By Allison Lampert and Aatreyee Dasgupta
Oct 28 (Reuters) – Honeywell Aerospace on Wednesday raised the lower end of its free cash flow forecast for the back half of 2026 and beat estimates for third-quarter profit and revenue, but the company largely expects to benefit only next year from efforts to improve its supply chain.
The aircraft engines, parts and defense systems manufacturer is growing capacity with a new factory, reducing dependence on sole source suppliers and is looking to pursue small acquisitions that could quickly bolster supply chain resilience.
Planemakers ramping up jet production require more parts from an often struggling supply chain, even as airlines face pressure from high fuel prices.
Honeywell Aerospace, which debuted on the Nasdaq in June after spinning off from Honeywell in a three-way split, has seen customer demand growth continue to outpace the capabilities of its supply base. Company shares dipped 4% on Wednesday in aftermarket trade.
“To deliver above market growth going forward we need our supply and manufacturing base to catch up,” CEO Jim Currier told analysts.
In August, the newly spun-off company lowered its 2026 sales growth forecast and issued a weaker-than-expected earnings outlook as persistent supply-chain hurdles crimped its ability to meet surging aftermarket demand.
While Honeywell Aerospace’s more than 3,000 suppliers are mostly delivering to plan, about 70 constrained suppliers “have not been consistently meeting our needs,” Currier said.
The Arizona-based company expects free cash flow of $1.2 billion to $1.4 billion in the second half of 2026, compared with its previous forecast of $1 billion to $1.4 billion. Free cash flow is closely watched by investors.
Honeywell Aerospace also announced the expansion of its manufacturing facilities with a new $500 million, 300,000-square-foot Arizona facility, to meet growing demand. The facility is set to open in late 2028.
The company expects pro forma standalone adjusted earnings per share for full-year 2026 to grow to $7.85 to $8.00 a share, from an earlier forecast of $7.60 to $7.90 a share.
It reiterated its earlier organic sales growth guidance of 4% to 5% for 2026.
For the third quarter, Honeywell Aero reported $500 million in free cash flow compared with analysts’ estimates of nearly $428 million, according to data compiled by LSEG.
For the quarter ended September 26, adjusted profit came in at $2.21 per share compared with estimates of $1.86 per share.
Quarterly sales rose 2% to $4.64 billion, ahead of estimates of $4.57 billion.
(Reporting by Allison Lampert in Montreal and Aatreyee Dasgupta in Bengaluru; Editing by Shailesh Kuber and Stephen Coates)
Comments