Solstice Advanced Materials Inc.
For the period ended Mar 31, 2026. Filed May 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 6, 2026
SOLS$58.00+5.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0002064953-25-000018
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0002064953-26-000047
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 91 current paragraphs.
31 unchanged; 24 reworded; 35 added; 23 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
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.
Current report
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”).
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
The following sets forth the net sales for our RAS segment for the three months ended March 31, 2026 and 2025.
Current report
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.
Current report
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.
Current report
The following sets forth the net sales for our ESM segment for the three months ended March 31, 2026 and 2025.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
See Note 8 - Debt of the Notes to the Consolidated Financial Statements for additional information regarding our debt obligations.
Current report
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.
Current report
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.
Current report
Cash and Cash Requirements
Current report
Summary
Current report
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.
Current report
Cash and Cash Equivalents Held by Foreign Subsidiaries
Current report
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.
Current report
Capital Expenditures
Current report
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.
Current report
Parent Company Credit Support
Current report
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.
Current report
Supply Chain Financing
Current report
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.
Current report
Contractual Obligations and Off-Balance Sheet Arrangements
Current report
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.
Removed paragraphs (23)
Previous report
The Condensed Combined Financial Statements included herein are derived from Honeywell’s historical accounting records and presented on a standalone basis as if the Company’s operations had been conducted independently from Honeywell. The Condensed Combined Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Honeywell’s historical accounting policies, by aggregating financial information from the components of Solstice’s and Honeywell’s accounting records directly attributable to Solstice Advanced Materials.
Previous report
Management believes that the expense and cost allocations have been determined on a basis that is a reasonable reflection of the utilization of services provided or the benefit received by the Company. The amounts that would have been, or will be incurred, on a stand-alone basis could materially differ from the amounts allocated due to economies of scale, difference in management judgment, a requirement for more or fewer employees, or other factors. Management does not believe, however, that it is practicable to estimate what these expenses would have been had the Company operated as an independent entity, including any expenses associated with obtaining any of these services from unaffiliated entities. In addition, the future results of operations, financial position, and cash flows could differ materially from the historical results presented herein.
Previous report
In connection with the Spin-off, we also entered into certain agreements with Honeywell, including a Separation and Distribution Agreement, a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement, an Intellectual Property Cross-License Agreement, a Trademark License Agreement and an Accelerator License Agreement, as described in Note 14. - “Subsequent Events” of the Notes to the unaudited Condensed Combined Financial Statements. Under the Transition Services Agreement, we generally expect to be able to utilize Honeywell’s services for a transitional period following the Spin-off before we replace these services over time with services supplied either internally or by third parties. The expenses for the services may vary from the historical costs directly billed and allocated to us for the same services.
Previous report
We continue to monitor macroeconomic and geopolitical developments amid heightened trade tensions, economic and trade policy uncertainty, and inflationary risks. The trade policy volatility during 2025—including new tariffs and, in some cases, subsequent rollbacks or suspensions—could adversely impact global growth and contribute to inflationary pressures. Global conflicts, tariffs, labor disruptions, and regulations continue to generate volatility in global markets and can contribute to supply chain vulnerabilities and pricing fluctuations. We remain proactive in our collaboration with suppliers to minimize shortages and mitigate supply chain and pricing volatility.
Previous report
NM - not meaningful
Previous report
Net sales increased due to favorable refrigerants volume and pricing, partially offset by lower sales volumes in alternative energy services attributed to certain large sales transactions which occurred in 2024 that did not recur in 2025, as well as lower volumes in healthcare packaging. A discussion of Net sales by reportable segment can be found under the “Segment Results” section.
Previous report
Cost of product and services sold increased by $51 million or 3% driven by volume increases and the overall product mix in the RAS segment. These volume increases were offset by the aforementioned volume declines in alternative energy services and healthcare packaging. Research and development expenses increased by $8 million or 13% driven by driven by continued investment in innovation across the portfolio of offering such as the next-gen molecules and Spectra Y; Selling, general and administrative expenses increased by $6 million or 2% driven by an increase in employee related expenses in preparation for the Spin-off. Transaction-related costs increased by $84 million driven by professional advisory services fees incurred in 2025 in preparation for the Spin-off; Other expense (income) changed by $41 million driven primarily by the impact of a government reimbursement of certain past legal expenses; Interest and other financial charges decreased by $6 million or 55% driven by certain finance leases being paid off.
