Industry Summary Articles

Honeywell announced results for the fourth quarter and full year 2025 and issued its outlook for 2026. The company also provided an update on anticipated timing for the spin-off of Honeywell Aerospace into an independent publicly traded company, now expected to be completed in the third quarter of 2026, ahead of the company's prior expectations.

Fourth-quarter sales growth was driven primarily by strong demand in the Aerospace and Building Automation segments. Orders grew 23% organically, led by double-digit growth in Aerospace Technologies and Energy and Sustainability Solutions (ESS), which drove a 4% sequential increase in backlog to over $37 billion.

Operating income decreased 35% and operating margin contracted 640 basis points to 10.2% primarily due to a one-time impairment charge related to the classification of the Productivity Solutions and Services (PSS) and Warehouse and Workflow Solutions (WWS) businesses as assets held for sale, and a one-time charge within the Aerospace Technologies segment related to the previously disclosed Flexjet-related litigation matters in the fourth quarter of 2025. Excluding these charges and other items, adjusted segment profit¹ increased 23%, or 2% excluding the impact of the Bombardier agreement ("BBD") signed in the fourth quarter of 2024⁴, to $2.3 billion led by growth in Aerospace Technologies and Building Automation, driving adjusted segment margin¹ expansion of 240 basis points (or margin contraction of 70 basis points ex. BBD⁴) to 22.8%.

EPS for the fourth quarter of $0.49 was down 72% primarily driven by the aforementioned one-time charges. Excluding these charges and other items, adjusted EPS¹ of $2.59 was up 17%, or down 3% ex. BBD⁴, driven by higher adjusted segment profit and a lower share count, partially offset by a higher effective tax rate. Finally, operating cash flow was $1.2 billion, down 38%, and free cash flow^1,5 was $2.5 billion, up 48%, or up 13% ex. BBD⁴.

For the full year, reported sales increased 8% and adjusted sales increased 9%, with organic sales¹ up 7% (or 6% organically ex. BBD⁴), exceeding the high end of original full year guidance by 2 points. Operating income decreased 6% and operating margin contracted 250 basis points, while adjusted segment profit¹ grew 11% (or 6% ex. BBD⁴) with adjusted segment margin¹ expansion of 40 basis points (or contraction of 40 basis points ex. BBD⁴) to 22.5%. Full-year EPS was $7.57, flat year over year, and full-year adjusted EPS¹ was $9.78, up 12% year over year (or 7% ex. BBD⁴). Operating cash flow was $6.1 billion, up 19%, and free cash flow^1,5 was $5.1 billion, up 20% (or up 7% ex. BBD⁴).

Management Commentary
"We concluded 2025 with strong results that exceeded the high end of our guidance for adjusted sales and adjusted EPS. Orders grew 23% stemming from robust demand in the Aerospace Technologies and Energy and Sustainability Solutions segments, including from our LNG acquisition that closed last year. As a result, we exited 2025 with a record backlog of over $37 billion which positions us well for 2026," said Vimal Kapur, chairman and CEO of Honeywell.

Kapur added, "During the quarter, we also made considerable progress on our portfolio optimization, with the spin off of Solstice Advanced Materials complete. Building on this momentum, we now expect the separation of our automation and aerospace businesses to be completed in the third quarter of 2026. In preparation, this quarter we established our go-forward segment structure for Honeywell, built on complementary business models that will drive cross-portfolio synergies and accelerate profitable growth over the long term, and announced the leadership team for Honeywell Aerospace. These actions all marked critical steps in our simplification journey. With strong management teams and clear strategies in place for both automation and aerospace, we are confident in our ability to deliver on our 2026 commitments," concluded Kapur.

Aerospace Technologies sales for the fourth quarter grew 21% organically¹ year over year, or 11% excluding the impact of the prior year's Bombardier agreement⁴, led by ongoing strength in commercial aftermarket and defense and space. Commercial aftermarket sales¹ increased 13% organically with double-digit growth in both business jet and air transport end markets. Defense and space sales rose 10% driven by sustained elevated global demand. Commercial original equipment growth accelerated from the prior quarter, supported by higher output from an improving supply chain. Orders and backlog both increased at a strong double-digit rate compared to the previous year. Adjusted segment margin¹ expanded 620 basis points to 26.5% as a result of the impact of the prior year's Bombardier agreement⁴. Excluding this prior year impact, adjusted segment margin¹ declined 60 basis points as commercial excellence and volume leverage were more than offset by cost inflation.

