On July 27, Charlotte, North Carolina-based industrial manufacturing conglomerate Honeywell announced its 2023 second-quarter earnings, year-over-year sales growth of 2% and organic sales growth of 3%, both down from the same period last year.

Sales growth in 2Q 2022 was 6%, while organic growth during that period was 8%. However, the company’s operating margin increased to 20.6% during 2Q 2023 after being reported at 19.1% for 1Q 2023. Honeywell reported sales of $9.1 billion during 2Q 2023.

Honeywell announced on April 26 that it had agreed to acquire Compressor Controls Corporation from newly formed diversified industrial manufacturer Indicor for $670 million in an all-cash transaction.

“Honeywell performed exceptionally well in the second quarter, meeting or exceeding guidance for all metrics,” said Vimal Kapur, President and CEO of Honeywell. “Organic sales growth was underpinned by double-digit growth in our commercial aerospace, process solutions, and UOP businesses. This marked the ninth consecutive quarter of double-digit growth in commercial aerospace, and strength in our overall Aerospace portfolio continues to support Honeywell’s short-term and long-term growth outlook. Our backlog remains at a record level, ending the second quarter at $30.5 billion, up 4% year over year.”

“Our continued focus on commercial excellence enabled us to remain ahead of the inflation curve and expand margins beyond the high end of our guidance range,” Kapur continued. “These operational efforts enabled us to grow adjusted earnings per share 6% year over year to $2.23 despite a 15-cent non-cash pension headwind. Our strong balance sheet allowed us to execute on our capital deployment strategy with meaningful portfolio updates, deploying $2.1 billion in the quarter to dividends, M&A, share repurchases, and high-return capex. We invested in multiple new technologies and adjacencies utilizing our robust M&A playbook, including completing our acquisition of Compressor Controls Corporation for approximately $700 million.”

Breaking Down 2Q 2023 Performance by Business Segment:

• Aerospace: Sales were up 16% year-over-year on an organic basis, the fourth consecutive quarter of double-digit organic growth, led by sustained strength in commercial aviation. Segment margin expanded 120 basis points to 27.7%, driven by commercial excellence and higher volume leverage partially offset by cost inflation.
• Honeywell Building Technologies: Sales were flat on an organic basis year-over-year. Building solutions grew 2% organically as a result of continued growth in services. Segment margin expanded 200 basis points to 25.5% due to commercial excellence and productivity actions, partially offset by cost inflation.
• Performance Materials and Technologies: Sales were up 7% on an organic basis year-over-year. HPS sales grew 11% organically, with strength in projects and in lifecycle solutions and services. Segment margin contracted 60 basis points to 21.7% as favorable price/cost was more than offset by challenges in advanced materials, including lower volumes and the previously communicated disruption in one of our plants.
• Safety and Productivity Solutions: Sales decreased 21% on an organic basis year-over-year. Sales declines were led by lower volumes in productivity solutions and services and warehouse and workflow solutions. Segment margin expanded 410 basis points year over year to 16.7%, driven by productivity actions and commercial excellence, partially offset by lower volume leverage and cost inflation.