MORRIS PLAINS, N.J.,
July 20, 2018 /PRNewswire/
-- Honeywell (NYSE: HON) today announced financial
results for the second quarter of 2018 and raised its full-year
sales, segment margin, earnings per share1, and free
cash flow4 guidance.
"Honeywell delivered another outstanding quarter with continued
top-line growth, strong margin expansion, and double-digit earnings
per share and free cash flow growth. Organic sales grew 6 percent,
driven by continued strength in Aerospace; demand for Intelligrated
warehouse automation solutions; and growth in residential thermal
solutions, thermostats and ADI global distribution in our Homes
business. We also saw continued robust short-cycle demand for our
process automation solutions. The increased volumes, combined with
our operational excellence initiatives, drove 60 basis points of
segment margin expansion, above the high end of the guidance we
provided in April. Our operational performance resulted in earnings
per share2 (excluding separation costs and other items)
of $2.12, up 18 percent, exceeding
the high end of our guidance range," said Darius Adamczyk, Chairman and Chief Executive
Officer of Honeywell. "We generated approximately $1.7 billion of free cash flow (excluding
separation costs) in the quarter, up 42 percent, with
conversion3 of 108 percent, and we continued to put our
strong balance sheet to work by repurchasing about $800 million in Honeywell shares in the second
quarter. In the first half of the year, we repurchased
approximately $1.7 billion in
Honeywell shares.
"Given our strong second-quarter performance and confident
outlook, we are raising our 2018 guidance. For the full year, we
now expect organic sales growth to be 5 to 6 percent, segment
margin expansion to be 40 to 60 basis points, earnings per
share1 to be $8.05 to
$8.15, and free cash flow4
to be $5.6 to $6.2 billion," Adamczyk said.
"Our software and Connected offerings continue to gain traction.
Across our segments, Connected software sales have grown
double-digits year-to-date. The portfolio transformation activities
we announced last year are nearly complete, with the spin of our
Transportation Systems business, Garrett, expected to be complete
by the end of the third quarter, and the spin of our Homes business
on track for completion by the end of the year. Our long-cycle
orders and backlog grew 11 and 14 percent respectively, which
positions us well for the rest of 2018 and into 2019. We are
committed to delivering outstanding returns for our shareowners
over the long term," Adamczyk concluded.
A summary of the Company's full-year guidance changes can be
found in Table 1.
Honeywell will discuss the results during an investor conference
call today starting at 9:30 a.m. Eastern
Daylight Time.
Second Quarter Performance
Honeywell sales for
the second quarter were up 8 percent on a reported basis and up 6
percent on an organic basis. The difference between reported and
organic sales relates to the impact of foreign currency
translation. The second-quarter financial results can be found in
Tables 2 and 3.
Aerospace sales for the second quarter were up 8 percent
on an organic basis driven by growth in business aviation OE,
demand in the commercial aftermarket, strength in U.S. and
international defense, and demand for light vehicle gas and
commercial vehicle turbochargers in Transportation Systems. Segment
margin expanded 30 basis points to 22.6 percent, primarily driven
by volume, commercial excellence, and lower customer incentives,
partially offset by higher volumes of lower-margin OE
shipments.
Home and Building Technologies sales for the second
quarter were up 3 percent on an organic basis driven by continued
strength in residential thermal products and thermostats,
commercial fire and software, as well as global growth in the ADI
distribution business. Segment margin expanded 60 basis points to
16.8 percent, primarily driven by commercial excellence, the
benefits from previously funded and executed restructuring, and
higher sales volumes.
Performance Materials and Technologies sales for the
second quarter were up 3 percent on an organic basis driven by
strong backlog conversion and short-cycle demand in Process
Solutions, catalyst and engineering growth in UOP, and continued
demand for Solstice® low global warming materials.
Segment margin expanded 50 basis points to 22.1 percent, primarily
driven by commercial excellence, benefits from previously funded
and executed restructuring, and higher volumes, partially offset by
inflation.
Safety and Productivity Solutions sales for the second
quarter were up 11 percent on an organic basis driven by continued
double-digit sales growth in Intelligrated, strong demand for new
Mobility products, and higher volumes in Sensing and IoT. Segment
margin expanded 150 basis points to 16.5 percent, primarily driven
by higher sales volumes and commercial excellence.
