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This industrial giant makes much of the technology that makes other companies run. And CEO Vimal Kapur has focused its portfolio on automation, aviation, and the energy transition. The goal is to address not just the technology behind that transition but the cost, making it feasible for enterprise customers to turn a profit while doing the right thing. On one urgent front, Honeywell is creating greener ways to store energy, such as through low-carbon hydrogen and food waste. It’s a leader in tech that produces sustainable aviation fuel (SAF) from such waste. At least for now, as Kapur told Fortune, “you can’t run a plane on electricity.”

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The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are electrical equipment and industrial machinery.

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<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Known for making everything from cockpit controls to N95 masks, Honeywell dipped two spots, to No. 94, on this year’s list. Revenues fell by 11.1% year over year, to $32.6 billion, as the pandemic grounded flights. Travel bans pummeled the company’s biggest business, aerospace, which includes selling commercial airplane parts to customers like Boeing and Airbus. Honeywell partially offset that turbulence by beefing up its warehouse automation unit, which supplies Amazon and others, and by spinning up new manufacturing lines for much in demand personal protective equipment. By the end of 2020, Honeywell had an enviable $15.2 billion in cash and equivalents on the balance sheet, which it could use for acquisitions. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Known for making everything from cockpit controls to N95 masks, Honeywell dipped 27 spots, to No. 374, on this year’s Global 500 list. Revenues fell by 11.1% year over year, to $32.6 billion, as the pandemic grounded flights. Travel bans pummeled the company’s biggest business, aerospace, which includes selling commercial airplane parts to customers like Boeing and Airbus. Honeywell partially offset that turbulence by beefing up its warehouse automation unit, which supplies Amazon and others, and by spinning up new manufacturing lines for much in demand personal protective equipment. By the end of 2020, Honeywell had an enviable $15.2 billion in cash and equivalents on the balance sheet, which it could use for acquisitions.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-94-Honeywell International

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Known for making everything from cockpit controls to N95 masks, Honeywell dipped two spots, to No. 94, on this year’s list. Revenues fell by 11.1% year over year, to $32.6 billion, as the pandemic grounded flights. Travel bans pummeled the company’s biggest business, aerospace, which includes selling commercial airplane parts to customers like Boeing and Airbus. Honeywell partially offset that turbulence by beefing up its warehouse automation unit, which supplies Amazon and others, and by spinning up new manufacturing lines for much in demand personal protective equipment. By the end of 2020, Honeywell had an enviable $15.2 billion in cash and equivalents on the balance sheet, which it could use for acquisitions. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Known for making everything from cockpit controls to N95 masks, Honeywell dipped two spots, to No. 94, on this year’s list. Revenues fell by 11.1% year over year, to $32.6 billion, as the pandemic grounded flights. Travel bans pummeled the company’s biggest business, aerospace, which includes selling commercial airplane parts to customers like Boeing and Airbus. Honeywell partially offset that turbulence by beefing up its warehouse automation unit, which supplies Amazon and others, and by spinning up new manufacturing lines for much in demand personal protective equipment. By the end of 2020, Honeywell had an enviable $15.2 billion in cash and equivalents on the balance sheet, which it could use for acquisitions.

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This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-347-Honeywell

Known for making everything from cockpit controls to quantum computers to N95 masks, Honeywell has gotten leaner lately. The industrial giant plunged 57 places on this year’s list as revenues fell by 12.2% year-over-year, to $36.7 billion. Honeywell planned the thinning: In October 2018, it jettisoned its historic home thermostat unit, now called Residio, and its automotive turbocharger business, Garret Motion. (Both spinoffs are now Fortune 1000 companies.) Thanks in part to the pruning, Honeywell has an enviable balance sheet, with about $10 billion in cash at the ready. Analysts say CEO Darius Adamczyk could well use the funds to bolster Honeywell’s burgeoning warehouse automation or “Internet of things” software businesses with “bolt-on” acquisitions. But the sharp pullback in air travel, an outcome of the globally spreading coronavirus, is expected to hammer the company’s biggest division, aerospace, in the fiscal quarters ahead.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-092-Honeywell

