ELEMENT SOLUTIONS INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) | MarketScreener

2022-07-31 17:14:37 By : Ms. Kelly ZHU

Our operations are organized into two segments: Electronics and Industrial & Specialty, which are each described below:

The segment provides specialty chemical solutions through the following businesses:

technologies, fluxes, cleaners and other

circuits in high volume device

interconnect materials are used to

formulations to the electronics industry, we

manufacture printed circuit boards and

portfolio is focused on specialized

materials, such as surface treatments,

wafer bump processes and photomask

The segment provides specialty chemical solutions through the following businesses:

and plastic finishing chemistries, we

systems that protect and decorate

coatings improve resistance to wear

shock absorbers for cars or provide

markets such as automotive interiors

broader sustainable solutions platform, we

for turnkey wastewater treatment and

industrial customer base is highly diverse

to transfer images on to consumer

to improve print quality and

are used in the consumer packaging

to the offshore energy industry, we

fluids for major oil and gas companies

Our recent accounting pronouncements have not changed materially from the summary disclosed in Note 3, Recent Accounting Pronouncements, to the Consolidated Financial Statements included in our 2021 Annual Report.

The impact of foreign currency translation is calculated by converting our current-period local currency financial results into U.S. dollars using the prior period's exchange rates and comparing these adjusted amounts to our prior-period reported results. The difference between actual growth rates and constant currency growth rates represents the estimated impact of foreign currency translation.

For a reconciliation of GAAP net sales growth to organic net sales growth, see "Net Sales" within the "Results of Operations" section below.

For a reconciliation of "Net income attributable to common stockholders" to Adjusted EBITDA, and more information about the adjustments made, see Note 12, Segment Information, to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

NOTE: Totals may not sum due to rounding.

Electronics' net sales in the second quarter of 2022 increased 11% on a reported basis and 8% on an organic basis.

Industrial & Specialty's net sales in the second quarter of 2022 increased 24% on a reported basis and 2% on an organic basis.

marketing campaigns from CPG customers which resulted in our customers extending the replacement cycle for flexographic plates.

NOTE: Totals may not sum due to rounding.

Year to date, Electronics' net sales increased 15% on a reported basis and 8% on an organic basis.

•Circuitry Solutions: net sales increased 10% on a reported basis and 13% on an organic basis. Foreign exchange had a negative impact of 3% on reported net sales. The increase in organic net sales was primarily due to growth in the memory disk business and pricing actions.

Year to date, Industrial & Specialty's net sales increased 27% on a reported basis and 3% on an organic basis.

For the three and six months ended June 30, 2022, interest expense, net increased primarily due to the interest associated with the $400 million Add-on Term Loans entered into in the third quarter of 2021.

The comparison of the Company's income tax provision between periods can be significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items. See Note 10, Income Taxes, to the unaudited Condensed Consolidated Financial Statements for further information.

We may from time to time seek to repurchase our equity and/or to retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, applicable restrictions under our various financing arrangements and other factors.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

Credit Facilities and Senior Notes

At June 30, 2022, we had $1.90 billion of indebtedness, net of unamortized discounts and debt issuance costs, which primarily included:

•$1.11 billion of term debt arrangements outstanding under our term loans; and

•$790 million of 3.875% USD Notes due 2028.

At June 30, 2022, we were in compliance with the customary affirmative and negative covenants, events of default and other customary provisions of the Credit Agreement as well as with the covenants included in the indenture governing our 3.875% USD Notes due 2028.

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