HONEYWELL INTERNATIONAL INC

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries (Honeywell Technologies, we, us, our, or the Company) for the three and six months ended June 30, 2026. The financial information as of June 30, 2026, should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2025, contained in our 2025 Annual Report on Form 10-K. Certain prior year amounts are reclassified to conform to the current year presentation. Discussions throughout the Management’s Discussion and Analysis of Financial Condition and Results of Operations are based on continuing operations unless otherwise noted.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries (Honeywell Technologies, we, us, our, or the Company) for the three and nine months ended September 30, 2026. The financial information as of September 30, 2026, should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2025, contained in our 2025 Annual Report on Form 10-K. Certain prior year amounts are reclassified to conform to the current year presentation. Discussions throughout the Management’s Discussion and Analysis of Financial Condition and Results of Operations are based on continuing operations unless otherwise noted.

Previous wording

We continue to operate in a challenging macroeconomic and geopolitical environment, including ongoing conflict in the Middle East and its impact on energy markets, trade flows, and shipping. Global growth expectations moderated, while inflationary pressures and market volatility remain elevated. In response, we remain focused on disciplined supplier engagement and proactive actions to manage critical material availability, logistics conditions, and input cost volatility across our network.

Current wording

We continue to operate in a challenging macroeconomic and geopolitical environment, including ongoing conflict in the Middle East and its impact on energy markets, trade flows, and shipping. Global growth expectations have moderated, while inflationary pressures and market volatility remain elevated. In response, we remain focused on disciplined supplier engagement and proactive actions to manage critical material availability, logistics conditions, and input cost volatility across our network.

Previous wording

In the third quarter on June 29, 2026, the Company completed the Aerospace Spin-Off. Each Honeywell Technologies shareowner received one share of Honeywell Aerospace common stock for every two shares of Honeywell Technologies common stock held of record as of the close of business on June 15, 2026, except that they received cash in lieu of any fractional shares of Honeywell Aerospace common stock that they would have received after application of such distribution ratio. After the date of the Aerospace Spin-Off, Honeywell Technologies does not beneficially own any shares of Honeywell Aerospace common stock and no longer consolidates Honeywell Aerospace into its financial results. The historical financial results of Honeywell Aerospace will be reflected in Honeywell Technologies’ consolidated financial statements as discontinued operations under GAAP for all periods beginning in the third quarter of 2026. In addition, following completion of the Aerospace Spin-Off, we now manage our businesses through three reportable business segments: Building Automation, Process Automation and Technology, and Industrial Automation.

Current wording

In the third quarter on June 29, 2026, the Company completed the Aerospace Spin-Off. Each Honeywell Technologies shareowner received one share of Honeywell Aerospace common stock for every two shares of Honeywell Technologies common stock held of record as of the close of business on June 15, 2026, except that they received cash in lieu of any fractional shares of Honeywell Aerospace common stock that they would have received after application of such distribution ratio. After the date of the Aerospace Spin-Off, Honeywell Technologies does not beneficially own any shares of Honeywell Aerospace common stock and no longer consolidates Honeywell Aerospace into its financial results. The historical financial results of Honeywell Aerospace are reflected as discontinued operations under GAAP for all periods. In addition, following completion of the Aerospace Spin-Off, we now manage our businesses through three reportable business segments: Building Automation, Process Automation and Technology, and Industrial Automation.

Previous wording

On July 17, 2026, we acquired Johnson Matthey’s Catalyst Technologies business segment for total consideration of $1,750 million, net of cash acquired.

Current wording

On July 17, 2026, we acquired Johnson Matthey’s Catalyst Technologies business segment for total consideration of $1,743 million, net of cash acquired. On July 27, 2026, and August 3, 2026, we completed the divestitures of the Warehouse and Workflow Solutions (WWS) and Productivity Solutions and Services (PSS) businesses, respectively.

