HONEYWELL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2024 RESULTS; ISSUES 2025 GUIDANCE

• Fourth Quarter Sales of $10.1 Billion, Reported Sales Up 7%, Organic¹ Sales Up 2%, Exceeding Previous Guidance
• Fourth Quarter Earnings Per Share of $1.96 and Adjusted Earnings Per Share¹ of $2.47, Exceeding Previous Guidance
• Full Year Operating Cash Flow of $6.1 Billion and Free Cash Flow¹ of $4.9 Billion, at High End of Previous Guidance
• Deployed a Record $14.6 Billion of Capital in 2024, Including $8.9 Billion to Acquisitions
• Expect 2025 Adjusted Earnings Per Share^2,3 of $10.10 - $10.50, Up 2% - 6%
• Honeywell Completes Comprehensive Portfolio Review, Plans to Separate Automation and Aerospace, Enabling the Creation of Three Industry-Leading Public Companies

CHARLOTTE, N.C., Feb. 6, 2025 /PRNewswire/ -- Honeywell (NASDAQ:HON) today announced results for the fourth quarter and 2024 that met or exceeded the company's updated full-year guidance. The company also provided its outlook for 2025 and separately announced its Board of Directors completed the comprehensive business portfolio evaluation launched a year ago by chairman and chief executive officer Vimal Kapur and intends to pursue a full separation of Automation and Aerospace Technologies.

The company reported fourth-quarter year-over-year sales growth of 7% and organic¹ sales growth of 2%, or 6% excluding the impact of the previously announced Bombardier agreement⁴, led by double-digit organic¹ sales growth in defense and space and building solutions. Despite ongoing macroeconomic challenges, Honeywell's backlog grew 11% to a record $35.3 billion. Earnings per share for the fourth quarter was $1.96, up 3% year over year. Adjusted earnings per share¹ was $2.47, down 8% year over year, exceeding previous guidance, or up 9% excluding the $0.45 impact of the Bombardier agreement⁴. Operating income increased 10% and operating margin expanded 50 basis points to 17.3%. Segment profit¹ decreased 8% to $2.1 billion and segment margin¹ contracted 350 basis points to 20.9%, or 70 basis points to 23.7% excluding the impact of the Bombardier agreement⁴. Operating cash flow was $2.3 billion, down 23%, and free cash flow¹ was $1.9 billion, down 27%.

For the full year, sales increased 5%, and 3% organically¹ (or 4% organically ex. BBD⁴), exceeding previous guidance. Operating income grew 5% and operating margin remained flat, while segment profit¹ grew 1%, (or 6% ex. BBD⁴), with segment margin¹ contraction of 90 basis points (or 20 basis points ex. BBD⁴), driven by another quarter of strength in long-cycle businesses outpacing short-cycle recovery within Industrial Automation. Honeywell reported full-year earnings per share of $8.71, up 3% year over year. Full year adjusted earnings per share¹ increased 4% to $9.89 and increased 9% to $10.34 excluding the $0.45 impact of the Bombardier agreement⁴.

"We delivered a strong end to a successful year, exceeding the high end of our guidance for fourth quarter sales and adjusted earnings per share¹ while navigating a dynamic operating environment," said Vimal Kapur, chairman and CEO of Honeywell. "In 2024, we also made significant progress optimizing Honeywell's portfolio. We completed four strategic bolt-on acquisitions representing $9 billion in capital deployed and announced two key divestitures in alignment with our portfolio simplification strategy, including the planned spin of our Advanced Materials business. As we look toward 2025, I am confident that our revitalized portfolio optimization strategy, established history of operational excellence, and robust installed base will unlock further value creation for our shareholders, customers, and employees."

Honeywell also announced its outlook for 2025. The company expects sales of $39.6 billion to $40.6 billion with organic¹ sales growth in the range of 2% to 5%. Segment margin² is expected to be in the range of 23.2% to 23.6%, with segment margin² expansion of 60 to 100 basis points. Adjusted earnings per share^2,3 is expected to be in the range of $10.10 to $10.50, up 2% to 6%. The company expects operating cash flow of $6.7 billion to $7.1 billion, and free cash flow¹ of $5.4 billion to $5.8 billion. Excluding the impact of the Bombardier agreement⁴, the company expects organic¹ sales growth of 1% to 4%, segment margin² down 10 to up 30 basis points year over year, and adjusted earnings per share^2,3 down 2% to up 2% year over year. Guidance assumes a mid-year close of the previously announced sale of the company's Personal Protective Equipment business. A summary of the company's 2025 guidance can be found in Table 1.

Separately, Honeywell announced that its Board of Directors concluded its comprehensive portfolio review and has decided to pursue a separation of its Automation and Aerospace businesses. The planned separation, coupled with the previously announced plan to spin Advanced Materials, will result in three publicly listed industry leaders with distinct strategies and growth drivers. The separation is intended to be completed in the second half of 2026 and in a manner that is tax-free to Honeywell shareholders.

Kapur commented, "The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies, and unlock significant value for shareholders and customers. Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value."

