Solstice Advanced Materials (NASDAQ: SOLS) grows Q1 sales but profit and margins decline
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Solstice Advanced Materials reported first-quarter 2026 net sales of $991 million, up 10% from $897 million a year earlier, driven by higher volumes and pricing in Refrigerants & Applied Solutions and growth in Electronic & Specialty Materials.
Despite the sales increase, net income attributable to Solstice fell to $85 million from $134 million, and diluted EPS declined to $0.53 from $0.85, mainly due to higher raw material costs, increased standalone public-company expenses, and a jump in interest and other financial charges to $29 million from $1 million after the 2025 spin-off financing.
Adjusted EBITDA slipped to $249 million from $271 million, with margin compressing to 25.1% from 30.2%, particularly in Refrigerants & Applied Solutions where mix and production costs weighed on profitability. Cash from operations rose to $199 million, cash and cash equivalents increased to $642 million, and the company ended the quarter with $2.0 billion of debt and no borrowings under its $1.0 billion revolving credit facility. The Board declared a quarterly dividend of $0.075 per share.
Positive
- Net sales growth and volume expansion: Net sales rose to $991 million from $897 million (10% increase), with organic sales up 8.0% and volume gains in low global warming potential refrigerants, nuclear services, and electronic materials.
- Solid cash generation and liquidity: Net cash provided by operating activities increased to $199 million from $160 million, while cash and cash equivalents grew to $642 million and the $1.0 billion revolving credit facility remained undrawn.
- Segment growth in Electronic & Specialty Materials: ESM net sales increased to $281 million from $261 million and Segment Adjusted EBITDA improved to $58 million from $53 million, reflecting stronger demand in electronic materials.
- Shareholder returns via dividends: The Board declared a quarterly cash dividend of $0.075 per share, and the company paid $12 million of dividends in the quarter, signaling an ongoing capital return framework.
Negative
- Earnings and margin compression: Net income attributable to Solstice declined to $85 million from $134 million (37% drop) and Adjusted EBITDA margin fell to 25.1% from 30.2%, pressured by higher costs and mix in Refrigerants & Applied Solutions.
- Higher interest burden from new leverage: Interest and other financial charges increased sharply to $29 million from $1 million following the issuance of $1.0 billion of 5.625% senior notes and a $1.0 billion term loan facility.
- RAS profitability under pressure: Refrigerants & Applied Solutions Segment Adjusted EBITDA decreased to $242 million from $250 million and margin declined to 34.1% from 39.3%, reflecting lower refrigerant margins and higher production costs.
- Ongoing environmental and nuclear litigation exposure: The company continues to face legal proceedings related to its Nuclear Facility and records environmental liabilities of $55 million; future outcomes could affect results in the periods recognized or paid.
Insights
Strong top-line growth but margin compression and higher interest reduced earnings.
Solstice grew Q1 2026 net sales 10% to $991 million, with both Refrigerants & Applied Solutions and Electronic & Specialty Materials contributing. Organic sales rose 8.0%, supported by higher volumes in LGWP refrigerants, nuclear conversion services and electronic materials.
Profitability softened: Adjusted EBITDA declined to $249 million and margin to 25.1% from 30.2%, reflecting mix shifts, inflation in raw materials and higher standalone corporate costs. Interest and other financial charges surged to $29 million after issuing $1.0 billion of 5.625% senior notes and drawing a $1.0 billion term loan facility in 2025.
Net income attributable to Solstice fell to $85 million from $134 million, while operating cash flow improved to $199 million on working capital gains. The company ended with $642 million of cash, no revolver borrowings and $2.0 billion of debt, and it maintained capital spending at $82 million to support growth, particularly in electronic materials and advanced fibers.
Key Figures
Net sales: $991 million
Net income attributable to Solstice: $85 million
Diluted EPS: $0.53
+5 more
8 metrics
Net sales
$991 million
For the three months ended March 31, 2026
Net income attributable to Solstice
$85 million
For the three months ended March 31, 2026 vs. $134 million in 2025
Diluted EPS
$0.53
For the three months ended March 31, 2026 vs. $0.85 in 2025
Adjusted EBITDA
$249 million
Q1 2026, margin 25.1% vs. 30.2% in 2025
Operating cash flow
$199 million
Net cash provided by operating activities in Q1 2026
Total debt
$2.0 billion
Outstanding debt (excluding finance leases) as of March 31, 2026
Cash and cash equivalents
$642 million
Balance as of March 31, 2026
RAS net sales
$711 million
Refrigerants & Applied Solutions Q1 2026 net sales
Key Terms
Segment Adjusted EBITDA, Organic sales percentage, Spin-off, Term Loan Facility, +2 more
6 terms
Segment Adjusted EBITDA financial
"The CODM evaluates segment performance based on segment adjusted EBITDA"
Segment adjusted EBITDA is a measure of how much profit a specific part of a company generates from its everyday operations, before counting interest, taxes, depreciation, amortization and one‑off items. Investors use it like checking the fuel efficiency of one car in a fleet: it helps compare which business lines truly earn money, evaluate trend performance, and decide where to invest or cut costs without distortions from financing or accounting choices.
Organic sales percentage financial
"The Company defines organic sales percentage as the year-over-year change in reported sales"
Spin-off financial
"On October 30, 2025, the Spin-off was consummated by means of a pro-rata distribution"
A spin-off happens when a company creates a new, independent business by separating part of itself, like splitting off a division into its own company. This often happens so the new company can focus better on its own goals or attract different investors. It matters because it can lead to more growth opportunities and clearer focus for both companies.
Term Loan Facility financial
"a seven-year senior secured first-lien term B loan facility in an aggregate principal amount of $1.0 billion (the “Term Loan Facility”)"
A term loan facility is a type of loan provided by a lender that is repaid over a set period of time, usually with fixed payments. It functions like a large, upfront loan that a borrower agrees to pay back gradually, often used to fund major investments or projects. For investors, understanding a company's use of such loans helps assess its financial stability and risk level.
Sidecar LC Facilities financial
"uncommitted bilateral letter of credit facilities in an aggregate uncommitted amount of $750 million (the “Sidecar LC Facilities”)"
Asset retirement obligations financial
"Asset retirement obligations result from legal obligations associated with the retirement of long-lived assets"
Asset retirement obligations are a company’s recorded promise to pay for dismantling, cleaning up, or restoring property when a long-lived asset is retired — for example decommissioning a plant or removing equipment. Companies estimate the future cleanup cost today and book it as a liability (and add the cost to the asset), so it affects the balance sheet, reported profits over time, and future cash needs; investors watch it like a planned bill that can reduce cash available for returns.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
__________________
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___to __
Commission file number 001-42812
(Exact name of registrant as specified in its charter)
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incorporation or organization) | Identification No.) | ||||||||||||||||
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| Securities registered pursuant to Section 12(b) of the Act: | |||||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 158,804,273 of the Registrant’s common shares outstanding at April 29, 2026.
