Honeywell First Quarter Sales Up 7% To $9.3 Billion; And Earnings Up 18% To $1.04 Per Share
- Higher Than Expected Organic Sales, Segment Margin and EPS - Broad Based Overdrive

MORRIS TOWNSHIP, N.J., April 20, 2012 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the first quarter of 2012:





 Total Honeywell








   ($ Millions, except Earnings Per Share)

 1Q 2011

 1Q 2012

% Change





Sales

8,672

9,307

7%





Earnings Per Share from Continuing Operations

$0.86

$1.04

21%

Earnings Per Share

$0.88

$1.04

18%





Cash Flow from Operations

(443)

196

N/A

Free Cash Flow*

446

300

(33%)


* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions


"Honeywell had a terrific start to the year highlighted by higher than expected organic sales, 70 basis points of margin expansion, and strong double-digit earnings growth," said Honeywell Chairman and Chief Executive Officer Dave Cote. "We've seen good momentum in the U.S. and our key high growth regions, which is more than offsetting softness in Europe impacting our short-cycle businesses. Our long-cycle businesses, namely commercial aerospace and UOP, had particularly strong growth, overdriving expectations in the quarter.  As a result of our strong first quarter and continued favorable outlook for our major markets, we're raising our 2012 earnings per share outlook. Our continued seed planting, coupled with great positions in good industries and the Five Initiatives – growth, productivity, cash, people, and our enablers - will remain the keys to our continued outperformance in 2012 and over the long-term."

The company is updating its full-year 2012 sales and EPS guidance and now expects:





Full Year Guidance









2012

2012

% Change


Prior Guidance

Revised Guidance

vs. 2011

Sales

$37.8 - 38.9B

$38.0 - 38.6B

4% - 6%





Earnings Per Share from Continuing Operations(1)

 $4.25 - $4.50

$4.35 - $4.55

9% - 14%

Earnings Per Share(2)

 $4.25 - $4.50

$4.35 - $4.55

7% - 12%





Free Cash Flow(3)

 ~$3.5B

~$3.5B

~100% conversion





(1) Proforma (Ongoing Operations); V% Excludes Any Mark-to-Market Pension Adjustments and Excludes 3Q11 Repo and Other Actions

     Funded by CPG Gain (in Disc. Ops)

 

(2) Proforma, V% Excludes Any Mark-to-Market Pension Adjustments

 

(3) Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions

First Quarter Segment Performance





Aerospace








   ($ Millions)

1Q 2011

1Q 2012

 % Change





Sales

2,696

2,950

9%

Segment Profit

467

534

14%

Segment Margin                                               

17.3%

18.1%

 80 bps

  • Sales were up 9% compared with the first quarter of 2011.  Organic growth was 8% which was primarily driven by an 18% increase in our Commercial end markets, partially offset by lower services revenue in Defense and Space.  Commercial OE sales were up 22%, or 18% organic excluding the impact of the EMS acquisition.  Commercial aftermarket sales were up 16% with growth in both spares and R&O.

  • Segment profit was up 14% and segment margin increased 80 bps to 18.1%, primarily due to strong commercial aftermarket volume and productivity, net of inflation and higher investments in R&D.

Automation and Control Solutions








   ($ Millions)

1Q 2011

1Q 2012

% Change





Sales

3,656

3,788

4%

Segment Profit                                                

459

491

7%

Segment Margin

12.6%

13.0%

 40 bps

  • Sales were up 4%, 3% organic, compared with the first quarter of 2011 driven by growth in Process Solutions and Building Solutions and Distribution, partially offset by a modest (1%) organic decline in Energy, Safety and Security as a result of market headwinds in several of our short cycle businesses.  ACS continues to benefit from new product introductions, geographic expansion, and favorable macro trends such as safety, security, and energy efficiency. 

  • Segment profit was up 7% and segment margins were up 40 bps to 13.0% driven by productivity benefits net of inflation, and the absence of prior year dilution from acquisitions.

Performance Materials and Technologies








   ($ Millions)

 1Q 2011

 1Q 2012

 % Change





Sales

1,355

1,615

19%

Segment Profit

284

319

12%

Segment Margin

21.0%

19.8%

 (120) bps

  • Sales were up 19%, 12% organic, compared with the first quarter of 2011, resulting from strong UOP catalyst and licensing sales, the phenol plant acquisition, and strong volumes in Resins & Chemicals, offsetting softer demand in Asia and Europe in Specialty Products and the impact of unfavorable pricing due to more challenging global supply conditions in Fluorines.  Demand for UOP technology offerings and services remained strong with new orders up over 50%.

  • Segment profit was up 12% due to higher volumes, partially offset by continued investment to support growth in the business.  Segment margin decreased (120) bps to 19.8%, primarily due to the dilutive impact of the phenol plant acquisition. This is better than expected performance due to less price/raws headwinds than originally planned.

