Management continues to evaluate the strategic options for divesting the Technology segment (with an operating margin of 2.5% in H1 2026) after achieving planned integration synergies (~£20–£30 million over 12–18 months). The company announced the completion of the sale of DCC Technology’s Info Tech business in the UK and Ireland to AURELIUS on 3 November 2025. Historically, DCC successfully divested its Environmental division (2017) and Food & Beverage division (2014), each for a profit of ~£30 million. In the long run, DCC will focus on its Energy business and the ongoing energy transition strategy.

As a standalone, DCC’s Energy business could be compared with UGI Corp (NYSE: UGI), Ameresco Inc (NYSE: AMRC), Solaria Energia y Medio Ambiente (BME: SLR), and Enphase Energy Inc (NASDAQ: ENPH), which trade at ~11x median 2027E EV/EBITA. The Technology business could be compared with direct peers such as Esprinet SpA (PRT IM), Dicker Data Ltd (DDR AU), ALSO Holding AG (ALSN SW) and Redington Ltd (REDI IN), which trade at ~8x median 2027E EV/EBITA. Applying multiples of 11x and 8x to 2026E segment EBITA consensus projections for the Energy and Technology businesses yield segment values of £6.0 billion and £0.7 billion, respectively.

Accounting for net debt of ~£1.2 billion (after factoring in the buyback), and minority interest of ~£102.7 million yields a total sum-of-the-parts value of ~£5.4 billion, translating into ~£63.16 per share (based on a diluted share count of ~85 million). The implied SOTP value of £63.16 per share when compared with the reported potential acquisition value from KKR and Energy Capital of ~ £66.72 per share, suggesting modest upside to our valuation.

FedEx Completes the Tax-Free Separation of FedEx Freight; Rate Post-Spin FDX at BUY & Post-Spin FDXF at NEUTRAL

Distribution: On June 1, 2026, before the market open, FedEx Corporation (NYSE: FDX) completed the tax-free spin-off of 80.1% of FedEx Freight Holding Company (NYSE: FDXF). Shareholders of record received two shares of FDXF for every share owned of FDX (with fractional shares paid out in cash).

Regular-way Trading & Indexation: Shares of FDXF (as well as post-spin FDX) commence so-called “regular way” trading this morning. FedEx Corp. will remain in both the S&P 500 & 100 Indexes as well as the Dow Jones Transportation Average (DJTA) while FedEx Freight is set to join the S&P 500 (replacing EPAM Systems), as of tomorrow, June 2nd, as well as the DJTA (replacing American Airlines), which likely mutes to some degree any potential index rotation dislocations.

When-issued Trading: For perspective, in the so-called “when-issued” trading market shares of FedEx Freight (FDCF) opened on 5/27 at $135 per share (with a bid/ask of $130-$150 per share) before closing at $151 per share (on volume of ~14K shares). On 5/28, FDXF-W closed at $185 per share (on volume of ~6.25K shares) before closing on 5/29 at $160.37 per share (on volume of 14.25K shares). Initial pre-market indications are pointing to a bid/ask of $160.15-$162.95 per share.

In regard to the parent, FDX-W opened & closed on 5/27 at $320 per share (on anemic volume of just 350 shares). On 5/28, the when-issued shares closed at $314.78 per share (on volume of 500 shares) before closing on 5/29 at $327.69 per share (on volume of 171 shares). Initial pre-market indications are pointing to an opening price of ~$330-$331 per share.

Pre- & Post-spin Recommendations: Following our initial pre-spin BUY recommendation back in April 2026, shares of consolidated/pre-spin FDX appreciated ~15% (roughly flat with the S&P 500 & Russell 2000).

For context, based on the when-issued closing prices FDX (RemainCo) is, by our estimates, implicitly trading at ~7.5x 2027E EV/EBITDA and 14x 2027E EPS, which is roughly in-line with average of peers Deutsche Post (DPW EU) at ~7x/14x and UPS (NYSE: UPS) at ~8x/13.5x, while FDXF (SpinCo) is trading at ~16x 2027E EV/EBITDA, which is in-line with SAIA (NASDAQ: SAIA) but a modest discount to XPO (NYSE: XPO) at 17.5x and a well-deserved discount to Old Dominion (NASDAQ: ODFL) at 22.5x. On the P/E front, SpinCo is implicitly trading, again, by our estimates, at 26x versus SAIA at 33x, XPO at 36x and ODFL at 36.5x. Against that backdrop, we think the post-spin parcel company (i.e., FDX or RemainCo) remains the better initial play, considering the structural improvements underway (i.e., Network 2.0) and its recent outperformance on execution, which we think lend credibility to its F2029E targets and should buoy near-term investor sentiment (i.e., momentum), as well as its free cash flow generation potential (i.e., ~$16 billion thru F2029E, which is more than it generated in the past 15 years), warrant a premium to peers. On the other hand, while we really like the FDXF story over the medium/long-term, given attractive underlying industry dynamics, an improving macro backdrop as well as the obvious self-help opportunities (i.e., yield, service and cost opportunities as the company solely focuses on what is best for its own network) we think it could be possible that the company’s relatively muted near term expectations, in part due to transition costs (TSAs) and necessary technology investments, may cloud what we view as a bright long-term future, at least initially. As such, we initially rate shares of FDX (i.e., RemainCo) at BUY and shares of FDXF (SpinCo) at NEUTRAL (but will be actively looking to turn more positive if/when the opportunity is presented).

