Qnity Electronics, Inc.

Q2 2026 net sales were $1.4 billion, up 22% year over year and 9% sequentially; organic sales were also up 22% year over year. Adjusted operating EBITDA was $431 million, up 24% year over year, with a 30.2% margin; adjusted EPS was $1.19, up 53% year over year. Semiconductor Technologies net sales were $744 million, organic sales grew 17% year over year, gross margin was approximately 49% and adjusted operating EBITDA margin was approximately 34%. ICS net sales were $685 million, organic sales grew 28% year over year, gross margin was approximately 44% and adjusted operating EBITDA margin was approximately 29%. Adjusted free cash flow was $259 million, capital expenditures were $90 million, cash and short-term investments were approximately $960 million, total debt was $4 billion and net debt leverage was approximately 2x. The company raised full-year guidance to net sales of $5.55 billion to $5.65 billion, adjusted operating EBITDA of $1.675 billion to $1.725 billion, adjusted EPS of $4.40 to $4.60 and adjusted free cash flow of $600 million to $700 million. For Q3, management expects sequential net sales growth in the low single digits overall, with Semiconductor Technologies up low single digits and ICS up mid-single digits; Semi EBITDA margin is expected in the mid-30s and ICS EBITDA margin in the high 20s.

Jon Kemp framed the quarter as proof that Qnity is benefiting from the industry’s shift from shrink to stack, with more complexity, more layers and more materials intensity across the semiconductor value chain. He emphasized broad-based demand in AI, high-performance computing and advanced connectivity, plus customer engagement around 3-nanometer, 2-nanometer and angstrom-era platforms. His tone was confident and constructive, repeatedly highlighting long-term growth opportunities, product wins and the company’s ability to scale with customer road maps.

Mike Goss highlighted that the quarter ran better than expectations, with strong operating leverage despite continued investment for growth. He pointed to $259 million of adjusted free cash flow, $90 million of capex, approximately $960 million of cash and short-term investments, $4 billion of debt and roughly 2x net debt leverage. He said the company repriced its senior secured term loan after quarter end for an annualized benefit of about $6 million, expects elevated full-year capex before returning toward a 6% of net sales range over the longer term, and said the $20 million of logistics/energy cost pressure is largely playing out as planned and being offset by pricing and the local-for-local model.

Analysts focused on the implied Q4 sequencing, margin headwinds, the faster-than-expected growth in ICS, capacity availability and the sustainability of advanced-node growth. Management said the back half is still supported by healthy order books and customer engagement, but Q4 could see a normal seasonal deceleration in consumer electronics and some inventory control, while Middle East developments, ramp timing and utilization remain watched variables. On margins, they pointed to mix, R&D/product qualification timing and the $20 million cost headwind, but said the mitigation playbook is working and transformation benefits should build over time.