Honeywell International Inc. HON reported fourth-quarter 2024 adjusted earnings of $2.47 per share, which surpassed the Zacks Consensus Estimate of $2.31. The bottom line decreased 8% year over year on an adjusted basis. On a reported basis, the company’s earnings were $1.96 per share, up 3%.

Total revenues of $10.09 billion beat the consensus estimate of $9.86 billion. The top line increased 7% from the year-ago quarter, driven by strength in the Aerospace Technologies segment. Organic sales increased 2% year over year.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

For 2024, Honeywell reported revenues of $38.5 billion, reflecting an increase of 5% year over year. Organic sales increased 3%. The company’s adjusted earnings were $9.89 per share compared with $9.52 in 2023.

Honeywell Q4 Performance by Business Segment

In October 2023, HON planned to realign its business segments to three megatrends, which were automation, the future of aviation and energy transition. Beginning in the second quarter of 2024, the company started operating under the segments discussed below.

Aerospace Technologies’ quarterly revenues were $3.99 billion, up 9% year over year. Organic sales increased 1% year over year. Strength in both commercial aftermarket and defense and space markets, driven by increased flight activity, augmented the top line. Our estimate for the segment’s revenues was $4.26 billion.

Industrial Automation revenues fell 1% year over year to $2.57 billion. Organic sales were flat year over year. Results benefited from growth in the process solutions business, which was offset by persistent softness in the safety & sensing technologies business. Our estimate for segmental revenues was pegged at $2.53 billion.

Building Automation revenues totaled $1.80 billion, up 20% year over year. Organic sales increased 8% year over year. The upside was driven by ongoing strength in both the building solutions and building products businesses. Our estimate for the segment’s revenues was $1.70 billion.

Energy and Sustainability Solutions’ revenues increased 4% to $1.73 billion. Organic sales inched up 1% year over year. The results were driven by increased demand for gas processing solutions and equipment products. Strength in the specialty chemicals and materials business also augmented is sales. Our estimate for the segment’s revenues was $1.71 billion.

Costs/Margins of HON

The company’s total cost of sales (cost of products and services) was about $6.4 billion, up 3.5% year over year. Selling, general and administrative expenses were $1.4 billion, up 8.4%. Interest expenses and other financial charges were $291 million, reflecting an increase of 44.1% year over year.

Operating income was $1.75 billion, up 10.2% year over year. The operating income margin was 17.3% compared with 16.8% in the year-ago period.

HON’s Balance Sheet & Cash Flow

Exiting 2024, Honeywell had cash and cash equivalents of $10.6 billion compared with $7.9 billion at the end of December 2023. Long-term debt was $25.5 billion, higher than $16.6 billion at 2023-end.

In the fourth quarter, it generated net cash of $2.28 billion from operating activities compared with $2.96 billion in the prior-year period. Capital expenditure totaled $393 million compared with $364 million in the previous year quarter.

Free cash flow in the quarter was $1.89 billion, down 27% from the year-ago quarter’s level.

Honeywell’s 2025 Guidance

For 2025, Honeywell expects sales to be in the range of $39.6-$40.6 billion. Organic sales are expected to increase in the band of 2-5%.

HON expects a segment margin of 23.2-23.6% compared with 22.6% in 2024. Adjusted earnings per share are expected to be between $10.10 and $10.50. The metric indicates an increase of 2-6% on a year-over-year basis. 

It expects operating cash flow to be in the range of $6.7-$7.1 billion. Free cash flow is expected to be in the band of $5.4-$5.8 billion.

Major Developments for Honeywell

Honeywell has been actively following its business transformation strategy that aims to unlock values for its shareholders. In conjunction with the earnings release, the company confirmed that it would spin off its Aerospace business. 

As part of its business portfolio transformation strategy, the company also plans to divest its Advanced Materials business and earlier entered into a deal to divest its Personal Protective Equipment unit. This will result in the creation of three publicly listed companies - Honeywell Automation, Honeywell Aerospace and Advanced Materials.

Honeywell Automation will operate as a pure-play automation leader with a global scale and robust installed base. Honeywell Aerospace will produce technologies for plane cockpits while Advanced Materials will focus on solutions for sectors such as healthcare.

The planned separation is anticipated to be completed in the second half of 2026 in a tax-free manner to HON’s shareholders.

Zacks Rank & Stocks to Consider

Honeywell presently carries a Zacks Rank #3 (Hold).

Some better-ranked companies are discussed below:

Enersys ENS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ENS delivered a trailing four-quarter average earnings surprise of 1.6%. In the past 60 days, the consensus estimate for Enersys’ fiscal 2025 (ending March 2025) earnings has increased 10.4%.

Markel Group Inc. MKL presently carries a Zacks Rank #2 (Buy). MKL delivered a trailing four-quarter average earnings surprise of 35.4%.

In the past 60 days, the consensus estimate for MKL’s 2025 earnings has inched up 0.1%.

AZZ Inc. AZZ presently carries a Zacks Rank of 2. AZZ delivered a trailing four-quarter average earnings surprise of 15.2%.

In the past 60 days, the consensus estimate for AZZ’s fiscal 2024 (ending February 2025) earnings has increased 2.1%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Honeywell International Inc. (HON) : Free Stock Analysis Report

AZZ Inc. (AZZ) : Free Stock Analysis Report

Markel Group Inc. (MKL) : Free Stock Analysis Report

Enersys (ENS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research