Honeywell International Inc. Q1 FY2026 earnings call

• Portfolio transformation progress: Aerospace spinoff expected to complete on June 29th, 2026; successfully raised $20 billion of aerospace spin financing; aerospace announced supplier framework agreement with US Department of War; amended agreement to acquire Johnson Smithy Catalyst Technologies business; signed agreements to sell productivity solution and services to Brady Corporation and warehouse and workflow business to American industrial partners. • First quarter results: Delivered strong results with 7% organic orders growth, backlog over $38 billion, book to bill above 1.1, 11% adjusted earnings growth, margin expanded 90 basis points to over 23%. • Process automation and technology outlook: Middle East conflict impacted revenue, but demand for differentiated process technology remains strong, secured over $2 billion in project wins, process technology orders increased double-digit, backlog up 22%. • Aerospace growth trajectory: Strong aerospace demand driving sustained orders growth, mechanical supply chain had temporary constraints but output improved in March, maintaining aerospace guidance of high single-digit organic sales growth.

Building Automation: Sales up 8% organically, led by new products and high-growth data center healthcare verticals; orders up 9% with double-digit growth in projects, services, and fire products. Aerospace: Sales grew 3% organically, with commercial demand and global defense needs supporting growth, but impacted by temporary supply chain headwinds; segment margin expanded 20 basis points. Industrial Automation: Sales up 1% organically, solutions grew 7% led by services demand, products declined slightly but sensing was strong; orders up 10%. Process Automation Technology: Sales down 6% organically due to timing delays and Middle East conflict; orders momentum continued with double-digit growth in first quarter, backlog up 22%.

• Second quarter: Anticipates organic sales growth of 2% to 4%; segment margin in range of 22.2% to 22.5%; adjusted EPS expected to be $2.40 at midpoint. • Full year: Maintaining organic growth outlook of 3% to 6%; strength to continue in building automation, industrial automation to recover in Europe and China, process automation technology roughly flat for the year with strong second half, aerospace full-year guide of high single-digit growth remains intact; maintaining full-year segment margin guidance of 22.7% to 23.1%; free cash flow guidance unchanged.

• Geopolitical uncertainty, including conflict in Middle East, which drove revenue impact, affected process automation technology due to energy exposure, and caused timing delays in refining catalyst reloads and automation service upgrades. • Temporary mechanical supply chain constraints in aerospace at start of 2026 led to slowdown in January and February, although output improved in March.

Q: Nigel Ko asked about supply chain challenges in aerospace and 2Q margins.

A: Jim Currier said supply chain was acute transitory issue with key suppliers, recovery seen in March; Mike Stepniak discussed margin expansion framework, mixed pressure in second quarter.

Q: Julian Mitchell asked about PAT organic sales ramp and commercial aero aftermarket.

A: Vimal Kapoor said backlog strong, demand pent-up; Jim Currier said no impact in Q1, negligible potential in Q2, growth constrained by supply.

Q: Sheila Cayolo asked about commercial aftermarket in Middle East and aerospace margins.

A: Jim Currier talked about business aviation growth, defense replenishment and sustainment; Mike Stepniak said mix favorable in Q1, expansion expected full year.

Q: Dean Dre asked about Middle East rebuild opportunity and impact of $100 oil on UOP.

A: Vimal Kapoor said near-term headwinds reflected, long-term favorable; Mike Stepniak said second half performance strong for process automation technology.

Q: Nicole DeBlaze asked about aerospace subsegments impact and order trends.

A: Jim Currier said all subsegments impacted, broad-based orders growth; Mike Stepniak said short cycle expected to accelerate.

Q: Andrew Obin asked about building automation competitive environment and sensors business.

A: Vimal Kapoor said competition from midsize companies, fragmented market; Mike Stepniak said sensor business working on liquid cooling.

Q: Andy Kaplowitz asked about IA margin improvement and LNG conversation.

A: Mike Stepniak said IA margin expansion due to cost simplification, pricing, NPI; Vimal Kapoor said bullish on LNG cycle.

Q: Joe Ritchie asked about process side ramp and building automation data center opportunity.

A: Vimal Kapoor said firm projects, backlog strong; Vimal Kapoor said improving share in data centers, working on liquid cooling for sensors.

Q: Amit Mehrota asked about supply chain cadence, PSS sale tax leakage, and Quantinium deconsolidation.

A: Jim Currier talked about supplier centric supply chain; Vimal Kapoor said no tax leakage, details in third quarter; Mark said restricted from sharing further on Quantinium.

Q: Chris Snyder asked about supply chain disruption cause and back half margin expectations.

A: Jim Currier said supplier centric, not de-stocking; Jim Currier said modest margin expansion annualized.