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Honeywell

HON · Nasdaq

Price and pruning, not volume, lifted gross margin to 40.4%

Sales rose 1.32%, but cost of sales fell to 59.6% of sales from 64.0%, as price added 5% and two units were sold.

Q3 FY2026, the quarter to Sep 30, 2026 · 10-Q filed Oct 22, 2026

Q3 FY2026 · revenue
$5.0B+1.3% on the year
Operating margin
—
Net income
$664.0M
Free cash flow, quarter
-$52.0M

Largest source of revenue: Product, 72.7% of the total.

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Where Honeywell's money goes

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Key insights · Q3 FY2026
  1. 01

    Price and pruning, not volume, lifted gross margin to 40.4%

    Sales rose 1.32%, but cost of sales fell to 59.6% of sales from 64.0%, as price added 5% and two units were sold.

    Why it matters

    Net sales rose 1.32% to $4,994 million from $4,929 million. The filing splits the change: price added 5% and volume 2%, so price contributed more than twice as much as selling more. It lists 'increased pricing and price adjustments to offset inflation' first among the reasons sales rose.1

    Cost of products and services sold fell 5.67% to $2,976 million from $3,155 million, taking 59.6% of net sales against 64.0% a year earlier. The filing gives one reason for the fall: 'lower costs from recent divestitures', the Warehouse and Workflow Solutions and Productivity Solutions and Services businesses sold in July and August. Gross margin reached 40.4%.1

    Spending below the gross line also fell. Research and development dropped 10.82% to $239 million, which the filing ties to lower new product investment in Industrial Automation, and selling, general and administrative expenses fell 4.94% to $1,039 million. Part of the improvement comes from spending less, not only from charging more.1

    AnalysisAnalysis: two different engines sit behind one margin figure. Selling units lifts the margin once, by removing revenue that cost more to produce, and that effect drops out of comparisons once the prior-year base no longer includes those units. Pricing has to be won again with every contract, so it is the part of the gain that says more about the continuing business.

  2. 02

    A missing one-time gain, not operations, drove the profit decline

    Net income from continuing operations fell 18.34% to $779 million, and the filing traces the drop to a year-earlier Resideo gain, not weaker segments.

    Why it matters

    Other (income) expense was income of $389 million against $957 million a year earlier. The filing explains the fall: the earlier quarter held a nonrecurring gain on the Resideo termination agreement, and this quarter carried higher divestiture-related costs, partly offset by a gain on selling the Warehouse and Workflow Solutions and Productivity Solutions and Services businesses.1

    Other income equalled 86% of pre-tax income from continuing operations a year ago ($957 million of $1,107 million) and 39.5% this quarter ($389 million of $986 million). Pre-tax income fell 10.93%. The filing's bridge of diluted earnings per share names the Resideo gain as the main reason for the decline, partly offset by the business sale gain, higher tax benefits and higher segment profit.1

    Tax expense fell to $60 million from $153 million, 6.1% of pre-tax income against 13.8% a year earlier, which the filing attributes mainly to changes in accruals on U.S. federal, state and foreign tax matters. A lower tax charge supported this quarter's net income, so the bottom line is not a clean read of the business in either period.1

    AnalysisAnalysis: this quarter's reported earnings sit between two sets of one-time items, a large gain missing from the comparison and a sale gain plus a tax benefit present in this one. The operating lines, gross margin and interest, are the cleaner guide to how the continuing company earns. Diluted earnings per share from continuing operations of $2.40 against $2.99 mixes both.

  3. 03

    Profit did not turn into cash this quarter

    Operating cash flow of $117 million was 17.6% of net income, and capital spending of 3.38% of sales left free cash flow at negative $52 million.

    Why it matters

    Net income attributable to Honeywell was $664 million, but operating cash flow was $117 million, 17.6% of it. Capital spending took 3.38% of net sales, more than the whole of operating cash flow, so free cash flow was negative $52 million, or negative 1.04% of net sales.1

    The quarter carried several transactions at once: the Aerospace spin-off completed at the end of June, the Catalyst Technologies acquisition in July and two divestitures in July and August. The filing names changes in working capital among the drivers of operating cash flow for the nine months, and says cash spent on repositioning actions was funded from operating cash flows.1

    AnalysisAnalysis: one quarter of weak conversion during a separation is not unusual, since deal costs, tax payments and working capital shifts reach cash before they settle. The filing calls operating cash flow its primary source of liquidity, so the quarters after the transactions are the test of whether conversion recovers or has weakened in the smaller company.

Sources

  1. 1.Honeywell 10-Q for the period to 2026-09-30 (the filing), Oct 22, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $34.6B in FY2007 to $37.4B in FY2025, over 18 years.

