CHARLOTTE, N.C. — Honeywell on Thursday announced results for the third quarter that met or exceeded the company's guidance. The company also updated its full-year sales, segment margin and adjusted earnings per share guidance ranges.
The company reported third-quarter year-over-year sales growth of 3% and organic sales growth of 2%, led by double-digit organic sales growth in commercial aviation, defense and space, and process solutions. Operating margin expanded 140 basis points to 20.9% and segment margin1 expanded by 80 basis points to 22.6%, led by expansion in Honeywell Building Technologies.
Earnings per share for the third quarter was $2.27, roughly flat year over year on a reported basis and up 1% year over year adjusted1. Excluding a 14-cent non-cash pension headwind, adjusted earnings per share1 was up 7%. Operating cash flow was $1.8 billion with operating cash flow margin of 19.6%, and free cash flow1 was $1.6 billion with free cash flow margin1 of 16.9%, driven by strong net income and collections.
"Honeywell executed through a challenging environment in the third quarter, meeting or exceeding guidance for all metrics and demonstrating once again our culture of execution and accountability," said Vimal Kapur, chief executive officer of Honeywell. "Organic sales growth was led by our Aerospace segment, where continued supply chain improvements enabled significant sales growth in both commercial aviation and defense and space. We also saw strong growth in other pockets of the portfolio, including double-digit organic sales growth in our process solutions business, and 20% organic sales growth in our Honeywell Connected Enterprise offerings.
"Orders growth of 10% in the quarter, led by strength in Aerospace and our other long-cycle businesses, drove our backlog to a new record level of $31.4 billion, up 8% year over year. Continued mix benefits combined with our laser focus on productivity across the Honeywell portfolio enabled us to expand margins in line with the high end of our guidance range. We remain committed to our capital deployment strategy and put our robust balance sheet to work in the third quarter by deploying $2.0 billion to dividends, high-return capex, M&A, and share repurchases, including more than doubling our share repurchases sequentially to 5.3 million shares. The result of all these efforts was increased adjusted earnings per share1 in the face of uncertain macroeconomic dynamics."
"I am very excited about the future of Honeywell. Our portfolio is aligned to powerful megatrends: automation, the future of aviation, and energy transition, all underpinned by our robust digitalization capabilities. Our technologically differentiated portfolio of solutions and world-class Honeywell Accelerator operating system will enable us to capitalize on these trends and drive the profitable growth we outlined in our long-term financial framework."
As a result of the company's third-quarter performance and management's outlook for the remainder of the year, Honeywell updated its full-year sales, segment margin and adjusted earnings per share guidance. Full-year sales are now expected to be $36.8 billion to $37.1 billion with organic sales growth in the range of 4% to 5%. Segment margin is now expected to be in the range of 22.5% to 22.6%, with segment margin expansion of 80 to 90 basis points, up 10 basis points on the low end from the prior guidance range.
Adjusted earnings per share is now expected to be in the range of $9.10 to $9.20, narrowing the range by 5 cents on both ends from the prior guidance range. Operating cash flow is still expected to be in the range of $4.9 billion to $5.3 billion, and free cash flow is still expected to be in the range of $3.9 billion to $4.3 billion, or $5.1 billion to $5.5 billion excluding the net impact of settlements signed in the fourth quarter of 2022.