Aptiv Completes the Spin-Off of Versigent; Initially Rate Post-Spin APTV at BUY and VGNT at NEUTRAL

Distribution: On April 1, 2026, before the market open, Aptiv PLC (NYSE: APTV), a Dublin-based global auto supplier, completed the tax-free spin-off of 100% of its Electrical Distribution Systems (EDS) business, Versigent (NYSE: VGNT).  Shareholders of record, as of March 17^th, received one share of VGNT for every three shares of APTV owned (i.e., a 1-for-3 distribution ratio).

Regular-way Trading and Indexation: Shares of VGNT (as well as post-spin APTV) will commence so-called “regular-way” trading as of this morning’s market open (4/1).  Pre-spin APTV is a member of the S&P 500 Index and will remain so following this transaction (although we note that based on our initial projections, which suggest a sub-$20 billion market cap, its potential removal at some point in the future could present some degree of an overhang for certain investors).  On the other hand, post-spin VGNT, will not be included in the S&P 500 Index but rather join the S&P SmallCap 600 Index (replacing Titan International) effective prior to the market open on April 2, 2026. To that end, it seems reasonable to suggest, there will be a degree of initial shareholder rotation/selling pressure, particularly considering that the so-called “Big 3” passive investors (i.e. Vanguard, BlackRock, and State Street) collectively own ~54.5 million shares or ~25.5% of the shares (and the pre-spin average daily trading volume was ~3.2 million shares). 

When-Issued Trading: For perspective, in the so-called “when-issued” trading market Versigent (VGNT-W) opened at $30 per share on March 27^th (3/27) before closing at $30.20 per share (on volume of less than 3K shares).  In subsequent days, shares were relatively steady around $30-$31 per share (on average volume of 45.5K shares per day) before closing last night (3/31) at $31.85 per share.  For its part, APTV-W both opened and closed on 3/27 at $58 per share (on volume of ~11.5K shares) before closing last night at $58.50 per share.

Initial Guidance: For FY 2026E, management has guided RemainCo’s (i.e., New Aptiv) sales in the range of $12.8-$13.2 billion, implying adjusted growth of ~4%. This outlook reflects modest global vehicle production assumptions supplemented by continued content expansion in advanced driver assistance systems (ADAS), centralized computing, and electrification components. The company expects EBITDA of $2.36-$2.48 billion, corresponding to an EBITDA margin of 18.6%. This margin profile reflects the inherently higher value-added nature of its engineering-intensive and software-aligned product mix. Earnings per share (EPS) guidance is $5.70-$6.10 (based on an 18.5% tax rate).  Over the medium term, management estimates sustained mid-single digit top-line growth supported by increasing adoption of centralized vehicle architectures, growth in ADAS penetration, expansion of software-enabled features, and continued tailwinds for electrification. EBITDA margins are expected to increase by 200bps by FY 2028E, driven by favorable mix shifts toward software-enabled solutions, platform standardization, engineering productivity, and operating leverage as program volumes scale. Free cash flow (FCF) is expected to be $650-$850 million in FY 2026E.  [Note: this guidance is net of $250 million of separation-related cash costs associated with the EDS transaction to be settled in FY 2026E, as well as an additional $200 million investment in building its semiconductor inventory.]  Post spin-off, RemainCo is expected to pursue a balanced and disciplined capital allocation framework anchored around maintaining an investment-grade balance sheet with a targeted gross leverage ratio of 2.0x-2.5x. The company intends to prioritize reinvestment in high-return organic growth initiatives, particularly across software-enabled, computing-intensive and electrification platforms, while selectively pursuing strategic acquisitions to enhance scale and diversification. With cumulative free cash flow (FCF) generation of ~$4 billion projected over FY 2026–2028E, excess cash beyond reinvestment requirements is earmarked for shareholder returns, primarily through share repurchases, reflecting a calibrated approach between funding growth and returning capital (see Exhibit 2).

