Honeywell Aerospace (NASDAQ:HONA) reported strong third-quarter 2026 earnings, exceeding management expectations as the company completed its first quarter of independent operations. Net sales reached $4.6 billion, reflecting a 2% organic growth driven by increased commercial air transport build rates and higher selectable equipment volumes. Adjusted EBIT stood at $1.2 billion, up 1% year-over-year, while non-GAAP EPS was $2.21, surpassing initial projections.
The company generated $500 million in free cash flow and maintained a robust backlog of $19.3 billion, up 12% year-over-year, fueled by strong defense and commercial aftermarket orders. The book-to-bill ratio for the quarter was 1.3, indicating sustained customer demand outpacing current manufacturing capacity. Commercial original equipment sales grew 8% organically, while defense and space sales saw a 1% increase, offset by a decline in international volumes.
Honeywell announced a $500 million expansion of its Tempe, Arizona manufacturing facility, set to open in late 2028, focusing on control systems for next-generation aircraft. CEO Jim Currier highlighted a significant win with the U.S. Air Force selecting the SkyShot 1600 engine for its autonomous collaborative platform program. The company also initiated its first regular capital return program, declaring a quarterly dividend of $0.40 per share.
Despite these positives, challenges included supply shortages impacting adjusted EBIT margins and the deferral of international defense sales due to prioritizing domestic demand. CFO Josh Jepsen noted that bearings remain the most constrained commodity group, and the wind-down of a non-aerospace restricted program created a 2 percentage point headwind for the Defense & Space segment.