• Organic Sales Growth: Exceeded or met the high end of guidance for the fourth quarter of 2024.
• Adjusted Earnings Growth: Met the high end of guidance for the fourth quarter of 2024.
• Capital Deployment: Over $14 billion deployed in 2024, including 4 acquisitions for approximately $9 billion.
• Backlog: Reached a record level of $35.3 billion, growing 11% year-over-year.
• Fourth Quarter Sales: Increased 2% organically, or 6% excluding Bombardier impact.
• Segment Margins: Declined 70 basis points year-over-year, excluding Bombardier impact of 280 basis points.
• Adjusted Earnings Per Share: Improved 9% excluding Bombardier impact.
• Free Cash Flow: $4.9 billion for 2024, $5.5 billion excluding Bombardier impact.
• 2025 Sales Guidance: $39.6 billion to $40.6 billion, representing organic growth of 2% to 5%.
• 2025 Earnings Per Share Guidance: $10.10 to $10.50, up 0% to 6% year-over-year.
• 2025 Free Cash Flow Guidance: $5.4 billion to $5.8 billion, down 2% to up 5% excluding Bombardier.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Honeywell International Inc (NASDAQ:HON) exceeded or met the high end of its guidance for organic sales growth and adjusted earnings growth in the fourth quarter of 2024.
• The company deployed over $14 billion of capital in 2024, including four acquisitions, and is on track to surpass its commitment to deploy at least $25 billion of capital through 2025.
• Honeywell International Inc (NASDAQ:HON) announced a strategic separation into three standalone companies: Automation, Aerospace, and Advanced Materials, which is expected to unlock significant value for stakeholders.
• The company reported a record backlog of $35.3 billion in the fourth quarter, growing 11% year-over-year.
• Honeywell International Inc (NASDAQ:HON) plans to reduce its share count by at least 1% in 2025, deploying more than $3 billion of capital for share repurchases.

Negative Points

• The evolving geopolitical situation and challenging global macroeconomic conditions may pressure Honeywell International Inc (NASDAQ:HON)'s near-term momentum.
• The company anticipates a continuation of the current industrial demand environment throughout 2025 without assuming a recovery in short-cycle demand.
• Segment margins declined 70 basis points year-over-year in the fourth quarter, excluding the impact of the Bombardier agreement.
• Honeywell International Inc (NASDAQ:HON) expects a one-time cost of $1.5 billion to $2 billion associated with the separation of Automation and Aerospace, as well as the Advanced Materials spin.
• The strengthening U.S. dollar is forecasted to reduce reported sales and adjusted earnings per share by approximately $400 million and $0.12, respectively, in 2025.

Q & A Highlights

Q: Can you provide details on the stranded and stand-up costs for Aerospace and Automation, and any insights on their free cash flow conversion? A: Aerospace and Automation are both expected to achieve around 100% free cash flow conversion. Regarding stranded and stand-up costs, we estimate one-time costs between $1.5 billion to $2 billion, but these figures will be refined as we progress. We anticipate normalizing stranded costs within 18 to 24 months post-separation. - Mike Stepniak, Vice President and CFO, Honeywell Aerospace Technologies

Q: What is the timing for naming the management teams for the separated entities, and will there be an external search for Aerospace leadership? A: We will announce management teams as we progress, but we expect the current Honeywell leadership to continue. The Board will decide the leadership for Honeywell Automation and Honeywell Aerospace. - Vimal Kapur, Chairman and CEO

Q: How do you view the operating segment margin guidance, and is there a plan for a more aggressive cost-out program in 2025? A: We are encouraged by margin projections and expect margin expansion in three segments, excluding Aerospace, which will remain flat due to the dilutive impact of the CAES acquisition. We plan to add about $100 million in repositioning costs to fund margin expansion. - Mike Stepniak, Vice President and CFO, Honeywell Aerospace Technologies

Q: Can you clarify the impact of below-the-line items like pension income and interest expense on 2025 earnings? A: Below-the-line items will create $0.50 of negative pressure on earnings, primarily due to $0.33 from interest expense related to M&A, $0.10 from incremental repositioning, and $0.09 from reduced pension income due to a European pension plan curtailment. - Mike Stepniak, Vice President and CFO, Honeywell Aerospace Technologies

Q: What are the expectations for revenue growth by geography in 2025, particularly in China and Europe? A: We expect growth in the U.S., India, and the Middle East, with continued pressure in Europe and China. Our guidance does not assume recovery in Europe or China for automation businesses. - Vimal Kapur, Chairman and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.