Honeywell (HON) Q4 Earnings Match Estimates, Increase Y/Y
Honeywell International Inc. HON reported fourth-quarter 2023 adjusted earnings of $2.60 per share, which came in line with the Zacks Consensus Estimate. The bottom line inched up 3% year over year on an adjusted basis. On a reported basis, the company’s earnings were $1.91 per share, indicating an increase of 26%.
Total revenues of $9,440 million missed the Zacks Consensus Estimate of $9,703 million. However, the top line inched up around 3% from the year-ago quarter. Organic sales increased 2% due to growth in commercial aviation, defense and space and process solutions.
Segmental Details
Aerospace’s quarterly revenues were $3.67 billion, up 15% year over year. Growth in commercial aviation and defense and space markets drove revenues. Our estimate for Aerospace revenues in the fourth quarter was $3.79 billion.
Honeywell Building Technologies’ revenues fell 1% year over year to $1.50 billion due to lower volumes of fire and security offerings, which was partially offset by growth in building solutions. Our estimate for segmental revenues was pegged at $1.54 billion.
Performance Materials and Technologies’ revenues totaled $3.03 billion, up 6% year over year. Our estimate for the segment’s revenues in the fourth quarter was $3.09 billion. Its revenues were driven by strong organic growth in the Advanced Materials, HPS and UOP businesses. Strength in life sciences and lifecycle solutions & services and solid orders in sustainable technology solutions business aided the segment’s results.
Safety and Productivity Solutions’ revenues decreased 24% to $1.23 billion due to lower volumes in warehouse and workflow solutions as a result of softness in the warehouse automation market. Weakness across short-cycle productivity solutions and services business also hurt its results. Our estimate for the segment’s revenues was $1.27 billion.
Honeywell International Inc. Price, Consensus and EPS Surprise
Honeywell International Inc. price-consensus-eps-surprise-chart | Honeywell International Inc. Quote
Costs/Margins
The company’s total cost of sales (cost of products and services) in the reported quarter was $6.2 billion, up 7.5% year over year. Selling, general and administrative expenses were $1.3 billion, up 3.8%. Interest expenses and other financial charges were $202 million compared with $144 million a year ago.
Operating income in the fourth quarter was $1.58 billion, down 12.7% year over year. The operating income margin was 16.8% compared with 19.7% in the year-ago period.
Balance Sheet/Cash Flow
Honeywell had cash and cash equivalents of $7.9 billion compared with $9.6 billion at the end of December 2022. Long-term debt was $16.6 billion, higher than $15.1 billion at 2022-end.
In 2023, it generated net cash of $5.34 billion from operating activities compared with $5.27 billion in the prior year. Capital expenditure totaled $1.04 billion in 2023 compared with $766 million in the previous year.
Free cash flow was $2.6 billion in the fourth quarter compared with $2.1 billion in the year-ago period.
2024 Guidance
For 2024, Honeywell expects sales in the range of $38.1-$38.9 billion compared with $36.7 billion in 2023. Organic sales are expected to increase 4-6%.
HON expects a segment margin in the band of 23-23.3% compared with 22.7% in 2023. Adjusted earnings per share are expected to be between $9.80 and $10.10 higher than $9.16 in 2023.
It expects operating cash flow in the range of $6.7-$7.1 billion for 2024, higher than $5.3 billion generated in 2023. Free cash flow is expected to be around $5.6-$6 billion.
Zacks Rank & Stocks to Consider
HON presently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the same space:
ITT Inc. ITT presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ITT delivered a trailing four-quarter average earnings surprise of 8%. In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has increased by a penny. The stock has risen 21.1% in the past three months.
Flowserve Corporation FLS presently carries a Zacks Rank of 2. FLS delivered a trailing four-quarter average earnings surprise of 27.3%.
In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has remained steady. The stock has risen 7.4% in the past three months.
Applied Industrial Technologies, Inc. AIT presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days. Shares of Applied Industrial have jumped 13.9% in the past three months.
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Honeywell International Inc. (HON) : Free Stock Analysis Report
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