Honeywell International Q4 2025 Honeywell International Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Honeywell International Inc Earnings Call
Speaker #1: Thank you for standing by, and welcome to the HONEYWELL 4th quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
Operator: Thank you for standing by, and welcome to the Honeywell Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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. Please go ahead.
Operator: Thank you for standing by, and welcome to the Honeywell Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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. Please go ahead.
Speaker #1: 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.
Speaker #1: Please go
Speaker #1: ahead. Thank you.
Sean Meakim: Thank you. Good morning, and welcome to Honeywell's Fourth Quarter 2025 Earnings and 2026 Outlook 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, as well as Mark Macaluso, who will be leading Investor Relations for Honeywell going forward. 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 recent SEC filings.
Sean Meakim: Thank you. Good morning, and welcome to Honeywell's Fourth Quarter 2025 Earnings and 2026 Outlook 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, as well as Mark Macaluso, who will be leading Investor Relations for Honeywell going forward. 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 recent SEC filings.
Speaker #2: Good morning, and welcome to HONEYWELL's 4th quarter 2025 earnings and 2026 outlook 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, as well as Mark Makaluso, who will be leading investor relations for HONEYWELL going forward.
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 recent SEC filings.
Speaker #2: This morning, we'll review our financial results for the 4th quarter and full year 2025 and discuss our guidance for the 1st quarter and full year 2026.
Sean Meakim: This morning, we'll review our financial results for the Q4 and full year 2025, and discuss our guidance for the Q1 and full year 2026. As a reminder, we began reporting advanced materials as discontinued operations beginning in the Q4 of 2025, following the successful spin of Solstice Advanced Materials on 30 October 2025. The Q4 results we present today exclude Solstice. As always, we'll leave time for your questions at the end. With that, it's my pleasure to turn the call over to Vimal, who'll begin on slide three.
This morning, we'll review our financial results for the Q4 and full year 2025, and discuss our guidance for the Q1 and full year 2026. As a reminder, we began reporting advanced materials as discontinued operations beginning in the Q4 of 2025, following the successful spin of Solstice Advanced Materials on 30 October 2025. The Q4 results we present today exclude Solstice. As always, we'll leave time for your questions at the end. With that, it's my pleasure to turn the call over to Vimal, who'll begin on slide three.
Speaker #2: As a reminder, we began reporting advanced materials as discontinued operations beginning in the 4th quarter of 2025, following the successful spin October 30th, of Solstice Advanced Materials on 2025.
Speaker #2: The 4th quarter results we present today exclude Solstice. As always, we will leave time for your questions at the end. With that, it's my pleasure to turn the call over to Vimal, who will begin on Slide 3.
Speaker #3: Thank you, Sean, and good morning, everyone. HONEYWELL delivered a strong 4th quarter to close 2025, exceeding our expectations for both adjusted sales and adjusted EPS.
Vimal Kapur: Thank you, Sean, and good morning, everyone. Honeywell delivered a strong fourth quarter to close 2025, exceeding our expectations for both adjusted sales and adjusted EPS, with orders up 23%, driving our backlog to over $37 billion. This performance reinforces the strength of our end market positions and execution. We exited the year with a sales growth of 6%, excluding the impact of 2024 Bombardier agreement, which demonstrates the outcome of our portfolio actions and our emerging focus on innovation stemming from continued investment in R&D. This gives us conviction in another year of meaningful top and bottom-line growth of 2026. Looking ahead, we expect to once again drive strong organic growth, fueled by conversion of our record backlog, disciplined price execution, and momentum in new product introductions.
Vimal Kapur: Thank you, Sean, and good morning, everyone. Honeywell delivered a strong fourth quarter to close 2025, exceeding our expectations for both adjusted sales and adjusted EPS, with orders up 23%, driving our backlog to over $37 billion. This performance reinforces the strength of our end market positions and execution. We exited the year with a sales growth of 6%, excluding the impact of 2024 Bombardier agreement, which demonstrates the outcome of our portfolio actions and our emerging focus on innovation stemming from continued investment in R&D. This gives us conviction in another year of meaningful top and bottom-line growth of 2026. Looking ahead, we expect to once again drive strong organic growth, fueled by conversion of our record backlog, disciplined price execution, and momentum in new product introductions.
Speaker #3: With orders up 23%, driving our backlog to over 37 billion dollars. This performance reinforces the strength of our end-market positions and execution. We exited the year with the sales growth of 6%, excluding the impact of 2024 Bombardier Agreement, which demonstrates the outcome of our portfolio actions, and our emerging focus on innovation, stemming from continued investment in R&D.
Speaker #3: This gives us conviction in another year of meaningful top- and bottom-line growth in 2026. Looking ahead, we expect to once again drive strong organic growth fueled by conversion of our record backlog, disciplined price execution, and momentum in new product introductions.
Speaker #3: The strong organic growth, coupled with productivity, and an aggressive reduction in stranded costs related to the spins, will enable us to deliver 6 to 9% earnings growth in 2026, along with accelerating cash generation.
Vimal Kapur: The strong organic growth, coupled with productivity, and an aggressive reduction in stranded costs related to the spins, will enable us to deliver 6% to 9% earnings growth in 2026, along with accelerating cash generation. It was about a year ago that we announced our intention to spin off Aerospace, which will result in creation of three leading pure-play independent public companies.... We have made tremendous progress throughout the year with the Advanced Materials spin complete, and we now expect to complete the Aerospace spin in Q3 2026. Both Aerospace and Automation will host Investor Day in June, and I hope many of you can join us then. Our teams are working around the clock to ensure this gets done as quickly and judiciously as possible, and I want to thank all our employees for their commitment and dedication to this process.
The strong organic growth, coupled with productivity, and an aggressive reduction in stranded costs related to the spins, will enable us to deliver 6% to 9% earnings growth in 2026, along with accelerating cash generation. It was about a year ago that we announced our intention to spin off Aerospace, which will result in creation of three leading pure-play independent public companies.... We have made tremendous progress throughout the year with the Advanced Materials spin complete, and we now expect to complete the Aerospace spin in Q3 2026. Both Aerospace and Automation will host Investor Day in June, and I hope many of you can join us then. Our teams are working around the clock to ensure this gets done as quickly and judiciously as possible, and I want to thank all our employees for their commitment and dedication to this process.
Speaker #3: It was about a year ago that we announced our intention to spin off Aerospace, which will result in the creation of three leading pure-play independent public companies.
Speaker #3: We have made tremendous progress throughout the year, with the advanced materials complete, the Aerospace spin-in and the spin complete, and we now expect to close in the third quarter of 2026.
Speaker #3: Both Aerospace and Automation will host investor day in June, and I hope many of you can join us then. Our teams are working around the clock to ensure this gets done as quickly and judiciously as possible, and I want to thank all our employees for their commitment and dedication to this process.
Speaker #3: We also remain very excited about the progress at continuum on key technological and commercial milestones that position the business to lead the way in quantum computing.
Vimal Kapur: We also remain very excited about the progress at Quantinuum on key technological and commercial milestones that position the business to lead the way in quantum computing. I will talk more about Quantinuum and its progress in a few minutes. 2026 will be exciting year as we move forward the final stages of our portfolio simplification. This positions each business with the right strategic focus, organizational agility, and tailored capital allocation strategies needed to grow faster and drive incremental value for our all stakeholders. Let's now turn to slide 3 to discuss the latest update on our portfolio transformation. As I mentioned, we are progressing faster than originally anticipated on our separation milestones. On 30 October, Solstice began trading as independent public company, and we now expect the Aerospace to occur in Q3.
We also remain very excited about the progress at Quantinuum on key technological and commercial milestones that position the business to lead the way in quantum computing. I will talk more about Quantinuum and its progress in a few minutes. 2026 will be exciting year as we move forward the final stages of our portfolio simplification. This positions each business with the right strategic focus, organizational agility, and tailored capital allocation strategies needed to grow faster and drive incremental value for our all stakeholders. Let's now turn to slide 3 to discuss the latest update on our portfolio transformation. As I mentioned, we are progressing faster than originally anticipated on our separation milestones. On 30 October, Solstice began trading as independent public company, and we now expect the Aerospace to occur in Q3.
Speaker #3: I will talk more about continuum and its progress in a few minutes. 2026 will be exciting year as we move forward the final stages of our portfolio simplification.
Speaker #3: This positions each business with the right strategic focus, organizational agility, and tailored capital allocation strategies needed to grow faster and drive incremental value for our all stakeholders.
Speaker #3: Let's now turn to Slide 3 to discuss the latest update on our portfolio transformation. As I mentioned, we are progressing faster than originally anticipated on our separation milestones.
Speaker #3: On October 30th, Solstice began trading as independent public company and we now expect the Aerospace to occur in Quarter 3. To that end, we announced the Aerospace Leadership Team last week comprised of tenured Aerospace veterans, and made key board appointments to bring extensive operating experience to our teams.
Vimal Kapur: To that end, we announced the Aerospace leadership team last week, comprised of tenured Aerospace veterans, and made key board appointments to bring extensive operating experience to our teams. Jim Currier, who will serve as President, CEO of Honeywell Aerospace at the time of separation, will be joined by Josh Jepson, who will serve as Chief Financial Officer. Additionally, we announced that Craig Arnold, the former Chairman and CEO of Eaton Corporation, will serve as Non-Executive Chair of Honeywell Aerospace Board of Directors. Craig brings more than two decades of experience in leadership roles at industrial and tech businesses, where he delivered transformational results through operational excellence and disciplined capital allocation. Together, Craig, Jim, and Josh bring the right mix of industry, company, and capital market experience to maximize the value for our customers, partners, employees, and our shareowners.
To that end, we announced the Aerospace leadership team last week, comprised of tenured Aerospace veterans, and made key board appointments to bring extensive operating experience to our teams. Jim Currier, who will serve as President, CEO of Honeywell Aerospace at the time of separation, will be joined by Josh Jepson, who will serve as Chief Financial Officer. Additionally, we announced that Craig Arnold, the former Chairman and CEO of Eaton Corporation, will serve as Non-Executive Chair of Honeywell Aerospace Board of Directors. Craig brings more than two decades of experience in leadership roles at industrial and tech businesses, where he delivered transformational results through operational excellence and disciplined capital allocation. Together, Craig, Jim, and Josh bring the right mix of industry, company, and capital market experience to maximize the value for our customers, partners, employees, and our shareowners.
Speaker #3: VimCourier, who will serve as President and CEO of HONEYWELL Aerospace at the time of separation, will be joined by Josh Jepsen, who will serve as Chief Financial Officer.
Speaker #3: announced the Craig Arnold, the former Additionally, we Chairman and CEO of Eaton Corporation, will serve as non-Executive Chair of HONEYWELL Aerospace Board of Directors.
Speaker #3: Craig brings more than two decades of experience in leadership roles at industrial and tech businesses, where he delivered transformational results through operational excellence and disciplined capital allocation.
Speaker #3: Together, Craig, Jim, and Josh bring the right mix of industry, company, and capital market experience to maximize the value for our customers, partners, employees, and our shareholders.
Speaker #3: We're also excited to welcome Indra Nooyi, former Chair and CEO of PepsiCo, to Honeywell's Board of Directors for strengthening our team with her proven track record of leading diverse global businesses and accelerating long-term growth.
Vimal Kapur: We're also excited to welcome Indra Nooyi, former Chair and CEO of PepsiCo, to Honeywell's Board of Directors, further strengthening our team with her proven track record of leading diverse global businesses and accelerating long-term growth. Beginning in 2026, we reorganized Honeywell segment into more simplified structure, focused on cohesive, synergetic business model. Moving forward, we'll be reporting four segments: Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. The three automation reporting segments will be organized into six strategic business units, enabling us to better solve customer challenges and deliver enhanced outcomes with Honeywell Forge platform. Finally, we concluded the strategic review of Productivity Solutions and Services and Warehouse and Workflow Solutions, and have announced that we intend to pursue a sale of both businesses in first half of 2026.
We're also excited to welcome Indra Nooyi, former Chair and CEO of PepsiCo, to Honeywell's Board of Directors, further strengthening our team with her proven track record of leading diverse global businesses and accelerating long-term growth. Beginning in 2026, we reorganized Honeywell segment into more simplified structure, focused on cohesive, synergetic business model. Moving forward, we'll be reporting four segments: Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. The three automation reporting segments will be organized into six strategic business units, enabling us to better solve customer challenges and deliver enhanced outcomes with Honeywell Forge platform. Finally, we concluded the strategic review of Productivity Solutions and Services and Warehouse and Workflow Solutions, and have announced that we intend to pursue a sale of both businesses in first half of 2026.
Speaker #3: Beginning in 2026, we reorganized HONEYWELL's segment into more simplified structure focused on cohesive, synergetic business models. Moving forward, we'll be reporting four segments: Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation.
Speaker #3: The three automation reporting segments will be organized into six strategic business units enabling us to better solve customer challenges and deliver in-house outcomes with HONEYWELL forged platform.
Speaker #3: Finally, we concluded the strategic review of productivity solution and services and warehouse and workflow solutions and have announced that we intend to pursue a sale of both businesses in first half of 2026.
Speaker #3: All of these actions position both aerospace and automation for a strong beginning as new industry-leading public companies in 2026. Let's turn to Slide 4 to discuss the recent advancements of continuum.
Vimal Kapur: All of these actions position both Aerospace and Automation for a strong beginning as new industry-leading public companies in 2026. Let's turn to slide 4 to discuss the recent advancements of Quantinuum. Following the recent fundraising, in which Quantinuum raised approximately $840 million at a $10 billion pre-money valuation, the pace of both technological and commercial progress at Quantinuum is rapidly increasing. Close collaboration with shareowners like Quanta, such as Quanta, NVIDIA, J.P. Morgan, Amgen, and Mitsui, have led to new commercial partnerships that are supporting the development of critical applications for improving drug discovery, cybersecurity, and encryption for large financial institutions.
All of these actions position both Aerospace and Automation for a strong beginning as new industry-leading public companies in 2026. Let's turn to slide 4 to discuss the recent advancements of Quantinuum. Following the recent fundraising, in which Quantinuum raised approximately $840 million at a $10 billion pre-money valuation, the pace of both technological and commercial progress at Quantinuum is rapidly increasing. Close collaboration with shareowners like Quanta, such as Quanta, NVIDIA, J.P. Morgan, Amgen, and Mitsui, have led to new commercial partnerships that are supporting the development of critical applications for improving drug discovery, cybersecurity, and encryption for large financial institutions.
Speaker #3: Following the recent fundraising, in which Continuum raised approximately $840 million at a $10 billion pre-money valuation, the pace of both technological and commercial progress at Continuum is rapidly increasing.
Speaker #3: Close collaboration with shareholders as Quanta, such as Quanta, NVIDIA, JP Morgan, Amgen, and Mitsui have led to new commercial partnerships that are supporting the development of critical applications for improving drug discovery, cybersecurity, and encryption for large financial institutions.
Speaker #3: In November, continuum announced the launch of Helios, the world's most accurate commercial quantum computer, which nearly doubles the qubit count of its predecessor H2 and we believe sets a new standard for quantum computing performance with the highest fidelity for quantum computing qubits ever released in the market.
Vimal Kapur: In November, Quantinuum announced the launch of Helios, the world's most accurate commercial quantum computer, which nearly doubles the qubit count of its predecessor, H2, and we believe sets a new standard for quantum computing performance with the highest fidelity for quantum computing qubits ever released in the market. Helios' groundbreaking design and advanced software stack brings quantum programming closer to the ease and flexibility of classical computing, which we believe positions the company to accelerate quantum's commercial adoption. Quantinuum also announced a partnership to integrate Helios with NVIDIA's AI supercomputing technology to create powerful new architecture that can solve the world's most pressing challenges. This collaboration between Quantinuum and NVIDIA is creating a future where AI becomes more expansive through quantum computing, and quantum computing becomes more powerful through AI.
In November, Quantinuum announced the launch of Helios, the world's most accurate commercial quantum computer, which nearly doubles the qubit count of its predecessor, H2, and we believe sets a new standard for quantum computing performance with the highest fidelity for quantum computing qubits ever released in the market. Helios' groundbreaking design and advanced software stack brings quantum programming closer to the ease and flexibility of classical computing, which we believe positions the company to accelerate quantum's commercial adoption. Quantinuum also announced a partnership to integrate Helios with NVIDIA's AI supercomputing technology to create powerful new architecture that can solve the world's most pressing challenges. This collaboration between Quantinuum and NVIDIA is creating a future where AI becomes more expansive through quantum computing, and quantum computing becomes more powerful through AI.
Speaker #3: Helios groundbreaking design and advanced software stack brings quantum programming closer to the ease and flexibility of classical computing. Which we believe positions the company to accelerate quantum's commercial adoption.
Speaker #3: Continuum also announced a partnership to integrate Helios with NVIDIA's AI supercomputing technology to create powerful new architecture that can solve the world's most pressing challenges.
Speaker #3: This collaboration between Continuum and NVIDIA is creating a future where AI becomes more expansive through quantum computing, and quantum computing becomes more powerful through AI.
Speaker #3: As continuum achieve these important technological and commercial milestones, I'm confident of the company's future and the best is yet to come. And before Mike talks about 4Q results, let's move to Slide 5 to discuss our recent growth acceleration.
Vimal Kapur: As Quantinuum achieves these important technological and commercial milestones, I am confident of the company's future, and the best is yet to come. Before Mike talks about Q4 results, let's move to slide 5 to discuss our recent growth acceleration. This chart demonstrates the recent acceleration in organic growth, stemming from a combination of strong end market demand, our portfolio simplification, and innovation. This drove a 300 to 400 basis point improvement in LTM average organic growth since the beginning of 2024. As I noted earlier, we see favorable end market dynamics across Aerospace and Defense, Process and Building Automation. We are enabling this further with an intentional shift to higher growth verticals. Our performance simplification efforts are positioning the company toward less cyclical and less capital-intensive markets, where we can build our install base and leverage this to drive software and services growth.
As Quantinuum achieves these important technological and commercial milestones, I am confident of the company's future, and the best is yet to come. Before Mike talks about Q4 results, let's move to slide 5 to discuss our recent growth acceleration. This chart demonstrates the recent acceleration in organic growth, stemming from a combination of strong end market demand, our portfolio simplification, and innovation. This drove a 300 to 400 basis point improvement in LTM average organic growth since the beginning of 2024. As I noted earlier, we see favorable end market dynamics across Aerospace and Defense, Process and Building Automation. We are enabling this further with an intentional shift to higher growth verticals. Our performance simplification efforts are positioning the company toward less cyclical and less capital-intensive markets, where we can build our install base and leverage this to drive software and services growth.
