Honeywell Technologies Adjusted EPS of $2.27 Up 34% as Sales Rise 7% Organically, Outlook Raised

Honeywell Technologies reported third-quarter 2026 results on Thursday, Oct. 22, in its first quarter as a standalone company, with adjusted earnings per share of $2.27, up 34% year over year and above the $2.17 average estimate, and sales up 1% reported and 7% organically to $4.994 billion.

Three different earnings figures describe this quarter, and they point in different directions for one reason. Adjusted EPS of $2.27 — a non-GAAP measure, as the company labels it — rose 34% from $1.70 a year earlier, driven by organic sales growth, higher segment profit and lower net interest expense; the $0.10 gap between the adjusted result and the average estimate is TickerGrove's calculation. Earnings per share from continuing operations, the reported figure, were $2.40, down 20% from $2.99, because the year-ago quarter included a one-time gain from the Resideo termination agreement. Total earnings per share, including discontinued operations, were $2.08, on total profit attributable to the company of $664 million, against $5.71 a year earlier on the same one-time comparison. The adjusted line is the cleanest read on the operating quarter; the reported decline is a comparison effect, not an operating deterioration.

Margins did the heavy lifting

Operating income rose 79% to $740 million, and operating margin expanded 640 basis points to 14.8%. Segment profit rose 23% to $1.062 billion, and segment margin expanded 370 basis points to 21.3%, led by Industrial Automation and Building Automation. The company attributed the gains to productivity, including the elimination of stranded costs related to prior spin-offs and divestitures, pricing actions that more than offset inflation, and volume leverage. Backlog increased 7% year over year to nearly $19 billion, excluding the Warehouse and Workflow Solutions and Productivity Solutions and Services divestitures completed in the third quarter.

Building Automation led; Process margins narrowed

Building Automation sales were $2.020 billion, up 8% reported and 8% organically, with segment profit of $546 million and a segment margin of 27.0%, up 30 basis points; building products grew 11% on fire and security strength, while building solutions grew 4%. Process Automation and Technology sales were $1.859 billion, up 16% reported and 8% organically, with segment profit of $412 million and a margin of 22.2%, down 210 basis points on project mix and dilution from the acquisition of Johnson Matthey's Catalyst Technologies business, as project sales grew 14% on liquefied natural gas and petrochemical work. Industrial Automation sales were $1.115 billion, down 23% reported but up 4% organically, with segment profit of $205 million and a margin of 18.4%, up 350 basis points, as 16% growth in solutions offset flat products, where double-digit sensing growth was largely offset by meter deployment deferrals in utilities.

Cash flow split on the same one-time comparison

Cash flow from operations from continuing operations was $607 million, down 74%, again because the year-ago quarter included the one-time Resideo termination settlement. Free cash flow — a non-GAAP measure, as the company labels it — was $688 million, up 15%, with free cash flow conversion of 95%, on higher operating income and lower capital expenditures. Chairman and Chief Executive Officer Vimal Kapur said in the release: “Honeywell Technologies delivered strong results across the business in our first quarter as a standalone company.” He added that 7% organic sales growth came in above the three-year target set at the company's June Investor Day, and that adjusted EPS rose 34%, well ahead of the company's expectations for the quarter.

The raised outlook carries one honest nuance

The company raised its full-year 2026 outlook — company expectations, not results. It now expects sales of $20.0 billion to $20.1 billion, up from $19.8 billion to $20.0 billion, with organic growth of 4% to 5%; adjusted earnings per share of $8.40 to $8.45, up from $8.05 to $8.35; segment margin of approximately 20.5%, at the previous high end; and operating cash flow and free cash flow of approximately $2.1 billion each, with free cash flow raised from approximately $2.0 billion. Reporting on Thursday put the analyst consensus for the year at adjusted earnings of $8.31 a share on sales of $20.15 billion — so the raised earnings guide sits above the consensus earnings figure while the sales guide midpoint sits below the consensus sales figure, a nuance worth keeping in view. What to watch next is whether organic growth holds in the 5% to 6% fourth-quarter range the company now expects, whether Process Automation margins recover as project mix normalizes, and whether the standalone cost program keeps expanding margins at the pace this quarter set.