As it relates to SpinCo (i.e., Versigent), management expects to generate EBITDA of $950-$1,030 million in FY 2026E, corresponding to an EBITDA margin of ~10.7%. The company’s expense base remains heavily weighted toward materials & manufacturing (~80% of revenue), with engineering (~3%) and SG&A (~6%-7%) representing smaller but more controllable levers. By FY 2028E, management targets EBITDA margins approaching ~12%, reflecting substantial performance improvements via engineering-led design optimization, vendor negotiations, manufacturing footprint consolidation & rotation into best-cost countries, and increasing automation across its cutting, crimping, and wire assembly processes. Engineering productivity gains through digitalization and resource consolidation are also expected to support operating leverage, partially offset by ongoing investments in electrification and adjacent growth initiatives.  From a cash flow perspective, Versigent is guiding to $200–$300 million of free cash flow (FCF) in FY 2026E, inclusive of ~$70 million of separation-related costs. Over the FY 2026E–2028E period, cumulative free cash flow generation is expected to approach ~$1 billion, reflecting improving EBITDA margins, disciplined capital expenditures below historical peak levels, and working capital normalization as the semiconductor-related inventory build moderates. Management emphasizes that the business model remains capital intensive relative to software-centric peers, but free cash flow conversion should improve as automation and footprint optimization reduce labor exposure and manufacturing inefficiencies. Capital allocation priorities are clearly sequenced: first, invest in organic growth through automation, footprint optimization, and electrification program support; second, maintain a competitive dividend policy; third, return excess capital via opportunistic share repurchases; and fourth, pursue selective bolt-on acquisitions that strengthen the company’s automotive architecture leadership or expand exposure to adjacent industrial markets (see Exhibit 2).

Pre- & Post-spin Recommendations: Following our initial pre-spin BUY recommendation, largely predicated on the broad contention that despite an admittedly tough macro backdrop the valuation suggested investors were either ascribing little value to SpinCo or that RemainCo was implicitly trading more in-line with its lower growth/margin auto supplier peers, shares of consolidated/pre-spin APTV declined ~1% (outperforming the S&P 500 by 1.3% but underperforming the Russell 2000 by ~1.2%).  Post-spin, the spin-off effectively separates two businesses with fundamentally different operating models, capital intensity, and margin structures. Versigent, for its part, will emerge as a global leader in vehicle electrical architecture and power distribution systems while, by contrast, post-spin Aptiv will operate as a technology-focused advanced mobility supplier centered on software-defined vehicle architecture, advanced driver-assistance systems (ADAS), centralized computing platforms, and high-value electronic components. These product categories are structurally aligned with several long-term industry megatrends, including the transition toward software-defined vehicles, increasing ADAS penetration, and the growing importance of centralized electrical & electronic architectures within next-generation vehicles (see Exhibit 1).

In terms of valuation (see Exhibit 3), Versigent could be compared with Lear Corp (LEA US), Borgwarner Inc (BWA US), and Valeo (FR FP), which trade at a median 2026E EV/EBITDA multiple of ~4x. Applying this 4x EV/EBITDA multiple to the average EBITDA guidance of Versigent of $0.9 billion yields a segment valuation of ~$4.25 billion. Adjusting for post-spin net debt of ~$1.7 billion, pension liabilities of ~$217 million, minority interest of $191 million and investments in affiliates of $143 million, yields a preliminary post-spin equity valuation of ~$2.3 billion or ~$32.50 per share (based on 1:3 share conversion ratio and ~70.9 million shares outstanding at the time of listing.). 

Post-spin Aptiv, could be imperfectly benchmarked against Denso Corp (6902 JT), Continental AG (CON GY), Gentex (GNTX US), Mobileye (MBLY US), Amphenol (APH US) and TE Connectivity (TEL US), which trade at ~9.5x median 2026E EV/EBITDA. Applying a ~9x multiple to the average guidance of RemainCo’s 2026E EBITDA of ~$2.4 billion implies a segment value of ~$22 billion. Accounting for net debt of $6.2 billion, pension liabilities of $75 million, minority interest of $239 million and investments in affiliates of $1.3 billion, the implied equity value is ~$17 billion, or $78.50 per share (based on a share count of 213 million).

All told, based on current opening indications (and the implied upside to our fair values estimates) we initially rate post-spin APTV as a BUY (amid a modest re-rating toward peers) and post-spin VGNT at NEUTRAL (although we will actively monitor the shares for a more attractive entry if dislocations occur amid a potential shareholder rotation over the next week/weeks as well as an uncertain macro backdrop).

Also, please see The Spin-Off Report dated March 13, 2026, for more information.

