Honeywell(HON) - 2025 Q1 - Quarterly Report

Cautionary Statement about Forward-Looking Statements This section outlines forward-looking statements regarding proposed spin-offs, divestitures, and acquisitions, noting potential risks and uncertainties - The report contains forward-looking statements regarding proposed spin-offs (Advanced Materials into Solstice, Automation and Aerospace Technologies separation), the sale of the personal protective equipment business, and the acquisition of Sundyne[5] - These statements are based on management's assumptions but are not guarantees, and actual results may differ due to material risks and uncertainties, including macroeconomic and geopolitical risks, supply chain disruptions, capital markets volatility, and inflation[5] About Honeywell Honeywell International Inc. operates globally across diverse industries, focusing on automation, aviation, and energy transition through four key segments - Honeywell International Inc. is an integrated operating company serving diverse global industries, focusing on automation, the future of aviation, and energy transition, supported by its Honeywell Accelerator operating system and Honeywell Forge Internet of Things (IoT) platform[7] - The company's business is structured into four segments: Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions[7] PART I. FINANCIAL INFORMATION This part presents Honeywell's unaudited financial statements and management's discussion and analysis for the first quarter ITEM 1. Financial Statements and Supplementary Data (unaudited) This section presents Honeywell's unaudited consolidated financial statements for the three months ended March 31, 2025, and 2024, including statements of operations, comprehensive income, balance sheets, cash flows, and shareowners' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items Consolidated Statement of Operations (unaudited) This statement details Honeywell's revenues, expenses, and net income for the three months ended March 31, 2025, and 2024 Consolidated Statement of Operations Summary | Metric | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net Sales | 9,822 | 9,105 | | Total Cost of products and services sold | 6,037 | 5,583 | | Research and development expenses | 439 | 360 | | Selling, general and administrative expenses | 1,361 | 1,302 | | Impairment of assets held for sale | 15 | — | | Other (income) expense | (200) | (231) | | Interest and other financial charges | 286 | 220 | | Income before taxes | 1,884 | 1,871 | | Tax expense | 417 | 396 | | Net income | 1,467 | 1,475 | | Net income attributable to Honeywell | 1,449 | 1,463 | | Earnings per share of common stock—basic | 2.24 | 2.24 | | Earnings per share of common stock—assuming dilution | 2.22 | 2.23 | Consolidated Statement of Comprehensive Income (unaudited) This statement presents Honeywell's net income and other comprehensive income components for the three months ended March 31, 2025, and 2024 Consolidated Statement of Comprehensive Income Summary | Metric | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income | 1,467 | 1,475 | | Other comprehensive income (loss), net of tax | (285) | 63 | | Comprehensive income | 1,182 | 1,538 | | Comprehensive income attributable to Honeywell | 1,152 | 1,550 | Consolidated Balance Sheet (unaudited) This statement provides a snapshot of Honeywell's assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Summary | Metric | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total current assets | 27,645 | 27,908 | | Total assets | 75,218 | 75,196 | | Total current liabilities | 22,071 | 21,256 | | Long-term debt | 25,744 | 25,479 | | Total shareowners' equity | 18,024 | 19,154 | | Total liabilities, redeemable noncontrolling interest and shareowners' equity | 75,218 | 75,196 | Consolidated Statement of Cash Flows (unaudited) This statement outlines Honeywell's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Consolidated Statement of Cash Flows Summary | Metric | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | 597 | 448 | | Net cash used for investing activities | (371) | (273) | | Net cash (used for) provided by financing activities | (1,180) | 3,696 | | Net (decrease) increase in cash and cash equivalents | (910) | 3,831 | | Cash and cash equivalents at end of period | 9,657 | 11,756 | Consolidated Statement of Shareowners' Equity (unaudited) This statement details changes in Honeywell's shareowners' equity, including dividends and stock repurchases, for the three months ended March 31, 2025, and 2024 Consolidated Statement of Shareowners' Equity Summary | Metric | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total shareowners' equity (end of period) | 18,024 | 17,045 | | Cash dividends per share of common stock | 1.13 | 1.08 | | Repurchases of common stock (shares in millions) | (8.9) | (3.4) | | Repurchases of common stock (cost in millions $) | (1,902) | (671) | Note 1. Basis of Presentation This note explains the basis for preparing the unaudited interim financial statements and the fiscal calendar used - The unaudited Consolidated Financial Statements reflect all necessary adjustments for fair presentation, with interim results not necessarily indicative of the entire year[27] - Honeywell uses a predetermined fiscal calendar for quarterly closing dates, which may cause minor differences in year-over-year