ESI

Element Solutions Inc

NYSE · MATERIALS · MISCELLANEOUS CHEMICAL PRODUCTS

36.34

+0.67 +1.88%

USD · close Oct 21

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MKT CAP $8.9BP/E 58.6DIV YIELD 0.88%FCF YIELD 1.37%REV TTM $2.8B +13.0%NET INCOME $148.7M −48.0%NET DEBT $1.5B52W 22.99 – 49.09SEC XBRL · TTM TO Invalid Date

How ESI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

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New in FY2025

The information on or linked to our website is not incorporated by reference into, and does not form a part of, this 2025 Annual Report or any of our other SEC filings.
Corporate Information Our principal executive offices are located at 500 South Pointe Drive, Suite 200, Miami Beach, Florida 33139 and our telephone number is (561) 207-9600.
Risk Factors The following discussion of "risk factors" identifies the material factors that may have a 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 2025 Annual Report when evaluating our business.
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.
In 2025, approximately 79% of our net sales were generated from non-U.S. operations.
As a result, we face certain risks inherent in international trade which may reduce our sales and harm our business, including: • 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 and other hostilities in the Middle East, and countervailing tariffs imposed by foreign governments on U.S. products; • changes in global or local economic conditions, including inflation, hyperinflation, fluctuations in interest rates and other increasing price levels in certain sectors, such as energy, impacting availability and cost of goods and services; • fluctuations in currency values and currency exchange rates for countries in, or with which, we conduct business; • changes or uncertainty in international, national or local legal environments, including tax, data handling, privacy, intellectual property, consumer protection, environmental and antitrust laws; • adverse tax consequences, including as a result of changes in taxation and regulatory requirements, transfer pricing practices involving our foreign operations, and additional withholding taxes or other taxes on foreign income; • foreign exchange controls or other currency restrictions and limitation on the movement of funds, potentially leading to the inability to readily repatriate earnings from foreign operations effectively; • natural disasters, extreme weather events, regional or global health concerns; • establishing and maintaining relationships with local distributors and OEMs; • 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; • import and export control and licensing requirements; risk of non-compliance with the Foreign Corrupt Practices Act of 1977, U.S. export control and trade sanction laws, SEC rules regarding conflict minerals sourcing and other similar anti-corruption and international trade laws or regulations in other jurisdictions; • greater difficulty in safeguarding intellectual property than in the U.S.; • difficulty in staffing and managing geographically diverse operations and ensuring compliance with our policies and procedures; and • challenges in maintaining an effective internal control environment, including language and cultural differences, varying levels of GAAP expertise and internal control over financial reporting.
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 imposed and may continue to impose new tariffs, trade restrictions and export restrictions, which may negatively impact end-user demand or restrict our ability to sell products.
The failure to attract and retain key personnel, or effectively manage succession, could have a material adverse effect on our business, financial condition or results of operations.
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 have a material adverse effect on our business, financial condition or results of operations.
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 assets, or any third-party insurance we may procure, may not be sufficient to protect us from, or compensate us for, actual liabilities.
The specialty chemicals 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.
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 2025, approximately 79% of our net sales were generated outside of the U.S.
Such regulations include the European Union's REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals), which mandates compliance obligations and restrictions on certain chemicals; REACH-like regimes, which have now been adopted in several other countries; the E.U.
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 lead 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.
A catastrophic occurrence at a location where our products are used may expose us to substantial liability for personal injury, wrongful death, product liability, commercial claims and reputational damage.
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.
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 , including via third-party distributors over whom we may have limited or no control .
F ailure 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; 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 over time as international relationships and confrontations between and among nations evolve.
State Department monitor trade restrictions and economic sanctions.
These agencies coordinate, administer and enforce 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.
However, a large portion of our net sales (approximately 79% in 2025) are generated by our non-U.S. operations, which means that we have net sales, substantial assets, liabilities and costs denominated in currencies other than the U.S. dollar.
We and our subsidiaries may be able to incur significant additional indebtedness in the future.
Our Credit Agreement provides for senior secured credit facilities, consisting of term loans B-3 of $1.29 billion maturing in 2030 and a revolving facility of $500 million maturing in 2031.
At February 18, 2026, we had $373 million, net of letters of credit, of borrowing capacity under our revolving facility.
As a result of our historical acquisitions, as of December 31, 2025, we had approximately $2.90 billion of intangible assets and goodwill.
Additionally, goodwill is subject to an impairment test at least annually.
Indicators 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.
These new disclosure requirements, which include climate bills in California, the EU's CSRD, its transposition in E.U. countries, the E.U.
Under our 2024 Plan, 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.
No further awards can be granted under our 2013 Plan, which was replaced by our 2024 Plan.
In addition, the number of shares reserved under 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.
At December 31, 2025, the aggregate equity-based awards outstanding under both plans was 1,996,366 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 stock repurchases and/or any future dividend payments, or any determination to cease repurchasing stock or paying dividends.
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 stock 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 could seriously harm our operations as well as the operations of our customers and suppliers.