Known for making everything from cockpit controls to quantum computers to N95 masks, Honeywell has gotten leaner lately. The industrial giant plunged 15 places, to No. 92, on this year’s list as revenues fell by 12.2% year-over-year, to $36.7 billion. Honeywell planned the thinning: In October 2018, it jettisoned its historic home thermostat unit, now called Residio, and its automotive turbocharger business, Garret Motion. (Both spinoffs are now Fortune 1000 companies.) Thanks in part to the pruning, Honeywell has an enviable balance sheet, with about $10 billion in cash at the ready. Analysts expect CEO Darius Adamczyk could use the funds to bolster Honeywell’s burgeoning warehouse automation or “Internet of things” software businesses with “bolt-on” acquisitions. But halted air travel, an outcome of the globally spreading coronavirus, is expected to hammer the company’s biggest division, aerospace, in the fiscal quarters ahead.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Honeywell, now operating under the name Honeywell Technologies, spun off Honeywell Aerospace as an independent company in June 2026. Honeywell International has completed its transformation from a century-old industrial conglomerate into three independent, publicly traded companies: Honeywell Technologies, Honeywell Aerospace, and Solstice Advanced Materials.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Vimal Kapur

Chairman and CEO

Jim Currier

President and CEO of Honeywell Aerospace Technologies

Lucian Boldea

President and CEO of Honeywell Industrial Automation

Billal Hammoud

President and CEO of Honeywell Building Automation

Ken West

President and CEO of Honeywell Energy & Sustainability Solutions

Honeywell Technologies (HON): Company Profile, Stock Price, News, Rankings

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Honeywell Technologies

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Thank you for standing by, and welcome to the Honeywell First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations.

Thank you. Good morning, and welcome to Honeywell's first quarter twenty twenty five earnings conference call. On the call with me today are Chairman and Chief Executive Officer, Vimal Kapoor and Senior Vice President and Chief Financial Officer, Mike Stepniak. This webcast and the presentation materials, including non GAAP reconciliations, are available on our Investor Relations website. From time to time, we post new information that may be of interest or material to our investors on this website.

Our discussion today includes forward looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning, we will review our financial results for the first quarter, share our guidance for the second quarter and provide an update on full year 2025. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to your Chairman and CEO, Vimal Kapoor.

Thank you, Sean, and good morning, everyone. Honeywell saw its strong finish to last year's carry into 2025 as we exceeded the high end of our guidance on all metrics in the first quarter, and this performance translated into substantial free cash flow growth as well. Overall, demand was strong with a book to bill above one. Although our business has solid momentum heading into second quarter, the economic climate has become increasingly uncertain in recent weeks. Global trade patterns are shifting because of increasing tariff and duties, making customer planning more difficult.

Weaker sentiments combined with higher price expectation warrants incremental caution regarding end market demand in the coming quarters. Despite these headwinds, we remain on track to deliver on our 2025 outlook as we are maintaining our full year organic growth guidance and raising our adjusted EPS guidance. Our outlook now incorporates the impact of current tariffs and macroeconomic uncertainty, fully offset by our ongoing mitigation efforts, local for local strategy, accelerator operating system, and resilient market position. As you can see, we are taking decisive actions during this uncertain time to not only protect, but grow earnings, invest for future, and position Honeywell for long term success regardless of the operating environment we face. Honeywell has a team across function and businesses meeting daily to review and respond to tariff announcements.

This team analyzes a number of levers to optimally respond to changing conditions. We're also closely monitoring bilateral negotiation and engaging with key stakeholders. From our perspective, there are three very important consideration for supporting American competitiveness and manufacturing. Maintain the principle of USMCA, strike the right kind of trade agreement with our major trading partners, and continue the global framework that has made The US the world leader in aerospace. As external environment has become more unpredictable, we remain focused on what we can control, and we have made significant progress in planning and executing our separation into three industry leading public companies.

This preparation has included key leadership appointments to ensure that we have the right people in place to continue our portfolio transformation. Let's turn to slide three to discuss a few important changes announced earlier this month. Souping Liu will succeed Anne Madden as senior vice president and general counsel while retaining her role as corporate secretary. Sue's more than fifteen years of legal experience at Honeywell across many of our business lines and geographies will further strengthen our executive leadership team and will transition into a new role as Senior Vice President of Portfolio Transformation and Senior Advisor where her experience leading over 100 acquisitions as Honeywell's Global Head of M and A will prove invaluable during our continued portfolio optimization. Also, our board of directors has elected Steven Williamson to join us as an independent director and audit committee member.

