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Solstice Advanced Materials, Inc. (SOLS)
NASDAQ:SOLS
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Solstice Advanced Materials, Inc.
(NASDAQ:SOLS)
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Rating:69Neutral
Price Target:
$66.00
▼(-16.33% Downside)
Action:ReiteratedDate:01/16/26
The score is driven primarily by solid financial quality (strong cash generation and low leverage) but moderated by declining profitability margins. Technically, the trend is strong, yet overbought indicators raise near-term risk. Valuation confidence is limited due to missing P/E and dividend yield data, and the latest earnings-call read-through is mixed given spin-off impacts and margin/cash-flow pressures despite improved guidance and strong orders.
Positive Factors
Strong cash conversion & FCF growth
High operating cash flow relative to net income and double-digit free cash flow growth indicate durable cash-generation capacity. This strengthens the company's ability to fund R&D, capex, debt servicing and strategic investments without relying on external financing, improving long-term resilience.
Low financial leverage, solid equity base
A very low debt-to-equity ratio and a high equity ratio signal conservative capital structure and financial flexibility. This reduces default and refinancing risk, allowing sustained investment through cycles and capacity to pursue strategic opportunities without materially increasing leverage.
Diversified, contract-driven revenue streams
Multiple revenue streams including long-term contracts and technology licensing create predictable, recurring cash flow and customer stickiness. Diversification across aerospace, automotive and electronics reduces single-market cyclicality and supports steady revenue visibility over multi-quarter horizons.
Negative Factors
Declining profitability margins
Sustained margin compression reduces internal funding for growth and weakens returns on invested capital. If driven by structural cost or pricing pressures, the decline limits ability to rebuild margins and could force trade-offs between pricing, investment and margin restoration over the medium term.
Modest revenue growth
Low single-digit top-line growth constrains scale benefits and limits headroom to absorb fixed costs or fund aggressive R&D and capex. In capital-intensive materials sectors, underwhelming revenue expansion can impede market share gains and slow recovery of compressed margins over multiple quarters.
Spin-off materially reduces scale and cash flow
A spin-off that meaningfully lowers sales and free cash flow shrinks the company's scale and financial cushion. This reduces investment bandwidth, may raise per-share volatility and creates execution risk during transition unless offset by clearer strategy or cost synergies post-separation.
Solstice Advanced Materials, Inc. (SOLS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.52B
Dividend YieldN/A
Average Volume (3M)2.95M
Price to Earnings (P/E)―
Beta (1Y)-0.58
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees102,000
SectorTechnology
Sector Strength88
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)0.26
Shares Outstanding158,747,540
10 Day Avg. Volume2,765,458
30 Day Avg. Volume2,948,145
Financial Highlights & Ratios
PEG Ratio-0.74
Price to Book (P/B)5.48
Price to Sales (P/S)1.99
P/FCF Ratio0.00
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue3.51
Enterprise Value/Gross Profit10.91
Enterprise Value/Ebitda14.37
Forecast
1Y Price Target
$80.83Price Target Upside2.47% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)2.76
Revenue Forecast (FY)$4.02B
Solstice Advanced Materials, Inc. Business Overview & Revenue Model
Company DescriptionSolstice Advanced Materials, Inc. operates as a specialty materials company. Its solutions enable industries and applications, including refrigerants, semiconductor manufacturing, data center cooling, alternative energy, protective fibers, healthcare packaging, and other. The company is based in Morris Plains, New Jersey.
How the Company Makes MoneySolstice Advanced Materials generates revenue through multiple streams, including the sale of advanced materials to various industries, contract manufacturing services, and licensing of its proprietary technologies. The company typically engages in long-term contracts with key clients in sectors like aerospace and automotive, providing a stable revenue base. Additionally, SOLS may collaborate with research institutions and other companies for joint development projects, which can lead to new product offerings and increased market reach. Strategic partnerships with industry leaders also enhance SOLS's credibility and market presence, driving further sales through co-marketing and distribution agreements.
Solstice Advanced Materials, Inc. Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Nov 05, 2026
Earnings Call Sentiment Positive
The call presents a mix of near-term headwinds—most notably margin pressure from transitory costs, refrigerant product-mix shifts, plant downtime, and a one-time nuclear loan repayment—alongside strong top-line momentum, a robust backlog (> $2B), targeted capacity investments across nuclear, electronic materials, and defense, and conservative but constructive 2026 guidance that targets margin recovery to ~25%. Balance sheet strength (net leverage ~1.5x, ~$1.5B liquidity), initiation of a dividend, and prioritized high-return capital deployment support a positive medium-term outlook despite near-term profitability compression.Q4-2025 Updates
Positive Updates
Revenue Growth — Full Year and Quarter
Full year 2025 net sales of $3.9 billion, up 3% year-over-year (would be +6% ex-opportunistic 2024 nuclear sales). Fourth quarter 2025 net sales of $987 million, up 8% year-over-year.
