Market Overview

Element Solutions Inc Announces Repurchase of 37 Million Shares from Pershing Square Capital Management and Increase to 2019 Adjusted EPS Guidance Range

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  • Element Solutions Inc has signed a definitive agreement to
    repurchase 37 million shares from Pershing Square Capital Management
    at a price of $11.72 per share
  • Element Solutions Inc increasing its 2019 adjusted EPS guidance to
    a range of $0.82 to $0.87
  • In connection with this transaction, Director Ryan Israel has
    elected to resign from the Board of Directors effective immediately

Element Solutions Inc (NYSE:ESI) ("Element Solutions" or the "Company")
announced today that it has agreed to repurchase 37 million shares from
Pershing Square Capital Management ("Pershing Square") at a price of
$11.72 per share. These shares represent more than 90% of Pershing
Square's holdings in Element Solutions and this transaction takes their
position from approximately 13% of the Company's outstanding shares on a
fully diluted basis to approximately 1%. In the context of this
transaction, Ryan Israel has elected to resign from the Board of Element
Solutions Inc.

Updated 2019 Guidance

The Company has increased its 2019 adjusted earnings per share ("EPS")
guidance from a range of $0.75 to $0.80 to an updated range of $0.82 to
$0.87 to reflect the accretion from this transaction. The Company's
other guidance remains unchanged.

Commentary

Executive Chairman Martin E. Franklin said, "Our short-term objective at
Element Solutions was to utilize our financial capacity to repurchase
shares in an opportunistic manner for the benefit of all shareholders.
After Friday's close, with our Board's unanimous support, we offered to
purchase the vast majority of Pershing Square's holdings at the last
sale price reported for the Company's shares as of the 4 pm close of
trading on the New York Stock Exchange. This offer was accepted,
documented and completed over the weekend. Bill Ackman and Pershing
Square as a firm have been great supporters of the Company over the last
five years and we are grateful for Ryan Israel's contribution as a
Director over this period. We believe this opportunistic repurchase is
by far the most efficient and earnings accretive approach for our
remaining shareholders, all while keeping our leverage ratio below our
stated goal of 3.5x net debt to adjusted EBITDA. This buyback utilizes
approximately 58% of our previously approved buyback program, and we
will continue to look at opportunities to return capital to shareholders
over the balance of the year, while remaining committed to our
disciplined leverage goals. Following this transaction, we expect to
produce substantial free cash flow in 2019 which should bring our net
leverage ratio to between 2.5x and 3.0x by year-end.

Pershing Square's CEO, William A. Ackman, said, "We are exiting our
investment in Element Solutions knowing well that the business is strong
and the stock price is cheap. Were it not for a repositioning of our
portfolio to larger capitalization activist situations, we would have
remained a long-term shareholder. Ryan joins me in wishing Martin, Ben
and the rest of the management team and Board of Directors great success
in the future."

About Element Solutions Inc

Element Solutions Inc is a leading specialty chemicals company whose
businesses formulate a broad range of solutions that enhance the
performance of products people use every day. Developed in multi-step
technological processes, our businesses' innovative solutions enable
customers' manufacturing processes in several key industries, including
electronic circuitry, communication infrastructure, automotive systems,
industrial surface finishing, consumer packaging and offshore energy.
More information about the Company is available at www.elementsolutionsinc.com.

Non-GAAP Measures

This press release includes non-GAAP measures, such as adjusted EPS and
adjusted EPS guidance and net debt to adjusted EBITDA, each as defined
below. These non-GAAP measures should be considered in addition to, not
as a substitute for, measures of financial performance prepared in
accordance with GAAP. This information includes the full benefit of $5
million of reorganizational cost savings realized in 2018 and an
additional $20 million of expected run-rate savings in 2019. This
information, however, should not necessarily be, and should not be
assumed to be, an indication of the results that may be achieved in the
future. Further, Element Solutions only provides adjusted EPS guidance
on a non-GAAP basis and does not provide reconciliations of such
forward-looking non-GAAP measure to GAAP due to the inherent difficulty
in forecasting and quantifying certain amounts that are necessary for
such reconciliations, including adjustments that could be made for
restructurings, refinancings, divestitures, integration and
acquisition-related expenses, share-based compensation amounts,
nonrecurring, unusual or unanticipated charges, expenses or gains,
adjustments to inventory and other charges reflected in the
reconciliation of historic numbers, the amount of which, based on
historical experience, could be significant.

Adjusted EPS: Adjusted
earnings per share is defined as net income (loss) from continuing
operations attributable to common stockholders adjusted to reflect
adjustments consistent with the Company's definition of adjusted EBITDA.
Additionally, the Company eliminates the amortization associated with
intangible assets and the step-up depreciation associated with fixed
assets both recognized in purchase accounting for acquisitions. Further,
it adjusts the effective tax rate to 27% for 2019. The resulting
adjusted net income available to stockholders is divided by the number
of shares of outstanding common stock as of the period end plus the
number of shares that would be issued if all the Company's convertible
stock were converted to common stock, stock options were vested and
exercised, and awarded equity grants were vested. Adjusted earnings per
share is a key metric used by management to measure operating
performance and trends. In particular, the exclusion of certain expenses
in calculating adjusted earnings per share facilitates operating
performance comparisons on a period-to-period basis.

Net Debt to Adjusted EBITDA ratio:
Net debt to adjusted EBITDA ratio is defined as consolidated
indebtedness, as defined in the Company's credit agreement, less cash
divided by Adjusted EBITDA.

Forward-looking Statements

This press release contains forward-looking statements, including,
but not limited to, adjusted EPS guidance, leverage ratio below the
Company's stated goal of 3.5x net debt to adjusted EBITDA, future
opportunities to return capital to shareholders, commitment to
disciplined leverage goals, free cash flow generation and net leverage
ratio goal of between 2.5x and 3.0x by year end. Actual results could
differ from those projected due to numerous factors, including, without
limitations, the Company's ability to realize the anticipated benefits,
efficiencies and cost savings expected from the recent sale of its
Agricultural Solutions business; the impact of this transaction on the
Company's share price and market volatility; the Company's ability to
retain customers and suppliers, retain or hire key personnel, and
maintain relationships with customers, suppliers and lenders; the
success of the Company's leadership transition and go-forward structure
and strategy; the impact of acquisitions, divestitures, restructurings,
refinancings, and other unusual items, including the Company's ability
to raise and/or retire new debt and/or equity and to integrate and
obtain the anticipated benefits, results and synergies from these items
or other related strategic initiatives. Additional information
concerning these and other factors that could cause actual results to
vary is, or will be, included in Element Solutions' periodic and other
reports filed with the Securities and Exchange Commission. These
forward-looking statements are made as of the date of this press release
and are based on management's estimates, assumptions and expectations
with respect to future events and financial performance. Element
Solutions undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.

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