Element Solutions at Wolfe Research: Strategic Shifts and Market Insights

On Tuesday, 17 June 2025, Element Solutions Inc (NYSE:ESI) presented at the Wolfe Research 2nd Annual Materials of the Future Conference. CEO Ben Gluklich detailed the company’s strategic positioning, highlighting its strengths in the electronics and industrial sectors, while addressing challenges such as geopolitical tensions and tariffs. The company is leveraging its nimble supply chain and focusing on high-growth areas like data centers and high-performance computing.

Key Takeaways

• Element Solutions outperformed market indicators like MSI and PCB growth.
• The company is shifting focus from consumer electronics to data centers and high-performance computing.
• Cuprion, a new material, is expected to contribute to profits by 2026.
• The company is gaining market share in the Chinese EV sector with its sintered silver technology.
• Despite weak demand in the industrial sector, profits have been maintained through efficiency improvements.

Financial Results

• Element Solutions has outperformed the MSI by over 1,000 basis points in the past 18 months.
• The circuit board business has also outpaced PCB square meter growth over the same period.

Operational Updates

• The electronics business is transitioning from a smartphone-driven model to a focus on data centers and computing.
• Cuprion, a new active copper material, will begin manufacturing in 2025, with profits anticipated in 2026.
• In the EV market, Element Solutions is expanding its presence, particularly in China, with its advanced sintered silver technology.

Future Outlook

• Continued growth in the electronics market is expected, driven by data centers and AI applications.
• The PCB market is projected to accelerate over the next four to five years.
• The semiconductor business is anticipated to grow in double digits.
• Expansion in the Western EV market is expected as more OEMs adopt Element Solutions’ technology.

Q&A Highlights

• The company is monitoring tariff impacts and geopolitical factors closely.
• There is cautious optimism about industrial recovery in China and Asia, but the Western market remains weak.
• A strong balance sheet allows for flexible capital allocation, seen as a key value driver.
• The assembly business is expected to achieve mid-single-digit growth with industrial recovery.

For more detailed insights, please refer to the full conference call transcript below.

Full transcript - Wolfe Research 2nd Annual Materials of the Future Conference:

Varun, Interviewer: Awesome. Next up, we have the CEO of Element Solutions, ESI. We have the president and CEO, Ben Gluklich, who I’ve had the pleasure of knowing for over a decade now. It’s making us feel both a lot old. You know?

So it’s been fantastic. And speaking of, you know, that time frame, you’ve been fairly integral to the evolution of what now stands as Elements portfolio going back many, many years. There’s been a lot going on even in the last year or so, especially with graphics, making a few pretty exciting acquisitions on the electronic side of the portfolio. Could you just give an assessment as CEO of where you stand today, where you’re most enthusiastic about? The balance sheet’s in the best place.

It’s been in the history of a public company. How should we be thinking about the portfolio? And we can branch off from there.

Ben Gluklich, President and CEO, Element Solutions: Yeah. It’s a it’s a great question. It’s a great place to start. We’ve been added as Element Solutions a little bit over six years at this point, and the portfolio keeps getting better. Portfolio keeps getting better because of the way we’ve been running the business, where we’ve been focusing, and where we’ve been deploying capital.

So we’ve been refining the portfolio, moving I think you you talked about the the upgrading, I think, is the the term you used, of our technology moving up towards the semiconductor market, more into the semi assembly and front end. That’s gone great. We’ve brought new technology into the portfolio, some of which is commercialized, some of which is on the way towards commercialization. We divested of a high quality but less core graphics business last year, and as you said, the balance sheet is as good as it’s been, so we’re in a great position to be on the offensive and bring new capabilities to bear into the portfolio as and when they become available.

Varun, Interviewer: So, you know, there’s been a lot of debate for every single person I’ve been on stage all day. You know, tariffs, macro noise, geopolitical risk. The tone of your first quarter call for the balance of the year was very balanced, methodical, preparing for challenges if and when they, you know, pop up. But at the same time, your messaging was still pretty constructive on the electronic side and, obviously, a few puts and takes on the industrial side, still generally okay. You know, How has that evolved over the last couple of months?