TABLE OF CONTENTS
| Cautionary Statement Concerning Forward-Looking Statements | 1 | |||||||
| Part I | Financial Information | |||||||
| Item 1 | FINANCIAL STATEMENTS (UNAUDITED) | 3 | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | 3 | |||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | 4 | |||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | 5 | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | 6 | |||||||
| CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) | 7 | |||||||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 8 | |||||||
| Note 1. Business Overview and Basis of Presentation | 8 | |||||||
| Note 2. Summary of Significant Accounting Policies | 9 | |||||||
| Note 3. Related Party Transactions | 10 | |||||||
| Note 4. Revenue Recognition and Contracts with Customers | 12 | |||||||
| Note 5. Income Taxes | 14 | |||||||
| Note 6. Inventories | 14 | |||||||
| Note 7. Goodwill and Other Intangible Assets – Net | 14 | |||||||
| Note 8. Debt | 15 | |||||||
| Note 9. Fair Value Measurements | 16 | |||||||
| Note 10. Stock-Based Compensation Plans | 16 | |||||||
Note 11. Shareowners’ Equity | 17 | |||||||
Note 12. Earnings Per Share | 18 | |||||||
| Note 13. Investments | 19 | |||||||
| Note 14. Commitments and Contingencies | 20 | |||||||
| Note 15. Segment Financial Data | 22 | |||||||
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||||||
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 36 | ||||||
| Item 4 | Controls and Procedures | 36 | ||||||
| Part II | Other Information | |||||||
| Item 1 | Legal Proceedings | 37 | ||||||
| Item 1A | Risk Factors | 37 | ||||||
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||||
| Item 3 | Defaults Upon Senior Securities | 37 | ||||||
| Item 4 | Mine Safety Disclosures | 37 | ||||||
| Item 5 | Other Information | 37 | ||||||
| Item 6 | Exhibits | 38 | ||||||
| Signatures | 39 | |||||||
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and our business and financial results. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “positioned,” “projects,” “forecasts,” “intends,” “plans,” “continues,” “could,” “believes,” “may,” “will,” “would,” “should,” “goals” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Although we believe that the forward-looking statements contained in this report are based on reasonable assumptions, you should be aware that a variety of factors, many of which are difficult to predict and outside of our control, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to:
•our limited operating history as an independent, publicly traded company and unreliability of historical consolidated financial information as an indicator of our future results;
•our ability to successfully develop new technologies and introduce new products;
•an overall decline in the health of the economy and the industries in which we operate, including as a result of inflation, tariffs and other trade barriers and restrictions, market volatility, geopolitical instability and social unrest, the possibility of an economic downturn or recession or other macroeconomic factors;
•changes in the price and availability of raw materials that we use to produce our products, including due to factors such as supply chain disruptions, including due to increased energy prices, and the impact of inflation;
•our ability to comply with complex government regulations and the impact of changes in such regulations;
•global climate change and related regulations and changes in customer demand;
•the public and political perceptions of nuclear energy and radioactive materials;
•economic, political, regulatory, foreign exchange and other risks of international operations;
•the impact of tariffs or other restrictions on foreign imports;
•our ability to borrow funds and access capital markets and any limitations in the terms of our indebtedness;
•our ability to compete successfully in the markets in which we operate;
•the effect on our revenue and cash flow from seasonal fluctuations and cyclical market conditions;
•concentrations of our credit, counterparty and market risk;
•our ability to successfully execute or effectively integrate potential acquisitions or complete potential divestitures;
•our joint ventures and strategic co-development partnerships;
•our ability to recruit and retain qualified personnel;
•potential material environmental liabilities;
1
•the hazardous nature of chemical manufacturing;
•decommissioning and remediation expenses and regulatory requirements;
•potential material litigation matters, including disputes related to the Spin-off (as defined herein);
•the impact of potential cybersecurity attacks, data privacy breaches and other operational disruptions;
•increasing stakeholder interest in public company performance, disclosure, and goal-setting with respect to sustainability matters;
•failure to maintain, protect and enforce our intellectual property or to be successful in litigation related to our intellectual property or the intellectual property of others, or competitors developing similar or superior intellectual property or technology;
•unforeseen U.S. federal income tax and foreign tax liabilities and our ability to achieve anticipated tax treatments in connection with the Spin-off;
•U.S. federal income tax reform;
•our ability to operate as an independent, publicly traded company without certain benefits available to us as a part of Honeywell International Inc. (“Honeywell”) prior to the Spin-off, including managing the costs of operating as an independent company following the Spin-off;
•our ability to achieve some or all of the benefits that we expect to achieve from the Spin-off;
•our inability to maintain intellectual property agreements;
•potential timing, declaration, amount and payment of the Company’s dividend program;
•potential cash contributions to defined benefit pension plans; and
•our ability to maintain proper and effective internal controls.
These and other factors are more fully discussed in Part II. Item 1A. “Risk Factors” and Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”), as may be updated from time to time in our Securities and Exchange Commission (“SEC”) filings. These risks could cause actual results to differ materially from those implied by forward-looking statements in this report. Even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. Solstice does not undertake to update or revise any of its forward-looking statements, which speak only as of the date they are made, except as may be required by law or regulation.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share amounts)
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Product sales1 | $ | $ | |||||||||
Service sales | |||||||||||
Net sales | |||||||||||
Costs, expenses and other | |||||||||||
Cost of products sold2 | |||||||||||
Cost of services sold | |||||||||||
Total cost of products and services sold | |||||||||||
Research and development expenses | |||||||||||
Selling, general and administrative expenses | |||||||||||
| Transaction-related costs | |||||||||||
Other expense (income) | ( | ( | |||||||||
Interest and other financial charges | |||||||||||
Total costs, expenses and other | |||||||||||
Income before taxes | |||||||||||
Income tax expense | |||||||||||
Net income | |||||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||
Net income attributable to Solstice Advanced Materials | $ | $ | |||||||||
| Basic earnings per share | $ | $ | |||||||||
| Diluted earnings per share | $ | $ | |||||||||
| Weighted average number of common shares outstanding - basic | |||||||||||
| Weighted average number of common shares outstanding - diluted | |||||||||||
__________________
1.Product sales include related party product sales of $16 million and $13 million for the three months ended March 31, 2026 and 2025, respectively.
2.Cost of products sold include related party cost of products sold of $5 million and $6 million for the three months ended March 31, 2026 and 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
3
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in millions)
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive (loss) income, net of tax | |||||||||||
Foreign exchange translation adjustment | ( | ||||||||||
Pension and other postretirement benefit adjustments | ( | ||||||||||
Cash flow hedges recognized in other comprehensive income | ( | ||||||||||
Less: Reclassification adjustment for gains included in net income | ( | ||||||||||
Changes in fair value of cash flow hedges | ( | ||||||||||
Total other comprehensive (loss) income, net of tax | ( | ||||||||||
Comprehensive income | $ | $ | |||||||||
The Notes to the Consolidated Financial Statements are an integral part of this statement.
4
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions, except per share amounts)
| As of | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowances of $ | |||||||||||
Inventories | |||||||||||
Product loans receivable, current2 | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment – net | |||||||||||
Goodwill | |||||||||||
Intangible assets – net | |||||||||||
Deferred income taxes | |||||||||||
| Equity method investments | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES | |||||||||||
Current liabilities: | |||||||||||
Accounts payable3 | $ | $ | |||||||||
| Current portion of long-term debt | |||||||||||
Product loans payable, current2 | |||||||||||
| Finance lease liabilities, current | |||||||||||
Accrued and other liabilities, current4 | |||||||||||
Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Product loans payable, noncurrent | |||||||||||
| Finance lease liabilities, noncurrent | |||||||||||
Other noncurrent liabilities | |||||||||||
Total liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
EQUITY | |||||||||||
Common stock (par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
Total Solstice Advanced Materials shareowners’ equity | |||||||||||
| Noncontrolling interest | ( | ( | |||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ | |||||||||
__________________
1.Accounts receivable include related party receivables of $40 million and $45 million as of March 31, 2026 and December 31, 2025, respectively.
2.Product loans receivable, current include related party loans receivables of $184 million and $178 million as of March 31, 2026 and December 31, 2025, respectively.
3.Accounts payable include related party accounts payables of $6 million and $2 million as of March 31, 2026 and December 31, 2025, respectively.
4.Accrued and other liabilities, current include related party payables of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
5
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | |||||||||||
| Amortization | |||||||||||
| Equity income of affiliated companies | ( | ( | |||||||||
| Gain on sale of fixed assets | ( | ||||||||||
Stock-based compensation expense | |||||||||||
| Other non-cash adjustments | ( | ||||||||||
| Changes in assets and liabilities | |||||||||||
Accounts receivable1 | ( | ( | |||||||||
| Inventories | ( | ||||||||||
| Other assets | |||||||||||
Accounts payable2 | ( | ( | |||||||||
Accrued and other liabilities, current3 | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Deferred income and customer advances | |||||||||||
Other liabilities, noncurrent | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures paid | ( | ( | |||||||||
| Proceeds from disposals of property, plant, and equipment | |||||||||||
Capitalized software | ( | ||||||||||
Net cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
Dividends | ( | ||||||||||
| Finance lease payments | ( | ( | |||||||||
| Net transfers to Parent | ( | ||||||||||
Net cash used for financing activities | ( | ( | |||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | |||||||||||
Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
__________________
1.Includes decrease in short term related party receivables of $5 million and $8 million for the three months ended March 31, 2026 and 2025, respectively.
2.Includes increase in related party accounts payables of $4 million and $1 million for the three months ended March 31, 2026 and 2025, respectively.
3.Includes increase in related party accrued liabilities of $2 million and $2 million for the three months ended March 31, 2026 and 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
6
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(Dollars in millions, except per share amounts)
Common Stock1 | Additional Paid-in Capital | Net Parent Investment | Accumulated Other Comprehensive Loss | Retained Earnings | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Foreign exchange translation adjustment | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Changes in fair value of cash flow hedges | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Foreign exchange translation adjustment | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Pension and other postretirement benefit adjustments | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Changes in fair value of cash flow hedges | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net transfers to Parent | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
__________________
1.See Note 11 - Shareowners’ Equity of the Notes to the Consolidated Financial Statements for a rollforward of common stock.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
7
SOLSTICE ADVANCED MATERIALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in tables in millions, unless otherwise noted)
Note 1. Business Overview and Basis of Presentation
About the Business
Solstice Advanced Materials Inc. (“Solstice,” the “Business” or the “Company”) is a global specialty chemicals and advanced materials company with leading positions in refrigerants, semiconductor materials, protective fibers, and healthcare packaging. Prior to October 30, 2025, the Company was wholly owned by Honeywell International Inc. (“Honeywell” or “Parent”).
