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.