Honeywell International Inc.
HON · Nasdaq
Next quarter
Reports Oct 22, 2026.
Consensus is $2.16 EPS for Sep 2026 across 5 estimates, ranging $2.04 to $2.20.
HON Jun 2026
- 8.33%
- -1.27%
- $1.80
- $1.95
- —
- $9.72B
Reported results
- $9.72B
- 37.59%
- $2.24B
- 23.05%
- $5.68B
- $17.83
Highlights
- Adjusted EPS: Honeywell Technologies reported adjusted EPS of $1.95, 8.3% above the $1.80 consensus and up 10% from $1.77 a year ago.
- Pure-play transition: Honeywell completed the Aerospace spin-off on June 29, creating a standalone automation company; the quarter still includes Aerospace Technologies in consolidated results.
- Continuing operations: Consolidated sales rose 4% year over year to $9.72 billion, while segment profit increased 5% to $2.24 billion and segment margin expanded 30 basis points to 23.1%.
- GAAP distortion: Reported diluted EPS was $17.83, versus $4.33 a year ago, primarily because of a $6.63 billion gain from deconsolidating Quantinuum; Honeywell Technologies’ standalone GAAP EPS was $16.65.
- Orders and backlog: Consolidated orders increased 4% to support an approximately $38 billion backlog; excluding Aerospace, orders rose 16% and backlog was approximately $20 billion.
- Automation segments: Building Automation led performance with 9% organic sales growth and a 27.1% margin, while Process Automation and Technology declined 1% organically and margin fell 180 basis points to 22.1%.
- Raised outlook: Full-year organic sales growth guidance increased to 3%-4% from 2%-3%, adjusted EPS guidance increased to $8.05-$8.35 from $7.90-$8.30, and segment-margin expansion guidance increased to 250-290 basis points.
- Cash generation: Honeywell Technologies generated $563 million of operating cash flow and $456 million of free cash flow, compared with $187 million and $114 million, respectively, a year ago.
- Aerospace performance: The spun-off Aerospace business delivered $4.5 billion of sales, up 5% organically, with commercial aviation OEM sales up 17% and segment profit up 2% to $1.1 billion.
Analysis
Honeywell’s second quarter was a beat on the metric that now matters most for the post-spin company: Honeywell Technologies’ adjusted EPS was $1.95 versus $1.80 expected, an 8.3% surprise, and increased 10% from $1.77 a year ago. Standalone Honeywell Technologies sales rose 3% reported and 4% organically to $5.19 billion, while adjusted segment profit increased 9% to $985 million and segment margin expanded 100 basis points to 19.0%. On the preceding consolidated basis, sales of $9.72 billion and operating income of $1.74 billion were up from $9.14 billion and $2.13 billion in the first quarter, although the comparison is complicated by the June 29 Aerospace separation.
The headline GAAP EPS of $17.83 is not representative: it includes a $6.63 billion gain from Quantinuum’s deconsolidation, leaving $16.65 of standalone GAAP EPS. Operationally, Building Automation was the main strength, with 9% organic growth and margin expansion, while Process Automation remained the weak spot because of lower catalyst shipments and mix. Management raised full-year organic growth, margin and adjusted EPS targets, citing better second-half fundamentals, and expects 4%-6% organic growth in the second half. The outlook includes the July 17 acquisition of Johnson Matthey’s Catalyst Technologies business and planned divestitures of the warehouse and productivity businesses.
Aerospace separation
The quarter marked the completion of Honeywell’s separation into Honeywell Technologies and Honeywell Aerospace. Because the transaction closed on June 29, the reported second-quarter consolidated statements still include Aerospace, while Aerospace will be reported as discontinued operations beginning in the third quarter. The new Honeywell Technologies business had $5.19 billion of sales, approximately $20 billion of backlog and orders up 16%.
- Aerospace results: The former Aerospace Technologies segment generated $4.53 billion of sales, up 5% organically, and $1.13 billion of segment profit, up 2%.