On October 8, 2024, Honeywell announced its plan to spin off its Advanced Materials business into an independent, U.S. publicly traded company through a pro rata distribution of all of the outstanding common shares of Solstice Advanced Materials to Honeywell shareowners (the “Spin-off”) that would be tax-free for U.S. federal tax purposes. On October 30, 2025, the Spin-off was consummated by means of a pro-rata distribution (the “Distribution”), which was intended to be tax-free for U.S. federal tax purposes, of all of the issued and outstanding Solstice Advanced Materials common shares to Honeywell’s shareowners of record as of October 17, 2025 (the “Record Date”), at which time each holder of Honeywell's common shares received one Solstice Advanced Materials common share for every four Honeywell common shares held as of the close of business on the Record Date, resulting in the Distribution of 158,727,456
Basis of Presentation
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
Prior to October 30, 2025 (“the Spin-off date”), the accompanying unaudited combined financial statements have been derived from Honeywell and presented on a standalone basis as if the Company’s operations had been conducted independently. The accompanying financial statements for periods prior to the Spin-off date include all revenues and costs directly attributable to the Solstice Advanced Materials business and an allocation of expenses related to certain Honeywell corporate functions. These expenses were allocated to the Solstice business based on a proportion of net sales. Solstice and Honeywell considered these allocations to be a reasonable reflection of the utilization of services or the benefits received. However, the allocations may not be indicative of the actual expense that would have been incurred had Solstice operated as an independent, standalone entity, nor are they indicative of future expenses of Solstice.
Honeywell used a centralized approach to cash management and financing of its operations. Accordingly, for periods prior to the Spin-off, a substantial portion of the Business’s cash accounts were regularly cleared to the former Parent at Honeywell’s discretion and Honeywell funded the Business’s operating and investing activities as needed. Honeywell’s long-term debt and related interest expense were not attributed to Solstice for any of the periods presented as the Business was not the legal obligor of such borrowings and Honeywell’s borrowings were not directly attributable to the Business. All significant intercompany transactions, including transfer of cash, between Solstice and Honeywell prior to the Spin-off were included within Net transfers to Parent on the statements of cash flows and the statements of equity through the pre-Spin-off periods.
After the Spin-off date, the Company’s financial statements were consolidated financial statements based on our reported results as a standalone company. All significant transactions between Solstice entities were eliminated.
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The accompanying financial statements for all periods presented, including the historical results of the Company prior to the Spin-off, are now referred to as “Consolidated Financial Statements.” Certain items have been recast to conform to current-period presentation. We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the SEC applicable to interim financial statements. Accordingly, certain note disclosures have been condensed. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements, corresponding notes, and significant accounting policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for presentation and disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
Note 2. Summary of Significant Accounting Policies
The significant accounting policies of the Company are set forth in Note 2 - Summary of Significant Accounting Policies within the Company’s 2025 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.
Supply Chain Financing
Use of Estimates
The Company prepares its Consolidated Financial Statements in conformity with GAAP. In doing so, the Company is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The Company’s actual results may differ materially from these estimates. Significant estimates inherent in the preparation of these Consolidated Financial Statements include, but are not limited to, accounting for allocation of expenses related to certain Honeywell corporate functions, evaluation of allowance for doubtful accounts, reserve for inventory obsolescence, goodwill and other intangible assets for impairment, environmental liabilities, asset retirement obligations (“ARO”), commitments and contingencies, pension liabilities and expenses and income taxes.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which improves the navigability of required interim disclosures, clarifies when that guidance is applicable, and introduces a new principle requiring companies to disclose events since the end of the last annual reporting period
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that have a material impact on the company. The ASU can be applied prospectively or retrospectively for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which excludes certain contracts from the scope of derivative accounting and clarifies the guidance on noncash consideration from a customer for the transfer of goods or services. The ASU can be applied prospectively for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with modified retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the accounting for costs related to internal-use software. The update removes all references to project stages and clarifies the two conditions needed to be met to begin capitalizing costs under ASC 350-40. The ASU can be applied prospectively, retrospectively, or via a modified prospective transition approach for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires companies to disclose additional information about the types of expenses in commonly presented expense captions. The new standard requires tabular disclosure of specified natural expenses in certain expense captions, a qualitative description of amounts that are not separately disaggregated, and disclosure of the Company's definition and total amount of selling expenses. The ASU should be applied prospectively for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
Note 3. Related Party Transactions
Corporate Allocations
The accompanying financial statements for the periods prior to the Spin-off reflected allocations of certain expenses from Honeywell including, but not limited to, legal, accounting, information technology (“IT”), human resources and other infrastructure support. The allocation method was based on the Company’s proportion of total Honeywell revenue in each respective period, relative to the Honeywell expense cost pool. Allocations for management costs and corporate support services provided to the Company totaled $54 million for the three months ended March 31, 2025, and such amounts were included within Selling, general and administrative expenses in the Consolidated Statements of Operations. These corporate allocations include stock-based compensation expense allocated to the Company for corporate and shared employees of $6 million, and U.S. pension service costs of $1 million for the three months ended March 31, 2025. There were no
Related Party Sales and Purchases
Product sales to affiliates
Product and service sales in the Consolidated Statements of Operations include sales to affiliates of $16 million and $13 million for the three months ended March 31, 2026 and March 31, 2025, respectively.
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Certain of these product sales are cash-settled and reflected in the Consolidated Balance Sheets. Accounts receivable – net includes $40 million and $45 million of these transactions as of March 31, 2026 and December 31, 2025, respectively.
Purchases from affiliates
Purchases made by the Company from its affiliates, including Honeywell (through the Spin-off date), were $5 million and $8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. Purchases made by the Company from Honeywell were $3 million for the three months ended March 31, 2025.
Accounts payable includes $6 million and $2 million as of March 31, 2026 and December 31, 2025, respectively, related to such transactions.
In addition to normal recurring purchases, ConverDyn, the Company’s consolidated VIE (refer to Note 13 – Investments for further details), holds accrued liabilities of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively, to General Atomics relating to payments owed by ConverDyn for the standby costs of maintaining a uranium conversion facility owned by such affiliate of General Atomics. These payments cannot be paid by ConverDyn until ConverDyn fully pays to the Company the costs of operating the Nuclear Facility. Until repaid, these obligations to the affiliate General Atomics accrue interest at the U.S. prime rate plus two percent.
Product loans
In 2024, ConverDyn entered into an arrangement to borrow certain products from a customer of ConverDyn and loan such products to an affiliate of General Atomics until December 31, 2026, in exchange for a fixed fee billed annually. The Consolidated Balance Sheets includes Product loans receivable related to uranium ore of approximately $184 million as of March 31, 2026, and approximately $178 million as of December 31, 2025. This results in a net position of $0 7
Cash Management and Net Parent Investment
Prior to the Spin-off, Honeywell used a centralized approach for the purpose of cash management and financing of its operations. The Company’s excess cash was transferred to Honeywell daily, and Honeywell funded the Company’s operating and investing activities as needed. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated Statements of Cash Flows as a financing activity through Net transfers to Parent.
Credit Support
Honeywell agreed to provide the Company support through certain parent company performance guarantees that will remain in place during a transition period of up to 24 months following the Spin-off and as guarantor of or obligor for certain letters of credit and other credit support instruments that have been issued on the Company’s behalf during a transition period of up to 12 months following the Spin-off.
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Note 4. Revenue Recognition and Contracts with Customers
Products and services sales are recognized when, or as, the Company transfers control of the promised products or services to its customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or services.
The Company has a comprehensive offering of products and services sold to a variety of customers in multiple end markets. See the following disaggregated revenue table and related discussions by reportable business segment for details:
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Refrigerants & Applied Solutions | |||||||||||
Refrigerants | $ | $ | |||||||||
Building Solutions and Intermediates | |||||||||||
Nuclear1 | |||||||||||
Healthcare Packaging | |||||||||||
Net Refrigerants & Applied Solutions | |||||||||||
Electronic & Specialty Materials | |||||||||||
Research and Performance Chemicals | |||||||||||
Electronic Materials | |||||||||||
Safety and Defense Solutions | |||||||||||
Net Electronic & Specialty Materials | |||||||||||
Net sales | $ | $ | |||||||||
1.Previously known as Alternative Energy Services (AES).
Contract Balances
The Company tracks progress on satisfying performance obligations under contracts with customers and records the related billings and cash collections on the Consolidated Balance Sheets in Accounts receivable – net. Unbilled receivables (contract assets) arise when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Deferred revenue (contract liabilities) arise when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements. Contract liabilities are derecognized when performance obligations are satisfied.
Balances of contract assets are included in Accounts receivable – net, and short-term and long-term contract liabilities are included in Accrued and other current liabilities and Other noncurrent liabilities, respectively, on the Consolidated Balance Sheets. Contract balances are classified as assets or liabilities on a contract-by-contract basis
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at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances:
| 2026 | 2025 | ||||||||||
| Contract assets - January 1 | $ | $ | |||||||||
Change in Contract assets - (decrease) increase | ( | ( | |||||||||
| Contract assets - March 31 | |||||||||||
| Contract liabilities - January 1 | ( | ( | |||||||||
Change in Contract liabilities - (increase) decrease | ( | ||||||||||
| Contract liabilities - March 31 | ( | ( | |||||||||
| Net change | $ | ( | $ | ( | |||||||
For the three months ended March 31, 2026 and 2025, the Company did not
When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at stand-alone selling price, they are accounted for as a new contract and performance obligations, which are recognized prospectively.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. The Company allocates a contract’s transaction price to each distinct performance obligation and recognizes revenue when, or as, the performance obligation is satisfied. When contracts with customers require highly complex integration or manufacturing services not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative stand-alone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable stand-alone sales are used to determine the stand-alone selling price.
