Q3 2025 Honeywell International Inc Earnings Call

It will be a question and answer session.

Please be advised that today's call is being recorded.

I would now like to hand, the call over to Sean Meacham, Vice President of Investor Relations. Please go ahead.

Thank you good morning, and welcome to Honeywell's third quarter 2025 earnings Conference call.

On the call with me today are chairman and Chief Executive Officer, Bill Mockup War, and senior Vice President and Chief Financial Officer, Mike Stefanek.

This webcast and the presentation materials, including non-GAAP reconciliations are available on our Investor Relations website.

From time to time, we post new information that may be of interest or material to our investors on this website. Our discussion today includes forward looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings.

Speaker #1: Thank you for standing by and welcome to the Honeywell Third Quarter 2020 Earnings Conference Call . This time , all participants are in a listen only mode .

Operator: Thank you for standing by and welcome to the Honeywell International Inc. third quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After the speakers' presentation there will be a question and answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead.

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 as always we'll leave time for your questions at the end I will turn the call over to chairman and CEO.

Speaker #1: After the speaker's presentation , there will be a question and answer session . Please be advised that today's call is being recorded . I would now like to hand the call over to Sean Meakim , Vice President of Investor Relations .

Thank you, Sean and good morning, everyone.

<unk> continued its strong 2025 performance in third quarter.

Speaker #1: Please go ahead .

Speaker #2: Thank you . Good morning and welcome to Honeywell's Third Quarter 2020 earnings conference call . On the call with me today are chairman and chief Executive Officer , Vimal Kapur and Senior Vice President and Chief Financial Officer , Mike Stepniak .

Sean Meakim: Thank you. Good morning and welcome to Honeywell International Inc.'s third quarter 2025 earnings conference call. On the call with me today are Chairman and Chief Executive Officer Vimal Kapur and Senior Vice President and Chief Financial Officer Mike Stepniak. This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website. From time to time, we post new information that may be of interest or material to our investors on this website. Our discussion today includes forward-looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. 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 of demonstrate early results of our focus on innovation, our excellent third quarter performance as poverty. Another increase in our full year guidance. We are raising our 2025 EPS guide for the third time this year.

Speaker #2: This webcast and the presentation materials , including non-GAAP reconciliations , are available on our Investor Relations website . From time to time , we post new information that may be of interest or material to our investors on this website .

Speaker #2: Our discussion today includes forward looking statements that are based on our best view of the world and of our businesses , as we see them today , and are subject to risks and uncertainties , including the ones described in our SEC filings this morning .

Even as we incorporate the impact of embedding spinoff of solstice advanced materials.

Speaker #2: 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 .

Nearly a year since we announced our intent to separate advanced materials. Today, we are a week out from sources first day of trading as an independent company. Our Swift progress to this point demonstrate our ability to diligently execute carefully crafted work plans that speed and efficacy we are.

Speaker #2: As always , we'll leave time for your questions at the end . I'll turn the call over to chairman and CEO , and we'll conclude .

Sean Meakim: As always, we will leave time for your questions. At the end, I'll turn the call over to Chairman and CEO.

Speaker #3: Thank you . Shawn , and good morning , everyone . Honeywell continued its strong 2025 performance in third quarter 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 .

Vimal Kapur: Thank you, Sean, and good morning, everyone. Honeywell International Inc. continued its strong 2025 performance in the third quarter. 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 result 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 impairing spinoff of Solstice Advanced Materials. Barely a year since we announced our intent to separate Advanced Materials, today, we are a week out from Solstice's first day of trading as an independent company.

The right resources in place to deliver on both our portfolio transformation and our businesses financial and operational targets, we will carry the learnings and momentum from solstice two next year separation of aerospace.

Speaker #3: 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 .

As we look to our future as three independent companies in 2026, we are proactively planning to realign the structure of our automation business at the beginning of next year to reflect how we will operate going forward. This move is another significant step in our simplification of honeymoon, which will provide the strategic focus.

Speaker #3: 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 .

Speaker #3: Even as we incorporate the impact of embedding spin off of solstice Advanced Materials . Barely a year since we announced our intent to separate advanced Materials today , we are a week out from solstice , first day of trading as an independent company .

Organizational agility, and Taylor capital allocation to grow faster and drive value for all our stakeholders. Please turn to slide three for the latest update of our separation.

A couple weeks ago sources held a well attended Investor day in New York, where David sale and his new management team presented a compelling vision for the new specialty materials company and how its rich history, a new independent strategy will unleash its growth potential and unlock long term stakeholder value.

Speaker #3: Our swift progress to this point demonstrates our ability to diligently execute carefully crafted work with speed and efficacy . We have the right resources in place to deliver on both our portfolio transformation and our businesses .

Vimal Kapur: Our swift progress to this point demonstrates our ability to diligently execute carefully crafted work plans with speed and efficacy. We have the right resources in place to deliver on both our portfolio transformation and our businesses' financial and operational targets. We will carry the learnings and momentum from Solstice to next year. Separation of Aerospace, as we look to our future as three independent companies in 2026, we are proactively planning to realign the structure of our automation business at the beginning of next year to reflect how we will operate going forward. This move is another significant step in our simplification of Honeywell International Inc., which will provide the strategic focus, organizational agility, and tailored capital allocation to grow faster and drive value for all our stakeholders. Please turn to slide 3 for the latest update of our separation.

Speaker #3: Financial and operational targets . We will carry the learnings and momentum from solstice to next year's separation of aerospace . As we look to our future as three independent companies , Aim 2026 .

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A week from today on October 30th Honeywell shareholders will receive new shares of solstice, which will begin trading as a separate public company I wanted to thank the teams that achieved this important milestone well ahead of the original schedule to complete by early 2026.

Speaker #3: We are proactively planning to realign the structure of our automation business at the beginning of next year to reflect how we will operate going forward .

I'm extremely excited for the opportunities in front of solstice and I will be cheering on the success in the years ahead.

Speaker #3: 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.

As a planned separation of aerospace in the second half of 2026 approaches our board has been intently focused on assembling a honeywell aerospace leadership team with the right mix of industry company and capital market experiences to maximize value for our customers partners employees and our shared.

Speaker #3: Please turn to slide three for the latest update of our separation . A couple of weeks ago , solstice held a well attended Investor Day in New York , where David Sewell and his new management team presented a compelling vision for the new speciality materials company and how its rich history and new independent strategy will unleash its growth potential and unlock long term stakeholder value .

Vimal Kapur: A couple of weeks ago, Solstice held a well-attended Investor Day in New York, where David Swell and his new management team presented a compelling vision for the new specialty materials company and how its rich history and new independent strategy will unleash its growth potential and unlock long-term stakeholder value. A week from today, on October 30th, Honeywell International Inc. shareholders will receive new shares of Solstice, which will begin trading as a separate public company. I want to thank the teams that achieved this important milestone well ahead of the original schedule to complete by early 2026. I'm extremely excited for the opportunities in front of Solstice and I will be cheering on the success in the years ahead as a planned separation of Aerospace in the second half of 2026 approaches.

We expect to make and aerospace leadership in headquarter announcements later this year.

The separation of aerospace brings the opportunity to further simplify Honeywell automation as a result, we have proactively designed at new simpler structure aligned to the future of the business, which I will discuss in more detail in the next slide as they seek to better position the future independent aerospace and automation company for success, we have opportunity.

Speaker #3: A week from today , on October 30th , Honeywell shareholders will receive new shares of Solstice , which will begin trading as a separate public company .

Speaker #3: I want to thank the teams that achieved this important milestone well ahead of the original schedule to complete by early 2026 . I'm extremely excited for the opportunities in front of solstice , and I will be cheering on the success in the years ahead as our planned .

<unk> completed transaction to simplify the legacy liabilities left on our balance sheet. During the third quarter, we entered into an agreement to divest all our bendix asbestos liability on attractive terms for all parties.

Speaker #3: Separation of aerospace . In the second half of 2026 approaches . Our board has been intently focused on assembling a Honeywell Aerospace leadership team with the right mix of industry , company and capital market experiences to maximize value for our customers , partners , employees and our shareowners .

We also terminated an indemnification and reimbursement agreement with radio in exchange for $1 $6 billion in cash in.

Vimal Kapur: The our board has been intently focused on assembling a Honeywell Aerospace leadership team with the right mix of industry, company, and capital market experiences to maximize value for our customers, partners, employees, and our share owners. We expect to make an Aerospace leadership and headquarter announcement later this year. The separation of Aerospace brings the opportunity to further simplify Honeywell Automation. As a result, we have proactively designed a new, simpler structure aligned to the future of the business, which I will discuss in more detail in the next slide as we seek to better position the future independent Aerospace and Automation companies for success. We have opportunistically completed transactions to simplify the legacy liabilities left on our balance sheet. During the third quarter, we entered into an agreement to divest all our Bendix asbestos liability on attractive terms for all parties.

In combination these transaction resulted in net cash inflow and simplify and de risk our balance sheet, providing the company with fewer administrative burdens and greater financial flexibility to focus on creating value for our core business on slide four I will go over segment realignment in more details.

Speaker #3: We expect to make . An aerospace leadership and headquarter announcements later this year . The separation of aerospace brings the opportunity to further simplify Honeywell automation as a result , we have proactively designed a new , simpler structure aligned to the future of the business , which I will discuss in more detail in the next slide .

We announced yesterday that we are planning to reorganize the Honeywell automation segments into a simplified structure focused on cohesive synergetic business models I.

Speaker #3: As we seek to better position the future independent aerospace and automation companies for success . We have opportunistically completed transaction to simplify the legacy liabilities left on our balance sheet .

I am 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.

Speaker #3: During the third quarter . We entered into an agreement to divest all our Bendix asbestos liability on attractive terms for all parties . We also terminated an indemnification and reimbursement agreement with residue in exchange for $1.6 billion in cash in combination , these transaction resulted in net cash inflow and will simplify and de-risk our balance sheet , providing the company with fewer administrative burdens and greater financial flexibility to focus on creating value for our core business .

As such effective beginning of first quarter of 2026, we plan to report four business segments.

Aerospace technologies building automation process automation and technology and industrial automation.

Vimal Kapur: We also terminated an indemnification and reimbursement agreement with Residue in exchange for $1.6 billion in cash. In combination, these transactions resulted in net cash inflow and will simplify and de-risk our balance sheet, providing the company with fewer administrative burdens and greater financial flexibility to focus on creating value for our core business. On slide 4, I will go over segment realignment in more detail. We announced yesterday that we are planning to reorganize the Honeywell Automation segments into a simplified structure focused on cohesive, synergetic business models. 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. As such, effective beginning of first quarter of 2026, we plan to report four business segments: Aerospace Technologies, Building Automation, Process Automation, and Technology and Industrial Automation ahead of upcoming Aerospace separation.

Ahead of upcoming aerospace separation this new structure serve as an elegant way to continue simplifying the remain co portfolio and align our external segment to the way we are increasingly driving our operation through consistent business models, our differentiated approach underscores our ability to grow our installed base in two ways by selling.

Speaker #3: On our slide four , I will go over segment realignment in more details . We announced yesterday that we are planning to reorganize the Honeywell Automation segments into a simplified structure focused on cohesive , synergetic business models .

Mission critical products through channel and by delivering strategic projects for our customers. We then mine this installed base by providing customers with high value outcome based solution with a combination of software and services.

Speaker #3: 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 .

The three that remain core reporting segments will be organized into six strategic business unit with each of our businesses aligned to our unified automation strategy, enabling us to solve enterprise level challenges and help our customers achieve new level of optimization with the Honeywell forge platform.

Speaker #3: As such , effective beginning of first quarter of 2026 , we plan to report for business segments . Aerospace technologies Building Automation , process automation , and technology , and industrial Automation ahead of upcoming aerospace separation .

Aerospace reporting is unchanged head of separation in the second half of the next year.

Speaker #3: This new structure serve as an elegant way to continue simplifying the Remainco portfolio and align our external segment to the way we are increasingly driving our operation through consistent business models .

Vimal Kapur: This new structure serves as an elegant way to continue simplifying the RemainCo portfolio and align our external segment to the way we are increasingly driving our operation through consistent business models. Our differentiated approach underscores our ability to grow our install base in two ways: by selling mission critical products through channels and by delivering strategic projects for our customers. We then mine this install base by providing customers with high value outcome based solutions with a combination of software and services. The three remaining core reporting segments will be organized into six strategic business units, with each of our businesses aligned to our unified automation strategy, enabling us to solve enterprise level challenges and help our customers achieve new levels of optimization. With the Honeywell Forge platform, Aerospace reporting is unchanged ahead of separation in the second half of next year.

New structure will allow us to better prioritize R&D efforts capital expenditure and go to market strategy with a growth mindset building automation will continue to be a leading provider of unified building automation solution delivering safer more sustainable integrated buildings and infrastructure asset and maintenance.

Speaker #3: Our differentiated approach underscores our ability to grow our installed base in two ways by selling mission critical products through channel and by delivering strategic projects for our customers .

Alex and solution business unit structure process automation and technology is combination of cord Honeywell process solutions and <unk> the global leader in process technology.

Speaker #3: We then mine this installed base by providing customers with high value , outcome based solution with a combination of software and services . The three remain core reporting segments will be organized into six strategic business units , with each of our businesses aligned to our unified Automation strategy , enabling us to solve enterprise level challenges and help our customers achieve new level of optimization .

These businesses have developed powerful commercial synergies enjoy a leading position in process market global EBIT, Boston installed base and share very similar business model characteristics.

A&P will report projects and aftermarket business units industrial automation portfolio of products and solutions businesses include mission critical offering with proven reliability and Daniel channel relationship positioning us to benefit from ongoing global reassuring dramatics.

Speaker #3: With the Honeywell Forge platform , aerospace reporting is unchanged ahead of separation in the second half of the next year . The new structure will allow us to better prioritize R&D efforts , capital expenditure and go to market strategy with a growth mindset .

But this realignment following the separation of aerospace next year Honeywell will be a premier pure play automation company, leading the future of automation through high ROI outcome based solution for our customers across our large addressable set of markets and as we continue our journey of transforming the portfolio I would like to highlight another.

Vimal Kapur: The new structure will allow us to better prioritize R&D efforts, capital expenditure, and go to market strategy with a growth mindset. Building Automation will continue to be a leading provider of unified building automation solutions, delivering safer, more sustainable integrated buildings and infrastructure assets and remain in its products and solutions business unit structure. Process Automation and technology is a combination of core Honeywell Process Solutions and UOP, the global leader in process technology. These businesses have developed powerful commercial synergies, enjoy leading positions in process markets globally with vast installed base, and share very similar business model characteristics. Plant will report projects and aftermarket business units. Industrial Automation's portfolio of products and solutions businesses include mission critical offerings with proven reliability and tenured channel relationships, positioning us to benefit from ongoing global reshoring thematics. With this realignment following the separation of Aerospace next year, Honeywell International Inc.

Speaker #3: Building automation will continue to be a leading provider of unified building automation solution , delivering safer , more sustainable , integrated buildings and infrastructure assets , and maintained its products and solutions business unit structure , process automation and technology is combination of core , Honeywell Process Solutions and UOP .

Lever of value creation, with our recently announced continuum capital raised on slide five.

Four years ago, we formed the world's most advanced full stack quantum computing company.

Speaker #3: The global leader in process technology . These businesses have developed powerful commercial synergies , enjoy leading position in process market globally with vast installed base and share very similar business model characteristics .

It has rapidly progressed quantum technology, along the path to universal fault tolerant computing, a more than two decades pursuits than it is soon to be realized.

Speaker #3: Bant will report projects in aftermarket business units , industrial automation , portfolio of products and solution businesses include mission Critical offering with proven reliability and tenured channel relationship positioning us to benefit from ongoing global reshoring thematics .

Technological progress was driven fundraising momentum.

Less than two years after completing an equity capital raise at a $5 billion pre money valuation the company announced in September our second raise at double the prior valuation as important as our capital contributions will be to advancing the development of quantum computing at scale, the collaboration with new shareholders, such as Quanta and Nvidia <unk>.

Speaker #3: With this realignment , following the separation of aerospace next year , Honeywell will be a premier pure play automation company leading the future of automation through high ROI .

Vimal Kapur: will be a premier pure play automation company, leading the future of automation through high ROI outcome based solutions for customers across a large addressable set of markets. As we continue our journey of transforming the portfolio, I would like to highlight another lever of value creation with the recently announced Quantinuum calculator on slide 5. Four years ago, we formed the world's most advanced full stack quantum computing company. It has rapidly progressed quantum technology along the path to universal fault tolerant computing in more than two decades of pursuit. It is soon to be realized technological progress has driven fundraising momentum. Less than two years after completing an equity capital raise at a $5 billion pre-money valuation, the company announces September a second raise at double the prior valuation.

