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Honeywell (HON) Beats on Q2 Earnings, Lifts 2023 Guidance
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Honeywell International Inc.’s (HON - Free Report) second-quarter 2023 adjusted earnings (excluding a penny from non-recurring items) of $2.23 per share surpassed the Zacks Consensus Estimate of $2.20. The bottom line increased 6.2% year over year.
Total revenues of $9,146 million missed the Zacks Consensus Estimate of $9,171 million. The top line inched up 2.2% from the year-ago quarter. Organic sales increased 3% due to growth in commercial aerospace, process solutions and UOP business.
Segmental Details
Aerospace’s quarterly revenues were $3,341 million, up 15% year over year. Higher commercial aviation aftermarket sales due to continued flight hour recovery in air transport drove the segment’s performance. Our estimate for Aerospace revenues in the second quarter was $3,189.7 million.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell Building Technologies’ revenues dipped 1% to $1,510 million due to a decline in building products sales as a result of softer volumes in security and building management systems. Our estimate for segmental revenues was pegged higher at $1,576 million as we expected institutional demand in airports, healthcare and education to have boosted the unit’s performance.
Performance Materials and Technologies’ revenues totaled $2,861 million, up 6% year over year. Our estimate for Performance Materials and Technologies revenues in the second quarter was $2,819 million. Segmental revenues were driven by strong organic growth in the UOP business, strength in projects and lifecycle solutions and services, and robust demand for fluorine products.
Safety and Productivity Solutions revenues decreased 22% to $1,433 million due to lower volumes in productivity solutions and services and warehouse and workflow solutions. Our estimate for the segment’s revenues was $1,557.9 million. We expected growth in the aftermarket services business to have helped the unit hold better.
Costs/Margins
The company’s total cost of sales (cost of products and services) in the reported quarter was $5,626 million, down nearly 1% year over year. Selling, general and administrative expenses were $1,262 million, down 3.4%. Interest expenses and other financial charges were $187 million compared with $87 million a year ago.
Operating income in the second quarter was $1,883 million, up 17.6% year over year. The operating income margin was 20.6% compared with 17.9% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the second quarter, Honeywell, carrying a Zacks Rank #2 (Buy), had cash and cash equivalents of $8,626 million compared with $9,627 million at the end of December 2022. Long-term debt was $17,600 million, higher than $15,123 million at 2022-end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
In the first six months of 2023, Honeywell generated net cash of $576 million from operating activities compared with $825 million in the year-ago period. Capital expenditure totaled $426 million in the first half of 2023 compared with $341 million in the year-ago period.
Free cash flow was $1,127 million in the second quarter compared with $843 million in the year-ago period.
2023 Outlook Improved
For 2023, Honeywell expects sales of $36.7-$37.3 billion compared with $36.5-$37.3 billion anticipated earlier. The mid-point of the guided range — $37 billion — lies above the Zacks Consensus Estimate of $36.87 billion. Organic sales are expected to increase 4-6% compared with a rise of 3-6% estimated earlier.
HON expects segment margin of 22.4-22.6% compared with 22.3-22.6% predicted earlier. Adjusted earnings per share are expected to be between $9.05 and $9.25 compared with $9.00 and $9.25 anticipated earlier. The mid-point of the guided range — $9.15 — lies below the Zacks Consensus Estimate of $9.16.
Honeywell continues to expect operating cash flow of $4.9-$5.3 billion for 2023. Free cash flow is still expected to be $3.9-$4.3 billion.
Performance of Some Other Conglomerates
General Electric Company (GE - Free Report) reported second-quarter 2023 adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of 46 cents per share. The bottom line decreased 12.8% year over year.
General Electric’s total revenues of $15,861 million beat the consensus estimate of $15,085 million. The top line increased 14.9% year over year, with strong growth in the Aerospace segment.
3M Company (MMM - Free Report) reported second-quarter 2023 adjusted earnings (excluding $14.52 from non-recurring items) of $2.17 per share, which surpassed the Zacks Consensus Estimate of $1.65. The bottom line declined in double digits year over year.
3M’s net sales of $8,325 million outperformed the Zacks Consensus Estimate of $7,955 million. However, the top line declined 4.3% year over year due to an adverse foreign currency impact of 0.9% and a 1.2% negative impact from divestitures. Organic sales fell 2.2%.
Danaher Corporation (DHR - Free Report) reported second-quarter 2023 adjusted earnings (excluding 56 cents from non-recurring items) of $2.05 per share, which surpassed the Zacks Consensus Estimate of $2. The bottom line decreased 25.5% year over year with a decline in sales.
Danaher’s net sales of $7,157 million outperformed the consensus estimate of $7,098 million. However, revenues declined 7.7% year over year due to a decrease in the sale of COVID-related products.
