Honeywell Gains After Solid Q1 Results And Raised FY23 Guidance

Honeywell International Inc HON reported first-quarter FY23 sales of $8.86 billion, up 6% Y/Y on a reported basis and 8% on an organic basis, beating the consensus of $8.52 billion.
Adjusted EPS was $2.07 (+8% Y/Y), beating the consensus of $1.93.
Sales by Segments: Aerospace $3.11 billion (+13% Y/Y), Honeywell Building Technologies $1.49 billion (+4% Y/Y), Performance Materials and Technologies $2.75 billion (+12% Y/Y) and Safety and Productivity Solutions $1.52 billion (-13% Y/Y).
Operating margin expanded by 390 bps to 19.1%, and segment margin expanded by 90 bps to 22%, reflecting continued solid expansion in Safety and Productivity Solutions and Honeywell Building Technologies.
Operating cash flow was negative $(784) million, compared to $36 million in 1Q22, and free cash flow was negative $(977) million.
Excluding the net impact of settlements signed in 4Q22, HON generated $295 million of free cash flow in Q1.
Backlog increased to $30.3 billion, up 6% Y/Y, with particular strength in the aerospace business.
HON held cash and cash equivalents of over $7 billion as of March 31, 2023.
"Our businesses are poised for sustained growth, our backlog will support our projections, and our technologically differentiated portfolio of solutions is allowing us to address the world's toughest automation, digitalization, and sustainability challenges," commented Darius Adamczyk, chairman, and chief executive officer of Honeywell.
Recently, Honeywell agreed to acquire Compressor Controls Corporation (CCC) from INDICOR, LLC for $670 million, representing ~15x 2023E EBITDA on a tax-adjusted basis in an all-cash transaction.
CCC is a turbomachinery control and optimization solutions provider and will be integrated into Honeywell's Process Solutions business.
Dividend: Honeywell's quarterly dividend payment of $1.03 per share is payable on June 2, 2023, to holders of record on May 12, 2023.
FY23 Outlook, raised: Honeywell expects sales of $36.5 billion-$37.3 billion, up from prior guidance of $36 billion-$37 billion versus the consensus of $36.75 billion.
The company expects adjusted EPS of $9.00-$9.25, compared to the previous range of $8.80-$9.20.
Adjusted EPS excluding Pension Headwind is expected to be $9.55 - $9.80, up from prior guidance of $9.35 - $9.75.
HON reaffirms guidance for Operating cash flows at $4.9 billion-$5.3 billion and Free Cash Flow at $3.9 billion-$4.3 billion.
Price Action: HON shares are trading higher by 2.5% at $195.77 on the last check Thursday.

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