HON · Honeywell International Inc. Common Stock Ex Distribution When Issued

Period Performance

Period Performance

For Q2 2026, consolidated net sales increased 4% to $9.714B, primarily driven by pricing actions across segments and favorable foreign currency translation. The gross margin contracted 170 bps to 37.6% due to higher direct and indirect material costs and labor cost inflation. Segment profit summed to $2.297B, reflecting mixed performance: Aerospace Technologies grew 2% on commercial aftermarket pricing, Building Automation surged 13% on strong demand, Process Automation & Technology declined 4% due to lower catalyst shipments, and Industrial Automation managed a 1% increase despite the PPE divestiture. Net income was significantly impacted by a $6.629B gain from the deconsolidation of Quantinuum and $0.7B in divestiture-related costs for the Aerospace Spin-Off, resulting in a net income of $6.481B for the six months (not Q2).

Segment Dynamics

• Aerospace Technologies: Sales +5% to $4.532B, with organic growth in Commercial Aviation Aftermarket (+$128M) and Original Equipment (+$100M). Segment margin slipped 70 bps to 24.8% due to higher inventory obsolescence charges.
• Building Automation: Sales +10% to $2.002B, driven by organic gains in Products (+$103M) and Solutions (+$59M). Margin improved 90 bps to 27.1% on operating leverage.
• Process Automation & Technology: Sales +4% to $1.679B, including $78M from Sundyne acquisition. Organic sales declined 1% due to a drop in catalyst shipments. Margin fell 180 bps to 22.1%.
• Industrial Automation: Sales -5% to $1.501B, reflecting the PPE divestiture impact of 9%. Organic sales grew 4% from project timing. Margin expanded 90 bps to 17.2%.

Forward View

Management continues to navigate a challenging macroeconomic environment with inflationary pressures and supply chain volatility. The completion of the Aerospace Spin-Off on June 29, 2026, and the realignment of segments into Building Automation, Process Automation & Technology, and Industrial Automation mark a structural shift. The backlog increased 12% to $38.0B, providing visibility. The company expects the sales of Productivity Solutions and Services and Warehouse and Workflow Solutions to close in Q3 2026, and the acquisition of Johnson Matthey's Catalyst Technologies for $1.75B closed in July 2026. No explicit quantitative guidance is provided, but operating cash flows are expected to be sufficient for near-term needs.