Track market-moving stories before they get noisy

Key Takeaways Dell has transformed into an AI infrastructure powerhouse.AI server demand is growing exponentially.The company offers investors hyper-growth at a reasonable price. AI Reinvigorates Dell TechnologiesZacks Rank #2 (Buy) stock Dell Technologies ((DELL - Free Report) ) is a leading provider of servers, storage, and PCs. Dell is best-known for its desktop computers, laptops, and monitors. However, the company is now taking advantage of the artificial intelligence boom, with nearly 40% of its revenue derived from it. It offers the Dell “AI Factory,” an end-to-end service that combines Dell’s compute, storage, client devices, and networking with open software ecosystems to streamline enterprise AI adoption. Additionally, Dell offers high-performance infrastructure for AI-optimized data center servers. Also, Dell offers clients on-premises setups that enable companies to run autonomous multi-step AI agents locally on high-performance workstations.

Dell AI Server Demand ExplodesDell AI servers provide the high-performance physical infrastructure required to build, train, fine-tune, and run artificial intelligence models. The company helps clients integrate dense clusters of graphics processing units (GPUs) to handle complex mathematical workloads such as Generative AI and deep learning. Although other companies compete with Dell in this industry, Dell has a large advantage over competitors because it has strategic partnerships with the two dominant AI makers – Advanced Micro Devices ((AMD - Free Report) ) and NVIDIA ((NVDA - Free Report) ). AI-optimized server revenue grew a mind-boggling 757% in Q1, and the company has a record backlog. Meanwhile, with big tech CAPEX spending expected to soar, server demand will continue to grow exponentially.

Image Source: Carson Investment Research, Bloomberg

Surging AI BacklogDell currently sits on a record backlog of $43 billion. Meanwhile, Wall Street analysts expect that the $300 billion behemoth to grow annual earnings by 66.80% in 2026 and 82.52% in 2027.

Image Source: Zacks Investment Research

Dell: A Reasonable ValuationAlthough Dell shares have soared recently, its valuation remains rather cheap. The stock has a P/E ratio of 31.41x. Meanwhile, its PEG ratio (which factors in the consensus long-term growth rate) is actually lower than it was in 2024.

Image Source: Zacks Investment Research

Dell Breaks Out of High, Tight Flag PatternGrowth investing legend William O’Neil coined the “high tight flag” technical pattern. The pattern is one of the rarest and most powerful patterns and led to monstrous moves in SanDisk ((SNDK - Free Report) ) in 2026 and Qualcomm ((QCOM - Free Report) ) in 2000. To spot the pattern, look for the following characteristics.

·       The Pole: The stock must double or more in eight weeks or less. A swift move in such a short period is evidence of overwhelming accumulation.

·       The Flag: The flag requires a pullback between three to five weeks that is no deeper than 25% off the flag pole high. Ideally, trading volume dries up during this period.

Tuesday, DELL Shares broke out of a classic HTF pattern:

Image Source: TradingView

Beyond the pattern itself, DELL has been impressive from a relative strength perspective. While AI-related stocks like Marvell Technologies (MRVL) and SanDisk (SNDK - Free Report) cratered in July, Dell saw little selling.

Image Source: Zacks Investment Research

Bottom Line

Dell has successfully evolved from a traditional PC manufacturer to an AI powerhouse. Driven by a massive backlog, key partnerships with chipmakers, and exceptionally strong technical tailwinds, the stock offers a rare blend of hyper-growth fundamentals coupled with a reasonable valuation.

DALLAS--(BUSINESS WIRE)--Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today reported second quarter 2026 U.S. GAAP diluted earnings per share of $1.15 and adjusted earnings per share of $2.45. Net sales of $2.8 billion increased 18 percent sequentially, reflecting a 4 percent increase in volume and a 14 percent increase in price. Results were driven by strong execution across both businesses, including favorable pricing and mix outcomes in Engineered Materials and strong commercial and operational execution within the Acetyl Chain. The quarter also benefited from continued momentum across targeted growth platforms, particularly in medical and electronics.

Celanese leveraged the flexibility of its global manufacturing and supply chain networks to capitalize on rapidly evolving market conditions while continuing to advance actions designed to improve the competitiveness, resilience, and earnings power of the portfolio. For the second quarter, the Company reported consolidated operating profit of $276 million, adjusted EBIT of $470 million, and operating EBITDA of $649 million at margins of 10, 17, and 24 percent, respectively.

During the quarter, Celanese continued to execute against its strategic priorities of driving growth, intensifying cost improvements, and strengthening cash generation to support deleveraging. Actions included completion of the Ulsan, South Korea Engineered Materials compounding unit closure, completion of the nylon 6,6 manufacturing network optimization ahead of schedule, and continued progress toward the planned closure of the acetate tow facility in Lanaken, Belgium. Together, these initiatives are expected to deliver in excess of $50 million of annualized fixed-cost savings while improving the long-term competitiveness of the portfolio.

“The second quarter demonstrated the agility and focus of Celanese and the benefits of the actions we are taking across both businesses,” said Scott Richardson, president and chief executive officer. “We delivered our highest adjusted earnings per share in nearly three years through commercial execution, continued progress in our growth initiatives, and the effectiveness of our global manufacturing and supply chain networks. At the same time, we advanced important portfolio, productivity, and footprint actions that are improving competitiveness, strengthening cash generation, supporting deleveraging, and positioning Celanese for continued earnings growth.”

Second Quarter 2026 Financial Highlights:

Three Months Ended

June 30,
2026

March 31,
2026

June 30,
2025

(unaudited)

(In $ millions, except per share data)

Net Sales

Engineered Materials

1,446

1,325

1,442

Acetyl Chain

1,329

1,036

1,115

Intersegment Eliminations

(23

)

(24

)

(25

)

Total

2,752

2,337

2,532

Operating Profit (Loss)

Engineered Materials

156

221

164

Acetyl Chain

237

95

153

Other Activities

(117

)

(102

)

(86

)

Total

276

214

231

Net Earnings (Loss)

129

48

200

Adjusted EBIT(1)

Engineered Materials

234

220

213

Acetyl Chain

321

131

195

Other Activities

(85

)

(76

)

(66

)

Total

470

275

342

Equity Earnings and Dividend Income

Engineered Materials

6

31

24

Acetyl Chain

44

2

43

Operating EBITDA(1)

649

455

530

Diluted EPS - continuing operations

$

1.15

$

0.41

$

1.89

Diluted EPS - total

$

1.13

$

0.40

$

1.80

Adjusted EPS(1)

$

2.45

$

0.85

$

1.43

Net cash provided by (used in) investing activities

(59

)

425

(88

)

Net cash provided by (used in) financing activities

(546

)

(3

)

(116

)

Net cash provided by (used in) operating activities

209

76

410

Free cash flow(1)

140

3

311

Recent Highlights:

Advanced the Engineered Materials Grow & Fortify strategy through the optimization of the Asia compounding network. Celanese completed the closure of its Ulsan, South Korea compounding facility and transitioned production to larger, more efficient assets in China and India, strengthening the regional supply chain while improving the competitiveness of the manufacturing footprint. Additionally, the business also completed, ahead of schedule, the previously announced optimization of the nylon 6,6 manufacturing network. Expanded the use of sustainable materials in automotive applications. As an example, Aisan Industry Kentucky, LLC, the consolidated subsidiary of Japan-based Aisan Industry Co., Ltd., adopted Celanese POM ECO-C for fuel pump modules supplied to a North American automaker, demonstrating continued commercial momentum for Celanese's lower-carbon engineered materials solutions and supporting customer sustainability objectives. Advanced downstream growth opportunities within the Acetyl Chain through sustainability-focused innovation. Celanese and Siegwerk, one of the world’s leading providers of printing inks and coatings for packaging applications and labels, announced a collaboration to support more sustainable printing ink solutions utilizing bio-based ethyl acetate, highlighting the Company's focus on higher-value downstream applications and customer-driven product innovation. Second Quarter Business Segment Overview

Engineered Materials

Engineered Materials reported second quarter net sales of $1.45 billion, a 9 percent sequential increase, consisting of a 3 percent increase in volume, a 6 percent increase in pricing, and a modest currency benefit. Results were driven by strong commercial execution, favorable pricing and mix, and continued momentum across strategic growth platforms, particularly in medical and electronics. The business reported second quarter operating profit of $156 million, adjusted EBIT of $234 million, and operating EBITDA of $335 million, with margins of 11, 16, and 23 percent, respectively. Performance benefited from improving portfolio mix, targeted growth initiatives, and ongoing execution of the Engineered Materials Grow & Fortify strategy. During the quarter, the business completed the previously announced Ulsan, South Korea compounding unit closure and nylon 6,6 network optimization ahead of schedule, as well as the successful execution of the business's largest POM turnaround in five years. Collectively, these actions strengthen the business' competitiveness, flexibility, and participation in higher-growth end markets.

Acetyl Chain

The Acetyl Chain reported second quarter net sales of $1.33 billion, a 28 percent sequential increase, consisting of increases of 6 percent in volume and 22 percent in price, with a small currency benefit. Results reflected the successful capture of pricing and margin opportunities and volume gains in the Western Hemisphere driven by Celanese's position as a reliable supplier via the business's integrated global network. The business delivered second quarter operating profit of $237 million, adjusted EBIT of $321 million, and operating EBITDA of $385 million at margins of 18, 24, and 29 percent, respectively. Performance highlighted the flexibility of the Acetyl Chain business model, as the Company leveraged its integrated global network, reliability of supply, and commercial agility to capture opportunities and strengthen customer relationships. During the quarter, Celanese completed the rapid restart of the Frankfurt VAM unit, optimized network utilization, and continued advancing downstream growth initiatives and productivity actions designed to improve the durability and earnings profile of the business.

