Honeywell announced results for the first quarter that exceeded the company's guidance on all metrics. The company also maintained its full-year organic growth guidance, raised its adjusted earnings per share guidance range, and reiterated its free cash flow guidance range.
The company reported first-quarter year-over-year sales growth of 8% and organic1 sales growth of 4%, led by a second consecutive quarter of double-digit organic sales growth in both defense and space and building solutions. Operating margin contracted 30 basis points to 20.1% and segment margin1 was flat at 23.0%, exceeding previous guidance. Operating income increased 6% and segment profit1 increased 8% to $2.3 billion, driven by contribution from acquisitions and a continued focus on commercial excellence. Earnings per share for the first quarter was $2.22, flat year over year, and adjusted earnings per share1 was $2.51, up 7% year over year. Operating cash flow was $0.6 billion and free cash flow1 was $0.3 billion, up 61% year over year.
"Honeywell started the year off exceptionally well, exceeding guidance across all metrics, led by solid organic growth," said Vimal Kapur, chairman and chief executive officer of Honeywell. "For the third straight quarter, we delivered both sequential and year-over-year backlog growth, driven by healthy order rates and continuing customer demand for our differentiated offerings. Despite the volatile macroeconomic backdrop, we maintained segment margin consistent with last year, which is a testament to the value delivered by our Accelerator operating system. Though we have not yet seen it in our results, we recognize we face an uncertain global demand environment for the remainder of 2025, and our company will work tirelessly, leveraging all tools available to us, to deliver for customers and shareholders."
Kapur added, "As we look ahead to our planned spin of Advanced Materials and separation of our Automation and Aerospace businesses, we are even more confident about the significant opportunities for value creation and sustained growth as we transform into three industry-leading public companies."
As a result of the company's first-quarter performance and management's outlook for the remainder of the year, Honeywell updated its full-year sales, segment margin2, and adjusted earnings per share2,3 guidance. Full-year sales are now expected to be $39.6 billion to $40.5 billion with organic1 sales growth in the range of 2% to 5%. Segment margin2 is expected to be in the range of 23.2% to 23.5%, with segment margin2 expansion of 60 to 90 basis points year over year. Adjusted earnings per share2,3 is now expected to be in the range of $10.20 to $10.50, up 5 cents at the midpoint from the prior guidance range. Operating cash flow is still expected to be in the range of $6.7 billion to $7.1 billion. Free cash flow1 is still expected to be in the range of $5.4 billion to $5.8 billion. Excluding the impact of the Bombardier agreement signed in the fourth quarter of 2024, the company expects organic sales growth of 1% to 4%, segment margin down 10 to up 20 basis points year over year, and adjusted earnings per share down 1% to up 2% year over year. Guidance incorporates the net expected impact of current tariffs, mitigation actions, and global demand uncertainty. Guidance also assumes an early May close of the sale of the company's Personal Protective Equipment business but does not yet include the impact of the pending Sundyne acquisition. A summary of the company's full-year guidance changes can be found in Table 1.
Portfolio Transformation
In February, Honeywell announced that its Board of Directors concluded its comprehensive portfolio review and decided to pursue a separation of its Automation and Aerospace businesses. The planned separation, coupled with the previously announced plan to spin Advanced Materials, will result in three publicly-listed industry leaders and is intended to be completed in the second half of 2026. To oversee the transformation processes, this quarter Honeywell formed dedicated separation management offices to ensure that its business leaders can remain focused on managing day-to-day operations over the coming months.
During the quarter, Honeywell continued its judicious deployment of shareholder capital, highlighted by the announcement of its acquisition of Sundyne in March for $2.2 billion. Honeywell also repurchased $1.9 billion of its shares in the quarter, furthering its commitment to deploy at least $25 billion toward high-return capital expenditures, dividends, opportunistic share purchases, and accretive acquisitions through 2025.
First-Quarter Performance
Honeywell sales for the first quarter were up 8% year over year on a reported basis and 4% on an organic1 basis year over year. The first-quarter financial results can be found in Tables 2 and 3.
Aerospace Technologies sales for the first quarter increased 9% organically1 year over year, driven by continued strong performance in commercial aftermarket and defense and space. Commercial aftermarket sales grew 15%, led by increased demand in air transport and better output from supply chain improvements. Defense and space sales increased 10% on an organic basis, aided by ongoing geopolitical uncertainty. Backlog grew 9% as orders were up high-single digits in the quarter. Segment margin contracted 190 basis points to 26.3% on account of expected mix pressure and the impact of acquisitions, partially offset by productivity actions.
Industrial Automation sales declined 2% on an organic1 basis year over year in the first quarter. Warehouse and workflow solutions returned to growth in the quarter, increasing 5%. Process solutions was flat year over year, as high single-digit growth in lifecycle solutions was offset by modest declines in smart energy and thermal solutions. Productivity solutions and services declined 1% when excluding the impact of prior-year license and settlement payments, driven by demand headwinds in Europe. Sensing and safety technologies decreased 5% year over year, as weaker volumes in our personal protective equipment business more than offset continued recovery in sensing, which delivered a second consecutive quarter of sales growth and high-single-digit orders growth. Segment margin contracted 130 basis points to 17.8%, driven by receivables write-downs and volume deleverage, partially offset by productivity actions.
Building Automation sales for the first quarter increased 8% on an organic1 basis year over year. Building solutions grew 11% organically for a second consecutive quarter, led by strength in the Middle East and North America. Building products grew 6% organically, highlighted by double-digit growth in fire products and the fourth consecutive quarter of organic growth in security offerings. Orders grew both year over year and sequentially, led by double-digit growth in projects. Segment margin expanded 150 basis points to 26.0%, driven by volume leverage and productivity actions, partially offset by mix.
Energy and Sustainability Solutions sales for the first quarter declined 2% on an organic1 basis. UOP grew 2% in the quarter led by strength in both refining and petrochemicals projects and sustainability projects. Advanced materials sales declined 4% as strength in specialty chemicals and materials was offset by challenging prior year comparisons in fluorine products. However, double-digit order growth in fluorine products led to a 7% increase in advanced materials orders year over year. Segment margin expanded 230 basis points to 22.2% as a result of commercial excellence, productivity actions, and the year-over-year benefit of the margin-accretive LNG acquisition.
Conference Call Details
Honeywell will discuss its first-quarter results and full-year 2025 guidance during an investor conference call starting at 8:30 a.m. Eastern Daylight 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.
