Solstice Advanced Materials (SOLS) risk factors, FY2025 10-K

Risks Relating to Our Business and Operations

1. 01We have limited operating history as an independent, publicly traded company, and our historical consolidated financial information is not necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results
2. 02historical consolidated financial data does not include an allocation of interest expense comparable to the interest expense we have incurred or will incur following the Spin-off, including interest expense in connection with the incurrence of indebtedness at the Company
3. 03If we are unable to innovate and successfully introduce new products, or new technologies or processes reduce the demand for our products or the price at which we can sell products, our profitability could be adversely affected
4. 04Our business is exposed to risks associated with the volatile global economic environment and geopolitical conditions
5. 05Raw material price fluctuations, inflation, scarcity, the ability of key suppliers to meet quality and delivery requirements or catastrophic events can increase the cost of our products and services, impact our ability to meet commitments to customers and cause us to incur significant liabilities
6. 06strategies will continue to be successful, or that we will be able to alter our strategies or develop new strategies if and as needed
7. 07Global climate change and related regulations and changes in customer demand could negatively affect our business, financial condition, results of operations and cash flows
8. 08We and our customers operate in a politically sensitive environment, and negative public and political perceptions of nuclear energy and radioactive materials could materially and adversely affect us, our customers, and the markets in which we operate
9. 09A significant percentage of our sales and operations is in non-U.S. jurisdictions and is subject to the economic, political, regulatory, foreign exchange and other risks of international operations
10. 10If significant tariffs or other restrictions continue to be placed on foreign imports by the U.S. and related countermeasures are taken by impacted foreign countries, our business, financial condition, results of operations and cash flows could be negatively affected
11. 11We have outstanding indebtedness, and the degree to which we are leveraged could adversely affect our business, financial condition, results of operations and cash flow
12. 12We may not be able to obtain additional capital that we need in the future on favorable terms or at all
13. 13We may be unable to compete successfully in the competitive markets in which we operate and, as a result, we may experience pricing pressure, fewer customer orders, reduced margins and the loss of market share
14. 14Our business is subject to both seasonal fluctuations and cyclical market conditions, which could cause variability in our financial results and liquidity
15. 15Concentrations of credit, counterparty, and market risk may adversely affect our business, financial condition, results of operations and cash flows
16. 16We may be unable to successfully execute or effectively integrate acquisitions or complete potential divestitures
17. 17We face risks associated with our joint ventures and strategic co-development partnerships
18. 18In certain cases, joint ventures and strategic co-development partnerships may present us with a lack of ability to fully control all aspects of their operations, including due to veto rights, and we may not have full visibility with respect to all operations, customer relations and compliance practices, among others
19. 19We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel could adversely affect our business, financial condition, results of operations and cash flows
20. 20Our operations and the prior operations of predecessor companies expose us to the risk of material environmental liabilities
21. 21Chemical manufacturing is inherently hazardous and may result in accidents, which may disrupt our operations or expose us to significant losses, liabilities or reputational harm
22. 22We cannot predict with certainty the outcome of litigation matters, government proceedings and other contingencies and uncertainties
23. 23Our business, reputation and financial performance may be materially impacted by cybersecurity attacks or data privacy or information security breaches
24. 24A material disruption of our operations, particularly at our manufacturing facilities or within our IT infrastructure, could adversely affect our business, financial condition, results of operations and cash flows
25. 25We may be impacted by increasing stakeholder interest in public company performance, disclosure, and goal-setting with respect to sustainability matters
26. 26We may be required to make significant cash contributions to the defined benefit pension plans that we sponsor
27. 27If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, our stock price and our ability to access the capital markets could be adversely impacted, and investors’ views of us could be harmed

Risks Relating to the Spin-off

1. 28The Spin-off could result in significant tax liability to Honeywell and its shareowners if it is determined to be a taxable transaction and, in certain circumstances, the Company could be required to indemnify Honeywell for material taxes pursuant to indemnification obligations under the Tax Matters Agreement
2. 29We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-off
3. 30We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent, publicly traded company, and we may experience increased costs after the Spin-off
4. 31indemnification obligations, we could incur operational difficulties or losses, and our business, results of operations, cash flows, and financial condition could be adversely affected
5. 32We may have potential business conflicts of interest with Honeywell with respect to our past and ongoing relationships
6. 33Certain of our directors and employees may have actual or potential conflicts of interest because of their financial interests in Honeywell
7. 34As we build our IT infrastructure and transition our data to our own systems, we could incur substantial additional costs and experience temporary business interruptions, including cybersecurity incidents
8. 35Restrictions under the Intellectual Property Cross-License Agreement may limit our ability to develop and commercialize certain products and services and/or prosecute, maintain and enforce certain intellectual property
9. 36The Spin-off and related internal restructuring transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements

Risks Relating to Our Common Stock and the Securities Market

1. 37Our stock price may fluctuate significantly
2. 38We will evaluate whether to continue to pay cash dividends on our common stock in the future, and the terms of our indebtedness may limit our ability to pay dividends on our common stock or the amount thereof or otherwise engage in actions intended to return capital to our shareowners
3. 39Your percentage ownership in the Company may be diluted in the future
4. 40Certain provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and Delaware law may discourage takeovers
5. 41though the transaction may offer our shareowners the opportunity to sell their shares of our common stock at a price above the prevailing market price. These provisions may also prevent or discourage attempts to remove and replace incumbent directors