Q2 FY2026
Filed Aug 4, 2026Qnity Reports Second Quarter 2026 Results, Raises Full-Year Financial Guidance
Second-quarter net sales increased 22% year-over-year, with both segments growing and adjusted pro forma operating EBITDA increasing to $431 million from $347 million. The company raised full-year 2026 guidance, although GAAP net income and diluted EPS declined year-over-year and the GAAP effective tax rate increased.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $1.43B | – | 22% |
| Organic sales growthnon-GAAP | 22% | – | 22% |
| Gross profitGAAP | $666M | – | – |
| Adjusted gross profitnon-GAAP | $666M | – | – |
| Income before income taxesGAAP | $199M | – | – |
| Net incomeGAAP | $136M | – | down 31% year-over-year |
| Net income available for Qnity common stockholdersGAAP | $124M | – | – |
| Diluted earnings per shareGAAP | $ 0.59 | – | down 34% year-over-year |
| Basic earnings per shareGAAP | $ 0.59 | – | – |
| Adjusted earningsnon-GAAP | $250M | – | up 53% year-over-year |
| Adjusted earnings per sharenon-GAAP | $ 1.19 | – | up 53% year-over-year |
| Adjusted operating EBITDAnon-GAAP | $431M | – | – |
| Adjusted pro forma operating EBITDAnon-GAAP | $431M | – | up 24% year-over-year |
| Adjusted operating EBITDA marginnon-GAAP | 30.2 % | – | – |
| Adjusted pro forma operating EBITDA marginnon-GAAP | 30.2 % | – | – |
| Net income marginGAAP | 9.5 % | – | – |
| Effective tax rateGAAP | 31.7 % | – | – |
| Base tax ratenon-GAAP | 19.8 % | – | – |
| Cash provided by operating activitiesGAAP | $241M | – | – |
| Capital expendituresother | $90M | – | – |
| Adjusted free cash flownon-GAAP | $259M | – | – |
| Adjusted pro forma free cash flownon-GAAP | $259M | – | – |
| Six-month net salesGAAP | $2.74B | – | 20% |
| Six-month net incomeGAAP | $298M | – | – |
| Six-month diluted earnings per shareGAAP | $ 1.31 | – | – |
| Six-month adjusted operating EBITDAnon-GAAP | $842M | – | – |
| Six-month adjusted pro forma operating EBITDAnon-GAAP | $842M | – | – |
| Six-month cash provided by operating activitiesGAAP | $376M | – | – |
| Six-month capital expendituresother | $212M | – | – |
| Six-month adjusted free cash flownon-GAAP | $287M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Semiconductor TechnologiesVolume increased 18%, local price & product mix decreased (1) %, total organic growth was 17%, and currency decreased (1) %. | $744M | – | 16% |
| Interconnect SolutionsVolume increased 28%, local price & product mix was —, total organic growth was 28%, and currency increased 2%. | $685M | – | 30% |
Full Year 2026 outlook
- Revenue$5.55B - $5.65B
- NoteAdjusted Operating EBITDA $1.675B - $1.725B
- NoteAdjusted EPS $4.40 - $4.60
- NoteAdjusted Free Cash Flow $600M - $700M
Capital returns
- Repurchases of common stock: $ (50) million for the six months ended June 30, 2026.
- Dividends paid to stockholders: $ (34) million for the six months ended June 30, 2026.
- Repayments on long-term debt: $ (12) million for the six months ended June 30, 2026.
- Distributions to noncontrolling interests: $ (6) million for the six months ended June 30, 2026.
What drove it
- Total organic sales increased 22%, with volume up 23%, local price & product mix down (1) %, and currency impact of — %.
- Semiconductor Technologies net sales increased 16%; Interconnect Solutions net sales increased 30%.
- Asia Pacific net sales increased 24%, Americas increased 16%, and EMEA increased 11%.
- Management cited strong customer engagement and demand across end markets as support for raised full-year guidance.
- Management identified AI, high-performance computing, advanced connectivity, and the shift toward shrink and stack as demand and materials-intensity trends.
Concerns
- GAAP net income declined to $ 136 million from $ 198 million, and GAAP diluted EPS declined to $ 0.59 from $ 0.90.
- GAAP net income margin was 9.5 % compared with 16.9 %.
- Effective tax rate was 31.7 % compared with 22.4 %.
- Transformation, integration and other charges were $ 42 million, compared with $ 2 million; Q2 2026 charges included approximately $24 million for information technology independence initiatives.
- Interest expense was $ 61 million, compared with —.
- For the six months ended June 30, 2026, accounts and notes receivable increased to $ 1,138 million from $ 992 million and inventories increased to $ 730 million from $ 661 million.
What to watch
- Delivery against full-year 2026 net sales guidance of $5.55B - $5.65B.
- Delivery against full-year adjusted operating EBITDA guidance of $1.675B - $1.725B and adjusted EPS guidance of $4.40 - $4.60.
- Delivery against full-year adjusted free cash flow guidance of $600M - $700M.
