2Q 2026
Filed Aug 5, 2026Honeywell Aerospace reports second quarter results; updates 2026 outlook
Sales, backlog and all three end markets grew year over year, but adjusted EBIT, net income and adjusted earnings per share declined, while full-year organic growth and pro forma standalone adjusted EBIT guidance were reduced because of supply-chain constraints.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Organic growth | 7% - 9% | 4% - 5% | below |
| Pro forma standalone adjusted EBIT | $4.65B - $4.75B | $4.35B - $4.45B | below |
| Year-over-year growth | 7% - 10% | Flat - 3% | below |
| Second half free cash flow | $1.0B - $1.5B | $1.0B - $1.5B | in line |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Backlogother | $18,154 | – | 9% |
| SalesGAAP | $4,522 | – | 5% |
| Organic sales growthnon-GAAP | 5% | – | 5% |
| Net incomeGAAP | $256 | – | (70)% |
| Adjusted EBITnon-GAAP | $995 | – | (7)% |
| Earnings per shareGAAP | $0.78 | – | (71)% |
| Adjusted earnings per sharenon-GAAP | $1.87 | – | (32)% |
| Commercial Original Equipment salesother | $679 | – | 6% |
| Commercial Aftermarket salesother | $2,026 | – | 8% |
| Defense and Space salesother | $1,817 | – | 3% |
| Electronic Solutions segment profit/segment adjusted EBITnon-GAAP | $459 | – | (3)% |
| Engines and Power Systems segment profit/segment adjusted EBITnon-GAAP | $174 | – | (32)% |
| Control Systems segment profit/segment adjusted EBITnon-GAAP | $389 | – | 8% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Electronic SolutionsStrength in Defense and Space and Commercial Aftermarket. | $1,774 | – | 8% |
| Engines and Power SystemsHigher Commercial Original Equipment shipments were offset by lower Defense and Space shipments. | $1,406 | – | 1% |
| Control SystemsLed by Commercial Aftermarket. | $1,342 | – | 7% |
Full-year 2026 and second half 2026 outlook
- RevenueOrganic growth 4% - 5%
- NotePro forma standalone adjusted EBIT $4.35B - $4.45B
- NoteYear-over-year growth Flat - 3%
- NotePro forma standalone adjusted earnings per share $7.60 - $7.90
- NoteSecond half free cash flow $1.0B - $1.5B
What drove it
- Commercial Aftermarket sales of $2.0 billion grew 8% year over year, driven by broad-based demand across the installed base, including higher business aviation flight hours.
- Commercial Original Equipment sales were up 6% to $0.7 billion as commercial air transport shipments recoupled to increased customer build schedules.
- Defense and Space sales of $1.8 billion expanded 3%, as increased domestic volumes were partially offset by lower international volumes due to supply constraints and the wind-down of a restricted government program.
- Year to date, the company has secured $15 billion of new wins (estimated lifetime value).
- The company is qualifying over 50 new suppliers, with 50 more expected for the second half.
- Planned supplier-tooling spending is up 20% in the second half versus the first half and doubling from 2025 to 2027, of which approximately 70% is going to castings.
- The company plans to expand the number of multi-sourced parts by more than 15% for the year.
Concerns
- Supply constraints limited output growth in the quarter.
- Adjusted EBIT was down 7%, including approximately $100 million of separation-related costs and inventory obsolescence charges.
- Electronic Solutions segment adjusted EBIT decreased 3% as higher volumes and pricing were more than offset by unfavorable mix and higher costs.
- Engines and Power Systems segment adjusted EBIT decreased 32% as unfavorable mix and higher costs more than offset price.
- Defense and Space international volumes were lower due to supply constraints and the wind-down of a restricted government program.
- Full-year organic growth guidance was reduced to 4% - 5% from 7% - 9%, and pro forma standalone adjusted EBIT guidance was reduced to $4.35B - $4.45B from $4.65B - $4.75B.
What to watch
- Execution against supply-chain actions, including qualification of over 50 new suppliers and 50 more expected for the second half.
- Whether increased investment in supplier tooling and expansion of multi-sourced parts improve output resilience.
