This morning, we will review our financial results for the third quarter, share our guidance for the fourth quarter, and provide an update on full year 2025. Growth in organic sales took another step up and finished ahead of expectations, driven by our commitment to developing new solutions that solve our customers' most challenging problems. Better top-line results translated into earnings well above our guided range, while strong orders across the portfolio demonstrate early results of our focus on innovation. Our excellent third-quarter performance is powering another increase in our full-year guidance.
We are raising our 2025 EPS guide for the third time this year, even as we incorporate the impact of impending spin-off of Solstice Advanced Materials. This move is another significant step in our simplification of Honeywell, which will provide the strategic focus, organizational agility, and tailored capital allocation to grow faster and drive value for all our stakeholders. On our slide four, I will go over segment realignment in more detail. I'm pleased to take this next step in evolving Honeywell's streamlined portfolio with the aim of unlocking incremental value and driving long-term growth and margin expansion.
We then mine this install base by providing customers with high-value, outcome-based solutions with a combination of software and services. The new structure will allow us to better prioritize R&D efforts, capital expenditure, and go-to-market strategy with a growth mindset. As we continue our journey of transforming the portfolio, I would like to highlight another level of value creation with the recently announced Quantinuum capital raise on slide five. Honeywell delivered exceptional third-quarter results, again exceeding the high end of organic growth and adjusted earnings per share guidance, as we have done each quarter this year.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales growth (full year) | FY2025 | ~6% (Raised ~150 bps from prior midpoint) |
| Sales (full year) | FY2025 | $40.7B-$40.9B (Raised) |
| Adjusted EPS (full year) | FY2025 | $10.60-$10.70 (Raised third time this year; up 7%-8%) |
| Free cash flow (full year) | FY2025 | $5.2B-$5.6B (Unchanged on a like-for-like basis) |
| Segment margin (full year) | FY2025 | Up 30-40 bps (Modestly lower than prior guidance) |
| Organic sales growth | Q4 2025 | 8%-10% (4%-6% ex-Bombardier) |
| Sales | Q4 2025 | $10.1B-$10.3B |
| EPS | Q4 2025 | $2.52-$2.62 (up 2%-6%) |
| Segment margin | Q4 2025 | 22.5%-22.8% (Up 160-190 bps (down 120-90 bps ex-Bombardier)) |
| Solstice spin-off impact | FY2025 | Sales -$700M, adj EPS -~$0.21, FCF -$200M (Newly incorporated into guidance) |
| Metric | YoY | Note |
|---|---|---|
| Organic sales | +6% | Return to double-digit growth in Aerospace and fourth straight quarter of high single-digit growth in Building Automation |
| Orders | +22% organic to $11.9B | Broad-based growth led by long-cycle Aerospace and energy projects; order growth accelerated in all four segments, book-to-bill above one |
| Segment profit | +5% | Led by ongoing margin expansion in Building Automation; margin met high end of guidance |
| Adjusted EPS | +9% to $2.82 | Strong segment profit growth and lower effective tax rate more than offset higher interest expense |
| GAAP EPS | +32% to $2.86 | Includes one-time items from balance-sheet de-risking transactions |
| Free cash flow | -16% to $1.5B | Capital expenditure timing and modestly higher working capital to support sales growth |
| Aerospace Technologies sales | +12% organic | Strength in commercial aftermarket and defense and space; commercial OE returned to growth |
| Aerospace margin | -160 bps to 26.1% | Commercial excellence and volume leverage offset by cost inflation and acquisition-related headwinds |
| Industrial Automation sales | +1% organic | Returned to growth, exceeding guidance, led by continued strength in sensing business |
| Industrial Automation margin | -150 bps to 18.8% | Commercial excellence and productivity offset by inflationary pressures |
| Building Automation sales | +7% organic | Strength in both building solutions and building products; North America and Middle East led, Europe grew fourth consecutive quarter |
| Building Automation margin | +80 bps | Leverage on strong volume performance |
| ESS sales | -2% organic | Strong refrigerants performance offset by licensing and catalyst delivery delays in UOP |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Portfolio simplification / separations | Solstice spin targeted early 2026; Aerospace separation planned | Solstice begins trading October 30, ahead of schedule; Aerospace separation in 2H 2026; new four-segment automation structure effective Q1 2026 | Accelerating |
| Margin trajectory | Margins more flattish through 2025 with growth prioritized | Transitory pressures from mix, catalyst push-outs, tariffs; expansion expected to return in 2026 | Pressured near-term, improving |
| Pricing | Lag effect was a 2025 headwind | Expected to become a good enabler of 2026 margin expansion as tariffs stabilize and inflation clarifies | Improving |
| Acquisitions (since 2023) | Expected ~1%-2% accretion in 2025 | Performing ahead of TVA on revenue and cost synergies; ~12x average multiple; becoming organic starting Q4 | Ahead of plan |
| Aerospace recovery | Destocking and OE recoupling underway | Recoupling largely behind; Q2 2025 was margin bottom; sequential improvement expected; past-due backlog over $2B | Recovering |
| Data center exposure (Building Automation) | Historically a small vertical | Becoming a larger contributor via fire safety, security, and building management; partnerships with hyperscalers and REITs | Growing |
| Geographic demand | — | Growth across all regions: solid US, Europe returning to low-to-mid single digit, strong Middle East/India, China flattish (high single including Aero) | Broadening |