Solstice Advanced Materials Inc 10-Q for FY2026 Q1
Solstice Advanced Materials Inc. (SOLS)
10-Q
2026-05-06
For: 2026-03-31
View Original
Added on
May 06, 2026
About this 10-Q
Solstice Advanced Materials Inc filed this 10-Q on May 6, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $991M
- up 10.5% from $897M a year earlier
- Net income
- $85M
- down 36.6% from net income of $134M a year earlier
- Diluted EPS
- $0.53
- down 37.6% from $0.85 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
__________________
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___to __
Commission file number 001-42812
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer | ||||||||||||||||
incorporation or organization) | Identification No.) | ||||||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||||
( | |||||||||||||||||
| (Registrant’s telephone number, including area code) | |||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | |||||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 158,804,273 of the Registrant’s common shares outstanding at April 29, 2026.
TABLE OF CONTENTS
| Cautionary Statement Concerning Forward-Looking Statements | ||||||||
| Part I | Financial Information | |||||||
| Item 1 | FINANCIAL STATEMENTS (UNAUDITED) | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) | ||||||||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | ||||||||
| Note 1. Business Overview and Basis of Presentation | ||||||||
| Note 2. Summary of Significant Accounting Policies | ||||||||
| Note 3. Related Party Transactions | ||||||||
| Note 4. Revenue Recognition and Contracts with Customers | ||||||||
| Note 5. Income Taxes | ||||||||
| Note 6. Inventories | ||||||||
| Note 7. Goodwill and Other Intangible Assets – Net | ||||||||
| Note 8. Debt | ||||||||
| Note 9. Fair Value Measurements | ||||||||
| Note 10. Stock-Based Compensation Plans | ||||||||
Note 11. Shareowners’ Equity | ||||||||
Note 12. Earnings Per Share | ||||||||
| Note 13. Investments | ||||||||
| Note 14. Commitments and Contingencies | ||||||||
| Note 15. Segment Financial Data | ||||||||
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||||
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | |||||||
| Item 4 | Controls and Procedures | |||||||
| Part II | Other Information | |||||||
| Item 1 | Legal Proceedings | |||||||
| Item 1A | Risk Factors | |||||||
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
| Item 3 | Defaults Upon Senior Securities | |||||||
| Item 4 | Mine Safety Disclosures | |||||||
| Item 5 | Other Information | |||||||
| Item 6 | Exhibits | |||||||
| Signatures | ||||||||
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 and our industry 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 or financial performance. 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 report 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:
•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 or complete potential divestitures;
•our joint ventures and strategic co-development partnerships;
•our ability to recruit and retain qualified personnel;
•potential material environmental liabilities;
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•the hazardous nature of chemical manufacturing;
•decommissioning and remediation expenses and regulatory requirements;
•potential material litigation matters, including disputes related to the Spin-off (as defined herein);
•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 International Inc. (“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 Part II. Item 1A. “Risk Factors” and Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”), as may be updated from time to time in our Securities and Exchange Commission (“SEC”) filings. These risks could cause actual results to differ materially from those implied by forward-looking statements in this report. 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 report, those results or developments may not be indicative of results or developments in subsequent periods. Solstice does not undertake to update or revise any of its forward-looking statements, which speak only as of the date they are made, except as may be required by law or regulation.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share amounts)
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Product sales1 | $ | $ | |||||||||||||||||||||
Service sales | |||||||||||||||||||||||
Net sales | |||||||||||||||||||||||
Costs, expenses and other | |||||||||||||||||||||||
Cost of products sold2 | |||||||||||||||||||||||
Cost of services sold | |||||||||||||||||||||||
Total cost of products and services sold | |||||||||||||||||||||||
Research and development expenses | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
| Transaction-related costs | |||||||||||||||||||||||
Other expense (income) | ( | ( | |||||||||||||||||||||
Interest and other financial charges | |||||||||||||||||||||||
Total costs, expenses and other | |||||||||||||||||||||||
Income before taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
Net income attributable to Solstice Advanced Materials | $ | $ | |||||||||||||||||||||
| Basic earnings per share | $ | $ | |||||||||||||||||||||
| Diluted earnings per share | $ | $ | |||||||||||||||||||||
| Weighted average number of common shares outstanding - basic | |||||||||||||||||||||||
| Weighted average number of common shares outstanding - diluted | |||||||||||||||||||||||
__________________
1.Product sales include related party product sales of $16 million and $13 million for the three months ended March 31, 2026 and 2025, respectively.
2.Cost of products sold include related party cost of products sold of $5 million and $6 million for the three months ended March 31, 2026 and 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
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SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in millions)
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Net income | $ | $ | |||||||||||||||||||||
Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
Foreign exchange translation adjustment | ( | ||||||||||||||||||||||
Pension and other postretirement benefit adjustments | ( | ||||||||||||||||||||||
Cash flow hedges recognized in other comprehensive income | ( | ||||||||||||||||||||||
Less: Reclassification adjustment for gains included in net income | ( | ||||||||||||||||||||||
Changes in fair value of cash flow hedges | ( | ||||||||||||||||||||||
Total other comprehensive (loss) income, net of tax | ( | ||||||||||||||||||||||
Comprehensive income | $ | $ | |||||||||||||||||||||
The Notes to the Consolidated Financial Statements are an integral part of this statement.
4
SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions, except per share amounts)
| As of | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowances of $ | |||||||||||
Inventories | |||||||||||
Product loans receivable, current2 | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment – net | |||||||||||
Goodwill | |||||||||||
Intangible assets – net | |||||||||||
Deferred income taxes | |||||||||||
| Equity method investments | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES | |||||||||||
Current liabilities: | |||||||||||
Accounts payable3 | $ | $ | |||||||||
| Current portion of long-term debt | |||||||||||
Product loans payable, current2 | |||||||||||
| Finance lease liabilities, current | |||||||||||
Accrued and other liabilities, current4 | |||||||||||
Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Product loans payable, noncurrent | |||||||||||
| Finance lease liabilities, noncurrent | |||||||||||
Other noncurrent liabilities | |||||||||||
Total liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
EQUITY | |||||||||||
Common stock (par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
Total Solstice Advanced Materials shareowners’ equity | |||||||||||
| Noncontrolling interest | ( | ( | |||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ | |||||||||
__________________
1.Accounts receivable include related party receivables of $40 million and $45 million as of March 31, 2026 and December 31, 2025, respectively.
2.Product loans receivable, current include related party loans receivables of $184 million and $178 million as of March 31, 2026 and December 31, 2025, respectively.
3.Accounts payable include related party accounts payables of $6 million and $2 million as of March 31, 2026 and December 31, 2025, respectively.
4.Accrued and other liabilities, current include related party payables of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
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SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | |||||||||||
| Amortization | |||||||||||
| Equity income of affiliated companies | ( | ( | |||||||||
| Gain on sale of fixed assets | ( | ||||||||||
Stock-based compensation expense | |||||||||||
| Other non-cash adjustments | ( | ||||||||||
| Changes in assets and liabilities | |||||||||||
Accounts receivable1 | ( | ( | |||||||||
| Inventories | ( | ||||||||||
| Other assets | |||||||||||
Accounts payable2 | ( | ( | |||||||||
Accrued and other liabilities, current3 | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Deferred income and customer advances | |||||||||||
Other liabilities, noncurrent | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures paid | ( | ( | |||||||||
| Proceeds from disposals of property, plant, and equipment | |||||||||||
Capitalized software | ( | ||||||||||
Net cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
Dividends | ( | ||||||||||
| Finance lease payments | ( | ( | |||||||||
| Net transfers to Parent | ( | ||||||||||
Net cash used for financing activities | ( | ( | |||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | |||||||||||
Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
__________________
1.Includes decrease in short term related party receivables of $5 million and $8 million for the three months ended March 31, 2026 and 2025, respectively.
2.Includes increase in related party accounts payables of $4 million and $1 million for the three months ended March 31, 2026 and 2025, respectively.
3.Includes increase in related party accrued liabilities of $2 million and $2 million for the three months ended March 31, 2026 and 2025, respectively.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
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SOLSTICE ADVANCED MATERIALS INC.
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(Dollars in millions, except per share amounts)
Common Stock1 | Additional Paid-in Capital | Net Parent Investment | Accumulated Other Comprehensive Loss | Retained Earnings | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Foreign exchange translation adjustment | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Changes in fair value of cash flow hedges | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Foreign exchange translation adjustment | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Pension and other postretirement benefit adjustments | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Changes in fair value of cash flow hedges | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net transfers to Parent | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
__________________
1.See Note 11 - Shareowners’ Equity of the Notes to the Consolidated Financial Statements for a rollforward of common stock.
The Notes to the Consolidated Financial Statements are an integral part of this statement.
7
SOLSTICE ADVANCED MATERIALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in tables in millions, unless otherwise noted)
Note 1. Business Overview and Basis of Presentation
About the Business
Solstice Advanced Materials Inc. (“Solstice,” the “Business” or the “Company”) is a global specialty chemicals and advanced materials company with leading positions in refrigerants, semiconductor materials, protective fibers, and healthcare packaging. Prior to October 30, 2025, the Company was wholly owned by Honeywell International Inc. (“Honeywell” or “Parent”).
On October 8, 2024, Honeywell announced its plan to spin off its Advanced Materials business into an independent, U.S. publicly traded company through a pro rata distribution of all of the outstanding common shares of Solstice Advanced Materials to Honeywell shareowners (the “Spin-off”) that would be tax-free for U.S. federal tax purposes. On October 30, 2025, the Spin-off was consummated by means of a pro-rata distribution (the “Distribution”), which was intended to be tax-free for U.S. federal tax purposes, of all of the issued and outstanding Solstice Advanced Materials common shares to Honeywell’s shareowners of record as of October 17, 2025 (the “Record Date”), at which time each holder of Honeywell's common shares received one Solstice Advanced Materials common share for every four Honeywell common shares held as of the close of business on the Record Date, resulting in the Distribution of 158,727,456
Basis of Presentation
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
Prior to October 30, 2025 (“the Spin-off date”), the accompanying unaudited combined financial statements have been derived from Honeywell and presented on a standalone basis as if the Company’s operations had been conducted independently. The accompanying financial statements for periods prior to the Spin-off date include all revenues and costs directly attributable to the Solstice Advanced Materials business and an allocation of expenses related to certain Honeywell corporate functions. These expenses were allocated to the Solstice business based on a proportion of net sales. Solstice and Honeywell considered these allocations to be a reasonable reflection of the utilization of services or the benefits received. However, the allocations may not be indicative of the actual expense that would have been incurred had Solstice operated as an independent, standalone entity, nor are they indicative of future expenses of Solstice.
Honeywell used a centralized approach to cash management and financing of its operations. Accordingly, for periods prior to the Spin-off, a substantial portion of the Business’s cash accounts were regularly cleared to the former Parent at Honeywell’s discretion and Honeywell funded the Business’s operating and investing activities as needed. Honeywell’s long-term debt and related interest expense were not attributed to Solstice for any of the periods presented as the Business was not the legal obligor of such borrowings and Honeywell’s borrowings were not directly attributable to the Business. All significant intercompany transactions, including transfer of cash, between Solstice and Honeywell prior to the Spin-off were included within Net transfers to Parent on the statements of cash flows and the statements of equity through the pre-Spin-off periods.
After the Spin-off date, the Company’s financial statements were consolidated financial statements based on our reported results as a standalone company. All significant transactions between Solstice entities were eliminated.
8
The accompanying financial statements for all periods presented, including the historical results of the Company prior to the Spin-off, are now referred to as “Consolidated Financial Statements.” Certain items have been recast to conform to current-period presentation. We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the SEC applicable to interim financial statements. Accordingly, certain note disclosures have been condensed. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements, corresponding notes, and significant accounting policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”). Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for presentation and disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.
Note 2. Summary of Significant Accounting Policies
The significant accounting policies of the Company are set forth in Note 2 - Summary of Significant Accounting Policies within the Company’s 2025 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.
Supply Chain Financing
Use of Estimates
The Company prepares its Consolidated Financial Statements in conformity with GAAP. In doing so, the Company is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The Company’s actual results may differ materially from these estimates. Significant estimates inherent in the preparation of these Consolidated Financial Statements include, but are not limited to, accounting for allocation of expenses related to certain Honeywell corporate functions, evaluation of allowance for doubtful accounts, reserve for inventory obsolescence, goodwill and other intangible assets for impairment, environmental liabilities, asset retirement obligations (“ARO”), commitments and contingencies, pension liabilities and expenses and income taxes.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which improves the navigability of required interim disclosures, clarifies when that guidance is applicable, and introduces a new principle requiring companies to disclose events since the end of the last annual reporting period
9
that have a material impact on the company. The ASU can be applied prospectively or retrospectively for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which excludes certain contracts from the scope of derivative accounting and clarifies the guidance on noncash consideration from a customer for the transfer of goods or services. The ASU can be applied prospectively for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with modified retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the accounting for costs related to internal-use software. The update removes all references to project stages and clarifies the two conditions needed to be met to begin capitalizing costs under ASC 350-40. The ASU can be applied prospectively, retrospectively, or via a modified prospective transition approach for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires companies to disclose additional information about the types of expenses in commonly presented expense captions. The new standard requires tabular disclosure of specified natural expenses in certain expense captions, a qualitative description of amounts that are not separately disaggregated, and disclosure of the Company's definition and total amount of selling expenses. The ASU should be applied prospectively for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.
Note 3. Related Party Transactions
Corporate Allocations
The accompanying financial statements for the periods prior to the Spin-off reflected allocations of certain expenses from Honeywell including, but not limited to, legal, accounting, information technology (“IT”), human resources and other infrastructure support. The allocation method was based on the Company’s proportion of total Honeywell revenue in each respective period, relative to the Honeywell expense cost pool. Allocations for management costs and corporate support services provided to the Company totaled $54 million for the three months ended March 31, 2025, and such amounts were included within Selling, general and administrative expenses in the Consolidated Statements of Operations. These corporate allocations include stock-based compensation expense allocated to the Company for corporate and shared employees of $6 million, and U.S. pension service costs of $1 million for the three months ended March 31, 2025. There were no
Related Party Sales and Purchases
Product sales to affiliates
Product and service sales in the Consolidated Statements of Operations include sales to affiliates of $16 million and $13 million for the three months ended March 31, 2026 and March 31, 2025, respectively.
10
Certain of these product sales are cash-settled and reflected in the Consolidated Balance Sheets. Accounts receivable – net includes $40 million and $45 million of these transactions as of March 31, 2026 and December 31, 2025, respectively.
Purchases from affiliates
Purchases made by the Company from its affiliates, including Honeywell (through the Spin-off date), were $5 million and $8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. Purchases made by the Company from Honeywell were $3 million for the three months ended March 31, 2025.
Accounts payable includes $6 million and $2 million as of March 31, 2026 and December 31, 2025, respectively, related to such transactions.
In addition to normal recurring purchases, ConverDyn, the Company’s consolidated VIE (refer to Note 13 – Investments for further details), holds accrued liabilities of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively, to General Atomics relating to payments owed by ConverDyn for the standby costs of maintaining a uranium conversion facility owned by such affiliate of General Atomics. These payments cannot be paid by ConverDyn until ConverDyn fully pays to the Company the costs of operating the Nuclear Facility. Until repaid, these obligations to the affiliate General Atomics accrue interest at the U.S. prime rate plus two percent.
