Hi, good morning, everyone. I have the pleasure of sitting down here with Ben Gliklich. If you don't know Ben, he is the CEO of Element Solutions, a role he's held since 2019, and it's kind of, t hough you've been with the company since 2014 through strategy and operations, it's been quite the baptism by fire over the last few years. You know, I'm sure you wear the experiences of an executive who's probably longer tenured than just the few years that you've been CEO of Element. Look, it's one of our favorite SMID- cap stock picks. Ben has done an exceptional job managing the cost structure at Element and growing the business, and we'll talk a little bit about that today, as well as kind of the challenges he sees in the core markets. Ben, you know, I don't know if you wanna make a few comments. You just kinda came off 4Q earnings, perhaps how the business is doing, and we'll move into Q&A. Sure. If not. Yeah. We can go in anyway. I'm happy to. I'm happy to introduce the company for those who are unfamiliar with us, and then make a couple of opening remarks, but questions are more fun. Element Solutions is a provider of specialty chemical technology that enables the performance of high-value products that you use every day in your life. The business has about 5,500 people, $2.5 billion of sales, global in nature. Key end markets are the exciting growth markets in power electronics, next generation internet infrastructure, next generation wireless technology and sustainability. The business is manifested by asset- light operations, meaning our manufacturing processes are not capital intensive. We blend chemistry and a high level of service, whether that's innovation to meet customers' needs, where we're developing a solution that a customer is asking for, so our product development is pulled, or technical service to support our customers' manufacturing. The moat in the business isn't about capital. The business doesn't require capital to sustain its margins or to grow. The moat is in the people. That's sort of the high level introduction of the business. We've had an outstanding first four years as Element Solutions. The business was launched in February of 2019, and in our first three years, we doubled our adjusted EPS, which was a goal that we had set to accomplish in five years. That was in the face of COVID and the supply chain disruptions associated with that. In the subsequent year, right, in 2022, we faced end market headwinds from COVID lockdowns, some of the supply chain disorder that was driven by COVID order patterns, and the stocking associated with that. We faced a significant FX headwind, right? Most of the businesses outside of the United States, and as the dollar strengthened, that was about a $40 million headwind last year. We had about a $100 million of cost inflation, yet we grew EBITDA in dollar terms. We feel good about our performance in that context, and we're optimistic about the markets in which we're participating emerging from the air pocket that they've been in in the second half of 2023, which I'm sure will be a question that Matt asks, let me turn it over to him. Yeah, look, I mean, again, new business wins. New business is obviously an important part. I do wanna hit on that, and you kind of talked about that in the 4Q earnings a bit. Handsets consumer electronics, a big portion of the business and the second half of the year was tough. As it relates to the growth opportunities there, where you are in your business, where are you in the cycle for some of these key consumer electronics and handset markets? Why are you optimistic? How are you trending versus the market, right? Mm-hmm. Destocking, you talked about, obviously, that can cause downdrafts below maybe where handset volumes are. Over the cycle, where do you expect to be from a beta to kind of the market performance? The markets in which our business participates are core markets are long-term secular growth markets. Secular growth isn't linear growth, right? There are air pockets along the way, and we hit an air pocket last year. Why are they secular growth markets? Computing power is proliferating, right? Electric vehicle production is growing, and penetration of the automotive fleet by electric vehicles is still in the early stages. The infrastructure required to support all of this computing power is growing. The demand for that is significant. Sustainability is not a trend that's going away, and customers that care about their environmental impact of their supply chains want to do business with us. That having been said, there are, again, air pockets along the way to secular growth, and we saw one in the second half of 2022, and that's rolling into the first half of 2023. The smartphone cycle isn't on the typical calendar year, right? New platforms or handsets are launched in September Q3-Q4 timeframe, and people don't decide in April that they wanna buy the new phone that was introduced last year. There's a carryover effect. Mobile phone units in 2022 were down 11% year-over-year. We sold fewer phones around the world in 2022 than in any year since 2013, just to give you a sense for how dramatic that decline was for an industry like that. The expectation in 2023 is for units to be flat, but the first half will be down significantly because of that carryover effect. When we think about 2023, and we think about that recovery, we envision, rather, it doesn't require heroic recovery in the back half to get to the ramp that our numbers imply. The other things that allow for our business to outperform units, right, in these cyclical environments is the increase of content per unit. Whether that's a 4G phone becoming a 5G phone, where we get 15% more value per unit, or cars becoming computers, where we get a significant value uplift. An electric