Amrize Spinoff: A North American Building Block to Watch

The June 23, 2025, spinoff of Holcim's North American business into Amrize (ticker: AMRZ) marks a pivotal moment for investors seeking exposure to a sector poised for growth. With a $3.4 billion debt financing package, clear financial targets, and a market-leading position in a $2 trillion annual construction economy, Amrize emerges as a compelling investment opportunity. Yet, near-term volatility and valuation discrepancies present a “buy on dip” scenario for contrarian investors. Here's why the pieces are falling into place for this new industrial giant.

### Post-Spinoff Performance: A Strong Foundation
Amrize's first quarter 2025 results, though not fully detailed numerically, align with Holcim's reported stability in North America. Despite weather-related headwinds early in the year, the business recovered momentum by March, securing an aggregates acquisition and maintaining its grip on over 230 infrastructure projects. The company's Q1 financial statements, filed under U.S. GAAP as part of its Form 10 Registration Statement, underscore its operational resilience.

Critically, Amrize's $3.4 billion bond offering—oversubscribed fourfold—signals investor confidence. The debt structure, including a 10-year tranche at 5.4%, reflects Amrize's investment-grade credit ratings (BBB+/Baa1) and its ability to fund growth without over-leveraging.



### Market Dynamics: North America's Construction Boom
The U.S. and Canadian construction markets are primed for growth, driven by infrastructure modernization, manufacturing reshoring, and housing demand. Amrize's dominance in cement (North America's largest producer), aggregates (top 1 or 2 in 85% of markets), and commercial roofing (second-largest player) positions it to capitalize on these trends.

Holcim's 2024 data provides a baseline: Amrize generated $11.7 billion in revenue, with EBITDA margins at 27.2%—up 220 basis points since 2021. Its mid-term targets—5–8% annual revenue growth and 8–11% EBITDA growth—are achievable given its scale and strategic acquisitions (35 since 2018, adding $3.8B in annualized revenue).



### Valuation Discrepancies: A Buying Opportunity
Amrize's shares, trading at a valuation multiple below peers like Martin Marietta (MLM) or Vulcan Materials (VMC), present a discount to its growth trajectory. Using Holcim's (HOLN) post-spinoff valuation as a proxy (up 12% since spinoff speculation began in 2023), Amrize's standalone value could be underestimated by the market.

Consider this:
- EV/EBITDA: Amrize's 2024 EV/EBITDA of ~8x is below the 10–12x range for its peers.
- Free Cash Flow: Amrize aims for >50% conversion of adjusted EBITDA to free cash flow, targeting $8B cumulative by 2028—a metric that could attract yield-seeking investors.

The bond market has already priced in Amrize's strength: its 10-year notes at 5.4% are competitive with the U.S. 10-year Treasury yield (4.5%), a testament to its creditworthiness.

### Strategic Advantages: A Diversified Play
Amrize's customer mix (28% infrastructure, 49% commercial, 23% residential) and geographic reach (1,000+ sites, 19,000 employees) mitigate regional risk. Its Building Envelope segment—focused on commercial roofing and insulation—benefits from a cyclical rebound in non-residential construction.

CEO Jan Jenisch's focus on innovation, including ECOPact low-carbon cement, aligns with ESG trends, reducing regulatory risks and attracting sustainability-conscious investors.

### Risks and Volatility: Navigating the Near-Term
No investment is without risks. Weather disruptions, such as 2025's delayed spring construction season, could temporarily pressure Q2 results. Additionally, Amrize's transition to independence—from separating supply chains to establishing governance—may introduce execution risks.

Holcim's stock, which has risen 8% since May's shareholder approval of the spinoff, may also face volatility if Amrize underperforms initially. However, the two companies' complementary geographies (Holcim focuses on Europe, Australia, and Latin America) should allow them to thrive independently.

### Investment Thesis: Buy on the Dip
Amrize's valuation discount, coupled with its robust balance sheet and clear growth targets, makes it a “buy on dip” candidate. Investors should aim to accumulate shares if post-spinoff volatility drags AMRZ below $40 (based on Holcim's pre-spin share price and 1:1 ratio).



Recommendation:
- Buy: Accumulate AMRZ shares on dips below $40, targeting a 12–18 month horizon.
- Hold: If AMRZ trades between $40–45, wait for confirmation of Q3 results.
- Avoid: Overpaying above $45 until free cash flow targets are met.

### Conclusion
Amrize's spinoff is more than a corporate restructuring—it's a play on North America's construction renaissance. With a fortress balance sheet, diversified revenue streams, and a management team proven to execute, Amrize is positioned to outperform peers. While near-term volatility is inevitable, the long-term thesis is as solid as the concrete it produces. For investors willing to look past short-term noise, Amrize offers a rare combination of value and growth in an infrastructure-heavy economy.