Qnity Electronics, Inc.

First-quarter net sales were $1.3 billion, up 18% year over year and 11% sequentially; organic sales increased 17%. Adjusted operating EBITDA was $411 million, up 22% year over year, with margin of 31.3%, more than 125 basis points higher than a year ago. Adjusted EPS was $1.08, up 33% year over year. Semiconductor Technologies posted net sales of $722 million and organic growth of 12%, while Interconnect Solutions posted net sales of $593 million and organic growth of 22%. Adjusted operating EBITDA margin was 36.4% in Semiconductor Technologies and 28.5% in Interconnect Solutions. Adjusted free cash flow was $28 million. For the second quarter, the company expects sequential net sales growth in the mid-single digits, Semiconductor Technologies revenue roughly flat with margins in the mid-30s, and ICS revenue growth in the high single-digit range with margins in the mid- to high 20s. Full-year guidance was raised to net sales of $5.225 billion to $5.375 billion, adjusted operating EBITDA of $1.535 billion to $1.625 billion, adjusted EPS of $3.80 to $4.14, and adjusted free cash flow of $500 million to $600 million. Management said MSI wafer start growth is now expected to be mid-single digits to high single digits, and it assumed about $20 million of geopolitical inflation headwinds for the rest of 2026, mostly offset through pricing actions.

Jon Kemp framed the quarter as evidence that Qnity is benefiting from a shift from "shrink" to "stack" in semiconductors, where materials, integration, and reliability become more important as chips move toward 3D architectures. He highlighted strong momentum in both semiconductor technologies and interconnect solutions, noting growing content in advanced nodes, advanced packaging, thermal management, and AI PCB applications. His tone was confident and strategic, emphasizing customer collaboration, POR wins, and the company’s position as a partner in next-generation computing.

Mike Goss emphasized the financial strength of the quarter: $1.3 billion in sales, $411 million of adjusted operating EBITDA, 31.3% EBITDA margin, and $1.08 adjusted EPS. He said the quarter’s performance reflected strong volumes, operating leverage, and favorable mix, while adjusted free cash flow was $28 million and capex included about one-third of the $61.5 million investment in the new Taiwan facility. He also cited approximately $850 million in cash and short-term investments, $4 billion of debt, and net debt leverage of 2.2x, while noting that capex is expected to run around 9% of sales for the full year and about 6% over the longer term. He added that the transformation plan remains on track for about $100 million of EBITDA run-rate benefit by the end of 2028.

Analysts focused on the sustainability of the second-half outlook, the size of the AI PCB opportunity, and whether the company could keep taking share as node transitions accelerate. Management said mainstream logic utilization is improving, AI demand is starting to spill into mainstream applications, and the company is seeing continued POR wins across advanced technologies. On ICS, Jon Kemp said advanced packaging, thermal management, and AI PCBs collectively grew more than 50% year over year in the quarter and remain the fastest-growing parts of the portfolio, while he stopped short of updating segment guidance. Questions also covered memory-market disruption, but management said China memory exposure is limited and that they are using scenario planning to manage geopolitical and supply-chain risks.