MODG reports 3Q 2025 results, with Topgolf’s same venue sales inflecting positive for the first time since 1H 2023; 2025E Sales & Adj. EBITDA Guidance, ex-divestitures, Raised (for both TopGolf & the company overall)

Last night, after the market close, MODG reported 3Q 2025 results, which, excluding the impact of the sale of the apparel brand Jack Wolfskin (JW) for ~$290 million in June 2025, demonstrated a sales increase of ~3% (or down ~8%, including JW) to $934 million (compared with consensus of $905.5 million) along with a ~4% decline in adj. EBITDA to $144.6 million (compared with consensus of $88 million).  Importantly, Topgolf’s same venue sales inflected positive during 3Q 2025, albeit at just 1%, for the first time since 1H 2023, which along with guidance is a dynamic that should fuel optimism in near-term trading.

The company ended 3Q 2025 with net debt of $2.226 billion (versus $2.54 billion in the prior period), implying a leverage ratio of 3.8x (versus 4.6x in 3Q 2024) and a REIT adjusted leverage ratio of 1.4x (compared with 2.4x).

On a consolidated basis, the company raised its full-year 2025E top-line guidance to $3.9-$3.94 billion (from $3.8-$3.92 billion) with adjusted EBITDA of $490-$510 million (up from $430-$490 million).  At Topgolf specifically, the company expects sales of $1.77-$1.79 billion (increased from $1.71-$1.77 billion), on a full-year same venue sales decline in the “mid-single digits” (previously a 6%-9% decline) with adjusted EBITDA of $295-$305 million (up from $265-$295 million).

On the dual track (spin/sale) process for TopGolf front, which we remind investors was announced in September 2024 with an initial expectation of completion in late-2025 but has been more recently pushed out until 2026 due to the departure of former CEO Artie Starr (who assumed the helm at Harley-Davidson) management commented on this morning’s conference call, “we’re continuing to be fully engaged in that and committed. We continue to evaluate both a spin and a sale. Unfortunately, no update on timing at this point. The timing was impacted by the CEO transition, but I feel good about that process. And it’s probably also worth mentioning that the improved results and outlook should be positive for value creation, whatever the final outcome is.”

Relatedly, we would note that in late-October it was reported by Bloomberg that the company was exploring the potential sale of its Callaway golf equipment brand, which is a development that comes in the context of the sale of its Jack Wolfskin athletic apparel brand to ANTA Sports for $290 million in cash in June 2025 (which, by our calculation, valued the business at ~21x 2025E adj. EBITDA and 0.8x sales).

Our base case fair value estimate (FVE) for MODG remains $11.00 per share, reflecting a blended multiple of ~8.5x multiple on our 2026E adjusted EBITDA of ~$523.5 million and net debt of ~$2.2 billion (see Exhibit 1 on page 2).

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

NewDD Reports Roughly “In-Line” Standalone 3Q 2025 Results; Adjusts 2025E Guidance on Currency Fluctuations; Announces a $0.20 per share Quarterly Dividend as well as a $500 Million Accelerated Share Repurchase (ASR) Program (Amid a Wider $2 Billion Buyback Authorization); Maintain BUY & $48 per share Fair Value Estimate (FVE)

This morning, before the market open, DuPont de Nemours, Inc. (NYSE: DD), which completed the tax-free spin-off of Qnity Electronics  (NYSE: FTV) on November 3^rd, reported 3Q 2025 results, its first as a standalone entity, demonstrating net sales growth of ~7% to $3.1 billion, on ~5% growth at Industrial and ~11% at Electronics, with operating EBITDA of ~$840 million and adjusted EPS of $1.09. 

The company updated its full year 2025E post-spin standalone guidance, which calls for sales of $6.84 billion with adjusted operating EBITDA of $1.6 billion, implying a ~23.4% margin, and adjusted EPS of $1.66 (compared with $1.43 in the 2024; see Exhibit 1 on page 2).

Notably, the company also formally declared its initial quarterly dividend of $0.20 per share (in line with the company’s previously articulated payout ratio target of 35%-45%), which is payable on December 15^th to shareholders of record on November 28^th.

