AI Takeaway
Honeywell's Q2 FY2026 net income surged 262% YoY to $5.68B, driven primarily by a $6.63B gain on the Quantinuum IPO/deconsolidation, while core operating results grew modestly (revenue +4.3%, operating income +5.3%) amid the completed Aerospace Spin-Off and one-for-two reverse stock split.
Revenue
$9.72B
++4.26% YoY
EPS (Basic)
$17.92
++264.23% YoY
Operating Income
$2.24B
++5.26% YoY
Filed · Source: SEC EDGAR 10-Q filing
Honeywell International (HON) reported Q2 FY2026 revenue of $9.72B, up 4.3% year over year. The company posted net income of $5.68B, up 261.9% from a year earlier, with diluted EPS of $17.83.
On June 4, 2026, Quantinuum completed its IPO, and Honeywell retained a 48% noncontrolling equity-method interest, resulting in a $6,629 million gain on deconsolidation of subsidiary recorded in Q2 2026, which was the primary driver of the 261.9% YoY jump in net income. This was partially offset by a $265 million equity loss related to Quantinuum post-deconsolidation.
Source: 10-Q Item 2 MD&A
On June 29, 2026, Honeywell completed the Aerospace Spin-Off, distributing one share of Honeywell Aerospace common stock for every two shares of Honeywell Technologies held; beginning Q3 2026, Aerospace Technologies results will be reported as discontinued operations. The company also effected a one-for-two reverse stock split concurrent with the spin-off, with all share and EPS figures retrospectively adjusted.
Source: 10-Q Item 2 MD&A
Q2 2026 gross margin percentage decreased 170 basis points to 37.6% versus 39.3% in Q2 2025, driven by higher direct/indirect material costs and higher labor costs that outpaced revenue growth from pricing actions.
Source: 10-Q Item 2 MD&A
Building Automation net sales grew 10% with segment profit up 13% to a 27.1% margin, while Process Automation and Technology segment profit declined 4% YoY (margin down 180bps to 22.1%) due to a 10% organic profit decline from lower catalyst shipments in Aftermarket, partially offset by the Sundyne acquisition contributing $78 million in sales.
Source: 10-Q Item 2 MD&A
Total backlog increased 12% YoY to $38.0 billion as of June 30, 2026, led by Aerospace Technologies ($18.4B). On July 17, 2026, Honeywell acquired Johnson Matthey's Catalyst Technologies business for $1,750 million net of cash acquired, expanding the Process Automation and Technology segment.
Source: 10-Q Item 2 MD&A
Following completion of the Aerospace Spin-Off on June 29, 2026, Honeywell is now a smaller, less diversified company that could amplify the impact of adverse market conditions and volatility. The filing notes risks including potential activist shareowner challenges, business disruption, diversion of management time, and stock price fluctuations that may not reflect the company's fundamental value post-separation.
Source: 10-Q Item 1A
Other income decreased due to approximately $0.7 billion in higher divestiture-related costs tied to the Aerospace Spin-Off in Q2 2026 alone (~$0.9 billion YTD), and a $241 million YTD loss on debt extinguishment from debt tender offers/redemptions ahead of the spin-off. These one-off separation costs materially pressured non-operating income.
Source: 10-Q Item 2 MD&A
Honeywell reached agreements in April 2026 to sell its Productivity Solutions and Services and Warehouse and Workflow Solutions businesses (within Industrial Automation) in two separate transactions expected to close in Q3 2026, subject to customary closing conditions including regulatory approvals. A $311 million YTD impairment charge was already recorded on these held-for-sale assets, with $48 million recognized in Q2 2026 alone.
Source: 10-Q Item 2 MD&A
The company is exposed to price fluctuations in key raw materials including copper, tungsten salts, aluminum, and molybdenum used in Process Automation and Technology, with many components sourced on a single or sole-source basis. Inability to offset inflation via pricing or productivity actions could adversely affect margins, as evidenced by the segment's 180 bps profit margin decline in Q2 2026.
