MORRIS PLAINS, N.J.,
July 18, 2019 /PRNewswire/
-- Honeywell (NYSE: HON) today announced financial
results for the second quarter of 2019 and raised its full-year
organic sales, earnings per share, and adjusted free cash flow
guidance.
"Honeywell delivered another strong quarter of top-line growth,
margin expansion, and adjusted free cash flow. Organic sales grew
5% led by our long-cycle businesses including U.S. and
international defense, business and general aviation, and oil and
gas. Our long-cycle backlog was up over 10%, which positions us
well for the second half of 2019. We also saw robust demand in our
short-cycle commercial fire, process automation services and
software, and aerospace aftermarket businesses. Segment margin
expanded 170 basis points year-over-year, which was 30 basis points
above the high end of our guidance. We delivered earnings per share
of $2.10, which was up 9%2
adjusted, excluding the impact of the spin-offs, and at the high
end of our second-quarter guidance," said Darius Adamczyk, chairman and chief executive
officer of Honeywell. "In the quarter, we repurchased approximately
$1.9 billion in Honeywell shares and
generated $1.5 billion of adjusted
free cash flow1, with conversion of 100%. We remain on a
path to deliver approximately 100% conversion for the full
year."
Adamczyk continued, "We are making significant progress in
transforming Honeywell into a premier software-industrial company,
with connected software sales continuing to grow at a double-digit
rate organically. The Honeywell Connected Enterprise foundation is
firmly in place, supported by the launch of Honeywell Forge, a
comprehensive IIoT software solution. Our digitization and supply
chain transformation initiatives are underway, which will enhance
our commercial efforts and drive continued segment margin
expansion. We are pleased with our progress to date.
"Given our first-half performance and our confidence in our
ability to continue to deliver for our shareowners even in an
uncertain environment, we are raising our full-year earnings per
share guidance by 5 cents to a new
range of $7.95 to $8.15, and raising our organic sales guidance to
a new range of 4% to 6%," Adamczyk concluded.
A summary of the company's full-year guidance changes can be
found in Table 1.
Second-Quarter Performance
Honeywell sales for the second quarter were down 15% on a
reported basis and up 5% 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
unfavorable 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 11% on an
organic basis driven by double-digit growth in business aviation
original equipment; continued strength in the U.S. and
international Defense and Space business, which grew 20%
organically; and commercial aftermarket demand across air transport
and business aviation. Segment margin expanded 330 basis points to
25.9%, primarily driven by commercial excellence, higher organic
sales volumes, and the favorable impact from the spin-off of the
Transportation Systems business in 2018.
Honeywell Building Technologies sales for the second
quarter were up 5% on an organic basis driven by ongoing strength
in commercial fire products and building management software, and
global building solutions projects growth. Segment margin expanded
390 basis points to 20.7% 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
second quarter were up 4% on an organic basis driven by short-cycle
demand in Process Solutions; strong licensing, engineering, and
refining catalyst sales growth in UOP; and demand for
Solstice® low global warming products in Advanced
Materials. Segment margin expanded 140 basis points to 23.5%,
primarily driven by productivity net of inflation and commercial
excellence.
Safety and Productivity Solutions sales for the
second quarter were down 4% on an organic basis driven by lower
sales volumes in productivity products due to inventory destocking
and fewer large project rollouts, partially offset by demand for
gas sensing and detection, and Intelligrated aftermarket and voice
solutions growth. Segment margin contracted 420 basis points to
12.3%, primarily driven by lower sales volumes in productivity
products and higher sales of lower margin products.
Conference Call Details
Honeywell will discuss its
second-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 (888) 394-8218 (domestic) or (323)
701-0225 (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
second-quarter 2019 earnings call or provide the conference code
HON2Q19. 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,
July 18, until 12:30 p.m. EDT, July
25, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 3915869.
