HONEYWELL OVERDELIVERS ON SALES AND EARNINGS WITH STRONG SECOND QUARTER RESULTS; RAISES ORGANIC GROWTH, SEGMENT MARGIN, AND ADJUSTED EPS GUIDANCE FOR THE FULL YEAR

CHARLOTTE, N.C., July 28, 2022

The company reported second quarter organic sales growth of 4%, or 7% excluding the impact of lower COVID-mask volumes and the wind down of operations in Russia,³ exceeding the high end of the company's guidance range. Operating margin contracted by 20 basis points to 17.9% primarily due to an additional charge related to Russia. Segment margin expanded by 50 basis points to 20.9%, or 80 basis points excluding the year-over-year impact of Quantinuum. Adjusted earnings per share¹ was $2.10, up 4% year over year and 2 cents above the high end of the company's guidance range. Operating cash flow was $0.8 billion, down 38% year over year, and free cash flow was $0.8 billion, down 43% year over year, due to higher working capital as expected ahead of anticipated volume growth in the back half.

"Honeywell met or exceeded guidance for all metrics in the second quarter despite a challenging macroeconomic backdrop," said Darius Adamczyk, chairman and chief executive officer of Honeywell. "Organic sales grew 4% led by strong double-digit growth in our commercial aerospace, building products, advanced sensing technologies, and advanced materials businesses. Aerospace, Honeywell Building Technologies, and Performance Materials and Technologies all grew organically and expanded margins in the quarter. While we recognize macro crosscurrents are clouding the global economic growth outlook, we remain confident in our demand outlook for the back half of the year with orders up 12% year over year and closing backlog² of $29.5 billion, up 12% year over year, led by our long-cycle businesses, which will help drive growth for quarters to come. We once again demonstrated our operational agility by staying ahead of the inflation curve, enabling us to expand margins and beat the high end of our adjusted EPS guidance. We also continued to execute on our capital deployment strategy, deploying $2.3 billion in the quarter, including $1.4 billion of share repurchases."

Adamczyk continued, "As we have shown, our rigorous operating principles enable us to mitigate external challenges and deliver results that maximize shareholder value. The continued recovery of our key commercial aviation, defense, energy, and non-residential end markets, our commercial excellence, and our technologically differentiated portfolio of solutions will allow us to capitalize on near-term growth opportunities and remain highly resilient amid ongoing uncertainties."

As a result of the company's second-quarter performance and management's outlook for the remainder of the year, full-year sales are now expected to be in the range of $35.5 billion to $36.1 billion, up 5% to 7% organically, or up 7% to 9% excluding the one-point impact of COVID-driven mask sales declines and one-point impact of lost Russian sales. Segment margin expansion⁴ is now expected to be in the range of 30 to 70 basis points, including an approximate (30) basis point impact from investments in the Quantinuum business. Adjusted earnings per share^4,5 is now expected to be in the range of $8.55 to $8.80. Operating cash flow is expected to be in the range of $5.5 billion to $5.9 billion, and free cash flow is expected to be $4.7 billion to $5.1 billion. A summary of the company's full year guidance changes can be found in Table 1.

Honeywell sales for the second quarter were up 2% year over year on a reported basis and 4% year over year on an organic basis. The second-quarter financial results can be found in Tables 2 and 3.