Honeywell Aerospace Faces Supply Chain Constraints Despite Strong Order Growth
Honeywell Aerospace (HONA) is experiencing supply chain bottlenecks that are limiting its ability to meet rising demand. While orders have increased by 8% over the past year and the book-to-bill ratio stands at 1.1, output growth has only reached 3-4%, driven primarily by constraints in castings, forgings, complex machining, and bearings. The CEO acknowledged that a small percentage of suppliers are causing significant delays, with one supplier's $15 million backlog affecting hundreds of millions in revenue. As parts remain scarce, the company is prioritizing original-equipment customers and domestic defense over higher-margin commercial aftermarket and international defense segments. This shift has led to downward revisions in 2026 EBIT guidance by around $300 million at the midpoint. The supply chain issues have also sparked investigations from shareholder-rights law firms, though no specific timelines for resolution are provided. Despite these challenges, HONA's stock remains near its low end of implied volatility and has declined significantly since peaking post-spin.
Topics: aerospace backlog manufacturing suppliers