As well, the company announced a new $2.0 billion share repurchase authorization (or ~5% of the outstanding shares at current levels), on which the company intends to “imminently” deploy $500 million toward a so-called accelerated share repurchase program (ASR) to be executed at prevailing market prices.

In terms of the medium-term financial outlook (i.e., 2025E-2028E; see Exhibit 2 on page 2), the company, on a consolidated basis, continues to project post-spin compound annual (CAGR) organic growth of 3%-4%, reflecting ~5% growth at Healthcare & Water along with ~2% growth at the Diversified Industrials segment, implying 2028E sales of ~$7.5-$7.75 billion, by our calculation, with 150-200 basis points of adj. operating EBITDA margin expansion, driven by leverage to sales growth (~110 bps), standard cost reductions (~40 bps) and productivity improvements in excess of inflation (~0-50 bps), implying adj. 2028E EBITDA of ~$1.9 billion.  Adj. EPS is expected to improve at a compound annual rate of ~8%-10%, not including incremental capital allocation activities, over the next three years, implying 2028E EPS, again, by our calculation, of ~$2.50-$2.65 (as well as that every ~1% growth in sales seemingly yields nearly 2% of EPS growth).  Anecdotally, with respect to cadence, management expects top-line growth, ex-acquisitions, to be relatively linear and that margin improvement, if anything, is likely more heavily weighted to the first two years of its forecast. 

All told, as stated in conjunction with the spin-off transaction’s completion earlier this week that while we see upside for both the post-spin DD and Qnity entities it appears to our mind that momentum aside NewDupont (post-spin DD), the comparatively slower growing, at least from a top-line perspective (i.e., 3%-4%), and lower-margin (i.e., ~23.5%) concern, albeit with less capital intensity (i.e., cap ex at 3% of sales and free cash flow conversion of ~90%), higher levels of committed capital returns (i.e., a dividend payout ratio of 35%-45%), as well as a lower leverage profile (i.e., less than 2.0x), is the more attractively mis-priced security on a relative basis.

Our fair value estimate for post-spin DuPont (NYSE: DD) remains $48 per share based on a ~13.5x blended multiple on 2026E EBITDA while accounting for corporate costs and projected net debt (see Exhibit 3 on page 3).

Please see The Spin-Off Report dated October 7, 2025 and Updates from 10/16/2025 and 11/4/2025 for more information.

RAL Tops Consensus in 3Q 2025; Commentary Seemingly Supports Our View of a Gradual Cyclical Recovery at T&M (with On-Going Strength at S&S); Shares Still Look Attractively Priced Off Trough Earnings (as well as RAL’s Overall Exposure to Secular Growth Areas, such as Electrification and Space & Defense)  

Last night, after the market close, Ralliant Corp. (NYSE: RAL), which completed its tax-free separation from Fortive Corp. (NYSE: FTV) in late June 2025, reported 3Q 2025 results with sales roughly flat year-over year (but up 5% sequentially) to $529 million (compared with consensus of $521 million and guidance of $513-$527 million) with adjusted EBITDA of $107.9 million (versus consensus of $101.5 million and $140.9 million in 3Q 2024), on a margin of ~20.4% (down 610 bps year over year but ahead of management’s 18%-20% guidance). Adjusted EPS were $0.60 (compared with consensus of $0.57, guidance of $0.53-$0.60 and $0.95 in the prior period). Free cash flow (FCF) was $126.6 million (versus consensus of ~$57 million and $131.9 million in 3Q 2024).

By segment, Sensors & Safety Systems (S&S) segment sales, which enjoys myriad secular tailwinds (e.g., grid monetarization and defense & space) and comprises ~60% of sales, were up 11% year over year (and 5% sequentially) to $326 million with adj. EBITDA up 9% to $94 million (on a 25 basis point deterioration in margin to 28.7%) while sales in the more cyclical/seasonal (as well as volume sensitive) Test & Measurement segment fell 14% year over year (but were up 6% sequentially) to $203 million with adjusted EBITDA of $28 million (down nearly 50%) on a margin of 13.8% (which was down 960 bps year over year but up 480 bps sequentially).