Industrial Automation sales for the fourth quarter grew 1% year over year on an organic basis¹ and 4% sequentially. Growth was driven by WWS, up 5% on steady conversion of our robust pipeline, continued strength in sensing, up 3% on strong tailwinds in industrial and aerospace and defense end markets, and a return to growth of 1% in PSS, which also delivered double-digit orders growth. Process solutions sales were flat on an organic basis, as strength in aftermarket services was offset by declines in measurement and controls products. Segment margin contracted 120 basis points year over year to 18.4% driven by cost inflation, partially offset by commercial excellence and benefit from the personal protective equipment (PPE) sale. Beginning in 2026, the core Process Solutions business will be reported as part of Process Automation and Technology (PA&T).

Building Automation sales for the fourth quarter increased 8% organically¹ year over year. Building solutions grew 9%, led by double-digit growth in services and building products grew 8%, highlighted by continued strength in North America and the Middle East. Orders increased both year over year and sequentially, driven by demand across both building solutions and building products. Segment margin expanded 20 basis points from the prior year to 27.0%, supported by commercial excellence and volume leverage partially offset by inflation.

Energy and Sustainability Solutions sales for the fourth quarter decreased 7% organically¹ year over year, driven by demand softness in petrochemical catalysts. Orders growth continued in UOP, led by strong demand in LNG and robust double-digit growth in refining and petrochemicals projects. Segment margin contracted 300 basis points to 23.7% driven by unfavorable mix from lower catalyst volumes and cost inflation. The advanced materials (AM) business is excluded from the ESS reportable business segment in the fourth quarter and full-year 2025 results following the spin-off of Solstice Advanced Materials and subsequent classification of AM as discontinued operations. Beginning in 2026, the businesses in ESS will be reported as part of Process Automation and Technology (PA&T).

2026 Outlook
Honeywell also announced its outlook for 2026. The company expects sales of $38.8 billion to $39.8 billion with organic¹ sales growth in the range of 3% to 6%. Segment margin² is expected to be 22.7% to 23.1%, with segment margin^2,6 expansion of 20 to 60 basis points. Adjusted earnings per share³ is expected to be $10.35 to $10.65, up 6% to 9%. The company expects operating cash flow of $4.7 billion to $5.0 billion. Free cash flow^1,5 is expected to be $5.3 billion to $5.6 billion, representing growth of 4% to 10% for the full year. A summary of the company's 2026 guidance can be found below. The company's outlook includes full-year expected results for Aerospace, PSS, and WWS, and does not incorporate the pending acquisition of Johnson Matthey's Catalyst Technologies business.

Portfolio Transformation
In the fourth quarter, Honeywell took steps to further optimize its portfolio and operations ahead of the planned separation of its automation and aerospace businesses now expected in the third quarter of 2026. On October 30, 2025, the company completed the spin-off of Solstice Advanced Materials, now trading on the Nasdaq Stock Market under the ticker 'SOLS' and, as a result, began reporting its AM business unit as discontinued operations. In November, the company announced the appointment of Jim Currier as President and CEO of Honeywell Aerospace and Craig Arnold as Chairman of the Honeywell Aerospace Board of Directors upon separation. In January 2026, the company announced Josh Jepsen as CFO of Honeywell Aerospace and made numerous other leadership appointments. In addition, following the strategic alternatives review completed in the fourth quarter, PSS and WWS businesses have been classified as held for sale. The intended sale allows Honeywell to focus on its core areas of automation expertise which are exposed to long-term secular growth drivers that further position the company as a global automation leader.

Settlement of Flexjet-Related Litigation Matters
On January 21, 2026, Honeywell and Flexjet announced that they have reached a comprehensive agreement to resolve their pending litigation and look forward to rebuilding the parties' commercial partnership. The agreement will resolve in full all pending claims among and between the parties, as well as related litigation involving StandardAero and Duncan Aviation. Simultaneously, and as a partial consideration for the resolution of the litigation, Honeywell and Flexjet have agreed to extend their aircraft engine maintenance through 2035. Honeywell and Flexjet look forward to working collaboratively going forward.

Conference Call Details
Honeywell will discuss its fourth-quarter results and full-year 2026 guidance during an investor conference call starting at 8:30 a.m. Eastern Standard Time today. A live webcast of the investor call as well as related presentation materials will be available through the Investor Relations section of the company's website (www.honeywell.com/investor). A replay of the webcast will be available for 30 days following the presentation.

To view the original press release, please click here.

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