Honeywell Beats On Q2 Earnings, Thanks To Aerospace Strength; Lowers FY24 EPS Outlook

Honeywell International Inc. HON shares are trading lower after the company reported second-quarter results and lowered FY24 EPS guidance.

Revenue grew 5% Y/Y (organic: +4% Y/Y) to $9.58 billion, beating the consensus of $9.41 billion.

The sales increase was attributed to double-digit organic sales growth in defense and space, commercial aviation, and building solutions.

Adjusted EPS was $2.49 (+8% Y/Y), beating the consensus of $2.42.

Sales by Segments: Aerospace Technologies $3.89 billion (+16% Y/Y), Industrial Automation $2.51 billion (-8% Y/Y), Building Automation $1.57 billion (+4% Y/Y) and Energy and Sustainability Solutions $1.60 billion (+2% Y/Y).

Operating margin expanded by 10 bps Y/Y to 20.7%, and Segment margin contracted by 10 bps Y/Y to 23.0% in the quarter.

Operating cash flow stood at $1.4 billion and free cash flow was $1.1 billion.

Also Read: Honeywell Gears Up United Airlines’ New 737 MAX with Cutting-Edge Avionics: Details

Honeywell chairman and CEO Vimal Kapur said, “While Aerospace continues to lead our growth, we are seeing broader participation across our portfolio, with three of our four segments contributing positive growth for the quarter. All four segments grew sequentially in the quarter as well, giving us further confidence in our expectation of a second half organic growth acceleration.”

“We also recently announced two additional deals – the $1.9 billion acquisition of CAES Systems and the $1.8 billion acquisition of Air Products’ LNG process technology and equipment business.”

Related: Honeywell Swoops In To Acquire CAES For $1.9B, Boosts Defense Business

“We continue to make significant progress on my key priorities for Honeywell as we accelerate our alignment to three powerful megatrends – automation, the future of aviation, and energy transition, all underpinned by digitalization.”

Honeywell held cash and equivalents of about $9.8 billion as of June-end.

The company deployed $6.4 billion of capital to share repurchases, dividends, and capital expenditures.

FY24 Outlook: The company raised sales growth to $39.10 billion-$39.70 billion (from $38.5 billion – $39.3 billion) versus the consensus of $38.76 billion.

Honeywell lowered adjusted EPS guidance to $10.05-$10.25 (from $10.15-10.45) versus the estimate of $10.25.

Also, Honeywell reduced the outlook for segment margin to 23.3%-23.5% (from 23.8%-24.1%), with segment margin contraction of 20 bps- flat.

The company now expects an operating cash flow of $6.6 billion- $7.0 billion and a free cash flow of $5.5 billion – $5.9 billion.

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 down 4.52% at $204.00 premarket at the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock