Honeywell Aerospace Inc.

What they do

Honeywell Aerospace supplies systems and technologies that support the production, maintenance, and safe operation of aerospace and defense platforms. It serves OEM, government, defense prime contractor, and aircraft operator customers across Commercial Air Transport, Business Aviation, and Defense and Space end markets. The company is organized into three segments: Electronic Solutions, Engines & Power Systems, and Control Systems.

Revenue drivers

• Electronic Solutions — One of three reporting segments, providing avionics and electronic systems; IndiGo selected Honeywell Aerospace's flagship avionics and power systems for 810 Airbus A320neo family aircraft, the largest new-aircraft-selectable equipment win in company history.
• Engines & Power Systems — One of three reporting segments, supplying engines and power systems for aerospace platforms; specific revenue contribution is not disclosed in the excerpt.
• Control Systems — One of three reporting segments, providing control systems for aerospace and defense platforms; specific revenue contribution is not disclosed in the excerpt.
• Aftermarket and RMU — Retrofit, modification and upgrade (RMU) strategy targets existing fleets; Aeromexico intends to adopt Surface Alerts (SURF-A) across its Boeing 737NG and 737MAX fleet of more than 100 aircraft.

Recent performance

Second quarter 2026 sales were $4.52 billion, up 5% on both a reported and organic basis year over year; the prior-year quarter was $4.29 billion. Net income was $0.3 billion and adjusted EBIT was $1.0 billion, excluding pro forma standalone adjustments; adjusted EBIT was down 7%, including approximately $100 million of separation-related costs and inventory obsolescence charges. Backlog grew to $18.2 billion at quarter end, up 9% from the prior year, and trailing twelve-months orders were up 8%, led by Defense and Space. Supply constraints limited output growth in the quarter.

Strategy

Management's three strategic priorities are expanding leadership in attractive end markets, investing in differentiated technology platforms, and strengthening operational capabilities. The Honeywell Aerospace Operating System is being rolled out across the company. Supply chain actions include qualifying over 50 new suppliers with 50 more expected in the second half, increasing supplier tooling spend by 20% in the second half versus the first half and doubling from 2025 to 2027 (about 70% to castings), and expanding multi-sourced parts by more than 15% for the year. Year to date the company secured $15 billion of new wins (estimated lifetime value).

Risks

• Supply chain constraints — Supply constraints limited output growth in the second quarter, and management is aligning second-half 2026 guidance to its supply chain's demonstrated capabilities.
• Separation and standalone costs — Transaction costs related to the spin-off and standalone public company setup are expected to continue through at least fiscal year 2027, and adjusted EBIT included approximately $100 million of separation-related costs and inventory obsolescence charges in the quarter.
• Historical financial presentation — The condensed combined financial statements are derived from Honeywell's historical accounting records and may not reflect what the company's financial position, results, or cash flows would have been as a standalone entity.
• Negative shareholder equity and leverage — As of June 27, 2026, total liabilities were $24.99 billion against total assets of $19.37 billion, resulting in shareholder equity of negative $5.70 billion, with $15.85 billion of long-term debt.

Outlook

The company revised full-year 2026 sales and pro forma standalone adjusted EBIT guidance, issued full-year pro forma standalone adjusted earnings per share guidance, and maintained its second-half 2026 free cash flow guidance range. Management said it is prudent to align second-half 2026 guidance to the supply chain's demonstrated capabilities at the end of the second quarter. The CEO reaffirmed commitment to the 2030 targets laid out at Investor Day in June and called for improved performance in 2027 and beyond.