Acquisitions and metal pass-through drove most of the 52% sales rise, while gross margin fell 7.8 points to 34.4% 11. Management raised 2026 adjusted EBITDA guidance to approximately $720 million, with adjusted EPS growth over 20% 8-K.
Element Solutions Inc · Q3 2026 · Reported 21 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenue | 995.30 | 656.10 | +51.7 % |
Gross profit | 342.40 | 277.00 | +23.6 % |
Operating income | 113.90 | 100.80 | +13.0 % |
Net income | 65.70 | 39.30 | +67.2 % |
Diluted EPS | 0.27 USD/share | 0.16 USD/share | +68.8 % |
Operating cash flow | 159.20 | 100.10 | +59.0 % |
Gross margin | 34.4 % | 42.2 % | -7.8 pp |
Operating margin | 11.4 % | 15.4 % | -3.9 pp |
Net margin | 6.6 % | 6.0 % | +0.6 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Operating cash flow for the quarter are derived by subtracting year-to-date periods.
Most of the 52% sales growth came from acquisitions and metal prices
Net sales rose 51.7% to $995.3 million 11. The reconciliation attributes 25 points to acquisitions and 14 points to pass-through metals pricing, leaving organic growth of 13% 12. Electronics organic sales rose 18%, with Assembly Solutions and Circuitry Solutions each up 16% and Semiconductor Solutions up 24% 12.
Management names AI and datacenter demand for solder paste, preforms and metallization as the volume drivers 13. Micromax, acquired in February 2026, contributed $137.8 million of Electronics sales, and EFC contributed $23.4 million in Specialties 12.
Gross margin fell 7.8 points and operating income grew slower than gross profit
Gross profit rose 23.6% to $342.4 million, but gross margin fell to 34.4% from 42.2% a year earlier 11. In Electronics, margin excluding pass-through metals sales fell 150 basis points, which the filing attributes to negative mix from lower-margin precious-metals products 18. Reported Electronics margin fell 840 basis points, which suggests that pass-through metals revenue dilutes the headline ratio. That is my reading; the report does not quantify it 17.
Operating expenses rose 30% against gross profit up 24%, so operating income rose 13.0% to $113.9 million and operating margin fell to 11.4% from 15.4% 11. The expense increase reflects acquired businesses, higher incentive compensation and $12.3 million of higher non-recurring acquisition and integration costs, partly offset by a $5.9 million fall in the EFC contingent consideration fair value 20. In a calculation that excludes the integration costs, operating income rose 25.2%. Excluding the contingent consideration gain, it rose 7.1% 11. These are single-item adjustments, not company figures.
Net income rose 67% mainly because other expense halved, and cash conversion eased
Net income rose to $65.7 million from $39.3 million, and diluted EPS to $0.27 from $0.16 8-K11. Other expense, net fell to $20.6 million from $45.3 million 11. The prior-year quarter carried an $11.0 million foreign exchange loss, $11.6 million of net metals derivative losses and a $7.0 million divestiture loss 2122. Net interest expense rose to $22.8 million from $13.3 million on a larger term loan balance and lower interest income 21.
Operating cash flow was $159.2 million against $100.1 million a year earlier, and free cash flow was $135 million 8-K. Cash conversion was 242% of net income, against 255% a year earlier 17. The report does not give the working-capital drivers for the quarter.
Specialties lagged, with Energy Solutions and margin both under pressure
Specialties organic sales rose 1%, and Energy Solutions fell 13% organically on temporary equipment downtime at a large customer 12. Specialties gross margin fell to 46.8% from 49.0%, which the filing ties to raw material inflation, accelerated depreciation from footprint optimization and mix 17.
Company-defined Specialties adjusted EBITDA fell 6% to $43 million even though EFC added 16 points to constant-currency growth 8-K.
What to watch next
Management guides 2026 adjusted EBITDA to approximately $720 million and adjusted EPS growth over 20%, assuming stable exchange rates and metal prices and full-year Micromax and EFC contributions 8-K.
Whether Electronics margin excluding pass-through metals stabilises after its 150 basis point decline on precious-metals mix 18.
Whether Energy Solutions recovers once the customer's equipment downtime ends, and how much higher interest expense weighs on earnings 1421.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.