Please see the Spin-Off Report dated April 6, 2026 and the Update from 4/8/2026 for more information as well as the Reference section on pages 4-10.

We think the post-spin parcel company (i.e., FDX or RemainCo) is the better initial play, considering the structural improvements underway (i.e., Network 2.0) and its recent outperformance on execution, which we think lend credibility to its F2029E targets and should buoy near-term investor sentiment.

CZR agrees to a $31 per share cash go-private offer from Fertitta Entertainment.

Investor Day Takeaways: Industrial/HVAC & ZET applications (along w/ continued share gains in legacy gas turbos) pretty well lay to rest the “Melting Ice Cube”/“Terminal Value is Zero” arguments, in our view although the auto/CV  vs. industrial valuation debate will likely remain on-going; capital returns stay targeted at ~75% of the ~$2 billion of FCF expected over the next 5-years.

We attended GTX’s Investor/Technology Day in NYC; to be sure, a ton of fascinating technical information was provided, particularly regarding the company’s innovations in the Industrial/HVAC space with its zero emission E-cooling compressors and high-speed E-powertrain products (which are outside its perceived core light- & commercial-vehicle competencies that are in their own right astounding feats of engineering representing a deep competitive moat).  That said, for the sake of brevity, we will focus on the broader financial topics that were discussed (although we have also included some product photos from the event for illustration on pages 4-5).

In summary, the company projects compound annual top-line growth of >5% over the next decade to ~$5 billion of sales in 2030 (versus ~$3.5 billion in 2025 and ~$3.75 billion in 2026E) and ~$6 billion in 2035 fueled by a 20% CAGR in its budding industrial applications (e.g., the Ingersoll-Rand & Trane partnerships) to >$500 million in 2030 (and ~$850 million in 2035E) as well as continued growth in its light-commercial (LCV), commercial (CV) and aftermarket (AM) sales, which are collectively projected to comprise more than 50% of overall sales (in 2030). 

All told, GTX projects core/legacy turbo sales for passenger vehicles (PV) will comprise ~$2 billion of total sales in 2030 with the combination of LCV, CV, Industrial & AM revenue contributing >$2 billion and so-called “Zero-Emission” (ZET) sales adding another $1 billion by 2030 (and ~$2.5 billion by 2035), all amid relative stability in overall corporate margins.

Based on the consistent financial framework, initially articulated back in December 2024, where RD&E and CapEx are <5% & <3% of sales, respectively, along with an 80% variable cost structure management expects to continue converting ~75% of adj. EBIT to free cash flow (FCF), implying that the company will generate ~$2 billion (or more) of FCF over the next five years (see Exhibit 2).

In terms of the allocation of that capital, GTX maintained the stance (again, initially articulated in late-2024) that it will return ~75% of FCF to shareholders in the form of dividends (currently $0.08 per quarter, raised from an initial $0.02) and share repurchases (which have decreased the diluted share count by ~45% since 2023) while also maintaining a leverage ratio of <2.0x (in-line with the 1.92x reported in 1Q 2026).  Anecdotally, tuck-in acquisitions are routinely evaluated but internal innovation seemingly remains the overall focus (by our inference).

In terms of near-term guidance, the company maintained its most recent full-year 2026E outlook, which was raised to the high-end of its previous position in 1Q 2026, (see Exhibit 1 on page 2), and currently calls for total sales of $3.6-$3.9 billion (previously $3.6-$3.8 billion) with adjusted EBIT of $520-$600 million (versus the prior guide of $520-$570 million). GAAP net income is expected to be $300-$360 million (up from $295-$335 million). Cash flow from operations are projected to be $407-$522 million (previously $407-$502 million), resulting in adj. free cash flow (FCF) of $355-$475 million (compared with the prior outlook of $355-$455 million).

In terms of valuation, management argues that GTX should trade at a premium to commercial-vehicle (CV) focused peers, such as Allison Transmission (NYSE: ALSN), Cummins (NYSE: CMI), Gates (NYSE: GTES), Knorr-Bremse (KBX GR) and SAF-Holland (SFQ GR), which trade at 2027E P/E & EV/EBITDA multiples of ~14x (in a range of 8x-19x) & ~9.0x (in a range of 5x-12x), respectively, and potentially more on par with a broader industrial cohort that includes company’s like Accelleron (ACLN SW), Carrier (NYSE: CARR), Johnson Controls (NYSE: JCI), Lennox (NYSE: LII), SPX (NYSE: SPXC) and Trane (NYSE: TT), which trade at ~22x (in a range of ~18x-26.5x) and 16.5x (in a range of 12.5x-22x).

