• Organic Sales Growth: 4% in Q1, led by Aerospace Technologies.
• Segment Margin: Flat at 23% from the prior year.
• Adjusted Earnings Per Share (EPS): $2.51, up 7% year over year.
• Orders: $10.6 billion, up 3% year over year.
• Free Cash Flow: Over $300 million, $100 million above the prior year.
• Share Repurchase: Nearly $2 billion in Q1, with an additional $1 billion in April.
• Dividends Paid: Over $700 million in Q1.
• Aerospace Technologies Sales Growth: 9% organically year over year.
• Building Automation Sales Growth: 8% organically, with margin expansion of 150 basis points.
• Energy and Sustainability Solutions Margin Expansion: 230 basis points in Q1.
• Full-Year Organic Sales Growth Guidance: 2% to 5%.
• Full-Year EPS Guidance: $10.20 to $10.50, up 3% to 6%.
• Full-Year Free Cash Flow Guidance: $5.4 billion to $5.8 billion.

• Warning! GuruFocus has detected 3 Warning Sign with HON.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Honeywell International Inc (NASDAQ:HON) exceeded the high end of its guidance on all metrics in the first quarter of 2025, demonstrating strong performance and substantial free cash flow growth.
• The company maintained its full-year organic growth guidance and raised its adjusted EPS guidance, showing confidence in its ability to navigate economic uncertainties.
• Honeywell International Inc (NASDAQ:HON) is actively managing tariff impacts through a local-for-local strategy and pricing adjustments, aiming to offset $500 million in tariff exposure.
• The company is progressing well with its plan to separate into three standalone public companies, which is expected to unlock significant value for stakeholders.
• Honeywell International Inc (NASDAQ:HON) has a strong acquisition strategy, with the recent acquisition of Sundyne expected to enhance its business profile and boost organic growth and segment margins.

Negative Points

• The economic climate has become increasingly uncertain, with shifting global trade patterns and higher price expectations posing challenges to customer planning.
• Industrial Automation sales declined 2% organically in the first quarter, with lower demand in personal protective equipment, particularly in China and Europe.
• Segment margin in Aerospace Technologies contracted by 190 basis points due to mix pressure and acquisition integration costs.
• The company anticipates potential end-market demand weakness triggered by geopolitical uncertainties, impacting organic sales and segment profit.
• Honeywell International Inc (NASDAQ:HON) is facing challenges in its Industrial Automation segment, with exposure to China trade and potential demand destruction in short-cycle businesses.

Q & A Highlights

Q: Can you provide more details on the tariff impact and the offset strategies? A: Vimal Kapur, CEO, explained that Honeywell's local-for-local strategy helps mitigate tariff impacts. The company plans to use pricing and direct material productivity to offset the $500 million tariff impact. The resilience of their aftermarket business and rational market competition also support their confidence in mitigating these tariffs.

Q: Is the macroeconomic contingency in the guidance based on actual data or a top-down view? A: Mike Stepniak, CFO, clarified that the contingency is more of a top-down view. While first-quarter orders were strong, the company is taking a prudent approach due to uncertainties, particularly in Industrial Automation and exposure to China.

Q: What is the volume assumption in the guidance, considering the macroeconomic contingency? A: Mike Stepniak stated that the guidance assumes about 3% price increase and a volume range of -2% to 1%. This reflects a conservative stance, with one more point of price and one less of volume compared to previous assumptions.

Q: How much of the tariff impact is related to China, and are there other regional hotspots? A: Vimal Kapur noted that 60-70% of the tariff exposure is related to China, particularly affecting exports from the US to China in Aerospace and ESS businesses. The impact from Mexico is immaterial.

Q: Can you discuss the Industrial Automation segment's performance and margin outlook? A: Vimal Kapur explained that the first-quarter margin contraction was due to receivables write-offs. The exit of the PPE business and productivity actions are expected to support margin expansion for the rest of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.