Honeywell Q4 Earnings: Revenue And EPS Beat, Pursues Planned Split Into 3 Public Companies By 2026

Honeywell International Inc. HON shares are trading lower after the company reported fourth-quarter results and disclosed the separation of the Automation and Aerospace business.

Revenue grew 7% year-over-year (Y/Y, organic: +2% Y/Y) to $10.09 billion, beating the consensus of $9.83 billion.

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

Sales by Segments: Aerospace Technologies $3.99 billion (+9% Y/Y), Industrial Automation $2.57 billion (-1% Y/Y), Building Automation $1.80 billion (+20% Y/Y) and Energy and Sustainability Solutions $1.73 billion (+4% Y/Y).

Operating margin expanded by 50 bps Y/Y to 17.3%, and Segment margin contracted by 350bps Y/Y at 20.9% in the quarter.

Adjusted EPS was $2.47 (-8% Y/Y), beating the consensus of $2.32.

Operating cash flow stood at $2.28 billion and, free cash flow was $1.89 billion. Honeywell held cash and equivalents of about $10.9 billion as of December 31, 2024.

The company deployed $14.6 billion of capital in 2024, including acquisitions worth $8.9 billion.

FY25 Outlook: The company expects sales guidance of $39.6 billion – $40.6 billion vs. consensus of $38.3 billion, with organic sales growth of 2% – 5%.

Honeywell targets adjusted EPS of $10.10 – $10.50 vs. consensus of $9.78.

Excluding the impact of the Bombardier agreement, the company projects organic sales growth of 1% – 4%, segment margin down 10 to up 30 basis points Y/Y, and adjusted EPS down 2% to up 2% Y/Y.

The company anticipates operating cash flow of $6.7 billion – $7.1 billion, with free cash flow of $5.4 billion – $5.8 billion.

Honeywell chairman and CEO Vimal Kapur said, “In 2024, we also made significant progress optimizing Honeywell’s portfolio. We completed four strategic bolt-on acquisitions representing $9 billion in capital deployed and announced two key divestitures in alignment with our portfolio simplification strategy, including the planned spin of our Advanced Materials business.”

Business Split: Honeywell disclosed that its Board of Directors planned the separation of Automation and Aerospace businesses.

Along with the previously planned spin-off of Advanced Materials, this move will create three publicly traded companies – Honeywell Automation, Honeywell Aerospace and Advanced Materials.

The separation is expected to be completed in the second half of 2026 and structured to be tax-free for Honeywell shareholders.

Honeywell is on track to surpass its commitment of deploying at least $25 billion toward high-return capital expenditures, dividends, share repurchases, and accretive acquisitions by 2025.

Investors can gain exposure to the stock via Gabelli Commercial Aerospace and Defense ETF GCAD and Amplify CWP Enhanced Dividend Income ETF DIVO.

Price Action: HON shares are down 2.41% at $217.00 premarket at the last check Thursday.

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