Honeywell Reports First Quarter Results; Updates 2025 Guidance
- Sales of $9.8 Billion, Reported Sales Up 8%, Organic1 Sales Up 4%, Exceeding High End of Previous Guidance
- Earnings Per Share of $2.22 and Adjusted Earnings Per Share1 of $2.51, Exceeding High End of Previous Guidance by 26 Cents
- Backlog Up 8% Excluding Acquisitions, Led by Strength in Building Automation and Energy and Sustainability Solutions Businesses
- Deployed $2.9 Billion of Capital to Share Repurchases, Dividends, and Capital Expenditures; Announced the $2.2 Billion Acquisition of Sundyne
- Company Maintains Full-Year Organic Growth Guidance and Raises Adjusted Earnings Per Share Guidance, Including Net Expected Impact of Tariffs, Mitigation Actions, and Global Demand Uncertainty
- Separations Proceeding as Planned; Committed to Delivering for All Stakeholders
CHARLOTTE, N.C., April 29, 2025 -- Honeywell (NASDAQ: HON) today announced results for the first quarter that exceeded the company's guidance on all metrics. The company also maintained its full-year organic growth guidance, raised its adjusted earnings per share guidance range, and reiterated its free cash flow guidance range.
The company reported first-quarter year-over-year sales growth of 8% and organic1 sales growth of 4%, led by a second consecutive quarter of double-digit organic sales growth in both defense and space and building solutions. Operating margin contracted 30 basis points to 20.1% and segment margin1 was flat at 23.0%, exceeding previous guidance. Operating income increased 6% and segment profit1 increased 8% to $2.3 billion, driven by contribution from acquisitions and a continued focus on commercial excellence. Earnings per share for the first quarter was $2.22, flat year over year, and adjusted earnings per share1 was $2.51, up 7% year over year. Operating cash flow was $0.6 billion and free cash flow1 was $0.3 billion, up 61% year over year.
"Honeywell started the year off exceptionally well, exceeding guidance across all metrics, led by solid organic growth," said Vimal Kapur, chairman and chief executive officer of Honeywell. "For the third straight quarter, we delivered both sequential and year-over-year backlog growth, driven by healthy order rates and continuing customer demand for our differentiated offerings. Despite the volatile macroeconomic backdrop, we maintained segment margin consistent with last year, which is a testament to the value delivered by our Accelerator operating system. Though we have not yet seen it in our results, we recognize we face an uncertain global demand environment for the remainder of 2025, and our company will work tirelessly, leveraging all tools available to us, to deliver for customers and shareholders."
Kapur added, "As we look ahead to our planned spin of Advanced Materials and separation of our Automation and Aerospace businesses, we are even more confident about the significant opportunities for value creation and sustained growth as we transform into three industry-leading public companies."
As a result of the company's first-quarter performance and management's outlook for the remainder of the year, Honeywell updated its full-year sales, segment margin2, and adjusted earnings per share2,3 guidance. Full-year sales are now expected to be $39.6 billion to $40.5 billion with organic1 sales growth in the range of 2% to 5%. Segment margin2 is expected to be in the range of 23.2% to 23.5%, with segment margin2 expansion of 60 to 90 basis points year over year. Adjusted earnings per share2,3 is now expected to be in the range of $10.20 to $10.50, up 5 cents at the midpoint from the prior guidance range. Operating cash flow is still expected to be in the range of $6.7 billion to $7.1 billion. Free cash flow1 is still expected to be in the range of $5.4 billion to $5.8 billion. Excluding the impact of the Bombardier agreement signed in the fourth quarter of 2024, the company expects organic sales growth of 1% to 4%, segment margin down 10 to up 20 basis points year over year, and adjusted earnings per share down 1% to up 2% year over year. Guidance incorporates the net expected impact of current tariffs, mitigation actions, and global demand uncertainty. Guidance also assumes an early May close of the sale of the company's Personal Protective Equipment business but does not yet include the impact of the pending Sundyne acquisition. A summary of the company's full-year guidance changes can be found in Table 1.
Portfolio Transformation
In February, Honeywell announced that its Board of Directors concluded its comprehensive portfolio review and decided to pursue a separation of its Automation and Aerospace businesses. The planned separation, coupled with the previously announced plan to spin Advanced Materials, will result in three publicly-listed industry leaders and is intended to be completed in the second half of 2026. To oversee the transformation processes, this quarter Honeywell formed dedicated separation management offices to ensure that its business leaders can remain focused on managing day-to-day operations over the coming months.
