Financial Analysis

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 Companys 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 Companys 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 Companys recorded liabilities for environmental costs: 2026 2025 Beginning Balance as of January 1 $ 56 $ 53 Accruals for environmental matters deemed probable and reasonably estimable 1 Environmental liability payments (2) (1) Ending Balance as of June 30 $ 54 $ 53 The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, li …

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Debt The following table contains the components of our debt: June 30, 2026 December 31, 2025 Total debt: Term Loan Facility due 2032 1 $ 1,000 $ 1,000 5.625% Senior Notes due 2033 1,000 1,000 Finance lease liabilities 109 118 $ 2,109 $ 2,118 Less: Unamortized discount 15 15 Unamortized debt issuance costs 13 13 Current portion of long-term debt and finance lease liabilities, current 20 18 Total $ 2,061 $ 2,072 __________________ 1. See Senior Credit Facilities below for information regarding interest rates for the term loan facility. 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 (as amended, 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 …

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See the following disaggregated revenue table and related discussions by reportable business segment for details: For The Three Months Ended June 30, For The Six Months Ended June 30, 2026 2025 2026 2025 Refrigerants & Applied Solutions Refrigerants $ 473 $ 418 $ 862 $ 744 Building Solutions and Intermediates 180 181 348 364 Nuclear 1 125 98 231 182 Healthcare Packaging 73 59 120 102 Net Refrigerants & Applied Solutions 850 756 1,561 1,392 Electronic & Specialty Materials Research and Performance Chemicals 135 132 257 253 Electronic Materials 119 104 228 194 Safety and Defense Solutions 43 41 94 91 Net Electronic & Specialty Materials 298 277 579 538 Net sales $ 1,148 $ 1,033 $ 2,139 $ 1,930 _________________ 1. Previously known as Alternative Energy Services (AES).

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Stock-Based Compensation Plans Stock-based compensation cost, which is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations, was $6 million and $11 million for the three and six months ended June 30, 2026, respectively, and $6 million and $12 million for the three and six months ended June 30, 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. Restricted Stock Units During the six months ended June 30, 2026, the Company granted 214,097 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 employees 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 $79.27. Performance Stock Units During the six months ended June 30, 2026, the Company granted 143,180 performance stock units (PSUs) pursuant to the 2025 Plan to certain employees. The PSU …

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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 Companys financial assets and liabilities accounted for at fair value on a recurring basis: June 30, 2026 December 31, 2025 Fair Value Level Assets Liabilities Assets Liabilities Product loan receivable 2 $ 314 $ $ 300 $ Product loan payable 2 314 300 Fair Value $ 314 $ 314 $ 300 $ 300 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 Companys outstanding debt (excluding finance lease liabilities) is estimated using qu …

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Goodwill and Other Intangible Assets Net The below table summarizes the change in goodwill for the six months ended June 30, 2026, by segment: December 31, 2025 Currency Translation Adjustment June 30, 2026 Refrigerants & Applied Solutions $ 624 $ (2) $ 622 Electronic & Specialty Materials 196 (1) 195 Total Goodwill $ 820 $ (3) $ 817 Other intangible assets are comprised of the following: June 30, 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 $ 35 $ (30) $ 5 $ 35 $ (30) $ 5 Patents and technologies 21 (6) 14 21 (6) 15 Other intangible assets 3 (2) 3 (2) Total definite-life intangibles net 58 (39) 19 58 (37) 21 Indefinite-life intangibles Trademarks 28 28 29 29 Total Other intangible assets net $ 86 $ (39) $ 47 $ 87 $ (37) $ 49 Amortization expense related to intangible assets was $0.7 million and $1.3 million for the three and six months ended June 30, 2026, respectively, and $1 million and $2 million for the three and six months ended June 30, 2025, respectively. Estimated intangible asset amortization expense for each of the next five years are as follows: Amount 2026 (remaining six months) $ 1 2027 3 2028 2 2029 2 2030 2 Thereafter 8 …

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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 23.5% for the six months ended June 30, 2026 and 38.2% for the six months ended June 30, 2025 . The effective tax rate decreased during 2026 compared to 2025 as a result of nondeductible transaction costs and discrete tax adjustments related to the Spin-off from Honeywell in the prior-year period.