Gone since FY2024

The information on or linked to our website is not incorporated by reference into, and does not form a part of, this 2024 Annual Report or any of our other SEC filings.
Corporate Information Our principal executive offices are located at 500 East Broward Boulevard, Suite 1860, Fort Lauderdale, Florida 33394 and our telephone number is (561) 207-9600.
Risk Factors The following discussion of "risk factors" identifies the material factors that may adversely affect our business, financial condition or results of operations.
Potential investors should carefully consider these risks and the other information in this 2024 Annual Report when evaluating our business.
In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers which could limit our ability to generate sales, acquire necessary raw materials and/or significantly increase costs.
In 2024, approximately 77% of our net sales were generated from non-U.S. operations.
As a result, we face certain risks inherent in international trade which may reduce our sales and harm our business, including: • 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 conflict and other hostilities in the Middle East, and the increased tariffs and trade restrictions between China and the U.S.; • changes in global or local economic conditions, including inflation, hyperinflation, fluctuations in interest rates and other increasing price levels in certain sectors, such as energy, impacting availability and cost of goods and services; • fluctuations in currency values and currency exchange rates for countries in, or with which, we conduct business; • changes or uncertainty in international, national or local legal environments, including tax, data handling, privacy, intellectual property, consumer protection, environmental and antitrust laws; • adverse tax consequences, including as a result of changes in taxation and regulatory requirements, transfer pricing practices involving our foreign operations, and additional withholding taxes or other taxes on foreign income; • foreign exchange controls or other currency restrictions and limitation on the movement of funds, potentially leading to the inability to readily repatriate earnings from foreign operations effectively; • natural disasters, extreme weather events, regional or global health concerns, such as outbreaks of COVID 19 or its variants; • establishing and maintaining relationships with local distributors and OEMs; • governmental regulations and/or sanctions affecting the import and export of products, including global trade barriers, additional taxes, tariff increases, cash repatriation restrictions, retaliations and boycotts between the U.S. and other countries, including Mexico, Russia and China; • import and export control and licensing requirements; risk of non-compliance with the Foreign Corrupt Practices Act of 1977, U.S. export control and trade sanction laws, SEC rules regarding conflict minerals sourcing and other similar anti-corruption and international trade laws or regulations in other jurisdictions; • greater difficulty in safeguarding intellectual property than in the U.S.; • difficulty in staffing and managing geographically diverse operations and ensuring compliance with our policies and procedures; and • challenges in maintaining an effective internal control environment, including language and cultural differences, varying levels of GAAP expertise and internal control over financial reporting.
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 instituted or are considering imposing retaliatory measures on certain U.S. goods.
The failure to attract and retain key personnel, or effectively manage succession, could have an adverse material impact on our business, financial condition or results of operations.
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 materially adversely affect our business, financial condition or results of operations.
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 assets may not be sufficient to protect us from, or compensate us for, actual liabilities.
The specialty chemical 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.
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, changes in exchange rates and worldwide price levels.
In 2024, approximately 77% of our net sales were generated outside of the U.S.
Such regulations include the European Union's REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals), which mandate compliance obligations and restrictions on certain chemicals; REACH-like regimes, which have now been adopted in several other countries; the E.U.
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 led 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.
A catastrophic occurrence at a location where our products are used may expose us to substantial liability for personal injury, wrongful death, product liability or commercial claims.
Foreign Corrupt Practices Act of 1977, the United Kingdom Bribery Act 2010 and similar anti-bribery 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.
Our policies mandate compliance with these anti-bribery 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.
F ailure by us or our intermediaries to comply with applicable anti-corruption laws may result in civil and/or criminal penalties or other sanctions, including disgorgement of profits and contract suspensions or 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 with time as international relationships and confrontations between and among nations evolve.
State Department monitors trade restrictions and economic sanctions and impose penalties upon U.S. persons and 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.
However, a large portion of our net sales (approximately 77% in 2024) are generated by our non-U.S. operations, which means that we have net sales, substantial assets, liabilities and costs denominated in currencies other than the U.S. dollar.
Our Credit Agreement provides for senior secured credit facilities in an initial aggregate principal amount of $1.42 billion, consisting of term loans B-3 of $1.04 billion maturing in 2030 and a revolving facility of $375 million maturing in 2027.
At December 31, 2024, we had $1.04 billion outstanding under the term loans and full availability of our unused borrowing capacity of $368 million, net of letters of credit, under the revolving facility.
We and our subsidiaries may incur significant additional indebtedness in the future.
As a result of our historical acquisitions, as of December 31, 2024, we had approximately $2.86 billion of intangible assets and goodwill.
For example, considering Graphics Solutions' lower than expected results, we conducted an interim impairment test on this reporting unit in the third quarter of 2023 which resulted in an impairment charge of $80.0 million.
Other indicators 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.
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.
Upon stockholders' approval on June 4, 2024, our 2024 Plan replaced our 2013 Plan, under which no further awards can be granted.
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.
This number of shares will be increased by the number of shares subject to awards under our 2013 Plan which are forfeited, cancelled, expired or otherwise terminated.
At December 31, 2024, the aggregate equity-based awards outstanding under both plans were as follows: • 3,939,584 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; and • 367,704 options which are all vested and exercisable at any time at the option of the holder to purchase shares of our common stock, on a one-for-one basis.
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 shares repurchases and/or any future dividend payments, or any determination to cease repurchasing stock or paying dividends.
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 shares 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, could seriously harm our operations as well as the operations of our customers and suppliers.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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