Solstice Advanced Materials Inc.

Greetings and welcome to the Solstice Advanced Materials third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Leadhead, Vice President, Investor Relations. Thank you. You may begin.

Thank you and good morning, everyone. Welcome to Solstice's third quarter 2025 earnings call. Solstice completed its spinoff from Honeywell on October 30th and is now listed on NASDAQ Stock Exchange under the ticker SOLS. We are excited to be with you today for our first earnings call following the spin. We released our third quarter 2025 financial results earlier this morning, Today's presentation, including non-GAAP reconciliations and our earnings press release, are available on the investor relations portion of Solstice's website at investor.solstice.com. Our discussion today will include forward-looking statements that are based on our best view of the world and our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. Turning to slide three, joining me today are David Sewell, our President and CEO, and Tina Pierce, our CFO. David will open today's call with highlights of our third quarter results. Tina will then review our segment performance and financial outlook before turning the call back to David for closing remarks. We will then be happy to take your questions. With that, I'll now turn the call over to David.

Thank you, Mike, and thank you, everyone, for joining us today. First, I'd like to recognize this significant milestone for Solstice as we host our first earnings call following our spinoff from Honeywell. Exactly one week ago today, we rang the opening bell at the NASDAQ to mark the beginning of our next chapter. The excitement was palpable throughout the day, not only from those participating in the celebration on site, but from all of our employees who cheered us on from their locations around the world. I can't stress enough how grateful I am to each of our team members who dedicated their time and talents to make that milestone possible, and to the entire Solstice team who continue to deliver for our customers. As you'll hear on today's call, even as we were in the final stretches of preparing the business to operate as an independent entity, we continued to deliver strong financial results. As we discussed at our investor day last month, Solstice has a strong track record of peer-leading growth fueled by our technology platforms and underpinned by strong secular growth trends in the end markets we serve. Our third quarter performance builds on this track record, delivering year-over-year net sales growth of 7%. This growth reflects both strong demand for our products as well as the significant value that our differentiated product platform provides our customers. During the third quarter, we also maintained our best-in-class margin profile, delivering adjusted standalone EBITDA margins of 24.3%. Our strong margin profile is driven by our commitment to operational excellence capital efficiency, and the specialty nature of our portfolio. During our investor day last month, we discussed how we are refining our operating model to focus on commercial excellence, drive productivity, and optimize return on invested capital. Following our spinoff, Solstice's pro forma capital structure reflects a prudent net leverage profile estimated at approximately 1.5 times. allowing for financial flexibility and the ability to continue reinvesting in high return growth areas of the business. As we strive to unleash growth, we will be allocating capital with clear priorities and discipline, specifically in areas such as semiconductor materials, nuclear conversion, protective fibers, and cooling technologies where we believe Solstice has a clear right to win. We believe this will enable us to make the key investments needed to accelerate our growth and profitability. Finally, with a strong third quarter, we are well positioned for the remainder of the year and are on track to deliver on our full year 2025 guidance. Turning to slide five, I'd like to discuss in more detail a few key highlights from our third quarter 2025 consolidated results. In the third quarter of 2025, Solstice recorded $969 million in net sales, up 7% year over year. Notably, in our refrigerants and applied solutions segment for the quarter, robust demand for refrigerants drove 22% year over year net sales growth for that business as we are capitalizing on the HFO transition. In electronic and specialty materials, we achieved top-line growth in both electronic materials and safety and defense solutions, which underscores the continued value that we provide our customers with our differentiated offerings across the businesses. Beyond the reported sales figure this quarter, underlying momentum continues to build in the business from key secular trends in the attractive and markets we serve. In alternative energy services, which is our nuclear conversion business, our backlog grew 12% sequentially, reflecting both favorable order activity and benefits in price. In electronic materials, we saw our order book strengthen throughout the quarter and see positive momentum carrying into the fourth quarter, further solidifying our optimism around our position and the growing AI, semiconductor, and data center landscape. Adjusted standalone EBITDA for the third quarter of 2025 was $235 million, reflecting a 5% decrease year over year and an adjusted standalone EBITDA margin of 24.3%. This was largely due to anticipated transitory costs, including certain items related to our spinoff, as well as the expected technology transition from HFCs to HFOs. As discussed during our recent investor day, this leads to our full year baseline guidance of 25% EBITDA margins, which we are well in line to achieve. Finally, while we reported a net loss attributed to Solstice of $35 million for the third quarter of 2025, The decrease year over year was primarily driven by the impact of higher income tax expense resulting from frictional taxes associated with the spinoff. We estimate these discrete tax items added approximately 80 percentage points to our effective tax rate this quarter. As we complete our transition to operating as a standalone public company and move past some of these discrete transitory items related to our spinoff, we are very confident in our opportunity for margin expansion and long-term trajectory for growth to drive improved profitability. Turning to slide six. I'd like to discuss in more detail the puts and takes impacting our year-over-year net sales and adjusted standalone EBITDA performance. Beginning with our net sales of $969 million for the quarter, organic net sales growth was 5%, including 2% from volume growth and 3% due to pricing. This primarily reflects volume growth and favorable pricing in refrigerants, which was partially offset by lower volumes in healthcare packaging and research and performance chemicals. Our net sales growth also included a 2% increase due to foreign currency translation. Turning to our adjusted standalone EBITDA of $235 million for the quarter, The decrease year-over-year was driven by approximately $10 million of anticipated transitory costs discussed earlier, which primarily fell in the ESM segment, as well as a year-over-year shift in refrigerants product mix, primarily within the stationary end market. This industry shift reflects a significant increase in demand for our low global warming potential refrigerants for stationary applications due to the ongoing regulatory transition towards next generation HFO solutions. While this transition translates to a year over year margin decline, we foresee much greater longer term benefits for our business due in part to our industry leadership in this space. As an example, As the installed base of stationary units using HFO blends continues to grow, we would expect to see benefits from an emerging aftermarket, which represents approximately 50% of our refrigerant product mix today. Our adjusted standalone EBITDA margin declined by a little less than three percentage points year over year, remaining healthy at 24.3%, inclusive, of an approximate 100 basis point impact from transitory costs that I mentioned earlier. Offsetting the negative impacts I just described were modest price and cost timing benefits for the quarter. I hope this gives you a clearer idea of the puts and takes impacting our business in the short term. We are pleased with our ability to continue to deliver a healthy and attractive margin profile and we are on track to deliver against our 2025 revenue and EBITDA guidance. With that, I'll now turn it over to Tina Pierce, our CFO, to discuss our segment results for the quarter in more detail.