Source: 10-Q Item 1A
Honeywell's international operations represent more than half of company sales, exposing it to tariffs, trade restrictions, and the ongoing Middle East conflict's impact on energy markets, trade flows, and shipping. The company also cites unresolved exposure related to the Russia-Ukraine conflict, including remaining contractual obligations with Russian counterparties for which reasonably possible losses cannot be estimated.
Source: 10-Q Item 1A
Reported EPS of $1.95 versus the $4.86 analyst consensus — a -59.9% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $9.72B | $9.32B | +4.26% |
Cost of Revenue | $6.07B | $5.66B | +7.21% |
Operating Income | $2.24B | $2.13B | +5.26% |
Net Income | $5.68B | $1.57B | +261.91% |
EPS (Basic) | $17.92 | $4.92 | +264.23% |
EPS (Diluted) | $17.83 | $4.90 | +263.88% |
R&D Expense | $524M | $459M | +14.16% |
SG&A Expense | $1.34B | $1.36B | -1.32% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $77.34B | $78.42B | -1.37% |
Current Assets | $28.08B | $27.97B | +0.40% |
Current Liabilities | $23.19B | $21.62B | +7.29% |
Stockholders' Equity | $18.54B | $16.09B | +15.17% |
Cash & Equivalents | $8.75B | $10.35B | -15.44% |
Long-Term Debt | $31.51B | $30.24B | +4.20% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $626M | $1.92B | -67.33% |
Investing Cash FlowYTD | $-1.05B | $-1.88B | +44.26% |
Financing Cash FlowYTD | $-3.25B | $-421M | -671.02% |
Share BuybacksYTD | $1B | $3.6B | -72.25% |
D&A | $312M | $348M | -10.34% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 23.0% | 22.8% | +0.22% |
Net Margin | 58.5% | — | — |
ROE | 30.7% | — | — |
ROA | 7.3% | — | — |
Current Ratio | $1.211 | — | — |
Expected release date, analyst estimates & what to watch
Honeywell delivered modest 2.4% revenue growth to $9.14B in Q1 2026 with improved operating margins, but net income plunged 43.3% to $821M and operating cash flow turned sharply negative at -$650M, signaling significant one-time charges and working capital headwinds.
Honeywell (HON) delivered FY2025 revenue growth of 7.8% to $37.4B, but net income fell 17.1% to $4.7B, pressured by higher costs, a 24.6% surge in R&D spending, and a significant decline in stockholders' equity amid aggressive share buybacks.
Other companies in Industrial Conglomerates
The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this 10-Q. However, GAAP net income of $5.68B (EPS diluted $17.83) far exceeded the prior year's $1.57B, though this was driven almost entirely by a one-time $6.63B gain on the Quantinuum deconsolidation rather than core operating improvement.
Net income rose 261.9% YoY to $5.68B primarily due to a $6,629 million non-cash gain recorded when Quantinuum completed its IPO on June 4, 2026 and Honeywell deconsolidated it, retaining a 48% equity-method stake. This one-time gain was partially offset by higher divestiture-related costs (~$0.7B) tied to the Aerospace Spin-Off and a $265 million equity loss on the retained Quantinuum stake.
Honeywell completed the Aerospace Spin-Off on June 29, 2026, distributing one Honeywell Aerospace share for every two Honeywell Technologies shares held, and simultaneously executed a one-for-two reverse stock split (all share/EPS figures retrospectively adjusted). Starting Q3 2026, Aerospace Technologies results will move to discontinued operations, and the company now operates through three segments: Building Automation, Process Automation and Technology, and Industrial Automation.
Revenue grew 4.3% YoY to $9.72B, driven by 4% pricing gains and favorable foreign currency translation, partially offset by the PPE business divestiture. However, gross margin percentage declined 170 basis points to 37.6% due to higher material and labor costs, while operating margin ticked up slightly to about 23.0% from 22.8%.
Key risks include execution challenges from becoming a smaller, less diversified company post-Aerospace Spin-Off, pending divestitures of Productivity Solutions and Warehouse and Workflow Solutions businesses subject to regulatory approval, and raw material cost pressures in the Process Automation and Technology segment. The company also cited geopolitical risks from the Middle East conflict and unresolved Russia-Ukraine related contractual exposures.