Speaker #3: This chart demonstrates the recent accelerations in organic growth stemming from a combination of strong end-market demand, our portfolio simplification, and innovation. This row of three to four hundred basis point improvement in LTM average organic growth since the beginning of 2024.
Speaker #3: As I noted earlier, we see favorable end-market dynamics across aerospace and defense, process and building automation. We are enabling this further with an intentional shift to higher-growth verticals.
Speaker #3: Our performance simplification efforts are positioning the company toward less cyclical and less capital-intensive markets, where we can build our install base and leverage this to drive software and services growth.
Speaker #3: This is being compounded by recent acquisitions in access solutions, LNG process technology, compressor control, and defense technology. On innovation, we delivered 4% organic growth from our new product introductions in 2025, with the majority coming from innovation in new markets and offerings as opposed to upgrades on existing core products.
Vimal Kapur: This is being compounded by recent acquisition in Access Solutions, LNG process technology, compressor control, and defense technology. On innovation, we delivered 4% organic growth from our new product introduction in 2025, with majority coming from innovation in new markets and offerings, as opposed to upgrade on existing core products. This is direct result of our meaningful step up in R&D investments in 2025, which continues at these levels in 2026, as well as management's focus on growth through new products. On the people side, we have made concerted effort to enhance our talent pool to drive growth. We added approximately 600 engineers to our workforce in 2025, which has greatly bolstered our R&D capacity and have also allocated the overwhelming majority of R&D to new product development.
This is being compounded by recent acquisition in Access Solutions, LNG process technology, compressor control, and defense technology. On innovation, we delivered 4% organic growth from our new product introduction in 2025, with majority coming from innovation in new markets and offerings, as opposed to upgrade on existing core products. This is direct result of our meaningful step up in R&D investments in 2025, which continues at these levels in 2026, as well as management's focus on growth through new products. On the people side, we have made concerted effort to enhance our talent pool to drive growth. We added approximately 600 engineers to our workforce in 2025, which has greatly bolstered our R&D capacity and have also allocated the overwhelming majority of R&D to new product development.
Speaker #3: This is direct result of our meaningful step up in R&D investments in 2025, which continues at these levels in 2026 as well as management's focus on growth through new products.
Speaker #3: On the people side, we have made concerted effort to enhance our talent pool to drive growth. We added approximately 600 engineers to our workforce in our R&D capacity and have 2025, which has greatly bolstered also allocated the overwhelming majority of R&D to new product development.
Speaker #3: Additionally, our sales team incentives are now better aligned to our objective of prioritizing the commercialization of new products, further reinforcing our plan to drive growth through innovation while building stronger customer intimacy.
Vimal Kapur: Additionally, our sales team incentives are now better aligned to our objective of prioritizing the commercialization of new products, further reinforcing our plan to drive growth through innovation while building stronger customer intimacy. With that, I will now turn the call over to Mike to go through our Q4 results, starting on slide 6.
Additionally, our sales team incentives are now better aligned to our objective of prioritizing the commercialization of new products, further reinforcing our plan to drive growth through innovation while building stronger customer intimacy. With that, I will now turn the call over to Mike to go through our Q4 results, starting on slide 6.
Speaker #3: With that, I will now turn the call over to Mike to go through our fourth-quarter results. Starting on Slide
Speaker #3: Thank you, Bimbo, and good
Mike Stepniak: Thank you, Vimal, and good morning. We ended the year with robust Q4 results. Sales grew 11% organically, or 6% excluding the impact of the 2024 Bombardier agreement, led by double-digit growth in aerospace and high single-digit growth in building automation. We also continued to drive price across the portfolio, as Vimal noted, which contributed roughly four percentage points to the top line. On a segment basis, aerospace sales grew 11% organically, excluding Bombardier, led by continued strength in both commercial aftermarket and defense and space. Commercial OE growth accelerated as expected from the Q3, as shipments continued to recouple with customers' build rates. Robust demand across all end markets led a third consecutive quarter of strong double-digit order growth and book-to-bill of 1.2.
Mike Stepniak: Thank you, Vimal, and good morning. We ended the year with robust Q4 results. Sales grew 11% organically, or 6% excluding the impact of the 2024 Bombardier agreement, led by double-digit growth in aerospace and high single-digit growth in building automation. We also continued to drive price across the portfolio, as Vimal noted, which contributed roughly four percentage points to the top line. On a segment basis, aerospace sales grew 11% organically, excluding Bombardier, led by continued strength in both commercial aftermarket and defense and space. Commercial OE growth accelerated as expected from the Q3, as shipments continued to recouple with customers' build rates. Robust demand across all end markets led a third consecutive quarter of strong double-digit order growth and book-to-bill of 1.2.
Speaker #2: morning. We ended the year with robust fourth-quarter results. Sales grew 11% organically, or 6% excluding the impact of the 2024 Bombardier agreement. That by double-digit growth in aerospace and high single-digit growth in building automation.
Speaker #2: We also continue to drive price across the portfolio, as Vimal Kapur noted, which contributed roughly 4 percentage points to the top line. On a segment basis, Aerospace sales grew 11% organically, excluding Bombardier.
Speaker #2: That by continued strength in both commercial aftermarket and defense and space. Commercial OE growth accelerated as expected from the third quarter as shipments continued to recover with customers' build rates.
Speaker #2: Robust demand across all end markets led to the third consecutive quarter of strong double-digit order growth and a book-to-bill of 1.2. Building Automation grew 8% organically, supported by growth of 9% in Solutions and 8% in Products.
Mike Stepniak: Building Automation grew 8% organically, supported by growth of 9% in solutions and 8% in products. Regionally, North America and Middle East led the overperformance, with Europe up strong mid-single digits as well. Orders increased both year-over-year and sequentially, driven by ongoing momentum across both building solutions and products, and highlighted by strength in the projects and fire businesses. Industrial Automation grew for a second consecutive quarter, with organic sales up 1%, led by warehouse and workflow solutions and sensing, as well as return to growth in productivity solutions and services. Process Solutions sales were flat, as strength in aftermarket services was offset by lower volumes in measurement and controls products. Finally, organic sales in Energy and Sustainability Solutions declined 7%, stemming from lower petrochemical catalyst shipments, coming in slightly below our expectations due to continued project deferrals.
Building Automation grew 8% organically, supported by growth of 9% in solutions and 8% in products. Regionally, North America and Middle East led the overperformance, with Europe up strong mid-single digits as well. Orders increased both year-over-year and sequentially, driven by ongoing momentum across both building solutions and products, and highlighted by strength in the projects and fire businesses. Industrial Automation grew for a second consecutive quarter, with organic sales up 1%, led by warehouse and workflow solutions and sensing, as well as return to growth in productivity solutions and services. Process Solutions sales were flat, as strength in aftermarket services was offset by lower volumes in measurement and controls products. Finally, organic sales in Energy and Sustainability Solutions declined 7%, stemming from lower petrochemical catalyst shipments, coming in slightly below our expectations due to continued project deferrals.
Speaker #2: Regionally, North America and Middle East led to overperformance. With Europe and up strong mid-single digits as well. Orders increased both year over year and sequentially, driven by ongoing momentum across both building solution and products and highlighted by strength in the projects and FHIR businesses.
Speaker #2: Industrial automation grew for a second consecutive quarter with organic sales up 1%, led by warehouse and workflow solutions, and sensing. As well as return to growth in productivity solutions and services.
Speaker #2: Process solution sales were flat, as strength in aftermarket services was offset by lower volumes in measurement and controls products. Finally, organic sales in energy and sustainability solutions declined 7%, stemming from lower petrochemical catalyst shipments.
Speaker #2: Coming in slightly below our expectations due to continued project deferrals. However, orders momentum in new B continued with over 40% orders growth in refining and petrochemicals projects, which supports our confidence in a gradual 2026 recovery.
Mike Stepniak: However, orders momentum in UOP continued, with over 40% orders growth in refining and petrochemicals projects, which supports our confidence in a gradual 2026 recovery. In total, Honeywell orders grew 23% organically, after 22% growth in Q3. Wins in long cycle aerospace, energy, and broad-based demand in building automation led the way, resulting in total book-to-bill above 1 and pushing backlog up 15% to a new record. On profitability, adjusted segment profit increased 23% or 2%, excluding Bombardier, with segment margin of 22.8%, led by ongoing margin expansion in building automation, partially offset by the timing of high-margin catalyst shipments in ESS and a headwind from a step-up in R&D.
However, orders momentum in UOP continued, with over 40% orders growth in refining and petrochemicals projects, which supports our confidence in a gradual 2026 recovery. In total, Honeywell orders grew 23% organically, after 22% growth in Q3. Wins in long cycle aerospace, energy, and broad-based demand in building automation led the way, resulting in total book-to-bill above 1 and pushing backlog up 15% to a new record. On profitability, adjusted segment profit increased 23% or 2%, excluding Bombardier, with segment margin of 22.8%, led by ongoing margin expansion in building automation, partially offset by the timing of high-margin catalyst shipments in ESS and a headwind from a step-up in R&D.
Speaker #2: In total, HONEYWELL orders grew 23% organically after 22% growth in the third quarter. Wins in long-cycle aerospace, energy, and broad-based demand in building automation led the way, resulting in total book-to-bill above one and pushing backlog up 15% to a new record.
Speaker #2: On profitability, adjusted segment profit increased 23%, or 2% excluding Bombardier. Segment margin was 22.8%, led by ongoing margin expansion in Building Automation, partially offset by the timing of high-margin catalyst shipments in ESS and a headwind from a step-up in R&D.
Speaker #2: In aerospace, adjusted segment margin expanded 40 basis points sequentially to 26.5%, as we again delivered stronger volumes enabled by supply chain improvements. While in VA, margins expanded 20 basis points year over year to 27%, driven by commercial excellence and volume leverage.
Mike Stepniak: In Aerospace, adjusted segment margin expanded 40 basis points sequentially to 26.5%, as we again delivered stronger volumes enabled by supply chain improvements, while in BA, margins expanded 20 basis points year-over-year to 27%, driven by commercial excellence and volume leverage. This was partially offset by declines in IA and ESS, driven principally by unfavorable mix from lower catalyst volumes and cost inflation. As a reminder, ESS Q4 and full year 2025 results include only the UOP business unit following the Q4 reclassification of advanced materials to discontinued operations, and this will be the last quarter we present results for ESS.
In Aerospace, adjusted segment margin expanded 40 basis points sequentially to 26.5%, as we again delivered stronger volumes enabled by supply chain improvements, while in BA, margins expanded 20 basis points year-over-year to 27%, driven by commercial excellence and volume leverage. This was partially offset by declines in IA and ESS, driven principally by unfavorable mix from lower catalyst volumes and cost inflation. As a reminder, ESS Q4 and full year 2025 results include only the UOP business unit following the Q4 reclassification of advanced materials to discontinued operations, and this will be the last quarter we present results for ESS.
Speaker #2: This was partially offset by declines in IA and ESS, driven principally by unfavorable mix from lower catalyst volumes and cost inflation. As a reminder, ESS fourth quarter and full year 2025 results include only the UOP business unit following the fourth quarter reclassification of advanced materials to discontinued operations.
Speaker #2: And this will be the last quarter we present results for ESS. Adjusted earnings per share of $2.59 was up 17% and down 3%, excluding the impact of the Bombardier agreement, driven primarily by higher segment profit and a lower share count.
Mike Stepniak: Adjusted earnings per share of $2.59 was up 17% and down 3%, excluding the impact of the Bombardier agreement, driven primarily by higher segment profit and a lower share count, overcoming a 24-cent year-over-year headwind from the timing of taxes. You can find additional information on the Q4 adjusted EPS bridge in the appendix of our presentation. Finally, free cash flow of $2.5 billion was up 48% or up 13%, excluding the impact of prior year Bombardier agreement. Growth in free cash flow was driven by higher operational income and collections, offset by higher cash taxes and interest payments. On capital deployment, we returned $900 million to shareholders in the quarter through dividends and share repurchases, while funding $300 million in high-return capital projects.
Adjusted earnings per share of $2.59 was up 17% and down 3%, excluding the impact of the Bombardier agreement, driven primarily by higher segment profit and a lower share count, overcoming a 24-cent year-over-year headwind from the timing of taxes. You can find additional information on the Q4 adjusted EPS bridge in the appendix of our presentation. Finally, free cash flow of $2.5 billion was up 48% or up 13%, excluding the impact of prior year Bombardier agreement. Growth in free cash flow was driven by higher operational income and collections, offset by higher cash taxes and interest payments. On capital deployment, we returned $900 million to shareholders in the quarter through dividends and share repurchases, while funding $300 million in high-return capital projects.
Speaker #2: Overcoming a 24-cent year-over-year headwind from the timing of taxes. You can find additional information on the fourth quarter adjusted EPS bridge in the appendix of our presentation.
Speaker #2: free cash flow of $2.5 Finally, billion was up 48%, or up 13%, excluding the impact of prior year Bombardier agreement. Growth in free cash flow was driven by higher operational income and collections, offset by higher cash taxes and interest payments.
Speaker #2: On capital deployment, we returned $900 million to shareholders in the quarter through dividends and share repurchases, while funding $300 million in high-return capital projects.
Speaker #2: We also repaid $2.3 billion of debt in the fourth quarter. For the full year, sales increased 7% organically—or 6% excluding the impact of the Bombardier agreement—exceeding the high end of original full-year guidance by two points.
Mike Stepniak: We also repaid $2.3 billion of debt in Q4. For the full year, sales increased 7% organically or 6%, excluding the impact of the Bombardier agreement, exceeding the high end of original full year guidance by 2 points. Adjusted segment profit grew 11%, or 6% excluding Bombardier, with adjusted segment margin expansion of 40 basis points, or contraction of 40 basis points excluding Bombardier to 22.5%. Adjusted earnings per share was $9.78, up 12% year-over-year, or up 7% excluding Bombardier. Finally, free cash flow was $5.1 billion, up 20% or up 7%, excluding the impact of the Bombardier agreement, presenting 14% margin.
We also repaid $2.3 billion of debt in Q4. For the full year, sales increased 7% organically or 6%, excluding the impact of the Bombardier agreement, exceeding the high end of original full year guidance by 2 points. Adjusted segment profit grew 11%, or 6% excluding Bombardier, with adjusted segment margin expansion of 40 basis points, or contraction of 40 basis points excluding Bombardier to 22.5%. Adjusted earnings per share was $9.78, up 12% year-over-year, or up 7% excluding Bombardier. Finally, free cash flow was $5.1 billion, up 20% or up 7%, excluding the impact of the Bombardier agreement, presenting 14% margin.
Speaker #2: Adjusted segment profit grew 11%, or 6%, excluding Bombardier. With adjusted segment margin expansion of 40 basis points, or contraction of 40 basis points excluding Bombardier to 22.5%.
Speaker #2: Adjusted earnings per share was $9.78, up 12% year over year, or up 7% excluding Bombardier. Finally, free cash flow was $5.1 billion, up 20%, or up 7% excluding the impact of the Bombardier agreement.
Speaker #2: Presenting 14% margin. We deployed $10 billion to capital in 2025, including $3.8 billion to repurchase $18 million shares, es, $2.2 billion to acquisitions, $1 billion to capital expenditures, and $3 billion to dividends.
Mike Stepniak: We deployed $10 billion to capital in 2025, including $3.8 billion to repurchase 18 million shares, $2.2 billion to acquisitions, $1 billion to capital expenditures, and $3 billion to dividends. We also repaid $3.8 billion of debt to lower interest expense. All in all, a very strong performance to end the year, with plenty of momentum heading into 2026. With that, let's turn to slide 8 to discuss our 2026 segment outlook. In aerospace, we expect top-line growth in the high single-digit range organically. We anticipate continued end market strength, supported by resilient supply chain that continues to grow its output. Commercial OE growth should accelerate in 2026 as we move past customer destocking and ramp our shipments alongside increasing production rates, particularly in commercial air transport.
We deployed $10 billion to capital in 2025, including $3.8 billion to repurchase 18 million shares, $2.2 billion to acquisitions, $1 billion to capital expenditures, and $3 billion to dividends. We also repaid $3.8 billion of debt to lower interest expense. All in all, a very strong performance to end the year, with plenty of momentum heading into 2026. With that, let's turn to slide 8 to discuss our 2026 segment outlook. In aerospace, we expect top-line growth in the high single-digit range organically. We anticipate continued end market strength, supported by resilient supply chain that continues to grow its output. Commercial OE growth should accelerate in 2026 as we move past customer destocking and ramp our shipments alongside increasing production rates, particularly in commercial air transport.
Speaker #2: We also repaid $3.8 billion of debt to lower interest expense. All in all, a very strong performance to end the year with plenty of momentum heading into 2026.
Speaker #2: With that, let's turn to slide eight to discuss our 2026 segment outlook. In aerospace, we expect top-line growth in the high single-digit range organically.
Speaker #2: We anticipate continued end-market strength, supported by a resilient supply chain that continues to grow its output. Commercial OE growth should accelerate in 2026 as we move past customer destocking and ramp our shipments alongside increasing production rates.
Speaker #2: Particularly in commercial air transport. Defense and space should maintain its momentum as higher global spending drives substantial orders growth and record backlog. Steady increases in flight hours in air transport and business jet underpin ongoing commercial aftermarket strength.
Mike Stepniak: Defense and space should maintain its momentum as higher global spending drives substantial orders growth and record backlog. Steady increases in flight hours in air transport and business jet underpin ongoing commercial aftermarket strength, though we expect modest normalization in growth rates from the prior year. Segment margins should expand modestly as volume leverage, better pricing alignment with tariff costs, and tapering acquisition integration costs more than offset mixed pressure from stronger growth in defense and space and commercial OE. For Building Automation, we expect full-year sales growth above mid-single digits, highlighted by strength in growing data center and healthcare end markets. We expect growth to be led by North America and acceleration in Europe on increased investments in healthcare and decarbonization infrastructure buildup. For the year, both products and solutions will grow at similar rates.
Defense and space should maintain its momentum as higher global spending drives substantial orders growth and record backlog. Steady increases in flight hours in air transport and business jet underpin ongoing commercial aftermarket strength, though we expect modest normalization in growth rates from the prior year. Segment margins should expand modestly as volume leverage, better pricing alignment with tariff costs, and tapering acquisition integration costs more than offset mixed pressure from stronger growth in defense and space and commercial OE. For Building Automation, we expect full-year sales growth above mid-single digits, highlighted by strength in growing data center and healthcare end markets. We expect growth to be led by North America and acceleration in Europe on increased investments in healthcare and decarbonization infrastructure buildup. For the year, both products and solutions will grow at similar rates.
Speaker #2: Though we expect modest normalization in growth rates from the prior year, segment margins should expand modestly as volume leverage, better pricing alignment with tariff costs, and tapering acquisition integration costs more than offset mixed pressure from stronger growth in defense and space and commercial OE.