<unk> to others like JP, Morgan Amgen and Mitsui may prove even more critical.

Speaker #3: Outcome based solution for customers across a large addressable set of markets . And as we continue our journey of transforming the portfolio , I would like to highlight another layer of value creation with a recently announced Continuum Capital raise on slide five .

<unk> fundraising efforts have led to new partnership that will support the development of critical applications for improving drug discovery dominant military cyber security and encryption for large financial institutions. While we are tremendously excited about the future of the business. We recognize we are not the best long term owner.

Speaker #3: Four years ago , we formed the world's most advanced full stack quantum computing company . It has rapidly progressed quantum technology along the path to universal fault tolerant computing .

And it will eventually need its own capital structure to fully exploit its growth potential.

Speaker #3: A more than two decades pursuits . Then it is soon to be realized . Technological progress has driven fundraising momentum . Less than two years after completing an equity capital raise at a $5 billion pre-money valuation , the company announces September a second raise at double the prior valuation .

As a result, Honeywell will seek to begin monetizing its stake in the company at the appropriate time in a manner that will create meaningful value for Honeywell shareowners.

The most recent capital raise will sustain continuum through that point in time.

Speaker #3: As important as the capital contributions will be to advancing the development of quantum computing at scale, the collaboration with new shareholders such as Quanta and Nvidia.

Vimal Kapur: As important as the capital contributions will be to advancing the development of quantum computing at scale, the collaboration with new shareholders such as Quantinuum and Nvidia, in addition to others like JPMorgan, Amgen, and Mitsui, may prove even more critical. Quantinuum's fundraising efforts have led to new partnership that will support the development of critical applications for improving drug discovery, government and military, cybersecurity, and encryption for large financial institutions. While we are tremendously excited about the future of the business, we recognize we are not the best long-term owner and it will eventually need its own capital structure to fully exploit its growth potential. As a result, Honeywell International Inc. will seek to begin monetizing its stake in the company at the appropriate time in a manner that will create meaningful value for Honeywell shareowners. The most recent capital raise will sustain Quantinuum through that point in time.

I will now turn the call over to Mike to go through our third quarter results beginning on slide six.

Thank you Ramon and good morning to everyone joining us Honeywell delivered exceptional fourth quarter results again exceeding the high end of organic growth and adjusted earnings per share guidance as we have done each quarter of this year organic sales accelerated to 6% year over year led by returned to double digit growth in aerospace and fourth straight quarter of high single.

Speaker #3: In addition to others like JPMorgan , Amgen and Mitsui , may prove even more critical . Continuum's fundraising efforts have led to new partnerships that will support the development of critical applications for improving drug discovery .

Speaker #3: Government and military cybersecurity , and encryption for large financial institutions . While we are tremendously excited about the future of the business , we recognize we are not the best long term owner and it will eventually need its own capital structure to fully exploit its growth potential .

Growth in building automation orders grew 22% organically from the previous year to $11 9 billion.

While wins for long cycle Aerospace and energy projects led the way the increase was broad based with order growth accelerating each of our four segments and an overall book to bill above what the results are encouraging and an early demonstration of our focus on growth through innovative new products and the impact of our increased R&D investments. This impressive.

Speaker #3: As a result, Honeywell will seek to begin monetizing its stake in the company at the appropriate time in a manner that will create meaningful value for Honeywell shareowners. The most recent capital raise will sustain continuity through that point in time.

<unk> performance pushed our backlog up yet another record, which positioned us well for future growth segment profit increased 5% from the prior year with segment margin meeting the high end of our guidance range led by ongoing margin expansion in building automation earnings per share in the first quarter was $2 86 up 30.

Speaker #3: I will now turn the call over to Mike to go through our third quarter results beginning on slide six .

Vimal Kapur: I will now turn the call over to Mike to go through our third quarter results beginning on slide six.

Speaker #4: Thank you . And good morning to everyone . Joining us . Honeywell delivered exceptional third quarter results . Again exceeding the high end of organic growth .

Mike Stepniak: Thank you Vimal and good morning to everyone joining us. Honeywell delivered exceptional third quarter results, again exceeding the high end of organic growth and adjusted earnings per share guidance, and as we have done each quarter this year, organic sales accelerated to 6% year over year led by return to double digit growth in aerospace and fourth straight quarter of high single digit growth in building automation. Orders grew 22% organically from the previous year to $11.9 billion. Wins for long cycle aerospace and energy projects led the way. The increase was broad based with order growth accelerating in each of our four segments and an overall book to bill above one. The results are encouraging and an early demonstration of our focus on growth through innovative new products and the impact of our increased R&D investments.

Speaker #4: And adjusted earnings per share guidance . As we have done each quarter this year . Organic sales accelerated to 6% year over year , led by return to double digit growth in aerospace and fourth straight quarter of high single digit growth in building automation .

2% from the prior year adjusted earnings per share was $2 82 up 9% year over year, a strong segment profit growth and lower effective tax rate more than offset higher interest expense you can find additional information on the year over year changes in the first quarter adjusted earnings per share in the appendix of our presentation.

Speaker #4: Orders grew 22% organically from the previous year to $11.9 billion , while wins for long cycle aerospace and energy projects led the way .

First quarter free cash flow was $1 5 billion.

Speaker #4: The increase in was broad based , with order growth accelerating in each of our four segments and an overall book to bill above one .

Down 16% from the prior year because of our capital expenditures timing and modestly higher working capital to support our sales growth, we maintain our disciplined capital allocation approach in the quarter, returning $800 million to shareholders, while committing $400 million too high return capital projects and completing two technology tuck in acquisitions.

Speaker #4: The results are encouraging , and an early demonstration of our focus on growth through innovative new products and the impact of our increased R&D investments .

Speaker #4: This impressive commercial performance push our backlog up to yet another record , which positions us well for future growth . Segment profit increased 5% from the prior year , with segment margin meeting the high end of our guidance range led by ongoing margin expansion in building automation , earnings per share in the third quarter was $2.86 , up 32% from the prior year .

Mike Stepniak: This impressive commercial performance pushed our backlog up to yet another record which positioned us well for future growth. Segment profit increased 5% from the prior year with segment margin meeting the high end of our guidance range led by ongoing margin expansion in building automation. Earnings per share in the third quarter was $2.86, up 32% from the prior year. Adjusted earnings per share was $2.82, up 9% year over year. Strong segment profit growth and lower effective tax rate more than offset higher interest expense. You can find additional information on the year over year changes in the third quarter adjusted earnings per share in the appendix of our presentation. Third quarter free cash flow was $1.5 billion, down 16% from the prior year because of capital expenditures timing and modestly higher working capital to support our sales growth.

Now, let's move to slide seven for a discussion of our first quarter segment performance.

I will provide a brief overview of results with additional commentary included on the right hand side of the slide.

Aerospace technologies grew 12% organically led by strength in both commercial aftermarket and defense space commercial OE returned to growth as expected as our cells recap to the delivery rates of our large customers.

Speaker #4: Adjusted earnings per share was $2.82 , up 9% year over year , as strong segment profit growth and lower effective tax rate more than offset higher interest expense .

Speaker #4: You can find additional information on the year over year changes in the third quarter , adjusted earnings per share in the appendix of our presentation , third quarter free cash flow was $1.5 billion , down 16% from the prior year because of a capital expenditures , timing and modestly higher working capital to support our sales growth , we maintain our disciplined capital allocation approach in the quarter , returning $800 million to shareholders while committing $400 million to high return capital projects and completing two technology taking acquisitions .

Orders momentum continued with strong double digit orders growth across all three end markets and book to Bill of one two on a year over year basis segment margin decreased 160 basis points to 26, 1% as commercial excellence and volume leverage were more than offset by cost inflation and acquisition related headwinds.

Mike Stepniak: We maintain our disciplined capital allocation approach in the quarter, returning $800 million to shareholders while committing $400 million to high return capital projects and completing two technology tucking acquisitions. Now let's move to Slide 7 for a discussion on our third quarter segment performance. I will provide a brief overview of results with additional commentary included on the right hand side of the slide. Aerospace Technologies grew 12% organically led by strength in both commercial aftermarket and defense and space. Commercial OEE returned to growth as expected as our sales recoupled to the delivery rates of our large customers. Orders momentum continued with strong double-digit orders growth across all three end markets and book to bill of 1.2 on a year-over-year basis. Segment margin decreased 160 basis points to 26.1% as commercial excellence and volume leverage were more than offset by cost inflation and acquisition-related headwinds.

However, sequentially margin improved 60 basis points on strong quarter over quarter volume supported by improved supply chain performance industrial automation sales returned to growth in the first quarter, increasing 1% organically and exceeding our guidance range led by continued strength in our sensing business segment margin in industrial automation declined 150.

Speaker #4: Now let's move to slide seven for a discussion on our third quarter segment performance . I will provide a brief overview of results with additional commentary included on the right hand side of the slide .

Three basis points from the prior year to 18, 8% as commercial excellence and productivity benefits were more than offset by inflationary pressures building automation again delivered high single digit growth for the quarter organic sales increased 7% from the previous year driven by strength in both building solutions and building products regionally North America.

Speaker #4: Aerospace technologies grew 12% organically , led by strength in both commercial aftermarket and defense and space commercial OE returned to growth as expected , as our sales recoupled to the delivery rates of our large customers orders .

Speaker #4: Momentum continued with strong double digit orders growth across all three end markets and book to bill of 1.2 on a year over year basis .

And the Middle East, while Europe grew organically for a fourth consecutive quarter.

Margin expanded 80 basis points year over year, as we leverage our strong volume performance energy and sustainability solutions performed in line with expectations in the first quarter down 2% organically strong refrigerants performance in advanced materials was offset by licensing and catalyst delivery delays and European segment margin was flat versus the prior year at <unk>.

Speaker #4: Segment margin decreased 160 basis points to 26.1% as Commercial excellence and volume leverage were more than offset by cost inflation and acquisition related headwinds .

Speaker #4: However , sequentially , margin improved 60 basis points on strong quarter over quarter volumes , supported by improved supply chain performance , industrial automation sales returned to growth in the third quarter , increasing 1% organically and exceeding our guidance range .

Mike Stepniak: However, sequentially, margin improved 60 basis points on strong quarter-over-quarter volume supported by improved supply chain performance. Industrial Automation sales returned to growth in the third quarter, increasing 1% organically and exceeding our guidance range, led by continued strength in our sensing business. Business segment margin in Industrial Automation declined 150 basis points from the prior year to 18.8% as commercial excellence and productivity benefits were more than offset by inflationary pressures. Building Automation again delivered high single-digit growth for the quarter. Organic sales increased 7% from the previous year, driven by strength in both building solutions and building products. Regionally, North America and the Middle East led, while Europe grew organically for a fourth consecutive quarter. Margin expanded 80 basis points year-over-year as we leverage our strong volume performance. Energy and Sustainability Solutions performed in line with expectations in the third quarter, down 2% organically.

24, 5% as one time or government reimbursement for past legal cost and the lift from margin accretive acquisitions offset cost and volume headwinds, let's turn now to slide eight to discuss our updated outlook for the year.

Speaker #4: LED by continued strength in our sensing Business segment . Margin in industrial automation declined 150 basis points from the prior year to 18.8% as commercial excellence and productivity benefits were more than offset by inflationary pressures .

Our guidance for the year now incorporates the impact of solstice separation from Honeywell at the end of October the spin is expected to reduce 2025 sales by $700 million.

Speaker #4: Building automation again delivered high single digit growth for the quarter . Organic sales increased 7% from the previous year , driven by strength in both building solutions and building products regionally .

Adjusted earnings per share by approximately <unk>, 21, and free cash flow by $200 million each.

Even with this impact we're again, raising our 2025 organic sales and adjusted earnings per share guidance as we fully pass through our strong third quarter segment profit and net income growth into our improved outlook on a like for like basis, our free cash flow expectations for the year remain unchanged.

Speaker #4: North America and the Middle East led , while Europe grew organically for a fourth consecutive quarter margin , expanded 80 basis points year over year .

Speaker #4: As we leverage our strong volume , performance , energy and sustainability solutions performed in line with expectations . In the third quarter . Down 2% organically .

Now I'll turn to slide nine to provide more details on fourth quarter and full year guidance.

Speaker #4: Strong refrigerants performance in advanced materials was offset by licensing and catalyst delivery delays in UOP segment margin was flat versus the prior year at 24.5% .

Mike Stepniak: Strong refrigerants performance in Advanced Materials was offset by licensing and catalyst delivery delays in EOP. Segment margin was flat versus the prior year at 24.5% as one-time more government reimbursement for past legal cost and the lift from margin-accretive acquisition offset cost and volume headwinds. Let's turn now to slide 8 to discuss our updated outlook for the year. Our guidance for the year now incorporates the impact of Solstice Advanced Materials separation from Honeywell International Inc. at the end of October. The spinoff is expected to reduce 2025 sales by $700 million, adjusted earnings per share by approximately $0.21, and free cash flow by $200 million. Even with this impact, we're again raising our 2025 organic sales and adjusted earnings per share guidance as we fully pass through our strong third quarter segment profit and net income growth into our improved outlook on a like-for-like basis.

We're taking up full year organic sales growth guidance by 150 basis points from the midpoint of our previous range. We now expect growth of approximately 6% for the year or 5% when excluding the prior year impact from the Bombardier agreement.

Speaker #4: As one time government reimbursement for past legal costs and the lift from margin and creative acquisition offset costs and volume headwinds . That's true .

Speaker #4: Now to slide eight to discuss our updated outlook for the year , our guidance for the year . Now incorporates the impact of solstice separation from Honeywell at the end of October .

This new outlook builds upon our strong sales momentum in recent quarters, while maintaining a pragmatic approach in the face of elevated geopolitical tensions and macro uncertainty for yourselves are now projected to be $40 7 billion to $49 billion.

Speaker #4: The spin is expected to reduce 2025 sales by $700 million, adjusted earnings per share by approximately $0.21, and free cash flow by $200 million.

We anticipate a fourth quarter organic sales growth of 8% to 10% or 4% to 6%, excluding Bombardier, which translates to sales of $10 1 billion to $10 3 billion.

Speaker #4: Even with this impact , we're again raising our 2025 organic sales and adjusted earnings per share guidance as we fully pass through our strong third quarter segment profit and net income growth into our improved outlook on a like for like basis , our free cash flow expectations for the year remain unchanged .

For the full year, we now expect our company's segment margin to be up 30 to 40 basis points are to be down 40 to 30 points excluding Bombardier we're in.

Mike Stepniak: Our free cash flow expectations for the year remain unchanged. Now I'll turn to Slide 9 to provide more details on fourth quarter and full year guidance. We're taking up full year organic sales growth guidance by 150 basis points from the midpoint of our previous range. We now expect growth of approximately 6% for the year, or 5% when excluding the prior year impact from the Bombardier agreement. This new outlook builds upon our strong sales momentum in recent quarters while maintaining a pragmatic approach in the face of elevated geopolitical tensions and macro uncertainty. Full year sales are now projected to be $40.7 billion to $40.9 billion. We anticipate a fourth quarter organic sales growth of 8% to 10% or 4% to 6% excluding Bombardier, which translates to sales of $10.1 billion to $10.3 billion for the full year.

Speaker #4: Now I'll turn to slide nine to provide more details on fourth quarter and full year guidance . We're taking up full year organic sales growth guidance by 150 basis points from the midpoint of our previous range .

Dissipating modestly lower margins versus prior guidance as a result of reduced expectations for project licensing catalyst shipments in certain of our short cycle industrial automation products, which carry high incremental margins. We are offsetting most of these headwinds by leveraging our strong volume growth and utilizing our accelerator operating model to implement productivity <unk>.

Speaker #4: We now expect growth of approximately 6% for the year , or 5% when excluding the prior year . Impact from the Bombardier Agreement .

Speaker #4: This new outlook builds upon our strong sales momentum in recent quarters . While maintaining a pragmatic approach in the face of elevated geopolitical tensions and macro uncertainty .

In the fourth quarter, we expect segment margin to be in the range of $22 five to 22, 8% up 160 to 190 basis points are down 120 to 90 basis points. Excluding Bombardier, we now anticipate full year earnings per share of $10 62.

Speaker #4: Four year sales are now projected to be $40.7 billion to $40.9 billion . We anticipate a fourth quarter organic sales growth of 8% to 10% , or 4% to 6% , excluding Bombardier , which translates to sales of 10.1 billion to $10.3 billion for the full year .

To $10 70 up 7% to 8% or up 5% to 6% excluding the impact of both the 2020 for Bombardier agreement and the impending solstice spinoff.

