Honeywell International Inc. (HON, Financial) released its first-quarter results before the opening bell on April 23. Both the top and bottom line exceeded analysts' expectations.
Earnings overview
The industrial conglomerate recorded adjusted earnings per share of $1.92, which decreased 13.1% from the prior-year quarter but beat estimates by 12 cents. Quarterly revenue surged 0.5% on a year-over-year basis to $8.5 billion. Analysts had predicted revenue of $8.1 billion.
The company's shares climbed 0.23% in premarket trading following the earnings announcement to $229.78 per share.
CEO Darius Adamczyk had the following to say:
"We continued to take advantage of our strong balance sheet, and deployed capital to high-return opportunities in the quarter, including closing our acquisition of quality management software leader Sparta Systems and announcing the acquisition of a majority stake in Fiplex, a leading provider of in-building communications systems. In addition, we repurchased $0.8 billion in Honeywell shares and made five strategic investments through Honeywell Ventures."
Segment results
Revenue for the aerospace segment plunged roughly 22% to $2.63 billion in the first quarter. Sales on an organic basis also declined 22%, reflecting lower volume in the aviation original equipment business, which was partially negated by growth in the defense and space business. The segment's margin expanded 110 basis points courtesy of "productivity actions and commercial excellence."
Sales at Honeywell Business Technology soared 6% to $1.36 billion. Likewise, organic sales were up 2% due to strong performance of the commercial fire and building management products. As a result of "commercial excellence and productivity measures," the segment's margins expanded 200 basis points to 22.5%.
In the Performance Materials and Technologies segment, revenue fell 2% to $2.35 billion. Organic sales were down 6%, while the segment's margin fell 290 basis points to 18.5%, which was mainly driven by lower volume and sales mix.
Safety and productivity solutions sales amounted to $2.12 billion in the reported quarter, which reflected a growth of 49% year over year. Organic sales grew 47% due to double-digit growth in intelligrated and respiratory personal protective equipment, which was partially offset by lower demand for gas sensing. Margins expanded 180 basis points to 14.3%.
Looking ahead
Honeywell anticipates commercial aerospace and oil and gas demand to go down rapidly due to the ongoing economic crisis. This will have an adverse impact on the company's overall revenue.
Honeywell projects sales to be in the $34 billion to $34.8 billion range for the full year, reflecting organic growth of 3% to 5%. Adjusted earnings for the same period are estimated to be around $7.75 and $8.00 per share. The company's operating cash flow guidance is around $5.8 billion to $6.1 billion, while free cash flow is expected to be in the range of $5.2 billion to $5.5 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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