Published: Thursday, November 6, 2025 · 9:01 PM | Updated: Thursday, November 6, 2025 · 9:01 PM
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🗝️ Key Points
- Solstice Advanced Materials declined Thursday following the company's third-quarter earnings.
- We expect shares of this newly independent company to remain volatile after last week's separation from Honeywell.
- Net sales increased 7% year over year to $969 million.
Solstice Advanced Materials declined Thursday following the company’s third-quarter earnings. We expect shares of this newly independent company to remain volatile after last week’s separation from Honeywell . Net sales increased 7% year over year to $969 million. Adjusted standalone EBITDA of $235 million fell 5%. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. SOLS mountain 2025-10-30 Solstice began trading as a separate stock on Oct. 30 Due to limited analyst coverage of Solstice, we can’t make an accurate comparison to Wall Street’s expectations. The stock has traded down every session since last Thursday’s spin, except for Wednesday’s nearly 11% jump. In the spin, we got one Solstice share for every four Honeywell shares we owned. We plan to keep both positions for now. Bottom line There were no real major surprises in the Solstice quarter. The 7% topline growth was provided when Honeywell reported earnings two weeks ago. The numbers and outlook were also pretty consistent with what we learned at the Investor Day last month, which we covered in our initial Solstice breakdown story. The revenue growth stands out as some of the best in the group, given Solstice’s exposure to attractive end markets like refrigerants and electronics. But there were some notable margin headwinds, mostly related to the company’s transition to an independent company. Its adjusted standalone EBITDA margins fell from 27% in the third quarter of 2024 to 24% in the third quarter of 2025. They are expected to drop further in the fourth quarter to 20% due to transitory costs, seasonality in the refrigerant business, and near-term actions that will set up Solstice for a better 2026. The good news is that many of these items are, in fact, transitory and won’t carry over into the new year. Management estimates the underlying business is running at a 25% margin profile entering 2026. As for the stock, we continue to chalk up the wild swings in the price to ongoing post-spinoff volatility, which is typical after breakups. The shareholder base needs to turn over from aerospace and multi-industry-minded investors to chemicals. Still, we view Solstice as a good house in what is currently a rough chemical neighborhood. There is attractive exposure and industry-leading positioning in areas like refrigerants and electronics, plus the nuclear angle here is exciting, given all the attention and investment happening in that field. Solstice’s separation from Honeywell will also create opportunities to further improve its cost structure and allow it to seek out growth opportunities. We are starting Solstice off with our 2 rating, looking to be more opportunistic when the volatility calms down. We expect some of this erratic trading will subside once more analysts start to cover the stock. Right now, it’s only covered by three major firms, with two holds and one buy and an average price target of about $60. We’re starting our Club price target on the more conservative side of about $54. Quarterly commentary Refrigerants & Applied Solutions net sales increased 9% year over year to $687 million. Adjusted EBITDA dropped 3% year over year due to a 431-basis point margin contraction, which was mostly due to an industry shift toward low global warming potential refrigerants for stationary applications. These are lower margin products, but management sees long-term benefits from their adoption through higher aftermarket sales. Growth was driven by its largest sub-segment, Refrigerants. Sales in this business increased 22% year over year to $400 million on both volume growth and favorable pricing. The other three subsegments reported annual declines in revenue. Building Solutions & Intermediates revenue dipped 3% year over year to $175 million, mostly due to softness in construction markets. Alternative Energy Services, which is the nuclear conversion business, saw revenue fall 2% to $63 million, but that was mostly due to customer timing. Importantly, ARS backlog increased 12% sequentially to $2.2 billion as of September 30th. Healthcare Packaging was down 14% year over year to $49 million on lower volumes related to some destocking in the pharmaceutical end market. Electronic & Specialty Materials net sales increased 2% year over year to $282 million, but adjusted EBITDA fell 15% year over year to $47 million and margin contracted 319 basis points. The margin hit was due to transitory cost items like spin-off related expenses and technology investments. Revenue growth was driven by subsegment Safety & Defense solutions, which were up 6% year over year to $53 million on strong demand for armor and medical fiber applications. Electronic Materials sales were up 4% year over year driven by higher volumes. The company noted that order patterns in electronic materials improved throughout the quarter, and it expects that momentum to carry into the fourth quarter. However, in the Research & Performance Chemicals subsegment revenue dipped 2% year over year to $126 million due to lower volumes. Turning to the balance sheet, Solstice remains in a strong financial position with a net Leverage ratio of 1.5 times and $1.5 billion of Total liquidity. This gives management ample power to invest in high growth opportunities in a disciplined fashion, with investment priorities in semiconductor materials, nuclear conversion, protective fibers, and cooling technologies. Guidance The company reaffirmed the 2025 outlook it provided at its Investor Day on Oct. 8. It continues to expect net sales in the range of $3.75 billion to $3.85 billion, with an adjusted standalone EBITDA margin of 25%, and capital expenditures of $365 million to $415 million. As a reminder, Solstice’s medium-term financial frameworks calls for low- to mid-single digit organic net sales growth, mid-single digit adjusted standalone EBITDA improvement, and disciplined capital deployment. (Jim Cramer’s Charitable Trust is long SOLS, HON. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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