To participate on the conference call, please dial (866)
548-4713 (domestic) or (323) 794-2093 (international) approximately
ten minutes before the 9:30 a.m. EDT
start. Please mention to the operator that you are dialing in
for Honeywell's second quarter 2018 earnings call or provide the
conference code HON2Q18. 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 1:30 p.m. EDT,
July 20, until 1:30 p.m. EDT, July
27, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 5576508.
TABLE 1: FULL-YEAR 2018 GUIDANCE5
|
Previous
Guidance
|
Current
Guidance
|
Sales
|
$42.7B -
$43.5B
|
$43.1B -
$43.6B
|
Organic
Growth
|
3% -
5%
|
5% -
6%
|
Segment
Margin
|
19.3% -
19.6%
|
19.4% -
19.6%
|
Expansion
|
Up 30 - 60
bps
|
Up 40 - 60
bps
|
Earnings Per
Share
|
$7.85 -
$8.05
|
$8.05 -
$8.15
|
Earnings
Growth
|
10% -
13%
|
13% -
15%
|
Free Cash
Flow
|
$5.3B -
$5.9B
|
$5.6B -
$6.2B
|
Growth
|
7% -
20%
|
13% -
26%
|
TABLE 2: SUMMARY OF FINANCIAL RESULTS – TOTAL
HONEYWELL
|
2Q
2017
|
2Q
2018
|
Change
|
Sales
|
10,078
|
10,919
|
8%
|
Organic
|
|
|
6%
|
Segment
Margin
|
19.0%
|
19.6%
|
60 bps
|
Operating Income
Margin
|
15.9%
|
16.3%
|
40 bps
|
Earnings Per
Share
|
|
|
|
Reported
|
$1.80
|
$1.68
|
(7%)
|
Excluding
Separation Costs of $346M and $12M Adjustment to the 4Q17 U.S. Tax
Legislation Charge
|
$1.80
|
$2.12
|
18%
|
Cash Flow from
Operations
|
1,447
|
1,861
|
29%
|
Free Cash
Flow (Excluding Separation Cost Impacts of $67M)
|
1,214
|
1,729
|
42%
|
|
|
|
|
TABLE 3: SUMMARY OF FINANCIAL RESULTS – SEGMENTS
|
|
|
|
|
|
|
|
AEROSPACE
|
2Q
2017
|
2Q
2018
|
Change
|
Sales
|
3,674
|
4,058
|
10%
|
Organic
|
|
|
8%
|
Segment
Profit
|
819
|
918
|
12%
|
Segment
Margin
|
22.3%
|
22.6%
|
30 bps
|
|
|
|
|
|
|
|
|
HOME AND BUILDING
TECHNOLOGIES
|
|
|
|
|
|
|
|
Sales
|
2,414
|
2,546
|
5%
|
Organic
|
|
|
3%
|
Segment
Profit
|
391
|
427
|
9%
|
Segment
Margin
|
16.2%
|
16.8%
|
60 bps
|
|
|
|
|
|
|
|
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
|
|
Sales
|
2,561
|
2,698
|
5%
|
Organic
|
|
|
3%
|
Segment
Profit
|
553
|
597
|
8%
|
Segment
Margin
|
21.6%
|
22.1%
|
50 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
|
|
Sales
|
1,429
|
1,617
|
13%
|
Organic
|
|
|
11%
|
Segment
Profit
|
214
|
267
|
25%
|
Segment
Margin
|
15.0%
|
16.5%
|
150 bps
|
|
|
|
|
|
|
|
|
Honeywell (www.honeywell.com) is a Fortune 100
software-industrial company that delivers industry specific
solutions that include aerospace and automotive products and
services; control technologies for buildings, homes, and industry;
and performance materials globally. Our technologies help
everything from aircraft, cars, homes and 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,
as well as the ability to effect the separations. 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, including with respect to any changes in or abandonment
of the proposed separations. 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; organic sales growth,
which we define as sales growth less the impacts from foreign
currency translation, acquisitions and divestitures for the first
12 months following transaction date, and impacts from adoption of
the new accounting guidance on revenue from contracts with
customers that arise solely due to non-comparable accounting
treatment of contracts existing in the prior period; 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 the Homes and
Transportation Systems businesses, if and as noted in the release;
free cash flow conversion, which we define as free cash flow
divided by net income attributable to Honeywell, excluding pension
mark-to-market expenses, separation costs related to the spin-offs,
the 4Q17 U.S. tax legislation charge, and adjustments to such
charge, if and as noted in the release; and 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, the 4Q17 U.S. tax legislation charge, and adjustments to
such charge, if and as noted in the release. Other than references
to reported earnings per share, all references to earnings per
share in this release are so adjusted. 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.