- Commercial Aftermarket demand and business aviation flight hours.
- The pace of Commercial Original Equipment shipments against customer build schedules.
- Recovery in Defense and Space international volumes.
- Delivery of the second half free cash flow guidance range of $1.0B - $1.5B.
Balance sheet and cash flow
- Backlog grew to $18.2 billion at quarter end, up 9% from the prior year.
- Trailing twelve-months orders were up 8%, led by continued strength in Defense and Space.
- Second half free cash flow guidance was maintained at $1.0B - $1.5B.
Analysis
Honeywell Aerospace reported $4,522 of sales in 2Q 2026, up 5% year over year on both a reported and organic basis. Backlog reached $18,154, up 9% from the prior year, while trailing twelve-months orders were up 8%, led by Defense and Space. Commercial Aftermarket was the strongest end market, with sales of $2,026 up 8%, supported by broad-based installed-base demand and higher business aviation flight hours. Commercial Original Equipment sales rose 6% to $679 as commercial air transport shipments recoupled to higher customer build schedules.
Growth was positive across the operating segments, but profitability weakened. Electronic Solutions sales increased 8% to $1,774, although segment adjusted EBIT declined 3% to $459 as unfavorable mix and higher costs outweighed volume and pricing. Engines and Power Systems sales grew 1% to $1,406, but segment adjusted EBIT fell 32% to $174 as unfavorable mix and higher costs more than offset price. Control Systems was the exception on profitability: sales increased 7% to $1,342 and segment adjusted EBIT increased 8% to $389 as price more than offset higher costs.
Consolidated adjusted EBIT declined 7% to $995, including approximately $100 million of separation-related costs and inventory obsolescence charges. Net income declined 70% to $256 and earnings per share declined 71% to $0.78. Adjusted earnings per share declined 32% to $1.87. The company stated that supply constraints limited output growth, and described lower Defense and Space international volumes from supply constraints and the wind-down of a restricted government program.
Management reduced full-year 2026 organic growth guidance to 4% - 5% from 7% - 9% and lowered pro forma standalone adjusted EBIT guidance to $4.35B - $4.45B from $4.65B - $4.75B. The company also changed its year-over-year growth outlook to Flat - 3% from 7% - 10%, initiated pro forma standalone adjusted earnings per share guidance of $7.60 - $7.90, and maintained second half free cash flow guidance of $1.0B - $1.5B. The guide reset reflects management's decision to align expectations with demonstrated supply-chain capabilities at the end of the second quarter.
The capital and operating focus is on restoring supply capability after the June 29 spin-off. The company is qualifying over 50 new suppliers, expects 50 more in the second half, plans supplier-tooling spending up 20% in the second half versus the first half, and is expanding multi-sourced parts by more than 15% for the year. Year-to-date new wins of $15 billion of estimated lifetime value support the demand backdrop, but the central execution issue remains whether these supply-chain actions can translate into improved output and financial performance in 2027 and beyond.
Management, verbatim
Our successful separation marks an important milestone for Honeywell Aerospace, and we enter this next chapter with solid momentum. We delivered mid-single-digit sales growth in our final quarter as a segment of Honeywell as the significant customer demand for our mission-critical portfolio continues. Secular trends across our end markets remain strong while supply constraints limited output growth in the quarter.
Jim Currier, Chief Executive Officer of Honeywell Aerospace
For the second half of 2026, we believe it is prudent to align our guidance to our supply chain’s demonstrated capabilities at the end of the second quarter.
Jim Currier, Chief Executive Officer of Honeywell Aerospace
Not in the filing
stated, not guessed- Period-end date
- GAAP gross profit and gross margin
- GAAP operating income and operating margin
- GAAP operating expenses
- Tax rate
- Operating cash flow
- Actual free cash flow
- Cash balance
- Debt balance
- Share repurchases
- Dividends
- Capital-return amounts
- Quarter-over-quarter comparisons for sales, income, EBIT, earnings per share and segments
- Segment margins
- GAAP segment profitability
- Full-year 2026 absolute revenue guidance
- Prior guidance for pro forma standalone adjusted earnings per share
- Reconciliation of non-GAAP guidance to GAAP measures
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.