SOLS 10-K & 10-Q changes, risk factors and insider trading

Risks Relating to the Pending Mergers with Element Solutions

Solstice shareowners as of immediately prior to the Mergers will have reduced ownership in the combined company and less influence over management.

We anticipate issuing approximately 126,000,000 shares of common stock pursuant to the Merger Agreement. The actual number of shares of common stock to be issued pursuant to the Merger Agreement will be determined at the closing of the Mergers based on the number of shares of Element Solutions common stock outstanding immediately prior to the First Merger. The issuance of these new shares could have the effect of depressing the market price of our common stock, through dilution of earnings per share or otherwise. Any dilution of, or delay of any accretion to, our earnings per share could cause the price of our common stock to decline or increase at a reduced rate.

Immediately after the closing of the Mergers, it is expected that Solstice shareowners as of immediately prior to the Mergers will own approximately 56%, and Element Solutions shareowners as of immediately prior to the Mergers will own approximately 44%, of the issued and outstanding shares of Solstice common stock, in each case calculated based on the fully diluted market capitalizations of Solstice and Element Solutions as of the date of signing of the Merger Agreement. As a result, current Solstice shareowners will have less influence on the management and policies of the combined company than they currently have on the management and policies of Solstice.

The Mergers may not be completed and the Merger Agreement may be terminated in accordance with its terms.

The Mergers are subject to a number of conditions that must be satisfied or waived prior to the closing of the Mergers, including, among other things, (i) the receipt of regulatory approvals, (ii) the absence of any legal restraint in effect that would prevent, make illegal, enjoin or prohibit the consummation of the Mergers, (iii) the accuracy of the representations and warranties made as of the date the Merger Agreement was entered into and as of the date the Mergers are completed, subject to customary materiality “bring down” standards, and (iv) the performance by all parties to the Merger Agreement in all material respects of all obligations required to be performed at or prior to closing. These conditions to the consummation of the Mergers may not be satisfied or waived in a timely manner or at all, and, accordingly, the Mergers may be delayed or may not be completed.

In addition, if the First Merger is not completed by July 6, 2027 (subject to automatic extension to the extent the only conditions not satisfied are those related to certain regulatory approvals or the absence of a legal restraint prohibiting the closing), either Solstice or Element Solutions may choose not to proceed with the Mergers by terminating the Merger Agreement, and the parties can mutually decide to terminate the Merger Agreement at any time, before or after stockholder approval. In addition, Solstice and Element Solutions may elect to terminate the Merger Agreement in certain other circumstances, including, among other things, (i) failing to cure the breach of a representation, warranty or covenant without which a closing condition would not be satisfied, or (ii) a final and non-appealable legal restraint enjoining or otherwise prohibiting the consummation of the Mergers.

The Merger Agreement limits the ability of Solstice to pursue alternatives to the Mergers, may discourage other companies from making a favorable alternative transaction proposal and, in specified circumstances, could require Solstice to pay Element Solutions a termination fee.

The Merger Agreement contains provisions that may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of Solstice from considering or submitting to Solstice a competing proposal that might result in greater value to its shareowners than the Mergers, or may result in a potential acquirer of Solstice proposing to pay a lower price per share to acquire Solstice than it might otherwise have proposed to pay. These provisions include a general prohibition on Solstice from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by Solstice’s board of directors entering into discussions with any third party regarding any competing proposal or offer for a competing transaction. The Merger Agreement further provides that under specified circumstances, which could arise either pursuant to a competing proposal or where Honeywell revokes its consent pursuant to the terms of a Tax Matters Agreement entered into between Solstice and Honeywell or otherwise seeks to prohibit the Mergers, Solstice may be required to pay Element Solutions a termination fee of either $385,000,000 or $513,000,000.

Failure to complete the Mergers, or a delay in the closing of the Mergers, could negatively impact our business, results of operations, financial condition and stock price.