Cash Flow and Tax

Celanese reported second quarter operating cash flow of $209 million and free cash flow of $140 million. Cash generation in the quarter reflected timing effects of working capital associated with the higher sales and earnings profile. Capital expenditures remained disciplined and aligned with the Company's deleveraging priorities.

The effective U.S. GAAP income tax rate was 8 percent, reflecting the impact of discrete items occurring during the second quarter, which was higher compared to the same period in 2025, primarily due to non-recurring favorable tax items for changes in uncertain tax positions related to prior year tax examinations and deferred tax benefits related to integration transactions in the prior year. The effective tax rate for 2026 adjusted earnings was also 8 percent for the second quarter, and we anticipate this rate for the full year 2026 based on expected jurisdictional earnings mix for the full year and consideration of other non-recurring U.S. GAAP items.

Outlook

“Looking to the third quarter, we expect continued moderation of supply-related opportunities, along with the impact of higher raw material costs in Engineered Materials and inventory-related actions associated with our nylon 6,6 and Lanaken footprint optimizations,” continued Richardson. “Based on these dynamics, we expect third quarter adjusted earnings per share of approximately $1.35 to $1.75.”

“While earnings are expected to moderate from the strong second quarter level, we remain focused on executing the initiatives within our control and continue to expect approximately $6.00 of adjusted earnings per share and $700 to $800 million of free cash flow for the full year. In the second quarter, we saw early benefits of our growth strategy and the increasing contribution of our growth platforms. Together with our productivity, portfolio, and footprint actions, these initiatives position Celanese to deliver strong performance in 2026 and create additional earnings growth opportunities in the years ahead,” Richardson concluded.

Reconciliations of forecasted non-GAAP measures such as adjusted earnings per share, adjusted EBIT, operating EBITDA or free cash flow to the equivalent U.S. GAAP measures (diluted earnings per share, net earnings (loss) attributable to Celanese Corporation and net cash provided by (used in) operations, respectively), are not available without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, and other items is not practical. For more information, see "Non-GAAP Financial Measures" below.

The Company's prepared remarks related to the second quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library on August 4, 2026. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our investor relations website under Financial Information/Non-GAAP Financial Measures. See also "Non-GAAP Financial Measures" below.

Celanese Corporation is a global leader in chemistry, producing specialty material solutions used across most major industries and consumer applications. Our businesses use our chemistry, technology and commercial expertise to create value for our customers, employees and shareholders. We support sustainability by responsibly managing the materials we create and growing our portfolio of sustainable products to meet customer and societal demand. We strive to make a positive impact in our communities and to foster inclusivity across our teams. Celanese Corporation is a Fortune 500 company that employs more than 11,000 employees worldwide with 2025 net sales of $9.5 billion.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, cash flow, financial performance, synergies, capital expenditures, deleveraging efforts, planned cost reductions, dividend policy, financing needs and other information that is not historical information. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements contained in this release. These risks and uncertainties include, among other things: the ability to successfully achieve planned cost reductions; changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; the length and depth of product and industry business cycles, particularly in the automotive, electrical, textiles, electronics and construction industries; potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, or from changes in the laws, regulations or policies of governments or other governmental activities, in the countries in which we operate; our level of indebtedness and our financial condition, each of which could diminish our ability to raise additional capital to fund operations, reduce our business and strategic flexibility, increase our interest expense, limit the success of our deleveraging efforts, and impact changes to our credit ratings, which could increase our interest expense in the event of additional downgrades; volatility or changes in the price and availability of raw materials and energy, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, carbon monoxide, wood pulp, hexamethylene diamine, Polyamide 66 ("PA66"), polybutylene terephthalate, ethanol, natural gas and fuel oil, and the prices for electricity and other energy sources; the ability to pass increases in raw materials prices, logistics costs and other costs on to customers or otherwise improve margins through price increases; the possibility that we will not be able to realize the anticipated benefits of the Mobility & Materials business (the "M&M Business") we acquired from DuPont de Nemours, Inc. (the "M&M Acquisition"), including synergies and growth opportunities, whether as a result of difficulties arising from the operation of the M&M Business or other unanticipated delays, costs, inefficiencies or liabilities; additional impairment of goodwill or intangible assets; increased commercial, legal or regulatory complexity of entering into, or expanding our exposure to, certain end markets and geographies; risks in the global economy and equity and credit markets and their potential impact on our ability to pay down debt in the future and/or refinance at suitable rates, in a timely manner, or at all; the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance; the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants; increased price competition and the introduction of competing products by other companies; the ability to identify desirable potential acquisition or divestiture opportunities and to complete such transactions, including obtaining regulatory approvals, consistent with the Company's strategy; market acceptance of our products and technology; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, transportation, logistics or supply chain disruptions, cybersecurity incidents, AI-related vulnerabilities, terrorism or political unrest, public health crises, or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the direct or indirect consequences of acts of war or conflict (such as the Russia-Ukraine conflict or conflicts in the Middle East) or terrorist incidents or as a result of fire, flood, hurricanes, other severe weather, natural disasters, other catastrophic events, or other crises; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in applicable tariffs, duties, treaties and trade agreements, tax rates or legislation throughout the world including, but not limited to, anti-dumping and countervailing duties, adjustments, changes in estimates or interpretations or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in the United States and other jurisdictions; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change or other sustainability matters; changes in currency exchange rates and interest rates; tax rates and changes thereto; and various other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Non-GAAP Financial Measures

Presentation

This document presents the Company's two business segments, Engineered Materials and the Acetyl Chain.

Use of Non-US GAAP Financial Information

This release uses the following Non-US GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, adjusted earnings per share and free cash flow. These measures are not recognized in accordance with US GAAP and should not be viewed as an alternative to US GAAP measures of performance or liquidity. The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin is operating margin; for operating EBITDA margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by (used in) operations.

Definitions of Non-US GAAP Financial Measures

Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8 of our Non-US GAAP Financial Measures and Supplemental Information document). We do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We do not provide reconciliations for operating EBITDA on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Operating EBITDA margin is defined by the Company as operating EBITDA divided by net sales. Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a of our Non-US GAAP Financial Measures and Supplemental Information document summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results. Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for contributions from or distributions to our noncontrolling interest joint ventures. We do not provide reconciliations for free cash flow on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Reconciliation of Non-US GAAP Financial Measures

Reconciliations of the Non-US GAAP financial measures used in this press release to the comparable US GAAP financial measure, together with information about the purposes and uses of Non-US GAAP financial measures, are included in our Non-US GAAP Financial Measures and Supplemental Information document filed as an exhibit to our Current Report on Form 8-K filed with the SEC on or about August 4, 2026 and also available on our website at investors.celanese.com under Financial Information/Financial Document Library.

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Beginning with the reporting period ending June 30, 2026, the Company revised its presentation of Equity Earnings and Dividend Income Attributable to Celanese Corporation. Previously, Other Income (Expense) Attributable to Celanese Corporation was included with the presentation of Equity Earnings and Dividend Income Attributable to Celanese Corporation. To provide a better understanding for readers of the U.S. GAAP results of the Company’s non-consolidated equity investments by presenting such results in isolation and better align with how management assesses such results, Other Income (Expense) Attributable to Celanese Corporation is now included with Non-Operating Pension, Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation. Prior periods presented have been revised to reflect this change.

Certain prior period amounts have been revised to correct for certain prior period immaterial errors. See Note 1 to our Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2026.

Supplemental Information

Additional information about our prior period performance is included in our Quarterly Reports on Form 10-Q and in our Non-US GAAP Financial Measures and Supplemental Information document.

Consolidated Statements of Operations - Unaudited

  Three Months Ended

June 30,
2026

March 31,
2026

June 30,
2025

(In $ millions, except share and per share data)

Net sales

2,752

2,337

2,532

Cost of sales

(2,134

)

(1,869

)

(1,998

)

Gross profit

618

468

534

Selling, general and administrative expenses

(251

)

(226

)

(214

)

Amortization of intangible assets

(39

)

(40

)

(42

)

Research and development expenses

(29

)

(28

)

(31

)

Other (charges) gains, net

(31

)

(20

)

(20

)

Foreign exchange gain (loss), net

10

12

6

Gain (loss) on disposition of businesses and assets, net

(2

)

48

(2

)

Operating profit (loss)

276

214

231

Equity in net earnings (loss) of affiliates

11

35

29

Non-operating pension and other postretirement employee benefit (expense) income

5

5

1

Interest expense

(186

)

(183

)

(177

)

Interest income

10

9

7

Dividend income - equity investments

43

1

41

Other income (expense), net

(17

)

1

1

Earnings (loss) from continuing operations before tax

142

82

133

Income tax (provision) benefit

(11

)

(33

)

77

Earnings (loss) from continuing operations

131

49

210

Earnings (loss) from operation of discontinued operations

(2

)

(1

)

(10

)

Income tax (provision) benefit from discontinued operations

—

—

—

Earnings (loss) from discontinued operations

(2

)

(1

)

(10

)

Net earnings (loss)

129

48

200

Net (earnings) loss attributable to noncontrolling interests

(4

)

(4

)

(3

)

Net earnings (loss) attributable to Celanese Corporation

125

44

197

Amounts attributable to Celanese Corporation

Earnings (loss) from continuing operations

127

45

207

Earnings (loss) from discontinued operations

(2

)

(1

)

(10

)

Net earnings (loss)

125

44

197

Earnings (loss) per common share - basic

Continuing operations

1.16

0.41

1.89

Discontinued operations

(0.02

)

