SOLS

Image source: The Motley Fool. Thursday, July 30, 2026, at 8:30 a.m. ET Vice President, Investor Relations - Michael Leithead President and Chief Executive Officer - David Sewell Chief Financial Officer - Tina Pierce Operator: Greetings and welcome to the Solstice Advanced Materials Q2 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mike Leithead, Vice President, Investor Relations. Mike, please go ahead. Michael Leithead: Thank you, and good morning, everyone. Welcome to Solstice's Second Quarter 2026 Earnings Call. We released our second quarter 2026 financial results earlier this morning. Today's presentation, including non-GAAP reconciliations and our earnings press release are available on the Investor Relations portion of Solstice's website at investors.solstice.com. Our discussion today will include forward-looking statements that are based on our best view of the world and our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This includes statements regarding our pending acquisition of Element Solutions. Please see the additional disclosure in this morning's materials and our related SEC filings. Joining me today are David Sewell, our President and CEO; and Tina Pierce, our CFO. David will open today's call with highlights of our second quarter results. Tina will then review our segment performance and financial outlook before turning the call back to David for closing remarks. We will then be happy to take your questions. With that, I'll now turn the call over to David. David Sewell: Thank you, Mike, and thank you, everyone, for joining us today. During the second quarter, Solstice Advanced Materials again delivered strong top and bottom line results, reflecting ongoing robust demand trends across several of our key businesses, including nuclear energy, electronic materials, refrigerants and health care packaging. In fact, 6 of our 7 businesses grew this quarter, 4 of them at double-digit rates. I want to take a moment to thank our entire Solstice team whose execution this quarter speaks for itself. This performance demonstrates the strength of Solstice's portfolio, not only through our transition to a stand-alone company, but also in a dynamic macroeconomic environment. This quarter, that resilience showed up in sound execution through macroeconomic volatility, a heavier slate of planned plant turnarounds and the largely complete exit of our transition service agreements. Our Specialty Materials assets and balance sheet strength continue to set us apart in this industry, allowing us to reinvest in growth at a time when many in the industry have needed to pare back. We continue to invest in compelling growth areas aligned with our strategic priorities, such as our Electronic Materials, Safety and Defense Solutions and nuclear businesses, consistent with what we believe are attractive long-term outlooks for demand. That investment spans both CapEx and increased R&D spending as we advance the next generation of critical molecules for our customers. Together with our announced acquisition of Element Solutions, these high-return organic investments mark a clear acceleration of our growth strategy. We generated $461 million of operating cash in the first half, supported by disciplined working capital management, cash generation that funds our growth investments and supports returning cash to shareholders through our recently declared quarterly dividend. The strong cash generation of our business is what gives us confidence in the rapid deleveraging of net debt to less than 3x EBITDA that we anticipate within 18 months following the close of the Element Solutions acquisition. With our strong first half performance and continued momentum across the business, we are raising our full year 2026 guidance even against an uncertain macroeconomic backdrop. Turning to Slide 4. I'd like to briefly update you on our acquisition of Element Solutions, which we announced on July 6. This combination represents a significant acceleration of our strategy to build an industry-leading advanced materials platform with increased exposure to high-growth electronics, AI infrastructure and other attractive end markets. The same secular trends powering our results this quarter include artificial intelligence, data centers, semiconductor manufacturing and thermal management are precisely what makes this combination so compelling. Together, we believe we will be better positioned to serve electronics and AI infrastructure customers from early-stage development through high-volume manufacturing, while our refrigerant solutions, including data center cooling and our specialty positions such as nuclear remain core to the combined company. The logic here is grounded in what you are already seeing in our results. The customer expansion, secular demand and technical capability that are foundational to the strength of our business. Solstice and Element are a natural fit, not only because we support similar customer environments, but because of our complementary strengths. When you combine our chemistry expertise with Element's formulation capabilities, you get what we expect to be a leading platform for innovation that will fuel the development of next-generation solutions. With Element, we believe we will also be positioned to collaborate with customers early in their project life cycles to develop solutions purpose-built to support their objectives. The synergies we outlined in our investor materials about the transaction build directly on those drivers, which is why we have confidence in the value this creates. The transaction remains subject to shareholder and regulatory approvals and other customary closing conditions, and we expect it to close in the first half of 2027. We are very excited about what our 2 companies can build together. Turning to Slide 5. I'd like to discuss our second quarter 2026 consolidated results. In the second quarter of 2026, Solstice recorded $1.148 billion in net sales, up 11% year-over-year, which exceeded the top end of the guidance we provided for the quarter. In our Refrigerants & Applied Solutions segment, strong demand for refrigerants driven by the ongoing HFO transition and accelerating data center orders, together with continued strength in nuclear and a recovery in health care packaging drove double-digit top line growth for the segment. In our Electronic and Specialty Materials segment, net sales growth was driven by robust demand in our electronic materials business for semiconductor applications. Adjusted EBITDA for the second quarter of 2026 was $290 million, up 2% year-over-year and exceeding the top end of the guidance we provided for the quarter. Adjusted EBITDA margin was 25.3%, in line with our expectations for the quarter. The decline in margin year-over-year was primarily driven by the timing of certain plant turnaround activity and prior year production incentive credits, partially offset by volume growth and favorable pricing. As a reminder, we continue to see ongoing strong demand for our low global warming potential products. Now over a year into the 454B transition, we continue to expect our Refrigerants and Applied Solutions segment to deliver mid-30% adjusted EBITDA margins in the second half of 2026 as the aftermarket develops. We reported GAAP net income attributable to Solstice of $119 million for the second quarter of 2026, up from $97 million a year ago or $0.75 per diluted share. Consistent with what we signaled last quarter, noncontrolling interest declined sequentially to $15 million this quarter from the atypically high $20 million in the first quarter. This quarter, we also reported adjusted diluted EPS of $0.88 for the second quarter. Finally, free cash flow for the first half of 2026 was $248 million, which is inclusive of the significant year-over-year increase in growth CapEx as we invest in high-return opportunities across the business, including the Spokane expansion to meet robust sputtering target demand. And with that, I'll now turn it over to Tina Pierce, our CFO, to discuss our financial results for the second quarter in more detail. Tina Pierce: Thank you, David. Turning to Slide 6. I'd like to discuss in more detail the key drivers of our year-over-year net sales and adjusted EBITDA performance in the second quarter. Beginning with our net sales of $1.148 billion for the quarter. Organic net sales growth was approximately 11%, reflecting both volume growth and favorable pricing. This primarily reflects volume growth and favorable pricing in both nuclear and refrigerants as well as volume growth in Electronic Materials. Foreign currency translation was a modest tailwind of roughly 0.5 point. Turning to our adjusted EBITDA of $290 million for the quarter, up 2% versus the prior year period. Year-over-year improvement in ESM, together with a favorable corporate and stand-alone comparison, more than offset a decline in RAS, which is primarily attributable to the timing of certain plant turnaround activity and production incentive credits that David just discussed. Turning to Slide 7. I'll now discuss the results in each of our 2 segments in more detail, beginning with Refrigerants and Applied Solutions. Overall, the segment achieved $850 million in net sales for the second quarter of 2026, reflecting 12% growth year-over-year, driven by volume growth and favorable pricing across the business. The segment posted $280 million in adjusted EBITDA for the second quarter of 2026, down 6% year-over-year and adjusted EBITDA margin of 32.9%, down 648 basis points year-over-year. As mentioned previously, this decrease was primarily driven by the timing of plant turnaround activity and prior year production incentive credits, which more than offset volume growth and favorable pricing in the segment. Turning to the performance of our subsegments. Refrigerant net sales increased 13% year-over-year to $473 million, driven by both favorable pricing and volume growth across our product offerings. Beyond the 454 strength that David highlighted, data center orders remain robust again this quarter, underscoring how this business sits at the intersection of several key secular growth trends. Our nuclear business had $125 million in net sales, up 27% year-over-year, reflecting both favorable pricing and increased volumes. We are seeing positive momentum in this business, reinforced by new supply agreements with 3 small modular reactor developers. For the first time in decades, we are seeing meaningful innovation from entrepreneurs across the nuclear ecosystem. We remain excited about this differentiated business and the critical role we believe it will play in the nuclear renaissance now clearly taking shape. Building Solutions and Intermediates net sales were $180 million, down 1% year-over-year. Continued construction market softness weighed on the subsegment, but we remain focused on advancing our LGWP solutions and maintaining disciplined operational execution to ensure we are well positioned to serve our customers upon a return to more normalized demand in key end markets. Lastly, for Healthcare Packaging, net sales were $73 million, up 24% year-over-year. The increase was driven by a recovery in customer demand patterns following the destocking we saw in the second half of 2025 as well as favorable net pricing. Now turning to our Electronic and Specialty Materials segment on Slide 8. The segment achieved $298 million in net sales for the second quarter of 2026, reflecting 8% growth year-over-year, driven by volume growth in Electronic Materials. The segment posted $64 million in adjusted EBITDA for the second quarter of 2026, up 24% year-over-year and adjusted EBITDA margin of 21.6%, up 280 basis points year-over-year. The increase was primarily driven by volume growth in Electronic Materials and productivity improvements. Looking at the performance of our subsegments, Electronic Materials net sales increased 15% year-over-year to $119 million, driven by volume growth and robust customer demand across semiconductor applications. We were also recently recognized with the top supplier award from SK Hynix, a strong external validation of the strength of our technology and execution. As David noted, we are expanding electronic materials capacity to meet AI and data center-driven semiconductor demand, which we see as a significant multiyear opportunity for Solstice. Safety and Defense Solutions had $43 million in net sales, up 7% year-over-year. As we anticipated last quarter, the business returned to growth driven by non-Armor applications, and we continue to invest in capacity expansion to support long-term market demand for our Spectra line of solutions. Finally, Research and Performance Chemicals net sales increased 3% year-over-year to $135 million with growth in Fine Chemicals, partially offset by ongoing end market softness in Specialty Additives. Moving to Slide 9 to discuss Solstice's balance sheet and capital management. Our strong balance sheet, cash flow generation and conservative leverage position continue to enable financial flexibility and fuel Solstice's many attractive growth investments. I would like to start with cash, with Solstice generating $461 million of operating cash flow in the first half of the year. In addition to healthy earnings generation, we were able to execute strong working capital management, reducing our dollar inventory despite the healthy increase in revenue and rising input costs. Our capital expenditures for the first half were $186 million, a 32% increase compared to the prior year period due to planned increases in capital spending to drive long-term growth in high-return areas of the business. As a reminder, beyond the electronic materials expansion in Spokane, we are actively investing in our Spectra ballistic fibers expansion in Virginia as well as advancing further expansion