Honeywell spinoff Solstice sees 2026 profit below estimate as margins remain under pressure

By Arunima Kumar

Feb 11 (Reuters) - Solstice Advanced Materials SOLS.O forecast full-year 2026 earnings below market estimates on Wednesday, overshadowing solid fourth-quarter sales growth and continued strength in nuclear and electronic materials.

The speciality materials maker that spun off from Honeywell HON.O in October expects 2026 adjusted earnings per share of $2.45 to $2.75, below analysts' average estimate of $2.93 per share, according to data compiled by LSEG.

Solstice expects annual sales of between $3.9 billion and $4.1 billion, compared with an estimate of $3.96 billion.

The revenue forecast signals modest growth from 2025, but continued pressure on profitability as the company absorbs higher operating costs and navigates the transition to low-global-warming-potential refrigerants.

The product shift, along with plant downtime and other operational headwinds, has weighed on margins even as demand tied to nuclear energy, data centers and artificial intelligence remains strong.

Chief Executive David Sewell told Reuters the company now sees the impact of its strategy as a standalone business focused on secular growth trends.

Rapid growth in AI-driven data centers is boosting demand for its thermal management and refrigerant products, while advanced computing is driving growth in semiconductor electronic materials.

Rising power needs linked to AI and data center expansion also support its nuclear energy business, he said, citing double-digit fourth-quarter growth across those segments.

Fourth-quarter net sales rose 8% to $987 million, driven by double-digit growth in Nuclear (Alternative Energy Services), Electronic Materials and refrigerant products and also beat estimates of $923.3 million.

However, adjusted standalone EBITDA for the October-December quarter fell nearly 20% to $189 million, with margin narrowing 662 basis points to 19.1%.