____________________
1 EPS guidance excludes pension mark-to-market,
separation costs related to the spin-offs of the Homes and
Transportation Systems businesses, and adjustments to the 4Q17 U.S.
tax legislation charge. We do not publish forward-looking EPS
guidance on a GAAP basis as management cannot reliably predict or
estimate, without unreasonable effort, pension mark-to-market
expense as it is dependent on macroeconomic factors, such as
changing interest rates and the return generated on invested
pension plan assets, separation costs given the inherent
uncertainty of any such estimates, and any adjustments to the 4Q17
U.S. tax legislation charge as the amounts are provisional and
subject to change.
2 EPS excludes separation costs related to the spin-offs
and adjustments to the 4Q17 U.S. tax legislation charge.
3 Free cash flow conversion excludes impacts from
separation costs related to the spin-offs and adjustments to the
4Q17 U.S. tax legislation charge.
4 Free cash flow guidance excludes impacts from
separation costs related to the spin-offs.
5 Guidance for EPS and EPS V% excludes pension
mark-to-market, separation costs related to the spin-offs of the
Homes and Transportation Systems businesses, the 4Q17 U.S. tax
legislation charge and adjustments to such charge; guidance for
free cash flow and free cash flow V% excludes impacts from
separation costs related to the spin-offs.
Contacts:
|
|
|
|
Media
|
Investor
Relations
|
Scott
Sayres
|
Mark
Macaluso
|
(480)
257-8921
|
(973)
455-2222
|
scott.sayres@honeywell.com
|
mark.macaluso@honeywell.com
|
Honeywell
International Inc.
|
Consolidated
Statement of Operations (Unaudited)
|
(Dollars in millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Product
sales
|
$
8,703
|
|
$
8,079
|
|
$
16,937
|
|
$
15,619
|
Service
sales
|
2,216
|
|
1,999
|
|
4,374
|
|
3,951
|
Net sales
|
10,919
|
|
10,078
|
|
21,311
|
|
19,570
|
|
|
|
|
|
|
|
|
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products sold (A)
|
6,202
|
|
5,807
|
|
12,107
|
|
11,188
|
Cost of services sold (A)
|
1,411
|
|
1,217
|
|
2,699
|
|
2,365
|
|
|
7,613
|
|
7,024
|
|
14,806
|
|
13,553
|
Selling, general and administrative expenses (A)
|
1,528
|
|
1,456
|
|
3,003
|
|
2,878
|
Other (income) expense
|
(316)
|
|
(259)
|
|
(584)
|
|
(517)
|
Interest and other financial charges
|
95
|
|
79
|
|
178
|
|
154
|
|
|
8,920
|
|
8,300
|
|
17,403
|
|
16,068
|
|
|
|
|
|
|
|
|
|
Income before
taxes
|
1,999
|
|
1,778
|
|
3,908
|
|
3,502
|
Tax
expense
|
719
|
|
378
|
|
1,177
|
|
770
|
|
|
|
|
|
|
|
|
|
Net income
|
1,280
|
|
1,400
|
|
2,731
|
|
2,732
|
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to the noncontrolling interest
|
13
|
|
8
|
|
26
|
|
14
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Honeywell
|
$
1,267
|
|
$
1,392
|
|
$
2,705
|
|
$
2,718
|
|
|
|
|
|
|
|
|
|
Earnings per share of
common stock - basic
|
$
1.70
|
|
$
1.82
|
|
$
3.62
|
|
$
3.56
|
|
|
|
|
|
|
|
|
|
Earnings per share of
common stock - assuming dilution
|
$
1.68
|
|
$
1.80
|
|
$
3.57
|
|
$
3.51
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - basic
|
745.5
|
|
764.2
|
|
748.0
|
|
763.6
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - assuming dilution
|
755.0
|
|
774.0
|
|
758.0
|
|
774.0
|
|
|
|
|
|
|
|
|
|
(A) 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
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
Net Sales