of our nuclear conversion business. As we work through debottlenecking at our Metropolis facility, we are exploring attractive incremental opportunities that we believe can take capacity beyond 10,000 metric tons, and we expect to share more later this year. Turning to our capital structure. We have maintained a conservative leverage profile and strong liquidity position. As of June 30, 2026, our total debt was approximately $2 billion, and we had cash and cash equivalents of $750 million, resulting in net debt of approximately $1.25 billion and a net leverage ratio of approximately 1.3x based on a trailing 12-month adjusted EBITDA. As of June 30, 2026, we also had $1 billion of availability under our revolving credit facility. Combined with the cash on our balance sheet, this results in approximately $1.75 billion of total liquidity. As David mentioned earlier, we announced on July 17, approval of a quarterly dividend of $0.075 per share, in line with last quarter, which will be payable on September 10 to shareowners of record as of August 27. We continue to view returning excess capital to shareholders as a key piece of our overall capital allocation approach. This same balance sheet strength is what allows us to finance the Element Solutions transaction from a position of discipline. We have structured the acquisition to preserve our current credit rating profile and our cash generation supports a clear path back to our target leverage in the periods following close. Turning to Slide 10. I'd like to discuss our outlook and financial guidance for both the full year and the third quarter of 2026. Importantly, we did what we said we would do during this quarter, delivering above the range we set and converting that into strong cash generation. This kind of execution is the foundation for the confidence we are expressing today, both in raising our full year outlook and in our continued ability to drive growth. For the full year 2026, we now expect to deliver net sales between $4.125 billion and $4.185 billion, adjusted EBITDA between $1.035 billion and $1.055 billion and adjusted diluted earnings per share between $2.75 and $2.95. Additionally, we now expect capital expenditures between $420 million and $440 million. Today, we are also providing guidance for the third quarter of 2026 as we want to help investors better understand our business and our first year as a public company. In the third quarter, we expect to deliver net sales between $990 million and $1.03 billion. Our outlook for the third quarter assumes continued momentum in refrigerants and Electronic Materials and more modest nuclear performance, reflecting the timing of final product loan returns and order patterns with consistent margin performance. A few additional modeling points for the second half. We expect a negative revenue of approximately $30 million from the final return of nuclear product loans skewed modestly toward the fourth quarter. I'd now like to pass it back over to David for some closing remarks. David Sewell: Thank you, Tina, and please turn to Slide 11. With strong performance in the first half and solid momentum heading into the remainder of the year, we are well positioned to deliver on our full year 2026 guidance. As we discussed today, we are seeing continued strong demand in our businesses that serve key end markets aligned with secular growth trends, including artificial intelligence, data centers, semiconductor manufacturing and nuclear energy and thermal management. These are core strategic areas for Solstice where we have both a clear right to play and right to win. Solstice is a strong growing business today with durable pricing power, high returns on capital and robust free cash flow. We are putting that cash flow to work with disciplined reinvesting in our businesses, both in terms of expanding our R&D pipeline as well as high-return growth CapEx while returning excess capital to shareholders through our quarterly dividend. Our pending acquisition of Element Solutions builds on that momentum, accelerating a strategy that is already working. We are energized by both delivering on our current business quarter after quarter and bringing these 2 companies together to create even more value. We have work well underway to develop an integration road map to seamlessly bring our businesses together after this transaction closes in order to unlock the compelling opportunities we see ahead for our combined company. We remain excited about the significant opportunities ahead in 2026 and beyond. We look forward to sharing additional updates throughout the year. And with that, we are now happy to take your questions. Operator: [Operator Instructions] Our first question today is coming from Kevin McCarthy from Vertical Research Partners. Matthew Hettwer: This is Matt Hettwer on for Kevin McCarthy. Congrats on the nice quarter. And in Refrigerants, how do you see sales and EBITDA growth unfolding in the back half of the year? And what kind of margin impact do you expect from incremental unit sales given the transition to HFO? David Sewell: Thanks, Matt. What we talked about for our refrigerants business is continued sequential margin expansion. I think we talked about mid-30s for the second half of the year, which we feel very confident in. We talked about some of the margin impacts in second quarter. With that behind us, we see the margin expansion continuing. We did have sequential margin expansion in refrigerants in Q2 over Q1. And from a volume standpoint, we feel very confident in continued strong demand for our refrigerants. We're actually seeing a little bit of an acceleration to HFOs from HFCs, which we think is a continued positive. And for the most part, the aftermarket for HFOs in North America has not kicked in yet. So that's additional upside that we see moving forward. Matthew Hettwer: And then as a follow-up, maybe you could discuss how your development of next-generation non-PFAS refrigerant molecules is progressing? David Sewell: So we're doing a lot of work on next-generation yf molecule, and we're really excited about the development that we have. We're currently in testing that looks very promising, and we have already begun conversations with customers on this as well. Part of the refrigerants that Tina talked about on the margins, we did increase our R&D spend earlier this year. And a big chunk of that is going to the next-generation yf molecule as well as next-generation molecules in development for things like 2-phase direct-to-chip, immersion cooling. So we feel really well positioned to continue to innovate in next generation. Operator: Our next question today is coming from Josh Spector from UBS. Joshua Spector: I just wanted to ask about the second half guidance. So you gave sales but not EBITDA for 3Q. So I'm not sure why you didn't give that, just considering we don't have a ton of history. So can you help us either with a specific kind of range for 3Q EBITDA or a way to think about phasing just given the moving parts here? Tina Pierce: Josh, yes, the reason is that our margins have been very consistent throughout 2026. We've got now one quarter and second quarter as well as the full year guidance. But I would just say that the way we look at it is our margin rate has been right around that 25% range. David Sewell: So Josh, you could probably just back into it with low 25% margin range with that revenue. Tina Pierce: With the revenue range that we guided. David Sewell: Yes. Joshua Spector: And you expect that consistent 3Q and 4Q then? David Sewell: We do -- we are -- as we've talked about, we do expect to see sequential growth in our margins as we move forward. But we're -- as we come off the TSAs and some of the other aspects, we don't anticipate that changing, but I would anticipate small sequential growth in our margin expansion. Joshua Spector: Okay. And if I could just ask a follow-up on refrigerants. I mean you noted data center growth. I'm just curious, are you at a point now where you could talk about the exposure there in terms of how much of refrigerant sales are exposed to data centers, what the growth is? And is that outside the data center cooling? Or is this liquid cooling inside that's driving some of the upside there? David Sewell: So our data center cooling, it's still a smaller piece of our overall refrigerants, which is why we just haven't broken it out. However, saying that, it's the fastest-growing aspect of our refrigerants business. It's growing strong double digits. Most of that is still in standard cooling that we do in data centers, chillers. The work we're doing in things like 2-phase and immersion cooling is really to be coming in the future. But the expansive growth of data centers and the technology we have in our refrigerants for data centers is really compelling, and that's why we're seeing such tremendous growth. Operator: Our next question is coming from John McNulty from BMO Capital Markets. John McNulty: Congrats on some solid results. So I wanted to dig into the RAS margins. Admittedly, they came in a little lighter than we expected in 2Q and yet you're looking for mid-30s in the back half. And that, I think, comes despite that uranium loan giveback. So I guess, can you help unpack the 2Q maybe coming in a little bit on the lighter side and how you get to those mid-30 margins even with that loan giveback, which I would think is at least a little bit of a drag. Tina Pierce: Yes. So John, first off, we did have -- as we had signaled in quarter one, we did have very heavy plant turnarounds in the quarter. Good news is all sites are back up and operating well. We did have one campaign that did shift from second quarter to the second half, and there is an absorption benefit from that shift. And then we also had some production incentive credit timing, as David alluded. So last year, in second quarter, we secured some of these incentives, and it was a cumulative impact in second quarter of last year, which made for some difficult comps for this year. Going forward, that will be more linear as we recognize each of it each quarter. I would say that second quarter was our most significant outage quarter. We tend not to do that much during the summer months when it's extremely warm. We'll have some more minor planned outages in the fall of the year, but not to the same scale as what we had in second quarter. And then as David mentioned, we do anticipate being mid-30s for the second half of this year. John McNulty: Okay. Fair enough. And then I guess maybe just as a follow-up on the nuclear platform. I know the EPC work, you're not expecting to kind of have any major announcements until kind of the late fall, early winter. But I guess, can you help us to understand if you're maybe leaning toward either brownfield versus greenfield? And also, any potential updates around either support from the federal government and/or support that you may be seeing from your customers? David Sewell: Yes, John, good question. And you hit on the key 3 areas which the team is working extremely hard on. So if you take the first question on the engineering work, that's progressing extremely well. And whether it's a brownfield or greenfield, I would also add, and I think Tina alluded to it briefly in her comments, because of the debottlenecking work we're doing this year to get to that 10,000-plus tons, we're really encouraged that there may be the potential to do additional debottlenecking in Metropolis. So I think you'll see more information coming out on additional debottlenecking. And then on a brownfield versus greenfield, it's -- we're right in the heat of all the analysis and where that's going to come out. One of the things we're also looking at is kind of a modular design, bringing in capacity at certain stages. So I think we'll have more for you in the next few months exactly where that's coming in. But I would tell you, there's just an enormous amount of work going on. And directionally, I think we'll be able to give you a lot more information when the study is completed over the next few months. But we're very encouraged by everything we've seen. On parts 2 and 3 of your question, our customer discussions to secure longer-term contracts well into the mid-2030s is going very well. We're really encouraged by the reception we've had from customers because they fully understand the need for us to secure that volume to commit to the build, and they want us to do this. They love our experience with a 60-year history of working with them, the confidence that we can start up a new facility quickly. So that's going extremely well. And then the last piece on the government discussions, really encouraged by the feedback we're getting from the Department of Energy and NRC and across the government because you know the passion the current administration has to increase nuclear capacity, and they are certainly wanting to continue the partnership that we have with them as we move forward with the potential expansion. So -- when we look at all 3 of the levers, we feel great about all of them as we move forward. And I think we'll be able to share more over the next few months. Operator: Our next question is coming from John Roberts from Mizuho Securities. John Ezekiel Roberts: It looks like the revenue guide for the September quarter and the December quarter are roughly the same, but the nuclear payback is skewed to the fourth quarter, and I think refrigerants is normally seasonally lower. So why would the revenue be similar between the 2 quarters? Tina Pierce: Well, yes, in terms of how we're looking at the second half of the year, as you mentioned, quarter 2 does tend to be the largest quarter for refrigerants. Nuclear, there was a little bit of timing of the orders, a little bit lighter in the second half due to the loan repayments that we