comparisons, but these effects are generally not significant[28] Note 2. Summary of Significant Accounting Policies This note details reclassifications, supply chain financing, and the evaluation and adoption of new accounting pronouncements - Certain prior year amounts were reclassified to conform to current year presentation, including the separate disclosure of changes in Income taxes within operating activities on the Consolidated Statement of Cash Flows[30] - Amounts outstanding related to supply chain financing programs are included in Accounts payable, totaling approximately $1,108 million as of March 31, 2025, and $1,150 million as of December 31, 2024[31] - The Company is evaluating the impact of new FASB ASUs on Income Statement Expense Disaggregation Disclosures (ASU 2024-03) and Income Taxes Disclosures (ASU 2023-09), while ASU 2023-07 on Segment Reporting was adopted for Q1 2025 interim disclosures without material impact[33][34][37] Note 3. Acquisitions, Divestitures, and Assets and Liabilities Held for Sale This note outlines recent and planned acquisitions, divestitures, and the classification of assets held for sale, including related impairment charges - Honeywell agreed to acquire Sundyne in an all-cash transaction for $2,160 million, expected to close in Q2 2025 and be included within the Energy and Sustainability Solutions segment[38] - Recent acquisitions include Air Products' LNG business ($1,837 million), CAES Systems Holdings LLC ($1,935 million), Civitanavi Systems S.p.A. ($200 million), and Carrier Global Corporation's Global Access Solutions business ($4,913 million)[39][40][43][44] - The company announced intentions to separate its Automation and Aerospace Technologies businesses into independent public companies by H2 2026 and spin off its Advanced Materials business (Solstice Advanced Materials) by end of 2025 or early 2026, both intended as tax-free separations[46][47] - The Personal Protective Equipment (PPE) business is classified as held for sale, with an agreement to sell for $1,325 million expected to close in Q2 2025. A $15 million impairment charge was recognized in Q1 2025 to write down the disposal group to fair value less costs to sell[49][50] Note 4. Revenue Recognition and Contracts with Customers This note provides a breakdown of net sales by segment and timing of recognition, along with remaining performance obligations Net Sales by Segment | Segment | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Change (%) | | :-------------------------------- | :------------------- | :------------------- | :--------- | | Aerospace Technologies | 4,172 | 3,669 | 13.7% | | Industrial Automation | 2,378 | 2,478 | (4.0)% | | Building Automation | 1,692 | 1,426 | 18.7% | | Energy and Sustainability Solutions | 1,561 | 1,525 | 2.4% | | Corporate and All Other | 19 | 7 | 171.4% | | Total Net Sales | 9,822 | 9,105 | 7.9% | - The gas detection business was realigned from Sensing and Safety Technologies to Process Solutions within Industrial Automation in April 2024, with historical periods recast to reflect this change[53] Revenue Recognition Timing | Timing of Recognition | Q1 2025 | Q1 2024 | | :-------------------------- | :------ | :------ | | Products, transferred point in time | 57 % | 58 % | | Products, transferred over time | 11 % | 11 % | | Services, transferred point in time | 5 % | 5 % | | Services, transferred over time | 27 % | 26 % | | Net sales | 100 % | 100 % | - Remaining performance obligations as of March 31, 2025, totaled $36,097 million, with 53% expected to be satisfied within one year and 47% greater than one year[68][69] Note 5. Repositioning and Other Charges This note details repositioning charges, including severance and exit costs, and other charges for the periods presented Repositioning and Other Charges Summary | Charge Type | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Total net repositioning charges | 9 | 34 | | Asbestos-related charges, net | 20 | 18 | | Probable and reasonably estimable environmental liabilities, net | 16 | 24 | | Other charges | — | 17 | | Total net repositioning and other charges | 45 | 93 | - In Q1 2025, gross repositioning charges totaled $36 million, including $24 million for severance related to 713 workforce reductions (primarily Building Automation and Industrial Automation) and $11 million for exit costs. $27 million of previously established reserves were returned to income[74] - In Q1 2024, gross repositioning charges totaled $49 million, including $33 million for severance related to 1,362 workforce reductions (primarily Industrial Automation and Building Automation) and $15 million for exit costs. $15 million of previously established reserves were returned to income[77] Note 6. Income Taxes This note explains the effective tax rate changes, primarily due to internal legal entity restructuring - The effective tax rate increased in Q1 2025 compared to Q1 2024 due to increased tax expense related to internal legal entity restructuring in advance of the anticipated sale of the PPE business[81] Note 7. Inventories This note provides a breakdown of inventory components, including raw materials, work in process, and finished products Inventories Breakdown | Inventory Type | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :----------------- | :-------------------------- | :----------------------------- | | Raw