(0.01

)

(0.09

)

Net earnings (loss) - basic

1.14

0.40

1.80

Earnings (loss) per common share - diluted

Continuing operations

1.15

0.41

1.89

Discontinued operations

(0.02

)

(0.01

)

(0.09

)

Net earnings (loss) - diluted

1.13

0.40

1.80

Weighted average shares (in millions)

Basic

109.8

109.7

109.5

Diluted

110.2

110.0

109.7

Consolidated Balance Sheets - Unaudited

  As of

June 30,

2026

As of

December 31,

2025

(In $ millions)

ASSETS

Current Assets

Cash and cash equivalents

1,364

1,263

Trade receivables - third party and affiliates, net

1,288

922

Non-trade receivables, net

581

545

Inventories

2,305

2,220

Assets held for sale

—

492

Other assets

257

251

Total current assets

5,795

5,693

Investments in affiliates

1,233

1,252

Property, plant and equipment, net

4,807

5,076

Operating lease right-of-use assets

417

359

Deferred income taxes

1,325

1,359

Other assets

605

601

Goodwill

4,151

4,171

Intangible assets, net

3,075

3,184

Total assets

21,408

21,695

LIABILITIES AND EQUITY

Current Liabilities

Short-term borrowings and current installments of long-term debt - third party and affiliates

1,311

1,204

Trade payables - third party and affiliates

1,485

1,279

Liabilities held for sale

—

75

Other liabilities

1,106

1,049

Income taxes payable

104

76

Total current liabilities

4,006

3,683

Long-term debt, net of unamortized deferred financing costs

10,696

11,394

Deferred income taxes

458

512

Uncertain tax positions

211

208

Benefit obligations

321

344

Operating lease liabilities

317

265

Other liabilities

811

817

Commitments and Contingencies

Shareholders' Equity

Treasury stock, at cost

(5,480

)

(5,482

)

Additional paid-in capital

450

431

Retained earnings

10,039

9,876

Accumulated other comprehensive income (loss), net

(842

)

(776

)

Total Celanese Corporation shareholders' equity

4,167

4,049

Noncontrolling interests

421

423

Total equity

4,588

4,472

Total liabilities and equity

21,408

21,695

Non-U.S. GAAP Financial Measures and Supplemental Information

August 4, 2026

In this document, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a consolidated basis.

Purpose

The purpose of this document is to provide information of interest to investors, analysts and other parties including supplemental financial information and reconciliations and other information concerning our use of non-U.S. GAAP financial measures. This document is updated quarterly.

Presentation

This document presents the Company's two business segments, Engineered Materials and the Acetyl Chain.

Use of Non-U.S. GAAP Financial Measures

From time to time, management may publicly disclose certain numerical "non-GAAP financial measures" in the course of our earnings releases, financial presentations, earnings conference calls, investor and analyst meetings and otherwise. For these purposes, the Securities and Exchange Commission ("SEC") defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable U.S. GAAP measure so calculated and presented. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States.

Non-GAAP financial measures disclosed by management are provided as additional information to investors, analysts and other parties because the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other U.S. GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Financial Information/Financial Document Library page of our website, investors.celanese.com. The definition and method of calculation of the non-GAAP financial measures used herein may be different from other companies' methods for calculating measures with the same or similar titles. Investors, analysts and other parties should understand how another company calculates such non-GAAP financial measures before comparing the other company's non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.

Pursuant to the requirements of SEC Regulation G, whenever we refer to a non-GAAP financial measure, we will also present in this document, in the presentation itself or on a Form 8-K in connection with the presentation on the Financial Information/Financial Document Library page of our website, investors.celanese.com, to the extent practicable, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

This document includes definitions and reconciliations of non-GAAP financial measures used from time to time by the Company.

Specific Measures Used

This document provides information about the following non-GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, operating profit (loss) attributable to Celanese Corporation, adjusted earnings per share, net debt, free cash flow and return on invested capital (adjusted). The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin and operating EBITDA margin is operating margin; for operating profit (loss) attributable to Celanese Corporation is operating profit (loss); for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; for net debt is total debt; for free cash flow is net cash provided by (used in) operations; and for return on invested capital (adjusted) is net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation shareholders' equity.

Definitions

Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8). We believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of unusual, non-operational or restructuring-related activities that affect comparability. Our management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial and operating results and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses and limitations as adjusted EBIT. Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We believe that operating EBITDA provides transparent and useful information to investors, analysts and other parties in evaluating our operating performance relative to our peer companies. We do not provide reconciliations for operating EBITDA on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Operating EBITDA margin is defined by the Company as operating EBITDA divided by net sales. Operating EBITDA margin has the same uses and limitations as operating EBITDA. Operating profit (loss) attributable to Celanese Corporation is defined by the Company as operating profit (loss), less earnings (loss) attributable to noncontrolling interests ("NCI"). We believe that operating profit (loss) attributable to Celanese Corporation provides transparent and useful information to management, investors, analysts and other parties in evaluating our core operational performance. Operating margin attributable to Celanese Corporation is defined by the Company as operating profit (loss) attributable to Celanese Corporation divided by net sales. Operating margin attributable to Celanese Corporation has the same uses and limitations as operating profit (loss) attributable to Celanese Corporation. Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We believe that adjusted earnings per share provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of the above stated items that affect comparability and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results. Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for contributions from or distributions to our NCI joint ventures. We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. Although we use free cash flow as a measure to assess the liquidity generated by our business, the use of free cash flow has important limitations, including that free cash flow does not reflect the cash requirements necessary to service our indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding obligations. Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain debt service and finance lease payments that are not deducted from that measure. We do not provide reconciliations for free cash flow on a forward-looking basis when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Net debt is defined by the Company as total debt less cash and cash equivalents. We believe that net debt provides useful information to management, investors, analysts and other parties in evaluating changes to the Company's capital structure and credit quality assessment. Return on invested capital (adjusted) is defined by the Company as adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation shareholders' equity. We believe that return on invested capital (adjusted) provides useful information to management, investors, analysts and other parties in order to assess our income generation from the point of view of our shareholders and creditors who provide us with capital in the form of equity and debt and whether capital invested in the Company yields competitive returns. Supplemental Information

Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:

Net sales for each of our business segments and the percentage increase or decrease in net sales attributable to price, volume, currency and other factors for each of our business segments. Cash dividends received from our equity investments. For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside shareholders' interests are shown as NCI. Amounts referred to as "attributable to Celanese Corporation" are net of any applicable NCI. Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Beginning with the reporting period ending June 30, 2026, the Company revised its presentation of Equity Earnings and Dividend Income Attributable to Celanese Corporation. Previously, Other Income (Expense) Attributable to Celanese Corporation was included with the presentation of Equity Earnings and Dividend Income Attributable to Celanese Corporation. To provide a better understanding for readers of the U.S. GAAP results of the Company’s non-consolidated equity investments by presenting such results in isolation and better align with how management assesses such results, Other Income (Expense) Attributable to Celanese Corporation is now included with Non-Operating Pension, Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation. Prior periods presented have been revised to reflect this change.

Certain prior period amounts have been revised to correct for certain prior period immaterial errors. See Note 1 to our Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2026.

Table 1

Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

125

44

(1,165

)

19

(1,357

)

197

(24

)

(Earnings) loss from discontinued operations

2

1

21

6

—

10

5

Interest income

(10

)

(9

)

(24

)

(6

)

(7

)

(7

)

(4

)

Interest expense

186

183

701

177

177

177

170

Refinancing expense

—

—

68

36

—

—

32

Income tax provision (benefit)

11

33

(90

)

(15

)

(7

)

(77

)

9

Certain Items attributable to Celanese Corporation (Table 8)

156

23

1,639

34

1,520

42

43

Adjusted EBIT

470

275

1,150

251

326

342

231

Depreciation and amortization expense(1)

179

180

743

184

191

188

180

Operating EBITDA

649

455

1,893

435

517

530

411

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions)

Engineered Materials

43

3

6

1

3

2

—

Acetyl Chain

22

18

11

11

—

—

—

Other Activities(2)

—

—

—

—

—

—

—

Accelerated depreciation and amortization expense

65

21

17

12

3

2

—

Depreciation and amortization expense(1)

179

180

743

184

191

188

180

Total depreciation and amortization expense

244

201

760

196

194

190

180

Table 2

Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited

  Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

Engineered Materials

156

10.8

%

221

16.7

%

(958

)

(17.8

)%

111

8.7

%

(1,327

)

(95.9

)%

164

11.4

%

94

7.3

%

Acetyl Chain

237

17.8

%

95

9.2

%

539

12.7

%

90

9.6

%

135

12.7

%

153

13.7

%

161

14.4

%

Other Activities(1)

(117

)

(102

)

(367

)

(108

)

(83

)

(86

)

(90

)

Total

276

10.0

%

214

9.2

%

(786

)

(8.2

)%

93

4.2

%

(1,275

)

(52.7

)%

231

9.1

%

165

6.9

%

Less: Net Earnings (Loss) Attributable to NCI for Engineered Materials

2

2

6

—

3

1

2

Less: Net Earnings (Loss) Attributable to NCI for Acetyl Chain

2

2

8

3

1

2

2

Operating Profit (Loss) Attributable to Celanese Corporation

272

9.9

%

210

9.0

%

(800

)

(8.4

)%

90

4.1

%

(1,279

)

(52.9

)%

228

9.0

%

161

6.7

%

Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation

Engineered Materials

154

10.7

%

219

16.5

%

(964

)

(17.9

)%

111

8.7

%

(1,330

)

