Honeywell announced results for the second quarter that met or exceeded the company's guidance. The company also updated its full-year sales, segment margin2, adjusted earnings per share2,3, and cash flow guidance ranges.
The company reported second-quarter year-over-year sales growth of 5% and organic1 sales growth of 4%, led by double digit organic1 sales growth in defense and space, commercial aviation, and building solutions. Operating income grew 5% and operating margin expanded 10 basis points to 20.7%, while segment profit1 grew 4% led by Aerospace Technologies. Segment margin1 contraction of 10 basis points was above the midpoint of our guidance range. Earnings per share for the second quarter was $2.36, up 6% year over year, and adjusted earnings per share1 was $2.49, up 8% year over year, above the high end of our guidance range. Operating cash flow was $1.4 billion and free cash flow1 was $1.1 billion, approximately flat year over year.
"Honeywell delivered a strong second quarter, once again meeting or exceeding guidance across all metrics while maneuvering through a dynamic operating environment," said Vimal Kapur, chairman and chief executive officer of Honeywell. "While Aerospace continues to lead our growth, we are seeing broader participation across our portfolio, with three of our four segments contributing positive growth for the quarter. All four segments grew sequentially in the quarter as well, giving us further confidence in our expectation of a second half organic growth acceleration."
Kapur continued, "We also made significant progress in our capital deployment strategy, deploying $6.4 billion to M&A, dividends, share repurchases, and capex, highlighted by the closing of our $5 billion acquisition of Access Solutions. We also recently announced two additional deals - the $1.9 billion acquisition of CAES Systems and the $1.8 billion acquisition of Air Products' LNG process technology and equipment business. We continue to make significant progress on my key priorities for Honeywell as we accelerate our alignment to three powerful megatrends - automation, the future of aviation, and energy transition, all underpinned by digitalization. Together, our technologically differentiated portfolio and world-class Honeywell Accelerator operating system are poised to further unlock incremental value and enable us to achieve our long-term financial framework."
As a result of the company's second-quarter performance and management's outlook for the remainder of the year, including the impact of recently announced acquisitions, Honeywell updated its full-year sales, segment margin2, adjusted earnings per share2,3, and cash flow1 guidance. Full-year sales are now expected to be $39.1 billion to $39.7 billion with organic1 sales growth in the range of 5% to 6%. Segment margin2 is now expected to be in the range of 23.3% to 23.5% with segment margin contraction2 of 20 basis points to flat year over year. Adjusted earnings per share2,3 is now expected to be in the range of $10.05 to $10.25, up 6% to 8% year over year. Operating cash flow is now expected to be in the range of $6.6 billion to $7.0 billion, with free cash flow1 of $5.5 billion to $5.9 billion. A summary of the company's full-year guidance can be found in Table 1.
Second-Quarter Performance
Honeywell sales for the second quarter were up 5% year over year on a reported basis and 4% on an organic1 basis year over year. The second-quarter financial results can be found in Tables 2 and 3.
Aerospace Technologies sales for the second quarter increased 16% on an organic1 basis year over year, the eighth consecutive quarter of double-digit organic growth, on sustained strength in both commercial aviation and defense and space. Commercial aviation was led by 17% growth in aftermarket sales as global flight activity continued to rise. Commercial original equipment sales once again grew double digits on increased shipset deliveries, particularly in air transport. Defense and space grew 19% year over year as sustained demand from the current geopolitical climate and further supply chain improvements enabled us to convert on our robust backlog. Segment margin contracted 60 basis points year over year to 27.2%, driven by mix pressure in original equipment, partially offset by commercial excellence net of inflation.
Industrial Automation sales for the second quarter decreased 8% on an organic1 basis year over year. Sales declines were primarily driven by volume softness in warehouse and workflow solutions. While sales declined in productivity solutions and services overall, they were up year over year and sequentially excluding the impact of payments under the license and settlement agreement that ended in the first quarter. Process solutions sales grew 1% in the second quarter as continued double-digit growth in aftermarket services was partially offset by softness in thermal solutions and smart energy. Sales in our sensing and safety technologies business declined year over year, but both orders and sales improved sequentially. Segment margin contracted 90 basis points to 19.0% due to lower volume leverage and the end of payments under the license and settlement agreement.
Building Automation sales for the second quarter increased 1% on an organic1 basis year over year and increased 10% sequentially including one month of benefit from the acquisition of our access solutions business. Building solutions delivered another solid quarter, growing 14% organically, as both projects and services grew double digits. The ongoing strength in building solutions was mostly offset by declines in building products, primarily driven by lower year over year volumes in fire and building management systems; however, both businesses saw improved sales quarter over quarter. Segment margin improved sequentially for the second consecutive quarter but contracted 60 basis points year over year to 25.3%, due to product mix headwinds and cost inflation, partially offset by productivity actions and commercial excellence.
Energy and Sustainability Solutions sales for the second quarter grew 3% on an organic1 basis year over year. Advanced materials once again led ESS with 8% sales growth, led by continued strength in fluorine products. UOP sales declined 4% in the quarter as a result of previously communicated difficult year-over-year comps from large gas processing equipment projects, partially offset by growth in refining catalysts and aftermarket services. Segment margin expanded 200 basis points to 25.2%, primarily driven by productivity actions.
Conference Call Details
Honeywell will discuss its second-quarter results and full-year 2024 guidance during an investor conference call starting at 8:30 a.m. Eastern Time today. A live webcast of the investor call as well as related presentation materials will be available through the Investor Relations section of the company's website (www.honeywell.com/investor). A replay of the webcast will be available for 30 days following the presentation.