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Aerospace
|
$
4,058
|
|
$
3,674
|
|
$
8,035
|
|
$
7,220
|
|
|
|
|
|
|
|
|
Home and Building
Technologies
|
2,546
|
|
2,414
|
|
4,979
|
|
4,683
|
|
|
|
|
|
|
|
|
Performance Materials
and Technologies
|
2,698
|
|
2,561
|
|
5,232
|
|
4,914
|
|
|
|
|
|
|
|
|
Safety and
Productivity Solutions
|
1,617
|
|
1,429
|
|
3,065
|
|
2,753
|
|
|
|
|
|
|
|
|
Total
|
$
10,919
|
|
$
10,078
|
|
$
21,311
|
|
$
19,570
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
Segment
Profit
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Aerospace
|
$
918
|
|
$
819
|
|
$
1,811
|
|
$
1,615
|
|
|
|
|
|
|
|
|
Home and Building
Technologies
|
427
|
|
391
|
|
843
|
|
768
|
|
|
|
|
|
|
|
|
Performance Materials
and Technologies
|
597
|
|
553
|
|
1,116
|
|
1,036
|
|
|
|
|
|
|
|
|
Safety and
Productivity Solutions
|
267
|
|
214
|
|
498
|
|
408
|
|
|
|
|
|
|
|
|
Corporate
|
(64)
|
|
(67)
|
|
(128)
|
|
(128)
|
|
|
|
|
|
|
|
|
Total segment
profit
|
2,145
|
|
1,910
|
|
4,140
|
|
3,699
|
|
|
|
|
|
|
|
|
Interest and other
financial charges
|
(95)
|
|
(79)
|
|
(178)
|
|
(154)
|
Stock compensation
expense (A)
|
(38)
|
|
(44)
|
|
(90)
|
|
(94)
|
Pension ongoing
income (B)
|
250
|
|
184
|
|
498
|
|
363
|
Other postretirement
income (B)
|
6
|
|
6
|
|
12
|
|
10
|
Repositioning and
other charges (C,D)
|
(265)
|
|
(224)
|
|
(458)
|
|
(353)
|
Other (E)
|
(4)
|
|
25
|
|
(16)
|
|
31
|
|
|
|
|
|
|
|
|
Income before
taxes
|
$
1,999
|
|
$
1,778
|
|
$
3,908
|
|
$
3,502
|
|
|
|
|
|
|
|
|
(A)
|
Amounts included in
Selling, general and administrative expenses.
|
(B)
|
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).
|
(C)
|
Amounts included in
Cost of products and services sold, Selling, general and
administrative expenses, and Other income/expense.
|
(D)
|
Includes
repositioning, asbestos, and environmental expenses.
|
(E)
|
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)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
8,082
|
|
$
7,059
|
Short-term investments
|
|
1,768
|
|
3,758
|
Accounts receivable - net
|
|
8,600
|
|
8,866
|
Inventories
|
|
4,792
|
|
4,613
|
Other current assets
|
|
1,537
|
|
1,706
|
|
Total current
assets
|
|
24,779
|
|
26,002
|
|
|
|
|
|
|
Investments and
long-term receivables
|
|
897
|
|
667
|
Property, plant and
equipment - net
|
|
5,968
|
|
5,926
|
Goodwill
|
|
18,137
|
|
18,277
|
Other intangible
assets - net
|
|
4,261
|
|
4,496
|
Insurance recoveries
for asbestos related liabilities
|
|
409
|
|
411
|
Deferred income
taxes
|
|
355
|
|
236
|
Other
assets
|
|
5,054
|
|
3,372
|
|
|
|
|
|
|
|
Total assets
|
|
$
59,860
|
|
$
59,387
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
|
$
6,808
|
|
$
6,584
|
Commercial paper and other short-term borrowings
|
|
4,447
|
|
3,958
|
Current maturities of long-term debt
|
|
133
|
|
1,351
|
Accrued liabilities
|
|
6,630
|
|
6,968
|
|
Total current
liabilities
|
|
18,018
|
|
18,861
|
|
|
|
|
|
|
Long-term
debt
|
|
12,504
|
|
12,573
|
Deferred income
taxes
|
|
2,751
|
|
2,894
|
Postretirement
benefit obligations other than pensions
|
|
497
|
|
512
|
Asbestos related
liabilities
|
|
1,178
|
|
1,173
|
Other
liabilities
|
|
7,134
|
|
5,930
|
Redeemable
noncontrolling interest
|
|
5
|
|
5
|
Shareowners'
equity
|
|
17,773
|
|
17,439
|
|
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
|
$
59,860
|
|
$
59,387
|
Honeywell
International Inc.