Speaker #2: For building automation, we expect full-year sales growth above mid-single digits, highlighted by strength in growing data center and healthcare end markets. We expect growth to be led by North America and acceleration in Europe on increased investments in healthcare and decarbonization infrastructure buildup.
Speaker #2: For the year, both products and solutions will grow at similar rates. We anticipate VA margin to expand over 50 basis points, driven by volume leverage, pricing, and productivity actions.
Mike Stepniak: We anticipate BA margin to expand over 50 basis points, driven by volume leverage, pricing, and productivity actions. Process automation technology sales are expected to be roughly flat organically year over year. Slower first half growth in petrochemicals and refining should be offset by robust demand in global projects, particularly in life sciences and cybersecurity solutions. We expect margin to be roughly flat, with pricing and productivity offsetting material cost inflation. And finally, in industrial automation, we expect sales to be down low single digits to roughly flat, with stable growth industrial solutions offset by headwinds from a challenging prior year comparison in products. Within this framework, we're not assuming any rebound on underlying end market demand. We expect IA to lead margin expansion across all segments in 2026 through meaningful productivity actions and fixed cost reduction.
We anticipate BA margin to expand over 50 basis points, driven by volume leverage, pricing, and productivity actions. Process automation technology sales are expected to be roughly flat organically year over year. Slower first half growth in petrochemicals and refining should be offset by robust demand in global projects, particularly in life sciences and cybersecurity solutions. We expect margin to be roughly flat, with pricing and productivity offsetting material cost inflation. And finally, in industrial automation, we expect sales to be down low single digits to roughly flat, with stable growth industrial solutions offset by headwinds from a challenging prior year comparison in products. Within this framework, we're not assuming any rebound on underlying end market demand. We expect IA to lead margin expansion across all segments in 2026 through meaningful productivity actions and fixed cost reduction.
Speaker #2: Process automation technology sales are expected to be roughly flat organically year over year. Slower first-half growth in petrochemicals and refining should be offset by robust demand in global projects, particularly in life sciences and cybersecurity solutions.
Speaker #2: We expect margin to be roughly flat with pricing and productivity offsetting material cost inflation. And finally, in industrial automation, we expect sales to be down low single digits to roughly flat with stable growth industrial solutions offset by headwinds from a challenging prior year comparison in products.
Speaker #2: Within this framework, we're not assuming any rebound on underlying end-market demand. We expect IA to lead margin expansion across all segments in 2026 through meaningful productivity actions and fixed cost reduction.
Speaker #2: Let's now turn to slide nine to double-click on process automation technology dynamics in 2026. During the second half of 2025, we saw 17% organic orders growth in the new P&T segment, which led a corresponding 16% rise in the opening backlog.
Mike Stepniak: Let's now turn to slide 9 to double-click on process automation and technology dynamics in 2026. During the second half of 2025, we saw 17% organic orders growth in the new PNT segment, which led a corresponding 16% rise in the opening backlog. This continues to be a significant part of our long cycle order strength, particularly in LNG and refining, both in the US and internationally. The backlog growth gives us confidence in an expected second half ramp, especially when measured against our historical backlog conversion rates. Wins in LNG and a number of large module equipment deals are expected to convert to sales in the back half of the year.
Let's now turn to slide 9 to double-click on process automation and technology dynamics in 2026. During the second half of 2025, we saw 17% organic orders growth in the new PNT segment, which led a corresponding 16% rise in the opening backlog. This continues to be a significant part of our long cycle order strength, particularly in LNG and refining, both in the US and internationally. The backlog growth gives us confidence in an expected second half ramp, especially when measured against our historical backlog conversion rates. Wins in LNG and a number of large module equipment deals are expected to convert to sales in the back half of the year.
Speaker #2: This continues to be a significant part of our long-cycle order strength, particularly in LNG and refining, both in the US and internationally. The backlog growth gives us confidence in an expected second half ramp, especially when measured against our historical backlog conversion rates.
Speaker #2: Wednesday in LNG and a number of large modular equipment deals are expected to convert to sales in the back half of the year. In addition, we're encouraged by our pipeline in P&T, which grew high single digits year over year.
Mike Stepniak: In addition, we're encouraged by our pipeline in PNT, which grew high single digits year over year, signaling that the strength long cycle orders is expected to persist, contingent on the pace of final investment decisions from our customers. We're diligently tracking the slower-than-expected aftermarket order rates for catalysts, particularly within petrochemicals, which has been influenced by overcapacity in the market. Catalyst shipments can be temporarily delayed in the short term, but are ultimately necessary for our customers to maintain yields, and those can only be deferred for a period of time. So while we acknowledge the challenges this business faced in 2025, we're encouraged by orders growth and backlog, as well as pent-up catalyst demand that should eventually fuel strong growth as we progress through 2026 and into 2027. Let's move to slide 10 to talk further about our expected segment margin expansion for 2026.
In addition, we're encouraged by our pipeline in PNT, which grew high single digits year over year, signaling that the strength long cycle orders is expected to persist, contingent on the pace of final investment decisions from our customers. We're diligently tracking the slower-than-expected aftermarket order rates for catalysts, particularly within petrochemicals, which has been influenced by overcapacity in the market. Catalyst shipments can be temporarily delayed in the short term, but are ultimately necessary for our customers to maintain yields, and those can only be deferred for a period of time. So while we acknowledge the challenges this business faced in 2025, we're encouraged by orders growth and backlog, as well as pent-up catalyst demand that should eventually fuel strong growth as we progress through 2026 and into 2027. Let's move to slide 10 to talk further about our expected segment margin expansion for 2026.
Speaker #2: Signaling that the strength long-cycle orders is expected to persist, contingent on the pace of final investment decisions from our customers. We're diligently tracking the slower-than-expected aftermarket order rates for catalysts.
Speaker #2: Particularly within petrochemicals, which has been influenced by overcapacity in the market. Catalyst shipments can be temporarily delayed in the short term, but are ultimately necessary for our customers to maintain yields.
Speaker #2: And those can only be deferred for a period of time. So while we acknowledge the challenges this business faced in 2025, we're encouraged by orders growth and backlog, as well as pent-up catalyst demand that should eventually fuel strong growth as we progress through 2026 and into 2027.
Speaker #2: Let's move to slide 10 to talk further about our expected segment margin expansion for 2026. In 2026, we anticipate the demand for our differentiated high-value solutions and continued pricing that is outpacing inflation will drive further margin expansion.
Mike Stepniak: In 2026, we anticipate the demand for our differentiated high-value solutions and continued pricing that is outpacing inflation will drive further margin expansion. On a segment basis, we expect improved volume leverage, principally in our Building Automation and Aerospace Technologies businesses, which will drive solid incremental margins, while PNT margins will be roughly flat in 2026 due to the impact of stronger projects growth in the second half. Our focus on productivity action and rigorous fixed cost management will continue in 2026. We're working diligently to rightsize our cost structure ahead of the planned aerospace spin and expect to eliminate the Stranded Costs in 12 to 18 months after the spin. We have already neutralized the impact of Solstice Stranded Costs in 2025 through productivity and fixed cost reduction in the rest of the business.
In 2026, we anticipate the demand for our differentiated high-value solutions and continued pricing that is outpacing inflation will drive further margin expansion. On a segment basis, we expect improved volume leverage, principally in our Building Automation and Aerospace Technologies businesses, which will drive solid incremental margins, while PNT margins will be roughly flat in 2026 due to the impact of stronger projects growth in the second half. Our focus on productivity action and rigorous fixed cost management will continue in 2026. We're working diligently to rightsize our cost structure ahead of the planned aerospace spin and expect to eliminate the Stranded Costs in 12 to 18 months after the spin. We have already neutralized the impact of Solstice Stranded Costs in 2025 through productivity and fixed cost reduction in the rest of the business.
Speaker #2: On the segment basis, we expect improved volume leverage principally in our building automation, aerospace technology businesses, which will drive solid incremental margins for P&T margins will be roughly flat in 2026 due to the impact of stronger projects growth in the second half.
Speaker #2: Our focus on productivity action and rigorous fixed cost management will continue in 2026. We're working diligently to right-size our cost structure ahead of the planned aerospace spin and expect to eliminate the stranded costs in 12 to 18 months after the spin.
Speaker #2: solstice stranded costs in We have already neutralized the impact of 2025 through productivity and fixed cost reduction in the rest of the business. Finally, continuing investments in R&D and technology will be a modest headwind to margin in 2026.
Mike Stepniak: Finally, Quantinuum investments in R&D and technology will be a modest headwind to margin in 2026. As Vimal noted, Quantinuum is making significant commercial R&D investment to maintain its leadership position in quantum computing. With that as the background, let's move to slide 11 to go through the details of our full year 2026 guidance. Before we get into the specifics, I want to point out that our 2026 guidance includes full year outlooks for aerospace, productivity solutions and services, and warehouse and workflow solutions, and does not incorporate the pending acquisition of Johnson Matthey's Catalyst Technologies business. We intend to update our outlook when these transactions are complete. For the full year 2026, we anticipate sales of $38.8 to 39.8 billion, up 3% to 6% organically.
Finally, Quantinuum investments in R&D and technology will be a modest headwind to margin in 2026. As Vimal noted, Quantinuum is making significant commercial R&D investment to maintain its leadership position in quantum computing. With that as the background, let's move to slide 11 to go through the details of our full year 2026 guidance. Before we get into the specifics, I want to point out that our 2026 guidance includes full year outlooks for aerospace, productivity solutions and services, and warehouse and workflow solutions, and does not incorporate the pending acquisition of Johnson Matthey's Catalyst Technologies business. We intend to update our outlook when these transactions are complete. For the full year 2026, we anticipate sales of $38.8 to 39.8 billion, up 3% to 6% organically.
Speaker #2: As Vimal noted, continuum is making significant commercial R&D investment to maintain its leadership position in quantum computing. With that as the backdrop, let's move to slide 11 to go through the details of our full year 2026 guidance.
Speaker #2: Before we get into the specifics, I want to point out that our 2026 guidance includes full year outlook for aerospace, productivity solutions, and services, and warehouse and workflow solutions.
Speaker #2: And does not incorporate the pending acquisition on Johnson Marty's catalyst technologies business. We intend to update our outlook when these transactions are complete. For the full year 2026, we anticipate sales of 38.8 to 39.8 billion dollars, up 3% to 6% organically.
Speaker #2: We expect growth to be led by aerospace, on higher commercial demand and increased defense budgets, and building automation, driven by new product innovations. This will be partially offset by a slower start to the year in process automation technology, which turns to growth in the second half, driven by order visibility and significantly easier comps.
Mike Stepniak: We expect growth to be led by aerospace on higher commercial demand and increased defense budgets, and building automation driven by new product innovations. This will be partially offset by a slower start to the year in process automation technology, which turns to growth in the second half, driven by order visibility, and significantly easier comps, and mixed regional and end market dynamics in industrial automation. Segment margins are expected to be up 20 to 60 basis points to 22.7 to 23.1%, as the benefits from price execution and productivity actions more than offset cost inflation and a roughly 30 basis points headwind from increased investments in Quantinuum. Industrial automation will lead for the year, driven by targeted fixed cost takeout, followed by building automation as higher volumes continue to drive margin expansion.
We expect growth to be led by aerospace on higher commercial demand and increased defense budgets, and building automation driven by new product innovations. This will be partially offset by a slower start to the year in process automation technology, which turns to growth in the second half, driven by order visibility, and significantly easier comps, and mixed regional and end market dynamics in industrial automation. Segment margins are expected to be up 20 to 60 basis points to 22.7 to 23.1%, as the benefits from price execution and productivity actions more than offset cost inflation and a roughly 30 basis points headwind from increased investments in Quantinuum. Industrial automation will lead for the year, driven by targeted fixed cost takeout, followed by building automation as higher volumes continue to drive margin expansion.
Speaker #2: And mixed regional and end-market dynamics in industrial automation. Segment margins are expected to be up 20 to 60 basis points to 22.7 to 23.1% as the benefits from price execution and productivity actions more than offset cost inflation and a roughly 30 basis points headwind from increased investments in continuum.
Speaker #2: Industrial automation will lead for the year, driven by targeted fixed cost takeout, followed by building automation, as higher volumes continue to drive margin expansion.
Speaker #2: Aerospace margins should expand modestly as volume leverage is partially dampened by mixed pressures. Finally, we expect P&T segment margins to be roughly flat year over year, with pricing and productivity offsetting material cost inflation.
Mike Stepniak: Aerospace margins should expand modestly as volume leverage is partially dampened by mixed pressures. Finally, we expect P&T segment margins to be roughly flat year-over-year, with pricing and productivity offsetting material cost inflation. We expect a combination of strong top line growth, coupled with productivity and fixed cost reduction, will drive adjusted earnings per share of $10.35 to $10.65, up 6% to 9%. Our guidance assumes a 1% reduction in share count, stemming from share repurchases. As we have signaled, we intend to focus our cash deployment in 2026 on reducing debt ahead of the separation.
Aerospace margins should expand modestly as volume leverage is partially dampened by mixed pressures. Finally, we expect P&T segment margins to be roughly flat year-over-year, with pricing and productivity offsetting material cost inflation. We expect a combination of strong top line growth, coupled with productivity and fixed cost reduction, will drive adjusted earnings per share of $10.35 to $10.65, up 6% to 9%. Our guidance assumes a 1% reduction in share count, stemming from share repurchases. As we have signaled, we intend to focus our cash deployment in 2026 on reducing debt ahead of the separation.
Speaker #2: We expect a combination of strong top-line growth coupled with productivity and fixed cost reduction will drive adjusted earnings per share of $10.35 to $10.65, up 6% to 9%.
Speaker #2: Our guidance assumes a 1% reduction in share count scheming from share repurchases. As we have signaled, we intend to focus our cash deployment in 2026 on reducing debt ahead of the separation.
Speaker #2: Moving to cash, we expect free cash flow of 5.3 to 5.6 billion dollars, up 4% to 10%, which represents an approximately 14% free cash flow margin and 83% conversion at the high end or 90% excluding non-cash pension income.
Mike Stepniak: Moving to cash, we expect free cash flow of $5.3 to 5.6 billion, up 4% to 10%, which represents an approximately 14% free cash flow margin and 83% conversion at the high end, or 90% excluding non-cash pension income. Capital expenditures are anticipated to increase by roughly $250 million to support growth investment attached to orders we already have in build backlog. This increase in spending will be funded by improvements in working capital efficiency with a continued focus on aerospace inventory. Let's move to slide 12 to briefly review a full year 2026 EPS bridge. The main takeaway on this slide is that the overwhelming majority of our earnings growth in 2026 is expected to come from segment profit growth, adding approximately $0.64 at the midpoint.
Moving to cash, we expect free cash flow of $5.3 to 5.6 billion, up 4% to 10%, which represents an approximately 14% free cash flow margin and 83% conversion at the high end, or 90% excluding non-cash pension income. Capital expenditures are anticipated to increase by roughly $250 million to support growth investment attached to orders we already have in build backlog. This increase in spending will be funded by improvements in working capital efficiency with a continued focus on aerospace inventory. Let's move to slide 12 to briefly review a full year 2026 EPS bridge. The main takeaway on this slide is that the overwhelming majority of our earnings growth in 2026 is expected to come from segment profit growth, adding approximately $0.64 at the midpoint.
Speaker #2: Capital expenditures anticipated to increase by roughly 250 million dollars to support growth investment attached to orders we already have in belt backbone. This increase in spending will be funded by improvements in working capital efficiency, with a continued focus on aerospace inventory.
Speaker #2: Let's move to slide 12 to briefly review a full year 2026 EPS range. The main takeaway on this slide is that the overwhelming majority of our earnings growth in 2026 is expected to come from segment profit growth, adding approximately 60% at the midpoint.
Speaker #2: We expect to benefit from higher volumes enhanced productivity and favorable price costs, offset by higher investment in continuum as I noted. As you can hopefully see, we have fairly clean high-quality and straightforward path to our 2026 outlook.
Mike Stepniak: We expect to benefit from higher volumes, enhanced productivity, and favorable price costs, offset by higher investment in Quantinuum, as I noted. As you can hopefully see, we have fairly clean, high quality, and straightforward path to our 2026 outlook. A few other points to note: below the line expenses should be roughly flat year-over-year, as higher pension income of approximately $660 million is offset by increased repositioning expenses as we prepare for separation, while net interest expense remains in line with 2025 levels. We expect the tax rate to remain roughly 19% and average shares outstanding to decline approximately 1%, adding $0.08 to earnings per share. Additional below-the-line details are available in the appendix of the presentation. Now let's turn to slide 13 to talk briefly about Q1 guidance.
We expect to benefit from higher volumes, enhanced productivity, and favorable price costs, offset by higher investment in Quantinuum, as I noted. As you can hopefully see, we have fairly clean, high quality, and straightforward path to our 2026 outlook. A few other points to note: below the line expenses should be roughly flat year-over-year, as higher pension income of approximately $660 million is offset by increased repositioning expenses as we prepare for separation, while net interest expense remains in line with 2025 levels. We expect the tax rate to remain roughly 19% and average shares outstanding to decline approximately 1%, adding $0.08 to earnings per share. Additional below-the-line details are available in the appendix of the presentation. Now let's turn to slide 13 to talk briefly about Q1 guidance.
Speaker #2: A few other points to note. Below the line expenses should be roughly flat year over year as higher pension income of approximately 660 million dollars is offset by increased repositioning expenses as we prepare for separation.
Speaker #2: While net interest expense remains in line with 2025 levels. We expect that tax rate to remain roughly 19% and average shares outstanding to decline approximately 1%, heading 8 cents to earnings per share.
Speaker #2: Additional below the line details are available in the appendix of the presentation. Now let's turn to slide 13 to talk briefly about OneQ guidance.
Speaker #2: We anticipate first-quarter organic sales growth of 3% to 5%. By segment, we anticipate organic sales growth in Aerospace, Building Automation, and Industrial Automation to look very similar to our full-year outlook for these businesses.
Mike Stepniak: We anticipate Q1 organic sales growth of 3% to 5% organically. By segment, we anticipate organic sales growth in aerospace, building automation, and industrial automation to look very similar to our full year outlook for these businesses, while process automation technology will be more in line with Q4 2025 levels, given the slow start, as mentioned earlier. In addition, we expect to see normal seasonal step down in revenue from Q4 to Q1, similar to past years. We expect segment margin to be in the range of 22.4% to 22.6%, flat to up 20 basis points, led by productivity actions in our automation businesses. We anticipate aerospace margins to be down slightly from the prior quarter on seasonally lower volumes. This will drive adjusted earnings per share growth in the first quarter of 2% to 6%.