Performance obligations satisfied at a point in time are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. Substantially all of the Company’s revenue relates to transfer of control of products or delivery of conversion services at a point in time. The Company’s contracts generally do not contain a significant financing component, as the period between when the Company transfers control of the product or service to the customer and when the customer pays for that product or service is one year or less.
As of March 31, 2026, the Company’s remaining performance obligations (“RPO”), which is the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied was approximately $2.9 billion. Performance obligations expected to be satisfied within one year and greater than one year are 34 % and 66 %, respectively.
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Note 5. Income Taxes
The effective tax rate in 2026 was higher than the U.S. federal statutory rate of 21% primarily due to jurisdictional mix of earnings and state income taxes. The effective tax rate was 23 % for the three months ended March 31, 2026 and 25 % for the three months ended March 31, 2025. The effective tax rate decreased during 2026 compared to 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to restructuring in advance of the Spin-off from Honeywell in the prior-year period.
Note 6. Inventories
The Company’s inventories are comprised of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished products | |||||||||||
Total Inventories | $ | $ | |||||||||
Note 7. Goodwill and Other Intangible Assets – Net
The below table summarizes the change in goodwill for the three months ended March 31, 2026, by segment:
| December 31, 2025 | Currency Translation Adjustment | March 31, 2026 | |||||||||||||||
Refrigerants & Applied Solutions | $ | $ | ( | $ | |||||||||||||
Electronic & Specialty Materials | |||||||||||||||||
Total Goodwill | $ | $ | ( | $ | |||||||||||||
Other intangible assets are comprised of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
Definite-life intangibles | |||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Patents and technologies | ( | ( | |||||||||||||||||||||||||||||||||
| Other intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
Total definite-life intangibles – net | ( | ( | |||||||||||||||||||||||||||||||||
Indefinite-life intangibles | |||||||||||||||||||||||||||||||||||
Trademarks | — | — | |||||||||||||||||||||||||||||||||
Total Other intangible assets – net | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Amortization expense related to intangible assets was $1
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Estimated intangible asset amortization expense for each of the next five years are as follows:
| Amount | |||||
| 2026 (remaining nine months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
Note 8. Debt
The following table contains the components of our debt:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total debt: | |||||||||||
Term Loan Facility due 20321 | $ | $ | |||||||||
Finance lease liabilities | |||||||||||
| $ | $ | ||||||||||
| Less: | |||||||||||
| Unamortized discount | |||||||||||
| Unamortized debt issuance costs | |||||||||||
| Current portion of long-term debt and finance lease liabilities, current | |||||||||||
| Total | $ | $ | |||||||||
Senior Notes
On September 30, 2025, the Company issued $1.0 billion of 5.625 % Senior Notes (the “Notes”) due September 30, 2033. The Notes were sold in private placements to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.
Senior Credit Facilities
On October 29, 2025, the Company entered into a credit agreement (the “Credit Agreement”), which provides for (i) a seven-year senior secured first-lien term B loan facility in an aggregate principal amount of $1.0 billion (the “Term Loan Facility”) and (ii) a five-year senior secured first-lien revolving credit facility with aggregate commitments of $1.0 billion (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).
The Company also entered into uncommitted bilateral letter of credit agreements, which provide for uncommitted bilateral letter of credit facilities in an aggregate uncommitted amount of $750 million (the “Sidecar LC Facilities”, and together with the Credit Facilities, the “Senior Credit Facilities”). The Sidecar LC Facilities provide for maintenance fees which accrue per annum on the aggregate amount of any letter of credit outstanding thereunder, payable quarterly, and fees which range from 0.60 % to 0.95 %, depending on the issuer and the type of letter of credit.
The Company may voluntarily prepay borrowings under the Credit Agreement without premium or penalty, subject to a 1.00 % prepayment premium in connection with certain repricing transactions with respect to the Term Loan
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Facility in the first six months after the effective date of the Credit Agreement and customary “breakage” costs with respect to SOFR loans. The Company may also reduce the commitments under the Revolving Credit Facility, in whole or in part, in each case, subject to certain minimum amounts and increments.
As of March 31, 2026, there were no outstanding borrowings under the Revolving Credit Facility, the interest rate on the Term Loan Facility was 5.42 %, and there were $263 million of unused letters of credit issued under the Sidecar LC Facilities.
The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving Credit Facility requiring the maintenance of certain financial ratios (as set forth in the Credit Agreement). As of March 31, 2026, the Company was in compliance with all of the financial covenants required by the Credit Agreement.
Note 9. Fair Value Measurements
The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:
•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.
•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.
•Level 3 - One or more inputs are unobservable and significant.
Financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
The following table sets forth the Company’s financial assets and liabilities accounted for at fair value on a recurring basis:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| Fair Value Level | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||
| Product loan receivable | 2 | $ | $ | — | $ | $ | — | |||||||||||||||||||||||||
| Product loan payable | 2 | — | — | |||||||||||||||||||||||||||||
| Fair Value | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The Company has agreements to lend quantities of uranium ore, which are reflected as product loans receivable, and to borrow quantities of uranium ore, which are reflected as product loans payable. As both the loans receivable and loans payable may be settled in cash, they are both separately measured on a quarterly basis at fair value which is derived using underlying uranium ore published industry average prices. As such, these instruments are classified within Level 2.
The fair value of the Company’s outstanding debt (excluding finance lease liabilities) is estimated using quoted market prices for the same or similar debt issuances, which is a Level 2 measurement. The Company’s outstanding debt (excluding finance lease liabilities) had a carrying value and an estimated fair value of $2.0
Note 10. Stock-Based Compensation Plans
Stock-based compensation cost, which is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations, was $5 million and $6 million for the three months ended March 31, 2026 and 2025, respectively. For all periods prior to the Spin-off, the Consolidated Statements of Operations reflect an allocation of these expenses on a specific identification basis for employees who exclusively supported the Company or, when specific identification is not practicable, a proportional cost allocation method primarily based on revenue or directly identifiable actual costs, depending on the nature of the services.
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Restricted Stock Units
During the three months ended March 31, 2026, the Company granted 184,911 restricted stock units (“RSUs”) pursuant to the Solstice 2025 Stock Incentive Plan (the “2025 Plan”) to certain employees. The RSUs typically will vest in equal annual installments over a three-year period, subject to the employee’s continued employment. Recipients of RSUs receive dividend equivalents that are paid subject to the same vesting restrictions as the underlying award. The weighted-average fair value per share of the RSUs granted was $79.12 .
Performance Stock Units
Note 11. Shareowners’ Equity
Authorized Capital Stock
The Company’s authorized capital stock consists of 500,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, without par value.
The following table sets forth the changes in the number of shares of common stock outstanding during the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| (in millions) | 2026 | ||||
| Balance as of beginning of period | |||||
| Common stock issued under employee compensation plans | |||||
| Common stock acquired | |||||
| Balance as of end of period | |||||
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Changes in Accumulated Other Comprehensive Loss by Component
The changes in Accumulated other comprehensive loss are provided in the table below.
| Foreign Exchange Translation Adjustment | Pension Adjustments | Changes in Fair Value of Cash Flow Hedges | Total | ||||||||||||||||||||
Balance as of December 31, 2025 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of March 31, 2026 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Balance as of December 31, 2024 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of March 31, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Amounts reclassified out of Accumulated other comprehensive loss related to pension adjustments are included within Other expense (income) in the Consolidated Statements of Operations. Amounts reclassified out of Accumulated other comprehensive loss related to cash flow hedges are included within Cost of products and services sold in the Consolidated Statements of Operations.
Note 12. Earnings Per Share
Basic earnings per share (“EPS”) is calculated by dividing net income attributable to common shareowners by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS, calculated using the treasury stock method, reflects the potential dilution that could occur if the Company’s outstanding stock-based compensation awards were issued.
On October 30, 2025, 158,727,456
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The following table sets forth the reconciliations of the numerators and denominators of the Company’s basic and diluted EPS calculations for the three months ended March 31, 2026 and 2025.
| (Amounts in millions, except per share amounts) | For The Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
Less: Net income attributable to noncontrolling interest | ||||||||||||||
Net income attributable to Solstice Advanced Materials | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||
| Weighted average number of common shares outstanding - basic | ||||||||||||||
| Dilutive effect of stock-based compensation plans | ||||||||||||||
| Weighted average number of common shares outstanding - diluted | ||||||||||||||
Basic EPS | $ | $ | ||||||||||||
Diluted EPS | $ | $ | ||||||||||||
The weighted average potential shares of common stock that were excluded from diluted EPS were 0.1 million at March 31, 2026 because the effect of including those potential shares was anti-dilutive.
Note 13. Investments
Equity method investments
The total balance of the Company’s equity method investments recorded within Equity method investments in the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 was $168 million and $162 million, respectively.
