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Honeywell's (HON) Q1 Earnings & Revenues Beat Estimates

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Honeywell International Inc. (HON - Free Report) reported better-than-expected first-quarter 2022 results, wherein both earnings and revenues surpassed estimates.

Earnings & Revenues

Adjusted earnings came in at $1.91 per share, surpassing the Zacks Consensus Estimate of $1.86. The bottom line fell 0.5% year over year.

Honeywell’s first-quarter revenues were $8,376 million, beating the consensus estimate of $8,350 million. The top line decreased 1% year over year on a reported basis. The decline was attributable to supply-chain constraints and a decrease in COVID mask sales. However, revenues increased 1% on an organic basis.

Segmental Breakup

Aerospace’s quarterly revenues were $2,749 million, up 4.4% year over year. Honeywell Building Technologies’ revenues increased 5.2% to $1,429 million. Performance Materials and Technologies’ revenues totaled $2,453 million, up 4.6%, while that for Safety and Productivity Solutions decreased 17.7% to $1,744 million.

Costs/Margins

The company’s total cost of sales in the reported quarter was $5,674 million, down 0.6% year over year. Selling, general and administrative expenses were $1,431 million, up 15.8%. Interest expenses and other financial charges were $85 million compared with $90 million a year ago.

Operating income in the first quarter was $1,271 million, down 15.8% on a year-over-year basis. The operating income margin was 15.2%, down 260 basis points.

Balance Sheet/Cash Flow

Exiting first-quarter 2022, Honeywell had cash and cash equivalents of $9,281 million compared with $10,959 million in the previous quarter. Long-term debt was $12,636 million, lower than $14,254 million recorded at the end of the previous quarter.

In the first three months of 2022, the company generated $36 million in cash from operating activities compared with $978 million in the year-ago period. In the first three months of the year, capital expenditure was $183 million compared with $221 million incurred in the year-ago period.

Free cash flow in the quarter was $50 million compared with $757 million in the year-ago period.

Guidance

Honeywell updated guidance for full-year 2022. For the year, the company anticipates earnings to be in the range of $8.50 to $8.80 per share, higher than $8.40 to $8.70 guided earlier. It anticipates revenues to be between $35.5 billion and $36.4 billion, with organic revenues expected to be up 4-7%. Notably, it previously anticipated revenues within $35.4 billion to $36.4 billion.

For 2022, Honeywell expects operating cash flow in the range of $5.7 billion to $6.1 billion and free cash flow to be between $4.7 billion and $5.1 billion.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies are discussed below.

Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GFF’s earnings surprise in the last four quarters was 97%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, GFF’s earnings estimates have increased 9% for fiscal 2022 (ending September 2022). The stock has declined 15.7% in the past three months.

Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 11.5%, on average.

In the past 60 days, AA’s earnings estimates have increased 72.1% for 2022. The stock has rallied 24.5% in the past three months.

Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.

Earnings estimates of Ferguson have increased 7% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 19.7% in the past three months.

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