RAL ended 3Q 2025 with net debt of $884.4 million, including $264 million in cash and debt of $1.486 billion, implying a net leverage ratio (per its credit agreement) of ~1.9x (within the company’s long-term target of 1.5x-2.0x).  The company expects to make a ~$35 million tax-related payment (the last) to its former parent in 4Q 2025 and is poised to pay out a $0.05 per share dividend (or $5.7 million) on December 23^rd; as well, the company remains authorized to repurchase ~$200 million worth of shares (roughly 4% of the outstanding shares at current prices).

In terms of guidance, management provided a 4Q 2025E outlook (see Exhibit 1 on page 2) calling for consolidated quarterly sales of $535-$550 million (compared with current consensus of ~$544 million), implying a low-to-mid digit sequential increase, with an adj. EBITDA margin of 20%-21% (roughly consistent with 3Q 2025) and adj. EPS of $0.62-$0.68 (versus current consensus of $0.66).  For context, 4Q 2025 guidance is based on several underlying assumptions, including that sales will continue to “gradually improve” with “consistent” growth in S&SS and T&M sales trends “in line” with normal seasonality, along with interest expense of $16-$18 million, an adj. effective tax rate of 17%-19%, and a diluted share count of 113.5-114.0 million.  Free cash flow conversion is expected to be “<95%” in the December quarter (but still greater than 100% for the full year). 

While not yet providing specific 2026E guidance, management articulated some perspective on the seasonality/cadence of standalone RAL’s business, including the fact that March-quarter is typically the trough of annual results (with a mid-to-high single digit sequential top-line decline compared with the December-quarter along with a ~200-300 basis point sequential decline in the adj. EBITDA margin.  Post spin-off interest expense is trending at ~$16 million per quarter and annual capex is expected to be ~2%-3% of sales, given on-going capacity expansion plans, looking into 2026.

In the medium-term, the company has articulated the expectation (at its 2025 Investor Day) that post-spin Ralliant would post “through cycle” compound annual top-line growth of 3%-5% (comprised of ~3% organic growth along with a ~1% tailwind from potential tuck-in M&A) with a consolidated margin profile in the “low-to-mid 20%s”, including a T&M margin in the “mid-teens to low-20%s” and an S&S margin in the “high-20%s”.  In terms of cash flow, working capital and capital expenditures are expected to comprise less than 10% and roughly 2% of sales, respectively, resulting in a 95%-plus free cash flow (FCF) conversion rate and more than $1 billion of cumulative FCF generation through 2028E (see Exhibit 2 on page 3).  Again, the company’s near-term capital allocation priorities remain focused on shareholders returns, primarily share repurchases along with a “modest” dividend, and lastly on opportunistic tuck-in acquisitions.

Recall, as part of our upgrade (see the note dated 9/18/2025) we highlighted that a portion of RAL’s underlying business, primarily within the Test & Measurement (T&M) segment, is in the midst of a relatively prolonged (but flattening to inflecting) cyclical downtrend (from both a top-line & margin perspective); in that context, while shares have outperformed since our recommendation the stock is still down mid-teens on an absolute basis  (and mid-to-high 20%s on a relative basis) since the spin-off and that with shares trading at ~13x 2026E EV/EBITDA and ~16.5x 2026E EPS, a notable discount to all relevant peers, we continue to see shares as attractively priced, particularly off what we view as trough earnings and ahead of what is expected to be cyclical recovery in looking into 2026E-2027E (following a roughly two-year period of consecutive quarters of year-over-year organic sales declines that have left industry-wide T&M volumes ~25% below 2023 levels).  

On a comparative basis, the higher-margin Sensors & Safety Systems (S&S) segment, which we note accounts for ~60% of consolidated sales at RAL, has posted relatively steady (albeit modest) core growth over the last several years. So while we are admittedly only modeling a relatively gradual slope of top-line improvement looking in 2026E (as opposed to a more V-shaped recovery) it strikes us that the risk to our numbers is likely to the upside, particularly given the depth/length of the downturn at T&M as well RAL’s exposure to secular demand trends, including grid modernization/new power demand, space & defense and electrification, among others (see Exhibit 3 on page 5).  Moreover, considering that incremental margins on organic growth have historically (i.e., pre-spin) ranged in the 45%-50% area management’s current 30%-35% commentary/target could prove somewhat conservative.

