“Industrial automation will lead for the year driven by targeted fixed cost takeout followed by building automation as higher volumes continue to drive margin expansion.”

In context

“these transactions are complete. For the full year 2026, we anticipate sales of $38.8 to $39.8 billion, up 3% to 6% organically. We expect growth to be led by Aerospace on higher commercial demand and increased defense budgets, and building automation driven by new product innovations. This will be partially offset by a slower start to the year in process automation technology, which turns to growth in the second half driven by order visibility and significantly easier comps, and mixed regional and end market dynamics in industrial automation. Segment margins are expected to be up 20 to 60 basis points to 22.7% to 23.1% as the benefits from price execution and productivity actions more than offset cost inflation and a roughly 30 basis points headwind from increased investments in Quanti. Industrial automation will lead for the year driven by targeted fixed cost takeout followed by building automation as higher volumes continue to drive margin expansion. Aerospace margin should expand modestly as volume leverage is partially dampened by mix pressures. Finally, we expect P&T segment margins to be roughly flat year over year, with pricing and productivity offsetting material cost inflation. Expect a combination of strong top-line growth coupled with fixed cost reduction will drive adjusted earnings per share of $10.35 to $10.65, up 6% to 9%. Our guidance assumes a 1% reduction in share count stemming from share repurchases. As we have signaled, we intend to focus our cash deployment in 2026 on reducing debt ahead of the separation. Moving to cash, we expect free cash flow of $5.3 to $5.6 billion, up 4% to 10%, which represents an approximately 14% cash flow margin and 83% conversion at the high end, or 90% excluding noncash pension income.”