Previous wording

Effective in the first quarter of 2026, we realigned certain of our business units comprising our Industrial Automation and Energy and Sustainability Solutions reportable business segments. This realignment formed a new reportable business segment, Process Automation and Technology, and resulted in a new composition of our Industrial Automation reportable business segment. Process Automation and Technology is comprised of UOP, which was previously in Energy and Sustainability Solutions, and the core portion of the Process Solutions business, which was previously in Industrial Automation. The new composition of Industrial Automation continues to include the smart energy, thermal solutions, and process measurement and control businesses, previously included in the Process Solutions business, as well as the Sensing and Safety Technologies, Warehouse and Workflow Solutions, and Productivity Solutions and Services businesses. Following the realignment, our reportable business segments were Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. In addition to the realignment, also beginning in 2026, we report the disaggregation of revenue within our Building Automation, Process Automation and Technology, and Industrial Automation segments based on business models. The realignment had no impact on our historical consolidated financial position, results of operations, or cash flows. Prior period amounts have been recast to reflect this change.

Current wording

Effective in the first quarter of 2026, we realigned certain of our business units comprising our Industrial Automation and Energy and Sustainability Solutions reportable business segments. This realignment formed a new reportable business segment, Process Automation and Technology, and resulted in a new composition of our Industrial Automation reportable business segment. Process Automation and Technology is comprised of UOP, which was previously in Energy and Sustainability Solutions, and the core portion of the Process Solutions business, which was previously in Industrial Automation. The new composition of Industrial Automation continues to include the smart energy, thermal solutions, and process measurement and control businesses, previously included in the Process Solutions business, as well as the Sensing and Safety Technologies businesses and the WWS and PSS businesses, prior to divestiture of the WWS and PSS businesses during the third quarter of 2026. Following the realignment, our reportable business segments were Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. In addition to the realignment, also beginning in 2026, we report the disaggregation of revenue within our Building Automation, Process Automation and Technology, and Industrial Automation segments based on business models. The realignment had no impact on our historical consolidated financial position, results of operations, or cash flows. Prior period amounts have been recast to reflect this change.

Previous wording

•Partially offset by lower sales from the divestiture of the PPE business, and

Current wording

•Largely offset by lower sales from the divestiture of the WWS and PSS businesses.

Previous wording

•Partially offset by lower sales from the divestiture of the personal protective equipment (PPE) business.

Current wording

•Partially offset by lower sales from the divestiture of the WWS, PSS and personal protective equipment (PPE) businesses.

Previous wording

•Higher direct and indirect material costs and higher labor costs of approximately $0.4 billion or 4%, and

Current wording

•Higher direct and indirect material costs and higher labor costs of approximately $0.3 billion or 3%, and

Previous wording

•Incremental costs from recent acquisitions of approximately $0.2 billion or 2%.

Current wording

•Incremental costs from recent acquisitions of approximately $0.3 billion or 3%,

Previous wording

Gross margin increased by approximately $0.1 billion and gross margin percentage decreased 100 basis points to 38.1% compared to 39.1% for the same period of 2025.

Current wording

Gross margin increased by approximately $0.2 billion and gross margin percentage increased 440 basis points to 40.4% compared to 36.0% for the same period of 2025.

Previous wording

Gross margin was flat and gross margin percentage decreased 170 basis points to 37.6% compared to 39.3% for the same period of 2025.

Current wording

Gross margin increased by approximately $0.2 billion and gross margin percentage increased 60 basis points to 39.9% compared to 39.3% for the same period of 2025.

Previous wording

Research and development expenses increased as a percentage of net sales due to increased investment in new product development in our Aerospace Technologies business.

Current wording

Research and development expenses declined slightly as a percentage of net sales due to decreased investment in new product development in our Industrial Automation business.

Previous wording

Research and development expenses increased as a percentage of net sales due to increased investment in new product development in our Aerospace Technologies business.

Current wording

Research and development expenses remained flat as a percentage of net sales due to consistent levels of investment in new product development.

Previous wording

Selling, general and administrative expenses were flat compared to the same period in 2025.

Current wording

Selling, general and administrative expenses remained flat compared to the same period in 2025.

Previous wording

Impairment of assets held for sale increased due to impairment charges recorded on the assets held for sale related to the Productivity Solutions and Services and Warehouse and Workflow Solutions businesses for the six months ended June 30, 2026.

