Honeywell International Inc. (NASDAQ:HON) stock traded lower in premarket trading Thursday after the company reported mixed third-quarter results, with adjusted earnings beating Wall Street expectations while revenue fell short of estimates.
Earnings Beat Estimates, Revenue Falls Short
The company, which uses the Honeywell Technologies name following the separation of its aerospace business, reported adjusted earnings of $2.27 per share, beating the $2.17 consensus estimate.
Revenue rose 1% year over year to $4.994 billion, missing the $5.007 billion consensus estimate.
Organic sales increased 7%, while short-cycle organic orders rose 8%, excluding the businesses divested during the quarter.
GAAP earnings per share from continuing operations fell 20% to $2.40, primarily reflecting a one-time gain recorded in the prior-year period. Adjusted earnings rose 34% to $2.27 per share, supported by organic sales growth, higher segment profit and lower net interest expense.
CEO Vimal Kapur said organic sales growth exceeded the three-year target outlined at the company’s June Investor Day, with all three business segments contributing to the gains.
Backlog increased 7% year over year to nearly $19 billion, excluding the impact of the Warehouse and Workflow Solutions (WWS) and Productivity Solutions and Services (PSS) divestitures completed during the quarter.
Honeywell Technologies Reports Growth Across All Three Segments
Building Automation: Organic sales rose 8%, driven by an 11% increase in building products revenue amid strong demand for fire and security offerings. Building solutions sales grew 4%, supported by services. Segment margin expanded 30 basis points to 27%, as higher prices and volumes offset inflation.
Process Automation and Technology: Organic sales increased 8%, led by 14% growth in project sales, particularly in liquefied natural gas and petrochemicals. Aftermarket sales rose 4%, supported by refining demand. However, segment margin contracted 210 basis points to 22.2%, reflecting an unfavorable project mix and the expected impact of the Johnson Matthey Catalyst Technologies acquisition.
Industrial Automation: Organic sales grew 4%, driven by a 16% increase in solutions revenue, particularly in industrial measurement and utilities. Product sales were flat, as double-digit growth in sensing was offset by delayed utility meter deployments. Segment margin expanded 350 basis points to 18.4%, supported by pricing and productivity improvements.
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Operating Profit Jumps 79%
Honeywell’s operating income surged 79% year over year, while segment profit increased 23%, supported by productivity gains, higher prices and increased volumes.
Operating margin expanded 640 basis points to 14.8%, while segment margin improved 370 basis points to 21.3%.
Operating cash flow fell 74% to $607 million, primarily reflecting a one-time settlement related to the Resideo termination agreement in the prior-year period.
However, free cash flow increased 15% to $688 million, supported by higher operating income and lower capital spending. Free cash flow conversion reached 95%.
The company ended September with $5.69 billion in cash and cash equivalents.
Honeywell Technologies Raises Outlook
Honeywell raised its fourth-quarter adjusted earnings forecast to $2.42 to $2.47 per share from $2.28 to $2.43, exceeding analysts’ consensus estimate of $2.41.
The company maintained its quarterly revenue outlook of $5 billion to $5.1 billion, below Wall Street’s estimate of $5.15 billion.
For full-year 2026, Honeywell increased its adjusted earnings forecast to $8.40 to $8.45 per share from $8.05 to $8.35, topping the $8.30 consensus estimate.
The company also raised its annual revenue outlook to $20 billion to $20.1 billion from $19.8 billion to $20 billion. However, the revised range remains slightly below analysts’ estimate of $20.13 billion.
HON Price Action: Honeywell International shares were down 0.33% at $214.03 during premarket trading on Thursday, according to Benzinga Pro data.
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