Honeywell (HON) - Get Report on Friday posted third-quarter adjusted earnings that beat analysts’ forecasts and sales ahead of predictions as double-digit growth in its defense and space, warehouse automation and PPE products and services offset a drop in aerospace revenue.
The company also reinstated guidance for its fourth quarter and full year amid expectations that the worst effects of the pandemic are past.
Honeywell posted net income of $781 million, or $1.07 a share, vs. $1.65 billion, or $2.23 a share, in the comparable year-ago period. On an adjusted basis, the company earned $1.56 a share, above the $1.49 a share expected by analysts polled by FactSet.
Sales came in at $7.8 billion, down 14% from $9.1 billion a year ago though above analysts’ forecasts of $7.7 billion. Aerospace sales, which includes parts for commercial airplanes, fell 25% on a year-over-year basis, driven by reduced flight hours and lower volumes among carriers due to the pandemic and drop-off in travel.
However, sales of "safety and productivity solutions" gained 8%, driven by double-digit sales of personal protective equipment as well as a return to growth in productivity solutions and services, Honeywell said. Orders for PPE were up approximately 150%, with backlog at a record high, Honeywell said.
"We continued to focus on driving sales growth in areas that have not been as impacted by the current downturn, including defense and space, warehouse automation and personal protective equipment, all of which grew by double-digits organically year-over-year,” Honeywell CEO Darius Adamczyk said in a statement.
Adamczyk also highlighted Honeywell’s cost-cutting efforts, noting the company cut costs by $450 million during the quarter, bringing year-to-date cost-cutting measures to $1.1 billion.
“We now expect to generate $1.5 billion to $1.6 billion of cost savings during 2020, up from our previous estimate of $1.4 billion to $1.6 billion," Adamczyk said, adding that the company’s has $15 billion of cash and short-term investments.
Honeywell issued $3 billion in debt during the quarter, which it used to repay a $3 billion term loan borrowed earlier this year.
The Charlotte-based company also reinstated guidance for its fourth quarter and full year.
Honeywell said it expects fourth-quarter sales of between $8.2 billion and $8.5 billion, a drop of between 11% and 14% from the same period last year, and per-share earnings of between $1.97 and $2.02, down 2% to 4% on an adjusted basis.
Full-year sales are expected to be in the range of $31.9 billion to $32.2 billion, representing a year-over-year sales drop of between 12% and 13%, with adjusted per-share earnings coming in at between $7 and $7.05.
Shares of Honeywell were down 0.4% at $163.93 in trading on Friday.