Product loans
In 2024, ConverDyn entered into an arrangement to borrow certain products from a customer of ConverDyn and loan such products to an affiliate of General Atomics until December 31, 2026, in exchange for a fixed fee billed annually. The Consolidated Balance Sheets includes Product loans receivable related to uranium ore of approximately $184 million as of March 31, 2026, and approximately $178 million as of December 31, 2025. This results in a net position of $0 7
Cash Management and Net Parent Investment
Prior to the Spin-off, Honeywell used a centralized approach for the purpose of cash management and financing of its operations. The Company’s excess cash was transferred to Honeywell daily, and Honeywell funded the Company’s operating and investing activities as needed. The total net effect of the settlement of these intercompany transactions is reflected in the Consolidated Statements of Cash Flows as a financing activity through Net transfers to Parent.
Credit Support
Honeywell agreed to provide the Company support through certain parent company performance guarantees that will remain in place during a transition period of up to 24 months following the Spin-off and as guarantor of or obligor for certain letters of credit and other credit support instruments that have been issued on the Company’s behalf during a transition period of up to 12 months following the Spin-off.
11
Note 4. Revenue Recognition and Contracts with Customers
Products and services sales are recognized when, or as, the Company transfers control of the promised products or services to its customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or services.
The Company has a comprehensive offering of products and services sold to a variety of customers in multiple end markets. See the following disaggregated revenue table and related discussions by reportable business segment for details:
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Refrigerants & Applied Solutions | |||||||||||||||||||||||
Refrigerants | $ | $ | |||||||||||||||||||||
Building Solutions and Intermediates | |||||||||||||||||||||||
Nuclear1 | |||||||||||||||||||||||
Healthcare Packaging | |||||||||||||||||||||||
Net Refrigerants & Applied Solutions | |||||||||||||||||||||||
Electronic & Specialty Materials | |||||||||||||||||||||||
Research and Performance Chemicals | |||||||||||||||||||||||
Electronic Materials | |||||||||||||||||||||||
Safety and Defense Solutions | |||||||||||||||||||||||
Net Electronic & Specialty Materials | |||||||||||||||||||||||
Net sales | $ | $ | |||||||||||||||||||||
1.Previously known as Alternative Energy Services (AES).
Contract Balances
The Company tracks progress on satisfying performance obligations under contracts with customers and records the related billings and cash collections on the Consolidated Balance Sheets in Accounts receivable – net. Unbilled receivables (contract assets) arise when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Deferred revenue (contract liabilities) arise when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements. Contract liabilities are derecognized when performance obligations are satisfied.
Balances of contract assets are included in Accounts receivable – net, and short-term and long-term contract liabilities are included in Accrued and other current liabilities and Other noncurrent liabilities, respectively, on the Consolidated Balance Sheets. Contract balances are classified as assets or liabilities on a contract-by-contract basis
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at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances:
| 2026 | 2025 | ||||||||||
| Contract assets - January 1 | $ | $ | |||||||||
Change in Contract assets - (decrease) increase | ( | ( | |||||||||
| Contract assets - March 31 | |||||||||||
| Contract liabilities - January 1 | ( | ( | |||||||||
Change in Contract liabilities - (increase) decrease | ( | ||||||||||
| Contract liabilities - March 31 | ( | ( | |||||||||
| Net change | $ | ( | $ | ( | |||||||
For the three months ended March 31, 2026 and 2025, the Company did not
When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at stand-alone selling price, they are accounted for as a new contract and performance obligations, which are recognized prospectively.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. The Company allocates a contract’s transaction price to each distinct performance obligation and recognizes revenue when, or as, the performance obligation is satisfied. When contracts with customers require highly complex integration or manufacturing services not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative stand-alone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable stand-alone sales are used to determine the stand-alone selling price.
Performance obligations satisfied at a point in time are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. Substantially all of the Company’s revenue relates to transfer of control of products or delivery of conversion services at a point in time. The Company’s contracts generally do not contain a significant financing component, as the period between when the Company transfers control of the product or service to the customer and when the customer pays for that product or service is one year or less.
As of March 31, 2026, the Company’s remaining performance obligations (“RPO”), which is the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied was approximately $2.9 billion. Performance obligations expected to be satisfied within one year and greater than one year are 34 % and 66 %, respectively.
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Note 5. Income Taxes
The effective tax rate in 2026 was higher than the U.S. federal statutory rate of 21% primarily due to jurisdictional mix of earnings and state income taxes. The effective tax rate was 23 % for the three months ended March 31, 2026 and 25 % for the three months ended March 31, 2025. The effective tax rate decreased during 2026 compared to 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to restructuring in advance of the Spin-off from Honeywell in the prior-year period.
Note 6. Inventories
The Company’s inventories are comprised of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished products | |||||||||||
Total Inventories | $ | $ | |||||||||
Note 7. Goodwill and Other Intangible Assets – Net
The below table summarizes the change in goodwill for the three months ended March 31, 2026, by segment:
| December 31, 2025 | Currency Translation Adjustment | March 31, 2026 | |||||||||||||||
Refrigerants & Applied Solutions | $ | $ | ( | $ | |||||||||||||
Electronic & Specialty Materials | |||||||||||||||||
Total Goodwill | $ | $ | ( | $ | |||||||||||||
Other intangible assets are comprised of the following:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
Definite-life intangibles | |||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Patents and technologies | ( | ( | |||||||||||||||||||||||||||||||||
| Other intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
Total definite-life intangibles – net | ( | ( | |||||||||||||||||||||||||||||||||
Indefinite-life intangibles | |||||||||||||||||||||||||||||||||||
Trademarks | — | — | |||||||||||||||||||||||||||||||||
Total Other intangible assets – net | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Amortization expense related to intangible assets was $1
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Estimated intangible asset amortization expense for each of the next five years are as follows:
| Amount | |||||
| 2026 (remaining nine months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
Note 8. Debt
The following table contains the components of our debt:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total debt: | |||||||||||
Term Loan Facility due 20321 | $ | $ | |||||||||
Finance lease liabilities | |||||||||||
| $ | $ | ||||||||||
| Less: | |||||||||||
| Unamortized discount | |||||||||||
| Unamortized debt issuance costs | |||||||||||
| Current portion of long-term debt and finance lease liabilities, current | |||||||||||
| Total | $ | $ | |||||||||
Senior Notes
On September 30, 2025, the Company issued $1.0 billion of 5.625 % Senior Notes (the “Notes”) due September 30, 2033. The Notes were sold in private placements to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.
Senior Credit Facilities
On October 29, 2025, the Company entered into a credit agreement (the “Credit Agreement”), which provides for (i) a seven-year senior secured first-lien term B loan facility in an aggregate principal amount of $1.0 billion (the “Term Loan Facility”) and (ii) a five-year senior secured first-lien revolving credit facility with aggregate commitments of $1.0 billion (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).
The Company also entered into uncommitted bilateral letter of credit agreements, which provide for uncommitted bilateral letter of credit facilities in an aggregate uncommitted amount of $750 million (the “Sidecar LC Facilities”, and together with the Credit Facilities, the “Senior Credit Facilities”). The Sidecar LC Facilities provide for maintenance fees which accrue per annum on the aggregate amount of any letter of credit outstanding thereunder, payable quarterly, and fees which range from 0.60 % to 0.95 %, depending on the issuer and the type of letter of credit.
The Company may voluntarily prepay borrowings under the Credit Agreement without premium or penalty, subject to a 1.00 % prepayment premium in connection with certain repricing transactions with respect to the Term Loan
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Facility in the first six months after the effective date of the Credit Agreement and customary “breakage” costs with respect to SOFR loans. The Company may also reduce the commitments under the Revolving Credit Facility, in whole or in part, in each case, subject to certain minimum amounts and increments.
As of March 31, 2026, there were no outstanding borrowings under the Revolving Credit Facility, the interest rate on the Term Loan Facility was 5.42 %, and there were $263 million of unused letters of credit issued under the Sidecar LC Facilities.
The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving Credit Facility requiring the maintenance of certain financial ratios (as set forth in the Credit Agreement). As of March 31, 2026, the Company was in compliance with all of the financial covenants required by the Credit Agreement.
Note 9. Fair Value Measurements
The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:
•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.
•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.
•Level 3 - One or more inputs are unobservable and significant.
Financial and nonfinancial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
The following table sets forth the Company’s financial assets and liabilities accounted for at fair value on a recurring basis:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| Fair Value Level | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||
| Product loan receivable | 2 | $ | $ | — | $ | $ | — | |||||||||||||||||||||||||
| Product loan payable | 2 | — | — | |||||||||||||||||||||||||||||
| Fair Value | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The Company has agreements to lend quantities of uranium ore, which are reflected as product loans receivable, and to borrow quantities of uranium ore, which are reflected as product loans payable. As both the loans receivable and loans payable may be settled in cash, they are both separately measured on a quarterly basis at fair value which is derived using underlying uranium ore published industry average prices. As such, these instruments are classified within Level 2.
The fair value of the Company’s outstanding debt (excluding finance lease liabilities) is estimated using quoted market prices for the same or similar debt issuances, which is a Level 2 measurement. The Company’s outstanding debt (excluding finance lease liabilities) had a carrying value and an estimated fair value of $2.0
Note 10. Stock-Based Compensation Plans
Stock-based compensation cost, which is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations, was $5 million and $6 million for the three months ended March 31, 2026 and 2025, respectively. For all periods prior to the Spin-off, the Consolidated Statements of Operations reflect an allocation of these expenses on a specific identification basis for employees who exclusively supported the Company or, when specific identification is not practicable, a proportional cost allocation method primarily based on revenue or directly identifiable actual costs, depending on the nature of the services.
16
Restricted Stock Units
During the three months ended March 31, 2026, the Company granted 184,911 restricted stock units (“RSUs”) pursuant to the Solstice 2025 Stock Incentive Plan (the “2025 Plan”) to certain employees. The RSUs typically will vest in equal annual installments over a three-year period, subject to the employee’s continued employment. Recipients of RSUs receive dividend equivalents that are paid subject to the same vesting restrictions as the underlying award. The weighted-average fair value per share of the RSUs granted was $79.12 .
Performance Stock Units
Note 11. Shareowners’ Equity
Authorized Capital Stock
The Company’s authorized capital stock consists of 500,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, without par value.
The following table sets forth the changes in the number of shares of common stock outstanding during the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| (in millions) | 2026 | ||||
| Balance as of beginning of period | |||||
| Common stock issued under employee compensation plans | |||||
| Common stock acquired | |||||
| Balance as of end of period | |||||
17
Changes in Accumulated Other Comprehensive Loss by Component
The changes in Accumulated other comprehensive loss are provided in the table below.
| Foreign Exchange Translation Adjustment | Pension Adjustments | Changes in Fair Value of Cash Flow Hedges | Total | ||||||||||||||||||||
Balance as of December 31, 2025 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of March 31, 2026 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Balance as of December 31, 2024 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Balance as of March 31, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Amounts reclassified out of Accumulated other comprehensive loss related to pension adjustments are included within Other expense (income) in the Consolidated Statements of Operations. Amounts reclassified out of Accumulated other comprehensive loss related to cash flow hedges are included within Cost of products and services sold in the Consolidated Statements of Operations.
Note 12. Earnings Per Share
Basic earnings per share (“EPS”) is calculated by dividing net income attributable to common shareowners by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS, calculated using the treasury stock method, reflects the potential dilution that could occur if the Company’s outstanding stock-based compensation awards were issued.
On October 30, 2025, 158,727,456
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The following table sets forth the reconciliations of the numerators and denominators of the Company’s basic and diluted EPS calculations for the three months ended March 31, 2026 and 2025.
| (Amounts in millions, except per share amounts) | For The Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||
Net income attributable to Solstice Advanced Materials | $ | $ | ||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average number of common shares outstanding - basic | ||||||||||||||||||||||||||
| Dilutive effect of stock-based compensation plans | ||||||||||||||||||||||||||
| Weighted average number of common shares outstanding - diluted | ||||||||||||||||||||||||||
Basic EPS | $ | $ | ||||||||||||||||||||||||
Diluted EPS | $ | $ | ||||||||||||||||||||||||
The weighted average potential shares of common stock that were excluded from diluted EPS were 0.1 million at March 31, 2026 because the effect of including those potential shares was anti-dilutive.
Note 13. Investments
Equity method investments
The total balance of the Company’s equity method investments recorded within Equity method investments in the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 was $168 million and $162 million, respectively.
The Company holds equity method investments in three joint ventures (“JV”), including a 49 % interest in Asahi-Schwebel (Taiwan) Co., Ltd., a manufacturer of woven glass fabrics, a 49 % interest in Quimobásicos, S.A. de C.V., a producer of refrigerant gases, and a 50 % interest in SinoChem noted in the variable interest entities (“VIE”) investment section below. The Company records these balances within Equity method investments in the Consolidated Balance Sheets. These investments are not considered significant for disclosure of summarized financial information on either an individual or aggregated basis.
Variable Interest Entities
SinoChem JV (unconsolidated)
The Company owns a 50 % interest in a JV with Sinochem Lantian New Materials Co., Ltd. for foam blowing agents. The Company’s variable interest in this JV is primarily related to third-party borrowings of the JV which are guaranteed by the Company. The investment was $107 million and $103 million as of March 31, 2026 and December 31, 2025, respectively.
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ConverDyn JV (consolidated)
The Company owns a 50 % interest in ConverDyn, which provides uranium hexafluoride conversion and related services to utilities operating nuclear power plants. The Company is the primary beneficiary and consolidates the JV. The following table summarizes the assets and liabilities of the ConverDyn JV included in the Company’s Consolidated Financial Statements (including noncontrolling interests):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Current assets | $ | $ | |||||||||
| Product loans receivable | |||||||||||
| Noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Current liabilities1 | |||||||||||
| Product loans payable | |||||||||||
| Noncurrent liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
_________________
1.Includes related party payables of $71 million and $69 million as of March 31, 2026 and December 31, 2025, respectively. See Note 3 - Related Party Transactions for additional information.
Note 14. Commitments and Contingencies
Environmental Matters
The Company records liabilities for environmental matters when remedial efforts or damage claim payments are probable and the costs can be reasonably estimated. Such liabilities are based on the Company’s best estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical, regulatory, or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other potentially responsible parties, technology, and information related to individual sites, the Company does not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of the Company’s recorded liabilities. Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued. The following table summarizes information concerning the Company’s recorded liabilities for environmental costs:
| Beginning Balance as of December 31, 2024 | $ | ||||||||||
Accruals for environmental matters deemed probable and reasonably estimable | |||||||||||
Environmental liability payments | |||||||||||
| Ending Balance as of March 31, 2025 | $ | ||||||||||
| Beginning Balance as of December 31, 2025 | $ | ||||||||||
Accruals for environmental matters deemed probable and reasonably estimable | |||||||||||
Environmental liability payments | ( | ||||||||||
| Ending Balance as of March 31, 2026 | $ | ||||||||||
The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation, or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined, although they could be material to the Company’s consolidated results of operations and operating cash flows in the periods recognized or paid. However, considering the Company’s past experience and existing reserves, the Company does not expect that environmental matters will have a material adverse effect on its consolidated financial position.