Steven's decade as CFO of Thermo Fisher Scientific will broaden and deepen the expertise of board. I wanna personally congratulate these three individuals on their new roles, and I look forward to working closely with each one of them. Let's turn to slide four to discuss update on separation. We hold strong conviction that separating automation, automation, aerospace, and advanced materials that unlock significant value for all Honeywell stakeholders by best positioning each stand alone public company for long term profitable growth. Following our announcement in February, Honeywell has taken many steps forward in preparation for these transactions.

First, we determined a tax free spin of Honeywell Aerospace will be most efficient way to separate our automation and aerospace businesses. Second, the board confirmed that I will lead the automation company going forward, and it's where I've spent bulk of my career and where I have a specific vision for the future. At the right time, board will evaluate the future leadership of Honeywell Aerospace as well. Third, we established dedicated separation management office run by experts in corporate transformation. These entities have empowerment to maintain the value of our businesses, minimize separation costs, and achieved our communicated timelines.

Most importantly, they will ensure that our operation leaders are focused solely on serving our customers and achieving our financial targets. Fourth, we appointed an accomplished leadership team, what will be called Solstice Advanced Materials. Collectively, they bring years of experience leading public companies, operating specialty chemical businesses, and utilizing Honeywell Accelerative Operating System. Solstice will be headquartered in New Jersey where the current leadership team for the business sits. Fifth, we continue deploying capital as an active buyer of our own shares, which offer tremendous value at recent levels.

We have repurchased about $3,000,000,000 of our shares already this year and will continue to repurchase our stock opportunistically. And lastly, in March, we announced the acquisition of Sundyne as we continue to optimize our portfolio. If you turn to slide five, I'll discuss how this deal fits into with our portfolio transformation. As you can see, Sundyne will be the fifth strategic bolt on acquisition since I became Honeywell's CEO, along with couple of strategically important technology tuck ins. SunDyne meet each of the common sense criteria we have set in.

It's the right size. It exceeds our financial return hurdles. It improves our business profile by boosting both organic growth and segment margins. And Honeywell is a natural owner of the business as Sundyne addresses a closely adjusted market to our existing ESS offering, which will allow us to sell a more robust and complementary portfolio of solution to our customers, particularly in LNG. We have meticulously built a pipeline of acquisition targets with compelling financial characteristics over the past several years and we'll continue to pursue them if they become available to us.

Given everything we have in flight, only the deals that are time sensitive will be pursued for now. Buying these differentiated businesses with strong aftermarket content and secular growth drivers at a reasonable price is a powerful use of capital. Our twenty twenty four acquisitions are now increasingly incorporated into our operations and performing admirably well with the bulk of integration work behind us, reinforcing that we have the right M and A process in place to create incremental value. While we continue to evaluate acquisition, we also look forward to opportunistically exit businesses such as personal protective equipment that do not fit into our business model or strategic priorities. The PPE sale will improve margins and organic growth.

I will now move to slide six to address how we view the present global uncertainty. As a company, we remain confident in our ability to navigate the current trade environment. For decades, we have positioned each of our business lines to serve their local markets. This local for local strategy reduces our overall exposure to international trade and geopolitical tensions. Based on tariffs in place today, our approximate 2025 exposure is about $500,000,000 before taking any mitigation measures.

Our better tested accelerator operating system can quickly identify areas of concern and implement mitigation efforts. Then we pursue consistent and clear communication with our suppliers, customers, and partners to maximize operational stability for all parties. Through this well developed operational systems and our established local for local footprint, we are confident we can fully offset the impact of current tariffs and are well positioned to manage future trade uncertainty. This is evident in today's results and our confidence in maintaining and raising guidance in spite of these offsetting headwinds. Most importantly, whenever elevated global tensions do subside, we remain in excellent position to capitalize on record backlog and continue our growth trajectory.

Now let me turn over to Mike to discuss our excellent first quarter results.

Thank you, Wimal, and good morning to everyone joining us. Let me begin on Slide seven. We had a very strong start to the year in the first quarter, exceeding the high end of our organic sales, segment margin and adjusted earnings per share guidance. Our results demonstrate tremendous effort from our commercial teams, successful productivity initiatives and excellent supply chain coordination with our partners in a rapidly changing marketplace. First quarter sales grew four percent organically, led by Aerospace Technologies, where both our commercial aftermarket and defense and space businesses experienced double digit growth.

