Honeywell International (NASDAQ:HON) Chairman and CEO Vimal Kapur said the company’s momentum from 2025 has carried into early 2026, with end markets “very, very similar” year over year and first-quarter performance tracking in line with the company’s recent guidance.
Early 2026 trends: strength in buildings and aerospace, uneven industrial demand
Kapur said Building Automation remains “very strong,” and described aerospace as similarly strong on the long-cycle side of the portfolio. In Industrial Automation, he pointed to solid demand in North America, offset by weaker conditions in Europe and China, which he said is reflected in Honeywell’s outlook.
Backlog growth meets capacity constraints
Discussing long-cycle project demand, Kapur said customers in certain high-demand segments are placing orders further in advance because of capacity constraints across the supply chain. He highlighted LNG and aerospace as examples of markets with extended booking horizons, saying Honeywell’s LNG business is booked “till practically end of 2027” and into early 2028, even as the company works to expand capacity, including doubling an LNG-related facility.
In aerospace, Kapur described bookings as strong but said growth is constrained by the company’s ability to physically deliver volume, noting Honeywell can only increase volume by roughly 12% to 14% per quarter and is investing to raise capacity.
Separation preparations and a sharper “pure-play” automation focus
Kapur said the company’s planned separation into three companies—first announced in October 2024—has moved from “a hypothesis” to an operating reality. He said that spending more time on the “RemainCo” has allowed Honeywell to assess growth potential and make decisions with greater strategic clarity, including portfolio adjustments within Industrial Automation.
As Honeywell positions itself to operate as a pure-play automation company in “six months or less,” Kapur outlined two principles guiding where the company will compete:
- Focus on mission-critical automation segments where performance matters to customers, supporting longevity, pricing power, and aftermarket potential.
- “Build and mine” the installed base by expanding services and software and improving asset visibility and penetration.
Kapur said Honeywell’s services and software aftermarket would be about 40% at the exit and framed moving toward a roughly half-and-half mix as a de-risking lever over time. He also said Honeywell has implemented a single system of record for installed base data across the company, enabling measurement of penetration rates and identifying where offerings or execution need improvement. He described the company’s Forge platform as a tool to mine the installed base more systematically using data science, rather than relying on traditional break-fix service models.
New products, pricing discipline, and persistent inflation
Kapur said new product introductions are a core growth strategy across Honeywell, but the timing of results can vary by segment. He said Building Automation can move faster, while Industrial Automation products often require customer certification, extending the adoption cycle. He also noted that process-focused new products can be more dependent on end-market dynamics, citing biofuels as an area where Honeywell invested in new offerings but adoption has slowed over the past 12 to 18 months.
On pricing, Kapur said inflation has become a “new gating factor” and described persistent cost pressure in the 3% to 3.5% range, including labor, electronics, and commodities such as copper, zinc, and precious metals used in catalysts. He said Honeywell has changed its approach by discussing inflation more directly with customers, applying greater sensitivity to price elasticity, and emphasizing productivity so the company does not rely solely on price increases. Kapur also said new products can support value-based pricing as inflation persists.
He also discussed limited exposure to memory pricing in a single business—Honeywell’s productivity solutions segment that makes mobile computers and scanners—and said the company is working with suppliers to migrate toward more standardized memory products as part of a redesign effort.
Quantinuum progress and a nearer-term view on commercialization
Kapur said momentum at Quantinuum has been supported by recent technology progress and rising customer interest. He highlighted a hardware platform launched in November 2025 that he said delivers 48 logical qubits with 99%+ fidelity, and he projected that in about a year the company expects a quantum computer with 100 logical qubits—something he said would be more powerful than any classical computer available. He said banks and pharmaceutical companies are among the most interested end markets, citing encryption considerations and potential molecular discovery applications, while emphasizing that use cases still need to be proven.
Kapur said Honeywell’s increased customer engagement and contracting activity, even at a modest level, has increased confidence in Quantinuum’s potential to be standalone, with Honeywell control “no more necessary.” He said the business model is expected to develop over the next 12 to 36 months. Kapur also pointed to work with NVIDIA on a software environment that shares workloads between GPUs and quantum systems, framing the approach as coexistence rather than displacement.
He noted Honeywell owns 52% of Quantinuum and said an eventual exit could benefit shareholders by eliminating roughly $250 million in annual investment that currently flows through the P&L, while potentially generating cash proceeds.
In other remarks, Kapur discussed Honeywell’s preference for bolt-on M&A and increasing comfort with carve-outs, saying the company’s portfolio has shifted materially, with 15% of revenue exited and 15% added. He also addressed data center demand as largely tied to Building Automation, saying customers are seeking greater standardization and faster execution, including tools aimed at cutting commissioning time significantly. Looking ahead, Kapur cited persistent inflation, geopolitics for a global RemainCo with 60% non-U.S. revenue, and the move from rule-based automation toward autonomy as key structural forces shaping the next five years.
About Honeywell International (NASDAQ:HON)
Honeywell International Inc is a diversified, publicly traded multinational conglomerate (NASDAQ: HON) that designs and manufactures a wide range of commercial and consumer products, engineering services and aerospace systems. The company operates through major business platforms that historically include Aerospace; Building Technologies; Performance Materials and Technologies; and Safety and Productivity Solutions. Its portfolio spans avionics and propulsion systems, building controls and HVAC equipment, process technologies and advanced materials, industrial automation software, and personal protective equipment and scanning solutions.
Honeywell’s aerospace business supplies aircraft manufacturers and operators with engines and auxiliary power units, avionics, flight safety systems and aftermarket services.