|
Consolidated
Statement of Cash Flows (Unaudited)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
1,280
|
|
$
1,400
|
|
$
2,731
|
|
$
2,732
|
Less: Net income attributable to the noncontrolling
interest
|
|
13
|
|
8
|
|
26
|
|
14
|
Net income attributable to Honeywell
|
|
1,267
|
|
1,392
|
|
2,705
|
|
2,718
|
Adjustments to reconcile net income attributable to Honeywell to
net
|
|
|
|
|
|
|
|
|
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
193
|
|
184
|
|
372
|
|
354
|
Amortization
|
|
95
|
|
92
|
|
204
|
|
193
|
Repositioning and other charges
|
|
265
|
|
224
|
|
458
|
|
353
|
Net
payments for repositioning and other charges
|
|
(187)
|
|
(127)
|
|
(328)
|
|
(264)
|
Pension
and other postretirement income
|
|
(256)
|
|
(190)
|
|
(510)
|
|
(373)
|
Pension
and other postretirement benefit payments
|
|
(8)
|
|
(23)
|
|
(44)
|
|
(47)
|
Stock
compensation expense
|
|
38
|
|
44
|
|
90
|
|
94
|
Deferred
income taxes
|
|
68
|
|
(50)
|
|
114
|
|
(92)
|
Other
|
|
76
|
|
(22)
|
|
78
|
|
(8)
|
Accounts receivable
|
|
158
|
|
(299)
|
|
97
|
|
(276)
|
Inventories
|
|
(26)
|
|
(12)
|
|
(189)
|
|
(298)
|
Other current assets
|
|
217
|
|
22
|
|
174
|
|
(3)
|
Accounts payable
|
|
167
|
|
199
|
|
224
|
|
314
|
Accrued liabilities
|
|
(206)
|
|
13
|
|
(448)
|
|
(278)
|
Net cash provided by
operating activities
|
|
1,861
|
|
1,447
|
|
2,997
|
|
2,387
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(199)
|
|
(233)
|
|
(339)
|
|
(401)
|
Proceeds from disposals of property, plant and equipment
|
|
1
|
|
1
|
|
3
|
|
25
|
Increase in investments
|
|
(1,204)
|
|
(1,073)
|
|
(1,787)
|
|
(2,329)
|
Decrease in investments
|
|
1,670
|
|
1,016
|
|
3,508
|
|
1,841
|
Cash paid for acquisitions, net of cash acquired
|
|
-
|
|
(15)
|
|
-
|
|
(15)
|
Other
|
|
343
|
|
(84)
|
|
220
|
|
(113)
|
Net cash provided by
(used for) investing activities
|
|
611
|
|
(388)
|
|
1,605
|
|
(992)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of commercial paper and other short-term
borrowings
|
|
6,073
|
|
2,568
|
|
12,749
|
|
5,036
|
Payments of commercial paper and other short-term
borrowings
|
|
(6,823)
|
|
(2,368)
|
|
(12,152)
|
|
(4,835)
|
Proceeds from issuance of common stock
|
|
67
|
|
155
|
|
127
|
|
376
|
Proceeds from issuance of long-term debt
|
|
2
|
|
5
|
|
5
|
|
16
|
Payments of long-term debt
|
|
(31)
|
|
(25)
|
|
(1,277)
|
|
(30)
|
Repurchases of common stock
|
|
(764)
|
|
(682)
|
|
(1,704)
|
|
(992)
|
Cash dividends paid
|
|
(560)
|
|
(546)
|
|
(1,116)
|
|
(1,049)
|
Other
|
|
(2)
|
|
(72)
|
|
(118)
|
|
(105)
|
Net cash used for by
financing activities
|
|
(2,038)
|
|
(965)
|
|
(3,486)
|
|
(1,583)
|
|
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
(249)
|
|
73
|
|
(93)
|
|
222
|
Net increase in cash
and cash equivalents
|
|
185
|
|
167
|
|
1,023
|
|
34
|
Cash and cash
equivalents at beginning of period
|
|
7,897
|
|
7,710
|
|
7,059
|
|
7,843
|
Cash and cash
equivalents at end of period
|
|
$
8,082
|
|
$
7,877
|
|
$
8,082
|
|
$
7,877
|
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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
$
2,145
|
|
$
1,910
|
|
$
4,140
|
|
$
3,699
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense (A)
|
|
(38)
|
|
(44)
|
|
(90)
|
|
(94)
|
Repositioning and
other (B,C)
|
|