Previous report
Income tax expenses - The effective tax rate in 2025 was higher than the effective tax rate in 2024 as a result of incremental frictional tax costs associated with the separation from Honeywell, which increased our effective tax rate by approximately 35% for the nine months ended September 30, 2025. See Note 5, “Income Taxes” of the Notes to the unaudited Condensed Combined Financial Statements for additional information on the effective tax rate.
Previous report
RAS net sales increased by $57 million or 9% due to favorable pricing and volume growth in refrigerants. These increases were offset by a decline in healthcare packaging due to volume.
Previous report
Segment Adjusted EBITDA decreased by $7 million or 3% and Segment Adjusted EBITDA margin decreased 4% primarily driven by stationary refrigerants product mix as a result of the ongoing transition to LGWP refrigerants. This decrease was partially offset by volume growth and favorable pricing.
Previous report
RAS net sales increased by $4 million due to volume growth and favorable pricing in refrigerants, offset by a reduction in our alternative energy services offering attributed to large sales transactions which occurred in 2024 that did not recur in 2025, and volume and price reductions in healthcare packaging.
Previous report
Segment Adjusted EBITDA decreased by $15 million or 2% and Segment Adjusted EBITDA margin remained relatively flat.
Previous report
ESM net sales increased by $5 million or 2%. The increase was attributable to volume increases in safety and defense and electronic materials offerings along with favorable pricing in our research and performance chemicals offering. These increases were partially offset by volume declines in our research and performance chemicals offering.
Previous report
ESM net sales increased by $38 million or 5%. The increase was attributable to demand driven volume increases in electronic materials and research and performance chemicals offerings, along with favorable pricing in our research and performance chemicals offering.
Previous report
Corporate and All Other increased by $21 million or 64% and $19 million or 17% for the three and nine months ended September 30, 2025, respectively, compared to the prior year, due to incremental ongoing costs incurred as part of the transition to operate as a new independent company.
Previous report
The Notes are senior unsecured obligations of Solstice, guaranteed on a senior unsecured basis by certain of its domestic subsidiaries and, from and after the escrow release date, will be guaranteed on a senior unsecured basis by each of Solstice’s existing and future domestic subsidiaries that guarantee the Company’s Senior Credit Facilities (described below). The Notes are subject to customary affirmative and negative covenants that limit the Company’s ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments; make investments; consummate certain asset sales; engage in certain transactions with affiliates; grant or assume certain liens; and consolidate, merge or transfer all or substantially all of the Company’s assets.
Previous report
All obligations under the Senior Credit Facilities are unconditionally guaranteed, jointly and severally, by: (a) the Company and (b) all direct and indirect wholly owned subsidiaries of the Company that are organized under the laws of the United States, any state thereof or the District of Columbia, subject to certain exceptions and limitations (collectively, the “Guarantors”). Subject to certain limitations, the Senior Credit Facilities are secured on a first priority basis by: (x) a perfected security interest in the equity interests of each direct subsidiary of the Company and each Guarantor under the Senior Credit Facilities (subject to certain customary exceptions) and (y) perfected security interests in, and mortgages on, substantially all tangible and intangible personal property and material real property of the Company and each of the Guarantors under the Senior Credit Facilities, subject, in each case, to certain exceptions.
Previous report
The Credit Facilities are subject to an interest rate, at the Company’s option, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the
Previous report
United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted SOFR rate, plus 1.00% per annum (“ABR”) or (b) an adjusted SOFR rate (“SOFR”) (which shall not be less than zero).
Previous report
The applicable margin for the Term Loan Facility is 1.75% per annum (for SOFR loans) and 0.75% per annum (for ABR loans). The applicable margin for the Revolving Credit Facility varies from 1.50% per annum to 2.00% per annum (for SOFR loans) and 0.50% to 1.00% per annum (for ABR loans) based on the Company’s Consolidated First Lien Leverage Ratio (as defined in the Credit Agreement). Accordingly, the interest rates for the Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, SOFR or future changes in the Company’s Consolidated First Lien Leverage Ratio. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months.
