CHARLOTTE, N.C., Oct. 17, 2019 /PRNewswire/ -- Honeywell (NYSE:
HON) today announced its financial results for the third
quarter of 2019 and raised its full-year segment margin and
adjusted earnings per share financial guidance1,
narrowed its sales guidance and reaffirmed its cash flow
guidance.
"We continue to deliver strong results and returns for our
shareowners, even with the ongoing uncertainty in the macroeconomic
environment," said Darius Adamczyk,
chairman and chief executive officer of Honeywell. "We delivered
adjusted earnings per share2 of $2.08, up 9%, excluding the impact of the
spin-offs2, which was above the high end of our
third-quarter guidance range. Organic sales growth of 3% was driven
by strength across Aerospace, continued demand for commercial fire
products in Building Technologies, and broad-based growth in
Process Solutions. In addition, Honeywell Connected Enterprise
drove double-digit connected software growth, continuing our
transformation into a premier software industrial company. Our
productivity rigor and the favorable impact of the 2018 spin-offs
also contributed to our strong results and expanded segment margin,
which was up 180 basis points to 21.2% in the quarter."
"We remain on track to meet our cash flow commitments for the
year, and we continued to execute on our capital deployment
strategy in the third quarter. We repurchased $1.0 billion in Honeywell shares, bringing total
repurchases in the first nine months of 2019 to $3.7 billion. We also acquired TruTrak Flight
Systems, made three strategic investments within Honeywell
Ventures, and announced a 10% dividend increase, the tenth
consecutive double-digit dividend increase. Additionally, during
the quarter, we issued $2.7 billion
of senior notes to refinance October debt maturities at attractive
rates, further strengthening our balance sheet," said Adamczyk.
"Overall, we had a strong third quarter, which was a
continuation of very strong performance year-to-date. We are well
positioned in attractive end markets with multiple levers for value
creation heading into 2020. We remain committed to delivering
outstanding returns for our customers, shareowners, and employees
over the long-term," concluded Adamczyk.
As a result of the company's performance in the first three
quarters and management's outlook for the remainder of the year,
Honeywell updated its full-year financial guidance1.
Organic sales growth is now expected to be in the range of 4% to
5%; segment margin1 is now expected to be 20.9% to
21.0%, up 20 basis points from the low end of the prior guidance
range; and adjusted earnings per share1 is now expected
to be $8.10 to $8.15, up fifteen
cents from the low end of the prior guidance range.
A summary of the company's full-year guidance changes can be
found in Table 1.
Third-Quarter Performance
Honeywell sales for the third quarter were down 16% on a
reported basis and up 3% on an organic basis. The difference
between reported and organic sales primarily relates to the
spin-offs of the Transportation Systems business (formerly in
Aerospace) and the Homes and ADI Global Distribution business
(formerly in Honeywell Building Technologies) as well as the impact
of foreign currency translation. The third-quarter financial
results can be found in Tables 2 and 3.
Aerospace sales for the third quarter were up 10% on an
organic basis driven by continued double-digit growth in the
Defense and Space business, strength in the commercial aftermarket,
and original equipment demand across air transport and business
aviation. Segment margin expanded 350 basis points to 25.6%,
primarily driven by commercial excellence, productivity, net of
inflation, and the favorable impact from the spin-off of the
Transportation Systems business in 2018.
Honeywell Building Technologies sales for the third
quarter were up 3% on an organic basis driven by continued demand
for commercial fire and building management products, and building
projects across the Americas. Segment margin expanded 390 basis
points to 21.0% driven by the favorable impact from the spin-off of
the Homes and ADI Global Distribution business in 2018.
Performance Materials and Technologies sales for the
third quarter were up 3% on an organic basis driven by robust
demand for services, gas products, and automation projects in
Process Solutions, double-digit software growth driven by demand
for Honeywell Forge for Industrial, and strength in licensing and
refining catalysts in UOP. This was partially offset by lower gas
processing sales in UOP and declines in Advanced Materials, which
was impacted by continued illegal imports of hydrofluorocarbons
(HFCs) into Europe. Segment margin
expanded 60 basis points to 21.8%, primarily driven by
productivity, net of inflation, and commercial excellence.
Safety and Productivity Solutions sales for the third
quarter were down 8% on an organic basis driven by distributor
destocking that resulted in lower sales volumes in productivity
products and the impact of major systems project timing in
Intelligrated, which more than offset continued demand for gas
sensing and detection products. Segment margin contracted 320 basis
points to 13.4%, primarily driven by lower sales volumes in
productivity products and higher sales of lower margin
products.
Conference Call Details
Honeywell will discuss its third-quarter results and updated
full-year guidance during an investor conference call starting at
8:30 a.m. Eastern Daylight Time
today. To participate on the conference call, please dial (800)
239-9838 (domestic) or (323) 794-2551 (international) approximately
ten minutes before the 8:30 a.m. EDT
start. Please mention to the operator that you are dialing in for
Honeywell's third-quarter 2019 earnings call or provide the
conference code HON3Q19. The live webcast of the investor call as
well as related presentation materials will be available through
the Investor Relations section of the company's website
(www.honeywell.com/investor). Investors can hear a replay of the
conference call from 12:30 p.m. EDT,
October 17, until 12:30 p.m. EDT, October
24, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 7673176.
