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- **Record Q3 Performance**: $147M adjusted EBITDA (vs. $140-145M guidance), driven by 7% Electronics organic growth and 29% Industrial margin (ex metals).
- **Strategic Acquisition**: Micromax ($40M EBITDA) to close Q1 2026, >5% EPS accretive and fitting Element's electronics portfolio.
- **Kuprion Momentum**: Mid-scale plant ramping Q4 2025, with commercial qualification underway for 2026 revenue.
- **Cash Flow Strength**: $84M free cash flow, 2.5x pro forma leverage, ample capacity for future M&A or growth investments.
- **Segment Outlook**: Electronics (data center, AI) growth offsetting EV weakness; Industrial poised for margin expansion as volumes recover.

**【CEO Summary Section】**
- Reported record third-quarter results with adjusted EBITDA of $147 million, exceeding guidance of $140-145 million.
- Announced acquisition of Micromax, a $40 million EBITDA contributor, expected to be >5% accretive to EPS and close in Q1 2026.
- Electronics segment achieved 7% organic growth, driven by data center and smartphone demand, despite EV market weakness.
- Industrial segment delivered 29% adjusted EBITDA margin (ex pass-through metals), benefiting from cost optimization and new wins.
- Kuprion commercialization on track for Q4 2025 ramp, with potential 2026 revenue contribution.

**【CFO Financial Commentary】**
- Organic sales grew 5%, with Electronics segment up 7% (semiconductor +5%, circuitry +13%).
- Adjusted EBITDA margin improved 20bps YoY to 28% (ex metals), driven by cost control and mix.
- Generated $84 million free cash flow, with $17 million CapEx for growth initiatives.
- Pro forma net leverage expected at 2.5x post-Micromax close, below 3.5x long-term target.

**【Q&A Key Highlights】**
- Micromax: 40%+ EBITDA margin (ex metals), fits between assembly and circuitry businesses; expects accelerated growth via Element's supply chain connectivity.
- Kuprion: Mid-scale plant to start production Q4 2025, targeting 2026 revenue; qualifying with key customers.
- Semiconductor: Wafer-level packaging (+15%+ growth) offset EV-related power electronics weakness; Argomax gaining share in high-thermal applications.
- Offshore: Strong pricing and demand visibility, but longer-cycle business subject to energy price trends.
- Leverage: 2.5x pro forma; capacity to deploy >$100 million in 2026 for accretive M&A or growth.

Element Solutions Inc (ESI) Q3 2025 Earnings Call Transcript

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