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HONEYWELL INTERNATIONAL INC (HON) Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $10.41B (+7% y/y; +6% organic), EPS $2.86 and adjusted EPS $2.82; operating margin contracted 220 bps to 16.9% while segment margin was 23.1% (−50 bps) .
  • Broad-based demand: orders +22% to $11.9B with book-to-bill >1 and backlog at a record high; strength in Aerospace Technologies and Energy & Sustainability Solutions drove order momentum .
  • Full-year guidance raised despite the October spin of Solstice Advanced Materials: adjusted EPS to $10.60–$10.70, sales $40.7–$40.9B, organic growth ~6%, segment margin 22.9–23.0% .
  • Strategic catalysts: (1) Solstice spin completed Oct 30, 2025, reducing FY25 sales by ~$0.7B and adjusted EPS by ~$0.21 ; (2) updated segment structure ahead of Aerospace separation in 2H26 ; (3) dividend increased to $4.76 annualized ($1.19 quarterly) effective Q4 2025 .

What Went Well and What Went Wrong

What Went Well

  • Aerospace Technologies organic sales +12% y/y, led by commercial aftermarket (+19% y/y) and defense & space (+10% y/y); orders strong double-digit and book-to-bill 1.2 in aero .
  • Building Automation organic sales +7% y/y with margin expansion (+80 bps to 26.7%) on volume leverage and commercial excellence; fire products posted a fourth consecutive quarter of double-digit growth .
  • Management raised full-year adjusted EPS guidance and reiterated strong order trends; CEO: “we are raising our full-year 2025 adjusted earnings per share guidance even while separating Solstice Advanced Materials” .

What Went Wrong

  • Company-level operating margin fell 220 bps y/y to 16.9% and segment margin −50 bps to 23.1%, reflecting cost inflation and acquisition impacts despite commercial excellence .
  • Industrial Automation segment margin contracted 150 bps to 18.8% on inflation and mixed demand (PSS −3% y/y; Europe weakness); sequential sales excluding PPE divestiture +2%, but project demand in process solutions was challenging .
  • Energy & Sustainability Solutions organic sales −2% y/y due to UOP licensing delays and lower catalysts volumes; management guided to Q4 margin contraction in ESS given mix and catalyst timing .

Financial Results

Consolidated Results vs Prior Year, Prior Quarter, and Estimates

MetricQ3 2024Q2 2025Q3 2025
Sales ($USD Billions)$9.73 $10.35 $10.41
EPS (GAAP, $)$2.16 $2.45 $2.86
Adjusted EPS ($)$2.58 $2.75 $2.82
Operating Margin (%)19.1% 20.4% 16.9%
Segment Margin (%)23.6% 22.9% 23.1%
Operating Cash Flow ($USD Billions)$2.00 $1.32 $3.29
Free Cash Flow ($USD Billions)$1.72 $1.02 $1.45
Revenue Consensus Mean ($USD Billions)$9.90*$10.06*$10.16*
EPS Consensus Mean ($)$2.50*$2.66*$2.57*

Values with asterisk retrieved from S&P Global.

Q3 2025 beats/misses vs consensus: Revenue beat ($10.41B vs $10.16B*) and adjusted EPS beat ($2.82 vs $2.57*); EBITDA below consensus ($2.323B actual vs $2.649B*) on mix/inflation impacts . Values with asterisk retrieved from S&P Global.

Segment Breakdown

SegmentMetricQ3 2024Q2 2025Q3 2025
Aerospace TechnologiesSales ($USD MM)$3,912 $4,307 $4,511
Segment Margin (%)27.7% 25.5% 26.1%
Industrial AutomationSales ($USD MM)$2,501 $2,380 $2,274
Segment Margin (%)20.3% 19.2% 18.8%
Building AutomationSales ($USD MM)$1,745 $1,826 $1,878
Segment Margin (%)25.9% 26.2% 26.7%
Energy & Sustainability SolutionsSales ($USD MM)$1,563 $1,837 $1,742
Segment Margin (%)24.5% 24.1% 24.5%

KPIs

KPIQ3 2024Q2 2025Q3 2025
Organic Sales Growth (Company, %)—5% 6%
Orders ($USD Billions)—$10.5B $11.9B
Orders Growth (%)—+6% y/y excl. M&A/div. +22% y/y
BacklogRecord (no figure) $36.6B (record) Record (no figure)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($B)FY 2025$40.1–$40.6 (adj. post-spin) $40.7–$40.9 Raised
Organic Growth (%)FY 20254–5 ~6 Raised
Segment Margin (%)FY 202522.9–23.0 22.9–23.0 Maintained (narrowed expansion to +30–40 bps)
Adjusted EPS ($)FY 2025$10.24–$10.44 (adj. post-spin) $10.60–$10.70 Raised
Operating Cash Flow ($B)FY 2025$6.7–$7.1 $6.4–$6.8 Lowered
Free Cash Flow ($B)FY 2025$5.2–$5.6 (adj. post-spin) $5.2–$5.6 Maintained
Spin impact (Solstice)FY 2025Sales −$0.7B; adj. EPS −$0.21; FCF −$0.2B Included in current guidance Incorporated