mentioned. Electronics, though, we're seeing continued growth there. And also, we're starting to see some of the capacity unlock in the second half of the year. And then as we mentioned in last quarter's call, our Safety and Defense business, we were flat in quarter one, and we anticipated that, that would pick up through the remainder of the year. So those [indiscernible] the good thing is there's really no assumed significant improvement in our construction businesses as well. John Ezekiel Roberts: Okay. And then since you were talking about maintenance downtime in the first half, I assume Metropolis was not part of the maintenance downtime, but maybe I'm wrong there. When is the next Metropolis planned maintenance downtime? And do you build inventory in advance of that? I don't think we've experienced one of those cycles yet. So how do you handle that? Tina Pierce: Yes. Actually, Metropolis was part of the turnaround in quarter 2. And so that's really an annualized process. We don't anticipate any more for this year. And yes, we do try to build some inventory in anticipation of that turnaround. Operator: Our next question today is coming from Hassan Ahmed from Alembic Global. Hassan Ahmed: Just wanted to sort of revisit the full year guidance again. I mean, from the sounds of it, you guys are obviously expecting a sequential decline in revenues Q2 to Q3. And obviously, then you have the nuclear repayment in Q4. It just seems that the EBITDA seems to be quite skewed for Q4 despite the nuclear element there and the like. So just trying to understand what gives you that confidence. I understand that the turnarounds are behind you guys and the like. But why are you expecting a Q4 to be, I guess, materially larger than Q3? Tina Pierce: Yes. Hassan, as I mentioned, it's really the growth in our electronics business and some of the capacity unlock in addition to just the volumes that we're seeing in that business. Safety and Defense, very light for quarter one. We knew that it was going to be stronger for the remainder of the year. And we do continue to expect good things from our refrigerants business. We now have lapped a full 12 months in terms of the 454B transition, but we're continuing to see growth. David talked about the data centers. So a lot of positive growth trends in that business as well. David Sewell: I would also add, we feel pretty good about some of the share gains that the team has executed on, and I think we'll start to see continued volume momentum in that area. Hassan Ahmed: Very helpful. And as a follow-up, I mean, obviously, a lot of macro uncertainty and volatility. How are you guys now thinking about sort of marketing for the permanent debt for the Element Solutions acquisition? Any sort of considerations around the time line? Tina Pierce: Yes. Well, we have a few windows. One would be in September and then kind of that October, November time frame and then, of course, first half. So we're going to be very opportunistic when we go to market. Operator: Our next question is coming from Arun Viswanathan from RBC Capital Markets. Arun Viswanathan: I guess my first question is just on electronics. You did see strong 15% growth there. Could you just elaborate a little bit on that? And I guess as a related point, I know you have the expansion going on at Spokane. So I guess maybe if you could provide some more details there, where are you on that? And I think you had previously mentioned that much of that was kind of spoken for. So is there an opportunity to continue to expand that facility? Or what can you offer on that side? David Sewell: Yes. Thanks, Arun. I appreciate the question. So if you look at our electronics business, it's really not only our sputtering targets, it's also our TIMs and heat spreaders. It's really strong across the board. To the point on our Spokane expansion, the reason for some of that elevated CapEx that we alluded to is because we're pulling in some of that to accelerate the expansion of Spokane because the demand is just so strong. So we will be -- we believe, increasing our output in the second half, which also goes to why we're more bullish on the second half of the year with our new guidance levels. So we feel great about that. And just the demand we're seeing in addition to accelerating the CapEx, we're already having initial discussions on are we going to need to do another expansion even beyond this. So the demand is just that strong for our copper manganese sputtering targets, which has really become the go-to product for leading-edge nodes. And so we are accelerating -- our customers are increasing their forecast multiple times over the last several months. And these forecasts go out multiple years. So we feel really good about the investments we're making in Spokane, and we'll continue to accelerate and expand capacity as quickly and safely as we possibly can. Arun Viswanathan: Great. And then just as a follow-up, I think the corporate came in a little bit lower than what we were expecting. How are you looking at that now for the full year? And have you guys -- is that a result of some optimization and productivity actions that you're taking? And do you see line of sight to more of those opportunities as well to reduce corporate expense? Or maybe you can just comment on that. Tina Pierce: Yes. So for the first half, the team has done an absolutely terrific job in terms of cost management of our corporate functions. Also, I'd say that we've -- as David mentioned in his opening comments, we've -- we're largely through the TSAs at this point. Second quarter was particularly heavy in that regard, but we have the most significant ones behind us at this point. As we look forward, we've said it's going to be roughly $60 million per quarter. Now with that being said, with the integration with ESI, we will obviously be looking at all of that spend and see if it's better spent and whether we can scale it in a much more significant way. But right now, we're forecasting at $60 million per quarter. But we're going to be very prudent in our cost in the second half as we were in the first half. Operator: Our next question is coming from Pete Osterland from Truist Securities. Peter Osterland: So first, I just wanted to ask about portfolio optimization. Are you actively exploring potential noncore divestitures? And are there any businesses in particular that might be noncore, but would be difficult to sell due to dis-synergies involved with the separation? I guess, broadly, how are you thinking about the portfolio at this stage? David Sewell: So Pete, thanks for the question. We -- when we spun out of Honeywell, we laid out a long-term strategic plan to our Board on the portfolio and being really a leader in these secular growth trends with a strong right to win and value proposition. And with that, the first step of that was the Advanced Electronics segment. We just felt so strongly about it and the new infrastructure that's needed around AI literally over the next decade plus. I mean we just see that growth so strong. And when you tie in our core capabilities around synthetic chemistry and our refrigerants business, our fluorine business and our electronics, we just think that, along with nuclear, just was such a great core for those secular growth trends. As we've talked about, we love the businesses we're in. We think it's a little premature to start talking about the portfolio, but we will certainly continue to optimize where we think it's appropriate as moving forward. But if you think about the financial profile of our company, where we want to go and really be a differentiated advanced materials company that's just so powerful in what we can provide our customers. We think we have a great portfolio that does that, but we'll certainly continue to look at optimizing in the future as any company would as you look forward. Michael Leithead: Pete, this is Mike. I would just add the one other caveat on top of what David said. Just as a reminder, as part of our tax-free spin-off from Honeywell late last year, there is some guardrails in the very near term around what we can do from a portfolio optimization standpoint. So just keep that in mind as well. Peter Osterland: Understood. And then just as a follow-up, you called out some raw material inflation baked into your expectations for the second half. Any specific inputs where inflation is most significant for you right now? And for which businesses are you seeing the greatest need to push through higher pricing in order to maintain your margins? David Sewell: Well, I would say -- I'll make a comment and certainly turn it over to Tina. We do pass through anything on our precious metals. So that's a straight pass-through. So as we see inflation in that area, we are able to pass that through to customers. Obviously, you see some core inflationary areas in diesel fuel, transportation. But I would say one of the biggest areas we're seeing inflation is sulfur in our refrigerants business. That has had an impact, but we -- the team has done a great job ensuring they're able to secure price to offset that inflation. Tina Pierce: And then yes, that's exactly right. I would say good execution in covering our price cost in second quarter, and we anticipate the same for the remainder of the year. Operator: We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mike for any further or closing comments. Michael Leithead: Great. Well, look, I really appreciate everybody joining us on quite a busy morning. If you need anything else or if you'd like to follow up, please reach out to myself or the Investor Relations inbox and always happy to spend some time to chat through it. So appreciate it, and have a good day. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today. Before you buy stock in Solstice Advanced Materials, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Solstice Advanced Materials wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $395,463!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,268,290!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by robust demand in nuclear energy, electronic materials, and refrigerants, with 6 of 7 businesses growing and 4 achieving double-digit rates. Management attributed the year-over-year margin decline to the timing of planned plant turnarounds and the absence of prior-year production incentive credits, rather than underlying demand weakness. The company is pivoting toward high-growth electronics and AI infrastructure, positioning itself to serve customers from early-stage development through high-volume manufacturing. Strategic reinvestment is being prioritized in Electronic Materials and Safety and Defense Solutions to align with attractive long-term demand outlooks for critical molecules. The pending Element Solutions acquisition is framed as a natural fit that combines Solstice's chemistry expertise with Element's formulation capabilities for next-generation solutions. Resilience was demonstrated through sound execution during macroeconomic volatility and the successful exit from the majority of transition service agreements (TSAs). Full-year 2026 guidance was raised based on strong first-half momentum and secular trends in AI, data centers, and semiconductor manufacturing. Management expects Refrigerants and Applied Solutions to deliver mid-30% adjusted EBITDA margins in the second half of 2026 as the HFO aftermarket develops. Capital expenditure guidance was increased to $420 million–$440 million to accelerate the Spokane facility expansion to meet robust sputtering target demand. The company anticipates rapid deleveraging to less than 3x EBITDA within 18 months following the close of the Element Solutions acquisition, expected in H1 2027. Nuclear performance in the third quarter is expected to be more modest due to the timing of final product loan returns and specific order patterns. A negative revenue impact of approximately $30 million is expected in the second half of 2026 from the final return of nuclear product loans, skewed toward the fourth quarter. Management noted ongoing construction market softness as a headwind for the Building Solutions and Intermediates subsegment, though they remain focused on LGWP solutions. Inflationary pressures were highlighted in sulfur for the refrigerants business, though the company has successfully implemented pricing to offset these costs. Tax-free spin-off guardrails from Honeywell currently limit immediate large-scale portfolio optimization or divestiture actions. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expressed confidence in mid-30% margins for the second half, noting that the North American HFO aftermarket has not yet fully kicked in, providing future upside. The transition from HFCs to HFOs is accelerating, which management views as a continued positive for volume and margin mix. Solstice is currently testing a next-generation yf molecule with promising results and has initiated early conversations with customers. Increased R&D spending is being directed toward 2-phase direct-to-chip and immersion cooling solutions for data centers. Engineering studies are exploring both brownfield and greenfield options, including a modular design to bring capacity online in stages. Management is encouraged by potential debottlenecking at the Metropolis facility that could take capacity beyond 10,000 metric tons. Customer discussions for long-term contracts extending into the mid-2030s are progressing well, supported by government interest in increasing nuclear capacity. Demand for copper manganese sputtering targets is so strong that customers are increasing forecasts multiple times, leading to accelerated CapEx to pull in expansion timelines. Management is already evaluating the need for a second expansion in Spokane beyond the current project due to multiyear AI and data center demand.