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Asset Retirement Obligations
Asset retirement obligations result from legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. Accordingly, the Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company depreciates the amount added to property, plant and equipment on a straight-line basis, and recognizes accretion expense in connection with the discounted liability over the remaining useful life of the asset.
The Company recognized as a liability the present value of the estimated future costs to decommission its uranium conversion facility. The estimated liability is based on the estimated useful lives of the underlying asset, third-party estimates of the cost to decommission the asset in the future, and federal and state regulatory requirements, adjusted for inflation and discounted using the Company’s credit-adjusted risk-free rate that ranges from 6.5 % to 6.6 %. Revisions to the liability could occur due to changes in the Company’s estimated useful lives of the underlying assets, estimated dates of decommissioning and timing of related cash outflows, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changes in estimates. The Company recognizes changes due to revised estimates by adjusting the carrying amount of the liability and the related long-lived asset if the asset is still in service or charged to expense in the period if the asset is no longer in service.
Other Matters
Nuclear Facility matters
Since 2018, the Company has been involved in various legal proceedings in the United States District Court for the Southern District of Illinois related to its Nuclear Facility, including eight separate lawsuits alleging cancer caused by radiation exposures that were settled in 2024. The Company remains involved in additional legal proceedings (i) related to alleged radiation contamination of properties around the plant by the city of Metropolis, Illinois, and the county of Massac, Illinois, (ii) a class action lawsuit alleging property damage by a group of plaintiffs on behalf of all property owners within a three-mile radius of the facility, and (iii) one alleged personal injury case. The Company is currently awaiting rulings on a motion for summary judgment related to the city and county cases, with rulings expected in 2026. For the alleged class action, the parties completed briefing on the plaintiffs’ motion for class certification and a ruling is expected in 2026. All plaintiffs in these matters are seeking compensatory damages and, in certain cases, punitive damages, medical monitoring, declaratory and/or injunctive relief. The Department of Energy (“the DoE”) has reached an agreement with the Company pursuant to which we understand the DoE intends to take appropriate action to provide sufficient assurance of the continued operational availability of the Company’s Nuclear Facility to support the existing and future demand for uranium hexafluoride, including by extending reimbursement to the Company for certain litigation costs. In addition, the Company is also pursuing claims under Honeywell’s nuclear liability policies with American Nuclear Insurers. While we cannot predict the outcome of these matters, based on the facts currently known to us, we do not anticipate that these matters will have a material adverse effect on our financial condition, results of operations, or cash flows.
Under the Company’s agreement with the DoE, the DoE has also agreed to share in certain costs in connection with the expansion of our Nuclear Facility.
Other matters
The Company is subject to a number of other lawsuits, investigations, and disputes (some of which involve substantial amounts claimed) arising out of the conduct of the Company's business, including matters relating to commercial transactions, intellectual property, and environmental, health, and safety matters. The Company recognizes liabilities for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in such matters, as well as potential ranges of probable losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts.
21
Given the uncertainty inherent in litigation and investigations, the Company cannot predict when or how these matters will be resolved and does not believe it is possible to develop estimates of reasonably possible loss (or a range of possible loss) in excess of current accruals for commitment and contingency matters. Considering the Company's past experience and existing accruals, the Company does not expect the outcome of such matters, either individually or in the aggregate, to have a material adverse effect on the Company's consolidated financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments (including new discovery of facts, changes in legislation, and outcomes of similar cases through the judicial system) or changes in assumptions, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company's consolidated results of operations or operating cash flows in the periods recognized or paid.
Note 15. Segment Financial Data
The Company globally manages its business operations through two reportable business segments. Segment information is consistent with how the President and Chief Executive Officer of Solstice Advanced Materials, who is the Chief Operating Decision Maker (“CODM”), and management reviews the businesses, makes investing and resource allocation decisions, and assesses operating performance. The Company manages and reports its operating results through its two reportable segments: (i) Refrigerants & Applied Solutions and (ii) Electronic & Specialty Materials, in accordance with ASC 280, Segment Reporting. The remainder of the Business’s operations are presented in Corporate and All Other, which is not a reportable business segment.
The CODM evaluates segment performance based on segment adjusted EBITDA, by comparing budget-to-actual and period-over-period results. Segment Adjusted EBITDA is defined as segment net income excluding income taxes, general corporate unallocated expense, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature.
The below table summarizes information about segment revenues, significant segment expenses and other segment items, for each historical period:
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Refrigerants & Applied Solutions | Electronic & Specialty Materials | Refrigerants & Applied Solutions | Electronic & Specialty Materials | ||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
Products | $ | $ | $ | $ | |||||||||||||||||||
Services | |||||||||||||||||||||||
Total Net sales | |||||||||||||||||||||||
| Less | |||||||||||||||||||||||
Cost of products and services sold1 | |||||||||||||||||||||||
Selling, general and administrative expenses2 | |||||||||||||||||||||||
| Research & development expenses | |||||||||||||||||||||||
Other segment items3 | ( | ( | ( | ( | |||||||||||||||||||
| Add | |||||||||||||||||||||||
Depreciation | |||||||||||||||||||||||
Amortization | |||||||||||||||||||||||
Segment Adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
__________________
1.Amounts exclude ARO accretion, repositioning charges, and other non-recurring items.
2.Amounts exclude stock-based compensation expense, transaction costs, nonoperating pension expense (income), repositioning charges, and other non-recurring items.
3.Other segment items primarily consisted of gains and losses from segment-related equity-method investments.
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A reconciliation of segment adjusted EBITDA to Net income attributable to Solstice Advanced Materials is as follows:
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||||||||||||||
Electronic & Specialty Materials | |||||||||||||||||||||||
Segment Adjusted EBITDA | $ | $ | |||||||||||||||||||||
Corporate and All Other | ( | ( | |||||||||||||||||||||
| Adjusted EBITDA | $ | $ | |||||||||||||||||||||
Depreciation | ( | ( | |||||||||||||||||||||
Amortization | ( | ( | |||||||||||||||||||||
Interest and other financial charges | ( | ( | |||||||||||||||||||||
Other adjustments1 | |||||||||||||||||||||||
Stock-based compensation expense | ( | ( | |||||||||||||||||||||
Transaction-related costs | ( | ( | |||||||||||||||||||||
Income tax expense | ( | ( | |||||||||||||||||||||
Net income | $ | $ | |||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
| Net income attributable to Solstice Advanced Materials | $ | $ | |||||||||||||||||||||
__________________
1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, nonoperating pension expense (income), and certain legal costs, net of recoveries.
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total assets reconciliation | |||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||
Electronic & Specialty Materials | |||||||||||
Corporate and All Other | |||||||||||
Total assets | $ | $ | |||||||||
| For The Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Capital expenditures | |||||||||||
Refrigerants & Applied Solutions | $ | $ | |||||||||
Electronic & Specialty Materials | |||||||||||
Corporate and All Other | |||||||||||
Total1 | $ | $ | |||||||||
__________________
1.Unpaid capital expenditures were $117 million and $39 million as of March 31, 2026 and March 31, 2025, respectively.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Solstice Advanced Materials Inc. and its consolidated subsidiaries (“Solstice,” “Solstice Advanced Materials,” “we,” “us,” “our,” or the “Company”) for the three months ended March 31, 2026. The financial information as of March 31, 2026 should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2025, contained in our 2025 Annual Report on Form 10-K.
OVERVIEW
Business overview
Solstice is a global, differentiated advanced materials company and a leading global provider of refrigerants, blowing agents, conversion services for the nuclear energy sector, semiconductor materials, protective fibers and healthcare packaging. We operate through two segments, reported as Refrigerants & Applied Solutions (“RAS”) and Electronic & Specialty Materials (“ESM”). Our business is recognized as an industry innovator as well as a technology and quality leader, supported by some of the industry’s most well-known brands.
Our RAS segment is a leading manufacturer of low global warming potential (“LGWP”) refrigerants, blowing agents, solvents, and aerosol materials, as well as conversion services for the nuclear energy sector. RAS serves the end markets of cooling, air conditioning and refrigeration (“HVAC/R”), automotive, nuclear energy, building and appliance insulation, and healthcare. RAS products include, among others, LGWP refrigerants, blowing agents, aerosol propellants, cleaning solvents, high-barrier pharmaceutical packaging materials and conversion services for nuclear energy providers. Our products are distributed and sold through well-known brands like Solstice, Genetron, and Aclar.
Our ESM segment is a leading provider of electronic materials, high-strength fibers and laboratory life science chemicals. ESM primarily serves the semiconductor, defense, pharmaceutical and construction end markets. ESM products include, among others, sputtering targets, lightweight high-strength fibers and high-purity life science solutions. Our products are distributed and sold through well-known brands like Spectra, Fluka, and Hydranal.
The Company serves over 3,000 customers across a wide range of end markets in approximately 120 countries and territories. Our global presence included 20 manufacturing sites and four standalone research and development (“R&D”) sites as of March 31, 2026.
Spin-off from Honeywell
On October 30, 2025 (“the “Spin-off date”), Honeywell International Inc. (“Honeywell”) completed the Spin-off of Solstice by means of a pro rata distribution (the “Distribution”), which was intended to be tax-free for U.S. federal tax purposes, of all of the issued and outstanding Solstice Advanced Materials common shares to Honeywell’s shareowners of record as of the close of business on October 17, 2025 (the “Record Date”), at which time each holder of Honeywell's common shares received one Solstice Advanced Materials common share for every four Honeywell common shares held as of the close of business on the Record Date, resulting in the Distribution of 158,727,456 of the Company’s common shares to Honeywell shareowners. Upon completion of the Distribution, on October 30, 2025, the Company commenced “regular way” trading as an independent public company under the ticker symbol “SOLS” on The Nasdaq Stock Market (“Nasdaq”). Following the Distribution, Honeywell did not own any Solstice Advanced Materials common shares.
Relationship with Honeywell
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
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Prior to the Spin-off date, the accompanying combined financial statements were derived from the consolidated financial statements and accounting records of Honeywell and presented on a standalone basis as if the Company’s operations had been conducted independently from Honeywell, which includes all revenues and costs directly attributable to the Solstice Advanced Materials business and an allocation of expenses related to certain Honeywell corporate functions. These expenses were allocated to the Solstice Advanced Materials business based on a proportion of net sales and may not be indicative of the actual expense that would have been incurred had Solstice operated as an independent, standalone entity, nor are they indicative of future expenses of the Company. All significant intercompany balances between Solstice and Honeywell prior to the Spin-off date were included within Net Parent investment on the accompanying financial statements.
Following the Spin-off date, the Company’s financial statements have been prepared on a consolidated financial basis and include the accounts of the Company and those of its subsidiaries and any variable interest entities for which the Company is the primary beneficiary. All significant transactions between Solstice entities were eliminated and any transactions with Honeywell or its subsidiaries are now recorded as third-party transactions.
The Company classifies certain expenses related to the Spin-off, as well as acquisitions and divestitures (if any) as Transaction-related costs in the Consolidated Statements of Operations. The Transaction-related costs related to the Spin-off include one-time and non-recurring expenses associated with the separation and stand-up of functions required to operate as a standalone public entity. These non-recurring costs primarily relate to legal, accounting, consulting and other professional service fees, system implementation costs, business and facilities separation, marketing development related to our brand and other matters. These costs are expected to continue through at least fiscal year 2026.
For additional information regarding our agreements with Honeywell, see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Relationship with Honeywell” included within our 2025 Annual Report on Form 10-K.
Macroeconomic Conditions
The global macroeconomic environment during the period remained volatile, driven by elevated geopolitical tensions, including ongoing conflicts in Ukraine and the Middle East, as well as heightened trade and diplomatic frictions among major economies. These conditions contributed to uncertainty in global markets, foreign currency volatility, and fluctuations in energy and commodity prices. Geopolitical tension and evolving trade and tariff policies continued to disrupt global supply chains, resulting in higher input costs and periodic supply constraints. We continue to monitor macroeconomic and geopolitical developments including heightened trade tensions, economic and trade policy uncertainty, and inflationary risks.
Mitigation strategies remain crucial to meet customer demand in this evolving environment. Our mitigation strategies include supply chain simplification, continued alignment to local supply sources, pricing actions and dual source strategies, long-term strategies for constrained materials, direct engagement with key suppliers, and new supplier development. Strong relationships with strategic primary and secondary suppliers allow us to collaborate to reliably source key components and raw materials, develop new products, commit our resources to assist certain suppliers, and at times, alter designs of existing products. We believe these mitigation strategies enable us to reduce supply risk, foster new product innovation, and expand our market presence. Additionally, due to the stringent quality controls and product qualification we perform on any new or altered product, these mitigation strategies have not impacted, and we do not expect them to impact, product quality or reliability.
To date, our strategies have helped minimize our exposure to these conditions. However, if we are not successful in sustaining or executing mitigation strategies, these macroeconomic conditions could have a material adverse effect on our results of operations, cash flows or financial condition.
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RESULTS OF OPERATIONS
Income Statement
| For The Three Months Ended March 31, | Percentage of Net Sales For The Three Months Ended March 31, | Percentage Change | ||||||||||||||||||||||||||||||
| (dollars in millions) | 2026 | 2025 | 2026 | 2025 | 2026 vs. 2025 | |||||||||||||||||||||||||||
| Net sales | $ | 991 | $ | 897 | 100 | % | 100 | % | 10 | % | ||||||||||||||||||||||
| Cost, expenses and other | ||||||||||||||||||||||||||||||||
| Total cost of products and services sold | 675 | 577 | 68 | % | 64 | % | 17 | % | ||||||||||||||||||||||||
| Gross profit | 317 | 321 | 32 | % | 36 | % | (1) | % | ||||||||||||||||||||||||
| Research and development expenses | 28 | 22 | 3 | % | 2 | % | 26 | % | ||||||||||||||||||||||||
| Selling, general and administrative expenses | 108 | 93 | 11 | % | 10 | % | 16 | % | ||||||||||||||||||||||||
| Transaction-related costs | 23 | 28 | 2 | % | 3 | % | (18) | % | ||||||||||||||||||||||||
| Other expense (income) | (7) | (11) | (1) | % | (1) | % | (38) | % | ||||||||||||||||||||||||
| Interest and other financial charges | 29 | 1 | 3 | % | — | % | NM | |||||||||||||||||||||||||
| Total costs, expenses and other | 855 | 710 | 86 | % | 79 | % | 21 | % | ||||||||||||||||||||||||
| Income before taxes | 136 | 188 | 14 | % | 21 | % | (27) | % | ||||||||||||||||||||||||
| Income tax expense | 31 | 47 | 3 | % | 5 | % | (34) | % | ||||||||||||||||||||||||
| Effective tax rate | 23 | % | 25 | % | — | % | — | % | (2) | % | ||||||||||||||||||||||
Net income | 105 | 140 | 11 | % | 16 | % | (25) | % | ||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 20 | 6 | 2 | % | 1 | % | 229 | % | ||||||||||||||||||||||||
Net income attributable to Solstice Advanced Materials | $ | 85 | $ | 134 | 9 | % | 15 | % | (37) | % | ||||||||||||||||||||||
NM - not meaningful
Net Sales
The following table sets forth the factors contributing to year-over-year changes in our net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||
| Change in net sales from prior period | 2026 vs. 2025 | ||||
| Volume | 5.6 | % | |||
| Price | 2.4 | % | |||
| Foreign currency translation | 2.5 | % | |||
| Total % change in net sales | 10.5 | % | |||
A discussion of Net sales by reportable segment can be found under the “Segment Results” section within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
Net sales increased by $94 million or 10% primarily due to volume growth of $37 million, favorable pricing of $22 million and favorable foreign currency translation impacts of $16 million in the RAS segment, as well as volume growth of $13 million and favorable currency translation impacts of $7 million in the ESM segment.
