Honeywell International (HON) Q2 2026 earnings summary

Executive summary

• Completed the spin-off of Aerospace, establishing a pure-play automation company and supporting the Quantinuum IPO, with a significant gain recognized on deconsolidation.

• Achieved strong Q2 2026 results: 4% organic sales growth, 16% organic orders growth, and double-digit adjusted EPS growth, driven by Building Automation and Industrial Automation.

• Completed the acquisition of Johnson Matthey's Catalyst Technologies business, enhancing the Process Automation and Technology portfolio and recurring revenue base.

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

• Portfolio transformation completed, including pending divestitures of Productivity Solutions & Services and Warehouse & Workflow Solutions.

Financial highlights

• Q2 2026 consolidated sales were $9.7B, up 4% year-over-year; organic sales also up 4%.

• Segment margin expanded 100 bps to 19.0%; operating margin was 17.9% (down 190 bps).

• Adjusted EPS was $1.95 (up 10% year-over-year); reported EPS was $17.83, reflecting a one-time Quantinuum gain.

• Free cash flow rose to $500M–$1.25B, driven by higher income and working capital improvements.

• Orders grew 16% organically, with backlog up 9%–12% and book-to-bill above 1.1x.

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) and adjusted EPS forecast at $8.05–$8.35 (up 25–29%).

• Free cash flow for 2026 expected at ~$2.0B, with 90%+ conversion rate.

• Backlog increased to $38.0B as of June 30, 2026, supporting future revenue visibility.

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

• Guidance includes Johnson Matthey acquisition and planned divestitures.