Previous report
In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, the Company is required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by the Company’s Consolidated First Lien Leverage Ratio and ranges from 0.25% to 0.35% per annum.
Previous report
Net cash provided by operating activities was $289 million for the nine months ended September 30, 2025, compared to $567 million in the prior-year period. The decrease was due to lower net income and greater working capital outflow, in particular due to higher accounts receivable and inventories partially offset by inflows of deferred revenue as well as increased payables related to purchased services and direct material spend and timing.
Previous report
Net cash used in financing activities was $328 million for the nine months ended September 30, 2025, compared to $325 million in the prior-year period. The increase was driven by an increase in net transfers to Honeywell offset by a decrease in finance lease payments.
Reworded paragraphs (24)
Previous wording
Solstice Advanced Materials Inc. (“Solstice,” “Solstice Advanced Materials,” “we,” “us,” “our,” or the “Company”) is a global, differentiated advanced materials company and a leading global provider of refrigerants, 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.
Current wording
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.
Previous wording
Our RAS segment is a leading manufacturer of low global warming potential (“LGWP”) refrigerants, blowing agents, solvents and aerosol materials. RAS serves the end markets of cooling, air conditioning and refrigeration (“HVAC/R”), automotive, 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 alternative energy services. 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.
Current wording
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.
Previous wording
During 2025, we have served over 3,000 customers across a wide range of end markets in approximately 120 countries and territories. Our global presence included 21 manufacturing sites, four R&D sites and approximately 4,000 employees as of September 30, 2025.
Current wording
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.
Previous wording
On October 8, 2024, Honeywell International Inc. (“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 shareholders (the “Spin-off”) that is tax-free for U.S. federal tax purposes. On October 30, 2025, the Spin-off was consummated by means of a tax-free pro rata distribution (the “Distribution”) of all of the issued and outstanding Solstice Advanced Materials common shares to Honeywell’s shareholders 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 shareholders. 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 does not own any Solstice Advanced Materials common shares and will no longer consolidate Solstice Advanced Materials with Honeywell's financial results. See Note 8. - “Long-Term Debt” and Note 14. - “Subsequent Events” of the Notes to the unaudited Condensed Combined Financial Statements for additional information on the Spin-off and related transactions.
Current wording
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.
Previous wording
The Condensed Combined Financial Statements include all revenues and costs directly attributable to the Solstice 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 consider 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.
Current wording
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.
Previous wording
We have incurred, and expect to continue to incur certain costs in connection with our establishment as a standalone public company (the “Transaction-related costs”). The Transaction-related costs 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, development of our brand and other matters. The Transaction-related costs are expected to continue through at least fiscal year 2026. Additionally, we have incurred, and expect to continue to incur increased costs as a result of becoming an independent, publicly traded company, primarily from establishing or expanding the corporate support for our businesses, including information technology (“IT”), human resources, treasury, tax, internal audit, risk management, stock-based compensation programs, accounting and financial reporting, investor relations, governance, legal, procurement and other services. See “Unaudited Pro Forma Combined Financial Information” in our final Information Statement, dated as of October 17, 2025 (the “Information Statement”) for additional details.
Current wording
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.
Previous wording
Net sales increased due to higher sales volume, favorable pricing and favorable currency movements. The higher sales volume was driven by growth in refrigerants, partially offset by volume declines in healthcare packaging. The price increase was driven by favorable refrigerants pricing. A discussion of Net sales by reportable segment can be found under the “Segment Results” section.
Current wording
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.”
Previous wording
Cost of product and services sold increased by $84 million or 15% driven by volume increases and the overall product mix in both segments; Research and development expenses increased by $5 million or 24% driven by continued investment in innovation across the portfolio of offerings such as the next-gen molecules and Spectra Y; Selling, general and administrative expenses increased by $6 million or 6% driven by an increase in employee related expenses in preparation for the Spin-off, partially offset by the impact of a government reimbursement of certain legal expenses; Transaction-related costs increased by $29 million driven by professional advisory services fees incurred in 2025 in preparation for the Spin-off; Other expense (income) changed by $37 million driven primarily by the impact of a government reimbursement of certain past legal expenses; Interest and other financial charges decreased by $1 million or 33% driven by certain finance leases being paid off.
Current wording
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.