Cost of product and services sold increased by $98 million or 17% primarily driven by volume increases and inflation in raw materials in both the RAS and ESM segments.
Research and development expenses increased by $6 million or 26% driven by continued investment in innovation across the portfolio of offerings such as Spectra Y and next-generation molecules; Selling, general and administrative expenses increased by $15 million or 16% driven by an increase in employee-related expenses, primarily in connection with corporate functions and additional headcount necessary to operate as an independent public company; Transaction-related costs decreased by $5 million driven by a decrease in professional advisory services fees incurred after the Spin-off; Other expense (income) had an unfavorable change of $4 million driven primarily by lower income from equity method investments and foreign currency losses in the current period compared to gains in the prior period; and Interest and other financial charges increased by $28 million driven by the issuance of debt in connection with the Spin-off in the second half of 2025.
Income tax expense decreased by $16 million. The effective tax rate in 2026 was lower than the effective tax rate in 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to restructuring in advance of the Spin-off from Honeywell in the prior-year period. See Note 5 - Income Taxes of the Notes to the Consolidated Financial Statements for additional information on the effective tax rate.
SEGMENT RESULTS
We manage and report our operating results through two reportable segments: Refrigerants & Applied Solutions (RAS) and Electronic & Specialty Materials (ESM). The remainder of our operations are presented in Corporate and All Other, which is not a reportable business segment.
Segment Adjusted EBITDA is the primary measure of segment profitability used by our Chief Operating Decision Maker. We define Segment Adjusted EBITDA as segment net income excluding income taxes, general corporate unallocated expense, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature.
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Refrigerants & Applied Solutions
Net Sales
The following sets forth the net sales for our RAS segment for the three months ended March 31, 2026 and 2025.
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our RAS segment for the three months ended March 31, 2026 and 2025.
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Net sales | $ | 711 | $ | 636 | |||||||||||||||||||
| Segment Adjusted EBITDA | 242 | 250 | |||||||||||||||||||||
| Segment Adjusted EBITDA margin | 34.1 | % | 39.3 | % | |||||||||||||||||||
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The following table sets forth the reported and organic net sales growth in our RAS segment’s net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||||||||
| 2026 vs. 2025 | |||||||||||
| Total % change in net sales | 11.7 | % | |||||||||
| Foreign currency translation | (2.5) | % | |||||||||
| Acquisitions, divestitures and other, net | — | % | |||||||||
Organic sales percentage(1) | 9.2 | % | |||||||||
(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for definition of Organic sales percentage.
For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
RAS net sales increased by $75 million or 12% primarily driven by volume growth of $37 million, mainly as a result of the ongoing transition to LGWP refrigerants and volume increases in nuclear, partially offset by volume declines in building solutions and intermediates due to lower demand in the construction end market. Favorable pricing of $22 million and favorable currency translation impacts on net sales of $16 million also contributed to the increase.
Segment Adjusted EBITDA decreased by $8 million or 3% and Segment Adjusted EBITDA margin decreased 5% primarily driven by lower margins due to refrigerant mix and higher production costs.
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Electronic & Specialty Materials
Net Sales
The following sets forth the net sales for our ESM segment for the three months ended March 31, 2026 and 2025.
The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our ESM segment for the three months ended March 31, 2026 and 2025.
| For The Three Months Ended March 31, | |||||||||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||||||||||||||
| Net sales | $ | 281 | $ | 261 | |||||||||||||||||||
| Segment Adjusted EBITDA | 58 | 53 | |||||||||||||||||||||
| Segment Adjusted EBITDA margin | 20.8 | % | 20.3 | % | |||||||||||||||||||
The following table sets forth the reported and organic net sales growth in our ESM segment’s net sales for the three months ended March 31, 2026.
| For The Three Months Ended March 31, | |||||||||||
| 2026 vs. 2025 | |||||||||||
| Total % change in net sales | 7.4 | % | |||||||||
| Foreign currency translation | (2.7) | % | |||||||||
| Acquisitions, divestitures and other, net | — | % | |||||||||
Organic sales percentage(1) | 4.7 | % | |||||||||
(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for definition of Organic sales percentage.
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For the three months ended March 31, 2026 compared with the three months ended March 31, 2025
ESM net sales increased by $19 million or 7%. The increase was primarily driven by volume growth of $13 million, mainly due to volume increases in electronic materials, partially offset by volume declines in performance chemicals. Currency translation favorably impacted net sales by $7 million.
Segment Adjusted EBITDA increased by $5 million or 10% primarily driven by demand growth in electronic materials. Segment Adjusted EBITDA margin remained relatively flat.
Corporate and All Other
Corporate and All Other costs increased by $20 million or 62% for the three months ended March 31, 2026 compared to the prior year due to an increase in selling, general and administrative expenses, primarily in connection with corporate functions and additional headcount necessary to operate as an independent public company.
NON-GAAP FINANCIAL MEASURES
We use 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 and (3) Adjusted EBITDA margin.
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.
| For The Three Months Ended March 31, | |||||||||||
| 2026 vs. 2025 | |||||||||||
| Total % change in net sales | 10.5 | % | |||||||||
| Foreign currency translation | (2.5) | % | |||||||||
| Acquisitions, divestitures and other, net | — | % | |||||||||
| Organic sales percentage | 8.0 | % | |||||||||
Adjusted EBITDA and Adjusted EBITDA margin: The Company defines Adjusted EBITDA as net income excluding income taxes, depreciation, amortization, interest and other financial charges, remeasurement of foreign currencies, stock-based compensation expense, nonoperating pension expense (income), transaction-related costs, repositioning charges, asset retirement obligations accretion, asset impairment charges, litigation costs and insurance settlements (net of recoveries), gains and losses on disposal of assets, and certain other items that are otherwise of an unusual or non-recurring nature. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by Net sales. We believe these measures are useful to investors as they provide greater transparency with respect to supplemental information used by management in its financial and operational decision making, as well as understanding ongoing operating trends. The table below reconciles Net income, the most directly comparable U.S. GAAP measure, to the Company’s non-GAAP measure of Adjusted EBITDA for the three months ended March 31, 2026 and 2025.
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| For The Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (Dollars in millions) | Amount | Percentage of Net Sales | Amount | Percentage of Net Sales | |||||||||||||||||||
Net income attributable to Solstice Advanced Materials (GAAP) | $ | 85 | 9 | % | $ | 134 | 15 | % | |||||||||||||||
Net income attributable to noncontrolling interest | 20 | 2 | % | 6 | 1 | % | |||||||||||||||||
| Net income (GAAP) | $ | 105 | 11 | % | $ | 140 | 16 | % | |||||||||||||||
| Depreciation | 53 | 5 | % | 50 | 6 | % | |||||||||||||||||
| Amortization | 6 | 1 | % | 7 | 1 | % | |||||||||||||||||
| Interest and other financial charges | 29 | 3 | % | 1 | — | % | |||||||||||||||||
Other adjustments(1) | (2) | — | % | (8) | (1) | % | |||||||||||||||||
Stock-based compensation expense | 5 | — | % | 6 | 1 | % | |||||||||||||||||
Transaction-related costs | 23 | 2 | % | 28 | 3 | % | |||||||||||||||||
| Income tax expense | 31 | 3 | % | 47 | 5 | % | |||||||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 249 | 25 | % | $ | 271 | 30 | % | |||||||||||||||
| Net sales | $ | 991 | $ | 897 | |||||||||||||||||||
| Adjusted EBITDA margin (Non-GAAP) | 25.1 | % | 30.2 | % | |||||||||||||||||||
1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, nonoperating pension expense (income), and certain legal costs, net of recoveries.
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LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company has been generating positive cash flows from operations. Prior to the consummation of the Spin-off, the Company was dependent upon Honeywell for all of its working capital and financing requirements. A substantial portion of the Company’s cash accounts were cleared to Honeywell regularly at Honeywell’s discretion, and Honeywell funded the Company’s operating and investing activities as needed. Transfers of cash between Honeywell and the Company were included within Net transfers to Parent on the accompanying financial statements through the Spin-off date. These arrangements ceased in conjunction with the Spin-off.
In connection with the Spin-off, we entered into certain third-party debt arrangements, as described below, and as of October 30, 2025, we no longer participate in Honeywell’s centralized cash management program. Our liquidity after the Spin-off depends on our operating cash flows, available cash balances, access to our credit facilities and our ability to access capital markets. We believe that our existing cash and cash equivalents, combined with our expected operating cash flows and available credit facilities (as discussed below) will be sufficient to meet our anticipated cash needs for at least the next 12 months.
On April 27, 2026, the Company announced that the Board of Directors declared a dividend of $0.075 per share of common stock outstanding, payable on June 10, 2026, to shareowners of record as of May 27, 2026. The Company currently expects to continue returning cash to shareowners through quarterly dividends, although payment of dividends remains subject to determination and declaration by the Board of Directors and there can be no assurance that the Company will continue to pay any dividends.
Senior Notes
On September 30, 2025, the Company issued $1.0 billion of 5.625% Senior Notes (the “Notes”) due September 30, 2033. The Notes were sold in private placements to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.
Senior Credit Facilities
On October 29, 2025, the Company entered into a credit agreement (the “Credit Agreement”), which provides for (i) a seven-year senior secured first-lien term B loan facility in an aggregate principal amount of $1.0 billion (the “Term Loan Facility”) and (ii) a five-year senior secured first-lien revolving credit facility with aggregate commitments of $1.0 billion (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).
The Company also entered into uncommitted bilateral letter of credit agreements, which provide for uncommitted bilateral letter of credit facilities in an aggregate uncommitted amount of $750 million (the “Sidecar LC Facilities”, and together with the Credit Facilities, the “Senior Credit Facilities”). The Sidecar LC Facilities provide for maintenance fees which accrue per annum on the aggregate amount of any letter of credit outstanding thereunder, payable quarterly, and fees which range from 0.60% to 0.95%, depending on the issuer and the type of letter of credit.
The Company may voluntarily prepay borrowings under the Credit Agreement without premium or penalty, subject to a 1.00% prepayment premium in connection with certain repricing transactions with respect to the Term Loan Facility in the first six months after the effective date of the Credit Agreement and customary “breakage” costs with respect to SOFR loans. The Company may also reduce the commitments under the Revolving Credit Facility, in whole or in part, in each case, subject to certain minimum amounts and increments.
As of March 31, 2026, there were no outstanding borrowings under the Revolving Credit Facility, the interest rate on the Term Loan Facility was 5.42%, and there were $263 million of unused letters of credit issued under the Sidecar LC Facilities.
The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving
33
Credit Facility requiring the maintenance of certain financial ratios (as set forth in the Credit Agreement). As of March 31, 2026, the Company was in compliance with all of the financial covenants required by the Credit Agreement.
See Note 8 - Debt of the Notes to the Consolidated Financial Statements for additional information regarding our debt obligations.
Cash Flows
Summarized cash flow information for the three months ended March 31, 2026 and 2025 is as follows:
| For The Three Months Ended March 31, | |||||||||||
| (Dollars in millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 199 | $ | 160 | |||||||
Net cash used for investing activities | $ | (77) | $ | (39) | |||||||
Net cash used for financing activities | $ | (15) | $ | (118) | |||||||
Operating Activities
Net cash provided by operating activities was $199 million for the three months ended March 31, 2026 compared to $160 million in the prior-year period. The increase was due to greater working capital inflow, primarily driven by lower inventories from destocking of certain RAS products, collections from certain customers, as well as higher income tax liabilities due to timing, partially offset by the release of customer rebates. This increase was partially offset by lower net income.
Investing Activities
Net cash used for investing activities was $77 million for the three months ended March 31, 2026 compared to $39 million in the prior-year period. The increase was driven by higher capital expenditures, primarily from the expansion of manufacturing facilities within our ESM segment, and the impact in the prior year of proceeds from the sale of certain assets.
Financing Activities
Net cash used for financing activities was $15 million for the three months ended March 31, 2026 compared to $118 million in the prior-year period. The decrease was driven by the absence of net transfers to Honeywell in the current period compared to the prior-year period. Quarterly dividend payments to shareowners were $12 million during the three months ended March 31, 2026.
Cash and Cash Requirements
Summary
As of March 31, 2026 and December 31, 2025, our cash and cash equivalents totaled $642 million and $534 million, respectively. We believe that we have sufficient liquidity based on our current cash position, expected operating cash flows and availability under our Credit Facilities to meet our expected payments related to our cash requirements for at least the next 12 months.
Cash and Cash Equivalents Held by Foreign Subsidiaries
Cash and cash equivalents held by Solstice Advanced Materials’ foreign subsidiaries were $403 million and $363 million as of March 31, 2026 and December 31, 2025, respectively.
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Capital Expenditures
Our capital expenditures primarily consist of continuing investments to maintain the safety and reliability of our existing operations, additional investments in new and existing facilities to support new production introduction and capacity expansion to grow our business. For the three months ended March 31, 2026 and 2025, our capital expenditures incurred were $82 million and $62 million, respectively. The increase was primarily driven by projects to support new products and solutions for our electronic materials and advanced fiber offerings. For the year ending December 31, 2026, we expect that our capital expenditures will be between $400 million and $425 million.
Parent Company Credit Support
Honeywell agreed to provide us support through certain parent company performance guarantees that will remain in place during a transition period of up to 24 months following the Spin-off and as guarantor of or obligor for certain letters of credit and other credit support instruments that have been issued on our behalf during a transition period of up to 12 months following the Spin-off.
Supply Chain Financing
We maintain agreements with unaffiliated third-party financial institutions that offer voluntary supply chain financing (“SCF”) programs to our suppliers. The SCF programs enable suppliers, at their sole discretion, to sell their receivables to third-party financial institutions in order to receive payment on receivables earlier than the negotiated commercial terms between us and our suppliers. We had $98 million outstanding obligations related to our SCF programs as of both March 31, 2026 and December 31, 2025.
Contractual Obligations and Off-Balance Sheet Arrangements
We do not engage in significant off-balance sheet financial arrangements that have or are likely to have a material current or future effect on our financial condition, changes in financial condition, net sales or expenses, results of operations, liquidity, capital expenditures or capital resources. There have been no material changes outside the ordinary course of business to our contractual obligations from those discussed in our 2025 Annual Report on Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
There were no material changes during the three months ended March 31, 2026 to the items disclosed as critical accounting estimates in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K.
35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our business and financial results are affected by fluctuations in world financial markets, including the impacts of foreign currency exchange rate and interest rate movements. We evaluate our exposure to such risks on an ongoing basis, and seek ways to manage these risks to an acceptable level, based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. Market risks have not materially changed from those disclosed under Part II. Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Solstice’s management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2026 to ensure information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
36
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to a number of lawsuits, investigations, disputes and claims (some of which involve substantial amounts) arising out of the conduct of our business, including matters relating to commercial transactions, intellectual property and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. See Note 14 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of environmental and other litigation matters.
