Honeywell Q3 Earnings: Revenue And Profit Growth, Adjusts Annual Outlook Factoring Acquisitions

Honeywell International Inc. HON shares are trading lower after the company reported third-quarter results and updated FY24 guidance.

Revenue grew 6% year-over-year (organic: +3%) to $9.728 billion, missing the consensus of $9.901 billion.

The sales increase was attributed to strong growth in defense and space, commercial aviation, and building solutions.

Adjusted EPS was $2.58 (+8% Y/Y), beating the consensus of $2.50.

Sales by Segments: Aerospace Technologies $3.912 billion (+12% Y/Y), Industrial Automation $2.50 billion (-5% Y/Y), Building Automation $1.75 billion (+14% Y/Y) and Energy and Sustainability Solutions $1.56 billion (+1% Y/Y).

Operating margin contracted by 180 bps Y/Y to 19.1%, and Segment margin remained flat Y/Y at 23.6% in the quarter.

Operating cash flow stood at $2.00 billion and, free cash flow was $1.72 billion. Honeywell held cash and equivalents of about $10.6 billion as of September 30, 2024.

The company deployed $3.1 billion to M&A, dividends, and capital expenditure.

FY24 Outlook: The company lowered sales guidance to $38.6 billion – $38.8 billion (from $39.1 billion – $39.7 billion prior) versus the consensus of $39.20 billion.

Honeywell tightened adjusted EPS guidance to $10.15 – $10.25 (from $10.05 – $10.25) versus the estimate of $10.13.

Also, Honeywell revised the outlook for segment margin to 23.4% – 23.5% (from 23.3% – 23.5% prior), with segment margin contraction of 10 bps to flat.

The company now expects an operating cash flow of $6.2 billion – $6.5 billion and a free cash flow of $5.1 billion – $5.4 billion.

Honeywell chairman and CEO Vimal Kapur said, “Our Accelerator operating system and culture of execution enabled us to grow segment profit by 6% in spite of transitory sales headwinds. We continue to see healthy order rates and sequential growth in our backlog, even excluding the impact of acquisitions closed in the quarter, giving us confidence in our ability to achieve our long-term targets.”

“We have made significant progress this year on the simplification and optimization of the Honeywell portfolio with the announcement of our plans to spin off Advanced Materials and exit our PPE business, as well as the closing of four strategic acquisitions.”

Investors can gain exposure to the stock via Themes Transatlantic Defense ETF NATO and Invesco Aerospace & Defense ETF PPA.

Price Action: HON shares are down 1.98% at $215.99 premarket at the last check Thursday.

Photo via Shutterstock

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