grepcent / static financial knowledge base

Informational only - not investment advice.

Solstice Advanced Materials Inc. (SOLS)

CIK: 0002064953. SIC: 2800 Chemicals & Allied Products. Latest 10-K as of: 2026-02-19.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2800 Chemicals & Allied Products

SEC company page: https://www.sec.gov/edgar/browse/?CIK=2064953. Latest filing source: 0002064953-26-000008.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue3,886,000,000USD20252026-02-19
Net income237,000,000USD20252026-02-19
Assets5,673,000,000USD20252026-02-19

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002064953.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric202320242025
Revenue3,649,000,0003,770,000,0003,886,000,000
Net income621,000,000594,000,000237,000,000
Diluted EPS3.913.741.49
Assets5,004,000,0005,673,000,000
Liabilities1,822,000,0004,296,000,000
Stockholders' equity3,258,000,0001,411,000,000
Cash and cash equivalents661,000,000534,000,000
Net margin17.02%15.76%6.10%

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002064953.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2025-Q32025-09-30969,000,000-35,000,000reported discrete quarter
2025-Q42025-12-31987,000,00041,000,000derived Q4 = FY annual - nine-month YTD
2026-Q12026-03-31991,000,00085,000,0000.53reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0002064953-26-000047.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-06. Report date: 2026-03-31.

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”).

24

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.

25

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.”

26

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 adjustmen

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-19. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section should be read in conjunction with the audited Consolidated Financial Statements and related Notes included in this Annual Report on Form 10-K, as well as the information contained in the section of this report titled Item 1. “Business.” This section contains forward-looking statements. See the sections of this Annual Report on Form 10-K titled “Cautionary Statement Concerning Forward-Looking Statements” and Item 1A. “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements that could cause future results to differ materially from those reflected in this section. The financial information discussed below and included in this Annual Report on Form 10-K may not necessarily reflect what our financial condition, results of operations or cash flows would have been had we been a standalone company during the full periods presented or what our financial condition, results of operations and cash flows may be in the future. Discussions related to the financial condition and results of operations for the year ended December 31, 2024 in comparison to the year ended December 31, 2023 have been omitted. For such omitted discussions, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s final Information Statement, dated as of October 17, 2025 (the “Information Statement”), attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 17, 2025.

OVERVIEW

Business Overview

Solstice Advanced Materials Inc. (“Solstice,” “Solstice Advanced Materials,” “we,” “us,” “our,” or the “Company”) 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.

In 2025, we served over 3,000 customers across a wide range of end markets in approximately 120 countries and territories. Our global presence included 20 manufacturing sites, four standalone research and development (“R&D”) sites and approximately 4,100 employees as of December 31, 2025.

Spin-off from Honeywell

On October 8, 2024, Honeywell International Inc. (“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 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

49

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 does 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”).

Prior to October 30, 2025 (“the “Spin-off date”), the accompanying combined financial statements as of December 31, 2024 and for the years ended December 31, 2024 and 2023 and the consolidated financial statements as of and for the year ended December 31, 2025 (the “financial statements”) of the Company 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. 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 Advanced Materials 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 the Company. All significant intercompany balances between Solstice and Honeywell prior to the Spin-off 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.

In connection with the Spin-off, we also entered into certain agreements with Honeywell, including a Separation Agreement, a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement, an Intellectual Property Cross-License Agreement, a Trademark License Agreement and an Accelerator License Agreement. Under the Transition Services Agreement, we generally expect to be able to utilize certain services from Honeywell for a transitional period following the Spin-off before we replace these services over time with services supplied either internally or by third parties. The expenses for the services may vary from the historical costs directly billed or allocated to us for the same services.

We also have incurred, and expect to continue to incur certain costs in connection with our establishment as an independent public company (the “Transaction-related costs”). The Transaction-related costs 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 Transaction-related costs are expected to continue through at least fiscal year 2026.

Macroeconomic Conditions

We continue to monitor macroeconomic and geopolitical developments amid heightened trade tensions, economic and trade policy uncertainty, and inflationary risks. Ongoing trade policy volatility—including new tariffs and, in some cases, subsequent rollbacks or suspensions—has and could continue to adversely impact global growth and contribute to inflationary pressures. Global conflicts, tariffs, labor disruptions and social unrest, and regulations continue to generate volatility in global markets and can contribute to supply chain vulnerabilities and pricing fluctuations. We remain proactive in our collaboration with suppliers to minimize shortages and mitigate supply chain and pricing volatility.

