Solstice Advanced Materials Inc.SOLS
Solstice Advanced Materials Inc. Revenue Disclosure
Revenue Recognition and Contracts with Customers
The Company has a comprehensive offering of products and services sold to a variety of customers in multiple end markets. See the following disaggregated revenue table and related discussions by reportable business segment for details:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Refrigerants & Applied Solutions | |||||||||||||||||
| Refrigerants | $ | 1,511 | $ | 1,302 | $ | 1,372 | |||||||||||
| Building Solutions and Intermediates | 719 | 738 | 718 | ||||||||||||||
Nuclear (AES) | 356 | 446 | 308 | ||||||||||||||
| Healthcare Packaging | 204 | 235 | 231 | ||||||||||||||
Net Refrigerants & Applied Solutions | 2,789 | 2,721 | 2,629 | ||||||||||||||
Electronic & Specialty Materials | |||||||||||||||||
| Research and Performance Chemicals | 500 | 482 | 464 | ||||||||||||||
| Electronic Materials | 409 | 381 | 407 | ||||||||||||||
| Safety and Defense Solutions | 187 | 186 | 149 | ||||||||||||||
Net Electronic & Specialty Materials | 1,097 | 1,049 | 1,020 | ||||||||||||||
Net sales | $ | 3,886 | $ | 3,770 | $ | 3,649 | |||||||||||
Contract Balances
The Company tracks progress on satisfying performance obligations under contracts with customers and records the related billings and cash collections in the Consolidated Balance Sheets in Accounts receivable – net unbilled receivables (contract assets) arise when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Deferred revenue (contract liabilities) arise when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements. Contract liabilities are derecognized when performance obligations are satisfied.
Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Contract assets - January 1 | 51 | $ | 26 | ||||||||
Change in Contract assets - (decrease) increase | (12) | 25 | |||||||||
| Contract assets - December 31 | 39 | 51 | |||||||||
| Contract liabilities - January 1 | (39) | (59) | |||||||||
Change in Contract liabilities - (increase) decrease | (2) | 20 | |||||||||
| Contract liabilities - December 31 | (41) | (39) | |||||||||
| Net change | $ | (14) | $ | 45 | |||||||
For the years ended December 31, 2025, 2024 and 2023, the Company recognized revenue of $3 million, $45 million and $3 million, respectively, that was previously included in the beginning balance of contract liabilities.
When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations.
The effect of a contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at stand-alone selling price, they are accounted for as a new contract and performance obligations, which are recognized prospectively.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. The Company allocates a contract’s transaction price to each distinct performance obligation and recognizes revenue when, or as, the performance obligation is satisfied. When contracts with customers require highly complex integration or manufacturing services not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative stand-alone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable stand-alone sales are used to determine the stand-alone selling price.
Performance obligations satisfied as of a point in time are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. Substantially all of the Company’s revenue relates to transfer of control of products or delivery of conversion services at a point in time. The Company’s contracts generally do not contain a significant financing component, as the period between when the Company transfers control of the product or service to the customer and when the customer pays for that product or service is one year or less.
As of December 31, 2025, the Company’s remaining performance obligations (“RPO”), which is the aggregate amount of total contract price that is unsatisfied or partially unsatisfied was approximately $2.8 billion. Performance obligations expected to be satisfied within one year and greater than one year are 27% and 73%, respectively.
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About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.