Honeywell International Inc.’s (HON - Free Report) fourth-quarter 2022 adjusted earnings (excluding $1.01 from non-recurring items) of $2.52 per share surpassed the Zacks Consensus Estimate of $2.49. This compares with our estimate for adjusted earnings per share of $2.46. The bottom line improved 20.6% year over year.
Total revenues of $9,186 million missed the Zacks Consensus Estimate of $9,221.1 million. Our estimate for total revenues in the fourth quarter stood at $9193.4 million. However, the top line increased 6% from the year-ago quarter. Organic sales increased 10% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $3,204 million, up 11% year over year. Our estimate for Aerospace revenues was $3,075.8 million. Strong commercial aftermarket demand drove the segment’s performance. Honeywell Building Technologies’ revenues increased 8% to $1,514 million, owing to growth in building products and solutions. Our estimate for segmental revenues was $1,665.9 million.
Performance Materials and Technologies’ revenues totaled $2,860 million, up 10%. Our estimate for Performance Materials and Technologies revenues in the fourth quarter was $2,703.3 million. Segmental revenues were driven by strong organic growth in advanced materials and process solutions.
Safety and Productivity Solutions revenues decreased 8% to $1,607 million due to lower volumes in warehouse and workflow solutions, and productivity solutions and services. Our estimate for the segment’s revenues was $1,748.4 million.
Costs/Margins
The company’s total cost of sales in the reported quarter was $4,587 million, down 0.2% year over year. Selling, general and administrative expenses were $1,249 million, up 3.8%. Interest expenses and other financial charges were $144 million compared with $80 million a year ago.
Operating income in the fourth quarter was $1,813 million, up 19.4% year over year. The operating income margin was 19.7% compared with 17.5% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the fourth quarter, Honeywell had cash and cash equivalents of $9,627 million compared with $10,959 million at the end of December 2021. Long-term debt was $15,123 million, lower than $14,254 million at the end of 2021.
In 2022, HON generated $5,274 million in cash from operating activities compared with $6,038 million at the end of the year-ago period. Capital expenditure totaled $766 million in 2022 compared with $895 million incurred in the year-ago period.
Free cash flow was $4,917 million in 2022, down 14.2% year over year.
2023 Outlook
For 2023, Honeywell expects sales of $36-$37 billion. The mid-point of the guided range — $36.5 billion — lies below the Zacks Consensus Estimate of $36.87 billion. The company expects organic sales growth of 2-5% in the year. Segmental margin is anticipated to be 22.2-22.6%, indicating a year-over-year rise of 50-90 basis points.
Honeywell expects adjusted earnings per share of $8.80-$9.20, suggesting a year-over-year rise of 0-5%. The mid-point of the guided range — $9 — lies below the Zacks Consensus Estimate of $9.12. Operating cash flow is expected to be $4.9-$5.3 billion in the year, while free cash flow is anticipated to be $3.9-$4.3 billion.
Zacks Rank & Key Picks
Honeywell presently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE pulled off a trailing four-quarter earnings surprise of 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
The Zacks Consensus Estimate for Allegion’s fourth-quarter earnings has been revised downward by 2.8% in the past 60 days. The stock has gained 16.9% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
The Zacks Consensus Estimate for Valmont’s fourth-quarter earnings estimate has been revised upward by a penny in the past 60 days. The stock has rallied 22.9% in the past six months.
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Honeywell International Inc.’s (HON - Free Report) fourth-quarter 2022 adjusted earnings (excluding $1.01 from non-recurring items) of $2.52 per share surpassed the Zacks Consensus Estimate of $2.49. This compares with our estimate for adjusted earnings per share of $2.46. The bottom line improved 20.6% year over year.
Total revenues of $9,186 million missed the Zacks Consensus Estimate of $9,221.1 million. Our estimate for total revenues in the fourth quarter stood at $9193.4 million. However, the top line increased 6% from the year-ago quarter. Organic sales increased 10% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $3,204 million, up 11% year over year. Our estimate for Aerospace revenues was $3,075.8 million. Strong commercial aftermarket demand drove the segment’s performance. Honeywell Building Technologies’ revenues increased 8% to $1,514 million, owing to growth in building products and solutions. Our estimate for segmental revenues was $1,665.9 million.
Performance Materials and Technologies’ revenues totaled $2,860 million, up 10%. Our estimate for Performance Materials and Technologies revenues in the fourth quarter was $2,703.3 million. Segmental revenues were driven by strong organic growth in advanced materials and process solutions.
Safety and Productivity Solutions revenues decreased 8% to $1,607 million due to lower volumes in warehouse and workflow solutions, and productivity solutions and services. Our estimate for the segment’s revenues was $1,748.4 million.
Costs/Margins
The company’s total cost of sales in the reported quarter was $4,587 million, down 0.2% year over year. Selling, general and administrative expenses were $1,249 million, up 3.8%. Interest expenses and other financial charges were $144 million compared with $80 million a year ago.
Operating income in the fourth quarter was $1,813 million, up 19.4% year over year. The operating income margin was 19.7% compared with 17.5% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the fourth quarter, Honeywell had cash and cash equivalents of $9,627 million compared with $10,959 million at the end of December 2021. Long-term debt was $15,123 million, lower than $14,254 million at the end of 2021.
In 2022, HON generated $5,274 million in cash from operating activities compared with $6,038 million at the end of the year-ago period. Capital expenditure totaled $766 million in 2022 compared with $895 million incurred in the year-ago period.
Free cash flow was $4,917 million in 2022, down 14.2% year over year.
2023 Outlook
For 2023, Honeywell expects sales of $36-$37 billion. The mid-point of the guided range — $36.5 billion — lies below the Zacks Consensus Estimate of $36.87 billion. The company expects organic sales growth of 2-5% in the year. Segmental margin is anticipated to be 22.2-22.6%, indicating a year-over-year rise of 50-90 basis points.
Honeywell expects adjusted earnings per share of $8.80-$9.20, suggesting a year-over-year rise of 0-5%. The mid-point of the guided range — $9 — lies below the Zacks Consensus Estimate of $9.12. Operating cash flow is expected to be $4.9-$5.3 billion in the year, while free cash flow is anticipated to be $3.9-$4.3 billion.
Zacks Rank & Key Picks
Honeywell presently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE pulled off a trailing four-quarter earnings surprise of 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
The Zacks Consensus Estimate for Allegion’s fourth-quarter earnings has been revised downward by 2.8% in the past 60 days. The stock has gained 16.9% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
The Zacks Consensus Estimate for Valmont’s fourth-quarter earnings estimate has been revised upward by a penny in the past 60 days. The stock has rallied 22.9% in the past six months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s an American AI company that’s riding low right now, but it has rounded up clients like BMW, GE, Dell Computer, and Bosch. It has prospects for not just doubling but quadrupling in the year to come. Of course, all our picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock And 4 Runners Up
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