Speaker #4: We now expect our company segment margin to be up 30 to 40 basis points or to be down 40 to 30 points , excluding Bombardier , we anticipating modestly lower margins versus prior guidance , a result of reduced expectations for project licensing .

Mike Stepniak: We now expect our company segment margin to be up 30 to 40 basis points or to be down 40 to 30 basis points, excluding Bombardier. We're anticipating modestly lower margins versus prior guidance, a result of reduced expectations for project licensing, catalyst shipments, and certain short cycle industrial automation products which carry high incremental margins. We are offsetting most of these headwinds by leveraging our strong volume growth and utilizing our Accelerator operating model to implement productivity actions. In the fourth quarter, we expect segment margin to be in the range of 22.5% to 22.8%, up 160 to 190 basis points or down 120 to 90 basis points, excluding Bombardier. We now anticipate full year earnings per share of $10.60 to $10.70, up 7% to 8% or up 5% to 6%, excluding the impact of both the 2024 Bombardier agreement and the impending Solstice Advanced Materials spinoff.

Earnings per share in the fourth quarter is expected to be $2 52 to $2, 60% up 2% to 6% from the prior year or down 6% to 3%, excluding the effects of Bombardier and solstice I will give additional details on changes to the full year EPS guidance later in my prepared remarks, we expect free cash flow.

Speaker #4: Catalyst shipments and certain short cycle industrial automation products , which carry high incremental margins . We are offsetting most of these headwinds by leveraging our strong volume growth and utilizing our accelerator operating model to implement productivity actions in the fourth quarter , we expect segment margin to be in the range of 22.5 to 22.8% , up 160 to 190 basis points , or down 120 to 90 basis points .

Between $5 2 billion and $5 6 billion down.

Down 2% to up 5%, excluding the effects of Bombardier and solstice, we provide additional information on the changes in the year over year free cash flow in the appendix of the presentation.

Through the first three quarters of the year, we have deployed 9 billion for share repurchases acquisitions dividends and capital projects going forward, we will continue to be opportunistic in allocating additional capital beyond that already committed to the highest return opportunities. Please turn to slide 10 for details on our segment level outflow for.

Speaker #4: Excluding Bombardier . We now anticipate full year earnings per share of $10.60 to $10.70 , up 7% to 8% , or up 5% to 6% .

Speaker #4: Excluding the impact of both the 2024 Bombardier agreement and the impending solstice spinoff , earnings per share in the fourth quarter is expected to be $2.52 to $2.62 , up 2% to 6% from the prior year , or down 6% to 3% excluding the effects of Bombardier and Solstice , I will give additional details on changes to the full year EPs guidance later in my prepared remarks .

The year.

In aerospace technologies, we are raising our expectations for full year sales growth to be low double digit range or high single digits when excluding the impact of the 2020 for Bombardier agreement.

Mike Stepniak: Earnings per share in the fourth quarter is expected to be $2.52 to $2.62, up 2% to 6% from the prior year or down 6% to 3% excluding the effects of Bombardier and Solstice. I will give additional details on changes to the full year EPS guidance later in my prepared remarks. We expect free cash flow between $5.2 billion and $5.6 billion, down 2% to up 5% excluding the effects of Bombardier and Solstice. We provide additional information on the changes in the year over year free cash flow in the appendix of the presentation. For the first three quarters of the year, we have deployed $9 billion for share repurchases, acquisitions, dividends, and capital projects. Going forward, we will continue to be opportunistic in allocating additional capital beyond debt already committed to the highest return opportunities.

We expect a robust defence and space growth to continue as our supply chain is improving and our global demand is benefiting from ramping national defense budgets commercial aftermarket sales should expand at a healthy rate with Eric transplant growth outpacing business aviation, we anticipate commercial OE sales growth accelerated for the <unk>.

Speaker #4: We expect free cash flow between 5.2 billion and $5.6 billion , down 2% to up 5% . Excluding the effects of Bombardier and Solstice , we provide additional information on the changes in the year over year free cash flow in the appendix of the presentation for the first three quarters of the year , we have deployed $9 billion for share repurchases , acquisitions , dividends and capital projects .

Remainder of the year as our shipments progressively realign to build schedules.

For the fourth quarter, we expect our organic sales to be up double digits or high single digits, excluding mobile ear led by defense and space commercial aftermarket growth should moderate from first quarter levels towards the longer term trend.

Speaker #4: Going forward , we will continue to be opportunistic in allocating additional capital beyond debt . Already committed to the highest return opportunities . Please turn to slide ten for details on our segment level outlook for the year in aerospace Technologies .

Excluding the year over year impact of Bombardier commercial OE should grow faster than the prior quarter.

Mike Stepniak: Please turn to Slide 10 for details on our segment level outlook for the year. In Aerospace Technologies, we are raising our expectations for full year sales growth to be in the low double digit range or high single digit when excluding the impact of the 2024 Bombardier Agreement. We expect robust Defense and Space growth to continue as our supply chain is improving and our global demand is benefiting from ramping national defense budgets. Commercial aftermarket sales should expand at a healthy rate with air transport growth outpacing business aviation. We anticipate commercial OE sales growth to accelerate for the remainder of the year as our shipments progressively realign to build schedules. For the fourth quarter, we expect Aero Organics sales to be up double digits or high single digits excluding Bombardier, led by Defense and Space.

We anticipate the second quarter marked the low point of aerospace margins and fourth quarter margins will be comparable to the FERC for the full year margins are expected to be approximately 26% as volume leverages more than offset by transitory integration headwinds from the case acquisition and cost inflation from tariff pressures temporarily.

Speaker #4: We are raising our expectations for full year sales growth to be low double digit range or high single digit when excluding the impact of the 2024 Bombardier agreement , we expect robust defense and space growth to continue as our supply chain is improving and our global demand is benefiting from ramping national defense budgets , commercial aftermarket sales should expand at a healthy rate with air transport growth outpacing business aviation .

Outpacing pricing in 2026 as pricing aligns with tariff cost OE shipments of electronic solutions recarpet with build rates and integration costs from the case acquisition subside aerospace margins are well positioned to increase from 2025 levels for industrial automation first quarter outperformance is compelling us.

Speaker #4: We anticipate commercial OE sales growth to accelerate for the remainder of the year as our shipments progressively realigned to build schedules for the fourth quarter , we expect Aero organic sales to be up double digits or high single digits , excluding Bombardier , led by defense and space commercial aftermarket growth should moderate from third quarter levels towards the longer term trend , excluding the year over year impact of Bombardier commercial OE should grow faster than the prior quarter .

To raise our full year top line expectations for a second consecutive quarter from down low to mid single digits to down only low single digits positive order growth in the first quarter was encouraging.

Mike Stepniak: Commercial aftermarket growth should moderate from third quarter levels towards the longer term trend. Excluding the year over year impact of Bombardier, commercial OE should grow faster than the prior quarter. We anticipate the second quarter marked the low point of aerospace margins and fourth quarter margins will be comparable to the third. For the full year, margins are expected to be approximately 26% as volume leverage is more than offset by transitory integration headwinds from the CASE acquisition and cost inflation from tariff pressures temporarily outpacing pricing. In 2026, as pricing aligns with tariff cost, OE shipments of electronic solutions recouple with build rates and integration costs from the CASE acquisition subside, aerospace margins are well positioned to increase from 2025 levels.

And even within both long and short cycle businesses, such that it would not be prudent to confirm a sustainable upward trend as.

Speaker #4: We anticipate the second quarter marked the low point of aerospace margins and fourth quarter margins will be comparable to the third . For the full year , margins are expected to be approximately 26% as volume leverage is more than offset by transitory integration headwinds from the case .

As a result of these mixed dynamics and a more challenging prior year comparison, we expect fourth quarter sales to be down low single digits, continuing momentum in smart energy and steady performance in assessing and warehouse automation should also modest demand headwinds in productivity solutions and services and short term project push outs and core process solutions.

Speaker #4: Acquisition and cost inflation from tariff pressures temporarily outpacing pricing in 2026 , as pricing aligns with tariff costs , oe shipments of electronic solutions , coupled with build rates and integration costs from the case acquisition subside .

We now expect to see margin contraction in industrial automation for the full year on increasingly unfavorable mix with similar margin performance in the fourth quarter in building automation, we continue to anticipate full year organic sales growth in the mid single digit to high single digit range supported by strength in the U S Middle East and India.

Speaker #4: Aerospace margins are well positioned to increase from 2025 levels for industrial automation . Third quarter outperformance is compelling us to raise our full year top line expectations for a second consecutive quarter from down low to mid-single digits to down only low single digits .

Mike Stepniak: For Industrial Automation, third quarter outperformance is compelling us to raise our full year top line expectations for a second consecutive quarter from down low to mid single digits to down only low single digits. Positive order growth in the third quarter was encouraging, though it was uneven within both long and short cycle businesses such that it would not yet be prudent to confirm a sustainable upward trend. As a result of these mixed dynamics and a more challenging prior year comparison, we expect fourth quarter sales to be down low single digits. Continued momentum in Smart Energy and steady performance in Sensing and Warehouse Automation should offset modest demand headwinds in Product Solutions and Services and short term project pushouts in Core Process Solutions.

And highlighted by robust demand in data centers healthcare and hospitality for the fourth quarter, we expect sales to be up mid single digits with momentum from strong order across both products and solutions, we anticipate a fifth consecutive quarter organic growth for products to be broad based across fire BMS and security solutions should come.

Speaker #4: Positive order growth in the third quarter was encouraging, though it was uneven within both long- and short-cycle businesses, such that it would not yet be prudent to confirm a sustainable upward trend.

Speaker #4: As a result of these mixed dynamics and a more challenging prior year comparison , we expect fourth quarter sales to be down low single digits .

To drive solid year over year growth in both projects and services, we expect margins for the full year and the fourth quarter to expand meaningfully as tailwind from volume leverage and productivity options from today.

Speaker #4: Continued momentum in smart energy and steady performance in sensing and warehouse automation should offset modest demand headwinds in productivity solutions and services , and short term project push outs in core process solutions .

Energy and sustainability solutions, we will limit our guidance commentary on advanced materials, given it spending separation as an independent company.

Speaker #4: We now expect to see margin contraction in industrial automation for the full year on increasingly unfavorable mix with similar margin performance in the fourth quarter .

Mike Stepniak: We now expect to see margin contraction in Industrial Automation for the full year on increasingly unfavorable mix, with similar margin performance in the fourth quarter. In Building Automation, we continue to anticipate full year organic sales growth in the mid single digit to high single digit range, supported by strength in the U.S., Middle East, and India, and highlighted by robust demand in data centers, healthcare, and hospitality. For the fourth quarter, we expect sales to be up mid single digits with momentum from strong orders across both products and solutions. We anticipate a fifth consecutive quarter of organic growth for products to be broad based across fire. BMS and security solutions should continue to drive solid year over year growth in both projects and services. We expect margins for the full year and the fourth quarter to expand meaningfully as tailwinds from volume leverage and productivity actions continue.

We are maintaining our full year <unk> sales growth guidance of flat to up slightly and anticipate fourth quarter sales to be down low single digits year over year.

Speaker #4: In building automation , we continue to anticipate full year organic sales growth in the mid-single digit to high single digit range , supported by strength in the US , Middle East and India , and highlighted by robust demand in data centers , healthcare and hospitality .

A difficult macro backdrop for NRG has weighed on our near term guidance, but the long term outlook remains strong at first quarter increase in GOP orders of 9% is a signal of growing underlying demand from our customers and we have good visibility into projects order strength continuing on segment margin, we anticipate a meaningful fourth quarter contraction.

Speaker #4: For the fourth quarter , we expect sales to be up mid-single digits with momentum from strong order across both products and solutions . We anticipate a fifth consecutive quarter of organic growth for products to be broad based across fire , BMS and security solutions should continue to drive solid year over year growth in both projects and services .

<unk>, resulting in a roughly one point of reduction for the full year lower high margin <unk> and licensing sales are offsetting commercial excellence, an uplift from the LNG and signed on acquisitions, while cost inflation and market headwinds have presented a margin challenge in 2025, we're taking meaningful steps to address <unk> cost structure and expect to return to.

Speaker #4: We expect margins for the full year and the fourth quarter to expand meaningfully as tailwinds from volume , leverage and productivity actions continue in energy and sustainability solutions , we will limit our guidance , commentary on advanced materials given its pending separations and independent company .

Mike Stepniak: In Energy and Sustainability Solutions, we will limit our guidance commentary on advanced materials. Given its pending separation as an independent company, we are maintaining our full year ESS sales growth guidance of flat to up slightly and anticipate fourth quarter sales to be down low single digits year over year. A difficult macro backdrop for energy has weighed on our near term guidance, but the long term outlook remains strong. A third quarter increase in EOP orders of 9% is a signal of growing underlying demand from our customers, and we have good visibility into projects order strength. Continuing on segment margin, we anticipate a meaningful fourth quarter contraction resulting in a roughly 1 point reduction for the full year. Lower high margin catalysts and licensing sales are offsetting commercial excellence and uplift from the LNG and Sundyne acquisitions.

Margin expansion in 2026, let's move to slide 11 to go through updates on our 2025 bps work.

Our earnings growth, our tradition comments separated out the year over year impact of solstice spinoff at the end of the month, which is anticipated to reduce adjusted earnings per share by 'twenty. One we now expect segment profit growth, both organic and contribution from acquisitions to at 60% to adjusted EPS for the full year.

Speaker #4: We are maintaining our full-year sales growth guidance of flat to up slightly, in anticipation of fourth-quarter sales to be down low single digits year-over-year.

Speaker #4: A difficult macro backdrop for energy has weighed on our near-term guidance . But the long term outlook remains strong . A third quarter increase in UOP orders of 9% is a signal of growing underlying demand from our customers , and we have good visibility into projects , order strength , continuing on segment margin , we anticipate a meaningful fourth quarter contraction , resulting in a roughly one point reduction for the full year .

Better than our previous view as we fully flow through better than anticipated third quarter operating results third quarter outperformance versus the midpoint of our guidance range benefited from a lower effective tax rate and reduced below the line expenses, which were also benefiting the full year.

Speaker #4: Lower high margin catalysts and licensing sales are offsetting commercial excellence and uplift from the LNG and Cyanidin acquisitions . While cost inflation and market headwinds have presented a margin challenge in 2025 , we're taking meaningful steps to address cost structure and expect to return to margin expansion in 2026 .

Fourth quarter segment profit contributions to earnings are in line with our prior expectations as better aerospace growth offsets margin headwinds in energy and a sustainably solutions in industrial automation as discussed earlier, we anticipate reduced year over year below the line headwinds of 39 per share as repositioning will be at the low end of our prior <unk>.

Mike Stepniak: While cost inflation and market headwinds have presented a margin challenge in 2025, we're taking meaningful steps to address ESS cost structure and expect to return to margin expansion in 2026. Let's move to slide 11 to go through updates on our 2025 EPS work. Our earnings growth attribution comments separate out the year over year impact of Solstice spinoff at the end of the month, which is anticipated to reduce adjusted earnings per share by $0.21. We now expect segment profit growth, both organic and contribution from acquisitions, to add 60% to adjusted EPS for the full year. $0.10 better than our previous view as we fully flow through better than anticipated third quarter operating results. Third quarter outperformance versus the midpoint of our guidance range benefited from a lower effective tax rate and reduced below the line expenses, which were also benefiting the full year.

Speaker #4: Let's move to slide 11 to go through updates on our 2025 EPs work . Our earnings growth attribution comments separate out the year over year impact of the spinoff .

Additional below the line details are available in the appendix of the presentation.

We now expect our full year effective tax rate to be 19% compared to 20% previously, adding <unk> <unk> to adjusted earnings per share.

Speaker #4: At the end of the month , which is anticipated to reduce adjusted earnings per share by $0.21 , we now expect segment profit growth both organic and contribution from acquisitions to add $0.60 to adjusted EPs for the full year , $0.10 better than our previous view .

To summarize we anticipate 2025 adjusted EPS to grow at mid single digit rate when excluding the impact of the solstice spin and Bombardier agreement now I'll hand, the call back over to BMO to finish our prepared comments on slide 12.

Speaker #4: As we fully flow through better than anticipated . Third quarter operating results . Third quarter up performance versus the midpoint of our guidance range benefited from a lower effective tax rate and reduced below the line expenses , which were also benefiting the full year fourth quarter segment profit .

Thanks, Mike Honeywell again exceeded its financial commitment in the third quarter as aerospace execution return that business to double digit year over year growth with orders increasing in each of our four segments. We are getting good returns from dedicating the right level of resources to creating new solution to sell it.

