Honeywell International Inc. (NASDAQ:HON) shares are trading higher on Thursday after the company raised the full-year adjusted EPS outlook.
The company reported second-quarter adjusted EPS of $4.52, missing the $4.81 analyst estimate. Meanwhile, revenue rose 4% year over year (Y/Y) to $9.719 billion, exceeding expectations of $9.506 billion.
Organic sales also increased 4% Y/Y in the quarter, and orders climbed 4% Y/Y, lifting backlog to about $38 billion.
Excluding Aerospace Technologies business, organic sales increased 4% Y/Y, and orders surged 16% Y/Y, leading to a backlog of around $20 billion.
Adjusted segment profit rose 5% Y/Y to $2.24 billion, while segment margin expanded 30 basis points to 23.1% in the quarter.
Operating cash flow increased to $1.28 billion from $1.06 billion a year earlier. Free cash flow rose 43% Y/Y to $1.25 billion in the quarter.
As of the end of the second quarter, the company’s cash and cash equivalents stood at $8.75 billion.
Segment Performance
Building Automation sales increased 9% Y/Y organically, with building products up 10% Y/Y led by strong fire business growth, and building solutions up 7% Y/Y led by services. Orders rose 13% Y/Y, supported by strong demand from data centers and hospitality. Segment margin expanded 90 bps Y/Y to 27.1% due to volume leverage and pricing.
Industrial Automation sales grew 4% Y/Y organically, on 10% Y/Y growth in solutions from utilities projects and warehouse backlog conversion. Products increased 1% Y/Y on sensing and industrial measurement demand. Segment margin improved 90 bps Y/Y to 17.2%, supported by pricing and productivity gains.
However, Process Automation and Technology sales declined 1% Y/Y organically on a 6% Y/Y decline in aftermarket sales. Orders increased 24% Y/Y on LNG strength, while segment margin contracted 180 bps Y/Y to 22.1% due to lower catalyst volumes and unfavorable mix.
Notably, Honeywell completed the spin-off of Aerospace Technologies business into a new public company, Honeywell Aerospace Inc. (NASDAQ:HONA) last month.
In the quarter, Aerospace Technologies’ organic sales increased 5% Y/Y, driven by 17% Y/Y growth in commercial aviation original equipment and 7% Y/Y growth in aftermarket demand. Results were impacted by material supply constraints, while defense and space sales were flat due to production timing. Segment profit rose 2% Y/Y to $1.1 billion, including a $40 million inventory obsolescence charge.
Outlook
The company raised its FY2026 adjusted EPS outlook to $8.05–$8.35 from $7.90–$8.30. However, it lowered sales guidance to $19.8 billion–$20.0 billion from $19.9 billion–$20.2 billion, below the $20.286 billion estimate.
For the third quarter, Honeywell expects adjusted EPS of $2.05–$2.20 (vs. $2.06 estimate) and revenue of $4.9 billion–$5.0 billion (vs. consensus of $5.253 billion).
For the fourth quarter, the company forecasts adjusted EPS of $2.28–$2.43 (consensus: $2.27) and sales of $5.0 billion–$5.1 billion (vs street view of $5.240 billion).
The company expects the Process Automation & Technology business to accelerate in the third quarter, led by higher project activity, catalyst shipments, and a strong backlog. Also, it projects Industrial Automation growth to improve in the second half, led by product demand.
HON Price Action: Honeywell Intl shares were up 5.49% at $245.78 at the time of publication on Thursday, according to Benzinga Pro data.
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