(96.1

)%

163

11.3

%

92

7.1

%

Acetyl Chain

235

17.7

%

93

9.0

%

531

12.5

%

87

9.3

%

134

12.6

%

151

13.5

%

159

14.2

%

Other Activities(1)

(117

)

(102

)

(367

)

(108

)

(83

)

(86

)

(90

)

Total

272

9.9

%

210

9.0

%

(800

)

(8.4

)%

90

4.1

%

(1,279

)

(52.9

)%

228

9.0

%

161

6.7

%

Equity Earnings and Dividend Income Attributable to Celanese Corporation

Engineered Materials

6

(2)

31

105

32

33

24

16

Acetyl Chain

44

2

131

42

43

43

3

Other Activities(1)

4

3

13

3

3

3

4

Total

54

36

249

77

79

70

23

Non-Operating Pension, Other Post-Retirement Employee Benefit and Other Income (Expense) Attributable to Celanese Corporation

Engineered Materials

(16

)

1

7

3

2

1

1

Acetyl Chain

—

—

1

—

1

—

—

Other Activities(1)

4

5

54

47

3

1

3

Total

(12

)

6

62

50

6

2

4

Certain Items Attributable to Celanese Corporation (Table 8)

Engineered Materials

90

(31

)

1,572

37

1,495

25

15

Acetyl Chain

42

36

32

17

9

1

5

Other Activities(1)

24

18

35

(20

)

16

16

23

Total

156

23

1,639

34

1,520

42

43

Adjusted EBIT / Adjusted EBIT Margin

Engineered Materials

234

16.2

%

220

16.6

%

720

13.4

%

183

14.3

%

200

14.5

%

213

14.8

%

124

9.6

%

Acetyl Chain

321

24.2

%

131

12.6

%

695

16.4

%

146

15.5

%

187

17.6

%

195

17.5

%

167

15.0

%

Other Activities(1)

(85

)

(76

)

(265

)

(78

)

(61

)

(66

)

(60

)

Total

470

17.1

%

275

11.8

%

1,150

12.0

%

251

11.4

%

326

13.5

%

342

13.5

%

231

9.7

%

Table 2

Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.)

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

Engineered Materials

101

104

441

105

115

112

109

Acetyl Chain

64

63

252

64

63

64

61

Other Activities(2)

14

13

50

15

13

12

10

Total

179

180

743

184

191

188

180

Operating EBITDA / Operating EBITDA Margin

Engineered Materials

335

23.2

%

324

24.5

%

1,161

21.5

%

288

22.6

%

315

22.8

%

325

22.5

%

233

18.1

%

Acetyl Chain

385

29.0

%

194

18.7

%

947

22.4

%

210

22.3

%

250

23.6

%

259

23.2

%

228

20.4

%

Other Activities(2)

(71

)

(63

)

(215

)

(63

)

(48

)

(54

)

(50

)

Total

649

23.6

%

455

19.5

%

1,893

19.8

%

435

19.7

%

517

21.4

%

530

20.9

%

411

17.2

%

Table 3

Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

per share

per share

per share

per share

per share

per share

per share

(In $ millions, except per share data)

Earnings (loss) from continuing operations attributable to Celanese Corporation

127

1.15

45

0.41

(1,144

)

(10.44

)

25

0.23

(1,357

)

(12.39

)

207

1.89

(19

)

(0.17

)

Income tax provision (benefit)

11

33

(90

)

(15

)

(7

)

(77

)

9

Earnings (loss) from continuing operations before tax

138

78

(1,234

)

10

(1,364

)

130

(10

)

Certain Items attributable to Celanese Corporation (Table 8)

156

23

1,639

34

1,520

42

43

Refinancing and related expenses

—

—

68

36

—

—

32

Adjusted earnings (loss) from continuing operations before tax

294

101

473

80

156

172

65

Income tax (provision) benefit on adjusted earnings(1)

(24

)

(8

)

(36

)

(6

)

(9

)

(15

)

(6

)

Adjusted earnings (loss) from continuing operations(2)

270

2.45

93

0.85

437

3.98

74

0.67

147

1.34

157

1.43

59

0.54

Diluted shares (in millions)(3)

Weighted average shares outstanding

109.8

109.7

109.5

109.6

109.6

109.5

109.4

Incremental shares attributable to equity awards

0.4

0.3

0.2

0.2

—

0.2

—

Total diluted shares

110.2

110.0

109.7

109.8

109.6

109.7

109.4

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

Adjusted effective tax rate

8

8

8

8

6

9

9

Actual Plan
Asset Returns

Expected
Plan Asset
Returns

(In percentages)

2025

7.8

5.3

Table 3a

Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited

Estimated

Actual

2026

2025

(In percentages)

U.S. GAAP annual effective tax rate

21

7

Discrete quarterly recognition of GAAP items(1)

(2

)

17

Tax impact of other charges and adjustments(2)

(3

)

(12

)

Utilization of foreign tax credits

(5

)

—

Changes in valuation allowances, excluding impact of other charges and adjustments(3)

2

(12

)

Other, includes effect of discrete current year transactions(4)

(5

)

8

Adjusted tax rate

8

8

____________________

Note: As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate for actual results.

(1) Such as changes in tax laws (including U.S. tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.

(2) Reflects the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes.

(3) Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.

(4) Includes tax impacts related to full-year actual tax opportunities and related costs, as well as current year realization of U.S. GAAP benefits deferred in prior years.

Table 4

Net Sales by Segment - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions)

Engineered Materials

1,446

1,325

5,390

1,277

1,384

1,442

1,287

Acetyl Chain

1,329

1,036

4,232

940

1,061

1,115

1,116

Intersegment eliminations(1)

(23

)

(24

)

(78

)

(13

)

(26

)

(25

)

(14

)

Net sales

2,752

2,337

9,544

2,204

2,419

2,532

2,389

Table 4a

Factors Affecting Segment Net Sales Sequentially - Unaudited

Three Months Ended June 30, 2026 Compared to Three Months Ended March 31, 2026

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

3

6

—

9

(1)

Acetyl Chain

6

22

—

28

Total Company

4

14

—

18

Three Months Ended March 31, 2026 Compared to Three Months Ended December 31, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

3

—

1

4

Acetyl Chain

8

1

1

10

Total Company

5

—

1

6

Three Months Ended December 31, 2025 Compared to Three Months Ended September 30, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(6

)

(2

)

—

(8

)

Acetyl Chain

(10

)

(1

)

—

(11

)

Total Company

(7

)

(2

)

—

(9

)

Three Months Ended September 30, 2025 Compared to Three Months Ended June 30, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(6

)

1

1

(4

)

Acetyl Chain

(2

)

(4

)

1

(5

)

Total Company

(4

)

(1

)

1

(4

)

Three Months Ended June 30, 2025 Compared to Three Months Ended March 31, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

9

—

3

12

Acetyl Chain

(1

)

(2

)

3

—

Total Company

4

(1

)

3

6

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

—

2

(1

)

1

Acetyl Chain

3

(1

)

(1

)

1

Total Company

2

—

(1

)

1

Table 4b Factors Affecting Segment Net Sales Year Over Year - Unaudited

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(6

)

5

1

—

(1)

Acetyl Chain

—

18

1

19

Total Company

(3

)

11

1

9

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

—

(1

)

4

3

Acetyl Chain

(7

)

(4

)

4

(7

)

Total Company

(3

)

(3

)

4

(2

)

Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(2

)

—

3

1

Acetyl Chain

(10

)

(7

)

2

(15

)

Total Company

(6

)

(3

)

2

(7

)

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(8

)

(1

)

2

(7

)

Acetyl Chain

(4

)

(8

)

1

(11

)

Total Company

(6

)

(4

)

1

(9

)

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(3

)

(1

)

2

(2

)

Acetyl Chain

(2

)

(7

)

2

(7

)

Total Company

(2

)

(4

)

2

(4

)

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(4

)

(2

)

(1

)

(7

)

Acetyl Chain

(6

)

(4

)

(1

)

(11

)

Total Company

(5

)

(3

)

(1

)

(9

)

Table 4c Factors Affecting Segment Net Sales Year Over Year - Unaudited

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Volume

Price

Currency

Total

(In percentages)

Engineered Materials

(4

)

(1

)

1

(4

)

Acetyl Chain

(6

)

(6

)

1

(11

)

Total Company

(4

)

(4

)

1

(7

)

Table 5 Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions, except percentages)

Net cash provided by (used in) investing activities

(59

)

425

(349

)

(104

)

(59

)

(88

)

(98

)

Net cash provided by (used in) financing activities

(546

)

(3

)

(513

)

(324

)

(118

)

(116

)

45

Net cash provided by (used in) operating activities

209

76

1,146

252

447

410

37

Capital expenditures on property, plant and equipment

(62

)

(66

)

(343

)

(84

)

(64

)

(93

)

(102

)

Contributions from/(Distributions) to NCI

(7

)

(7

)

(30

)

(8

)

(8

)

(6

)

(8

)

Free cash flow(1)

140

3

773

160

375

311

(73

)

Net sales

2,752

2,337

9,544

2,204

2,419

2,532

2,389

Free cash flow as % of Net sales

5.1

%

0.1

%

8.1

%

7.3

%

15.5

%

12.3

%

(3.1

)%

Table 6

Cash Dividends Received - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions)

Dividends from equity method investments

16

54

139

47

40

21

31

Dividends from equity investments without readily determinable fair values

43

1

122

40

40

41

1

Total

59

55

261

87

80

62

32

Table 7

Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

(In $ millions)

Short-term borrowings and current installments of long-term debt - third party and affiliates

