CHARLOTTE, N.C., Jan. 31, 2020 /PRNewswire/ -- Honeywell (NYSE:
HON) today announced financial results for the fourth quarter
and full year 2019, as well as its outlook for 2020.
"We finished 2019 with a strong fourth quarter. Organic sales
were up 2% for the quarter and up 5% for the full year, driven by
continued strength across Aerospace, growth in Process Solutions,
and demand for commercial fire, security and building management
products. We also had strong bookings in Intelligrated again, up
over 100% in the fourth quarter. Our growth and productivity rigor,
in addition to the impact of the 2018 spin-offs, drove 130 basis
points of segment margin expansion in the quarter, and 150 basis
points for the full year. This resulted in adjusted earnings per
share of $2.06 for the quarter, up
11%1, and $8.16 for the
year, up 10%4, excluding the impact of the spin-offs,"
said Darius Adamczyk, chairman and
chief executive officer of Honeywell. "We have continued to meet or
exceed our guidance and the long-term targets we set forth in 2017,
while further strengthening our balance sheet. We generated
$6.3 billion of adjusted free cash
flow for the year and achieved 105% conversion2. We
continue to effectively deploy capital, and in 2019, we repurchased
$4.4 billion of Honeywell shares,
completed the acquisitions of TruTrak Flight Systems and Rebellion
Photonics, made over 10 strategic investments within Honeywell
Ventures, and announced our tenth consecutive double-digit dividend
increase."
The company also announced its outlook for 2020. Honeywell
expects sales of $36.7 billion to
$37.8 billion, representing
year-over-year organic growth of 0% to 3%; segment margin expansion
of 20 to 50 basis points; earnings per share of $8.60 to $9.00, up
5% to 10% adjusted3; operating cash flow of $6.6 billion to $7.1
billion, and free cash flow of $5.7
billion to $6.2 billion. A
summary of the company's 2020 guidance can be found in Table 1.
Adamczyk concluded, "2019 was another exciting year for
Honeywell, as we continued to build our Honeywell Connected
Enterprise business, resulting in double-digit connected software
growth, made significant progress within our Honeywell Digital and
Integrated Supply Chain transformation initiatives, and launched a
brand campaign that highlights some of Honeywell's most exciting
innovations. We delivered strong results, and entered 2020 with
positive momentum, including a healthy long-cycle backlog that was
up 10% year-over-year. I am confident that we will be able to
continue to perform for our shareowners, our customers, and our
employees in 2020."
Fourth-Quarter Performance
Honeywell sales for the fourth quarter were down 2%
on a reported basis and up 2% on an organic basis. The difference
between reported and organic sales primarily relates to the
spin-off of the former Homes and ADI Global Distribution business
(formerly in Honeywell Building Technologies). The fourth-quarter
financial results can be found in Tables 2 and 3.
Aerospace sales for the fourth quarter were up 7% on
an organic basis driven by continued strength in the Defense and
Space business, growth in the air transport commercial aftermarket,
and original equipment demand in business aviation. Segment margin
expanded 270 basis points to 26.1%, primarily driven by commercial
excellence and aftermarket volumes.
Honeywell Building Technologies sales for the fourth
quarter were up 3% on an organic basis driven by continued demand
in commercial fire and building management products, as well as
security growth across the Americas and Europe. Segment margin
expanded 170 basis points to 20.3%, primarily driven by the
favorable impact following the spin-off of the former Homes and ADI
Global Distribution business.
Performance Materials and Technologies sales for the
fourth quarter were up 3% on an organic basis driven by continued
strength in Process Solutions, particularly in projects, services,
and smart energy, and strength in equipment and petrochemical
catalysts in UOP. This was partially offset by declines in Advanced
Materials, which was impacted by continued illegal imports of
hydrofluorocarbons (HFCs) into Europe and demand softness in specialty
products. Segment margin contracted 80 basis points to 22.5%,
primarily driven by unfavorable mix, partially offset by
productivity, net of inflation.
Safety and Productivity Solutions sales for the
fourth quarter were down 11% on an organic basis driven by the
impact of major systems project timing in Intelligrated, lower
sales volumes in productivity products, and lower demand for
personal protective equipment in the Safety business, which more
than offset continued demand for gas sensing products.