Building solution remains a significant contributor as well. Segment margin remained flat from the prior year at 23% with improvement in building automation and energy and sustainability solutions, offset by pressure in aerospace technologies and industrial automation. I would like to highlight that this margin performance includes an increase in our research and development spend of 50 basis points from the previous year to 4.5% of sales. We continue to balance current period profitability with our organic growth initiatives. Segment profit for the quarter grew 8% year over year, aided by the inclusion of our twenty twenty four acquisitions, which are performing ahead of the initial expectations.

Earnings per share for the first quarter was $2.22 per share, flat from the previous year, while adjusted earnings per share was $2.51 per share, up 7% year over year. Segment profit more than offset headwinds from interest rate expense, foreign exchange and taxes. You'll find a bridge of adjusted EPS from 1Q 'twenty four to 1Q 'twenty five in the appendix of this presentation. Orders were $10,600,000,000 in the quarter, up 3% year over year, excluding the effect of acquisitions, both supported by organic backlog growth of 8% to a new record of $36,100,000,000 Orders growth was led by longer cycle building automation and aerospace businesses. First quarter cash flow was more than $300,000,000 over $100,000,000 above the prior year, driven primarily by better adjusted earnings.

We're utilizing our cash flow and strong balance sheet to dynamically allocate capital, including returning capital to shareholders. In the first quarter, we repurchased nearly $2,000,000,000 of our own shares at prices we find highly compelling, and we bought back roughly another $1,000,000,000 during the month of April, representing about 2% of our shares outstanding in 2025. We also paid more than $700,000,000 of dividends in the first quarter. We are investing in our business both organically and inorganically, as we allocated approximately $250,000,000 of capital projects and announced the acquisition of Sanddye. Now let's spend some time discussing our first quarter performance by business.

In Aerospace Technologies, sales in the first quarter were up 9% organically year over year, exceeding our prior expectations. Better output as a result of supply chain improvements and robust demand from air transport customers to support increased flight activity drove 15% sales growth in the commercial aftermarket business. Defense and Space, aided by increased output and elevated global defense spending in a world of ongoing geopolitical uncertainty, delivered fifth consecutive quarter of double digit growth despite challenging comps and expiring government programs a year ago. Aerospace industry demand continues to outpace supplies, supporting our orders growth of 9% and a book to bill of 1.1%. First quarter segment margin contracted 190 basis points to 26.3% but matched our expectations as mix pressure and acquisition integration costs from Case were partially offset by productivity actions.

Industrial Automation sales declined 2% organically in the first quarter, led by lower demand in personal protective equipment, particularly in China and Europe. Warehouse and Workflow Solutions returned to growth in the quarter, up 5% as demand for warehouse automation continues to stabilize in prior year comparisons get easier. Our sensing business demonstrated recovery in the second consecutive quarter with double digit growth in both healthcare and aerospace and defense end markets. Process solution sales were flat as continued strength in life cycle solutions and Services and Compressor Controls was offset by modest declines in Smart Energy and Thermal Solutions. In Productivity Solutions and Services, weakness in Europe led a sales decline of 1% year over year when excluding the impact of the final year license and settlement payments.

Segment margin Industrial Automation contracted 130 basis points to 17.8%, driven by receivables write downs and volume deleverage, partially offset by productivity actions. Building automation delivered another solid quarter and outpaced our expectations, up 8% organically, led by second consecutive quarter of both double digit growth in Building Solutions and mid single digit growth in Building Products. Solutions continue to benefit from its robust backlog, up 11% in the quarter, led by over 30% growth in The Middle East and mid teens growth in North America. Building Products growth of 6% was driven by double digit organic growth in Fire and sustained strength in Security. Overall, orders continued to be encouraging indicator for Building Automation, with the first quarter marking a fourth consecutive quarter of year over year growth.

Building automation margin expanded 150 basis points driven by volume leverage, productivity actions and accretion from Access Solutions. Energy and Sustainability Solutions sales declined 2% organically in the first quarter. Strong quarter in petrochemical and refining projects as well as sustainability projects helped EOP deliver 2% organic sales growth year over year. Advanced Materials sales declined 4% as challenging prior year comps in Fluorine Products offset broad based strength in Specialty Chemicals and Materials, highlighted by over 20% growth in Spectrum. Orders were the bright spot for Advanced Materials, up 7% year over year, driven by double digit growth in Fluorine Products.