The Company holds equity method investments in three joint ventures (“JV”), including a 49 % interest in Asahi-Schwebel (Taiwan) Co., Ltd., a manufacturer of woven glass fabrics, a 49 % interest in Quimobásicos, S.A. de C.V., a producer of refrigerant gases, and a 50 % interest in SinoChem noted in the variable interest entities (“VIE”) investment section below. The Company records these balances within Equity method investments in the Consolidated Balance Sheets. These investments are not considered significant for disclosure of summarized financial information on either an individual or aggregated basis.
Variable Interest Entities
SinoChem JV (unconsolidated)
The Company owns a 50 % interest in a JV with Sinochem Lantian New Materials Co., Ltd. for foam blowing agents. The Company’s variable interest in this JV is primarily related to third-party borrowings of the JV which are guaranteed by the Company. The investment was $107 million and $103 million as of March 31, 2026 and December 31, 2025, respectively.
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ConverDyn JV (consolidated)
The Company owns a 50 % interest in ConverDyn, which provides uranium hexafluoride conversion and related services to utilities operating nuclear power plants. The Company is the primary beneficiary and consolidates the JV. The following table summarizes the assets and liabilities of the ConverDyn JV included in the Company’s Consolidated Financial Statements (including noncontrolling interests):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Current assets | $ | $ | |||||||||
| Product loans receivable | |||||||||||
| Noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Current liabilities1 | |||||||||||
| Product loans payable | |||||||||||
| Noncurrent liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
_________________
1.Includes related party payables of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively. See Note 3 - Related Party Transactions for additional information.
Note 14. Commitments and Contingencies
Environmental Matters
The Company records liabilities for environmental matters when remedial efforts or damage claim payments are probable and the costs can be reasonably estimated. Such liabilities are based on the Company’s best estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical, regulatory, or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other potentially responsible parties, technology, and information related to individual sites, the Company does not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of the Company’s recorded liabilities. Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued. The following table summarizes information concerning the Company’s recorded liabilities for environmental costs:
| Beginning Balance as of December 31, 2024 | $ | ||||
Accruals for environmental matters deemed probable and reasonably estimable | |||||
Environmental liability payments | |||||
| Ending Balance as of March 31, 2025 | $ | ||||
| Beginning Balance as of December 31, 2025 | $ | ||||
Accruals for environmental matters deemed probable and reasonably estimable | |||||
Environmental liability payments | ( | ||||
| Ending Balance as of March 31, 2026 | $ | ||||
The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation, or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined, although they could be material to the Company’s consolidated results of operations and operating cash flows in the periods recognized or paid. However, considering the Company’s past experience and existing reserves, the Company does not expect that environmental matters will have a material adverse effect on its consolidated financial position.
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Asset Retirement Obligations
Asset retirement obligations result from legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. Accordingly, the Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company depreciates the amount added to property, plant and equipment on a straight-line basis, and recognizes accretion expense in connection with the discounted liability over the remaining useful life of the asset.
The Company recognized as a liability the present value of the estimated future costs to decommission its uranium conversion facility. The estimated liability is based on the estimated useful lives of the underlying asset, third-party estimates of the cost to decommission the asset in the future, and federal and state regulatory requirements, adjusted for inflation and discounted using the Company’s credit-adjusted risk-free rate that ranges from 6.5 % to 6.6 %. Revisions to the liability could occur due to changes in the Company’s estimated useful lives of the underlying assets, estimated dates of decommissioning and timing of related cash outflows, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changes in estimates. The Company recognizes changes due to revised estimates by adjusting the carrying amount of the liability and the related long-lived asset if the asset is still in service or charged to expense in the period if the asset is no longer in service.
Other Matters
Nuclear Facility matters
Since 2018, the Company has been involved in various legal proceedings in the United States District Court for the Southern District of Illinois related to its Nuclear Facility, including eight separate lawsuits alleging cancer caused by radiation exposures that were settled in 2024. The Company remains involved in additional legal proceedings (i) related to alleged radiation contamination of properties around the plant by the city of Metropolis, Illinois, and the county of Massac, Illinois, (ii) a class action lawsuit alleging property damage by a group of plaintiffs on behalf of all property owners within a three-mile radius of the facility, and (iii) one alleged personal injury case. The Company is currently awaiting rulings on a motion for summary judgment related to the city and county cases, with rulings expected in 2026. For the alleged class action, the parties completed briefing on the plaintiffs’ motion for class certification and a ruling is expected in 2026. All plaintiffs in these matters are seeking compensatory damages and, in certain cases, punitive damages, medical monitoring, declaratory and/or injunctive relief. The Department of Energy (“the DoE”) has reached an agreement with the Company pursuant to which we understand the DoE intends to take appropriate action to provide sufficient assurance of the continued operational availability of the Company’s Nuclear Facility to support the existing and future demand for uranium hexafluoride, including by extending reimbursement to the Company for certain litigation costs. In addition, the Company is also pursuing claims under Honeywell’s nuclear liability policies with American Nuclear Insurers. While we cannot predict the outcome of these matters, based on the facts currently known to us, we do not anticipate that these matters will have a material adverse effect on our financial condition, results of operations, or cash flows.
Under the Company’s agreement with the DoE, the DoE has also agreed to share in certain costs in connection with the expansion of our Nuclear Facility.
Other matters
The Company is subject to a number of other lawsuits, investigations, and disputes (some of which involve substantial amounts claimed) arising out of the conduct of the Company's business, including matters relating to commercial transactions, intellectual property, and environmental, health, and safety matters. The Company recognizes liabilities for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in such matters, as well as potential ranges of probable losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts.
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Given the uncertainty inherent in litigation and investigations, the Company cannot predict when or how these matters will be resolved and does not believe it is possible to develop estimates of reasonably possible loss (or a range of possible loss) in excess of current accruals for commitment and contingency matters. Considering the Company's past experience and existing accruals, the Company does not expect the outcome of such matters, either individually or in the aggregate, to have a material adverse effect on the Company's consolidated financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments (including new discovery of facts, changes in legislation, and outcomes of similar cases through the judicial system) or changes in assumptions, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company's consolidated results of operations or operating cash flows in the periods recognized or paid.
Note 15. Segment Financial Data
The Company globally manages its business operations through two reportable business segments. Segment information is consistent with how the President and Chief Executive Officer of Solstice Advanced Materials, who is the Chief Operating Decision Maker (“CODM”), and management reviews the businesses, makes investing and resource allocation decisions, and assesses operating performance. The Company manages and reports its operating results through its two reportable segments: (i) Refrigerants & Applied Solutions and (ii) Electronic & Specialty Materials, in accordance with ASC 280, Segment Reporting. The remainder of the Business’s operations are presented in Corporate and All Other, which is not a reportable business segment.
The CODM evaluates segment performance based on segment adjusted EBITDA, by comparing budget-to-actual and period-over-period results. Segment Adjusted EBITDA is defined as segment net income excluding income taxes, general corporate unallocated expense, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature.
The below table summarizes information about segment revenues, significant segment expenses and other segment items, for each historical period:
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Refrigerants & Applied Solutions | Electronic & Specialty Materials | Refrigerants & Applied Solutions | Electronic & Specialty Materials | ||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
Products | $ | $ | $ | $ | |||||||||||||||||||
Services | |||||||||||||||||||||||
Total Net sales | |||||||||||||||||||||||
| Less | |||||||||||||||||||||||
Cost of products and services sold1 | |||||||||||||||||||||||
Selling, general and administrative expenses2 | |||||||||||||||||||||||
| Research & development expenses | |||||||||||||||||||||||
Other segment items3 | ( | ( | ( | ( | |||||||||||||||||||
| Add | |||||||||||||||||||||||
Depreciation | |||||||||||||||||||||||
Amortization | |||||||||||||||||||||||
Segment Adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
__________________
1.Amounts exclude ARO accretion, repositioning charges, and other non-recurring items.
2.Amounts exclude stock-based compensation expense, transaction costs, nonoperating pension expense (income), repositioning charges, and other non-recurring items.
3.Other segment items primarily consisted of gains and losses from segment-related equity-method investments.
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A reconciliation of segment adjusted EBITDA to Net income attributable to Solstice Advanced Materials is as follows:
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||
Electronic & Specialty Materials | |||||||||||
Segment Adjusted EBITDA | $ | $ | |||||||||
Corporate and All Other | ( | ( | |||||||||
| Adjusted EBITDA | $ | $ | |||||||||
Depreciation | ( | ( | |||||||||
Amortization | ( | ( | |||||||||
Interest and other financial charges | ( | ( | |||||||||
Other adjustments1 | |||||||||||
Stock-based compensation expense | ( | ( | |||||||||
Transaction-related costs | ( | ( | |||||||||
Income tax expense | ( | ( | |||||||||
Net income | $ | $ | |||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||
| Net income attributable to Solstice Advanced Materials | $ | $ | |||||||||
__________________
1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, nonoperating pension expense (income), and certain legal costs, net of recoveries.
