HON earnings analysis
What we found in HON's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Honeywell posted 4% Q2 sales growth to $9.719B, with Building Automation delivering 10% revenue growth and a 90-basis-point margin improvement, while backlog rose 12% to $38.008B. Profitability was mixed: gross margin contracted 170 basis points to 37.6%, and Process Automation and Technology's organic sales declined 1%. Reported EPS was substantially distorted by the $15.78-per-share Quantinuum deconsolidation gain, while first-half operating cash flow fell to $626M from $1.916B amid separation costs, working-capital use and litigation payments. The Aerospace Spin-Off and pending Industrial Automation divestitures materially change the company's future comparability and risk profile.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth led by Building Automation
- Q2 net sales increased 4% year over year to $9.719B. Building Automation was the principal growth contributor, with sales up $176M to $2.002B and segment profit up $63M to $542M.
- Building Automation margin expanded
- Building Automation's segment margin expanded 90 basis points to 27.1%, as higher demand lifted Products organic sales by $103M and Solutions organic sales by $59M.
- Backlog reached $38.008B
- Order backlog increased 12% year over year to $38.008B at June 30, including $18.435B in Aerospace Technologies, $9.258B in Building Automation, and $7.640B in Process Automation and Technology.
- Industrial margins improved despite divestiture
- Industrial Automation reported sales down 5% to $1.501B, but its segment margin rose 90 basis points to 17.2%; the $145M sales impact from the PPE divestiture more than offset $47M of higher organic Solutions sales.
- EPS includes a sizable deconsolidation gain
- Reported earnings were heavily affected by portfolio actions: Quantinuum deconsolidation contributed $15.78 per diluted share after tax, while higher divestiture-related costs reduced diluted EPS by $1.54.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Consolidated and process margins compressed
- Gross margin fell 170 basis points year over year to 37.6%, reflecting higher direct and indirect material costs and labor costs. Process Automation and Technology margin also declined 180 basis points to 22.1%.
- Cash conversion weakened materially
- First-half operating cash flow declined to $626M from $1.916B, while working-capital use was $863M. Management attributed the decline principally to roughly $800M of divestiture-related cash payments, plus $482M of net interest payments and a $375M Flexjet litigation settlement payment.
- Liquidity declined amid high debt load
- Cash, cash equivalents and short-term investments declined to $9.2B at June 30 from $12.9B at December 31, while total borrowings remained elevated at $33.988B. Moody's revised its outlook to negative on June 25, 2026.
- Process growth masks organic aftermarket decline
- Process Automation and Technology's reported revenue growth of 4% was acquisition-driven: Sundyne added $78M, while organic sales declined 1% as Aftermarket sales fell $77M on lower catalyst shipments.
- Held-for-sale divestitures carry execution risk
- Assets held for sale incurred a $311M impairment charge in the first half. The proposed Productivity Solutions and Services and Warehouse and Workflow Solutions sales are expected in Q3 2026 but remain subject to regulatory approvals and customary closing conditions.
- Macro and input-cost volatility remains elevated
- No separate updated Item 1A risk-factor disclosure was included in the supplied filing text. MD&A nonetheless identifies ongoing Middle East conflict, trade-policy changes and inflation as potential adverse factors; the company incurred approximately $0.4B of higher material and labor costs in the first half.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $17.83
- Gross margin
- 37.6%
- Operating margin
- 18.4%
- Segment
- Aerospace Technologies: $4.532B revenue, +5% YoY; segment profit $1.126B, +2%
- Segment
- Building Automation: $2.002B revenue, +10% YoY; segment profit $542M, +13%
- Segment
- Process Automation and Technology: $1.679B revenue, +4% YoY; segment profit $371M, -4%
- Segment
- Industrial Automation: $1.501B revenue, -5% YoY; segment profit $258M, +1%
What they said about what is next.
The 10-Q provides no quantitative revenue or EPS outlook. Management states operating cash flow is expected to meet operating cash needs for at least the next 12 months; the two Industrial Automation divestitures are expected to close in Q3 2026, subject to regulatory approvals and customary conditions.
The filing reads about the same as the one before it.
What came before.
- 10-Q · July 23, 2026
- Honeywell reported $9.714B of Q2 sales, up 4% year over year, with Building Automation the standout at 10% growth and a 90-basis-point margin improvement to 27.1%. However, consolidated gross margin fell 170 basis…
- 10-Q · April 23, 2026
- Honeywell reported modest revenue growth (total net sales change +2%) in Q1 2026 driven by pricing (+4%) and FX (+2%) while volume declined (−2%). Gross margin was largely stable at 38.7% (down 10 bps vs. Q1 2025) but…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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