materials | 1,744 | 1,528 | | Work in process | 1,396 | 1,346 | | Finished products | 3,471 | 3,568 | | Total Inventories | 6,611 | 6,442 | Note 8. Goodwill and Other Intangible Assets—Net This note details changes in goodwill by segment and the net carrying amount of other intangible assets Goodwill by Segment | Segment | December 31, 2024 (Millions $) | Acquisitions (Millions $) | Currency Translation Adjustment (Millions $) | March 31, 2025 (Millions $) | | :-------------------------------- | :----------------------------- | :------------------------ | :--------------------------------------- | :-------------------------- | | Aerospace Technologies | 3,028 | 5 | 11 | 3,044 | | Industrial Automation | 9,164 | — | 92 | 9,256 | | Building Automation | 6,136 | — | 57 | 6,193 | | Energy and Sustainability Solutions | 2,598 | 3 | 4 | 2,605 | | Corporate and All Other | 899 | — | 24 | 923 | | Total Goodwill | 21,825 | 8 | 188 | 22,021 | Other Intangible Assets Net Carrying Amount | Intangible Type | March 31, 2025 Net Carrying Amount (Millions $) | December 31, 2024 Net Carrying Amount (Millions $) | | :-------------------------- | :------------------------------------------ | :--------------------------------------------- | | Patents and technology | 1,638 | 1,664 | | Customer relationships | 4,069 | 4,160 | | Trademarks (definite-life) | 103 | 102 | | Other (definite-life) | 288 | 291 | | Trademarks (indefinite-life) | 439 | 439 | | Total Other intangible assets—net | 6,537 | 6,656 | - Intangible assets amortization expense increased to $136 million for Q1 2025, up from $70 million in Q1 2024[84] Note 9. Debt and Credit Agreements This note outlines the company's long-term debt, short-term borrowings, and available credit facilities Debt and Credit Agreements Summary | Metric | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :----------------------------------------- | :-------------------------- | :----------------------------- | | Total Long-term debt and current related maturities | 27,076 | 26,826 | | Less: Current maturities of long-term debt | 1,332 | 1,347 | | Total Long-term debt | 25,744 | 25,479 | - Commercial paper and other short-term borrowings outstanding increased to $5.8 billion as of March 31, 2025 (weighted average interest rate 4.10%), from $4.3 billion as of December 31, 2024 (weighted average interest rate 4.22%)[89] - The Company entered into a new $3.0 billion 364-day credit agreement on March 17, 2025, replacing a $1.5 billion agreement, and maintains a $4.0 billion five-year credit agreement, with no outstanding borrowings under either as of March 31, 2025[90][91] Note 10. Leases This note presents the company's operating and finance lease liabilities Lease Liabilities | Lease Type | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :-------------------------- | :-------------------------- | :----------------------------- | | Operating lease liabilities | 1,159 | 1,126 | | Finance lease liabilities | 140 | 154 | Note 11. Derivative Instruments and Hedging Transactions This note details the notional amounts and fair values of derivative instruments used for hedging and other purposes Derivative Instruments and Hedging Transactions Summary | Metric | March 31, 2025 Notional (Millions $) | December 31, 2024 Notional (Millions $) | March 31, 2025 Fair Value Asset (Millions $) | December 31, 2024 Fair Value Asset (Millions $) | March 31, 2025 Fair Value (Liability) (Millions $) | December 31, 2024 Fair Value (Liability) (Millions $) | | :----------------------------------------- | :----------------------------------- | :-------------------------------------- | :------------------------------------------ | :--------------------------------------------- | :------------------------------------------------ | :-------------------------------------------------- | | Total derivatives designated as hedging instruments | 12,142 | 12,349 | 45 | 157 | (334) | (205) | | Total Derivative instruments | 20,596 | 21,122 | 46 | 160 | (340) | (210) | - The carrying value of debt instruments designated as net investment hedges increased to $6,399 million as of March 31, 2025, from $6,158 million as of December 31, 2024[95] Note 12. Fair Value Measurements This note describes the fair value hierarchy used for financial and nonfinancial assets and liabilities, including Level 2 and Level 3 measurements - The Company classifies financial and nonfinancial assets and liabilities based on a three-level fair value hierarchy, with most derivatives and available-for-sale investments classified as Level 2[102] - The disposal group of the PPE business was measured at fair value less costs to sell using significant unobservable inputs (Level 3)[109] Note 13. Earnings Per Share This note provides the calculation of basic and diluted earnings per share, including factors affecting diluted EPS Earnings Per Share Calculation | Metric | 3 Months Ended March 31, 2025 | 3 Months Ended March 31, 2024 | | :----------------------------------------- | :---------------------------- | :---------------------------- | | Net income attributable to Honeywell (Millions $) | 1,449 | 1,463 | | Weighted average shares outstanding (Millions) | 648.2 | 652.3 | | Earnings per share of common stock—basic | $2.24 | $2.24 | | Total weighted average diluted shares outstanding (Millions) | 651.7 | 656.6 | | Earnings per share of common stock—assuming dilution | $2.22 | $2.23 | - The diluted EPS calculations excluded 2.4 million stock options in Q1 2025 (compared to 4.9 million in Q1 2024) because their exercise cost exceeded the average market price[110] Note 14. Accumulated Other Comprehensive Loss This note details the components of accumulated other comprehensive loss, including foreign exchange and pension adjustments Accumulated Other Comprehensive Loss Components | Component | Balance at Dec 31, 2024 (Millions $) | Net Current Period OCI (Loss) (Millions $) | Balance at Mar 31, 2025 (Millions $) | | :----------------------------------------- | :----------------------------------- | :--------------------------------------- | :----------------------------------- | | Foreign Exchange Translation Adjustment | (2,872) | (290) | (3,162) | | Pension and Other Postretirement Benefit Adjustments | (642) | 11 | (631) | | Changes in Fair Value of Available for Sale Investments | (1) | — | (1) | | Changes in Fair Value of Cash Flow Hedges | 24 | (18) | 6 | | Total | (3,491) | (297) | (3,788) | Note 15. Commitments and Contingencies This note discusses environmental liabilities, asbestos-related claims, and ongoing legal investigations and resolutions - Environmental liabilities increased to $747 million as of March 31, 2025, from $678 million at December 31, 2024, with $106 million in new accruals and $37 million in payments[116] - Honeywell has an indemnification agreement with Resideo Technologies, Inc. for 90% of annual net spending on environmental matters at certain sites, capped at $140 million annually. A receivable of $90 million was recorded in Q1 2025[119][120] - Asbestos-related liabilities for Bendix claims decreased to $1,439 million as of March 31, 2025, from $1,482 million at December 31, 2024, with 4,954 unresolved claims at period-end[121][124] - The Company is cooperating with an SEC investigation primarily focused on certain accounting matters in its former Performance Materials and Technologies segment, but does not expect a material adverse effect[129] - Comprehensive resolution was reached in December 2022 for Petrobras and Unaoil investigations, with a $203 million payment made in January 2023, resolving all related investigations[130][131] Note 16. Pension Benefits This note outlines the net periodic benefit cost for U.S. and non-U.S. pension plans and related transactions Net Periodic Pension Benefit Cost | Component | U.S. Plans Q1 2025 (Millions $) | U.S. Plans Q1 2024 (Millions $) | Non-U.S. Plans Q1 2025 (Millions $) | Non-U.S. Plans Q1 2024 (Millions $) | | :-------------------------------- | :------------------------------ | :------------------------------ | :-------------------------------- | :-------------------------------- | | Service cost | 7 | 7 | 1 | 3 | | Interest cost | 147 | 150 | 47 | 47 | | Expected return on plan assets | (289) | (281) | (73) | (74) | | Amortization of prior service (credit) cost | — | (2) | — | — | | Recognition of actuarial (gains) losses | — | — | 14 | — | | Net periodic benefit (income) cost | (135) | (126) | (11) | (24) | - The Company repurchased $200 million of its common stock from the Honeywell U.S. Pension Plan Master Trust during Q1 2025[136] Note 17. Other (Income) Expense This note provides a breakdown of other income and expense components, including interest income, pension income, and acquisition/divestiture costs Other (Income) Expense Breakdown | Component | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Interest income | (90) | (105) | | Pension ongoing income—non-service | (155) | (161) | | Other postretirement income—non-service | (4) | (6) | | Equity income of affiliated companies | (17) | (16) | | Foreign exchange (gain) loss | 4 | 26 | | Divestiture-related costs | 48 | — | | Acquisition-related costs | 6 | 2 | | Expense related to Russia-Ukraine conflict | — | 17 | | Other, net | 8 | 12 | | Total Other (income) expense | (200) | (231) | Note 18. Segment Financial Data This note presents financial data for Honeywell's four reportable business segments, including segment profit and total assets - Honeywell globally manages its business operations through four reportable business segments: Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions[138] - Effective Q2 2024, segment profit calculation was updated to exclude amortization of acquisition-related intangible assets, certain acquisition- and divestiture-related costs, and impairments, with historical periods recast for comparability[139][140] Segment Profit by Business Segment | Segment | Q1 2025 Segment Profit (Millions $) | Q1 2024 Segment Profit (Millions $) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | | Aerospace Technologies | 1,099 | 1,035 | | Industrial Automation | 424 | 474 | | Building Automation | 440 | 350 | | Energy and Sustainability Solutions | 346 | 303 | | Corporate and All Other | (51) | (68) | | Total Segment profit | 2,258 | 2,094 | Total Assets by Business Segment | Segment | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Aerospace Technologies | 17,506 | 16,966 | | Industrial Automation | 21,344 | 21,035 | | Building Automation | 11,719 | 11,438 | | Energy and Sustainability Solutions | 10,420 | 10,337 | | Corporate and All Other | 14,229 | 15,420 | | Total assets | 75,218 | 75,196 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion and analysis of Honeywell's financial condition and results of operations for the three months ended March 31, 2025, covering macroeconomic conditions, strategic business updates (spin-offs, separations), consolidated operating results, segment performance, and liquidity and capital resources Business Update This section provides an overview of macroeconomic conditions and strategic corporate actions, including planned spin-offs and separations Macroeconomic Conditions The company monitors evolving macroeconomic conditions and geopolitical risks, implementing strategies to mitigate potential impacts - The company is closely monitoring evolving macroeconomic conditions and heightened geopolitical risks, including increased economic and trade policy uncertainty, rising trade tensions, global conflicts, tariffs, labor disruptions, and inflation[153] - Mitigation strategies include pricing actions, hedging, long-term strategies for constrained materials, direct supplier engagement, and new supplier development to reduce supply risk and foster innovation[154] Spin-Off of Advanced Materials Honeywell plans to spin off its Advanced Materials business into an independent public company, Solstice Advanced Materials, by late 2025 or early 2026 - Honeywell announced its intention to spin off its Advanced Materials business into Solstice Advanced Materials, an independent, U.S. publicly traded company, targeted for completion by the end of 2025 or early 2026, intended as a tax-free spin-off[156] Separation of Automation and Aerospace Technologies The company intends to separate its Automation and Aerospace Technologies businesses into independent public companies by the second half of 2026 - The Company announced its intention to pursue a separation of its Automation and Aerospace Technologies businesses into independent, U.S. publicly traded companies, intended to be completed in the second half of 2026 as a tax-free separation[157] Results of Operations This section analyzes the consolidated operating results, including net sales, costs, and income components, for the reporting period Net Sales Net sales increased due to acquisitions, pricing, and higher volumes, partially offset by foreign currency impacts Net Sales Change Factors | Factor | Q1 2025 vs. Q1 2024 Change | | :-------------------------------- | :------------------------- | | Volume | 2% | | Price | 2% | | Foreign currency translation | (1)% | | Acquisitions, divestitures, and other, net | 5% | | Total % change in Net sales | 8% | - Net sales increased due to incremental sales from recent acquisitions, increased pricing, and higher sales volumes, partially offset by the unfavorable impact of foreign currency translation[172] - Backlog of orders increased 13% to $36.1 billion as of March 31, 2025, compared to March 31, 2024[170] Cost of Products and Services Sold Costs increased due to acquisitions, higher material and labor costs, and sales of lower-margin products, partially offset by productivity gains - Cost of products and services sold increased due to incremental costs from recent acquisitions (approximately $0.3 billion or 5%), higher direct and indirect material and labor costs (approximately $0.2 billion or 4%), and higher sales volumes of lower margin products (approximately $0.1 billion or 2%), partially offset by higher productivity (approximately $0.2 billion or 4%)[179] Gross Margin Gross margin increased in absolute terms but decreased as a percentage of sales due to various cost factors - Gross margin increased by approximately $0.3 billion, but the gross margin percentage decreased 20 basis points to 38.5% in Q1 2025 compared to 38.7% for the same period of 2024[178] Research and Development Expenses Research and development expenses increased, primarily driven by higher spending in the Aerospace Technologies business - Research and development expenses increased due to increased spending, primarily in the Aerospace Technologies business[182] Research and Development Costs | Metric | 3 Months Ended March 31, 2025 (Millions $) | 3 Months Ended March 31, 2024 (Millions $) | | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Company funded research and development expenses | 439 | 360 | | Customer-sponsored research and development | 267 | 269 | | Total research and development costs | 706 | 629 | Selling, General and Administrative Expenses Selling, general and administrative expenses increased due to incremental costs from acquisitions - Selling, general and administrative expenses increased due to incremental costs from acquisitions[185] Impairment of Assets Held for Sale An impairment charge was recorded for assets held for sale related to the Personal Protective Equipment business - An impairment charge of $15 million was recorded on assets held for sale related to the PPE business during the three months ended March 31, 2025[188] Other (Income) Expense Other income decreased primarily due to higher divestiture-related costs during the period - Other income decreased due to higher divestiture-related costs[190] Interest and Other Financial Charges Interest and other financial charges increased, mainly attributable to prior year issuances of long-term debt - Interest and other financial charges increased to $286 million in Q1 2025 from $220 million in Q1 2024, primarily due to prior year issuances of