And how are you thinking about the second half of the year? If we could do electronics versus industrial separately, let’s start with electronics.

Ben Gluklich, President and CEO, Element Solutions: Sure. So we have the benefit of a very nimble supply chain, Right? So we manufacture locally, we source locally, we sell locally. And so that gives us a lot of flexibility to navigate trade tensions and and and all of the tariffs that have emerged over the past emerged and then gone away and evolved over the past several months. It requires a lot of work internally, but we’ve been able to mitigate that, and we feel good about our position.

And that goes for the entire business. With regard to demand, right, we struck a more optimistic tone on our call because the same dynamics that have been propelling the business over the past couple years in an environment that hasn’t been very growthy persist. The business is migrating from having been a b to c smartphone, driven electronics business to being a b to b data center, high performance computing business. And those demand trends have been durable. There’s been no pause in investment in data center capacity.

There’s been no pause in adoption of high performance computing applications like AI, and that is driving the high end of the electronic supply chain where we are, focused. And so our business has been outperforming MSI, our semi business has outperforming MSI by over a thousand basis points over the past year and a half. Our circuit board business has been outperforming PCB square meters over the past year and a half, and those demand trends haven’t seemed to dissipate. So we feel cautiously optimistic that that’s durable in electronics. And so what you saw through the last year and the first quarter will continue over the balance of this year.

On the industrial side, it has been a weak demand environment, but there are things that we can do around procurement, around supply chain improvement that have allowed for us to drive profits last year in a down volume environment and should allow for us to preserve profit this year as well.

Varun, Interviewer: I’m gonna get back to the industrial side of it. You know, income versus revenues has been an interesting story with an element that goes right back to the portfolio evolution. But just sticking with this just because I want to make sure everybody kind of gets the message. When I think when we think about the tariff environment, there are two things in terms of just the preparation. We’re currently in the I don’t know.

Some people will call it die of the storm, some people will say, we’re miraculously going to get all these deals at the last second. And who the heck knows? But when you take a step back in terms of your preparation as CEO, I’d like to hit on just are there any one or two things you’re particularly paying attention on? And then also as it pertains to your customers and the ultimate price points of the products that your products are actually going into, are you at all concerned about demand destruction? Are you hearing that from your customers?

Are people still generally in wait and see mode?

Ben Gluklich, President and CEO, Element Solutions: Every year, we don’t have great visibility. Right? So the large smartphone handset manufacturers don’t know how many units they’re gonna sell six months out. So how does their supply chain know how many circuit boards they need to make and how do we know what our volumes are gonna be? That’s normal.

And so sitting here today, the question of will there be demand destruction, we can’t answer that because our supply chain can’t answer that. And so it’s not as though we’re operating in a very different visibility dynamic per se than normal. We thought there could have been some pull forward in the second quarter. April was really strong. The the the quarter has has remained reasonably strong.

So we have no indication of demand destruction today. Right? Just as we said in the in on our last call. And so we’re paying a lot of attention to these these vectors. And by the way, our customers don’t stock our products.

So it’s not as though there’d be an inventory bubble of our material. It would be downstream from us if there were one, and we have no indication of that to date. The things that we’re watching around tariffs are really around flow of goods. For the most part, we’re local for local, but there are certain things that move over borders and we need to be ready to move production as as best possible to avoid, painful tariffs for ourselves or our customers.

Varun, Interviewer: So taking a step back and let’s let’s go to the heart of the electronics business in the portfolio, which is now, I think, just based on my model, like 64.7% of that portfolio and hopefully growing even more depending on what you do with the graphics proceeds. When I take a step back and I look at this, and I define it slightly different, but fear not. I look at semi. I look at data center. Obviously, we get into some circuitry and everything else.

And then I look at some of the new technologies like Cupriun that’s gonna have to, you know, advance on that. Sticking with the semi slash advanced packaging side of the business, what have you been seeing it perhaps for the generals in the crowd, just maybe hit on just exactly what you do here. And we get a hit on the trends and how you expect that to evolve over the next, I’ve been saying six to eighteen months to give everybody a little leeway given the environment.