ITEM 1A. RISK FACTORS
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors presented in our 2025 Annual Report on Form 10-K under Part I. Item 1A. “Risk Factors.” For further discussion of our risk factors, refer to Part I, Item 1A. “Risk Factors” in our 2025 Annual Report on Form 10-K. Any of these factors could materially adverse effect our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended March 31, 2026, no directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
37
ITEM 6. EXHIBITS
| Exhibit Number | Exhibit Description | |||||||
Form of Restricted Stock Unit Agreement (Officers) (2026) (filed herewith) | ||||||||
Form of Performance Stock Unit Agreement (2026) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 25, 2026) | ||||||||
Form of 2026-2028 Performance Stock Unit Agreement (Executive Officers) (2026) (filed herewith) | ||||||||
Deferred Compensation Plan for Non-Employee Directors of Solstice Advanced Materials Inc. (2026) (filed herewith) | ||||||||
| Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | ||||||||
| Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | ||||||||
| Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||||||||
| Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | ||||||||
| 101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
____________________
* Management contract or any compensatory plan, contract, or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SOLSTICE ADVANCED MATERIALS INC. | |||||||||||
Date: May 6, 2026 | By: | /s/ John S. Barresi | |||||||||
| John S. Barresi | |||||||||||
| Chief Accounting Officer | |||||||||||
| (on behalf of the Registrant | |||||||||||
| and as the Registrant’s | |||||||||||
| Principal Accounting Officer) | |||||||||||
39
Exhibit 10.1
2025 STOCK INCENTIVE PLAN
OF SOLSTICE ADVANCED MATERIALS INC. AND ITS AFFILIATES
OF SOLSTICE ADVANCED MATERIALS INC. AND ITS AFFILIATES
RESTRICTED STOCK UNIT AGREEMENT
This RESTRICTED STOCK UNIT AGREEMENT made in Morris Plains, New Jersey, as of ###GRANT_DATE### (the “Grant Date”), between Solstice Advanced Materials Inc. (the “Company”) and ###PARTICIPANT_NAME### (“Participant”).
1.Grant of Award. The Company has granted you ###TOTAL_AWARDS### Restricted Stock Units, subject to the provisions of this Agreement and the 2025 Stock Incentive Plan of Solstice Advanced Materials Inc. and its Affiliates (the “Plan”). The Company will hold the Restricted Stock Units and Additional Restricted Stock Units (as defined in Section 2) in a bookkeeping account on your behalf until they become payable or are forfeited or cancelled.
The Restricted Stock Unit Plan Details for this grant can be found on the Morgan Stanley StockPlan Connect website at www.stockplanconnect.com. The Company reserves the right to change or correct any information contained on the Morgan Stanley StockPlan Connect website to reflect the terms of the Award actually made by the Company on the Grant Date or the Plan.
2.Dividend Equivalents. Except as otherwise determined by the Compensation Committee (the “Committee”), in its sole discretion, you will earn Dividend Equivalents in an amount equal to the value of any cash or stock dividends paid by the Company upon one Share of Common Stock for each unvested Restricted Stock Unit or Additional Restricted Stock Unit (as defined below) credited to your bookkeeping account on a dividend payment date. In the case of cash dividends, the Company shall credit to your bookkeeping account, on each dividend payment date, an additional number of Restricted Stock Units (“Additional Restricted Stock Units”) equal to (a) divided by (b), where (a) equals the total number of unvested Restricted Stock Units and Additional Restricted Stock Units, if any, subject to this Agreement on such date multiplied by the dollar amount of the cash dividend paid per Share of Common Stock on such date, and (b) equals the Fair Market Value of a Share on such date. If a dividend is paid to holders of Common Stock in Shares, the Company shall credit to you, on each dividend payment date, Additional Restricted Stock Units equal to the total number of unvested Restricted Stock Units and Additional Restricted Stock Units subject to this Agreement on such date multiplied by the Share dividend paid per Share of Common Stock on such date. Additional Restricted Stock Units are subject to the same restrictions, including but not limited to vesting, transferability and payment restrictions, that apply to the Restricted Stock Units to which they relate.
3.Payment Amount. Each Restricted Stock Unit and Additional Restricted Stock Unit represents one (1) Share of Common Stock.
4.Vesting. Except in the event of your Termination of Service due to death or Disability, or as otherwise provided in Section 8 of this Agreement relating to a Change in Control, the Restricted Stock Units and Additional Restricted Stock Units will vest as provided on the attached Vesting Schedule Table, which is incorporated into, and made a part of, this Agreement.
###VEST_SCHEDULE_TABLE###
5.Form and Timing of Payment. Vested Restricted Stock Units will be redeemed solely for Shares. Except as otherwise determined by the Company, in its sole discretion, vested Additional Restricted Stock Units will be redeemed solely for Shares. Except as otherwise provided in Section 7(b) below, payment of vested Restricted Stock Units and Additional Restricted Stock Units will be made as soon as practicable following the applicable vesting date but in no event later than two and one-half (2-1/2) months following the end of
the calendar year in which the vesting date occurs. As determined by the Company in its sole discretion prior to the vesting date, any fractional Shares may be paid in cash or rounded up or down to the nearest whole Share. You cannot defer payment of the Restricted Stock Units or the Additional Restricted Stock Units.
6.Termination of Service. Except as otherwise provided in Sections 7(a) and 8 of this Agreement, any Restricted Stock Units and Additional Restricted Stock Units that have not vested as of your Termination of Service will immediately be forfeited, and your rights with respect to these Restricted Stock Units and Additional Restricted Stock Units will end.
7.Retirement, Death or Disability.
a. Vesting and Payment Following Retirement. If you terminate employment with the Company and its Affiliates (i) not for Cause, and (ii) after you attain at least 70 points (actual age plus Years of Service, with minimum age 55), and (iii) after you provide the Company at least 120 days’ advance notice of your Termination of Employment, and (iv) you comply with all applicable post-termination restrictive covenants, the following special provisions shall apply:
(A) the amount of unvested Restricted Stock Units and Additional Restricted Stock Units that shall vest under this Section 7 shall equal (1) the total number of Shares granted to you under Section 1 of this Agreement, (2) multiplied by a fraction, the numerator of which is your Years of Service from the Grant Date to your Termination of Employment and the denominator of which is the total years of service from the Grant Date to the final vesting date of this Award, then (3) minus the total number of Shares that vested on or before your Termination of Employment; and
(B) Shares that vest pursuant to Paragraph (A) above shall be distributed at the Award’s next regular vesting date, not to exceed the number of Shares that would have vested at such date under the original vesting schedule, with excess Shares vesting at a future vesting date if necessary.
b. Vesting and Payment Following Death or Disability.
(i) If your Termination of Employment occurs due to death or Disability before the vesting date described in Section 4 of this Agreement, all of your unvested Restricted Stock Units and Additional Restricted Stock Units will vest as of your Termination of Employment. If you are deceased, the Company will make a payment to your estate only after the Company has determined that the payee is the duly appointed executor or administrator of your estate, subject to Section 7.14 of the Plan.
(ii) If your Termination of Employment occurs due to death or Disability before the vesting date described in Section 4 of this Agreement, payment for vested Restricted Stock Units and Additional Restricted Stock Units will be made as soon as practicable following your Termination of Employment, but in no event later than the last day of the calendar year in which your Termination of Employment occurs.
c. If your Termination of Employment due to retirement occurs before the vesting date described in Section 4 of this Agreement and you do not satisfy the requirements of Section 7(a) above, all unvested Restricted Stock Units and Additional Restricted Stock Units will be forfeited and your rights with respect to any award under this Agreement will terminate.
8.Change in Control. In the event of a Change in Control (as defined in the Plan), the following provisions apply:
a.Unless adjusted or exchanged pursuant to Section 5.4 of the Plan, Restricted Stock Units and Additional Restricted Stock Units that have not vested or terminated as of the date of the Change in Control will immediately vest. No later than the earlier of 90 days after the date of the Change in Control or two and one-half months after the end of the calendar year in which the Change in Control
occurs, you will receive for the Restricted Stock Units and Additional Restricted Stock Units a single payment in cash equal to the product of the number of outstanding Restricted Stock Units and Additional Restricted Stock Units as of the date of the Change in Control (including any Restricted Stock Units and Additional Restricted Stock Units that vest pursuant to this Section 8) and an amount equal to the greater of (i) the highest price per Share paid by the Successor, as determined by the Committee, and (ii) the highest Fair Market Value during the period of 90 days that ends on the date of the Change in Control. Any securities or other property that is part or all of the consideration paid for Shares pursuant to the Change in Control will be valued at the higher of (x) the valuation placed on the securities or property by any entity that is a party with the Company to the Change in Control, or (y) the valuation placed on the securities or property by the Committee.
b.If adjusted or exchanged pursuant to Section 5.4 of the Plan, Restricted Stock Units and Additional Restricted Stock Units that have not vested or terminated as of the date of the Change in Control will continue to vest in accordance with the schedule described in Section 4 of this Agreement (or as adjusted if more favorable); provided, however, that if you incur an involuntary Termination of Service not for Cause (as defined in Section 2.7 of the Plan) or a voluntary Termination of Service for Good Reason (as defined in Section 2.20 of the Plan) on or before the second anniversary of the date of the Change in Control, Restricted Stock Units and Additional Restricted Stock Units that have not vested or terminated as of your Termination of Service will immediately vest in full and be settled no later than the earlier of 90 days after the Termination of Service or two and one-half months after the end of the calendar year in which the Termination of Service occurs.
9.Withholdings. The Company or your local employer shall have the power and the right to deduct or withhold, or require you to remit to the Company or to your local employer, prior to any issuance or delivery of Shares on Restricted Stock Units or Additional Restricted Stock Units, an amount sufficient to satisfy taxes imposed under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gain taxes, transfer taxes, and social security contributions, and National Insurance Contributions, that are required by law to be withheld as determined by the Company or your local employer.
10.Transfer of Award. You may not transfer the Restricted Stock Units, Additional Restricted Stock Units or any interest in such Units except by will or the laws of descent and distribution or except as permitted by the Committee and as specified in the Plan. Any other attempt to dispose of your interest will be null and void.
11.Requirements for and Forfeiture of Award.
a.General. The Award is expressly contingent upon you complying with the terms, conditions and definitions contained in this Section 11 and in any other agreement that governs your noncompetition with Solstice, your nonsolicitation of Solstice’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Solstice’s trade secrets and proprietary and confidential information. For purposes of this Section 11, the term “Solstice” is defined as Solstice Advanced Materials Inc. (a Delaware corporation having a place of business in Morris Plains, New Jersey), its predecessors, designees and successors, as well as its past, present and future operating companies, divisions, subsidiaries, affiliates and other business units, including businesses acquired by purchase of assets, stock, merger or otherwise.
b.Remedies.
1.You expressly agree and acknowledge that the forfeiture provisions of subsection 11.b.2. of this Agreement shall apply if: (A) you are terminated for Cause (as defined in the Plan) or you voluntarily terminate your employment with less than a 60-day notice period, or (B) from the
Grant Date until the date that is twenty-four (24) months after your Termination of Employment for any reason, you (i) enter into an employment, consultation or similar agreement or arrangement (including any arrangement for service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business in which Solstice is engaged if the business is competitive (in the sole judgment of the Solstice International Inc. Chief Executive Officer (“CEO”)) with Solstice and the CEO has not approved the agreement or arrangement in writing, or (ii) make any statement, publicly or privately (other than to your spouse and legal advisors), which would be disparaging (as defined below) to Solstice or its businesses, products, strategies, prospects, condition, or reputation or that of its directors, employees, officers or members; provided, however, that nothing shall preclude you from making any statement in good faith which is required by any applicable law or regulation or the order of a court or other governmental body, or (iii) write or contribute to a book, article or other media publication, whether in written or electronic format, that is in any way descriptive of Solstice or your career with Solstice without first submitting a draft thereof, at least thirty (30) days in advance, to the Solstice Advanced Materials Inc. Senior Vice President and General Counsel, whose judgment about whether such book, article or other media publication is disparaging shall be determinative; or such a book, article or other media publication is published after a determination that it is disparaging; provided, however, that nothing herein shall preclude you from reporting (in good faith) possible violations of federal law or regulation to any governmental agency or entity, including but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and/or any agency Inspector General, or making any other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, or from otherwise making any statement (in good faith) which is required by any applicable law or regulation or the order of a court or other governmental body.
For purposes of this subsection 11.b.1, the term “disparaging” shall mean any statement or representation (whether oral or written and whether true or untrue) which, directly or by implication, tends to create a negative, adverse, or derogatory impression about the subject of the statement or representation or which is intended to harm the reputation of the subject of the statement or representation.
2.In addition to the relief described in any other agreement that governs your noncompetition with Solstice, your nonsolicitation of Solstice’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Solstice’s trade secrets and proprietary and confidential information, if the CEO determines, in his sole judgment, that you have violated the terms of any such agreement or you have engaged in an act that violates subsection 11.b.1. of this Agreement, or you are terminated for Cause (as defined in the Plan), or you voluntarily terminate your service with less than a 30-day notice period (i) any Restricted Stock Units and Additional Restricted Stock Units that have not vested under this Agreement shall immediately be cancelled, and you shall forfeit any rights you have with respect to such Units as of the date of the CEO’s determination or the date of your Termination of Service for Cause or voluntary Termination of Service, as applicable, and (ii) you shall immediately deliver to the Company Shares equal in value to the Restricted Stock Units and Additional Restricted Stock Units you received during the period beginning twelve (12) months prior to your Termination of Service and ending on (x) the date of the CEO’s determination in the case of a violation other than for a Termination of Service for Cause or voluntary termination without sufficient notice, or (y) the date of your Termination of Service in the case of a Termination of Service for Cause or voluntary termination without sufficient notice, as applicable.
3.Notwithstanding anything in the Plan or this Agreement to the contrary, you acknowledge that the Company may be entitled or required by law, Company policy or the requirements of an exchange on which the Shares are listed for trading, to recoup compensation paid to you
pursuant to the Plan, and you agree to comply with any Company request or demand for recoupment.
12.Restrictions on Payment of Shares. Payment of Shares for your Restricted Stock Units and Additional Restricted Stock Units is subject to the conditions that, to the extent required at the time of exercise, (i) the Shares underlying the Restricted Stock Units and Additional Restricted Stock Units shall be duly listed, upon official notice of redemption, upon The Nasdaq Stock Market LLC (“Nasdaq”), and (ii) a Registration Statement under the Securities Act of 1933 with respect to the Shares shall be effective. The Company shall not be required to deliver any Common Stock until all applicable federal and state laws and regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by counsel for the Company.
13.Adjustments. Any adjustments to the Restricted Stock Units and Additional Restricted Stock Units will be governed by Section 5.4 of the Plan.
14.Disposition of Securities. By accepting the Award, you acknowledge that you have read and understand (i) the Company’s policy, and are aware of and understand your obligations under applicable securities laws in respect of trading in the Company’s securities, and (ii) the Company’s stock ownership guidelines as they apply to this Award. The Company shall have the right to recover, or receive reimbursement for, any compensation or profit you realize on the disposition of Shares received for Restricted Stock Units or Additional Restricted Stock Units to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.
