Qnity Electronics (Q) — Q4 2025 Earnings Call Transcript

Date: Feb 26, 2026 | Source: Qnity Investor Relations / MarketBeat (official) — prepared remarks + highlights

Participants: Jon Kemp (CEO), Mike Goss (Interim CFO), Meg Miller (VP, Global Communications)

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Meg Miller (Vice President, Global Communications): Thank you and welcome to our fourth quarter 2025 earnings call, Qnity's first earnings call as a standalone public company following our spin-off from DuPont. I'm joined by Jon Kemp, Chief Executive Officer, and Mike Goss, Interim Chief Financial Officer. Earlier today we issued our earnings release and supplemental presentation, available on our Investor Relations website. Today's discussion will include forward-looking statements and certain non-GAAP financial measures; please refer to our earnings release and SEC filings for reconciliations. With that, I'll turn the call over to Jon.

Jon Kemp (Chief Executive Officer): Thank you, Meg. This is a landmark moment for Qnity. Following our spin-off from DuPont, we are now a pure-play leader in semiconductor materials, singularly focused on the most exciting growth opportunities in the industry. Our seventh consecutive quarter of strong profitable organic growth demonstrates the power of our integrated portfolio and the momentum of our customers' most advanced roadmaps.

Qnity sits at the center of the industry's shift from "shrink" to "stack." As transistors approach physical limits, innovation is moving to three-dimensional architectures — stacking chips, adding layers, and lengthening the journey every chip takes. This multiplies materials intensity across the entire value chain: more CMP steps, more advanced cleans, more complex lithography patterning, more advanced packaging, more thermal management, and higher-layer-count circuit boards. Qnity is one of the only companies with an end-to-end portfolio spanning the full stack.

In the fourth quarter, we delivered net sales of $1.19 billion, above our expectations, with double-digit organic growth in both segments. Semiconductor Technologies continued to benefit from advanced logic and high-bandwidth memory demand as customers scale 3-nanometer and begin 2-nanometer activity. Interconnect Solutions delivered exceptional growth in advanced packaging, interconnects, and thermal management, with our AI-linked platforms growing more than 50% year over year. Adjusted EPS grew 28% year over year to $0.82 as we capture strong operating leverage.

We enter 2026 with record process-of-record (POR) win momentum across every line of business, positioning us for continued above-market growth. Our innovation engine — from new CMP materials for 2-nanometer and Angstrom-era nodes, to AI PCB metallization and next-generation thermal solutions — gives us confidence in our long-term outlook.

Mike Goss (Interim Chief Financial Officer): Thanks, Jon. Fourth quarter net sales were $1.19 billion, beating the consensus of $1.15 billion. Adjusted operating EBITDA was approximately $350 million with margin of 29.3%. Adjusted EPS was $0.82, up 28% year over year and well above the $0.64 consensus estimate. GAAP EPS was $0.48, reflecting transformation and integration charges as we build out our standalone infrastructure.

We exited 2025 with a strong balance sheet: approximately $915 million in cash and short-term investments at the start of the first quarter, and net leverage of approximately 2 times. We initiated a quarterly dividend and executed our disciplined capital allocation framework, prioritizing organic reinvestment in high-return growth capacity, followed by shareholder returns.

As a standalone company, we are executing our transformation plan across three focus areas: driving productivity and quality improvements, strengthening commercial and innovation excellence, and advancing our local-for-local operating model. We expect these actions to deliver approximately $100 million of EBITDA run-rate benefit by the end of 2028. Our IT separation and transition services agreement exits are progressing well.

For full-year 2026, we are providing initial guidance of net sales of approximately $5.1 to $5.3 billion, adjusted EBITDA of approximately $1.4 to $1.5 billion, adjusted EPS of $3.50 to $4.00, and adjusted free cash flow of $450 to $550 million. This reflects mid-to-high-single-digit organic growth, with AI-driven end markets providing the primary tailwind. We expect first-quarter 2026 to continue the momentum with low-double-digit organic growth.

Jon Kemp (Chief Executive Officer): Thanks, Mike. Before we open the call to questions, I want to reiterate our confidence. The semiconductor industry is entering a new era where materials are the hidden hero of performance, yield, and reliability. Qnity is uniquely positioned at the center of this trend with one of the broadest portfolios across the stack, decades of innovation alongside our customers, and a local-for-local model for manufacturing and support. We are aligned with the industry's most groundbreaking roadmaps and embedded in our customers' next-generation platforms. With our record POR momentum, disciplined capital allocation, and transformation program, we are well positioned to deliver durable, long-term growth and value creation for our shareholders. Operator, let's open the call to Q&A.

Key Q&A Highlights

• AI/advanced packaging demand: Qnity's advanced packaging, interconnects, and thermal management platforms grew more than 50% year over year in Q4, driven by AI-led demand across data centers, hyperscalers, and HBM architectures.
• 3nm/2nm content: Volumes at 3-nanometer continued to scale with meaningful early activity at 2-nanometer; Angstrom-era engagement (16/14/10) is a core R&D focus with customers.
• Local-for-local capex: Capacity expansion in the US (Delaware) and Taiwan supports local-for-local manufacturing and customer proximity; capex targeted at ~9% of sales in FY26, ~6% long-term.
• Transformation: ~$100M EBITDA run-rate benefit by end-2028 from productivity, commercial excellence, and operating model initiatives.