- Commercial aviation: Original-equipment sales increased 17% as shipments recoupled to production schedules, while aftermarket sales rose 7% on installed-base demand.
- Separation accounting: Honeywell recognized $820 million of pre-tax divestiture-related costs and a $6.63 billion gain from Quantinuum deconsolidation in the consolidated quarter.
Automation operating performance
The standalone automation businesses produced solid underlying growth and margin expansion overall, but performance was uneven. Building Automation benefited from data-center and hospitality demand, pricing and volume leverage. Process Automation and Technology saw strong project orders, particularly in LNG, but reported lower sales because of a difficult catalyst comparison. Industrial Automation delivered organic growth despite reported sales being reduced by divestitures.
- Building Automation: Sales increased 10% reported and 9% organically to $2.00 billion; segment profit rose 13% to $542 million and margin expanded 90 basis points to 27.1%.
- Process Automation and Technology: Sales increased 4% reported but fell 1% organically to $1.68 billion; orders rose 24%, while profit fell 4% to $371 million and margin contracted 180 basis points to 22.1%.
- Industrial Automation: Sales declined 5% reported to $1.50 billion because of divestitures but grew 4% organically; profit was flat at $258 million and margin increased 90 basis points to 17.2%.
Raised 2026 outlook
Honeywell raised its operating outlook after the quarter, signaling confidence that the weaker process and industrial trends will improve in the second half. The revised outlook includes the Catalyst Technologies acquisition, which closed July 17, as well as the expected early-August closings of the Productivity Solutions and Services and Warehouse and Workflow Solutions divestitures.
- Sales: Full-year guidance is now $19.8-$20.0 billion, versus $19.9-$20.2 billion previously, while organic growth increased to 3%-4% from 2%-3%.
- Second half: Management expects 4%-6% organic sales growth in the second half, supported by improved process and industrial fundamentals.
- Profitability: Segment margin guidance increased to 20.1%-20.5%, representing 250-290 basis points of expansion versus 220-270 basis points previously.
- Earnings: Adjusted EPS guidance increased to $8.05-$8.35 from $7.90-$8.30, implying 25%-29% growth; operating cash flow and free cash flow targets remain approximately $2.1 billion and $2.0 billion.
Quantinuum deconsolidation
Quantinuum’s June 4 IPO materially changed the accounting profile of the quarter. Honeywell retained a 48% stake and now accounts for the investment under the equity method. The transaction generated a large one-time accounting gain, but the remaining investment also produced a $265 million equity loss in the quarter, making GAAP earnings a poor indicator of underlying automation performance.
- Gain: Honeywell recorded a $6.63 billion gain on deconsolidation, based on a retained-interest fair value of approximately $7.53 billion at the transaction date.
- Residual stake: The Quantinuum investment had a $7.26 billion carrying value at June 30 and a $9.42 billion fair value.
- Adjusted earnings: The deconsolidation gain contributed $15.87 per share to the consolidated adjusted-EPS reconciliation; standalone Honeywell Technologies adjusted EPS was $1.95.
Cash and portfolio actions
Cash generation improved sharply for the continuing automation businesses, although separation activity and balance-sheet restructuring continued to affect reported cash and debt. Honeywell Technologies also completed the acquisition of Johnson Matthey’s Catalyst Technologies business after quarter-end and is preparing to exit two held-for-sale businesses.
- Cash flow: Standalone operating cash flow rose to $563 million from $187 million a year ago, while free cash flow increased to $456 million from $114 million.
- Balance sheet: Consolidated cash was $8.75 billion at June 30, down from $12.49 billion at year-end, while total long-term debt and current maturities increased to $31.51 billion from $28.69 billion.
- Divestitures: Assets held for sale totaled $2.37 billion and included a cumulative $311 million valuation allowance increase during the first six months.
- Acquisition: Honeywell paid $1.75 billion for Johnson Matthey’s Catalyst Technologies business, which will be included in Process Automation and Technology.
