Honeywell International's ($HON) second-quarter results have surpassed Wall Street's expectations, shedding light on the industrial conglomerate's promising trajectory. Furthermore, Honeywell has revised its full-year outlook, a reflection of its proactive approach amidst recent acquisitions that are set to bolster its market position. The company is now projecting adjusted earnings in the range of $10.05 to $10.25 per share for the fiscal year 2024.
This marks a slight decrease from previous estimates, which ranged from $10.15 to $10.45. Revenue expectations have been updated to between $39.1 billion and $39.7 billion, an improvement compared to the prior forecast of $38.5 billion to $39.3 billion. According to consensus estimates from Capital IQ, the market anticipates a normalized EPS of $10.26 and revenue of $38.88 billion. In recent trading, however, Honeywell's stock experienced a downturn, falling by 5.8% on one Thursday. Earlier in the month, Honeywell announced an agreement to acquire Air Products and Chemicals' (APD) liquefied natural gas process technology and equipment business for approximately $1.81 billion.
Furthermore, in June, the conglomerate executed a deal to acquire CAES Systems, a company specializing in aerospace and defense technology, for $1.9 billion from Advent International. During an earnings call, Chief Financial Officer Gregory Lewis expressed cautious optimism: "While we are encouraged by our performance year-to-date and our robust backlog, the back half will remain influenced by the dynamic macroeconomic backdrop and varying levels of channel improvement across our portfolio." He added, "Collectively, acquisitions are expected to add approximately $800 million to Honeywell sales in 2024." For the three months ending in June, Honeywell’s adjusted EPS witnessed an 8% increase year over year, achieving $2.49, which exceeded Wall Street’s prediction of $2.42.
Revenue also improved, climbing to $9.58 billion from last year’s $9.15 billion, outperforming analyst forecasts which estimated $9.42 billion. Particularly noteworthy was the aerospace technologies sector, which reported a remarkable 16% growth year over year, generating $3.89 billion in revenue, buoyed by advancements in both commercial aviation and defense and space sectors.
However, the industrial automation segment experienced an 8% sales decline, down to $2.51 billion, primarily due to weakened demand in warehouse and workflow solutions. On a positive note, building automation sales rose by 4% to reach $1.57 billion, and energy and sustainability solutions grew by 2%, totaling $1.6 billion. Chief Executive Vimal Kapur was optimistic during a company statement, stating, "All four segments grew sequentially in the quarter as well, giving us further confidence in our expectation of a second-half organic growth acceleration." Looking ahead to the current quarter, Honeywell is anticipating adjusted EPS in the range of $2.45 to $2.55, with sales expected between $9.8 billion and $10 billion, according to findings shared in an investor presentation.
The Street is projecting normalized EPS of $2.56 and revenue of $9.86 billion. In summary, Honeywell's strategic decisions to enhance its revenue streams through acquisitions, alongside its recent financial performance, solidify its outlook despite current market fluctuations. With a focus on various growth sectors, Honeywell seems poised to continue its progress in a complex economic environment..