This quarter marked a second full quarter of ownership of the LNG business acquired from Air Products, which continues to grow at accretive sales and margin rates. ESS segment margin expanded two thirty basis points in the quarter, led by productivity actions and the year over year benefit from the LNG acquisition, partially offset by cost inflation. Taken altogether, we still see long cycle businesses outperforming short cycle ones, while record backlog levels and best in class operating system position us well for future periods. I'll now move to slide eight to talk about our second quarter and full year guidance. Although a strong first quarter like we delivered would typically indicate improved expectations for the remainder of the year, we cannot ignore changes in the geopolitical environment that Wimal mentioned in his earlier remarks and believe that continuing to take a pragmatic approach to our guidance is appropriate given the increasing global uncertainty.

Rest assured, Honeywell is actively and successfully addressing both potential cost and demand challenges to mitigate their impact on our business. We have a playbook of rapid implementation of sourcing, pricing and productivity changes. As a reminder, our local for local approach to maintaining supply chain has been our strategy for more than two decades and is a very mature part of our operating system. This structure and our leading market positions will help mitigate much of our recent tariff changes across the portfolio, but we're not immune. We'll continue to balance protecting margins and sustaining volume across our end markets.

Now let's discuss what this means for 2025 guidance. For clarity, our guidance now assumes the impact of announced tariffs net of mitigation actions as well as additional contingency for potential end market demand weakness triggered by this uncertainty. We're maintaining our prior outlook calling for organic sales growth of 2% to 5% for the year or one percent to 4% when excluding the prior year impact from the Bombardier agreement, with better 1Q performance being offset by a prudent guidance posture given greater uncertainty for the rest of the year. As we contemplate the potential influence of uncertainty on our customers' activity, we are assuming an impact to organic sales for the remainder of the year approaching 1% to segment profit of about 2% and to EPS of about $0.18 comparing to the guidance we laid out in February. Full year sales are now projected to be $39,600,000,000 to $40,500,000,000 as favorable movements in foreign exchange rates since year end are being offset by two fewer months of revenue from our PPE business, given an early May exit rather than June.

Our guidance does not incorporate the acquisition of Sindheim, which is still expected to close in the second quarter. We anticipate year over year organic sales improvement to be relatively balanced across the next three quarters when excluding the impact of last year's Bombardier agreement, which will only influence the fourth quarter comparison. Consequently, we also see second quarter sales growing 1% to 4% organically, which translates into sales of 9,800,000,000.0 to $10,100,000,000 with one more month of PPE operations included or a $200,000,000 impact compared to a full quarter. We now anticipate our overall segment margin to basis points this year or to be down 10 basis points to up 20 basis points ex Bombardier. Changes to our margin outlook from prior expectations are focused in IA and ESS, given their relatively higher exposure to China trade.

For the second quarter, segment margin is expected to be in the range of 22.8% to 23.2%, down 20 basis points to up 20 basis points from the prior year as margin improvement in IA and BA is offset by contraction in Aero and ESS. For the year, we now expect earnings per share of $10.2 to $10.5 up 3% to 6% or down 1% to up 2% excluding the prior year Bombardier agreement impact. Earnings per share in the second quarter is anticipated to be in the range of $2.6 and $2.7 up 4% to up 8% year over year. I will provide additional details for full year EPS in a few minutes. Free cash flow for the year is still expected to be 5,400,000,000.0 to $5,800,000,000 down 2% to up 5% ex Bombardier and roughly in line with earnings growth.

You can reference the 2025 free cash flow bridge in the appendix. Beyond our CapEx and dividend commitments, we plan to continue to deploy capital diligently over the course of the year, funding both attractive time sensitive acquisitions such as Sundyne, as well as being opportunistic on repurchase of our shares. Year to date, we have already bought back $3,000,000,000 worth of our stock, including $1,000,000,000 in April, putting us on the path to reduce our net share count for the year by 2%, far exceeding our 1% annual commitment. In summary, we're taking a clear eyed look at the remainder of 2025 to set appropriate expectations for our business given all the information available to us today. We are also not pausing the investment needed to fuel the future of innovation growth.

I'll now turn to Slide nine to spend a few minutes on our outlook by business, discussing high level expectations by segment with additional details by SBU covered in the commentary portion of the slide. For Aerospace Technologies, we are holding our twenty twenty five full year outlook for organic sales growth in the high single digit range or mid single digit to high single digit when excluding the impact of last year's Bombardier agreement. Eros is expected to maintain its position as the growth leader for Honeywell, driven by ongoing ramp in flight activity and global defense spending. For the second quarter, organic sales are expected to be up in the mid single digit to high single digit range, led by strength in our commercial aftermarket business as supply chain outlook continues to support our outlook. Margins for the quarter and the year should be roughly 26% as case integration headwinds temporarily bring the segment below the run rate levels.