The Merger Agreement is subject to a number of conditions that must be fulfilled to complete the Mergers. Those conditions include, among others, the approval by our shareowners of the share issuance proposal, the approval by Element Solutions stockholders of the merger proposal and certain regulatory approvals. A number of the conditions are not within our control, including Element Solutions’ stockholder approval, and may prevent, delay or otherwise materially adversely affect the closing of the Mergers. We cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if another uncertainty may arise, and we cannot assure our shareowners that we will be able to timely complete the Mergers as currently contemplated under the Merger Agreement or at all. Our business, results of operations, financial condition or stock price could be adversely affected, potentially in a material way, by the failure to complete the Mergers, or by a delay in the closing of the Mergers, and we may suffer consequences that could adversely affect our business, results of operations, financial condition and stock price, including the following:

•we may not realize any or all of the potential benefits of the Mergers, including any synergies that could result from combining our financial and business resources with those of Element Solutions;

•the costs of achieving synergies may be more than we have anticipated and we may not realize all of the potential benefits of such synergies;

•matters relating to the Mergers will require substantial commitments of time and resources by our management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company;

•we have incurred and will incur further substantial expenses in connection with the Mergers, including financial advisory, legal, accounting, consulting and other advisory fees, severance/retention employee benefit-related costs and other regulatory fees and other costs relating to the Mergers regardless of whether the Mergers are completed;

•we may be subject to legal proceedings related to the potential delay of, or failure to complete, the Mergers; we may experience disruptions to our business resulting from the pendency of the Mergers, including adverse changes in relationships with, or loss of, customers, business partners and employees, which may not be reversible and may continue or even intensify in the event the Mergers are delayed or not completed;

•we may experience negative reactions to the Mergers, including if the Mergers are not completed, from the financial markets, including negative impacts on the market price of our common stock; and

•under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Mergers, which restrictions could adversely affect our ability to conduct our business as we otherwise would have done if not subject to these restrictions.

We will incur substantial transaction and integration-related costs in connection with the Mergers.

We have incurred significant financial advisory, legal, accounting, consulting and other advisory fees and other regulatory fees and other costs relating to the Mergers. We have incurred, and expect to continue to incur, additional costs in connection with the satisfaction of the various conditions to closing of the Mergers. If there is any delay in the consummation of the Mergers, these costs could increase significantly. We also will incur significant integration-related fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Mergers and the integration of the two companies’ businesses.

Litigation relating to the Mergers, if any, could result in an injunction preventing the closing of the Mergers and/or substantial costs to Solstice and Element Solutions.

Securities and fiduciary lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the Merger Agreement. Even if such lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.

The failure to integrate the businesses and operations of Solstice and Element Solutions successfully in the expected time frame may adversely affect the future results of the combined company.

We and Element Solutions have operated and, until the closing of the Mergers, will continue to operate independently. Following the closing of the Mergers, our respective businesses may not be integrated successfully. It is possible that the integration process could result in the loss of our key employees or key Element Solutions employees, the loss of customers, suppliers, vendors or other business counterparties, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with and following the closing of the Mergers or higher-than-expected integration costs and an overall post-closing integration process that takes longer than originally anticipated. Specifically, the following challenges, among others, must be addressed in integrating the operations of Solstice and Element Solutions in order to realize the anticipated benefits of the Mergers:

•combining the companies’ operations and corporate functions and the resulting difficulties associated with managing a larger, more complex, diversified business;

•combining the businesses of Solstice and Element Solutions in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the Mergers;

•developing and managing new product lines;

•avoiding delays in connection with the Mergers or the integration process;

•integrating personnel from the two companies and minimizing the loss of key employees;

•identifying and eliminating redundant functions and assets;

•harmonizing the companies’ operating practices, employee development and compensation programs, internal controls, compliance and other policies, procedures and processes;

•maintaining existing agreements with customers, suppliers, vendors and other business counterparties and avoiding delays in entering into new agreements with prospective customers, suppliers, vendors and other business counterparties;

•coordinating geographically separate organizations; and

•addressing possible differences in business backgrounds, corporate cultures and management philosophies.

Certain of these factors will be outside of our control, and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and other adverse impacts, which could materially affect the combined company’s financial position, results of operations and cash flows. If the combined company is unable to achieve the anticipated benefits of the Mergers within the anticipated time frame, or at all, the anticipated benefits, including synergies, cost savings, innovation opportunities and operational efficiencies, may not be realized fully or at all, or may take longer to realize than expected, and the value of the combined company’s common stock may decline.

