Solstice Raises 2026 Guidance as Q3 Sales Rise 8%

Solstice Advanced Materials Inc. raised its full-year 2026 guidance for the second consecutive quarter after higher sales in electronic materials, refrigerants and healthcare packaging lifted third-quarter revenue and adjusted EBITDA. The company also outlined plans to accelerate share repurchases while continuing to invest in capacity expansion.

For the quarter ended Sept. 30, Solstice reported net sales of $1.046 billion, up 8% from $969 million a year earlier. Organic sales increased 8.3%, with volume accounting for most of the growth and foreign-exchange movements providing a smaller benefit.

Net income attributable to Solstice was $80 million, or $0.50 per diluted share, compared with a net loss of $35 million, or $0.22 per share, in the prior-year period. Adjusted diluted earnings were $0.80 per share.

Adjusted EBITDA rose 13% to $265 million from adjusted standalone EBITDA of $235 million a year earlier. The adjusted EBITDA margin increased to 25.3% from an adjusted standalone margin of 24.3%, reflecting sales growth and operating leverage. The current-period measure reflects Solstice’s actual independent operations, while the prior-year result included adjustments intended to show the business on a standalone basis.

Electronic Materials Leads Segment Growth

Electronic & Specialty Materials recorded third-quarter sales of $320 million, up 13%, as all three businesses in the segment grew. Adjusted EBITDA increased 44% to $68 million, and the segment margin expanded to 21.2% from 16.7%.

Electronic Materials sales climbed 31% to $135 million, driven by demand for sputtering targets and thermal solutions used in memory and artificial-intelligence-related applications. Solstice said its ongoing sputtering-target capacity expansion also contributed to the performance. Safety & Defense Solutions sales increased 3% to $54 million, while Research & Performance Chemicals rose 4% to $131 million.

Solstice estimates that data-center-related products will generate about 6% of its 2026 revenue, with sales growing more than 50% year over year. The category includes roughly $100 million of refrigerant sales and more than $150 million from electronic products such as thermal interface materials, heat spreaders, sputtering targets and electronic polymers.

Refrigerants and Healthcare Packaging Offset Other Softness

Refrigerants & Applied Solutions sales rose 6% to $726 million. Adjusted EBITDA increased 3% to $251 million, although the margin declined 82 basis points to 34.5%, partly because of higher research and development spending. The margin was 160 basis points above the second quarter of 2026, in line with the company’s previously stated expectations.

Refrigerants sales increased 8% to $433 million as automotive and data-center demand helped offset residential softness. Healthcare Packaging revenue advanced 24% to $61 million. Nuclear sales rose 4% to $66 million and included about $30 million in estimated sales value from previously disclosed product-loan returns. Building Solutions & Intermediates revenue fell 5% to $167 million.

The company’s nuclear backlog reached $2.6 billion at the end of the quarter, up about 20% year over year, with contracts extending through 2039. Solstice expects annual production at its Metropolis facility to exceed 10,000 metric tons in 2026 and sees a path to an additional 1,000 to 2,000 metric tons through debottlenecking. Any larger expansion remains subject to expected investment returns, further customer commitments and updated project-cost estimates.

Full-Year Outlook Raised

Solstice now expects 2026 net sales of $4.195 billion to $4.220 billion, compared with its previous range of $4.125 billion to $4.185 billion. Adjusted EBITDA is projected at $1.050 billion to $1.060 billion, versus the earlier $1.035 billion to $1.055 billion range. Adjusted diluted EPS is expected to be $2.90 to $2.95, compared with the previous forecast of $2.75 to $2.95.

Capital expenditure guidance remains unchanged at $420 million to $440 million. The company does not provide GAAP reconciliations for forward-looking adjusted EBITDA or adjusted EPS because some potential adjustments cannot be forecast with reasonable certainty.

For the fourth quarter, management expects sales of $1.010 billion to $1.035 billion, adjusted EBITDA of $246 million to $256 million and adjusted diluted EPS of $0.57 to $0.62. The outlook assumes a stable macroeconomic environment. Solstice expects continued momentum in Electronic Materials, while refrigerant portfolio breadth is expected to mitigate residential weakness. Fourth-quarter nuclear revenue is anticipated to decline slightly year over year because of shipment timing, but full-year nuclear revenue is projected to rise 10% to 15%, including the product-loan returns.

Cash Generation Supports Investment and Repurchases

Operating cash flow totaled $693 million for the first nine months of 2026, while capital expenditures were $325 million and non-GAAP free cash flow was $368 million. Investments supported multiyear capacity projects in Electronic Materials, Safety & Defense Solutions and Nuclear.

At Sept. 30, Solstice held $714 million in cash and cash equivalents against about $2 billion of debt. Net debt was $1.25 billion, and the non-GAAP net leverage ratio declined to 1.3 times from 1.5 times at the end of 2025. Total liquidity stood at $1.7 billion.

The company repurchased $100 million of shares during the third quarter and intends to substantially complete the remaining $400 million under its authorization by the end of the first quarter of 2027. It also pays a quarterly dividend of $0.075 per share.

Solstice identified uncertainty around macroeconomic conditions, inflation, tariffs, raw-material availability, regulation, foreign exchange, hazardous manufacturing operations and the execution of expansion projects. Management also does not expect interest-rate-sensitive housing and construction markets to improve during 2026. Raw-material costs are expected to be modestly inflationary, with the company planning to offset them through pricing.