We are lowering the 2025 sales outlook for Industrial Automation to down mid single digits year over year as the trajectory of short cycle orders and customer CapEx decisions has become increasingly uncertain in the current environment. We expect IA margins to be up modestly versus the prior year as we work to mitigate a potentially weaker demand environment and incremental costs related to tariffs with additional commercial excellence and productivity actions. We also anticipate second quarter sales to be down mid single digits year over year as strong end market talents in sensing and continued growth in warehouse automation offset by muted demand growth in productivity solutions services and personal protective equipment. Industrial Automation margin is expected to expand as the PPE exit, commercial excellence and productivity more than offset volume deleverage and cost inflation. For Building Automation, we are raising our 2025 sales outlook to mid single digit growth given standout performance in both long and short cycle businesses in the first quarter.

Our sales outlook for the remainder of the year remains largely unchanged as momentum from new product innovation and robust demand in high growth regions is partially tempered by global uncertainty for our business segment with the most international exposure. In the second quarter, we expect sales to be up low mid single digits with sequential and year over year growth in both solutions and products. Margins for the quarter and for the year should expand as volume leverage, accretion from access solutions and productivity actions more than offset cost inflation. In energy and sustainability solutions, we expect twenty twenty five organic sales growth to remain in our previously guided low single digit range year over year, led by strength in EOP and ongoing momentum in SDS. We continue to build on our robust pipeline from sustained global demand in projects despite ongoing macroeconomic uncertainty.

We anticipate ESS margin to remain flat as cost inflation is offset by productivity actions and the full year benefit from the LNG acquisition. For the second quarter, organic sales should be up sequentially with plus to up year over year growth as backlog conversion is partially offset by the final quarter of difficult foreign incomes for the year. Margin is expected to contract from the prior year as a result of timing impacts, but remain in line with the first quarter. Now let's turn to Slide 10 to go over our 2025 EPS bridge. Walking from 2024 adjusted EPS ex Bombardier to the midpoint of our 2025 EPS guidance range involves a few moving pieces.

We see organic segment profit growth adding $0.13 per share to 2025 earnings, down from our prior guide. The first quarter surpassed our outlook, but that will be more than offset by our more prudent posture towards guidance for the remainder of the year, driven by geopolitical changes seen over the past few weeks and their possible impact on customer demand, particularly in the back half of the year. Contributions from our 2024 acquisitions are still expected to add approximately $0.33 per share to twenty twenty five EPS. Notably, expectations for these businesses have shown stability at levels ahead of our initial plans at the time of purchase. Again, I remind everyone that the Sanday acquisition is not yet included in guidance for the year.

The sale of our PPE business, for which we now model an early May close, will drag down earnings by $07 for the year, so it will prove beneficial to segment margin and organic sales growth. Foreign exchange movements since February have modestly reduced the expected currency headwind to earnings for the year to $05 per share. Please see the appendix of this presentation for a bridge with the sales impact of FX. Below the line items, the difference between segment profit and income before tax remains the largest headwind to year over year earnings growth at $0.52 per share. Pension income for the year is still expected to be $550,000,000 50 million dollars less than 2024 because of onetime item in Europe.

The related transaction ended up closing early in the second quarter rather than the first quarter as anticipated previously, which shifted the negative income effect. Repositioning expenses are now expected to be $125,000,000 to $225,000,000 as roughly half of the lower first quarter spending assumed to occur later in the year. Lastly, other below the line expenses anticipated to be modestly higher at $1,350,000,000 to $1,400,000,000 increasing from 2024 on account of higher interest expense from last year's acquisitions and the first quarter's accelerating share repurchase. Full year tax rate expectations have not changed, though we anticipate a lower rate in the second quarter offset by higher third quarter rate. Finally, our full year average share count expectation has been reduced by 12,000,000 shares, increasing the tailwind to EPS to $0.19 Now I'll turn the call back over to Vimal.

Thanks, Mike. In closing, our performance in the first quarter exceeded all our communicated targets on the strength of our business model and the dedication of our more than hundred thousand future shapers around the globe. Our BOS installed base continues to provide stable demand for our solutions in this time of uncertainty. Simultaneously, we are investing substantial resources to expand further into high growth verticals to develop innovative new products and services and to grow our supply capabilities to fulfill our record backlog even as we maintain promised level of profitability. In updating our 2025 outlook, we sought to prudently balance the strength of our first quarter results with the unfolding economic uncertainty in the global economy.