15.Plan Terms Govern. The vesting and redemption of Restricted Stock Units or Additional Restricted Stock Units, the disposition of any Shares received for Restricted Stock Units or Additional Restricted Stock Units, the treatment of gain on the disposition of these Shares, and the treatment of Dividend Equivalents are subject to the provisions of the Plan and any rules that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into this Agreement. Capitalized terms used in this Agreement have the meaning set forth in the Plan, unless otherwise stated in this Agreement. In the event of any conflict between the terms of the Plan and the terms of this Agreement, the Plan shall control. By accepting the Award, you acknowledge that the Plan and the Plan prospectus, as in effect on the date of this Agreement, have been made available to you for your review.
16.Personal Data.
a.By entering into this Agreement, and as a condition of the grant of the Restricted Stock Units, you expressly consent to the collection, use, and transfer of personal data as described in this Section to the full extent permitted by and in full compliance with applicable law.
b.You understand that your local employer holds, by means of an automated data file, certain personal information about you, including, but not limited to, name, home address and telephone number, date of birth, social insurance number, salary, nationality, job title, any shares or directorships held in the Company, details of all Restricted Stock Units or other entitlement to shares awarded, canceled, exercised, vested, unvested, or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”).
c.You further understand that part or all of your Data may be also held by the Company or its Affiliates, pursuant to a transfer made in the past with your consent, in respect of any previous grant of Restricted Stock Units or awards, which was made for the same purposes of managing and administering of previous award/incentive plans, or for other purposes.
d.You further understand that your local employer will transfer Data to the Company or its Affiliates among themselves as necessary for the purposes of implementation, administration, and management
of your participation in the Plan, and that the Company or its Affiliates may transfer data among themselves, and/or each, in turn, further transfer Data to any third parties assisting the Company in the implementation, administration, and management of the Plan (“Data Recipients”).
e.You understand that the Company or its Affiliates, as well as the Data Recipients, are or may be located in your country of residence or elsewhere, such as the United States. You authorize the Company or its Affiliates, as well as the Data Recipients, to receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan, including any transfer of such Data, as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf, to a broker or third party with whom the Shares may be deposited.
f.You understand that you may show your opposition to the processing and transfer of your Data, and, may at any time, review the Data, request that any necessary amendments be made to it, or withdraw your consent herein in writing by contacting the Company. You further understand that withdrawing consent may affect your ability to participate in the Plan.
g.You further understand the Company or the Affiliate(s) for which you act as a director or officer may need your Data to fulfill the applicable statutory requirements or prepare annual financial statements. You hereby consent that the Company or Affiliate(s) may transfer the Data among themselves, and/or each, in turn, further transfer Data to any third parties assisting the Company or the Affiliate(s) in fulfilling the applicable statutory requirements or preparing annual financial statements whether during your service or after your Termination of Service.
17.Discretionary Nature and Acceptance of Award. By accepting this Award, you agree to be bound by the terms of this Agreement and acknowledge that:
a.The Company (and not your local employer) is granting your Restricted Stock Units and Additional Restricted Stock Units. Furthermore, this Agreement is not derived from any preexisting labor relationship between you and the Company, but rather from a mercantile relationship.
b.The Company may administer the Plan from outside your country of residence and United States law will govern all Restricted Stock Units and Additional Restricted Stock Units granted under the Plan.
c.Benefits and rights provided under the Plan are wholly discretionary and, although provided by the Company, do not constitute regular or periodic payments.
d.The benefits and rights provided under the Plan are not to be considered part of your salary or compensation under your employment with your local employer for purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind. You waive any and all rights to compensation or damages as a result of the termination of service with your local employer for any reason whatsoever insofar as those rights result, or may result, from the loss or diminution in value of such rights under the Plan or your ceasing to have any rights under, or ceasing to be entitled to any rights under, the Plan as a result of such termination.
e.The grant of Restricted Stock Units and Additional Restricted Stock Units hereunder, and any future grant of Restricted Stock Units or Additional Restricted Stock Units under the Plan, is entirely voluntary, and at the complete discretion of the Company. Neither the grant of the Restricted Stock Units, the Additional Restricted Stock Units nor any future grant by the Company will be deemed to create any obligation to make any future grants, whether or not such a reservation is explicitly stated at the time of such a grant. The Company has the right, at any time and/or on an annual basis, to amend,
suspend or terminate the Plan; provided, however, that no such amendment, suspension, or termination will adversely affect your rights hereunder.
f.The Plan will not be deemed to constitute, and will not be construed by you to constitute, part of the terms and conditions of service. Neither the Company nor your local employer will incur any liability of any kind to you as a result of any change or amendment, or any cancellation, of the Plan at any time.
g.Participation in the Plan will not be deemed to constitute, and will not be deemed by you to constitute, an employment or labor relationship of any kind with the Company.
18.Limitations. Nothing in this Agreement or the Plan gives you any right to continue in the service of the Company or any of its Affiliates or to interfere in any way with the right of the Company or any Affiliate to terminate your service at any time. Payment of your Restricted Stock Units and Additional Restricted Stock Units is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of this Award or the account established on your behalf. You have no rights as a shareowner of the Company pursuant to the Restricted Stock Units or Additional Restricted Stock Units until Shares are actually delivered to you.
19.Incorporation of Other Agreements. This Agreement and the Plan constitute the entire understanding between you and the Company regarding the Restricted Stock Units. This Agreement supersedes any prior agreements, commitments or negotiations concerning the Restricted Stock Units and the Additional Restricted Stock Units.
20.Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of the Agreement, which shall remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision shall be construed so as to be enforceable to the maximum extent compatible with applicable law.
21.Governing Law. The Plan, this Agreement, and all determinations made and actions taken under the Plan or this Agreement shall be governed by the internal substantive laws, and not the choice of law rules, of the State of Delaware and construed accordingly, to the extent not superseded by applicable federal law.
22.Agreement Changes. The Company reserves the right to change the terms of this Agreement and the Plan without your consent to the extent necessary or desirable to comply with the requirements of Code section 409A, the Treasury regulations and other guidance thereunder.
23.Acknowledgements and Acceptance. By accepting this Agreement, you agree that: (i) you have carefully read, fully understand and agree to all of the terms and conditions described in this Agreement, the Plan, the Plan’s prospectus and all accompanying documentation; and (ii) you understand and agree that this Agreement and the Plan constitute the entire understanding between you and the Company regarding the Award, and that any prior agreements, commitments or negotiations concerning the Award are replaced and superseded.
To retain this Award, you must accept it on the Morgan Stanley website.
Date Accepted: ###ACCEPTANCE_DATE###
Exhibit 10.3
2025 STOCK INCENTIVE PLAN
OF SOLSTICE ADVANCED MATERIALS INC. AND ITS AFFILIATES
2026-2028 PERFORMANCE PLAN GRANT AGREEMENT
This PERFORMANCE STOCK UNIT AGREEMENT made in Morris Plains, New Jersey, as of ###GRANT_DATE### (the “Grant Date”), between Solstice Advanced Materials Inc. (the “Company”) and ###PARTICIPANT_NAME### (the “Participant”).
1. Grant of Performance Award. The Company has granted you ###TOTAL_AWARDS### as a target number (“Target Award”) of Restricted Stock Units as a Performance Award (“Performance Stock Units”), subject to the terms of this Agreement and the 2025 Stock Incentive Plan of Solstice Advanced Materials Inc. and Its Affiliates (the “Plan”).
The Company will hold the Performance Stock Units and Additional Performance Stock Units (as defined in Section 4) in a bookkeeping account on your behalf until they become payable or are forfeited or cancelled.
The details for this grant can be found on the Morgan Stanley at Work website at https://atwork.morganstanley.com. The Company reserves the right to change or correct any information contained on the Morgan Stanley at Work website to reflect the terms of the Award actually made by the Company on the Grant Date or the Plan.
2. Definitions. For purposes of this Agreement, the following definitions apply:
a. “Actual Award” means (A) the product of (i) the Plan Payout Percentage (as determined under Section 3), and (ii) your Target Award; plus (B) any Additional Performance Stock Units (as determined under Section 4). Notwithstanding anything in this Agreement to the contrary, the Committee may reduce the amount of your Actual Award in its sole discretion.
b. “Committee” means the Compensation Committee of the Solstice Board of Directors.
c. “Performance Cycle” means the three-year period beginning on January 1, 2026 and ending on December 31, 2028.
3. Performance Measures. Performance Measures and Plan Payout Percentage shall be determined based on actual performance against pre-set goals as set forth in Attachment A, which is incorporated into and made a part of this Agreement.
4. Dividend Equivalents. Except as otherwise determined by the Committee, in its sole discretion, you will earn Dividend Equivalents in an amount equal to the value of any cash or stock dividends paid by the Company upon one Share of Common Stock for each unvested Performance Stock Unit or Additional Performance Stock Unit (as defined below) credited to your bookkeeping account on a dividend payment date. At the vesting date(s) specified in Section 6, such Dividend Equivalents shall be adjusted up or down based on your Actual Award. In the case of cash dividends, the Company shall credit to your bookkeeping account, on each dividend payment date, an additional number of Performance Stock Units (“Additional Performance Stock Units”) equal to (a) divided by (b), where (a) equals the total number of unvested Performance Stock Units and Additional Performance Stock Units, if any, subject to this Agreement on such date multiplied by the dollar amount of the cash dividend paid per Share of Common Stock on such date, and (b) equals the Fair Market Value of a Share on such date. If a dividend is paid to holders of Common Stock in Shares, the Company shall credit to you, on such dividend payment date, Additional Performance Stock Units equal to the total number of unvested Performance Stock Units and Additional Performance Stock Units subject to this Agreement on such date multiplied by the Share dividend paid per Share of Common Stock on such date. Additional Performance Stock Units are subject to the same restrictions, including but not limited to vesting, transferability and payment restrictions, that apply to the Performance Stock Units to which they relate. You will continue to earn Additional Performance Stock Units on unpaid Performance Stock Units and Additional Performance Stock Units that are held in your bookkeeping account until the vested Shares are paid to you.
5. Payment Amount. Each Performance Stock Unit and Additional Performance Stock Unit represents one (1) Share of Common Stock. Your Actual Award will not exceed 200% of your Target Award.
6. Vesting and Payment. Except as otherwise provided in this Agreement, the vesting and payment of an Actual Award is contingent upon (i) the achievement of a Plan Payout Percentage based on performance as described in Section 3 and Attachment A, and (ii) you remaining actively employed by the Company until and on the later of February 24, 2029 or the date the Committee certifies the level of performance attained with respect to Performance Measures for the Performance Cycle (“Vesting Date”). In no event will Additional Performance Stock Units be paid if the related Performance Stock Units have not vested.
If earned, the Actual Award will be paid fully in Shares, rounded up to the nearest whole Share Except as otherwise provided in Sections 8 and 9, if an Actual Award is due, payment in Shares will be made as soon as practicable following the Vesting Date, but in no event later than two and one-half months following the end of the year in which vesting occurs.
7. Termination of Employment. Except as otherwise provided in this Agreement, if your Termination of Employment occurs for any reason other than death or Disability before the Vesting Date, any unvested Performance Stock Units and Additional Performance Stock Units will immediately be forfeited and your rights with respect to future payments under this Agreement will end.
8. Death or Disability. If your Termination of Employment occurs because of your death or Disability before the Vesting Date, you or your estate will receive the prorated value of your Actual Award. The prorated value of the Actual Award shall be determined by multiplying the Actual Award by a fraction, the numerator of which is the number of days you were actively employed before your Termination of Employment from your first eligibility date to the last day of the Performance Cycle, and the denominator of which is the total number of days from your first eligibility date to the last day of the Performance Cycle. Such prorated Actual Award, stated in Shares, shall be multiplied by the Fair Market Value of the Shares on the last trading day of the Performance Cycle and paid in cash as soon as practicable, but in no event later than two and one-half months following the end of the Performance Cycle. Additional Performance Stock Units will be calculated on the prorated Actual Award as provided in Section 4.
9. Change in Control. Notwithstanding anything in Sections 2 through 8 to the contrary, in the event of a Change in Control (as defined in the Plan), the following provisions apply:
a. Rollover of Performance Awards. If adjusted or exchanged pursuant to Section 5.3(c) – (f) of the Plan, Performance Stock Units and Additional Performance Stock Units that have not vested or terminated as of the date of the Change in Control will continue to vest in accordance with the schedule described in Section 6 of this Agreement (or as adjusted if more favorable); provided, however, that (x) if you incur an involuntary Termination of Employment not for Cause (as defined in Section 2.7 of the Plan) or a voluntary Termination of Employment for Good Reason (as defined in Section 5.4(d) of the Plan) on or before the second anniversary of the date of the Change in Control and after the Performance Cycle has ended, your unpaid Actual Award will immediately vest in full and be paid in cash no later than the earlier of 90 days after the Termination of Employment or two and one-half months after the end of the calendar year in which the Termination of Employment occurs, or (y) if you incur an involuntary Termination of Employment not for Cause (as defined in Section 2.7 of the Plan) or a voluntary Termination of Employment for Good Reason (as defined in Section 5.4(d) of the Plan) during the two-year period following the Change in Control and before the Performance Cycle has ended, an amount equal to the Target Award, pro-rated to reflect the portion of the Performance Cycle that elapsed before such Termination of Employment, will be paid in cash no later than the earlier of 90 days after the Termination of Employment or two and one-half months after the end of the calendar year in which the Termination of Employment occurs.
b. Cashout of Performance Awards. Unless adjusted or exchanged pursuant to Section 5.3(a) or 5.3(b) of the Plan (concerning rollover of outstanding awards in certain circumstances), Performance Stock Units and Additional Performance Stock Units that have not vested or terminated as of the date of the Change in Control will immediately vest. If the Change in Control occurs after the Performance Cycle has ended, you will receive your
unpaid Actual Award. If the Change in Control occurs before the Performance Cycle has ended, the Actual Award will be based on the Target Award or other level of substantially achieved performance, as determined by the Committee prior to the Change in Control. No later than the earlier of 90 days after the date of the Change in Control or two and one-half months after the end of the calendar year in which the Change in Control occurs, you will receive for the Performance Stock Units and Additional Performance Stock Units a single cash payment equal to the product of the number of vested and outstanding Performance Stock Units and Additional Performance Stock Units as of the date of the Change in Control (including any Performance Stock Units and Additional Performance Stock Units that vest pursuant to this Section 9) and an amount equal to the greater of (i) the highest price per Share paid by the successor, as determined by the Committee, and (ii) the highest Fair Market Value during the period of 90 days that ends on the date of the Change in Control. Any securities or other property that is part or all of the consideration paid for Shares pursuant to the Change in Control will be valued at the higher of (x) the valuation placed on the securities or property by any entity that is a party with the Company to the Change in Control, or (y) the valuation placed on the securities or property by the Committee.
10. Withholdings. The Company or your local employer shall have the power and the right to deduct or withhold, or require you to remit to the Company or to your local employer, prior to any issuance or delivery of Shares, an amount sufficient to satisfy taxes imposed under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gain taxes, transfer taxes, and social security contributions, and National Insurance Contributions, that are required by law to be withheld as determined by the Company or your local employer.
11. Transfer of Performance Award. You may not transfer the Performance Stock Units, Additional Performance Stock Units or any interest in such Units or any portion of your Actual Award except by will or the laws of descent and distribution or except as permitted by the Committee and as specified in the Plan. Any other attempt to dispose of your interest will be null and void.
