Key Takeaways
- Revenue of $9.14 billion came in below the $9.3 billion consensus forecast — marking the third consecutive quarterly shortfall.
- Ongoing Middle East tensions disrupted operations in the company’s process automation and technology division, pressuring sales.
- Profit fell 43.3% to $821 million year-over-year, while adjusted EPS climbed 11% to $2.45, surpassing forecasts.
- Second-quarter outlook disappointed investors, with projected EPS of $2.35–$2.45 versus analyst estimates of $2.56.
- The planned aerospace division separation has been accelerated to June 29, while Quantinuum submitted IPO documentation.
Shares of Honeywell International (HON) stock tumbled over 6% during premarket hours Thursday following the industrial giant’s third consecutive quarter of missing revenue projections, with operations notably impacted by ongoing turmoil in the Middle East.
Honeywell International Inc., HON
First-quarter revenue increased 2.4% from the prior year to reach $9.14 billion, undershooting the FactSet analyst consensus of $9.3 billion. A significant contributor to this shortfall was the process automation and technology division, which experienced a “slowdown in activity in the Middle East stemming from the conflict.” Management pointed to supply-chain interruptions and an increasingly “challenging geopolitical environment” as primary headwinds.
Profit tumbled 43.3% to $821 million, impacted by expenses associated with debt refinancing and asset write-downs connected to units designated for divestiture. Free cash flow totaled just $100 million, declining from the year-ago period, partially attributed to payment delays stemming from the regional conflict.
Profit Exceeds Expectations, But Forward Guidance Weighs on Sentiment
On an adjusted basis, the company reported earnings per share growth of 11% to $2.45, exceeding the FactSet projection of $2.32. This represents the seventh consecutive quarter where adjusted earnings surpassed analyst targets.
However, investor confidence wavered on the company’s forward-looking statements. Honeywell anticipates second-quarter EPS ranging from $2.35 to $2.45, substantially beneath the Street consensus of $2.56. Revenue for the upcoming quarter is forecast between $9.4 billion and $9.6 billion, likewise trailing the $9.73 billion analyst estimate.
Management maintained its full-year projections, calling for revenue between $38.8 billion and $39.8 billion, with adjusted EPS in the $10.35 to $10.65 range.
Defense and space segment revenue grew 4% compared to the prior year, with leadership attributing the increase to “escalating geopolitical conflicts.” However, this expansion proved insufficient to counterbalance weaknesses across other business lines.
The premarket decline positioned the shares for their steepest post-earnings session since February 3, 2022, when they dropped 7.6%.
HON has declined 9.7% from the onset of the Iran conflict through Wednesday’s close. The iShares U.S. Aerospace & Defense ETF (ITA) fell 10.1% during the comparable timeframe. For the year, HON remains higher by 12.8%, outpacing the S&P 500’s 4.3% advance.
Corporate Restructuring Initiatives Progress
The company provided an update on its ongoing portfolio transformation efforts. The aerospace business separation is now scheduled to finalize on June 29, moved forward from the previously communicated third-quarter timeframe.
A day earlier, Quantinuum, the company’s quantum-computing venture, submitted registration documents for a public market debut.
Additionally, management disclosed an agreement to divest its Warehouse and Workflow Solutions operation to American Industrial Partners through an all-cash arrangement. This transaction, alongside the previously disclosed sale of the Productivity Solutions and Services (PSS) business, is anticipated to conclude during the latter half of 2026.
Since reaching recent peaks, HON stock has retreated 12% year to date.
