Qnity Electronics — Q3 2026 Earnings Summary

Financial Performance:

• Net sales for Q3 2026 reached $1.6 billion, representing a 22% year-over-year increase compared to $1.276 billion in Q3 2025.
• Gross margin and adjusted gross margin were 47.8% for the quarter.
• GAAP net income was $196 million, down from $223 million in Q3 2025.
• Adjusted operating EBITDA was $503 million, up from $370 million in Q3 2025.
• GAAP diluted earnings per share (EPS) were $0.87, a 14% decrease year-over-year.
• Adjusted diluted EPS were $1.46, a 55% increase year-over-year.
• For the nine months ended September 30, 2026, net sales totaled $4.3 billion compared to $3.564 billion in the prior year period.
• GAAP net income for the nine months was $494 million, down from $620 million in the prior year period.
• Adjusted operating EBITDA for the nine months was $1.345 billion, up from $1.091 billion in the prior year period.
• Cash provided by operating activities for the nine months was $647 million, down from $782 million in the prior year period.
• Capital expenditures for the nine months were $290 million, compared to $214 million in the prior year period.
• Adjusted free cash flow for the nine months was $607 million, up from $568 million in the prior year period.
• Total assets were $14.717 billion as of September 30, 2026, compared to $14.070 billion as of December 31, 2025.
• Long-term debt was $3.996 billion as of September 30, 2026, compared to $4.003 billion as of December 31, 2025.
• Cash and cash equivalents were $1.124 billion as of September 30, 2026, compared to $915 million as of December 31, 2025.

Guidance and Future Outlook:

• Qnity raised full-year 2026 guidance based on strong third-quarter performance and continued business momentum.
• Full-year 2026 net sales guidance is $5.77 billion to $5.83 billion.
• Full-year 2026 adjusted operating EBITDA guidance is $1.785 billion to $1.805 billion.
• Full-year 2026 adjusted EPS guidance is $4.95 to $5.05.
• Full-year 2026 adjusted free cash flow guidance is $800 million to $900 million.
• Management indicated that materials innovation is becoming a critical driver of chip performance as the industry shifts toward shrink and stack.
• The company sees tremendous opportunities ahead and is continuing to invest in differentiated technologies where visible customer demand exists.

Business Segments and Product Lines:

• Semiconductor Technologies segment net sales were $797 million in Q3 2026, up from $693 million in Q3 2025.
• Interconnect Solutions segment net sales were $759 million in Q3 2026, up from $583 million in Q3 2025.
• Semiconductor Technologies segment adjusted operating EBITDA was $285 million for Q3 2026, up from $240 million in Q3 2025.
• Interconnect Solutions segment adjusted operating EBITDA was $236 million for Q3 2026, up from $152 million in Q3 2025.
• Corporate adjusted operating EBITDA was $(18) million for Q3 2026, compared to $(10) million in Q3 2025.
• Organic sales growth for the quarter was 22%, driven entirely by volume growth with no contribution from price/product mix or currency.
• Semiconductor Technologies organic sales growth was 16% (volume) for the quarter.
• Interconnect Solutions organic sales growth was 29% (volume) for the quarter.
• Asia Pacific region organic sales growth was 24% for the quarter.
• Americas region organic sales growth was 24% for the quarter.
• EMEA region organic sales growth was 0% for the quarter.

Market and Competitive Landscape:

• Qnity describes itself as the premier solutions provider across the semiconductor value chain.
• The company is establishing itself as a key provider for AI, high performance computing, and advanced connectivity.
• Qnity's end-to-end solutions enable customers to address complex system-level challenges including signal reliability, power density, and thermal management.
• The company is a constituent of the S&P 500 index.

Risks and Challenges:

• Risks include the ability to realize anticipated benefits of the multi-year transformation plan within the anticipated timeframe or at all.
• There is a risk that costs of the transformation plan may be higher than currently anticipated.
• The competitive environment in which Qnity operates presents risks.
• International operations face risks from geopolitical uncertainty, conflict, trade restrictions, and sanctions laws.
• Compliance with complex and increasing legal and regulatory requirements is a risk.
• Risks exist regarding the ability to realize benefits of the spin-off from DuPont, including achievement of anticipated synergies and operational efficiencies.
• Risks include contractual allocation of certain liabilities in connection with the spin-off and the possibility of disputes, litigation, or unanticipated costs related to the spin-off.

Management Commentary and Tone:

• Jon Kemp, Chief Executive Officer, stated the company delivered its tenth consecutive quarter of profitable growth with strong performance across both segments.
• Kemp highlighted a year of disciplined execution as an independent company, citing a deep portfolio, close alignment with customer roadmaps, and a local-for-local model as key differentiators.
• Management emphasized that materials innovation is a critical driver of chip performance and that Qnity's solutions address the most complex system-level challenges.
• The tone was confident, with management expressing "tremendous opportunities ahead" and a commitment to investing in differentiated technologies.

Other Key Points:

• Qnity completed its spin-off from DuPont de Nemours, Inc. on November 1, 2025.
• Financial results for Q3 2025 are presented on a pro forma basis to reflect the spin-off as if it occurred on January 1, 2025.
• The company repurchased common stock for $75 million during the nine months ended September 30, 2026.
• Dividends paid to stockholders totaled $50 million during the nine months ended September 30, 2026.
• The company incurred $53 million in transformation, integration, and other charges in Q3 2026, primarily related to IT independence initiatives ($35 million), transformation initiatives ($11 million), integration costs ($4 million), and severance/asset charges ($3 million).
• The company incurred $123 million in transformation, integration, and other charges for the nine months ended September 30, 2026.
• Qnity recorded $64 million in interest expense for Q3 2026, compared to $14 million in Q3 2025.
• The company received $360 million in proceeds from a term loan facility repricing and repaid $360 million during the nine months ended September 30, 2026.
• A gain on sale of assets of $5 million was recorded during the nine months ended September 30, 2026, attributable to the sale of land.
• Adjusted operating EBITDA margin was 32.3% for Q3 2026, compared to 29.9% in Q3 2025.
• Adjusted operating EBITDA margin was 31.3% for the nine months ended September 30, 2026, compared to 30.6% in the prior year period.