This morning, we'll review our financial results for the fourth quarter and full year 2025 and discuss our guidance for the first quarter and full year 2026. Honeywell delivered a strong fourth quarter to close 2025, exceeding our expectations for both adjusted sales and adjusted EPS, with orders up 23%, driving our backlog to over $37 billion. This gives us conviction in another year of meaningful top and bottom-line growth of 2026. Looking ahead, we expect to once again drive strong organic growth, fueled by conversion of our record backlog, disciplined price execution, and momentum in new product introductions.
The strong organic growth, coupled with productivity and an aggressive reduction in stranded costs related to the spins, will enable us to deliver 6%-9% earnings growth in 2026, along with accelerating cash generation. This positions each business with the right strategic focus, organizational agility, and tailored capital allocation strategies needed to grow faster and drive incremental value for our all stakeholders. Craig brings more than two decades of experience in leadership roles at industrial and tech businesses, where he delivered transformational results through operational excellence and disciplined capital allocation. Together, Craig, Jim, and Josh bring the right mix of industry, company, and capital market experience to maximize the value for our customers, partners, employees, and our shareowners.
Beginning in 2026, we reorganized Honeywell segment into more simplified structure, focused on cohesive, synergetic business model.... Following the recent fundraising, in which Quantinuum raised approximately $840 million at a $10 billion pre-money valuation, the pace of both technological and commercial progress at Quantinuum is rapidly increasing. Helios' groundbreaking design and advanced software stack brings quantum programming closer to the ease and flexibility of classical computing, which we believe positions the company to accelerate quantum's commercial adoption. Before Mike talks about 4Q results, let's move to slide five to discuss our recent growth acceleration.
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS growth | Full year 2026 | 6% to 9% earnings growth |
| Price contribution | Full year 2026 | Around 3% to 3.5% |
| Total segment margin | Full year 2026 | Up 20 to 60 bps headline; 50 to 90 bps operationally |
| Aerospace sales growth | Full year 2026 | High single digits organically |
| Building automation sales growth | Full year 2026 | Above mid-single digits, with margin up over 50 bps |
| Process automation and technology sales | Full year 2026 | Roughly flat organically, margin roughly flat |
| Industrial automation sales | Full year 2026 | Down low single digits to roughly flat, leading margin expansion (~100 bps operationally) |
| Aerospace spin timing | 2026 | Now expected in the third quarter of 2026 (Pulled forward / ahead of plan) |
| Metric | YoY | Note |
|---|---|---|
| Total sales | Up 11% organically (6% ex-Bombardier) | Double-digit aerospace growth, high single-digit building automation growth, and roughly 4 points of price. |
| Aerospace segment margin | Expanded 40 bps sequentially to 26.5% | Stronger volumes enabled by supply chain improvements. |
| Building automation organic sales | Up 8% | 9% growth in solutions and 8% in products, led by North America and Middle East with strength in projects and fire. |
| ESS organic sales | Down 7% | Lower petrochemical catalyst shipments and continued project deferrals. |
| Adjusted EPS | Up 17% (down 3% ex-Bombardier) to $2.59 | Higher segment profit and lower share count, offset by a 24-cent tax timing headwind. |
| Free cash flow | Up 48% (up 13% ex-Bombardier) to $2.5 billion | Higher operational income and collections, partly offset by higher cash taxes and interest payments. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Portfolio separation | Announced intent to spin aerospace and advanced materials | Solstice spin complete, aerospace spin pulled into Q3 2026, and PSS and Warehouse/Workflow Solutions to be sold in first half of 2026 | Ahead of plan |
| Pricing strategy | Historically a 1% to 2% price company | Capturing about 4% in 2025 and 3.5% planned for 2026 amid persistent inflation, with more mature, region-specific and product-specific pricing | Structurally higher |
| Process automation orders | Softness in large project activity | Over 40% order growth in refining and petrochemical projects with backlog up 15%, converting to revenue in second half 2026 | Sharply improved on long cycle |
| Quantinuum | Investing in quantum computing | $840 million raise at $10 billion valuation, Helios launch, NVIDIA partnership, and confidential S-1 filed; ~$100 million higher year-over-year investment and ~30 bps margin headwind | Accelerating |
| Stranded costs | Costs from spins to be eliminated over time | Advanced materials stranded costs neutralized in 2026; aerospace stranded costs to be eliminated in 12 to 18 months | Being eliminated |
| Recurring revenue via Forge platform | Building started connecting assets first | Building automation showing results; process is 9 to 12 months behind on its connected plant journey toward agentic, ARR-based models | Expanding |