All told, our fair value estimate (FVE) for post-spin Ralliant Corp. (NYSE: RAL) remains $54 per share reflecting a ~15.5x 2026E EV/EBITDA multiple (or ~20.5x 2026E EPS) and accounting for corporate costs and projected net debt (see Exhibit 4 on page 4).

Please see the Spin-Off Report dated June 12, 2025, and Updates from 6/30/2025, 8/12/2025 and 9/18/2025, for more information.

TRS to sell its Aerospace business to Tinicum (and Blackstone) for $1.45 billion (or ~18x TTM EBITDA) 

Today, TRS announced an agreement to sell its TriMas Aerospace business, which produces highly engineered fasteners, bolts, rivets, screws, and machine parts for the aerospace industry under brands including, among others, Monogram, Allfast, Mac Fastners, RS, Weldmac, Martinic and TFI Aerospace, to Tinicum L.P. (with Blackstone as a minority investor) for $1.485 billion (versus our admittedly conservative after-tax estimate of ~$955 million), implying a purchase price of ~18x trailing-twelve month EBITDA (compared with our conservative forward multiple of 10.5x). The deal is expected to close by the end of 1Q 2026. 

Tinicum L.P., which according to its website generates ~$3.1 billion in annual sales and has a combined enterprise value to nearly $9 billion (along with 13,500 employees) is a privately-held platform company that is organized around four sectors: 1) Engineered Products; 2) Industrial Distribution & Services; 3) Industrial Software & Technology; and 4) Specialty Infrastructure.

Post-closing, NewTriMas will be focused on its core packaging business and has established a Strategic Investment Committee to evaluate both potential accretive/strategic acquisitions as well as other options to return cash to shareholders and/or bolster its balance sheet.

On the latter front, TRS ended 3Q 2025, with net debt of $373.4 million, including $33.6 million of cash & debt of ~$373.4 million, and a net leverage ratio of 2.2x (compared with 2.4x at the end of 2Q 2025, 2.6x at year-end 2024 and its 4.0x covenant) as well as no significant maturities until 2029.

While we ascertain more granular information on the expected after-tax proceeds, our base case fair value estimate for TRS remains $39 per share, reflecting a blended multiple of ~10x on 2026E adj. EBITDA as well as projected net debt (with bull & bear cases of $44 and $35 per share, respectively; see Exhibit #2 on page 2).

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

DuPont Completes the Tax-Free Separation of Qnity Electronics; Rate Post-Spin DD and Q at BUY, Based on Initial Trading Indications

Distribution: On November 1, 2025, DuPont de Nemours (NYSE: DD) completed the tax-free spin-off of 100% of Qnity Electronics, Inc. (NYSE: Q).  Shareholders of record received one share of Q for every two shares owned of DuPont (DD). 

Regular-way Trading & Indexation: Shares of Q (as well as post-spin DD) commence so-called “regular way” trading this morning (11/3). Dupont will remain a member of the S&P 500 index while Qnity is set to join the benchmark (replacing Eastman Chemical), before the start of trading on November 4, 2025, which likely mutes potential index-related dislocations in initial trading.

When-issued Trading: For perspective, in the so-called “when-issued” trading market shares of Qnity (Q-WI) closed on 10/27, the first day of trading, at ~$94 per share (versus our initial $96 fair value estimate) on volume of 70K shares. In subsequent days, the shares fluctuated between ~$93.50-$95.00 per share (on average volume of ~160K per day) before closing on Friday (10/31) at $95.00 per share (on volume of more than 280K shares) with initial pre-market indications pointing to a relatively orderly opening price of $94-$95 per share.  For its part, when-issued trading in post-spin DuPont (DD-WI) closed on 10/27 at ~$34 per share (versus our initial $48.50 fair value estimate) on volume of ~81K shares.  In subsequent days, the shares traded in a similarly tight range between $34-$45 per share (on average daily volume of ~255K shares) before closing on 10/31 at $34.19 (on volume of ~445K shares) with initial pre-market indications also pointing to a relatively orderly open around ~$34.50-$35 per share.