Intelligrated orders were robust for the second consecutive
quarter, up over 100% year-over-year in the fourth quarter,
resulting in a backlog increase of over 30% exiting the year.
Segment margin contracted 330 basis points to 12.7%, primarily
driven by lower sales volumes in productivity products and mix of
sales.
Conference Call Details
Honeywell will discuss its fourth quarter and full-year results
as well as its 2020 outlook during an investor conference call
today starting at 8:30 a.m. Eastern Standard
Time. To participate on the conference call, please dial
(866) 548-4713 (domestic) or (323) 794-2093 (international)
approximately ten minutes before the 8:30
a.m. EST start. Please mention to the operator that you
are dialing in for Honeywell's fourth quarter 2019 earnings and
2020 outlook call or provide the conference code HON2020. 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 approximately
12:30 p.m. EST, January 31, until 12:30
p.m. EST, February 7, by
dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 7318539.
TABLE 1: FULL-YEAR 2020 GUIDANCE
Sales
|
|
$36.7B -
$37.8B
|
Organic
Growth
|
|
0% -
3%
|
Segment
Margin
|
|
21.3% -
21.6%
|
Expansion
|
|
Up 20 - 50
bps
|
Earnings Per
Share
|
|
$8.60 -
$9.00
|
Adjusted Earnings
Growth3
|
|
5% -
10%
|
Operating Cash
Flow
|
|
$6.6B -
$7.1B
|
Free Cash
Flow
|
|
$5.7B -
$6.2B
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
FY
2018
|
|
FY
2019
|
|
Change
|
Sales
|
|
41,802
|
|
36,709
|
|
(12)%
|
Organic
Growth
|
|
|
|
|
|
5%
|
Segment
Margin
|
|
19.6%
|
|
21.1%
|
|
150 bps
|
Operating Income
Margin
|
|
16.0%
|
|
18.7%
|
|
270 bps
|
Reported Earnings Per
Share
|
|
$8.98
|
|
$8.41
|
|
(6)%
|
Adjusted Earnings Per
Share Ex-Spins4
|
|
$7.39
|
|
$8.16
|
|
10%
|
Cash Flow from
Operations
|
|
6,434
|
|
6,897
|
|
7%
|
Conversion
|
|
95%
|
|
112%
|
|
17%
|
Adjusted Free Cash
Flow2
|
|
6,030
|
|
6,271
|
|
4%
|
Adjusted Free Cash
Flow Conversion2
|
|
100%
|
|
105%
|
|
5%
|
Adjusted Free Cash
Flow Conversion, Ex-Pension2
|
|
115%
|
|
114%
|
|
(1)%
|
|
|
4Q
2018
|
|
4Q
2019
|
|
Change
|
Sales
|
|
9,729
|
|
9,496
|
|
(2)%
|
Organic
Growth
|
|
|
|
|
|
2%
|
Segment
Margin
|
|
20.1%
|
|
21.4%
|
|
130 bps
|
Operating Income
Margin
|
|
15.6%
|
|
17.8%
|
|
220 bps
|
Reported Earnings Per
Share
|
|
$2.31
|
|
$2.16
|
|
(6)%
|
Adjusted Earnings Per
Share Ex-Spins1
|
|
$1.86
|
|
$2.06
|
|
11%
|
Cash Flow from
Operations
|
|
1,559
|
|
2,614
|
|
68%
|
Conversion
|
|
91%
|
|
167%
|
|
76%
|
Adjusted Free Cash
Flow2
|
|
1,486
|
|
2,292
|
|
54%
|
Adjusted Free Cash
Flow Conversion2
|
|
105%
|
|
154%
|
|
49%
|
Adjusted Free Cash
Flow Conversion, Ex-Pension2
|
|
121%
|
|
166%
|
|
45%
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
|
|
FY
2018
|
|
FY
2019
|
|
Change
|
Sales
|
|
15,493
|
|
14,054
|
|
(9)%
|
Organic
Growth
|
|
|
|
|
|
9%
|
Segment
Profit
|
|
3,503
|
|
3,607
|
|
3%
|
Segment
Margin
|
|
22.6%
|
|