TABLE 1: FULL-YEAR 2019 GUIDANCE1
|
|
Previous
Guidance
|
|
Current
Guidance
|
|
Sales
|
|
$36.7B -
$37.2B
|
|
$36.7B -
$36.9B
|
|
Organic
Growth
|
|
4% -
6%
|
|
4% -
5%
|
|
Segment
Margin
|
|
20.7% -
21.0%
|
|
20.9% -
21.0%
|
|
Expansion
|
|
Up 110 - 140
bps
|
|
Up 130 - 140
bps
|
|
Expansion
Ex-Spins3
|
|
Up 30 - 60
bps
|
|
Up 50 - 60
bps
|
|
Adjusted Earnings Per
Share4
|
|
$7.95 -
$8.15
|
|
$8.10 -
$8.15
|
|
Earnings Growth
Ex-Spins
|
|
8% -
10%
|
|
~
10%
|
|
Operating Cash
Flow
|
|
$6.2B -
$6.5B
|
|
$6.2B -
$6.5B
|
|
Adjusted Free Cash
Flow5
|
|
$5.7B -
$6.0B
|
|
$5.7B -
$6.0B
|
|
Conversion
|
|
98% -
100%
|
|
98% -
100%
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
3Q
2018
|
|
3Q
2019
|
|
Change
|
|
Sales
|
|
10,762
|
|
9,086
|
|
(16)%
|
|
Organic
Growth
|
|
|
|
|
|
3%
|
|
Segment
Margin
|
|
19.4%
|
|
21.2%
|
|
180 bps
|
|
Operating Income
Margin
|
|
15.6%
|
|
19.3%
|
|
370 bps
|
|
Reported Earnings Per
Share
|
|
$3.11
|
|
$2.23
|
|
(28)%
|
|
Adjusted Earnings Per
Share Ex-Spins6
|
|
$1.90
|
|
$2.08
|
|
9%
|
|
Cash Flow from
Operations
|
|
1,878
|
|
1,471
|
|
(22)%
|
|
Adjusted Free Cash
Flow7
|
|
1,809
|
|
1,286
|
|
(29)%
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
|
AEROSPACE
|
|
3Q
2018
|
|
3Q
2019
|
|
Change
|
|
Sales
|
|
4,030
|
|
3,544
|
|
(12)%
|
|
Organic
Growth
|
|
|
|
|
|
10%
|
|
Segment
Profit
|
|
891
|
|
908
|
|
2%
|
|
Segment
Margin
|
|
22.1%
|
|
25.6%
|
|
350 bps
|
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
|
|
|
|
|
|
Sales
|
|
2,517
|
|
1,415
|
|
(44)%
|
|
Organic
Growth
|
|
|
|
|
|
3%
|
|
Segment
Profit
|
|
430
|
|
297
|
|
(31)%
|
|
Segment
Margin
|
|
17.1%
|
|
21.0%
|
|
390 bps
|
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
|
|
|
|
|
|
Sales
|
|
2,640
|
|
2,670
|
|
1%
|
|
Organic
Growth
|
|
|
|
|
|
3%
|
|
Segment
Profit
|
|
560
|
|
582
|
|
4%
|
|
Segment
Margin
|
|
21.2%
|
|
21.8%
|
|
60 bps
|
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
|
|
|
|
|
|
Sales
|
|
1,575
|
|
1,457
|
|
(7)%
|
|
Organic
Growth
|
|
|
|
|
|
(8)%
|
|
Segment
Profit
|
|
262
|
|
195
|
|
(26)%
|
|
Segment
Margin
|
|
16.6%
|
|
13.4%
|
|
(320) bps
|
|
|
1As
discussed in the notes to the attached reconciliations, we do not
provide guidance for margin or EPS on a GAAP basis.
|
|
2Adjusted
EPS and adjusted EPS V% ex-spins exclude 3Q18 after-tax separation
costs related to the spin-offs of Resideo and Garrett, the 3Q18
after-tax segment profit contribution from Resideo and Garrett, net
of the spin indemnification impacts assuming both indemnification
agreements were effective in 3Q18, and adjustments to the charges
taken in connection with the 4Q17 U.S. tax legislation
charge.
|
|
3Segment
margin expansion ex-spins guidance excludes sales and segment
profit contribution from Resideo and Garrett in 2018.
|
|
4Adjusted
EPS and adjusted EPS V%, ex-spins, guidance excludes pension
mark-to-market, adjustments to the charges taken in connection with
the 4Q17 U.S. tax legislation charge, 2018 after-tax separation
costs related to the spin-offs of Resideo and Garrett, and the 2018
after-tax segment profit contribution from the spin-offs, net of
spin indemnification impacts assuming both indemnification
agreements were effective for all of 2018, of $0.62.
|
|
5Adjusted
free cash flow guidance and associated conversion exclude estimated
payments of ~$0.3B for separation costs incurred in 2018 related to
the spin-offs of Resideo and Garrett. Adjusted free cash flow
conversion guidance also excludes pension mark-to-market and
adjustments to the charges taken in connection with the 4Q17 U.S.
tax legislation charge. As discussed in the notes to the attached
reconciliations, we do not provide cash flow conversion guidance on
a GAAP basis.
|
|
6Adjusted
EPS ex-spins and adjusted EPS V% ex-spins exclude 3Q18 after-tax
separation costs related to the spin-offs of Resideo and Garrett of
$233M, and the favorable adjustments to the charges taken in
connection with the 4Q17 U.S. tax legislation charge of $114M in
3Q19 and $1,047M in 3Q18. Also excludes the 3Q18 after-tax segment
profit contribution from the spin-offs, net of spin indemnification
impacts assuming both indemnification agreements were effective in
3Q18, of $0.13.
|
|
7Adjusted
free cash flow and adjusted free cash flow V% exclude impacts from
separation costs related to the spin-offs of $7M in 3Q19 and $114M
in 3Q18.
|
Honeywell (www.honeywell.com) is a Fortune 100 technology
company that delivers industry specific solutions that include
aerospace products and services; control technologies for buildings
and industry; and performance materials globally. Our technologies
help everything from aircraft, buildings, manufacturing plants,
supply chains, and workers become more connected to make our world
smarter, safer, and more sustainable. For more news and information
on Honeywell, please visit www.honeywell.com/newsroom.
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. We identify the principal risks and uncertainties that
affect our performance in our Form 10-K and other filings with the
Securities and Exchange Commission.
This release contains financial measures presented on a non-GAAP
basis. Honeywell's non-GAAP financial measures used in this release
are as follows: segment profit, on an overall Honeywell basis, a
measure by which we assess operating performance, which we define
as operating income adjusted for certain items as presented in the
Appendix; segment margin, on an overall Honeywell basis, which we
define as segment profit divided by sales and which we adjust to
exclude sales and segment profit contribution from Resideo and
Garrett in 2018, if and as noted in the release; organic sales
growth, which we define as sales growth less the impacts from
foreign currency translation, and acquisitions and divestitures for
the first 12 months following transaction date; adjusted free cash
flow, which we define as cash flow from operations less capital
expenditures and which we adjust to exclude the impact of
separation costs related to the spin-offs of Resideo and Garrett,
if and as noted in the release; adjusted free cash flow conversion,
which we define as adjusted free cash flow divided by net income
attributable to Honeywell, excluding pension mark-to-market
expenses, separation costs related to the spin-offs, and
adjustments to the charges taken in connection with the 4Q17 U.S.
tax legislation charge, if and as noted in the release; and
adjusted earnings per share, which we adjust to exclude pension
mark-to-market expenses, as well as for other components, such as
separation costs related to the spin-offs, adjustments to the
charges taken in connection with the 4Q17 U.S. tax legislation
charge, and after-tax segment profit contribution from Resideo and
Garrett in the periods noted in the release, net of spin
indemnification impacts assuming both indemnification agreements
were effective in such periods, if and as noted in the release. The
respective tax rates applied when adjusting earnings per share for
these items are identified in the release or in the reconciliations
presented in the Appendix. Management believes that, when
considered together with reported amounts, these measures are
useful to investors and management in understanding our ongoing
operations and in the analysis of ongoing operating trends. These
metrics should be considered in addition to, and not as
replacements for, the most comparable GAAP measure. Refer to the
Appendix attached to this release for reconciliations of non-GAAP
financial measures to the most directly comparable GAAP
measures.
|
Honeywell
International Inc.
