Honeywell(US:HON)2025-07-24 13:38markdown PART I Financial Information [Financial Statements and Supplementary Data (unaudited)](index=5&type=section&id=ITEM%201%20Financial%20Statements%20and%20Supplementary%20Data%20(unaudited)%3A) This section provides Honeywell's unaudited consolidated financial statements for Q2 and YTD 2025, including key statements and detailed notes on accounting policies, acquisitions, revenue, and segment data [Consolidated Statement of Operations](index=5&type=section&id=Consolidated%20Statement%20of%20Operations) Honeywell reported an 8.1% increase in Q2 2025 net sales to $10.35 billion, with diluted EPS rising to $2.45, reflecting growth in both product and service sales Consolidated Statement of Operations Highlights (Q2 & YTD 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $10,352M | $9,577M | +8.1% | $20,174M | $18,682M | +7.9% | | Product Sales | $7,119M | $6,477M | +10.0% | $13,764M | $12,740M | +8.0% | | Service Sales | $3,233M | $3,100M | +4.3% | $6,410M | $5,942M | +7.9% | | **Income Before Taxes** | $1,871M | $1,974M | -5.2% | $3,755M | $3,845M | -2.3% | | **Net Income Attributable to Honeywell** | $1,570M | $1,544M | +1.7% | $3,019M | $3,007M | +0.4% | | **EPS (Diluted)** | $2.45 | $2.36 | +3.8% | $4.67 | $4.59 | +1.7% | [Consolidated Balance Sheet](index=7&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, total assets increased to $78.4 billion, driven by goodwill from acquisitions, while liabilities and long-term debt also grew, leading to a decrease in shareowners' equity Consolidated Balance Sheet Highlights (June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $27,967M | $27,908M | +$59M | | Cash and cash equivalents | $10,349M | $10,567M | -$218M | | **Goodwill** | $23,804M | $21,825M | +$1,979M | | **Total Assets** | $78,419M | $75,196M | +$3,223M | | **Total Current Liabilities** | $21,619M | $21,256M | +$363M | | **Long-term Debt** | $30,167M | $25,479M | +$4,688M | | **Total Honeywell Shareowners' Equity** | $16,095M | $18,619M | -$2,524M | [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities slightly increased in H1 2025, while investing cash outflows significantly decreased due to lower acquisitions and a business sale, and financing activities shifted to a net cash outflow Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $1,916M | $1,819M | | **Net Cash Used for Investing Activities** | ($1,880M) | ($5,405M) | | Cash paid for acquisitions, net | ($2,163M) | ($4,913M) | | Proceeds from sale of business, net | $1,157M | $0M | | **Net Cash (Used for) Provided by Financing Activities** | ($421M) | $5,298M | | Repurchases of common stock | ($3,604M) | ($1,200M) | | Proceeds from issuance of long-term debt | $4,035M | $5,710M) | | **Net (Decrease) Increase in Cash** | ($218M) | $1,651M | [Note 3 – Acquisitions and Divestitures](index=11&type=section&id=Note%203%20%E2%80%93%20Acquisitions%20and%20Divestitures) Honeywell actively transformed its portfolio in 2025 through acquisitions like Sundyne and planned divestitures, alongside announced spin-offs of Advanced Materials, Automation, and Aerospace Technologies businesses - Completed the acquisition of Sundyne for $**2.15 billion** and Carrier's Global Access Solutions business for $**4.91 billion**[38](index=38&type=chunk)[44](index=44&type=chunk) - Announced an agreement to acquire Johnson Matthey's Catalyst Technologies business for £**1.8 billion**, expected to close in H1 2026[37](index=37&type=chunk) - Completed the sale of its personal protective equipment (PPE) business for $**1.157 billion**[47](index=47&type=chunk) - Announced intentions to spin off its Advanced Materials business (expected Q4 2025) and separate its Automation and Aerospace Technologies businesses (intended for H2 2026)[48](index=48&type=chunk)[49](index=49&type=chunk) [Note 4 – Revenue Recognition and Contracts with Customers](index=14&type=section&id=Note%204%20%E2%80%93%20Revenue%20Recognition%20and%20Contracts%20with%20Customers) Honeywell's revenue is disaggregated by segment, with total remaining performance obligations of $36.6 billion as of June 30, 2025, of which 56% is expected to be recognized within one year - Total remaining performance obligations (backlog) as of June 30, 2025, were $**36.6 