Honeywell's Q1 Earnings & Revenues Beat Estimates, Increase Y/Y

Core Insights - Honeywell International Inc. reported first-quarter 2025 adjusted earnings of $2.51 per share, exceeding the Zacks Consensus Estimate of $2.21, marking a 7% year-over-year increase on an adjusted basis [1] - Total revenues reached $9.82 billion, surpassing the consensus estimate of $9.57 billion, and reflecting an 8% increase from the previous year, driven by the Aerospace Technologies segment [2] Financial Performance - Aerospace Technologies revenues were $4.17 billion, up 14% year over year, with organic sales increasing by 9% due to heightened flight activity in commercial aftermarket and defense markets [3] - Industrial Automation revenues declined 4% year over year to $2.38 billion, with organic sales falling 2%, impacted by softness in the safety & sensing technologies business [4] - Building Automation revenues increased 19% year over year to $1.69 billion, with organic sales up 8%, driven by strength in building solutions and products [5] - Energy and Sustainability Solutions revenues rose 2% to $1.56 billion, although organic sales fell 2% due to weakness in the Advanced Materials business [6] Costs and Margins - Total cost of sales was approximately $6.04 billion, an increase of 8.1% year over year, while selling, general and administrative expenses rose by 4.5% to $1.36 billion [7] - Operating income was $1.97 billion, reflecting a 6% year-over-year increase, with an operating income margin of 20.1% compared to 20.4% in the previous year [7] Balance Sheet and Cash Flow - As of the end of Q1 2025, Honeywell had cash and cash equivalents of $9.7 billion, down from $10.6 billion at the end of December 2024, with long-term debt increasing to $25.7 billion [8] - The company generated net cash of $597 million from operating activities, up from $448 million in the prior-year period, with capital expenditure totaling $251 million [8] - Free cash flow for the quarter was $346 million, representing a 61% increase from the previous year [9] 2025 Guidance - Honeywell expects sales for 2025 to be in the range of $39.6-$40.5 billion, with organic sales anticipated to increase by 2-5% [11] - The company projects a segment margin of 23.2-23.5%, up from 22.6% in 2024, and adjusted earnings per share between $10.20 and $10.50, indicating a 3-6% year-over-year increase [11] - Operating cash flow is expected to be in the range of $6.7-$7.1 billion, with free cash flow projected between $5.4-$5.8 billion [11] Major Developments - Honeywell plans to divest its Advanced Materials business and has already entered into a deal to divest its Personal Protective Equipment unit, leading to the creation of three publicly listed companies: Honeywell Automation, Honeywell Aerospace, and Advanced Materials [12][13] - The planned separation is expected to be completed in the second half of 2026 in a tax-free manner for shareholders [13]