The News: Honeywell’s revenue for the second quarter of 2022 came in at $8.95 billion, up two percent from $8.8 billion one year ago, as the aerospace, building technologies, performance materials and safety and productivity products vendor reported its latest earnings figures on July 27. Read the full Press Release from the Honeywell website.
Honeywell Revenue Hits $8.95B in Q2 2022, Up 2% from Q2 2021
Analyst Take: Honeywell’s revenue for Q2 2022 squeaked upward by two percent compared to the same quarter one year ago, but that is admirable amid an extremely challenging operating environment across the business world. And things were not helped by lower sales volumes for the critical Covid-19 N95 masks that Honeywell manufactures as personal protective equipment (PPE) for healthcare workers, especially after Honeywell invested heavily in bumping up its facilities to make the PPE gear amid the lingering pandemic.
Here are Honeywell’s Q2 2022 results by the numbers:
- Q2 2022 revenue of $8.95 billion, up two percent from $8.8 billion one year ago. The revenue figure beat analyst consensus estimates of $8.67 billion for the quarter from FactSet data.
- Q2 2022 non-GAAP adjusted earnings per share (EPS) of $2.10, up from $2.00 per share one year ago. The EPS beat analyst consensus estimates of $2.03 per share.
- Q2 2022 net income of $1.26 billion, which is down 13 percent from$1.45 billion one year ago, according to a MarketWatch report.
Over the last 12 months, we have been closely following Honeywell, its innovations and investments, as well as its evolution to a technology powerhouse in an era of digital transformation—especially at the edge and in heavy industries like aerospace, manufacturing, construction, and public sector.
Honeywell’s story continues to evolve beyond its diverse industrial businesses to a multi-year pivot to transition to more software-focused products, while tapping into its rich industry data. Honeywell is also benefiting from the secular trends of sustainability, edge computing and IoT, which are tailwinds for the business. With a massive focus going into ESG, Honeywell is able to strategically insert itself into the discussion with both technology and a pragmatic materials approach that is helping more companies reach measurable sustainability goals.
So, while the Q2 2022 figures show only a small revenue gain, they represent another data point on the company’s multi-year journey to transform the business. And despite that small revenue gain, Honeywell is on a positive track for the future as evidenced by revenue gains in its product segments that are showing progress.
Plenty of other tech companies are seeing similar situations, so this is not just an experience being seen by Honeywell. Between the lingering pandemic, continuing supply chain issues, the war in Ukraine and other global issues, things are tough all over, in the markets and the tech business world.
Honeywell’s Key Indicators Remain Solid
Honeywell reported second quarter organic sales growth of four percent, or seven percent excluding the impact of lower Covid-19-mask sales volumes and the wind-down of operations in Russia due to the war.
Operating cash flow was $800 million, down 38 percent year-over-year, and free cash flow was $800 million, down 43 percent year-over-year, due to higher working capital as expected ahead of anticipated volume growth in the back half, according to the company.
Honeywell saw sales revenue increase in its Aerospace division to $2.9 billion, up five percent from $2.7 billion one year ago, and a revenue increase of nine percent in its Honeywell Building Technologies unit for a total of $1.5 billion, up from $1.4 billion a year ago. The Performance Materials and Technologies unit saw revenue increase by six percent to $2.7 billion, up from $2.5 billion one year ago. The Honeywell Safety and Productivity Solutions unit saw revenue fall by 12 percent to $1.8 billion, down from $2.1 billion one year ago.
Honeywell also announced that its orders are up 12 percent year-over-year and that it has a closing backlog of $29.5 billion, up 12 percent year-over-year, led by the company’s long-cycle businesses.
Honeywell Full-Year 2022 Guidance
Honeywell also provided full-year guidance for the rest of 2022 as part of its Q2 2022 earnings report. The guidance calls for:
- Full-Year 2022 revenue of $35.5 billion to $36.1 billion, which is down slightly from earlier guidance of $35.5 billion to $36.4 billion.
- Non-GAAP adjusted EPS of $8.55 to $8.80 per share, unchanged from the previous guidance.
- Organic growth of five percent to seven percent, compared to four percent to seven percent that was announced previously.
Overview of Honeywell’s Q2 2022 Earnings
Honeywell’s business demand and orders are strong, according to the company, while it smartly remains focused on tight control of margins. Honeywell looks to be positioned well in what could be a challenging year and is showing resiliency and a continuing goal of operational excellence in a topsy-turvy market.
Honeywell continues to wisely focus on bringing differentiated products to the market, which is a smart strategy to get through this tough period. The company offers a compelling mix of warehouse and workflow products, productivity products and services, business and aviation products, advanced materials products, and most crucially, its recurring connected software business.
To get through the challenges ahead, we believe that Honeywell must remain focused on disciplined cost management and swift pricing actions to stay ahead of inflation and to continue delivering robust margins.
We believe that Honeywell continues to demonstrate the correct response to the challenging macroeconomic environment and economic headwinds affecting the markets, and that it is doing so with smart execution. The company took swift action earlier to mitigate supply chain challenges and inflation by focusing on supply chain efforts, redesigning parts, and implementing quick pricing actions, which was a successful path to cope with negative conditions.
It will be interesting to watch Honeywell’s performance over the next few quarters and into 2023 as it navigates these uncertain times. We believe that Honeywell is well-positioned for future success if it remains focused on growth and continues to invest in new markets and technologies such as ESG enablement products for enterprises, and the continued growth and maturity of its investment in the Quantinuum standalone quantum computing company.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.