(Información remitida por la empresa firmante)
In extensive private communications, which commenced in April 2021, we have pursued a constructive dialogue with individuals including yourself as Chair, Paul Waterman (CEO), Ralph Hewins (CFO) and James Curran (IR). In our many conversations, we extensively outlined our frustration with management’s value destructive capital allocation, inability to improve operating performance and failure to find a clear path to narrow the Company’s valuation gap. In August 2021, we spoke in detail with you and Mr. Curran regarding our analysis that, while the Company had consistently produced EBITDA margins in-line with the median for the peer group, its returns on invested capital had significantly degraded following the acquisitions of SummitReheis and Mondo Minerals, on both an absolute basis and relative to the Company’s cost of capital.
In our February 16, 2023, letter to you, we further expressed our concerns and questioned management’s ability to deliver share price growth.[10] We concluded our letter with the recommendation that the Board initiate a review of strategic alternatives to maximize value for shareholders.
Due to a consistent lack of progress, we have now reluctantly decided to make this letter public. While we frequently engage with companies regarding various shareholder matters in private, we rarely do so in public. However, we believe it is in the best interest of all shareholders to be aware of these issues. Additionally, if more shareholders share their concerns with the Company’s Board, we hope these issues might finally be properly addressed.
Sincerely,
Steve RaineriChris Meeker
Senior Vice President-Portfolio Manager Vice President-Portfolio Manager
Franklin Mutual Advisers, LLC Franklin Mutual Advisers, LLC
Franklin Mutual Advisers, LLC, the investment advisor for the Franklin Mutual Series funds, is a wholly owned subsidiary of Franklin Resources, Inc., a global investment management organization with subsidiaries operating as Franklin Templeton.
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SOURCE Franklin Mutual Advisers, LLC
LEGAL NOTICE: The information provided here and in the linked letter should not be construed as legal, tax or investment advice or a recommendation or solicitation to buy, sell or hold any investment. The views expressed in the letter are those of the signatories and the comments, opinions and analyses are rendered as at the date of the letter and may change without notice. These views may differ from those of other investment staff within Mutual Series or within other investment management teams of Franklin Templeton which operate with independent investment discretion. Franklin Templeton accepts no liability whatsoever for any loss arising from use of this information or reliance upon any comments, opinions or analyses in the letter.
[1] Market share position noted in 2019 CMD presentation
[2] Sika, Givaudan, RPM International, Symrise, Imerys, H.B. Fuller, Avient, Stepan, Croda International, Ashland, Minerals Technologies, Innospec, Ingevity
[3] Management had established a 17% adjusted operating margin objective at 2019 CMD event
[4] Natural ingredients penetration noted in 2019 CMD presentation
[5] Market share of AP actives noted in 2019 CMD presentation
[6] 2020 goodwill impairment $33.4M, 2021 goodwill impairment $52.3M, 2022 goodwill impairment $103.4M, 2022 property, plant & equipment impairment $23.4M, Elementis’ annual report, note 5 adjusting items
[7] TTM revenue and EBITA excluding $7M of Group costs allocated to Chromium equal to $171M and $21M, respectively, Elementis press release 11/30/2022
[8] Elementis “Response to Mineral Technologies’ Proposal”, December 2020, page 18
[9] Average share price of Elementis from 12/10/2020 – 09/15/2023, Bloomberg
[10] Franklin Mutual Advisers, LLC letter for Mr. John O’Higgins, February 16, 2023
View original content:https://www.prnewswire.co.uk/news-releases/franklin-mutual-advisers-sends-letter-urging-elementis-board-of-directors-to-pursue-an-immediate-sale-of-the-company-301932555.html