Honeywell Q3 Earnings: Tops Earnings Comfortably; Raises Guidance

Honeywell International (NYSE: HON) reported a decent quarter this time around. The company managed a beat on both earnings and revenues by a comfortable margin. The improved bottom line can be attributed to higher sales at Aerospace, Home and Building Technologies, and the Safety and Productivity Solutions segments.

Due to consistent outperformance, management has decided to increase the guidance for a second time this year. It now estimates earnings per share for FY 2017 to lie between $7.05-$7.10, up from $7.00-$7.10 a quarter ago.

Despite this, however, the conglomerate’s continuous restructuring activities are yet to show any signs of overall stabilization in many of its major end markets.

Key Highlights:

• As mentioned above, improved sales at Aerospace helped buoy the top line this time around. Revenues at the segment were up by nearly 1.6% on higher sales at Commercial Aftermarket and lower customer incentives year-over-year. Additionally, the segment also benefited from strength in the U.S. defense space, and robust fares demand in the air transport and regional segment.
• The company also witnessed notable growth at Home and Building Technologies. The segment reported a revenue increase of about 3.3% year-over-year. Here, the top line was driven by air and water product sales in China, the timely roll-outs of the smart Energy program, as well as sustained growth in the Distributions business. The company also benefited from the recent move by TCL to include Solstice in its manufacturing process for its refrigerators. The Chinese industrial giant manufactures over 2 million refrigerators annually.
• At Safety and Productivity Solutions, the company witnessed a superb top line growth of over 21% year-over-year. Revenues improved on higher demand for industrial safety products, Movilizer software sales, and better performance at voice-enabled workflow solutions. Additionally, the inclusion of Intelligrated also contributed heavily in the double digit growth in organic sales at the segment. We can expect to see this momentum carry forward into 2018 as well.
• The positives aside, Performance Materials and Technologies revenues were down by about 3% year-over-year. The decline was partially offset by robust catalyst, equipment, licensing, and gas processing volumes. In Q3, the company managed to sign a number of new deals with names such as Canada Kuwait Petrochemical, Farabi Petrochemicals, and Kuwait Paraxylene Production. The financial translations of this deal have not yet been disclosed. Hence, we could be seeing better growth at the segment going forward.

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