|
|
Consolidated
Statement of Operations (Unaudited)
|
|
(Dollars in millions,
except per share amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Product
sales
|
$
|
6,793
|
|
|
$
|
8,477
|
|
|
$
|
20,496
|
|
|
$
|
25,414
|
|
|
Service
sales
|
2,293
|
|
|
2,285
|
|
|
6,717
|
|
|
6,659
|
|
|
Net sales
|
9,086
|
|
|
10,762
|
|
|
27,213
|
|
|
32,073
|
|
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
|
Cost of products sold
(1)
|
4,775
|
|
|
6,127
|
|
|
14,244
|
|
|
18,234
|
|
|
Cost of services sold
(1)
|
1,263
|
|
|
1,429
|
|
|
3,767
|
|
|
4,127
|
|
|
6,038
|
|
|
7,556
|
|
|
18,011
|
|
|
22,361
|
|
|
Selling, general and
administrative expenses (1)
|
1,296
|
|
|
1,524
|
|
|
4,046
|
|
|
4,527
|
|
|
Other (income)
expense
|
(311)
|
|
|
(275)
|
|
|
(901)
|
|
|
(859)
|
|
|
Interest and other
financial charges
|
96
|
|
|
99
|
|
|
266
|
|
|
277
|
|
|
7,119
|
|
|
8,904
|
|
|
21,422
|
|
|
26,306
|
|
|
Income before
taxes
|
1,967
|
|
|
1,858
|
|
|
5,791
|
|
|
5,767
|
|
|
Tax expense
(benefit)
|
319
|
|
|
(498)
|
|
|
1,151
|
|
|
679
|
|
|
Net income
|
1,648
|
|
|
2,356
|
|
|
4,640
|
|
|
5,088
|
|
|
Less: Net income
attributable to the noncontrolling interest
|
24
|
|
|
18
|
|
|
59
|
|
|
44
|
|
|
Net income
attributable to Honeywell
|
$
|
1,624
|
|
|
$
|
2,338
|
|
|
$
|
4,581
|
|
|
$
|
5,044
|
|
|
Earnings per share of
common stock - basic
|
$
|
2.26
|
|
|
$
|
3.15
|
|
|
$
|
6.33
|
|
|
$
|
6.76
|
|
|
Earnings per share of
common stock - assuming dilution
|
$
|
2.23
|
|
|
$
|
3.11
|
|
|
$
|
6.25
|
|
|
$
|
6.67
|
|
|
Weighted average
number of shares outstanding - basic
|
717.6
|
|
|
741.8
|
|
|
723.5
|
|
|
746.0
|
|
|
Weighted average
number of shares outstanding - assuming dilution
|
726.7
|
|
|
752.0
|
|
|
732.8
|
|
|
756.0
|
|
|
|
|
(1)
|
Cost of products and
services sold and selling, general and administrative expenses
include amounts for repositioning and other charges, the service
cost component of pension and other postretirement (income)
expense, and stock compensation expense.
|
|
Honeywell
International Inc.
|
|
Segment Data
(Unaudited)
|
|
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Net Sales
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Aerospace
|
$
|
3,544
|
|
|
$
|
4,030
|
|
|
$
|
10,393
|
|
|
$
|
12,065
|
|
|
Honeywell Building
Technologies
|
1,415
|
|
|
2,517
|
|
|
4,254
|
|
|
7,496
|
|
|
Performance Materials
and Technologies
|
2,670
|
|
|
2,640
|
|
|
7,977
|
|
|
7,872
|
|
|
Safety and
Productivity Solutions
|
1,457
|
|
|
1,575
|
|
|
4,589
|
|
|
4,640
|
|
|
Total
|
$
|
9,086
|
|
|
$
|
10,762
|
|
|
$
|
27,213
|
|
|
$
|
32,073
|
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
Segment
Profit
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Aerospace
|
$
|
908
|
|
|
$
|
891
|
|
|
$
|
2,653
|
|
|
$
|
2,702
|
|
|
Honeywell Building
Technologies
|
297
|
|
|
430
|
|
|
868
|
|
|
1,273
|
|
|
Performance Materials
and Technologies
|
582
|
|
|
560
|
|
|
1,790
|
|
|
1,676
|
|
|
Safety and
Productivity Solutions
|
195
|
|
|
262
|
|
|
598
|
|
|
760
|
|
|
Corporate
|
(54)
|
|
|
(53)
|
|
|
(202)
|
|
|
(181)
|
|
|
Total segment
profit
|
1,928
|
|
|
2,090
|
|
|
5,707
|
|
|
6,230
|
|
|
Interest and other
financial charges
|
(96)
|
|
|
(99)
|
|
|
(266)
|
|
|
(277)
|
|
|
Stock compensation
expense (1)
|
(37)
|
|
|
(41)
|
|
|
(112)
|
|
|
(131)
|
|
|
Pension ongoing
income (2)
|
150
|
|
|
247
|
|
|
449
|
|
|
745
|
|
|
Other postretirement
income (2)
|
12
|
|
|
12
|
|
|
35
|
|
|
24
|
|
|
Repositioning and
other charges (3,4)
|
(96)
|
|
|
(299)
|
|
|
(306)
|
|
|
(756)
|
|
|
Other (5)
|
106
|
|
|
(52)
|
|
|
284
|
|
|
(68)
|
|
|
Income before
taxes
|
$
|
1,967
|
|
|
$
|
1,858
|
|
|
$
|
5,791
|
|
|
$
|
5,767
|
|
|
|
|
(1)
|
Amounts included in
Selling, general and administrative expenses.
|
|
(2)
|
Amounts included in
Cost of products and services sold and Selling, general and
administrative expenses (service costs) and Other income/expense
(non-service cost components).
|
|
(3)
|
Amounts included in
Cost of products and services sold, Selling, general and
administrative expenses, and Other income/expense.
|
|
(4)
|
Includes
repositioning, asbestos, and environmental expenses.
|
|
(5)
|
Amounts include the
other components of Other income/expense not included within other
categories in this reconciliation. Equity income (loss) of
affiliated companies is included in segment profit.
|
|
Honeywell
International Inc.