Pre- & Post-spin Recommendations: Following our initial pre-spin BUY recommendation earlier this month, shares of consolidated/pre-spin DD appreciated ~5% (outperforming the S&P 500 and Russell 2000 by ~1.5% and ~4.0%, respectively).  In terms of our post-spin recommendation, our sense of investor sentiment/enthusiasm, while clearly anecdotal, decidedly sides with Qnity (Q), the pre-spin Electronics business, which represents the relatively higher growth, higher margin business (i.e., 6%-7% and ~30%, respectively), albeit with a higher expected leverage profile (i.e., closer to 3.0x), as well as a lower committed shareholder return profile (i.e., a ~10% dividend payout ratio and a free cash flow conversion ratio of ~65%) and a non-investment grade (i.e., BB+) credit rating.  In that context, it does appear that our perception is, to some degree, being tangibly expressed in initial trading indications (i.e., $94-$95 per share); that said, we continue to see excess medium-term upside for shares amid both cyclical (i.e., wafer starts) and secular (i.e., materials content) tailwinds for what will now be a pure-play semiconductor materials business. On the other hand, at least based on initial trading indications, it appears that NewDupont (post-spin DD), the comparatively slower growing, at least from a top-line perspective (i.e., 3%-4%), and lower-margin (i.e., ~23.5%) concern, albeit with less capital intensity (i.e., cap ex at 3% of sales and free cash flow conversion of ~90%), higher levels of committed capital returns (i.e., a dividend payout ratio of 35%-45%), as well as a lower leverage profile (i.e., less than 2.0x), may perhaps be the more attractively priced security, again, based on initial trading indications.  That said, all told our initial take is that upside exists on both sides of the transaction; thus, we maintain BUY ratings on both post-spin DD and Q (see Exhibit 1 on page 3).  (Again, post-spin DD will remain in the S&P 500 index and Q is set to join the index before the start of trading tomorrow, November 4^th.)

Also, please see The Spin-Off Report dated October 7, 2025 for more information.

NPKI reported solid 3Q 2025 results & modestly raised full-year guidance for the 3^rd time this year; net cash balance continues to grow while funding share repurchases and high-return investments in rental fleet expansion (due to higher expected demand in 2026); fair value estimate increased to $13.50 per share

Last night, after the market close, NPK International (NYSE: NPKI) reported 3Q 2025 results with sales from continuing operations up ~56% to $68.8 million (versus consensus of $57.8 million), driven by strength in demand for rentals of its core-composite matting products (particularly among utility & critical infrastructure customers).  Adj. EBITDA more than doubled to $15.4 million (in-line with consensus) on 530 basis points of margin expansion to 22.3% (despite incremental transportation costs due to surges in customer demand) while EPS were $0.07 (in-line with consensus).

The company ended 3Q 2025 with net cash of $26.1 million (up ~$10 million sequentially), including ~$35.6 million of cash and ~$9.5 million of debt.  Notably, the company repurchased 0.4 million shares for $3.4 million (or an implied price of ~$8.45 per share), which, we note, comes after repurchasing ~3% of the outstanding shares during 1H 2025.   For context, NPKI has ~$92 million remaining on a $100 million buyback authorization (which at current prices equates to ~10% of the outstanding shares).

On the longer-term capital allocation front, management indicates that with a growing net cash balance it will continue to repurchase shares and that it is also “actively evaluating several core inorganic opportunities that increase our market coverage, value and relevance to customers in key critical infrastructure markets”. 

In terms of guidance (see Exhibit 1 on page 2), management increased (for the 3^rd time) its full-year 2025E outlook, which currently calls for full-year 2025E sales of $268-$272 million (up from its previous and initial guides of $250-$260 million and $230-$250 million, respectively) with adj. EBITDA of $71-$74 (up from its previous and initial targets of $68-$74 million and $60-$70 million, respectively).

Anecdotally, the company indicated the expectation that rental & services revenue should grow in the “mid-20%s” for the full year (versus its prior commentary of “high-teens to low-20%s”), with product sales up in the “high-teens” (versus its prior commentary of 10%-15%).

