Honeywell Aerospace sinks 10% as supply chain woes slash 2026 outlook

Honeywell Aerospace shares fell 10.43% in after-hours trading to $182.40 after the company cut its 2026 guidance on supply chain constraints.

"For the second half of 2026, we believe it is prudent to align our guidance to our supply chain's demonstrated capabilities at the end of the second quarter," Jim Currier, CEO of Honeywell Aerospace, said.

The company, spun off from Honeywell in June, reported second-quarter revenue of $4.52 billion, up 5% year-over-year, and adjusted earnings of $1.87, down 32% from $2.75 a year earlier. Honeywell Aerospace cut its organic revenue growth forecast to 4%-5% from 7%-9% and lowered pro-forma standalone adjusted EBITDA guidance to $4.35 billion-$4.45 billion from $4.65 billion-$4.75 billion.

Full-year adjusted EPS is now expected at $7.60-$7.90, below the $8.86 consensus tracked by LSEG. The Engines and Power Systems division reduced adjusted EBIT by $82 million, while backlog rose 9% to $18.15 billion.

On the earnings call, Currier acknowledged the company's supply base has not ramped as expected. "I underestimated how long it would take to implement and see traction from the corrective measures we had taken," he said. The CFO confirmed that critical and constrained suppliers represent roughly 2% of the supplier base, yet their inability to scale is creating disproportionate bottlenecks across all end markets.

Management said it is prioritizing commercial OEM deliveries to Boeing and Airbus, which shifts volume away from higher-margin aftermarket spares and services. The CFO clarified that Middle East conflict and higher fuel prices did not have a material impact on aftermarket demand in the quarter, keeping the focus on internal supply chain mechanics.

The company said it is taking "strategic and tactical actions" to position for accelerating growth, including its record commercial agreement with IndiGo announced in July covering avionics, auxiliary power units and aftermarket services for 810 Airbus A320neo-family aircraft. The stock had traded at $206.05 on Monday, down 2.63%, before the earnings release.

The guidance cut shows supply chain inefficiencies are imposing structural costs that may not resolve quickly. The company reaffirmed its commitment to the 2030 targets laid out at Investor Day in June, but investors will watch the next earnings report for updated segment margins and supply chain progress.

This article is for informational purposes only and does not constitute investment advice.