Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Organic Sales Growth | 7% | Above high end of targets |
| Segment Margin | 21.3% | Up 370 basis points |
| Adjusted EPS | $2.27 | Up 34% |
| Free Cash Flow | $690 million | Up 15% |
| Ending Backlog | Nearly $19 billion | Up 7% |
Guidance and outlook
- Full-year 2026 organic growth: 4% to 5%
- Full-year 2026 adjusted EPS: $8.40 to $8.45
- Full-year 2026 free cash flow: $2.1 billion
- Q4 2026 organic growth: 5% to 6%
- Q4 2026 segment margin: Approximately 22%
How management sounded
Positive (+7 on our -10 to +10 scale). Management raised full-year guidance across all metrics and highlighted strong execution on margin expansion and cost reduction. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Q4 Order Confidence
Asked: How confident are you in Q4 order growth given we are only one month into the quarter?
Answer: Management noted that the first three weeks of October trended at or above expectations and they remain highly confident in high single-digit order growth.
Stranded Costs
Asked: Does the early completion of stranded cost reduction change the corporate expense outlook?
Answer: Corporate costs are planned at about $400 million for next year, with a focus on productivity and margin expansion.
Industrial Automation Margins
Asked: How confident are you in continued margin expansion for the Industrial Automation segment?
Answer: Management is highly confident, citing improved on-time delivery which rose to 60%, successful new product launches, and a clear pathway to 25% margins by 2029.
Process Automation and Technology Margins
Asked: Will margins remain under pressure until the Johnson Matthey acquisition anniversary?
Answer: Margins are expected to expand in the second half of 2027 as catalyst volume grows and integration is completed.
Data Center Strategy
Asked: How does the data center ecosystem contribute to growth?
Answer: It is becoming a pan-Honeywell strategy involving building automation, process automation, and industrial sensing, with orders up over 100% year-to-date.
What to watch before the next call
- The impact of inflation on margins into the first half of 2027.
- The integration progress of the Johnson Matthey Catalyst Technologies business.
- The conversion of the $19 billion backlog into revenue.
- The adoption rates of new gas and water meter technologies in 2027.