ULVR to Combine its Foods Business with McCormick & Co. in a Reverse Morris Trust (RMT) Transaction that is Expected to be Completed in Mid-2027

On March 31, 2026, Unilever PLC (ULVR LN), which completed the tax-free separation of its global Ice Cream division, The Magnum Ice Cream Company (MICC LN) in December 2025, announced its intent to separate its Foods Business, which includes brands such as Hellmann’s and Knorr, and combine it with McCormick & Co. (NYSE: MKC), which operates a portfolio of brands including Frank’s, French’s, Cholula and Maille, in a Reverse Morris Trust (RMT) transaction that is expected to tax-free for U.S. federal income tax purposes. Notably, the transaction has been unanimously approved by both company’s Boards of Directors (and includes a ~$420 million termination fee for MKC and a $75 million expense reimbursement clause for ULVR).  Post-spin, four of the combined company’s 12 Board members will be appointed by ULVR and the go-forward entity company, which may plan to seek a secondary listing in Europe, will be led by Brendan Foley (the current Chairman, President and CEO of MCK).

The deal, which is expected to be completed in mid-2027, subject to customary approvals and conditions, reflects an estimated enterprise value of $44.8 billion for ULVR’s Foods business (implying EV/sales and EV/EBITDA multiples of 3.6x and 13.8x, respectively).  Per the merger agreement, Unilever and its shareholders are expected to own 65% (split 55.1% for investors and 9.9% for ULVR) of the combined company (valued at roughly ~$29.1 billion) as well as receive a cash distribution of $15.7 billion (which is expected to be primarily deployed toward debt reduction to maintain a ~2.0x leverage ratio as well as share repurchases) while existing McCormick shareholders will own the remaining 35% of the combined entity.  

Following the transaction, ULVR will operate as a pure-play Home & Personal Care (HPC) business, focused on Beauty, Wellbeing, Personal Care and Home Care, which could be compared with a range of peers, including Beiersdorf AG (BEI GY), Colgate-Palmolive (NYSE: CL), Church & Dwight (NYSE: CHD), Estee Lauder (NYSE: EL), Kenvue Inc. (NYSE: KVUE), which is being acquired by Kimberly-Clark (NYSE: KMB), L’Oreal (OR FP), Procter & Gamble (NYSE: PG), and Reckitt Benckiser (RKT LN), which trade at ~11.5x 2027E EV/EBITDA (in the 8.5x-16x range). Applying the average multiple to estimated 2027E standalone EBITDA implies value of ~€109 billion.  Accounting for the disclosed valuation of the Foods business along with net debt, including the expected receipt of cash from MKC, as well as minority interest, pension liabilities, and ULVR’s retained stake in MICC, yields a preliminary sum-of the parts valuation of ~£55.50 (based on a diluted share count of ~2.195 billion and a EUR/GBP exchange ratio of 0.87).

Post-Spin DD Proposes a Reverse Stock Split; Expects to Close the ~$1.8 billion Sale of Aramids on April 1st; Drop Coverage, Effective as of Today’s Close

Last night, after the market close, DuPont de Nemours, Inc. (NYSE: DD), which completed the tax-free spin-off of Qnity Electronics (NYSE: Q) on November 1, 2025 announced plans to seek shareholder approval for a reverse stock split at its annual meeting on May 21st (where holders of record on March 30th will be eligible to vote). If approved, the as yet undetermined split ratio is expected to be no less than 1-for-2 but no more than 1-for 4.

Additionally, the company recently disclosed that the previously announced (in August 2025) deal to sell its Aramids business (i.e., the Kevlar & Nomex brands) to Arclin, a portfolio company of TJC, for ~$1.8 billion is set to close of April 1st.

For context, following our initial BUY rating on shares of post-spin DD appreciated shares appreciated ~45% (outperforming the S&P 500 and Russell 2000 indexes by ~43.5% and 36.5%, respectively), which prompted our more recent downgrade of the shares (to NEUTRAL) on February 10, 2026 , as the stock was, at the time, trading roughly in-line with our $50 fair value estimate (FVE). Subsequently, shares have declined ~10.5% (underperforming the S&P and Russell indexes by ~6% and ~3%, respectively, including the $0.20 dividend paid on March 16th).

All told, given the span of time that has passed since the transaction and our broader view of the overall opportunity set in the spin-off space we will drop coverage, effective as of today’s close, to focus on more current transactions.