25.7%
|
|
310 bps
|
|
|
4Q
2018
|
|
4Q
2019
|
|
|
Sales
|
|
3,428
|
|
3,661
|
|
7%
|
Organic
Growth
|
|
|
|
|
|
7%
|
Segment
Profit
|
|
801
|
|
954
|
|
19%
|
Segment
Margin
|
|
23.4%
|
|
26.1%
|
|
270 bps
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
FY
2018
|
|
FY
2019
|
|
Change
|
Sales
|
|
9,298
|
|
5,717
|
|
(39)%
|
Organic
Growth
|
|
|
|
|
|
5%
|
Segment
Profit
|
|
1,608
|
|
1,165
|
|
(28)%
|
Segment
Margin
|
|
17.3%
|
|
20.4%
|
|
310 bps
|
|
|
4Q
2018
|
|
4Q
2019
|
|
|
Sales
|
|
1,802
|
|
1,463
|
|
(19)%
|
Organic
Growth
|
|
|
|
|
|
3%
|
Segment
Profit
|
|
335
|
|
297
|
|
(11)%
|
Segment
Margin
|
|
18.6%
|
|
20.3%
|
|
170 bps
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
FY
2018
|
|
FY
2019
|
|
Change
|
Sales
|
|
10,674
|
|
10,834
|
|
1%
|
Organic
Growth
|
|
|
|
|
|
4%
|
Segment
Profit
|
|
2,328
|
|
2,433
|
|
5%
|
Segment
Margin
|
|
21.8%
|
|
22.5%
|
|
70 bps
|
|
|
4Q
2018
|
|
4Q
2019
|
|
|
Sales
|
|
2,802
|
|
2,857
|
|
2%
|
Organic
Growth
|
|
|
|
|
|
3%
|
Segment
Profit
|
|
652
|
|
643
|
|
(1)%
|
Segment
Margin
|
|
23.3%
|
|
22.5%
|
|
(80) bps
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
FY
2018
|
|
FY
2019
|
|
Change
|
Sales
|
|
6,337
|
|
6,104
|
|
(4)%
|
Organic
Growth
|
|
|
|
|
|
(4)%
|
Segment
Profit
|
|
1,032
|
|
790
|
|
(23)%
|
Segment
Margin
|
|
16.3%
|
|
12.9%
|
|
(340) bps
|
|
|
4Q
2018
|
|
4Q
2019
|
|
|
Sales
|
|
1,697
|
|
1,515
|
|
(11)%
|
Organic
Growth
|
|
|
|
|
|
(11)%
|
Segment
Profit
|
|
272
|
|
192
|
|
(29)%
|
Segment
Margin
|
|
16.0%
|
|
12.7%
|
|
(330) bps
|
|
1Adjusted
EPS and adjusted EPS V% ex-spins excludes pension mark-to-market,
4Q18 after-tax separation costs related to the spin-offs, the 4Q18
after-tax segment profit contribution from the spin-off of Resideo,
net of spin reimbursement impacts assuming the indemnification and
reimbursement agreement was effective in 4Q18, and 4Q18 adjustments
to the charges taken in connection with the 4Q17 U.S. tax
legislation charge.
|
2Adjusted
free cash flow excludes impacts from separation costs related to
the spin-offs. Adjusted free cash flow conversion also excludes
pension mark-to-market and adjustments to the charges taken in
connection with the 4Q17 U.S. tax legislation charge. Adjusted free
cash flow conversion, ex-pension also excludes pension ongoing
income.
|
3Adjusted
EPS V% guidance excludes pension mark-to-market and adjustments to
the charges taken in connection with the 4Q17 U.S. tax legislation
charge in 2019.
|
4Adjusted
EPS and adjusted EPS V% ex-spins excludes pension mark-to-market,
2018 after-tax separation costs related to the spin-offs of Resideo
and Garrett, the 2018 after-tax segment profit contribution from
the spin-offs, net of spin reimbursement impacts assuming both
indemnification and reimbursement agreements were effective in
2018, and adjustments to the charges taken in connection with the
4Q17 U.S. tax legislation charge.