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total assets reconciliation | |||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||
Electronic & Specialty Materials | |||||||||||
Corporate and All Other | |||||||||||
Total assets | $ | $ | |||||||||
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Capital expenditures | |||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||
Electronic & Specialty Materials | |||||||||||
Corporate and All Other | |||||||||||
Total1 | $ | $ | |||||||||
__________________
1.Unpaid capital expenditures were $117 million and $39 million as of March 31, 2026 and March 31, 2025, respectively.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Solstice Advanced Materials Inc. and its consolidated subsidiaries (“Solstice,” “Solstice Advanced Materials,” “we,” “us,” “our,” or the “Company”) for the three months ended March 31, 2026. The financial information as of March 31, 2026 should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2025, contained in our 2025 Annual Report on Form 10-K.
OVERVIEW
Business overview
Solstice is a global, differentiated advanced materials company and a leading global provider of refrigerants, blowing agents, conversion services for the nuclear energy sector, semiconductor materials, protective fibers and healthcare packaging. We operate through two segments, reported as Refrigerants & Applied Solutions (“RAS”) and Electronic & Specialty Materials (“ESM”). Our business is recognized as an industry innovator as well as a technology and quality leader, supported by some of the industry’s most well-known brands.
Our RAS segment is a leading manufacturer of low global warming potential (“LGWP”) refrigerants, blowing agents, solvents, and aerosol materials, as well as conversion services for the nuclear energy sector. RAS serves the end markets of cooling, air conditioning and refrigeration (“HVAC/R”), automotive, nuclear energy, building and appliance insulation, and healthcare. RAS products include, among others, LGWP refrigerants, blowing agents, aerosol propellants, cleaning solvents, high-barrier pharmaceutical packaging materials and conversion services for nuclear energy providers. Our products are distributed and sold through well-known brands like Solstice, Genetron, and Aclar.
Our ESM segment is a leading provider of electronic materials, high-strength fibers and laboratory life science chemicals. ESM primarily serves the semiconductor, defense, pharmaceutical and construction end markets. ESM products include, among others, sputtering targets, lightweight high-strength fibers and high-purity life science solutions. Our products are distributed and sold through well-known brands like Spectra, Fluka, and Hydranal.
The Company serves over 3,000 customers across a wide range of end markets in approximately 120 countries and territories. Our global presence included 20 manufacturing sites and four standalone research and development (“R&D”) sites as of March 31, 2026.
Spin-off from Honeywell
On October 30, 2025 (“the “Spin-off date”), Honeywell International Inc. (“Honeywell”) completed the Spin-off of Solstice by means of a pro rata distribution (the “Distribution”), which was intended to be tax-free for U.S. federal tax purposes, of all of the issued and outstanding Solstice Advanced Materials common shares to Honeywell’s shareowners of record as of the close of business on October 17, 2025 (the “Record Date”), at which time each holder of Honeywell's common shares received one Solstice Advanced Materials common share for every four Honeywell common shares held as of the close of business on the Record Date, resulting in the Distribution of 158,727,456 of the Company’s common shares to Honeywell shareowners. Upon completion of the Distribution, on October 30, 2025, the Company commenced “regular way” trading as an independent public company under the ticker symbol “SOLS” on The Nasdaq Stock Market (“Nasdaq”). Following the Distribution, Honeywell did not own any Solstice Advanced Materials common shares.
Relationship with Honeywell
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
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Prior to the Spin-off date, the accompanying combined financial statements were derived from the consolidated financial statements and accounting records of Honeywell and presented on a standalone basis as if the Company’s operations had been conducted independently from Honeywell, which includes all revenues and costs directly attributable to the Solstice Advanced Materials business and an allocation of expenses related to certain Honeywell corporate functions. These expenses were allocated to the Solstice Advanced Materials business based on a proportion of net sales and may not be indicative of the actual expense that would have been incurred had Solstice operated as an independent, standalone entity, nor are they indicative of future expenses of the Company. All significant intercompany balances between Solstice and Honeywell prior to the Spin-off date were included within Net Parent investment on the accompanying financial statements.
Following the Spin-off date, the Company’s financial statements have been prepared on a consolidated financial basis and include the accounts of the Company and those of its subsidiaries and any variable interest entities for which the Company is the primary beneficiary. All significant transactions between Solstice entities were eliminated and any transactions with Honeywell or its subsidiaries are now recorded as third-party transactions.
The Company classifies certain expenses related to the Spin-off, as well as acquisitions and divestitures (if any) as Transaction-related costs in the Consolidated Statements of Operations. The Transaction-related costs related to the Spin-off include one-time and non-recurring expenses associated with the separation and stand-up of functions required to operate as a standalone public entity. These non-recurring costs primarily relate to legal, accounting, consulting and other professional service fees, system implementation costs, business and facilities separation, marketing development related to our brand and other matters. These costs are expected to continue through at least fiscal year 2026.
For additional information regarding our agreements with Honeywell, see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Relationship with Honeywell” included within our 2025 Annual Report on Form 10-K.
Macroeconomic Conditions
The global macroeconomic environment during the period remained volatile, driven by elevated geopolitical tensions, including ongoing conflicts in Ukraine and the Middle East, as well as heightened trade and diplomatic frictions among major economies. These conditions contributed to uncertainty in global markets, foreign currency volatility, and fluctuations in energy and commodity prices. Geopolitical tension and evolving trade and tariff policies continued to disrupt global supply chains, resulting in higher input costs and periodic supply constraints. We continue to monitor macroeconomic and geopolitical developments including heightened trade tensions, economic and trade policy uncertainty, and inflationary risks.
Mitigation strategies remain crucial to meet customer demand in this evolving environment. Our mitigation strategies include supply chain simplification, continued alignment to local supply sources, pricing actions and dual source strategies, long-term strategies for constrained materials, direct engagement with key suppliers, and new supplier development. Strong relationships with strategic primary and secondary suppliers allow us to collaborate to reliably source key components and raw materials, develop new products, commit our resources to assist certain suppliers, and at times, alter designs of existing products. We believe these mitigation strategies enable us to reduce supply risk, foster new product innovation, and expand our market presence. Additionally, due to the stringent quality controls and product qualification we perform on any new or altered product, these mitigation strategies have not impacted, and we do not expect them to impact, product quality or reliability.
To date, our strategies have helped minimize our exposure to these conditions. However, if we are not successful in sustaining or executing mitigation strategies, these macroeconomic conditions could have a material adverse effect on our results of operations, cash flows or financial condition.
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RESULTS OF OPERATIONS
Income Statement
| For The Three Months Ended March 31, | Percentage of Net Sales For The Three Months Ended March 31, | Percentage Change | |||||||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | 2026 | 2025 | 2026 vs. 2025 | ||||||||||||||||||||||||
| Net sales | $ | 991 | $ | 897 | 100 | % | 100 | % | 10 | % | |||||||||||||||||||
| Cost, expenses and other | |||||||||||||||||||||||||||||
| Total cost of products and services sold | 675 | 577 | 68 | % | 64 | % | 17 | % | |||||||||||||||||||||
| Gross profit | 317 | 321 | 32 | % | 36 | % | (1) | % | |||||||||||||||||||||
| Research and development expenses | 28 | 22 | 3 | % | 2 | % | 26 | % | |||||||||||||||||||||
| Selling, general and administrative expenses | 108 | 93 | 11 | % | 10 | % | 16 | % | |||||||||||||||||||||
| Transaction-related costs | 23 | 28 | 2 | % | 3 | % | (18) | % | |||||||||||||||||||||
| Other expense (income) | (7) | (11) | (1) | % | (1) | % | (38) | % | |||||||||||||||||||||
| Interest and other financial charges | 29 | 1 | 3 | % | — | % | NM | ||||||||||||||||||||||
| Total costs, expenses and other | 855 | 710 | 86 | % | 79 | % | 21 | % | |||||||||||||||||||||
| Income before taxes | 136 | 188 | 14 | % | 21 | % | (27) | % | |||||||||||||||||||||
| Income tax expense | 31 | 47 | 3 | % | 5 | % | (34) | % | |||||||||||||||||||||
| Effective tax rate | 23 | % | 25 | % | — | % | — | % | (2) | % | |||||||||||||||||||
Net income | 105 | 140 | 11 | % | 16 | % | (25) | % | |||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 20 | 6 | 2 | % | 1 | % | 229 | % | |||||||||||||||||||||
Net income attributable to Solstice Advanced Materials | $ | 85 | $ | 134 | 9 | % | 15 | % | (37) | % | |||||||||||||||||||
NM - not meaningful
Net Sales
The following table sets forth the factors contributing to year-over-year changes in our net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| Change in net sales from prior period | 2026 vs. 2025 | ||||
| Volume | 5.6 | % | |||
| Price | 2.4 | % | |||
| Foreign currency translation | 2.5 | % | |||
| Total % change in net sales | 10.5 | % | |||
A discussion of Net sales by reportable segment can be found under the “Segment Results” section within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
Net sales increased by $94 million or 10% primarily due to volume growth of $37 million, favorable pricing of $22 million and favorable foreign currency translation impacts of $16 million in the RAS segment, as well as volume growth of $13 million and favorable currency translation impacts of $7 million in the ESM segment.
Cost of product and services sold increased by $98 million or 17% primarily driven by volume increases and inflation in raw materials in both the RAS and ESM segments.