Transportation Systems








   ($ Millions)

1Q 2011

 1Q 2012

 % Change





Sales                                                                  

965

954

(1%)

Segment Profit

118

120

2%

Segment Margin

12.2%

12.6%

40 bps

 

  • Sales were down (1%), but up 1% on an organic basis, compared with the first quarter of 2011, due to new business launches and higher diesel penetration, partially offset by lower European vehicle production and aftermarket sales volume.

  • Segment profit was up 2% and segment margins increased 40 bps to 12.6% primarily driven by productivity gains including benefits from prior period restructuring actions.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT.  To participate, please dial (631) 291-4830 a few minutes before the 9:30 a.m. EDT start.  Please mention to the operator that you are dialing in for Honeywell's investor conference call.  The live webcast of the investor call will be available through the "Investor Relations" section of the company's Website (http://www.honeywell.com/investor).  Investors can access a replay of the conference call from 12:30 p.m. EDT, April 20, until midnight, April 27, by dialing (404) 537-3406.  The access code is 65469116.

Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, and Chicago Stock Exchanges.  For more news and information on Honeywell, please visit www.honeywellnow.com.

This release contains certain statements that may be deemed "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements.

Contacts:


Media

Investor Relations

Robert C. Ferris  

Elena Doom

(973) 455-3388  

(973) 455-2222

rob.ferris@honeywell.com  

elena.doom@honeywell.com

 

 

Honeywell International Inc

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)









Three Months Ended




March 31,




2012


2011








Product sales

$     7,377


$   6,813


Service sales

1,930


1,859


Net sales

9,307


8,672








Costs, expenses and other





    Cost of products sold  (A)

5,571


5,194


    Cost of services sold  (A)

1,309


1,230




6,880


6,424


    Selling, general and administrative expenses (A)

1,231


1,232


    Other (income) expense

(15)


(29)


    Interest and other financial charges

89


99




8,185


7,726








Income from continuing operations before taxes

1,122


946


Tax expense

297


256








Income from continuing operations after taxes

825


690








Income from discontinued operations after taxes

-


18








Net income

825


708








Less: Net income attributable to the noncontrolling interest

2


3








Net income attributable to Honeywell

$        823


$     705








Amounts attributable to Honeywell:






Income from continuing operations less net income






   attributable to the noncontrolling interest

823


687



Income from discontinued operations

-


18



Net income attributable to Honeywell

$        823


$     705








Earnings per share of common stock - basic:





Income from continuing operations

1.06


0.87


Income from discontinued operations

-


0.03


Net income attributable to Honeywell

$       1.06


$    0.90








Earnings per share of common stock - assuming dilution:





Income from continuing operations

1.04


0.86


Income from discontinued operations

-


0.02


Net income attributable to Honeywell

$       1.04


$    0.88








Weighted average number of shares outstanding-basic

777.3


785.5








Weighted average number of shares outstanding -





    assuming dilution

788.1


797.7








(A) Cost of products and services sold and selling, general and administrative expenses include amounts for

repositioning and other charges, pension and other post-retirement expense, and stock compensation expense

  

     








Honeywell International Inc


Segment Data (Unaudited) 


(Dollars in millions)










Three Months Ended




March 31,


Net Sales

2012


2011








Aerospace

$ 2,950


$ 2,696








Automation and Control Solutions

3,788


3,656








Performance Materials and Technologies

1,615


1,355








Transportation Systems

954


965








Corporate

-


-








     Total

$ 9,307


$ 8,672














Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes










Three Months Ended




March 31,


Segment Profit

2012


2011








Aerospace

$    534


$    467








Automation and Control Solutions

491


459








Performance Materials and Technologies

319


284








Transportation Systems

120


118








Corporate

(49)


(68)








     Total Segment Profit

1,415


1,260








Other income/(expense) (A)

5


20


Interest and other financial charges

(89)


(99)


Stock compensation expense (B)

(51)


(49)


Pension ongoing expense (B)

(13)


(35)


Other postretirement income/(expense) (B)

(23)


(18)


Repositioning and other charges (B)

(122)


(133)








Income from continuing operations before taxes

$ 1,122


$    946














(A)

Equity income/(loss) of affiliated companies is included in Segment Profit











(B)

Amounts included in cost of products and services sold and selling, general and administrative expenses.

  

     











Honeywell International Inc


Consolidated Balance Sheet (Unaudited)


(Dollars in millions)













March 31,

December 31, 





2012



2011












ASSETS








Current assets:








    Cash and cash equivalents


$   3,988



$   3,698



    Accounts, notes and other receivables


7,268



7,228



    Inventories


4,368



4,264



    Deferred income taxes


428



460



    Investments and other current assets


501



484




Total current assets


16,553



16,134












Investments and long-term receivables


533



494



Property, plant and equipment - net


4,814



4,804



Goodwill


11,910



11,858



Other intangible assets - net


2,420



2,477



Insurance recoveries for asbestos related liabilities


680



709



Deferred income taxes


2,061



2,132



Other assets


1,399



1,200













Total assets


$ 40,370



$ 39,808












LIABILITIES AND SHAREOWNERS' EQUITY








Current liabilities:








    Accounts payable


$   4,535



$   4,738



    Short-term borrowings


69



60



    Commercial paper


948



599



    Current maturities of long-term debt


615



15



    Accrued liabilities


6,499



6,863




Total current liabilities


12,666



12,275












Long-term debt


6,269



6,881



Deferred income taxes


707



676



Postretirement benefit obligations other than pensions


1,400



1,417



Asbestos related liabilities


1,509



1,499



Other liabilities


5,977



6,158



Shareowners' equity


11,842



10,902













Total liabilities and shareowners' equity


$ 40,370



$ 39,808












 

  








Honeywell International Inc


 Consolidated Statement of Cash Flows (Unaudited)


(Dollars in millions)










Three Months Ended




March 31,




2012


2011


Cash flows from operating activities:






    Net income attributable to Honeywell


$    823


$    705


    Adjustments to reconcile net income attributable to Honeywell to net






    cash provided  by operating activities:






        Depreciation and amortization


230


242


        Gain on sale of non-strategic businesses and assets


-


(44)


        Repositioning and other charges


122


133


        Net payments for repositioning and other charges


(104)


(109)


        Pension and other postretirement expense


36


54


        Pension and other postretirement benefit payments


(289)


(1,050)


        Stock compensation expense


51


49


        Deferred income taxes


132


68


        Excess tax benefits from share based payment arrangements


(12)


(13)


        Other


(7)


108


        Changes in assets and liabilities, net of the effects of






        acquisitions and divestitures:






           Accounts, notes and other receivables


(40)


(172)


           Inventories


(108)


(330)


           Other current assets


(28)


(14)


           Accounts payable


(203)


(4)


           Accrued liabilities


(407)


(66)


Net cash provided by/(used for) operating activities


196


(443)








Cash flows from investing activities:






    Expenditures for property, plant and equipment


(152)


(124)


    Proceeds from disposals of property, plant and equipment


1


1


    Increase in investments


(84)


(164)


    Decrease in investments


92


62


    Cash paid for acquisitions, net of cash acquired


(1)


(7)


    Proceeds from sales of businesses, net of fees paid


-


217


    Other


22


31


Net cash (used for)/provided by investing activities


(122)


16








Cash flows from financing activities:






    Net increase in commercial paper


349


1


    Net increase/(decrease) in short-term borrowings


7


(9)


    Proceeds from issuance of common stock


90


101


    Proceeds from issuance of long-term debt


2


1,381


    Payments of long-term debt


-


(437)


    Excess tax benefits from share based payment arrangements


12


13


    Cash dividends paid


(291)


(264)


Net cash provided by financing activities


169


786








Effect of foreign exchange rate changes on cash and cash equivalents


47


67


Net increase in cash and cash equivalents


290


426


Cash and cash equivalents at beginning of period


3,698


2,650


Cash and cash equivalents at end of period


$ 3,988


$ 3,076








  

Honeywell International Inc

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to Pension Cash Contributions (Unaudited)

(Dollars in millions)








Three Months Ended







March 31,







2012


2011














Cash provided by operating activities

$       196


$       (443)














Expenditures for property, plant and equipment 

(152)


(124)














Free cash flow

$         44


$       (567)














Pension cash contributions

256


1,013














Free cash flow, prior to pension cash contributions                                             

$       300


$        446























We define free cash flow as cash provided by operating activities, less cash expenditures for property, plant and equipment



















We believe that this metric is useful to investors and management as a measure of cash generated by business operations

that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business

development activities or acquisitions, and to pay dividends, repurchase stock, repay debt obligations prior to their

maturities, or make cash pension contributions. This metric can also be used to evaluate our ability to generate cash flow 

from business operations and the impact that this cash flow has on our liquidity. 

   

    

Honeywell International Inc

Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Mark-to-Market Pension Adjustments

and Third Quarter 2011 Repositioning and Other Actions Funded by CPG Gain






2011



EPS - continuing operations assuming dilution

$   2.35



Mark-to-market pension adjustment

$   1.44



EPS - continuing operations assuming dilution, excluding mark-to-market pension adjustment

$   3.79



Third quarter 2011 repositioning and other actions funded by CPG gain

$   0.22



EPS - continuing operations assuming dilution, excluding mark-to-market


   pension adjustment and third quarter 2011 repositioning and other actions funded by CPG gain

$   4.01






2011



EPS - Total Honeywell assuming dilution

$   2.61



Mark-to-market pension adjustment

$   1.44



EPS - Total Honeywell assuming dilution, excluding mark-to-market pension adjustment

$   4.05



We believe EPS, excluding mark-to-market pension expense and third quarter 2011 repositioning and other actions


funded by CPG gain, is a metric that is useful to investors and management in understanding our ongoing operations


and in analysis of ongoing operating trends




EPS utilizes weighted average shares outstanding of 791.6 million and the effective tax rate for the period. Mark-to-market uses a


blended tax rate of 36.9%


 

SOURCE Honeywell

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