vehicle has about 1.5x to 2x the content versus a comparable internal combustion engine car for us. Just generally, the proliferation of computing power, the increase in sensors and chips in automotive is driving 3 points of incremental growth for us from automotive over automotive units through the cycle. If automotive units are going to grow 2%-3% through the cycle, we're going to grow 5% in our Auto business because of that. That's how we get the beta that you were asking about. That's how we think about both the trend for 2023 and the longer-term trend, our ability to outperform. None of that takes into consideration strategic execution, commercial excellence, and our ability to drive market share through delivering on the very robust strategy process we've put in place at the company. Thank you for that. I mean, one of the comments that you made during the introduction that we tend to appreciate is the asset-light structure of Element and your ability, perhaps, or at least what you've displayed as an ability to kind of control your costs. On the 4Q call, you talked about if this doesn't materialize, we have other avenues we can use and utilize to help maintain and drive earnings. Perhaps you can talk through that end. Hopefully, we don't get there, but. Yeah. Look, there are two core hallmarks of this business and the business model, right? The first is strong cash flow generation in all environments. The second is the ability to preserve profit in downdrafts, right? Strong cash flow generation because, and sort of linked to this idea that we can preserve profits, but it's not a capital-intensive business. We don't have significant capital needs to support ongoing operations to support growth, right? We generate, we convert earnings into cash flow at a very high, consistently high ratio. The ability to preserve profits. Because the margins in this business aren't driven solely by asset utilization, like in commodity chemicals businesses, where the amount of volume you put through a fixed site drives the margin, right? This is a business where we're blending, our primary cost is in people. The gross margins of this business going back decades have been 40% plus, right? That's through multiple cycles, demand cycles, volume cycles, inflationary cycles like we've seen. When volumes decline, raw material prices tend to decline, you're able to preserve the margin. The lever that we throw to preserve the EBITDA margin is around OpEx, right? We have people all over the world selling, supporting customers, innovating, and those are, you know, relatively expensive people with significant variable costs, significant fringe cost, travel expense, marketing expense. Those are levers that we know how to throw to preserve profit without damaging the long-term growth trajectory of the business. We're not talking about wholesale restructuring, letting go a big piece of the workforce and then rehiring them. We can't do that because our people are specialists, and they're rare and incredibly valuable to us and valued by our customers, right? We can, if we're not growing, if we don't hit our targets, we don't have incentive compensation. That automatically, that cost just falls out of the business. That's a lever that we've seen thrown. We've seen travel reductions because of COVID over the past couple of years preserve profit when we were in the teeth of the COVID crisis. There are other levers around we would call discretionary OpEx that allow for us to preserve profits, and we've been executing that playbook for years. The leadership team of this company, while it's a relatively new company, the people who ran the predecessor businesses have been around for a very long time and are familiar with this, and the people in the business are familiar with that cadence. Yeah. No, from an operating leverage perspective and the fact that you don't have the fixed cost base, sometimes we forget how impactful that can be. In 4Q, when the tide really goes out on volumes and we have companies reporting EBITDA margins in the single digits when, you know, they were mid-teens, high 20%, you know, it's, it can become quite stark. Flip side, new business wins, right? You talked about the leverage you have, the beta you have to some of these macro global trends. New business wins become hard for us to see when volumes are kind of coming out. Mm-hmm. When you look at what you've been able to achieve the last six months, can you talk a little bit about where you are from the business and the wins perspective that sets you up for when the markets recover? Yeah, absolutely. It's one of the most exciting things that's happening at Element Solutions. Yeah. We have a very robust sales process and a very robust strategy process where we've identified the fastest-growing, deepest pools of profit available to us. We're prioritizing our assets against those opportunities at the expense of the other opportunities. We're building a pipeline that's as big as it's ever been. Our new wins in 2022, despite all the disruption and slow macro environment, were bigger than in any year prior. We're seeing very robust commercial activity. This is a company that has brought capabilities in to support customers that are adjacent and new relative to its history and to the market, whether that's water treatment for industrial plating customers, whether that's some of the things we're doing in adhesives opportunities in electronics, and that is driving significant commercial traction. You're right. In a, in an environment where you're seeing receding a tide, you're seeing utilization levels lower, it's hard to disaggregate new wins and market share, from a volume decline. We feel as though we're winning more than our fair share of the opportunities at a time when supply chains are moving. You look at our Industrial Solutions business with what's happened with gas prices in Europe and some of the geopolitical instability, we're seeing big tiers moving manufacturing into new geographies, and we're there to support them. We're putting capital behind them, in exchange for long-term high-profit contracts. That will translate into share when these markets come back and when those lines come online. You talked a little bit about, you mentioned EVs, right? 