12. Requirements for and Forfeiture of Award.
a. General. This Award is expressly contingent upon you complying with the terms, conditions and definitions contained in this Section 12 and in any other agreement that governs your non-competition with Solstice, your non-solicitation of Solstice’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Solstice’s trade secrets and proprietary and confidential information. For purposes of this Section 12, the term “Solstice” is defined as Solstice Advanced Materials Inc. (a Delaware corporation having a place of business in Morris Plains, New Jersey), its predecessors, designees and successors, as well as its past, present and future operating companies, divisions, subsidiaries, affiliates and other business units, including businesses acquired by purchase of assets, stock, merger or otherwise.
b. Remedies.
1. You expressly agree and acknowledge that the forfeiture provisions of subsection 12.b.2. of this Agreement shall apply if: (A) you are terminated for Cause (as defined in the Plan) or you voluntarily terminate your employment with less than a 60-day notice period, or (B) from the Grant Date until the date that is twenty-four (24) months after your Termination of Employment for any reason, you (i) enter into an employment, consultation or similar agreement or arrangement (including any arrangement for service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business in which Solstice is engaged if the business is competitive (in the sole judgment of the Solstice Chief Executive Officer (“CEO”)) with Solstice and the CEO has not approved the agreement or arrangement in writing, or (ii) make any statement, publicly or privately (other than to your spouse and legal advisors), which would be disparaging (as defined below) to Solstice or its businesses, products, strategies, prospects, condition, or reputation or that of its directors, employees, officers or members; provided, however, that nothing shall preclude you from making any statement in good faith which is required by any applicable law or regulation or the order of a court or other governmental body, or (iii) write or contribute to a book, article or other media publication, whether in written or electronic format, that is in any way descriptive of Solstice or your career with Solstice without first submitting a draft thereof, at least thirty (30) days in advance, to the Solstice Advanced Materials Inc. Senior Vice President and General Counsel, whose
judgment about whether such book, article or other media publication is disparaging shall be determinative; or such a book, article or other media publication is published after a determination that it is disparaging; provided, however, that nothing herein shall preclude you from reporting (in good faith) possible violations of federal law or regulation to any governmental agency or entity, including but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and/or any agency Inspector General, or making any other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, or from otherwise making any statement (in good faith) which is required by any applicable law or regulation or the order of a court or other governmental body.
For purposes of this subsection 12.b.1, the term “disparaging” shall mean any statement or representation (whether oral or written and whether true or untrue) which, directly or by implication, tends to create a negative, adverse, or derogatory impression about the subject of the statement or representation or which is intended to harm the reputation of the subject of the statement or representation.
2. In addition to the relief described in any other agreement that governs your non-competition with Solstice, your non-solicitation of Solstice’s employees, customers, suppliers, business partners and vendors, and/or your conduct with respect to Solstice’s trade secrets and proprietary and confidential information, if the CEO of Solstice determines, in their sole judgment, that you have violated the terms of any such agreement or you have engaged in an act that violates subsection 12.b.1. of this Agreement, or you are terminated for Cause (as defined in the Plan) or you voluntarily terminate your employment with less than a 60-day notice period, (i) any Performance Stock Units and Additional Performance Stock Units that have not vested under this Agreement shall immediately be cancelled, and you shall forfeit any rights you have with respect to such Units as of the date of the CEO’s determination or the date of your Termination of Employment for Cause or voluntary Termination of Employment, as applicable, and (ii) you shall immediately deliver to the Company Shares or cash equal in value to the Actual Award you received during the period beginning twelve (12) months prior to your Termination of Employment and ending on (x) the date of the CEO’s determination in the case of a violation other than for a Termination of Employment for Cause or voluntary termination without sufficient notice, or (y) the date of your Termination of Employment in the case of a Termination of Employment for Cause or voluntary termination without sufficient notice, as applicable.
3. Notwithstanding anything in the Plan or this Agreement to the contrary, you acknowledge that the Company may be entitled or required by law, Company policy or the requirements of an exchange on which the Shares are listed for trading, to recoup compensation paid to you pursuant to the Plan, and you agree to comply with any Company request or demand for recoupment.
13. Restrictions on Payment of Shares. Payment of Shares is subject to the conditions that, to the extent required at the time of exercise, (i) the Shares underlying the Award and/or Actual Award shall be duly listed, upon official notice of redemption, upon Nasdaq, and (ii) a Registration Statement under the Securities Act of 1933 with respect to the Shares shall be effective. The Company shall not be required to deliver any Common Stock until all applicable federal and state laws and regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by counsel for the Company.
14. Adjustments. Any adjustments to this Performance Award will be governed by Section 5.3 of the Plan.
15. Disposition of Securities. By accepting the Performance Award, you acknowledge that you have read and understand (i) the Company’s policy, and are aware of and understand your obligations under applicable securities laws in respect of trading in the Company’s securities, and (ii) the Company’s stock ownership guidelines as they apply to this Performance Award. The Company shall have the right to recover, or receive reimbursement for, any compensation or profit you realize on the disposition of Shares received to the extent that the Company has a right of recovery or reimbursement under applicable securities laws.
16. Plan Terms Govern. This Award (including the vesting and redemption of Performance Stock Units or Additional Performance Stock Units, the disposition of any Shares received, the treatment of gain on the disposition of these Shares, and the treatment of Dividend Equivalents) are subject to the provisions of the Plan and any rules
that the Committee may prescribe. The Plan document, as may be amended from time to time, is incorporated into this Agreement. Capitalized terms used in this Agreement have the meaning set forth in the Plan, unless otherwise stated in this Agreement. In the event of any conflict between the terms of the Plan and the terms of this Agreement, the Plan shall control. By accepting the Performance Award, you acknowledge that the Plan and the Plan prospectus, as in effect on the date of this Agreement, have been made available to you for your review. Without limiting the generality of the foregoing, you agree that all determinations made by the Committee of the Performance Measures described in Section 3 (including but not limited to, Adjusted Earnings per Share, Return on Invested Capital, Total Shareholder Return and the Company’s ranking within the Compensation Peer Group) shall be final, binding and conclusive on you in accordance with Article III of the Plan.
17. Personal Data.
a. By entering into this Agreement, and as a condition of the grant of this Performance Award, you expressly consent to the collection, use, and transfer of personal data as described in this Section to the full extent permitted by and in full compliance with applicable law.
b. You understand that your local employer holds, by means of an automated data file, certain personal information about you, including, but not limited to, name, home address and telephone number, date of birth, social insurance number, salary, nationality, job title, any shares or directorships held in the Company, details of all Performance Stock Units or other entitlement to shares awarded, canceled, exercised, vested, unvested, or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”).
c. You understand that part or all of your Data may be also held by the Company or its Affiliates, pursuant to a transfer made in the past with your consent, in respect of any previous grant of Performance Stock Units or awards, which was made for the same purposes of managing and administering of previous award/incentive plans, or for other purposes.
d. You understand that your local employer will transfer Data to the Company or its Affiliates among themselves as necessary for the purposes of implementation, administration, and management of your participation in the Plan, and that the Company or its Affiliates may transfer data among themselves, and/or each, in turn, further transfer Data to any third parties assisting the Company in the implementation, administration, and management of the Plan (“Data Recipients”).
e. You understand that the Company or its Affiliates, as well as the Data Recipients, are or may be located in your country of residence or elsewhere, such as the United States. You authorize the Company or its Affiliates, as well as the Data Recipients, to receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan, including any transfer of such Data, as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf, to a broker or third party with whom the Shares may be deposited.
f. You understand that you may show your opposition to the processing and transfer of your Data, and, may at any time, review the Data, request that any necessary amendments be made to it, or withdraw your consent herein in writing by contacting the Company. You understand that withdrawing consent may affect your ability to participate in the Plan.
g. You further understand the Company or the Affiliate(s) for which you act as a director or officer may need your Data to fulfill the applicable statutory requirements or prepare annual financial statements. You hereby consent that the Company or Affiliate(s) may transfer the Data among themselves, and/or each, in turn, further transfer Data to any third parties assisting the Company or the Affiliate(s) in fulfilling the applicable statutory requirements or preparing annual financial statements whether during your employment or after your Termination of Employment.
18. Discretionary Nature and Acceptance of Performance Award. By accepting this Performance Award, you agree to be bound by the terms of this Agreement and acknowledge that:
a. The Company (and not your local employer) is granting these Performance Stock Units and Additional Performance Stock Units. This Agreement is not derived from any preexisting labor relationship between you and the Company, but rather from a mercantile relationship.
b. The Company may administer the Plan from outside your country of residence and United States law will govern all Performance Stock Units and Additional Performance Stock Units granted under the Plan.
c. Benefits and rights provided under the Plan are wholly discretionary and, although provided by the Company, do not constitute regular or periodic payments.
d. The benefits and rights provided under the Plan are not to be considered part of your salary or compensation under your employment with your local employer for purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind. You waive any and all rights to compensation or damages as a result of the termination of employment with your local employer for any reason whatsoever insofar as those rights result, or may result, from the loss or diminution in value of such rights under the Plan or your ceasing to have any rights under, or ceasing to be entitled to any rights under, the Plan as a result of such termination.
e. The grant of this Performance Award, and any future grant of Performance Stock Units or Additional Performance Stock Units under the Plan, is entirely voluntary, and at the complete discretion of the Company. Neither the grant of the Performance Stock Units, the Additional Performance Stock Units nor any future grant by the Company will be deemed to create any obligation to make any future grants, whether or not such a reservation is explicitly stated at the time of such a grant. The Company has the right, at any time and/or on an annual basis, to amend, suspend or terminate the Plan; provided, however, that no such amendment, suspension, or termination will adversely affect your rights hereunder.
f. The Plan will not be deemed to constitute, and will not be construed by you to constitute, part of the terms and conditions of employment. Neither the Company nor your local employer will incur any liability of any kind to you as a result of any change or amendment, or any cancellation, of the Plan at any time.
g. Participation in the Plan will not be deemed to constitute, and will not be deemed by you to constitute, an employment or labor relationship of any kind with the Company.
19. Limitations. Nothing in this Agreement or the Plan gives you any right to continue in the employ of the Company or any of its Affiliates or to interfere in any way with the right of the Company or any Affiliate to terminate your employment at any time. Payment of your Performance Stock Units and Additional Performance Stock Units is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of this Performance Award or the account established on your behalf. You have no rights as a shareowner of the Company pursuant to the Performance Stock Units and Additional Performance Stock Units until Shares are actually delivered to you.
20. Incorporation of Other Agreements. This Agreement and the Plan constitute the entire understanding between you and the Company regarding the Performance Stock Units. This Agreement supersedes any prior agreements, commitments or negotiations concerning the Performance Stock Units and Additional Performance Stock Units.
21. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of the Agreement, which shall remain in full force and effect. Moreover, if any provision is found to be excessively broad in duration, scope or covered activity, the provision shall be construed so as to be enforceable to the maximum extent compatible with applicable law.
22. Governing Law. The Plan, this Agreement, and all determinations made and actions taken under the Plan or this Agreement shall be governed by the internal substantive laws, and not the choice of law rules, of the State of Delaware and construed accordingly, to the extent not superseded by applicable federal law.
23. Agreement Changes. The Company reserves the right to change the terms of this Agreement and the Plan without your consent to the extent necessary or desirable to comply with the requirements of Code section 409A, the Treasury regulations and other guidance thereunder.
24. Acknowledgements and Acceptance. By signing this Agreement (including via electronic signature), you agree that: (i) you have carefully read, fully understand and agree to all of the terms and conditions described in this Agreement, the Plan, the Plan’s prospectus and all accompanying documentation; and (ii) you understand and agree that this Agreement and the Plan constitute the entire understanding between you and the Company regarding the Performance Award, and that any prior agreements, commitments, or negotiations concerning the Performance Award are replaced and superseded.
To retain this Award, you must accept it on the Morgan Stanley website.
Date Accepted: ###ACCEPTANCE_DATE###
 | Exhibit 10.4 | ||||
Deferred Compensation Plan for Non-Employee Directors of
Solstice Advanced Materials Inc.
Solstice Advanced Materials Inc.
The Deferred Compensation Plan for Non-Employee Directors of Solstice Advanced Materials Inc. has been created to provide an opportunity for the non-employee Directors of Solstice Advanced Materials Inc. to defer compensation paid for services as a member of the Solstice Advanced Materials Inc. Board of Directors. The Plan is unfunded for tax purposes. Unless otherwise provided, the terms of the Plan are effective as of the Effective Date.
1.Director Compensation
Each non-employee Director of the Board of Directors (the "Board") of Solstice Advanced Materials Inc. (the "Corporation") or any of its subsidiaries (a "Director") will receive Compensation for each year of service as a Director. In accordance with the terms of the Plan, the Director may elect to defer such Compensation.
2.Eligibility
Each active Director is eligible to participate in the Deferred Compensation Plan for Non-Employee Directors of Solstice Advanced Materials Inc. (the "Plan").
3.Definitions
(a)Account. An “Account” is the hypothetical Plan account reflecting the Director’s Elective Deferrals made to the Plan, plus any interest or earnings on those amounts.
(b)Code. The term “Code” means the Internal Revenue Code of 1986, as amended and the regulations and rulings promulgated thereunder.
(c)Common Stock. The term “Common Stock” means the publicly traded common stock of the Corporation or any successor.
(d)Compensation. A Director’s “Compensation” includes the annual cash retainer paid to a Director for services on the Board and any additional amounts that the Director may receive from the Corporation related to services as a Director. For the initial Plan Year, Compensation will only include amounts earned after March 31, 2026.
(e)Effective Date. The Plan’s “Effective Date” is the date the Plan is adopted and approved.
(f)Elective Deferrals. “Elective Deferrals” are an amount or percentage of the Compensation paid to the Director, which the Director has elected to defer to the Plan. All Elective Deferrals and any earnings credited thereto shall be immediately 100% vested.
(g)Election Form. An “Election Form” means the method for making Deferral Elections or Distribution Elections provided by the Plan Administrator. The Election Form may be written or electronic, as the Plan Administrator prescribes.
(h)Plan Administrator. The “Plan Administrator” of the Plan shall be the Chief Human Resources Officer (“CHRO”). The CHRO may delegate his or her responsibilities to an authorized delegate provided that the CHRO remains responsible for the Plan Administrator’s duties.
(i)Plan Year. The “Plan Year” is the calendar year period starting on January 1 and ending on December 31. The initial “Plan Year” will be April 1, 2026 through December 31, 2026.
(j)Separation from Service. A “Separation from Service” is the termination of a Director's Board service, which shall comply with Code Section 409A and the regulations and rulings promulgated thereunder.
4.Participation
(a)Timing of Election. Prior to the beginning of any Plan Year, each Director who is not then participating in the Plan may elect to participate in the Plan by directing that all or any part of the Director's Compensation, which otherwise would be payable as Compensation for services as a Director during the upcoming Plan Year, be credited to the Director's Account in the Plan as Elective Deferrals (“Deferral Election”). Such Deferral Election must be made prior to the
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beginning of the Plan Year to which the Elective Deferral applies. All Deferral Elections are irrevocable for the Plan Year to which they apply.