|
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 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,
separation costs related to the spin-offs, and adjustments to the
4Q17 U.S. tax legislation charge, if and as noted in the release;
adjusted free cash flow conversion, ex-pension, which we define as
adjusted free cash flow conversion, excluding pension ongoing
income, 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
reimbursement impacts assuming both indemnification and
reimbursement 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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Product
sales
|
$
|
7,133
|
|
|
$
|
7,434
|
|
|
$
|
27,629
|
|
|
$
|
32,848
|
|
Service
sales
|
2,363
|
|
|
2,295
|
|
|
9,080
|
|
|
8,954
|
|
Net sales
|
9,496
|
|
|
9,729
|
|
|
36,709
|
|
|
41,802
|
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products sold
(1)
|
5,025
|
|
|
5,400
|
|
|
19,269
|
|
|
23,634
|
|
Cost of services sold
(1)
|
1,303
|
|
|
1,285
|
|
|
5,070
|
|
|
5,412
|
|
|
6,328
|
|
|
6,685
|
|
|
24,339
|
|
|
29,046
|
|
Selling, general and
administrative expenses (1)
|
1,473
|
|
|
1,524
|
|
|
5,519
|
|
|
6,051
|
|
Other (income)
expense
|
(164)
|
|
|
(290)
|
|
|
(1,065)
|
|
|
(1,149)
|
|
Interest and other
financial charges
|
91
|
|
|
90
|
|
|
357
|
|
|
367
|
|
|
7,728
|
|
|
8,009
|
|
|
29,150
|
|
|
34,315
|
|
Income before
taxes
|
1,768
|
|
|
1,720
|
|
|
7,559
|
|
|
7,487
|
|
Tax
expense
|
178
|
|
|
(20)
|
|
|
1,329
|
|
|
659
|
|
Net income
|
1,590
|
|
|
1,740
|
|
|
6,230
|
|
|
6,828
|
|
Less: Net income
attributable to the noncontrolling interest
|
28
|
|
|
19
|
|
|
87
|
|
|
63
|
|
Net income
attributable to Honeywell
|
$
|
1,562
|
|
|
$
|
1,721
|
|
|
$
|
6,143
|
|
|
$
|
6,765
|
|
Earnings per share of
common stock - basic
|
$
|
2.19
|
|
|
$
|
2.34
|
|
|
$
|
8.52
|
|
|
$
|
9.10
|
|
Earnings per share of
common stock - assuming dilution
|
$
|
2.16
|
|
|
$
|
2.31
|
|
|
$
|
8.41
|
|
|
$
|
8.98
|
|
Weighted average
number of shares outstanding - basic
|
713.5
|
|
|
734.0
|
|
|
721.0
|
|
|
743.0
|
|
Weighted average
number of shares outstanding -
assuming dilution
|
722.6
|
|
|
743.9
|
|
|
730.3
|
|
|
753.0
|
|
|
(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
December 31,
|
|
Twelve Months
Ended
December 31,
|
Net Sales
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Aerospace
|
$
|
3,661
|
|
|
$
|
3,428
|
|
|
$
|
14,054
|
|
|
$
|
15,493
|
|
Honeywell Building
Technologies
|
1,463
|
|
|
1,802
|
|
|
5,717
|
|
|
9,298
|
|
Performance Materials
and Technologies
|
2,857
|
|
|
2,802
|
|
|
10,834
|
|
|
10,674
|
|
Safety and
Productivity Solutions
|
1,515
|
|
|
1,697
|
|
|
6,104
|
|
|
6,337
|
|
Total
|
$
|
9,496
|
|
|
$
|
9,729
|
|
|
$
|
36,709
|
|
|
$
|
41,802
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
Segment
Profit
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Aerospace
|
$
|
954
|
|
|
$
|
801
|
|
|
$
|
3,607
|
|
|
$
|
3,503
|
|
Honeywell Building
Technologies
|
297
|
|
|
335
|
|
|
1,165
|
|
|
1,608
|
|
Performance Materials
and Technologies
|
643
|
|
|
652
|
|
|
2,433
|
|
|
2,328
|
|
Safety and
Productivity Solutions
|
192
|
|
|
272
|
|
|
790
|
|
|
1,032
|
|
Corporate