50

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.

RESULTS OF OPERATIONS

Income Statement

The following table sets forth our results of operations for the years ended December 31, 2025 and 2024.

For The Years Ended December 31,

Percentage of Net Sales For The Years Ended

Percentage Change

(dollars in millions)

2025

2024

2025

2024

2025 vs. 2024

Net sales

$

3,886 

$

3,770 

100 

%

100 

%

3 

%

Cost, expenses and other

Total cost of products and services sold

2,636 

2,464 

68 

%

65 

%

7 

%

Gross profit

1,250

1,306

32 

%

35 

%

(4)

%

Research and development expenses

97 

83 

3 

%

2 

%

17 

%

Selling, general and administrative expenses

421 

392 

11 

%

10 

%

7 

%

Transaction-related costs

117 

26 

3 

%

1 

%

NM

Other expense (income)

(60)

(5)

(2)

%

— 

%

NM

Interest and other financial charges

28 

13 

1 

%

— 

%

114 

%

Total costs, expenses and other

3,239 

2,973 

83 

%

79 

%

9 

%

Income before taxes

647 

797 

17 

%

21 

%

(19)

%

Income tax expense

362 

192 

9 

%

5 

%

89 

%

Effective tax rate

56 

%

24 

%

— 

%

— 

%

32 

%

Net income

285 

605 

7 

%

16 

%

(53)

%

Less: Net income (loss) attributable to noncontrolling interest

48 

11 

1 

%

— 

%

336 

%

Net income attributable to Solstice Advanced Materials

$

237 

$

594 

6 

%

16 

%

(60)

%

______________

NM - not meaningful

51

Net Sales

The following table sets forth the factors contributing to year-over-year changes in our net sales for the year ended December 31, 2025.

For The Year Ended December 31,

Change in net sales from prior period

2025 vs 2024

Volume

— 

%

Price

2 

%

Foreign currency translation

1 

%

Total % change in net sales

3 

%

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.”

2025 compared with 2024

Net sales increased by $116 million or 3% primarily due to favorable volume and pricing in refrigerants of $195 million, demand-driven volume increases in electronic materials of $39 million, as well as favorable pricing in research and performance chemicals of $16 million. The increase was partially offset by lower sales volumes in nuclear (alternative energy) services of $112 million attributed to certain large sales transactions which occurred in 2024 that did not recur in 2025, as well as lower volumes in healthcare packaging of $43 million.

Cost of product and services sold increased by $172 million or 7% driven by volume increases in both the RAS and ESM segments, as well as the overall product mix in the RAS segment. These volume increases were partially offset by the volume declines in healthcare packaging.

Research and development expenses increased by $14 million or 17% driven by continued investment in innovation across the portfolio of offerings such as Spectra Y and next-gen molecules; Selling, general and administrative expenses increased by $29 million or 7% driven by an increase in employee-related expenses, primarily in connection with certain functions necessary to be an independent company; Transaction-related costs increased by $91 million driven by professional advisory services fees incurred in 2025 in connection with the Spin-off; Other expense (income) had a favorable change by $55 million driven primarily by a government reimbursement of certain past legal expenses and lower currency losses compared to last year; and Interest and other financial charges increased by $15 million or 114% driven by the issuance of debt in connection with the Spin-off in 2025.

Income tax expense increased by $170 million. The effective tax rate in 2025 was higher than the effective tax rate in 2024 as a result of incremental frictional tax costs associated with the separation from Honeywell, which increased our effective tax rate by approximately 32% for the year ended December 31, 2025. 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, pension and other postretirement 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.

52

Refrigerants & Applied Solutions

Net Sales

The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our RAS segment for the years ended December 31, 2025 and 2024.

For The Years Ended December 31,

(Dollars in millions)

2025

2024

Net sales

$

2,789 

$

2,721 

Segment Adjusted EBITDA

981 

1,058 

Segment Adjusted EBITDA margin

35.2 

%

38.9 

%

The following table sets forth the reported and organic net sales growth in our RAS segment’s net sales for the year ended December 31, 2025.

