Honeywell raises 2026 outlook as third-quarter organic sales rise 7%; adjusted EPS up 34%

Honeywell Technologies (Nasdaq: HON) reported third-quarter sales of $4,994 million, up 1% from a year earlier and up 7% on an organic basis, and raised its 2026 outlook, according to its results release dated October 22.

What happened

Operating income rose 79% to $740 million, and the operating margin was 14.8%, up 640 basis points. Segment profit rose 23% to $1,062 million and the segment margin, a non-GAAP measure, was 21.3%, up 370 basis points. Adjusted earnings per share, which exclude one-time items, rose 34% to $2.27 from $1.70. Reported earnings per share from continuing operations fell 20% to $2.40 from $2.99, which the company attributed "primarily to a one-time gain from the Resideo termination agreement in prior year."

Free cash flow was $688 million, up 15% and free cash flow conversion was 95%. Operating cash flow fell 74% to $607 million for the same prior-year reason. Backlog rose 7% to "nearly $19 billion," excluding businesses it has divested.

By segment, Building Automation sales rose 8% to $2,020 million, Process Automation and Technology sales rose 16% to $1,859 million, and Industrial Automation sales fell 23% to $1,115 million, though organic growth in that segment was 4%.

Chairman and Chief Executive Officer Vimal Kapur said the quarter was "our first quarter as a standalone company" and that organic growth of 7% was "above the three-year target set at our June Investor Day."

The new outlook

Honeywell now expects 2026 sales of $20.0 billion to $20.1 billion, up from $19.8 billion to $20.0 billion, with organic growth of 4% to 5%, up from 3% to 4%. Adjusted earnings per share are expected at $8.40 to $8.45, up 30% to 31% from 2025, against $8.05 to $8.35 before. The company expects segment margin of about 20.5%, free cash flow of about $2.1 billion, up from about $2.0 billion, and operating cash flow of about $2.1 billion, unchanged.

What to watch

The outlook assumes organic growth of 5% to 6% in the fourth quarter. The company said it would discuss the results on a call at 8:30 a.m. Eastern time on October 22.