Fourth-Quarter Performance

Honeywell sales for the fourth quarter were up 7% year over year on a reported basis and 2% on an organic¹ basis year over year. The fourth-quarter financial results can be found in Tables 2 and 3.

Aerospace Technologies sales for the fourth quarter increased 1% on an organic¹ basis year over year, or 11% excluding the impact of the Bombardier agreement⁴, driven by strong performance in commercial aftermarket and defense and space. Commercial aftermarket led growth in the quarter, up 17% organically as continued demand in air transport drove increased flight activity. Defense and space sales increased 14% organically as a result of ongoing global demand and further supply chain improvements. Segment margin contracted 780 basis points to 20.3% as higher volume leverage and productivity actions were more than offset by the Bombardier agreement⁴, cost inflation, and mix pressure in our original equipment business. Excluding Bombardier⁴, segment margin contracted 100 basis points to 27.1%.

Industrial Automation sales were flat on an organic¹ basis year over year for the fourth quarter and up 3% sequentially. Process solutions grew 3% organically, the third consecutive quarter of both year over year and sequential growth, driven by continued strength in lifecycle solutions and services. Productivity solutions and services grew a third consecutive quarter and in full year 2024 when excluding the impact of prior year license and settlement payments. Sensing and safety technologies decreased 4% year over year, but the sensing business returned to growth in the quarter. Orders were a bright spot in the quarter, up 7% highlighted by double-digit growth in warehouse and workflow solutions and the sensing portion of sensing and safety technologies. Segment margin contracted 200 basis points to 19.6%, driven by cost inflation, prior year license and settlement payments, and one-time asset write-downs, partially offset by commercial excellence and productivity actions.

Building Automation sales for the fourth quarter were up 8% organically¹ year over year. Organic growth of 11% in building solutions was led by mid-teens growth in North America and over 50% growth in the Middle East. Building products grew organically in the fourth quarter, led by double-digit growth in fire products. Overall, Europe returned to growth in the quarter, while high growth regions grew by 14%. Orders grew double digits year over year on an organic basis due to strength in both building solutions and fire products. Segment margin expanded 250 basis points to 26.8% driven by productivity actions, commercial excellence, and benefit from the access solutions acquisition partially offset by cost inflation.

Energy and Sustainability Solutions sales for the fourth quarter grew 1% on an organic¹ basis. UOP led growth for ESS, up 3% on robust gas processing solutions and equipment demand. Advanced Materials sales declined 1% organically in the quarter as expected macro-related headwinds in fluorine products were partially offset by continued strength in our specialty chemicals and materials business. Orders grew 19% year over year, the third consecutive quarter of double-digit orders growth. Segment margin contracted 180 basis points to 24.9%, driven by cost inflation and volume deleverage in advanced materials partially offset by commercial excellence and benefit from the LNG acquisition.

About Bombardier Agreement

During the fourth quarter, Honeywell announced the signing of a strategic agreement with Bombardier, a global leader in aviation and manufacturer of world-class business jets, to provide advanced technology for current and future Bombardier aircraft in avionics, propulsion, and satellite communications technologies. The collaboration will advance new technology to enable a host of high-value upgrades for the installed Bombardier operator base, as well as lay innovative foundations for future aircraft. Honeywell estimates the value of this partnership to the company at $17 billion over its life. While the commercial agreement impacted Honeywell's fourth quarter 2024 financials⁴, the company is confident it will lead to long-term value creation for Honeywell shareholders.

Conference Call Details

Honeywell will discuss its fourth-quarter results and full-year 2025 guidance during an investor conference call starting at 8:30 a.m. Eastern Standard Time today. A live webcast of the investor call as well as related presentation materials will be available through the Investor Relations section of the company's website (www.honeywell.com/investor). A replay of the webcast will be available for 30 days following the presentation. 

 

 

During the third quarter of 2024, Honeywell concluded the assets and liabilities of the personal protective equipment business (part of the Sensing and Safety Technologies business unit within the Industrial Automation segment) met the held for sale criteria as of September 30, 2024; therefore, Honeywell presented the associated assets and liabilities of the business as held for sale in the Consolidated Balance Sheet as of September 30, 2024. The Company recognized a valuation allowance of $125 million in the third quarter of 2024 to write down the disposal group to fair value, less costs to sell, as well as recorded an impairment charge of $37 million (after tax) on indefinite-lived intangible assets. In the fourth quarter, the Company recognized an increase to the valuation allowance of $94 million.

About Honeywell

Honeywell is an integrated operating company serving a broad range of industries and geographies around the world. Our business is aligned with three powerful megatrends – automation, the future of aviation, and energy transition – underpinned by our Honeywell Accelerator operating system and Honeywell Connected Enterprise integrated software platform. As a trusted partner, we help organizations solve the world's toughest, most complex challenges, providing actionable solutions and innovations that help make the world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom. 

Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media.

