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Honeywell (HON) Beats on Q1 Earnings, Raises FY23 Guidance
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Honeywell International Inc.’s (HON - Free Report) first-quarter 2023 earnings of $2.07 per share surpassed the Zacks Consensus Estimate of $1.93. This compares with our estimate for adjusted earnings per share of $1.92. The bottom line improved 8.4% year over year.
Total revenues of $8,864 million beat the Zacks Consensus Estimate of $8492.6 million. Our estimate for total revenues in the first quarter stood at $8483.7 million. The top line increased 6% from the year-ago quarter. Organic sales increased 8% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $3,111 million, up 13% year over year. Higher commercial aviation aftermarket sales due to continued flight hour recovery in air transport drove the segment’s performance.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell Building Technologies’ revenues increased 4% to $1,487 million, owing to growth in building solutions and strong demand for fire offerings. Our estimate for segmental revenues was $1,489.9 million.
Performance Materials and Technologies’ revenues totaled $2,749 million, up 12%. Our estimate for Performance Materials and Technologies revenues in the first quarter was $2,504.2 million. Segmental revenues were driven by strong organic growth in the UOP business and robust demand for fluorine products.
Safety and Productivity Solutions revenues decreased 13% to $1,515 million due to lower volumes in warehouse and workflow solutions and productivity solutions and services. Our estimate for the segment’s revenues was $1,691.4 million.
Costs/Margins
The company’s total cost of sales (cost of products and services) in the reported quarter was $5,498 million, up 3.3% year over year. Selling, general and administrative expenses were $1,317 million, down approximately 8%. Interest expenses and other financial charges were $170 million compared with $85 million a year ago.
Operating income in the first quarter was $1,692 million, up 33.1% year over year. The operating income margin was 19.1% compared with 15.2% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the first quarter, Honeywell, carrying a Zacks Rank #2 (Buy), had cash and cash equivalents of $6,869 million compared with $9,627 million at the end of December 2022. Long-term debt was $14,670 million, lower than $15,123 million at the end of 2022.
In first-quarter 2023, HON used net cash of $784 million in operating activities compared with $36 million cash generated in the year-ago period. Capital expenditure totaled $193 million in the first quarter compared with $183 million incurred in the year-ago period.
Free cash flow was negative $977 million in the first quarter compared with a positive $50 million in the year-ago period.
2023 Outlook Improved
For 2023, Honeywell expects sales of $36.5-$37.3 billion compared with $36-$37 billion anticipated earlier. The mid-point of the guided range — $36.9 billion — lies above the Zacks Consensus Estimate of $36.64 billion.
The company expects organic sales growth of 3-6% in the year compared with 2-5% estimated earlier. Segmental margin is anticipated to be 22.3-22.6%, indicating a year-over-year rise of 60-90 basis points (an increase of 50-90 basis points was anticipated earlier).
Honeywell expects adjusted earnings per share of $9-9.25, suggesting a year-over-year rise of 3-6% (an increase of 0-5% was predicted earlier). The mid-point of the guided range — $9.13 — lies above the Zacks Consensus Estimate of $9.03. Operating cash flow is still expected to be $4.9-$5.3 billion for 2023, while free cash flow is anticipated to be $3.9-$4.3 billion.
Performance of Some Other Conglomerates
General Electric Company (GE - Free Report) , sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2023 adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate of 13 cents. The bottom line increased 12.5% year over year. You can see the complete list of today’s Zacks #1 Rank stocks.
General Electric’s total revenues of $14,486 million beat the Zacks Consensus Estimate of $13,395 million. The top line increased 14.3% year over year.
Danaher Corporation (DHR - Free Report) , carrying a Zacks Rank #3 (Hold), reported first-quarter 2023 adjusted earnings (excluding 42 cents from non-recurring items) of $2.36 per share, which surpassed the Zacks Consensus Estimate of $2.26. The bottom line decreased 14.5% year over year with a decline in sales.
Danaher’s net sales of $7,167 million outperformed the Zacks Consensus Estimate of $7,028.5 million. However, it declined 7% year over year due to a decrease in the sale of COVID-related products.
3M Company (MMM - Free Report) , carrying a Zacks Rank #3, reported first-quarter 2023 adjusted earnings (excluding 21 cents from non-recurring items) of $1.97 per share, which surpassed the Zacks Consensus Estimate of $1.60. The bottom line declined in double digits year over year due to the exit of the company’s Russia operations and a 3.4 percentage point headwind from the decline in disposable respirator demand.
3M’s net sales of $8,031 million outperformed the Zacks Consensus Estimate of $7,635 million. However, the top line declined 9% year over year due to an adverse foreign currency impact of 2.8% and a 1.3% negative impact from divestitures. Organic sales fell 4.9%.
