Honeywell to sell Warehouse and Workflow Solutions to private equity firm
Honeywell announced an agreement to sell its Warehouse and Workflow Solutions (WWS) business in an all-cash transaction to American Industrial Partners, an operationally focused private equity firm.
This transaction and the previously announced sale of Productivity Solutions and Services (PSS) are both expected to close in the second half of 2026. The company also updated the expected timing for the spin-off of Honeywell Aerospace to June 29, subject to final approval by Honeywell's board of directors and other customary conditions.
The company reported that its first-quarter and organic sales grew 2% driven primarily by pricing actions and new product introductions. Orders grew 7% organically fueled by strong demand in Building and Industrial Automation. As a result, backlog was up 2% sequentially to $38.3 billion.
Operating income decreased 14% and segment profit increased 6% to $2.1 billion with growth in all four segments. Operating margin contracted 320 basis points to 16.1% due to an impairment charge related to the PSS and WWS assets held for sale, and higher repositioning and divestiture-related costs. Excluding these and other items, segment margin expanded 90 basis points to 23.3%, driven by higher pricing and earlier-than-anticipated removal of stranded costs related to the planned spin-off of Honeywell Aerospace, which more than offset higher cost inflation.
Aerospace Technologies sales for the first quarter grew 3% organically year over year. Orders increased 6% compared to the previous year, with a book-to-bill of 1.1x, reflecting the continued elevated demand environment. Electronic solutions delivered strong double-digit growth in the quarter as shipment volumes better aligned to customer build schedules. Temporary mechanical supply chain disruptions pressured output growth across the segment, limiting sales growth in engines and power systems and control systems. Defense and space sales grew 4% driven by expanding global demand amid escalating geopolitical conflict. Commercial original equipment increased 3% as customer order patterns aligned to build schedules. Commercial aftermarket sales grew 3% with ongoing demand strength across the installed base. Segment margin expanded 20 basis points from the prior year to 26.5% as commercial excellence, productivity, and favorable mix were partially offset by cost inflation.
Building Automation sales grew 8% organically year over year. By business model, building solutions grew 8% driven by strength in services, and building products grew 8% highlighted by double-digit growth in the fire business, particularly in North America. Orders increased 9% led by growth in data center and hospitality verticals. Segment margin expanded 40 basis points to 26.4%, supported by commercial excellence and volume leverage, partially offset by cost inflation.
Process Automation and Technology sales decreased 6% organically year over year, driven by declines in aftermarket, which was down 10% due to delays in refining catalyst shipments and automation service upgrades. Projects sales were flat organically, as double-digit growth in LNG was offset by delays in process automation. PA&T saw an overall slowdown in activity in the Middle East stemming from the conflict which caused a transitory impact on revenue in the quarter. Despite this, orders were up 3% driven by double-digit growth in process technology. Segment margin expanded 200 basis points to 23.7%, driven primarily by productivity actions, partially offset by cost inflation.
Industrial Automation sales grew 1% year over year on an organic basis. Solutions grew 7% driven by project timing and aftermarket demand in warehouse and workflow solutions and strong services demand in measurement. Products declined 1% driven by productivity solutions and services, partially offset by continued momentum in sensing. Segment margin expanded 260 basis points year over year to 17.0% driven by commercial excellence and productivity actions, partially offset by cost inflation.
The company is maintaining its full-year outlook after a strong first quarter despite the uncertainty stemming from the Middle East conflict. Honeywell expects full-year sales of $38.8 billion to $39.8 billion with organic sales growth of 3% to 6%; segment margin in the range of 22.7% to 23.1%, with segment margin expansion of 20 to 60 basis points year over year; and adjusted earnings per share in the range of $10.35 to $10.65, up 6% to 9%. Operating cash flow is now expected to be in the range of $4.4 billion to $4.7 billion, while free cash flow expectations are unchanged at $5.3 billion to $5.6 billion.
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