  • Revenue$37.4B
  • Operating income$8.1B
  • Operating margin21.7%
Period
Q3 FY2026
Revenue
$5.0B
Operating income
$1.1B
Operating margin
21.3%
Net income
$664.0M
Free cash flow
-$52.0M
Business performance

Does the profit turn into cash?

Q3 FY2026: free cash flow of -$52.0M against net income of $664.0M in the quarter.

  • Operating cash flow$6.4B
  • Capital expenditure$986.0M
  • Free cash flow$5.4B
  • Net income$4.7B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Consolidated Statement of Operations. The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
40.4%
Source10-Q, Derived from Net sales and Total Cost of products and services sold in the 10-Q filed 2026-10-22
Operating margin
Not reported
no operating income line is reported
Net margin
13.3%
Source10-Q, Derived from Net income attributable to Honeywell Technologies and Net sales in the 10-Q filed 2026-10-22
Free cash flow, quarter
-$52.0M
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Free cash flow margin, quarter
-1.0%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Cash conversion, quarter
0.18x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Capital spending, quarter
3.4%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-22
Revenue growth
+1.3%
From the record's own history, against the prior year.

Not reported, or not derivable

  • operating margin: no operating income line is reported

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Revenue streams

Product$3.6B72.6%
Service$1.4B27.4%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22

Segments

Building Automation$2.0B40.4%
Process Automation and Technology$1.9B37.2%
Industrial Automation$1.1B22.3%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22

ConsolidationItems

Operating Segments$2.0B40.4%
Corporate and All Other$00.0%
Quantinuum$00.0%
Corporate and Eliminations$00.0%

These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

The filing's cost lines could not be read beneath operating income.

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

Order backlog
$18.8B
As of Sep 30, 2026
View source
Our backlog of orders increased 1% to $18.8 billion as of September 30, 2026, compared to September 30, 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations, 10-Q filed Oct 22, 2026
Order backlog growth, year over year
1.0%
As of Sep 30, 2026
View source
Our backlog of orders increased 1% to $18.8 billion as of September 30, 2026, compared to September 30, 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations, 10-Q filed Oct 22, 2026
Price contribution to net sales change, Q3 year over year
5.0%
As of Sep 30, 2026
View source
Volume 2 % - % Price 5 % 4 %
Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations, 10-Q filed Oct 22, 2026
Sales volume contribution to net sales change, Q3 year over year
2.0%
As of Sep 30, 2026
View source
Volume 2 % - % Price 5 % 4 %
Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations, 10-Q filed Oct 22, 2026