For The Year Ended December 31,

2025 vs. 2024

Total % change in net sales

3 

%

Foreign currency translation

(1)

%

Acquisitions, divestitures and other, net

— 

%

Organic sales percentage(1)

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.

53

2025 compared with 2024

RAS net sales increased by $68 million or 3% due to volume growth and favorable pricing in refrigerants, partially offset by a reduction in our nuclear (alternative energy) services offering attributed to large sales transactions which occurred in 2024 that did not recur in 2025, as well as volume reductions in healthcare packaging.

Segment Adjusted EBITDA decreased by $77 million or 7% and Segment Adjusted EBITDA margin decreased 4% primarily driven by refrigerants product mix as a result of the ongoing transition to LGWP refrigerants, and volume declines in healthcare packaging due to anticipated customer destocking.

Electronic & Specialty Materials

Net Sales

The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our ESM segment for the years ended December 31, 2025 and 2024.

For The Years Ended December 31,

(Dollars in millions)

2025

2024

Net sales

$

1,097 

$

1,049 

Segment Adjusted EBITDA

203 

201 

Segment Adjusted EBITDA margin

18.5 

%

19.2 

%

54

The following table sets forth the reported and organic net sales growth in our ESM segment’s net sales for the year ended December 31, 2025.

For The Year Ended December 31,

2025 vs. 2024

Total % change in net sales

5 

%

Foreign currency translation

(1)

%

Acquisitions, divestitures and other, net

— 

%

Organic sales percentage(1)

4 

%

________________

(1)See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for definition of Organic sales percentage.

2025 compared with 2024

ESM net sales increased by $48 million or 5%. The increase was attributable to demand-driven volume increases in electronic materials, as well as favorable pricing in our research and performance chemicals offering.

Segment Adjusted EBITDA increased by $2 million or 1% and Segment Adjusted EBITDA margin decreased 1%, primarily driven by lower pricing with certain customers in the electronic materials business.

Corporate and All Other

Corporate and All Other costs increased by $23 million or 14% for the year ended December 31, 2025 due to incremental ongoing costs incurred as part of the transition 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 Year Ended December 31,

For The Year Ended December 31,

2025 vs. 2024

2024 vs. 2023

Total % change in net sales

3 

%

3 

%

Foreign currency translation

(1)

%

— 

%

Acquisitions, divestitures and other, net

— 

%

— 

%

Organic sales percentage

2 

%

3 

%

55

•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, pension and other postretirement 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 years ended December 31, 2025 and 2024.

Years Ended December 31,

2025

2024

(Dollars in millions)

Amount

Percentage of Net Sales

Amount

Percentage of Net Sales

Net income attributable to Solstice Advanced Materials (GAAP)

$

237

6 

%

$

594

16 

%

Net income (loss) attributable to noncontrolling interest

48

1 

%

11

— 

%

Net income (GAAP)

$

285

7 

%

$

605

16 

%

Depreciation

191

5 

%

175

5 

%

Amortization

29

1 

%

42

1 

%

Interest and other financial charges

28

1 

%

13

— 

%

Other adjustments1

(38)

(1)

%

28

1 

%

Stock compensation expense

27

1 

%

17

— 

%

Transaction-related costs

117

3 

%

26

1 

%

Income tax expense

362

9 

%

192

5 

%

Adjusted EBITDA (Non-GAAP)

$

1,000

26 

%

$

1,098

29 

%

Net sales

$

3,886

$

3,770

Adjusted EBITDA margin (Non-GAAP)

25.7 

%

29.1 

%

_________________

1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, pensions expenses, and certain legal costs, net of recoveries.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Historically, the Company has generated 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. This arrangement is not reflective of the manner in which the Company would have been able to finance its operations had it been a standalone business separate from Honeywell during the periods presented. Transfers of cash between Honeywell and the Company are included within Net transfers to Parent on the Consolidated Statements of Cash Flows and the Consolidated Statements of Equity included elsewhere in this Annual Report on Form 10-K. 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

56

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.

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. The proceeds of the Notes were held in escrow pending completion of the Spin-off, and such proceeds were released from escrow on October 29, 2025 in connection with the Spin-off.

The Notes are senior unsecured obligations of the Company and are, or will be, guaranteed on a senior unsecured basis by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s Senior Credit Facilities (described below). The Notes are subject to customary affirmative and negative covenants that limit the Company’s ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments; make investments; consummate certain asset sales; engage in certain transactions with affiliates; grant or assume certain liens; and consolidate, merge or transfer all or substantially all of the Company’s assets.