We anticipate Q1 organic sales growth of 3% to 5% organically. By segment, we anticipate organic sales growth in aerospace, building automation, and industrial automation to look very similar to our full year outlook for these businesses, while process automation technology will be more in line with Q4 2025 levels, given the slow start, as mentioned earlier. In addition, we expect to see normal seasonal step down in revenue from Q4 to Q1, similar to past years. We expect segment margin to be in the range of 22.4% to 22.6%, flat to up 20 basis points, led by productivity actions in our automation businesses. We anticipate aerospace margins to be down slightly from the prior quarter on seasonally lower volumes. This will drive adjusted earnings per share growth in the first quarter of 2% to 6%.
Speaker #2: While process automation technology will be more in line with 4Q25 levels given the slow start as mentioned earlier. In addition, we expect to see normal seasonal step down in revenue from 4Q to 1Q, similar to past years.
Speaker #2: We expect segment margin to be in the range of 22.4% to 22.6%—flat to up 20 basis points, led by productivity actions in our automation businesses.
Speaker #2: Margins to be down slightly from the prior quarter. We anticipate Aerospace to be down on seasonally lower volumes. This will drive adjusted earnings per share growth in the first quarter of 2% to 6%.
Speaker #2: We expect a roughly 70 million dollar increase in below the line driven by higher interest expense from recent acquisition and increased repositioning expense ahead of the separation.
Mike Stepniak: We expect a roughly $70 million increase in below the line, driven by higher interest expense from recent acquisition and increased repositioning expense ahead of the separation. Additionally, as we announced last week, following a settlement of all Flexsys-related litigation matters, we made a one-time cash payment of $377 million in Q1, which is excluded from our full year free cash flow guidance. I'll now hand the call back over to Vimal to wrap up before Q&A.
We expect a roughly $70 million increase in below the line, driven by higher interest expense from recent acquisition and increased repositioning expense ahead of the separation. Additionally, as we announced last week, following a settlement of all Flexsys-related litigation matters, we made a one-time cash payment of $377 million in Q1, which is excluded from our full year free cash flow guidance. I'll now hand the call back over to Vimal to wrap up before Q&A.
Speaker #2: Additionally, as we announced last week, following a settlement of all Flexit-related litigation matters, we made a one-time cash payment of $377 million in the first quarter, which is excluded from our full-year free cash flow guidance.
Speaker #2: I'll now hand the call back over to Vimal to wrap up before Q&A. Thank you, Mike. We are pleased with our strong furniture 2025 with adjusted sales and adjusted earnings per share exceeding the high end of our guidance range.
Vimal Kapur: Thank you, Mike. We are pleased with our strong finish to 2025, with adjusted sales and Adjusted Earnings Per Share exceeding the high end of our guidance range. This performance underscores the resilience of our business model approach and highlights the growing demand for our innovative solution. Looking ahead, our guidance for 2026 is underpinned by continued strength in our orders growth, price execution, and record beginning backlog. As always, our guidance serves as a prudent baseline for performance that we have a strong conviction we can achieve. Moreover, we continue to progress our separation milestone, which we are tracking ahead of plan, paving a clear path for both aerospace and automation to emerge as industry-leading companies in 2026.
Vimal Kapur: Thank you, Mike. We are pleased with our strong finish to 2025, with adjusted sales and Adjusted Earnings Per Share exceeding the high end of our guidance range. This performance underscores the resilience of our business model approach and highlights the growing demand for our innovative solution. Looking ahead, our guidance for 2026 is underpinned by continued strength in our orders growth, price execution, and record beginning backlog. As always, our guidance serves as a prudent baseline for performance that we have a strong conviction we can achieve. Moreover, we continue to progress our separation milestone, which we are tracking ahead of plan, paving a clear path for both aerospace and automation to emerge as industry-leading companies in 2026.
Speaker #2: This performance underscores the resilience of our business model approach and highlights the growing demand for our innovative solution. Looking ahead, our guidance for 2026 is underpinned by continued strength in our orders growth, price execution, and record beginning backlog.
Speaker #2: As always, our guidance serves as a prudent baseline for performance that we have a strong conviction we can achieve. Moreover, we continue to progress our separation milestone, which we are tracking ahead of plan, paving a clear path for both aerospace and automation to emerge as industry leading companies in 2026.
Speaker #2: We look forward to sharing more about our strategy and long-term growth at the upcoming Honeywell Aerospace Investor Day on June 2nd and 3rd in Phoenix.
Vimal Kapur: We look forward to sharing more about our strategy and long-term growth at the upcoming Honeywell Aerospace Investor Day on 2 and 3 June in Phoenix, followed by Honeywell Automation Investor Day on 11 June in New York City. These events will provide an excellent opportunity for us to engage with our investors and showcase the strength of our portfolio. Before turning to Q&A, I want to take a moment to acknowledge our Head of Investor Relations, Sean Meakim, for all his contribution over the past 4 years. As you know, Sean will be moving to aerospace with a spin-off to establish another world-class investor relations function, as he did in Honeywell. He will be an incredible asset to Craig, Jim, and Josh as they begin their journey as a standalone entity.
We look forward to sharing more about our strategy and long-term growth at the upcoming Honeywell Aerospace Investor Day on 2 and 3 June in Phoenix, followed by Honeywell Automation Investor Day on 11 June in New York City. These events will provide an excellent opportunity for us to engage with our investors and showcase the strength of our portfolio. Before turning to Q&A, I want to take a moment to acknowledge our Head of Investor Relations, Sean Meakim, for all his contribution over the past 4 years. As you know, Sean will be moving to aerospace with a spin-off to establish another world-class investor relations function, as he did in Honeywell. He will be an incredible asset to Craig, Jim, and Josh as they begin their journey as a standalone entity.
Speaker #2: Followed by Honeywell Automation Investor Day on June 11th in New York City. These events will provide an excellent opportunity for us to engage with our investors and showcase the strength of our portfolio.
Speaker #2: turning to Q&A, I want to take a And before moment to acknowledge our Head of Investor Relations, Sean Meakim, for all his contribution over the past four years.
Speaker #2: As you know, Sean will be moving to aerospace with a spin-off to establish another world-class investor relation function as he did in Honeywell. He will be an incredible asset to Craig, Jim, and Josh as they begin their journey as a standalone entity.
Speaker #2: Sean effectively communicated the vision and value of Honeywell's strategy with credibility and conviction, laying the framework with investors for our emergence post-separation. On behalf of the leadership team and shareholders, I want to thank Sean for your dedication and commitment and say that I could not be happier to have you lead the IR function at Honeywell Aerospace.
Vimal Kapur: Sean effectively communicated the vision and value of Honeywell's strategy with credibility and conviction, laying the framework with investors for our emergence post-separation. On behalf of the leadership team and shareholders, I want to thank Sean for your dedication and commitment, and say that I could not be happier to have you lead the IR function at Honeywell Aerospace. Congratulations, and with that, Sean, let's take the questions.
Sean effectively communicated the vision and value of Honeywell's strategy with credibility and conviction, laying the framework with investors for our emergence post-separation. On behalf of the leadership team and shareholders, I want to thank Sean for your dedication and commitment, and say that I could not be happier to have you lead the IR function at Honeywell Aerospace. Congratulations, and with that, Sean, let's take the questions.
Speaker #2: Congratulations. And with that, Sean, let's take the
Speaker #2: Questions. Thanks for the kind words,
Sean Meakim: Thanks for the kind words, Vimal. I'm very grateful for the opportunity to lead IR and be part of this team. It's been a great learning experience, and I'm really excited about what's ahead for both aerospace and Honeywell. Vimal and Mike are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Operator, please open the line for Q&A.
Sean Meakim: Thanks for the kind words, Vimal. I'm very grateful for the opportunity to lead IR and be part of this team. It's been a great learning experience, and I'm really excited about what's ahead for both aerospace and Honeywell. Vimal and Mike are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Operator, please open the line for Q&A.
Speaker #3: Vimal, I'm very grateful for the opportunity to lead IR and be part of this team. It's been a great learning experience, and I'm really excited about what's ahead for both Aerospace and Honeywell.
Speaker #3: Vimal and Mike are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up.
Speaker #3: Operator, please open the line for Q&A.
Speaker #4: 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 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 pressing the star keys. Our first question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.
Operator: 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 pressing the star keys. Our first question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.
Speaker #4: 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 keys.
Speaker #4: Our first question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.
[Analyst] (Barclays): Hi, good morning, and yes, I want to say thank you, Sean, for all the help. If we think about the margin progression, just to try and understand that a little bit more, for the total company, so it's sort of flattish year-over-year in Q1, picks up steam over the balance of the year. Maybe help us understand how second half-weighted that margin acceleration is, and are there any specific items on a segment level driving that, please?
Speaker #5: Hi, good morning and yes, I want to say thank you, Sean, for all the help. If we think about the margin progression, just to try and understand that a little bit more, for the total company.
Julian Mitchell: Hi, good morning, and yes, I want to say thank you, Sean, for all the help. If we think about the margin progression, just to try and understand that a little bit more, for the total company, so it's sort of flattish year-over-year in Q1, picks up steam over the balance of the year. Maybe help us understand how second half-weighted that margin acceleration is, and are there any specific items on a segment level driving that, please?
Speaker #5: So it's sort of flattish year on year in the first quarter. Picks up steam over the balance of the year. Maybe help us understand how second half weighted that margin acceleration is and are there any specific items on a segment level driving that, please?
Mike Stepniak: Sure, Julian, thank you for the question. So on the headline numbers, we're expanding 20 to 60. Operationally, we really are expanding margins about 50 to 90 basis points. And we have a little bit of a headwind, about 30 basis points this year from Quantinuum. That headwind is a little bit higher in Q1. In Q1, our taxes are the highest, and our interest expense for the year is the highest, so that's easing. So I think what you'll receive from us, 20, 20 bps in Q1, and then sequentially improving. Second half looks much better than the first half.
Mike Stepniak: Sure, Julian, thank you for the question. So on the headline numbers, we're expanding 20 to 60. Operationally, we really are expanding margins about 50 to 90 basis points. And we have a little bit of a headwind, about 30 basis points this year from Quantinuum. That headwind is a little bit higher in Q1. In Q1, our taxes are the highest, and our interest expense for the year is the highest, so that's easing. So I think what you'll receive from us, 20, 20 bps in Q1, and then sequentially improving. Second half looks much better than the first half.
Speaker #6: Sure, Julian. Thank you for the question. So, on the headline numbers, we're expanding 20 to 60. Operationally, we really are expanding margins about 50 to 90 basis points.
Speaker #6: And we have a little bit of a headwind about 30 basis points this year from continuum. That headwind is a little bit higher in the first quarter.
Speaker #6: In the first quarter, also, our taxes are the highest, and we're paying our interest expense for the year, which is the highest. So that's easing.
Speaker #6: So I think what you'll see from us 20, 20 bips in the first quarter and then sequentially improving. Second half looks much better than the first half.
Speaker #2: Yeah, and Julian, what I'll add is that the fundamental playbook, which Honeywell always executed on margin expansion, which is price, volume, productivity, that will be in full play this year.
Vimal Kapur: Yeah, and Julian, what I'll add is that, the fundamental playbook, which Honeywell always executed on margin expansion, which is price, volume, productivity, that will be in full play this year. We do expect, as Mike mentioned, our operational margins to expand, you know, 50 to 90 basis points and invest some money back in Quantinuum. But, we, we are very well programmed to deliver margin expansion as we did in the past, like, 2023, we were 100 basis points margin expansion. So we are very confident in delivering our margin expansion, rubric for 2026.
Vimal Kapur: Yeah, and Julian, what I'll add is that, the fundamental playbook, which Honeywell always executed on margin expansion, which is price, volume, productivity, that will be in full play this year. We do expect, as Mike mentioned, our operational margins to expand, you know, 50 to 90 basis points and invest some money back in Quantinuum. But, we, we are very well programmed to deliver margin expansion as we did in the past, like, 2023, we were 100 basis points margin expansion. So we are very confident in delivering our margin expansion, rubric for 2026.
Speaker #2: We do expect, as Mike mentioned, our operational margins to expand 50 to 90 basis points and invest some money back in continuum. But we are very well programmed to deliver margin expansion as we did in the past, like 2023, we were 100 basis points margin expansion.
Speaker #2: So we are very confident on delivering our margin expansion rubric for 2026.
Speaker #6: And I would just also maybe add that last year we talked about it, we stepped up on engineering. From R&D standpoint, that's now normalized going into 2026.
Mike Stepniak: I would just also maybe add that last year, we, we talked about it, we stepped up on engineering from an R&D standpoint. That's now normalized going into 2026. It's not a headwind for us. Last year was about, I think, 50 basis points of headwind if you take 2025 as a whole.
Mike Stepniak: I would just also maybe add that last year, we, we talked about it, we stepped up on engineering from an R&D standpoint. That's now normalized going into 2026. It's not a headwind for us. Last year was about, I think, 50 basis points of headwind if you take 2025 as a whole.
Speaker #6: It's not a headwind for us. And last year was about, I think, 50 bips of headwind if you take 2025 as a whole.
Speaker #5: That's helpful. Thank you. And then just a quick follow-up on the aerospace margins specifically. I think they're starting out the year maybe down a touch year on year, and then up a few tens of basis points for the year in aggregate.
[Analyst] (Barclays): That's helpful. Thank you. And then just a quick follow-up on the, aerospace, margins, specifically. I think they're, they're starting out the year, maybe, down a touch year on year, and, and then up a few tens of basis points for the year in aggregate. Maybe clarify kind of how you see those mix impacts playing out through the year. And there's been some discussion on commercial OE contract renewal timings and so forth. Is that a factor this year affecting the aero margins at all?
Julian Mitchell: That's helpful. Thank you. And then just a quick follow-up on the, aerospace, margins, specifically. I think they're, they're starting out the year, maybe, down a touch year on year, and, and then up a few tens of basis points for the year in aggregate. Maybe clarify kind of how you see those mix impacts playing out through the year. And there's been some discussion on commercial OE contract renewal timings and so forth. Is that a factor this year affecting the aero margins at all?
Speaker #5: Maybe clarify kind of how you see those mix impacts playing out through the year, and there's been some discussion on commercial OE contract renewal timings and so forth.
Speaker #5: Is that a factor this year affecting the aero
Speaker #6: Sure. So maybe I'll just start with the 2025 progression by saying it's important. As you think about 2026, so we entered 2025 and we said we'll finish about 26% for the year.
Mike Stepniak: Sure. So maybe I'll just start with the 2025 progression, but I think it's important, as you think about 2026. So we entered 2025, and we said we'll finish about 26% for the year. That's exactly what we did, and the team executed well, despite Liberation Day, having to contend with the tariffs. Largely, tariffs are behind us. Going to 2026, price will be better for aerospace. Acquisition integration costs are abating. That's also a tailwind, and supply chain is continuing to improve.
Mike Stepniak: Sure. So maybe I'll just start with the 2025 progression, but I think it's important, as you think about 2026. So we entered 2025, and we said we'll finish about 26% for the year. That's exactly what we did, and the team executed well, despite Liberation Day, having to contend with the tariffs. Largely, tariffs are behind us. Going to 2026, price will be better for aerospace. Acquisition integration costs are abating. That's also a tailwind, and supply chain is continuing to improve.
Speaker #6: That's exactly what we did. And the team executed well. Despite the liberation day and having to contend with the tariffs. Largely tariffs are behind us.
Speaker #6: Going to 2026, price will be better. For aerospace, acquisition integration costs are abating. That's also a tailwind. And supply chain is continuing to improve.
Speaker #6: So, for 2026, really, to me, it's a margin expansion question—it's really just a question of how much. And that's a factor of mix.
Mike Stepniak: So for 2026, really, to me, it's a margin expansion question, is really just a question of how much, and that's a factor of mix and how mix is going to play out in the business, as well as how we continue to unlock and scale the supply chain and how the trajectory progresses. But 2026, I fully expect margin expansion in aerospace.
So for 2026, really, to me, it's a margin expansion question, is really just a question of how much, and that's a factor of mix and how mix is going to play out in the business, as well as how we continue to unlock and scale the supply chain and how the trajectory progresses. But 2026, I fully expect margin expansion in aerospace.
Speaker #6: And how is mix going to play out in the business as well as how we continue to unlock and scale the supply chain and how the trajectory progresses.
Speaker #6: But 2026, I fully expect margin expansion in aerospace.
Speaker #2: And Julian, to your question on the OE contracts, yeah, we are indeed negotiating our contracts with multiple OEs as we speak. Both on the commercial side and business jet side.
Vimal Kapur: Julian, to your question on the OE contracts, yeah, we are indeed negotiating our contracts with multiple OE as we speak, both on the commercial side and business jet side. You know, those are in progress right now. And what I can share you is that longer term, it will bode well for aerospace margin expansion, because nature of these are long term. So we remain very confident that there's going to have a positive impact on our margin expansion story for the business in the timeframe.
Vimal Kapur: Julian, to your question on the OE contracts, yeah, we are indeed negotiating our contracts with multiple OE as we speak, both on the commercial side and business jet side. You know, those are in progress right now. And what I can share you is that longer term, it will bode well for aerospace margin expansion, because nature of these are long term. So we remain very confident that there's going to have a positive impact on our margin expansion story for the business in the timeframe.
Speaker #2: Those are under progress right now. And what I can share with you is that longer term, it will play board on quite well for aerospace margin expansion.
Speaker #2: Because the nature of these are long-term. So we remain very confident that this is going to have a positive impact on our margin expansion story for the business in the time ahead.
Speaker #3: And Julian, one last piece I would just add on, just thinking of the first quarter reminder that liberation day was in April. So there's a little bit of a lapping where we have that a little bit of a lag on the pricing impact, relative to the tariffs in aerospace in the first quarter for the OE
[Analyst] (Melius Research): And Julian, one last piece I would just add on. Just think about the Q1 reminder that Liberation Day was in April, so there's a little bit of a lapping where we have that little bit of lag on the pricing impact, relative to the tariffs in aerospace in the Q1 for the OE business.
Sean Meakim: And Julian, one last piece I would just add on. Just think about the Q1 reminder that Liberation Day was in April, so there's a little bit of a lapping where we have that little bit of lag on the pricing impact, relative to the tariffs in aerospace in the Q1 for the OE business.
Speaker #3: business. Great.
[Analyst] (UBS): Great. Thank you.
Julian Mitchell: Great. Thank you.
Speaker #5: Thank
Speaker #5: you. Thank
Speaker #6: you. Thank
Vimal Kapur: Thank you.
Mike Stepniak: Thank you.
Speaker #4: You. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.
Speaker #7: Thanks. Good morning. So a lot going on here, guys. Continuum. You announced you filed a confidential S1 earlier this month. Are you fully committed to an IPO at this point, or is there an option to bring in a strategic investor?
