Key Metrics
- Revenue:
- Aerospace Technologies: $3,912 million
- Industrial Automation: $2,501 million
- Building Automation: $1,745 million
- Energy and Sustainability Solutions: $1,563 million
- Corporate and other: $7 million
- Organic Growth:
- Aerospace Technologies: 10% (yoy)
- Industrial Automation: (5%) (yoy)
- Building Automation: 3% (yoy)
- Energy and Sustainability Solutions: 1% (yoy)
- Segment Profit:
- Aerospace Technologies: $1,082 million
- Industrial Automation: $508 million
- Building Automation: $452 million
- Energy and Sustainability Solutions: $383 million
- Corporate and other: $(129) million
- Segment Operating Margin:
- Aerospace Technologies: 27.7%
- Industrial Automation: 20.3%
- Building Automation: 25.9%
- Energy and Sustainability Solutions: 24.5%
Forward guidance
- Full-Year Sales Guidance: Expected to be in the range of $38.6 billion to $38.8 billion, representing organic growth of 3% to 4% (down from 5% to 6%).
- Fourth Quarter Sales Guidance: Anticipated sales in the range of $10.2 billion to $10.4 billion, up 2% to 4% organically.
- Segment Margin Guidance: Overall segment margin expected to end the year between 23.4% and 23.5%, flat to 10 basis points from 2023.
- Adjusted EPS Guidance: Full-year adjusted EPS expected to be in the upper half of the prior range, now between $10.15 to $10.25, up 7% to 8% year-on-year.
- Free Cash Flow Guidance: Expected in the range of $5.1 billion to $5.4 billion, down 4% to up 2% from prior year.
- 2024 Aerospace Growth: Low-double-digit organic sales growth expected, with double-digit growth in both commercial aviation and defense and space.
- Industrial Automation Outlook: Organic sales expected to decline in the high-single-digit range for 2024, with fourth quarter sales down low-single-digits.
Key takeaways
- Positives:
- Vimal Kapur emphasized the strength of Honeywell's backlog, stating, "Our backlog is up 6%, 10% with all the acquisitions," indicating a solid foundation for future growth.
- The company reported a record $1 billion in orders for UOP, showcasing strong demand for sustainability offerings, which aligns with market trends towards energy transition.
- Honeywell's strategic partnerships, such as with Google Cloud, are expected to enhance their product offerings and drive organic growth, with Kapur stating, "We expect this is going to help us support our organic growth profile in the years ahead."
- The aerospace segment continues to perform well, with double-digit growth in defense and space, reflecting strong demand in that sector.
- Negatives:
- The company faced operational challenges, including project delays and supply chain disruptions, with Kapur noting, "Near-term delays in couple of the project-led businesses... have caused us to rebase our expectations for the year."
- Industrial Automation sales were flat, with Greg Lewis indicating, "The main driver of the sales miss was performance below our prior expectations in Industrial Automation," highlighting ongoing struggles in that segment.
- Honeywell revised its full-year sales guidance down to $38.6 billion to $38.8 billion, reflecting a more cautious outlook due to "incrementally more challenging end market backdrop."
- The decision to exit the PPE business and reclassify it as an asset held for sale suggests a need to streamline operations, which may indicate underlying weaknesses in that segment.
Peer Summary
- Aerospace Sector: General Electric reported a 28% increase in orders, indicating robust demand, while Honeywell noted operational challenges affecting its aerospace segment. Northrop Grumman highlighted a record backlog of $85 billion, emphasizing strong future revenue potential driven by increased defense budgets.
- Industrial Automation: Emerson Electric projected flat revenue growth, with a noted decline in discrete automation orders. Illinois Tool Works reported a 1% organic revenue decline, reflecting persistent demand challenges, particularly in automotive and construction sectors.
- Energy and Sustainability: Emerson's strong project funnel in sustainability suggests a growing market, while Honeywell's sustainability offerings saw record orders, indicating a sector trend towards energy transition.
- Consumer Demand: 3M acknowledged softness in the consumer segment, with organic sales down 0.7%, contrasting with Honeywell's mixed performance in building automation, which grew 3% year-over-year.