Ben Gluklich, President and CEO, Element Solutions: Well, we’ve got a limited time. I could go for a very long time to explain the the technology here, but but put very simply, for the history of the semiconductor industry, the way innovation was in size, so getting more transistors into the same space. And we’ve gotten to form factors that are just too small where it it’s not economic to go smaller. And so the way people are getting more computing power into the same spaces is by architect architecture, so putting multiple chips together. And that’s effectively what advanced packaging is.

It’s the way that the chips are put together, and it’s a very heterogeneous pursuit. It was homogeneous around scale, let’s get small. Now everybody has their own packaging designs and architectures. And Element, somewhat intentionally and somewhat just, by chance, is very very well positioned to solve packaging problems for our supply chains because we speak to all of the interfaces, whether that’s the very high end circuit board that has multiple chips attached to it, whether it’s the way the chip is put into the package, or whether it’s the way multiple chips are attached to one another. And so our product, our solution set speaks to the system around a package as opposed to a product.

So we compete with many different companies, but none of the same company. In other words, there’s no one who can offer the breadth of what we do in the advanced packaging market like we do. And so the market’s coming towards us in that regard, and, you see it in the p and l already. You see the acceleration in our semi business, which is driven by what we do in copper deposition, which is effectively the back end of the front end. What we do in semi assembly, which is die attach and package attach.

Some of the innovation we brought to market in the assembly business and our circuitry business, which is selling more and more into these very, very high end printed circuit boards that are somewhat of a hybrid between a semiconductor and circuit board. So, again, the market’s coming towards us, and our solution set is highly differentiated, which gives us a better seat at the table to speak the language of the OSATs who are driving this packaging. And that’s not something that shows up in one quarter. Right? The product cycles, the innovation cycles, the technology roadmaps are many years long.

And so we’re just starting to see the fruits from this evolution.

Varun, Interviewer: I want to hit on that for a second and forgive me for using the sell side buzz terms. I hate doing it, but it’s, it’s kind of necessary in this case. But when I think about the growth there, you mentioned something very important. You said the growth is coming to you, and you and I have discussed this before about the evolution of the portfolio, and it’s really only a matter of time. And now even when the environment’s been pretty choppy, you’ve still been showing very good results because as you pointed out, you could make an announcement, say, oh, we’re just slow data centers in ’27 and ’28.

You’re like, you haven’t slowed down in 2025. But when we think about, you know, the buzz terms, whether it’s HPC or hyperscalers or AI and every everything in between that your customers are constantly, you know, obviously evolving their own portfolios for, Has that growth I mean, it seems like you have, quote unquote, a right to win. Can you just hit on kind of the key factors of, you know, where you were positioned, where you are positioned, and whether or not you consider yourselves to be in the position to have, quote unquote, that right to win on a going forward basis?

Ben Gluklich, President and CEO, Element Solutions: Yeah. The term we use is incumbency.

Varun, Interviewer: It’s a simple one.

Ben Gluklich, President and CEO, Element Solutions: Incumbency, which is to say, this is a market that has incredibly high barriers to entry from a technical perspective, from a technical service perspective. And the supply chain works with the existing partners, not just for their current production, but to meet their future needs. So we do these technology roadmap exchanges with our customers, with customers’ customers to understand where they’re going because they need us to meet them to enable their next generation capabilities. So the more value you capture, the more technology you can bring to bear, the more roadmap exchanges you get, the more incumbency you have. And so today, we are providing the best in class capability for the big server boards that are going into data centers.

So we have a seat at the table to understand what the next board designs are gonna look like and what the requirements of those board designs might be. We might even help our customers define what the qualifications will be. And so we have that level of incumbency and and that is in the core markets that are driving the overall ecosystem forward.

Varun, Interviewer: One more on this, then we can switch over to Circuitry Assembly. But going right back to the portfolio evolution, Cuprian. I know. Sorry. I should talk into it.