To that end, we note that the Q & Aramids transactions ostensibly mark the culmination of DD’s multi-year transformation into a more simplified industrials business with key competencies in technologies for the healthcare and water treatment markets.

All that said, while less interesting in the context of our more specific catalyst driven focus we still think there is a clear fundamental underpinning to support a longer-term investment in post-spin DD amid what we discern should be relatively steady/predictable EPS growth rate of 8%-10%, a more disciplined approach to capital allocation, as well as a several turn multiple discount to its higher-valued multi-industrial and so-called “compounder” (i.e., ECL, LIN, XYL, VTO) peers.

Please see The Spin-Off Report dated October 8, 2025 and Updates from 10/16/2025, 11/3/2025, 11/6/2025 and 2/10/2026 for more information.

CZR spiked in late-day trading yesterday due to an unconfirmed press report out of the WSJ that the company had received take-over offers of $33 & $34 per share

CZR shares spiked ~12% yesterday in late-day trading following a press report out of The Wall St. Journal (WSJ) that the company is in exclusive talks with Golden Nugget Casinos owner Tillman Fertitta following the receipt of a ~$34 per share offer for the company, which reportedly topped a previous $33 per share all-cash offer from Carl Icahn whose Ichan Enterprises owns ~1.2% of CZR’s stock (at a reported cost basis of ~$37 per share) and recently secured the addition of 2 directors to CZR’s 12-member Board.  Notably, as of this writing the WSJ report remains unconfirmed by the company (or any potential bidders).

Recall, in late February 2026, The Financial Times (FT) reported that the company was weighing potential (but unquantified) takeover offers, including from Mr. Fertitta, as well as a management-led buyout.

On the fundamental/financial front, recall that earlier this month CZR reported 4Q & full-year 2025 results; on a quarterly basis, 4Q 2025 sales rose ~4.5% to ~$3 billion, as weakness in Vegas (down ~5%) was offset by growth in Regional and Digital (~4% and ~21%, respectively), with adj. EBITDA up ~2% to $901 million.  For full-year 2025, consolidated sales rose ~2.5% to $11.5 billion, reflecting a ~3.5% decline in the Vegas market offset by 4% and ~39% growth at Regional and Digital, respectively, with adj. EBITDA down 2.7% to ~$3.6 billion.

The company ended 2025 with nearly $11 billion of net debt, including ~$900 million of cash and ~$11.8 billion of debt, and a leverage ratio of ~3.3x (roughly flat compared with the end of 2024).  Available liquidity, including cash and capacity of its revolver exceeded $2.8 billion at year-end and the company’s earliest maturities, totaling ~$800 million, are not until 2028.

In terms of capital allocation, during 2025 the company fully redeemed $546 million of 8.125% notes due 2027 and repurchased 9.6 million shares (nearly 5% of the shares outstanding) for ~$229 million (or an implied purchase price of less than $24 per share share).  [Note: in 2024 the company repurchased another 13.2 million shares (~6% of the outstanding share count) for $391 million (at an implied purchase price of ~$29.60).]

Looking into 2026, which out providing specific guidance, management expects its cash flow generation to benefit from lower capital spending, interest expense and cash taxes, resulting in the company being a “significant cash flow generator” in 2026 (ostensibly ahead of the ~$500 million generated in 2025). In that context, management remains committed to a balanced cash deployment strategy focused on both debt reduction and share repurchases.

In terms of other financial guidance, the company, again, does not provide granular earnings guidance but has articulated a broad framework for full-year modeling expectations, including total master lease rent of ~$1.38 billion, interest expense of ~$720 million, capital expenditures of ~$675 million and cash taxes at 3%-4 of adj. EBITDA (see Exhibit 1).

On Digital specifically, management continues to “see a business capable of driving 20% top-line growth with a 50% flow-through to EBITDA, which keeps us on track to achieve our long-term goals” (i.e., $500 million of adj. EBITDA in 2027 with additional upside in the out years).

Our base case fair value estimate for CZR remains $34 per share, based on a blended multiple of ~7.0x as well as projected net debt, including minority interest and leases capitalized at the corporate average and a fully diluted share count of ~200 million (see Exhibit 2).