TABLE 1: FULL-YEAR 2019 GUIDANCE
|
Previous
Guidance
|
Current
Guidance
|
Sales
|
$36.5B -
$37.2B
|
$36.7B -
$37.2B
|
Organic
Growth
|
3% -
6%
|
4% -
6%
|
Segment
Margin
|
20.7% -
21.0%
|
20.7% -
21.0%
|
Expansion
|
Up 110 - 140
bps
|
Up 110 - 140
bps
|
Expansion
Ex-Spins3
|
Up 30 - 60
bps
|
Up 30 - 60
bps
|
Earnings Per
Share
|
$7.90 -
$8.15
|
$7.95 -
$8.15
|
Earnings Growth
Adjusted Ex-Spins4
|
7% -
10%
|
8% -
10%
|
Operating Cash
Flow
|
$6.0B -
$6.5B
|
$6.2B -
$6.5B
|
Adjusted Free Cash
Flow5
|
$5.5B -
$6.0B
|
$5.7B -
$6.0B
|
Conversion
|
95% -
100%
|
98% -
100%
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
2Q
2018
|
2Q
2019
|
Change
|
Sales
|
10,919
|
9,243
|
(15%)
|
Organic
Growth
|
|
|
5%
|
Segment
Margin
|
19.6%
|
21.3%
|
170 bps
|
Operating Income
Margin
|
16.3%
|
19.1%
|
280 bps
|
Reported Earnings Per
Share
|
$1.68
|
$2.10
|
25%
|
Adjusted Earnings Per
Share Ex-Spins6
|
$1.93
|
$2.10
|
9%
|
Cash Flow from
Operations
|
1,861
|
1,678
|
(10%)
|
Adjusted Free Cash
Flow7
|
1,729
|
1,535
|
(11%)
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
|
|
|
|
AEROSPACE
|
2Q
2018
|
2Q
2019
|
Change
|
Sales
|
4,058
|
3,508
|
(14%)
|
Organic
Growth
|
|
|
11%
|
Segment
Profit
|
918
|
907
|
(1%)
|
Segment
Margin
|
22.6%
|
25.9%
|
330 bps
|
|
|
|
|
|
|
|
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
|
|
Sales
|
2,546
|
1,450
|
(43%)
|
Organic
Growth
|
|
|
5%
|
Segment
Profit
|
427
|
300
|
(30%)
|
Segment
Margin
|
16.8%
|
20.7%
|
390 bps
|
|
|
|
|
|
|
|
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
|
|
Sales
|
2,698
|
2,735
|
1%
|
Organic
Growth
|
|
|
4%
|
Segment
Profit
|
597
|
644
|
8%
|
Segment
Margin
|
22.1%
|
23.5%
|
140 bps
|
|
|
|
|
|
|
|
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
|
|
Sales
|
1,617
|
1,550
|
(4%)
|
Organic
Growth
|
|
|
(4%)
|
Segment
Profit
|
267
|
191
|
(28%)
|
Segment
Margin
|
16.5%
|
12.3%
|
(420) bps
|
|
|
|
|
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 separation costs related to
the spin-offs, and adjustments to 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 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.
1 Adjusted free cash flow and associated
conversion exclude impacts from separation costs related to the
spin-offs of $28M.
2 Adjusted EPS V% ex-spins excludes 2Q18 after-tax
separation costs related to the spin-offs of Resideo and Garrett,
the 2Q18 after-tax segment profit contribution from Resideo and
Garrett, net of the spin indemnification impacts assuming both
indemnification agreements were effective in 2Q18, and 2Q18
adjustments to the 4Q17 U.S. tax legislation charge.
3 Segment margin expansion ex-spins guidance
excludes sales and segment profit contribution from Resideo and
Garrett in 2018.
4 Adjusted EPS V% ex-spins guidance excludes 2018
pension mark-to-market, 2018 after-tax separation costs related to
the spin-offs of Resideo and Garrett, and 2018 adjustments to the
4Q17 U.S. tax legislation charge. Also excludes 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.
5 Adjusted free cash flow guidance and associated
conversion excludes estimated payments of ~$0.3B for separation costs incurred in 2018
related to the spin-offs of Resideo and Garrett.
6 Adjusted EPS ex-spins and adjusted EPS V%
ex-spins exclude 2Q18 after-tax separation costs related to the
spin-offs of Resideo and Garrett of $346M, and the favorable 2Q18 adjustments to the
4Q17 U.S. tax legislation charge of $12M. Also excludes the 2Q18 after-tax segment
profit contribution from the spin-offs, net of spin indemnification
impacts assuming both indemnification agreements were effective in
2Q18, of $0.19.
7 Adjusted free cash flow and adjusted free cash
flow V% exclude impacts from separation costs related to the
spin-offs of $28M in 2Q19 and
$67M in 2Q18.