Research and development expenses increased by $6 million or 26% driven by continued investment in innovation across the portfolio of offerings such as Spectra Y and next-generation molecules; Selling, general and administrative expenses increased by $15 million or 16% driven by an increase in employee-related expenses, primarily in connection with corporate functions and additional headcount necessary to operate as an independent public company; Transaction-related costs decreased by $5 million driven by a decrease in professional advisory services fees incurred after the Spin-off; Other expense (income) had an unfavorable change of $4 million driven primarily by lower income from equity method investments and foreign currency losses in the current period compared to gains in the prior period; and Interest and other financial charges increased by $28 million driven by the issuance of debt in connection with the Spin-off in the second half of 2025.
Income tax expense decreased by $16 million. The effective tax rate in 2026 was lower than the effective tax rate in 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to restructuring in advance of the Spin-off from Honeywell in the prior-year period. See Note 5 - Income Taxes of the Notes to the Consolidated Financial Statements for additional information on the effective tax rate.
SEGMENT RESULTS
We manage and report our operating results through two reportable segments: Refrigerants & Applied Solutions (RAS) and Electronic & Specialty Materials (ESM). The remainder of our operations are presented in Corporate and All Other, which is not a reportable business segment.
Segment Adjusted EBITDA is the primary measure of segment profitability used by our Chief Operating Decision Maker. We define Segment Adjusted EBITDA as segment net income excluding income taxes, general corporate unallocated expense, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature.
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Refrigerants & Applied Solutions
Net Sales
The following sets forth the net sales for our RAS segment for the three months ended March 31, 2026 and 2025.
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our RAS segment for the three months ended March 31, 2026 and 2025.
| For The Three Months Ended March 31, | |||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||
| Net sales | $ | 711 | $ | 636 | |||||||
| Segment Adjusted EBITDA | 242 | 250 | |||||||||
| Segment Adjusted EBITDA margin | 34.1 | % | 39.3 | % | |||||||
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The following table sets forth the reported and organic net sales growth in our RAS segment’s net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| 2026 vs. 2025 | |||||
| Total % change in net sales | 11.7 | % | |||
| Foreign currency translation | (2.5) | % | |||
| Acquisitions, divestitures and other, net | — | % | |||
Organic sales percentage(1) | 9.2 | % | |||
(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for definition of Organic sales percentage.
For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
RAS net sales increased by $75 million or 12% primarily driven by volume growth of $37 million, mainly as a result of the ongoing transition to LGWP refrigerants and volume increases in nuclear, partially offset by volume declines in building solutions and intermediates due to lower demand in the construction end market. Favorable pricing of $22 million and favorable currency translation impacts on net sales of $16 million also contributed to the increase.
Segment Adjusted EBITDA decreased by $8 million or 3% and Segment Adjusted EBITDA margin decreased 5% primarily driven by lower margins due to refrigerant mix and higher production costs.
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Electronic & Specialty Materials
Net Sales
The following sets forth the net sales for our ESM segment for the three months ended March 31, 2026 and 2025.
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our ESM segment for the three months ended March 31, 2026 and 2025.
| For The Three Months Ended March 31, | |||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||
| Net sales | $ | 281 | $ | 261 | |||||||
| Segment Adjusted EBITDA | 58 | 53 | |||||||||
| Segment Adjusted EBITDA margin | 20.8 | % | 20.3 | % | |||||||
The following table sets forth the reported and organic net sales growth in our ESM segment’s net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| 2026 vs. 2025 | |||||
| Total % change in net sales | 7.4 | % | |||
| Foreign currency translation | (2.7) | % | |||
| Acquisitions, divestitures and other, net | — | % | |||
Organic sales percentage(1) | 4.7 | % | |||
(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for definition of Organic sales percentage.
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For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
ESM net sales increased by $19 million or 7%. The increase was primarily driven by volume growth of $13 million, mainly due to volume increases in electronic materials, partially offset by volume declines in performance chemicals. Currency translation favorably impacted net sales by $7 million.
Segment Adjusted EBITDA increased by $5 million or 10% primarily driven by demand growth in electronic materials. Segment Adjusted EBITDA margin remained relatively flat.
Corporate and All Other
Corporate and All Other costs increased by $20 million or 62% for the three months ended March 31, 2026 compared to the prior year due to an increase in selling, general and administrative expenses, primarily in connection with corporate functions and additional headcount necessary to operate as an independent public company.
NON-GAAP FINANCIAL MEASURES
We use non-GAAP financial measures to supplement the financial measures prepared in accordance with U.S. GAAP. These include (1) Organic sales percentage, (2) Adjusted EBITDA and (3) Adjusted EBITDA margin.
Below are definitions and reconciliations of certain non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. Management believes these non-GAAP financial measures provide investors with a meaningful measure of its performance period to period, align the measures to how management evaluates performance internally, and make it easier for investors to compare our performance to peers. These measures should be considered in addition to, and not as replacements for, the most directly comparable U.S. GAAP measure. The non-GAAP financial measures we use are as follows:
Organic sales percentage: The Company defines organic sales percentage as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
| For The Three Months Ended March 31, | |||||
| 2026 vs. 2025 | |||||
| Total % change in net sales | 10.5 | % | |||
| Foreign currency translation | (2.5) | % | |||
| Acquisitions, divestitures and other, net | — | % | |||
| Organic sales percentage | 8.0 | % | |||
Adjusted EBITDA and Adjusted EBITDA margin: The Company defines Adjusted EBITDA as net income excluding income taxes, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by Net sales. We believe these measures are useful to investors as they provide greater transparency with respect to supplemental information used by management in its financial and operational decision making, as well as understanding ongoing operating trends. The table below reconciles Net income, the most directly comparable U.S. GAAP measure, to the Company’s non-GAAP measure of Adjusted EBITDA for the three months ended March 31, 2026 and 2025.
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| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (Dollars in millions) | Amount | Percentage of Net Sales | Amount | Percentage of Net Sales | |||||||||||||||||||
Net income attributable to Solstice Advanced Materials (GAAP) | $ | 85 | 9 | % | $ | 134 | 15 | % | |||||||||||||||
Net income attributable to noncontrolling interest | 20 | 2 | % | 6 | 1 | % | |||||||||||||||||
| Net income (GAAP) | $ | 105 | 11 | % | $ | 140 | 16 | % | |||||||||||||||
| Depreciation | 53 | 5 | % | 50 | 6 | % | |||||||||||||||||
| Amortization | 6 | 1 | % | 7 | 1 | % | |||||||||||||||||
| Interest and other financial charges | 29 | 3 | % | 1 | — | % | |||||||||||||||||
Other adjustments(1) | (2) | — | % | (8) | (1) | % | |||||||||||||||||
Stock-based compensation expense | 5 | — | % | 6 | 1 | % | |||||||||||||||||
Transaction-related costs | 23 | 2 | % | 28 | 3 | % | |||||||||||||||||
| Income tax expense | 31 | 3 | % | 47 | 5 | % | |||||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 249 | 25 | % | $ | 271 | 30 | % | |||||||||||||||
| Net sales | $ | 991 | $ | 897 | |||||||||||||||||||
| Adjusted EBITDA margin (Non-GAAP) | 25.1 | % | 30.2 | % | |||||||||||||||||||
1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, nonoperating pension expense (income), and certain legal costs, net of recoveries.
32
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company has been generating positive cash flows from operations. Prior to the consummation of the Spin-off, the Company was dependent upon Honeywell for all of its working capital and financing requirements. A substantial portion of the Company’s cash accounts were cleared to Honeywell regularly at Honeywell’s discretion, and Honeywell funded the Company’s operating and investing activities as needed. Transfers of cash between Honeywell and the Company were included within Net transfers to Parent on the accompanying financial statements through the Spin-off date. These arrangements ceased in conjunction with the Spin-off.
In connection with the Spin-off, we entered into certain third-party debt arrangements, as described below, and as of October 30, 2025, we no longer participate in Honeywell’s centralized cash management program. Our liquidity after the Spin-off depends on our operating cash flows, available cash balances, access to our credit facilities and our ability to access capital markets. We believe that our existing cash and cash equivalents, combined with our expected operating cash flows and available credit facilities (as discussed below) will be sufficient to meet our anticipated cash needs for at least the next 12 months.
On April 27, 2026, the Company announced that the Board of Directors declared a dividend of $0.075 per share of common stock outstanding, payable on June 10, 2026, to shareowners of record as of May 27, 2026. The Company currently expects to continue returning cash to shareowners through quarterly dividends, although payment of dividends remains subject to determination and declaration by the Board of Directors and there can be no assurance that the Company will continue to pay any dividends.
Senior Notes
On September 30, 2025, the Company issued $1.0 billion of 5.625% Senior Notes (the “Notes”) due September 30, 2033. The Notes were sold in private placements to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.
Senior Credit Facilities
On October 29, 2025, the Company entered into a credit agreement (the “Credit Agreement”), which provides for (i) a seven-year senior secured first-lien term B loan facility in an aggregate principal amount of $1.0 billion (the “Term Loan Facility”) and (ii) a five-year senior secured first-lien revolving credit facility with aggregate commitments of $1.0 billion (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).