1,311

1,741

1,204

1,204

1,199

252

406

Long-term debt, net of unamortized deferred financing costs

10,696

10,813

11,394

11,394

11,655

12,689

12,378

Total debt

12,007

12,554

12,598

12,598

12,854

12,941

12,784

Cash and cash equivalents

(1,364

)

(1,758

)

(1,263

)

(1,263

)

(1,440

)

(1,173

)

(951

)

Net debt

10,643

10,796

11,335

11,335

11,414

11,768

11,833

Table 8

Certain Items - Unaudited

The following Certain Items attributable to Celanese Corporation are included in Net earnings (loss) and are adjustments to non-GAAP measures:

Q2 '26

Q1 '26

2025

Q4 '25

Q3 '25

Q2 '25

Q1 '25

Income Statement Classification

(In $ millions)

Exit and shutdown costs

121

44

98

29

10

27

32

Cost of sales / SG&A / Other (charges) gains, net / Gain (loss) on disposition of businesses and assets, net / Non-operating pension and other postretirement employee benefit (expense) income

Asset impairments

—

—

1,513

27

(1)

1,486

(2)

—

—

Cost of sales / Other (charges) gains, net

Impact from plant incidents and natural disasters

—

11

3

—

—

—

3

Cost of sales

Mergers, acquisitions and dispositions

35

15

52

23

12

12

5

Cost of sales / SG&A

Actuarial (gain) loss on pension and postretirement plans

—

—

(49

)

(49

)

—

—

—

Cost of sales / SG&A / Non-operating pension and other postretirement employee benefit (expense) income

Legal settlements and commercial disputes

4

3

17

1

11

2

3

Cost of sales / SG&A / Other (charges) gains, net

(Gain) loss on disposition of businesses and assets

(4

)

(50

)

—

—

—

—

—

Gain (loss) on disposition of businesses and assets, net

Other

—

—

5

3

1

1

—

Cost of sales / SG&A

Certain Items attributable to Celanese Corporation

156

23

1,639

34

1,520

42

43

Table 9

Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited

2025

(In $ millions, except percentages)

Net earnings (loss) attributable to Celanese Corporation

(1,165

)

Adjusted EBIT (Table 1)

1,150

Adjusted effective tax rate (Table 3a)

8

%

Adjusted EBIT tax effected

1,058

2025

2024

Average

(In $ millions, except percentages)

Short-term borrowings and current installments of long-term debt - third parties and affiliates

1,204

1,501

1,353

Long-term debt, net of unamortized deferred financing costs

11,394

11,078

11,236

Celanese Corporation shareholders' equity

4,049

5,129

4,589

Invested capital

17,178

Return on invested capital (adjusted)

6.2

%

Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital

(6.8

)%

Second Quarter 2026 Revenues of $458.8 Million Reflect 19.1 Percent Organic Growth and 30.5 Percent Growth Over Second Quarter 2025 Revenues of $351.5 Million

Kratos Government Solutions Second Quarter 2026 Revenues of $379.7 Million Reflect 22.0 Percent Organic Growth and 36.4 Percent Growth Over Second Quarter 2025 Revenues of $278.3 Million

Unmanned Systems Second Quarter 2026 Revenues of $79.1 Million Reflect 8.1 Percent Organic Growth Over Second Quarter 2025 Revenues of $73.2 Million

Second Quarter 2026 Consolidated Book to Bill Ratio of 1.1 to 1 and Bookings of $492.2 Million

Last Twelve Months Ended June 28, 2026, Consolidated Book to Bill Ratio of 1.3 to 1 and Bookings of $1.990 Billion

Increases Full Year 2026 Revenue Guidance to $1.750 to $1.810 Billion, With Forecasted Organic Revenue Growth of Approximately 18 Percent to 23 Percent as Compared to Full Year 2025

SAN DIEGO,Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), a leader in defense, national security and global markets, today reported its second quarter 2026 financial results, including Revenues of $458.8 million, Operating Loss of $1.6 million, Net Income of $4.4 million, Adjusted EBITDA of $38.2 million and a consolidated book to bill ratio of 1.1 to 1.0.

Second quarter 2026 Net Income and Operating Income includes non-cash stock compensation expense of $16.3 million, Company-funded Research and Development (R&D) expense of $13.6 million, including efforts in our Space, Satellite, Unmanned Systems and Microwave Electronic businesses, and non-cash amortization expense of $12.5 million.

Kratos reported in the second quarter 2026 GAAP Net Income of $4.4 million and GAAP Net Income per share of $0.02, compared to GAAP Net Income of $2.9 million and GAAP Net Income per share of $0.02, for the second quarter of 2025. Adjusted earnings per share (EPS) were $0.21 for the second quarter of 2026, compared to $0.11 for the second quarter of 2025.

Second quarter 2026 Revenues of $458.8 million increased $107.3 million, reflecting 30.5 percent growth and 19.1 percent organic growth from second quarter 2025 Revenues of $351.5 million. Organic revenue growth was reported in our Unmanned Systems (KUS) segment of 8.1 percent and in our Government Solutions (KGS) segment of 22.0 percent. The most notable growth in our KGS Segment was in our Defense Rocket Systems, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, compared to the second quarter of 2025.

Second quarter 2026 Cash Flow Used in Operations was $11.0 million, primarily reflecting the working capital requirements related to the 30.5 percent revenue growth impacting our receivables, and also including increases in inventory balances related to ramps in production and investments we are making related to certain development initiatives. Free Cash Flow Used in Operations for the second quarter of 2026 was $18.9 million after funding $17.2 million of capital expenditures, and net of cash received of $9.3 million for the sale of company-owned Valkyries.

For the second quarter of 2026, KUS generated Revenues of $79.1 million, compared to $73.2 million in the second quarter of 2025, with the increase primarily driven by Valkyrie-related activity. KUS’s Operating Income was $1.2 million in the second quarter of 2026, compared to an Operating Loss of $0.3 million in the second quarter of 2025. KUS’s Adjusted EBITDA for the second quarter of 2026 was $5.1 million, compared to $3.6 million for the second quarter of 2025, reflecting the impact of the revenue volume and mix. KUS’s book-to-bill ratio for the second quarter of 2026 was 1.0 to 1.0 and 1.1 to 1.0 for the twelve months ended June 28, 2026, with bookings of $78.4 million for the three months ended June 28, 2026, and bookings of $354.4 million for the twelve months ended June 28, 2026. Total backlog for KUS at the end of the second quarter of 2026 was $374.6 million, compared to $375.4 million at the end of the first quarter of 2026.

For the second quarter of 2026, our KGS segment Revenues of $379.7 million increased from Revenues of $278.3 million in the second quarter of 2025, reflecting a 36.4 percent increase and a 22.0 percent organic growth rate, excluding the impact of the Nomad Global Communication Solutions (Nomad) and Orbit Technologies Ltd (Orbit) acquisitions. The increased Revenues includes organic revenue growth across our Defense and Rocket Support business, Turbine Technologies, Microwave Products and Space, Training and Cyber businesses, with organic revenue growth rates of 50.2 percent, 43.3 percent, 29.5 percent and 8.7 percent, respectively, over the second quarter of 2025.

KGS reported Operating Income of $14.3 million in the second quarter of 2026 compared to $12.6 million in the second quarter of 2025, primarily reflecting increased volume and mix in revenues. Second quarter 2026 KGS Adjusted EBITDA was $33.1 million, compared to second quarter 2025 KGS Adjusted EBITDA of $24.7 million, primarily reflecting the volume and mix in revenues and resources.

KGS reported a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, a book-to-bill ratio of 1.4 to 1.0 for the last twelve months ended June 28, 2026, and bookings of $413.8 million and $1.636 billion for the three and last twelve months ended June 28, 2026, respectively. KGS’s total backlog was $1.710 billion at the end of the second quarter of 2026, compared to $1.676 billion at the end of the first quarter of 2026.

Kratos reported consolidated bookings of $492.2 million and a book-to-bill ratio of 1.1 to 1.0 for the second quarter of 2026, and consolidated bookings of $1.990 billion and a book-to-bill ratio of 1.3 to 1.0 for the last twelve months ended June 28, 2026. Consolidated backlog was $2.084 billion on June 28, 2026, as compared to $2.051 billion on March 29, 2026. Kratos’ bid and proposal pipeline was $15.0 billion at June 28, 2026, as compared to $14.3 billion on March 29, 2026. Backlog on June 28, 2026, included funded backlog of $1.572 billion and unfunded backlog of $512.7 million.

Eric DeMarco, Kratos’ President and CEO, said, “Kratos’ second quarter results are reflective of the execution of the Kratos team and that our strategy, including making internally funded investments to be first-to-market with relevant hardware and software, that is engineered up front for affordable mass production, at scale, is aligned with the Department of War’s priorities. Representative of this alignment is Kratos’ last 12 month book-to-bill ratio of 1.3 to 1.0, the number of opportunities for Kratos continuing to increase as evidenced in our bid and proposal pipeline of $15 billion, and our business momentum expected to accelerate in the second half of 2026 and into 2027.”

Mr. DeMarco continued, “Kratos’ second quarter year over year organic growth rate was 19.1 percent, we are now forecasting third quarter organic growth of approximately 19 percent to 25 percent, and for fourth quarter organic growth of approximately 19 percent to 31 percent.   As a result, we have increased our full year 2026 organic revenue growth forecast up to approximately 18 percent to 23 percent as compared to full year 2025, which now also includes an expectation of approximately 10 percent organic growth for our Unmanned Systems business based upon recent contract awards, including Valkyrie.”

