On October 26, 2023, Honeywell International Inc (HON, Financial) released its Q3 2023 earnings report, showcasing a strong performance that met or exceeded the company's guidance. The company reported a 3% year-over-year sales growth and a 2% organic sales growth, led by double-digit organic sales growth in commercial aviation, defense and space, and process solutions.
Financial Performance
Honeywell's operating margin expanded 140 basis points to 20.9% and segment margin expanded by 80 basis points to 22.6%, led by expansion in Honeywell Building Technologies. Earnings per share for the third quarter was $2.27, roughly flat year over year on a reported basis and up 1% year over year adjusted. Excluding a 14-cent non-cash pension headwind, adjusted earnings per share was up 7%. Operating cash flow was $1.8 billion with operating cash flow margin of 19.6%, and free cash flow was $1.6 billion with free cash flow margin of 16.9%, driven by strong net income and collections.
Honeywell executed through a challenging environment in the third quarter, meeting or exceeding guidance for all metrics and demonstrating once again our culture of execution and accountability," said Vimal Kapur, chief executive officer of Honeywell.
Capital Deployment and Future Outlook
Honeywell deployed $2.0 billion of capital in the third quarter, including repurchasing 5.3 million Honeywell shares. The company updated its full-year sales, segment margin, and adjusted earnings per share guidance ranges. Full-year sales are now expected to be $36.8 billion to $37.1 billion with organic sales growth in the range of 4% to 5%. Adjusted earnings per share is now expected to be in the range of $9.10 to $9.20.
Summary of Financial Tables
The company's financial tables show a 3% increase in sales from $8,951 million in Q3 2022 to $9,212 million in Q3 2023. Operating income margin also improved from 19.5% in Q3 2022 to 20.9% in Q3 2023. Earnings per share remained relatively stable at $2.27, compared to $2.28 in Q3 2022. Cash flow from operations decreased by 13% from $2,083 million in Q3 2022 to $1,809 million in Q3 2023.
The segment financial results show an 18% increase in Aerospace sales from $2,976 million in Q3 2022 to $3,499 million in Q3 2023. Honeywell Building Technologies sales remained flat at $1,530 million, while Performance Materials and Technologies sales increased by 5% from $2,720 million in Q3 2022 to $2,867 million in Q3 2023. Safety and Productivity Solutions sales decreased by 24% from $1,727 million in Q3 2022 to $1,314 million in Q3 2023.
Overall, Honeywell International Inc (HON, Financial) demonstrated a strong performance in Q3 2023, meeting or exceeding its guidance and showing resilience in a challenging environment.
Explore the complete 8-K earnings release (here) from Honeywell International Inc for further details.
