Solstice Advance Materials Stock Falls. Why It Was an Odd Quarter.

The Constellation Energy nuclear reactor at the Clinton Clean Energy Center. Solstice produces uranium hexafluoride, an intermediate product required to manufacture fuel for the reactor. (Photo by Scott Olson/Getty Images)

Key Points

• Solstice Advanced Materials, a new stand-alone company, reported third-quarter Ebitda of $235 million on sales of $969 million.
• The company’s sales increased by 7% year over year, with refrigerant sales up 9% and electronics and specialty materials sales up 2%.
• Management reiterated its 2025 Ebitda guidance of approximately $950 million, while Wall Street projects around $960 million.

Solstice Advanced Materials , a maker of refrigerants, electronic materials, and even uranium hexafluoride, important for nuclear reactors, became a stand-alone company only days ago. It’s already reporting quarterly earnings.

They look OK.

Thursday, the company reported third-quarter earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $235 million from sales of $969 million. Wall Street was looking for $236 million and $964 million, respectively, according to FactSet.

The results are very close to consensus estimates. There isn’t much of a consensus, however. There are only three quarterly Ebitda estimates. There is a good reason for that. Solstice is new. It recently completed its spinoff from Honeywell. It started trading on a stand-alone basis on Oct. 30.

Looking ahead, management reiterated its guidance for 2025 Ebitda of about $950 million. Wall Street is projecting about $960 million.

Results and guidance might look a touch light, but it’s an odd quarter for the company. It’s the first one it reported as a stand-alone company, and operations weren’t officially separated during the quarter.

Things look fine, in line with what management communicated to investors before the spinoff. Sales rose 7% year over year. Refrigerant sales grew 9%. Electronics and Specialty Material sales grew 2%.

Shares were up in premarket trading, but fell over the day, closing down 6.9% at $45.02, while the S&P 500 and Dow Jones Industrial Average dropped 1.1% and 0.8%, respectively.

Investors might want to brace for more volatile trading in the coming days. There is no history of how Solstice trades after earnings. What’s more, shares rose 10.7% on Wednesday, closing at $48.33, without any company-specific news to pin the gain on.

The stock appeared to go up because it went down. Wednesday’s close still left Solstic stock down 41 cents from where shares closed at on Oct. 30, the day of the spin. Shares of spinoffs can trade widely for a while around the time of the spin as investors decide what to do with the new stock that arrived in their portfolios.

Write to Al Root at allen.root@dowjones.com