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement28 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeOf revenueSource
Income Statement
Net sales$4.99B$4.93B+1.3%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-22
Product$3.63B$3.57B+1.5%72.6%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [us-gaap:ProductMember], as reported in the 10-Q filed 2026-10-22
Service$1.37B$1.36B+0.7%27.4%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax [us-gaap:ServiceMember], as reported in the 10-Q filed 2026-10-22
Costs, expenses and other
Total Cost of products and services sold$2.98B$3.16B-5.7%59.6%Source10-Q, us-gaap:CostOfGoodsAndServicesSold, as reported in the 10-Q filed 2026-10-22
Product$2.13B$2.04B+4.2%42.6%Source10-Q, us-gaap:CostOfGoodsAndServicesSold [us-gaap:ProductMember], as reported in the 10-Q filed 2026-10-22
Service$849.0M$1.11B-24%17.0%Source10-Q, us-gaap:CostOfGoodsAndServicesSold [us-gaap:ServiceMember], as reported in the 10-Q filed 2026-10-22
Research and development expenses$239.0M$268.0M-11%4.8%Source10-Q, us-gaap:ResearchAndDevelopmentExpense, as reported in the 10-Q filed 2026-10-22
Selling, general and administrative expenses$1.04B$1.09B-4.9%20.8%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-10-22
Impairment of assets held for sale$0$00.0%Source10-Q, us-gaap:ImpairmentOfLongLivedAssetsToBeDisposedOf, as reported in the 10-Q filed 2026-10-22
Loss on debt extinguishment (shown as a deduction)($0)$00.0%Source10-Q, us-gaap:GainsLossesOnExtinguishmentOfDebt, as reported in the 10-Q filed 2026-10-22
Gain on deconsolidation of subsidiary (shown as a deduction)($0)$00.0%Source10-Q, us-gaap:DeconsolidationGainOrLossAmount, as reported in the 10-Q filed 2026-10-22
Other (income) expense (shown as a deduction)($389.0M)$957.0M-59%7.8%Source10-Q, us-gaap:OtherNonoperatingIncomeExpense, as reported in the 10-Q filed 2026-10-22
Interest and other financial charges$143.0M$263.0M-46%2.9%Source10-Q, us-gaap:InterestExpenseNonoperating, as reported in the 10-Q filed 2026-10-22
Total costs, expenses and other$4.01B$3.82B+4.9%80.3%Source10-Q, hon:CostsAndOperatingAndNonoperatingExpenses, as reported in the 10-Q filed 2026-10-22
Income Statement
Income from continuing operations before taxes and equity losses$986.0M$1.11B-11%19.7%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments, as reported in the 10-Q filed 2026-10-22
Tax expense$60.0M$153.0M-61%1.2%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-10-22
Equity loss (shown as a deduction)(-$147.0M)$02.9%Source10-Q, us-gaap:IncomeLossFromEquityMethodInvestments, as reported in the 10-Q filed 2026-10-22
Net income from continuing operations$779.0M$954.0M-18%15.6%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Net (loss) income from discontinued operations-$103.0M$905.0M2.1%Source10-Q, us-gaap:IncomeLossFromDiscontinuedOperationsNetOfTax, as reported in the 10-Q filed 2026-10-22
Net income$676.0M$1.86B-64%13.5%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-22
Less: Net income (loss) attributable to noncontrolling interest$12.0M$34.0M-65%0.2%Source10-Q, us-gaap:NetIncomeLossAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Net income attributable to Honeywell Technologies$664.0M$1.83B-64%13.3%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-22
Earnings (loss) per share of common stock—basic:
Earnings per share of common stock from continuing operations—basic (in dollars per share)$2$3-20%0.0%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsPerBasicShare, as reported in the 10-Q filed 2026-10-22
(Loss) earnings per share of common stock from discontinued operations—basic (in dollars per share)-$0$30.0%Source10-Q, us-gaap:IncomeLossFromDiscontinuedOperationsNetOfTaxPerBasicShare, as reported in the 10-Q filed 2026-10-22
Total earnings per share of common stock—basic (in dollars per share)$2$6-64%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-10-22
Earnings (loss) per share of common stock—assuming dilution:
Earnings per share of common stock from continuing operations—assuming dilution (in dollars per share)$2$3-20%0.0%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsPerDilutedShare, as reported in the 10-Q filed 2026-10-22
Earnings per share of common stock from discontinued operations—assuming dilution (in dollars per share)-$0$30.0%Source10-Q, us-gaap:IncomeLossFromDiscontinuedOperationsNetOfTaxPerDilutedShare, as reported in the 10-Q filed 2026-10-22
Total earnings per share of common stock—assuming dilution (in dollars per share)$2$6-64%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-10-22
Cash flow statement7 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ3 FY2026A year earlierChangeSource
Cash flows from operating activities
Net income$676.0M$1.86B-64%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-22
Less: Net income from discontinued operations-$103.0M$905.0MSource10-Q, us-gaap:IncomeLossFromDiscontinuedOperationsNetOfTax, as reported in the 10-Q filed 2026-10-22
Net income from continuing operations$779.0M$954.0M-18%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities
Gain on deconsolidation of subsidiary (shown as a deduction)($0)$0Source10-Q, us-gaap:DeconsolidationGainOrLossAmount, as reported in the 10-Q filed 2026-10-22