Mike Stepniak: Fourth quarter segment profit contributions to earnings are in line with our prior expectations of better aerospace growth offsetting assets, margin headwinds in Energy and Sustainability Solutions and Industrial Automation. As discussed earlier, we anticipate reduced year over year below the line headwinds of $0.39 per share as repositioning will be at the low end of our prior range. Additional below the line details are available in the appendix of the presentation. We now expect our full year effective tax rate to be 19% compared to 20% previously, adding $0.13 to adjusted earnings per share. To summarize, we anticipate 2025 adjusted EPS to grow at a mid single digit rate when excluding the impact of the Solstice Advanced Materials spin and Bombardier agreement. Now I'll hand the call back over to Vimal to finish our prepared comments on slide 12.

Speaker #4: Contributions to earnings are in line with our prior expectations and better aerospace growth offsets . Margin headwinds in energy and sustainability solutions and industrial automation .

Speaker #4: As discussed earlier , we anticipate reduced year over year below the line headwinds of $0.39 per share as repositioning will be at the low end of our prior range .

To a large global customer base as just one example of our recent commercial success, both stream recently announced that Honeywell engines and avionics well powered its new Super midsized, GE 300 business jet platform, which will offer superior range efficiency and.

Speaker #4: Additional below the line details are available in the appendix of the presentation . We now expect our full year effective tax rate to be 19% , compared to 20% previously adding $0.13 to adjusted earnings per share .

Safety to current comparable aircraft. This win is a testament of our ability to stay at the forefront of leading edge technologies that matter most to our customers. We are going into the final quarter of 2025 from a position of strength with operating momentum leading us to raise our guidance for the third time this year.

Speaker #4: To summarize , we anticipate 2025 adjusted EPs to grow at a mid-single digit rate when excluding the impact of the solstice . Spin and Bombardier agreement .

Speaker #4: Now , I'll hand the call back over to Vimal to finish our prepared comments on slide 12 .

Speaker #3: Thanks , Mike . Honeywell again exceeded its financial commitment in the third quarter as aerospace execution returned . That business to double digit year over year growth , with orders increasing in each of our four segments .

Vimal Kapur: Thanks, Mike. Honeywell again exceeded its financial commitment in the third quarter as aerospace execution returned that business to double-digit year-over-year growth. With orders increasing in each of our four segments, we are getting good returns from dedicating the right level of resources to creating new solutions to sell into our large global customer base. As just one example of our recent commercial success, Gulfstream recently announced that Honeywell's engines and avionics will power its new super mid-sized GE300 business jet platform, which will offer superior range, efficiency, and safety to current comparable aircraft. This win is a testament to our abilities to stay at the forefront of leading-edge technologies that matter most to our customers.

Year, even as a shifting micro environment requires a high level of agility to deliver these results. We are pleased by the performance of our acquisitions since 2023, which continue to help us shape, our portfolio and deliver higher growth and margins are commercial and operational momentum building into 2026.

Speaker #3: We are getting good returns from dedicating the right level of resources to creating new solutions to sell into our large global customer base .

Speaker #3: As just one example of our recent commercial success , Gulf recently announced that Honeywell's engines and avionics will power its new super midsize G 300 business jet platform , which will offer superior range , efficiency and safety to current comparable aircraft .

Which will be historic one for Honeywell at the same time, we are operating with the same commitment to operational excellence that is defined Honeywell for decades.

By 2025 was affected by a number of headwinds, including heightened economic uncertainty incremental data at <unk> and.

And significant cost inflation, we have already begun taking action to position, our aerospace and automation businesses to return to underlying margin expansion in 2026 as the prepare aerospace to begin their journey as a leading independent company next year, we expect to begin 2026 operating under.

Speaker #3: This win is a testament of our abilities to stay at the forefront of leading edge technologies that matter most to our customers . We are going into the final quarter of 2025 from a position of strength with operating momentum leading us to raise our guidance for the third time this year .

Vimal Kapur: We are going into the final quarter of 2025 from a position of strength, with operating momentum leading us to raise our guidance for the third time this year, even as a shifting micro environment requires a high level of agility to deliver these results. We are pleased by the performance of our acquisitions since 2023, which continue to help us shape our portfolio and deliver higher growth and margins. Our commercial and operational momentum are building into 2026, which will be a historic one for Honeywell. At the same time, we are operating with the same commitment to operational excellence that has defined Honeywell for decades. While 2025 was affected by a number of headwinds, including heightened economic uncertainty, incremental tariffs, and significant cost inflation, we have already begun taking action to position our aerospace and automation businesses to return to underlying margin expansion in 2026.

The new structure that aligns to how we will deliver the future of automation given us a running start post separation.

Speaker #3: Even as a shifting micro environment requires a high level of agility to deliver these results , we are pleased by the performance of our acquisition since 2023 , which continued to help us shape our portfolio and deliver higher growth and margins .

Recently customer across end markets faced similar structural challenges such as skilled labor shortages aging infrastructure operational inefficiencies and elevated energy and maintenance as.

Speaker #3: Our commercial and operational momentum are building into 2026 , which will be historic one for Honeywell . At the same time , we are operating with the same commitment to operational excellence that has defined Honeywell for decades .

As value creation shift towards harnessing the power of data to solve enterprise scale challenges and achieve new levels of approximation. We are streamlining our business unit centered around cohesive business model. We're addressing these issues. This segment realignment exemplify the effort to simplify our whole organization to focus on actions.

Speaker #3: While 2025 was affected by a number of headwinds , including heightened economic uncertainty , incremental tariffs and significant cost inflation , we have already begun taking action to position our aerospace and automation businesses to return to underlying margin expansion in 2026 as we prepare aerospace to begin its journey as a leading independent company next year , we expect to begin 2026 operating under a new structure that aligns to how we will deliver the future of automation , giving us a running start for separation .

That creates the highest value for our stakeholders, reducing distraction from legacy liabilities.

<unk> strategic ordinary for parts of our portfolio that do not fit our business model and acquiring complementary technology to bolt on and tuck in acquisitions, all demonstrate our commitment to optimizing our business for future growth and value creation and finally <unk>.

Vimal Kapur: As we prepare Aerospace to begin its journey as a leading independent company next year, we expect to begin 2026 operating under a new structure that aligns to how we will deliver the future of automation, giving us a running start post separation. Increasingly, customers across end markets face similar structural challenges such as skilled labor shortages, aging infrastructure, operational inefficiencies, and elevated energy and maintenance. As value creation shifts towards harnessing the power of data to solve enterprise-scale challenges and achieve new levels of transformation, we are streamlining our business unit centered around a cohesive business model for addressing these issues.

<unk> recent capital raise and technological leap forward delivering the promise of quantum computing, which the company will demonstrate in coming weeks move Honeywell closer to realizing the value of its binary investment in this space, but that Sean let's take questions.

Speaker #3: Increasingly , customer across end markets face similar structural challenges , such as skilled labor shortages , aging infrastructure , operational inefficiencies , and elevated energy and maintenance as value creation shift towards harnessing the power of data to solve enterprise scale challenges and achieve new level of transformation , we are streamlining our business unit centered around cohesive business model for addressing these issues .

Thank you Pamela.

Mike are now available to answer your questions. We ask that you. Please be mindful of others in the queue by asking only one question and one related follow up.

Operator, please open the line for Q&A.

Speaker #3: This segment realignment exemplifies our effort to simplify our whole organization , to focus on actions that creates a highest value for our stakeholders , reducing distraction from legacy liabilities , reviewing strategic alternatives for parts of our portfolio that do not fit our business model , and acquiring complementary technology through bolt on and tuck in acquisitions .

Vimal Kapur: This segment realignment exemplifies our effort to simplify our whole organization to focus on actions that create the highest value for our stakeholders, reducing distraction from legacy liabilities, reviewing strategic alternatives for parts of our portfolio that do not fit our business model, and acquiring complementary technology through bolt-on and tuck-in acquisitions all demonstrate our commitment to optimizing our business for future growth and value creation. Finally, Quantinuum's recent capital raise and technological leap forward, delivering the promise of quantum computing, which the company will demonstrate in coming weeks, move Honeywell closer to realizing the value of its pioneering investment in the space. With that, Sean, let's take questions.

Thank you.

If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before question with Turkey.

Our first question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.

Speaker #3: All demonstrate our commitment to optimizing our business for future growth and value creation. And finally, Continuum's recent capital raise and technological leap forward, delivering the promise of quantum computing, which the company will demonstrate in the coming weeks.

Oh, Thanks, good morning, everyone.

I just wanted to maybe kick off.

With with the full key margin for PFS and I'm just doing the quick math here it implies three to four points of.

Speaker #3: Move Honeywell closer to realizing the value of its pioneering investment in the space. With that, Sean, let's take questions.

The decline year over year, So I just want to make sure number one that that math is correct and secondly is the advanced materials.

Speaker #2: Thank you . Vimal . Vimal and Mike are now available to answer your questions . We ask that you please be mindful of others in the queue by asking only one question and one related follow up .

Sean Meakim: Thank you. Vimal and Mike are now available to answer your questions. We ask that you please be mindful of others in the queue by asking only one question and one related follow-up. Operator, please open the line for Q&A.

Joseph spend at least two months of that is that having a material impact.

On that fell year over year.

Speaker #2: Operator . Please open the line for Q&A .

Good morning, Nigel So I would first highlight that within DSS, we see LNG doing extremely well in that business.

Speaker #1: Thank you . If you'd like to ask a question , please press star one on your telephone keypad . A confirmation tone will indicate your line is in the question queue .

Operator: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Nigel Koh with Wolfe Research. Please proceed with your question.

So we see really good project activity and that's that's progressing well orders are up what do we see in the fourth quarter, we're seeing a little bit of a transitory I would say softness in margins and thats predominantly driven by mix. So we see capitalized push outs to continuing its affecting us in the in the fourth quarter, but generally.

Speaker #1: You may press star two if you'd like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star key .

Speaker #1: Our first question comes from the line of Nigel Coe with Wolfe Research . Please proceed with your question .

Speaker #5: Oh , thanks . Good morning everyone . I just wanted to maybe kick off with with with the for Q margin for S and I'm just doing the quick math here .

Mike Stepniak: Oh, thanks. Good morning everyone. I just wanted to maybe kick off with the Q4 margin for Energy and Sustainability Solutions. I'm just doing the quick math here. It implies 3% to 4% of decline year over year. I just want to make sure, number one, that math is correct and secondly, is the Solstice Advanced Materials spinoff losing two months of that, is that having a material impact on that year over year? Good morning, Nigel. I would first highlight that within Energy and Sustainability Solutions we see LNG doing extremely well in that business. We see really good project activity and that's progressing well. Orders are up. In the fourth quarter, we see a little bit of transitory, I would say, softness in margins and that's predominantly driven by mix. We see catalyst push outs to continue.

I would say that <unk> will normalize as we progress through 2020, we expect to its historical margins and then on an advanced materials advanced materials, while it's a little bit I would say accretive to the overall portfolio, but we are working for them.

Speaker #5: It implies 3 to 4 points of decline year over year . So I just want to make sure , number one , that that math is correct .

Speaker #5: And secondly is the advance materials sources spin . Losing two months of that is that having a material impact on that year over year ?

As we are setting up for 2026 and Nigel This is Shawn I'll, just remind you that the ESF business and European particular, typically has a seasonal build in both volume and mix favorability from <unk>. If you recall, we had an unusually strong second quarter, which we called out at the time it so really.

Speaker #4: Good morning Nigel . So I would first highlight that within SAS we see LNG doing extremely well in that business . So does we see really good project activity .

Full year fourth quarter impact is not that severe and it's really just a timing factor of where things came in a second quarter versus traditionally being higher in three and <unk> and so I'd emphasize just the timing is more of a factor than anything else.

Speaker #4: And that's that's progressing well . Orders are up . What we see in the fourth quarter we see a little bit of transitory .

Speaker #4: I would say softness in margins . And that's predominantly driven by mix . So we see catalysts push out to continue . It's effecting us in the in the fourth quarter .

Okay, and that's actually my follow up question number one did we see these pressures in <unk> in this government service.

Mike Stepniak: It's affecting us in the fourth quarter. Generally, I would say that Energy and Sustainability Solutions will normalize as we progress through 2026 back to its historical margins. On Advanced Materials, Advanced Materials was a little bit, I would say, accretive to the overall portfolio, but we're working for that as we are setting up for 2026.

Speaker #4: But generally I would say that SS will normalize as we progress through 2026 back to its historical margins . And then on on advanced materials , advanced materials was a little bit , I would say , accretive to the overall portfolio , but we're working through that as as we are setting up for 2026 .

Government settlements, maybe offset that just wondering if you can maybe quantify that and then do you think that we.

We see that mix shifting it back in the first half of next year, all or do you have that visibility at this point.

So like I said I think from that from the order activity standpoint, the order activity on big New projects is.

Speaker #2: And Nigel, this is Sean. I would just remind you that the S business and UAP in particular typically has a seasonal build, and both volume and mix favorability from one Q4 to the next. If you recall, we had an unusually strong second quarter, which we called out at the time.

Sean Meakim: Nigel, this is Sean. I'll just remind you that the Energy and Sustainability Solutions business and UOP in particular typically has a seasonal build, and both volume and mix favorability from Q1 through Q4. If you recall, we had an unusually strong second quarter, which we called out at the time. That full year fourth quarter impact is not that severe. It's really just a timing factor of where things came in the second quarter versus traditionally it'd be higher in Q3 and Q4. I'd emphasize just the timing is more of a factor than anything else.

Is quite strong and we will continue to see that in the fourth quarter from a revenue conversion standpoint, given these are big capital projects. They are start converting to revenue probably in the second and second quarter and then the second half from a catalyst standpoint based on how customers.

Speaker #2: And so really , that full year , four quarter impact is not that severe . It's really just a timing factor of where things came in in second quarter versus traditionally would be higher in three and four .

Order in the ordering pattern, we see that improving next year as well, but but don't see that volume in the fourth quarter and like Shawn said, we we usually see a fourth quarter seasonal seasonality in the business and we didn't see it this year because a lot of that volume came came to us in the second quarter, so there'll be a little bit.

Speaker #2: And so I’d emphasize just the timing is more of a factor than anything else.

Speaker #5: Okay . And that's actually my follow up question number one . Did we see these pressures in three ? Q and this government service , this government settlements , maybe offset that ?

[Analyst]: Okay.

Mike Stepniak: That's actually my follow-up question number one. Did we see these pressures in Q3, and this government service, these government settlements maybe offset that? Just wonder if you maybe quantify that, and then do you think that this, we see that mix shift back in the first half of next year, or do you have that visibility at this point? Like I said, I think from the order activity standpoint, the order activity on big new projects is quite strong, and we'll continue to see that in the fourth quarter. From a revenue conversion standpoint, given these are big capital projects, they start converting to revenue probably in the second quarter and then second half. From a catalyst standpoint, based on how customers order and ordering pattern, we see that improving next year as well, but don't see that volume in the fourth quarter.

Speaker #5: Just just wonder if you maybe quantify that . And then do you think that this you know , we see that mix shift in the back in the first half of next year or or do you have that visibility at this point ?

Have a gap in the fourth quarter as far as the USS margins.

But all things said, Nigel we expect the margin to expand in 2026.

It's a transition or anything at the end of the day I mean, we are we are positioning the business for growth. The LNG segment is doing extremely well sundial is doing extremely well all of our projects as Mike as Mike mentioned.

Speaker #4: So like I said , I think from the from the order activity standpoint , the order activity on on big new projects is , is quite strong and we'll continue to see that in the fourth quarter from a revenue conversion standpoint , given these are big capital projects , they're start converting to revenue probably in the second and second quarter .

Is performing at <unk>, 8% growth in Q3, we expect solid Q4, so just really the translation effect on our catalyst volume.

Speaker #4: And then the second half from a catalyst standpoint based on how customers order and ordering pattern , we see that improving next year as well .

And we think that will adjust in 2026, and we should have a more.

Year more unexpected lines expanding our margins in 2026.

Okay. Thanks very much.

Speaker #4: But but don't see that volume in the fourth quarter . And like Sean said , we we usually see fourth quarter seasonal seasonality in the business .

Thank you.

Mike Stepniak: Like Sean said, we usually see fourth quarter seasonality in the business, and we didn't see it this year because a lot of that volume came to us in the second quarter. There will be a little bit of a gap in the fourth quarter as far as Energy and Sustainability Solutions margins.

Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Speaker #4: And we didn't see it this year because a lot of that volume came , came to us in the second quarter . So there will be a little bit of a gap in the fourth quarter as far as the SS margins .

Hi, good morning.

Just wanted to start with the IAA segment as it seems there's a lot of different moving parts inside it.

Speaker #3: But all things said , Nigel , we expect the SS margin to expand in 2026 . You know , it's it's a transitionary thing .