billion**[67](index=67&type=chunk) - Of the total backlog, **56%** is expected to be satisfied within one year, and **44%** after one year[68](index=68&type=chunk) Disaggregated Revenue by Segment (Six Months Ended June 30, 2025) | Segment | Net Sales (in millions) | | :--- | :--- | | Aerospace Technologies | $8,479 | | Industrial Automation | $4,758 | | Building Automation | $3,518 | | Energy and Sustainability Solutions | $3,398 | | **Total Net Sales** | **$20,174** | [Note 15 – Commitments and Contingencies](index=27&type=section&id=Note%2015%20%E2%80%93%20Commitments%20and%20Contingencies) Honeywell faces various commitments and contingencies, including $755 million in environmental liabilities, $1.406 billion in asbestos-related liabilities, and ongoing litigation and an SEC investigation - Total recorded liabilities for environmental matters were $**755 million** as of June 30, 2025[122](index=122&type=chunk)[124](index=124&type=chunk) - Asbestos-related liabilities for Bendix claims stood at $**1.406 billion**, with related insurance recoveries recorded at $**105 million**[128](index=128&type=chunk)[131](index=131&type=chunk) - The company is in a legal dispute with Flexjet, LLC regarding an aircraft engine maintenance service agreement, with a trial anticipated in 2026[139](index=139&type=chunk)[140](index=140&type=chunk) - Honeywell is cooperating with a formal SEC investigation focused on certain financial reporting matters, including its former Performance Materials and Technologies segment[136](index=136&type=chunk) [Note 18 – Segment Financial Data](index=32&type=section&id=Note%2018%20%E2%80%93%20Segment%20Financial%20Data) Total segment profit reached $4.62 billion for the six-month period ended June 30, 2025, with Aerospace Technologies being the largest contributor to both sales and profit Segment Performance (Six Months Ended June 30, 2025) | Segment | Net Sales | Segment Profit | | :--- | :--- | :--- | | Aerospace Technologies | $8,479M | $2,197M | | Industrial Automation | $4,758M | $880M | | Building Automation | $3,518M | $919M | | Energy and Sustainability Solutions | $3,398M | $789M | | **Total Segment** | **$20,153M** | **$4,785M** | - A reconciliation from total segment profit of $**4.62 billion** to consolidated income before taxes of $**3.76 billion** is provided, with major reconciling items including interest charges, amortization of intangibles, and pension income[158](index=158&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=ITEM%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Honeywell's sales increased 8% in Q2 and YTD 2025, driven by acquisitions and pricing, while the company actively manages its portfolio through strategic acquisitions, divestitures, and planned business separations, maintaining strong liquidity - The company is undergoing a significant portfolio transformation, including the completed divestiture of its PPE business, the acquisition of Sundyne, and announced plans to separate its Advanced Materials, Automation, and Aerospace Technologies businesses into independent public companies[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - Backlog of orders increased **14%** year-over-year to $**36.6 billion** as of June 30, 2025, indicating strong future demand[190](index=190&type=chunk) Net Sales Change Drivers (YTD 2025 vs. 2024) | Driver | % Change in Net Sales | | :--- | :--- | | Volume | 2% | | Price | 2% | | Foreign currency translation | 0% | | Acquisitions, divestitures, and other, net | 4% | | **Total % change** | **8%** | [Review of Business Segments](index=46&type=section&id=Review%20of%20Business%20Segments) In Q2 2025, Aerospace Technologies, Building Automation, and Energy and Sustainability Solutions segments reported strong sales growth, while Industrial Automation sales declined due to a divestiture - **Aerospace Technologies:** Q2 sales up **11%** (**6%** organic), driven by Defense and Space and Commercial Aviation Aftermarket. Acquisitions of CAES and Civitanavi contributed **5%** to sales growth[226](index=226&type=chunk)[227](index=227&type=chunk) - **Industrial Automation:** Q2 sales down **5%**, primarily due to the divestiture of the PPE business. Organic sales were flat[233](index=233&type=chunk)[235](index=235&type=chunk) - **Building Automation:** Q2 