Honeywell International Inc. (NASDAQ:HON) reported their Q1 results, beating profit expectations but missing revenue forecasts, which caused a 5.5% drop in pre-market trading as investors honed in on the revenue miss and lowered operational cash flow guidance.
The industrial conglomerate reported adjusted earnings per share of $2.45, exceeding the analysts' consensus estimate of $2.32 by $0.13. However, revenue of $9.14 billion missed expectations of $9.28 billion, although it grew by 2% compared to $8.93 billion in the same quarter last year. The company cited disruptions due to the conflict in the Middle East, which affected payment collections and delayed some deliveries, particularly in the process automation and technology segment.
Honeywell has maintained its revenue forecast for the year at $38.8 billion - $39.8 billion and adjusted earnings per share forecast at $10.35 - $10.65. The midpoint revenue forecast of $39.3 billion came in below the analysts' consensus estimate of $39.51 billion, while the earnings per share midpoint of $10.50 was slightly below the consensus of $10.52.
The company lowered its operating cash flow forecast to $4.4 billion - $4.7 billion from the previous range of $4.7 billion - $5.0 billion, while maintaining its free cash flow forecast at $5.3 billion - $5.6 billion.
"Honeywell has shown a strong start to the year despite a challenging geopolitical environment," said Vimal Kapur, Chairman and CEO of Honeywell. "Orders grew by 7% with increases across all segments, boosting the backlog to over $38 billion, driven by buildings and industrial automation."
The company reported a segment margin expansion of 90 basis points to 23.3%, driven by pricing actions and the earlier-than-expected removal of isolated costs associated with the planned spin-off of its Aerospace division. Orders grew by 7% organically, leading to a backlog of approximately $38 billion.
Honeywell also announced the sale of its Warehouse and Workflow Solutions business to American Industrial Partners, with the deal expected to close in the second half of 2026. The company also updated its expected timeline for the spin-off of Honeywell Aerospace to June 29, 2026.