Contacts:
|
|
|
|
Media
|
Investor
Relations
|
Nina
Krauss
|
Mark
Macaluso
|
(704)
627-6035
|
(973)
455-2222
|
nina.krauss@honeywell.com
|
mark.macaluso@honeywell.com
|
Honeywell
International Inc.
Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Product
sales
|
$
|
6,990
|
|
|
$
|
8,703
|
|
|
$
|
13,703
|
|
|
$
|
16,937
|
|
Service
sales
|
2,253
|
|
|
2,216
|
|
|
4,424
|
|
|
4,374
|
|
Net sales
|
9,243
|
|
|
10,919
|
|
|
18,127
|
|
|
21,311
|
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products sold
(1)
|
4,848
|
|
|
6,202
|
|
|
9,470
|
|
|
12,107
|
|
Cost of services sold
(1)
|
1,246
|
|
|
1,412
|
|
|
2,503
|
|
|
2,698
|
|
|
6,094
|
|
|
7,614
|
|
|
11,973
|
|
|
14,805
|
|
Selling, general and
administrative expenses (1)
|
1,387
|
|
|
1,528
|
|
|
2,750
|
|
|
3,003
|
|
Other (income)
expense
|
(305)
|
|
|
(316)
|
|
|
(590)
|
|
|
(584)
|
|
Interest and other
financial charges
|
85
|
|
|
95
|
|
|
170
|
|
|
178
|
|
|
7,261
|
|
|
8,921
|
|
|
14,303
|
|
|
17,402
|
|
Income before
taxes
|
1,982
|
|
|
1,998
|
|
|
3,824
|
|
|
3,909
|
|
Tax
expense
|
426
|
|
|
718
|
|
|
832
|
|
|
1,177
|
|
Net income
|
1,556
|
|
|
1,280
|
|
|
2,992
|
|
|
2,732
|
|
Less: Net income
attributable to the noncontrolling interest
|
15
|
|
|
13
|
|
|
35
|
|
|
26
|
|
Net income
attributable to Honeywell
|
$
|
1,541
|
|
|
$
|
1,267
|
|
|
$
|
2,957
|
|
|
$
|
2,706
|
|
Earnings per share of
common stock - basic
|
$
|
2.13
|
|
|
$
|
1.70
|
|
|
$
|
4.07
|
|
|
$
|
3.62
|
|
Earnings per share of
common stock - assuming dilution
|
$
|
2.10
|
|
|
$
|
1.68
|
|
|
$
|
4.02
|
|
|
$
|
3.57
|
|
Weighted average
number of shares outstanding - basic
|
723.2
|
|
|
745.5
|
|
|
726.4
|
|
|
748.0
|
|
Weighted average
number of shares outstanding -
assuming dilution
|
733.0
|
|
|
755.0
|
|
|
735.9
|
|
|
758.0
|
|
|
(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
June 30,
|
|
Six Months Ended
June 30,
|
Net Sales
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Aerospace
|
$
|
3,508
|
|
|
$
|
4,058
|
|
|
$
|
6,849
|
|
|
$
|
8,035
|
|
Honeywell Building
Technologies
|
1,450
|
|
|
2,546
|
|
|
2,839
|
|
|
4,979
|
|
Performance Materials
and Technologies
|
2,735
|
|
|
2,698
|
|
|
5,307
|
|
|
5,232
|
|
Safety and
Productivity Solutions
|
1,550
|
|
|
1,617
|
|
|
3,132
|
|
|
3,065
|
|
Total
|
$
|
9,243
|
|
|
$
|
10,919
|
|
|
$
|
18,127
|
|
|
$
|
21,311
|
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
Segment
Profit
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Aerospace
|
$
|
907
|
|
|
$
|
918
|
|
|
$
|
1,745
|
|
|
$
|
1,811
|
|
Honeywell Building
Technologies
|
300
|
|
|
427
|
|
|
571
|
|
|
843
|
|
Performance Materials
and Technologies
|
644
|
|
|
597
|
|
|
1,208
|
|
|
1,116
|
|
Safety and
Productivity Solutions
