Dive Brief:
- Honeywell’s building automation segment organically rose sales 1% year over year to nearly $1.6 billion, driven by growth in its building solutions business and offset by a drop in revenue for its building products business, according to the company’s second quarter earnings released Thursday.
- The company’s building solutions business saw an organic increase of 14% in sales during the second quarter, while sales for its building products business declined 7% year over year driven by reduced year-over-year sales volume in the fire and building management systems segment. Revenue increases in its building solutions business includes a 20% growth in projects and services due to strength in data centers, healthcare and energy, Honeywell CFO and Senior Vice President Greg Lewis said on a second-quarter earnings call Thursday.
- “Our long-cycle building solutions business led the way while we continue to work through lower volumes in our building products portfolio,” Lewis said. “Double-digit orders growth was a highlight for Building Automation in the quarter, growing both sequentially and year over year in both solutions and products.”
Dive Insight:
Honeywell’s organic sales rose 4% year over year to $9.6 billion, including 1% in volume growth. The company attributed this growth to continued strength in its aerospace, energy and sustainability solutions, and “a return to growth” in its building automation segment, according to Honeywell’s second-quarter earnings presentation.
Building automation sales rose 10% sequentially, or quarter over quarter, including one month of benefit from the acquisition of Global Access Solutions in June, the company said in its earnings release Thursday. The building automation segment margin dropped 60 basis points to 25.3% “due to product mix headwinds and cost inflation, partially offset by productivity actions and commercial excellence,” Honeywell said.
Double-digit orders growth in Honeywell’s building automation and energy and sustainability solutions segments also drove a 4% year-over-year increase in orders, per the company’s earnings presentation. The near flat organic sales in the building automation segment follows a 3% year-over-year decrease in the first quarter.
Honeywell expects product sales to improve modestly in the third and fourth quarters based on favorable order trends in the second quarter, Lewis said on the call. In the third quarter, management expects “building solutions to outpace product sales,” Lewis said. “However, the magnitude remains dependent on the ongoing normalization of channel inventories.”
Within the building solutions business, a 20% growth in projects and services orders in the second quarter would support “additional revenue growth in the back half and into 2025,” Lewis noted. Lewis added that the company expects double-digit growth in building solutions project orders for the year, and low-single-digit organic growth for its building products business, following its incorporation of Global Access Solutions into the business.
Orders in its building automation and energy and sustainability solutions segments grew by double digits and rose high-single-digits in its industrial automation segment, helping the company grow its backlog 5% year over year to maintain a “record level of $32 billion,” Honeywell CEO Vimal Kapur said on the call.
Honeywell expects third-quarter sales to organically rise 4% to 6%, reaching $9.8 billion to $10 billion, with full-year sales projected to climb 5% to 6% to reach $39.1 billion to $39.7 billion, per the company’s earnings presentation.
