Honeywell reported strong first-quarter 2026 results driven by continued momentum in its building automation segment, even as geopolitical tensions in the Middle East weighed on other parts of its business.
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The company posted total sales of $9.1 billion for the quarter, reflecting a 2% year-over-year increase. However, its building automation division significantly outperformed, recording an 8% increase in sales to $1.88 billion, fueled by robust demand from data center and healthcare markets.
“Building automation surpassed our expectations,” CFO Mike Stepniak said during the company’s April 23 earnings call.
According to CEO Vimal Kapur, the building automation segment has now delivered strong performance for five to six consecutive quarters, emerging as a key growth engine for the company.
One major driver is the rapid expansion of data centers, particularly as operators adopt more advanced cooling technologies. Kapur highlighted the shift toward liquid cooling systems, which require more sophisticated controls compared to traditional air-based HVAC systems.
“If the liquid cooling trend is true, it requires more sophisticated controls compared to traditional HVAC air-based control,” Kapur said. “That is where Honeywell International Inc. technology is going to be very relevant.”
Another growth factor is the increasing adoption of “bring-your-own-power” strategies, where local governments require data centers to generate their own energy rather than rely on public grids. This trend aligns with Honeywell’s expertise in power automation systems.
“We have seen a trend where behind-the-meter power capacity is being set up, and our traditional automation capability is very unique in that space,” Kapur said.
The company is also seeing strong traction among mid-sized, or “tier-two,” data center operators, which are becoming more prominent globally.
“We have done a great job moving into tier-two data center providers,” Kapur said. “There is a lot of conversation around hyperscalers, but increasingly tier-two providers are becoming very relevant.”
Despite the positive performance in building automation, Honeywell reported that geopolitical instability impacted other segments of its business. The company estimated a 0.5% revenue hit in the first quarter due to the Middle East conflict, primarily affecting its process automation and technology divisions.
“We hope for a fast resolution to the conflict,” Kapur said. “Our guidance assumes the conflict persists through the end of the quarter and the resulting logistics and shipment delays cause a roughly 1% impact to revenue.”
Looking ahead, Honeywell expects to offset some of those impacts through increased demand for rebuilding and repair efforts in affected regions.
The company also continues to streamline its operations through a multiyear restructuring strategy. Honeywell announced plans to sell its warehouse and workflow solutions business to American Industrial Partners, along with its productivity solutions and services unit to Brady Corp., in efforts to sharpen its focus on core automation businesses.
“The sales allow us to further simplify our portfolio,” Kapur said.
Honeywell reaffirmed its full-year outlook, projecting total sales of $39.8 billion and growth between 3% and 6%. The company expects stronger performance in the second half of the year as market conditions stabilize and delayed demand returns.
Originally reported by Robert Freedman, Lead Editor in Facilities Dive.
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