During the quarter, Honeywell continued its judicious deployment of shareholder capital, highlighted by the announcement of its acquisition of Sundyne in March for $2.2 billion. Honeywell also repurchased $1.9 billion of its shares in the quarter, furthering its commitment to deploy at least $25 billion toward high-return capital expenditures, dividends, opportunistic share purchases, and accretive acquisitions through 2025.
First-Quarter Performance
Honeywell sales for the first quarter were up 8% year over year on a reported basis and 4% on an organic1 basis year over year. The first-quarter financial results can be found in Tables 2 and 3.
Aerospace Technologies sales for the first quarter increased 9% organically1 year over year, driven by continued strong performance in commercial aftermarket and defense and space. Commercial aftermarket sales grew 15%, led by increased demand in air transport and better output from supply chain improvements. Defense and space sales increased 10% on an organic basis, aided by ongoing geopolitical uncertainty. Backlog grew 9% as orders were up high-single digits in the quarter. Segment margin contracted 190 basis points to 26.3% on account of expected mix pressure and the impact of acquisitions, partially offset by productivity actions.
Industrial Automation sales declined 2% on an organic1 basis year over year in the first quarter. Warehouse and workflow solutions returned to growth in the quarter, increasing 5%. Process solutions was flat year over year, as high single-digit growth in lifecycle solutions was offset by modest declines in smart energy and thermal solutions. Productivity solutions and services declined 1% when excluding the impact of prior-year license and settlement payments, driven by demand headwinds in Europe. Sensing and safety technologies decreased 5% year over year, as weaker volumes in our personal protective equipment business more than offset continued recovery in sensing, which delivered a second consecutive quarter of sales growth and high-single-digit orders growth. Segment margin contracted 130 basis points to 17.8%, driven by receivables write-downs and volume deleverage, partially offset by productivity actions.
Building Automation sales for the first quarter increased 8% on an organic1 basis year over year. Building solutions grew 11% organically for a second consecutive quarter, led by strength in the Middle East and North America. Building products grew 6% organically, highlighted by double-digit growth in fire products and the fourth consecutive quarter of organic growth in security offerings. Orders grew both year over year and sequentially, led by double-digit growth in projects. Segment margin expanded 150 basis points to 26.0%, driven by volume leverage and productivity actions, partially offset by mix.
Energy and Sustainability Solutions sales for the first quarter declined 2% on an organic1 basis. UOP grew 2% in the quarter led by strength in both refining and petrochemicals projects and sustainability projects. Advanced materials sales declined 4% as strength in specialty chemicals and materials was offset by challenging prior year comparisons in fluorine products. However, double-digit order growth in fluorine products led to a 7% increase in advanced materials orders year over year. Segment margin expanded 230 basis points to 22.2% as a result of commercial excellence, productivity actions, and the year-over-year benefit of the margin-accretive LNG acquisition.
Conference Call Details
Honeywell will discuss its first-quarter results and full-year 2025 guidance during an investor conference call starting at 8:30 a.m. Eastern Daylight Time today. A live webcast of the investor call as well as related presentation materials will be available through the Investor Relations section of the company’s website (www.honeywell.com/investor). A replay of the webcast will be available for 30 days following the presentation.
TABLE 1: FULL-YEAR 2025 GUIDANCE2
|
Previous Guidance |
Current Guidance |
Sales |
$39.6B - $40.6B |
$39.6B - $40.5B |
Organic1 Growth |
2% - 5% |
2% - 5% |
Segment Margin |
23.2% - 23.6% |
23.2% - 23.5% |
Expansion |
Up 60 - 100 bps |
Up 60 - 90 bps |
Adjusted Earnings Per Share3 |
$10.10 - $10.50 |
$10.20 - $10.50 |
Adjusted Earnings Growth3 |
2% - 6% |
3% - 6% |
Operating Cash Flow |
$6.7B - $7.1B |
$6.7B - $7.1B |
Free Cash Flow1 |
$5.4B - $5.8B |
$5.4B - $5.8B |
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
|
1Q 2025 |
1Q 2024 |
Change |
Sales |
$9,822 |
$9,105 |
8% |
Organic1 Growth |
|
|
4% |
Operating Income |
$1,970 |
$1,860 |
6% |
Operating Income Margin |
20.1% |
20.4% |
-30 bps |
Segment Profit1 |
$2,258 |
$2,094 |
8% |
Segment Margin1 |
23.0% |
23.0% |
0 bps |
Earnings Per Share |
$2.22 |
$2.23 |
—% |
Adjusted Earnings Per Share1 |
$2.51 |
$2.34 |
7% |
Operating Cash Flow |
$597 |
$448 |
33% |
Free Cash Flow1 |
$346 |
$215 |
61% |
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
(Dollars in millions)
AEROSPACE TECHNOLOGIES |
1Q 2025 |
1Q 2024 |
Change |
Sales |
$4,172 |
$3,669 |
14% |
Organic1 Growth |
|
|
9% |
Segment Profit |
$1,099 |
$1,035 |
6% |
Segment Margin |
26.3% |
28.2% |
-190 bps |
INDUSTRIAL AUTOMATION |
|
|
|
Sales |
$2,378 |