Impairment of assets held for sale$0$0Source10-Q, us-gaap:ImpairmentOfLongLivedAssetsToBeDisposedOf, as reported in the 10-Q filed 2026-10-22
Loss on debt extinguishment (shown as a deduction)($0)$0Source10-Q, us-gaap:GainsLossesOnExtinguishmentOfDebt, as reported in the 10-Q filed 2026-10-22
Statement of Cash Flows
Cash and cash equivalents at end of period$5.69B$12.93B-56%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-22
Balance sheet38 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeSource
Current assets
Cash and cash equivalents$5.69BSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-22
Short-term investments$492.0MSource10-Q, us-gaap:ShortTermInvestments, as reported in the 10-Q filed 2026-10-22
Accounts receivable, less allowances of $155 and $167, respectively$5.09BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-10-22
Inventories$2.06BSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-10-22
Assets held for sale$0Source10-Q, us-gaap:AssetsHeldForSaleNotPartOfDisposalGroupCurrent, as reported in the 10-Q filed 2026-10-22
Other current assets$988.0MSource10-Q, us-gaap:OtherAssetsCurrent, as reported in the 10-Q filed 2026-10-22
Current assets of discontinued operations$0Source10-Q, us-gaap:AssetsOfDisposalGroupIncludingDiscontinuedOperationCurrent, as reported in the 10-Q filed 2026-10-22
Total current assets$14.32BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-10-22
Assets
Equity method investments$7.27BSource10-Q, us-gaap:EquityMethodInvestments, as reported in the 10-Q filed 2026-10-22
Long-term receivables and other investments$1.11BSource10-Q, us-gaap:OtherLongTermInvestments, as reported in the 10-Q filed 2026-10-22
Property, plant and equipment—net$2.71BSource10-Q, us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization, as reported in the 10-Q filed 2026-10-22
Goodwill$17.56BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-10-22
Other intangible assets—net$5.44BSource10-Q, us-gaap:IntangibleAssetsNetExcludingGoodwill, as reported in the 10-Q filed 2026-10-22
Deferred income taxes$199.0MSource10-Q, us-gaap:DeferredIncomeTaxAssetsNet, as reported in the 10-Q filed 2026-10-22
Other assets$4.49BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-10-22
Assets of discontinued operations$0Source10-Q, us-gaap:DisposalGroupIncludingDiscontinuedOperationAssetsNoncurrent, as reported in the 10-Q filed 2026-10-22
Total assets$53.10BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-10-22
Current liabilities
Accounts payable$3.59BSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-10-22
Commercial paper and other short-term borrowings$2.42BSource10-Q, us-gaap:ShortTermBorrowings, as reported in the 10-Q filed 2026-10-22
Current maturities of long-term debt$3.78BSource10-Q, us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent, as reported in the 10-Q filed 2026-10-22
Accrued liabilities$5.11BSource10-Q, us-gaap:AccruedLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-22
Discontinued Operations$0Source10-Q, us-gaap:LiabilitiesOfDisposalGroupIncludingDiscontinuedOperationCurrent [us-gaap:SegmentDiscontinuedOperationsMember], as reported in the 10-Q filed 2026-10-22
Disposal Group, Held-for-Sale, Not Discontinued Operations$0Source10-Q, us-gaap:LiabilitiesOfDisposalGroupIncludingDiscontinuedOperationCurrent [us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember], as reported in the 10-Q filed 2026-10-22
Total current liabilities$14.91BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-10-22
Liabilities
Long-term debt$10.39BSource10-Q, us-gaap:LongTermDebtAndCapitalLeaseObligations, as reported in the 10-Q filed 2026-10-22
Deferred income taxes$1.56BSource10-Q, us-gaap:DeferredIncomeTaxLiabilitiesNet, as reported in the 10-Q filed 2026-10-22
Postretirement benefit obligations other than pensions$80.0MSource10-Q, us-gaap:OtherPostretirementDefinedBenefitPlanLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-22
Other liabilities$3.51BSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-22
Liabilities of discontinued operations$0Source10-Q, us-gaap:LiabilitiesOfDisposalGroupIncludingDiscontinuedOperationNoncurrent, as reported in the 10-Q filed 2026-10-22
Shareowners’ equity
Capital—common stock issued$479.0MSource10-Q, us-gaap:CommonStockValueOutstanding, as reported in the 10-Q filed 2026-10-22
Capital - additional paid in capital$11.13BSource10-Q, us-gaap:AdditionalPaidInCapitalCommonStock, as reported in the 10-Q filed 2026-10-22
Common stock held in treasury, at cost (shown as a deduction)($43.85B)Source10-Q, us-gaap:TreasuryStockValue, as reported in the 10-Q filed 2026-10-22
Accumulated other comprehensive loss-$4.10BSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-10-22
Retained earnings$58.76BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-10-22
Total Honeywell Technologies shareowners’ equity$22.42BSource10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-10-22
Noncontrolling interest$237.0MSource10-Q, us-gaap:MinorityInterest, as reported in the 10-Q filed 2026-10-22
Total shareowners’ equity$22.65B$17.75B+28%Source10-Q, us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-22
Statement of Financial Position
Total liabilities and shareowners’ equity$53.10BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-10-22