Mr. DeMarco concluded, “Kratos’ EBITDA margins are also increasing, and are forecast to continue to increase in the second half of 2026 and into 2027, as the business scales, production increases and we realize financial leverage on our fixed cost infrastructure. We are generating and forecasting for increased margins irrespective of increased costs as we pursue large new opportunities with the Department of War and the strength of the Shekel adversely impacting our Israel operations profitability, where we now have over 700 personnel. Expected future growth areas for Kratos include; hypersonic and rocket systems, missiles, jet engines, space and satellite communications.”

Financial Guidance

We are providing our initial third quarter guidance and increasing our full year 2026 Revenue guidance and tightening our Adjusted EBITDA guidance, and our assumptions, including as related to: current forecasted business mix, expected employee sourcing, hiring and retention; potential manufacturing, production and supply chain disruptions; potential parts shortages and related continued significant cost and price increases in each of these areas, which are impacting the industry and Kratos. We continue to make significant investments in bid, proposal and other new program opportunity areas, and increasing staffing to enable us to ramp production levels, all of which is currently adversely impacting our profit margins and free cash flow generation. We are also making significant investments in inventory, property, plant, equipment and facilities, consistent with the Department of War’s National Security Strategy and its stated expectations of U.S. National Security government contractors. These investments are expected to continue at least into Kratos’ fiscal year 2027, as our opportunity pipeline continues to increase.

Kratos’ revised cash flow guidance also assumes certain investments in our Rocket Systems and Unmanned Systems businesses, related to the procurement of rocket motors and related systems, and has been updated to include the working capital requirements related to the procurement of the materials and equipment in the third and fourth quarters to ramp our production of jet engines to 3,000 in 2027 to address the demand for engines for small cruise missiles, and our plan to begin producing approximately 40 Valkyries annually beginning by the beginning of 2028, as well as the completion of certain of our unmanned systems and related derivatives and vehicles. Additional forecasted investments in 2026 include our funding of the Prometheus joint venture, our Anaconda radar program, our Helios hypersonic and arc chamber program, our Indiana hypersonic integration facility, our Birmingham advanced manufacturing facility for hypersonic systems, expansion and new microwave electronics facilities in Israel and the U.S., our GEK and BladeWorks engine facilities, the continued build of our second lot of 12 Valkyrie aircraft, certain manufacturing and production related equipment for our recently acquired Nomad acquisition, certain drone-related investments, and our Vulcan, Kraken, Elysium, Nemesis, Hermes and other initiatives. The revised forecast for our estimated FY26 capital expenditure spend includes the shift in timing of construction and procurement of related machinery and equipment, to remove certain expenditures which are now funded under customer contract, and a shift in classification of investments for various drone opportunities which will be classified as a use of working capital in our Operating Cash Flow as work in process rather than capital expenditures when incurred. In summary, Kratos continues to make the required investments to support the rebuild of the U.S. defense industrial base and related infrastructure consistent with the Department of War’s direction, take advantage of the ongoing generational recapitalization of strategic and other weapon and National Security related systems, and generate value for all Kratos stakeholders, including the warfighter and Kratos shareholders.

   $MQ326FY26   Revenues$460 - $480$1,750 - $1,810R&D$13 - $15$50 - $53Operating Income$1 - $4$16 - $22Depreciation$11 - $12$48 - $50Amortization$12 - $13$43 - $46Stock Based Compensation$16 - $17$60 - $64Adjusted EBITDA$40 - $45$173 - $176   Operating Cash Flow $30 - $50Capital Expenditures $125 - $135Free Cash Flow Use ($85 - $105)    FY26 Forecasted Investments for New Program and Opportunities ($M)Capital ExpendituresEstimated Spend Program/Opportunity      Advanced Manufacturing Facility for Hypersonics/Engines & Test Cell$4-$5 Various Customer OpportunitiesPayload Integration Facility$4-$5 MACH-TB and OtherNomad Plant Improvements and Machinery$8 $9 Various Customer OpportunitiesC5ISR Facility and Machinery$3-$5 Various Air Defense ProgramsBladeWorks Turbo Fan Facility and Test Cells and New Designs$18-$19 Various Engine OpportunitiesMicrowave Products New/Expanded Facilities and Machinery$14-$15 Various Customer OpportunitiesSpace and Satellite Additional Secure Facility Build-Out$7-$8 Various Confidential ProgramsValkyrie Second Production Lot 12 Build$23-$24 Various Customer Opportunities $81-$90  Normal Maintenance Capital Expenditures$44-$45  Total FY26 Forecasted Capital Expenditures$125-$135        Other Investments included in Working Capital (Operating Cash Flow)     Rocket System Inventory Build - Zeus/Oriole$40 $45 Various including MACH-TBMaterials and Hardware$13 $14 Various Drone OpportunitiesInventory Purchases for Small Jet Engine Production$19 $21 Various Jet Engine Cruise Missile Opportunities     to enable production of 3,000 Jet Engines in 2027Unmanned Systems Initiative/Enhancements3 5 Various Customer Opportunities $75 $85  Estimated Funding for Investments     Funding Investment in Prometheus$50 $55  Total FY26 Forecasted Total Investments$250 $275               We expect our second half of fiscal 2026 will have significantly higher Revenue than the first half, as we expect to begin to receive in the second half of 2026 certain long-lead time items related to existing customer funded programs, including solid rocket motors and other hardware related to certain hypersonic and other programs, hardware and components related to jet engine and propulsion system development and production, and hardware related to air defense, missile, radar and other National Security system production. We expect our third quarter Revenues to grow organically 19 to 25 percent from third quarter 2025, with forecasted margin expansion in the third quarter tempered somewhat by increased business development and proposal costs to support the forecasted revenue growth, as well as continued negative foreign currency impacts on our Microwave Products Israeli business, which is adversely impacted by the strength of the Israeli Shekel vs. the US Dollar.

We expect Kratos’ second half of fiscal 2026 Adjusted EBITDA to be greater than our first half as our Revenue increases and Adjusted EBITDA margins expand and are impacted by both expected increased scale and product mix, and customer contract funding is expected to increase coming off of the late 2025 and early 2026 U.S. Government shutdown and extended Continuing Resolution. We continue to expect Kratos’ full year 2026 Adjusted EBITDA margin rates to be approximately 100 bps greater than our reported 2025 Adjusted EBITDA margin rates.

We expect to provide our initial full year 2027 financial guidance when we report our third quarter of fiscal 2026 later this year. We continue to expect our 2027 Adjusted EBITDA margin rates to increase an additional 100 bps above forecast 2026 Adjusted EBITDA margin rates, when we provide full year 2027 guidance later this year.

Management will discuss the Company’s financial results at a conference call beginning at 2:00 p.m. Pacific (5:00 p.m. Eastern) today. The call will be available at www.kratosdefense.com. Participants may register for the call using this On-line Form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN that can be used to access the call. For those who cannot access the live broadcast, a replay will be available on Kratos’ website.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is a technology, hardware, products, system and software company addressing the defense, national security, and commercial markets. Kratos makes true internally funded research, development, capital and other investments, to rapidly develop, produce and field relevant solutions that address our customers’ mission critical needs and requirements. At Kratos, affordability is a technology, and we seek to utilize proven, leading-edge approaches and technology, not unproven bleeding edge approaches or technology, with Kratos’ approach designed to reduce cost, schedule and risk, enabling us to be first to market with cost effective solutions. We believe that Kratos is known as the innovative disruptive change agent in the industry, a company that is an expert in designing products and systems up front for successful rapid, large quantity, low-cost future manufacturing, which is a value-add competitive differentiator for our large traditional prime system integrator partners and also to our government and commercial customers. Kratos intends to pursue program and contract opportunities as the prime or lead contractor when we believe our probability of win is high and any investment required by Kratos is within our capital resource comfort level. We intend to partner and team with a large, traditional system integrator when our assessment of probability of win is greater or required investment is beyond Kratos’ comfort level. Kratos’ primary business areas include, virtualized ground systems for satellites and space vehicles including software for command & control (C2) and telemetry, tracking and control (TT&C), jet powered unmanned aerial drone systems, hypersonic vehicles and rocket systems, propulsion systems for drones, missiles, loitering munitions, supersonic systems, space craft and launch systems, command, control, communication, computing, combat, intelligence surveillance and reconnaissance (C5ISR) and microwave electronic products for missile, radar, air defense, missile defense, space, satellite, counter unmanned aircraft systems (CUAS), directed energy, communication and other systems, and virtual & augmented reality training systems for the warfighter. For more information, visit www.KratosDefense.com and follow Kratos on LinkedIn and X.

