First-quarter sales of $9.14 billion fell short of analyst expectations as conflict disrupted activity in its process automation business
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Honeywell $HON reported first-quarter revenue of $9.14 billion, missing analyst expectations, as the Middle East conflict disrupted activity in its Process Automation and Technology segment and slowed collections. The stock fell about 7.7% in premarket trading on April 23.
The top-line result was up 2% compared with $8.93 billion a year ago but fell short of the $9.28 billion consensus, per Yahoo Finance. On the bottom line, adjusted EPS came in at $2.45, an 11% increase that cleared the $2.32 analyst consensus.
Honeywell attributed the shortfall in part to its Process Automation and Technology segment, which it said experienced disrupted business conditions tied directly to the regional conflict, describing the revenue impact as temporary. Organic sales in that segment fell 6% year over year, dragged by a 10% decline in aftermarket revenue tied to delays in refining catalyst shipments and automation service upgrades. Free cash flow of $56 million was also down year over year, partially due to delayed collections stemming from the Middle East conflict, Honeywell said.
"Honeywell delivered a strong start to the year while navigating a challenging geopolitical environment," CEO Vimal Kapur said in a statement. "Orders were up 7% with growth in all segments, pushing backlog to over $38 billion, led by buildings and industrial automation."
Despite the revenue shortfall, Honeywell maintained its full-year sales guidance of $38.8 billion to $39.8 billion and its adjusted EPS guidance of $10.35 to $10.65. The company lowered its full-year operating cash flow outlook to $4.4 billion to $4.7 billion, from a prior range of $4.7 billion to $5.0 billion, while keeping its free cash flow guidance unchanged at $5.3 billion to $5.6 billion.
Pricing discipline and a faster-than-expected wind-down of stranded costs connected to the pending Aerospace spin-off helped lift segment margin by 90 basis points to 23.3%. Backlog reached $38.3 billion, supported by 7% organic order growth.
Alongside the earnings report, Honeywell announced an agreement to sell its Warehouse and Workflow Solutions business to American Industrial Partners for an undisclosed sum, expected to close in the second half of 2026. That transaction made it the second asset sale Honeywell announced within a single week, coming days after it reached a separate agreement to divest its Productivity Solutions and Services unit to Brady Corporation, per Bloomberg. The Warehouse and Workflow Solutions business generated about $935 million in revenue in 2025, Honeywell said.
The company also updated the expected completion date for the spin-off of Honeywell Aerospace to June 29, 2026, subject to board approval. The aerospace unit will trade on the Nasdaq $NDAQ under the ticker "HONA." Honeywell said it plans to host investor days for both the aerospace and automation businesses in June ahead of the separation.
The quarterly shortfall extended Honeywell's streak of top-line disappointments to three in a row, and the early share-price slide left the stock poised for its steepest post-earnings selloff in roughly four years, MarketWatch noted.
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