|
|
Consolidated Balance
Sheet (Unaudited)
|
|
(Dollars in
millions)
|
|
|
September 30,
2019
|
|
December 31,
2018
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
10,908
|
|
|
$
|
9,287
|
|
|
Short-term
investments
|
1,456
|
|
|
1,623
|
|
|
Accounts receivable -
net
|
7,583
|
|
|
7,508
|
|
|
Inventories
|
4,601
|
|
|
4,326
|
|
|
Other current
assets
|
1,640
|
|
|
1,618
|
|
|
Total current
assets
|
26,188
|
|
|
24,362
|
|
|
Investments and
long-term receivables
|
631
|
|
|
742
|
|
|
Property, plant and
equipment - net
|
5,240
|
|
|
5,296
|
|
|
Goodwill
|
15,426
|
|
|
15,546
|
|
|
Other intangible
assets - net
|
3,787
|
|
|
4,139
|
|
|
Insurance recoveries
for asbestos related liabilities
|
412
|
|
|
437
|
|
|
Deferred income
taxes
|
241
|
|
|
382
|
|
|
Other
assets
|
8,179
|
|
|
6,869
|
|
|
Total
assets
|
$
|
60,104
|
|
|
$
|
57,773
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
5,522
|
|
|
$
|
5,607
|
|
|
Commercial paper and
other short-term borrowings
|
3,422
|
|
|
3,586
|
|
|
Current maturities of
long-term debt
|
4,088
|
|
|
2,872
|
|
|
Accrued
liabilities
|
6,883
|
|
|
6,859
|
|
|
Total current
liabilities
|
19,915
|
|
|
18,924
|
|
|
Long-term
debt
|
11,101
|
|
|
9,756
|
|
|
Deferred income
taxes
|
1,366
|
|
|
1,713
|
|
|
Postretirement
benefit obligations other than pensions
|
329
|
|
|
344
|
|
|
Asbestos related
liabilities
|
2,195
|
|
|
2,269
|
|
|
Other
liabilities
|
6,885
|
|
|
6,402
|
|
|
Redeemable
noncontrolling interest
|
7
|
|
|
7
|
|
|
Shareowners'
equity
|
18,306
|
|
|
18,358
|
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
|
60,104
|
|
|
$
|
57,773
|
|
|
Honeywell
International Inc.
|
|
Consolidated
Statement of Cash Flows (Unaudited)
|
|
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
$
|
1,648
|
|
|
$
|
2,356
|
|
|
$
|
4,640
|
|
|
$
|
5,088
|
|
|
Less: Net income
attributable to the noncontrolling interest
|
24
|
|
|
18
|
|
|
59
|
|
|
44
|
|
|
Net income
attributable to Honeywell
|
1,624
|
|
|
2,338
|
|
|
4,581
|
|
|
5,044
|
|
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
165
|
|
|
186
|
|
|
500
|
|
|
558
|
|
|
Amortization
|
98
|
|
|
100
|
|
|
319
|
|
|
304
|
|
|
Repositioning and
other charges
|
96
|
|
|
299
|
|
|
306
|
|
|
756
|
|
|
Net payments for
repositioning and other charges
|
(72)
|
|
|
(191)
|
|
|
(157)
|
|
|
(519)
|
|
|
Pension and other
postretirement income
|
(162)
|
|
|
(259)
|
|
|
(484)
|
|
|
(769)
|
|
|
Pension and other
postretirement benefit payments
|
(5)
|
|
|
(23)
|
|
|
(50)
|
|
|
(67)
|
|
|
Stock compensation
expense
|
37
|
|
|
41
|
|
|
112
|
|
|
131
|
|
|
Deferred income
taxes
|
(342)
|
|
|
(596)
|
|
|
(298)
|
|
|
(482)
|
|
|
Other
|
93
|
|
|
(241)
|
|
|
98
|
|
|
(163)
|
|
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(176)
|
|
|
34
|
|
|
(78)
|
|
|
131
|
|
|
Inventories
|
(3)
|
|
|
(270)
|
|
|
(276)
|
|
|
(459)
|
|
|
Other current
assets
|
171
|
|
|
182
|
|
|
(68)
|
|
|
356
|
|
|
Accounts
payable
|
(81)
|
|
|
242
|
|
|
(89)
|
|
|
466
|
|
|
Accrued
liabilities
|
28
|
|
|
36
|
|
|
(133)
|
|
|
(412)
|
|
|
Net cash provided by
(used for) operating activities
|
1,471
|
|
|
1,878
|
|
|
4,283
|
|
|
4,875
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(192)
|
|
|
(183)
|
|
|
(504)
|
|
|
(522)
|
|
|
Proceeds from
disposals of property, plant and equipment
|
31
|
|
|
1
|
|
|
41
|
|
|
4
|
|
|
Increase in
investments
|
(944)
|
|
|
(1,095)
|
|
|
(3,218)
|
|
|
(2,882)
|
|
|
Decrease in
investments
|
1,155
|
|
|
1,126
|
|
|
3,318
|
|
|
4,634
|
|
|
Cash paid for
acquisitions, net of cash acquired
|
(4)
|
|
|
(51)
|
|
|
(4)
|
|
|
(51)
|
|
|
Other
|
175
|
|
|
30
|
|
|
245
|
|
|
250
|
|
|
Net cash provided by
(used for) investing activities
|
221
|
|
|
(172)
|
|
|
(122)
|
|
|
1,433
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of commercial paper and other short-term
borrowings
|
3,178
|
|
|
6,551
|
|
|
10,292
|
|
|
19,300
|
|
|
Payments of
commercial paper and other short-term borrowings
|
(3,178)
|
|
|
(7,001)
|
|
|
(10,293)
