Honeywell International (HON) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $9.7B, up 6% year-over-year, with organic sales up 3% amid a challenging environment; strong Aerospace and Building Automation growth offset Industrial Automation headwinds.

• Adjusted EPS grew 8% to $2.58, surpassing the high end of guidance; segment margin was 23.6%, and free cash flow rose 10% to $1.7B.

• Announced plan to spin off Advanced Materials business by late 2025 or early 2026 and classified PPE business as held for sale, with related impairment charges.

• Four major acquisitions closed in 2024, deploying over $9B in capital and adding up to $2B in run rate sales; portfolio optimization and M&A remain strategic priorities.

• CFO transition announced: Mike Stepniak to succeed Greg Lewis in February 2025, with a focus on seamless transition and continued growth initiatives.

Financial highlights

• Q3 2024 net sales: $9.7B (up 6% year-over-year), organic sales up 3%; segment margin flat at 23.6%; adjusted EPS $2.58 (up 8%); free cash flow $1.7B (up 10%).

• Segment profit increased 6% to $2.3B; gross margin was 38.5%, up 10 bps year-over-year.

• Orders grew 2% organically year-over-year, with a book-to-bill of 1.1 and record backlog of $34B, up 10% year-over-year.

• Lower share count (654M vs. 667M) and lower adjusted effective tax rate (21.0% vs. 23.0%).

• Operating cash flow for YTD 2024 was $3.8B, up $1.4B year-over-year, mainly due to the absence of the prior year NARCO buyout payment.

Outlook and guidance

• Full-year 2024 sales expected at $38.6B–$38.8B, with organic growth of 3%–4%; segment margin forecast at 23.4%–23.5%.

• Adjusted EPS guidance raised to $10.15–$10.25, up 7%–8% year-over-year.

• Free cash flow guidance for 2024 reduced to $5.1B–$5.4B due to slower inventory progress and payment cycles.

• Fourth quarter sales expected at $10.2B–$10.4B, up 2%–4% organically; adjusted EPS $2.73–$2.83.

• Advanced Materials spin-off targeted for completion by end of 2025 or early 2026, subject to approvals.