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Honeywell (HON) Beats on Q1 Earnings, Raises FY23 Guidance
Honeywell International Inc.’s (HON - Free Report) first-quarter 2023 earnings of $2.07 per share surpassed the Zacks Consensus Estimate of $1.93. This compares with our estimate for adjusted earnings per share of $1.92. The bottom line improved 8.4% year over year.
Total revenues of $8,864 million beat the Zacks Consensus Estimate of $8492.6 million. Our estimate for total revenues in the first quarter stood at $8483.7 million. The top line increased 6% from the year-ago quarter. Organic sales increased 8% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $3,111 million, up 13% year over year. Higher commercial aviation aftermarket sales due to continued flight hour recovery in air transport drove the segment’s performance.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Honeywell Building Technologies’ revenues increased 4% to $1,487 million, owing to growth in building solutions and strong demand for fire offerings. Our estimate for segmental revenues was $1,489.9 million.
Performance Materials and Technologies’ revenues totaled $2,749 million, up 12%. Our estimate for Performance Materials and Technologies revenues in the first quarter was $2,504.2 million. Segmental revenues were driven by strong organic growth in the UOP business and robust demand for fluorine products.
Safety and Productivity Solutions revenues decreased 13% to $1,515 million due to lower volumes in warehouse and workflow solutions and productivity solutions and services. Our estimate for the segment’s revenues was $1,691.4 million.
Costs/Margins
The company’s total cost of sales (cost of products and services) in the reported quarter was $5,498 million, up 3.3% year over year. Selling, general and administrative expenses were $1,317 million, down approximately 8%. Interest expenses and other financial charges were $170 million compared with $85 million a year ago.
Operating income in the first quarter was $1,692 million, up 33.1% year over year. The operating income margin was 19.1% compared with 15.2% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the first quarter, Honeywell, carrying a Zacks Rank #2 (Buy), had cash and cash equivalents of $6,869 million compared with $9,627 million at the end of December 2022. Long-term debt was $14,670 million, lower than $15,123 million at the end of 2022.
In first-quarter 2023, HON used net cash of $784 million in operating activities compared with $36 million cash generated in the year-ago period. Capital expenditure totaled $193 million in the first quarter compared with $183 million incurred in the year-ago period.
Free cash flow was negative $977 million in the first quarter compared with a positive $50 million in the year-ago period.
2023 Outlook Improved
For 2023, Honeywell expects sales of $36.5-$37.3 billion compared with $36-$37 billion anticipated earlier. The mid-point of the guided range — $36.9 billion — lies above the Zacks Consensus Estimate of $36.64 billion.
The company expects organic sales growth of 3-6% in the year compared with 2-5% estimated earlier. Segmental margin is anticipated to be 22.3-22.6%, indicating a year-over-year rise of 60-90 basis points (an increase of 50-90 basis points was anticipated earlier).
Honeywell expects adjusted earnings per share of $9-9.25, suggesting a year-over-year rise of 3-6% (an increase of 0-5% was predicted earlier). The mid-point of the guided range — $9.13 — lies above the Zacks Consensus Estimate of $9.03. Operating cash flow is still expected to be $4.9-$5.3 billion for 2023, while free cash flow is anticipated to be $3.9-$4.3 billion.
Performance of Some Other Conglomerates
General Electric Company (GE - Free Report) , sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2023 adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate of 13 cents. The bottom line increased 12.5% year over year. You can see the complete list of today’s Zacks #1 Rank stocks.
General Electric’s total revenues of $14,486 million beat the Zacks Consensus Estimate of $13,395 million. The top line increased 14.3% year over year.
Danaher Corporation (DHR - Free Report) , carrying a Zacks Rank #3 (Hold), reported first-quarter 2023 adjusted earnings (excluding 42 cents from non-recurring items) of $2.36 per share, which surpassed the Zacks Consensus Estimate of $2.26. The bottom line decreased 14.5% year over year with a decline in sales.
Danaher’s net sales of $7,167 million outperformed the Zacks Consensus Estimate of $7,028.5 million. However, it declined 7% year over year due to a decrease in the sale of COVID-related products.
3M Company (MMM - Free Report) , carrying a Zacks Rank #3, reported first-quarter 2023 adjusted earnings (excluding 21 cents from non-recurring items) of $1.97 per share, which surpassed the Zacks Consensus Estimate of $1.60. The bottom line declined in double digits year over year due to the exit of the company’s Russia operations and a 3.4 percentage point headwind from the decline in disposable respirator demand.
3M’s net sales of $8,031 million outperformed the Zacks Consensus Estimate of $7,635 million. However, the top line declined 9% year over year due to an adverse foreign currency impact of 2.8% and a 1.3% negative impact from divestitures. Organic sales fell 4.9%.