Image source: The Motley Fool. Thursday, July 30, 2026, at 8:30 a.m. ET Vice President, Investor Relations - Michael Leithead President and Chief Executive Officer - David Sewell Chief Financial Officer - Tina Pierce Operator: Greetings and welcome to the Solstice Advanced Materials Q2 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mike Leithead, Vice President, Investor Relations. Mike, please go ahead. Michael Leithead: Thank you, and good morning, everyone. Welcome to Solstice's Second Quarter 2026 Earnings Call. We released our second quarter 2026 financial results earlier this morning. Today's presentation, including non-GAAP reconciliations and our earnings press release are available on the Investor Relations portion of Solstice's website at investors.solstice.com. Our discussion today will include forward-looking statements that are based on our best view of the world and our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This includes statements regarding our pending acquisition of Element Solutions. Please see the additional disclosure in this morning's materials and our related SEC filings. Joining me today are David Sewell, our President and CEO; and Tina Pierce, our CFO. David will open today's call with highlights of our second quarter results. Tina will then review our segment performance and financial outlook before turning the call back to David for closing remarks. We will then be happy to take your questions. With that, I'll now turn the call over to David. David Sewell: Thank you, Mike, and thank you, everyone, for joining us today. During the second quarter, Solstice Advanced Materials again delivered strong top and bottom line results, reflecting ongoing robust demand trends across several of our key businesses, including nuclear energy, electronic materials, refrigerants and health care packaging. In fact, 6 of our 7 businesses grew this quarter, 4 of them at double-digit rates. I want to take a moment to thank our entire Solstice team whose execution this quarter speaks for itself. This performance demonstrates the strength of Solstice's portfolio, not only through our transition to a stand-alone company, but also in a dynamic macroeconomic environment. This quarter, that resilience showed up in sound execution through macroeconomic volatility, a heavier slate of planned plant turnarounds and the largely complete exit of our transition service agreements. Our Specialty Materials assets and balance sheet strength continue to set us apart in this industry, allowing us to reinvest in growth at a time when many in the industry have needed to pare back. We continue to invest in compelling growth areas aligned with our strategic priorities, such as our Electronic Materials, Safety and Defense Solutions and nuclear businesses, consistent with what we believe are attractive long-term outlooks for demand. That investment spans both CapEx and increased R&D spending as we advance the next generation of critical molecules for our customers. Together with our announced acquisition of Element Solutions, these high-return organic investments mark a clear acceleration of our growth strategy. We generated $461 million of operating cash in the first half, supported by disciplined working capital management, cash generation that funds our growth investments and supports returning cash to shareholders through our recently declared quarterly dividend. The strong cash generation of our business is what gives us confidence in the rapid deleveraging of net debt to less than 3x EBITDA that we anticipate within 18 months following the close of the Element Solutions acquisition. With our strong first half performance and continued momentum across the business, we are raising our full year 2026 guidance even against an uncertain macroeconomic backdrop. Turning to Slide 4. I'd like to briefly update you on our acquisition of Element Solutions, which we announced on July 6. This combination represents a significant acceleration of our strategy to build an industry-leading advanced materials platform with increased exposure to high-growth electronics, AI infrastructure and other attractive end markets. The same secular trends powering our results this quarter include artificial intelligence, data centers, semiconductor manufacturing and thermal management are precisely what makes this combination so compelling. Together, we believe we will be better positioned to serve electronics and AI infrastructure customers from early-stage development through high-volume manufacturing, while our refrigerant solutions, including data center cooling and our specialty positions such as nuclear remain core to the combined company. The logic here is grounded in what you are already seeing in our results. The customer expansion, secular demand and technical capability that are foundational to the strength of our business. Solstice and Element are a natural fit, not only because we support similar customer environments, but because of our complementary strengths. When you combine our chemistry expertise with Element's formulation capabilities, you get what we expect to be a leading platform for innovation that will fuel the development of next-generation solutions. With Element, we believe we will also be positioned to collaborate with customers early in their project life cycles to develop solutions purpose-built to support their objectives. The synergies we outlined in our investor materials about the transaction build directly on those drivers, which is why we have confidence in the value this creates. The transaction remains subject to shareholder and regulatory approvals and other customary closing conditions, and we expect it to close in the first half of 2027. We are very excited about what our 2 companies can build together. Turning to Slide 5. I'd like to discuss our second quarter 2026 consolidated results. In the second quarter of 2026, Solstice recorded $1.148 billion in net sales, up 11% year-over-year, which exceeded the top end of the guidance we provided for the quarter. In our Refrigerants & Applied Solutions segment, strong demand for refrigerants driven by the ongoing HFO transition and accelerating data center orders, together with continued strength in nuclear and a recovery in health care packaging drove double-digit top line growth for the segment. In our Electronic and Specialty Materials segment, net sales growth was driven by robust demand in our electronic materials business for semiconductor applications. Adjusted EBITDA for the second quarter of 2026 was $290 million, up 2% year-over-year and exceeding the top end of the guidance we provided for the quarter. Adjusted EBITDA margin was 25.3%, in line with our expectations for the quarter. The decline in margin year-over-year was primarily driven by the timing of certain plant turnaround activity and prior year production incentive credits, partially offset by volume growth and favorable pricing. As a reminder, we continue to see ongoing strong demand for our low global warming potential products. Now over a year into the 454B transition, we continue to expect our Refrigerants and Applied Solutions segment to deliver mid-30% adjusted EBITDA margins in the second half of 2026 as the aftermarket develops. We reported GAAP net income attributable to Solstice of $119 million for the second quarter of 2026, up from $97 million a year ago or $0.75 per diluted share. Consistent with what we signaled last quarter, noncontrolling interest declined sequentially to $15 million this quarter from the atypically high $20 million in the first quarter. This quarter, we also reported adjusted diluted EPS of $0.88 for the second quarter. Finally, free cash flow for the first half of 2026 was $248 million, which is inclusive of the significant year-over-year increase in growth CapEx as we invest in high-return opportunities across the business, including the Spokane expansion to meet robust sputtering target demand. And with that, I'll now turn it over to Tina Pierce, our CFO, to discuss our financial results for the second quarter in more detail. Tina Pierce: Thank you, David. Turning to Slide 6. I'd like to discuss in more detail the key drivers of our year-over-year net sales and adjusted EBITDA performance in the second quarter. Beginning with our net sales of $1.148 billion for the quarter. Organic net sales growth was approximately 11%, reflecting both volume growth and favorable pricing. This primarily reflects volume growth and favorable pricing in both nuclear and refrigerants as well as volume growth in Electronic Materials. Foreign currency translation was a modest tailwind of roughly 0.5 point. Turning to our adjusted EBITDA of $290 million for the quarter, up 2% versus the prior year period. Year-over-year improvement in ESM, together with a favorable corporate and stand-alone comparison, more than offset a decline in RAS, which is primarily attributable to the timing of certain plant turnaround activity and production incentive credits that David just discussed. Turning to Slide 7. I'll now discuss the results in each of our 2 segments in more detail, beginning with Refrigerants and Applied Solutions. Overall, the segment achieved $850 million in net sales for the second quarter of 2026, reflecting 12% growth year-over-year, driven by volume growth and favorable pricing across the business. The segment posted $280 million in adjusted EBITDA for the second quarter of 2026, down 6% year-over-year and adjusted EBITDA margin of 32.9%, down 648 basis points year-over-year. As mentioned previously, this decrease was primarily driven by the timing of plant turnaround activity and prior year production incentive credits, which more than offset volume growth and favorable pricing in the segment. Turning to the performance of our subsegments. Refrigerant net sales increased 13% year-over-year to $473 million, driven by both favorable pricing and volume growth across our product offerings. Beyond the 454 strength that David highlighted, data center orders remain robust again this quarter, underscoring how this business sits at the intersection of several key secular growth trends. Our nuclear business had $125 million in net sales, up 27% year-over-year, reflecting both favorable pricing and increased volumes. We are seeing positive momentum in this business, reinforced by new supply agreements with 3 small modular reactor developers. For the first time in decades, we are seeing meaningful innovation from entrepreneurs across the nuclear ecosystem. We remain excited about this differentiated business and the critical role we believe it will play in the nuclear renaissance now clearly taking shape. Building Solutions and Intermediates net sales were $180 million, down 1% year-over-year. Continued construction market softness weighed on the subsegment, but we remain focused on advancing our LGWP solutions and maintaining disciplined operational execution to ensure we are well positioned to serve our customers upon a return to more normalized demand in key end markets. Lastly, for Healthcare Packaging, net sales were $73 million, up 24% year-over-year. The increase was driven by a recovery in customer demand patterns following the destocking we saw in the second half of 2025 as well as favorable net pricing. Now turning to our Electronic and Specialty Materials segment on Slide 8. The segment achieved $298 million in net sales for the second quarter of 2026, reflecting 8% growth year-over-year, driven by volume growth in Electronic Materials. The segment posted $64 million in adjusted EBITDA for the second quarter of 2026, up 24% year-over-year and adjusted EBITDA margin of 21.6%, up 280 basis points year-over-year. The increase was primarily driven by volume growth in Electronic Materials and productivity improvements. Looking at the performance of our subsegments, Electronic Materials net sales increased 15% year-over-year to $119 million, driven by volume growth and robust customer demand across semiconductor applications. We were also recently recognized with the top supplier award from SK Hynix, a strong external validation of the strength of our technology and execution. As David noted, we are expanding electronic materials capacity to meet AI and data center-driven semiconductor demand, which we see as a significant multiyear opportunity for Solstice. Safety and Defense Solutions had $43 million in net sales, up 7% year-over-year. As we anticipated last quarter, the business returned to growth driven by non-Armor applications, and we continue to invest in capacity expansion to support long-term market demand for our Spectra line of solutions. Finally, Research and Performance Chemicals net sales increased 3% year-over-year to $135 million with growth in Fine Chemicals, partially offset by ongoing end market softness in Specialty Additives. Moving to Slide 9 to discuss Solstice's balance sheet and capital management. Our strong balance sheet, cash flow generation and conservative leverage position continue to enable financial flexibility and fuel Solstice's many attractive growth investments. I would like to start with cash, with Solstice generating $461 million of operating cash flow in the first half of the year. In addition to healthy earnings generation, we were able to execute strong working capital management, reducing our dollar inventory despite the healthy increase in revenue and rising input costs. Our capital expenditures for the first half were $186 million, a 32% increase compared to the prior year period due to planned increases in capital spending to drive long-term growth in high-return areas of the business. As a reminder, beyond the electronic materials expansion in Spokane, we are actively investing in our Spectra ballistic fibers expansion in Virginia as well as advancing further expansion of our nuclear conversion business. As we work through debottlenecking at our Metropolis facility, we are exploring attractive incremental opportunities that we believe can take capacity beyond 10,000 metric tons, and we expect to share more later this year. Turning to our capital structure. We have maintained a conservative leverage profile and strong liquidity position. As of June 30, 2026, our total debt was approximately $2 billion, and we had cash and cash equivalents of $750 million, resulting in net debt of approximately $1.25 billion and a net leverage ratio of approximately 1.3x based on a trailing 12-month adjusted EBITDA. As of June 30, 2026, we also had $1 billion of availability under our revolving credit facility. Combined with the cash on our balance sheet, this results in approximately $1.75 billion of total liquidity. As David mentioned earlier, we announced on July 17, approval of a quarterly dividend of $0.075 per share, in line with last quarter, which will be payable on September 10 to shareowners of record as of August 27. We continue to view returning excess capital to shareholders as a key piece of our overall capital allocation approach. This same balance sheet strength is what allows us to finance the Element Solutions transaction from a position of discipline. We have structured the acquisition to preserve our current credit rating profile and our cash generation supports a clear path back to our target leverage in the periods following close. Turning to Slide 10. I'd like to discuss our outlook and financial guidance for both the full year and the third quarter of 2026. Importantly, we did what we said we would do during this quarter, delivering above the range we set and converting that into strong cash generation. This kind of execution is the foundation for the confidence we are expressing today, both in raising our full year outlook and in our continued ability to drive growth. For the full year 2026, we now expect to deliver net sales between $4.125 billion and $4.185 billion, adjusted EBITDA between $1.035 billion and $1.055 billion and adjusted diluted earnings per share between $2.75 and $2.95. Additionally, we now expect capital expenditures between $420 million and $440 million. Today, we are also providing guidance for the third quarter of 2026 as we want to help investors better understand our business and our first year as a public company. In the third quarter, we expect to deliver net sales between $990 million and $1.03 billion. Our outlook for the third quarter assumes continued momentum in refrigerants and Electronic Materials and more modest nuclear performance, reflecting the timing of final product loan returns and order patterns with consistent margin performance. A few additional modeling points for the second half. We expect a negative revenue of approximately $30 million from the final return of nuclear product loans skewed modestly toward the fourth quarter. I'd now like to pass it back over to David for some closing remarks. David Sewell: Thank you, Tina, and please turn to Slide 11. With strong performance in the first half and solid momentum heading into the remainder of the year, we are well positioned to deliver on our full year 2026 guidance. As we discussed today, we are seeing continued strong demand in our businesses that serve key end markets aligned with secular growth trends, including artificial intelligence, data centers, semiconductor manufacturing and nuclear energy and thermal management. These are core strategic areas for Solstice where we have both a clear right to play and right to win. Solstice is a strong growing business today with durable pricing power, high returns on capital and robust free cash flow. We are putting that cash flow to work with disciplined reinvesting in our businesses, both in terms of expanding our R&D pipeline as well as high-return growth CapEx while returning excess capital to shareholders through our quarterly dividend. Our pending acquisition of Element Solutions builds on that momentum, accelerating a strategy that is already working. We are energized by both delivering on our current business quarter after quarter and bringing these 2 companies together to create even more value. We have work well underway to develop an integration road map to seamlessly bring our businesses together after this transaction closes in order to unlock the compelling opportunities we see ahead for our combined company. We remain excited about the significant opportunities ahead in 2026 and beyond. We look forward to sharing additional updates throughout the year. And with that, we are now happy to take your questions. Operator: [Operator Instructions] Our first question today is coming from Kevin McCarthy from Vertical Research Partners. Matthew Hettwer: This is Matt Hettwer on for Kevin McCarthy. Congrats on the nice quarter. And in Refrigerants, how do you see sales and EBITDA growth unfolding in the back half of the year? And what kind of margin impact do you expect from incremental unit sales given the transition to HFO? David Sewell: Thanks, Matt. What we talked about for our refrigerants business is continued sequential margin expansion. I think we talked about mid-30s for the second half of the year, which we feel very confident in. We talked about some of the margin impacts in second quarter. With that behind us, we see the margin expansion continuing. We did have sequential margin expansion in refrigerants in Q2 over Q1. And from a volume standpoint, we feel very confident in continued strong demand for our refrigerants. We're actually seeing a little bit of an acceleration to HFOs from HFCs, which we think is a continued positive. And for the most part, the aftermarket for HFOs in North America has not kicked in yet. So that's additional upside that we see moving forward. Matthew Hettwer: And then as a follow-up, maybe you could discuss how your development of next-generation non-PFAS refrigerant molecules is progressing? David Sewell: So we're doing a lot of work on next-generation yf molecule, and we're really excited about the development that we have. We're currently in testing that looks very promising, and we have already begun conversations with customers on this as well. Part of the refrigerants that Tina talked about on the margins, we did increase our R&D spend earlier this year. And a big chunk of that is going to the next-generation yf molecule as well as next-generation molecules in development for things like 2-phase direct-to-chip, immersion cooling. So we feel really well positioned to continue to innovate in next generation. Operator: Our next question today is coming from Josh Spector from UBS. Joshua Spector: I just wanted to ask about the second half guidance. So you gave sales but not EBITDA for 3Q. So I'm not sure why you didn't give that, just considering we don't have a ton of history. So can you help us either with a specific kind of range for 3Q EBITDA or a way to think about phasing just given the moving parts here? Tina Pierce: Josh, yes, the reason is that our margins have been very consistent throughout 2026. We've got now one quarter and second quarter as well as the full year guidance. But I would just say that the way we look at it is our margin rate has been right around that 25% range. David Sewell: So Josh, you could probably just back into it with low 25% margin range with that revenue. Tina Pierce: With the revenue range that we guided. David Sewell: Yes. Joshua Spector: And you expect that consistent 3Q and 4Q then? David Sewell: We do -- we are -- as we've talked about, we do expect to see sequential growth in our margins as we move forward. But we're -- as we come off the TSAs and some of the other aspects, we don't anticipate that changing, but I would anticipate small sequential growth in our margin expansion. Joshua Spector: Okay. And if I could just ask a follow-up on refrigerants. I mean you noted data center growth. I'm just curious, are you at a point now where you could talk about the exposure there in terms of how much of refrigerant sales are exposed to data centers, what the growth is? And is that outside the data center cooling? Or is this liquid cooling inside that's driving some of the upside there? David Sewell: So our data center cooling, it's still a smaller piece of our overall refrigerants, which is why we just haven't broken it out. However, saying that, it's the fastest-growing aspect of our refrigerants business. It's growing strong double digits. Most of that is still in standard cooling that we do in data centers, chillers. The work we're doing in things like 2-phase and immersion cooling is really to be coming in the future. But the expansive growth of data centers and the technology we have in our refrigerants for data centers is really compelling, and that's why we're seeing such tremendous growth. Operator: Our next question is coming from John McNulty from BMO Capital Markets. John McNulty: Congrats on some solid results. So I wanted to dig into the RAS margins. Admittedly, they came in a little lighter than we expected in 2Q and yet you're looking for mid-30s in the back half. And that, I think, comes despite that uranium loan giveback. So I guess, can you help unpack the 2Q maybe coming in a little bit on the lighter side and how you get to those mid-30 margins even with that loan giveback, which I would think is at least a little bit of a drag. Tina Pierce: Yes. So John, first off, we did have -- as we had signaled in quarter one, we did have very heavy plant turnarounds in the quarter. Good news is all sites are back up and operating well. We did have one campaign that did shift from second quarter to the second half, and there is an absorption benefit from that shift. And then we also had some production incentive credit timing, as David alluded. So last year, in second quarter, we secured some of these incentives, and it was a cumulative impact in second quarter of last year, which made for some difficult comps for this year. Going forward, that will be more linear as we recognize each of it each quarter. I would say that second quarter was our most significant outage quarter. We tend not to do that much during the summer months when it's extremely warm. We'll have some more minor planned outages in the fall of the year, but not to the same scale as what we had in second quarter. And then as David mentioned, we do anticipate being mid-30s for the second half of this year. John McNulty: Okay. Fair enough. And then I guess maybe just as a follow-up on the nuclear platform. I know the EPC work, you're not expecting to kind of have any major announcements until kind of the late fall, early winter. But I guess, can you help us to understand if you're maybe leaning toward either brownfield versus greenfield? And also, any potential updates around either support from the federal government and/or support that you may be seeing from your customers? David Sewell: Yes, John, good question. And you hit on the key 3 areas which the team is working extremely hard on. So if you take the first question on the engineering work, that's progressing extremely well. And whether it's a brownfield or greenfield, I would also add, and I think Tina alluded to it briefly in her comments, because of the debottlenecking work we're doing this year to get to that 10,000-plus tons, we're really encouraged that there may be the potential to do additional debottlenecking in Metropolis. So I think you'll see more information coming out on additional debottlenecking. And then on a brownfield versus greenfield, it's -- we're right in the heat of all the analysis and where that's going to come out. One of the things we're also looking at is kind of a modular design, bringing in capacity at certain stages. So I think we'll have more for you in the next few months exactly where that's coming in. But I would tell you, there's just an enormous amount of work going on. And directionally, I think we'll be able to give you a lot more information when the study is completed over the next few months. But we're very encouraged by everything we've seen. On parts 2 and 3 of your question, our customer discussions to secure longer-term contracts well into the mid-2030s is going very well. We're really encouraged by the reception we've had from customers because they fully understand the need for us to secure that volume to commit to the build, and they want us to do this. They love our experience with a 60-year history of working with them, the confidence that we can start up a new facility quickly. So that's going extremely well. And then the last piece on the government discussions, really encouraged by the feedback we're getting from the Department of Energy and NRC and across the government because you know the passion the current administration has to increase nuclear capacity, and they are certainly wanting to continue the partnership that we have with them as we move forward with the potential expansion. So -- when we look at all 3 of the levers, we feel great about all of them as we move forward. And I think we'll be able to share more over the next few months. Operator: Our next question is coming from John Roberts from Mizuho Securities. John Ezekiel Roberts: It looks like the revenue guide for the September quarter and the December quarter are roughly the same, but the nuclear payback is skewed to the fourth quarter, and I think refrigerants is normally seasonally lower. So why would the revenue be similar between the 2 quarters? Tina Pierce: Well, yes, in terms of how we're looking at the second half of the year, as you mentioned, quarter 2 does tend to be the largest quarter for refrigerants. Nuclear, there was a little bit of timing of the orders, a little bit lighter in the second half due to the loan repayments that we mentioned. Electronics, though, we're seeing continued growth there. And also, we're starting to see some of the capacity unlock in the second half of the year. And then as we mentioned in last quarter's call, our Safety and Defense business, we were flat in quarter one, and we anticipated that, that would pick up through the remainder of the year. So those [indiscernible] the good thing is there's really no assumed significant improvement in our construction businesses as well. John Ezekiel Roberts: Okay. And then since you were talking about maintenance downtime in the first half, I assume Metropolis was not part of the maintenance downtime, but maybe I'm wrong there. When is the next Metropolis planned maintenance downtime? And do you build inventory in advance of that? I don't think we've experienced one of those cycles yet. So how do you handle that? Tina Pierce: Yes. Actually, Metropolis was part of the turnaround in quarter 2. And so that's really an annualized process. We don't anticipate any more for this year. And yes, we do try to build some inventory in anticipation of that turnaround. Operator: Our next question today is coming from Hassan Ahmed from Alembic Global. Hassan Ahmed: Just wanted to sort of revisit the full year guidance again. I mean, from the sounds of it, you guys are obviously expecting a sequential decline in revenues Q2 to Q3. And obviously, then you have the nuclear repayment in Q4. It just seems that the EBITDA seems to be quite skewed for Q4 despite the nuclear element there and the like. So just trying to understand what gives you that confidence. I understand that the turnarounds are behind you guys and the like. But why are you expecting a Q4 to be, I guess, materially larger than Q3? Tina Pierce: Yes. Hassan, as I mentioned, it's really the growth in our electronics business and some of the capacity unlock in addition to just the volumes that we're seeing in that business. Safety and Defense, very light for quarter one. We knew that it was going to be stronger for the remainder of the year. And we do continue to expect good things from our refrigerants business. We now have lapped a full 12 months in terms of the 454B transition, but we're continuing to see growth. David talked about the data centers. So a lot of positive growth trends in that business as well. David Sewell: I would also add, we feel pretty good about some of the share gains that the team has executed on, and I think we'll start to see continued volume momentum in that area. Hassan Ahmed: Very helpful. And as a follow-up, I mean, obviously, a lot of macro uncertainty and volatility. How are you guys now thinking about sort of marketing for the permanent debt for the Element Solutions acquisition? Any sort of considerations around the time line? Tina Pierce: Yes. Well, we have a few windows. One would be in September and then kind of that October, November time frame and then, of course, first half. So we're going to be very opportunistic when we go to market. Operator: Our next question is coming from Arun Viswanathan from RBC Capital Markets. Arun Viswanathan: I guess my first question is just on electronics. You did see strong 15% growth there. Could you just elaborate a little bit on that? And I guess as a related point, I know you have the expansion going on at Spokane. So I guess maybe if you could provide some more details there, where are you on that? And I think you had previously mentioned that much of that was kind of spoken for. So is there an opportunity to continue to expand that facility? Or what can you offer on that side? David Sewell: Yes. Thanks, Arun. I appreciate the question. So if you look at our electronics business, it's really not only our sputtering targets, it's also our TIMs and heat spreaders. It's really strong across the board. To the point on our Spokane expansion, the reason for some of that elevated CapEx that we alluded to is because we're pulling in some of that to accelerate the expansion of Spokane because the demand is just so