Honeywell Raises Annual Outlook After Third-Quarter Adjusted EPS Rises 34%
Key Facts
Honeywell Technologies raised its financial outlook for 2026 after third-quarter adjusted earnings per share rose 34% year on year, according to the company's earnings release. Adjusted earnings per share reached $2.27, compared with $1.70 in the same period of 2025. The company attributed the improvement to organic sales and segment profit growth, along with lower net interest expense. It now expects full-year adjusted earnings per share of between $8.40 and $8.45, compared with a previous range of $8.05 to $8.35. It also raised its annual sales target range to between $20.0 billion and $20.1 billion, from $19.8 billion to $20.0 billion in its July guidance. The improved outlook included annual free cash flow, which it now targets at about $2.1 billion, compared with about $2.0 billion previously.
Third-quarter sales totaled $4,994 million, compared with $4,929 million in the year-earlier quarter, a reported increase of 1%, according to the earnings release. Segment profit margin rose to 21.3% from 17.6% a year earlier, an expansion of 370 basis points. Reported earnings per share from continuing operations, meanwhile, fell 20% to $2.40, compared with $2.99 in the third quarter of 2025. Honeywell attributed the decline primarily to the gain related to the Resideo termination agreement in the comparison year. On cash flow, free cash flow rose to $688 million during the quarter, compared with $599 million in the same period a year earlier. Free cash flow growth reached 15%, with the company saying higher operating income and lower capital expenditure supported the increase.
The earnings presentation showed backlog rising 7% year on year to about $19 billion, excluding the divested warehouse and productivity businesses. In its energy business, the company recorded more than a billion dollars in additional orders since the first quarter of 2026, alongside investment in refining, petrochemicals and liquefied natural gas. Process Automation and Technology project sales grew 14% during the third quarter. The company attributed this growth to the conversion of backlog for liquefied natural gas and petrochemical projects into sales. Industrial Automation orders also rose 16%, excluding the divested businesses, driven by sensing and utilities.
The results mark Honeywell's first quarter as a standalone automation company following the spinoff of its aerospace business and the sale of the two non-core businesses. The aerospace business began operating as an independent public company named Honeywell Aerospace, under the ticker HONA, on June 29, 2026. Vimal Kapur said in the statement announcing the completion of the Productivity Solutions and Services sale that the closing represented "the final step toward completing our transformation into a pure-play automation company." On acquisitions, Honeywell completed its purchase of Johnson Matthey's Catalyst Technologies business on July 17, 2026, according to its second-quarter earnings release. The company's shares also underwent a one-for-two reverse stock split, which took effect on June 29, 2026.
For the fourth quarter of 2026, Honeywell is targeting sales of between $5.0 billion and $5.1 billion, according to its quarterly earnings presentation. It expects adjusted earnings per share of between $2.42 and $2.47 for the same period. The company lists strong demand in the Middle East among the expected drivers of order growth next quarter, alongside India and Asia Pacific. It also plans to eliminate all remaining stranded costs associated with the spun-off businesses by the end of 2026. Its investor relations website scheduled the third-quarter earnings conference call for October 22, 2026, at 8:30 a.m. Eastern Daylight Time.