Honeywell Q1: Strong Growth In Aerospace Offsets Industrial Dip, Narrows Outlook Amid Uncertain Demand

Honeywell International Inc. (NASDAQ:HON) shares are trading higher after the company reported first-quarter results.

Revenue grew 8% year-over-year (Y/Y, organic: +4% Y/Y) to $9.82 billion, beating the consensus of $9.59 billion.

The sales increase was attributed to double-digit organic growth in the defense, space, and building solutions businesses.

Sales by Segments: Aerospace Technologies $4.17 billion (+14% Y/Y), Industrial Automation $2.38 billion (-4% Y/Y), Building Automation $1.69 billion (+19% Y/Y) and Energy and Sustainability Solutions $1.56 billion (+2% Y/Y).

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The backlog increased by 8%, excluding acquisitions, primarily due to strong performance in its Building Automation and Energy and Sustainability Solutions businesses.

Operating margin contracted by 30 bps Y/Y to 20.1%, and Segment margin remained flat Y/Y at 23.0% in the quarter.

Adjusted EPS was $2.51 (+7% Y/Y), beating the consensus of $2.21.

Operating cash flow stood at $597 million (+33% Y/Y), and free cash flow was $346 million (+61% Y/Y).

Honeywell held cash and equivalents of about $9.66 billion as of March 31, 2025.

The company deployed $2.9 billion of capital in the first quarter, including a share buyback worth $1.9 billion.

Dividend: Honeywell declared a quarterly dividend per share of $1.13, payable on June 6, 2025, out of surplus to holders of record as of business on May 16, 2025.

Outlook: For FY25, Honeywell revised its adjusted EPS guidance to $10.20-$10.50, from $10.10-$10.50 earlier (vs. consensus of $10.29) and sales guidance to $39.60 billion-$40.50 billion (from the prior $39.60 billion-$40.60 billion) compared to street view of $40.27 billion.

Honeywell anticipates second-quarter adjusted EPS of $2.60-$2.70, (vs. consensus of $2.56) and sales of $9.80 billion-$10.10 billion, slightly below the street view of $10.17 billion.

“Despite the volatile macroeconomic backdrop, we maintained segment margin consistent with last year, which is a testament to the value delivered by our Accelerator operating system,” said Honeywell chairman and CEO Vimal Kapur.

”Though we have not yet seen it in our results, we recognize we face an uncertain global demand environment for the remainder of 2025, and our company will work tirelessly, leveraging all tools available to us, to deliver for customers and shareholders.”

Acquisitions: In March, the company announced a $2.16 billion all-cash acquisition of Sundyne from Warburg Pincus, which is expected to close in the second quarter of 2025.

Honeywell expects the acquisition to boost sales growth, segment margins, and adjusted EPS in its first full year.

Also, in February, Honeywell disclosed that its board of directors planned the separation of Automation and Aerospace businesses, which is expected to be completed in the second half of 2026.

Investors can gain exposure to the stock via Gabelli Commercial Aerospace and Defense ETF (NYSE:GCAD) and Amplify CWP Enhanced Dividend Income ETF (NYSE:DIVO).

Price Action: HON shares are up 4.46% at $209.61 premarket at the last check Tuesday.

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