strong. So we will be -- we believe, increasing our output in the second half, which also goes to why we're more bullish on the second half of the year with our new guidance levels. So we feel great about that. And just the demand we're seeing in addition to accelerating the CapEx, we're already having initial discussions on are we going to need to do another expansion even beyond this. So the demand is just that strong for our copper manganese sputtering targets, which has really become the go-to product for leading-edge nodes. And so we are accelerating -- our customers are increasing their forecast multiple times over the last several months. And these forecasts go out multiple years. So we feel really good about the investments we're making in Spokane, and we'll continue to accelerate and expand capacity as quickly and safely as we possibly can. Arun Viswanathan: Great. And then just as a follow-up, I think the corporate came in a little bit lower than what we were expecting. How are you looking at that now for the full year? And have you guys -- is that a result of some optimization and productivity actions that you're taking? And do you see line of sight to more of those opportunities as well to reduce corporate expense? Or maybe you can just comment on that. Tina Pierce: Yes. So for the first half, the team has done an absolutely terrific job in terms of cost management of our corporate functions. Also, I'd say that we've -- as David mentioned in his opening comments, we've -- we're largely through the TSAs at this point. Second quarter was particularly heavy in that regard, but we have the most significant ones behind us at this point. As we look forward, we've said it's going to be roughly $60 million per quarter. Now with that being said, with the integration with ESI, we will obviously be looking at all of that spend and see if it's better spent and whether we can scale it in a much more significant way. But right now, we're forecasting at $60 million per quarter. But we're going to be very prudent in our cost in the second half as we were in the first half. Operator: Our next question is coming from Pete Osterland from Truist Securities. Peter Osterland: So first, I just wanted to ask about portfolio optimization. Are you actively exploring potential noncore divestitures? And are there any businesses in particular that might be noncore, but would be difficult to sell due to dis-synergies involved with the separation? I guess, broadly, how are you thinking about the portfolio at this stage? David Sewell: So Pete, thanks for the question. We -- when we spun out of Honeywell, we laid out a long-term strategic plan to our Board on the portfolio and being really a leader in these secular growth trends with a strong right to win and value proposition. And with that, the first step of that was the Advanced Electronics segment. We just felt so strongly about it and the new infrastructure that's needed around AI literally over the next decade plus. I mean we just see that growth so strong. And when you tie in our core capabilities around synthetic chemistry and our refrigerants business, our fluorine business and our electronics, we just think that, along with nuclear, just was such a great core for those secular growth trends. As we've talked about, we love the businesses we're in. We think it's a little premature to start talking about the portfolio, but we will certainly continue to optimize where we think it's appropriate as moving forward. But if you think about the financial profile of our company, where we want to go and really be a differentiated advanced materials company that's just so powerful in what we can provide our customers. We think we have a great portfolio that does that, but we'll certainly continue to look at optimizing in the future as any company would as you look forward. Michael Leithead: Pete, this is Mike. I would just add the one other caveat on top of what David said. Just as a reminder, as part of our tax-free spin-off from Honeywell late last year, there is some guardrails in the very near term around what we can do from a portfolio optimization standpoint. So just keep that in mind as well. Peter Osterland: Understood. And then just as a follow-up, you called out some raw material inflation baked into your expectations for the second half. Any specific inputs where inflation is most significant for you right now? And for which businesses are you seeing the greatest need to push through higher pricing in order to maintain your margins? David Sewell: Well, I would say -- I'll make a comment and certainly turn it over to Tina. We do pass through anything on our precious metals. So that's a straight pass-through. So as we see inflation in that area, we are able to pass that through to customers. Obviously, you see some core inflationary areas in diesel fuel, transportation. But I would say one of the biggest areas we're seeing inflation is sulfur in our refrigerants business. That has had an impact, but we -- the team has done a great job ensuring they're able to secure price to offset that inflation. Tina Pierce: And then yes, that's exactly right. I would say good execution in covering our price cost in second quarter, and we anticipate the same for the remainder of the year. Operator: We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mike for any further or closing comments. Michael Leithead: Great. Well, look, I really appreciate everybody joining us on quite a busy morning. If you need anything else or if you'd like to follow up, please reach out to myself or the Investor Relations inbox and always happy to spend some time to chat through it. So appreciate it, and have a good day. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today. Before you buy stock in Solstice Advanced Materials, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Solstice Advanced Materials wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,081!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,166,221!* Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Solstice Advanced Materials (SOLS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Honeywell Technologies (NASDAQ:HON) used to be one giant company that made everything from thermostats to jet engines. Not anymore. Over the past year, it split into three separate public companies: Solstice Advanced Materials, spun off last October; Honeywell Aerospace, spun off just last month; and Honeywell Technologies, the automation business that's left, which is what CEO Vimal Kapur now runs. This week's earnings report was the first one for Honeywell Technologies as its own standalone firm, and the stock jumped more than 5% on the news. Since the aerospace spinoff only finished right at the end of the quarter, this report still includes some of Honeywell Aerospace's results mixed in, which makes straight comparisons tricky. Total revenue, including that leftover aerospace piece, came in at $9.72 billion, up 4% from a year ago and beating the roughly $9.5 billion analysts expected. Strip aerospace back out, and revenue for just the automation business was $5.19 billion, up 3%, beating the $5.02 billion Wall Street had modeled specifically for the smaller, standalone company. On profit, adjusted earnings per share, including the leftover aerospace results came in at $4.52, actually down 4% from $4.72 a year earlier. On a standalone basis without aerospace, adjusted earnings were $1.95 a share, up 10% from $1.77 a year ago and beating the $1.82 analysts expected for the new, smaller Honeywell Technologies. There was also a one-time boost: net profit under standard accounting rules hit $5.68 billion, largely because of a $6.63 billion one-time accounting gain tied to deconsolidating Quantinuum, Honeywell's quantum computing venture, a separate transaction from the aerospace spin-off, not from the actual operating business doing better. That raises a real question. Is this a genuinely strong first quarter as a standalone firm, or does the messy, one-time nature of a spinoff quarter make it hard to tell what Honeywell Technologies (NASDAQ:HON) actually looks like going forward? All three of Honeywell's remaining automation segments grew organically, and orders for the standalone business overall grew 16%, with backlog reaching about $20 billion. Building Automation was the standout, with organic sales up 9% and orders up 13%, driven by strong demand from data centers and hotels. Industrial Automation grew sales 4% organically on strong demand for sensing and measurement equipment. Process Automation, the one segment with sales down slightly this quarter, actually saw orders surge 24%, with Middle East orders alone up more than 50% on refurbishment projects, and management expects a "sharp inflection" in that segment's growth starting in the third quarter. Kapur said the results reflect a "year-plus long process to simplify our business," and that the benefits are already showing up. On the strength of the quarter, management raised its full-year guidance across the board: organic growth guidance moved from 2-3% to 3-4%, segment margin guidance from 19.8-20.3% to 20.1-20.5%, and adjusted earnings growth from 22-28% to 25-29%. Full-year sales guidance in dollar terms actually came down slightly, from $19.9-20.2 billion to $19.8-20.0 billion, which the company said shows selling off two smaller businesses faster than originally planned, not weaker demand, and those two divestitures are expected to close by early August. The new guidance also shows Honeywell Technologies (NASDAQ:HONA)’s acquisition of Johnson Matthey's Catalyst Technologies business, which closed July 17. CNBC's Jim Cramer Investing Club, which owns the stock, raised its price target to $275 from $250 after the report. READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. Some of the good news comes with a real concern. The consolidated adjusted earnings figure, $4.52 a share, was actually down 4% from a year ago. This shows that the older parts of the business being sold off are still dragging down its total earnings during this transition. Full-year sales guidance in dollar terms also did go down, and while the explanation is faster divestitures rather than weaker demand, investors won't get full clarity on that until those business sales actually close in early August. Process Automation's sales still fell this quarter, and the promised turnaround is a forecast for the third quarter, not something that's happened yet. Kapur was also direct that the firm’s full-year outlook assumes the Iran war doesn't get worse and doesn't disrupt supply chains any further, a real risk given how unpredictable that conflict has been. Also, Honeywell Aerospace, the newly spun-off sister company whose results still partly bled into this report, missed estimates and fell about 6% the same day. It is a reminder that not every piece of the old Honeywell empire is performing well right now. As a brand-new standalone stock, Honeywell Technologies (NASDAQ:HON) also doesn't have much of its own independent trading history yet, which adds a layer of uncertainty to any valuation. Insider Monkey's hedge fund database still lists the older, pre-split "Honeywell International" entity, since the Honeywell Aerospace spinoff only completed after the most recent filing period. That data shows 75 hedge funds holding the stock at the end of Q1 2026, down from 79 the quarter before, with the dollar value held falling from $3.85 billion to $3.55 billion. Because that reflects the old, larger conglomerate rather than the new, smaller automation-only business, it's a useful signal of general sentiment heading into the split, but not a clean read on how funds view Honeywell Technologies specifically. That data won't exist until funds file positions in the new, standalone stock. We also haven't seen any insider purchases since 2019. Honeywell Technologies (NASDAQ:HON)'s first quarter as a standalone company beat what Wall Street expected for the new, smaller business, and orders and backlog both point to real demand ahead, not just a one-time accounting boost. But this is also a transition quarter, with leftover aerospace results, a one-time spinoff gain, and lowered dollar sales guidance all making it harder than usual to judge the underlying business cleanly. The clearest test comes next quarter, the first one with no aerospace numbers mixed in at all, when investors finally get to see what Honeywell Technologies looks like entirely on its own. While we acknowledge the risk and potential of HON as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HON and that has 10,000% upside potential, check out our report about this cheapest AI stock. READ NEXT: 10 Undervalued Aerospace and Defense Stocks to Buy and Space Exploration Technologies Corp. (SPCX) Stock Just Lost $1 Trillion in a Month. Is the Selloff a Buying Opportunity or a Warning? Disclosure: None.

Net Sales of $1,148 million up 11% YoY reflecting double-digit growth in Nuclear, Electronic Materials, Refrigerants, and Healthcare Packaging Net Income attributable to Solstice Advanced Materials of $119 million, Diluted Earnings per Share (EPS) of $0.75, and Adjusted diluted EPS1 of $0.88 Adjusted EBITDA 1 of $290 million, with Adjusted EBITDA Margin 1 of 25.3% Operating Cash Flow for the six months ended June 30, 2026 of $461 million, Free Cash Flow1 of $248 million Company raises Full-Year 2026 Guidance; now expects Net Sales of $4,125 - $4,185 million, Adjusted EBITDA1 of $1,035 - $1,055 million, and Adjusted Diluted Earnings per Share (EPS)1 of $2.75 - $2.95 MORRIS PLAINS, N.J., July 30, 2026 /PRNewswire/ -- Solstice Advanced Materials (Nasdaq: SOLS) ("Solstice" or "the Company"), a global leader in high-performance specialty materials, today reported financial results for the second quarter of 2026. "Solstice delivered strong second-quarter results with double-digit growth across four of our seven reported businesses," said David Sewell, President and Chief Executive Officer. "We are executing well on our organic growth strategy while positioning for the future: our agreement to acquire Element Solutions accelerates our strategy to build a scaled advanced materials platform aligned with the most powerful trends in our markets, including AI, data centers, nuclear energy, and semiconductor manufacturing." Net Sales in the second quarter of 2026 were $1,148 million, an 11% increase compared to the second quarter of 2025, reflecting a 12% increase in Net Sales in the Refrigerants & Applied Solutions segment and an 8% increase in Net Sales in the Electronic & Specialty Materials segment. Organic Net Sales1 increased by 11% in the second quarter of 2026 driven by both volume growth and favorable pricing. Net Income attributable to Solstice Advanced Materials in the second quarter of 2026 was $119 million, compared to Net Income attributable to Solstice Advanced Materials of $97 million in the second quarter of 2025. The increase was primarily driven by higher Net Sales and lower income taxes partially offset by higher standalone company operating costs and net interest expense. Adjusted EBITDA1,2 for the second quarter of 2026 was $290 million, a 2% increase compared to the second quarter of 2025. Adjusted EBITDA Margin1,2 for the second quarter of 2026 decreased 218 basis points to 25.3%. Adjusted EBITDA Margin1,2 was impacted by timing of plant turnaround activity and production incentive credits in the prior year, partially offset by volume growth and favorable pricing. Financial Position Operating Cash Flow for the six months ended June 30, 2026 was $461 million. Capital Expenditures3 for the six months ended June 30, 2026 were $186 million, a 35% increase compared to the prior-year period due to planned increases in capital spending intended to drive long-term growth. Free Cash Flow1 for the