Honeywell Spins Off Aerospace in Record Share Split
The industrial conglomerate set June 29 as the distribution date for its aerospace unit, handing shareholders one new share for every two held.
Honeywell International (HON) moved to separate its aerospace business in the first quarter, announcing a record-date spin-off that will leave shareholders with half as many shares of the slimmed-down parent. The company said it will distribute one share of Honeywell Aerospace (HONA) for every two shares of Honeywell on June 29, 2026, and will effect a 1-for-2 reverse stock split immediately after, cutting its outstanding share count from approximately 634 million to 317 million.
The quarter’s results were overshadowed by the impending separation, yet underlying performance showed signs of stabilization. Sales rose 2% year-over-year to $9.1 billion, matching organic growth of 2%—the first positive organic print since the fourth quarter of 2025. Orders climbed 7%, accelerating from prior quarters, and backlog grew 2% sequentially to $38.3 billion, led by strength in Building and Industrial Automation.
Reported earnings per share fell 35% to $1.29, weighed down by $263 million in impairment and separation charges, while adjusted EPS increased 11% to $2.45 on higher segment profit and a lower share count. Operating margin contracted 320 basis points to 16.1%, but segment margin expanded 90 basis points to 23.3%, reflecting earlier-than-anticipated removal of stranded costs tied to the aerospace spin-off.
Segment performance was mixed. Aerospace Technologies revenue grew 4% to $4.3 billion, with orders up 6% and margin expanding 20 basis points to 26.5%. Building Automation sales jumped 11% to $1.9 billion, supported by volume leverage, while Process Automation and Technology declined 6% organically as refining catalyst shipments were delayed. Industrial Automation, though down 11% year-over-year, eked out 1% organic growth and expanded margin 260 basis points to 17.0%.
Honeywell reaffirmed its full-year guidance for sales of $38.8 billion to $39.8 billion, organic growth of 3% to 6%, and adjusted EPS of $10.35 to $10.65. It trimmed its operating cash flow outlook to $4.4 billion to $4.7 billion from $4.7 billion to $5.0 billion, while maintaining free cash flow guidance at $5.3 billion to $5.6 billion. First-quarter operating cash flow swung to a negative $0.7 billion from a positive $0.4 billion a year earlier, reflecting higher spin-off costs and a litigation settlement payment.
The company also announced the sale of its Warehouse and Workflow Solutions business to American Industrial Partners, following the previously disclosed divestiture of Productivity Solutions and Services, both expected to close in the second half of 2026. To reduce leverage ahead of the spin-off, Honeywell launched cash tender offers for up to $3.75 billion in dollar-denominated securities and €1.25 billion in euro-denominated debt. Honeywell Aerospace, meanwhile, secured $4 billion in revolving credit facilities and commenced a private offering of up to $16 billion in senior notes to fund a cash distribution to the parent.