Honeywell International raises 2026 adjusted EPS outlook as adjusted earnings rise 34%
Sales of $4,994 million rose 1% reported and 7% organic, while operating income climbed 79% to $740 million. Segment margin was 21.3%.
Key takeaways
- Honeywell International Inc. (HON) reported third-quarter 2026 sales of $4,994 million, up 1% from a year earlier, with 7% organic growth, in results released on Oct. 22. The company raised its full-year 2026 adjusted earnings per share guidance to $8.40 to $8.45 from $8.05 to $8.35.
Honeywell International Inc. (HON) said Thursday that third-quarter sales rose 1% to $4,994 million and operating income climbed 79%, and it raised its full-year 2026 outlook. The company describes itself as a global, pure-play automation company.
The results were furnished in a press release attached to a Form 8-K filing with the Securities and Exchange Commission.
Here's how the company did:
- Revenue: $4,994 million vs. $4,929 million a year earlier
- Operating income: $740 million vs. $413 million a year earlier
- Earnings per share, diluted, from continuing operations: $2.40 vs. $2.99 a year earlier
- Adjusted earnings per share: $2.27 vs. $1.70 a year earlier
- Free cash flow: $688 million vs. $599 million a year earlier
Organic sales growth was 7%. Divestitures in the prior period reduced reported growth by 8 percentage points, and acquisitions added 2 points, the company said.
Backlog rose 7% from a year earlier to nearly $19 billion. The figure excludes the Warehouse and Workflow Solutions (WWS) and Productivity Solutions and Services (PSS) divestitures completed in the third quarter.
Operating income rose 79%. The company attributed the increase to productivity, including the elimination of stranded costs tied to prior spin-offs and divestitures, pricing actions that more than offset inflation, and volume leverage.
Operating margin was 14.8%, up 640 basis points from 8.4%. Segment profit rose 23% to $1,062 million from $866 million, and segment margin was 21.3%, up 370 basis points from 17.6%.
Reported earnings per share fell 20% to $2.40 from $2.99. The company said the decline reflects a one-time gain from the Resideo termination agreement in the prior year.
Excluding that gain and other items, adjusted earnings per share rose 34% to $2.27. The company cited organic sales growth, higher segment profit and lower net interest expense.
Operating cash flow from continuing operations was $607 million, down 74% from $2,306 million. The prior year included a one-time settlement from the Resideo termination agreement.
Free cash flow, which the company defines as operating cash flow less capital expenditures and certain separation-related payments, rose 15% to $688 million. Free cash flow conversion was 95%, the company said.
Here's how the company's segments did during the quarter:
- Building Automation: sales of $2,020 million vs. $1,878 million, up 8% organically; segment margin 27.0% vs. 26.7%
- Process Automation and Technology: sales of $1,859 million vs. $1,598 million, up 8% organically; segment margin 22.2% vs. 24.3%
- Industrial Automation: sales of $1,115 million vs. $1,450 million, down 23% reported and up 4% organically; segment margin 18.4% vs. 14.9%
Building Automation sales grew 8% organically. Building products rose 11%, fueled by the fire and security businesses, while building solutions grew 4% on continued strength in services.
Process Automation and Technology project sales grew 14%, led by LNG and petrochemical projects. Aftermarket sales rose 4%, driven mainly by refining demand.
Segment margin in Process Automation and Technology contracted 210 basis points. The company attributed the decline to project mix and dilution from the acquisition of Johnson Matthey's Catalyst Technologies business.
Industrial Automation sales grew 4% organically, led by a 16% rise in solutions. Product sales were flat, as double-digit growth in sensing was offset by meter deployment deferrals in utilities.
Industrial Automation segment margin expanded 350 basis points to 18.4%, driven mainly by price and productivity actions, partly offset by inflation.
The company raised its full-year 2026 outlook for organic revenue, adjusted EPS and free cash flow. It now expects segment margin at the previous high end of its guidance range.
| Measure | Previous 2026 guidance | Current 2026 guidance |
|---|---|---|
| Sales | $19.8 billion to $20.0 billion | $20.0 billion to $20.1 billion |
| Organic sales growth | 3% to 4% | 4% to 5% |
| Segment margin | 20.1% to 20.5% | Approximately 20.5% |
| Segment margin expansion | 250 to 290 basis points | Approximately 290 basis points |
| Adjusted EPS | $8.05 to $8.35 | $8.40 to $8.45 |
| Adjusted EPS growth | 25% to 29% | 30% to 31% |
| Free cash flow | Approximately $2.0 billion | Approximately $2.1 billion |
The company expects fourth-quarter organic sales growth of 5% to 6%. Its adjusted EPS guidance of $8.40 to $8.45 represents a $0.23 increase from the midpoint of the previous range.
“Honeywell Technologies delivered strong results across the business in our first quarter as a standalone company,” Chairman and Chief Executive Officer Vimal Kapur said. “As a result of this strong performance, we are raising our full-year 2026 outlook, which gives me great confidence in our long-term strategy and our ability to deliver on our 2029 targets.”
Net income attributable to Honeywell International was $664 million, compared with $1,825 million a year earlier, the filing showed.