Why Honeywell Shares Are Sliding Today

Honeywell International Inc HON reported second-quarter FY23 sales of $9.15 billion, up 2% Y/Y on a reported basis and +3% on an organic basis, missing the consensus of $9.17 billion.

Adjusted EPS was $2.23 (+6% Y/Y), beating the consensus of $2.21.

Sales by Segments: Aerospace $3.34 billion (+15% Y/Y), Honeywell Building Technologies $1.51 billion (-1% Y/Y), Performance Materials and Technologies $2.86 billion (+6% Y/Y) and Safety and Productivity Solutions $1.43 billion (-22% Y/Y).

Operating margin expanded by 270 bps to 20.6%, and segment margin expanded by 150 bps to 22.4%, reflecting continued solid expansion in Safety and Productivity Solutions, Honeywell Building Technologies, and Aerospace.

Related: Honeywell Likely To Report Higher Q2 Earnings; Here's A Look At Recent Price Target Changes By The Most Accurate Analysts

Net cash provided by operating activities for the quarter was $1.36 billion (+72% Y/Y), and Free cash flow was $1.13 billion (+34% Y/Y).

The backlog increased to $30.5 billion, up 4% Y/Y. HON held cash and equivalents of over $8.7 billion as of June 30, 2023.

"Honeywell's Accelerator operating system continues to drive outstanding results and maximize shareowner value as we navigate a challenging macro environment. This operating system, along with continued growth in our key end markets and our technologically differentiated portfolio of solutions, is enabling us to raise our full-year 2023 guidance."

FY23 Outlook: Honeywell expects sales of $36.7 billion - $37.3 billion, up from prior guidance of $36.5 billion-$37.3 billion, versus the consensus of $37 billion.

The company expects adjusted EPS of $9.05 - $9.25, compared to the previous range of $9.00-$9.25, versus the consensus of $9.17.

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 lower by 1.20% at $205.77 premarket on Thursday.