Strong Organic Momentum
Q4 organic net sales growth of 6% composed of ~2.5% volume growth and ~4% pricing; Q4 also benefited from ~2% foreign currency translation.
Segment Strength — Refrigerants & Nuclear
Refrigerants & Applied Solutions segment net sales $710 million in 2025 (+10% YoY). Refrigerants net sales $367 million (+20% YoY). Nuclear net sales $111 million (+39% YoY) with backlog >$2 billion and contracted production largely through 2030.
Electronic Materials Demand and Capacity Investments
Electronic & Specialty Materials net sales $277 million (+4% YoY). Electronic Materials up 19% YoY to $112 million. Company announced investment to double sputtering target capacity in Spokane to meet AI/data center demand.
Backlog, Production Expansion, and Secular Tailwinds
Backlog exceeds $2 billion; expecting >10 kt UF6 production in 2026 (≈20% increase vs planned 2024 capacity). Management cites secular demand drivers: nuclear renaissance, AI, data centers and defense spending.
Financial Discipline and Capital Allocation
Return on invested capital ~19% and net leverage ~1.5x adjusted EBITDA. Long-term debt $2.0 billion, cash $534 million, ~ $1.5 billion total liquidity (including $1.0 billion revolver availability).
Capital Deployment and Shareholder Return
FY 2025 CapEx $408 million (+38% YoY) to fund growth projects. Company initiated a quarterly dividend of $0.75 per share and prioritizes high-return organic investments, selective M&A, and balance sheet strength.
2026 Guidance and Margin Recovery Outlook
Full-year 2026 guidance: net sales $3.9–$4.1 billion, adjusted EBITDA $975–$1,025 million, adjusted diluted EPS $2.45–$2.75, and CapEx $400–$425 million. Q1 2026 guidance implies ~25% adjusted EBITDA margin (adj. EBITDA $235–$245M on $935–$985M sales). Management expects return to ~25% EBITDA margin in 2026 and double-digit EBITDA CAGR for nuclear through 2030 (after 2026 one-offs).
Negative Updates
Profitability Compression — Q4 and FY EBITDA Declines
Full-year adjusted standalone EBITDA $957 million, down 4% YoY (margin 24.6%). Q4 adjusted standalone EBITDA $189 million, down 20% YoY with margin of 19.1% (significant quarter-on-quarter margin compression).
Transitory Costs and TSA Impact
Management cites transitory costs from the spin-off (including TSA/IT/logistics transitions and an unwind of an FX hedge). Guidance notes an approximate $30 million cost impact from TSAs in 2026, heavier in the first half of the year.
Refrigerants Product-Mix & Margin Headwind
Transition to low global warming potential refrigerants (HFOs) pressured margins in 2025 due to product-mix shifts and imported product mix; management expects mix-related headwinds to persist near-term before aftermarket margin tailwinds materialize.
Plant Downtime, Under-absorption and Destocking
Margin and EBITDA were negatively impacted by plant downtime and under-absorption. Healthcare packaging sales fell 25% YoY in 2025 due to customer destocking (management says destocking mostly behind them).
Segment Softness — Building Solutions and Specialty Chemicals
Building Solutions & Intermediates net sales $181 million, down 5% YoY due to softness in construction. Research & Performance Chemicals down 3% YoY driven by weaker demand in specialty additives tied to construction.
Safety & Defense Near-Term Order Timing Volatility
Safety and Defense Solutions sales declined 10% YoY in 2025 driven by lower volumes from order timing; management expects long-term growth but near-term variability remains.
One-time Nuclear Loan Return Reduces 2026 Revenue
Final product-loan returns related to Metropolis Works limit product available for open-market sales in 2026, reducing revenues by approximately $30 million in 2026 (management estimated roughly a $10 million EBITDA impact in 2026).
Adjusted EBITDA Less CapEx and Cash Conversion
Adjusted standalone EBITDA less CapEx for full year 2025 was $549 million, down 21% YoY driven by higher CapEx and lower EBITDA. Cash conversion finished 2025 at 57%.
