Have you ever watched a giant company reshape itself, like a puzzle breaking apart to form new, sharper pieces? That’s exactly what’s happening with Honeywell, a name synonymous with industrial innovation. The conglomerate is embarking on a bold journey to split into three distinct entities, and the first piece—Solstice Advanced Materials—is about to take center stage. As an investor or someone curious about market moves, you might be wondering: what’s in it for you? Let’s dive into this transformation, unpack what Solstice brings to the table, and explore why this breakup could be a game-changer.
The Big Split: Honeywell’s Strategic Makeover
Honeywell’s decision to carve itself into three companies isn’t just a corporate reshuffle—it’s a calculated move to unlock hidden value. The first step, set to wrap up by late October 2025, involves spinning off Solstice Advanced Materials, a specialty chemicals business with a knack for serving cutting-edge industries. If you’re a Honeywell shareholder as of October 17, 2025, you’ll get one share of Solstice (ticker: SOLS) for every four shares of Honeywell (ticker: HON) you own. Come October 30, these two will trade separately, marking the start of Honeywell’s multi-phase breakup.
Why the split? The push came from an activist investor who saw Honeywell’s sprawling structure as a drag on its potential. They argued that breaking the conglomerate into focused units—chemicals, automation, and aerospace—could mirror the success of other industrial giants who streamlined their operations. Think of it like decluttering a house: sometimes, separating the pieces makes everything shine brighter.
What Is Solstice Advanced Materials?
Solstice isn’t just another chemical company—it’s a mid-sized powerhouse with nearly $4 billion in annual sales and close to $1 billion in adjusted EBITDA. Its portfolio is a vibrant mix of products, from refrigerants cooling data centers to ballistic fibers protecting military personnel. If I had to sum it up, Solstice is like the Swiss Army knife of specialty chemicals—versatile, precise, and built for high-stakes applications.
The company operates through two main segments: Refrigerants & Applied Solutions and Electronic & Specialty Materials. The former is the heavyweight, raking in about $2.7 billion in 2024 sales with a robust 40% EBITDA margin. Refrigerants, which make up half of this segment’s revenue, are the unsung heroes behind air-conditioned offices, humming data centers, and even your car’s AC. The segment also includes building solutions, like insulation materials, and healthcare packaging that keeps medical supplies safe.
The Electronic & Specialty Materials segment, with $1 billion in sales, is a bit leaner, posting a 19.2% EBITDA margin. It serves industries like pharmaceuticals, construction, and electronics, with a growing focus on materials for advanced computing. Its safety and defense solutions, like fibers for bulletproof vests, add a layer of resilience to its portfolio. In my view, this diversity is what makes Solstice intriguing—it’s not tied to one market’s ups and downs.
“Solstice’s strength lies in its ability to serve high-growth, high-margin markets with precision and innovation.”
– Industry analyst
A Global Footprint with Local Smarts
Solstice’s global reach is impressive, with 61% of sales coming from the U.S., 23% from Europe, the Middle East, and Africa, and 16% from other international markets. What’s clever is how they’ve sidestepped the headaches of global trade disruptions. About 90% of U.S. sales are made domestically, and 60% of international sales are produced in their respective regions. This localized approach shields Solstice from tariffs and supply chain chaos, a move I find particularly savvy in today’s unpredictable trade landscape.
When tariffs did pinch, Solstice’s management didn’t just sit back—they passed costs to customers or shifted supply chains to friendlier regions. It’s the kind of agility that makes you nod in approval, knowing the company’s not easily rattled by global curveballs.
Financials: Steady Growth, But Is It Enough?