Vimal Kapur: All things said, Nigel, we expect ESS margin to expand in 2026. It's a transitionary thing. At the end of the day, we are positioning the business for growth. The LNG segment is doing extremely well. Sundyne is doing extremely well. The overall projects, as Mike mentioned, are performing at orders rate of 8% growth in Q3. We expect solid Q4. It's just really the transitionary effect on the catalyst volume, and we think that will adjust in 2026. We should have a year more in expected lines with expanding our margins in 2026.

Hugh you flip to organic growth in Q3, I think for the first time in a couple of years, but it sounds like that will reverse in the fourth quarter. So just trying to understand is that a function of.

Speaker #3: At the end of the day . You know , we are we are positioning the business for growth . LNG segment is doing extremely well .

Speaker #3: Sundyne is doing extremely well . The overall projects as as Mike mentioned , is performing at the orders rate of 8% . Growth in Q3 .

Something moving the wrong way again in short cycle low hour or is it more a function of the large project delays and a longer cycle business and trying to understand on margins I think that was the comment on similar margin in Q4, So does that mean, it's 19% ish.

Speaker #3: We expect solid Q4 . So just really the transitionary effect on the catalyst volume . And we think that will adjust in 2026 , and we should have a more year , more on expected lines with expanding our margins in 2026 .

Margin and are there any one time kind of headwinds on that as we're thinking about next year.

Speaker #5: Okay . Thank you very much .

Mike Stepniak: Okay, thank you very much.

Speaker #3: Thank you Nigel .

Vimal Kapur: Thank you, Nigel.

Speaker #1: Thank you . Our next question comes from the line of Julian Mitchell with Barclays . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Yes, so I would say from my standpoint. The orders are are looking I would say that we are looking strong in <unk>.

Speaker #6: Hi. Good morning. Just wanted to start with the IA segment as it seems to have a lot of different moving parts inside it.

[Analyst]: Hi, good morning. Just wanted to start with the Industrial Automation segment as it seems there's a lot of different moving parts inside it. You flip to organic growth in Q3 I think for the first time in a couple of years. It sounds like that will reverse in the fourth quarter. Just trying to understand, is that a function of something moving the wrong way again in short cycle lower or is it more a function of the large project delays in the longer cycle business? Trying to understand on margins, I think there was the comment on similar margin in Q4. Does that mean it's a 19% margin and are there any one-time kind of headwinds on that as we're thinking about next year?

As you know we have a lot of times.

Timing variability as far as the larger orders, especially in our warehouse automation business.

Speaker #6: You you flip to organic growth in Q3 . I think for the first time in a couple of years . But it sounds like that will reverse in the fourth quarter .

So we're monarch monitoring that but generally I would say VW, where we started the year, we feel much better about the business and the progression.

Speaker #6: So just trying to understand is that a function of something moving the wrong way ? Again , in short cycle , lower , or is it more a function of the large project delays in the longer cycle business and trying to understand on margins ?

So from a margin standpoint.

Margins should grow sequentially in the fourth quarter for IAA, there aren't really any one timers and the team is positioned to expand margins in 2026 as well. So we have good visibility to margin expansion.

Speaker #6: I think there was the comment on similar margin in Q4 . So does that mean it's a 19% ish ? And are there any one time kind of headwinds on that ?

<unk> going going into 2026 backlog is improving thats, giving us I would say.

Good leverage from a fixed cost standpoint that we have good visibility to pricing.

Speaker #6: As we're thinking about next year ?

That's helpful. Thank you and then just my quick follow up on the Aerospace Division, maybe give us some update on where we stand on that.

Speaker #4: Yeah . So I would say from my standpoint , the the orders are are looking I would say they were looking strong in three .

Mike Stepniak: Yeah. I would say from an Industrial Automation standpoint, the orders are looking, I would say they were looking strong in Q3, but as you know, we have a lot of timing variability as far as the larger orders, especially in our warehouse automation business. We're monitoring that. Generally, I would say vis-à-vis where we started the year, we feel much better about the business and the progression. From a margin standpoint, margin should grow sequentially in the fourth quarter for Industrial Automation. There aren't really any one-timers, and the team is positioned to expand margins in 2026 as well. We have good visibility to margin expansion in Industrial Automation. Going to 2026, backlog is improving. That's giving us, I would say, good leverage from a fixed cost standpoint, and we have good visibility to pricing.

Speaker #4: Q but as you know , we have a lot of timing variability as far as the larger orders , especially in our warehouse automation business .

Destocking do you think it's largely behind you now on the commercial Aero side and should we assume that that 26% margin rate again thats a good.

Speaker #4: So we're monitoring that . But generally , I would say vis a vis where we started the year , we feel much better about the business and the progression .

<unk> hold or into next year barring violent swings in mix.

Sure So super happy with how the Aero team performing the in the in the FERC quarter, and I think Youll see more good news from Arrow team as we go to fourth quarter and next year I would say from a margin standpoint.

Speaker #4: So from a margin standpoint , margins should grow sequentially in the fourth quarter for IA , there aren't really any one timers , and the team is positioned to to expand margins in 2026 as well .

Speaker #4: So we have good visibility to margin expansion in IA going going to 2026 , backlog is improving . That's giving us , I would say good leverage from a fixed cost standpoint .

<unk> 25 to four is probably the bottom.

And you should continue to see sequential improvement on margins going into 2026 and on recapturing I think thats largely behind US I think commercial will sequentially improve growth rates in the fourth quarter as well and we should we should have a good print on arrow and <unk> going into 2026 the setup.

Speaker #4: And we have good visibility to pricing .

Speaker #6: That's helpful . Thank you . And then just my quick follow up on the aerospace division , maybe give us some update on where we stand on that destocking .

[Analyst]: That's helpful. Thank you. Just my quick follow up on the Aerospace division. Maybe give us some update on where we stand on that destocking. Do you think it's largely behind you now on the commercial Aero side? Should we assume that that 26% margin rate again, that's a good placeholder into next year barring violent swings in mix?

So really good orders again, we're extremely high high double digits and our.

Speaker #6: Do you think it's largely behind you now on the commercial aero side ? And should we assume that that 26% margin rate again , that's a good placeholder into next year , barring violent swings in mix .

Pas positive backlog, even with us are outputting.

At these rates continues to hang over $2 billion. So we still have a lot of I would say to work with going to 2026.

Speaker #4: Sure . So super happy with how the aero team performed in the in the in the first quarter . And I think you will see more good news from Aero team as we go to fourth quarter and next year .

Mike Stepniak: Sure. Super happy with how the Aero team performed in the first quarter. I think you will see more good news from the Aero team as we go to the fourth quarter and next year. I would say from a margin standpoint, full Q2 2025 was probably the bottom, and you should continue to see sequential improvements on margins going to 2026 and on recoupling. I think that's largely behind us. I think commercial will sequentially improve growth rates in the fourth quarter as well. We should have a good print on Aero in Q4 and going to 2026. The setup looks really good. Orders again were extremely high, high double digits. Our positive backlog, even with us outputting at these rates, continues to hang over $2 billion. We still have a lot, I would say, to work with going to 2026.

That's great. Thank you.

Thank you.

Thank you. Our next question comes from the line of Steve Tusa with Jpmorgan. Please proceed with your question.

Speaker #4: I would say from a margin standpoint , full Q25 was probably the bottom and you should continue to see sequential improvements on margins going to 2026 and on decoupling .

Hey, good morning, Frank.

Good morning, Dave.

Can you guys just talk about the trend in the in the margin. It's been really strong in the last couple of quarters, maybe a tad bit weaker this quarter than we were expecting.

Speaker #4: I think that's largely behind us . I think commercial we will sequentially improve growth rates in the fourth quarter as well . And we should we should have a good print on for Q and going into 2026 , the setup looks really good .

Whats the what are the moving parts, there and how do you feel about that going into 'twenty six.

Steve So super happy with the performance and I think as we talked about it before.

Speaker #4: Orders . Again , we're extremely high . High double digits . And you know , our backlog , even with us outputting at these rates continues to to hang over $2 billion .

<unk> still has a lot of runway.

Far as the <unk>, it's really just a matter of mix between projects and products.

Nothing I would say concerning there and like I said sequentially.

Speaker #4: So we still have a lot of I would say to work with going into 2026 .

We will continue to expand margins in 2026, there, but really good I.

Speaker #6: That's great. Thank you.

[Analyst]: That's great. Thank you.

I would say really good setup and plan to continue to expand those margins. So no concerns on that business yes.

Speaker #4: Thank you .

Mike Stepniak: Thank you.

Speaker #1: Thank you . Our next question comes from the line of Steve Tusa with J.P. Morgan . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your question.

Randy you had said that.

I was going to reinforce that the big.

Speaker #7: Hey , good morning .

That reinforces the overarching honeymoons strategy on how we are pivoting our business to higher growth and margin expansion. So they are ahead of the curve on executing that and I'm very confident in other businesses are going to demonstrate the same. So we do expect 2026 to follow the trend line Youll absorb MBA in 2025.

[Analyst]: Hey, good morning.

Speaker #4: Good morning .

Mike Stepniak: Good morning to you.

Speaker #3: Steve .

Speaker #7: Can you guys just talk about the trend in the in the Bay margin ? It's been really strong in the last couple quarters , maybe a tad bit weaker this quarter than than we were expecting .

[Analyst]: Can you guys just talk about the trend in the Building Automation margin? It's been really strong in the last couple of quarters, maybe a tad bit weaker this quarter than we were expecting. What are the moving parts there, and how do you feel about that going into 2026?

Speaker #7: What's the what are the moving parts there . And and how do you feel about that going into 26 .

And then just lastly on the profile of the income statement you guys made obviously solstice is coming out you guys made these changes around the liabilities and any thoughts around.

Speaker #4: Steve . So super happy with the BA performance . And I think as we talked about it before , BA team still has a lot of runway as far as the three Q it's really just a matter of of mix between projects and products .

Mike Stepniak: Super happy with the BA performance and I think as we talked about it before, BA team still has a lot of runway as far as the Q3. It's really just a matter of mix between projects and products. Nothing I would say concerning there. Like I said, sequentially, BA will continue to expand margins and in 2026 they have a really good, I would say really good setup and plan to continue to expand those margins. No concerns on that business.

Changing the pension accounting and how you are reflecting that in your income statement and is that something that.

Speaker #4: Nothing I would say concerning there . Like I said sequentially , BA will will continue to expand margins . And in 2026 they have a really good , I would say really good setup .

Could happen before aerospace goes or.

That kind of reevaluation of the earnings format.

So it's definitely one of our agenda items as we go over.

Speaker #4: And and plan to continue to expand those margins . So no concerns on that business .

Into 2026, we're actively discussing it.

Speaker #3: Yeah . And . I was going to reinforce that the BA just reinforces the overarching strategy on how we are pivoting our business to higher growth and margin expansion .

Vimal Kapur: Yeah, I was going to reinforce that. The BA just reinforces the overarching Honeywell International Inc. strategy on how we are pivoting our business through higher growth and margin expansion. They are ahead of the curve on executing that, and I'm very confident other businesses are going to demonstrate the same. We do expect 2026 to follow the trend line you have observed in BA in 2025.

We understand your concern and your thoughts on pension treatment I would say just based on where you see will continue to simplify our our balance sheet and how we reported earnings to make sure you have a better visibility to through cash flow conversion.

Speaker #3: So they are ahead of the curve and executing that . And I'm very confident in other businesses are going to demonstrate the same .

Speaker #3: So we do expect 2026 to follow the trend line . You have observed in BA in 2025 .

And EPS, so it's definitely on our agenda, but we're.

We're not ready to speak about it today.

Speaker #7: And then just lastly, on the profile of the income statement, you guys made, obviously, Solstice is coming out. You guys made these changes around the liabilities.

[Analyst]: Lastly, on the profile of the income statement you guys made, obviously Solstice Advanced Materials is coming out. You guys made these changes around the liabilities. Any thoughts around changing the pension accounting and how you're reflecting that in your income statement? Is that something that could happen before Aerospace goes, or that kind of reevaluation of the earnings format?

Yes totally fair thanks, a lot.

Thank you. Thank you.

Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

Speaker #7: Any thoughts around changing the the pension accounting and how you reflecting that in your income statement ? And is that something that could happen before aerospace goes or , you know , that kind of reevaluation of the earnings format .

Hey, good morning, guys.

Good morning, Doug.

I can't.

I know this can be a little bit lumpy, but I can't remember in a quarter with 22% order growth.

I know you gave some per segment granularity, but was there any kind of discrete projects or anything big that generally move the needle there or was it more across the board has kind of indicated in your slides.

Speaker #4: So it's definitely on one of our agenda items as we go over the , you know , into 2026 , we're actively discussing it .

Mike Stepniak: It is definitely one of our agenda items. As we go over into 2026, we're actively discussing it. We understand your concern and your thoughts on pension treatment. I would say just based on what you see, we'll continue to simplify our balance sheet and how we report earnings to make sure you have better visibility to cash flow conversion and EPS. It is definitely on our agenda, but we're not ready to speak about it today.

Speaker #4: We understand your concern and your thoughts on on pension treatment . I would say just based on what you see . We'll continue to simplify our our balance sheet and , and how we report earnings to to make sure you have a better visibility to , to cash flow conversion and EPs .

It's more across the board Scott I mean I think.

Aero continues to do extremely well and they're maintaining the momentum will continue to increase their win rates and backlog.

We had a strong orders growth in building automation, which closed a lot of that in the revenue stream that you have seen.

Speaker #4: So it's definitely on our agenda . But we're not ready to speak about it today .

Speaker #7: Yep . Totally fair . Thanks a lot .

[Analyst]: Yep, totally fair. Thanks a lot.

Ssrs growth are very good and also in Ies I would say that the.

Speaker #3: Thank you . Thank you .

Vimal Kapur: Thank you.

Mike Stepniak: Thank you.

The auto growth is across all segments long cycle, even stronger than sharp cycles are short cycle is also growing and I do expect that trend to continue in Q4, we don't expect any substantial change.

Speaker #1: Thank you . Our next question comes from the line of Scott Davis with Melius Research . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

Speaker #8: Hey good good morning guys .

Mike Stepniak: Hey, good morning guys. Good morning, Scott. I know this can be a little bit lumpy, but I can't remember a quarter with 22% order growth. I know you gave some per segment granularity, but was there any kind of discrete projects or anything big that generally moved the needle there, or was it more across the board as kind of indicated in your slides?

Speaker #4: Good morning .

Speaker #8: I can't I know this can be a little bit lumpy , but I can't remember a quarter with 22% order growth . You know I know you gave some per segment granularity , but was there any kind of discrete projects or anything big that generally move the needle there , or was it more across the board as kind of indicated in your slides ?

In the trajectory and Thats foundation of the growth oriented Honeywell, we have been focusing on over the last two years and therefore, we have put in terms of our portfolio revitalization and.

Focusing on the R&D spend on the rate that our projects you can see the early effect of that and I am confident that things will get better as we go along in 2026.

Speaker #3: It's more across the board , Scott . I mean , I think , you know , aero continues to do extremely well . And they maintaining their momentum of continued increase , their win rates and backlog .

Vimal Kapur: It's more across the board, Scott. I mean, I think Aero continues to do extremely well, and they're maintaining the momentum of continuing to increase their win rates and backlog. We had a strong orders growth in Building Automation, which flows a lot of that in the revenue stream, which you have seen. Energy and Sustainability Solutions orders growth were very good, and also in Industrial Automation Solutions, I would say that the order growth is across all segments. Long cycle even stronger than short cycle, but short cycle is also growing, and I do expect the trend to continue in Q4. We don't expect any substantial change in the trajectory. That's the foundation of the growth-oriented Honeywell International Inc. we have been focusing on over the last two years.

Okay. That's helpful. And then switching gears slightly you guys have done six.

Pretty meaningful deals in the last two years in and I think you'd previously said that was kind of 1% to 2% tailwind accretion in 'twenty five I believe somewhere in that ballpark.

Speaker #3: We had a strong orders growth in building automation , which flows a lot of that into revenue stream which you have seen s orders growth were very good .

How does that flow through on 26, given what youre seeing in the deal models and it sounds like you're a little ahead of the deal models on.

Speaker #3: And also in AIA . So I would say that the order growth is across all segments . Long cycle , even stronger than short cycle , but short cycle is also growing .

On that that group of transactions overall.

Speaker #3: And and I do expect the trend to continue in Q4 . You know , we don't expect any substantial change in the trajectory .

Yes, so overall, Scott I would say the.

The amenities are performing very well on an average over these are all the deals we did since I started our drill times multiple.

