Honeywell Aerospace Drops 11% as CEO Admits Supply Missteps
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- Honeywell Aerospace shares dropped 11% in extended trading Wednesday after the company cut full-year guidance, on top of a 6% regular-session sell-off that pushed the stock to a new post-separation low of $182.
- Q2 results missed Wall Street estimates, with revenue of $4.52 billion (up 5.4% year-over-year) versus the $4.6 billion consensus and adjusted EPS of $1.87 — down 32% year-over-year and below the $2.11 estimate.
- CEO Jim Currier told the earnings call that supply chain constraints had caused factory volumes to fall below expectations, admitting he had "underestimated how long it would take to implement and see traction from the corrective measures" taken to ramp output.
- Full-year guidance was slashed across the board: organic sales growth cut to 4–5% from 7–9%, pro-forma adjusted EBIT to $4.35–$4.45 billion from $4.65–$4.75 billion, and the first standalone EPS guide of $7.60–$7.90 sits well below the Street consensus of $8.90.
- Demand remains strong, with order growth of 8% year-over-year and $15 billion in new wins measured by lifetime value year-to-date; management attributed the miss entirely to supply, saying only 2% of its roughly 3,000 suppliers are driving the bottleneck.
- Segment results were mixed: Electronic Solutions sales rose 8% on defense, space, and aftermarket strength; Engines and Power Systems sales rose only 1% with segment profits plunging 32% as higher costs overwhelmed pricing; Control Systems sales grew 7% with segment EBIT up 8%.
- The CNBC Investing Club is downgrading Honeywell Aerospace to a rating of 3 and exiting the position, citing a loss of management credibility after the company had multiple chances — at its investor day and at the separation — to reset near-term expectations before cutting them now.
Why it matters: Honeywell Aerospace's first quarterly report as a standalone public company — separated from Honeywell Technologies in late June — was supposed to clarify its investment story; instead, an 11% after-hours drop, a guidance cut, and a credibility-damaging admission from the CEO leave investors in the penalty box for multiple quarters, with corrective investment likely pressuring margins before any 2027 confirmation that supply issues are resolved.
