Solstice Advanced Materials — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the quarter ended September 30, 2026, were $1,046 million, an 8% increase year-over-year from $969 million.
• Net income attributable to Solstice Advanced Materials was $80 million, compared to a net loss of $35 million in the prior-year period.
• Diluted earnings per share (EPS) were $0.50, compared to a loss of $0.22 per share in the prior year.
• Adjusted diluted EPS was $0.80.
• Adjusted EBITDA was $265 million, a 13% increase from $235 million in the prior year.
• Adjusted EBITDA margin was 25.3%, an improvement of 109 basis points year-over-year.
• Operating cash flow for the nine months ended September 30, 2026, was $693 million.
• Capital expenditures for the nine months ended September 30, 2026, were $325 million, a 31% increase from the prior period.
• Free cash flow for the nine months ended September 30, 2026, was $368 million.
• Total long-term debt was $2.0 billion as of September 30, 2026.
• Cash and cash equivalents were approximately $714 million as of September 30, 2026.
• Net leverage ratio was approximately 1.3x based on trailing twelve-month Adjusted EBITDA.
• Total liquidity was approximately $1.7 billion, including cash and $1.0 billion of availability through the revolving credit facility.
• Income tax expense was $24 million, down $158 million from the prior year due to frictional taxes associated with the spin-off from Honeywell in the prior-year period.

Guidance and Future Outlook:

• Full-year 2026 Net Sales guidance raised to $4,195 - $4,220 million (previously $4,125 - $4,185 million).
• Full-year 2026 Adjusted EBITDA guidance raised to $1,050 - $1,060 million (previously $1,035 - $1,055 million).
• Full-year 2026 Adjusted Diluted EPS guidance raised to $2.90 - $2.95 (previously $2.75 - $2.95).
• Full-year 2026 Capital Expenditures guidance remains unchanged at $420 - $440 million.
• Fourth Quarter 2026 Net Sales guidance is $1,010 - $1,035 million.
• Fourth Quarter 2026 Adjusted EBITDA guidance is $246 - $256 million.
• Fourth Quarter 2026 Adjusted Diluted EPS guidance is $0.57 - $0.62.
• Management cited strong year-to-date business performance as the driver for raising the full-year outlook for the second consecutive quarter.

Business Segments and Product Lines:

• Refrigerants & Applied Solutions (RAS) segment net sales were $726 million, up 6% year-over-year.
  • Refrigerants sales increased 8%, driven by strong demand in automotive and data center applications.
  • Healthcare Packaging sales increased 24%, reflecting higher volume and pricing following destocking in the second half of 2025.
  • Nuclear revenues increased 4%, with a backlog of $2.6 billion.
  • Building Solutions & Intermediates sales decreased 5% due to soft construction-related end markets.
  • RAS Segment Adjusted EBITDA was $251 million, up 3%, with a margin of 34.5% (down 82 bps year-over-year due to higher R&D investment).
• Electronic & Specialty Materials (ESM) segment net sales were $320 million, up 13% year-over-year, reaching a record quarterly level.
  • Electronic Materials sales increased 31%, driven by demand for sputtering targets and thermal solutions in memory and AI-related applications.
  • Research & Performance Chemicals sales grew 4%.
  • Safety & Defense Solutions sales increased 3%.
  • ESM Segment Adjusted EBITDA was $68 million, up 44%, with a margin of 21.2% (up 453 bps year-over-year).
• Corporate expenses were $53 million, slightly lower than $54 million in the prior year.

Market and Competitive Landscape:

• The company is positioned to benefit from secular growth trends including nuclear energy, thermal management, AI, and data centers.
• Demand for conversion services remains robust.
• The company serves over 3,000 customers across more than 120 countries and territories.

Risks and Challenges:

• Risks include limited operating history as an independent company, unreliability of historical consolidated financial information as a future indicator, and the ability to successfully develop new technologies.
• Economic risks include inflation, tariffs, trade barriers, market volatility, geopolitical instability, and potential economic downturns.
• Operational risks include raw material price and availability fluctuations, supply chain disruptions, and compliance with complex government regulations.
• Specific industry risks include public and political perceptions of nuclear energy, global climate change regulations, and the hazardous nature of chemical manufacturing.
• Financial risks include the ability to borrow funds, access capital markets, and maintain internal controls.
• Litigation risks include disputes related to the spin-off and potential material environmental liabilities.

Management Commentary and Tone:

• David Sewell, President and CEO, stated that Solstice delivered strong results demonstrating the value of its differentiated portfolio and consistent execution.
• Management expressed confidence in the team's focus on operational excellence and disciplined capital deployment to deliver long-term value.
• The tone reflects confidence in the company's ability to capitalize on key secular growth trends.

Other Key Points:

• The company returned $112 million to shareowners in the third quarter, including $100 million in share repurchases.
• The Board authorized a $500 million share repurchase program; $100 million was completed in the quarter (1.7 million shares), with an intention to substantially complete the authorization by the end of the first quarter of 2027.
• The Board declared a quarterly dividend of $0.075 per share, payable on December 10, 2026, to shareholders of record as of November 25, 2026.
• The company completed approximately $30 million of previously communicated product loan returns in the quarter.
• The company is an independent, publicly traded company following its spin-off from Honeywell International Inc. on October 30, 2025.
• The company does not provide a reconciliation of forward-looking Adjusted EBITDA or Adjusted diluted EPS to GAAP net income due to the difficulty in forecasting certain deductions.