|
|
|
(19,153)
|
|
|
Proceeds from
issuance of common stock
|
47
|
|
|
115
|
|
|
425
|
|
|
242
|
|
|
Proceeds from
issuance of long-term debt
|
2,696
|
|
|
21
|
|
|
2,725
|
|
|
26
|
|
|
Payments of long-term
debt
|
(36)
|
|
|
(26)
|
|
|
(120)
|
|
|
(1,303)
|
|
|
Repurchases of common
stock
|
(1,000)
|
|
|
(604)
|
|
|
(3,650)
|
|
|
(2,308)
|
|
|
Cash dividends
paid
|
(595)
|
|
|
(553)
|
|
|
(1,798)
|
|
|
(1,669)
|
|
|
Pre-separation
funding
|
—
|
|
|
1,604
|
|
|
—
|
|
|
1,604
|
|
|
Other
|
(40)
|
|
|
(23)
|
|
|
(72)
|
|
|
(141)
|
|
|
Net cash provided by
(used for) financing activities
|
1,072
|
|
|
84
|
|
|
(2,491)
|
|
|
(3,402)
|
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(81)
|
|
|
(69)
|
|
|
(49)
|
|
|
(162)
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
2,683
|
|
|
1,721
|
|
|
1,621
|
|
|
2,744
|
|
|
Cash and cash
equivalents at beginning of period
|
8,225
|
|
|
8,082
|
|
|
9,287
|
|
|
7,059
|
|
|
Cash and cash
equivalents at end of period
|
$
|
10,908
|
|
|
$
|
9,803
|
|
|
$
|
10,908
|
|
|
$
|
9,803
|
|
|
Honeywell
International Inc.
|
|
Reconciliation of
Organic Sales % Change (Unaudited)
|
|
|
Three Months
Ended September
30, 2019
|
|
Honeywell
|
|
|
Reported sales %
change
|
(16)%
|
|
Less: Foreign
currency translation
|
(1)%
|
|
Less: Acquisitions,
divestitures and other, net
|
(18)%
|
|
Organic sales %
change
|
3%
|
|
|
|
Aerospace
|
|
|
Reported sales %
change
|
(12)%
|
|
Less: Foreign
currency translation
|
—%
|
|
Less: Acquisitions,
divestitures and other, net
|
(22)%
|
|
Organic sales %
change
|
10%
|
|
|
|
Honeywell Building
Technologies
|
|
|
Reported sales %
change
|
(44)%
|
|
Less: Foreign
currency translation
|
(1)%
|
|
Less: Acquisitions,
divestitures and other, net
|
(46)%
|
|
Organic sales %
change
|
3%
|
|
|
|
Performance
Materials and Technologies
|
|
|
Reported sales %
change
|
1%
|
|
Less: Foreign
currency translation
|
(2)%
|
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
|
Organic sales %
change
|
3%
|
|
|
|
Safety and
Productivity Solutions
|
|
|
Reported sales %
change
|
(7)%
|
|
Less: Foreign
currency translation
|
(1)%
|
|
Less: Acquisitions,
divestitures and other, net
|
2%
|
|
Organic sales %
change
|
(8)%
|
|
|
We define organic
sales percent as the year-over-year change in reported sales
relative to the comparable period, excluding the impact on sales
from foreign currency translation and acquisitions, net of
divestitures. We believe this measure is useful to investors and
management in understanding our ongoing operations and in analysis
of ongoing operating trends.
|
|
|
A quantitative
reconciliation of reported sales percent change to organic sales
percent change has not been provided for forward-looking measures
of organic sales percent change because management cannot reliably
predict or estimate, without unreasonable effort, the fluctuations
in global currency markets that impact foreign currency
translation, nor is it reasonable for management to predict the
timing, occurrence and impact of acquisition and divestiture
transactions, all of which could significantly impact our reported
sales percent change.
|
|
Honeywell
International Inc.
|
|
Reconciliation of
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited)
|
|
(Dollars in
millions)
|
|
|
Three Months Ended
September 30,
|
|
2019
|
|
2018
|
|
Segment
profit
|
$
|
1,928
|
|
|
$
|
2,090
|
|
|
Stock compensation
expense (1)
|
(37)
|
|
|
(41)
|
|
|
Repositioning, Other
(2,3)
|
(109)
|
|
|
(313)
|
|
|
Pension and other
postretirement service costs (4)
|
(30)
|
|
|
(54)
|
|
|
Operating
income
|
$
|
1,752
|
|
|
$
|
1,682
|
|
|
Segment
profit
|
$
|
1,928
|
|
|
$
|
2,090
|
|
|
÷ Net
sales
|
$
|
9,086
|
|
|
$
|
10,762
|
|
|
Segment profit margin
%
|
21.2
|
%
|
|
19.4
|
%
|
|
Operating
income
|
$
|
1,752
|
|
|
$
|
1,682
|
|
|
÷ Net
sales
|
$
|
9,086
|
|
|
$
|
10,762
|
|
|
Operating income
margin %
|
19.3
|
%
|
|
15.6
|
%
|
|
|
|
(1)
|
Included in Selling,
general and administrative expenses.