$2,478 |
(4%) |
Organic1 Growth |
|
|
(2%) |
Segment Profit |
$424 |
$474 |
(11%) |
Segment Margin |
17.8% |
19.1% |
-130 bps |
BUILDING AUTOMATION |
|
|
|
Sales |
$1,692 |
$1,426 |
19% |
Organic1 Growth |
|
|
8% |
Segment Profit |
$440 |
$350 |
26% |
Segment Margin |
26.0% |
24.5% |
150 bps |
ENERGY AND SUSTAINABILITY SOLUTIONS |
|
|
|
Sales |
$1,561 |
$1,525 |
2% |
Organic1 Growth |
|
|
(2%) |
Segment Profit |
$346 |
$303 |
14% |
Segment Margin |
22.2% |
19.9% |
230 bps |
1. See additional information at the end of this release regarding non-GAAP financial measures.
2. Segment margin and adjusted EPS are non-GAAP financial measures. Management cannot reliably predict or estimate, without unreasonable effort, the impact and timing on future operating results arising from items excluded from segment margin or adjusted EPS. We therefore, do not present a guidance range, or a reconciliation to, the nearest GAAP financial measures of operating margin or EPS.
3. Adjusted EPS and adjusted EPS V% guidance excludes items identified in the non-GAAP reconciliation of adjusted EPS at the end of this release, and any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market.
During the third quarter of 2024, Honeywell concluded the assets and liabilities of the personal protective equipment business (part of the Sensing and Safety Technologies business unit within the Industrial Automation segment) met the held for sale criteria; therefore, Honeywell presented the associated assets and liabilities of the business as held for sale in the Consolidated Balance Sheet beginning September 30, 2024. In the first quarter of 2025, the Company recognized a $15 million increase in the valuation allowance to write down the disposal group to fair value, less costs to sell.
About Honeywell
Honeywell is an integrated operating company serving a broad range of industries and geographies around the world. Our business is aligned with three powerful megatrends - automation, the future of aviation, and energy transition - underpinned by our Honeywell Accelerator operating system and Honeywell Connected Enterprise integrated software platform. As a trusted partner, we help organizations solve the world's toughest, most complex challenges, providing actionable solutions and innovations that help make the world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.
Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media.
We describe many of the trends and other factors that drive our business and future results in this release. Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including statements related to the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, the proposed separation of Automation and Aerospace Technologies, the sale of the personal protective equipment business, and the acquisition of Sundyne. Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes, or anticipates will or may occur in the future. They are based on management’s assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors, many of which are difficult to predict and outside of our control, including Honeywell's current expectations, estimates, and projections regarding, among other things, the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, the proposed separation of Automation and Aerospace Technologies, the sale of the personal protective equipment business, and the acquisition of Sundyne. They are not guarantees of future performance, and actual results, developments, and business decisions may differ significantly from those envisaged by our forward-looking statements, including the consummation of the spin-off of the Advanced Materials business into Solstice Advanced Materials, the proposed separation of Automation and Aerospace Technologies, the sale of our personal protective equipment business, and the acquisition of Sundyne, and the anticipated benefits of each. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties, including ongoing macroeconomic and geopolitical risks, such as the impacts of tariffs and other trade barriers and restrictions, lower GDP growth or recession in the U.S. or globally, supply chain disruptions, capital markets volatility, inflation, and certain regional conflicts, which can affect our performance in both the near- and long-term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this release can or will be achieved. These forward-looking statements should be considered in light of the information included in this release, our Form 10-K, and our other filings with the Securities and Exchange Commission. Any forward-looking plans described herein are not final and may be modified or abandoned at any time.
This release contains financial measures presented on a non-GAAP basis. Honeywell’s non-GAAP financial measures used in this release are as follows:
- Segment profit, on an overall Honeywell basis;
- Segment profit margin, on an overall Honeywell basis;
- Organic sales growth;
- Free cash flow; and
- Adjusted earnings per share.
Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain measures presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Refer to the Appendix attached to this release for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.