive impact of 52%49% on reported net sales. Foreign exchange had aan positiveimmaterial impact of 4% on reported net sales. The increase in organic net sales was primarilydriven dueby tovolume demandincreases foracross engineeredseveral product categories in Asia, including continued strength in preform materials infor datacenter applications and strength in pastes for premium smartphones in Asia.applications.

Specialties' net sales in the firstsecond quarter of 2026 increased 4%14% on a reported basis and 1%3% on an organic basis.

•Industrial Solutions: net sales increased 6%5% on a reported basis and were relatively flat3% on an organic basis. Foreign exchange had a positive impact of 6%2% on reported net sales. FlatOrganic organicgrowth saleswas weredriven theby resultpricing actions and improved volume of automotiveboth customerfunctional softnessand decorative plating chemistry in the Americas offset by the impact of higher metal surcharges.Europe.

•Energy Solutions: net sales increased 21%4% on a reported basis and 15%1% on an organic basis. Foreign exchange had a positive impact of 6%3% on reported net sales. The increase in organic net sales was primarily due to pricing actions andpartially anoffset increaseby inlower production volumes from competitive wins.volumes.

Electronics' gross profit in the firstsecond quarter of 2026 increased by 42%32% on a reported basis and 39%31% on a constant currency basis. The Micromax Acquisition had a positive impact of 8%18% on constant currency gross profit which includes $13.6$33.4 million of gross profit less an inventory step-up from purchase accounting of $1.4 million. The constant currency increase in gross profit dollars was primarily driven by broad-based organic volume growth across the Electronics businesses. Gross profit margins excluding net sales from pass-through metals improveddecreased 550240 bpsbasis points when compared to the firstsecond quarter of 2025. The increasedecrease in gross margin excluding the impact of pass-through metals was primarily due to positivenegative mix from higherlower valuemargin precious metals-based product sales within the portfolio, including the Micromax products.revenue.

Specialties' gross profit in the firstsecond quarter of 2026 increased by 5%12% on a reported basis and remained relatively flat10% on a constant currency basis. The EFC Acquisition had a positive impact of 7% on constant currency gross profit which includes $7.9$7.0 million of gross profit less an inventory step-up from purchase accounting of $2.0$0.7 million. TheSofter MGS Transaction had a negative impact of $8.8 million, or 10%, on constant currency gross profit. Underlyingunderlying gross margin improvement was primarily driven by growthraw inmaterial the higher margin Energy Solutions business.inflation.

Operating expenses in the firstsecond quarter of 2026 increased 22%28% on a reported basis and 19%27% on a constant currency basis. The constant currency increase was primarily driven by $10.3 million of operating expenses related to businesses acquired in the first quarter of 2026 ($5.5$6.4 million from the Micromax Acquisition and $4.8$3.9 million from the EFC Acquisition), $10.3 million of higher non-recurring acquisition costs, higher incentive compensation costs due to increased expectations for strong full year financial resultsresults, $5.7 million of higher non-recurring acquisition and integration costs and a $5.9$3.4 million increase in the fair value of the contingent consideration associated with the EFC Acquisition in the firstsecond quarter of 2026; partially offset by $4.5 million of lower operating expenses due to the sale of MacDermid Graphics Solutions in the first quarter of 2025.2026.

For the three and six months ended MarchJune 31,30, 2026 and 2025, interest expense, net increased $7.2$11.1 million and $18.3 million, respectively, primarily due to a higher effective interest rate on a higher outstanding term loan principal balance and lower interest income when compared to the prior year period as well as interest expense due to borrowings under the Company's revolving credit facility in the first quarter of 2026.

Foreign exchange gains (losses)

For the three and six months ended MarchJune 31,30, 2026 and 2025, the fluctuations in foreign exchange gains (losses) were primarily driven by the remeasurement of intercompany loans.

Other expense,income (expense), net

For the three months ended MarchJune 31,30, 2026, other expense,income, net included $5.2$9.9 million of net lossesgains associated with metals derivative contracts ($26.9$1.9 million of realized losses and $21.7$8.0 million of unrealized gains) and $0.6$0.8 million of charges due to highly inflationary accounting for our operations in Turkey. For the three months ended MarchJune 31,30, 2025, other expense,income, net included $11.1$1.4 million of net lossesgains associated with metals derivative contracts ($0.3$2.5 million of realized losses and $10.8$3.9 million of unrealized lossesgains), $1.8 million of debt extinguishment costs related to the partial prepayment of our term loans B-3 and $1.2$0.9 million of charges due to highly inflationary accounting for our operations in Turkey.

Gain(Loss) gain on divestitures

In the first quarter of 2025, we completed the sale of our flexographic printing plate business, MacDermid Graphics Solutions, resulting in a gain of $72.1$70.9 million. In the second quarter of 2025, we recognized a loss on sale of $4.3 million for other immaterial divestiture activity.

For the three months ended MarchJune 31,30, 2026, the Company recognized income tax expense of $26.7$29.8 million as compared to $17.8$15.8 million in the same period for 2025. Income tax expense for the three months ended MarchJune 31,30, 2026, includes a continued U.S. benefit related to claiming foreign tax credits, a recurring benefit from a U.S. tax deduction related to foreign-derived deduction eligible income (commonly referred to as FDDEI), partiallyan offsetexpense withrelated foreign tax credit valuation allowances of $6.4 million andto net Controlled Foreign Corporation tested income (commonly referred to as NCTI), includingand the impact of changes to the level and mix of earnings. The foreign tax credit valuation allowance was required after taking into account the impacts on projected future taxable income from the EFC and Micromax Acquisitions, including significant tax-basis amortization of acquired intangible property and increased interest expense from the Add-on Term Loans.

