Honeywell's Q1 Earnings & Revenues Beat Estimates, Increase Y/Y

Honeywell International Inc. HON reported first-quarter 2025 adjusted earnings of $2.51 per share, which surpassed the Zacks Consensus Estimate of $2.21. The bottom line increased 7% year over year on an adjusted basis. On a reported basis, the company’s earnings were $2.22 per share, flat year over year.

Total revenues of $9.82 billion beat the consensus estimate of $9.57 billion. The top line increased 8% from the year-ago quarter, driven by strength in the Aerospace Technologies segment. Organic sales increased 4% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Honeywell Q1 Performance by Business Segment

In October 2023, HON planned to realign its business segments to three megatrends, which were automation, the future of aviation and energy transition. Beginning in the second quarter of 2024, the company started operating under the segments discussed below.

Aerospace Technologies’ quarterly revenues were $4.17 billion, up 14% year over year. Organic sales increased 9% year over year. Strength in both commercial aftermarket and defense and space markets, driven by increased flight activity, augmented the top line. Our estimate for the segment’s revenues was $4.03 billion.

Industrial Automation revenues declined 4% year over year to $2.38 billion. Organic sales fell 2% year over year. Results benefited from growth in the warehouse and workflow solutions business, which was offset by persistent softness in the safety & sensing technologies business. Our estimate for segmental revenues was pegged at $2.46 billion.

Building Automation revenues totaled $1.69 billion, up 19% year over year. Organic sales increased 8% year over year. The upside was driven by ongoing strength in both the building solutions and building products businesses. Our estimate for the segment’s revenues was $1.52 billion.

Energy and Sustainability Solutions’ revenues increased 2% to $1.56 billion. Organic sales fell 2% year over year. The results were driven by strength across UOP, specialty chemicals and materials businesses. However, weakness in the Advanced Materials business offset the gains. Our estimate for the segment’s revenues was $1.52 billion.

Honeywell International Inc. Price, Consensus and EPS Surprise

Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote

Costs & Margins of HON

The company’s total cost of sales (cost of products and services) was about $6.04 billion, up 8.1% year over year. Selling, general and administrative expenses were $1.36 billion, up 4.5%. Interest expenses and other financial charges were $286 million, reflecting an increase of 30% year over year.

Operating income was $1.97 billion, up 6% year over year. The operating income margin was 20.1% compared with 20.4% in the year-ago period.

HON’s Balance Sheet & Cash Flow

Exiting first-quarter 2025, Honeywell had cash and cash equivalents of $9.7 billion compared with $10.6 billion at the end of December 2024. Long-term debt was $25.7 billion, higher than $25.5 billion at 2024-end.

In the first quarter, it generated net cash of $597 million from operating activities compared with $448 million in the prior-year period. Capital expenditure totaled $251 million compared with $233 million in the previous year quarter.

Free cash flow in the quarter was $346 million, up 61% from the year-ago quarter’s level.

Honeywell’s 2025 Guidance

For 2025, Honeywell expects sales to be in the range of $39.6-$40.5 billion. Organic sales are expected to increase in the range of 2-5%.

HON expects a segment margin of 23.2-23.5% compared with 22.6% in 2024. Adjusted earnings per share are expected to be between $10.20 and $10.50. The metric indicates an increase of 3-6% on a year-over-year basis. 

It expects operating cash flow to be in the range of $6.7-$7.1 billion. Free cash flow is expected to be in the band of $5.4-$5.8 billion.

Major Developments for Honeywell

As part of its business portfolio transformation strategy, the company also plans to divest its Advanced Materials business and earlier entered into a deal to divest its Personal Protective Equipment unit. This will result in the creation of three publicly listed companies - Honeywell Automation, Honeywell Aerospace and Advanced Materials.

Honeywell Automation will operate as a pure-play automation leader with a global scale and robust installed base. Honeywell Aerospace will produce technologies for plane cockpits while Advanced Materials will focus on solutions for sectors such as healthcare.

The planned separation is anticipated to be completed in the second half of 2026 in a tax-free manner to HON’s shareholders.

Zacks Rank & Stocks to Consider

Honeywell presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked companies are discussed below:

Griffon Corporation GFF currently sports a Zacks Rank of 1. GFF delivered a trailing four-quarter average earnings surprise of 14.7%. In the past 60 days, the consensus estimate for Griffon’s fiscal 2025 (ending September 2025) earnings has increased 2.9%.

AerSale Corporation ASLE presently sports a Zacks Rank 1. ASLE delivered an earnings surprise of 28.6% in the last reported quarter. In the past 60 days, the consensus estimate for AerSale’s 2025 earnings has increased 32.1%.

Federal Signal Corporation FSS currently carries a Zacks Rank #2 (Buy). FSS delivered a trailing four-quarter average earnings surprise of 9.5%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 0.8%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research