[Analyst] (Wolfe Research): Thanks. Good morning. So a lot going on here, guys. Quantinuum, you announced you filed a confidential S-1 earlier this month. Are you fully committed to an IPO at this point, or is there an option to bring in a strategic investor? And then just, I just want to make sure we get the right numbers on the investment spending. It looks like it's picking up by about $100 million year-over-year. So that would be, what? $250 million of total spend within corporate. Just want to make sure that's the number. And does the free cash flow or rather the cash burn kind of equate to that number as well?
Nigel Coe: Thanks. Good morning. So a lot going on here, guys. Quantinuum, you announced you filed a confidential S-1 earlier this month. Are you fully committed to an IPO at this point, or is there an option to bring in a strategic investor? And then just, I just want to make sure we get the right numbers on the investment spending. It looks like it's picking up by about $100 million year-over-year. So that would be, what? $250 million of total spend within corporate. Just want to make sure that's the number. And does the free cash flow or rather the cash burn kind of equate to that number as well?
Speaker #7: And I just want to make sure we get the right numbers on the investment spending. It looks like it's picking up by about $100 million year over year.
Speaker #7: So that would be, what, $250 million of total spend within corporates? Just want to make sure that's the number. And does the free cash flow, or rather the cash burn, kind of equate to that number as well?
Speaker #7: So that would be what, 250 million of total spend within corporates. Just want to make sure that's the number. And does the free cash flow or rather the cash burn kind of equate to that number as well?
Speaker #6: So I'll start. I'll add a bit more comment on just on the commercial progress, etc. But you're exactly right. It's about $100 million year over year, increase.
Mike Stepniak: So I'll start, and I'll let Vimal comment on the, just on the commercial progress, et cetera. But you're exactly right. It's about $100 million year-over-year increase. We fully consolidate Quantinuum right now. As you know, our raise was quite successful, so Quantinuum has plenty of cash, but, it, it flows through for Honeywell's financials. But it's about $100 million year-over-year increase in terms of maturation and commercial efforts that the team is progressing.
Mike Stepniak: So I'll start, and I'll let Vimal comment on the, just on the commercial progress, et cetera. But you're exactly right. It's about $100 million year-over-year increase. We fully consolidate Quantinuum right now. As you know, our raise was quite successful, so Quantinuum has plenty of cash, but, it, it flows through for Honeywell's financials. But it's about $100 million year-over-year increase in terms of maturation and commercial efforts that the team is progressing.
Speaker #6: We fully consolidate continuum right now. As you know, our raise was quite successful. So continuum has plenty of cash, but it flows through for Honeywell's financials.
Speaker #6: But it's about $100 million year over year increase in terms of maturation and commercial efforts that the team is progressing.
Speaker #2: And Nigel, you put it well. A lot going on in Honeywell. So we are absolutely working on the continuum leg. What I can share with you is we're obviously in the legal restrictions on what we can share.
Vimal Kapur: Nigel, you put it well, a lot going on in Honeywell, so we are absolutely working on the Quantinuum leg. What I can share with you is, we are obviously in the legal restrictions on what we can share, but as a practical matter, the progression on platform continues to be very promising, which is the reason we are investing more R&D dollars to continue to progress to launch the next version of our quantum machine, which is committed in 2027 timeframe. So that's a driver. And I actually spend a lot of time with the customers now to talk about leveraging quantum for commercial applications. So think about banks, think about pharmaceutical companies, and think about large governments. They're all very interested, given we are coming closer to time to value.
Vimal Kapur: Nigel, you put it well, a lot going on in Honeywell, so we are absolutely working on the Quantinuum leg. What I can share with you is, we are obviously in the legal restrictions on what we can share, but as a practical matter, the progression on platform continues to be very promising, which is the reason we are investing more R&D dollars to continue to progress to launch the next version of our quantum machine, which is committed in 2027 timeframe. So that's a driver. And I actually spend a lot of time with the customers now to talk about leveraging quantum for commercial applications. So think about banks, think about pharmaceutical companies, and think about large governments. They're all very interested, given we are coming closer to time to value.
Speaker #2: But as a practical matter, the progression on platform continues to be very promising, which is the reason we are investing more R&D dollars to continue to progress to launch the next version of our quantum machine.
Speaker #2: Which is committed in the 2027 timeframe, so that's a driver. And I actually spend a lot of time with customers now to talk about leveraging quantum for commercial applications.
Speaker #2: So think about banks, think about pharmaceutical companies, and think about large governments. They all very interested given we are coming closer to time to value.
Vimal Kapur: And we are also building leadership team of Quantinuum business, you know, expanding its capability so that it could stand alone as an independent company at the right time. So that's what I can share. I think lot of, lot of wheels in motion, and we continue to work very hard to make it a successful business.
Speaker #2: And we are also building leadership team of continuum business. Expanding its capability so that it could stand alone as an independent company at the right time.
And we are also building leadership team of Quantinuum business, you know, expanding its capability so that it could stand alone as an independent company at the right time. So that's what I can share. I think lot of, lot of wheels in motion, and we continue to work very hard to make it a successful business.
Speaker #2: So that's what I can share. I think a lot of wheels in motion. And we continue to work very hard to make it a successful
Speaker #2: business. That's very helpful.
[Analyst] (Wolfe Research): That's very helpful. Thanks. And then my follow-on is really just wanted to dig into the extraordinary strength in the process orders. Last time we checked in with you guys, you were talking about softness in large project activity. That seems to have changed, you know, 180. So just wondering what's changed? And perhaps a bit more detail on where you're seeing the strength by geography or end market.
Nigel Coe: That's very helpful. Thanks. And then my follow-on is really just wanted to dig into the extraordinary strength in the process orders. Last time we checked in with you guys, you were talking about softness in large project activity. That seems to have changed, you know, 180. So just wondering what's changed? And perhaps a bit more detail on where you're seeing the strength by geography or end market.
Speaker #7: Thanks. And then my follow-on is really just wanted to dig into the extraordinary strength in the process orders. Last time we checked in with you guys, you were talking about softness in large project activity.
Speaker #7: That seems to have changed 180. So just wondering what's changed and perhaps a bit more detail on where you've seen the strength by geography or end market.
Speaker #6: So Nigel, there are two dynamics going on in the market. On the positive side, people are spending capital to build more capacity in LNG and refining.
Vimal Kapur: So Nigel, there are two dynamics going on in the market. On the positive side, people are spending capital to build more capacity in LNG and refining. That drives, that's showing our orders up so substantially and backlog up by 15%. So that's positive. Those are long cycle, and we, therefore, will show more revenue accretion from them in second half of 2026, because the cycle time is 12 to 18 months. So we started lapping up our bookings from Q3 of last year and built the backlog, which will convert now Q3 and Q4 of 2026. Also on the positive side, the LNG business continues to do quite well. Sundyne business we acquired is going to become baseline, you know, and organic growth, so that's going to help in the second half of the year.
Vimal Kapur: So Nigel, there are two dynamics going on in the market. On the positive side, people are spending capital to build more capacity in LNG and refining. That drives, that's showing our orders up so substantially and backlog up by 15%. So that's positive. Those are long cycle, and we, therefore, will show more revenue accretion from them in second half of 2026, because the cycle time is 12 to 18 months. So we started lapping up our bookings from Q3 of last year and built the backlog, which will convert now Q3 and Q4 of 2026. Also on the positive side, the LNG business continues to do quite well. Sundyne business we acquired is going to become baseline, you know, and organic growth, so that's going to help in the second half of the year.
Speaker #6: That's showing our orders up. It's up substantially, and backlog is up by 15%. So that's positive. Those are long cycle, and we therefore will show more revenue accretion from them in the second half of 2026, because the cycle time is 12 to 18 months.
Speaker #6: So we started lapping up our bookings from quarter three of last year and built the backlog, which will convert now Q3 and Q4 of 2026.
Speaker #6: On the positive side, the LNG business continues to do quite well. Sundine business we acquired is going to become baseline. An organic growth. So that's going to help.
Speaker #6: In the second half of the year, on the other side of the ledger, we continue to see pressure on the catalyst demand on petrochemical side.
Vimal Kapur: On the other side of the ledger, we continue to see pressure on the catalyst demand on petrochemical side. Petrochemical has excess capacity in the world, so our customers are shying to buy more catalysts, and also, I would say, in automation side, some of our migration offerings. So there's certainly a slowness there. Our guide doesn't factor any change in that in 2026. Now, I'm not suggesting it won't change, but we are cautious on how we are guiding at this point, and that remains the low point in the business. So strength in long cycle, in LNG and refining, and weakness in short cycles, specifically in the petrochemical side.
On the other side of the ledger, we continue to see pressure on the catalyst demand on petrochemical side. Petrochemical has excess capacity in the world, so our customers are shying to buy more catalysts, and also, I would say, in automation side, some of our migration offerings. So there's certainly a slowness there. Our guide doesn't factor any change in that in 2026. Now, I'm not suggesting it won't change, but we are cautious on how we are guiding at this point, and that remains the low point in the business. So strength in long cycle, in LNG and refining, and weakness in short cycles, specifically in the petrochemical side.
Speaker #6: Petrochemical has excess capacity in the world. So our customers are shying to buy more catalysts and also I would say in automation side, some of our migration offerings.
Speaker #6: So, there's certainly a slowness there. Our guide doesn't factor any change in that in 2026. Now, I'm not suggesting it won't change, but we are cautious on how we are guiding at this point.
Speaker #6: And that remains the low point in the business. So strength in long cycle in LNG and refining. And weakness in short cycles, specifically in the
Speaker #4: Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your
Operator: 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 #4: question.
[Analyst] (Melius Research): Hey, good morning, guys.
Scott Davis: Hey, good morning, guys.
Speaker #7: Good morning, guys.
Vimal Kapur: Good morning.
Vimal Kapur: Good morning.
Speaker #7: morning. Glad to see
[Analyst] (Melius Research): Glad to see the final spin-off moving up, here. But look, I wanted to talk a little bit about price, because forever, Honeywell was kind of a 1% to 2% price company, and now the last couple of years, you've been able to capture meaningfully more, 4% now, which is still meaningfully more than the peer group average. But what... Can you guys walk through, you know, there's kind of two angles here. I mean, one is kind of passing through tariff impacts, you know, and that's not a structural price increase, that's more of a pass-through. But can you talk about really how much of this price is kind of a change in pricing strategy, how you guys approach projects, contracts? You know, obviously, new products help, I would imagine.
Scott Davis: Glad to see the final spin-off moving up, here. But look, I wanted to talk a little bit about price, because forever, Honeywell was kind of a 1% to 2% price company, and now the last couple of years, you've been able to capture meaningfully more, 4% now, which is still meaningfully more than the peer group average. But what... Can you guys walk through, you know, there's kind of two angles here. I mean, one is kind of passing through tariff impacts, you know, and that's not a structural price increase, that's more of a pass-through. But can you talk about really how much of this price is kind of a change in pricing strategy, how you guys approach projects, contracts? You know, obviously, new products help, I would imagine.
Speaker #8: the final spin-off moving up here. But look, I wanted to talk a little bit about price because forever, Honeywell was kind of a 1 to 2 percent price company.
Speaker #8: And now, the last couple of years, you've been able to capture meaningfully more—4% now, which is still meaningfully more than the peer group average.
Speaker #8: But what can you guys walk through? There's kind of two angles here. I mean, one is kind of passing through tariff impacts and that's not a structural price increase that's more of a pass-through.
Speaker #8: But can you talk about really how much of this price is kind of a change in pricing strategy and how you guys approach projects and contracts?
Speaker #8: Obviously, new products help, I would imagine. And how much of that 4% is kind of just the run-of-the-mill passing on tariffs? Thanks.
[Analyst] (Melius Research): And how much of that 4% is kind of just the run-of-the-mill passing on tariffs? Thanks.
And how much of that 4% is kind of just the run-of-the-mill passing on tariffs? Thanks.
Speaker #2: Yeah. So that's a great question. And I think a lot about it. On the dynamic, I think fundamentally the inflation drivers have become more persistent in the markets we serve.
Vimal Kapur: Yep. Scott, it's a great question, and I think a lot about it, you know, on the dynamic. I think fundamentally, the inflation drivers have become more persistent in the markets we serve. And I drive the inflation drivers into three buckets. Labor cost is increasing, typically 3 to 4%. In a typical year, there are labor shortages. There's enough talk, you know, messaging around that. We also see cost increase in electronics prices. Memory is a new driver now. Of course, it's a small portion of what we buy, but it all starts compounding. And then, commodity prices keep going up. I mean, there's a lot of news on gold, but then there's also other commodities which keep ramping up.
Vimal Kapur: Yep. Scott, it's a great question, and I think a lot about it, you know, on the dynamic. I think fundamentally, the inflation drivers have become more persistent in the markets we serve. And I drive the inflation drivers into three buckets. Labor cost is increasing, typically 3 to 4%. In a typical year, there are labor shortages. There's enough talk, you know, messaging around that. We also see cost increase in electronics prices. Memory is a new driver now. Of course, it's a small portion of what we buy, but it all starts compounding. And then, commodity prices keep going up. I mean, there's a lot of news on gold, but then there's also other commodities which keep ramping up.
Speaker #2: And I drive the insistent the inflation drivers into three buckets: labor costs, increasing typically 3 to 4 percent in a typical year. There are labor shortages.
Speaker #2: There's enough messaging around that. We also see cost increases in electronics prices. Memory is a new driver now. Of course, it's a small portion of what we buy, but it all starts compounding.
Speaker #2: And then commodity prices keep going up. I mean, there's a lot of news on gold, but then there's also other commodities, which keep ramping up.
Speaker #2: So when you put it all together, fundamentally, the inflationary trend in industrial segment and segment specifically Honeywell serve remains quite persistent. And our pricing strategy, therefore, has become more mature, really to look at as a long-term trend, work with our customers, and align with them that what's coming ahead and minimize the impact on their businesses to the extent we can and deploy pricing, which is also different by regions.
Vimal Kapur: So when you put it all together, fundamentally, the inflationary trend in industrial segment and segments, specifically Honeywell serve, they remain quite persistent. And our pricing strategy, therefore, has become more mature, really, to look at as a long-term trend, work with our customers, and align with them that what's coming ahead, and minimize the impact on their businesses to the extent we can, and deploy pricing, which is also different by regions. It could be one in US, different in Europe, different in other parts of the world. Also different for new products, because we need to see where we have some leverage there, based upon feature function, which are differentiated. So a lot going on in the pricing front, and I would say 2026 is gonna look very similar to 2025 in the same ZIP code.
So when you put it all together, fundamentally, the inflationary trend in industrial segment and segments, specifically Honeywell serve, they remain quite persistent. And our pricing strategy, therefore, has become more mature, really, to look at as a long-term trend, work with our customers, and align with them that what's coming ahead, and minimize the impact on their businesses to the extent we can, and deploy pricing, which is also different by regions. It could be one in US, different in Europe, different in other parts of the world. Also different for new products, because we need to see where we have some leverage there, based upon feature function, which are differentiated. So a lot going on in the pricing front, and I would say 2026 is gonna look very similar to 2025 in the same ZIP code.
Speaker #2: It could be one in the US, different in Europe, different in other parts of the world. Also different for new products. Because we need to see where we have some leverage there.
Speaker #2: Based upon feature function, which are differentiated. So a lot going on in the pricing front. And I would say 2026 is going to look very similar to 2025 in the same zip code.
Vimal Kapur: And we spend a lot of time to make sure that the price cost doesn't become a headwind for us, and we do maximum to preserve our volume while we are preserving our margins.
Speaker #2: And we spend a lot of time to make sure that the price cost doesn't become a headwind for us. And we do maximum to preserve our volume while we are preserving our margins.
And we spend a lot of time to make sure that the price cost doesn't become a headwind for us, and we do maximum to preserve our volume while we are preserving our margins.
[Analyst] (Melius Research): That's very helpful.
Speaker #8: That's very helpful.
Scott Davis: That's very helpful.
Mike Stepniak: Yeah, I would just maybe add that, too. If you look at our portfolio, we've been migrating to high-growth verticals where we can afford better pricing, and we have a bigger step up in terms of revenue that is generated by NPI, and these products tend to be accretive and give us better pricing as well.
Mike Stepniak: Yeah, I would just maybe add that, too. If you look at our portfolio, we've been migrating to high-growth verticals where we can afford better pricing, and we have a bigger step up in terms of revenue that is generated by NPI, and these products tend to be accretive and give us better pricing as well.
Speaker #3: I would just maybe just add that too. If you look at our portfolio, we've been migrating to high-growth verticals where we can afford better pricing.
Speaker #3: And we have a bigger step up in terms of revenue that is generated by NPI. And these products tend to be accretive and give us better pricing as well.
Speaker #8: Yeah. No. And then just the natural follow-up would just be, is there you could when you talk about NPI and you talked about product launches, but is there do you guys use a Vitality index or anything internally and any kind of way to kind of compare that acceleration of NPI versus the past?
[Analyst] (Melius Research): Yeah. No, and then just the natural follow-up would just be, is there... You know, you could--when you talk about NPI, and you talked about product launches, but is there--do you guys use a Vitality Index or anything internally in any kind of way to kind of compare the acceleration of NPI versus the past?
Scott Davis: Yeah. No, and then just the natural follow-up would just be, is there... You know, you could--when you talk about NPI, and you talked about product launches, but is there--do you guys use a Vitality Index or anything internally in any kind of way to kind of compare the acceleration of NPI versus the past?
Speaker #2: Yeah. You saw one of the mention of that in our growth acceleration chart in the our prepared remarks. One thing we certainly started measuring is how much of revenue in a given year is coming from new products.
Vimal Kapur: Yeah, you saw one of the mention of that in our prepared remarks. One thing we've certainly started measuring is how much of revenue in a given year is coming from new products, net new growth coming from new products, and last year it was approximately 4%. It means our R&D dollars are creating a differentiated demand into our offerings, and we are able to either keep share or gain share, or able to move to new verticals. So we are measuring two key KPIs. One is vitality.
Vimal Kapur: Yeah, you saw one of the mention of that in our prepared remarks. One thing we've certainly started measuring is how much of revenue in a given year is coming from new products, net new growth coming from new products, and last year it was approximately 4%. It means our R&D dollars are creating a differentiated demand into our offerings, and we are able to either keep share or gain share, or able to move to new verticals. So we are measuring two key KPIs. One is vitality.
Speaker #2: Net new growth coming from new products. And last year, it was approximately 4%. It means our R&D dollars are creating a differentiated demand into our offerings.
Speaker #2: And we are able to either keep share or gain share or able to move to new verticals. So we are measuring two key KPIs.
Speaker #2: One is vitality. We used to measure that, Scott, for many years. And what I learned is some of our segments high vitality is just right to play.