Cuprian, obviously, something you’re correct me if I’m wrong, you’re particularly enthusiastic about. What is it? How can it help customers? And when can the financial community expect at least preliminary results in terms of the tangible addressable market?

Ben Gluklich, President and CEO, Element Solutions: Sure. So it’s the future of materials or materials of the future conference. I think that active copper, which is the product associated with Cuprion, certainly qualifies as such. Very rarely in our supply chain do you see material science breakthroughs where you’re using a fundamentally different material. And and we believe active copper, Cuprion, is one of those.

It’s a it’s a new to the world technology that has attributes that solve emerging pain points for the fastest growing, most technically challenging applications in the electronics ecosystem. That’s around filling very small holes through substrates to get finer features, more computing power into a circuit board. That’s around plating very big vias, which allows for more, current, more voltage to go through a circuit board. That’s around thermal management, managing the heat created by these high voltage, high performance circuit boards. The breadth of applications associated with this material is incredibly wide.

The demand signal from the market is incredibly strong. The bottleneck is our ability to make the product at high volumes and qualifying the applications that our customers are going to use with OEMs. And so we’ve been on this timeline, which is to say we’ll have some manufacturing capability online in 2025, and we’ll have some profits in 2026. And the outlook from there is pretty steep and positive. That timeline remains the case when you’re bringing new material to market.

There are unknown unknowns. We’ve we’ve crossed a few of them off of the list, I would say, over the past, eighteen months. I’m sure we’ll confront more, but we remain incredibly enthusiastic about this technology. Our conviction in demand is as strong as it’s been. We’re chopping the wood to get it to market.

The margin profile, because we’re bringing some so much value to the supply chain is very strong, and it’s a it’s it remains a great sign of, again, our ability to bring value to our supply chains, to be a great partner, in the ecosystem, which has a whole bunch of other ancillary benefits when you think about, the incumbency I was just talking about.

Varun, Interviewer: Every time I meet with you, find myself back in my office going through definitions and products and for what it’s worth last night, late night, this is the last one I was preparing for and I found myself on their website and going through all the specs and the products versus what some of our other analysts are saying at technology. And it is it is, in fact, pretty fascinating. So looking forward to hearing more about that. Switching over to, you know, to some of the, you know, circuitry assembly. I mean, we were talking about PCBs, and we could talk about assembly kind of in the middle and get into some EV stuff perhaps.

But it seems as though I mean, you’ve been gaining a decent amount of share. I previously, perhaps incorrectly, Ben, kind of you do as a more of a Western, you know, OE, you know, exposure, and it seems like you gained a lot of exposure and some was direct and some was not with the Chinese OE. So when you’ve looked at handset demand consumer electronics, I mean, it seems like you’ve been performing pretty well in the context of what has been a pretty fairly choppy market. Would that be a correct assessment? And then kind of how do you assess the market from here?

And perhaps just focusing longer term in terms of AI enabled phones, we already have five gs. Just what are the key drivers of your business that we should be monitoring? And can you perhaps even further position yourself to gain share?

Ben Gluklich, President and CEO, Element Solutions: Yes. So the business has outperformed the demand indicators that we look at, whether it’s for our semi business, we look at MSI. For the circuit board business, we’re looking at printed circuit board square meters production. Last year, it was a mid single digit number and we grew high single digit for the circuitry business. The assembly business, a little bit more industrially oriented.

We look at electronic systems growth, and it was not a great year for electronic systems growth. Our assembly business still had a pretty good year, and obviously our semi business had an outstanding year last year. The drivers are what we’ve been talking about, right? We play in the most advanced segments of each of those markets. And the most advanced segments, the most technically challenging applications are growing and the value associated with them are growing faster than units.

As we look at this year, we used to look at smartphones, and and now we’re talking about PCB square meters. Why is that? Smartphone market has been weak. It’s dislocated from trend. It’s way off of peak.

It may not get back to peak of 1,700,000,000 units, but one point two, one point three is is is quite low. And you could say that the replacement cycle has been extended, yet our business has been growing because of that shift towards b to b. So what would we suggest people look at as an indicator for our business? PCB square meters for the circuitry business is a good one. We should grow faster every year because there’s a lot of old technology that has a lot of square meters associated with it.