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

Close Coverage of HON with Shares Trading Roughly In-Line with our Current Fair Value Estimate (FVE) Following Strong Post-Spin Price Appreciation; Coverage will Resume ahead of the 3Q 2026 Aerospace Separation

For context, Honeywell International Inc. (NYSE: HON) completed the tax-free separation of Solstice Advanced Materials Inc. (NASDAQ: SOLS) on October 29, 2025; following our initial BUY recommendation shares of post-spin HON have appreciated ~22.5% (outperforming the S&P and Russell Indexes by ~24.5% and ~19.0%, respectively).  [Note: shareholders of record as of February 27, 2026 are also eligible to receive the $1.19 per share quarterly dividend that will be paid on March 13, 2026.]

That said, with the shares trading roughly in-line with our current $243.50 per share fair value estimate (FVE), which is based on a blended multiple of ~17x while accounting for corporate costs and projected net debt (see Exhibit 2 on page 3), and considering the time elapsed since the SOLS spin we prefer to maintain a disciplined approach and withdraw our recommendation/close coverage, and resume coverage to provide a more granular view on New Honeywell ahead of the company’s forthcoming transactions (i.e., the sale of WSS & PSS and the separation of Automation & Aerospace).

Notably, recall that in conjunction with 4Q 2026 results the company moved up the anticipated separation, for which covered will be resumed, of its Aerospace & Automation businesses into 3Q 2026 (from 4Q 2026).  As well, the company has moved its Productivity Solutions & Services (PSS) and Warehouse & Workflow Solutions (WSS) businesses, both in the Automation segment, as “held for sale” given management’s previous stated efforts that is actively seeking their divestiture. (Additionally, in January 2026, HON reached a settlement to resolve its previously on-going litigation with Flexjet and extend the two parties’ aircraft engine maintenance agreement through 2035 and, most recently, the company announced it had amended its agreement to acquire Johnson Matthey’s Catalyst Technologies business, originally announced in May 2025, which reduced the purchase price from £1.8 billion to £1.3.25 billion due to underperformance vis-a-vis the terms of its initial agreement; the transaction is expected to close, at the latest, by the end of August 2026.)

In terms of guidance, management’s full-year 2026 outlook, including Aerospace, PSS and WSS but excluding the pending £1.8 billion acquisition of Johnson Matthey’s Catalyst Technologies business, calls for consolidated sales of $38.8-$39.8 billion with organic sales growth of 3%-6%. Segment-level margin is expected to be 22.7%-23.1%, implying profitability expansion of 20-60 basis points (bps) year-over-year. Adjusted EPS is projected to be $10.35-$10.65, up an implied 6%-9%. Management forecasts operating cash flow of $4.7-$5.0 billion with free cash flow (FCF) of $5.3- $5.6 billion, implying year-over-year growth of 4%-10% (see Exhibit 1 on page 2).

Also, please see The Spin-Off Report dated October 14, 2025 and Updates from 10/30/2025, for more information.

CZR spiked in late-day trading yesterday due to an unconfirmed press report out of the FT that the company was weighing takeover offers (or potentially a management-led buyout)

CZR shares spiked ~19% yesterday in late-day trading following a press report out of The Financial Times (FT) that the company was weighing potential (but unquantified) takeover offers, including from Golden Nugget Casinos owner Tillman Fertitta, as well as a management-led buyout. Again, as of this writing, the FT report remains unconfirmed by the company and did not include any indications of the potential financial framework of any potential transaction. 

Additionally, while not a topic of the FT report we note that activist-investor Carl Icahn, whose previous ownership stint (back in 2019-2020) resulted in CZR’s sale to Eldorado Resorts for ~$17.5 billion, re-established a ~1.2% stake in late-2024 (with a reported costs basis of ~$37 per share), and more recently, reached an agreement with the company to add two Icahn representatives, Jesse Lynn & Ted Papapostolou, to CZR’s expanded 12-member Board (up from 10), which we note still includes Courtney Mather who was appointed as part of a previous settlement between Mr. Icahn and the company (although we note that Mr. Mather is not currently still an employee of Icahn Enterprises). While expressing respect for and a willingness to work with the current management team, Mr. Icahn has publicly urged the exploration of “strategic alternatives for the Company’s underappreciated digital business”.

