Honeywell International (HON) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales rose 2% year-over-year to $9.1B–$9.14B, with 7% organic orders growth and backlog reaching $38.3B, despite supply chain and geopolitical challenges.

• Portfolio transformation advanced with announced sales of Productivity Solutions & Services (PSS) and Warehouse & Workflow Solutions (WWS), and the Aerospace spin-off planned for June 29, 2026.

• Net income from continuing operations was $795M, down from $1.30B in Q1 2025, reflecting higher impairment, debt extinguishment, and divestiture costs.

• Reaffirmed full-year 2026 outlook and robust demand in aerospace and automation.

• Portfolio actions, including the Aerospace spin-off and business sales, are subject to board and regulatory approvals.

Financial highlights

• Segment margin expanded 90 bps to 23.3%, with margin expansion in all four segments.

• Adjusted EPS rose 11% to $2.45, while reported EPS dropped 35% to $1.29 due to impairment and separation costs.

• Free cash flow was $56M–$100M, down year-over-year due to timing of collections, inventory headwinds, and litigation settlement.

• Returned $1.8B to shareholders via $1B in share repurchases and $800M in dividends.

• Gross margin for Q1 2026 was 38.7%.

Outlook and guidance

• Q2 2026 organic sales growth expected at 2–4%, with full-year organic growth outlook at 3–6%.

• Segment margin guidance for FY 2026 at 22.7–23.1%, with adjusted EPS forecasted at $10.35–$10.65, up 6–9%.

• Free cash flow for FY 2026 projected at $5.3B–$5.6B.

• Aerospace separation and divestitures expected to close in H2 2026, subject to regulatory approvals.

• Outlook assumes Middle East conflict persists through Q2, impacting revenue by $100–$150M.