(b)Newly Eligible Directors. Any Director providing services on the Effective Date of the Plan and any person who thereafter becomes a Director may elect, within thirty (30) days after the date the Director becomes eligible to participate in the Plan, to defer all or any part of the Director's Compensation paid for services performed for calendar quarters beginning after the date of the Deferral Election, consistent with the requirements of Treasury Regulation Section 1.409A-2(a)(7). If a Director does not make a Deferral Election with respect to a Plan Year by the specified date, the Director will be deemed to have elected to receive their Compensation in cash. When a Deferral Election is made with respect to a Plan Year, the Non-Employee Director may not revoke or change that Deferral Election with respect to such Plan Year.
(c)Form and Duration of Election. A Deferral Election shall be made by on an Election Form provided by the Plan Administrator, executed by the Director and then returned to the Plan Administrator. Such Deferral Election is irrevocable for the Plan Year to which it applies and shall continue in effect for the current Plan Year and for further Plan Years until it is affirmatively revoked. Any change or termination to the amount of Elective Deferrals being made to the Plan during a Plan Year shall become effective for the next Plan Year. In the event the Director ceases to make Elective Deferrals to the Plan, the amounts credited to the Director's Account prior to the cessation of Election Deferrals shall not be affected by the change and shall remain as part of the Director’s Account.
(d)Adjustment of Future Elective Deferrals. Prior to the beginning of any Plan Year, a Director may file a new written Election Form with the Plan Administrator changing the percentage of Elective Deferrals to be credited to the Director's Account for services as a Director in the upcoming Plan Year. Elections for a particular Plan Year must be made on or before December 31 of the prior Plan Year in order to be effective for the next Plan Year. An Elective Deferral election made for the current Plan Year is irrevocable and will not be affected by the new Elective Deferral change and will continue to be made in accordance with the Deferral Election in place for the respective Plan Year and for subsequent Plan Years until it is affirmatively revoked.
5.Investment Options
(a)Available Investment Options. Once a Director makes an election to make Elective Deferrals to the Plan, such amounts shall be credited to the Director’s Account and shall be hypothetically invested in one or more investment options made available by the Corporation from time to time in its discretion. and which may correspond with one or more investment funds in the Solstice Advanced Materials Deferred Compensation Plan (“DCP”). If an investment option under the Plan that mirrors an investment in the DCP changes or the timing of the crediting of interest under the DCP with respect to the investment changes, such change shall be automatically applied to the Plan. The investment options under the Plan are used solely to calculate the earnings that are credited to each Director's Account in accordance with Paragraph 5(b) below, and do not represent any beneficial interest on the part of the Director in any asset or other property of the Corporation. At the inception of the Plan, the sole investment fund shall be the Annual RateFund in the DCP.
(b)Crediting of Earnings/Losses. The Director’s Account shall be credited with earnings and losses, as applicable, commencing on the date each such Elective Deferral is credited to the Director’s Account in the Plan. Any interest or earnings on the Elective Deferrals credited to the Plan shall accrue daily and will be credited for bookkeeping purposes to the Director's Account as soon as administratively possible on or after the last day of the month. The Director's Account shall continue to be hypothetically invested in accordance with Paragraph 5(a) from the date initially credited to Plan until distributed in accordance with the Plan.
6.Director's Account
All Compensation which a Director elects to defer under the Plan shall be credited to the Director's Account. All credits shall be made as unfunded book entries and the Director shall not have any interest in any amounts credited to the Director's Account until distributed in accordance with the terms of the Plan.
7.Distribution from Accounts
(a)Distributions Generally. At the time a Director makes an election to make Elective Deferrals under the Plan pursuant to Paragraph 4, the Director shall also file with the Plan Administrator a
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distribution election on the Election Form provided by the Plan Administrator outlining the timing and form of distribution of the Elective Deferrals to which the election applies (a “Distribution Election”). Unless the Plan Administrator determines otherwise in accordance with Code Section 409A, a Distribution Election for a particular Plan Year must apply to all amounts credited to the Director’s Account for that Plan Year.
(b)Timing of Distribution. A Director may select from the available distribution dates available on the Election Form provided to the Director, which shall generally include either payment (i) as soon as administratively practicable following the first business day of the Plan Year immediately following the year in which the Director Separates from Service from the Board, or (ii) on the earlier of as soon as administratively practicable following the first business day of the Plan Year as the Director may elect or the first business day following the Director’s Separation from Service. If no timing is elected, the amounts will be distributed the Director's Account shall be paid as soon as administratively practicable following the first business day of the Plan Year immediately following the year in which the Director ceases to be a Director. Once a Distribution Election is made, the same election shall remain in place for distribution of future Elective Deferrals for the Plan Year. If no Distribution Election is made with respect to a Plan Year, then the Director’s Account will be paid as soon as administratively practicable following the first business day of the Plan Year immediately following the year in which the Director Separates from Service from the Board.
(c)Form of Payment. A Director may elect to receive the Director’s Account in the form of a single lump-sum payment or in a number of approximately equal installments (provided the payout period does not exceed fifteen (15) years). Different forms of payment may be elected with respect to the portions of the Account payable at different times. If no Distribution Election is made with respect to a Plan Year, then the Director’s Account will be paid in a single lump sum distribution.
(d)Subsequent Election. A director may irrevocably elect to change the timing and form of a payment from the Director’s Account by making a Subsequent Election on an Election Form approved by the Plan Administrator. A Subsequent Election (i) will not be effective as to any payment scheduled to be made within twelve (12) months of the Subsequent Election, and (ii) the amount to which the Subsequent Election applies must be deferred by at least five (5) years from the originally scheduled payment date on the original Election Form. The Plan Administrator may limit the changes to the form and commencement date and may also limit the number of Subsequent Elections that may be made by a Director. Unless the Plan Administrator determines otherwise, a Director may only make one Subsequent Election. The Plan Administrator reserves the right and discretion to reject and disallow a Subsequent Election for any reason and at any time.
8.Change in Control
(a)Interest Equivalents. Notwithstanding anything to the contrary in the Plan, in the event of a Change in Control (i) the Plan may not be amended to reduce the formulas contained in paragraph 5 which determine the rate at which amounts equivalent to interest accrue with respect to cash amounts credited to a Director's Account, and (ii) the Plan Administrator referred to in paragraph 10(c) shall fix rates under the formulas contained in paragraph 5 in lieu of the Treasurer of the Corporation.
(b)Payment on a Change in Control. In the event of a Change in Control, the aggregate amount credited to the Director's Account under the Plan shall be paid in one lump-sum payment as soon as practicable following the Change in Control but in no event more than ninety (90) days after the Change in Control.
(c)Definition of Change in Control. For purposes of the Plan, a Change in Control shall comply with the requirements of Code Section 409A of the Code and is deemed to occur at the time (i) when any entity, person or group (other than the Corporation, any subsidiary or any savings, pension or other benefit plan for the benefit of employees of the Corporation or its subsidiaries) which theretofore beneficially owned less than 30% of the Common Stock within the past 12 months then outstanding acquires shares of Common Stock in a transaction or series of transactions that results in such entity, person or group directly or indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii) of the purchase of shares of Common Stock pursuant to a tender offer or exchange offer (other than an offer by the Corporation) for all, or any part of, the Common Stock ("Offer"), (iii) of a merger in which the Corporation will not survive as an independent, publicly owned corporation, a consolidation, or a sale, exchange or other disposition
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of all or substantially all of the Corporation's assets, (iv) of a substantial change in the composition of the Board during any period of two consecutive years such that individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the stockholders of the Corporation, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (v) of any transaction or other event which the Committee, in its discretion, determines to be a Change in Control for purposes of the Plan.
9.Distribution on Death
(a)Payment Upon Death. If a Director dies before all amounts credited to the Director's Account are paid in accordance with the Director's prior elections, the remaining unpaid balance in such Account (including all unpaid installments if installment payments had been elected by the Director) shall be paid in the form of a single lump sum distribution to the Director’s beneficiary within sixty (60) days after the date of death of the Director, or by such other date as may be permitted under Code Section 409A of the Code.
(b)Beneficiary Designation. A Director may elect and/or change the designated beneficiary (or beneficiaries) at any time during the Director's lifetime by completing a Beneficiary Designation Form provided by the Plan Administrator and return such form to the Plan Administrator. A Beneficiary Designation Form is not considered valid unless it has been received by and approved by the Plan Administrator. If a Director fails to designate a beneficiary, then the Director’s designated Beneficiary shall be deemed to be the Director’s estate. If a Director is divorced, any beneficiary designation previously made by the Director that designated the Director’s former spouse as beneficiary shall automatically be revoked and, if the Director did not make a subsequent beneficiary election, all amounts owed to the Director under the Plan shall be made to the Director’s estate.
10.Payment Due to Unforeseeable Emergency
The Plan Administrator may allow a Director to withdraw all or a portion of the Director Account in the event of an Unforeseeable Emergency, as defined below, consistent with Code Section 409A. The amount withdrawn may not exceed the amount needed to satisfy the financial hardship, including applicable taxes payable on such amount. The term “Unforeseeable Emergency” means a severe financial hardship of the Director resulting from (a) an illness or accident of the Director, the Director’s spouse, or the Director’s dependent; (b) a loss of the Director’s property due to casualty; or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director, all as determined in the sole discretion of the Plan Administrator consistent with Code Section 409A. Distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Director’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan, consistent with Code Section 409A. The Administrator may require cancellation of the Director’s current Elective Deferral election in the event of a distribution on account of Unforeseeable Emergency.
11.Compliance with Code Section 409A
The Corporation intends for the Plan to comply with the requirements of Code Section 409A of the Code and shall be operated and interpreted consistent with that intent. In no event may a Director, directly or indirectly, designate the Plan Year of a payment except in accordance with Code Section 409A. Notwithstanding the foregoing, the Corporation makes no representation that the Plan complies with Code Section 409A of the Code and shall have no liability to any Director for any failure to comply with Code Section 409A of the Code
12.Miscellaneous
(a)The right of a Director to receive any amount credited to the Director's Account shall not be transferable or assignable by the Director, except by will or by the laws of descent and distribution. To the extent that any person acquires a right to receive any amount credited to a Director's Account hereunder, such right shall be no greater than that of an unsecured general creditor of the Corporation. Except as expressly provided herein, any person having an interest in any amount credited to a Director's Account under the Plan shall not be entitled to payment until the date the amount is due and payable. No person shall be entitled to anticipate any payment by assignment, alienation, sale, pledge, encumbrance or transfer in any form or manner prior to actual or constructive receipt thereof. Any attempt to alienate, sell, transfer, assign, pledge, attach or
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otherwise encumber any Compensation or amount, whether currently or hereafter payable, will be void.
(b)The Corporation shall not be required to reserve or otherwise set aside funds or shares of Common Stock for the payment of its obligations hereunder.This Plan is intended to be unfunded for tax purposes and for purposes of Title I of the ERISA. Nothing contained herein, and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Corporation and any Plan Administrator or any other person. To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured creditor of the Corporation.
(c)Prior to a Change in Control, the Committee shall interpret the Plan and make all determinations deemed necessary or desirable for the Plan's operation. The determination of the Committee shall be conclusive. The Committee may obtain such advice or assistance as it deems appropriate from persons not serving on the Committee. The Senior Vice President responsible for Human Resources or other appropriate officer of the Corporation shall, following a Change in Control, name as Plan Administrator any person or entity (including, without limitation, a bank or trust company). Following a Change in Control, the Plan Administrator shall interpret the Plan and make all determinations deemed necessary or desirable for the Plan's implementation of the Change in Control. The determination of the Plan Administrator shall be conclusive. The Corporation shall provide the Plan Administrator with such records and information as are necessary for the proper administration of the Plan. The Plan Administrator shall rely on such records and other information as the Plan Administrator shall in its judgment deem necessary or appropriate in determining the eligibility of a Director and the amount payable to a Director under the Plan.
(d)The Plan Administrator shall have the authority to:
(i)construe and interpret the Plan and apply its provisions;
(ii)promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(iii)authorize any person to execute, on behalf of the Corporation, any instrument required to carry out the purposes of the Plan;
(iv)determine minimum or maximum amounts of Compensation that Directors may elect to defer under the Plan;
(v)calculate deemed earnings, losses, and Interest on Accounts;
(vi)interpret, administer, reconcile any inconsistency in, correct any defect in, and/or supply any omission in the Plan and any instrument, Distribution Election Form, or agreement relating to the Plan; and
(vii)exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of the Plan.
(e)The Board may at any time amend or terminate the Plan provided that no amendment or termination shall impair the rights of a Director with respect to amounts then credited to the Director's Account and any such amendment shall comply with the requirements of Code Section 409A.
(f)Nothing contained herein will entitle a Director to continue to serve as a member of the Board or require a Director to continue to provide services as a member of the Board. The termination of a Director’s service as a member of the Board will have no effect on his or her rights hereunder, except as otherwise provided herein.
(g)This Plan shall be construed in accordance with and governed by the laws of New Jersey to the extent not superseded by federal law, without reference to the principles of conflict of laws. The courts of competent jurisdiction in the District of New Jersey shall have exclusive jurisdiction for all claims, actions and other proceedings involving or relating to the Plan or any party in interest, including, by way of example and without limitation, a claim or action (i) to recover benefits allegedly due under the Plan or by reason of any law; (ii) to enforce rights under the Plan; (iii) to
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clarify rights to future benefits under the Plan; or (iv) that seeks a remedy, ruling or judgment of any kind against the Plan or a party in interest.
(h)Payments made by the Corporation hereunder will be subject to any applicable tax-withholding requirements and to such other deductions as are required at the time of such payment under any income tax or other law, whether of the United States or any other jurisdiction.
(i)If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.
(j)The Plan has a right of reimbursement against any person who receives or holds a payment from the Plan in excess of the amount to which a Director or beneficiary is entitled under the terms of the Plan. The Plan Administrator may recover the amount overpaid in any manner, including, but not limited to, by legal action against the recipient and/or holder of the overpayment or offset against other or future benefits payable to or with respect to the Director or beneficiary under the Plan.
(k)Any notice or filing required or permitted to be given to the Plan Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the Plan Administrator for the Deferred Compensation Plan for Non-Employee Directors of Solstice Advanced Materials Inc., 115 Tabor Road, Morris Plains, New Jersey 07950 or to such other person or entity as the Plan Administrator may designate from time to time.
Solstice Advanced Materials Inc.
/s/ Jason Clifford | |||||
Jason Clifford | |||||
Senior Vice President & Chief Human Resources Officer | |||||
February 10, 2026 | |||||
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, David Sewell, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Solstice Advanced Materials Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2026 | By: | /s/ David Sewell | |||||||||
David Sewell | |||||||||||
President and Chief Executive Officer | |||||||||||
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Tina Pierce, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Solstice Advanced Materials Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2026 | By: | /s/ Tina Pierce | |||||||||
Tina Pierce | |||||||||||
Senior Vice President and Chief Financial Officer | |||||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Solstice Advanced Materials Inc. (the “Company”) for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Sewell, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 6, 2026 | By: | /s/ David Sewell | |||||||||
David Sewell | |||||||||||
| President and Chief Executive Officer | |||||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Solstice Advanced Materials Inc. (the “Company”) for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tina Pierce, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 6, 2026 | By: | /s/ Tina Pierce | |||||||||
Tina Pierce | |||||||||||
Senior Vice President and Chief Financial Officer | |||||||||||