1.5x-2x content versus an ICE. That almost was also different from just the ongoing not even electrification, you know, a car becoming more of a computer than a car. On the EV exposure side, can you talk a little bit about what you are offering? I know you have content and inverters and things like that. Where are you playing in this transition, and what's your market share look like in some of these opportunities? Yeah. The opportunities that we are uncovering in vehicle electrification are profound. You know, we are all over your car, whether it's the hood ornament, the side view mirror, the door handles that look like metal but it's plastic with a thin film of metal. That's our technology. On the interior, the center console, the decorative finishes that look like metal or the films. You know, our legacy businesses have a very robust position in all cars, EVs, internal combustion. Also on brake calipers, on nuts and bolts in the engine that you don't see but need to be reliable through, you know, many cycles of heat and water and salt and cold. You know, we provide functional coatings for that as well. Our Electronics business is increasingly moving into the automobile, where circuit board reliability, or electronics hardware reliability is 1,000 times more challenging than a smartphone. If you leave your smartphone in the sun, right, for too long, it stops working. You leave it in a snowbank, it stops working. You regularly park your car in the sun or in a snowbank, and the electronics hardware, which have life safety applications, has to work. Those are the technical requirements for our materials, and we lead from a technical perspective. It's not just that there's more circuit boards, but it's the requirements that those circuit boards must be put through. Requirements, challenging technical requirements translates into value for us. As you move into electric vehicles, there's a whole new world around battery case coating, around converting battery power to the powertrain. We've got significant amounts of current. Those cycles, voltage cycles test the reliability of legacy attachment materials for building electronics hardware and where thermal loss really matters, right? If your smartphone gets hot, you know, that's a shame. The heat that emanates from an electric vehicle battery transmission is energy that could be used to get longer range. We've got innovative materials and, as you mentioned, power electronics and power inverters and power semi that reduce the thermal loss and are more reliable than legacy technologies, and we're really on the leading edge there in continuing to innovate. Those are high-value products that enable the range and performance of high-end electric vehicles. We're investing a lot in our capacity there and in our commercial capability and our applications capability, and it's been very impactful. If you look at our Assembly Solutions business, which is one of the three verticals in electronics, in Q4, when mobile phones were down 18%, our Assembly business grew 11% organically, right? That's been driven by electric vehicles, by the industrial economy and some of the great capabilities we have there. Yeah. I wanted to actually transition to that a little bit because I know we spent a little bit of the time more recently on consumer electronics handsets. Particularly in your Assembly business and your Industrial business, there's a lot more going on. From the macro perspective, you know, what are you seeing in some of these more broadly diverse end markets that you're kind of touching on? Yeah. Look, if the question is sort of general macro observations, we talked about the smartphone market being weak and our expectation that in general, electronics, high-end electronics are gonna be soft, you know, continuing from the second half of 2022 into the first half of 2023. In the industrial economy, we've been positively surprised in Europe, where, you know, things were looking like they were going to be quite bad as we exited 2022, went through the winter. Because it was a warm winter, because gas prices have come down, they've been reasonably resilient and outperformed our expectations. North America has remained strong. China hasn't really picked back up following Lunar New Year. It's very hard to get a good read on activity in China in the first two months of any year because you have stocking patterns associated with the Lunar New Year holiday. The Lunar New Year holiday sometimes is two weeks. It's sometimes one week. It's January. It's February. The year-over-year comps are misleading. You really get a sense in March. Our read to date is that things remain slow. They haven't emerged despite a lot of positive leading indicators around saving rates and stimulus. Yeah. That's generally the worldview as it stands from a macro perspective. Our Industrial business is continuing to grow, market share, price, activity. Our Assembly Solutions business continued to grow through the fourth quarter because of electric vehicles, because it's more broadly exposed to the industrial economy, which had a reasonably strong emergence in the fourth quarter relative to the high-end electronics markets. Look, we talked a little bit about or you talked about cash flow conversion, right? What that's enabled is a pretty consistent schedule of inorganic M&A