Solstice shares fall 7% despite Q3 profit beat and raised forecast

Solstice Advanced Materials (SOLS) shares fell 6.6% in regular-session trading as of 3:59 p.m. ET on Nov. 4, from a regular-session close of $61.74.

Solstice Advanced Materials (SOLS) said in its press release that net sales rose 8% from a year earlier to $1.05 billion, in line with the $1.04 billion consensus estimate. Adjusted diluted earnings per share were 80 cents, topping the 71-cent consensus estimate.

Solstice sells materials for refrigerants, semiconductor manufacturing, data center cooling, nuclear power and healthcare packaging. It serves more than 3,000 customers in more than 120 countries and territories.

Here's how the company did:

• Adjusted diluted EPS: 80 cents, vs. 71 cents expected
• Diluted EPS (GAAP): 50 cents, vs. a loss of 22 cents a year earlier
• Net sales: $1.05 billion, vs. $969 million a year earlier and $1.04 billion expected
• Adjusted EBITDA: $265 million, up 13% from a year earlier

Net income attributable to Solstice Advanced Materials was $80 million, compared with a loss of $35 million in the third quarter of 2025. The company said the increase was primarily driven by higher net sales and lower income taxes, partly offset by higher interest expense.

Adjusted EBITDA margin rose 109 basis points to 25.3%, the company said.

Segment results

The Refrigerants & Applied Solutions segment reported net sales of $726 million, up 6% from a year earlier. Refrigerants sales rose 8%, reflecting strong demand across automotive and data center applications.

Segment adjusted EBITDA rose 3%, while its margin fell 82 basis points to 34.5%, due in part to higher R&D investment.

The Electronic & Specialty Materials segment reported record quarterly net sales of $320 million, up 13%. Electronic Materials sales rose 31%, on demand for sputtering targets and thermal solutions in memory and AI-related applications.

Segment adjusted EBITDA rose 44% in the segment, the company said.

2026 guidance

The company raised its full-year net sales forecast to $4.20 billion to $4.22 billion, from $4.13 billion to $4.19 billion previously. It raised its adjusted diluted EPS forecast to $2.90 to $2.95, from the $2.75 to $2.95 range it gave on July 30. Capital expenditures are unchanged at $420 million to $440 million.

For the fourth quarter, the company expects net sales of $1.01 billion to $1.04 billion and adjusted diluted EPS of 57 to 62 cents.

"Our strong business performance year-to-date gives us confidence to raise our full-year outlook for the second consecutive quarter," said David Sewell, President and Chief Executive Officer. "Our team remains focused on operational excellence and disciplined capital deployment to deliver long-term value for shareowners."

Cash and capital returns

Operating cash flow was $693 million for the first nine months of 2026. Capital expenditures were $325 million, up 31%, and free cash flow was $368 million.

In the third quarter the company repurchased 1.7 million shares for $100 million under a $500 million authorization approved on Aug. 27. It intends to substantially complete the program by the end of the first quarter of 2027.

The board declared a quarterly dividend of 7.5 cents per share, payable Dec. 10 to shareowners of record as of Nov. 25.

As of Sept. 30, total long-term debt was $2.0 billion and cash was $714 million. Net leverage was 1.3 times, and total liquidity was about $1.7 billion.

Revenue has risen in each of the last three quarters, from $969 million in the third quarter of 2025 to $1.15 billion in the second quarter of 2026, according to its SEC filings.

Costs and charges

Interest and other financial charges were $60 million, including $34 million of amortization and write-off of fees tied to a bridge loan facility and backstop revolving credit facility for the terminated merger with Element Solutions Inc. Transaction-related costs were $31 million.

Income tax expense was $24 million, a decrease of $158 million from a year earlier, when the company recorded frictional taxes tied to its spin-off from Honeywell International Inc.