Honeywell Delivers Strong First Quarter Results and Beats Earnings Guidance

CHARLOTTE, N.C., April 25, 2024/PRNewswire/ -- Honeywell (NASDAQ: HON) today announced results for the first quarter that met or exceeded the company's guidance. The company also reiterated its full-year sales, segment margin², adjusted earnings per share^2,3, and cash flow guidance ranges.

"Honeywell delivered a strong start to 2024. Organic¹ growth was led by double-digit growth in both our commercial aviation and defense and space businesses," said Vimal Kapur, chief executive officer of Honeywell. "As long-cycle customer demand remained strong, our robust backlog increased 6% year over year and was up sequentially, ending the quarter at a record level of $32.0 billion. We also experienced pockets of recovery in short cycle, and expect broader participation as the year unfolds and channels normalize further. Improving business mix, continued focus on commercial excellence, and productivity actions enabled us to expand margins in line with the high end of our guidance range and overdeliver on our adjusted earnings per share^2,3 guidance.

"Concurrently, we executed on our capital deployment strategy, putting our robust balance sheet to work through $1.6 billionin dividends, share repurchases, and high-return capital expenditures. In addition, we announced our intention to acquire Civitanavi Systems, which will further strengthen our navigation offerings in Aerospace and expand our footprint in Europe."

Kapur continued, "Building on this quarter's momentum, we are poised for another year of significant transformation at Honeywell as we remain well-positioned to deliver on our commitments and accelerate growth in 2024. Our portfolio is aligned to three powerful megatrends - automation, the future of aviation, and energy transition, all underpinned by digitalization. Looking ahead, I remain confident in our ability to create value as we continue to execute on our M&A playbook and leverage our differentiated Accelerator operating system to unlock the full value of our latest acquisitions, as well as in our core businesses."

As a result of the company's first-quarter performance and management's outlook for the remainder of the year, Honeywell maintained its full-year sales, segment margin², adjusted earnings per share^2,3, and cash flow guidance. Full-year sales are expected to be $38.1 billionto $38.9 billion, with organic¹ sales growth in the range of 4% to 6%. Segment margin² is expected to be in the range of 23.0% to 23.3%, with segment margin expansion² of 30 to 60 basis points. Adjusted earnings per share^2,3 is expected to be in the range of $9.80to $10.10, up 7% to 10%. Operating cash flow is expected to be in the range of $6.7 billionto $7.1 billion, with free cash flow¹ of $5.6 billionto $6.0 billion. A summary of the company's full-year guidance can be found in Table 1.

First-Quarter Performance

Honeywell sales for the first quarter were up 3% year over year on a reported basis and 3% year over year on an organic¹ basis. The first-quarter financial results can be found in Tables 2 and 3.

Aerospace Technologies sales for the first quarter were up 18% on an organic¹ basis year over year, the seventh consecutive quarter of double-digit organic growth, as a result of ongoing strength in both commercial aviation and defense and space. Sales growth was led by commercial original equipment, up over 20% year over year for the second straight quarter as shipset deliveries continued to increase sequentially. Commercial aftermarket grew 17% on increased flight activity, led by air transport. Defense and space grew 16% year over year as demand remained strong, while supply chain improvements allowed us to execute on our robust order book. Segment margin expanded 150 basis points year over year to 28.1%, driven by commercial excellence and volume leverage, partially offset by cost inflation and mix pressure within our original equipment business.

Industrial Automation sales for the first quarter were down 13% on an organic¹ basis year over year. Sales decline was primarily due to lower volumes in warehouse and workflow solutions. Sales in our short-cycle productivity solutions and services business were down versus the prior year, but orders grew double digits year over year and sequentially for the second straight quarter, an encouraging sign of recovering demand. Our lifecycle solutions and services business was a bright spot in the quarter, up double-digits year over year. Segment margin contracted 200 basis points to 16.8% driven by lower volume leverage and cost inflation, partially offset by productivity actions and commercial excellence.

Building Automation sales for the first quarter were down 3% on an organic¹ basis year over year. Building solutions continues to be a bright spot, with double-digit growth in projects and another quarter of growth in services. Strength in building solutions was offset by building products, where lower volumes led to sales declines across fire, security, and building management systems. Segment margin contracted 120 basis points to 24.0%, slightly above fourth quarter levels, due to product mix headwinds and cost inflation, partially offset by productivity actions and commercial excellence.

Energy and Sustainability Solutions sales for the first quarter were up 5% on an organic¹ basis year over year. Advanced materials led ESS with 6% sales growth, primarily driven by another quarter of double-digit improvement in fluorine products. UOP sales grew 3% in the quarter as a result of double-digit growth in petrochemical catalyst shipments and refining equipment, partially offset by expected challenging year-over-year comps from large gas processing equipment projects. Segment margin contracted 70 basis points to 19.8% as one-time factory restart costs were partially offset by favorable business mix and productivity actions.

Conference Call Details

Honeywell will discuss its first-quarter results and full-year 2024 guidance during an investor conference call starting at 8:30 a.m. Eastern Daylight Timetoday. 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 2024 GUIDANCE²

TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS

TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS

_{¹ See additional information at the end of this release regarding non-GAAP financial measures.}

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). 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. 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. 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 lower GDP growth or recession, capital markets volatility, inflation, and certain regional conflicts, that 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 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.

Q1 2024 Earnings Release Financial

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