|
191
|
|
|
267
|
|
|
403
|
|
|
498
|
|
Corporate
|
(72)
|
|
|
(64)
|
|
|
(148)
|
|
|
(128)
|
|
Total segment
profit
|
1,970
|
|
|
2,145
|
|
|
3,779
|
|
|
4,140
|
|
Interest and other
financial charges
|
(85)
|
|
|
(95)
|
|
|
(170)
|
|
|
(178)
|
|
Stock compensation
expense (1)
|
(34)
|
|
|
(38)
|
|
|
(75)
|
|
|
(90)
|
|
Pension ongoing
income (2)
|
148
|
|
|
250
|
|
|
299
|
|
|
498
|
|
Other postretirement
income (2)
|
11
|
|
|
6
|
|
|
23
|
|
|
12
|
|
Repositioning and
other charges (3,4)
|
(126)
|
|
|
(266)
|
|
|
(210)
|
|
|
(457)
|
|
Other (5)
|
98
|
|
|
(4)
|
|
|
178
|
|
|
(16)
|
|
Income before
taxes
|
$
|
1,982
|
|
|
$
|
1,998
|
|
|
$
|
3,824
|
|
|
$
|
3,909
|
|
|
(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)
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
8,225
|
|
|
$
|
9,287
|
|
Short-term
investments
|
1,718
|
|
|
1,623
|
|
Accounts receivable -
net
|
7,407
|
|
|
7,508
|
|
Inventories
|
4,600
|
|
|
4,326
|
|
Other current
assets
|
1,818
|
|
|
1,618
|
|
Total current
assets
|
23,768
|
|
|
24,362
|
|
Investments and
long-term receivables,
|
747
|
|
|
742
|
|
Property, plant and
equipment - net
|
5,260
|
|
|
5,296
|
|
Goodwill
|
15,573
|
|
|
15,546
|
|
Other intangible
assets - net
|
3,933
|
|
|
4,139
|
|
Insurance recoveries
for asbestos related liabilities
|
422
|
|
|
437
|
|
Deferred income
taxes
|
259
|
|
|
382
|
|
Other
assets
|
7,788
|
|
|
6,869
|
|
Total
assets
|
$
|
57,750
|
|
|
$
|
57,773
|
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
5,602
|
|
|
$
|
5,607
|
|
Commercial paper and
other short-term borrowings
|
3,558
|
|
|
3,586
|
|
Current maturities of
long-term debt
|
4,017
|
|
|
2,872
|
|
Accrued
liabilities
|
6,717
|
|
|
6,859
|
|
Total current
liabilities
|
19,894
|
|
|
18,924
|
|
Long-term
debt
|
8,608
|
|
|
9,756
|
|
Deferred income
taxes
|
1,722
|
|
|
1,713
|
|
Postretirement
benefit obligations other than pensions
|
326
|
|
|
344
|
|
Asbestos related
liabilities
|
2,226
|
|
|
2,269
|
|
Other
liabilities
|
6,907
|
|
|
6,402
|
|
Redeemable
noncontrolling interest
|
7
|
|
|
7
|
|
Shareowners'
equity
|
18,060
|
|
|
18,358
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
|
57,750
|
|
|
$
|
57,773
|
|
Honeywell
International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
1,556
|
|
|
$
|
1,280
|
|
|
$
|
2,992
|
|
|
$
|
2,732
|
|
Less: Net income
attributable to the noncontrolling interest
|
15
|
|
|
13
|
|
|
35
|
|
|
26
|
|
Net income
attributable to Honeywell
|
1,541
|
|
|
1,267
|
|
|
2,957
|
|
|
2,706
|
|
Adjustments to
reconcile net income attributable to Honeywell to net
cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
|
172
|
|
|
193
|
|
|
335
|
|
|
372
|
|
Amortization
|
123
|
|
|
95
|
|
|
221
|
|
|
204
|
|
Repositioning and
