HONEYWELL INTERNATIONAL INC Q2 2026 earnings call

Honeywell's second quarter of 2026 marked its debut as pure-play Honeywell Technologies following the June 29 Aerospace spin-off, and the company delivered better-than-expected results that prompted a broad guidance raise. Organic sales grew 4%, led by Building Automation (+9%) and stronger-than-anticipated Industrial Automation (+4%), while Process Automation & Technology dipped 1% on a tough catalyst comparison but still beat plan. Orders were the standout, up 16% organically with double-digit short-cycle demand in every segment and PA&T orders up 24% (book-to-bill above 1.2), lifting backlog 9%. Segment margin expanded 100 basis points to 19% and segment profit rose 9% on productivity, volume leverage, and ahead-of-plan stranded-cost removal, driving adjusted EPS up 10% to $1.95 (up ~20% excluding a $0.16 tax headwind) and free cash flow to roughly $500 million. Management raised full-year organic growth to 3%-4%, segment-margin expansion to 250-290 basis points, and adjusted EPS to $8.20 at the midpoint (up ~27% year-over-year), reaffirming ~$2 billion of free cash flow at ~95% conversion. The quarter also completed the portfolio transformation, with the Quantinuum IPO (47% stake retained), the July 17 close of the Johnson Matthey Catalyst Technologies acquisition (~13x EBITDA), and the imminent close of two Industrial Automation divestitures (removing ~$400 million of 2026 revenue). Strategically, leadership emphasized a sharp second-half PA&T inflection driven by LNG and catalyst, a high-growth-vertical pivot (data centers, hospitality, healthcare, semiconductors) increasingly visible in orders, ~15% Forge software ARR growth, and a resilient, heavily localized Middle East business, framing 2027 as incrementally stronger than at the June Investor Day. On a consolidated GAAP basis (including the legacy Aerospace segment and a one-time gain on the Quantinuum deconsolidation), the company reported net sales of $9.72 billion, an operating margin of 17.9%, and diluted EPS of $17.83.

• The quarter marked Honeywell's debut as pure-play Honeywell Technologies, delivering 4% organic sales growth ahead of expectations, with better-than-anticipated performance in both Process Automation & Technology and Industrial Automation.
• Orders grew 16% organically with broad-based, double-digit short-cycle demand across every segment, lifting ending backlog 9% and producing a total-company book-to-bill of 1.1.
• Segment margin expanded 100 basis points to 19% and segment profit rose 9%, overcoming cost inflation and unfavorable mix through productivity, volume leverage, and ahead-of-plan stranded-cost removal.
• Adjusted EPS of $1.95 rose 10% (and would have been up 20% excluding a $0.16 tax headwind), while free cash flow grew considerably to roughly $500 million.
• Management raised the full-year 2026 outlook across the board: organic growth to 3%-4%, segment margin expansion to 250-290 bps, and adjusted EPS to $8.20 at the midpoint (up ~27% year-over-year).
• Portfolio transformation reached its finale, the Aerospace spin-off closed June 29, Quantinuum completed a successful IPO (47% stake retained), and the Johnson Matthey Catalyst Technologies acquisition closed July 17 at ~13x EBITDA.

• Process Automation & Technology sales declined 1% organically and its segment margin contracted 180 basis points to 22.1%, driven by a 6% aftermarket decline against a tough prior-year large-catalyst comparison and unfavorable mix.
• A higher adjusted effective tax rate created a $0.16 per-share headwind in the quarter, muting reported adjusted EPS growth to 10% from an underlying ~20%.
• The earlier-than-planned close of the Productivity Solutions & Services and Warehouse & Workflow Solutions divestitures removed roughly $400 million of 2026 revenue.
• Middle East conditions caused modest revenue loss in Q1 and Q2 and some collection issues (concentrated in March-April), and guidance assumes tensions persist at current levels with no improvement.
• Repositioning costs spiked in Q2 (now expected at ~$100-$110 million for the year) as the company consolidated its process-business footprint, and management flagged persistent inflation in electronics, memory, copper, and labor.