Taking both into account, we are raising the midpoint of our 2025 EPS guidance. The work to separate Honeywell into three stand alone public companies has begun in earnest, and the value creation opportunity from greater strategic focus, financial flexibility, and tailored capital priorities for each of the business are becoming clearer each day. Our separation teams kicked off the process with a preparatory spins to lay out clearly the road ahead and the large obstacles to overcome. Such planning will allow us to move both quickly and effectively in the months ahead while ensuring our businesses do not miss a beat. In this way, we'll be certain to deliver our commitment to our shareholders, customers, and our employees.

One way in which we can further maximize our value as we work through our spin off transaction is to continue to selectively utilize our strong balance sheet and cash flow generation for a creative bolt on acquisition. In lieu of the availability of such deal, we'll believe our shares offer tremendous value at recent levels. With that, Sean, let's take questions.

Thank you, Vimal. Vimal and Mike are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Operator, please open the line for Q and A.

Thank Our first question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.

Thanks. Good morning, everyone. Thanks for the question. Maybe just a bit more details on the tariffs. In fact, the way

through, obviously, 500,000,000. I just want to confirm that's the sec I'm assuming that second half, so the annualized would be closer to $1,000,000,000 But just maybe just talk about kind of the offset strategies there, any pricing versus supply chain measures, anything there would be helpful.

Hey, Nigel. So, of all, I would say, if you see the chart in our deck, our local for local strategy is a foundation for counting the impact of the tariffs. We are largely localized in each regions in United States and Europe and so on. So our impact that way is informed by that local footprint. Now to your question, the countermeasures are going to be some pricing.

We are going to do pricing where we have the opportunity. At the same time, we have substantial direct material productivity option available this year. And with a combination of the two, we are going to offset the impact of this 500,000,000 of tariff. I do believe that if we look at our business mix, it's largely a large part of it is aftermarket, which give us the resilience to allow pricing execution there. At the same time, we operate in very rational markets.

Most of our competition are public companies, which are projecting very similar strategies. So, our confidence to execute mitigating this $500,000,000 tariff is very high.

And Nigel, this is Sean. Just a clarifying point on that, the $1,000,000,000 estimate as you put, keep in mind, tariffs in the first half are not zero. So I think as you annualize a full year impact, it'd be something a bit lower than what you suggested, but not too far off.

Okay. Thanks, Sean. That's helpful. And then, Mike, you mentioned contingency in the guide, Luke's macros. I'm curious, you know, is that more of a top down, you know, reading all the stuff in the press that we were reading?

Is that more the top down contingency? Or are you starting to see unusual behavior or anything to kind of inform a weaker second half?

That's correct. That's more a top down view. If we look at our first quarter orders, very strong. April, strength in orders also continued. So we feel good about that.

That said, just looking at our end markets, especially in industrial automation, our exposure to China there, We took a little bit more, I would say, prudent view in terms of what contingency we want to have just to make sure we protect our total year. So, yes, this is demand contingency for the second half. I don't have any data that would suggest that demand is falling out, but we'll continue to take a prudent stance on our guide. I want to make sure that the guide I give you, I have a high level of confidence that team can deliver on it. Okay.

Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your question.

Can you guys just parse out what your volume assumption is? I think coming into this year, you've talked about like three points of price. Maybe what's the volume assumption just in the context of this contingency? Just trying to kind of gauge what's kind of in the base case and what's just a hedge on that front.

Sure. So just to clarify one more time, our total year framework is unchanged, that everything holds. If you look at now price volume, going to the year, we're assuming about, I think, 2% price, that's what we communicated.

And then and the volume was minus 1% to 2% up. In this current guide, I'm assuming about 3% of price, and I'm assuming about minus 2% of volume to 1% of volume. So that's the conservatism is there.

So whether you include Bombardier or not, either way, one more point of price, one less of volume would align to the

Yes. That makes a ton of sense. And then just related to the tariffs, can you maybe talk about how much is roughly coming from China? And I know this may be kind of old news at this stage, but any other other than Mexico, any other kind of hotspots that we should be watching when it comes to other regions? Or is this mostly like a China thing, the $500,000,000

So Steve, if you peel out our tariffs, I would say that going into China, exports from U. S. Into China is a big part of impact. As we've always shared, we are net exporter to China for many years. Aerospace and ESS business, UOP, we ship it from U.

