Honeywell Q3 2025: Aerospace Drives Growth, One-Time Gain Boosts Profit

Industrial giant Honeywell International Inc. (HON) just released its third-quarter financial results for 2025, revealing solid top-line growth driven by its aerospace division and strategic acquisitions. As a global player in everything from jet engines to smart building controls, Honeywell's performance is often seen as a bellwether for the broader industrial economy. Let's unpack the key details from their latest 10-Q filing to understand what's driving the company.

Revenue Growth and a Shifting Portfolio

Honeywell reported net sales of $10.4 billion for the third quarter, a healthy 7% increase from the $9.7 billion in the same period last year. This growth was a balanced mix of higher prices (3%), increased sales volume (3%), and a slight tailwind from foreign currency exchange rates (1%).

The following flow diagram breaks down how Honeywell generated its revenue and where the money went during the third quarter ending September 30, 2025.

The diagram shows an "Unallocated" cost of revenue. These are costs of goods and services sold that are not directly assigned to a specific business segment at the corporate level.

A look at the company's four business segments shows where the real action is:

• Aerospace Technologies: The star performer this quarter, with sales soaring 15% to $4.5 billion. This growth was driven by a 12% jump in organic sales (which excludes the effects of acquisitions and currency fluctuations) and contributions from recent acquisitions.
• Building Automation: This segment, which provides products and solutions for smart buildings, posted a solid 8% sales increase to $1.9 billion, fueled by strong demand.
• Energy and Sustainability Solutions: Sales grew 11% to $1.7 billion. However, this figure is a bit deceiving. The growth was entirely due to recent acquisitions; on an organic basis, sales actually declined by 2%.
• Industrial Automation: At first glance, this segment appears to be struggling, with sales dropping 9% to $2.3 billion. The primary reason, however, was the sale of its Personal Protective Equipment (PPE) business earlier in the year. Organically, the segment's sales were actually up 1%.

This segment performance highlights Honeywell's active portfolio management—using acquisitions to bolster growth in key areas like energy and divesting businesses that no longer fit its core strategy.

The Bottom Line: Profit Boosted by One-Time Events

While revenue grew, Honeywell’s profitability faced some headwinds. The company's gross margin percentage fell to 34.1% from 38.5% last year, pressured by costs from recent acquisitions, adjustments for future environmental liabilities, and higher material and labor costs.

However, the reported net income saw a substantial boost, rising to $1.8 billion from $1.4 billion a year ago. This translates to a diluted earnings per share (EPS) of $2.86, up from $2.16. What drove this impressive jump? A massive one-time gain.

Honeywell recognized an $802 million pre-tax gain from terminating an indemnification agreement with Resideo, a company it spun off in 2018. This single event added approximately $1.23 to its quarterly EPS, more than explaining the entire year-over-year increase. This gain was partially offset by about $234 million in costs related to divestitures and a $219 million charge for environmental liabilities.

Looking Ahead

Honeywell's Q3 results paint a picture of a company in transition. The core business, particularly Aerospace, is performing well, and strategic acquisitions are reshaping its growth profile. However, the significant one-time gain from the Resideo agreement masks some underlying margin pressure that investors will be watching closely. Furthermore, the company announced it is exploring strategic alternatives for two other businesses within its Industrial Automation segment, signaling that more portfolio changes may be on the way as Honeywell continues to hone its focus on its most promising markets.