Honeywell reported continued strength in its Building Automation segment during the second quarter, including double-digit growth in its fire business.
Honeywell (Nasdaq: HON) posted a strong second quarter following its transformation into a pure-play automation company, highlighting continued momentum in its Building Automation segment, including robust growth in its fire business, while raising its full-year 2026 financial outlook.
Chairman and CEO Vimal Kapur said the company’s strategy centers on expanding its installed base and generating recurring revenue through software, services and outcome-based solutions.
“The second quarter marked an important milestone for Honeywell Technologies as we began our next chapter as a pure-play automation company,” Kapur said. “Our results this quarter have demonstrated the strength of the new Honeywell Technologies portfolio.”
The company reported its first earnings as a standalone business following Honeywell's three-way split, posting 4% organic sales growth in the second quarter. Continued strength in Building Automation and better-than-expected performance across its automation businesses fueled the results, while organic orders rose 16% and backlog increased 9%.
Building Automation posted the highest organic sales growth among Honeywell’s three operating segments.
According to Kapur, Honeywell generated more than 50% order growth and 30% organic sales growth in its high-growth verticals while maintaining strong performance across its traditional markets.
“This quarter, we drove over 50% orders growth and 30% organic sales growth in high-growth verticals while maintaining our strong position in the core with approximately 30% orders growth in our Fire business,” he said.
Chief Financial Officer Mike Stepniak said Building Automation delivered 9% organic sales growth during the quarter, driven by double-digit growth in products and continued strength in solutions.
“The teams drove double-digit growth in the Fire and Services businesses, respectively, and we saw strength in all regions led by Asia Pacific, Middle East and Americas,” Stepniak said. “All in, another strong quarter from Billal and the Building Automation team.”
Building Automation segment margin expanded 90 basis points to 27.1%, driven by volume leverage and pricing, partially offset by inflation.
Honeywell also identified healthcare, hospitality and data centers as important growth verticals for Building Automation. Stepniak said the company now expects the segment to deliver mid-single-digit or better organic growth for the full year, supported by strong second-quarter orders in those markets.
Kapur said Honeywell is increasingly aligning its portfolio with higher-growth verticals while emphasizing software and recurring services.
“Our strategy focuses on two key pillars: growing our installed base and then monetizing this vast installed base through innovative software, services and outcome-based solutions,” he said. “While maintaining our leading position in core verticals, we are also increasing our exposure to higher-growth verticals like data centers, LNG, grid infrastructure and life sciences.”
The company also reiterated that software and annual recurring revenue will play a larger role in its long-term growth strategy as it seeks to expand margins and earnings.
Based on second-quarter performance, Honeywell increased its full-year guidance, raising expected organic sales growth to 3% to 4% from its previous forecast of 2% to 3%. The company also increased its adjusted earnings per share outlook to a midpoint of $8.20 from $8.10 previously while projecting stronger segment margin expansion.
Kapur said Honeywell’s simplified automation portfolio is positioned to benefit from long-term macro trends.
“With our portfolio transformation complete, our simplified pure-play automation portfolio is well positioned to benefit from long-term macro tailwinds,” he said, citing AI, increasing global energy demand, an aging population and increased consumption as key growth drivers.
(Editor’s note: This article was produced with the assistance of generative AI using Honeywell’s publicly available earnings call transcript as source material. The content was reviewed, edited and verified by the SecurityInfoWatch editorial team to ensure accuracy, context and adherence to our editorial standards.)