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Honeywell (HON) Beats on Q2 Earnings, Lifts 2023 Guidance
Honeywell International Inc.’s (HON - Free Report) second-quarter 2023 adjusted earnings (excluding a penny from non-recurring items) of $2.23 per share surpassed the Zacks Consensus Estimate of $2.20. The bottom line increased 6.2% year over year.
Total revenues of $9,146 million missed the Zacks Consensus Estimate of $9,171 million. The top line inched up 2.2% from the year-ago quarter. Organic sales increased 3% due to growth in commercial aerospace, process solutions and UOP business.
Segmental Details
Aerospace’s quarterly revenues were $3,341 million, up 15% year over year. Higher commercial aviation aftermarket sales due to continued flight hour recovery in air transport drove the segment’s performance. Our estimate for Aerospace revenues in the second quarter was $3,189.7 million.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Honeywell Building Technologies’ revenues dipped 1% to $1,510 million due to a decline in building products sales as a result of softer volumes in security and building management systems. Our estimate for segmental revenues was pegged higher at $1,576 million as we expected institutional demand in airports, healthcare and education to have boosted the unit’s performance.
Performance Materials and Technologies’ revenues totaled $2,861 million, up 6% year over year. Our estimate for Performance Materials and Technologies revenues in the second quarter was $2,819 million. Segmental revenues were driven by strong organic growth in the UOP business, strength in projects and lifecycle solutions and services, and robust demand for fluorine products.
Safety and Productivity Solutions revenues decreased 22% to $1,433 million due to lower volumes in productivity solutions and services and warehouse and workflow solutions. Our estimate for the segment’s revenues was $1,557.9 million. We expected growth in the aftermarket services business to have helped the unit hold better.
Costs/Margins
The company’s total cost of sales (cost of products and services) in the reported quarter was $5,626 million, down nearly 1% year over year. Selling, general and administrative expenses were $1,262 million, down 3.4%. Interest expenses and other financial charges were $187 million compared with $87 million a year ago.
Operating income in the second quarter was $1,883 million, up 17.6% year over year. The operating income margin was 20.6% compared with 17.9% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the second quarter, Honeywell, carrying a Zacks Rank #2 (Buy), had cash and cash equivalents of $8,626 million compared with $9,627 million at the end of December 2022. Long-term debt was $17,600 million, higher than $15,123 million at 2022-end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
In the first six months of 2023, Honeywell generated net cash of $576 million from operating activities compared with $825 million in the year-ago period. Capital expenditure totaled $426 million in the first half of 2023 compared with $341 million in the year-ago period.
Free cash flow was $1,127 million in the second quarter compared with $843 million in the year-ago period.
2023 Outlook Improved
For 2023, Honeywell expects sales of $36.7-$37.3 billion compared with $36.5-$37.3 billion anticipated earlier. The mid-point of the guided range — $37 billion — lies above the Zacks Consensus Estimate of $36.87 billion. Organic sales are expected to increase 4-6% compared with a rise of 3-6% estimated earlier.
HON expects segment margin of 22.4-22.6% compared with 22.3-22.6% predicted earlier. Adjusted earnings per share are expected to be between $9.05 and $9.25 compared with $9.00 and $9.25 anticipated earlier. The mid-point of the guided range — $9.15 — lies below the Zacks Consensus Estimate of $9.16.
Honeywell continues to expect operating cash flow of $4.9-$5.3 billion for 2023. Free cash flow is still expected to be $3.9-$4.3 billion.
Performance of Some Other Conglomerates
General Electric Company (GE - Free Report) reported second-quarter 2023 adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of 46 cents per share. The bottom line decreased 12.8% year over year.
General Electric’s total revenues of $15,861 million beat the consensus estimate of $15,085 million. The top line increased 14.9% year over year, with strong growth in the Aerospace segment.
3M Company (MMM - Free Report) reported second-quarter 2023 adjusted earnings (excluding $14.52 from non-recurring items) of $2.17 per share, which surpassed the Zacks Consensus Estimate of $1.65. The bottom line declined in double digits year over year.
3M’s net sales of $8,325 million outperformed the Zacks Consensus Estimate of $7,955 million. However, the top line declined 4.3% year over year due to an adverse foreign currency impact of 0.9% and a 1.2% negative impact from divestitures. Organic sales fell 2.2%.
Danaher Corporation (DHR - Free Report) reported second-quarter 2023 adjusted earnings (excluding 56 cents from non-recurring items) of $2.05 per share, which surpassed the Zacks Consensus Estimate of $2. The bottom line decreased 25.5% year over year with a decline in sales.
Danaher’s net sales of $7,157 million outperformed the consensus estimate of $7,098 million. However, revenues declined 7.7% year over year due to a decrease in the sale of COVID-related products.