Honeywell Technologies reported third-quarter 2026 sales of $5.0 billion on 22 October, up 1 percent as reported and 7 percent organically, in what it called its first quarter as a standalone company. Operating margin was 14.8 percent, up 640 basis points, and segment margin was 21.3 percent, up 370 basis points. Earnings per share were $2.40, down 20 percent because of a one-time gain a year earlier, and adjusted earnings per share were $2.27, up 34 percent. Free cash flow was $688 million, up 15 percent, with conversion of 95 percent. The company raised its full-year guidance for organic revenue, adjusted earnings per share and free cash flow.
The case for the quarter is that profit grew at several times the rate of sales. Operating income rose 79 percent and segment profit rose 23 percent, which Honeywell attributed to productivity, including the elimination of stranded costs from earlier spin-offs and divestitures, pricing that more than offset inflation, and volume. Organic growth of 7 percent was above the three-year target set at the company’s investor day in June, and backlog rose 7 percent to nearly $19 billion, excluding divested businesses. The new full-year guidance is sales of $20.0 billion to $20.1 billion, up from $19.8 billion to $20.0 billion, organic growth of 4 percent to 5 percent, up from 3 percent to 4 percent, and adjusted earnings per share of $8.40 to $8.45, up from $8.05 to $8.35.
The counter-argument is that reported results were weaker than adjusted ones and that sales growth was small. Reported sales grew only 1 percent, the gap between that and the 7 percent organic figure reflecting divestitures, and reported earnings per share fell 20 percent. Operating cash flow was $607 million, down 74 percent, because a year earlier the company received a one-time settlement from the termination of its agreement with Resideo. The guidance for free cash flow rose only from about $2.0 billion to about $2.1 billion, and operating cash flow is still expected to be about $2.1 billion, unchanged. Segment margin guidance of about 20.5 percent is at the previous high end of the range, and expansion is now expected to be up about 290 basis points. The midpoint of the adjusted earnings guidance rose to $8.425 from $8.20, about 2.7 percent, and expected adjusted earnings growth rose to 30 percent to 31 percent from 25 percent to 29 percent.
The report matters because Honeywell has been reshaped by spin-offs and divestitures, and this is the first set of results for the smaller company that remains. Chief Executive Vimal Kapur said the performance gives him confidence in its 2029 targets, and said that adjusted operating income rose at more than three times the rate of sales. The company has three segments, and its guidance suggests that it expects the improvement to hold through the rest of the year.
Honeywell’s first standalone quarter produced higher margins, a higher guidance and stronger adjusted earnings. The reported figures are a reminder of how many one-time items surround the change.