(278)
|
|
(209)
|
|
(441)
|
|
(344)
|
Pension and other
postretirement service costs (C)
|
|
(51)
|
|
(59)
|
|
(107)
|
|
(122)
|
Operating
Income
|
|
$
1,778
|
|
$
1,598
|
|
$
3,502
|
|
$
3,139
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
$
2,145
|
|
$
1,910
|
|
$
4,140
|
|
$
3,699
|
÷ Net
Sales
|
|
$
10,919
|
|
$
10,078
|
|
$
21,311
|
|
$
19,570
|
Segment Profit Margin
%
|
|
19.6%
|
|
19.0%
|
|
19.4%
|
|
18.9%
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
$
1,778
|
|
$
1,598
|
|
$
3,502
|
|
$
3,139
|
÷ Net
Sales
|
|
$
10,919
|
|
$
10,078
|
|
$
21,311
|
|
$
19,570
|
Operating Income
Margin %
|
|
16.3%
|
|
15.9%
|
|
16.4%
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
(A) Included in
Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment.
(C) Included in Cost of products and services sold, Selling,
general and administrative expenses and Other
income/expense.
|
|
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, on an overall Honeywell basis, to
operating income has not been provided for all forward-looking
measures of segment profit and segment margin included
herewithin. Management cannot reliably predict or estimate,
without unreasonable effort, the impact and timing on future
operating results arising from items excluded from segment
profit. The information that is unavailable to provide a
quantitative reconciliation could have a significant impact on our
reported financial results. To the extent quantitative
information becomes available without unreasonable effort in the
future, and closer to the period to which the forward-looking
measures pertain, a reconciliation of segment profit to operating
income will be included within future filings.
|
Honeywell
International Inc.
|
Reconciliation of
Organic Sales % Change (Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2018
|
Honeywell
|
|
|
Reported sales %
change
|
|
8%
|
Less: Foreign
currency translation
|
|
2%
|
Less: Acquisitions,
divestitures and other, net
|
|
-
|
Organic sales %
change
|
|
6%
|
|
|
|
Aerospace
|
|
|
Reported sales %
change
|
|
10%
|
Less: Foreign
currency translation
|
|
1%
|
Less: Acquisitions,
divestitures and other, net
|
|
1%
|
Organic sales %
change
|
|
8%
|
|
|
|
Home and Building
Technologies
|
|
|
Reported sales %
change
|
|
5%
|
Less: Foreign
currency translation
|
|
2%
|
Less: Acquisitions,
divestitures and other, net
|
|
-
|
Organic sales %
change
|
|
3%
|
|
|
|
Performance
Materials and Technologies
|
|
|
Reported sales %
change
|
|
5%
|
Less: Foreign
currency translation
|
|
2%
|
Less: Acquisitions,
divestitures and other, net
|
|
-
|
Organic sales %
change
|
|
3%
|
|
|
|
Safety and
Productivity Solutions
|
|
|
Reported sales %
change
|
|
13%
|
Less: Foreign
currency translation
|
|
2%
|
Less: Acquisitions,
divestitures and other, net
|
|
-
|
Organic sales %
change
|
|
11%
|
|
|
|
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, acquisitions, net of
divestitures, and non-comparable impacts from adoption of the new
revenue recognition standard. 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
Cash Provided by Operating Activities to Free Cash Flow, Excluding
Separation Cost Payments and Calculation of Free Cash Flow
Conversion, Excluding Separation Costs and Adjustments to 4Q17 U.S.