Dividend guidance: annual dividend increased to $4.76; quarterly dividend $1.19 payable Dec 5, 2025 (record date Nov 14, 2025) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/technology, Honeywell ForgeElevated R&D, new products; BA services growth R&D up, focus on NPI; pricing lag vs tariffs in aero “Connected offerings through Honeywell Forge” driving recurring revenue; Quantinuum raised >$600M at $10B pre-money, partnerships with Nvidia/JPM/Amgen/Mitsui Increasing investment and ecosystem
Supply chainAero aftermarket strength on supply unlock Aero destocking at OEMs; electromechanical supply challenges improving Supply chain performance improved; aero margin sequentially +60 bps Improving
Tariffs/macroGuidance incorporates tariffs/uncertainty Pricing lag vs tariff costs in aero; moratorium visibility Tariff cost inflation still a headwind in aero; pricing alignment expected in 2026 Stabilizing, offset in 2026
Product performance (Aero aftermarket/OE)Aftermarket +15% Aftermarket normalizing; OE recoupling expected H2 Aftermarket +19% y/y; OE shipments returned to growth; aero margin ~26% FY Positive momentum
Regional trendsMiddle East/North America strong in BA Europe recovering; balanced global growth Growth across all regions; China flattish ex-Aero; Middle East/India strong Broadening
Regulatory/legal (IRA/OB3)—IRA/OB3 mostly preserved; energy project timing pushed right UOP licensing delays; catalysts push-outs; orders +9% in UOP Near-term headwinds; orders improving
R&D executionR&D up 60 bps of sales (4.6%) Elevated R&D across segments; upper quartile spend target Continued investment; 2026 pricing plans underway Sustained acceleration

Management Commentary

  • CEO Vimal Kapur: “we are raising our full-year 2025 adjusted earnings per share guidance even while separating Solstice Advanced Materials at the end of October” .
  • CFO Mike Stepniak: “Orders grew 22%…book-to-bill above one…backlog up to yet another record…third quarter free cash flow was $1.5B, down 16% from the prior year because of capex timing and higher working capital” .
  • CEO on Aerospace trajectory: “Q2 2025 was probably the bottom, and you should continue to see sequential improvements on margins going to 2026…commercial OE will sequentially improve growth rates in the fourth quarter” .
  • CFO on ESS: “we anticipate a meaningful fourth quarter contraction resulting in a roughly one-point reduction for the full year…taking meaningful steps to address ESS cost structure and expect to return to margin expansion in 2026” .

Q&A Highlights

  • ESS margins: Q4 contraction driven by mix and catalyst push-outs; LNG performing well; margins expected to expand in 2026 .
  • Industrial Automation: sequential margin improvement in Q4; 2026 visibility for margin expansion, backlog improving, pricing intact .
  • Aerospace: OE destocking largely behind; FY25 margins ~26% with price alignment and acquisitions headwinds easing in 2026 .
  • Pricing strategy: protect volume while preserving margins; pricing expected to be tailwind in 2026 as tariffs stabilize .
  • Data centers in BA: growing exposure across fire, security, BMS; partnership with LS Electric to integrate electrical and controls .

Estimates Context

  • Q3 2025: Actual revenue $10.41B vs consensus $10.16B*; adjusted EPS $2.82 vs consensus $2.57*; EBITDA $2.323B vs consensus $2.649B* (mix/inflation headwind) . Values with asterisk retrieved from S&P Global.
  • Q2 2025: Actual revenue $10.35B vs consensus $10.06B*; adjusted EPS $2.75 vs consensus $2.66*; EBITDA $2.622B vs consensus $2.548B* . Values with asterisk retrieved from S&P Global.
  • Q3 2024: Actual revenue $9.73B vs consensus $9.90B*; adjusted EPS $2.58 vs consensus $2.50*; EBITDA $2.504B vs consensus $2.589B* . Values with asterisk retrieved from S&P Global.
MetricQ3 2024Q2 2025Q3 2025
Revenue Actual ($USD Billions)$9.73 $10.35 $10.41
Revenue Consensus ($USD Billions)$9.90*$10.06*$10.16*
Adjusted EPS Actual ($)$2.58 $2.75 $2.82
Adjusted EPS Consensus ($)$2.50*$2.66*$2.57*
EBITDA Actual ($USD Billions)$2.504 [GetEstimates]$2.622 [GetEstimates]$2.323 [GetEstimates]
EBITDA Consensus ($USD Billions)$2.589*$2.549*$2.650*

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Demand and backlog strength underpin Q4 sales momentum; orders +22% y/y in Q3 and aero book-to-bill 1.2 suggest durable top-line through year-end .
  • Mix/inflation and acquisition headwinds drove margin compression in Q3; management expects 2026 margin expansion across aero, IA, and ESS as pricing aligns and catalysts normalize .
  • Guidance raised for FY25 adjusted EPS and organic growth despite Solstice spin; execution discipline and recurring software via Honeywell Forge are supporting earnings quality .
  • Near-term watch items: ESS Q4 margin contraction due to catalysts mix; IA uneven short-cycle vs long-cycle dynamics; aero tariffs/pricing lag narrowing into 2026 .
  • Strategic catalysts: dividend increase (Q4), October Solstice spin completion, and 2026 aero separation with updated segment reporting to simplify the automation pure-play .

Note on non-GAAP: Adjusted EPS excludes items including the $802M gain from the Resideo indemnification termination (−$1.26 per share), environmental liability estimate adjustment (+$0.25), and loss related to asbestos liabilities settlement (+$0.17); FY25 adjusted EPS guidance also excludes pension mark-to-market and certain divestiture-related costs .

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