Vimal Kapur: We used to measure that, Scott, for many years, and what I learned is, some of our segments, high vitality is just, you know, right to play because the turnaround of the products is so fast, and if your vitality is not, you know, 40s and 50s, you basically may start losing share. So incrementally, while we continue to measure vitality and remain core Honeywell, we'll have vitality in high 40s, think about 45% or so. We also now measure every quarter, new product revenue coming from new products. And our internal target is, like we did 4% last year, we'd like to maintain that rate. That requires a lot of, you know, ideation, working with the customers, having the right ideas, and so on.
We used to measure that, Scott, for many years, and what I learned is, some of our segments, high vitality is just, you know, right to play because the turnaround of the products is so fast, and if your vitality is not, you know, 40s and 50s, you basically may start losing share. So incrementally, while we continue to measure vitality and remain core Honeywell, we'll have vitality in high 40s, think about 45% or so. We also now measure every quarter, new product revenue coming from new products. And our internal target is, like we did 4% last year, we'd like to maintain that rate. That requires a lot of, you know, ideation, working with the customers, having the right ideas, and so on.
Speaker #2: Because the turnaround of the products is so fast. And if your vitality is not 40s and 50s, you basically may start losing share. So incrementally, while we continue to measure vitality and remain core Honeywell, we'll have vitality in high 40s.
Speaker #2: Think about 45% or so. We also now measure every quarter new product revenue coming from new products. And our internal target is, like, we did 4% last year—would like to maintain that rate.
Speaker #2: That requires a lot of ideation, working with the customers, having the right ideas, and so on. But that's going to be the new playbook for Honeywell that we want to grow through new products and then whatever market allows us to pick up on price.
Vimal Kapur: But that's gonna be the new playbook for Honeywell, that we want to grow through new products, and then whatever market allows us to pick up on price. So yeah, that's, that's, that's how I would summarize that, that, that comment.
But that's gonna be the new playbook for Honeywell, that we want to grow through new products, and then whatever market allows us to pick up on price. So yeah, that's, that's, that's how I would summarize that, that, that comment.
Speaker #2: So yeah, that's how I would summarize that comment.
Speaker #8: Very helpful. Thanks. I'll pass it on. And best of luck this year,
[Analyst] (Melius Research): Very helpful. Thanks. I'll pass it on, and best of luck this year, guys.
Scott Davis: Very helpful. Thanks. I'll pass it on, and best of luck this year, guys.
Speaker #8: guys. Thank you.
Vimal Kapur: Thank you.
Vimal Kapur: Thank you.
Speaker #8: Appreciate it. Thank
Mike Stepniak: Appreciate it.
Mike Stepniak: Appreciate it.
Speaker #4: you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your
Operator: 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 J.P. Morgan. Please proceed with your question.
Speaker #4: question. Hey, good
Speaker #4: question. Hey, good
[Analyst] (J.P. Morgan): Hey, good morning.
Steve Tusa: Hey, good morning.
Speaker #8: Morning, Steve. morning. Good
Mike Stepniak: Morning, Steve. Good morning.
Vimal Kapur: Morning, Steve.
Mike Stepniak: Good morning.
Speaker #9: Steve, just to clarify that answer. So you're expecting morning. roughly 3% price this year?
[Analyst] (J.P. Morgan): So just to clarify that answer, so you're expecting roughly 3% price this year?
Steve Tusa: So just to clarify that answer, so you're expecting roughly 3% price this year?
Mike Stepniak: Price will be above 3%. I would say most likely 3.5. Depending on geography and the vertical, we're deploying 3 to 4%. On average, should be 3.5. Quarterly also, there'll be a little bit of movement, but that's kind of the framework we're using for the year with the teams.
Speaker #8: Price will be above 3%. I would say most likely 3 and a half. Depending on geography and the vertical, we deploy in 3 to 4 percent on average should be 3 and a half.
Mike Stepniak: Price will be above 3%. I would say most likely 3.5. Depending on geography and the vertical, we're deploying 3 to 4%. On average, should be 3.5. Quarterly also, there'll be a little bit of movement, but that's kind of the framework we're using for the year with the teams.
Speaker #8: And quarterly also, there’ll be a little bit of movement, but that’s kind of the framework we’re using for the—
Speaker #8: year with the teams. So at the
[Analyst] (J.P. Morgan): So at the low end of the range, you have volume down 50 basis points?
Steve Tusa: So at the low end of the range, you have volume down 50 basis points?
Speaker #9: low end of the range, you have volume down. 50 bits?
Mike Stepniak: No, no. It really just depends on the... We deploy price at SKU level, essentially. So it's depending on how fast, if the product is growing at 1% and market doesn't allow us to deploy more price, we won't do that.
Mike Stepniak: No, no. It really just depends on the... We deploy price at SKU level, essentially. So it's depending on how fast, if the product is growing at 1% and market doesn't allow us to deploy more price, we won't do that.
Speaker #8: No, no. It really just depends on where we deploy price at the SKU level, essentially. So it's depending on how fast—if the product is growing at 1% and the market doesn't allow us to deploy more price, we won't do that.
Speaker #2: I think low end, I would say, Steve, is volume growth. And the low end of the guide, 3 to 6 to 0. High end, it is about 3.
Vimal Kapur: I think low end, I would say, Steve, is volume growth in the low end of the guide, 3 to 6 is 0. High end, it is about 3. So that's kind of how you want to look at the guide. 3 to 6, price being somewhere around 3 to 3.5, and the balance is volume.
Vimal Kapur: I think low end, I would say, Steve, is volume growth in the low end of the guide, 3 to 6 is 0. High end, it is about 3. So that's kind of how you want to look at the guide. 3 to 6, price being somewhere around 3 to 3.5, and the balance is volume.
Speaker #2: So that's kind of how you want to look at the guide. 3 to 6 price being somewhere around 3 to 3 and a half and the balance is
Speaker #2: volume. Yeah.
[Analyst] (J.P. Morgan): Yeah, it seems pretty conservative with your order growth rate, but I won't belabor that point. Just on the stranded costs, it seems like I would have maybe expected the advanced material stranded costs to come out a little bit quicker. Can you maybe just level set us on where those stranded costs lie today, especially on the aero side, what to expect, and how those should, you know, layer out of the numbers? Because that seems to be a relatively heavy burden that, you know, you're leaving in there, but should, you know, be a tailwind at some point in the next 18 months or so.
Steve Tusa: Yeah, it seems pretty conservative with your order growth rate, but I won't belabor that point. Just on the stranded costs, it seems like I would have maybe expected the advanced material stranded costs to come out a little bit quicker. Can you maybe just level set us on where those stranded costs lie today, especially on the aero side, what to expect, and how those should, you know, layer out of the numbers? Because that seems to be a relatively heavy burden that, you know, you're leaving in there, but should, you know, be a tailwind at some point in the next 18 months or so.
Speaker #9: It seems pretty conservative with your order growth rate, but I won't belabor that point. Just on the stranded costs, it seems like I would have maybe expected the advanced material stranded cost to come out a little bit quicker.
Speaker #9: Can you maybe just level set us on where those stranded costs lie today, especially on the aero side? And what should we expect? And how should those layer out of the numbers?
Speaker #9: Because that seems to be a relatively heavy burden that you're leaving in there, but should be a tailwind at some point in the next 18 months or so.
Vimal Kapur: ... No, you're right, Steve. So we have already neutralized the advanced materials stranded costs in 2026. So that's one of the work we are showing in our margin expansion, that it is net neutral. So the headwind of that is gone, which shows that we are looking ahead and executing it as simultaneously as we work through spin. Now, specifically coming to the aerospace question, right now, I will admit that we are so heavily focused to make spin happen in Q3. We'll share the specifics of stranded cost, et cetera, during our Investor Day coming up in June. But we are absolutely confident and committed that we will eliminate stranded costs in 12 to 18 months' time. Earlier, the better, we absolutely get it, but that's the range we expect to take it out.
Vimal Kapur: ... No, you're right, Steve. So we have already neutralized the advanced materials stranded costs in 2026. So that's one of the work we are showing in our margin expansion, that it is net neutral. So the headwind of that is gone, which shows that we are looking ahead and executing it as simultaneously as we work through spin. Now, specifically coming to the aerospace question, right now, I will admit that we are so heavily focused to make spin happen in Q3. We'll share the specifics of stranded cost, et cetera, during our Investor Day coming up in June. But we are absolutely confident and committed that we will eliminate stranded costs in 12 to 18 months' time. Earlier, the better, we absolutely get it, but that's the range we expect to take it out.
Speaker #8: No, you're right, Steve. So we have already neutralized the advanced material stranded costs in 2026. So that's one of the walk we are showing in our margin expansion that it is net neutral.
Speaker #8: So the headwind of that is gone, which shows that we are looking ahead and executing it as simultaneously as we're working through spin. Now, specifically coming to the aerospace question, right now, I will admit that we are so heavily focused to make spin happen in Q3, we'll share the specifics of stranded cost, etc., during our investor day coming up in June.
Speaker #8: But we are absolutely confident and committed that we will eliminate stranded cost in 12 to 18 months' time, earlier the better. We absolutely get it.
Speaker #8: But that's the range we expect to take it out.
Speaker #9: Okay. And then just one last one on aero. Can you give us any kind of magnitude of margin improvement embedded in the guidance for aero this year?
[Analyst] (Jefferies): Okay. And then just one last one on Aero. Can you give us any kind of magnitude of margin improvement embedded in the guidance for Aero this year? Is it, you know, 25, 50 basis points? Like, maybe just a little bit of color on directionally magnitude.
Steve Tusa: Okay. And then just one last one on Aero. Can you give us any kind of magnitude of margin improvement embedded in the guidance for Aero this year? Is it, you know, 25, 50 basis points? Like, maybe just a little bit of color on directionally magnitude.
Speaker #9: Is it 25, 50 bits? Maybe just a little bit of color on directionally
Speaker #9: magnitude. Yeah.
Sean Meakim: Yeah, I would say modest, Steve. Think like low 30s incrementals.
Sean Meakim: Yeah, I would say modest, Steve. Think like low 30s incrementals.
Speaker #8: like low 30s I would say modest, Steve. Think incrementals.
Speaker #9: Got it. Okay. Thanks, guys.
[Analyst] (Jefferies): Got it. Okay! Thanks, guys.
Steve Tusa: Got it. Okay! Thanks, guys.
Speaker #8: Thank you, Steve.
Vimal Kapur: Thank you, Steve.
Vimal Kapur: Thank you, Steve.
Speaker #2: Thank
Sean Meakim: Thank you.
Sean Meakim: Thank you.
Speaker #2: you. Thank you.
Operator: Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.
Speaker #4: Our next question comes from the line of Dean Drey with RBC Capital Markets. Please proceed with your question.
Speaker #10: Thank you. Good morning, everyone. And congrats to the team on hitting these transformation milestones earlier. And also, best to Sean and welcome back to Mark.
[Analyst] (RBC Capital Markets): Thank you. Good morning, everyone, and congrats to the team on hitting these transformation milestones earlier. And also best to Sean, and welcome back to Mark. Just the first question: you've been now more specific about the portfolio cleanups for PSS and warehouse. What can you tell us about the sales process?
Deaney Dray: Thank you. Good morning, everyone, and congrats to the team on hitting these transformation milestones earlier. And also best to Sean, and welcome back to Mark. Just the first question: you've been now more specific about the portfolio cleanups for PSS and warehouse. What can you tell us about the sales process?
Speaker #10: Just the first question, just—now that you've been more specific about the portfolio cleanups for PSS and Warehouse, what can you tell us about the sales process?
Speaker #8: So I would say at this point, we have a lot of interest on both the businesses. And we expect to do sign of the deeds in quarter two.
Vimal Kapur: So, I would say at this point, we have a lot of interest on both the businesses, and we expect to do sign of the deals in Q2. Now, the specifics in the quarter, it's hard to pinpoint a month here at this point, but we do expect that Q2, we'll be able to sign it, and the close will be customary, you know, regulatory approvals. So that you can then, you know, estimate that the total time this business may not be part of Honeywell. You know, what it does is, Deane, interestingly, when we complete the transaction of warehouse automation business integrated and productivity solution business, it simplifies us into three end markets: process, buildings, and industrial.
Vimal Kapur: So, I would say at this point, we have a lot of interest on both the businesses, and we expect to do sign of the deals in Q2. Now, the specifics in the quarter, it's hard to pinpoint a month here at this point, but we do expect that Q2, we'll be able to sign it, and the close will be customary, you know, regulatory approvals. So that you can then, you know, estimate that the total time this business may not be part of Honeywell. You know, what it does is, Deane, interestingly, when we complete the transaction of warehouse automation business integrated and productivity solution business, it simplifies us into three end markets: process, buildings, and industrial.
Speaker #8: None of the specifics in the quarter—it's hard to pinpoint a month here at this point. But we do expect that in Q2 we'll be able to sign it.
Speaker #8: And the close will be customary regulatory approvals so that you can then estimate that the total time this business may not be part of Honeywell.
Speaker #8: What it does is Dean, interestingly, when we complete the transaction of warehouse automation business in Telegraded, and productivity solution business, it simplifies us into three-end markets.
Speaker #8: Process, buildings, and industrial. Because this allows us to make a choice not to be in the transportation, logistics, and warehouse markets—not that these are bad markets.
Vimal Kapur: Because this allows us to make a choice not to be in transportation, logistics, and warehouse markets. Not that these are bad markets; it's more a question of where we want to participate as a company. So it's a choice to be made. The second thing it does is, it makes Industrial Automation a sensing and measurement business. We had one of the challenge of Industrial Automation being a complex business to understand, with a lot of segments and a lot of drivers. So with this decision, we are able to narrow down the business to sensing and measurement, which gives us a platform on which we will build upon, you know, through organic growth, and, you know, hopefully, we'll look at more inorganic actions in the future. So it plays out extremely well in our overarching strategy.
Because this allows us to make a choice not to be in transportation, logistics, and warehouse markets. Not that these are bad markets; it's more a question of where we want to participate as a company. So it's a choice to be made. The second thing it does is, it makes Industrial Automation a sensing and measurement business. We had one of the challenge of Industrial Automation being a complex business to understand, with a lot of segments and a lot of drivers. So with this decision, we are able to narrow down the business to sensing and measurement, which gives us a platform on which we will build upon, you know, through organic growth, and, you know, hopefully, we'll look at more inorganic actions in the future. So it plays out extremely well in our overarching strategy.
Speaker #8: It's more a question of where we want to participate as a company, so it's a choice to be made. And the second thing it does is it makes industrial automation a sensing and measurement business.
Speaker #8: We had one of the challenges of industrial automation being a complex business to understand with a lot of segments, and a lot of drivers.
Speaker #8: So with this decision, we are able to narrow down the business to sensing and measurement, which gives us a platform on which we will build upon through organic growth and hopefully we'll look at more inorganic actions in the future.
Speaker #8: So it plays out extremely well in our overarching
Speaker #8: So it plays out extremely well in our overarching strategy. That's real.
[Analyst] (RBC Capital Markets): That's real helpful. And, the second question, there was a reference about pockets of weakness in Europe and China. Maybe just give us a sense of, from the geographies, what you're seeing at the margin.
Deaney Dray: That's real helpful. And, the second question, there was a reference about pockets of weakness in Europe and China. Maybe just give us a sense of, from the geographies, what you're seeing at the margin.
Speaker #10: helpful. And the second question there was a reference about pockets of weakness in Europe and China. Maybe just give us a sense of from the geographies what you're seeing at the
Speaker #10: margin. I would say
Vimal Kapur: I would say that, you know, those comments are specifically for Industrial Automation business. Industrial Automation business is seeing strength in North America and US in particular. The segments are performing extremely well. But the segments of IA business in China and in Europe, the exposures we have in end markets we serve, we see pressure there, and that's a weakness in short cycle in Europe. Now, that's not true for other parts of Honeywell. If you see Building Automation, they don't see pressure in Europe and China because they serve different markets, and they have different product lines. So it's very specific to Industrial Automation at this point, and we'll observe how the year progresses.
Vimal Kapur: I would say that, you know, those comments are specifically for Industrial Automation business. Industrial Automation business is seeing strength in North America and US in particular. The segments are performing extremely well. But the segments of IA business in China and in Europe, the exposures we have in end markets we serve, we see pressure there, and that's a weakness in short cycle in Europe. Now, that's not true for other parts of Honeywell. If you see Building Automation, they don't see pressure in Europe and China because they serve different markets, and they have different product lines. So it's very specific to Industrial Automation at this point, and we'll observe how the year progresses.
Speaker #8: Those comments are specifically for the Industrial Automation business. Industrial Automation is seeing strength in North America, and the U.S. in particular. The segments are performing extremely well.
Speaker #8: But the segments of IA business in China and in Europe the exposures we have in end markets we serve we see pressure there. And that's a weakness in short cycle in Europe.
Speaker #8: Now, that's not true for other parts of Honeywell. If you see building automation, they don't see pressure in Europe and China because they serve different markets.
Speaker #8: And they have different product lines. So it's very specific to industrial automation at this point. And we'll observe how the year progresses. What we are doing is we are focused on launching much more new products.
Vimal Kapur: What we are doing is we are focused on launching more, much more new products, so that we are able to generate more demand organically to offset some of this, you know, drivers. And we'll observe how the year progresses with our actions to counter some of these market conditions.
What we are doing is we are focused on launching more, much more new products, so that we are able to generate more demand organically to offset some of this, you know, drivers. And we'll observe how the year progresses with our actions to counter some of these market conditions.
Speaker #8: So that we are able to generate more demand organically to offset some of this drivers. And we'll observe how the year progresses with our actions to counter some of these market
Speaker #8: So that we are able to generate more demand organically to offset some of these drivers. And we'll observe how the year progresses with our actions to counter some of these market conditions.
Speaker #10: Thank
Speaker #10: you. Thank you,
Speaker #10: you. Thank you,
[Analyst] (RBC Capital Markets): Thank you.
Deaney Dray: Thank you.
Vimal Kapur: Thank you, Deane.
Vimal Kapur: Thank you, Deane.
Speaker #8: Dean. Thank you.
Operator: 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 Kahyaoglu with Jefferies. Please proceed with your question.
Speaker #4: Our next question comes from the line of Sheila Kayoglu with Jefferies. Please proceed with your question.
Speaker #11: Good morning, guys, and thank you. I'll focus on aerospace, if that's okay. All three end markets grew double digits in '25. Maybe if you could tell us the rank order of how you're thinking about 2026 end markets, and any changes around the medium-term growth trajectories as we prep for Investor Day in June.
[Analyst] (Jefferies): Good morning, guys, and thank you. I'll focus on aerospace, if that's okay. All three end markets grew double digits in 2025. Maybe if you could tell us the rank order of how you're thinking about 2026 end markets and any changes around the medium-term growth trajectories as we prep for Investor Day in June.