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”).

All obligations under the Senior Credit Facilities are unconditionally guaranteed, jointly and severally, by: (a) the Company and (b) all direct and indirect wholly owned subsidiaries of the Company that are organized under the laws of the United States, any state thereof or the District of Columbia, subject to certain exceptions and limitations (collectively, the “Guarantors”). Subject to certain limitations, the Senior Credit Facilities are secured on a first priority basis by: (x) a perfected security interest in the equity interests of each direct subsidiary of the Company and each Guarantor under the Senior Credit Facilities (subject to certain customary exceptions) and (y) perfected security interests in, and mortgages on, substantially all tangible and intangible personal property and material real property of the Company and each of the Guarantors under the Senior Credit Facilities, subject, in each case, to certain exceptions.

Loans under the Credit Agreement accrue interest at the Adjusted Term SOFR rate (“SOFR”) (which has a 0% floor) plus a SOFR margin.

The applicable margin for the Term Loan Facility is 1.75% per annum (for SOFR loans). The applicable margin for the Revolving Credit Facility varies from 1.50% per annum to 2.00% per annum (for SOFR loans) based on the Company’s Consolidated First Lien Leverage Ratio (as defined in the Credit Agreement). Accordingly, the interest rates for the Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the SOFR or future changes in the Company’s Consolidated First Lien Leverage Ratio. Interest payments with respect to the Credit Facilities are required at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months.

In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, the Company is required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by the Company’s Consolidated First Lien Leverage Ratio and ranges from 0.25% to 0.35% per annum.

57

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 December 31, 2025, there were no outstanding borrowings under the Revolving Credit Facility, the interest rate on the Term Loan Facility was 5.59% (three month SOFR plus 1.75%), and there were $270 million of unused letters of credit under the Sidecar LC Facilities.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit the Company and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/repurchases, in respect of the Company and its subsidiaries’ equity interests, to engage in transactions with affiliates or amend certain material documents. In addition, the Credit Agreement also contains financial covenants for the benefit of the lenders under the Revolving Credit Facility requiring the maintenance of a Consolidated First Lien Leverage Ratio of not greater than 3.50 to 1.00 (with a temporary step-up following a material acquisition to 4.00 to 1.00), and a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.75 to 1.00. As of December 31, 2025, we were in compliance with all of the financial covenants required by the Credit Agreement.

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. In addition to the maintenance fee, Sidecar LC Facilities also provide for each issuer’s standard fees with respect to the issuance, amendment, renewal or extension of any letter of credit.

Cash Flows

Summarized cash flow information for the years ended December 31, 2025 and 2024 is as follows:

For The Years Ended December 31,

(Dollars in millions)

2025

2024

Net cash provided by operating activities

$

455 

$

842 

Net cash used in investing activities

(330)

(298)

Net cash used in financing activities

(235)

(453)

Operating

Net cash provided by operating activities was $455 million for the year ended December 31, 2025 compared to $842 million for the same period in 2024. The decrease was due to lower net income and greater working capital outflow, in particular due to higher inventories and accounts receivable, partially offset by increased payables related to purchased services and direct material spend and timing, increased accruals due to timing of certain corporate expenses, as well as inflows of deferred revenue.

Investing

Net cash used in investing activities was $330 million for the year ended December 31, 2025 compared to $298 million for the same period in 2024. The increase was driven by higher capital expenditures, primarily within our ESM segment, partially offset by proceeds from the sale of assets.

Financing

Net cash used in financing activities was $235 million for the year ended December 31, 2025 compared to $453 million for the same period in 2024. The decrease was driven by proceeds from the issuance of our debt, partially offset by a dividend to Honeywell and an increase in net transfers to Honeywell for the period prior to the Spin-off.

58

Cash and Cash Requirements

Summary

As of December 31, 2025 and 2024, our cash and cash equivalents totaled $534 million and $661 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 $363 million and $647 million as of December 31, 2025 and 2024, respectively.

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 years ended December 31, 2025, 2024 and 2023, our capital expenditures incurred were $408 million, $296 million and $299 million, respectively. For the year ending December 31, 2026, we expect that our capital expenditures will be between $400 million and $425 million. The increase in 2025 and expected 2026 capital expenditures was and is expected to be primarily driven by projects to support new products and solutions for our electronic materials and advanced fiber offerings.

