Honeywell International (HON) Q2 2026 earnings summary

Executive summary

• Completed the spin-off of Aerospace and deconsolidation of Quantinuum, establishing a pure-play automation company and recognizing a $6.6B gain.

• Achieved 4% organic sales growth in Q2 2026, with strong performance in Building Automation and Industrial Automation.

• Closed the Johnson Matthey Catalyst Technologies acquisition, expanding the Process Automation & Technology portfolio in refining, petrochemicals, and renewables.

• Raised full-year outlook for organic growth, segment margin, and adjusted EPS, reflecting Q2 outperformance and improved second-half expectations.

• Launched new three-year financial targets through 2029, emphasizing organic growth, margin expansion, and recurring software revenue growth.

Financial highlights

• Q2 2026 sales were $9.7B (up 4% YoY), with organic sales up 4%; ex-Aerospace, sales were $5.2B (up 4% organic).

• Segment margin expanded 100 bps to 19.0% (ex-Aerospace), with overall segment margin at 23.1%.

• Adjusted EPS was $1.95 (up 10% YoY); reported EPS was $17.83, reflecting the Quantinuum gain.

• Free cash flow reached $1.25B in Q2 (up 43%), with $2.8B deployed year-to-date for share repurchases, dividends, and growth investments.

• Orders grew 16% organically, with backlog up 9% (ex-Aerospace backlog ~$20B, up 16%).

Outlook and guidance

• Full-year 2026 organic sales growth outlook raised to 3–4%, with segment margin guidance at 20.1–20.5% (up 250–290 bps YoY).

• Adjusted EPS guidance increased to $8.05–$8.35 (up 25–29% YoY); free cash flow expected at ~$2.0B.

• Three-year targets: 4–6% organic growth, ~15% annual recurring software revenue growth, ~24% segment margin, and >$3B free cash flow with 90%+ conversion.

• Guidance includes Johnson Matthey acquisition and planned divestitures of Productivity Solutions & Services and Warehouse & Workflow Solutions.

• Building Automation forecasted for mid-single-digit plus organic growth; PA&T to accelerate to high single digits in H2; Industrial Automation to continue low single-digit growth.