Honeywell Takes Flight: Boosts Guidance, Closes Carrier Global Transaction

Honeywell International Inc. HON shares are trading higher after the company raised its second-quarter and FY24 guidance following the completion of the acquisition of Carrier Global Corporation‘s CARR Global Access Solutions business.

In particular, the company closed the buyout for $4.95 billion, with the deal expected to support Honeywell’s plans to align its portfolio to automation, the future of aviation, and energy transition.

Global Access Solutions’ approximately 1,200 employees are now part of Honeywell. The transaction is expected to be adjusted earnings per share accretive in the first full year of ownership.

FY24 Outlook: The company now projects sales of $38.5 billion-$39.3 billion (vs. $38.1 billion-$38.9 billion prior and a consensus of $38.45 billion) and adjusted EPS of $10.15-$10.45 (vs. consensus of $9.93 and prior outlook of $9.80-$10.10).

Also, Honeywell raised the outlook for segment margin to 23.8% to 24.1% (from 23% to 23.3%), with segment margin expansion of 30 to 60 basis points.

The company continues to expect an operating cash flow of $6.7 billion-$7.1 billion and a free cash flow of $5.6 billion-$6.0 billion.

Q2 FY24 Guidance: Honeywell increased outlook for sales to $9.3 billion to $9.6 billion (from $9.2 billion-$9.5 billion) vs. consensus of $9.34 billion and adjusted EPS to $2.35 to $2.45 (from $2.25 – $2.35) vs. the consensus of $2.32.

The company now anticipates a segment margin of 22.7% to 23.1% (vs. 22% – 22.4% earlier).

Vimal Kapur, Chief Executive Officer, said, “As the world’s security needs evolve from a focus on protecting people to protecting both people and critical assets, we see strong growth prospects for our Access Solutions acquisition.”

“By building on our strong track record of delivering high-value building automation products, solutions, and services globally, this acquisition creates an exciting opportunity for us to achieve faster growth and further margin expansion, while generating better outcomes for our Building Automation customers.”

Honeywell held cash and equivalents of about $12 billion as of March-end.

Investors can gain exposure to the stock via Gabelli Commercial Aerospace And Defense ETF GCAD and Invesco Aerospace & Defense ETF (PPA).

Price Action: HON shares are up 0.90% at $204.01 premarket at the last check Monday.

Image from Shutterstock