Our base case fair value estimate for GTX is $36 per share, reflecting a 14x multiple on our 2028E adjusted net income forecast and a fully diluted share count of ~161 million (see Exhibit 3 on page 3).

PCS Research Group welcomes and encourages your feedback.  Please feel free to call us if we can be of service.

Investor Day Takeaways: Industrial/HVAC & ZET applications (along w/continued share gains in legacy gas turbos) pretty well lay to rest the “Melting Ice Cube”/“Terminal Value is Zero” arguments.

ALERT: MSGS Confidentially Files a Form 10 Related to the Potential Separation of the Knicks & Rangers Sports Teams; Timeline for any Transaction Remains Unclear

Today, during market hours, Madison Square Garden Sports Corp. (NYSE: MSGS), a holding company comprised of two primary sports assets, namely the New York Knicks NBA basketball franchise and the New York Rangers NHL hockey team, indicated it had confidentially filed a Form 10 with the SEC, indicating marked progress toward a potential tax-free separation (with the likely pro-rata distribution of 100% of Class A and Class B shares).  Recall, in February 2026 (see The Spin-Off Report Radar Screen), the company indicated it had been authorized by its Board to explore a potential separation of the Knicks and the Rangers into two separate standalone companies, which made this development seemingly likely considering its history, which has included several similar transactions, including the spin-off of The Madison Square Company from Cablevision in 2010, the split of MSGS & MSG Entertainment or MSGE in 2020, and the separation of Sphere Entertainment from MSGE in 2023.  Notably, no formal timeline for a potential transaction has yet to be articulated.

In terms of valuation, so-called “trophy assets”, particularly in the sports arena, tend to confound traditional financial valuation metrics, in favor of a more asset-based valuation, of which the annual Forbes’ list of team values has historically been the most relevant (although in the event of a sale teams have broadly garnered a substantial premium).  In that context, the outlet’s most recent valuation for the National Basketball Association’s (NBA) New York Knicks stood at ~$9.75 billion, making it the league’s 3^rd most valuable franchise, comprised of ~$2.3 billion for the league-wide revenue share, ~$4 billion for the “market” (i.e., NYC), $1.865 for its stadium (i.e., MSG in midtown Manhattan) and $1.4 billion of brand-related value.  For the National Hockey League’s (NHL) New York Rangers, Forbes estimates the value at ~$4.0 billion, making it’s the league’s 2^nd most valuable franchise, comprised of ~$104 million for the leagued-wide revenue share, ~$2.1 billion of market-related value (i.e., NYC), $1.2 for its stadium (i.e., MSG) and $650 million in brand-related value. 

Considering the 2010 split of MSGS and MSG Entertainment (NYSE: MSGE), which currently owns the arena, the total implied value of the sports teams, excluding the iconic MSG arena’s value, is ~$10.7 billion. Accounting for net debt and a 10% liquidity discount yields a total base case sum of the parts valuation of ~$10.5 billion or $391 per share (based on a diluted share count of ~24.2 million).

MSGS confidentially files a Form 10 with the SEC, indicating marked progress toward a potential tax-free separation (with the likely pro-rata distribution of 100% of Class A and Class B shares).

The company has potentially attracted takeover interest from private equity firms, including Blackstone and Clayton, Dubilier & Rice (CDR).

Close Coverage of SPB As Strategic Investment in HPC from Oaktree likely puts a Spin-Off on the Backburner (with a Sale, at some point, likely being the More Likely Long-Term Outcome, in our view)

Last night, after the market close, Spectrum Brands (NYSE: SPB) posted 2Q F2025 results (September-ending) demonstrating consolidated sales up ~5.0% to ~$709 million while adj. EBITDA rose ~18% to $84 million.  Adj. EPS were $1.25 (versus $0.68 in 2Q F2024).

The company ended 2Q F2025 with a net debt of ~$475 million and a net leverage ratio of 1.66x.

In terms of guidance, SPB projects full-year consolidated top-line growth in the “low single-digits” with “low single digit” adjusted EBITDA growth.  Adjusted free cash flow (FCF) conversion is expected to be ~50% of adj. EBITDA. 

Most notably, the company announced a $127 million strategic investment in its Home & Personal Care (HPC) business, comprised of $67 million in preferred equity and the remainder in a term-loan (that will be non-recourse to SPG), from Oaktree Capital Management.  The transaction, which closed early in 3Q F2025, valued the business at ~6.0x trailing-twelve months (TTM) adj. EBITDA, and ultimately leaves SPB with a 73% majority position in the business, which moving forward will now be treated as a separate platform.

While this transaction does not functionally preclude an ultimate spin-off over the longer-term, which was the intention SPG initially announced in July 2024 (see our initial report dated October 18, 2024), management commentary has, in our view, consistently supported a dual-track process that favored a sale (as opposed to a spin).

In that context, on last night’s call management indicated that with ownership of 73% on a fully diluted basis “if we want to sell to somebody who wants to pay a big number, we’re fully able to do that.”

As always, we will continue to monitor the shares to ascertain if a spin-off transaction again emerges as a more likely outcome.

Again, please see the comprehensive Spin-Off Report dated October 18, 2024 for more information.