other charges
|
126
|
|
|
266
|
|
|
210
|
|
|
457
|
|
Net payments for
repositioning and other charges
|
(51)
|
|
|
(187)
|
|
|
(85)
|
|
|
(328)
|
|
Pension and other
postretirement income
|
(159)
|
|
|
(256)
|
|
|
(322)
|
|
|
(510)
|
|
Pension and other
postretirement benefit payments
|
(15)
|
|
|
(8)
|
|
|
(45)
|
|
|
(44)
|
|
Stock compensation
expense
|
34
|
|
|
38
|
|
|
75
|
|
|
90
|
|
Deferred income
taxes
|
(36)
|
|
|
67
|
|
|
44
|
|
|
114
|
|
Other
|
9
|
|
|
76
|
|
|
5
|
|
|
78
|
|
Changes in assets and
liabilities, net of the effects of acquisitions
and divestitures:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(100)
|
|
|
158
|
|
|
98
|
|
|
97
|
|
Inventories
|
(52)
|
|
|
(26)
|
|
|
(273)
|
|
|
(189)
|
|
Other current
assets
|
(22)
|
|
|
217
|
|
|
(239)
|
|
|
174
|
|
Accounts
payable
|
21
|
|
|
167
|
|
|
(8)
|
|
|
224
|
|
Accrued
liabilities
|
87
|
|
|
(206)
|
|
|
(161)
|
|
|
(448)
|
|
Net cash provided by
(used for) operating activities
|
1,678
|
|
|
1,861
|
|
|
2,812
|
|
|
2,997
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(171)
|
|
|
(199)
|
|
|
(312)
|
|
|
(339)
|
|
Proceeds from
disposals of property, plant and equipment
|
8
|
|
|
1
|
|
|
10
|
|
|
3
|
|
Increase in
investments
|
(1,048)
|
|
|
(1,204)
|
|
|
(2,274)
|
|
|
(1,787)
|
|
Decrease in
investments
|
1,367
|
|
|
1,670
|
|
|
2,163
|
|
|
3,508
|
|
Other
|
110
|
|
|
343
|
|
|
70
|
|
|
220
|
|
Net cash provided by
(used for) investing activities
|
266
|
|
|
611
|
|
|
(343)
|
|
|
1,605
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
issuance of commercial paper and other short-term
borrowings
|
3,796
|
|
|
6,073
|
|
|
7,114
|
|
|
12,749
|
|
Payments of
commercial paper and other short-term borrowings
|
(3,796)
|
|
|
(6,823)
|
|
|
(7,115)
|
|
|
(12,152)
|
|
Proceeds from
issuance of common stock
|
233
|
|
|
67
|
|
|
378
|
|
|
127
|
|
Proceeds from
issuance of long-term debt
|
9
|
|
|
2
|
|
|
29
|
|
|
5
|
|
Payments of long-term
debt
|
(71)
|
|
|
(31)
|
|
|
(84)
|
|
|
(1,277)
|
|
Repurchases of common
stock
|
(1,900)
|
|
|
(764)
|
|
|
(2,650)
|
|
|
(1,704)
|
|
Cash dividends
paid
|
(597)
|
|
|
(560)
|
|
|
(1,203)
|
|
|
(1,116)
|
|
Other
|
(2)
|
|
|
(2)
|
|
|
(32)
|
|
|
(118)
|
|
Net cash provided by
(used for) financing activities
|
(2,328)
|
|
|
(2,038)
|
|
|
(3,563)
|
|
|
(3,486)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(16)
|
|
|
(249)
|
|
|
32
|
|
|
(93)
|
|
Net increase
(decrease) in cash and cash equivalents
|
(400)
|
|
|
185
|
|
|
(1,062)
|
|
|
1,023
|
|
Cash and cash
equivalents at beginning of period
|
8,625
|
|
|
7,897
|
|
|
9,287
|
|
|
7,059
|
|
Cash and cash
equivalents at end of period
|
$
|
8,225
|
|
|
$
|
8,082
|
|
|
$
|
8,225
|
|
|
$
|
8,082
|
|
Honeywell
International Inc.
