Honeywell Aerospace — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 sales were $4.644 billion, representing a 2% increase year-over-year on both reported and organic bases.
• Net income for the quarter was $737 million, up 13% from $654 million in the prior year period.
• Adjusted EBIT was $1.161 billion, up 1% year-over-year from $1.151 billion, including an approximate $50 million net benefit from IEEPA tariff refunds and new standalone costs.
• Backlog grew to $19.324 billion at quarter-end, a 12% increase from $17.255 billion in the prior year.
• Trailing twelve-month orders increased 9% year-over-year.
• Cash flow from operations was $668 million for the quarter.
• Free cash flow was $500 million for the quarter.
• Earnings per share (diluted) were $2.29; adjusted earnings per share were $2.21.
• Long-term debt stood at $15.853 billion as of September 26, 2026, compared to $4 million as of December 31, 2025.
• Cash and cash equivalents increased to $1.558 billion from $213 million at the end of 2025.

Guidance and Future Outlook:

• Full-year 2026 organic sales growth guidance remains unchanged at 4% to 5%.
• Full-year 2026 pro forma standalone adjusted EBIT guidance was narrowed to $4.375 billion to $4.425 billion (previously $4.35 billion to $4.45 billion).
• Full-year 2026 pro forma standalone adjusted earnings per share guidance was raised to $7.85 to $8.00 (previously $7.60 to $7.90).
• Second half 2026 free cash flow guidance was raised to $1.2 billion to $1.4 billion (previously $1.0 billion to $1.4 billion).
• Management anticipates higher sales and output growth in 2027 and beyond, driven by robust demand and supply chain improvements.
• Year-over-year growth guidance for full-year 2026 was updated to 1% to 2% (previously flat to 3%).

Business Segments and Product Lines:

• Electronic Solutions: Sales grew 4% reported and 5% organic to $1.784 billion; segment adjusted EBIT increased 11% to $564 million.
• Engines and Power Systems: Sales increased 3% reported and 2% organic to $1.515 billion; segment adjusted EBIT decreased 16% to $250 million due to unfavorable mix and higher costs.
• Control Systems: Sales were flat at $1.345 billion on both reported and organic bases; segment adjusted EBIT increased 2% to $382 million.
• Commercial Original Equipment: Sales rose 7% reported and 8% organic to $690 million.
• Commercial Aftermarket: Sales grew 2% to $2.126 billion, driven by healthy underlying demand but limited by mechanical component availability.
• Defense and Space: Sales expanded 1% to $1.828 billion, led by CAES and Civitanavi acquisitions, partially offset by lower international volumes and the wind-down of a non-aerospace restricted government program.
• The company secured over $20 billion in new wins year-to-date, including:
  • U.S. Air Force advancement of the SkyShot 1600 engine to Preliminary Design Review for the Autonomous Collaborative Platform program.
  • Over $2 billion in new awards for advanced navigation and RF systems for missiles and munitions programs.
  • An agreement with the City of Phoenix Aviation Department to study Surface Alert (SURF-A) technology for ground vehicle operators at three local airports.
• A 300,000 square foot expansion of the Tempe, Arizona manufacturing facility was announced, expected to open in late 2028.

Market and Competitive Landscape:

• Demand for solutions remains robust with 9% orders growth over the last 12 months.
• Supply chain constraints from a small number of mechanical suppliers are currently limiting output growth; management is deepening commitments to enduring partnerships and qualifying additional material sources.
• The company operates as an independent public company following its spin-off from Honeywell International Inc. on June 29, 2026.

Risks and Challenges:

• Risks include supply chain disruptions, constraints on raw materials and components, and changes in their price or availability.
• Risks related to the spin-off from Honeywell International Inc., including the ability to realize anticipated benefits of operating independently.
• Risks associated with government spending, changes in demand for commercial aerospace and defense products, and geopolitical factors.
• The impact of tariffs, including the amount and timing of any tariff refunds.
• The ability to declare and pay dividends in future periods.
• Adverse outcomes of litigation matters and government proceedings.

Management Commentary and Tone:

• CEO Jim Currier stated the company delivered results above expectations in its first quarter as a standalone company, increasing sales and adjusted EBIT sequentially and year-over-year.
• Management highlighted encouraging signs from pacing suppliers and progress in qualifying additional material sources.
• The Board's decision to declare a dividend underscores visibility into durable free cash flow growth and is a key component of the capital allocation strategy.
• The tone reflects confidence in accelerating investments to drive greater output and better serve customers.

Other Key Points:

• The Board declared an inaugural quarterly cash dividend of $0.40 per share on common stock.
• The dividend is payable on December 4, 2026, to shareholders of record as of November 13, 2026.
• The company employs more than 36,000 people globally and supports over 10,000 customers.
• The company is listed on Nasdaq under the ticker HONA.
• Transaction costs for the quarter were $18 million, down significantly from $143 million in the prior year period.
• Environmental expenses were $19 million, down from $258 million in the prior year period.