Honeywell announced on April 23 its financial results for the first quarter and revealed an agreement to sell its Warehouse and Workflow Solutions (WWS) business to American Industrial Partners. The company also confirmed the expected timing for the spin-off of Honeywell Aerospace, now set for June 29, pending final board approval and other customary conditions.
The quarterly update comes as Honeywell continues a multi-year transformation of its portfolio. The planned divestitures are intended to position both aerospace and automation businesses as independent companies with distinct growth paths.
In the first quarter, Honeywell reported a 2% increase in both reported and organic sales, driven by pricing actions and new product launches. Orders grew organically by 7%, especially in Building Automation and Industrial Automation segments, resulting in a sequential backlog increase to $38.3 billion. Operating income decreased by 14%, while segment profit rose by 6% to $2.1 billion across all four segments. The operating margin contracted due to impairment charges related to assets held for sale as well as costs associated with repositioning efforts.
Earnings per share stood at $1.29, down from last year due mainly to restructuring charges; however, adjusted earnings per share increased by 11% to $2.45 because of segment profit growth and a lower weighted-average share count. Operating cash flow was negative at ($0.7) billion due primarily to higher separation-related payments and litigation settlements; free cash flow was $0.1 billion, affected partly by collection delays linked to conflict in the Middle East.
Chairman and Chief Executive Officer Vimal Kapur said, “Honeywell delivered a strong start to the year while navigating a challenging geopolitical environment… This is a testament to the resiliency of the Honeywell portfolio.” Kapur added that recent transactions “conclude our multi-year portfolio transformation,” positioning aerospace and automation businesses for “bright futures as independent, leading companies.” He also noted upcoming investor events ahead of the planned separation.
By segment performance: Aerospace Technologies sales grew organically by 3%; Building Automation saw an organic increase of 8%; Process Automation & Technology sales declined organically by 6%; Industrial Automation posted an organic gain of 1%. Margins expanded across most segments despite cost inflation pressures.
The WWS transaction is expected in the second half of this year subject to closing conditions; terms were not disclosed but will see WWS join AIP’s existing investments under brands like Intelligrated and Transnorm.
Looking forward, Honeywell maintained its full-year outlook with projected sales between $38.8 billion–$39.8 billion (organic growth forecasted at up to 6%), segment margins up slightly from last year’s levels, adjusted earnings per share rising up to nine percent over last year’s figures, operating cash flow expectations revised upward slightly from prior guidance.
