Honeywell International Inc.’s (HON – Free Report) fourth-quarter 2022 adjusted earnings (excluding $1.01 from non-recurring items) of $2.52 per share surpassed the Zacks Consensus Estimate of $2.49. This compares with our estimate for adjusted earnings per share of $2.46. The bottom line improved 20.6% year over year.
Total revenues of $9,186 million missed the Zacks Consensus Estimate of $9,221.1 million. Our estimate for total revenues in the fourth quarter stood at $9193.4 million. However, the top line increased 6% from the year-ago quarter. Organic sales increased 10% due to growth in Honeywell Building Technologies, Performance Materials and Technologies and Aerospace segments.
Segmental Details
Aerospace’s quarterly revenues were $3,204 million, up 11% year over year. Our estimate for Aerospace revenues was $3,075.8 million. Strong commercial aftermarket demand drove the segment’s performance. Honeywell Building Technologies’ revenues increased 8% to $1,514 million, owing to growth in building products and solutions. Our estimate for segmental revenues was $1,665.9 million.
Performance Materials and Technologies’ revenues totaled $2,860 million, up 10%. Our estimate for Performance Materials and Technologies revenues in the fourth quarter was $2,703.3 million. Segmental revenues were driven by strong organic growth in advanced materials and process solutions.
Safety and Productivity Solutions revenues decreased 8% to $1,607 million due to lower volumes in warehouse and workflow solutions, and productivity solutions and services. Our estimate for the segment’s revenues was $1,748.4 million.
Costs/Margins
The company’s total cost of sales in the reported quarter was $4,587 million, down 0.2% year over year. Selling, general and administrative expenses were $1,249 million, up 3.8%. Interest expenses and other financial charges were $144 million compared with $80 million a year ago.
Operating income in the fourth quarter was $1,813 million, up 19.4% year over year. The operating income margin was 19.7% compared with 17.5% in the year-ago period.
Balance Sheet/Cash Flow
Exiting the fourth quarter, Honeywell had cash and cash equivalents of $9,627 million compared with $10,959 million at the end of December 2021. Long-term debt was $15,123 million, lower than $14,254 million at the end of 2021.
In 2022, HON generated $5,274 million in cash from operating activities compared with $6,038 million at the end of the year-ago period. Capital expenditure totaled $766 million in 2022 compared with $895 million incurred in the year-ago period.
Free cash flow was $4,917 million in 2022, down 14.2% year over year.
2023 Outlook
For 2023, Honeywell expects sales of $36-$37 billion. The mid-point of the guided range — $36.5 billion — lies below the Zacks Consensus Estimate of $36.87 billion. The company expects organic sales growth of 2-5% in the year. Segmental margin is anticipated to be 22.2-22.6%, indicating a year-over-year rise of 50-90 basis points.
Honeywell expects adjusted earnings per share of $8.80-$9.20, suggesting a year-over-year rise of 0-5%. The mid-point of the guided range — $9 — lies below the Zacks Consensus Estimate of $9.12. Operating cash flow is expected to be $4.9-$5.3 billion in the year, while free cash flow is anticipated to be $3.9-$4.3 billion.
Zacks Rank & Key Picks
Honeywell presently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
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