long-term debt[191][192] Tax Expense The effective tax rate increased due to higher tax expense from internal legal entity restructuring for the PPE business sale - The effective tax rate increased 90 basis-points as a result of increased tax expense related to internal legal entity restructuring in advance of the anticipated sale of the PPE business[196] Net Income Attributable to Honeywell Diluted earnings per share slightly decreased due to higher divestiture costs, interest charges, and amortization, partially offset by segment profit - Earnings per share of common stock—assuming dilution slightly decreased, primarily due to higher divestiture-related costs ($0.08 after tax), higher interest and other financial charges ($0.08 after tax), and higher acquisition-related intangibles amortization ($0.07 after tax), partially offset by higher segment profit ($0.20 after tax)[201] Review of Business Segments This section provides a detailed review of the financial performance for each of Honeywell's four reportable business segments Aerospace Technologies Sales and segment profit increased, driven by commercial aviation aftermarket and defense, though segment margin percentage decreased Aerospace Technologies Performance Summary | Metric | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Change (%) | | :---------------- | :------------------- | :------------------- | :--------- | | Net sales | 4,172 | 3,669 | 14 % | | Segment profit | 1,099 | 1,035 | 6 % | Aerospace Technologies Change Factors | Factor | Net Sales Change (%) | Segment Profit Change (%) | | :-------------------------------- | :------------------- | :------------------------ | | Organic | 9 % | 6 % | | Foreign currency translation | — % | (1)% | | Acquisitions, divestitures, and other, net | 5 % | 1 % | | Total % change | 14 % | 6 % | - Sales increased by $503 million, driven by higher organic sales in Commercial Aviation Aftermarket ($243 million) due to increased flight hours and in Defense and Space ($135 million) due to increased shipments. Acquisitions of CAES and Civitanavi Systems contributed $180 million[208] - Segment margin percentage decreased 190 basis points to 26.3% in Q1 2025 from 28.2% in Q1 2024[209] Industrial Automation Sales and segment profit decreased due to lower organic sales in productivity solutions and sensing technologies, and unfavorable currency translation Industrial Automation Performance Summary | Metric | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Change (%) | | :---------------- | :------------------- | :------------------- | :--------- | | Net sales | 2,378 | 2,478 | (4)% | | Segment profit | 424 | 474 | (11)% | Industrial Automation Change Factors | Factor | Net Sales Change (%) | Segment Profit Change (%) | | :-------------------------------- | :------------------- | :------------------------ | | Organic | (2)% | (9)% | | Foreign currency translation | (2)% | (2)% | | Acquisitions, divestitures, and other, net | — % | — % | | Total % change | (4)% | (11)% | - Sales decreased by $100 million, primarily due to lower organic sales in Productivity Solutions and Services ($48 million) from decreased license and settlement payments, lower organic sales in Sensing and Safety Technologies ($21 million) due to reduced PPE demand, and unfavorable foreign currency translation ($42 million)[213] - Segment margin percentage decreased 130 basis points to 17.8% in Q1 2025 from 19.1% in Q1 2024[215] Building Automation Sales and segment profit increased significantly, driven by higher organic sales and the acquisition of Access Solutions Building Automation Performance Summary | Metric | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Change (%) | | :---------------- | :------------------- | :------------------- | :--------- | | Net sales | 1,692 | 1,426 | 19 % | | Segment profit | 440 | 350 | 26 % | Building Automation Change Factors | Factor | Net Sales Change (%) | Segment Profit Change (%) | | :-------------------------------- | :------------------- | :------------------------ | | Organic | 8 % | 12 % | | Foreign currency translation | (2)% | (3)% | | Acquisitions, divestitures, and other, net | 13 % | 17 % | | Total % change | 19 % | 26 % | - Sales increased by $266 million, driven by higher organic sales in Building Solutions ($68 million) and Products ($51 million) due to increased demand. The acquisition of Access Solutions contributed $179 million[221] - Segment margin percentage increased 150 basis points to 26.0% in Q1 2025 from 24.5% in Q1 2024[221] Energy and Sustainability Solutions Sales increased due to the LNG acquisition, partially offset by lower organic sales in Advanced Materials, with segment profit also rising Energy and Sustainability Solutions Performance Summary | Metric | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Change (%) | | :---------------- | :------------------- | :------------------- | :--------- | | Net sales | 1,561 | 1,525 | 2 % | | Segment profit | 346 | 303 | 14 % | Energy and Sustainability Solutions Change Factors | Factor | Net Sales Change (%) | Segment Profit Change (%) | | :-------------------------------- | :------------------- | :------------------------ | | Organic | (2)% | 4 % | | Foreign currency translation | (1)% | (1)% | | Acquisitions, divestitures, and other, net | 5 % | 11 % | | Total % change | 2 % | 14 % | - Sales increased by $36 million, driven by $75 million from the LNG acquisition, partially offset by lower organic sales in Advanced Materials ($39 million) due to reduced fluorine product volumes[227] - Segment margin percentage increased 230 basis points to 22.2% in Q1 2025 from 19.9% in Q1 2024[227] Corporate and All Other This category primarily includes unallocated corporate costs, holding-company debt interest, and the Quantinuum interest - This category primarily includes unallocated corporate costs, interest expense on holding-company debt, and the controlling majority-owned interest in Quantinuum, and is not a separate reportable business segment[229] Repositioning Charges Cash spending for repositioning actions in Q1 2025 was $43 million, funded through operating cash flows - Cash spending related to repositioning actions was $43 million in the three months ended March 31, 2025, funded through operating cash flows[230] Liquidity and Capital Resources This section discusses the company's cash position, cash flow summary, future cash requirements, and assessment of current liquidity Cash This section details the company's cash and cash equivalents, including amounts held in non-U.S. subsidiaries Cash and Cash Equivalents | Metric | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------------ | :-------------------------- | :----------------------------- | | Cash and cash equivalents (including short-term investments) | 10,100 | 11,000 | - $8.0 billion of the Company's cash, cash equivalents, and short-term investments were held in non-U.S. subsidiaries as of March 31, 2025, with no material currency control restrictions or repatriation taxes expected[234] Cash Flow Summary This summary outlines the net cash provided by or used for operating, investing, and financing activities Cash Flow Activities Summary | Activity | Q1 2025 (Millions $) | Q1 2024 (Millions $) | Variance (Millions $) | | :----------------------------------------- | :------------------- | :------------------- | :-------------------- | | Net cash provided by operating activities | 597 | 448 | 149 | | Net cash used for investing activities | (371) | (273) | (98) | | Net cash (used for) provided by financing activities | (1,180) | 3,696 | (4,876) | | Net (decrease) increase in cash and cash equivalents | (910) | 3,831 | (4,741) | - Operating cash flows increased by $149 million, driven by a $423 million favorable impact from other operating activities (timing of customer advances), partially offset by a $286 million unfavorable impact from working capital (increase in accounts receivable)[239] - Financing cash flows decreased by $4,876 million, primarily due to a $5,664 million decrease in long-term debt proceeds (used to fund 2024 acquisitions) and a $1,231 million increase in common stock repurchases, partially offset by a $1,689 million increase in net commercial paper proceeds[241] Cash Requirements and Assessment of Current Liquidity This section details principal future cash requirements and the company's expected sufficiency of liquidity sources - Principal future cash requirements include funding capital expenditures, share repurchases ($1.9 billion in Q1 2025), dividends, strategic acquisitions (e.g., Sundyne for $2.2 billion), and debt repayments[242][244] - The company expects operating cash flows, available cash, committed credit lines, and access to public debt and equity markets to be sufficient for future operating needs and investment opportunities for at least the next twelve months[245] Borrowings This section details the company's fixed rate notes, commercial paper, term loans, and other borrowings Total Borrowings Breakdown | Metric | March 31, 2025 (Millions $) | December 31, 2024 (Millions $) | | :---------------- | :-------------------------- | :----------------------------- | | Fixed rate notes | 26,052 | 25,853 | | Commercial paper | 5,755 | 4,271 | | Term loan | 1,000 | 1,000 | | Variable rate notes | 22 | 22 | | Other | 411 | 392 | | Fair value of hedging instruments | (112) | (136) | | Debt issuance costs | (296) | (303) | | Total borrowings | 32,832 | 31,099 | - The company utilizes corporate bond markets for long-term fixed rate notes and the commercial paper market for short-term borrowings for general corporate purposes and acquisitions[250] - Honeywell has a $1.0 billion Fixed Rate Term Loan Credit Agreement (due 2027), a $3.0 billion 364-day credit agreement (due 2026), and a $4.0 billion five-year credit agreement (due 2029), with $1.0 billion outstanding under the term loan as of March 31, 2025[253] Credit Ratings This section provides the company's credit ratings and outlooks from S&P, Fitch, and Moody's Credit Ratings Overview | Agency | Outlook | Short-term | Long-term | | :------- | :-------------- | :--------- | :-------- | | S&P | Watch Negative | A-1 | A | | Fitch | Watch Negative | F1 | A | | Moody's | Stable | P1 | A2 | - Moody's revised its credit rating outlook from positive to stable on January 10, 2025, while S&P and Fitch revised their outlooks from stable to credit watch negative/rating watch negative on February 6 and 7, 2025, respectively[254] Other Matters This section refers to discussions on litigation, critical accounting estimates, and recent accounting pronouncements Litigation This section refers to Note 15 for detailed discussions of environmental, asbestos, and other litigation