Notice Regarding Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, express or implied statements concerning the Company’s expectations regarding its future financial performance, including the Company’s expectations for its third quarter, second half, and full year 2026 revenues, R&D, operating income, depreciation, amortization, stock based compensation expense, and Adjusted EBITDA, and full year 2026 operating cash flow, capital expenditures, investments, and free cash flow, forecasted company and business unit organic revenue growth, estimated revenue and organic revenue growth for 2026 and 2027, Adjusted EBITDA margins in 2026 and 2027, future initiation of higher margin programs and negotiation of lower margin contracts which are expected to be renewed in the future, expected future investments in property, plant, facilities, and equipment (including expected investments in the Prometheus joint venture and other programs, opportunities, and initiatives), expected future production of Valkyries, the ability of the Company’s customers to respond to industry and market conditions, the impact of acquired companies and businesses on the Company’s operations and financial condition, the Company’s bid and proposal pipeline and backlog, including the Company’s ability to timely execute on its backlog, demand for its products and services, including the Company’s alignment with today’s National Security requirements and the positioning of its C5ISR and other businesses, ability to successfully compete and expected new customer awards, the impact of federal government shutdowns on the Company’s operations and financial condition, the availability and timing of government funding for the Company’s offerings, availability of an experienced skilled workforce, inflation and increased costs, risks related to potential cybersecurity events or disruptions of our information technology systems, and delays in our financial projections, industry, business and operations, including projected growth. Such statements are only predictions, and the Company’s actual results may differ materially from the results expressed or implied by these statements. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Factors that may cause the Company’s results to differ include, but are not limited to: risks to our business and financial results related to the reductions and other spending constraints imposed on the U.S. Government and our other customers, including as a result of sequestration and extended continuing resolutions, the Federal budget deficit and Federal government shut-downs; risks of adverse regulatory action or litigation; risks associated with debt leverage; risks that our cost-cutting initiatives will not provide the anticipated benefits; risks that changes, cutbacks or delays in spending by the DoW may occur, which could cause delays or cancellations of key government contracts; risks of delays to or the cancellation of our projects as a result of protest actions submitted by our competitors; risks that changes may occur in Federal government (or other applicable) procurement laws, regulations, policies and budgets; risks of the availability of government funding for the Company's products and services due to performance, cost growth, or other factors, changes in government and customer priorities and requirements (including cost-cutting initiatives, the potential deferral of awards, terminations or reduction of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011, as amended); risks related to tariffs or import duties which could affect the Company’s supply chain and customer affordability; risks related to Executive Orders issued by the Trump Administration and resultant changes to the DoW procurement policies and Federal Acquisition Regulations; risks related to DoW reorganization and DOGE; risks that the unmanned aerial systems and unmanned ground sensor markets do not experience significant growth; risks that products we have developed or will develop will not become programs of record; risks that we cannot expand our customer base or that our products do not achieve broad acceptance which could impact our ability to achieve our anticipated level of growth; risks of increases in the Federal government initiatives related to in-sourcing; risks related to security breaches, including cyber security attacks and threats or other significant disruptions of our information systems, facilities and infrastructures; risks related to our compliance with applicable contracting and procurement laws, regulations and standards; risks related to the new DoW Cybersecurity Maturity Model Certification; risks relating to the ongoing conflict in Ukraine and the Israeli-Palestinian military conflict; risks to our business in Israel including our expanded operations in Israel following the Orbit acquisition; risks related to contract performance; risks related to failure of our products or services; risks associated with our subcontractors’ or suppliers’ failure to perform their contractual obligations, including the appearance of counterfeit or corrupt parts in our products; changes in the competitive environment (including as a result of bid protests); failure to successfully integrate acquired operations and compete in the marketplace, which could reduce revenues and profit margins; risks that potential future goodwill impairments will adversely affect our operating results; risks that anticipated tax benefits will not be realized in accordance with our expectations; risks that a change in ownership of our stock could cause further limitation to the future utilization of our net operating losses; risks that we may be required to record valuation allowances on our net operating losses which could adversely impact our profitability and financial condition; risks that the current economic environment will adversely impact our business, including with respect to our ability to recruit and retain sufficient numbers of qualified personnel to execute on our programs and contracts, as well as expected contract awards and risks related to increasing interest rates; currently unforeseen risks associated with any public health crisis, and risks related to natural disasters or severe weather. These and other risk factors are more fully discussed in the Company’s Annual Report on Form 10-K for the period ended December 28, 2025, and in our other filings made with the Securities and Exchange Commission.

Note Regarding Use of Non-GAAP Financial Measures and Other Performance Metrics
This news release contains non-GAAP financial measures, including organic revenue growth rates computed as the revenue growth rate excluding the current year impact of the contribution from acquisitions, Adjusted EPS (computed using income before income taxes, excluding depreciation, amortization of intangible assets, amortization of capitalized contract and development costs, stock-based compensation expense, acquisition and restructuring related items and other, which includes, but is not limited to, legal related items, non-recoverable rates and costs, and foreign transaction gains and losses, less the estimated impact of current and deferred income taxes) and Adjusted EBITDA (which excludes, among other things, acquisition and restructuring related items, stock compensation expense, foreign transaction gains and losses, and the associated margin rates). Additional non-GAAP financial measures include Free Cash Flow from Operations computed as Cash Flow from Operations less Capital Expenditures plus proceeds from sale of assets and Adjusted EBITDA related to our KUS and KGS businesses. Kratos believes this information is useful to investors because it provides a basis for measuring the Company’s available capital resources, the actual and forecasted operating performance of the Company’s business and the Company’s cash flow, excluding non-recurring items and non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with GAAP. The Company’s management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and investors should carefully evaluate the Company’s financial results calculated in accordance with GAAP and reconciliations to those financial results. In addition, non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this news release.

Another Performance Metric the Company believes is a key performance indicator in our industry is our Book to Bill Ratio as it provides investors with a measure of the amount of bookings or contract awards as compared to the amount of revenues that have been recorded during the period and provides an indicator of how much of the Company’s backlog is being burned or utilized in a certain period. The Book to Bill Ratio is computed as the number of bookings or contract awards in the period divided by the revenues recorded for the same period. The Company believes that the rolling or last twelve months’ Book to Bill Ratio is meaningful since the timing of quarter-to-quarter bookings can vary.

Press Contact:
Claire Cantrell
[email protected]

Investor Information:
877-934-4687
[email protected]

        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in millions, except per share data)         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Service revenues$169.7  $134.9  $303.7  $237.3 Product sales289.1  216.6  526.1  416.8 Total revenues458.8  351.5  829.8  654.1 Cost of service revenues131.6  107.2  230.9  182.9 Cost of product sales227.1  170.5  409.2  323.8 Total costs358.7  277.7  640.1  506.7 Gross profit - service revenues38.1  27.7  72.8  54.4 Gross profit - product sales62.0  46.1  116.9  93.0 Total gross profit100.1  73.8  189.7  147.4             Selling, general and administrative expenses73.3  54.1  136.0  106.4 Merger and acquisition expenses0.8  -  2.7  - Research and development expenses13.6  10.2  24.3  20.2 Depreciation3.9  3.0  7.7  5.6 Amortization of intangible assets10.1  2.8  15.9  4.9 Operating income (loss)(1.6) 3.7  3.1  10.3 Interest income (expense), net10.2  (1.2) 14.7  (2.1)Other income (loss), net(1.6) 2.1  (1.0) 1.8 Income before income taxes7.0  4.6  16.8  10.0 Provision for income taxes2.6  1.7  0.5  2.6 Net Income$4.4  $2.9  $16.3  $7.4             Basic income per common share$0.02  $0.02  $0.09  $0.05 Diluted income per common share$0.02  $0.02  $0.09  $0.05             Weighted average common shares outstanding:           Basic188.6  155.7  182.7  154.9 Diluted190.1  157.4  184.8  156.9             Adjusted EBITDA (1)$38.2  $28.3  $76.9  $55.0                          Unaudited Reconciliation of GAAP to Non-GAAP Measures

Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP net income adjusted for net interest income (expense), provision for income taxes, depreciation and amortization expense of intangible assets, amortization of capitalized contract and development costs, stock-based compensation, acquisition and restructuring related items and other, and foreign transaction (gain) loss.

Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to net income (loss) or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity.  The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below.  Please refer to the following table below that reconciles GAAP net income (loss) to Adjusted EBITDA.

The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:

Interest income and interest expense, net. The Company receives interest income on investments and incurs interest expense on loans, capital leases and other financing arrangements, including the amortization of issue discounts and deferred financing costs. These amounts may vary from period to period due to changes in cash and debt balances.

Income taxes. The Company's tax expense can fluctuate materially from period to period due to tax adjustments that may not be directly related to underlying operating performance or to the current period of operations and may not necessarily reflect the impact of utilization of our NOLs.

Depreciation. The Company incurs depreciation expense (recorded in cost of revenues and in operating expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets.

Amortization of intangible assets. The Company incurs amortization of intangible expense related to acquisitions it has made. These intangible assets are valued at the time of acquisition and are amortized over the estimated useful lives.

Amortization of capitalized contract and development costs. The Company incurs amortization of previously capitalized software development and non-recurring engineering or design costs related to certain products or offerings in its Unmanned Systems, rocket support and services, and space and satellite businesses as related units are sold or over the estimated useful life, as applicable.

Stock-based compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of selling, general and administrative expense. Although stock-based compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company's shares, risk-free interest rates and the expected term and forefeiture rates of the awards. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.

Foreign transaction (gain) loss. The Company incurs transaction gains and losses which are not hedged related to transactions with foreign customers in currencies other than the U.S. dollar. In addition, certain intercompany transactions can give rise to realized and unrealized foreign currency gains and losses.

Acquisition and transaction related items. The Company incurs transaction related costs, such as legal and accounting fees and other expenses, related to acquisitions and divestiture activities. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Restructuring costs. The Company incurs restructuring costs for cost reduction actions which include employee termination costs, facility shut-down related costs and lease commitment costs for unused, excess or exited facilities.  Management believes that these costs are not indicative of ongoing operating results as they are either non-recurring and/or not expected when full capacity and volumes are achieved.

Legal related items. The Company incurs costs related to pending legal settlements and other legal related matters. Management believes these items are outside the normal operations of the Company's business and are not indicative of ongoing operating results.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company's presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring. 

