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Honeywell (NASDAQ: HON) delivered a robust performance in the second quarter of 2024, showcasing strong financial metrics that either met or exceeded the company’s guidance. The company reported sales of $9.6 billion, marking a 5% increase in reported sales and a 4% rise in organic sales.

Double-digit organic sales growth in defense and space, commercial aviation, and building solutions primarily drove this growth. Operating income grew by 5%, and the operating margin expanded by ten basis points to 20.7%. Segment profit also saw a 4% increase, led by Aerospace Technologies. However, there was a slight contraction in segment margin by ten basis points, which remained above the midpoint of the guidance range.

Earnings per share (EPS) for the quarter stood at $2.36, up 6% year-over-year, while adjusted EPS was $2.49, up 8% year-over-year, surpassing the high end of the guidance range.

The company’s performance was further bolstered by strong order growth, which rose by 4%, led by the Building Automation and Energy and Sustainability Solutions businesses. Honeywell also deployed $6.4 billion of capital towards mergers and acquisitions (M&A), dividends, share repurchases, and capital expenditures. This included the closing of a $5 billion acquisition of Access Solutions and the announcement of two additional deals worth $1.9 billion and $1.8 billion, respectively.

Operating cash flow for the quarter was $1.4 billion, and free cash flow remained flat year-over-year at $1.1 billion. Vimal Kapur, Chairman and CEO of Honeywell, expressed confidence in the company’s ability to navigate a dynamic operating environment, emphasizing the strong performance across its four segments and the expectation of accelerated organic growth in the second half of the year.

Honeywell Reports Double Beat in Q2

When comparing the current quarter’s performance against expectations, Honeywell exceeded market forecasts. Analysts had anticipated an EPS of $2.42 and revenue of $9.41 billion. The actual EPS of $2.49 surpassed the expected figure by $0.07, while the reported revenue of $9.6 billion exceeded expectations by $0.19 billion.

This outperformance was largely attributed to the strong growth in key business segments such as defense and space, commercial aviation, and building solutions. The company’s ability to achieve the high end of its previous guidance for organic sales growth and adjusted EPS further underscores its robust operational execution.

The company’s performance metrics, including a 5% increase in reported sales and a 4% rise in organic sales, were in line with or above the high end of the previous guidance. The operating margin expansion of 10 basis points to 20.7% and the segment profit growth of 4% were also noteworthy achievements.

These results reflect Honeywell’s strategic focus on high-growth areas and its successful capital deployment strategy. The strong order growth and the significant capital deployed towards M&A and other strategic initiatives further highlight the company’s commitment to driving long-term value for shareholders.

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Honeywell Ups Full-Year Guidance

Honeywell has updated its full-year guidance based on the strong second-quarter performance and the anticipated impact of recent acquisitions. The company now expects full-year sales to be in the range of $39.1 billion to $39.7 billion, with organic sales growth projected to be between 3% and 5%.

The segment margin is expected to be between 20.6% and 21.1%, while the adjusted EPS is forecasted to be in the range of $9.10 to $9.50. Additionally, the company anticipates operating cash flow to be between $5.1 billion and $5.5 billion, with free cash flow projected to be between $4.2 billion and $4.6 billion.

Vimal Kapur highlighted the company’s strategic alignment with three powerful megatrends—automation, the future of aviation, and energy transition—underpinned by digitalization. The recent acquisitions, including the $5 billion acquisition of Access Solutions and the announced deals worth $1.9 billion and $1.8 billion, are expected to further strengthen Honeywell’s portfolio and drive incremental value.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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