|
|
(2)
|
Includes
repositioning, asbestos, environmental expenses and equity income
adjustment.
|
|
(3)
|
Included in Cost of
products and services sold, Selling, general and administrative
expenses and Other income/expense.
|
|
(4)
|
Included in Cost of
products and services sold and Selling, general and administrative
expenses.
|
|
|
We define segment
profit as operating income, excluding stock compensation expense,
pension and other postretirement service costs, and repositioning
and other charges. We believe these measures are useful to
investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends.
|
|
Honeywell
International Inc.
|
|
Reconciliation of
Earnings per Share to Adjusted Earnings per Share and Adjusted
Earnings per Share Excluding Spin-off Impact (Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Twelve Months
Ended
December
31,
|
|
2019
|
|
2018
|
|
2018
|
|
Earnings per share of
common stock - assuming dilution (1)
|
$
|
2.23
|
|
|
$
|
3.11
|
|
|
$
|
8.98
|
|
|
Pension
mark-to-market expense (2)
|
—
|
|
|
—
|
|
|
0.04
|
|
|
Separation costs
(3)
|
—
|
|
|
0.31
|
|
|
0.97
|
|
|
Impacts from U.S. Tax
Reform
|
(0.15)
|
|
|
(1.39)
|
|
|
(1.98)
|
|
|
Adjusted earnings per
share of common stock - assuming dilution
|
$
|
2.08
|
|
|
$
|
2.03
|
|
|
$
|
8.01
|
|
|
Less: EPS,
attributable to spin-offs
|
|
|
0.13
|
|
|
0.62
|
|
|
Adjusted earnings per
share of common stock - assuming dilution, excluding spin-off
impact
|
|
|
$
|
1.90
|
|
|
$
|
7.39
|
|
|
|
|
(1)
|
For the three months
ended September 30, 2019 and 2018, adjusted earnings per share
utilizes weighted average shares of approximately 726.7 million and
752.0 million. For the twelve months ended December 31, 2018,
adjusted earnings per share utilizes weighted average shares of
approximately 753.0 million.
|
|
(2)
|
Pension
mark-to-market expense uses a blended tax rate of 24% for
2018.
|
|
(3)
|
For the three months
ended September 30, 2018, separation costs of $248 million ($233
million net of tax) includes $132 million of tax costs we incurred
in the restructuring of the ownership of various legal entities in
anticipation of the spin-off transactions ("frictional tax costs")
and $116 million ($101 million net of tax) of other separation
costs. For the twelve months ended December 31, 2018, separation
costs of $732 million including net tax impacts.
|
|
|
We believe adjusted
earnings per share, excluding spin-off impact, is a measure that is
useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends. For forward
looking information, management cannot reliably predict or
estimate, without unreasonable effort, the pension mark-to-market
expense as it is dependent on macroeconomic factors, such as
interest rates and the return generated on invested pension plan
assets. We therefore do not include an estimate for the pension
mark-to-market expense. Based on economic and industry conditions,
future developments and other relevant factors, these assumptions
are subject to change.
|
|
Honeywell
International Inc.
|
|
Reconciliation of
Cash Provided by Operating Activities to Adjusted Free Cash Flow
and Calculation of Adjusted Free Cash Flow Conversion
(Unaudited)
|
|
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
2019
|
|
Three Months
Ended
September 30,
2018
|
|
Cash provided by
operating activities
|
$
|
1,471
|
|
|
$
|
1,878
|
|
|
Expenditures for
property, plant and equipment
|
(192)
|
|
|
(183)
|
|
|
Free cash
flow
|
1,279
|
|
|
1,695
|
|
|
Separation cost
payments
|
7
|
|
|
114
|
|
|
Adjusted free cash
flow
|
$
|
1,286
|
|
|
$
|
1,809
|
|
|
Net income
attributable to Honeywell
|
$
|
1,624
|
|
|
$
|
2,338
|
|
|
Separation costs,
includes net tax impacts
|
—
|
|
|
233
|
|
|
Impacts from U.S. Tax
Reform
|
(114)
|
|
|
(1,047)
|
|
|
Adjusted net income
attributable to Honeywell
|
$
|
1,510
|
|
|
$
|
1,524
|
|
|
Cash provided by
operating activities
|
$
|
1,471
|
|
|
$
|
1,878
|
|
|
÷ Net income (loss)
attributable to Honeywell
|
$
|
1,624
|
|
|
$
|
2,338
|
|
|
Operating cash flow
conversion
|
91
|
%
|
|
80
|
%
|
|
Adjusted free cash
flow
|
$
|
1,286
|
|
|
$
|
1,809
|
|
|
÷ Adjusted net income
attributable to Honeywell
|
$
|
1,510
|
|
|
$
|
1,524
|
|
|
Adjusted free cash
flow conversion %
|
85
|
%
|
|
119
|
%
|
|
|
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,
pay dividends, repurchase stock or repay debt obligations prior to
their maturities. 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
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited)
|
|
(Dollars in
millions)
|
|
|
Twelve Months
Ended
December
31,
2018
|
|
Segment
profit
|
$
|
8,190
|
|
|
|
|
Stock compensation
expense (1)
|
(175)
|
|
|
Repositioning, Other
(2,3)
|
(1,100)
|
|
|
Pension and other
postretirement service costs (4)
|
(210)
|
|
|
|
|
Operating
income
|
$
|
6,705
|
|
|
|
|
Segment
profit
|
$
|
8,190
|
|
|
÷ Net
sales
|
$
|
41,802
|
|
|
Segment profit margin
%
|
19.6
|
%
|
|
|
|
Operating
income
|
$
|
6,705
|
|
|
÷ Net
sales
|
$
|
41,802
|
|
|
Operating income
margin %
|
16.0
|
%
|
|
|
|
(1)
|
Included in Selling,
general and administrative expenses.
