NYSE:ESI
Element Solutions Inc
A premier North American engineering firm delivering high-margin technical services and advanced materials to Fortune 500 clients across complex industrial sectors.
Key Metrics
Investment Thesis
Bull Case
Investors may favor ESI for its established foothold in high-barrier-to-entry industrial niches, consistent ability to generate substantial free cash flow, and a disciplined balance sheet with over $626M in cash. The company's transition from a loss-making history to consistent profitability suggests a mature turnaround story with room for growth in expanding global markets.
Bear Case
Concerns arise from the significant accumulated deficit of -$904.6M which still weighs on equity, potential margin pressure from rising input costs reflected in high COGS, and the cyclicality of the energy and industrial sectors that could impact future order intake. High goodwill of $2.24B also poses a balance sheet risk if acquisition synergies fail to materialize.
About Element Solutions Inc
Element Solutions Inc. (ESI) is a leading global provider of specialized environmental, industrial, and life sciences solutions, serving critical markets in energy, healthcare, and defense through its core segments of Engineering Services, Materials Science, and Process Technologies.
Analysis
Management Discussion
Financial performance remained resilient with revenue stabilizing at $2.55B in 2025 after a slight dip in 2023, while net income recovered to $191M following a strong $244.5M quarter in 2024. Strong operating cash flow of $289.8M and significant capital returns via dividends and share repurchases demonstrate management's commitment to shareholder value despite prior accumulated deficits.
Industry Overview
The industrial services sector is characterized by steady demand from essential infrastructure projects and manufacturing needs, though it faces headwinds from supply chain disruptions and labor shortages. Companies like ESI succeed by offering integrated solutions that combine engineering expertise with proprietary materials, creating sticky client relationships in a fragmented market.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.55B | $2.33B | $2.46B | $2.55B |
| Cost of Revenue | $1.60B | $1.41B | $1.42B | $1.48B |
| Gross Profit | $952.7M | $918.5M | $1.04B | $1.07B |
| Operating Expenses | $627.4M | $744.9M | $691.8M | $728.3M |
| Operating Income | $325.3M | $173.6M | $343.9M | $342.2M |
| R&D | $48.8M | $68.1M | $63.0M | $67.6M |
| G&A | $578.6M | $596.8M | $628.8M | $660.7M |
| Stock-Based Comp | $17.7M | $9.4M | $14.8M | $59.1M |
| D&A | $161.3M | $166.7M | $157.6M | $151.2M |
| Depreciation | $41.6M | $42.6M | $40.0M | $41.1M |
| Amortization | $120.0M | $124.0M | $118.0M | $110.0M |
| Other OpEx | $0 | $80.0M | $0 | $0 |
| Non-Operating Income | $-53.3M | $-44.5M | $-56.2M | $-76.6M |
| Pre-Tax Income | $272.0M | $129.1M | $287.7M | $265.6M |
| Income Tax | $85.8M | $13.0M | $44.8M | $74.6M |
| Continuing Ops | $186.2M | $116.1M | $242.9M | $191.0M |
| Discontinued Ops | $1.8M | $2.1M | $1.6M | $0 |
| Net Income | $188.0M | $118.2M | $244.5M | $191.0M |
| Minority Interest | $800.0K | $100.0K | $300.0K | $200.0K |
| Net to Common | $187.2M | $118.1M | $244.2M | $190.8M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.19B | $1.20B | $1.27B | $1.58B |
| Cash & Equivalents | $265.6M | $289.3M | $359.4M | $626.5M |
| Accounts Receivable | $455.8M | $461.8M | $439.6M | $517.7M |
| Inventory | $290.7M | $298.9M | $246.2M | $294.7M |
| Other Current Assets | $176.6M | $147.5M | $224.8M | $143.6M |
| Long-Term Assets | $3.71B | $3.78B | $3.60B | $3.52B |
| PP&E (Net) | $277.2M | $296.9M | $276.8M | $319.6M |
| Intangibles | $805.5M | $879.3M | $732.0M | $657.2M |
| Goodwill | $2.41B | $2.34B | $2.13B | $2.24B |
| Operating Leases | $85.1M | $90.3M | $79.7M | $83.8M |
| Other LT Assets | $134.4M | $173.4M | $383.4M | $216.4M |
| Total Assets | $4.90B | $4.97B | $4.87B | $5.10B |
| Current Liabilities | $344.4M | $369.4M | $379.7M | $429.9M |
| Accounts Payable | $132.2M | $140.6M | $121.3M | $165.5M |
| Current Leases | $15.9M | $15.0M | $15.2M | $16.5M |
| Taxes Payable | $59.8M | $68.6M | $68.0M | $82.7M |
| Other Current Liab | $136.5M | $145.2M | $175.2M | $165.2M |
| Long-Term Liabilities | $2.21B | $2.26B | $2.10B | $1.98B |
| LT Operating Leases | $71.4M | $78.1M | $66.4M | $69.5M |
| Other LT Liab | $2.14B | $2.18B | $2.03B | $1.91B |
| Total Liabilities | $2.55B | $2.63B | $2.48B | $2.41B |
| Shareholders' Equity | $2.35B | $2.34B | $2.40B | $2.69B |
| Paid-In Capital | $4.19B | $4.20B | $4.21B | $4.28B |
| Retained Earnings | $-1.22B | $-1.18B | $-1.02B | $-904.6M |
| AOCI | $-298.1M | $-345.9M | $-467.2M | $-308.9M |
| Total L&E | $4.90B | $4.97B | $4.87B | $5.10B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $188.0M | $118.2M | $244.5M | $191.0M |
| Non-Cash Adjustments | $73.2M | $196.9M | $42.5M | $-33.9M |
| Working Capital Changes | $34.7M | $20.7M | $76.6M | $132.7M |
| Cash from Operations | $295.9M | $335.8M | $363.6M | $289.8M |
| Capital Expenditures | $47.8M | $52.7M | $68.4M | $62.2M |
| Cash from Investing | $-75.2M | $-250.2M | $-73.8M | $286.1M |
| Debt Issuances | $0 | $1.30B | $1.04B | $0 |
| Share Buybacks | $151.0M | $0 | $0 | $25.0M |
| Dividends Paid | $78.4M | $77.4M | $78.2M | $77.8M |
| Cash from Financing | $-275.6M | $-58.7M | $-206.6M | $-320.4M |
| FX Effect | $-11.4M | $-3.2M | $-13.1M | $11.6M |
| Net Change in Cash | $-64.5M | $23.7M | $70.1M | $267.1M |
| Beginning Cash | $330.1M | $265.6M | $289.3M | $359.4M |
| Ending Cash | $265.6M | $289.3M | $359.4M | $626.5M |
Frequently Asked Questions
How does Element Solutions Inc make money?
The company operates primarily through three distinct revenue streams: Engineering Services (providing project management and technical consulting), Materials Science (supplying specialty chemicals and consumables for manufacturing processes), and Process Technologies (delivering custom equipment fabrication and installation).
What are the main risks for ESI?
Customer concentration risk due to reliance on large industrial clients, potential volatility in global commodity pricing affecting material costs, regulatory changes impacting environmental and safety standards, and foreign exchange fluctuations given its international operations.
What is ESI's competitive advantage?
ESI leverages a highly skilled workforce with deep domain expertise in niche industries, maintains strategic relationships with major Fortune 500 clients requiring specialized regulatory compliance, and utilizes a diversified revenue model that mitigates exposure to single-sector downturns.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.