Honeywell Aerospace Inc

Q2 2026 performance: revenue +5% YoY but profit pressured by supply + a ~$50M charge - Sales: $4.5B, +5% organically YoY. - Orders: +8% YoY, book-to-bill 1.1 (demand strong). - Output: constrained—YoY output growth ~4% in Q2 (up from ~3% in Q1), but ramp slower than expected. - Profit: Adjusted EBIT $1.0B (-2% YoY), driven by unfavorable mix and ~$50M inventory obsolescence charge. - EPS: $1.78, down vs prior period (higher taxes and lower adjusted EBIT).

Big negative: guidance reset due to slower supply-chain ramp (mechanical constraints) - Management said earlier expectations for steady acceleration through mid-year did not materialize—notably June ramp was weaker, leading to a more prudent baseline. - CEO emphasized this is contained to a small fraction of suppliers: - Constrained/critical suppliers ~2% of the supply base; ~98% perform as expected. - Key implication: lower ability to convert strong demand into shipments, especially affecting aftermarket (spares) due to parts availability.

Updated 2026 outlook (pro forma stand-alone) — slower growth but unchanged long-term targets - Organic sales forecast: +4% to +5% for full-year 2026 (top-line reset lower vs prior outlook). - Adjusted EBIT: $4.35B to $4.45B (mid-point reduced; explained as $50M inventory obsolescence plus mix/volume leverage and allocation decisions). - Pro forma EPS (new): $7.60 to $7.90. - Free cash flow (unchanged expectation): $1.0B to $1.5B in 2H, range reflecting timing/work-capital effects post-separation. - Capex: ~$650M.