Automation giant Honeywell Technologies has raised its full-year 2026 financial outlook after delivering stronger-than-expected third-quarter performance, with adjusted earnings per share surging 34% and organic sales growing 7% across all three business segments.

 

The automation company reported third-quarter sales of $4.99 billion, up 1% from $4.93 billion a year earlier, while organic sales growth reached 7%, driven by broad-based demand, pricing actions and continued momentum across its portfolio.

 

Adjusted earnings per share rose to $2.27 from $1.70 in the year-ago quarter. Operating income climbed 79% to $740 million, while segment profit increased 23% to $1.06 billion.

 

The company also reported a significant expansion in profitability, with operating margin rising 640 basis points to 14.8% and segment margin increasing 370 basis points to 21.3%.

 

Backlog climbed 7% year over year to nearly $19 billion, excluding the impact of the Warehouse and Workflow Solutions and Productivity Solutions and Services divestitures.

 

Honeywell Chairman and Chief Executive Officer Vimal Kapur said the results marked a strong start for the company as a standalone business, pointing to broad-based growth, cost reductions and improving exposure to high-growth markets.

 

“Honeywell Technologies delivered strong results across the business in our first quarter as a standalone company. Continued momentum across all three segments, together with our improving position in high-growth verticals, translated to 7% organic sales growth, above the three-year target set at our June Investor Day. 

 

"This performance, coupled with continued progress reducing fixed cost, enabled adjusted operating income to increase at more than three times the rate of sales, while adjusted EPS rose 34%, well ahead of our expectations for the quarter. 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,” said Chairman and Chief Executive Officer Vimal Kapur.

 

The revised outlook raises Honeywell’s expected full-year organic sales growth to 4%-5%, from the previous 3%-4% range. The company now expects revenue of $20.0 billion to $20.1 billion, compared with its earlier forecast of $19.8 billion to $20.0 billion.

 

Adjusted earnings per share are now projected at $8.40-$8.45, up from $8.05-$8.35 previously. The revised range implies adjusted earnings growth of 30%-31%, compared with the earlier forecast of 25%-29%.

 

Honeywell also raised its free cash flow forecast to approximately $2.1 billion from $2.0 billion, while maintaining its operating cash flow outlook at around $2.1 billion.

 

Segment margin is now expected to reach approximately 20.5%, the upper end of the company’s previous guidance, representing an expansion of roughly 290 basis points.

 

For the fourth quarter, Honeywell expects organic sales growth of 5%-6%.

 

All three segments recorded organic sales growth in the quarter, although reported revenue and profitability varied across businesses.

 

Building Automation led reported sales growth, with revenue increasing 8% to $2.02 billion. Organic growth also reached 8%, supported by an 11% increase in building products, particularly fire and security, and 4% growth in building solutions as services demand remained strong.

 

Segment profit rose 9% to $546 million, while segment margin edged up 30 basis points to 27%.

 

Process Automation and Technology posted the strongest reported revenue growth, with sales climbing 16% to $1.86 billion. Organic sales increased 8%, driven by 14% growth in project sales, particularly in liquefied natural gas (LNG) and petrochemicals, and 4% growth in aftermarket sales, supported primarily by refining demand.

 

Segment profit increased 6% to $412 million. However, segment margin contracted 210 basis points to 22.2%, reflecting project mix and dilution from the acquisition of Johnson Matthey’s Catalyst Technologies business.

 

Industrial Automation delivered 4% organic growth despite a steep decline in reported sales. Revenue fell 23% to $1.12 billion, reflecting the impact of divestitures. Solutions sales increased 16%, driven mainly by industrial measurement and utilities, while product sales were flat as double-digit growth in sensing was offset by delays in utility meter deployments.

 

Segment profit declined 5% to $205 million, but segment margin expanded 350 basis points to 18.4%, supported by pricing and productivity measures that partly offset inflation.

 

Despite stronger adjusted earnings and margins, Honeywell’s reported earnings per share declined 20% to $2.40 from $2.99 a year earlier.

 

The decline was primarily attributable to a one-time gain associated with the Resideo indemnification and reimbursement agreement termination in the prior-year quarter. Honeywell’s adjusted earnings measure excludes this and other specified items to provide a view of underlying operating performance.

 

Operating cash flow from continuing operations fell 74% to $607 million from $2.31 billion, largely because the prior-year period included the one-time Resideo settlement.

 

Free cash flow, by contrast, increased 15% to $688 million from $599 million. Adjusted free cash flow conversion reached 95%, reflecting higher operating income and lower capital expenditure.

 

The results highlight a distinction between Honeywell’s improving operating performance and the effects of significant one-time items on reported financial comparisons.

 

Honeywell’s revised guidance signals management’s confidence that growth, productivity gains and margin expansion can continue through the remainder of 2026.

 

The company expects to finish the year with stronger organic sales growth, higher adjusted earnings and improved free cash flow, while maintaining its target of approximately 20.5% segment margin.