The Company also entered into uncommitted bilateral letter of credit agreements, which provide for uncommitted bilateral letter of credit facilities in an aggregate uncommitted amount of $750 million (the “Sidecar LC Facilities”, and together with the Credit Facilities, the “Senior Credit Facilities”). The Sidecar LC Facilities provide for maintenance fees which accrue per annum on the aggregate amount of any letter of credit outstanding thereunder, payable quarterly, and fees which range from 0.60% to 0.95%, depending on the issuer and the type of letter of credit.
The Company may voluntarily prepay borrowings under the Credit Agreement without premium or penalty, subject to a 1.00% prepayment premium in connection with certain repricing transactions with respect to the Term Loan Facility in the first six months after the effective date of the Credit Agreement and customary “breakage” costs with respect to SOFR loans. The Company may also reduce the commitments under the Revolving Credit Facility, in whole or in part, in each case, subject to certain minimum amounts and increments.
As of March 31, 2026, there were no outstanding borrowings under the Revolving Credit Facility, the interest rate on the Term Loan Facility was 5.42%, and there were $263 million of unused letters of credit issued under the Sidecar LC Facilities.
The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving
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Credit Facility requiring the maintenance of certain financial ratios (as set forth in the Credit Agreement). As of March 31, 2026, the Company was in compliance with all of the financial covenants required by the Credit Agreement.
See Note 8 - Debt of the Notes to the Consolidated Financial Statements for additional information regarding our debt obligations.
Cash Flows
Summarized cash flow information for the three months ended March 31, 2026 and 2025 is as follows:
| For The Three Months Ended March 31, | |||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 199 | $ | 160 | |||||||
Net cash used for investing activities | $ | (77) | $ | (39) | |||||||
Net cash used for financing activities | $ | (15) | $ | (118) | |||||||
Operating Activities
Net cash provided by operating activities was $199 million for the three months ended March 31, 2026 compared to $160 million in the prior-year period. The increase was due to greater working capital inflow, primarily driven by lower inventories from destocking of certain RAS products, collections from certain customers, as well as higher income tax liabilities due to timing, partially offset by the release of customer rebates. This increase was partially offset by lower net income.
Investing Activities
Net cash used for investing activities was $77 million for the three months ended March 31, 2026 compared to $39 million in the prior-year period. The increase was driven by higher capital expenditures, primarily from the expansion of manufacturing facilities within our ESM segment, and the impact in the prior year of proceeds from the sale of certain assets.
Financing Activities
Net cash used for financing activities was $15 million for the three months ended March 31, 2026 compared to $118 million in the prior-year period. The decrease was driven by the absence of net transfers to Honeywell in the current period compared to the prior-year period. Quarterly dividend payments to shareowners were $12 million during the three months ended March 31, 2026.
Cash and Cash Requirements
Summary
As of March 31, 2026 and December 31, 2025, our cash and cash equivalents totaled $642 million and $534 million, respectively. We believe that we have sufficient liquidity based on our current cash position, expected operating cash flows and availability under our Credit Facilities to meet our expected payments related to our cash requirements for at least the next 12 months.
Cash and Cash Equivalents Held by Foreign Subsidiaries
Cash and cash equivalents held by Solstice Advanced Materials’ foreign subsidiaries were $403 million and $363 million as of March 31, 2026 and December 31, 2025, respectively.
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Capital Expenditures
Our capital expenditures primarily consist of continuing investments to maintain the safety and reliability of our existing operations, additional investments in new and existing facilities to support new production introduction and capacity expansion to grow our business. For the three months ended March 31, 2026 and 2025, our capital expenditures incurred were $82 million and $62 million, respectively. The increase was primarily driven by projects to support new products and solutions for our electronic materials and advanced fiber offerings. For the year ending December 31, 2026, we expect that our capital expenditures will be between $400 million and $425 million.
Parent Company Credit Support
Honeywell agreed to provide us support through certain parent company performance guarantees that will remain in place during a transition period of up to 24 months following the Spin-off and as guarantor of or obligor for certain letters of credit and other credit support instruments that have been issued on our behalf during a transition period of up to 12 months following the Spin-off.
Supply Chain Financing
We maintain agreements with unaffiliated third-party financial institutions that offer voluntary supply chain financing (“SCF”) programs to our suppliers. The SCF programs enable suppliers, at their sole discretion, to sell their receivables to third-party financial institutions in order to receive payment on receivables earlier than the negotiated commercial terms between us and our suppliers. We had $98 million outstanding obligations related to our SCF programs as of both March 31, 2026 and December 31, 2025.
Contractual Obligations and Off-Balance Sheet Arrangements
We do not engage in significant off-balance sheet financial arrangements that have or are likely to have a material current or future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures or capital resources. There have been no material changes outside the ordinary course of business to our contractual obligations from those discussed in our 2025 Annual Report on Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
There were no material changes during the three months ended March 31, 2026 to the items disclosed as critical accounting estimates in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our business and financial results are affected by fluctuations in world financial markets, including the impacts of foreign currency exchange rate and interest rate movements. We evaluate our exposure to such risks on an ongoing basis, and seek ways to manage these risks to an acceptable level, based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. Market risks have not materially changed from those disclosed under Part II. Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Solstice’s management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2026 to ensure information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to a number of lawsuits, investigations, disputes and claims (some of which involve substantial amounts) arising out of the conduct of our business, including matters relating to commercial transactions, intellectual property and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. See Note 14 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of environmental and other litigation matters.
ITEM 1A. RISK FACTORS
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors presented in our 2025 Annual Report on Form 10-K under Part I. Item 1A. “Risk Factors.” For further discussion of our risk factors, refer to Part I, Item 1A. “Risk Factors” in our 2025 Annual Report on Form 10-K. Any of these factors could materially adverse effect our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended March 31, 2026, no directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
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ITEM 6. EXHIBITS
| Exhibit Number | Exhibit Description | |||||||
10.1* | Form of Restricted Stock Unit Agreement (Officers) (2026) (filed herewith) | |||||||
10.2* | Form of Performance Stock Unit Agreement (2026) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 25, 2026) | |||||||
10.3* | Form of 2026-2028 Performance Stock Unit Agreement (Executive Officers) (2026) (filed herewith) | |||||||
10.4* | Deferred Compensation Plan for Non-Employee Directors of Solstice Advanced Materials Inc. (2026) (filed herewith) | |||||||
31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |||||||
31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |||||||
32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | |||||||
32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | |||||||
| 101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
____________________
* Management contract or any compensatory plan, contract, or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SOLSTICE ADVANCED MATERIALS INC. | |||||||||||
Date: May 6, 2026 | By: | /s/ John S. Barresi | |||||||||
| John S. Barresi | |||||||||||
| Chief Accounting Officer | |||||||||||
| (on behalf of the Registrant | |||||||||||
| and as the Registrant’s | |||||||||||
| Principal Accounting Officer) | |||||||||||
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FAQ
How did Solstice Advanced Materials (SOLS) perform financially in Q1 2026?
Solstice reported Q1 2026 net sales of $991 million, up from $897 million a year earlier. Net income attributable to Solstice declined to $85 million from $134 million, and diluted EPS fell to $0.53 from $0.85 as margins and interest costs pressured earnings.
What drove revenue growth for Solstice Advanced Materials (SOLS) in Q1 2026?
Revenue grew mainly from higher volumes and pricing in Refrigerants & Applied Solutions and stronger demand in Electronic & Specialty Materials. Net sales increased by $94 million, or 10%, with organic sales up 8.0% and favorable foreign currency translation also contributing.
Why did Solstice Advanced Materials’ Q1 2026 earnings decline despite higher sales?
Earnings fell because costs grew faster than sales and interest expenses increased. Gross margin compressed as raw material inflation and mix in refrigerants weighed on profitability, standalone public-company expenses rose, and interest and other financial charges jumped to $29 million from $1 million after new debt issuance.
What were Q1 2026 segment results for Solstice Advanced Materials (SOLS)?
In Q1 2026, Refrigerants & Applied Solutions net sales were $711 million with Segment Adjusted EBITDA of $242 million. Electronic & Specialty Materials net sales were $281 million and Segment Adjusted EBITDA was $58 million, supported by growth in electronic materials demand.
How strong is Solstice Advanced Materials’ liquidity and cash flow position?
Solstice generated $199 million of net cash from operating activities in Q1 2026 and ended with $642 million of cash and cash equivalents. The company had $2.0 billion of debt, no borrowings under its $1.0 billion revolving credit facility, and continued investing with $82 million in capital expenditures.
Is Solstice Advanced Materials (SOLS) paying a dividend after the spin-off?
Yes. The Board declared a quarterly dividend of $0.075 per share, payable June 10, 2026, to shareholders of record on May 27, 2026. The company paid $12 million in dividends during Q1 2026 and currently expects to continue quarterly dividend payments, subject to Board approval.
What environmental and legal matters affect Solstice Advanced Materials?
Solstice records environmental liabilities, which totaled $55 million at March 31, 2026, and remains involved in litigation related to its Nuclear Facility. It also has an agreement with the U.S. Department of Energy that includes reimbursement of certain litigation costs and cost sharing on facility expansion.