Company Guidance
Solstice provided full-year 2026 guidance of net sales $3.9–$4.1 billion, adjusted EBITDA $975–$1,025 million, adjusted diluted EPS $2.45–$2.75 and capital expenditures $400–$425 million (anchored to a midpoint implying low single‑digit revenue growth and mid‑single‑digit adjusted EBITDA growth versus 2025 at the midpoint); it also issued Q1 2026 guidance of net sales $935–$985 million and adjusted EBITDA $235–$245 million (implying an ~25% adjusted EBITDA margin), while noting assumptions that include a ~$30 million revenue headwind from the final nuclear loan return and an ~ $30 million cost impact from TSAs, continued momentum in refrigerants, nuclear and electronic materials, an anticipated roll‑off of certain costs boosting sequential margins, a target to return to ~25% EBITDA margin in 2026 and beyond, expected nuclear production >10 kt in 2026 (≈20% above planned 2024 capacity) and longer‑term double‑digit nuclear EBITDA CAGR to 2030; balance sheet metrics cited include ROIC ≈19%, long‑term debt $2.0 billion, cash $534 million, net debt ≈$1.4 billion, and ~ $1.5 billion total liquidity, and the company initiated a $0.75 per‑share quarterly dividend.Solstice Advanced Materials, Inc. Financial Statement Overview
Summary
Solid fundamentals supported by strong cash conversion (operating cash flow to net income 0.78; free cash flow growth 18.44%) and conservative leverage (debt-to-equity 0.13; equity ratio 65.10%). The main offset is weakening profitability, with net margin falling from 17.02% to 11.19% alongside declining EBIT/EBITDA margins.Income Statement
Solstice Advanced Materials, Inc. shows a modest revenue growth rate of 3.32% in the latest year, indicating steady expansion. However, there is a decline in profitability margins, with the net profit margin decreasing from 17.02% to 11.19%. The EBIT and EBITDA margins also show a downward trend, suggesting potential challenges in cost management or operational efficiency.72
Positive
Balance Sheet
The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.13, indicating prudent financial leverage. The return on equity is healthy at 12.95%, although it has decreased from the previous year's 19.96%. The equity ratio stands at 65.10%, reflecting a solid equity base relative to total assets.78
Positive
Cash Flow
Solstice Advanced Materials, Inc. demonstrates positive cash flow dynamics with a free cash flow growth rate of 18.44%. The operating cash flow to net income ratio is robust at 0.78, suggesting efficient cash generation relative to earnings. The free cash flow to net income ratio is also strong at 0.65, indicating good cash conversion.75
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 |
|---|---|---|---|
Income Statement | |||
| Total Revenue | 3.89B | 3.77B | 3.65B |
| Gross Profit | 1.25B | 1.30B | 1.28B |
| EBITDA | 953.33M | 966.00M | 1.05B |
| Net Income | 237.00M | 422.00M | 621.00M |
Balance Sheet | |||
| Total Assets | 5.67B | 5.00B | 4.66B |
| Cash, Cash Equivalents and Short-Term Investments | 534.00M | 661.00M | 606.00M |
| Total Debt | 2.43B | 416.00M | 229.00M |
| Total Liabilities | 4.30B | 1.82B | 1.63B |
| Stockholders Equity | 1.41B | 3.26B | 3.11B |
Cash Flow | |||
| Free Cash Flow | 0.00 | 546.00M | 461.00M |
| Operating Cash Flow | 0.00 | 842.00M | 760.00M |
| Investing Cash Flow | 0.00 | -298.00M | -324.00M |
| Financing Cash Flow | 0.00 | -453.00M | -378.00M |
Solstice Advanced Materials, Inc. Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $8.03B | 9.97 | 16.45% | 3.34% | 14.48% | 34.97% | |
73 Outperform | $5.96B | 18.83 | 30.59% | 1.52% | 13.01% | 21.96% | |
72 Outperform | $8.35B | 13.47 | 21.77% | 0.01% | 1.08% | 8.24% | |
69 Neutral | $12.52B | ― | ― | ― | ― | ― | |
65 Neutral | $5.42B | 6.34 | 12.35% | 5.30% | ― | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
51 Neutral | $5.28B | -6.38 | ― | 2.17% | 92.02% | -1386.34% |
* Technology Sector Average
SOLS
Solstice Advanced Materials, Inc.
78.88
30.53
63.13%
AMG
Affiliated Managers
312.92
151.72
94.12%
HLNE
Hamilton Lane
106.83
-37.91
-26.19%
JHG
Janus Henderson Group
52.10
13.83
36.14%
STEP
StepStone Group
44.35
-10.20
-18.70%
OTF
Blue Owl Technology Finance Corp.
11.64
-3.50
-23.12%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.