Tax Legislation Charge
(Unaudited)
|
(Dollars in
millions)
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
June 30,
2018
|
|
June 30,
2017
|
|
|
|
|
Cash provided by
operating activities
|
$
1,861
|
|
$
1,447
|
Expenditures for
property, plant and equipment
|
(199)
|
|
(233)
|
Free cash
flow
|
1,662
|
|
1,214
|
Separation cost
payments
|
67
|
|
-
|
Free cash flow,
excluding separation cost payments
|
$
1,729
|
|
$
1,214
|
|
|
|
|
Net income
attributable to Honeywell
|
$
1,267
|
|
$
1,392
|
Separation costs, net
of tax
|
346
|
|
-
|
Adjustments to 4Q17
U.S tax legislation charge
|
(12)
|
|
-
|
|
Net income
attributable to Honeywell, excluding separation costs and
adjustments to 4Q17 U.S. tax legislation charge
|
$
1,601
|
|
$
1,392
|
|
|
|
|
Cash provided by
operating activities
|
$
1,861
|
|
$
1,447
|
÷ Net income
attributable to Honeywell
|
$
1,267
|
|
$
1,392
|
Operating cash flow
conversion
|
147%
|
|
104%
|
|
|
|
|
Free cash flow,
excluding separation cost payments
|
$
1,729
|
|
$
1,214
|
|
|
|
|
÷ Net income
attributable to Honeywell, excluding separation costs and
adjustments to 4Q17 U.S. tax legislation charge
|
$
1,601
|
|
$
1,392
|
Free cash flow
conversion %, excluding separation costs and adjustments to 4Q17
U.S tax legislation charge
|
108%
|
|
87%
|
|
|
|
|
|
|
|
|
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
Earnings per Share to Earnings per Share, Excluding Separation
Costs and Adjustments to 4Q17 U.S. Tax Legislation Charge
(Unaudited)
|
|
|
Three Months
Ended
|
|
June 30,
|
|
2018
|
|
2017
|
|
|
|
|
Earnings per share of
common stock - assuming dilution (1)
|
$
1.68
|
|
$
1.80
|
Separation costs
(2)
|
0.46
|
|
-
|
Adjustments to 4Q17
U.S. tax legislation charge
|
(0.02)
|
|
-
|
Earnings per share of
common stock - assuming dilution, excluding separation costs and
adjustments to 4Q17 U.S. tax legislation charge
|
$
2.12
|
|
$
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three
months ended June 30, 2018 and 2017, utilizes weighted average
shares of approximately 755 million and 774 million.
|
|
|
|
|
(2) Separation costs
of $354 million ($346 million net of tax) includes $291 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 $63 million ($55 million net of tax)of
other separation costs.
|
|
|
|
|
We believe earnings
per share, excluding separation costs and adjustments to 4Q17 U.S.
tax legislation charge is a measure that is 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 Earnings per Share at 24% Effective Tax Rate,
Excluding Separation Costs and Adjustments to 4Q17 U.S. Tax
Legislation Charge (Unaudited)
|
|
|
Three Months
Ended
|
|
June 30,
2018
|
Earnings per share of
common stock - assuming dilution (1)
|
$
1.68
|
Separation costs
(2)
|
0.46
|
Adjustments to 4Q17
U.S. tax legislation charge
|
(0.02)
|
Earnings per share of
common stock - assuming dilution, excluding separation costs and
adjustments to 4Q17 U.S. tax legislation charge
|
2.12
|
Income tax impact at
24% effective tax rate (3)
|
(0.06)
|
Earnings per share of
common stock - assuming dilution at 24% effective tax rate,
excluding separation costs and adjustments to 4Q17 U.S. tax
legislation charge
|
$
2.06
|
|
|
|
|
|
|
(1) Utilizes weighted
average shares of approximately 755 million.
|
|
|
(2) Separation costs
of $354 million ($346 million net of tax) includes $291 million of
frictional tax costs and $63 million ($55 million net of tax)of
other separation costs.
|
|
|
(3) Income tax impact
at 24% effective tax rate, approximately $47 million, is provided
to align our effective tax rate with previously issued
guidance.
|
|
|
We believe earnings
per share at 24% effective tax rate excluding separation costs and
adjustments to 4Q17 U.S. tax legislation charge is a measure that
is useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends.
|
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, 2017
|
|
|
Segment
Profit
|
$
7,690
|
|
|
Stock compensation
expense (A)
|
(176)
|
Repositioning and
other (B,C)
|
(1,010)
|
Pension and other
postretirement service costs (C)
|
(247)
|
Operating
Income
|
$
6,257
|
|
|
Segment
Profit
|
$
7,690
|
÷ Net
Sales
|
$
40,534
|
Segment Profit Margin
%
|
19.0%
|
|
|
Operating
Income
|
$
6,257
|
÷ Net
Sales
|
$
40,534
|
Operating Income
Margin %
|
15.4%
|
|
|
(A) Included in
Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment.