This screen right here is a very big printed circuit board. Right? It has far less capacity than the smartphone in my pocket, but it has a lot of volume. So we’re gonna be looking at the high density interconnect, the flexible, the, the 18 plus layer boards that are going into really high performance applications. And those segments of the circuit board market are growing, you know, a couple points to double the rate of the average circuit board market.

So just by virtue of keeping our share in those markets, we’re gonna outgrow the market, but of course, we wanna do better. And so the the exciting thing as we sit here today is that market research suggests that the printed circuit board market will accelerate over the next four or five years because more of the market is being driven by data centers, high performance data centers. Right? So the amount of circuitry that’s going into the data center market last year and this year is much less because it’s growing 40% than it will be in four or five years. So the percentage of the business that’s attributable to the faster growing parts of the business is growing, and therefore the average of the market is growing.

And so we feel very well positioned for the medium term acceleration in circuitry. The semi business has been performing and we’ve articulated our long term growth algorithm and our semi business should be growing in the double digits go forward. And the assembly business won’t grow as fast, but it should get to the middle mid single digits if you get any sort of industrial recovery over the next couple of years.

Varun, Interviewer: You talked about the exposure on EVs just while we’re kind of transitioning business and somewhere between electronics and industrial given assembly. Can you talk about your business there? What trends you’re currently seeing exposure to EVs? Is it a Tesla story? Is it a Chinese EV story?

Is it somewhere between? And probably most importantly, Ben, I’d really like to hit on your market share potential, just given where we could probably triangulate the market growth. I’d once again like to focus on the market outgrowth opportunity.

Ben Gluklich, President and CEO, Element Solutions: So you know, our our capabilities in EV are broad. Right? There’s the same things we sell into the industrial market in ICE vehicles, are decorative and functional surface treatments. There’s more sensors, there’s more computing in EVs. But the real power alley we have in electric vehicles is in power electronics.

It’s a pun. Unintentional. So we have similar to what we have with active copper in Cuprion, we have a really differentiated technology that we built internally for sintered silver, nanoparticulate silver that can be used to put power semis together and power semis into power modules. And this technology is differentiated because it allows for higher voltage to go through the power module, so you need less of them and less heat to escape the system. So the battery converts into power for the motor more efficiently than using other materials.

So it’s a very, value add capability that is only in the early innings of adoption in the EV supply chain. And so our business has been vastly outgrowing EV units because it’s growing share of the OEM ecosystem. It was highly concentrated as in an American EV OEM, up until about two years ago, a year and a half ago, and it started winning some of these new platforms, particularly in China. In China, it was a race to market at first, and now it’s a race to quality. And in the race to quality, they’re adopting this technology.

And so we had a a weak first quarter with that American EV OEM, but the business grew because of penetration of the Chinese EV supply chain. What, what’s ahead of us for this business is the West, because the non EV centric OEMs have very long production life cycles. Right? So they’re working on model years three, four years out, and they’re still grappling with how they’re gonna make EVs. Are they gonna make the electric motor themselves?

Are they gonna use their electronics tiers to make them? And as those questions get answered, they’ll start using our technology. They’re already beginning to with the tiers today, but that’s only on the highest performing selected units. So, the EV opportunity for us is more than just unit growth. It’s ecosystem penetration, very high value, high margin capability, very differentiated with a wide moat around it.

It’s it’s it’s an exciting, space for us.

Varun, Interviewer: One of things I’ve argued in transitioning further into the industrial business that as sluggish as the macro has been, you’ve still been growing op income. And you I I think you and I have had this discussion for probably two, two and a half, three years now. Is that still probably the best way to think about it? Just has the market shown any signs of life in terms of coming back? I mean, auto numbers are coming a little bit better, at least for the first half.

Obviously, we could debate the second half implied USR. But I mean, China has been better. But how should we think about that? And then I have a longer term question on your other core industrial businesses.

