- Price
- $59.92
- Fair value
- $85.00
- Discount
- 29.5%
- Uncertainty
- Medium
- LSEG rating
- 2.00
- Moat
- Narrow
- Next earnings
- 2026-11-04
- Next earnings is estimate
- No
- Company name
- Solstice Advanced Materials
- Sector
- Specialty chemicals
- About
- Solstice Advanced Materials makes specialty chemicals and materials. Honeywell spun it off as a separate public company on October 30, 2025, and its shares trade on the Nasdaq. It has two segments. Refrigerants & Applied Solutions sells low global-warming refrigerants, building materials and intermediates, nuclear fuel conversion services and healthcare packaging films. Its Metropolis Works plant in Illinois is the only uranium conversion facility in the US. Electronic & Specialty Materials sells materials for semiconductor manufacturing, research chemicals and protective fibers for safety and defense. In Q2 2026, net sales were $1,148 million, and refrigerants gave $473 million of them. For 2026, Solstice expects net sales of $4,125 million to $4,185 million and adjusted EBITDA of $1,035 million to $1,055 million.
- Thesis
- The market lost trust in how Solstice uses its capital. On July 6, 2026, Solstice agreed to buy Element Solutions in a cash-and-stock deal valued at about $14.5 billion, with new debt, and the stock fell by about a quarter that week. After shareholders objected, the two companies ended the deal on August 27, 2026, with no fees, and Solstice approved a $500 million share buyback. The stock did not recover, so investors still fear that management will try another large deal. Margins also fell. The adjusted EBITDA margin of Refrigerants & Applied Solutions fell to 32.9% in Q2 2026 from 39.4% a year earlier, because of plant turnarounds and production credits in the prior year, and capital spending rises to $420 million to $440 million in 2026. For the gap to close, four things must be true. Solstice must meet its 2026 guidance, with Q3 net sales of $990 million to $1,030 million and full-year adjusted EBITDA of $1,035 million to $1,055 million. The segment margin must return to the mid-30% range in H2 2026, as management expects. Solstice must use its cash for buybacks and organic growth, not for large purchases. The Metropolis lawsuit settlement must be signed and approved at no material cost. The first test is the Q3 2026 report on November 4, 2026, and the FY 2026 report in about February 2027 gives the 2027 guidance. If results hold and capital use stays disciplined, the gap can close over the next two to four quarters.
- Risks
- Management tried a large purchase that shareholders did not want. If Solstice tries another large deal with new debt, investors can lose more trust and the balance sheet can weaken.
Refrigerants give the largest part of sales. Prices for low global-warming refrigerants depend on regulation and on new capacity from competitors. A fall in refrigerant prices lowers the segment margin, which was already 32.9% in Q2 2026 against 39.4% a year earlier.
The Metropolis Works plant handles uranium hexafluoride. The settlement of the lawsuits is not final, and a safety or environmental problem at the plant can stop the nuclear business and add costs.
Capital spending rises to $420 million to $440 million in 2026 for growth projects. If demand from semiconductor, data center or nuclear customers grows more slowly, the returns on these projects fall.
Solstice is a new public company with its own costs after the spin-off from Honeywell. Higher standalone costs and interest expense reduced the growth in profit in 2026.
- Balance sheet
- Cash: $750M
Debt: $2.1B
Net debt: $1.4B
Net debt / EBITDA: 1.3× (low)
Interest cover: 6.9×
Undrawn credit line: $1.0B
Debt due within 12 months: $20M
Last debt due: 2033
Solstice took on its debt before the spin-off from Honeywell. At June 30, 2026, debt was a $1,000 million term loan due 2032, at 5.41%, $1,000 million of 5.625% senior notes due September 30, 2033, and $109 million of finance leases. The $1.0 billion revolving credit facility had no borrowings. Net debt was about 1.3 times adjusted EBITDA for the 12 months to June 2026. Interest cover is income before taxes plus interest, divided by interest and other financial charges, for H1 2026. For the Element deal, Solstice had arranged $4.685 billion of bridge financing, but the commitments ended with the deal on August 27, 2026. Free cash flow was $248 million in H1 2026. The new $500 million buyback and the dividend of $0.075 per quarter now use part of the cash.
As of 2026-06-30.
- Checkpoints
- Nov 4, 2026: Q3 2026 results: refrigerant margins and guidance. Pending. Watch: Net sales within $990 million to $1,030 million, a Refrigerants & Applied Solutions margin near the mid-30% range and the full-year guidance kept pass; a guidance cut fails.
Feb 2027 (estimate): FY 2026 results, 2027 guidance and buybacks. Pending. Watch: 2026 adjusted EBITDA of $1,035 million to $1,055 million, growth in the 2027 guidance and share buybacks under the $500 million program pass; a new large debt-funded purchase fails.
Q2 2027 (estimate): Final Metropolis settlement. Pending. Watch: A signed settlement with court approval and no material cost passes; a failed settlement or a large charge fails.
- Recent events
- 2026-10-09: Solstice announced a $49 million investment to expand its research and development facility in Buffalo, New York.
2026-09-29: Solstice reached an agreement in principle to settle all lawsuits about its Metropolis Works uranium conversion plant, filed since 2018 by residents, the City of Metropolis and Massac County. Solstice denies the allegations and does not expect a material effect on its results. The settlement needs a signed agreement and court approval.
2026-08-27: Solstice and Element Solutions ended their merger agreement after feedback from shareholders, and neither company pays a fee. Solstice approved a $500 million share buyback, its first, and affirmed its Q3 and full-year 2026 guidance.
2026-07-30: Solstice reported Q2 2026 results. Net sales rose 11% to $1,148 million, with growth of 27% in Nuclear, 15% in Electronic Materials, 13% in Refrigerants and 24% in Healthcare Packaging. Adjusted EBITDA rose 2% to $290 million, and the margin fell to 25.3%. Solstice raised its 2026 guidance.
2026-07-06: Solstice agreed to buy Element Solutions, a maker of electronics and industrial chemicals, in a cash-and-stock deal valued at about $14.5 billion including net debt. Goldman Sachs committed bridge loans, and Solstice expected to close the deal in the first half of 2027.
2026-05-06: Solstice reported Q1 2026 results. Net sales rose 10% to $991 million, and adjusted EBITDA was $249 million, a margin of 25.1%. Solstice reaffirmed its 2026 guidance.