Speaker #3: And that's foundation of the growth oriented Honeywell . We have been focusing on over the last two years . And the effort we have put in in terms of our portfolio revitalization and , you know , you know , focusing on R&D spend on the right set of projects , you can see the early effect of that , and I'm confident that things will get better as we go along in into 2026 .

We are either on TV or ahead of DVA in majority of them.

Vimal Kapur: The effort we have put in in terms of a portfolio revitalization and focusing on the R&D spend on the right set of projects, you can see the early effect of that, and I'm confident that things will get better as we go along into 2026.

The foundation of the strategy, we had that they will help us to grow our organic growth rates and margin expansion. They are really working very well for us. So I'm really encouraged maybe Mike you want to add some specific.

Speaker #8: Okay . That's helpful . And then switching gears slightly , you guys have done six pretty meaningful deals in the last two years .

Mike Stepniak: Okay, that's helpful. Switching gears slightly, you guys have done six pretty meaningful deals in the last two years. I think you previously said that was kind of 1 to 2% tailwind accretion in 2025, I believe somewhere in that ballpark. How does that flow through on 2026 given what you're seeing in the deal models? It sounds like you're a little ahead of the deal models on that group of transactions overall.

Feedback further numbers sure. So like <unk> said I think our journey of those deals starting actually fourth quarter and going to next shares becoming organic for us from a from a growth standpoint.

Speaker #8: And I think you previously said that was kind of 1 to 2% tailwind accretion in 25 . I believe somewhere in that ballpark .

<unk> said there are there continue to be accretive and TBA. As are ahead of plan both on revenue synergies and cost synergies. So we feel really good about these acquisitions and how they fit portfolio not only financially, but also from a from a technology complementary standpoint.

Speaker #8: How does that flow through on 26 , given what you're seeing in the deal models . And it sounds like you're a little ahead of the deal models on on that that group of transactions overall .

Speaker #3: Yeah . So overall , Scott , I would say the the amenities are performing very well on an average over these are all the deals we did since I started at 12 times multiple .

Vimal Kapur: Yeah. Overall, Scott, I would say the M&A deals are performing very well on an average. These are all the deals we did since I started, are 12 times multiple, and we are either on TBA or ahead of TBA in majority of them. The foundational strategy we had, that they will help us to grow our organic growth rates and margin expansion, they're really working very well for us. I'm really encouraged. Maybe, Mike, you want to add some specific feedback further on this.

Okay. Thank you best of luck.

Thank you.

Speaker #3: And we are either on TVA or ahead of TVA in majority of them . And the the foundational strategy we had that they will help us to grow our organic growth rates and margin expansion .

Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.

Thanks, operator, good morning, everybody demo.

I wanted to ask if you can just talk about the pricing strategy across the organization you made a comment recently around.

Speaker #3: They really working very well for us . So I'm really encouraged . Maybe , Mike , you want to add some specific feedback further on this .

Pricing vis vis wanting to preserve or protect volume I forgot the exact wording, but it was something to that effect.

Speaker #4: Sure . So like Vimal said , I think majority of those deals starting actually fourth quarter and going into next year is becoming organic for us from a from a growth standpoint .

Mike Stepniak: Sure. Like Vimal said, I think majority of these deals starting actually fourth quarter and going to next year is becoming organic for us from a growth standpoint. Like Vimal said, they continue to be accretive and TBAs are ahead of plan both on revenue synergies and on cost synergies. We feel really good about these acquisitions and how they fit portfolio not only financially but also from a technology complementary standpoint. Okay, thank you fellows. Best of luck. Thanks.

And.

The question is really in the context, if I look at your revenue expectations are increasing.

Speaker #4: And like the most said , they're they're continue to be accretive . And Tbas are ahead of plan both on on revenue synergies and on cost synergies .

Margin expectations are coming down a little bit fully understand theres mix Theres acquisition, Theres timing, but just wanted to understand if there's maybe a pricing opportunity in the future that is not being exploited today, either because of the R&D investments youre, making or maybe just more surgical focus on that post the spin off of the businesses.

Speaker #4: So we feel really good about these acquisitions and how they fit the portfolio , not only financially , but also from a from a technology complimentary standpoint .

Speaker #8: Okay . Thank you fellas . Best of luck .

So thanks, Amit I would say the fundamentally our strategy has been that we wanted to preserve our margins, while we keep our volumes to our expectations. So that has been the north star we have been focusing on and we have demonstrated that.

Speaker #3: Thanks .

Speaker #9: Thank you .

Vimal Kapur: Thank you.

Speaker #1: Thank you . Our next question comes from the line of Maroccia with UBS . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Manit Mirotra with UBS. Please proceed with your question.

Speaker #10: Thanks . Operator . Morning , everybody . Vimal , I wanted to ask if you can just talk about the pricing strategy across the organization .

[Analyst]: Thanks, operator. Morning, everybody. Vimal, I wanted to ask if you can just talk about the pricing strategy across the organization. You made a comment recently around pricing vis-à-vis, you know, wanting to preserve or protect volume. I forgot the exact wording, but it was something to that effect. The question is really in the context, if I look this year, revenue expectations are increasing, margin expectations are coming down a little bit. I fully understand there's mix, there's acquisition, there's timing. I just wanted to understand if there's maybe a pricing opportunity in the future that is not being exploited today either because of the R&D investments you're making or maybe just more surgical focus on that post the spinoff of the businesses.

For the most part I would say that if I look ahead in 2026.

Pricing will become a good enabler for 2026.

Speaker #10: You made a comment recently around pricing vis a vis wanting to preserve or protect volume . I forgot the exact wording , but it was something to that effect .

No.

Margin expansion.

The only headwind defense and flat pricing I would call out in 2020 firewall just a lag effect. It just the timing, we learning something and we can lag 30 days 45 days.

Speaker #10: And you know , the the the question is really in the context , if I look this year , revenue expectations are increasing , margin expectations are coming down a little bit fully understand there's mix .

Not going to face that event in 2026, so overall I do remain confident that our model of getting our margin expansion through pricing. While we are protecting our volume is really working and some of the margin expansion. We have seen in this year the margins have been more flattish as primarily a foe.

Speaker #10: There's acquisition , there's timing . But just wanted to understand if there's maybe a pricing opportunity in the future that is not being exploited today either because of the R&D investments you're making or maybe just a more surgical focus on on that post .

Speaker #10: The spin off of the businesses .

Speaker #3: So thanks , Amit . I would say the fundamentally our strategy has been that we want to preserve our margins while we keep our volumes to our expectations .

Vimal Kapur: Thank you, Amit. I would say that fundamentally our strategy has been that we want to preserve our margins while we keep our volumes to our expectations. That has been the North Star we have been focusing on and we have demonstrated that for the most part. I would say that if I look ahead in 2026, pricing will become a good enabler for 2026 margin expansion. The only headwind we faced in pricing I'll call out in 2025 was just a lag effect. It's just the timing. We're learning something and we can lag 30 days, 45 days. We are not going to face that event in 2026. Overall, I do remain confident that our model of getting our margin expansion through pricing while we're protecting our volume is really working.

Because has been growth and there are some transitional issue items, which have happened at this point whether it is.

Data validated.

Speaker #3: So that has been the North Star . We have been focusing on , and we have demonstrated that for the most part , I would say that if I look ahead in 2026 , pricing will become a good enabler for 2026 .

Costs hitting us in some pockets and M&A impact et cetera, I'm very confident though that transition really and youre going to see strong impact in our margin expansion and into into 2026, Mike anything to add that's exactly right. I mean, we've been now with the teams focusing on 2026 pricing for about Montana.

Speaker #3: You know , margin expansion . The only headwind we faced in pricing , I'll call out in 2025 was just a lag effect .

We have a really good plan and strategy laid out across our.

Speaker #3: It's just the timing . We learning something and we we can lag 30 days , 45 days . We are going to we are not going to face that event in 2026 .

Our segments and and regionally and based on everything I see pricing will become.

Speaker #3: So overall I do remain confident that our model of getting our margin expansion through pricing , while we protecting our volume is really working .

Stronger next year and a lot a lot of that is really driven just by tariff stabilizing in that picture on inflation.

Being much more clear so the teams know what they need to deploy et cetera, and then I would say if you just look at segments <unk> was behind on price. This year, it's going to be a tailwind for them next year and other than that I think teams are generally caught up at this stage.

Speaker #3: And some of the margin expansion we have seen in this year , the margins have been more flattish . It's primarily our focus has been growth , and there are some transitionary issue items which have happened at this point .

Vimal Kapur: Some of the margin expansion we have seen in this year, the margins have been more flattish, is primarily our focus has been growth and there are some transitional issue items which have happened at this point. Whether it is tariff related, cost hitting us in some pockets and M&A impact, et cetera. I'm very confident those are transitionary and we're going to see strong impact in our margin expansion into 2026. Mike, anything to add?

Speaker #3: Whether it is , you know , tariff related cost hitting us in some pockets . And , you know , M&A impacted , etc.

On pricing going into next year, so I'm really positive on <unk>.

On price being better incrementally next year versus this year.

Speaker #3: . I'm very confident those are transitionary . And we're going to see strong impact in our margin expansion into into 2026 . Mike , anything to add ?

Okay. That's very encouraging thank you and just one follow up related to that just on margins Youre very clear about the trajectory for margin Aero next year.

Speaker #4: That's exactly right . I mean , we've been now with the teams focusing on 2026 pricing for about a month and a half .

Mike Stepniak: That's exactly right. We've been now with the teams focusing on 2026 pricing for about a month and a half. We have a really good plan and strategy laid out across our segments and regionally. Based on everything I see, pricing will become stronger next year. A lot of that is really driven just by tariffs stabilizing and that picture on inflation being much more clear, so the teams know what they need to deploy, etc. If you just look at segments, Aerospace was behind on price this year, it's going to be a tailwind for them next year. Other than that, I think teams are generally caught up at this stage on pricing going to next year. I'm really positive on price being better incrementally next year versus this year.

If I look at all the different pieces, there all kind of converging industrial automation kind of sticks out a little bit in terms of structurally lower margins in building automation and arrow.

Speaker #4: We have a really good plan and strategy laid out across the our segments . And and regionally and based on everything I see , pricing will become stronger next year and a lot , a lot of that is really driven just by tariffs stabilizing .

I think you've talked about maybe some self help opportunity there, but maybe kind of talk about a little bit of the industrial automation margin opportunity from kind of the high teen where you see that maybe structurally the opportunity for that.

Speaker #4: And that picture on inflation being much more clear . So the teams know what they need to deploy , etc. . And then I would say if you just look at segments , Aero was was behind on price this year .

I mean.

I look at industrial automation margin expansion.

More than normal way the VR as you as we've seen.

Speaker #4: It's going to be a tailwind for them next year . And other than that , I think teams are generally caught up at this stage on on pricing going to next year .

Our.

Segment announcement last evening.

We are going to focus in industrial automation on primarily the product businesses.

Speaker #4: So I'm really positive on on price being better incrementally next year versus this year .

Speaker #10: Okay . That's very encouraging . Thank you . And just one follow up related to that . Just on margins . You're very clear about the trajectory for margin and arrow next year .

Bye bye bye, taking process automation out and re farming segment of process automation and technology I think that's really positions us extremely well and on industrial automation that simplification now allows us to.

[Analyst]: Okay, that's very encouraging. Thank you. Just one follow up related to that, just on margins. You're very clear about the trajectory for margin Aero next year. If I look at all the different pieces, they're all kind of converging. Industrial Automation kind of sticks out a little bit in terms of structurally lower margins than Building Automation and Aero. I think, Vimal, you've talked about maybe some self help opportunity there, but maybe kind of talk about a little bit of the Industrial Automation margin opportunity from kind of the high teens, where you see that, maybe structurally, the opportunity for that.

Speaker #10: If I look at all the different pieces , they're all kind of converging industrial automation kind of sticks out a little bit in terms of structurally lower margins and building automation and arrow , I think you've talked about maybe some self-help opportunity there , but maybe kind of talk about a little bit of the industrial automation margin opportunity from kind of the high teens where you see that maybe structurally , the opportunity for that .

Focus on how we have executed well on a classical product business model and building automation really playing that playbook in industrial automation. So I do expect.

The pricing is going to play we've talked about it a few minutes back on the productivity side, we will see positive effect our board.

Fixed cost and variable cost productivity.

Speaker #3: I mean , I mean , I look at industrial automation , margin expansion more than normal way , you know , we are as you as we have seen our segment announcement last evening , we are going to focus in industrial automation on primarily the product businesses by , by by taking process automation out and and reforming a segment of process automation and technology .

On the on the variable side.

Vimal Kapur: I mean I look at industrial automation margin expansion more than normal way. As you have seen our segment announcement last evening, we are going to focus in industrial automation on primarily the product businesses by taking process automation out and reforming a segment of process automation and technology. I think this really positions us extremely well. On industrial automation that simplification now allows us to focus on how we have executed well on a classical product business model in building automation, really playing that playbook in industrial automation. I do expect the pricing is going to play. We talked about it a few minutes back. On the productivity side we will see positive effect of both fixed cost and variable cost productivity.

Feel confident on direct materials.

And on the fixed side baselines, the cost structure of the business aligned to the volumes we are seeing.

We feel good about that where do we sit today. So what all the setup is good for IAA I think the what I am really focusing upon is getting the business more to the higher growth momentum compared to what we are exhibiting right now and at the right time. We also start looking at the M&A Optionality, which we can bring to the business to further.

Speaker #3: I think that's really positions us extremely well . And on industrial automation , that simplification now allows us to focus on how we have executed well on a classical product business model in building automation , really playing that playbook in industrial automation .

And our portfolio.

Okay very good thank you very much.

Thank you.

Thank you. Our next question comes from the line of Sheila <unk>.

With Jefferies. Please proceed with your question.

Speaker #3: So I do expect the pricing is going to play . We talked about it a few minutes back on the productivity side . We will positive effect of both fixed cost and variable cost productivity .

Good morning, guys and thank you for the time.

Maybe first question on aerospace and.

I realize some of it will fall in the next leadership team material announced later this year. How are you thinking about the biggest opportunities and the implications for margins as we think about 25 being transitory.

Speaker #3: You know , on the on the variable side , we feel confident on direct materials and on the fixed side Baselining the cost structure of the business aligned to the volume we are seeing .

Vimal Kapur: On the variable side we feel confident on direct materials and on the fixed side baselining the cost structure of the business aligned to the volumes we are seeing. We feel good about that. Where do we sit today? Overall the setup is good for IEA. What I'm really focusing upon is getting the business more to the higher growth momentum compared to what we are seeing exhibiting right now. At the right time we also start looking at the M&A optionality which we can bring to the business to further strengthen our portfolio.

Yeah with some headwind from just the evolution of early next next year.

Speaker #3: We feel good about that . Where do we sit today ? So overall the setup is good for IA . I think the what I'm really focusing upon is getting the business more to the higher growth momentum compared to what we are .

Sheila I would say the transition that is occurring we spoke about that in the last quarter or two.

We definitely see the the.

The OE mix.

Becoming less intense compared to how we started the year. So that certainly has benefits to us the data validated pressure, which came into the cost under the margin rates of arrow.

Speaker #3: Executing right now . And at the right time . We also start looking at the M&A optionality , which we can bring to the business to further strengthen our portfolio .

Speaker #10: Okay . Very good . Thank you very much .

[Analyst]: Okay, very good. Thank you very much.

Would be less of a factor in 2026.

Speaker #3: Thank you .

Vimal Kapur: Thank you.

Speaker #1: Thank you . Our next question comes from the line of Sheila Kahyaoglu with Jefferies . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Sheila Kayalu with Jefferies. Please proceed with your question. Good morning guys and thank you for the time. Maybe first question on aerospace and you know I realize some of it will fall on the next leadership team which you'll announce later this year. How are you thinking about the biggest opportunities and the implications for margins as we think about 2025 being a transitory year with some headwinds and just the evolution of OE mix next year.

And then the case acquisition, which was acting as a headwind for our margins in 2025 would not be a factor in fact, it will be a tailwind. So as I look ahead all of these factors the confidence of that.

Speaker #11: Good morning , guys , and thank you for the time . Maybe first question on aerospace and , you know , I realized some of it will fall on the next leadership team , which you'll announce later this year .

We bottomed out and 25% margins in.

Speaker #11: How are you thinking about the biggest opportunities and the implications for margins as we think about 25 being a transitory year with some headwinds and just evolution of OE mix next year ?

Quarter, two and then we are lapping towards 'twenty, six and higher that direction is.

It is very clear and we are working hard to demonstrate.

Towards that and better in 2026 and beyond.

Speaker #3: I mean , Sheila , I would say the the the transition which is occurring , we spoke about that in the last quarter to we definitely see the the OE mix up becoming less intense compared to how we started the year .