- The pace and cost of information technology independence initiatives, transformation initiatives, integration-related costs, and severance and asset-related charges.
- Volume trends in Semiconductor Technologies and Interconnect Solutions, particularly demand tied to AI, high-performance computing, and advanced connectivity.
- Working-capital trends in receivables and inventories and the level of long-term debt.
Balance sheet and cash flow
- Cash and cash equivalents were $ 961 million at June 30, 2026, compared with $ 915 million at December 31, 2025.
- Long-Term Debt was $ 3,997 million at June 30, 2026, compared with $ 4,003 million at December 31, 2025.
- Short-term borrowings were $ 23 million at June 30, 2026, compared with $ 24 million at December 31, 2025.
- Accounts and notes receivable - net were $ 1,138 million at June 30, 2026, compared with $ 992 million at December 31, 2025.
- Inventories - net were $ 730 million at June 30, 2026, compared with $ 661 million at December 31, 2025.
- Cash provided by operating activities was $ 376 million for the six months ended June 30, 2026, compared with $ 480 million for the six months ended June 30, 2025.
- Cash used for investing activities was $ (205) million for the six months ended June 30, 2026, compared with $ (153) million for the six months ended June 30, 2025.
- Cash used for financing activities was $ (109) million for the six months ended June 30, 2026, compared with $ (330) million for the six months ended June 30, 2025.
Analysis
Qnity reported second-quarter net sales of $ 1,429 million, up 22% year-over-year, with organic sales also up 22%. Both operating segments contributed: Semiconductor Technologies reported $ 744 million of sales and 16% total growth, while Interconnect Solutions reported $ 685 million and 30% total growth. Volume was the principal reported contributor in both segments, increasing 18% in Semiconductor Technologies and 28% in Interconnect Solutions. Asia Pacific grew 24%, compared with 16% in the Americas and 11% in EMEA.
Profitability was mixed on a GAAP basis but stronger in the adjusted pro forma presentation. Gross profit increased to $ 666 million from $ 540 million. Adjusted pro forma operating EBITDA was $ 431 million, compared with $ 347 million, and its margin was 30.2 % compared with 29.7 %. However, GAAP net income declined to $ 136 million from $ 198 million, GAAP diluted EPS declined to $ 0.59 from $ 0.90, and net income margin declined to 9.5 % from 16.9 %. The effective tax rate increased to 31.7 % from 22.4 %.
The gap between GAAP and adjusted outcomes reflects reported items including $ 42 million of transformation, integration and other charges, $ 50 million of amortization of intangibles, $ 42 million of indirect legacy costs, and $ 61 million of interest expense. The company stated that second-quarter transformation, integration and other charges primarily included approximately $24 million for information technology independence initiatives, approximately $8 million for transformation initiatives, approximately $3 million of other integration-related costs, and approximately $7 million of severance and other asset-related charges.
Cash generation was positive in the quarter, with GAAP cash provided by operating activities of $ 241 million and adjusted free cash flow of $ 259 million. For the first six months, cash provided by operating activities was $ 376 million compared with $ 480 million, while capital expenditures were $ 212 million compared with $ 153 million. Cash and cash equivalents were $ 961 million at June 30, 2026, and long-term debt was $ 3,997 million. The company repurchased $ (50) million of common stock and paid $ (34) million of dividends during the first six months.
Management raised full-year 2026 guidance based on strong second-quarter performance and continued near-term momentum, including strong customer engagement and demand across end markets. The outlook calls for net sales of $5.55B - $5.65B, adjusted operating EBITDA of $1.675B - $1.725B, adjusted EPS of $4.40 - $4.60, and adjusted free cash flow of $600M - $700M. Key reported execution points are sustained volume growth across both segments, adjusted EBITDA margin performance, free-cash-flow delivery after capital expenditures, and the cost and timing of separation-related transformation and IT-independence work.
Management, verbatim
We delivered our ninth consecutive quarter of profitable growth driven by disciplined execution across both segments.
Jon Kemp, Chief Executive Officer
The continued momentum reflects our deep alignment with the industry’s most advanced technology roadmaps, our embedded role in customers’ next-generation platforms, and our ability to deliver the solutions they need at scale.
Jon Kemp, Chief Executive Officer
The industry shift toward shrink and stack is lengthening the journey every chip takes, requiring more process complexity and more layers, creating a multiplier effect for materials intensity.
Jon Kemp, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter comparisons for Q2 2026 key metrics were not provided.
- GAAP operating income was not reported.
- GAAP gross margin was not reported.
- Non-GAAP operating income was not reported.
- Quarterly GAAP free cash flow was not reported.
- Prior full-year guidance was not provided, so a comparison of actual results with prior guidance cannot be made.
- Forward guidance for gross margin, operating expenses, and tax rate was not provided.
- A quantitative reconciliation of forward-looking adjusted operating EBITDA, adjusted EPS, and adjusted free cash flow to corresponding GAAP measures was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.