In addition, at times, the attention of certain members of management and other resources may be focused on the closing of the Mergers and the integration of the businesses and as such diverted from day-to-day business operations or other opportunities that may be beneficial to us, which may disrupt our ongoing operations and the operations of the combined company.

The Mergers may result in a loss of customers, distributors, service providers, suppliers, vendors and other business counterparties and may result in the termination of existing contracts.

Following the Mergers, some of our and Element Solutions’ customers, distributors, service providers, suppliers, vendors and other business counterparties may terminate or scale back their current or prospective business relationships with the combined company. In addition, we and Element Solutions have contracts with customers, distributors, service providers, suppliers, vendors and other business counterparties that may require us or Element Solutions to obtain consents from these other parties in connection with the Mergers, which may not be obtained on favorable terms or at all. If relationships with customers, distributors, service providers, suppliers, vendors or other business counterparties are adversely affected by the Mergers, or if the combined company loses the benefits of our and Element Solutions’ contracts of Solstice, the business, financial condition, cash flows or results of operations of the combined company could be materially and adversely affected.

The indebtedness of the combined company following consummation of the Mergers will be substantially greater than Solstice’s indebtedness on a standalone basis existing prior to the announcement of the Merger Agreement. The indebtedness of the combined company could adversely affect its business flexibility.

As of June 30, 2026, Solstice had approximately $2.0 billion of outstanding indebtedness. As of June 30, 2026, Element Solutions had approximately $2.1 billion of outstanding indebtedness, consisting primarily of amounts outstanding under the Element Solutions senior secured term loans B-3 of $1.3 billion maturing in 2030, $50 million outstanding under a revolving credit facility maturing in 2031 and $797 million of senior notes maturing in 2028. In connection with the Mergers, Solstice entered into the Bridge Commitment Letter pursuant to which, among other things, the commitment parties have committed to provide Solstice with the Bridge Facility. The Bridge Commitment Letter also contemplates that Solstice will seek to obtain Permanent Financing, which is expected to consist of indebtedness in an aggregate principal amount of approximately $4.7 billion, consisting of (i) a senior secured term loan facility in an aggregate principal amount of approximately $1.5 billion and (ii) senior unsecured notes in an aggregate principal amount of approximately $3.2 billion. However, there can be no assurance that Solstice will be able to obtain the Permanent Financing on terms acceptable to Solstice or at all, and prevailing market conditions, Solstice’s financial condition and credit ratings and other factors may adversely affect Solstice’s ability to obtain such financing. If Solstice obtains the Permanent Financing on or prior to the closing of the mergers, commitments under the Bridge Facility will be correspondingly reduced. However, if Solstice has not obtained the Permanent Financing on or prior to the closing of the mergers, Solstice expects to draw on the Bridge Facility to finance, together with other sources of funds, the acquisition, the refinancing of certain existing indebtedness of Element Solutions and related fees and expenses in connection with the transactions. We estimate that the pro forma indebtedness of the combined company, assuming the closing of the Mergers had occurred on June 30, 2026, would have been approximately $7 billion after giving effect to the repayment of the outstanding principal balance of Element Solutions’ existing $2.1 billion of outstanding debt. Solstice is reviewing the treatment of Element Solutions’ existing indebtedness and expects to refinance, repurchase, redeem, exchange or otherwise terminate Element Solutions’ outstanding credit facility and notes in connection with or following the consummation of the Mergers.

The combined company’s substantially increased indebtedness will reduce its flexibility to respond to changing business and economic conditions, and could have adverse effects on its financial condition, cash flows or results of operations, including by:

•imposing additional cash management requirements on the combined company in order to support interest payments, which would reduce the amount available to fund its operations and other business activities;

•increasing the combined company’s borrowing costs and the risk of default on debt obligations of the combined company;

•increasing the vulnerability of the combined company to adverse changes in general economic and industry conditions, economic downturns and adverse developments in its business;

•limiting the ability of the combined company to sell assets, engage in strategic transactions, declare and pay dividends or obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes;

•limiting the flexibility of the combined company in planning for or reacting to changes in its business and the industry in which it operates;

•increasing the exposure of the combined company to a rise in interest rates, which would generate greater interest expense to the extent the combined company does not have applicable interest rate fluctuation hedges; and

•reducing funds available to engage in investments in product development, capital expenditures, dividend payments, share repurchases and other activities, thereby creating competitive disadvantages for Solstice relative to other companies with lower debt levels.