We describe many of the trends and other factors that drive our business and future results in this release. Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes, or anticipates will or may occur in the future and include statements related to the proposed spin-off of the Company's Advanced Materials business into a stand-alone, publicly traded company and the proposed separation of Automation and Aerospace. They are based on management's assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors, many of which are difficult to predict and outside of our control. They are not guarantees of future performance, and actual results, developments, and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties, including ongoing macroeconomic and geopolitical risks, such as lower GDP growth or recession, supply chain disruptions, capital markets volatility, inflation, and certain regional conflicts, that can affect our performance in both the near- and long-term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this release can or will be achieved. These forward-looking statements should be considered in light of the information included in this release, our Form 10-K, and our other filings with the Securities and Exchange Commission. Any forward-looking plans described herein are not final and may be modified or abandoned at any time.

This release contains financial measures presented on a non-GAAP basis. Honeywell's non-GAAP financial measures used in this release are as follows:

• Segment profit, on an overall Honeywell basis;
• Segment profit margin, on an overall Honeywell basis;
• Organic sales growth;
• Free cash flow; and
• Adjusted earnings per share.

Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain measures presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Refer to the Appendix attached to this release for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.

 

 

 

 

Appendix

Non-GAAP Financial Measures

The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in this press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP).

Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. Management believes the change to adjust for amortization of acquisition-related intangibles and certain acquisition- and divestiture-related costs provides investors with a more meaningful measure of its performance period to period, aligns the measure to how management will evaluate performance internally, and makes it easier for investors to compare our performance to peers. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain measures presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Other companies may calculate these non-GAAP measures differently, limiting the usefulness of these measures for comparative purposes.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitations of these non-GAAP financial measures are that they exclude significant expenses and income that are required by GAAP to be recognized in the consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Investors are urged to review the reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single financial measure to evaluate Honeywell's business.

We define organic sales percentage as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

A quantitative reconciliation of reported sales percent change to organic sales percent change has not been provided for forward-looking measures of organic sales percent change because management cannot reliably predict or estimate, without unreasonable effort, the fluctuations in global currency markets that impact foreign currency translation, nor is it reasonable for management to predict the timing, occurrence and impact of acquisition and divestiture transactions, all of which could significantly impact our reported sales percent change.

We define operating income as net sales less total cost of products and services sold, research and development expenses, impairment of assets held for sale, and selling, general and administrative expenses. We define segment profit, on an overall Honeywell basis, as operating income, excluding stock compensation expense, pension and other postretirement service costs, amortization of acquisition-related intangibles, certain acquisition- and divestiture-related costs and impairments, and repositioning and other charges. We define segment profit margin, on an overall Honeywell basis, as segment profit divided by net sales. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

A quantitative reconciliation of operating income to segment profit, on an overall Honeywell basis, has not been provided for all forward-looking measures of segment profit and segment profit margin included herein. Management cannot reliably predict or estimate, without unreasonable effort, the impact and timing on future operating results arising from items excluded from segment profit, particularly pension mark-to-market expense as it is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. The information that is unavailable to provide a quantitative reconciliation could have a significant impact on our reported financial results. To the extent quantitative information becomes available without unreasonable effort in the future, and closer to the period to which the forward-looking measures pertain, a reconciliation of operating income to segment profit will be included within future filings.

Acquisition amortization and acquisition- and divestiture-related costs are significantly impacted by the timing, size, and number of acquisitions or divestitures we complete and are not on a predictable cycle and we make no comment as to when or whether any future acquisitions or divestitures may occur. We believe excluding these costs provides investors with a more meaningful comparison of operating performance over time and with both acquisitive and other peer companies.

 

Honeywell International Inc.

Reconciliation of Earnings per Share to Adjusted Earnings per Share (Continued)

(Unaudited)

We define adjusted earnings per share as diluted earnings per share adjusted to exclude various charges as listed above. We believe adjusted earnings per share is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. For forward-looking information, management cannot reliably predict or estimate, without unreasonable effort, the pension mark-to-market expense or the divestiture-related costs. The pension mark-to-market expense is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. The divestiture-related costs are subject to detailed development and execution of separation restructuring plans for the announced separation of Automation and Aerospace Technologies. We therefore do not include an estimate for the pension mark-to-market expense or divestiture-related costs. Based on economic and industry conditions, future developments, and other relevant factors, these assumptions are subject to change.

Acquisition amortization and acquisition- and divestiture-related costs are significantly impacted by the timing, size, and number of acquisitions or divestitures we complete and are not on a predictable cycle and we make no comment as to when or whether any future acquisitions or divestitures may occur. We believe excluding these costs provides investors with a more meaningful comparison of operating performance over time and with both acquisitive and other peer companies.

We define free cash flow as cash provided by operating activities less cash for capital expenditures.

We believe that free cash flow is a non-GAAP measure that is useful to investors and management as a measure of cash generated by operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock, or repay debt obligations prior to their maturities. This measure can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity.

We define free cash flow as cash provided by operating activities less cash for capital expenditures.

We believe that free cash flow is a non-GAAP measure that is useful to investors and management as a measure of cash generated by operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock, or repay debt obligations prior to their maturities. This measure can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity.

 

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