(C) 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, on an overall Honeywell basis, to
operating income has not been provided for all forward-looking
measures of segment profit and segment margin included
herewithin. Management cannot reliably predict or estimate,
without unreasonable effort, the impact and timing on future
operating results arising from items excluded from segment profit,
particularly 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. The information
that is unavailable to provide a quantitative reconciliation could
have a significant impact on our reported financial results.
To the extent quantitative information becomes available without
unreasonable effort in the future, and closer to the period to
which the forward-looking measures pertain, a reconciliation of
segment profit to operating income will be included within future
filings.
|
Honeywell
International Inc.
|
Reconciliation of
Earnings Per Share to Earnings Per Share, Excluding Pension
Mark-to-Market Expense, Separation Costs and Adjustments to 4Q17
U.S. Tax Legislation Charge (Unaudited)
|
|
|
|
|
|
Twelve Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2017
(1)
|
|
2018
|
|
|
|
|
Earnings per share of
common stock - assuming dilution (EPS)
|
$
2.14
|
|
TBD
|
Pension
mark-to-market expense
|
0.09
|
|
TBD
|
Separation
costs
|
0.02
|
|
TBD
|
Adjustments to 4Q17
U.S. tax legislation charge
|
4.86
|
|
TBD
|
|
EPS, excluding
pension mark-to-market expense, separation costs, and adjustments
to 4Q17 U.S. tax legislation charge
|
$
7.11
|
|
$8.05 -
$8.15
|
|
|
|
|
|
|
|
|
(1) Utilizes weighted
average shares of approximately 772.1 million for full year.
Pension mark-to-market expense uses a blended tax rate of
23%.
|
|
|
|
|
We believe earnings
per share, excluding pension mark-to-market expense, separation
costs and adjustments to 4Q17 U.S. tax legislation charge is a
measure that is useful to investors and management in understanding
our ongoing operations and in analysis of ongoing operating
trends. For forward looking information, management cannot
reliably predict or estimate, without unreasonable effort, the
pension mark-to-market expense as it is dependent on macroeconomic
factors, such as interest rates and the return generated on
invested pension plan assets, the separation costs given the
inherent uncertainty in the estimates, and any adjustments to the
4Q17 U.S. tax legislation charge as the amounts are
provisional. We therefore do not include an estimate for the
pension mark-to-market expense, separation costs, or adjustments to
4Q17 U.S. tax legislation charge in this reconciliation. Based on
economic and industry conditions, future developments and other
relevant factors, these assumptions are subject to
change.
|
Honeywell
International Inc.
Reconciliation of
Cash Provided by Operating Activities to Free Cash Flow, Excluding
Separation Cost Payments (Unaudited)
|
|
|
|
|
Twelve Months
Ended
|
Twelve Months
Ended
|
|
December 31, 2017
($M)
|
December 31, 2018
($B)
|
|
|
|
Cash provided by
operating activities
|
$
5,966
|
TBD
|
Expenditures for
property, plant and equipment
|
(1,031)
|
~(0.9)
|
Free cash
flow
|
4,935
|
TBD
|
Separation cost
payments
|
-
|
TBD
|
Free cash flow,
excluding separation cost payments
|
$
4,935
|
~$5.6 -
$6.2
|
|
|
|
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, management cannot reliably predict or
estimate, without unreasonable effort, the separation cost payments
given the inherent uncertainty of the estimates. We therefore
do not include an estimate for the separation cost payments in this
reconciliation.
|
View original
content:http://www.prnewswire.com/news-releases/honeywell-beats-guidance-and-delivers-8-reported-sales-growth-and-29-operating-cash-flow-growth-raises-high-end-of-2018-earnings-guidance1-by-10-cents-300684150.html
SOURCE Honeywell