opportunities, right? Coventya more recently, but even DMP, H.K. Wentworth. How is the synergy capture from that layering in, how important is that to the way you see the growth of the business? How are they performing? Because we all... I mean, some of those ones I just mentioned were smaller, but, like, as you layer them in, what are you seeing out of them, as it relates to performance in kind of a pretty choppy macro? Sure. You know, Element Solutions' mantra is operational excellence and prudent capital allocation, right? Run the great businesses we have better every day. The better we run them, the more cash they generate, the more interesting things we can do with that cash, which is then reinforced by operational excellence. It's a feedback loop. Prudent capital allocation has looked different in different times, right? We've been aggressive buyers of our shares. We've done, you know, some medium-sized acquisitions, some smaller sized acquisitions, depending on what opportunities are available to us. Last year was more of a, of a buyback year than an acquisition year. M&A comes in two flavors for us. We buy businesses that are sort of market share related, overlapping, where we have an opportunity to consolidate, bring new capabilities, new team members to support existing customers, where there's a cost opportunity. Coventya was a lot of that, but it also brought new capabilities, and that's the other flavor, which is how can we add adjacencies, bring in capabilities that are value added to our customers, broaden our portfolio in markets we deeply understand? That's what DMP and HK Wentworth were. The Coventya acquisition has been outstanding. You know, we are well ahead of our plan for synergies. That business will generate $50 million of EBITDA for us in 2024, you know, on its way from $30 million when we bought the business. It's a sub 10x multiple, that really expanded our portfolio and our reach and our penetration of that market. The DMP acquisition was a much smaller acquisition. DMP was a water treatment technology company. You know, in our industry, we're selling materials that are used in plating processes, and there's a lot of water that's used in that process as well. We basically stopped at the end of the plating line, and then the water went off. We realized that if we can help solve the water issues for these customers, that's the most existential issue in many markets, because a lot of these plating shops are in water-stressed areas. The cost of treatment is very, very high, and we bring a different lens to water treatment. We're not a water treatment company, we're a chemistry company, so we can understand the chemistries that are being treated. We have made incredible progress with that business. It started small. It was, you know, $20 million of revenue, and it's on its way to 50 in three years. You know, it's growing double digits every year. Our customers are thrilled by the capabilities that we're bringing to bear. It's not just the revenue from the water treatment equipment. We can bring a customer a solution that no one else can provide, and we'll win their chemistry business because of that, too. It's actually driving market share in the core businesses. It's very, very complementary, synergistic, and we're thrilled about that. H.K. Wentworth is more on the polymer-based electronics adhesives, conformal coating, thermal interface materials. If you think about what happens at an electronic hardware assembler, they're taking a printed circuit board that's been treated with our chemistry, putting a transistor, a chip, a component onto that board using our Assembly Solutions, and then they're putting other polymers on to protect the board to keep that chip on, whether that's high-end electronics glue to dissipate the heat that's generated by those circuits. We wanna play in those areas, in those polymer-based areas. If we can speak to the way our materials interface, we can drive share. Those are very big addressable markets where we're under-penetrated. We're excited about that. It's still early innings, but we believe we can execute and grow. Yeah, I was gonna say, I mean, do you... Kind of dovetail this a little bit, but do you still see enough fragmentation in the markets that you serve that you can remain incrementally inquisitive for the business? Yeah. You can't enter these markets organically. The moats around these capabilities are gigantic, right? No one's gonna try a new material for a Apple, you know, for a new phone where reliability is, you know, taken for granted. You're only going to have success if you have some proven capability, and that's why we do these small tuck-ins and then grow organically off of them. That's worked for us. The adhesives market, the thermal interface market, the addressable markets that are very big. The strategy there is going to be, let's prove to ourselves we can execute organically before we deploy any capital to consolidate. In our core markets, in the industrial surface treatment market, in the circuitry market, they have been more consolidated, but they still remain quite fragmented. There are new technologies emerging regularly that, for the same reason I just said, can't really get true customer traction that we can help monetize for those innovators. Another area we've been deploying capital over the past year has been emerging technology companies, where, you know, they've innovated something outstanding that there's demand in the market for. They've got a very interesting new solution, and we'll invest behind them, buy that technology, and that really helps monetize the technology, accelerate the path to profitability for these businesses. On the, on the flip side, right, one of your key competitors was just acquired, right? I don't cover MKSI. For me, it's