Ben Gluklich, President and CEO, Element Solutions: So the industrial business has grown profits while revenues and volumes have been soft, and that’s because we’ve been driving better procurement. We’ve had raw material deflation. We’ve been driving productivity. We we had done some consolidation in the industrial business, very hard to close sites and rationalize supply chain in this market broadly. And and so it’s taken us time, but we’re getting there.

The the the current environment is more of the same. We’re seeing some green shoots in China and Asia. The West has been pretty mediocre. Our offshore business is is well positioned for the year, but there has been some potholes along the way just driven by timing of orders. There are reasons one could be optimistic about the industrial business.

You look at Germany getting rid of the debt ceiling and starting to invest in infrastructure, like that could be a tailwind for us. We haven’t seen it yet. This has been the most extended industrial recession we’ve seen in the West in a very, very long time. And so if you believe in reversion to the mean, at some point, it’ll get better. But that’s certainly not baked into our guide for 2025.

Varun, Interviewer: One question, quick question on the guide, and then I’ll ask a longer term question. FX is looking a little better. Auto as of right now perhaps looks a little bit better. General industrial activity is still a little choppy. It seems like semi is okay.

I mean, what have been the are there two things you’re still pleasantly surprised in? And are there still two things you’re closely monitoring into the back half just given the macro situation we’re still in?

Ben Gluklich, President and CEO, Element Solutions: Look, I think the one overarching question is pull forward and potential demand destruction. So the impact of tariffs and geopolitics on industrial activity. On our q one call, we talked about April having been strong. You know, we’ve been surprised by the strength of electronics. Whether that’s pull forward or not is hard to know, again, talking about the visibility in the business.

And, you know, how do how do how does the consumer, fare in the back half of the year is they’re all related to that one issue around industrial activity. That that that is very hard for us to to get a signal for sitting here today.

Varun, Interviewer: So two part question, one short term, one long term. FX, just as a tailwind, just plain and simple. And then also, once again, for those that perhaps are a little bit more unfamiliar with the story, you mentioned Germany infrastructure spending. Everybody thinks about that business as, oh, it’s just that auto business that Element has everybody’s so focused on the electronics business, which is a good thing. Could you just hit on, you know, kind of some of the German announcement?

And yes, of course, we know it’s, you know, ’27, ’28, ’29, but it seems like there’s perhaps an emerging opportunity there that which a lot of people don’t have in their models.

Ben Gluklich, President and CEO, Element Solutions: Our industrial solutions business is about 50% auto and 50 other. The other is construction, building products, heavy machinery, and it’s almost 50% Europe, the industrial solutions business. Right? And so if you see an increase in spending, there’s a trickle down associated with that. Right?

And so if conditions improve in Europe around industrial productivity, that will be a a a significant demand driver for for our industrial business.

Varun, Interviewer: So electronics seems like it’s still doing pretty well. Industrial choppy, but well within the expectations. Balance sheet in the best place since the IPO of the former companies, parent. What’s the one thing the investment community is missing? What’s the what are the two things?

Like, I I asked, you know, the the CEO before you. I said, you know, what what are you wondering after they’re in call? If you say, Varun, why why how am I not getting asked this? Like, why is not nobody writing about this? Is there anything that’s top of mind there?

Ben Gluklich, President and CEO, Element Solutions: Capital allocation is the the the framework we established when we launched Element was prudent was operational excellence and prudent capital allocation. And I think that we’ve demonstrated an ability to execute well and and drive margins and above market growth through a period that has been very choppy. And capital allocation has been, more limited in the past two years. We’re sitting here with a great balance sheet and the flexibility to drive value from the balance sheet today may be underappreciated go forward. So I’m excited about what what what the future holds as we continue to execute and build capacity to do interesting things, bringing our management technology to bear on on businesses we bring into the fold.

And the cash flow characteristics of the business and stability of the business, I think is still something that people could benefit from studying.

Varun, Interviewer: Thank you very much for taking the time. I always appreciate your enthusiasm and your candor, and I look forward to hosting you again soon. Thank you so much.

Ben Gluklich, President and CEO, Element Solutions: Thanks, guys.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.