In connection with the debt financing related to the Mergers, it is anticipated that Solstice would seek ratings of the indebtedness of the combined company from one or more nationally recognized credit rating agencies. Such credit ratings would reflect each rating organization’s opinion of the combined company’s financial strength, operating performance and ability to meet its debt obligations. Such credit ratings will affect the cost and availability of future borrowings and, accordingly, its cost of capital. There can be no assurance that the combined company will achieve a particular rating or maintain a particular rating in the future.

In addition, the combined company’s ability to arrange additional financing or refinancing of this existing debt will depend on, among other factors, its financial condition and performance, as well as prevailing market conditions and other factors beyond its control. There can be no assurance that the combined company will be able to obtain additional financing or refinance existing debt on favorable terms or at all.

Proposed Acquisition of Element Solutions Inc

On July 6, 2026, Solstice entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire Element Solutions Inc (“Element Solutions”) in a cash-and-stock transaction pursuant to which Element Solutions stockholders will receive, for each share of Element Solutions common stock, $10.00 in cash and 0.500 shares of Solstice common stock. The transactions contemplated pursuant to the Merger Agreement are referred to as the “Transactions”.

In connection with entering into the Merger Agreement, Solstice entered into a commitment letter providing among other things, financing for the Transactions in the form of an initial $4.685 billion bridge commitment from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC. Solstice intends to obtain permanent debt financing in the form of a senior secured term loan B facility and unsecured notes in public or private offering(s) prior to the closing of the Transactions. Solstice intends to use any such financing in addition to cash from its balance sheet to fund the cash consideration payable at closing of the Transactions. The receipt of financing by Solstice is not a condition to Solstice’s obligation to consummate the Transactions.

See Note 16 – Subsequent Events for additional information regarding the Transactions.

Organization Information

In connection with the Spin-off from Honeywell, Solstice entered into a Tax Matters Agreement with Honeywell. If the Merger Agreement is terminated under certain specified circumstances, including pursuant to a competing proposal or in the event that Honeywell revokes its consent pursuant to the Tax Matters Agreement entered into between the Company and Honeywell, or otherwise seeks to prohibit the Mergers, the Company may be required to pay Element Solutions a termination fee of $385.0 million or $513 million. If the Merger Agreement is terminated under certain specified circumstances, Element Solutions may be required to pay the Company a termination fee of $376.0 million.

For the three months ended June 30, 2026 compared with the three months ended June 30, 2025

For the six months ended June 30, 2026 compared with the six months ended June 30, 2025

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NM - not meaningful

The following table sets forth the factors contributing to year-over-year changes in our net sales for the six months ended June 30, 2026.

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.”

Net sales increased by $209 million or 11% primarily due to volume growth of $95 million, favorable pricing of $52 million and favorable foreign currency impacts of $22 million in the RAS segment, as well as volume growth of $26 million, favorable foreign currency impacts of $9 million and favorable pricing of $6 million in the ESM segment.

Cost of product and services sold increased by $205 million or 16% primarily driven by volume increases and inflation in raw materials in both the RAS and ESM segments.

Research and development expenses increased by $8 million or 18% 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 $32 million or 16% driven by an increase in employee-related expenses, primarily in connection with additional headcount necessary to operate as an independent public company; Transaction-related costs decreased by $11 million or 18% driven by a decrease in professional advisory services fees incurred after the Spin-off, partially offset by expenses incurred in connection with potential strategic transactions; Other expense (income) remained relatively flat; and Interest and other financial charges increased by $50 million driven by the issuance of debt in connection with the Spin-off in the second half of 2025.

Income tax expense decreased by $75 million. The effective tax rate in 2026 was lower than the effective tax rate in 2025 as a result of nondeductible transaction costs and incremental frictional tax costs related to the Spin-off from Honeywell in the prior-year period. See Note 5 – Income Taxes of the Notes to the Consolidated Financial Statements for additional information on the effective tax rate.