Current wording

Impairment of assets held for sale increased due to impairment charges recorded on the assets held for sale related to the WWS and PSS businesses for the nine months ended September 30, 2026.

Previous wording

Loss on debt extinguishment in the six months ended June 30, 2026 was due to the debt tender offers and redemptions.

Current wording

Loss on debt extinguishment in the nine months ended September 30, 2026 due to debt tender offers and redemptions.

Previous wording

Gain on deconsolidation of subsidiary in the three months ended June 30, 2026 was due to the deconsolidation of Quantinuum.

Current wording

Gain on deconsolidation of subsidiary in the nine months ended September 30, 2026 due to deconsolidation of Quantinuum.

Previous wording

•Partially offset by higher pension income of approximately $0.1 billion.

Current wording

•Higher divestiture-related costs of approximately $0.1 billion,

Previous wording

The effective tax rate increased 670 basis points due to the following:

Current wording

The effective tax rate decreased 660 basis points due to the following:

Previous wording

•Changes in accruals on foreign tax matters of 560 basis points,

Current wording

•Changes in accruals on U.S. federal, state, and foreign tax matters of 3,950 basis points,

Previous wording

The effective tax rate increased 190 basis points due to the following:

Current wording

The effective tax rate decreased 270 basis points due to the following:

Previous wording

Equity loss in the six months ended June 30, 2026 was due to equity losses on Quantinuum following the deconsolidation of Quantinuum in the second quarter of 2026.

Current wording

Equity loss in the nine months ended September 30, 2026 was due to equity losses on Quantinuum following the deconsolidation of Quantinuum in the second quarter of 2026.

Previous wording

Earnings per share of common stock–assuming dilution increased due to the following:

Current wording

Earnings per share of common stock–assuming dilution decreased due to the following:

Previous wording

Our backlog of orders increased 12% to $38.0 billion as of June 30, 2026, compared to June 30, 2025. Backlog represents the estimated remaining value of work to be performed or products to be shipped under firm contracts. Backlog is equal to our remaining performance obligations under the contracts that meet the guidance on revenue from contracts with customers as discussed in Note 4 Revenue Recognition and Contracts with Customers of Notes to Consolidated Financial Statements. Our backlog by reportable business segment is as follows:

Current wording

Our backlog of orders increased 1% to $18.8 billion as of September 30, 2026, compared to September 30, 2025. Backlog represents the estimated remaining value of work to be performed or products to be shipped under firm contracts. Backlog is equal to our remaining performance obligations under the contracts that meet the guidance on revenue from contracts with customers as discussed in Note 4 Revenue Recognition and Contracts with Customers of Notes to Consolidated Financial Statements. Our backlog by reportable business segment is as follows:

Previous wording

During the period reflected in the Quarterly Report on Form 10-Q, we globally managed our business operations through four reportable business segments: Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. Upon the Aerospace Spin-Off, we now manage our businesses through three reportable business segments: Building Automation, Process Automation and Technology, and Industrial Automation.

Current wording

We previously globally managed our business operations through four reportable business segments: Aerospace Technologies, Building Automation, Process Automation and Technology, and Industrial Automation. Following completion of the Aerospace Spin-Off, we now manage our businesses through three reportable business segments: Building Automation, Process Automation and Technology, and Industrial Automation. The historical financial results of Honeywell Aerospace are reflected as discontinued operations under GAAP for all periods.

Previous wording

Sales increased $176 million due to higher organic sales of $103 million in Products and higher organic sales of $59 million in Solutions, both driven by higher demand.

Current wording

Sales increased $142 million due to higher organic sales of $110 million in Products and higher organic sales of $38 million in Solutions, both driven by higher demand.

Previous wording

Sales increased $366 million due to higher organic sales of $174 million in Products and higher organic sales of $120 million in Building Solutions, both driven by higher demand.

Current wording

Sales increased $508 million due to higher organic sales of $284 million in Products and higher organic sales of $158 million in Building Solutions, both driven by higher demand.

Previous wording

Sales increased $66 million due to inorganic sales of $78 million in Sundyne during the three months ended June 30, 2026 and higher organic sales of $54 million in Projects driven by increased volume, partially offset by lower organic sales of $77 million in Aftermarket driven by a decline in catalyst shipments.