Previous wording
Income tax expenses - The effective tax rate in 2025 was higher than the effective tax rate in 2024 as a result of incremental frictional tax costs associated with the separation from Honeywell, which increased our effective tax rate by approximately 80% for the three months ended September 30, 2025. See Note 5, “Income Taxes” of the Notes to the unaudited Condensed Combined Financial Statements for additional information on the effective tax rate.
Current wording
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.
Previous wording
We manage and report our operating results through two reportable segments: RAS and ESM. The remainder of our operations are presented in Corporate and All Other, which is not a reportable business segment.
Current wording
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.
Previous wording
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, stock compensation expense, pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, and certain other items that are otherwise of an unusual or non-recurring nature, including but not limited to, impairment charges, litigation, and insurance settlements, and gains and losses on disposal of assets.
Current wording
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.
Previous wording
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our RAS segment for the three and nine months ended September 30, 2025 and 2024.
Current wording
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.
Previous wording
Segment Adjusted EBITDA decreased by $8 million or 15% and Segment Adjusted EBITDA margin decreased 3% driven by anticipated transitory cost items.
Current wording
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.
Previous wording
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our ESM segment for the three and nine months ended September 30, 2025 and 2024.
Current wording
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.
Previous wording
Segment Adjusted EBITDA increased by $8 million or 6% and Segment Adjusted EBITDA margin remained relatively flat.
Current wording
Segment Adjusted EBITDA increased by $5 million or 10% primarily driven by demand growth in electronic materials. Segment Adjusted EBITDA margin remained relatively flat.
Previous wording
Adjusted EBITDA and Adjusted EBITDA margin: The Company defines Adjusted EBITDA as net income excluding income taxes, depreciation, amortization, interest and other financial charges, other expense, stock compensation expense, pension and other postretirement income (expense), transaction-related costs, repositioning charges, asset retirement obligation accretion, and certain other items that are otherwise of an unusual or non-recurring nature (including but not limited to impairment charges, litigation costs and insurance settlements, net of recoveries, and gains and losses on disposal of assets). The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by Net sales. We believe these measures are useful to investors as they provide 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 and nine months ended September 30, 2025 and 2024.
Current wording
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.
Previous wording
Historically, the Company has generated positive cash flows from operations. Prior to the consummation of the Spin-off, as part of Honeywell the majority of the Company’s cash was transferred to Honeywell daily and the Company was dependent upon Honeywell for all of its working capital and financing requirements. Those arrangements have been settled in cash in conjunction with the Spin-off.
Current wording
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.
Previous wording
Following our separation from Honeywell on October 30, 2025, we no longer participate in Honeywell’s centralized cash management program. Our future liquidity will depend on operating cash flows, available cash balances, access to credit facilities and our ability to access capital markets. We believe that our existing cash and cash equivalents, combined with our 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.
Current wording
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.
Previous wording
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. The proceeds of the Notes were held in escrow pending completion of the Spin-off, and such proceeds were released from escrow on October 29, 2025 in connection with the Spin-off.
Current wording
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.
Previous wording
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. In addition to the maintenance fee, Sidecar LC Facilities also provide for each issuer’s standard fees with respect to the issuance, amendment, renewal or extension of any letter of credit.
Current wording
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.
Previous wording
The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/repurchases, in respect of the Company and its subsidiaries’ equity interests, to engage in transactions with affiliates or amend certain material documents. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving Credit Facility requiring the maintenance of a Consolidated First Lien Leverage Ratio of not greater than 3.50 to 1.00 (with a temporary step-up following a material acquisition to 4.00 to 1.00), and a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.75 to 1.00.
Current wording
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
Previous wording
Summarized cash flow information for the nine months ended September 30, 2025 and 2024 is as follows:
Current wording
Summarized cash flow information for the three months ended March 31, 2026 and 2025 is as follows:
Previous wording
Net cash used in investing activities was $228 million for the nine months ended September 30, 2025, compared to $204 million in the prior-year period. The increase was driven by higher capital expenditures, primarily within our ESM segment, partially offset by proceeds from the sale of assets.
Current wording
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.
Previous wording
There were no material changes during the three and nine months ended September 30, 2025 to the items disclosed as critical accounting estimates in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Information Statement.
Current wording
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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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”).