Full-year 2025E capital spending is expected to be in the $45-$50 million range (up from $35-$40 million previously) with the increase in response to a greater than expected demand outlook for 2026.  For context, NPKI has increased the size of its composite matting rental by fleet by ~13% year-to date (compared with ~14% in 2024) and, anecdotally, management responded to a query on this morning’s conference call as to whether the capex spend on fleet expansion should track relatively proportionally with top-line growth by indicating, “over the long-term, it should” albeit with potential short-term variability (up or down) from fluctuations in utilization. [Note: the cash-on-cash returns from fleet investment have historically been ~25%-plus.]

While not providing specific 2026E guidance, the company stated on its earnings call that amid “a multi-year capital cycle for our utility customers and sustained market conversion from timber to composite” (along with its capacity expansion plans) NPKI should be able to “continue to deliver double-digit growth in 2026 and beyond”.

Our base case fair value for NPKI (formerly NR) moves to $13.50 based on a 12.5x multiple of 2026E adjusted EBITDA, while accounting for corporate costs and projected net debt/cash (see Exhibit 2).  [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, more recently, 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.

Honeywell Completes the Tax-Free Separation of Solstice Advanced Materials; Rate Post-Spin HON at BUY & Post-Spin SOLS at NEUTRAL 

Distribution: On October 29, 2025, at 12:01 a.m. (ET), Honeywell International Inc. (NYSE: HON) completed the tax-free spin-off of 100% of Solstice Advanced Materials Inc. (NASDAQ: SOLS).  Shareholders of record received one share of SOLS for every four shares owned of Honeywell. 

Regular-way Trading & Indexation: Shares of SOLS (as well as post-spin HON) commence so-called “regular way” trading this morning.  Honeywell will remain in the Dow Jones Industrial Average (DJIA) while Solstice is set to join the S&P 500 (as of today, October 30^th), which likely mutes potential index rotation to some degree we suspect that shares may take a period to find/accumulate its core underlying shareholder base as a standalone.  To that end, we discern that, by and large, the Advanced Materials business (now SOLS) was not necessarily core to the average HON owner’s investment thesis.

When-issued Trading: For perspective, in the so-called “when-issued” trading shares of Solstice (SOLSV) opened on 10/20 at ~$58 per share (versus our initial $63 fair value estimate) before closing at $48.40 per share (on volume of nearly 275.75K shares) In subsequent days, the fluctuated between ~$46-$50 per shares (on average volume of ~330K per day) before closing last night (10/29) at $49.25 per share (on volume topping 7.5 million shares) with initial pre-market indications pointing to an open price in the low-$50s (i.e., $51.50 per share).

Pre- & Post-spin Recommendations: Following our initial pre-spin BUY recommendation earlier this month, shares of consolidated/pre-spin HON appreciated ~5% (outperforming the S&P 500 and Russell 2000 by ~1.5% and ~4%, respectively.  In terms of our post-spin recommendation, while our estimates suggest upside for both the post-spin concerns (see Exhibit 1), based on initial pre-market trading indications, from a tactical perspective we lean toward the suggestion, as mentioned earlier, that as a standalone SOLS, while a high-quality, stable and diverse materials company, may face some initial trading volatility, in terms of index rotation and a churn in the underlying shareholder base, which likely affords new investors the option to avoid (take advantage of) any initial trading dislocations.  On the other hand, we think the post-spin parent is the larger, more attractive investment play both in the near-term as well as looking into 2026-2027 when additional, perhaps more impactful, portfolio actions, including the potential monetization of PSS and WWS, which will simplify the future standalone Automation company, as well as the planned spin-off of the Aerospace business and the latent potential for an initial public offering (IPO) of Quantinuum, represent other incremental milestones in a potentially significant multi-year re-rating process for legacy HON. 

Update 2025E pre-spin guidance/Post-spin reporting changes: As of January 1, 2026, the post-spin parent (HON) will report in four segments: 1) Aerospace Technologies, which is still on track to be spun-off in a tax-free transaction in 2H 2026; as well as 2) Building Automation; 3) Industrial Automation; and 4) Process Automation & Process Technology

Also, please see The Spin-Off Report dated October 14, 2025 for more information.