Current wording

Sales increased $395 million as the acquisitions of Sundyne and Johnson Matthey's Catalyst Technologies business contributed $330 million of inorganic sales during the nine months ended September 30, 2026. In addition, organic sales increased $132 million in Projects driven by increased volume, partially offset by lower organic sales of $114 million in Aftermarket driven by a decline in catalyst shipments.

Previous wording

Sales decreased $73 million due to lower sales of $145 million driven by the sale of our PPE business on May 21, 2025, partially offset by higher organic sales of $47 million in Solutions driven by project timing.

Current wording

Sales decreased $335 million driven by a decline in sales of $375 million due to the sale of our WWS and PSS businesses on July 27, 2026 and August 3, 2026, respectively, partially offset by higher organic sales of $40 million in Solutions driven by project timing.

Previous wording

Sales decreased $249 million due to lower sales of $381 million driven by the sale of our PPE business on May 21, 2025, partially offset by higher organic sales of $78 million in Solutions driven by project timing.

Current wording

Sales decreased $588 million driven by a decline in sales of $755 million due to the sale of our PPE, WWS, and PSS businesses on May 21, 2025, July 27, 2026 and August 3, 2026, respectively, partially offset by higher organic sales of $114 million in Solutions driven by increased demand.

Previous wording

Corporate and All Other primarily includes unallocated corporate costs, interest expense on holding-company debt, and the former controlling majority-owned interest in Quantinuum prior to deconsolidation in the second quarter of 2026. Corporate expenses historically allocated to the Advanced Materials business prior to it being spun off in the fourth quarter of 2025 and not eligible to be part of discontinued operations are now included in Corporate and All Other. Corporate and All Other is not a separate reportable business segment as segment reporting criteria is not met. The Company continues to monitor the activities in Corporate and All Other to determine the need for further reportable business segment disaggregation.

Current wording

Corporate and All Other primarily includes unallocated corporate costs, interest expense on holding-company debt, and the former controlling majority-owned interest in Quantinuum prior to deconsolidation in the second quarter of 2026. Corporate expenses historically allocated to the Honeywell Aerospace and Advanced Materials businesses prior to being spun off and not eligible to be part of discontinued operations are now included in Corporate and All Other. Corporate and All Other is not a separate reportable business segment as segment reporting criteria is not met. The Company continues to monitor the activities in Corporate and All Other to determine the need for further reportable business segment disaggregation.

Previous wording

See Note 5 Repositioning and Other Charges of Notes to Consolidated Financial Statements for a discussion of our repositioning actions and related charges incurred in the six months ended June 30, 2026 and 2025. Cash spending related to our repositioning actions was $91 million in the six months ended June 30, 2026, and was funded through operating cash flows.

Current wording

See Note 5 Repositioning and Other Charges of Notes to Consolidated Financial Statements for a discussion of our repositioning actions and related charges incurred in the nine months ended September 30, 2026 and 2025. Cash spending related to our repositioning actions was $115 million in the nine months ended September 30, 2026, and was funded through operating cash flows.

Previous wording

As of June 30, 2026 and December 31, 2025, we held $9.2 billion and $12.9 billion, respectively, of cash and cash equivalents, including our short-term investments. We monitor third-party depository institutions that hold our cash and cash equivalents on a daily basis. Our emphasis is primarily safety of principal and secondarily maximizing yield of those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one counterparty.

Current wording

As of September 30, 2026 and December 31, 2025, we held $6.2 billion and $12.7 billion, respectively, of cash and cash equivalents, including our short-term investments. We monitor third-party depository institutions that hold our cash and cash equivalents on a daily basis. Our emphasis is primarily safety of principal and secondarily maximizing yield of those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one counterparty.

Previous wording

As of June 30, 2026, we held $6.7 billion of the Company’s cash, cash equivalents, and short-term investments in non-U.S. subsidiaries. We do not have material amounts related to any jurisdiction subject to currency control restrictions that impact our ability to access and repatriate such amounts. Under current laws, we do not expect taxes on repatriation or restrictions on amounts held outside of the U.S. to have a material effect on our overall liquidity.