About this data

Source
Honeywell 10-Q, accession 0000773840-26-000143, filed Oct 22, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds Honeywell's model up, and what could bend it

Competitive edge

  • An $18.8 billion backlog runs well ahead of quarterly sales

    Firm orders of $18.8 billion, against quarterly net sales of $4,994 million, give the company sight of much of its future revenue before it is booked.

    The detail

    The filing defines backlog as 'the estimated remaining value of work to be performed or products to be shipped under firm contracts'. It stood at $18.8 billion at the end of September, up 1% from a year earlier, with Building Automation and Process Automation and Technology holding most of it.1

    AnalysisAnalysis: automation for buildings and process plants is sold as projects and systems that take months or years to deliver, then serviced over the life of the installation. Signed work lets the company plan supply, labour and pricing against known demand. The caveat is pace: backlog grew 1% while net sales grew 1.32%, so the reserve is steady rather than building.

  • Retired debt nearly halved the interest charge

    Interest and other financial charges fell 45.63% to $143 million, taking 14.5% of pre-tax income against 23.8% a year earlier.

    The detail

    The filing attributes the decline to debt tender offers and redemptions this year, carried out around the Aerospace separation. Interest and other financial charges now equal 2.86% of net sales, down 2.47 points from a year earlier.1

    AnalysisAnalysis: a lower fixed charge means more of each dollar the segments earn reaches net income, and leaves the smaller company room to borrow for acquisitions. The filing also shows S&P and Moody's with a negative outlook on its ratings, so the cost of future borrowing is not settled by the paydown alone.

  • Building Automation now anchors the continuing company

    At $2,020 million, 40.4% of net sales, Building Automation is the largest segment, and the filing says its sales and segment profit rose on higher demand.

    The detail

    The filing attributes Building Automation's higher sales to demand in both Products and Solutions, and reports higher segment profit and a higher segment margin. Unlike the other two segments, its comparison this quarter carries no acquisitions or divestitures, so its growth is organic.1

    AnalysisAnalysis: building controls, once installed, are expensive to replace and are maintained for years, which ties product sales to later service and upgrade work. That is a steadier base than project-led segments, and it now carries the largest share of the company's sales.

What to watch

  • Quantinuum losses now land in reported earnings

    A new equity loss of $147 million, Honeywell's share of Quantinuum's losses, equalled 18.9% of net income from continuing operations of $779 million.

    The detail

    Quantinuum completed its IPO in June, after which Honeywell kept a noncontrolling interest and accounts for it under the equity method. The filing attributes the equity loss entirely to Quantinuum since the deconsolidation. It sits below pre-tax income of $986 million, equal to 14.9% of it.1

    AnalysisAnalysis: the line is outside management's operating control. While Quantinuum invests ahead of revenue, its losses can weigh on Honeywell's reported earnings each quarter, and their size depends on decisions Honeywell no longer makes alone.

  • Acquisitions and old indemnities carry execution risk

    Honeywell is integrating a catalyst acquisition while selling units and carrying indemnities from past spin-offs, and the filing names each as a risk to results.

    The detail

    The filing names the risk that acquired businesses fail to earn expected returns, including impairment, that several acquisitions cannot be integrated at once and on schedule, and that non-core units cannot be sold on satisfactory terms. It also warns that indemnities given in past divestitures and spin-offs, or received from counterparties, may leave it carrying lawsuits, product liability or environmental costs.1

    The risk already shows in this quarter. Process Automation and Technology, where the Johnson Matthey Catalyst Technologies business now sits, is the one segment whose segment margin fell, and the filing cites higher divestiture-related costs as a drag on other income.1

  • Pricing gains rest on an inflationary backdrop

    Price added 5% to sales against 2% from volume, so recent growth leans on price increases the filing frames as offsets to inflation.

    The detail

    The filing describes conflict in the Middle East affecting energy markets, trade flows and shipping, moderating global growth, elevated inflation and changing trade policies. It answers with pricing actions, dual sourcing and supplier work, and warns these conditions may still have a material adverse effect on results, cash flows or financial condition.1

    AnalysisAnalysis: for the margin to hold, price would have to keep covering material and labour costs after the inflation that justified it eases, and volume would have to take over as the source of growth. With backlog up 1%, the next quarters depend on new orders converting quickly rather than on a fast-rising reserve of demand.

Sources

  1. 1.Honeywell 10-Q for the period to 2026-09-30 (the filing), Oct 22, 2026, read Nov 2, 2026
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Honeywell, further in

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What could change the outlook

What Honeywell's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What the new Honeywell's margin depends on from here

    How much of the gross margin gain comes from price and how much from units sold, and which signals in orders and cash would show whether it holds.

  • Reading the earnings through the one-time items

    A guide to separating Quantinuum, tax and deal effects from the operating business, and what a clean quarter for the continuing company would look like.

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Questions to start with
  • How much of Honeywell's 40.4% gross margin this quarter came from price increases versus selling the WWS and PSS businesses?
  • Why was Honeywell's operating cash flow only 17.6% of net income this quarter, and what would show it recovering?
  • How could Honeywell's share of Quantinuum's losses affect its continuing earnings while Quantinuum keeps investing?

Business Lens describes Honeywell from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.