|
|
(2)
|
Includes
repositioning, asbestos, environmental expenses and equity income
adjustment.
|
|
(3)
|
Included in Cost of
products and services sold, Selling, general and administrative
expenses and Other income/expense.
|
|
(4)
|
Included in Cost of
products and services sold and Selling, general and administrative
expenses.
|
|
|
We define segment
profit as operating income, excluding stock compensation expense,
pension and other postretirement service costs, and repositioning
and other charges. We believe these measures are useful to
investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends.
|
|
|
A quantitative
reconciliation of segment profit margin, on an overall Honeywell
basis, to operating income margin has not been provided for all
forward-looking measures of segment profit margin included
herewithin, however, operating income margin is expected to be up
230 to 240 bps in 2019 full year, with the differences between
segment profit margin and operating income margin driven by
expected full year stock compensation expense, repositioning and
other, and pension and other postretirement service costs. For
forward looking information, a reconciliation of segment profit
margin to operating income margin is not provided as management
cannot reliably predict or estimate, without unreasonable effort,
the apportionment of the amount attributable to the reconciling
items between segment profit margin and operating income margin due
to the uncertainty of each respective item.
|
|
Honeywell
International Inc.
|
|
Calculation of
Segment Profit Excluding Spin-off Impact and Segment Margin
Excluding Spin-off Impact
|
|
(Dollars in
millions)
|
|
|
Twelve Months
Ended
December
31,
2018
|
|
Segment
profit
|
$
|
8,190
|
|
|
Spin-off impact
(1)
|
(1,011)
|
|
|
Segment profit
excluding spin-off impact
|
$
|
7,179
|
|
|
|
|
Sales
|
$
|
41,802
|
|
|
Spin-off impact
(1)
|
(6,551)
|
|
|
Sale excluding
spin-off impact
|
$
|
35,251
|
|
|
|
|
Segment profit margin
% excluding spin-off impact
|
20.4
|
%
|
|
|
|
(1)
|
Amount computed as
the portion of Aerospace and Honeywell Building Technologies
segment profit and sales in the applicable prior year period for
Transportation Systems and Homes and Global Distribution spin-off
businesses.
|
|
Honeywell
International Inc.
|
|
Reconciliation of
Cash Provided by Operating Activities to Adjusted Free Cash Flow
(Unaudited)
|
|
|
Twelve Months
Ended
December 31,
2019(E) ($B)
|
|
Cash provided by
operating activities
|
~$6.2 -
$6.5
|
|
Expenditures for
property, plant and equipment
|
~(0.8)
|
|
Free cash
flow
|
~5.4 - 5.7
|
|
Separation cost
payments
|
~0.3
|
|
Adjusted free cash
flow
|
~$5.7 -
$6.0
|
|
|
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,
pay dividends, repurchase stock or repay debt obligations prior to
their maturities. 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. For forward
looking information, we do not provide cash flow conversion
guidance on a GAAP basis as management cannot reliably predict or
estimate, without unreasonable effort, the pension mark-to-market
expense as it is dependent on macroeconomic factors, such as
interest rates and the return generated on invested pension plan
assets.
|
|
Contacts:
|
|
|
|
|
Media
|
Investor
Relations
|
|
Nina
Krauss
|
Mark
Bendza
|
|
(704)
627-6035
|
(704)
627-6200
|
|
nina.krauss@honeywell.com
|
mark.bendza@honeywell.com
|
View original
content:http://www.prnewswire.com/news-releases/honeywell-delivers-strong-earnings-with-370-basis-points-of-operating-margin-expansion-and-180-basis-points-of-segment-margin-expansion-raises-2019-full-year-earnings-and-margin-guidance1-300940095.html
SOURCE Honeywell