Current wording

As of September 30, 2026, we held $4.5 billion of the Company’s cash, cash equivalents, and short-term investments in non-U.S. subsidiaries. We do not have material amounts related to any jurisdiction subject to currency control restrictions that impact our ability to access and repatriate cash. Under current laws, we do not expect taxes on repatriation or restrictions on amounts held outside of the U.S. to have a material effect on our overall liquidity.

Previous wording

Net cash used for investing activities from continuing operations was driven by $538 million of capital expenditures and the deconsolidation of $623 million of Quantinuum cash, partially offset by $127 million of net cash receipts from settlements of derivative contracts.

Current wording

Net cash used for investing activities from continuing operations was driven by $1,763 million of cash paid for acquisitions, the deconsolidation of $623 million of Quantinuum cash and $369 million of capital expenditures, partially offset by $1,454 million of proceeds from sale of businesses.

Previous wording

Net cash used for financing activities was driven by $13,187 million of payments of long-term debt, $3,413 million of net payments of commercial paper, $1,576 million of cash dividends paid, and $1,000 million of repurchases of common stock, partially offset by $15,835 million of pre-separation funding related to the Aerospace Spin-Off.

Current wording

Net cash used for financing activities was driven by $14,688 million of payments of long-term debt, $3,469 million of net payments of commercial paper, $1,816 million of cash dividends paid, $1,000 million of repurchases of common stock and $1,000 million of Spin-Off cash, partially offset by $15,835 million of pre-separation funding related to the Aerospace Spin-Off.

Previous wording

Six months ended June 30, 2026 compared with six months ended June 30, 2025

Current wording

Nine months ended September 30, 2026 compared with nine months ended September 30, 2025

Previous wording

Net cash used for investing activities from continuing operations decreased by $717 million, driven by a $2,135 million decrease in cash paid for acquisitions and a $542 million net increase in cash receipts from settlement of derivative contracts, partially offset by a $1,151 million decrease in proceeds from sale of businesses, the deconsolidation of $623 million of Quantinuum cash and a $122 million increase in capital expenditures.

Current wording

Net cash used for investing activities from continuing operations decreased by $618 million, driven by a $526 million net increase in cash receipts from settlement of derivative contracts, a $438 million decrease in cash paid for acquisitions, and a $297 million increase in proceeds from sale of businesses, partially offset by the deconsolidation of $623 million of Quantinuum cash in the nine months ended September 30, 2026.

Previous wording

Net cash used for financing activities increased by $2,825 million, driven by an $11,878 million increase of payments of long-term debt, a $5,286 million increase of net payments of commercial paper, and a decrease in proceeds from issuance of long-term debt of $4,035 million, partially offset by $15,835 million of pre-separation funding related to the Aerospace Spin-Off and a $2,604 million decrease in repurchases of common stock.

Current wording

Net cash used for financing activities increased by $5,377 million, driven by a $13,133 million increase of payments of long-term debt, a $5,929 million increase of net payments of commercial paper, a decrease in proceeds from issuance of long-term debt of $4,035 million, and a $1,000 million increase of Spin-Off cash partially offset by $15,835 million of pre-separation funding related to the Aerospace Spin-Off and a $2,704 million decrease in repurchases of common stock.

Previous wording

In addition to normal operating cash requirements, our principal future cash requirements include funding capital expenditures, share repurchases, dividends, strategic acquisitions, and debt repayments. During the six months ended June 30, 2026, we repurchased common stock of $1.0 billion. Refer to the section titled Liquidity and Capital Resources of our 2025 Form 10-K for a discussion of our expected capital expenditures, share repurchases, mergers and acquisitions activity, and dividends for 2026.

Current wording

In addition to normal operating cash requirements, our principal future cash requirements include funding capital expenditures, share repurchases, dividends, strategic acquisitions, and debt repayments. During the nine months ended September 30, 2026, we repurchased common stock of $1.0 billion. Refer to the section titled Liquidity and Capital Resources of our 2025 Annual Report on Form 10-K for a discussion of our expected capital expenditures, share repurchases, mergers and acquisitions activity, and dividends for 2026.