Sheila Kahyaoglu: Good morning, guys, and thank you. I'll focus on aerospace, if that's okay. All three end markets grew double digits in 2025. Maybe if you could tell us the rank order of how you're thinking about 2026 end markets and any changes around the medium-term growth trajectories as we prep for Investor Day in June.
Speaker #8: Thanks, Sheila. Yeah. I would say that we were really pleased with the progress the team made on supply chain. Really great performance on volume, especially to end the year.
Sean Meakim: Thanks, Sheila. Yeah, I would say that we were really pleased with the, the progress the team made on supply chain. Really great performance on volume, especially to end the year. So great momentum, particularly with the, the order rates going into 2026. Looking at the growth rates by end market, we'd say defense and space is likely to lead, so high single digits may be creeping into low double, depending on supply chain progress. We then expect OE to be high single digit growth, and then still strong performance in aftermarket, but continue on that path towards normalization. So call it mid to high single digit growth is the range, and all that should blend to a high single digit performance for 2026.
Sean Meakim: Thanks, Sheila. Yeah, I would say that we were really pleased with the, the progress the team made on supply chain. Really great performance on volume, especially to end the year. So great momentum, particularly with the, the order rates going into 2026. Looking at the growth rates by end market, we'd say defense and space is likely to lead, so high single digits may be creeping into low double, depending on supply chain progress. We then expect OE to be high single digit growth, and then still strong performance in aftermarket, but continue on that path towards normalization. So call it mid to high single digit growth is the range, and all that should blend to a high single digit performance for 2026.
Speaker #8: So, great momentum, particularly with the order rates going into '26. Looking at the growth rates by end market, we'd say defense and space is likely to lead.
Speaker #8: So high single digits may be creeping in a low double depending on supply chain progress. We then expect OE to be high single digit growth.
Speaker #8: And then still strong performance in aftermarket but continue on that path towards normalization. So call it mid to high single digit growth is the range.
Speaker #8: And all that should blend to a high single digit performance for 2026.
Speaker #11: Got it. you. Thank And then one on I know a lot has been asked on margins already, but just specifically around incremental investments as we see from the defense contractors.
[Analyst] (Jefferies): Got it. Thank you. Then one on, I know a lot has been asked on margins already, but just specifically around incremental investments as we see from the defense contractors. You know, how, how are you thinking about incremental investments surrounding your portfolio within aerospace and R&D focus areas?
Sheila Kahyaoglu: Got it. Thank you. Then one on, I know a lot has been asked on margins already, but just specifically around incremental investments as we see from the defense contractors. You know, how, how are you thinking about incremental investments surrounding your portfolio within aerospace and R&D focus areas?
Speaker #11: How are you thinking about incremental investments surrounding your portfolio within aerospace and R&D focus
Speaker #11: Areas? Sheila, we have been investing if
Vimal Kapur: ... Peter, we, we have been investing, you know, if you look at the broader theme of, you know, investment, we have been investing in supply chain. We have telegraphed that earlier, more than a billion-dollar investment, and then we have delivered volume growth over 14 quarters now, double-digit volume growth, which results into our organic growth. Now, in 2025, 2026, overall Honeywell CapEx increase is about $250 million. Aero is a large part of it, and it's good news in my view, because Aero needs more volumes, it needs to expand supply chain capacity. There are other parts of investment and other parts of automation business, but Aero has a large share of it. So fundamentally speaking, we are able to deliver to Department of War needs for more volume.
Vimal Kapur: ... Peter, we, we have been investing, you know, if you look at the broader theme of, you know, investment, we have been investing in supply chain. We have telegraphed that earlier, more than a billion-dollar investment, and then we have delivered volume growth over 14 quarters now, double-digit volume growth, which results into our organic growth. Now, in 2025, 2026, overall Honeywell CapEx increase is about $250 million. Aero is a large part of it, and it's good news in my view, because Aero needs more volumes, it needs to expand supply chain capacity. There are other parts of investment and other parts of automation business, but Aero has a large share of it. So fundamentally speaking, we are able to deliver to Department of War needs for more volume.
Speaker #8: If you look at the broader theme of investments, we have been investing in supply chain. We have telegraphed that earlier. More than a $1 billion investment.
Speaker #8: And then we have delivered volume growth over 14 quarters now, double digit volume growth, which results into our organic growth. Now, in 2025, 2026, overall Honeywell CapEx increases about 250 million dollars.
Speaker #8: Aero is a large part of it. And it's a good news in my view because Aero needs more volumes. It needs to expand supply chain capacity.
Speaker #8: There are other parts of investment and other parts of automation business, but Aero has a large share of it. So fundamentally speaking, we are able to deliver to Department of War needs for more volume.
Speaker #8: And in fact, we are close to PO now, hardly with any past due, which shows that we have ability to meet their needs of the volume they are looking for.
Vimal Kapur: In fact, we are close to PO now, hardly with any pass-through, which shows that we have ability to meet their needs of the volume they are looking for. We are very well positioned there. I think our volume capacity, our investments are always in order, and we'll continue to make more if it is necessary to grow the business.
In fact, we are close to PO now, hardly with any pass-through, which shows that we have ability to meet their needs of the volume they are looking for. We are very well positioned there. I think our volume capacity, our investments are always in order, and we'll continue to make more if it is necessary to grow the business.
Speaker #8: So we are very well positioned there. I think our volume capacity our investments are always in order. And we'll continue to make more if it is necessary to grow the business.
Speaker #8: Sheila, for Aero it's about 150 million dollars in CapEx increase next year. Majority of it is going to be funded through working
[Analyst] (Deutsche Bank): For Aero, it's about $150 million in CapEx increase next year. Majority of it's gonna be funded through working capital improvement.
Mike Stepniak: For Aero, it's about $150 million in CapEx increase next year. Majority of it's gonna be funded through working capital improvement.
Speaker #8: capital. Improvement. So And it's. not growing
[Analyst] (UBS): And it's-
Sheila Kahyaoglu: And it's-
[Analyst] (Deutsche Bank): So not growing-
Mike Stepniak: So not growing-
Speaker #11: Okay.
[Analyst] (UBS): Okay, got it. Thank you.
Sheila Kahyaoglu: Okay, got it. Thank you.
Speaker #11: Thank markets.
Speaker #11: you. Thank
Speaker #4: Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.
Speaker #12: Thanks, Operator. Hi, everybody. Vimal the building automation growth has been good the last few quarters. And I think some of that is applicable to kind of the success you've had in plugging the assets into forge.
[Analyst] (UBS): Thanks, operator. Hi, everybody. Vimal, the building automation growth has been good the last few quarters, and I think some of that is applicable to kind of the success you've had in plugging the assets into Forge. And I guess the question I have is: How can you replicate that in the process and industrial businesses, whereby maybe those cyclical parts of the business, you can generate more recurring revenue by upselling some of the services, by plugging into your platform? Can you just talk about that, or are those just two different things?
Amit Mehrotra: Thanks, operator. Hi, everybody. Vimal, the building automation growth has been good the last few quarters, and I think some of that is applicable to kind of the success you've had in plugging the assets into Forge. And I guess the question I have is: How can you replicate that in the process and industrial businesses, whereby maybe those cyclical parts of the business, you can generate more recurring revenue by upselling some of the services, by plugging into your platform? Can you just talk about that, or are those just two different things?
Speaker #12: And I guess the question I have is what is the how can you replicate that in the process and industrial businesses whereby maybe those cyclical parts of the business you can generate more recurring revenue by upselling some of the services by plugging into your platform?
Speaker #12: Can you just talk about that or are those just two different
Speaker #12: things?
Speaker #8: Yeah.
Vimal Kapur: Yeah. No, excellent question, Amit. You know, we have been working very hard to change our business model to more recurring revenue, and the basis of that is stronger linkage to our IoT platform, Forge. Building started that first and process started that later. I would say the gap between that is about 9 to 12 months, and we can clearly see results in the building. What we have been able to do is really build. I'm gonna use the word Ontology-Based Models. It means that we are able to, when we connect a building, we are able to identify all its assets and really build a reference data model for our customer, which allows us to then build different applications on top of it.
Vimal Kapur: Yeah. No, excellent question, Amit. You know, we have been working very hard to change our business model to more recurring revenue, and the basis of that is stronger linkage to our IoT platform, Forge. Building started that first and process started that later. I would say the gap between that is about 9 to 12 months, and we can clearly see results in the building. What we have been able to do is really build. I'm gonna use the word Ontology-Based Models. It means that we are able to, when we connect a building, we are able to identify all its assets and really build a reference data model for our customer, which allows us to then build different applications on top of it.
Speaker #8: Now, the excellent question, Amit. We have been working very hard to change our business model to more recurring revenue. And the basis of that is stronger linkage to our IoT platform forge.
Speaker #8: Building started that first and process started that later. I would say the gap between that is about 9 to 12 months. And we can clearly see results in the buildings.
Speaker #8: What we have been able to do is really build I'm going to use the word ontology-based models. It means that we are able to when we connect the building, we are able to identify all its assets.
Speaker #8: And really build a reference data model for our customer, which allows us to then build different applications on top of it. And hopefully, when we are in investor day, we'll be able to show you agents on top of forge, which are managing different operations maintenance, energy management.
Vimal Kapur: And hopefully, when we are in Investor Day, we'll be able to show you agents on top of Forge, which are managing different operations, maintenance, energy management. So we are moving now to agentic way of working on, on our, on our customer base, and you're absolutely right, that kind of innovation is driving the growth pull-through of our products, because it's a one solution, it's not separated from other. Now we're on the same journey in the process. We're just about 9 months, 12 months behind. Our connected plant is our key offering, which takes our customer install base, both on process technology and process automation, and again, ability to build this ontology-based model, and then give a much more stronger capability to optimize their operations.
And hopefully, when we are in Investor Day, we'll be able to show you agents on top of Forge, which are managing different operations, maintenance, energy management. So we are moving now to agentic way of working on, on our, on our customer base, and you're absolutely right, that kind of innovation is driving the growth pull-through of our products, because it's a one solution, it's not separated from other. Now we're on the same journey in the process. We're just about 9 months, 12 months behind. Our connected plant is our key offering, which takes our customer install base, both on process technology and process automation, and again, ability to build this ontology-based model, and then give a much more stronger capability to optimize their operations.
Speaker #8: So we have moved now to agentic way of working on our customer base. And you're absolutely right. That kind of innovation is driving the growth full through of our products.
Speaker #8: Because it's one solution, it's not separated from others. Now, it's the same journey in the process. We're just about nine to twelve months behind.
Speaker #8: Connected plant is our key offering. Which takes our customer install base both on process technology and process automation and again, ability to build this ontology-based model and then give a much more stronger capability to optimize their operations.
Speaker #8: So that's coming. That's coming soon. And we do expect that to become an enabler for recurring revenue growth in the process segment in the near future.
Vimal Kapur: So that's coming, that's coming soon, and we do expect that to become an enabler for recurring revenue growth in the process segment in the near future. And then finally, we'll in industrial side, our business is far more becoming sensing and measurement. It's less about our controls, but we have to evolve that strategy there. But I remain very confident we are going to see the same pattern in process in very near future.
So that's coming, that's coming soon, and we do expect that to become an enabler for recurring revenue growth in the process segment in the near future. And then finally, we'll in industrial side, our business is far more becoming sensing and measurement. It's less about our controls, but we have to evolve that strategy there. But I remain very confident we are going to see the same pattern in process in very near future.
Speaker #8: And then finally, in industrial side, our business is far more becoming sensing and measurement. It's less about controls. But we have to evolve that strategy there.
Speaker #8: But I remain very confident we are going to see the same pattern in process in very near future.
Speaker #12: And just sort of very much related to that, your building automation revenue forecast is kind of mid-single digit plus this year. It feels like that journey in connecting those 11,000–12,000 assets in the field is kind of a third of the way through.
[Analyst] (UBS): Just sort of very much related to that, you know, your building automation revenue forecast is kind of mid-single digit plus this year. It feels like that journey in connecting those 11,000 to 12,000, you know, assets in the field is kind of 1/3 of the way through, and I think you guys have a goal of kind of accelerating that this year. So I'm just wondering, is it just conservatism? Because it seems like as you get to that journey of fully connected assets, you can actually drive sustainability and that kind of high single digit organic growth.
Amit Mehrotra: Just sort of very much related to that, you know, your building automation revenue forecast is kind of mid-single digit plus this year. It feels like that journey in connecting those 11,000 to 12,000, you know, assets in the field is kind of 1/3 of the way through, and I think you guys have a goal of kind of accelerating that this year. So I'm just wondering, is it just conservatism? Because it seems like as you get to that journey of fully connected assets, you can actually drive sustainability and that kind of high single digit organic growth.
Speaker #12: And I think you guys have a goal of kind of accelerating that this year. So I'm just wondering, is it just conservatism? Because it seems like as you get to that journey of fully connected assets, you can actually drive sustainability and that kind of high single-digit organic growth.
Speaker #8: Yeah. I mean, our penetration, Amit, actually is much lower, which gives us sort of runway and upside. We'll share those details during Investor Day—how much of the install base is penetrated from a connected assets perspective.
Vimal Kapur: Yeah, I mean, our penetration, Amit, actually is much lower, which gives us a lot of runway and upside. You know, we'll share those details during Investor Day, how much of install base is penetrated from connected assets perspective. But also bear in mind that recurring revenue takes time to scale. So if I, you know, as our recurring revenue bank is building, it just compounds every year at a bigger scale. So we are at a low base at this point, but we do believe that we also will continue to ramp it up at a much higher rate in the times ahead, as our ARR is growing there.
Vimal Kapur: Yeah, I mean, our penetration, Amit, actually is much lower, which gives us a lot of runway and upside. You know, we'll share those details during Investor Day, how much of install base is penetrated from connected assets perspective. But also bear in mind that recurring revenue takes time to scale. So if I, you know, as our recurring revenue bank is building, it just compounds every year at a bigger scale. So we are at a low base at this point, but we do believe that we also will continue to ramp it up at a much higher rate in the times ahead, as our ARR is growing there.
Speaker #8: But also bear in mind that recurring revenue takes time to scale. So if I as our recurring revenue bank is building, it just compounds every year at a bigger scale.
Speaker #8: So we are a low base at this point. But we do believe that we also will continue to ramp it up at a much higher rate in the times ahead.
Speaker #8: As our ARR is growing there. And we expect to share two things during the investor day. Our offerings on forge, both for buildings and process and industrial sub-initial ideas.
Vimal Kapur: We expect to share two things during the Investor Day, our offerings on Forge, both for buildings and process and industrial, some initial ideas, and then our ARR strategy, how much it is, and how much we expect it to compound in the times ahead.
We expect to share two things during the Investor Day, our offerings on Forge, both for buildings and process and industrial, some initial ideas, and then our ARR strategy, how much it is, and how much we expect it to compound in the times ahead.
Speaker #8: And then our ARR strategy, how much it is and how much we expect to compound in the times
Speaker #8: ahead. Okay.
Speaker #12: Yeah. That'll be helpful. Thank you very much.
[Analyst] (UBS): Okay. Yeah, that'll be helpful. Thank you very much. Appreciate it.
Amit Mehrotra: Okay. Yeah, that'll be helpful. Thank you very much. Appreciate it.
Speaker #12: Appreciate it. Thanks.
Speaker #8: Thank you.
Vimal Kapur: Thank you.
Vimal Kapur: Thank you.
Speaker #4: Thank you. Our next question comes in line of Nicole DeBlaise with Deutsche Bank. Please proceed with your
Speaker #4: Thank you. Our next question comes from Nicole DeBlaise with Deutsche Bank. Please proceed with your question. Yeah.
Operator: Thank you. Our next question comes from line of Nicole DeBlase with Deutsche Bank. Please proceed with your question.
Operator: Thank you. Our next question comes from line of Nicole DeBlase with Deutsche Bank. Please proceed with your question.
Speaker #11: Thanks. Good morning, guys. Just wanted to start on some of the order trends that you saw during the quarter. Can we talk them all about how short cycle order trends generally trended?
[Analyst] (Deutsche Bank): Yeah, thanks. Good morning, guys. Just wanted to start on some of the order trends that you saw during the quarter. Can we talk a little more about how short cycle order trends generally trended and, you know, not just relative to Q3, but also throughout the, the cadence of each month of the quarter?
Nicole DeBlase: Yeah, thanks. Good morning, guys. Just wanted to start on some of the order trends that you saw during the quarter. Can we talk a little more about how short cycle order trends generally trended and, you know, not just relative to Q3, but also throughout the, the cadence of each month of the quarter?
Speaker #11: And not just relative to 3Q, but also throughout the cadence of each month of the
Speaker #11: quarter. Sure.
Speaker #8: So I would tell you that generally, if you you have to look at it regionally. So US, Meta, India, short cycle orders perform well throughout the year.
Vimal Kapur: Sure. So I would tell you that generally, if you have to look at it regionally. So US, MEA, India, short cycle orders performed well throughout the year and in the Q4 as well.
Mike Stepniak: Sure. So I would tell you that generally, if you have to look at it regionally. So US, MEA, India, short cycle orders performed well throughout the year and in the Q4 as well.
Speaker #8: And in the fourth quarter as well. On the other hand, Europe and China at least for where we participate specifically in industrial automation, we're just okay and not great.
Mike Stepniak: ... On the other hand, Europe and China, at least for where we participate, specifically in industrial automation, were just okay, not great. Going into Q1, we see that orders generally will be high single digits. On the short cycle side, probably mid single digits for BA and aerospace. And then on IA and PNT, we will continue to monitor, but as Vimal mentioned earlier, the catalyst and conversions are a little bit slow.
... On the other hand, Europe and China, at least for where we participate, specifically in industrial automation, were just okay, not great. Going into Q1, we see that orders generally will be high single digits. On the short cycle side, probably mid single digits for BA and aerospace. And then on IA and PNT, we will continue to monitor, but as Vimal mentioned earlier, the catalyst and conversions are a little bit slow.
Speaker #8: Going into the first quarter, we see that orders generally will be high single digits on the short cycle side, probably mid-single digits for BA and aerospace.
Speaker #8: And then on the IA and PA&T, we will continue to monitor. But as Vimal mentioned earlier, the catalyst and convergence are a little bit
Speaker #8: slow. Okay.
Speaker #11: Got it. Thanks, Mike. That's helpful. And then maybe just a question on industrial automation margins. I think you mentioned in the prepared remarks that this is where you guys expect the greatest year-on-year margin expansion in 2026.
[Analyst] (Bank of America): Okay, got it. Thanks, Mike. That's helpful. And then, maybe just a question on industrial automation margins. I think you mentioned in the prepared remarks that this is where you guys expect the greatest year-on-year margin expansion in 2026. Can you maybe elaborate a little bit on that with respect to the magnitude of potential margin expansion? Thank you.