six months ended June 30, 2026 was $248 million. As of June 30, 2026, the Company's Total Long-Term Debt was $2.0 billion and Cash and Cash Equivalents were approximately $750 million. As a result, the Company's Net Leverage ratio was approximately 1.3x based on a trailing twelve-month Adjusted EBITDA1. Total liquidity was approximately $1.75 billion, including Cash and Cash Equivalents and $1.0 billion of availability through the Company's revolving credit facility. Capital Deployment The Company announced on July 17, 2026, that the Board of Directors declared a quarterly dividend of $0.075 per share of common stock outstanding, payable on September 10, 2026, to shareowners of record as of August 27, 2026. Announced acquisition of Element Solutions On July 6, 2026, Solstice announced that it had entered into a definitive agreement to acquire Element Solutions in a cash-and-stock transaction. The transaction is subject to shareholder and regulatory approvals and other customary closing conditions and is expected to close in the first half of 2027. Segment HighlightsRefrigerants & Applied Solutions (RAS) Net Sales for the Refrigerants & Applied Solutions segment were $850 million in the second quarter of 2026, up 12% compared to the second quarter of 2025. Net Sales in Refrigerants increased 13% in the second quarter of 2026 compared to the second quarter of 2025, reflecting strong volume and pricing across the business' product offerings. Nuclear revenues increased 27% in the second quarter of 2026 compared to the second quarter of 2025, reflecting both favorable pricing and increased volumes. Net Sales in Healthcare Packaging improved 24%, as customer demand patterns recovered following destocking in the second half of 2025. Segment Adjusted EBITDA for the Refrigerants & Applied Solutions segment decreased 6% in the second quarter of 2026 compared to the second quarter of 2025. Segment Adjusted EBITDA Margin for the segment decreased 648 basis points compared to the second quarter of 2025. The decrease was primarily driven by timing of current year plant turnaround activity and production incentive credits in the prior year. These decreases were partially offset by volume growth and favorable pricing. The Company continues to expect this segment to generate mid-30% Adjusted EBITDA Margins in the second half of 2026. Electronic & Specialty Materials (ESM) Net Sales for the Electronic & Specialty Materials segment were $298 million in the second quarter of 2026, up 8% compared to the second quarter of 2025. Growth was primarily driven by a 15% increase in Electronic Materials reflecting increased volume on robust customer demand across the semiconductor market. Safety & Defense Solutions sales increased 7% compared to the prior year, reflecting stronger order patterns. Research & Performance Chemicals sales grew 3% on demand for fine chemicals. Segment Adjusted EBITDA for the Electronic & Specialty Materials segment increased 24% in the second quarter of 2026 compared to the second quarter of 2025, primarily driven by volume growth in Electronic Materials. Segment Adjusted EBITDA Margin for the segment increased 280 basis points compared to the second quarter of 2025. Corporate Expenses Corporate Expenses totaled $54 million in the second quarter of 2026, compared to $46 million in the second quarter of 2025 due to incremental ongoing costs necessary to operate as an independent public company. There were no standalone cost adjustments in the second quarter of 2026, compared to $21 million in the second quarter of 2025, which was prior to the separation from Honeywell on October 30, 2025. Income Tax Expense Income Tax Expense was $42 million in the second quarter of 2026, a decrease of $59 million compared to the second quarter of 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to the Spin-off from Honeywell in the prior-year period. Effective tax rates were 24% and 51% for the second quarters of 2026 and 2025, respectively. 2026 Financial Outlook "Our strong first-half performance gives us confidence to raise our full-year outlook, even against an uncertain macroeconomic backdrop," said David Sewell, President and Chief Executive Officer. "We remain focused on disciplined execution across our current business and on completing our acquisition of Element Solutions." The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) or Adjusted diluted Earnings per Share to GAAP net income (loss) attributable to Solstice Advanced Materials, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because deductions (such as repositioning charges, transaction costs, impairment charges, and litigation and other matters) used to calculate projected net income (loss) vary based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP) or Adjusted Net Income attributable to Solstice (non-GAAP). These statements represent forward-looking information and a projected financial outlook, and actual results may vary. Please see the risks and assumptions referred to in the "Forward-Looking Statements" section of this news release. The guidance in this news release is only effective as of the date it is given and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance. Conference Call Details Solstice will discuss its second quarter results during an investor conference call starting at 8:30 a.m. Eastern Time today. A live webcast of the investor call as well as related presentation materials will be available on the Investor Relations section of the Company's website, investor.solstice.com. The teleconference can be accessed by dialing 877-407-8029 (North America toll-free) or +1 201-689-8029 (international). A replay of the webcast will be available shortly after the call concludes and will be available for 30 days following the presentation. About Solstice Advanced Materials Solstice Advanced Materials is a leading global specialty materials company that advances science for smarter outcomes. Solstice offers high-performance solutions that enable critical industries and applications, including refrigerants, semiconductor manufacturing, data center cooling, nuclear power, protective fibers, healthcare packaging and more. Solstice is recognized for developing next-generation materials through some of the industry's most renowned brands such as Solstice®, Genetron®, Aclar®, Spectra®, Fluka™ and Hydranal™. Partnering with over 3,000 customers across more than 120 countries and territories and supported by a robust portfolio of over 5,700 patents and pending applications, Solstice's approximately 4,100 employees worldwide drive innovation in materials science. For more information, visit www.Solstice.com. Forward-Looking Statements This news release 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, our industry, and with respect to our proposed acquisition of Element Solutions Inc ("Element Solutions") 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, financial performance, or with respect to the proposed acquisition of Element Solutions. 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 news release 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: risks and uncertainties around the Company's proposed acquisition of Element Solutions, including the risk that the anticipated benefits and synergies of the transaction may not be realized when expected or at all, that the terms and scope of the expected financing in connection with the transaction may prove to be less favorable than currently expected, that the transaction may not be completed in a timely matter or at all, the risk that disruptions from the proposed acquisition will harm our business, including current plans and operations, and the risk of litigation related to the transaction; 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, including the proposed acquisition of Element Solutions, or complete potential divestitures; our joint ventures and strategic co-development partnerships; our ability to recruit and retain qualified personnel; potential material environmental liabilities; the hazardous nature of chemical manufacturing; decommissioning and remediation expenses and regulatory requirements; potential material litigation matters, including disputes related to the spin off ("the Spin-off") from Honeywell International Inc. ("Honeywell"); 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 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 the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections included in our Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 19, 2026, our Quarterly Reports on Form 10-Q, and other documents we may file from time to time with the SEC. These risks could cause actual results to differ materially from those implied by forward-looking statements in this release. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by securities or other applicable law. We give no assurance that we will achieve our expectations. 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 release, those results or developments may not be indicative of results or developments in subsequent periods. Non-GAAP Financial Measures The Company uses 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, (3) Adjusted EBITDA Margin, (4) Adjusted Standalone EBITDA, (5) Adjusted Standalone EBITDA margin, (6) Adjusted Net Income attributable to Solstice, (7) Adjusted diluted EPS, (8) Free cash flow, (9) Net debt, (10) Total leverage ratio, and (11) Net leverage ratio. 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. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Standalone EBITDA, and Adjusted Standalone 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. The Company defines Adjusted Standalone EBITDA as Adjusted EBITDA less, for fiscal year 2025, estimated recurring and ongoing costs required to operate a new independent public company, and autonomous entity adjustments as well as adjustments for certain other employee compensation expense for employees that have historically been shared with other Honeywell businesses and were transferred to the Company in connection with the spin-off. The Company defines Adjusted Standalone EBITDA Margin as Adjusted Standalone 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. Adjusted net income attributable to Solstice and Adjusted diluted EPS: The Company defines Adjusted net income attributable to Solstice as Net income attributable to Solstice Advanced Materials excluding the after-tax impact - based on the tax rates by jurisdiction, net of discrete items - of amortization of acquired intangibles, remeasurement of foreign currencies, 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. We believe Adjusted net income attributable to Solstice is useful to investors as it provides greater transparency with respect to supplemental information used by management in its financial and operational decision making, as well as in understanding ongoing operational trends. The Company defines Adjusted diluted EPS as Adjusted net income attributable to Solstice divided by diluted weighted average shares outstanding to reflect shares that are dilutive or anti-dilutive based on the amount of Adjusted net income attributable to Solstice. The weighted average common shares outstanding used to calculate Adjusted diluted earnings (loss) per share will differ from such shares used to calculate diluted earnings (loss) per share (GAAP) when the inclusion of dilutive shares has an anti-dilutive effect for one calculation but not for the other. We believe Adjusted diluted EPS is useful to investors as it provides greater transparency with respect to supplemental information used by management in its financial and operational decision making, as well as in understanding ongoing operational trends. Free cash flow: The Company defines free cash flow as net cash provided by operating activities less net capital expenditures. Net capital expenditures include capital expenditures paid less proceeds from the disposals of property, plant, and equipment. We believe this measure is useful to investors and management as a measure of cash generated by operations that can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock, or repay debt obligations prior to their maturities. This measure can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity. Net debt, total leverage ratio and net leverage ratio: The Company defines net debt as total debt less cash. The Company defines total leverage ratio as total debt divided by Adjusted EBITDA. The Company defines net leverage ratio as net debt divided by Adjusted EBITDA. For purposes of showing total leverage ratio and net leverage ratio, we use Adjusted Standalone EBITDA instead of Adjusted EBITDA. We believe these measures are useful to investors and management in understanding our overall financial condition. View original content to download multimedia:https://www.prnewswire.com/news-releases/solstice-advanced-materials-reports-second-quarter-2026-results-302838290.html

Interested in Solstice Advanced Mat? Here are five stocks we like better. Solstice Advanced Materials exceeded Q2 guidance, with sales up 11% year over year to $1.148 billion and adjusted EBITDA rising 2% to $290 million. Growth was driven by refrigerants, nuclear energy, electronic materials and healthcare packaging. The company raised its full-year 2026 outlook to $4.125 billion-$4.185 billion in sales and $1.035 billion-$1.055 billion in adjusted EBITDA, while continuing capacity expansions in semiconductors, nuclear conversion and ballistic fibers. Solstice expects its pending Element Solutions acquisition to close in the first half of 2027, expanding exposure to electronics, AI infrastructure, semiconductor manufacturing and thermal management; the deal remains subject to shareholder and regulatory approvals. This New Spinoff Is a Nuclear and AI Chip Beneficiary Worth Watching Solstice Advanced Mat (NASDAQ:SOLS) reported second-quarter results that exceeded its prior guidance range, supported by demand in refrigerants, nuclear energy, electronic materials and healthcare packaging. The company also raised its full-year outlook as it continues to invest in capacity expansions and pursues its pending acquisition of Element Solutions. Net sales rose 11% year over year to $1.148 billion in the second quarter, while adjusted EBITDA increased 2% to $290 million. Adjusted EBITDA margin was 25.3%, with margins affected by planned plant turnarounds and the absence of prior-year production incentive credits. GAAP net income attributable to Solstice increased to $119 million, or $0.75 per diluted share, from $97 million a year earlier. Adjusted diluted earnings per share were $0.88. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “Six of our seven businesses grew this quarter, four of them at double-digit rates,” President and CEO David Sewell said, citing demand trends in nuclear energy, electronic materials, refrigerants and healthcare packaging. Refrigerants and Applied Solutions generated $850 million in second-quarter sales, up 12% from a year earlier. Adjusted EBITDA for the segment declined 6% to $280 million, and its 32.9% margin fell 648 basis points. Chief Financial Officer Tina Pierce said the year-over-year decline primarily reflected the timing of plant turnaround activity and production incentive credits recorded in the prior-year period. Refrigerant sales rose 13% to $473 million, driven by higher pricing and volumes across product offerings, including R-454B products and data-center cooling applications. Nuclear sales increased 27% to $125 million, reflecting increased volumes and favorable pricing. The company also signed new supply agreements with three small modular reactor developers. Building solutions and intermediates sales declined 1% to $180 million as construction-market softness continued. Healthcare packaging sales rose 24% to $73 million, following a recovery in customer demand after destocking in the second half of 2025 and favorable pricing. → 3 Value ETFs to Consider as Growth Stocks Lag Behind Electronic and Specialty Materials reported sales of $298 million, up 8% year over year, led by volume growth in electronics. Segment adjusted EBITDA increased 24% to $64 million, while adjusted EBITDA margin expanded 280 basis points to 21.6% on higher volumes and productivity improvements. Electronic materials sales grew 15% to $119 million, which management attributed to demand across semiconductor applications. Sewell said the company is accelerating an expansion in Spokane to increase output of copper manganese sputtering targets, which are used in leading-edge semiconductor nodes. He said customers have increased their multiyear forecasts and that Solstice has begun considering capacity expansion beyond the current Spokane project. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? Safety and defense solutions sales rose 7% to $43 million, driven by non-armor applications. Research and performance chemicals sales increased 3% to $135 million, as growth in bind chemicals partly offset softness in specialty additives. Solstice generated $461 million of operating cash flow during the first half of 2026 and $248 million of free cash flow, including increased investment in growth capital expenditures. First-half capital expenditures rose 32% from a year earlier to $186 million. The company is expanding electronic materials capacity in Spokane, ballistic fiber capacity in Virginia, and its nuclear conversion operations. Pierce said Solstice is conducting debottlenecking work at its Metropolis facility and is evaluating opportunities to raise capacity beyond 10,000 metric tons. As of June 30, Solstice had approximately $2 billion of total debt and $750 million of cash, resulting in about $1.25 billion of net debt and net leverage of roughly 1.3 times trailing 12-month adjusted EBITDA. It also had $1 billion available under its revolving credit facility, for total liquidity of about $1.75 billion. The company declared a quarterly dividend of $0.075 per share, payable Sept. 10 to shareholders of record as of Aug. 27. Solstice raised its full-year 2026 guidance and now expects: Net sales of $4.125 billion to $4.185 billion. Adjusted EBITDA of $1.035 billion to $1.055 billion. Adjusted diluted EPS of $2.75 to $2.95. Capital expenditures of $420 million to $440 million. For the third quarter, Solstice forecast net sales of $990 million to $1.03 billion. Management did not provide a specific EBITDA range, but Pierce said margins have been near 25% during 2026, while Sewell indicated investors could use a low-25% margin range with the company’s revenue outlook. Management expects modest sequential margin improvement through the second half. In Refrigerants and Applied Solutions, Sewell said Solstice expects adjusted EBITDA margins in the mid-30% range in the second half as major turnaround activity moves behind the company. He said North American aftermarket demand for HFO refrigerants has not yet fully developed, representing potential future upside. The company expects approximately $30 million of negative revenue in the second half from final returns of nuclear product loans, weighted modestly toward the fourth quarter. Management said continued electronics growth, capacity additions, improving safety and defense volumes, refrigerant demand and share gains support its confidence in the second-half outlook. Solstice announced its planned acquisition of Element Solutions on July 6. Sewell said the combination is intended to expand the company’s exposure to electronics, artificial intelligence infrastructure, semiconductor manufacturing and thermal-management markets by pairing Solstice’s chemistry capabilities with Element’s formulation expertise. The deal remains subject to shareholder and regulatory approvals and other customary closing conditions, with closing expected in the first half of 2027. Solstice expects to reduce net debt to less than three times EBITDA within 18 months after the transaction closes. Pierce said the company will be opportunistic in accessing permanent debt markets, identifying potential financing windows in September, October-November and the first half of 2027. Solstice Advanced Materials is a leading global specialty materials company that advances science for smarter outcomes. Solstice offers high-performance solutions that enable critical industries and applications, including refrigerants, semiconductor manufacturing, data center cooling, nuclear power, protective fibers, healthcare packaging and more. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Solstice Advanced Mat Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Solstice Advanced Materials (SOLS) moved into focus after releasing second quarter 2026 results, updating guidance, and outlining financing tied to its planned Element Solutions acquisition, giving investors several fresh data points to assess. See our latest analysis for Solstice Advanced Materials. At a share price of $57.39, Solstice Advanced Materials has a 1-day share price return of 3.11% after the earnings beat and raised guidance, yet the 30-day share price return is down 35.23%. This means recent weakness contrasts with a still positive year to date share price return of 16.46%. If you are weighing Solstice Advanced Materials against other opportunities, this could be a good moment to scan the market for stronger setups using our screener for 29 best rare earth metal stocks Bulls point to Solstice Advanced Materials’ earnings beat, higher guidance, and analyst target gap. Bears focus on the sharp recent share price slide and acquisition related debt. Which side does the current valuation appear to support more strongly? The most followed narrative currently values Solstice Advanced Materials at $87.67 per share compared with the last close of $57.39, which is a wide gap that puts the recent earnings beat and guidance update in a different light. Read the complete narrative. Read the complete narrative. Want to see what sits behind that return target? The core of this narrative is how revenue, margins and earnings are expected to evolve together. Curious which growth and profitability assumptions need to hold for Solstice Advanced Materials to reach that fair value. Result: Fair Value of $87.67 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Solstice Advanced Materials still faces the risk that higher Nuclear and Electronic Materials volumes, or stronger HFO refrigerant margins, could shift earnings well beyond current assumptions. Find out about the key risks to this Solstice Advanced Materials narrative. The earlier narrative points to a fair value of $87.67, which frames Solstice Advanced Materials as undervalued at $57.39. On simple P/E, the picture is very different. The stock trades on 48.5x earnings compared with 27.3x for peers, 25.2x for the US Chemicals industry and a fair ratio of 23.5x. That is a wide premium for investors to weigh. For a closer look at how this earnings based view stacks up against the market, and what the gap might mean for valuation risk, See what the numbers say about this price — find out in our valuation breakdown. With mixed signals around Solstice Advanced Materials in the recent numbers and narratives, it makes sense to move quickly, review the underlying data, and decide what stands out most to you by weighing its 3 key rewards and 2 important warning signs. Do not stop with Solstice Advanced Materials. The same tools that surfaced this opportunity can help you spot other stocks that fit the kind of portfolio you want to build. Target high quality companies trading below what their fundamentals may justify by checking the 57 high quality undervalued stocks. Prioritize resilience and capital protection by scanning the 89 resilient stocks with low risk scores before the next wave of investors catches on. Get ahead of the crowd by reviewing the screener containing 20 high quality undiscovered gems that may not yet be widely followed but show solid underlying metrics. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SOLS. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strong top and bottom line results with net sales up 11% year over year to $1.148 billion, exceeding guidance. Six of seven businesses grew in Q2, with four achieving double-digit growth, driven by nuclear energy, electronic materials, refrigerants, and healthcare packaging. Robust demand in electronic materials for semiconductor applications, with 15% net sales growth and a top supplier award from SK Hynix. Nuclear business net sales increased 27% year over year, supported by new supply agreements with three small modular reactor developers. Raised full-year 2026 guidance for net sales, adjusted EBITDA, and adjusted diluted EPS, reflecting confidence in continued momentum. Strong cash generation with $461 million operating cash flow in the first half, supporting growth investments and shareholder dividends. Pending acquisition of Element Solutions expected to accelerate growth strategy in electronics and AI infrastructure, with rapid deleveraging anticipated. Refrigerants business benefiting from HFO transition and accelerating data center orders, with mid-30% EBITDA margins expected in the second half. Healthcare packaging net sales up 24% year over year, recovering from prior destocking with favorable net pricing. Safety and Defense Solutions returned to growth with 7% net sales increase, driven by non-armor applications and capacity expansion. Adjusted EBITDA margin declined to 25.3% from prior year due to plant turnaround timing and prior year production incentive credits. Refrigerants and Applied Solutions segment adjusted EBITDA down 6% year over year, with margin falling 648 basis points. Building solutions and intermediate net sales down 1% year over year due to continued construction market softness. Planned plant turnarounds in Q2 impacted production and margins, with one campaign shifted to the second half. Raw material inflation, particularly in sulfur for refrigerants, required pricing actions to offset cost pressures. Nuclear performance expected to be more modest in Q3 due to timing of final product returns and order patterns. Negative revenue impact of approximately $30 million expected from final return of nuclear product lines in the second half. Corporate expenses remain elevated at roughly $60 million per quarter, though largely through transition service agreements. Pending Element Solutions acquisition subject to shareholder and regulatory approvals, with close not expected until first half of 2027. Macroeconomic uncertainty and volatility pose risks to demand in certain end markets, such as construction. Warning! GuruFocus has detected 3 Warning Sign with SOLS. Is SOLS fairly valued? Test your thesis with our free DCF calculator. Q: How do you see sales and EBITDA growth unfolding in the back half of the year for refrigerants, and what kind of margin impact do you expect from incremental unit sales given the transition to HFOs?A: (David Sewell, President and CEO) We expect continued sequential margin expansion, with mid-30% margins for the second half of the year. We feel very confident in this, as the margin impacts from Q2 are behind us. We are seeing a slight acceleration from HFCs to HFOs, and the aftermarket for HFOs in North America has not yet kicked in, representing additional upside. Q: Can you discuss how your development of next-generation non-PFAS refrigerant molecules is progressing?A: (David Sewell, President and CEO) We are doing a lot of work on the next-generation YF molecule and are very excited about the development. We are currently in testing, which looks very promising, and have already begun conversations with customers. A big chunk of our increased R&D spend is going to this, as well as next-generation molecules for things like two-phase directed chip immersion cooling. Q: Can you help unpack the Q2 RAS margins, which came in lighter than expected, and how you get to mid-30% margins in the back half despite the uranium loan giveback?A: (Tina Pierce, CFO) Q2 had a very heavy plant turnaround schedule, as signaled in Q1. All sites are back up and operating well. One campaign shifted from Q2 to the second half, providing an absorption benefit. We also had production incentive credit timing, as last year's Q2 had a cumulative impact that made for difficult comps. Q2 was our most significant outage quarter; we will have minor planned outages in the fall, but not on the same scale. Q: On the nuclear platform, can you help us understand if you are leaning toward brownfield versus greenfield for the expansion, and any updates on support from the federal government or customers?A: (David Sewell, President and CEO) The engineering work is progressing extremely well. We are encouraged by the potential for additional debottlenecking at Metropolis to get beyond 10,000 tons. We are in the heat of analysis on brownfield versus greenfield and are also looking at a modular design. Customer discussions to secure long-term contracts into the mid-2030s are going very well. We are also really encouraged by feedback from the Department of Energy and NRC, as the current administration is passionate about increasing nuclear capacity. Q: The revenue guide for Q3 and Q4 are roughly the same, but the nuclear payback is skewed to Q4 and refrigerants is normally seasonally lower. Why would revenue be similar between the two quarters?A: (Tina Pierce, CFO) While Q2 is typically the largest quarter for refrigerants and nuclear orders are a bit lighter in the second half due to loan repayments, we are seeing continued growth in electronics and some capacity unlocking in the second half. Our safety and defense business, which was flat in Q1, is picking up. There is no assumed significant improvement in our construction businesses. Q: On electronics, you saw strong 15% growth. Could you elaborate on that and provide more details on the Spokane expansion?A: (David Sewell, President and CEO) The strength is across the board, including sputtering targets and T's and heat spreaders. We are pulling in some CapEx to accelerate the Spokane expansion because demand is so strong. We believe we will increase output in the second half. We are already having initial discussions on whether we will need another expansion beyond this, as demand for copper manganese sputtering targets is that strong. Customers are increasing their multi-year forecasts multiple times. Q: Are you actively exploring potential non-core divestitures, and how are you thinking about the portfolio at this stage?A: (David Sewell, President and CEO) When we spun out of Honeywell, we laid out a long-term strategic plan to be a leader in secular growth trends. We love the businesses we are in, and it is a little premature to start talking about the portfolio. We will continue to optimize where appropriate, but we think we have a great portfolio. (Mike Leadhead, VP of IR) As a caveat, part of our spinoff from Honeywell includes some guardrails in the very near term around what we can do from a portfolio optimization standpoint. Q: You called out some raw material inflation. Any specific inputs where inflation is most significant, and for which businesses are you seeing the greatest need to push through higher pricing?A: (David Sewell, President and CEO) We pass through precious metals costs directly. One of the biggest areas of inflation is sulfur in our refrigerants business, but the team has done a great job securing price to offset that. (Tina Pierce, CFO) We had good execution in covering price/cost in Q2 and anticipate the same for the remainder of the year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.