Let’s talk numbers. Solstice has grown its sales from $2.8 billion in 2017 to $3.8 billion in 2024, a 4.4% compound annual growth rate. That’s slightly ahead of its peer group’s median of 3.9%, which includes companies like Chemours and Eastman. Profitability is where Solstice shines, boasting a 26.4% EBITDA margin in 2024 compared to the peer median of 17.8%. Its return on invested capital (ROIC) is equally impressive at 21.5%, more than double the peer average of 8.4%.
| Metric | Solstice (2024) | Peer Median |
| Sales Growth (CAGR) | 4.4% | 3.9% |
| EBITDA Margin | 26.4% | 17.8% |
| Return on Invested Capital | 21.5% | 8.4% |
But here’s the catch: growth has plateaued recently. Sales hovered around $3.6 billion in 2022 and 2023 before inching up to $3.8 billion in 2024. For 2025, Solstice projects revenue between $3.75 billion and $3.85 billion, signaling more of the same. Management’s medium-term outlook promises low to mid-single-digit growth, with EBITDA climbing at a similar pace. Is that enough to excite investors? Honestly, I’m not convinced—it feels like a solid foundation, but the spark of rapid growth is missing.
Why Solstice Could Still Shine
Despite the sluggish growth, Solstice’s management is betting on an inflection point. They see tailwinds from trends like advanced computing, environmental sustainability, and healthcare innovation. For instance, their refrigerants are critical for cooling the data centers powering AI and cloud computing. Their healthcare packaging solutions, like ultra-high moisture barrier polymers, are in demand as medical needs evolve. And don’t overlook their defense products—those ballistic fibers aren’t just niche; they’re mission-critical.
- Data center cooling: Growing demand for refrigerants as AI and cloud computing expand.
- Healthcare packaging: High-margin polymers for medical safety.
- Defense solutions: Ballistic fibers for military applications.
Still, Solstice isn’t immune to the cyclical nature of the chemical industry. Economic slowdowns could dampen demand in construction or industrial markets. But with a net leverage ratio of 1.5, Solstice’s balance sheet is rock-solid, giving it room to weather storms and invest in growth. In my experience, a strong balance sheet is like a lifeboat in choppy waters—it keeps you afloat when others are sinking.
“A lean balance sheet and exposure to high-growth markets position Solstice for long-term success.”
– Financial strategist
What’s Next for Honeywell?
While Solstice takes flight, Honeywell isn’t done reshaping itself. By mid-2026, the company plans to split its remaining businesses into two: one focused on aerospace and the other on automation. The aerospace division, with its ties to aviation and defense, is a favorite among investors for its steady cash flows and long-term contracts. Automation, meanwhile, is being streamlined, with Honeywell exploring “strategic alternatives” for its Productivity Solutions and Warehouse businesses.
Here’s where it gets interesting: some investors might sell their Solstice shares to double down on Honeywell, betting on the aerospace division’s allure. I get the logic—aerospace feels sexier than chemicals—but dismissing Solstice too quickly could be a mistake. Its exposure to high-growth trends makes it a sleeper hit, especially as an independent entity free to chart its own course.
Should You Invest in Solstice?
So, what’s the verdict? Solstice is a solid business with a diversified portfolio, strong margins, and a knack for navigating global challenges. Its above-average profitability and resilient supply chain are big pluses. But the lack of explosive growth raises a red flag for those chasing high-flyers. If you’re a long-term investor, Solstice’s exposure to trends like AI, healthcare, and defense could pay off as the economy stabilizes.
- Assess your portfolio: Does Solstice’s steady profile complement your growth stocks?
- Watch the market: Post-spin-off trading could reveal undervaluation opportunities.
- Consider the long game: Solstice’s secular trends may outweigh cyclical risks.
Perhaps the most interesting aspect is Solstice’s potential to surprise. As an independent company, it can focus on niche markets without the baggage of a conglomerate structure. Will it soar like a rocket or plod along like a steady tortoise? Only time will tell, but I’m keeping my eyes peeled for how it trades after October 30.
Final Thoughts: A Breakup Worth Watching
Honeywell’s breakup is more than a corporate maneuver—it’s a chance for investors to rethink their strategies. Solstice Advanced Materials, with its blend of innovation and stability, offers a compelling case for those willing to dig deeper. While it may not scream “growth stock” just yet, its strong fundamentals and exposure to future-proof industries make it a name to watch. As the chemical industry evolves, Solstice could carve out a niche that surprises even the skeptics.
What do you think? Will you hold onto your Solstice shares or pivot to Honeywell’s aerospace play? The market’s about to get a lot more interesting, and I, for one, can’t wait to see how this unfolds.
