Honeywell’s Resilient Performance Amid Macroeconomic Challenges

Honeywell International Inc., a diversified industrial conglomerate, has reported strong financial results for the three and nine months ended September 30, 2025, demonstrating resilience in the face of ongoing macroeconomic and geopolitical headwinds.

Navigating Macroeconomic Conditions Honeywell continues to closely monitor the evolving macroeconomic landscape, including heightened trade tensions, economic and trade policy uncertainty, and inflationary pressures. The company has implemented proactive mitigation strategies to address supply chain vulnerabilities and pricing fluctuations, such as supply chain simplification, alignment to local supply sources, pricing actions, dual source strategies, and new supplier development. These efforts have helped Honeywell minimize its exposure to the challenging conditions, though the company acknowledges that if these strategies are not successful, the macroeconomic environment could have a material adverse effect on its consolidated results.

Portfolio Transformation and Realignment Honeywell has been actively transforming its portfolio to enhance strategic fit, market position, profitability, and cash flow contribution. Key developments include:

• Divestiture of the PPE business in the second quarter of 2025
• Acquisition of Sundyne and announcement to acquire Johnson Matthey’s Catalyst Technologies business
• Planned spin-off of the Advanced Materials business into an independent, publicly traded company, Solstice Advanced Materials, expected to be completed on October 30, 2025
• Announced intention to separate the Automation and Aerospace Technologies businesses into independent, publicly traded companies, expected to be completed in the second half of 2026
• Evaluation of strategic alternatives for the Productivity Solutions and Services and Warehouse and Workflow Solutions businesses within the Industrial Automation segment

These portfolio actions are aimed at streamlining Honeywell’s operations, improving its strategic focus, and enhancing shareholder value.

Consolidated Financial Performance Honeywell’s consolidated financial results for the three and nine months ended September 30, 2025, demonstrate the company’s ability to navigate the challenging environment:

Net Sales:

• Q3 2025 vs. Q3 2024: Increased 7% to $10,405 million, driven by higher pricing, increased sales volumes, and favorable foreign currency translation.
• YTD 2025 vs. YTD 2024: Increased 8% to $30,568 million, driven by incremental sales from recent acquisitions, higher pricing, and increased sales volumes.

Gross Margin:

• Q3 2025: Decreased 440 basis points to 34.1% due to higher direct and indirect material costs, higher labor costs, and an adjustment to estimated future environmental liabilities.
• YTD 2025: Decreased 160 basis points to 37.1% compared to the same period in 2024.

Segment Profit:

• Aerospace Technologies: Increased 9% in Q3 2025 and 6% in YTD 2025, driven by higher organic sales in Commercial Aviation Aftermarket and Defense and Space.
• Industrial Automation: Decreased 16% in Q3 2025 and 10% in YTD 2025, primarily due to the divestiture of the PPE business.
• Building Automation: Increased 11% in Q3 2025 and 19% in YTD 2025, driven by higher organic sales in both Products and Building Solutions.
• Energy and Sustainability Solutions: Increased 11% in both Q3 2025 and YTD 2025, driven by the acquisitions of Sundyne and LNG.

Net Income Attributable to Honeywell:

• Q3 2025: Increased due to a gain recognized on the Resideo termination agreement and lower impairment charges, partially offset by higher divestiture-related costs and an adjustment to estimated future environmental liabilities.
• YTD 2025: Increased due to the gain on the Resideo termination agreement and higher segment profit, partially offset by higher divestiture-related costs and the adjustment to estimated future environmental liabilities.

The company’s diverse portfolio and proactive management of macroeconomic challenges have enabled Honeywell to deliver solid financial performance during the period.

Backlog and Liquidity Honeywell’s backlog of orders increased 14% to $39.1 billion as of September 30, 2025, compared to the same period in 2024, indicating strong demand for the company’s products and services.

Honeywell’s liquidity position remains robust, with $13.4 billion in cash and cash equivalents as of September 30, 2025. The company’s primary sources of liquidity include operating cash flows, U.S. cash balances, access to non-U.S. cash, short-term debt from the commercial paper market, long-term borrowings, committed credit lines, and access to public debt and equity markets.

During the nine months ended September 30, 2025, Honeywell generated $5.2 billion in net cash from operating activities, which was used to fund capital expenditures, share repurchases, dividends, and strategic acquisitions. The company also has access to various loan and revolving credit agreements, including a $6.0 billion Delayed Draw Term Loan Agreement, a $3.0 billion 364-day credit agreement, a $1.0 billion Fixed Rate Term Loan Credit Agreement, and a $4.0 billion five-year credit agreement, providing additional sources of liquidity.

Honeywell’s credit ratings from S&P, Fitch, and Moody’s remain strong, with a short-term rating of A-1, F1, and P1, respectively, and a long-term rating of A, A, and A2, respectively, as of September 30, 2025. The company’s ability to access the global debt capital markets and the related cost of these borrowings are affected by the strength of its credit rating and market conditions.

Segment Performance Honeywell’s four reportable business segments – Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions – each contributed to the company’s overall performance, though with varying degrees of success:

Aerospace Technologies

• Q3 2025 vs. Q3 2024: Segment sales increased 15% and segment profit increased 9%, driven by higher organic sales in Commercial Aviation Aftermarket and Defense and Space, as well as contributions from the acquisitions of CAES and Civitanavi Systems.
• YTD 2025 vs. YTD 2024: Segment sales increased 13% and segment profit increased 6%, driven by the same factors as the quarterly performance.

Industrial Automation

• Q3 2025 vs. Q3 2024: Segment sales decreased 9% and segment profit decreased 16%, primarily due to the divestiture of the PPE business.
• YTD 2025 vs. YTD 2024: Segment sales decreased 6% and segment profit decreased 10%, also due to the PPE business divestiture and lower organic sales in Productivity Solutions and Services.

Building Automation

• Q3 2025 vs. Q3 2024: Segment sales increased 8% and segment profit increased 11%, driven by higher organic sales in both Products and Building Solutions.
• YTD 2025 vs. YTD 2024: Segment sales increased 14% and segment profit increased 19%, driven by the same factors as the quarterly performance.

Energy and Sustainability Solutions

• Q3 2025 vs. Q3 2024: Segment sales increased 11% and segment profit increased 11%, driven by higher organic sales in Advanced Materials and the acquisitions of Sundyne and LNG.
• YTD 2025 vs. YTD 2024: Segment sales increased 10% and segment profit increased 11%, driven by the same factors as the quarterly performance.

The performance of Honeywell’s business segments reflects the company’s ability to capitalize on growth opportunities in its key markets, while also navigating the challenges posed by the macroeconomic environment.

Outlook and Future Initiatives Honeywell’s ongoing portfolio transformation and strategic realignment initiatives are expected to enhance the company’s focus and position it for long-term success. The planned spin-off of the Advanced Materials business and the separation of the Automation and Aerospace Technologies businesses into independent, publicly traded companies will allow Honeywell to sharpen its strategic focus and better serve its customers in each of its core markets.

Additionally, the evaluation of strategic alternatives for the Productivity Solutions and Services and Warehouse and Workflow Solutions businesses within the Industrial Automation segment is aimed at further streamlining Honeywell’s operations and improving its overall portfolio.

Despite the macroeconomic headwinds, Honeywell remains committed to driving innovation, expanding its market presence, and delivering value to its shareholders. The company’s strong liquidity position, diversified portfolio, and proactive management of challenges position it well to navigate the current environment and capitalize on future growth opportunities.