HON · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

HONEYWELL INTERNATIONAL INC · 2026-10-22 · Importance 42 · Surprise 40

Third-quarter 2026 gross margin increased approximately $200 million year over year. Third-quarter gross margin percentage expanded 440 basis points to 40.4% from 36.0%. Nine-month gross margin increased approximately $200 million, while gross margin percentage improved 60 basis points to 39.9% from 39.3%. Year-to-date direct and indirect material costs and labor costs increased approximately $300 million, or 3%, and acquisition-related costs increased approximately $300 million, or 3%, partly offset by approximately $500 million, or 6%, of lower divestiture-related costs.

Key facts

• Q3 2026 gross margin increased by approximately $0.2 billion and gross margin percentage increased 440 basis points to 40.4% compared to 36.0% in Q3 2025. source
• Year-to-date 2026 gross margin increased by approximately $0.2 billion and gross margin percentage increased 60 basis points to 39.9% compared to 39.3% for the same period of 2025. source
• Year-to-date 2026 cost of products and services sold increased due to higher material and labor costs of approximately $0.3 billion or 3% and incremental costs from recent acquisitions of approximately $0.3 billion or 3%, largely offset by lower costs from divestitures of approximately $0.5 billion or 6%. source
• Cost of products and services sold for Q3 2026 decreased due to lower costs from recent divestitures. source