Vimal Kapur: I mean, Sheila, I would say the transition which is occurring, we spoke about that in the last quarter too. We definitely see the OE mix becoming less intense compared to how we started the year. That certainly is a benefit to us. The tariff-related pressure which came into the cost under the margin rates of Aero would be less of a factor in 2026. The case acquisition which was acting as a headwind for our margins in 2025 would not be a factor. In fact, it will be a tailwind. As I look ahead, all these factors, the confidence that we bottomed out in 25% margins in Q2 and then we are lapping towards 26% and higher. That direction is very clear and we are working hard to demonstrate towards that and better in 2026 and beyond.

Great and then maybe if I could follow up on the aftermarket.

Nice acceleration there.

Called out I think some moderation in Q4.

What kind of surprise to the upside in the quarter on the commercial aftermarket commercial aviation business aviation.

Speaker #3: So that certainly is benefit to us . The tariff related pressure which came into the cost onto the margin rates of aero , would be less of a factor in 2026 .

Within recurring revenue if you could just talk about that.

So I would say it was on the on the aftermarket the graph is really broad based and a lot of that graph is the.

Speaker #3: And then the case acquisition , which was acting as a headwind for our margins in 2025 , would not be a factor . In fact , it will be a tailwind .

<unk> has been very stable order growth is also driven by us being able to unlock our supply chain and.

Speaker #3: So as I look ahead , all these factors , the confidence that we bottomed out in 25% margins in quarter two , and then we are lapping towards 26 and higher that that direction is is very clear and we are working hard to demonstrate , you know , towards that and better in 2026 and beyond .

I hope that continues but from a demand standpoint going into fourth quarter. This business should grow high single digits on a normalized basis. So demand is still strong across the industry and not really any particular drivers with exception of supply chain performing much better than it did in the second quarter.

Great. Thank you.

Thank you.

Speaker #11: Great . And then maybe if I could follow up on the aftermarket , just nice acceleration there . And you called out , I think some moderation in Q4 .

Operator: Great. Maybe if I could follow up on the aftermarket. Just nice acceleration there. You called out, I think, some moderation in Q4. What kind of surprised the upside in the quarter on the commercial aftermarket, whether commercial aviation, business aviation, was it recurring revenue? If you could just talk about that.

Thank you. Our next question comes from the line of Deane Dray with RBC capital markets. Please proceed with your question.

Speaker #11: You know , what kind of surprised to the upside in the quarter on the commercial aftermarket , whether commercial aviation business aviation , was it recurring revenue ?

Thank you and good morning, everyone.

Good morning, <unk> morning.

First I'd just like to say congrats to the team on getting solstice of the finish line or.

Speaker #11: If you could just talk about that ?

Speaker #4: So I would say it was on the on the aftermarket , the growth is really broad based , and a lot of that growth is the man has been very stable .

Mike Stepniak: I would say it was on the aftermarket. The growth is really broad based, and a lot of that growth is the demand has been very stable. A lot of the growth is also driven by us being able to unlock our supply chain. I hope that continues. From a demand standpoint, going to fourth quarter, this business should grow high single digits on a normalized basis. Demand is still strong across the industry and not really any particular drivers, with the exception of supply chain performing much better than it did in the second quarter.

Or the starting line depending on your perspective, we've seen multiple spins by comps.

Companies that we know all the work that goes into it so congrats.

Speaker #4: A lot of that growth is also driven by us being able to unlock our supply chain and and I hope that continues . But from a demand standpoint , going into fourth quarter , this business should should grow high , single digits as on the normalized basis .

And I appreciate I appreciate it good quarter, Dean and <unk> teams have worked really really hard to get it done ahead of time. Our earlier estimate was Q1 'twenty six and we pulled it forward by one quarter.

Speaker #4: So demand is still strong across the industry . And not really any particular drivers with exception of supply chain performing much better than it did in the second quarter .

Great and then.

I missed the very beginning did you have any update on the process of looking at strategic alternatives for productivity solutions with services and warehouse automation and any update on potential timing.

Speaker #11: Great . Thank you .

Operator: Great. Thank you.

Speaker #9: Thank you .

Mike Stepniak: Thank you.

We kicked off the process of strategic review I would say that in the Q1 in 2026 first quarter earnings call, we should be able to provide you much more definitive.

Speaker #1: Thank you . Our next question comes from the line of DeAndre with RBC Capital Markets . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Dean Dray with RBC Capital Markets. Please proceed with your question.

Speaker #10: Thank you . Good morning everyone .

[Analyst]: Thank you. Good morning, everyone.

Over.

Speaker #3: Good morning .

Vimal Kapur: Morning, Dean.

Speaker #9: Good morning .

I think the book is in progress, but I do not have any additional details I can share with you right now.

Speaker #12: Hey first I'd just like to say congrats to the team on getting solstice to the finish line or the starting line depending on your perspective .

[Analyst]: Hey, first I'd just like to say congrats to the team on getting Solstice Advanced Materials to the finish line or the starting line depending on your perspective. We've seen multiple spins by companies and we know all the work that goes into it. So congrats.

So we expect to when we're back in about 90 days, we should have more information for you.

Speaker #12: We've seen multiple spins by companies and we know all the work that goes into it . So congrats .

Got it and then on industrial automation and your comment that more of a product focus.

Speaker #3: I appreciate the good words here. Dean and the teams have worked really, really hard to get it done ahead of time or earlier.

Vimal Kapur: I appreciate the good guys there. Dean and teams have worked really, really hard to get it done ahead of time. Our earlier estimate was Q1 2026, and we pulled it forward by at least a quarter.

It was interesting to see the callout about sensors being in their fourth quarter of growth and you called out.

Speaker #3: Estimate was Q1 26 and we pulled it forward by at least one quarter . .

Health care centers in particular, so we're now getting some additional insight into these businesses can you comment on the growth opportunity in the sensor business.

Speaker #12: Great . And then I missed the very beginning . Did you have any update on the process of looking at strategic alternatives for productivity solutions and services ?

[Analyst]: Great. I missed the very beginning. Did you have any update on the process of looking at strategic alternatives for productivity solutions and services and warehouse automation? Any update on potential timing?

Yes, if you look at our industrial automation look ahead.

Speaker #12: And warehouse automation ? Any update on potential timing ?

Depending on what decision, we make on our scanning and mobility business and warehouse automation business.

Speaker #3: We kicked off the process of strategic review . I would say that in the Q1 , in 2026 , first quarter earnings call , we should be able to provide you much more definitive path forward .

Vimal Kapur: We kicked off the process of strategic review. I would say that in the Q1 2026 first quarter earnings call, we should be able to provide you a much more definitive path forward. I think the work is in progress, but I do not have any additional details I can share with you right now. We expect when we are back in about 90 days, we should have more information for you.

The balance would be a product oriented business, where our products are critical.

Speaker #3: I think the work is in progress, but I do not have any additional details I can share with you right now. So we expect that when we are back in about 90 days, we should have more information for you.

These are related to compliance these products are satisfied and.

And Thats, our fundamental model literally working towards and we also our client shifts that IAA would also become a pivot towards of our U S. Onshoring growth. So all of those items are in play as we are thinking ahead about the IEM portfolio moving forward no sensors is one of the biggest business there.

Speaker #12: Got it . And then on an automation and your comment that's more of a product focus . It was interesting to see the call out about sensors being in their fourth quarter of growth .

[Analyst]: Got it. On industrial automation and your comment it's more of a product focus, it was interesting to see the call out about sensors being in their fourth quarter of growth and you called out healthcare sensors in particular. We're now getting some additional insight into these businesses. Can you comment on the growth opportunity in the sensor business?

We have.

Speaker #12: And you called out healthcare sensors in particular . So we're now getting some additional insight into these businesses . Can you comment on the growth opportunity in the sensor business ?

<unk> in three verticals and sensors aerospace.

Medical devices and industrial.

And.

We have good run up to this business in 2025, we expect to maintain that momentum in 2026, and we expect to provide no more segment specific details in IAA.

Speaker #3: Yes . If you look at our industrial automation , look ahead , depending on what decision we make on our scanning and mobility business .

Vimal Kapur: Yes. If you look at our industrial automation look ahead, depending on what decision we make on our scanning and mobility business and warehouse automation business, the balance IA would be a product-oriented business where products are critical, these are related to compliance, these products are certified, and that's a fundamental model we really are working towards. We also are conscious that IA would also become a pivot towards our U.S. onshoring growth. All those items are in play as we are thinking ahead about the IA portfolio moving forward. Sensors is one of the biggest businesses there. We have position in three verticals in sensors: aerospace, medical devices, and industrial. We have good run up to this business in 2025.

Have simplified the segment.

And as we have more conversations and discussions in the future I look forward to providing you more details, but fundamentally sensors is one of the key part of the business and we remain very.

Speaker #3: And whereas automation business , the the the balance , I would be a product oriented business where products are critical . These are related to compliance .

Optimistic on how this will perform in the times ahead.

Speaker #3: These products are certified . And that's a fundamental , you know , model . We really working towards . And we also are conscious that IA would also become a pivot towards our US onshoring growth .

Thank you.

Thank you. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question.

Thank you I wanted to follow up on the industrial automation portfolio and specifically I guess the realignment slide from 15.

Speaker #3: So all those items are in play as we are thinking ahead about the IA portfolio moving forward . The sensors is one of the biggest business there .

Speaker #3: We have positioned in three verticals in sensors , aerospace , medical devices and industrial . And you know , we have good run up to this business in 2025 .

I mean, I guess it seems like the only or I guess, the only full business line being put into the new industrial automation segment is that sensing business, assuming warehouse in PSS get divested. So I guess, maybe any color on how much revenue is kind of being maybe pushed out of the process.

Speaker #3: We expect to maintain that momentum in 2026 . And we expect to provide no more segment specific details in IA , as we have simplified the segment and as we have more conversations and discussions in the future , I look forward to providing you more details .

Vimal Kapur: We expect to maintain that momentum in 2026, and we expect to provide no more segment-specific details in IA as we have simplified the segment and as we have more conversations and discussions in the future. I look forward to providing you more details. Fundamentally, sensors is one of the key parts of the business, and we remain very optimistic on how this will perform in the times ahead.

Solutions bucket into that new industrial automation portfolio, and then more broadly how do you feel about the scale of this industrial automation business and is it an area where you could be looking to add assets. Thank you.

Speaker #3: But fundamentally , sensors is is one of the key part of the business , and we remain very optimistic on how this will perform in the times ahead .

Yeah, So Chris.

Speaker #12: Thank you .

What we provided yesterday, it's more acute accumulation of our two year the bulk of simplification.

[Analyst]: Thank you.

Speaker #1: Thank you . Our next question comes from the line of Chris Snyder with Morgan Stanley . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question.

We have been working on our portfolio.

Spins, both we have done some of the strategic review of that sector.

Speaker #13: Thank you. I wanted to follow up on the industrial automation portfolio and specifically, I guess, the realignment slide from 15.

[Analyst]: Thank you. I wanted to follow up on the industrial automation portfolio and specifically the realignment slide from 15. It seems like the only, or the only full business line being put into the new industrial automation segment is that sensing business assuming warehouse and PSS get divested. Any color on how much revenue is being pushed out of the process solutions bucket into that new industrial automation portfolio? More broadly, how do you feel about the scale of this industrial automation business and is it an area where you could be looking to add assets?

I see the definition into three end markets three verticals as an outcome of all of that so we are pleased first of all where we have landed ourselves.

Speaker #13: I mean , I guess it seems like the only or I guess the only full business line being put into the new industrial automation segment is that sensing business , you know , assuming warehouse and PS get divested .

Building process and industrial.

Clearly building then process have higher scale today compared to industrial to your question.

Speaker #13: So I guess maybe any color on how much revenue is kind of being maybe pushed out of the process solutions bucket into that new industrial automation portfolio .

But we are starting from a position from which we will build upon in industrial from a on a very product oriented business.

And we'll continue to see more opportunities on.

Speaker #13: And then more broadly , how do you feel about the scale of this industrial automation business , and is it an area where you could be looking to add assets ?

On how we how we strengthen that.

So more to come there.

This is <unk>.

<unk> finished the unfinished task of this strategic review of.

Speaker #13: Thank you .

Mike Stepniak: Thank you.

Speaker #9: Yep .

[Analyst]: Yep.

Speaker #3: So .

Vimal Kapur: What we provided yesterday is more a culmination of our two years of work of simplification. You know we have been working on our portfolio, the spins work, we have done some of the strategic reviews, et cetera. I see the definition into three end market, three verticals is an outcome of all of that. We are pleased, first of all, where we have landed ourselves: Buildings, process, and industrial. Clearly, buildings and process have higher scale today compared to industrial, to your question. We are starting from a position from which we want to build upon in industrial, on a very product-oriented business, and we'll continue to see more opportunities on how we strengthen that. More to come there. I first want to finish the unfinished task of the strategic review of scanning and mobility warehouse automation. We have yet to complete that work.

Speaker #9: .

Speaker #3: Chris , what what we provided yesterday is more of culmination of our two years of work of simplification . You know , we've been working on our portfolio , the spins work .

Scanning and mobility.

Automation be yet to complete that work.

We also want to focus on organic growth return of industrial automation to its baseline and I am confident all of that is going to take shape well in 2026, and then we'll turn our focus into what else we need to add to this portfolio. So that it becomes a meaningful part of Honeywell.

Speaker #3: We have done some of the strategic reviews , etc. . I see the definition into three end markets , three verticals is an outcome of all of that .

Speaker #3: So we are pleased , first of all , where we have landed ourselves , buildings , process and industrial . Clearly buildings and processes have higher scale today compared to industrial .

Thank you I really appreciate that.

Maybe to follow up on building automation and specifically could you provide any color or comments on the data center exposure or opportunity. There I mean, our channel checks, we're hearing more and more about controls needing to be more complex.

Speaker #3: To your question and but we are starting from a position from which we want to build upon in industrial , from a on a very product oriented business .

Speaker #3: And we'll continue to see more opportunities on on how we how we strengthen that . So more to come there . You know , this is I first want to finish the unfinished task of the strategic review of scanning and mobility warehouse automation .

As the <unk>.

The facilities get bigger and more complex.

Historically that has not been a big vertical for you guys, but it seems like you've done a better job breaking in there over the last year. So can you maybe talk about how you broke in and what is the opportunity. Thank you.

Yes so.

Speaker #3: We yet to complete that work . We also want to focus on organic growth , return of industrial automation to its baseline , and I'm confident all that is going to take shape .

Recently, Chris data centers, becoming a bigger part of our building automation business, certainly not contributing to the growth rate to a certain degree.

Vimal Kapur: We also want to focus on organic growth, return of industrial automation to its baseline. I'm confident all that is going to take shape well in 2026, and then we'll turn our focus into what else we need to add to this portfolio so that it becomes a meaningful part of Honeywell International Inc.

Speaker #3: Well , in 2026 . And then we'll turn our focus into what else we need to add to this portfolio . So that it becomes meaningful .

We are I would say that our position in safety and security and data Center is is we are well positioned in that.

Speaker #3: Part of Honeywell .

Youre talking about more like 2% spanned up data center is in this space So spend vice president digital small, but we have a good position in a fire safety systems, we have a good position in our security system.

Speaker #13: Thank you . I really appreciate that . I guess maybe to follow up on building automation and specifically , could you provide any color or comments on the data center exposure or opportunity there ?

[Analyst]: Thank you, I really appreciate that. I guess maybe to follow up on Building Automation and specifically, could you provide any color or comments on the data center exposure or opportunity there? Our channel checks are hearing more and more about controls needing to be more complex as the facilities get bigger and more complex. I think historically that has not been.

We are increasingly improving our position in the building management.

Speaker #13: You know , our channel checks , we're hearing more and more about controls needing to be more complex . You know , as the the facilities get bigger and more complex .

And we continue to work our way through to gain more share in.

In that market, so certainly lot of.

Speaker #13: I think historically that has not been a big vertical for you guys , but it seems like you've done a better job breaking in there over the last year .

Hyper scaler.

Mike Stepniak: A big vertical for you guys.

A lot of Reits are becoming our customer you may have seen a recent announcement also in our partnership with Lf electric on which we want to work more joint solution between electrical system and control system, because we see a need for that by a customer. So we continue to improve our strategy continuing to improve our port.

[Analyst]: It seems like you've done a better job breaking in there over the last year. Can you talk about how you broke in and what is the opportunity? Thank you.

Speaker #13: So can you talk about how you broke in and what is the opportunity ? Thank you .

Speaker #3: Yep . So increasingly , Chris data center is becoming a bigger part of our building automation business . Certainly not contributing to the growth rate to a certain degree .