Income tax expense for the three and six months ended MarchJune 31,30, 2025, included a continued U.S. benefit related to claiming foreign tax credits and a benefit from a U.S. tax deduction related to foreign-derived intangible income (commonly referred to as FDII), partially offset by a $7.7 million multi-year tax settlement and the impact of changes to the level and mix of earnings.

On February 28, 2025, wethe Company completed the MGS Transaction and realized a gain on sale of $72.1$70.9 million as of March 31, 2025. This transaction resulted in a nominal tax impact which reduced the effective tax rate primarily due to the realization of a deferred tax asset and an offsetting release of a valuation allowance.

For the three months ended MarchJune 31,30, 2026, Electronics' Adjusted EBITDA increased 34%47% on a reported basis and 29%44% on a constant currency basis. The Micromax Acquisition had a positive impact of $10.2$30.0 million, or 11%,31%, on constant currency Adjusted EBITDA. The remaining constant currency increase was primarily driven by the broad-based increase in sales across all businesses.

For the three months ended June 30, 2026, Specialties' Adjusted EBITDA increased 9%7% on a reported basis and 3%4% on a constant currency basis. The EFC Acquisition had a positive impact of $3.7$3.8 million, or 9%, on constant currency Adjusted EBITDA. The MGS Transaction had a negative impact of $5.3 million, or 13%,10%, on constant currency Adjusted EBITDA. The remaining constant currency increasedecrease was primarily driven by growthincreased fromraw material inflation within the Energy Solutions business.

Our primary sources of liquidity during the threesix months ended MarchJune 31,30, 2026 were the proceeds from the Add-on Term Loans andLoans, our revolving credit facility and available cash generated from operations. Our primary uses of cash and cash equivalents were to fund the Micromax Acquisition, the EFC Acquisition and operations, including working capital and capital expenditures and pay cash dividends. Our first significant debt principal payment of approximately $800 million is related to the maturity of our 3.875% USD Notes due 2028. In the firstsecond quarter of 2026, we paid a cash dividend of 8 cents per share. We currently expect to continue to pay a cash dividend on a quarterly basis; however, the actual declaration of any cash dividends as well as their amounts and timing, will be subject to the final determination of our Board of Directors based on factors including our future earnings and cash flow generation.

For the full year 2026, we expect our capital expenditures to be approximately $75.0 million to $100 million. We believe that our cash and cash equivalents and cash generated from operations, supplemented by our availability under our lines of credit, including our revolving credit facility under the Credit Agreement, will be sufficient to meet our working capital needs, interest payments, capital expenditures, potential dividend payments and other business requirements for at least the next twelve months. However, working capital cycles and/or future repurchases of our common stock and/or acquisitions may require additional funding, which may include future debt and/or equity offerings. Our long-term liquidity may be influenced by our ability to borrow additional funds, manage interest rates, renegotiate existing debt and/or raise new equity or debt under terms that are favorable to us.

During the threesix months ended MarchJune 31,30, 2026, approximately 76%77% of our net sales were generated from non-U.S. operations, and we expect a large portion of our net sales to continue to be generated outside of the U.S. As a result, our foreign subsidiaries will likely continue to generate a substantial portion of our cash. We manage our worldwide cash requirements with available funds generated by the many subsidiaries through which we conduct business. We expect to continue to have cost efficient access to those funds on a global basis. We may transfer cash from certain international subsidiaries to the U.S. and/or other international subsidiaries when we believe it is cost effective to do so. Of our $177$190 million of cash and cash equivalents at MarchJune 31,30, 2026, $145$170 million was held by our foreign subsidiaries.

The decrease in net cash flows provided by operating activities of $92.6$65.6 million was primarily driven by higher investment in working capital from rising metals prices partially offset by higher cash operating profits (net income adjusted for non-cash items), including higher earnings as a result of the Micromax Acquisition and the EFC Acquisition, and lower incentive compensation due to timing of payments associated with 2025 performance.Acquisition.

During the threesix months ended MarchJune 31,30, 2026, we paid $493$494 million in connection with the Micromax Acquisition and $367 million in connection with the EFC Acquisition.Acquisition and paid approximately $24.3 million in higher capital expenditures due to several large projects, including the initial build out for Kuprion capacity and plant consolidation projects. During the threesix months ended MarchJune 31,30, 2025, we received cash proceeds of $323$326 million uponfrom divestitures, primarily related to the closing of the MGS Transaction.

During the threesix months ended MarchJune 31,30, 2026, we received cash proceeds of $449 million from the Add-on Term Loans and $85.0$50.0 million in net borrowings from the revolving credit facility. In addition, we paid $20.2$39.8 million of cash dividends on shares of our common stock. During the threesix months ended MarchJune 31,30, 2025, we prepaid $200 million of our term loans B-3B-3. andIn addition, we paid $19.8$39.1 million of cash dividends on shares of our common stock, $19.4 million in aggregate for the repurchase of shares of our common stock under our stock repurchase program and $4.8 million for shares of our common stock withheld to satisfy the tax withholding requirements related to the vesting of RSUs included in "Other, net."

At MarchJune 31,30, 2026, we had $2.16$2.12 billion of indebtedness, net of unamortized discounts and debt issuance costs of $14.6$13.6 million, which was comprised of:

Availability under our revolving credit facility and various lines of credit and overdraft facilities totaled $436$469 million at MarchJune 31,30, 2026 (net of $7.0$6.9 million of stand-by letters of credit which reduce our borrowing capacity).

At MarchJune 31,30, 2026, we were in compliance with the debt covenants contained in the Credit Agreement and the indenture governing our 3.875% USD Notes due 2028.