a little bit of a loss because we're now more distant to that asset. From a competitive backdrop, right, they're gonna work on sales synergies. Clearly, they saw a reason that they thought they could lever both businesses for faster growth. I mean, have you seen your competitive backdrop change? Does it pressure you to increase your offerings? You know, how should we think about or how is ESI kind of responding to-. Yeah. -the change? The... You know, Atotech is an excellent business. We have very robust, capable competitors with great technology and great service offerings. Atotech has historically always offered equipment and chemistry together in a bundle, right? Which is not something we've done. Notwithstanding the fact I just talked about water treatment equipment, it's a small part of our business, we don't sell plating lines that we make ourselves. We don't sell either for the industrial market or for the circuitry market. Now, we are able to source equipment from third-party manufacturers and sell a full solution to a customer, but we don't have that manufacturing ourselves. We don't have the capital intensity, the cyclicality associated with equipment manufacturing. The fact that Atotech is now part of MKS, which also has other equipment, doesn't change the competitive landscape for us because we were never competing on our own equipment technology, right? Again, notwithstanding the water side of the business. It really doesn't change much for us. You know, in our markets, we are a meaningful participant, and there has been consolidation in electronics materials. There hasn't been much consolidation in the areas specifically where we participate. Yeah. We really haven't seen anything change strategically. You know, our competitors remain viable competitors, but our performance, both commercially and from a strategy perspective, are outlining our ability to, you know, grow our share. Okay. I think they underpin empirically, you know, the organic opportunities and how these changes aren't changing our ability to win. Okay. Look, with a few minutes here, the last one I was gonna kind of tap on a bit is just geopolitics, right? Constant theme. It seems like the tone is changing in China and in Asia, particularly as it relates to foreign investment in the way that they think about maybe self-sufficiency, right? You have a lot of exposure to Asia. Mm-hmm. How are you thinking about this? Like, how are you managing your position? There's real concerns around invasions of Taiwan, what that could mean for global supply chains. You're obviously an important part of that, but it's also very important for your business. Yeah. What are you stress testing? How do you think about how your business holds up here? Um- Hopefully, it's years away. Yeah. Hopefully, it never happens. Look- like, you know, it's... We control the controllables, we support our customers wherever they are. As supply chains have moved out of China in some instances, you know, that's an opportunity for us. We don't have the local Chinese competition in some of these markets like Vietnam and India. We're investing in applications labs and people on the ground to support customers that are opening new sites in new geographies. We've seen a big. You know, I talked about in the Industrial Solutions business, how things are moving from Europe, but we're seeing a big level of investment in Mexico, which is our backyard, and we've got really good sharing capabilities there. Where our supply chains go, we'll be there to support them. We're already there in many instances, it takes them longer to move because they're more manufacturing, equipment-intensive, capital-intensive businesses. You think about a plating shop, a circuit board fab, semiconductor fab versus the, you know, wet chemistries that are used. We believe we're well positioned to continue to support these industries, regardless of where they are. We have business continuity capability, and can make most of our products anywhere in the world. Yeah. obviously, you worry about geopolitics. The only thing you can do is be prepared, and we believe we are from a footprint perspective, from a manufacturing perspective, from an IP perspective, to support our supply chains and our customers. Yeah. I guess it's tricky because in some respects, you go where your customers go, and you can't just start selling product to Vietnam because you need to move away from China. Like, you need your customers to be there. I guess it's encouraging to hear that the supply chain is starting that direction. I mean, we see it obviously in the U.S. with all the semi fabs coming domestically. More broadly, I guess it seems to be. Yeah. Those are very big opportunities for us. Yeah. You know, these production facilities, particularly on the semiconductor side, but also on the circuit board side, once they've chosen a vendor, it's very, very hard to displace. Once you have a process of record, you are very, very hard to displace. As capacity is added and as we have improved our capabilities over the past several years, we're better positioned to win more of that business than we've been in the past. We're seeing that with some of the North American semiconductor fabs, where we've won big pieces of business in markets where we were under-penetrated historically. You know, we're not seeing the benefit of that through the P&L because of the ramp time for those fabs. You know, those will be material contributors to growth in the medium term. Okay. All right. I think we're out of time. Ben, I appreciate it. Thank you for kind of supporting us and coming out to the conference. I know it's a short drive for you. All the same, thank you for being here. Yeah. Thanks for your questions. Thanks for your time. Of course. I'll see you guys around. Bye.