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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 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 Companys 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 …

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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 Companys 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 $61 million and $115 million for the three and six months ended June 30, 2025, respectively, 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 $2 million and $8 million, and U.S. pension service costs of $0 million and $1 million for the three and six months ended June 30, 2025, respectively. There were no such allocations for the three and six months ended June 30, 2026. Honeywell is not considered an affiliate following the Spin-off. Related Party Sales and Purchases Product sales to affiliates Product and service sales in the Consolidated Statements of Operations include sales to affiliates of $29 million and $45 million for the three and six months ended June 30, 2026, respectively, and $25 million and $38 mill …

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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 June 30, For The Six Months Ended June 30, 2026 2025 2026 2025 Refrigerants & Applied Solutions Refrigerants $ 473 $ 418 $ 862 $ 744 Building Solutions and Intermediates 180 181 348 364 Nuclear 1 125 98 231 182 Healthcare Packaging 73 59 120 102 Net Refrigerants & Applied Solutions 850 756 1,561 1,392 Electronic & Specialty Materials Research and Performance Chemicals 135 132 257 253 Electronic Materials 119 104 228 194 Safety and Defense Solutions 43 41 94 91 Net Electronic & Specialty Materials 298 277 579 538 Net sales $ 1,148 $ 1,033 $ 2,139 $ 1,930 _________________ 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 as …

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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 Businesss 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. T …

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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 Companys 2025 Annual Report on Form 10-K. The Company includes herein certain updates to those policies. 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 Companys 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 (prior to the Spin-off), 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. Transaction-related costs The Company classi …

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Shareowners Equity Authorized Capital Stock The Companys 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 and six months ended June 30, 2026. For The Three Months Ended June 30, For The Six Months Ended June 30, (in millions) 2026 2026 Balance as of beginning of period 158.8 158.7 Common stock issued under employee compensation plans, net 0.1 Common stock acquired Balance as of end of period 158.8 158.8 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 $ (120) $ (8) $ 2 $ (127) Other comprehensive income (loss) before reclassifications (15) (15) Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income (loss) (15) (15) Balance as of June 30, 2026 $ (135) $ (8) $ 2 $ (142) Balance as of December 31, 2024 $ (218) $ (5) $ 10 $ (213) Other comprehensive income (loss) before reclassifications 88 (2) (37) 49 Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income (loss) 88 (2) (37) 49 Balance as of June 30, 2025 $ (130) $ (7) $ …

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Subsequent Events The Company evaluated subsequent events for recognition or disclosure through July 30, 2026, the date the Consolidated Financial Statements were available to be issued. On July 6, 2026, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Solar Merger Sub One Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (Merger Sub One), Solar Merger Sub Two LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (Merger Sub Two and, together with Merger Sub One, the Merger Subs), and Element Solutions Inc, a Delaware corporation (Element Solutions). The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, the Company will acquire Element Solutions through the following: (i) first, Merger Sub One will merge with and into Element Solutions (the First Merger), with Element Solutions surviving the merger as a wholly-owned subsidiary of the Company (the Surviving Corporation), and (ii) immediately following the First Merger, the Surviving Corporation will merge with and into Merger Sub Two (the Second Merger and together with the First Merger, the Mergers), with Merger Sub Two surviving the Second Merger as a wholly-owned subsidiary of the Company (the Surviving Company). The Mergers and the other transactions contemplated by the Merger Agreement are collectively referred to as the Transactions. Under the terms of the Merger …

SubsequentEventsTextBlock · excerpt; the full note is in the filing