Qnity Electronics, Inc.

RESULTS OF OPERATIONS

The following table summarizes sales variances by segment and geographic region from the prior year:

1. Europe, Middle East and Africa.

We reported net sales for the three months ended September 30, 2025 of $1.3 billion, up 11% from $1.1 billion for the three months ended September 30, 2024, due to an 11% increase in volume and a 1% favorable currency impact partially offset by a 1% decrease in local price and product mix. The volume increase was attributable to both Interconnect Solutions (up 15%) and Semiconductor Technologies (up 9%). Contributing to the volume increase was an approximate $40 million benefit from order timing related to system cut-over activities in advance of the Separation. The favorable currency impact was attributable to Interconnect Solutions (up 1%) while the currency impact of Semiconductor Technologies remained flat. Local price and product mix declined in both Interconnect Solutions (down 1%) and Semiconductor Technologies (down 1%).

Net sales for the nine months ended September 30, 2025 were $3.6 billion, up 10% from $3.2 billion for the nine months ended September 30, 2024, due to a 12% increase in volume partially offset by a 2% decrease in local price and product mix. The increase in volume was attributable to both Interconnect Solutions (up 15%) and Semiconductor Technologies (up 9%). Contributing to the volume increase was an approximate $40 million benefit from order timing related to system cut-over activities in advance of the Separation. Local price and product mix declined in both Interconnect Solutions (down 2%) and Semiconductor Technologies (down 1%).

Cost of Sales

Cost of sales were $701 million for the three months ended September 30, 2025, up 15% from $609 million for the three months ended September 30, 2024 primarily due to increased volume of 10% as well as increases in input costs of 4% and unfavorable currency impacts of 1%.

Cost of sales as a percentage of net sales for the three months ended September 30, 2025 was 55% as compared to 53% for the three months ended September 30, 2024.

Cost of sales were $1.9 billion for the nine months ended September 30, 2025, up 9% from $1.8 billion for the nine months ended September 30, 2024 due to increased volume of 9%.

Cost of sales as a percentage of net sales remained flat at 54% for the nine months ended September 30, 2025 and 2024.

Research and Development ("R&D") Expenses

R&D expense was $92 million for the three months ended September 30, 2025, up from $81 million for the three months ended September 30, 2024. R&D expense as a percentage of net sales was consistent period over period at 7% for each of the three months ended September 30, 2025 and 2024.

R&D expense was $264 million for the nine months ended September 30, 2025, up from $230 million for the nine months ended September 30, 2024. R&D expense as a percentage of net sales was consistent period over period at 7% for each of the nine months ended September 30, 2025 and 2024.

Selling, General and Administrative ("SG&A") Expenses

SG&A expenses were $159 million in the third quarter of 2025, up slightly from $156 million in the third quarter of 2024. SG&A expenses as a percentage of net sales decreased period over period at 12% and 14% for the three months ended September 30, 2025 and 2024, respectively.

For the first nine months of 2025, SG&A expenses were $453 million, down from $461 million in the first nine months of 2024. SG&A expenses as a percentage of net sales remained relatively consistent at 13% and 14% for the nine months ended September 30, 2025 and 2024, respectively. The decrease for the nine months ended September 30, 2025 as compared with the same period of the prior year was primarily due to decrease in legal expenses partially offset by higher employee related costs.

Amortization of Intangibles

Amortization of intangibles was $51 million in the third quarter of 2025, down from $57 million in the third quarter of 2024. In the first nine months of 2025, amortization of intangibles was $156 million, down from $177 million in the same period of the prior year. The decrease for the three and nine months ended September 30, 2025 as compared with the same periods of the prior year was primarily due to the absence of amortization from fully amortized assets.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $1 million in the third quarter of 2025, down from $4 million of charges in the third quarter of 2024. In the first nine months of 2025, restructuring and asset related charges - net were $20 million, up from $7 million of charges in the same period last year. The activity for the three and nine months ended September 30, 2025 and 2024 related to nonrecurring charges in connection with DuPont-approved restructuring programs. See Note 4 to the unaudited interim Combined Financial Statements for additional information.

Equity in Earnings of Nonconsolidated Affiliates

Our share of the earnings of nonconsolidated affiliates was $15 million in the third quarter of 2025, up from $10 million in the third quarter of 2024. In the first nine months of 2025, our share of earnings of nonconsolidated affiliates was $37 million, up from $33 million in the first nine months of 2024. The increase for each of the three and nine month periods is due to higher earnings in the underlying nonconsolidated affiliates. See Note 10 to the unaudited interim Combined Financial Statements for additional information.

Other Income (Expense) - Net

Other income (expense) - net includes a variety of income and expense items such as gain or loss on sale of assets and foreign exchange gains or losses. Other income (expense) - net remained flat at $1 million of expense in the three months ended September 30, 2025, and 2024.

In the first nine months of 2025, Other income (expense) - net was an expense of $3 million, as compared to $9 million of income in the first nine months of 2024. The nine months ended September 30, 2025 included $4 million net foreign exchange loss, as compared to $3 million net foreign exchange gain for the nine months ended September 30, 2024. See Note 6 to the unaudited interim Combined Financial Statements for additional information.

Interest Expense

Interest expense was $14 million for the three and nine months ended September 30, 2025. There was no interest expense for the three and nine months ended September 30, 2024. The increase in interest expense in 2025 was driven by interest associated with the Notes (as defined herein). See Note 12 to the unaudited interim Combined Financial Statements for additional information.

Provision for Income Taxes

Our effective tax rate fluctuates based, among other factors, on where income is earned and the level of income relative to tax attributes. For the nine months ended September 30, 2025, the effective tax rate was 19.8%, compared with 22.4% for the nine months ended September 30, 2024. The lower effective tax rate for the first nine months of 2025 in comparison to the first nine months of 2024 resulted from a combination of certain discrete tax expenses incurred in 2024, including the settlement of an international tax audit, offset by changes to the geographic mix of earnings in 2025, including the impacts of the OECD's Global Anti-Base Erosion rules under Pillar Two in jurisdictions in which we operate.