On the fundamental/financial front, recall that earlier this month CZR reported 4Q & full-year 2025 results; on a quarterly basis, 4Q 2025 sales rose ~4.5% to ~$3 billion, as weakness in Vegas (down ~5%) was offset by growth in Regional and Digital (~4% and ~21%, respectively), with adj. EBITDA up ~2% to $901 million.  For full-year 2025, consolidated sales rose ~2.5% to $11.5 billion, reflecting a ~3.5% decline in the Vegas market offset by 4% and ~39% growth at Regional and Digital, respectively, with adj. EBITDA down 2.7% to ~$3.6 billion.

The company ended 2025 with nearly $11 billion of net debt, including ~$900 million of cash and ~$11.8 billion of debt, and a leverage ratio of ~3.3x (roughly flat compared with the end of 2024).  Available liquidity, including cash and capacity of its revolver exceeded $2.8 billion at year-end and the company’s earliest maturities, totaling ~$800 million, are not until 2028.

In terms of capital allocation, during 2025 the company fully redeemed $546 million of 8.125% notes due 2027 and repurchased 9.6 million shares (nearly 5% of the shares outstanding) for ~$229 million (or an implied purchase price of less than $24 per share share).  [Note: in 2024 the company repurchased another 13.2 million shares (~6% of the outstanding share count) for $391 million (at an implied purchase price of ~$29.60).]

Looking into 2026, which out providing specific guidance, management expects its cash flow generation to benefit from lower capital spending, interest expense and cash taxes, resulting in the company being a “significant cash flow generator” in 2026 (ostensibly ahead of the ~$500 million generated in 2025). In that context, management remains committed to a balanced cash deployment strategy focused on both debt reduction and share repurchases.

In terms of other financial guidance, the company, again, does not provide granular earnings guidance but has articulated a broad framework for full-year modeling expectations, including total master lease rent of ~$1.38 billion, interest expense of ~$720 million, capital expenditures of ~$675 million and cash taxes at 3%-4 of adj. EBITDA (unchanged; see Exhibit 1).

On Digital specifically, management continues to “see a business capable of driving 20% top-line growth with a 50% flow-through to EBITDA, which keeps us on track to achieve our long-term goals” (i.e., $500 million of adj. EBITDA in 2027 with additional upside in the out years).

Our base case fair value estimate for CZR remains $34 per share, based on a blended multiple of ~7.0x as well as projected net debt, including minority interest and leases capitalized at the corporate average and a fully diluted share count of ~200 million (see Exhibit #2).

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

MDT Launches its IPO Roadshow for MiniMed Group (i.e., the Diabetes Business); still plans a potential Tax-Free Split Off Later in 2026

On May 21, 2025, Medtronic plc (NYSE: MDT), a global healthcare technology company based in Ireland but headquartered in Minneapolis, announced the intent to separate its Diabetes business into a standalone public company. The transaction, which is “generally” expected to be tax-free to shareholders, was, at the time, indicated to preferably be accomplished via an initial public offering (IPO) and a subsequent split-off within the subsequent 18 months (i.e., late 2026), subject to customary conditions, including final Board & regulatory approvals. The parent, MDT, initially indicated that the deal was expected to be accretive to both gross and operating margins (by 50 bps & 100 bps, respectively) as well as EPS; management also plans to maintain its current dividend policy post-spin. As it relates to SpinCo (i.e. MiniMed Group), which accounted for ~7.5% of consolidated sales and ~3.5% of operating profit in F2025, management envisions a “scaled” and more focused player in intensive insulin management industry that will be “appropriately” capitalized.

More recently, the company, in a S-1 filing, has indicated that it is moving ahead with an initial public offering (IPO) of shares in its Diabetes business, which will be dubbed MiniMed Group and is expected to trade on the NASDAQ exchange under the ticker “MMED”.  In early March, the company intends to offer 28 million shares at an expected offering price of $25-$28 per share (with the 30-day option for underwriters to issue an “over-allotment” of an additional 4.2 million shares), implying a total raise of $700-$784 million (and an implied overall valuation of ~8 billion).  Following the IPO, Medtronic, the parent, will still control ~90.03% of the MMED (or ~88.7%, including the over-allotment provision), leaving the company the flexibility to potentially spin/split off at least 80.1% of the shares in a tax-free distribution to shareholders.  That said, per filings, the company has agreed to not pursue such a “divestment”, if at all, for a period of 180 days (i.e. September 2026) without the consent of its bankers (i.e., Goldman Sachs, Bank of America, Citi & Morgan Stanley).

