01—Abstract
Summary
Summary of the 10-Q filed May 12, 2026. Cited figures are marked; the original filing is the authoritative source.
Qnity Electronics, Inc. (Q) reported first-quarter 2026 net sales of $1.315 billiona, up 18% from $1.118 billion in the first quarter of 2025, driven by a 17% increase in volume.
Growth was led by Interconnect Solutions, with net sales up 25% to $593 millionb, and Semiconductor Technologies, up 12% to $722 million. The filing attributes demand strength to AI-driven applications, advanced packaging, high bandwidth memory and AI PCB and thermal management. Segment Adjusted Operating EBITDA rose to $432 million from $361 million.
Profitability was mixed below the sales line. Net income attributable to Qnity common stockholders was $151 millionc, down from $193 million, and diluted EPS was $0.72 versus $0.92. The decline reflected $61 million of interest expense, which was absent in the prior-year period because the company had no long-term debt then, and an effective tax rate of 25.7% versus 19.1%.
Transformation, integration and other charges rose to $28 milliond from $17 million, mainly IT independence costs of about $24 million. Cash flow and capital allocation remained solid. Operating cash flow was $135 million versus $207 million, which management attributed primarily to interest payments on long-term debt.
Capital expenditures were $122 million. Cash and cash equivalents ended the quarter at $857 million, and long-term debt was $4.00 billion. The company repurchased $25 million of stock under a $500 million authorization approved in February 2026, leaving $475 million available, and declared a quarterly dividend of $0.08 per share payable June 15, 2026.
02—Key points
Key Highlights
- Net sales of $1,315 million, up 18% from $1,118 million, with volume contributing 17 percentage points of growth.
- Interconnect Solutions net sales rose 25% to $593 million; Semiconductor Technologies rose 12% to $722 million.
- Segment Adjusted Operating EBITDA was $432 million versus $361 million, with Interconnect Solutions up 48% to $169 million.
- Net income available for common stockholders fell to $151 million from $193 million, and diluted EPS was $0.72 versus $0.92.
- Interest expense of $61 million was new versus the prior year, and the effective tax rate rose to 25.7% from 19.1%.
- Operating cash flow was $135 million versus $207 million; cash ended at $857 million with $4.00 billion of long-term debt.
- A $500 million share repurchase authorization was approved February 20, 2026; $25 million was used in March, leaving $475 million, and a $0.08 quarterly dividend was declared.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 12, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $1.31B$1.12B | +17.6% |
| Cost of Revenue | $697.00M$587.00M | +18.7% |
| Gross Profit | $618.00M$531.00M | +16.4% |
| R&D Expenses | $94.00M$84.00M | +11.9% |
| SG&A Expenses | $173.00M$140.00M | +23.6% |
| Net Income | $162.00M$199.00M | −18.6% |
| EPS (Basic) | $0.72$0.92 | −21.7% |
| EPS (Diluted) | $0.72$0.92 | −21.7% |
| Shares Outstanding (Basic) | 209.70M209.40M | +0.1% |
| Shares Outstanding (Diluted) | 210.30M209.40M | +0.4% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the first quarter of 2026?
Net sales rose 18% to $1.315 billion, primarily from a 17% increase in volume. The filing attributes Interconnect Solutions' 23% volume gain to AI-driven technology ramps, advanced packaging, AI PCB and thermal management, and Semiconductor Technologies' 12% volume gain to end-market strength, improved customer utilization and AI-driven applications in advanced nodes.
Why did net income and EPS decline despite higher sales?
Net income attributable to common stockholders fell to $151 million from $193 million. The filing cites interest expense of $61 million, which had no prior-year equivalent because the company had no long-term debt outstanding as of March 31, 2025, along with a higher effective tax rate of 25.7% versus 19.1%, driven by interest deductibility limits and higher tax costs on foreign earnings remittances.
What is the status of the company's capital returns?
Qnity repurchased 219,581 shares for $25 million at an average price of $113.78 in March 2026 under its $500 million authorization, leaving $475 million available. It paid $17 million in dividends in the quarter and declared a $0.08 per share quarterly dividend payable June 15, 2026.
What is the company's debt and liquidity position?
Long-term debt was $4.00 billion at March 31, 2026, and total debt was $4.023 billion. Cash and equivalents were $857 million, of which $703 million was held by foreign subsidiaries. The $1.25 billion senior secured revolving facility, maturing October 2030, had no drawings, and the company was in compliance with all debt covenants.
What are the company's ongoing separation and transformation costs?
Transformation, integration and other charges were $28 million, mostly about $24 million of IT independence costs. The company launched a multi-year transformation plan in February 2026, and the filing states that most remaining cash outflows under the program are expected within the next two years. The company also indemnifies DuPont for certain legacy liabilities, with indemnification liabilities of $196 million recorded in total.
06—Continue