Vimal Kapur: Yep. Increasingly, Chris, data center is becoming a bigger part of our Building Automation business. Certainly, it's contributing to the growth rate to a certain degree. I would say that our position in safety and security in data center is, we are well positioned in that. You're talking about more like 2% spend of data center is in this space, so spend-wise percentages are small. We have a good position in our fire safety systems. We have a good position in our security system. We are increasingly improving our position in the building management, and we continue to work our way through to gain more share in that market. Certainly, a lot of hyperscalers, a lot of REITs are becoming our customer.

Speaker #3: We are I would say that our position in safety and security in data center is , is we are well positioned in that the , you know , you're talking about more like 2% spend of data center is in this space .

Palio and item and confident that data center end market growth, which is occurring that certainly help building automation business as additionally, as a vector to maintain their growth momentum.

We would be we're starting from a very low position, but we are certainly gaining more and more momentum there.

Speaker #3: So spend wise percentages are small , but we have a good position in our fire safety systems . We have good position in our security system .

Thank you very much.

Speaker #3: We are increasingly improving our position in the building management , and we continue to , you know , work our way through to gain more share in that market .

Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.

Hey, good morning, everyone.

Speaker #3: So certainly a lot of , you know , hyperscalers , a lot of rights are becoming our customer . You may have seen a recent announcement also in our partnership with RLS Electric , on which we want to work more joint solution between electrical system and control system , because we see a need for that by our customer .

So look.

And while you've done you've done a lot from that from a portfolio perspective, a lot has been announced.

Vimal Kapur: You may have seen a recent announcement also in our partnership with LS Electricity, on which we want to work more joint solution between electrical system and control system because we see a need for that by our customer. We continue to improve our strategy, continue to improve our portfolio, and I remain confident that data center and market growth which is occurring will certainly help Building Automation business as additional, you know, as a vector to maintain their growth momentum. We were starting from a very low position, but we are certainly gaining more and more momentum there.

This new structure I think it very neatly separates the different businesses I guess the question is as we head into the era of spin in the second half of 'twenty six could you potentially see additional announcements on the portfolio.

Speaker #3: So we continue to improve our strategy , continue to improve our portfolio . And I remain confident that data center and market growth , which is occurring , will certainly help building automation business as additional , you know , as a vector to maintain their growth momentum .

I would say that as.

As we mentioned few months back that.

Based on our current portfolio assessment to actions we have done they are completed.

But in a company of our side you never say you're done I think the portfolio revitalization is a continued activity. So I do expect us to do more additions.

Speaker #3: It's it's we were we were starting from a very low position , but we are certainly gaining more and more momentum . There .

Speaker #13: Thank you . Venmo .

Mike Stepniak: Thank you, Vimal.

Which are bolt on to our portfolio.

Speaker #1: Thank you . Our next question comes from the line of Joe Ritchie with Goldman Sachs . Please proceed with your question .

Operator: Thank you. Our next question comes from the line of Joe Richie with Goldman Sachs. Please proceed with your question.

Which fits into the core of our buildings process and industrial.

And.

If your question is is there any more exit plan, we feel good about the portfolio of what we have at the <unk>.

Speaker #14: Hey good morning everyone . So look you've done a you've done a lot from a from a portfolio perspective . A lot has been announced .

[Analyst]: Good morning everyone. Bimal, you've done a lot from a portfolio perspective. A lot has been announced. I like this new structure. I think it very neatly separates the different businesses. I guess the question is, as we head into the aerospin in 2H26, could you potentially see additional announcements on the portfolio?

At the position we are today.

These are all mission critical parts of automation they.

Speaker #14: I like this new structure . I think it very neatly separates the different businesses . I guess the question is , as we head into the era of spin in the second half of 26 , could you potentially see additional announcements on the portfolio ?

Dry very similar comment outcomes like safety operational excellence reliability, and they really help us to gain mining installed base through our <unk> platform. So that commonality, we have achieved a lot of effort.

Speaker #3: I would say that , as we mentioned a few months back , that based on the current portfolio assessment actions , we have done , they are completed .

Vimal Kapur: I would say that as we mentioned a few months back, that based on the current portfolio assessment actions we have done, they are completed. In a company of our size you never say you are done. I think the portfolio revitalization is a continued activity. I do expect us to do more additions which are bolt-on to our portfolio which fits into the core of buildings, process, and industrial. If your question is, is there any more exit plan, we feel good about the portfolio, what we have at the position we are today. These are all mission-critical parts of automation. They drive very similar common outcomes like safety, operational excellence, reliability, and they really help us to gain a lot of mining install base through our Forge platform.

And I don't see that there will be any material change we want to make on what we own but certainly like to consider adding more on a bolt on basis or maybe tuck in sometimes as we finish our spins.

Speaker #3: But in a company of our size , you never say you are done . I think the portfolio revitalization is a continued activity .

And we will continue to report to you if you make any progress on that.

Speaker #3: So I do expect us to do more additions which are bolt on to our portfolio , which fits into the core of buildings , process and industrial and I knew if your question is , is there any more exit plan ?

Yeah.

Got it Thats Super helpful. I know, we're bumping up on time, so I'll just keep it to one thank you.

Thank you. Thank you.

Thank you. Our next question comes from the line of Andy Kaplowitz with Citigroup. Please proceed with your question.

Speaker #3: We feel good about the portfolio of what what we have at the at the position we are today . These are all mission critical parts of automation .

Good morning, everyone.

But I guess I'm wondering.

And then maybe just back to the macro can you talk about the cadence of orders and revenue in Q3 did you see any changes in your short cycle businesses as the quarter shook out in here into Q4.

Speaker #3: They drive very similar , common outcomes like safety , operational excellence , reliability , and they really help us to gain a lot of mining , install base through our forge platform so that commonality we have achieved with a lot of effort , and I don't see that there will be any material change .

Any particular trends you're seeing by region I think he mentioned some recovery is continuing and at least be a in Europe and China, but what are you seeing overall for Honeywell.

Vimal Kapur: That commonality we have achieved with a lot of effort and I don't see that there will be any material change we want to make on what we own. I certainly like to consider adding more on a bolt-on basis or maybe tuck in sometimes as we finish our spins. We'll continue to report to you if we make any progress on that.

I mean, I would say the biggest change andi ISR was that.

Speaker #3: We want to make on what we own , but certainly like to consider adding more on a bolt on basis . Or maybe tuck in some times as we finish our spins and we'll we'll continue to report to you if you make any progress on that .

We have growth across all parts of the world that has not happened for a while.

We have a solid growth in U S. Europe is performing.

More like low single digit to mid single depending on the business. So Europe is.

Speaker #14: Got it . That's super helpful . I know we're bumping up on time , so I'll just keep it to one . Thank you .

[Analyst]: Got it. That's super helpful. I know we're bumping up on time, so I'll just keep it to one. Thank you.

Returning to an exact reasonable growth middle East, India does always very well for Honeywell and China is more flattish for Honeywell less aero, but if you add it will be a growing high singles.

Speaker #9: Thank you , thank you .

Mike Stepniak: Thank you, thank you, thank you.

Speaker #1: Thank you . Our next question comes from the line of Andy Kaplowitz with Citigroup . Please proceed with your question .

Operator: Our next question comes from the line of Andy Kapowitz with Citigroup. Please proceed with your question.

Speaker #15: Hey good morning everyone . Well , maybe just back to the macro . Can you talk about the cadence of orders and revenue in Q3 ?

[Analyst]: Good morning everyone. Maybe just back to the macro. Can you talk about the cadence of orders and revenue in Q3? Did you see any changes in your short cycle businesses as the quarter shook out here into Q4? Are there any particular trends you're seeing by region? I think you mentioned some recovery is continuing in at least Building Automation in Europe and China. What are you seeing overall for Honeywell International Inc.?

So I think that that is a distinctive part of what we are observing.

I think it's the diversity of our portfolio in the end markets. We serve is certainly helping us and our focus on growth.

Speaker #15: Did you see any changes in your short cycle businesses as a quarter shook out here into Q4 , are there any particular trends you're seeing by region ?

And creating new products mining installed base all of those studies are coming together and I do expect I mentioned earlier a good Q4 also for the orders ahead. So it's not a one time, we do expect to maintain this momentum.

Speaker #15: I think you mentioned some recovery is continuing , and at least BA in Europe and China . But what are you seeing overall for Honeywell ?

Speaker #9: I mean , I .

Vimal Kapur: I would say the biggest change, Andy, I saw was that.

Speaker #3: Would say the the biggest change , Andy , I saw was that we have growth across all parts of the world . That's not happened for a while .

For rest of the year.

That's helpful and I know you mentioned lower energy prices have continued to lead to some delays in <unk>, but as you. Just said you know improved orders does it give you more confidence that these businesses are going to turn higher than 26, and maybe what are your customers telling you about their capex expectations for 'twenty six.

[Analyst]: We.

Vimal Kapur: Have growth across all parts of the world. That's not happened for a while. We have a solid growth in U.S. Europe is performing more like low single digit to mid single depending on the business. Europe is returning to reasonable growth. Middle East, India does always very well for Honeywell International Inc. and China is more flattish for Honeywell International Inc., less Aero. If you add Aero, we are growing high singles. I think that is a distinctive part of what we are observing. I think the diversity of our portfolio in the end markets we serve is certainly helping us and our focus on growth and creating new products, mining, install base. All those studies are coming together and I do expect I mentioned earlier a good Q4 also for the orders ahead. It's not a one time.

Speaker #3: We have a solid growth in us . Europe is performing , you know , more like low single digits to mid-single depending on the business .

Speaker #3: So Europe is returning to an reasonable growth . Middle East , India does always very well for Honeywell and China is more flattish for Honeywell , less Aero .

I mean, if you look at our ESF business, Andy the positives are strong demand in LNG and gas be certainly have brought up demand and order strength in doors. We also see investments made by our customer far more localization.

Speaker #3: But if you add aero , we are growing high single . So it's I think that is that is a distinctive part of what we are observing .

Refining and petrochemical capacity, so we see investments made.

Speaker #3: I think the diversity of our portfolio in the end markets we serve is certainly helping us, and our focus on growth and creating new products.

Across in India, and parts of Africa parts of Middle East. So those continue there the only.

Speaker #3: Mining , install , base , all those strategies are coming together and I do expect I mentioned earlier , good Q4 also for the orders ahead .

Lack of momentum we have seen which we discussed before was catalyst demand.

Speaker #3: So it's not a one time . We do expect to maintain this momentum for for for rest of the year .

I think it's partly impacted by the oil price partly impacted by some overcapacity and we do expect things to settle as the year progresses in 2026 long cycle demand is strong.

Vimal Kapur: We do expect to maintain this momentum for rest of the year.

Speaker #15: It's helpful . And I know you mentioned lower energy prices have continued to lead to some delays . You know , in HP's and UOP .

[Analyst]: It's helpful. I know you mentioned lower energy prices have continued to lead to some delays in HPS and UOP, but as you just said, improved orders. Does it give you more confidence that these businesses are going to turn higher in 2026, and maybe what are your customers telling you about their CapEx expectations for 2026?

That is evident in our orders rate of <unk> I think short cycle demand is more flattish, but we do expect it to recover.

Speaker #15: But as you just said , you know , improved orders . you more confidence that these businesses are going to turn higher in 26 ?

Speaker #15: And maybe what are your customers telling you about their Does it give CapEx expectations for 26 ?

During the course of 2026.

Thank you.

Melissa will take one last question.

Speaker #9: I mean .

Speaker #3: If you look at our s business and the positives are strong demand in LNG and gas , we certainly have a lot of demand and orders strength in those .

Vimal Kapur: I mean if you look at our Energy and Sustainability Solutions business, Andy, the positives are strong demand in LNG and gas. We certainly have a lot of demand and order strength in those. We also see investments made by our customer for more localization of refining and petrochemical capacity. We see investments made across in India and parts of Africa, parts of Middle East. Those continue there. The only lack of momentum we have seen, which we discussed before, was catalyst demand. I think it's partly impacted by the oil price, partly impacted by some overcapacity, and we do expect things to settle as the year progresses in 2026. Long cycle demand is strong. That is evident in our orders rate of Energy and Sustainability Solutions. I think short cycle demand is more flattish, but we do expect it to recover during the course of 2026.

Thank you. Our final question comes from the line of Nicole <unk> with Deutsche Bank. Please proceed with your question.

Yeah. Thanks, Good morning, guys. Thanks for fitting me in.

Speaker #3: We also see investments made by our customers for more localization of refining and petrochemical capacity. So, we see investments made across India, parts of Africa, and parts of the Middle East.

Yes.

Good morning, Paul.

I guess I'll just ask one since we're running over time.

Curious, how short cycle industrial trends kind of shaped up throughout the quarter did things kind of remained stable versus how you exited Q or any notable trends that you would highlight thank you.

Speaker #3: So those continue there . The only lack of momentum we have seen , which we discussed before , was catalyst demand . I think it's partly impacted by the oil price , partly impacted by some overcapacity .

I would say short cycle trends are actually better.

In Q3, <unk> and we do expect a similar trends as you have seen in our guide we are not expecting any substantial change quarter on quarter.

Speaker #3: And we do expect things to settle as the year progresses . In 2026 . So long cycle demand is strong . That is evident in our orders rate of s .

But we always remain prudent in our guidance, we don't know what we don't know so.

Speaker #3: I think short cycle demand is more flattish , but we do expect it to recover . You know , during the course of 2026 .

But I think an overarching theme is very similar dynamics in the end markets, which Honeywell serves in between quarter three and portable.

Speaker #15: Thank you .

[Analyst]: Thank you, Melissa.

Speaker #2: Melissa . We'll take one last question .

Sean Meakim: We'll take one last question.

Got it thanks demo.

Speaker #1: Thank you . Our final question comes from the line of Nicole Deblase with Deutsche Bank . Please proceed with your question .

Operator: Thank you. Our final question comes from the line of Nicole Deblaze with Deutsche Bank. Please proceed with your question. Yeah, thanks. Good morning, guys. Thanks for sending me in.

Thank you.

Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Cooper for any final comments.

Speaker #16: Yeah . Thanks . Good morning guys . Thanks for putting me in .

Speaker #9: Good morning Colin .

Thank you operator as always I would like to express my gratitude gratitude to our shareholders our customers and all of the Honeywell future shippers across the word.

Mike Stepniak: Good morning, Carol.

Speaker #16: I guess I'll just ask one since we're running over time , I'm curious how short cycle industrial trends kind of shaped up throughout the quarter .

Operator: I guess I'll just ask one since we're running over time. I'm curious how short cycle industrial trends kind of shaped up throughout the quarter. Did things kind of remain stable versus how you exited Q2, or any notable trends that you would highlight? Thank you.

Speaker #16: Did did things kind of remain stable versus how you exited Touk or any notable trends that you would highlight ? Thank you .

Driving our stellar results in the quarter.

And our path ahead is promising and we look forward to sharing more with everyone in the quarters to come. Thank you all for listening and please stay safe and healthy.

Speaker #9: I would .

Speaker #3: Say short cycle trends are actually better in Q3 . Q versus four Q and we do expect a similar trends as you've seen in our guide , we're not expecting any substantial change quarter on quarter , but we always remain prudent in our guide .

Vimal Kapur: I would say short cycle trends are actually better in Q3 versus Q4, and we do expect similar trends. As you have seen in our guide, we are not expecting any substantial change quarter on quarter. We always remain prudent in our guide. We don't know what we don't know. I think an overarching theme is very similar dynamics in the end markets which Honeywell International Inc. serves in between Q3 and Q4.

Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Speaker #3: We don't know what we don't know . So but I think an overarching theme is very similar dynamics . In the end markets , which Honeywell serves in between quarter three and quarter four .

Speaker #16: Got it . Thanks , Vimal .

Operator: Got it. Thanks Vimal.

Speaker #9: Thank you .

Vimal Kapur: Thank you.

Speaker #1: Thank you , ladies and gentlemen . That concludes our question and answer session . I'll turn the floor back to Mr. Kapoor for any final comments .

Operator: Thank you, ladies and gentlemen. That concludes our question and answer session. I'll turn the floor back to Mr. Kapur for any final comments.

Speaker #3: Thank you . Operator . As always , I would like to express my gratitude . Gratitude to our shareholders . Our customers and all the Honeywell Future shapers across the world driving our stellar results in the quarter .

Vimal Kapur: Thank you, operator. As always, I would like to express my gratitude to our shareholders, our customers, and all the Honeywell future shapers across the world driving our stellar results in the quarter. Our path ahead is promising, and we look forward to sharing more with everyone in the quarters to come. Thank you all for listening, and please stay safe and healthy.

Speaker #3: And our path ahead is promising. We look forward to sharing more with everyone in the quarters to come. Thank you all for listening, and please stay safe and healthy.

Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.