Street Calls of the Week
Introduction & Market Context
Honeywell International Inc (NYSE:HON) released its third-quarter 2025 earnings presentation on October 23, revealing strong performance that exceeded analyst expectations and prompted the company to raise its full-year guidance. The industrial conglomerate saw its stock jump 6.3% following the announcement, with shares trading at $219.62, approaching its 52-week high of $242.77.
The company’s strong quarterly performance comes amid a significant strategic transformation, with the imminent spin-off of its Advanced Materials business (Solstice) and ongoing preparations to separate its Aerospace Technologies division by the second half of 2026.
Quarterly Performance Highlights
Honeywell delivered impressive third-quarter results, exceeding its guided ranges for both sales and earnings per share. The company reported adjusted earnings of $2.82 per share, significantly outperforming its guidance range of $2.50-$2.60 and beating analyst expectations by 10.16%.
Organic sales grew 6%, surpassing the high end of the company’s 2-4% guidance range. Orders increased by 22% year-over-year, helping Honeywell achieve a new record backlog of $39.1 billion. The company returned $0.8 billion to shareholders during the quarter.
As shown in the following comparison of actual results versus guidance:
Segment Performance Analysis
Honeywell’s segment performance showed mixed results, with Aerospace Technologies and Building Automation delivering strong organic growth while other segments faced challenges.
Aerospace Technologies led the way with 12% organic sales growth, reaching $4.51 billion in the quarter. Building Automation also performed well with 7% organic growth and was the only segment to achieve margin expansion, improving by 80 basis points to 26.7%. Industrial Automation posted modest 1% organic growth, while Energy and Sustainability Solutions declined by 2% organically.
The detailed segment breakdown reveals the varying performance across Honeywell’s portfolio:
CEO Vimal Kapur emphasized the company’s strong position heading into the final quarter, stating, "We are going into the final quarter of 2025 from a position of strength," according to the earnings call transcript.
Strategic Transformation Progress
Honeywell continues to advance its portfolio transformation strategy, which will ultimately result in three independent public companies. The Solstice Advanced Materials spin-off is scheduled for October 30, 2025, ahead of initial expectations. Honeywell will receive a $1.5 billion dividend from this transaction. Meanwhile, the Honeywell Aerospace spin-off remains on track for completion in the second half of 2026.
The company also unveiled its planned segment realignment for the remaining business (RemainCo), which will take effect in the first quarter of 2026. After the Aerospace separation, RemainCo will report three segments focused on cohesive business models: Building Automation, Process Automation & Technology, and Industrial Automation.
The following timeline illustrates Honeywell’s transformation journey:
The new segment structure is designed to streamline operations and enhance focus on automation technologies:
Another notable strategic development was Quantinuum’s successful capital raise of over $600 million at a $10 billion pre-money valuation, doubling its prior 2024 valuation. This funding round included investments from existing investors and new strategic partners, including Quanta Computer and NVIDIA. The capital will support the advancement of quantum computing at scale and sustain Quantinuum through its initial monetization event.
Outlook & Guidance
Based on its strong third-quarter performance, Honeywell raised its full-year 2025 guidance for both organic sales growth and adjusted earnings per share. However, the guidance reflects the impact of the Solstice spin-off scheduled for October 30.
The company now expects full-year sales of $40.7-$40.9 billion, representing approximately 6% organic growth. Adjusted EPS guidance was raised to $10.60-$10.70, up 7-8% compared to the previous year. Free cash flow is projected to be $5.2-$5.6 billion, representing growth of 6-14%.
For the fourth quarter, Honeywell expects sales of $10.1-$10.3 billion, reflecting 8-10% organic growth, and adjusted EPS of $2.52-$2.62.
The following chart illustrates the impact of the Solstice spin-off on the company’s raised guidance:
The detailed fourth-quarter and full-year outlook provides additional perspective on expected performance:
Conclusion
Honeywell’s third-quarter 2025 presentation reveals a company successfully executing on both operational and strategic fronts. The strong performance in Aerospace Technologies and Building Automation, coupled with robust order growth across all segments, has positioned the company well for continued success as it approaches its planned transformations.
The imminent spin-off of Solstice Advanced Materials and the planned separation of Aerospace Technologies represent significant milestones in Honeywell’s strategic evolution. Meanwhile, the company’s investment in quantum computing through Quantinuum demonstrates its commitment to future growth opportunities.
With raised guidance and a clear roadmap for its portfolio transformation, Honeywell appears well-positioned to deliver value to shareholders despite the complexities of managing multiple strategic initiatives simultaneously. As CFO Mike Stepniak noted during the earnings call, "We feel really good about these acquisitions and how they fit the portfolio," reflecting management’s confidence in the company’s strategic direction.
Full presentation:
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