Honeywell Aerospace shares tumbled 11% on Wednesday evening after the company reported weak quarterly results and cut its full-year outlook due to supply chain stumbles. It’s a rough look for the newly public maker of cockpit systems and other aircraft parts, which split from Honeywell Technologies in late June. Revenue in the second quarter ended June 27 rose 5.4% year over year to $4.52 billion, missing the LSEG-compiled consensus estimate of $4.6 billion. Adjusted earnings per share (EPS) fell 32% from the year-ago period to $1.87, below the LSEG estimate of $2.11. The decline in extended trading Wednesday, on top of a 6% sell-off in shares during the regular session, is bringing shares down to $182, which would be a new low as a standalone company. Bottom line We expected some noise in the company’s first report post-separation, but this was flat-out ugly. Honeywell Aerospace is experiencing strong demand, evidenced by its 8% order growth year over year, and $15 billion worth of new wins — as measured by lifetime value — year to date. Honeywell Aerospace makes cockpit and power systems, engines for business jets and other components like sensors. However, issues within its supply chain are hurting output and preventing the firm from meeting all its orders. As a result, the company slashed its full-year guidance for organic growth and operating profit, and offered a weak initial 2026 earnings forecast. “After a few years of double-digit output growth, we faced supply chain constraints in the first quarter that resulted in factory volume growth below expectations,” CEO Jim Currier said in the earnings call. “At the time, we guided you to expect a steady ramp in our output through the first half, accelerating into the back half. While we are seeing progress, the ramp has not come through at the pace we had initially laid out. Frankly, I underestimated how long it would take to implement and see traction from the corrective measures we had taken and are taking.” Cutting your outlook is never something you want to do in your first earnings call as a CEO of a public company, but we do have some appreciation for management’s willingness to take its medicine and completely reset expectations to a level where a miss is much less likely in the future. One can never be so sure, but management explained on the call that its outlook for the remainder of the year implies similar year-over-year output growth levels to those delivered in the first half. “While we have confidence in all the actions we’re taking to accelerate output near term, we believe it is prudent to set short-term financial guidance that is achievable without dramatic improvement in supply chain performance,” added CFO Josh Kepsen. Where do we go from here? Frankly, we are shocked and humbled by what just happened. Honeywell Aerospace was supposed to get cleaner post-separation from the cyclical Honeywell Technologies business. We’ve already seen the Technologies story benefit from its split , but now the Aerospace story has been muddied by an outlook cut and poor execution. You could argue that this is why Aerospace needed to be separated in the first place. The supply chain wasn’t a new issue for them, although the company never made it clear it was this bad. What we learned Wednesday night is that Aerospace didn’t receive the necessary attention when it operated under the larger Honeywell conglomerate. Now as a standalone company, management can offer its full resources and scrutiny to fix this issue and prevent it from happening again. Management stressed that the poor results are entirely due to supply and not a demand issue. The company explained on the call that it has over 3,000 suppliers that support the business, and 98% are “performing exceptionally well.” It’s the remaining 2% causing the bottleneck, and management is moving with urgency to fix this issue. That will require elevated investment, which could hurt the margins for a period. But, at the same time, we are paying the price for that lack of attention, and other investors will likely put this stock in the penalty box. Management is still committed to the 2030 targets it introduced at its investor day in early June , but cutting 2026 guidance this early makes it difficult to have much confidence in achieving those long-term goals. Management credibility is a critical part of investing, and Honeywell Aerospace failed its first test. The company had multiple opportunities to signal to Wall Street that near-term expectations were too high, and executives could’ve used the investor day or the separation later in June to moderate expectations. Again, that’s what makes this slash to the guide so confusing and humbling. There are three choices we can make from this print: buy more, do nothing, or sell. First off, doing nothing is never a strategy. We’re long-term investors, not traders, but we don’t want to dig in our heels and put new money to work in a stock that could remain stuck until management’s 2027 guidance confirms the supply chain issues are behind it. That leaves sell. It’s painful to walk away from a stock at a loss we bought as recently as two Mondays ago, but the problem we can’t get past is the credibility part. The stock will be put in a penalty box for multiple quarters as management works to rebuild investor confidence. With the thesis changed, we would rather find other opportunities in the market than hold onto something that could be dead money. We are downgrading our rating to a 3. Segment commentary Sales for Electronic Solutions — which includes avionics equipment, navigation and sensor products, electromagnetic defense solutions, and space-related revenues — grew 8% year over year on a reported and organic basis, driven by strength in defense and space, as well as commercial aftermarket sales. Despite higher volumes, segment adjusted earnings before interest and taxes (EBIT) fell 3% year over year, as higher volumes and pricing were more than offset by an unfavorable mix and higher costs. EBIT is a measure of operating profitability. Sales for Engines and Power Systems — including the auxiliary power systems used to run air conditioning while the plane is on the ground — increased 1% year over year on a reported and organic basis. End markets were mixed, with growth in commercial original equipment shipments offset by lower defense and space shipments. Segment profits fell 32% year over year, mostly because higher pricing could not offset rising costs. Sales for Control Systems — including air and thermal control solutions — increased 7% year over year on a reported and organic basis, led by commercial aftermarket sales. Segment adjusted EBIT increased 8% year over year as higher pricing offset higher costs. Guidance The company shaved its full-year outlook across several key metrics. Management now anticipates organic sales growth of 4% to 5% year over year, down from its prior guidance of 7% to 9% growth. Pro-forma standalone adjusted EBIT is expected to be in the range of $4.35 billion to $4.45 billion, down from its prior range of $4.65 billion to $4.75 billion. The new range is flat to up 3% year over year, down from its prior view of 7% to 10% growth. Pro-forma standalone adjusted EPS is expected to be $7.60 to $7.90, which is well below the Street consensus of $8.90. This was the first time the company provided standalone EPS guidance for the year. (Jim Cramer’s Charitable Trust is long HONA, HON . 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