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 and $96 million outstanding obligations related to our SCF programs as of December 31, 2025 and December 31, 2024, respectively. See Note 2 - Summary of Significant Accounting Policies of the Notes to the audited Consolidated Financial Statements for additional information on our SCF agreements.

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. In the normal course of business, we enter into various contractual obligations that impact, or could impact, the cash requirements of our operations. As of December 31, 2025, we had short-term (2026), mid-term (2027 and 2028), and long-term (2029 and thereafter) purchase obligations of $696 million, $848 million, and $248 million, respectively. We also had material future contractual obligations related to product loans, leases, debt, pension, and environmental liabilities. See Note 2 - Summary of Significant Accounting Policies, Note 10 - Leases, Note 11 - Debt, Note 18 - Postretirement Benefit

59

Plans, and Note 20 - Commitments and Contingencies of the Notes to the audited Consolidated Financial Statements for additional information.

The above discussion excludes any future payments to decommission our AES Facility. We estimate our asset retirement obligation based on the estimated useful lives of the underlying asset, third-party estimates as to the cost to decommission the asset in the future, and federal and state regulatory requirements; however, revisions to the liability could occur due to changes in the estimated useful lives of the underlying assets, estimated dates of decommissioning, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changes in estimates. See Note 20 - Commitments and Contingencies— Asset Retirement Obligations of the Notes to the audited Consolidated Financial Statements for additional information.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. Certain estimates and assumptions involved in the application of accounting principles have a material impact on reported financial condition and operating performance and on the comparability of such reported information over different reporting periods. Critical accounting estimates or assumptions are those where the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and the impact of the estimates and assumptions on financial condition or operating performance is material. We consider the estimates and assumptions discussed below to be critical to the understanding of our financial statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our Consolidated Financial Statements.

Income Taxes – On a recurring basis, we assess the need for a valuation allowance against our deferred tax assets by considering all available positive and negative evidence, such as past operating results, projections of future taxable income, enacted tax law changes, and the feasibility and impact of tax planning initiatives. Our projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs, as well as the timing and amount of reversals of taxable temporary differences.

See Note 2 - Summary of Significant Accounting Policies of the Notes to the audited Consolidated Financial Statements for further discussion of additional income tax policies.

Goodwill – The Company’s business combinations have resulted in the recognition of goodwill. We engage independent third-party valuation specialists for assistance in the allocation of the purchase price and determination of the fair value of goodwill, which involves the use of accounting estimates and assumptions based on information available at or near the acquisition date. We believe the accounting estimates and assumptions are reasonable based on information available at the date of acquisition through historical experience and information obtained from management of the acquired entity; however, there is inherent uncertainty in the accounting estimates as assumptions are forward-looking and could be affected by future economic and market conditions.

Goodwill is subject to annual impairment testing as of October 1, or more frequently, if necessary. In testing goodwill, the fair value is estimated utilizing a discounted cash flow approach, including consideration of the Company’s strategic and annual operating plans, and adjusted for terminal value assumptions. These impairment tests use estimates and assumptions. If actual results differ from such estimates and assumptions it could materially impact our financial condition or operating performance. To address this uncertainty, we perform sensitivity analyses on key estimates and assumptions. Once the fair value is determined, if the carrying amount exceeds the fair value, it is impaired. Any impairment is measured as the difference between the carrying amount and its fair value.

We perform annual goodwill impairment tests for our four reporting units using a quantitative assessment. Over the past three fiscal years, there have been no impairments. As of October 1, 2025, the fair value of each reporting unit was greater than 120% of their respective carrying values.

60

Defined Benefit Pension Plans – For periods prior to the Spin-off, certain employees of the Solstice Advanced Materials business participated in U.S. pension plans sponsored by Honeywell. Following the Spin-off, the Company sponsors a defined benefit pension plan for these U.S. employees, with benefit obligations and corresponding assets transferred, as part of the Spin-off, from the Honeywell plans in which these employees participated. For all periods presented, we also sponsor unfunded defined benefit pension plans for certain non-US employees, primarily in Germany. For financial reporting purposes, net periodic pension (income) expense is calculated annually based upon various actuarial assumptions, including a discount rate for plan obligations and an expected long-term rate of return on plan assets. Changes in the discount rate and expected long-term rate of return on plan assets could materially affect the annual pension (income) expense amount. Annual pension (income) expense is comprised of service and interest cost, assumed return on plan assets, prior service amortization (Pension ongoing (income) expense), and an amortization of unrecognized gain or loss when they exceed 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) and would be amortized over the average remaining working lifetime of plan participants.