As expected, CZR posts weak 3Q 2025 results, exacerbated by “hold” challenges; management remains optimistic on 4Q 2025 & 1H 2026 results overall and maintains its Digital outlook/targets; intends to continue to use FCF to reduce debt as well as repurchase shares (particularly in 4Q 2025, at current levels)

Last evening, after the market close, CZR reported 3Q 2025 consolidated sales roughly flat year over year to $2.869 billion (compared with consensus of $2.894 billion), as a ~9.5% decline in Las Vegas revenue was roughly offset by growth in Regional, Digital and M&B.  Adj. EBITDA fell ~11.5% to $884 million (versus consensus of ~$939.85 billion), in part driven by “hold” challenges (i.e., unfavorable outcomes on both table games and sports betting outcomes, particularly in the NFL).  On a “hold” normalized basis, management indicated that adj. EBITDA would have been $927 million.

In terms of capital allocation, during the quarter the company fully redeemed $546 million of 8.125% notes due 2027 and through October has repurchased 3.9 million shares (nearly 2% of the shares outstanding) for ~$100 million (at an implied purchase price of ~$25.65 per share) along with 13.2 million shares (~6% of the outstanding share count) for $391 million since mid-2024 (at an implied purchase price of ~$29.60). Management remains committed to a balanced cash deployment strategy between debt reduction and share repurchases; that said, on its earnings call management anecdotally added that at current levels the company intends to be “active” on the buyback front in 4Q 2025.

In terms of guidance, the company does not provide granular earnings guidance but has articulated a broad framework for full-year modeling expectations, including total master lease rent of ~$1.35 billion (unchanged), interest expense of ~$790 million (up from ~$775 million), capital expenditures of ~$675 million (up from ~$650 million (at the mid-point) and cash taxes at 3%-4 of adj. EBITDA (unchanged; see Exhibit 1 on page 2).

Anecdotally, coming out the seasonally slow/leisure-dominated September-quarter, the company remains optimistic, particularly regarding its “group” business (i.e., conferences and conventions), in 4Q 2025 and 1H 2026.

On Digital specifically, management continue 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 2026 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 ~208 million (see Exhibit #2 on page 2).

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

TRS tops consensus in 3Q 2025 and increases full year 2025E guidance; strategic review remains on going (but is nearing a conclusion) under new leadership; fair value moves to $39 per share

Today, TRS reported 3Q 2025 consolidated sales up ~17.5% to $269.3 million (compared with consensus of $262.0 million), primarily driven by a ~46% increase in sales at the Aerospace segment.  Adj. segment EBITDA rose ~28% to $44.2 million (versus consensus of ~$46 million) while adj. EPS rose ~42% to $0.61 (compared with consensus of $0.56). Year-to-date, adj. free cash flow (FCF) was ~$44 million (compared with ~$12.5 million in the prior year period).

TRS ended 3Q 2025, with net debt of $373.4 million, including $33.6 million of cash & debt of ~$373.4 million, and a net leverage ratio of 2.2x (compared with 2.4x at the end of 2Q 2025, 2.6x at year-end 2024 and its 4.0x covenant) as well as no significant maturities until 2029.

In terms of capital allocation, while no shares were repurchased during 3Q 2025 the company has repurchased 106,200 shares for ~$2.3 million in the first nine months of 2025 (at an implied purchase price of ~$21.65 per share). TRS remains authorized to repurchase an additional ~$65.4 million worth of shares.

On the guidance front, in conjunction with 3Q 2025 results TRS increased its consolidated full-year 2025E guidance, which now calls for consolidated sales growth at the upper-end of its previous 8%-10% forecast (up from its initial 4%-6%) and adj. EPS of $2.02-$2.12 (up from the previous outlook of $1.95-$2.00 and the initial guide of $1.70-$1.85; see Exhibit 1 on page 2), implying ~25% year-over-year growth at the mid-point.

On its 3Q 2025 earnings call, relatively new CEO (appointed in June 2025) Thomas Snyder, formerly of Silgan Holdings (NYSE: SLGN), indicated that the previously announced portfolio review remains on-going but that the company is “well into” its evaluation and “actively working on bringing the review to its conclusion” with a keen eye on “making decisions that serve the best interest” of all stakeholders. 

Our base case fair value estimate for TRS increases is $39 per share, reflecting a blended multiple of ~10x on 2026E adj. EBITDA as well as projected net debt (with bull & bear cases of $43.50 and $34 per share, respectively; see Exhibit #2 on page 2).

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