S. So clearly, a part of our tariff impact is channel related tariffs. On incoming side in The U. S, the impact is not big, because we're largely localized, but at the same time, there's impact of some products coming from impacted by reciprocal tariffs, because we do impact parts from all over the world. And then there a tail off impact from China, both in specifically in industrial automation business.

So that's the construct of it. And as we said before, we have factored all known tariff rates, which are known today, both coming into U. S. And coming into China.

And Steve, I would just add, so for China, it's about 60% to 70% of our overall tariff exposure, rest of it is reciprocal, Mexico is 100% offset.

Yes, got it. Yes, 100% covered. Okay, got it. Great. Thanks a lot.

Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Hi, good morning. Maybe just wanted to start with the Industrial Automation segment. So maybe help us understand, you have that big drop off in the PSS top line in the first quarter. Kind of how are you thinking about that playing out for the balance of the year? Anything odd going on sort of share wise?

And on the margin front, I suppose those IA margins were down in the first quarter. I think they guided to be up slightly for the year. So maybe any help around the sort of cadence of that margin swinging from down to up as we go through the year?

Yes. So, Julian, the PSS quarter one was roughly flattish. If you take out the royalty we get from Zebra, that was the last quarter we had the comps. So, there's a flattish revenue. We did extremely well in North America.

Europe, there was some pressure. I think it's too early for us to see any comps related to competition. So, I think as our competition will declare results, we'll observe if there's any specific puts and takes to share. I would say in our guide, when we talked about contingency, there are two drivers of that contingency from the future demand, if I can use the word unknown. One is definitely China.

Mike talked about uncertainty we see there. We have a business exposure. And then second part is the uncertainty around our businesses, which touches the retail markets. So PSS being one of them. I cannot tell you an absolute number because we are not trying to drill down a number business by business.

We have taken overall broader view. So, we do expect some pressure to a certain degree on PSS business in our assumption for rest of the year. On the margins in first quarter, the large part of the margin contraction in IA was receivables write off. We had some past receivable write off, and based upon the progress of that, we wrote them off. The year as we progress, we don't have a similar event for us of the year.

Also, as the PPE business retires from our portfolio, that gives us a favorable tailwind. So, fundamentally, I think all those factors play out to help us margin expansion for the rest of the year.

I would add PP is obviously accretive to our segment margin and accretive to our organic growth.

That's helpful. And then just my follow-up on the capital deployment. Last year, you had under €2,000,000,000 of buyback and close to €9,000,000,000 committed to M and A. This year, year to date, you're running a sort of €3,000,000,000 buyback and a couple of billion euros of M and A. Any way you could frame for us sort of the buyback scope for the year?

And I understand it depends on share price action and other uses of cash potentially, but just trying to gauge sort of how aggressive or large could that buyback be, assuming the share price stays around current levels?

Julian, I would just say at this stage that we will continue to be opportunistic. We obviously view our share price as very attractive business stage for buybacks. But at the same time, we want to balance our capital deployment with M and A. And obviously M and A machine has been now in play for us for a couple of years. So if deals there are specific deals that we've been working for a while and then attractive to us, we'll not pass them on.

Yes. So it'll be a balanced approach, Julian. I mean, we do expect opportunistic approach on share buyback to continue. But at the same time, if there's a time bound M and A deal we have been working for a couple of years, We also don't want to miss the window at this point of time.

Our next question comes from the line of Scott Davis with Melius Research.

I hate to beat the dead horse, but still on tariffs. The I just wanted to clarify kind of the cadence of you've got the cost side of tariffs and you have price. I imagine they don't match up kind of perfectly unless you're doing surcharges, I suppose. But is the intent to match up price and mitigation efforts with tariffs by, say, the end of the year and have it be neutral by then? Or do you think you can do it sooner than that?

I would say it will be much sooner than that. I mean, we stood up a large team of people that can understand tariffs by HTS code and know it essentially to $1 And the teams have been quite active in terms of understanding what how to offset it and what are the mitigation actions. I would say it's not 100% price. I mean, like Wimal said earlier, we have other options and our direct material productivity has been really good. So we're trying to manage, I would say, demand with cost and demand destruction vis a vis price.

So we feel very confident in the second half, we'll be, I would say, on par. And definitely by fourth quarter, we'll be in a stable operating mode, assuming things don't change materially for us here.

Honeywell Technologies (HON) Q1 2025 Earnings Call Transcript

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