Nicole DeBlase: Okay, got it. Thanks, Mike. That's helpful. And then, maybe just a question on industrial automation margins. I think you mentioned in the prepared remarks that this is where you guys expect the greatest year-on-year margin expansion in 2026. Can you maybe elaborate a little bit on that with respect to the magnitude of potential margin expansion? Thank you.
Speaker #11: Can you maybe elaborate a little bit on that with respect to the magnitude of potential margin expansion? Thank you.
Speaker #8: Yeah. So vis-à-vis our guide of 20 to 60, and what we're driving operationally, we have industrial automation at close to 100 bps. And the reason for it, if you look at the margin trajectory and progression, we feel like industrial automation has the most opportunity.
Mike Stepniak: Yeah, so vis-a-vis our guide of 20 to 60 and what are we driving operationally, we have industrial automation at close to 100 basis points. And the reason for it, if you look at the margin trajectory and progression, we feel like industrial automation has the most opportunity, both from a productivity operationally, as well as pricing and leverage volume and demand. So that's how we instrumented the year, and I have a high confidence on the team will execute on that.
Mike Stepniak: Yeah, so vis-a-vis our guide of 20 to 60 and what are we driving operationally, we have industrial automation at close to 100 basis points. And the reason for it, if you look at the margin trajectory and progression, we feel like industrial automation has the most opportunity, both from a productivity operationally, as well as pricing and leverage volume and demand. So that's how we instrumented the year, and I have a high confidence on the team will execute on that.
Speaker #8: Both from a productivity operationally as well as pricing and leverage volume and demand. And so that's how we instrumented the year. And I have a high confidence on the team will
Speaker #8: execute on that. Thank you.
Speaker #11: I'll pass it on.
[Analyst] (Bank of America): Thank you. I'll pass it on.
Nicole DeBlase: Thank you. I'll pass it on.
Speaker #4: Thank you. Our next question comes in line of Chris Snyder with Morgan Stanley. Please proceed with your
Operator: Thank you. Our next question comes from line of Chris Snyder with Morgan Stanley. Please proceed with your question.
Operator: Thank you. Our next question comes from line of Chris Snyder with Morgan Stanley. Please proceed with your question.
Speaker #4: question. Thank
Speaker #12: You. I wanted to follow up on some of the commercial OE contracting discussion. Just given the very long nature of these contracts, I imagine these negotiations are a lot more comprehensive than just pricing for some of the tariff pressure that's come through over the last year.
[Analyst] (Morgan Stanley): Thank you. I wanted to follow up on some of the commercial OE contracting discussion. You know, just given the very long nature of these contracts, I imagine these negotiations are, are a lot more comprehensive than just pricing for some of the tariff pressure that's come through over the last year. So I don't know, maybe you don't want to kind of frame the magnitude of these conversations, but any color there would be helpful. Or if you could just maybe talk about, like, when was the last time the company did a big, you know, comprehensive commercial OE price reset?
Chris Snyder: Thank you. I wanted to follow up on some of the commercial OE contracting discussion. You know, just given the very long nature of these contracts, I imagine these negotiations are, are a lot more comprehensive than just pricing for some of the tariff pressure that's come through over the last year. So I don't know, maybe you don't want to kind of frame the magnitude of these conversations, but any color there would be helpful. Or if you could just maybe talk about, like, when was the last time the company did a big, you know, comprehensive commercial OE price reset?
Speaker #12: So I don't know. Maybe you don't want to kind of frame the magnitude of these conversations. But any color there would be helpful. Or if you could just maybe talk about when was the last time the company did a big comprehensive commercial OE price reset?
Speaker #8: So Chris, these contract negotiations don't span one particular OE, first of all. I mean, this is more than one. If you are large, we are small.
Vimal Kapur: So, so Chris, you know, these contract negotiations don't span one particular OE, first of all. I mean, this is more than one. Few are large, few are small, that's just a matter of fact. And, you know, some of these are due for a long time. Think about five years plus in some cases. So the impact of that, you're absolutely right, because when you're renegotiating a contract after five, seven, eight years, not only you're looking at the pricing changes, but other aspects of the contract. And that's why it takes a very long time to renegotiate a long-term contracts there. And as I said before, these renegotiated contracts will bear very well for aerospace margin expansion in the future. So it will be a great setup because we lap all the previous long-term inflation we have been absorbing in some of these contracts.
Vimal Kapur: So, so Chris, you know, these contract negotiations don't span one particular OE, first of all. I mean, this is more than one. Few are large, few are small, that's just a matter of fact. And, you know, some of these are due for a long time. Think about five years plus in some cases. So the impact of that, you're absolutely right, because when you're renegotiating a contract after five, seven, eight years, not only you're looking at the pricing changes, but other aspects of the contract. And that's why it takes a very long time to renegotiate a long-term contracts there. And as I said before, these renegotiated contracts will bear very well for aerospace margin expansion in the future. So it will be a great setup because we lap all the previous long-term inflation we have been absorbing in some of these contracts.
Speaker #8: That's just a matter of fact. And some of these are due for a long time. Think about five years plus in some cases. So the impact of that, you're absolutely right.
Speaker #8: Because when you renegotiating a contract after five, seven, eight years, not only you're looking at the pricing changes, but other aspects of the contract.
Speaker #8: And that's why it takes a very long time to renegotiate a long-term contract here. And as I said before, these renegotiated contracts will bode very well for aerospace margin expansion in the future.
Speaker #8: So it will be a great setup because we lap all the previous long-term inflation we have been absorbing in some of these contracts that won't be a headwind
Vimal Kapur: That won't be a headwind anymore.
That won't be a headwind anymore.
Speaker #8: anymore. Oh, thank you.
[Analyst] (Morgan Stanley): Well, thank you, really appreciate that. Yes, certainly a lot of cost inflation over the last 5, 7, 8 years. Maybe just a quick one. I think, you guys mentioned that R&D was kind of at the full run rate, obviously an increase in 2025. So is that right? Is R&D kind of at a full run rate level now? And I know aero takes a long time to convert into sales, but I would imagine the industrial side of the business converts quicker. So can you just maybe talk about how you think some of the R&D spend converts to sales on industrial, and could there be any tailwinds from that over the next 12 months? Thank you.
Chris Snyder: Well, thank you, really appreciate that. Yes, certainly a lot of cost inflation over the last 5, 7, 8 years. Maybe just a quick one. I think, you guys mentioned that R&D was kind of at the full run rate, obviously an increase in 2025. So is that right? Is R&D kind of at a full run rate level now? And I know aero takes a long time to convert into sales, but I would imagine the industrial side of the business converts quicker. So can you just maybe talk about how you think some of the R&D spend converts to sales on industrial, and could there be any tailwinds from that over the next 12 months? Thank you.
Speaker #12: Really appreciate that. Yeah. Certainly, a lot of cost inflation over the last five, seven, eight years. Maybe just a quick one. I think you guys mentioned that R&D was kind of at the full run rate.
Speaker #12: Obviously, it increased in '25. So is that right? Is R&D kind of at a full run rate level now? And I know Aero takes a long time to convert into sales.
Speaker #12: But I would imagine the industrial side of the business converts quicker. So can you just maybe talk about how you think some of the R&D spend converts to sales on industrial and could there be any tailwinds from that over the next 12 months?
Speaker #12: Thank
Speaker #12: you. Yeah.
Speaker #8: So like I said earlier, I think the R&D right now is at the level that we wanted it. It's 's about 4.8% of sales.
Mike Stepniak: Yeah, so like I said earlier, I think the R&D right now is at the level that we wanted it, so about 4.8% of sales. That we feel is a sweet spot for us. Quarterly, going into Q1, that will continue to abate, and will be more normalized. And we're obviously getting revenue growth, which will be a tailwind from a margin standpoint.
Mike Stepniak: Yeah, so like I said earlier, I think the R&D right now is at the level that we wanted it, so about 4.8% of sales. That we feel is a sweet spot for us. Quarterly, going into Q1, that will continue to abate, and will be more normalized. And we're obviously getting revenue growth, which will be a tailwind from a margin standpoint.
Speaker #8: We feel it's a sweet spot for us. Quarterly, going into the first quarter, that's where we'll continue to abate and we'll be more normalized.
Speaker #8: And we obviously getting revenue growth, which will be a tailwind for margin standpoint. And the cycle time, Chris, very strong. I would say 18 months, 15 to 18 months for the short cycle.
Vimal Kapur: The cycle time, Chris, you know, varies from, I would say, you know, 15 to 18 months for the short cycle, and for the long cycle business like aerospace and some of our process technology, could be 3 to 5 years. So these are long bets in some cases, and it's our job as leadership to put those bets so that we could not deliver even short-term growth, but also position the companies well for the long-term growth.
Sean Meakim: The cycle time, Chris, you know, varies from, I would say, you know, 15 to 18 months for the short cycle, and for the long cycle business like aerospace and some of our process technology, could be 3 to 5 years. So these are long bets in some cases, and it's our job as leadership to put those bets so that we could not deliver even short-term growth, but also position the companies well for the long-term growth.
Speaker #8: And for the long-cycle business, like aerospace and some of our process technology, it could be three to five years. So these are long bets in some cases.
Speaker #8: And it's our job as leadership to place those bets so that we can not only deliver short-term growth, but also position the company well for long-term growth.
Speaker #12: And if you look at just the—if you look at—
Mike Stepniak: And I-
Mike Stepniak: And I-
Vimal Kapur: Thank you.
Vimal Kapur: Thank you.
Mike Stepniak: If you look at our corporate costs, I mean, it's really, for us, a 30 bps drag on Quantinuum, no impact from R&D. Stranded costs, we addressed throughout last year, so we don't have a lot of stranded costs as far as Solstice. So we feel really good about the progression we're making on our structural costs.
Mike Stepniak: If you look at our corporate costs, I mean, it's really, for us, a 30 bps drag on Quantinuum, no impact from R&D. Stranded costs, we addressed throughout last year, so we don't have a lot of stranded costs as far as Solstice. So we feel really good about the progression we're making on our structural costs.
Speaker #8: Thank you.
Speaker #12: Our corporate costs, I mean, it's really, for us, the 30 bps drag on continuum—no impact from R&D. Stranded costs, we addressed throughout last year.
Speaker #12: So we don't have a lot of stranded costs as far as solstice. So we feel really good about the progression we're making on our structural costs.
Speaker #12: Thank you, guys. Much
[Analyst] (Morgan Stanley): Thank you, guys. Much appreciated.
Chris Snyder: Thank you, guys. Much appreciated.
Speaker #12: appreciated. Thank you.
Operator: Thank you. Our final question comes from the line of Andrew Obin with Bank of America. Please proceed with your question.
Operator: Thank you. Our final question comes from the line of Andrew Obin with Bank of America. Please proceed with your question.
Speaker #4: Our final question comes from the line of Andrew Oben with Bank of America. Please proceed with your question.
Speaker #12: Yes. Good morning. Thank you for fitting me in. The question on building automation, just a follow-up. Can we just talk about how much growth is coming from access solution cross-sell, and also how much exposure do you have there to data centers, just because you are the market leader on building automation?
[Analyst] (Bank of America): Yes, good morning. Thank you for fitting me in. A question on the question on building automation, just to follow up, can we just talk about how much growth is coming from Access Solutions cross-sell? And also, how much exposure do you have there to data centers, just because you are the market leader on building automation, I would imagine, that's a nice tailwind as well.
Andrew Obin: Yes, good morning. Thank you for fitting me in. A question on the question on building automation, just to follow up, can we just talk about how much growth is coming from Access Solutions cross-sell? And also, how much exposure do you have there to data centers, just because you are the market leader on building automation, I would imagine, that's a nice tailwind as well.
Speaker #12: I would imagine that's a nice tailwind as well.
Speaker #8: Yeah. So Andrew, the access solution acquisition is playing extremely well. And overall, the revenue in that segment is growing high single digit. In line with building automation, which is growing high single digit.
Vimal Kapur: Yeah. So, Andrew, the Access Solutions acquisition is playing extremely well, and overall, the revenue in that segment is growing high single digits, in line with Building Automation, which is growing high single digits. So our thesis has played out quite well. The second part of your question, that sales synergies have been a big feature of it? That was one of the main drivers. We thought this business will create our value, and that's been a additive to the overall growth. And again, it's reflected in Building Automation numbers. Because that growth is not only coming in Access Solutions business, we're able to pull through a lot of Access Solutions in our projects business, in our solution side of the house there. So that certainly is becoming important, you know, an important play.
Vimal Kapur: Yeah. So, Andrew, the Access Solutions acquisition is playing extremely well, and overall, the revenue in that segment is growing high single digits, in line with Building Automation, which is growing high single digits. So our thesis has played out quite well. The second part of your question, that sales synergies have been a big feature of it? That was one of the main drivers. We thought this business will create our value, and that's been a additive to the overall growth. And again, it's reflected in Building Automation numbers. Because that growth is not only coming in Access Solutions business, we're able to pull through a lot of Access Solutions in our projects business, in our solution side of the house there. So that certainly is becoming important, you know, an important play.
Speaker #8: So our thesis has played out quite well. The second part of your question that sales synergies have been a big feature of it, that was one of the main drivers we thought this business would create our value.
Speaker #8: And that's been an additive to the overall growth. And again, it's reflected in building automation numbers because that growth is not only coming in access solutions business.
Speaker #8: We're able to pull through a lot of access solution in our projects business in our solution side of the house there. So that's certainly is becoming an important play.
Speaker #8: And finally, data center overall position of Honeywell in building automation is becoming slowly material. We are inching towards that becoming greater than 5% of our revenue.
Vimal Kapur: And finally, data center overall position of Honeywell in Building Automation is becoming slowly material. We are inching towards that becoming, you know, greater than 5% of our revenue. Think about it, that, that number was zero a couple of years back. So we are inching our way through across all the three solution we provide in data center: the safety for fire, the environmental controls for building management system, and security. So we continue to, work our way through and, as that market is performing, that will continue to help the growth of, Building Automation.
And finally, data center overall position of Honeywell in Building Automation is becoming slowly material. We are inching towards that becoming, you know, greater than 5% of our revenue. Think about it, that, that number was zero a couple of years back. So we are inching our way through across all the three solution we provide in data center: the safety for fire, the environmental controls for building management system, and security. So we continue to, work our way through and, as that market is performing, that will continue to help the growth of, Building Automation.
Speaker #8: Think about it that number was zero a couple of years back. So we are inching our way through across all the three solutions we provide in data center: the safety for fire, the environmental controls for building management system, and security.
Speaker #8: So we continue to work our way through. And as that market is performing, that will continue to help the growth of building automation.
Speaker #12: All right. Thank you. And another question, a follow-up question. After selling productivity solutions and warehouse and workflow solutions, do you anticipate further portfolio actions on industrial automation side or beyond that?
[Analyst] (Bank of America): Thank you. And another question, a follow-up question. After selling Productivity Solutions and Warehouse and Workflow Solutions, do you anticipate further portfolio actions on Industrial Automation side or beyond that?
Andrew Obin: Thank you. And another question, a follow-up question. After selling Productivity Solutions and Warehouse and Workflow Solutions, do you anticipate further portfolio actions on Industrial Automation side or beyond that?
Speaker #8: No. I mean, we are very pleased with the end state. And as I mentioned, Andrew, that we have built now a business in industrial automation, which is heavily focused on sensing and measurement.
Vimal Kapur: No. I mean, we are, we are very pleased with the, the end state. And as I mentioned, Andrew, that we have built now a business in industrial automation, which is heavily focused on sensing and measurement. So we have a common block sensing in sensors for aerospace, sensor for medical devices, you know, measurement system for gas detection in industrial and semiconductor, measurement of, you know, gas and others. So we have a common team, which allows us to build a business around it. So we'll scale from here, so stay tuned, and as we, you know, share our strategy for industrial automation during our Investor Day.
Vimal Kapur: No. I mean, we are, we are very pleased with the, the end state. And as I mentioned, Andrew, that we have built now a business in industrial automation, which is heavily focused on sensing and measurement. So we have a common block sensing in sensors for aerospace, sensor for medical devices, you know, measurement system for gas detection in industrial and semiconductor, measurement of, you know, gas and others. So we have a common team, which allows us to build a business around it. So we'll scale from here, so stay tuned, and as we, you know, share our strategy for industrial automation during our Investor Day.
Speaker #8: So we have a common blocks: sensing in sensors for aerospace, sensors for medical devices, measurement system for gas detection in industrial and semiconductor, measurement of gas and others.
Speaker #8: So we have a common theme which allows us to build a business around it. So we'll scale from here. So stay tuned. And as we share our strategy for industrial automation during our investor day.
Speaker #12: Look forward to that. Thanks so much.
[Analyst] (Bank of America): Look forward to that. Thanks so much.
Andrew Obin: Look forward to that. Thanks so much.
Speaker #8: Thank
Speaker #8: you. Thank you.
Speaker #8: you. Thank you.
Vimal Kapur: Thank you.
Vimal Kapur: Thank you.
Operator: Thank you. Ladies and gentlemen-
Operator: Thank you. Ladies and gentlemen-
Speaker #4: Ladies and gentlemen. I'm sorry. Go ahead, Okay. sir.
Vimal Kapur: Okay.
Vimal Kapur: Okay.
Operator: I'm sorry. Go ahead, sir.
Operator: I'm sorry. Go ahead, sir.
Vimal Kapur: No.
Vimal Kapur: No.
Speaker #4: This concludes our No. question and answer session. I'll turn the floor back to Mr. Kapoor for any final
Operator: This concludes our question and answer session. I'll turn the floor back to Mr. Kapur for any final comments.
Operator: This concludes our question and answer session. I'll turn the floor back to Mr. Kapur for any final comments.
Speaker #4: comments. Thank you.
Vimal Kapur: Thank you. So as always, I would like to thank our shareholders, our customers, and all the Honeywell future shapers across the world for a strong finish to 2025. We remain confident in our path ahead, and we look forward to sharing more with everyone in the quarters to come. So thank you for all listening, and please stay safe and healthy.
Vimal Kapur: Thank you. So as always, I would like to thank our shareholders, our customers, and all the Honeywell future shapers across the world for a strong finish to 2025. We remain confident in our path ahead, and we look forward to sharing more with everyone in the quarters to come. So thank you for all listening, and please stay safe and healthy.
Speaker #8: So, as always, I would like to thank our shareholders, our customers, and all the Honeywell Future Shapers across the world for a strong finish to 2025.
Speaker #8: We remain confident in our path ahead. And we look forward to sharing more with everyone in the quarters to come. So thank you for all listening.
Speaker #8: And please stay safe and
Speaker #8: healthy. Thank you.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