Reconciliation of Net Income to Adjusted EBITDA is as follows:

         Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025             Net income$                     4.4  $                     2.9  $                   16.3  $                     7.4 Interest (income) expense, net(10.2) 1.2  (14.7) 2.1 Provision for income taxes2.6  1.7  0.5  2.6 Depreciation (including cost of service revenues and product sales)12.0  9.0  23.0  17.3 Stock-based compensation16.3  8.6  31.3  17.3 Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Amortization of intangible assets10.1  2.8  15.9  4.9 Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Acquisition and restructuring related items and other0.8  -  2.7  - Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of previously recorded contingent liability-  (1.1) -  (1.1)Litigation fees and legal related items-  2.0  -  2.0 Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0              Kratos Defense & Security Solutions, Inc.
Unaudited Segment Data
(in millions)     Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Revenues:           Unmanned Systems$79.1  $73.2  $161.7  $136.3 Kratos Government Solutions379.7  278.3  668.1  517.8 Total revenues$458.8  $351.5  $829.8  $654.1             Operating income           Unmanned Systems$1.2  $(0.2) $2.5  $(1.9)Kratos Government Solutions14.3  12.5  34.6  29.5 Unallocated corporate expense, net(17.1) (8.6) (34.0) (17.3)Total operating income (loss)$(1.6) $3.7  $3.1  $10.3             Note: Unallocated corporate expense, net includes costs for certain stock-based compensation programs (including stock-based compensation costs for the employee stock purchase plan and restricted stock units), the effects of items not considered part of management’s evaluation of segment operating performance, and acquisition and restructuring related items, corporate costs not allocated to the segments, legal related items, and other miscellaneous corporate activities.
  Reconciliation of Segment Operating Income (Loss) to Adjusted EBITDA is as follows:

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Unmanned Systems           Operating income (loss)$                     1.1  $                   (0.2) $                     2.5  $                   (1.9)Other income-  -  0.1  0.1 Depreciation2.9  2.7  5.7  5.0 Amortization of intangible assets1.0  1.0  1.9  2.0 Amortization of capitalized contract and development costs0.1  -  0.1  - Resolution of Previously Recorded Contingent Liability-  (0.3) -  (0.3)Litigation Fees and Legal Related Items-  0.5  -  0.5 Adjusted EBITDA$                     5.1  $                     3.7  $                   10.3  $                     5.4 % of revenue6.4% 5.1% 6.4% 4.0%            Kratos Government Solutions           Operating income$                   14.3  $                   12.5  $                   34.6  $                   29.5 Other income(1.7) 2.4  (1.4) 2.4 Depreciation9.1  6.3  17.3  12.3 Amortization of intangible assets9.1  1.8  14.0  2.9 Amortization of capitalized contract and development costs2.3  0.9  4.1  1.8 Reversal of contingent acquisition consideration-  -  (2.0) - Resolution of Previously Recorded Contingent Liability-  (0.8) -  (0.8)Litigation Fees and Legal Related Items-  1.5  -  1.5 Adjusted EBITDA$                   33.1  $                   24.6  $                   66.6  $                   49.6 % of revenue8.7% 8.8% 10.0% 9.6%            Total Adjusted EBITDA$                   38.2  $                   28.3  $                   76.9  $                   55.0 % of revenue8.3% 8.1% 9.3% 8.4%             Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in millions)
           June 28,  December 28,
 2026  2025 Assets     Current assets:     Cash and cash equivalents$1,437.6  $560.6 Accounts receivable, net171.3  165.0 Unbilled receivables, net405.4  292.4 Inventoried costs, net235.9  188.2 Prepaid expenses24.1  12.9 Other current assets82.2  43.8 Total current assets2,356.5  1,262.9 Property, plant and equipment, net419.4  361.9 Operating lease right-of-use assets50.6  43.4 Goodwill871.2  595.7 Intangible assets, net220.8  53.9 Other assets159.4  144.4 Investment in joint venture11.9  5.0 Total assets$4,089.8  $2,467.2 Liabilities and Stockholders’ Equity     Current liabilities:     Accounts payable$104.8  $69.6 Accrued expenses95.9  60.5 Accrued compensation92.2  82.3 Billings in excess of costs and earnings on uncompleted contracts93.6  73.4 Current portion of operating lease liabilities13.8  12.8 Current portion of finance lease liabilities5.1  3.4 Other current liabilities19.9  9.0 Total current liabilities425.3  311.0 Operating lease liabilities, net of current portion39.9  33.8 Finance lease liabilities, net of current portion134.8  95.8 Other long-term liabilities63.0  30.3 Total liabilities663.0  470.9 Commitments and contingencies     Stockholders’ equity:     Common stock0.2  0.2 Additional paid-in capital4,051.6  2,635.9 Accumulated other comprehensive income (loss)0.6  2.1 Accumulated deficit(625.6) (641.9)Total equity3,426.8  1,996.3 Total liabilities and stockholders’ equity$4,089.8  $2,467.2        Kratos Defense & Security Solutions, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in millions)
       Six Months Ended
 June 28,  June 29,  2026  2025 Operating activities:     Net income$16.3  $7.4 Adjustments to reconcile net income to net cash provided by (used in) operating activities:     Depreciation and amortization38.9  22.2 Amortization of lease right-of-use assets6.9  6.0 Deferred income taxes2.1  - Stock-based compensation31.3  17.3 Amortization of deferred financing costs0.2  0.3 Provision for doubtful accounts0.1  - Changes in assets and liabilities, net of acquisitions:     Accounts receivable16.7  (23.1)Unbilled receivables(104.3) (49.9)Inventoried costs(24.8) (7.3)Prepaid expenses and other assets(36.6) (27.3)Operating lease liabilities(7.5) (5.7)Accounts payable23.0  17.5 Accrued expenses20.6  9.1 Accrued compensation(3.2) - Billings in excess of costs and earnings on uncompleted contracts(10.7) (5.1)Income tax receivable and payable(3.9) (0.9)Other liabilities(3.5) (1.4)Net cash used in operating activities(38.4) (40.9)Investing activities:     Cash paid for acquisitions, net of cash acquired(346.8) - Proceeds from sale of assets13.5  - Investment in joint venture(6.9) - Capital expenditures(37.1) (43.1)Proceeds from state grant for capital construction2.0  - Net cash used in investing activities(375.3) (43.1)Financing activities:     Repayment under credit facility and term loan-  (5.0)Proceeds from the issuance of common stock, net of issuance costs1,348.4  555.9 Debt issuance costs(1.4) - Payment under finance leases(2.0) (0.9)Payments of employee taxes withheld from share-based awards(59.1) (18.3)Proceeds from shares issued under equity plans5.3  4.6 Net cash provided by financing activities1,291.2  536.3 Net cash flows877.5  452.3 Effect of exchange rate changes on cash and cash equivalents(0.5) 2.0 Net increase in cash and cash equivalents877.0  454.3 Cash and cash equivalents at beginning of period560.6  329.3 Cash and cash equivalents at end of period$1,437.6  $783.6        Kratos Defense & Security Solutions, Inc.
Unaudited Non-GAAP Measures
Computation of Adjusted Earnings Per Share
(in millions, except per share data)
       Adjusted income and adjusted income per diluted common share (Adjusted EPS) are non-GAAP measures for reporting financial performance and exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results and trends and allows for comparability with our peer company index and industry. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company's business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income before amortization of intangible assets and capitalized contract and development costs, depreciation, stock based compensation, foreign transaction gain/loss, and acquisition and restructuring related items and other. The estimated impact to income taxes excludes the impact to the expenses and release of valuation alloweffective tax rate, current tax provision and deferred tax provision, and excludes the impact of discrete items, including transaction related expenses and release of valuation allowance, or benefit related to the add-backs.*     
Adjusted EPS reflects adjusted income on a per share basis using weighted average diluted shares outstanding.

The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures.

 Three Months Ended
 Six Months Ended
 June 28,  June 29,  June 28,  June 29,  2026  2025  2026  2025 Net income$4.4  $2.9  $16.3  $7.4 Less: GAAP provision for income taxes2.6  1.7  0.5  2.6 Income before taxes7.0  4.6  16.8  10.0 Add: Amortization of intangible assets10.1  2.8  15.9  4.9 Add: Amortization of capitalized contract and development costs2.4  0.9  4.2  1.8 Add: Depreciation12.0  9.0  23.0  17.3 Add: Stock-based compensation16.3  8.6  31.3  17.3 Add: Foreign transaction (gain) loss(0.2) 0.3  (0.3) 0.7 Add: Acquisition and restructuring related items and other0.8  -  2.7  - Less: Reversal of contingent acquisition consideration-     (2.0)   Non-GAAP Adjusted income from consolidated operations before income taxes48.4  26.2  91.6  52.0 Income taxes on Non-GAAP measure Adjusted income*9.0  9.1  17.5  16.0 Non-GAAP Adjusted net income$39.4  $17.1  $74.1  $36.0                         Diluted earnings per common share$0.02  $0.02  $0.09  $0.05 Less: GAAP provision for income taxes0.01  0.01  -  0.02 Add: Amortization of intangible assets0.06  0.02  0.09  0.03 Add: Amortization of capitalized contract and development costs0.01  0.01  0.02  0.01 Add: Depreciation0.07  0.06  0.13  0.11 Add: Stock-based compensation0.09  0.05  0.16  0.11 Add: Foreign transaction loss-  -  -  - Add: Acquisition and restructuring related items and other-  -  0.01  - Less: Reversal of contingent acquisition consideration      (0.01) - Income taxes on Non-GAAP measure Adjusted income*(0.05) (0.06) (0.09) (0.10)Adjusted income per diluted common share$0.21  $0.11  $0.40  $0.23             Weighted average diluted common shares outstanding190.1  157.4  184.8  156.9              *The impact to income taxes is calculated by recasting income before income taxes to include the add-backs involved in determining Adjusted Income before income taxes and recalculating the income tax provision, including current and deferred income taxes, using the Adjusted Income before income taxes.The recalculation also adjusts for any discrete tax expense, including transaction related expenses and the release of valuation allowance, or benefit related to the add-backs.