Honeywell 1Q25: Thesis Confirming

Sales Growth: 8% y/y

Organic Growth: 4% y/y

GAAP EPS: $2.22, beat by $0.26

All around great quarter for the management team at Honeywell. They gave further details on the Honeywell spin off companies and confirmed that Honeywell Automation will be the remainco. The current CEO, Vimal Kapur, will remain CEO of Honeywell Automation and the Advanced Materials segment will list as Solstice Advanced Materials at the end of this year.

Financially, Honeywell saw very strong organic growth (9% y/y) within Aerospace driven by the commercial aftermarket and defense and space operations. Industrial Automation continues to be a laggard but Building Automation posted strong 8% y/y organic growth to compensate. An overall beat and raise on all fronts left the market satisfied with Honeywell's performance and the stock has traded up 7.33% in the last five days, partially aided by the market's great week.

Honeywell also did a great job detailing their exposure to tariffs, which seems relatively limited given the products they sell locally are often produced locally. While I don't know what Honeywell's peer set tariff exposure looks like, I feel comfortable owning Honeywell regardless of tariff concerns as I geographically diversify my holdings. The following is the slide from the deck detailing this tariff exposure:

Overall solid quarter and certainly thesis affirming. Honeywell is taking steps to ensure that the spin offs will occur efficiently and on time. We received some bonus return in that the fundamental business has started performing a little bit better. I think they may have benefitted from customers over-purchasing in 1Q to avoid tariffs in later quarters, but I'm not in this position because of the fundamental performance over the next 15 months. As long as the separation is on track I plan to hold the Honeywell position.