matters - Refers to Note 15 Commitments and Contingencies for further discussion of environmental, asbestos, and other litigation matters[255] Critical Accounting Estimates This section confirms no material changes to critical accounting estimates since the 2024 Annual Report on Form 10-K - There have been no material changes to the Company's Critical Accounting Estimates presented in its 2024 Annual Report on Form 10-K[256] Recent Accounting Pronouncements This section refers to Note 2 for a discussion of recent accounting pronouncements - Refers to Note 2 Summary of Significant Accounting Policies for a discussion of recent accounting pronouncements[257] ITEM 3. Quantitative and Qualitative Disclosures about Market Risks This section states that there have been no material changes to the Company's quantitative and qualitative disclosures about market risks since the 2024 Annual Report on Form 10-K - As of March 31, 2025, there has been no material change in the Company's quantitative and qualitative disclosures about market risks since the 2024 Annual Report on Form 10-K[258] ITEM 4. Controls and Procedures Honeywell's management, including the CEO and CFO, concluded that the disclosure controls and procedures were effective as of March 31, 2025, and there were no material changes to internal control over financial reporting during the period - Honeywell management, including the Chairman and CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025[260] - There were no changes that materially affected, or are reasonably likely to materially affect, Honeywell's internal control over financial reporting during the period[260] PART II. OTHER INFORMATION This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and equity sales ITEM 1. Legal Proceedings This section refers to Note 15 for detailed discussions of environmental, asbestos, and other litigation matters, confirming no new matters requiring disclosure for environmental monetary sanctions exceeding $300,000 - The Company is subject to various lawsuits, investigations, and claims, with further discussion provided in Note 15 Commitments and Contingencies[262] - There were no matters requiring disclosure for environmental monetary sanctions in excess of $300,000[263] ITEM 1A. Risk Factors This section highlights that there have been no material changes to the Company's risk factors since the 2024 Annual Report on Form 10-K, while reiterating the impact of macroeconomic conditions and specific industry risks on its business segments - Other than as noted, there have been no material changes to the Company's Risk Factors presented in its 2024 Annual Report on Form 10-K[264] - The Company and its businesses may continue to be negatively affected by global macroeconomic conditions, including inflation, high interest rates, supply chain and labor disruptions, geopolitical instability, and trade restrictions[266] - Specific risks include customer buying patterns and supply chain constraints for Aerospace Technologies, reduced investments and demand for safety products in Industrial Automation, downturns in construction and competitive landscape for Building Automation, and capacity utilization and raw material demand for Energy and Sustainability Solutions[267] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds The Board of Directors authorized a $10 billion share repurchase program in April 2023, with $3.6 billion remaining as of March 31, 2025. During Q1 2025, Honeywell repurchased 8.9 million shares for $1.9 billion - The Board of Directors authorized the repurchase of up to $10 billion of Honeywell common stock on April 24, 2023, with no expiration date[268] - During the three months ended March 31, 2025, Honeywell repurchased 8.9 million shares of its common stock for $1.9 billion[270] - As of March 31, 2025, $3.6 billion remained available under the share repurchase authorization for additional share repurchases[270] ITEM 4. Mine Safety Disclosures This section indicates that information concerning mine safety and other regulatory matters for the company's chabazite ore surface mine in Arizona is included in Exhibit 95 of the report - Information concerning mine safety and other regulatory matters associated with the Company's chabazite ore surface mine in Arizona is included in Exhibit 95 to this quarterly report[271] ITEM 5. Other Information This section states that no executive officers or directors adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 equity trading arrangements during the three months ended March 31, 2025 - During the three months ended March 31, 2025, none of the executive officers or directors adopted, terminated, or modified a "Rule 10b5-1 trading arrangement," or any "non-Rule 10b5-1 trading arrangement"[273] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including offer letters, credit agreements, certifications, mine safety disclosures, and XBRL taxonomy documents - The exhibits include offer letters, a 364-Day Credit Agreement, certifications (pursuant to Sarbanes-Oxley Act), Mine Safety Disclosures, and Inline XBRL documents[275] Signatures This section confirms the report's signing by the Registrant's Principal Accounting Officer on April 29, 2025 - The report was signed on April 29, 2025, by Robert D. Mailloux, Vice President and Controller, as the Registrant's Principal Accounting Officer[279]