Honeywell International Inc. Common Stock Ex Distribution When Issued

Second-quarter sales grew 4% organically. Adjusted EPS was $1.95, up 10%, and segment margin expanded 100 basis points to 19%. Free cash flow was roughly $0.5 billion, with the quarter benefiting from higher income and better working capital despite collection headwinds in the Middle East. On guidance, Honeywell Technologies raised full-year organic sales growth to 3% to 4% from 2% to 3%, second-half organic growth to 4% to 6%, full-year segment margin expansion to 250 to 290 basis points, and full-year adjusted EPS to $8.20 at the midpoint from $8.10. The company still expects roughly $2 billion of free cash flow in 2026 and about 95% conversion.

Vimal Kapur framed the quarter as the start of Honeywell Technologies’ next chapter as a pure-play automation company. He emphasized the company’s strategy of growing the installed base and monetizing it through software, services, and outcome-based solutions, while pointing to 16% organic orders growth and broad-based demand as evidence the transformation is working. His tone was confident and constructive, repeatedly highlighting long-term tailwinds, a stronger second half, and confidence in the 3-year targets laid out at Investor Day.

Mike Stepniak said the quarter came in ahead of expectations, with 4% organic sales growth, 9% segment profit growth, 100 bps of segment margin expansion to 19%, and $1.95 adjusted EPS. He pointed to lower net interest expense from debt paydown, a higher tax rate that created a $0.16 headwind, and strong free cash flow of roughly $0.5 billion. He also said full-year margin expansion is now expected to be 250 to 290 bps, that the company expects to exit the year above 22% segment margin, and that repositioning costs are running around $100 million to $110 million for the year.

Analysts pressed management on the Middle East, Johnson Matthey integration, Industrial Automation recovery, margin progression, stranded costs, and the outlook for 2027. Management said Middle East collection issues were modest, mostly in March and April, and that the business there is now largely normalized, with full-year revenue expected to be about high single digits and orders about 40%. On Johnson Matthey, management said the deal is strategically complementary, was done at about 13x EBITDA on 2027 earnings, and offers cost and sales synergy potential, though they are not baking in revenue synergies yet.