Honeywell Aerospace Advances Drive Solid Q1 Results, Exceed Expectations

Honeywell International Inc HON reported first-quarter fiscal 2024 sales of $9.105 billion.

That’s up 3% year-over-year on a reported basis and and increase of 3% on an organic basis, beating the consensus of $9.03 billion.

The sales increase was attributed to solid growth in Aerospace Technologies and Energy and Sustainability Solutions.

Adjusted EPS was $2.25 (+9% Y/Y), beating the consensus of $2.17.

Sales by Segments:

• Aerospace Technologies$3.67 billion (+18% Y/Y)
• Industrial Automation $2.48 billion (-12% Y/Y)
• Building Automation $1.43 billion (-4% Y/Y)
• And Energy and Sustainability Solutions $1.53 billion (+4% Y/Y).

Related: Honeywell Likely To Report Higher Q1 Earnings; Here Are The Recent Forecast Changes From Wall Street’s Most Accurate Analysts

Operating margin expanded by 130 bps to 20.4%. Segment margin expanded by 20 bps to 22.2%, driven by expansion in Aerospace Technologies.

Net cash provided by operating activities for the quarter was $448 million compared to cash used of $million a year ago. Free cash flow was $215 million versus cash outflow of $977 million YoY. (+22% Y/Y).

As long-cycle customer demand remained strong, Honeywell’s robust backlog increased 6% year over year. It was up sequentially, ending the quarter at a record level of $32 billion, Honeywell CEO Vimal Kapur said.

“We also experienced pockets of recovery in short cycle, and expect broader participation as the year unfolds and channels normalize further,” Kapur said.

Honeywell held cash and equivalents of about $11.756 billion as of March 31, 2023. The company deployed $1.6 billion of capital to share repurchases, dividends, and capital expenditures.

During the quarter, Honeywell announced its intention to acquire Civitanavi Systems. The deal would further strengthen its navigation offerings in Aerospace and expand its footprint in Europe.

Q2 Outlook: Honeywell expects sales of $9.2 billion-$9.5 billion versus the consensus of $9.38 billion, Adjusted EPS of $2.25 – $2.35 versus the consensus of $2.35, and segment margin of 22% – 22.4%.

2024 Outlook: Honeywell expects sales of $38.1 billion-$38.9 billion versus the consensus of $38.84 billion, with organic sales growth from 4% to 6%.

Honeywell expects Segment margin in the range of 23% to 23.3%, with segment margin expansion of 30 to 60 basis points.

Honeywell sees an adjusted EPS of $9.80-$10.10 versus a consensus of $9.95; anticipates operating cash flow of $6.7 billion-$7.1 billion and free cash flow of $5.6 billion-$6 billion.

Price Action: Honeywell shares are trading higher by 1.13% at $197 premarket at the last check Thursday.

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