The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our RAS segment for the three and six months ended June 30, 2026 and 2025.

The following table sets forth the reported and organic net sales growth in our RAS segment’s net sales for the three and six months ended June 30, 2026 compared with the prior year periods.

For the six months ended June 30, 2026 compared with the six months ended June 30, 2025

RAS net sales increased by $169 million or 12% primarily driven by volume growth of $95 million, mainly as a result of the ongoing transition to LGWP refrigerants and volume increases in nuclear. Favorable pricing of $52 million, primarily driven by higher pricing in the stationary end market, and favorable currency translation impacts on net sales of $22 million also contributed to the increase.

Segment Adjusted EBITDA decreased by $26 million or 5% and Segment Adjusted EBITDA margin decreased 6% primarily driven by inflation of raw material costs and higher R&D expenses.

The following table sets forth the net sales, Segment Adjusted EBITDA, and Segment Adjusted EBITDA margin amounts for our ESM segment for the three and six months ended June 30, 2026 and 2025.

The following table sets forth the reported and organic net sales growth in our ESM segment’s net sales for the three and six months ended June 30, 2026 compared with the prior year periods.

For the six months ended June 30, 2026 compared with the six months ended June 30, 2025

ESM net sales increased by $41 million or 8%. The increase was primarily driven by volume growth of $26 million, mainly due to volume increases in electronic materials related to stronger memory demand in the semiconductor end market. Favorable currency translation impacts on net sales of $9 million and favorable pricing of $6 million also contributed to the increase.

Segment Adjusted EBITDA increased by $18 million or 17% and Segment Adjusted EBITDA margin increased 2% primarily driven by volume growth in Electronic Materials, improved pricing, and productivity.

1.Other adjustments primarily consisted of gains and losses from disposal of long-lived assets, remeasurement of foreign currencies, environmental reserves, asset retirement obligations, nonoperating pension expense (income), and certain legal costs, net of recoveries.

Financing Relating to the Proposed Acquisition of Element Solutions

In connection with entering into the Merger Agreement, the Company entered into a commitment letter (the “Commitment Letter”), dated as of July 6, 2026, with Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC (together, the “Commitment Parties”), pursuant to which, among other things, the Commitment Parties agreed to provide a first lien senior secured 364-day bridge term loan credit facility in an aggregate principal amount of up to $4.685 billion (the “Bridge Facility”). The Bridge Facility has been syndicated to a group of lenders consisting of a majority of the Company’s existing lenders under the Revolving Credit Facility. The Commitment Letter also provides for a $1.0 billion backstop senior secured revolving credit facility (the “Backstop Revolving Facility” and together with the Bridge Facility, the “Facilities”), which will only be established in the event that a proposed amendment to the Company’s Credit Agreement to permit the Bridge Facility does not become effective on or prior to the closing of the Transactions. On July 24, 2026, the Company entered into an amendment to the Credit Agreement to allow, among other things, for the provision of $4.685 billion in bridge financing to the Company and certain other transactions in connection with the Merger Agreement. As a result, the Backstop Revolving Facility will not be established.

The Bridge Commitment Letter also contemplates that the Company will seek to obtain permanent financing in the form of a senior secured term loan B facility and unsecured notes in public or private offering(s) prior to the closing of the Transactions (collectively, the “Permanent Financing”). The Bridge Facility is intended to be available to the Company to finance, together with other sources of funds, the acquisition, the refinancing of certain existing indebtedness of Element Solutions and related fees and expenses in connection with the Transactions, in the event that the Company has not obtained the Permanent Financing on or prior to the closing of the Transactions. Commitments under the Bridge Facility will be reduced by the amount of any Permanent Financing as well as certain other events. The receipt of financing by the Company is not a condition to the Company’s obligation to consummate the Transactions.

The Facilities are subject to customary conditions precedent to funding, including the consummation of the Transactions in all material respects in accordance with the terms of the Merger Agreement and other customary funding conditions for facilities of this type, and contain customary representations, warranties, covenants and indemnification provisions for transactions of this nature.