Laman Zeynalova
Deputy Editor-in-Chief Read more
BAKU, Azerbaijan, October 22. Honeywell Technologies has raised its full-year 2026 forecasts for organic sales growth, adjusted earnings per share (EPS) and free cash flow following strong third-quarter results.
The company reported third-quarter sales of $5 billion, up 1% year-on-year on a reported basis and 7% organically, driven by “broad-based strength across all three segments,” pricing measures and continued demand in key markets. Backlog increased 7% year-on-year to nearly $19 billion, excluding the impact of the divestitures of Warehouse and Workflow Solutions (WWS) and Productivity Solutions and Services (PSS) in the third quarter. Operating income rose 79%, while segment profit increased 23%, supported by productivity improvements, pricing measures that more than offset inflation, higher volumes and the elimination of stranded costs associated with previous spin-offs and divestitures.
Operating margin expanded by 640 basis points to 14.8%, while segment margin increased by 370 basis points to 21.3%, led by the Industrial Automation and Building Automation businesses. Reported EPS declined 20%, primarily due to a one-time gain from the Resideo termination agreement in the previous year. Excluding the impact of this and other items, adjusted EPS increased 34% year-on-year to $2.27, reflecting organic sales growth, higher segment profit and lower net interest expense.
Operating cash flow fell 74% to $607 million, mainly due to the one-time settlement associated with the Resideo termination agreement in the prior-year period. Meanwhile, free cash flow increased 15% to $688 million, with a conversion rate of 95%, supported by higher operating income and lower capital expenditures.
Performance by business segment
Building Automation sales grew 8% organically year-on-year. Building products revenue increased 11%, driven by the fire and security businesses, while building solutions sales rose 4% on continued strength in services. Segment margin expanded by 30 basis points to 27%, benefiting from volume growth and pricing measures that offset inflation.
Process Automation and Technology sales also increased 8% organically. Project sales rose 14%, supported by continued growth in LNG and petrochemical projects, while aftermarket sales increased 4%, primarily driven by refining demand.
The segment's margin contracted by 210 basis points, as expected, reflecting the project mix and the dilutive effect of the acquisition of Johnson Matthey's Catalyst Technologies business.
Industrial Automation sales grew 4% organically, led by 16% growth in solutions, primarily driven by industrial measurement and utilities. Product sales remained flat year-on-year, as double-digit growth in sensing was largely offset by industry-wide delays in utility meter deployments.
The segment's margin expanded by 350 basis points to 18.4%, primarily reflecting pricing and productivity measures, partly offset by inflation.
Updated 2026 guidance
Honeywell said it was raising its full-year outlook for organic revenue, adjusted EPS and free cash flow, while expecting segment margin to reach the upper end of its previous guidance range.
The company now expects full-year sales of $20 billion to $20.1 billion, with organic sales growth of 4% to 5%. Fourth-quarter organic sales growth is projected at 5% to 6%. Full-year segment margin is forecast at approximately 20.5%, “at the upper end of its previous guidance range,” representing an expansion of around 290 basis points.
Adjusted EPS is expected to reach $8.40 to $8.45, an increase of 30% to 31% year-on-year and $0.23 above the midpoint of the previous guidance range. Honeywell also expects both operating cash flow and free cash flow to reach approximately $2.1 billion for the full year.