For its part, over the last 5- and 10-year periods, MDT has traded at ~13.5x-14.0x forward EV/EBITDA and 17x-18.0x forward EPS while the broader medical device cohort, which could imperfectly include Baxter International (NYSE: BAX), Becton, Dickinson & Co. (NYSE: BDX), DexCom (NASDAQ: DXCM), GE Healthcare (NASDAQ: GEHC), and Stryker Corp. (NYSE: SYK), trade at ~14.5x and ~17x forward EBITDA and EPS, respectively (in ranges of 9.0x-19.5x and 11x-23.5x).  In terms of guidance, MDT’s F2026 guidance calls for organic sales growth of ~5.5% with diluted non-GAAP EPS of ~4.5% to $5.62-$5.66, including ~$185 million of tariff impacts. 

Applying a blended multiple of 13.5x, based on individual segment margin profiles, to projected F2026E EBITDA and accounting for net debt yields a preliminary, base case, sum of the parts valuation of ~$142 billion or ~$110.00 per share (based on a diluted share count of ~1.2895 billion).

NPKI tops consensus in 4Q 2025 & provides 2026E sales and adj. EBITDA guidance where the mid-points are ahead of consensus forecasts and imply year-over-year growth of 14% and 25%, respectively, driven by strong demand, fleet expansion & operating leverage; fair value estimate increased to ~$16.50 per share

Last night, after the market close, NPK International (NYSE: NPKI) reported 4Q 2025 results with sales from continuing operations up ~31% to $75.2 million (versus consensus of $68.8 million), driven by strength in demand for rentals of its core-composite matting products (particularly among utility & critical infrastructure customers), which were up ~35% during the quarter.  Adj. EBITDA increased ~27% to $21.7 million (compared with consensus of $18.7 million) while adj. EPS were $0.13 (compared with consensus of ~$0.10 and $0.08 in the prior year period).

For full-year 2025, sales rose ~27% to $277 million, driven by rental revenue growth of ~39%, while adj. EBITDA from continuing operations rose ~38% to $75.5 million (compared with ~$55 million in 2024) on ~200 basis points of margin expansion.  Adj. EPS from continuing operations were $0.42 (versus $0.41 in 2024).

The company ended 2025 with net debt of ~$12 million, including ~$5 million of cash and ~$17 million of debt.  Notably, during 2025, NPKI repurchased ~4% of its shares (at an implied price of ~$6.70 per share), as well as completed the $42 million acquisition of U.K.-based Grassform, which operates a composite mat fleet of ~20,000 (and generated ~$2 million of sales in 4Q 2025), in late-November 2025.

On the longer-term capital allocation front, management indicates that given the health of its balance sheet (and durability of its demand outlook) the company will continue to return capital to shareholders, invest in expanding its current matting fleet (where the cash-on-cash returns have historically been ~25%-plus) as well as evaluate small tuck-in acquisitions within its core critical infrastructure markets.  [Note: during 2025, NPKI generated an ~11% after-tax return on assets.]

In terms of guidance (see Exhibit 1 on page 2), management issued its full-year 2026E outlook, which currently calls for full-year 2026E sales of $305-$325 million, up ~14% year-over-year at the mid-point (and compares with prior consensus of $306 million) with adj. EBITDA of $88-$100 million, implying ~25% growth at the mid-point (and compares with prior consensus of ~$89  million). Anecdotally, the company indicated the expectation that rental & services revenue should grow in the “low-to-mid teens” for the full year.

Full-year 2026E capital spending is expected to be in the $45-$55 million range (compared with ~$47 million in 2025 and $43.5 million in 2024) excluding incremental expansion investment in its manufacturing capacity that would be aimed at capitalizing on what management describes as a “a multi-year capital cycle” for its utility customers as well as “sustained market conversion from timber to composite”.

Our base case fair value for NPKI (formerly NR) moves to $16.50 based on a 13x multiple of 2027E adjusted EBITDA and accounting for projected net debt.  [Note: NPKI changed its corporate moniker from Newpark Resources (old ticker NR) in December 2024 following the sale of its Fluid Systems (or oil field services) business and, subsequently, in late-May 2025 changed its Global Industry Classification Standard (GICS) classification to Industrials/Capital Goods/Trading Companies & Distributors (from oil field services).]

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