The key assumptions used in developing our net periodic pension (income) expense for our pension plans included the following:

U.S. Plans1

Non-U.S. Plans

2025

2025

2024

2023

Actuarial assumptions used to determine benefit obligations

Discount rate

5.3 

%

4.1 

%

3.4 

%

3.3 

%

Salary scale

— 

%

2.6 

%

2.8 

%

2.8 

%

Actuarial assumptions used to determine net periodic benefit income

Discount rate - benefit obligation

5.2 

%

4.1 

%

3.3 

%

3.3 

%

Discount rate - service cost

5.1 

%

— 

%

— 

%

— 

%

Discount rate - interest cost

4.6 

%

— 

%

— 

%

— 

%

Expected rate of return on plan assets

7.3 

%

— 

%

— 

%

— 

%

Salary scale

— 

%

2.6 

%

2.8 

%

2.8 

%

__________________

1.Prior to the Spin-off, certain of the Company’s U.S. employees participated in defined benefit plans which were sponsored by Honeywell. During this period, the Company did not record assets or liabilities to recognize the funded status of these plans because Solstice was not the legal sponsor of these plans. In conjunction with the Spin-off, the benefit obligations for these employees, and a proportionate share of the related Honeywell plans’ assets and liabilities, were transferred to a newly formed U.S. defined benefit pension plan sponsored by the Company. Therefore prior period amounts are not applicable for all U.S. Plan information presented within this footnote.

The discount rate reflects the market rate on December 31 (measurement date) for high-quality fixed income investments with maturities corresponding to our benefit obligations and is subject to change each year. The discount rate can be volatile from year to year as it is determined based upon prevailing interest rates as of the measurement date. We used a 5.3% discount rate and a 4.1% discount rate for our U.S. Plans and Non-U.S. Plans, respectively, to determine benefit obligations as of December 31, 2025, reflecting an increase in the market interest rate environment since the prior year-end.

Pension (income) expense for our defined benefit plans is not expected to be significant in 2026.

Contingent Liabilities – We are subject to a number of lawsuits, investigations, and claims (some of which involve substantial dollar amounts) arising out of the conduct of our business operations or those of previously owned entities, including matters relating to commercial transactions, government contracts, product liability, employee benefit plans, intellectual property, legal, and environmental, health, and safety matters. We continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Such analysis includes making judgments concerning matters such as the outcome of negotiations and the impact of evidentiary requirements.

61

Because most contingencies are resolved over long periods of time, liabilities may change in the future 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.

Asset retirement obligations – We record asset retirement obligations associated with the retirement of tangible long-lived assets as a liability in the period in which the obligation is incurred and its fair value can be reasonably estimated. These obligations primarily represent legal obligations to return our AES Facility to its initial state in connection with the site being decommissioned (if ever). The liability is measured at the present value of the obligation when incurred and is adjusted in subsequent periods. Corresponding asset retirement costs are capitalized as part of the carrying value of the related long-lived assets and depreciated over the asset’s useful life.

See Note 20 - Commitments and Contingencies of the Notes to the audited Consolidated Financial Statements for further discussion of our asset retirement obligations.

Environmental Liabilities and Expenditures - We accrue for environmental remediation costs when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the information is only sufficient to establish a range of probable liability, and no point within the range is more likely than any other, the lower end of the range has been used. Estimated liabilities are determined based on existing remediation laws and technologies and our planned remedial responses, which are derived from environmental studies, sampling, testing, and analyses. Inherent uncertainties exist in such evaluations, primarily due to unknown environmental conditions, changing governmental regulations regarding liability, and emerging remediation technologies. These liabilities are adjusted periodically as remediation efforts progress and as additional technology, regulatory, and legal information become available.

Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued.

See Note 20 - Commitments and Contingencies of the Notes to the audited Consolidated Financial Statements for further discussion of our environmental matters.