Reconciliation of Organic Sales % Change (Unaudited)
|
|
|
Three Months
Ended June 30, 2019
|
Honeywell
|
|
Reported sales %
change
|
(15)%
|
Less: Foreign
currency translation
|
(2)%
|
Less: Acquisitions,
divestitures and other, net
|
(18)%
|
Organic sales %
change
|
5%
|
|
|
Aerospace
|
|
Reported sales %
change
|
(14)%
|
Less: Foreign
currency translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
(25)%
|
Organic sales %
change
|
11%
|
|
|
Honeywell Building
Technologies
|
|
Reported sales %
change
|
(43)%
|
Less: Foreign
currency translation
|
(2)%
|
Less: Acquisitions,
divestitures and other, net
|
(46)%
|
Organic sales %
change
|
5%
|
|
|
Performance
Materials and Technologies
|
|
Reported sales %
change
|
1%
|
Less: Foreign
currency translation
|
(3)%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
4%
|
|
|
Safety and
Productivity Solutions
|
|
Reported sales %
change
|
(4)%
|
Less: Foreign
currency translation
|
(2)%
|
Less: Acquisitions,
divestitures and other, net
|
2%
|
Organic sales %
change
|
(4)%
|
|
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
June 30,
|
|
2019
|
|
2018
|
Segment
profit
|
$
|
1,970
|
|
|
$
|
2,145
|
|
Stock compensation
expense (1)
|
(34)
|
|
|
(38)
|
|
Repositioning, Other
(2,3)
|
(137)
|
|
|
(279)
|
|
Pension and other
postretirement service costs (4)
|
(37)
|
|
|
(51)
|
|
Operating
income
|
$
|
1,762
|
|
|
$
|
1,777
|
|
Segment
profit
|
$
|
1,970
|
|
|
$
|
2,145
|
|
÷ Net
sales
|
$
|
9,243
|
|
|
$
|
10,919
|
|
Segment profit margin
%
|
21.3%
|
|
|
19.6%
|
|
Operating
income
|
$
|
1,762
|
|
|
$
|
1,777
|
|
÷ Net
sales
|
$
|
9,243
|
|
|
$
|
10,919
|
|
Operating income
margin %
|
19.1%
|
|
|
16.3%
|
|
|
(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
June 30,
|
|
Twelve Months
Ended
December
31,
|
|
2019
|
|
2018
|
|
2018
|
Earnings per share of
common stock - assuming dilution (1)
|
$
|
2.10
|
|
|
$
|
1.68
|
|
|
$
|
8.98
|
|
Pension
mark-to-market expense
|
—
|
|
|
—
|
|
|
0.04
|
|
Separation costs
(2)
|
—
|
|
|
0.46
|
|
|
0.97
|
|
Impacts from U.S. Tax
Reform
|
—
|
|
|
(0.02)
|
|
|
(1.98)
|
|
Adjusted earnings per
share of common stock - assuming
dilution
|
$
|
2.10
|
|
|
$
|
2.12
|
|
|
$
|
8.01
|
|
Less: EPS,
attributable to spin-offs
|
|
|
0.19
|
|
|
0.62
|
|
Adjusted earnings per
share of common stock - assuming
dilution, excluding spin-off impact
|
|
|
$
|
1.93
|
|
|
$
|
7.39
|
|
|
(1) For the three
months ended June 30, 2019 and 2018, adjusted earnings per
share utilizes weighted average
shares of approximately 733.0 million and 755.0 million. For the
twelve months ended December 31, 2018,
adjusted earnings per share utilizes weighted average shares of
approximately 753.0 million.
|
|
(2) For the three
months ended June 30, 2018, 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. 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.
|
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
June 30, 2019
|
|
Three Months
Ended
June 30, 2018
|
Cash provided by
operating activities
|
$
|
1,678
|
|
|
$
|
1,861
|
|
Expenditures for
property, plant and equipment
|
(171)
|
|
|
(199)
|
|
Free cash
flow
|
1,507
|
|
|
1,662
|
|
Separation cost
payments
|
28
|
|
|
67
|
|
Adjusted free cash
flow
|
$
|
1,535
|
|
|
$
|
1,729
|
|
Net income
attributable to Honeywell
|
$
|
1,541
|
|
|
$
|
1,267
|
|
Separation costs,
includes net tax impacts
|
—
|
|
|
346
|
|
Adjustments to 4Q17
U.S tax legislation charge
|
—
|
|
|
(12)
|
|
Adjusted net income
attributable to Honeywell
|
$
|
1,541
|
|
|
$
|
1,601
|
|
Cash provided by
operating activities
|
$
|
1,678
|
|
|
$
|
1,861
|
|
÷ Net income (loss)
attributable to Honeywell
|
$
|
1,541
|
|
|
$
|
1,267
|
|
Operating cash flow
conversion
|
109%
|
|
|
147%
|
|
Adjusted free cash
flow
|
$
|
1,535
|
|
|
$
|
1,729
|
|
÷ Adjusted net income
attributable to Honeywell
|
$
|
1,541
|
|
|
$
|
1,601
|
|
Adjusted free cash
flow conversion %
|
100%
|
|
|
108%
|
|
|
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 210 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.
|
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.
|
View original
content:http://www.prnewswire.com/news-releases/honeywell-delivers-earnings-of-2-10--at-high-end-of-guidance-raises-full-year-sales-earnings-and-cash-guidance-300887096.html
SOURCE Honeywell