Honeywell Announces 2025 Second Quarter Results, Updates Full-Year Guidance
Honeywell (Nasdaq: HON) today announced its 2025 second quarter results, with all major metrics exceeding or meeting company expectations. Honeywell increased its full-year organic growth and adjusted EPS guidance and reiterated its full-year free cash flow outlook.
The company reported a sales performance of $104 billion in the second quarter, representing an 8% increase over the same period last year. Organic sales growth was 5%, with UOP business achieving two-digit organic sales growth. Revenue grew 7%, departmental profit rose 8% to $24 billion, primarily driven by the strong performance of the Smart Building Technologies Group. Operating margin decreased 30 basis points to 20.4%, and departmental profit margin decreased 10 basis points to 22.9%, in line with previous expectations. Earnings per share was $2.45, a 4% increase over the same period last year, while adjusted EPS was $2.75, a 10% increase.
"Despite macroeconomic uncertainty, Honeywell delivered a strong second quarter performance, with organic growth and adjusted EPS both exceeding expectations." said Vimal Kapur, Honeywell's Chairman and CEO. "With the leadership of our Smart Building Technologies Group, three of our four major business groups achieved sales growth over 5% in this quarter, fully demonstrating the strength of our acceleration operating system in responding to changes and driving growth. In this quarter, we continued to drive innovation through new product development and further accelerated record-breaking order backlog growth. At the same time, we continue to take a prudent capital deployment strategy, selectively pursuing high-quality M&A opportunities like the acquisition of Zefon's catalyst technology business and strategic acquisition of Li-ion Tamer."
Kapur also noted: "This month, we announced a strategic review of our production solutions and services business, as well as our warehouse and workflow solutions business. This marks the completion of my initial plan to streamline and optimize our business portfolio. Honeywell is actively pushing forward with plans to spin off into three industry-leading public companies, which we believe will create greater value for customers, employees, and shareholders."
Based on the company's second-quarter performance and management's outlook for the second half of the year, Honeywell updated its full-year sales guidance, departmental profit rate, and adjusted EPS guidance. The company expects full-year sales to be $408 billion to $413 billion, with organic sales growth expected to increase by 4% to 5%. Departmental profit rate is expected to increase by 40 to 60 basis points, while adjusted EPS is expected to be $10.45 to $10.65, up 20 cents from the midpoint of previous guidance.
The company also expects operating cash flow to remain at $67 billion to $71 billion and free cash flow to be $54 billion to $58 billion. Excluding the impact of the Bombardier agreement signed in the fourth quarter of 2024, the company expects organic sales growth to increase by 3% to 4%, departmental profit rate to decrease by 30 to 10 basis points, and adjusted EPS to increase by 1% to 3%. This guidance range includes the impact of the completed Victory deal and the sale of personal safety protective equipment business in May.
Business Portfolio Transformation
In February this year, Honeywell announced that its Board of Directors had completed a comprehensive review of its business portfolio and decided to push forward with plans to spin off its automation business and aerospace business. This spin-off plan will be synchronized with the previously announced high-performance materials business divestiture (expected to be completed in the fourth quarter of 2025), ultimately forming three independent publicly traded industry-leading companies, expected to be fully completed by the second half of 2026. To ensure a smooth transformation, Honeywell has established a dedicated spin-off management office to ensure that each business leadership team remains focused on daily operations management during the transition period.
In the second quarter, Honeywell continued to optimize its business portfolio around the upcoming spin-off plan and prudently deployed shareholder capital, including repurchasing $17 billion of company stock. In May, the company completed the sale of its personal safety protective equipment (PPE) business for $13 billion; in July, it announced a strategic review of its production solutions and services business as well as its warehouse and workflow solutions business. Additionally, Honeywell announced in May that it had acquired Zefon's catalyst technology business for £18 billion, completed the acquisition of Sundyne for $22 billion in June, and completed a strategic enhancement acquisition of Li-ion Tamer in July. Through these transactions, Honeywell has announced a total of $135 billion in M&A deals since December 2023, exceeding its commitment to deploy at least $250 billion by 2025 for high-return capital expenditures, dividends, opportunistic stock repurchases, and growth acquisitions.