sales up **16%** (**8%** organic), boosted by strong product demand and an **8%** contribution from the Access Solutions acquisition. Segment profit grew **21%** with margin expansion[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - **Energy and Sustainability Solutions:** Q2 sales up **15%** (**6%** organic), led by higher licensing volumes in UOP. Acquisitions of LNG and Sundyne contributed **7%** to sales growth[248](index=248&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) Honeywell maintained strong liquidity with $10.7 billion in cash, funding significant share repurchases and acquisitions in H1 2025, supported by increased borrowings - Held $**10.7 billion** of cash, cash equivalents, and short-term investments as of June 30, 2025[258](index=258&type=chunk) - Key cash uses in the first six months of 2025 were common stock repurchases ($**3.6 billion**), dividends ($**1.5 billion**), and acquisitions ($**2.2 billion**)[262](index=262&type=chunk)[263](index=263&type=chunk)[270](index=270&type=chunk) - Total borrowings increased from $**31.1 billion** at year-end 2024 to $**36.5 billion** at June 30, 2025, partly due to drawing $**4.0 billion** from a new term loan facility[274](index=274&type=chunk)[279](index=279&type=chunk) [Quantitative and Qualitative Disclosures about Market Risks](index=54&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) No material changes to the company's quantitative and qualitative disclosures about market risks were reported as of June 30, 2025, compared to the 2024 Annual Report on Form 10-K - As of June 30, 2025, there has been no material change in the company's market risk information from the 2024 Annual Report on Form 10-K[284](index=284&type=chunk) [Controls and Procedures](index=55&type=section&id=ITEM%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[286](index=286&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[286](index=286&type=chunk) PART II Other Information [Legal Proceedings](index=56&type=section&id=ITEM%201%20Legal%20Proceedings) The company is subject to various lawsuits, investigations, and claims, with details provided in Note 15 of the financial statements - The company is subject to a number of lawsuits, investigations, and claims. For details, refer to Note 15 Commitments and Contingencies[288](index=288&type=chunk) [Risk Factors](index=56&type=section&id=ITEM%201A%20Risk%20Factors) No material changes to the company's risk factors were noted from those presented in its 2024 Annual Report on Form 10-K and Q1 2025 Form 10-Q - No material changes to the Risk Factors presented in the 2024 Annual Report on Form 10-K were noted[290](index=290&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Honeywell repurchased 8.2 million shares for $1.72 billion in Q2 2025, with $1.9 billion remaining available under the current share repurchase authorization Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | March 30 - April 26, 2025 | 5,047,330 | $199.49 | | April 27 - May 24, 2025 | 1,798,837 | $212.34 | | May 25 - June 28, 2025 | 1,368,449 | $225.78 | | **Total Q2 2025** | **8,214,616** | **N/A** | - As of June 30, 2025, $**1.9 billion** remained available under the company's share repurchase authorization[293](index=293&type=chunk) [Mine Safety Disclosures](index=57&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) Information concerning mine safety for a subsidiary's surface mine in Arizona is included in Exhibit 95, as required by the Dodd-Frank Act - Information concerning mine safety for a subsidiary's surface mine in Arizona is included in Exhibit 95[295](index=295&type=chunk) [Other Information](index=57&type=section&id=ITEM%205%20Other%20Information) No executive officers or directors adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 equity trading arrangements during Q2 2025 - No executive officers or directors adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[297](index=297&type=chunk) [Exhibits](index=58&type=section&id=ITEM%206%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, credit agreements, and officer certifications - Lists filed exhibits, including a Delayed Draw Term Loan Agreement, a Cooperation Agreement with Elliott Investment Management, and officer certifications[299](index=299&type=chunk)