|
(54)
|
|
|
(100)
|
|
|
(256)
|
|
|
(281)
|
|
Total segment
profit
|
2,032
|
|
|
1,960
|
|
|
7,739
|
|
|
8,190
|
|
Interest and other
financial charges
|
(91)
|
|
|
(90)
|
|
|
(357)
|
|
|
(367)
|
|
Stock compensation
expense (1)
|
(41)
|
|
|
(44)
|
|
|
(153)
|
|
|
(175)
|
|
Pension ongoing
income (2)
|
143
|
|
|
247
|
|
|
592
|
|
|
992
|
|
Pension
mark-to-market expense
|
(123)
|
|
|
(37)
|
|
|
(123)
|
|
|
(37)
|
|
Other postretirement
income (2)
|
12
|
|
|
8
|
|
|
47
|
|
|
32
|
|
Repositioning and
other charges (3,4)
|
(240)
|
|
|
(335)
|
|
|
(546)
|
|
|
(1,091)
|
|
Other
(5)
|
76
|
|
|
11
|
|
|
360
|
|
|
(57)
|
|
Income before
taxes
|
$
|
1,768
|
|
|
$
|
1,720
|
|
|
$
|
7,559
|
|
|
$
|
7,487
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
9,067
|
|
|
$
|
9,287
|
|
Short-term
investments
|
1,349
|
|
|
1,623
|
|
Accounts
receivable—net
|
7,493
|
|
|
7,508
|
|
Inventories
|
4,421
|
|
|
4,326
|
|
Other current
assets
|
1,973
|
|
|
1,618
|
|
Total current
assets
|
24,303
|
|
|
24,362
|
|
Investments and
long-term receivables
|
588
|
|
|
742
|
|
Property, plant and
equipment—net
|
5,325
|
|
|
5,296
|
|
Goodwill
|
15,563
|
|
|
15,546
|
|
Other intangible
assets—net
|
3,734
|
|
|
4,139
|
|
Insurance recoveries
for asbestos related liabilities
|
392
|
|
|
437
|
|
Deferred income
taxes
|
86
|
|
|
382
|
|
Other
assets
|
8,688
|
|
|
6,869
|
|
Total
assets
|
$
|
58,679
|
|
|
$
|
57,773
|
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
5,730
|
|
|
$
|
5,607
|
|
Commercial paper and
other short-term borrowings
|
3,516
|
|
|
3,586
|
|
Current maturities of
long-term debt
|
1,376
|
|
|
2,872
|
|
Accrued
liabilities
|
7,476
|
|
|
6,859
|
|
Total current
liabilities
|
18,098
|
|
|
18,924
|
|
Long-term
debt
|
11,110
|
|
|
9,756
|
|
Deferred income
taxes
|
1,670
|
|
|
1,713
|
|
Postretirement
benefit obligations other than pensions
|
326
|
|
|
344
|
|
Asbestos related
liabilities
|
1,996
|
|
|
2,269
|
|
Other
liabilities
|
6,766
|
|
|
6,402
|
|
Redeemable
noncontrolling interest
|
7
|
|
|
7
|
|
Shareowners'
equity
|
18,706
|
|
|
18,358
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
|
58,679
|
|
|
$
|
57,773
|
|
Honeywell
International Inc.
|
Consolidated
Statement of Cash Flows (Unaudited)
|
(Dollars in
millions)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
1,590
|
|
|
$
|
1,740
|
|
|
$
|
6,230
|
|
|
$
|
6,828
|
|
Less: Net income
attributable to the noncontrolling interest
|
28
|
|
|
19
|
|
|
87
|
|
|
63
|
|
Net income
attributable to Honeywell
|
1,562
|
|
|
1,721
|
|
|
6,143
|
|
|
6,765
|
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by
operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
173
|
|
|
163
|
|
|
673
|
|
|
721
|
|
Amortization
|
96
|
|
|
91
|
|
|
415
|
|
|
395
|
|
(Gain) loss on sale
of non-strategic businesses and assets
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Repositioning and
other charges
|
240
|
|
|
335
|
|
|
546
|
|
|
1,091
|
|
Net payments for
repositioning and other charges
|
(219)
|
|
|
(133)
|
|
|
(376)
|
|
|
(652)
|
|
Pension and other
postretirement income
|
(32)
|
|
|
(218)
|
|
|
(516)
|
|
|
(987)
|
|
Pension and other
postretirement benefit payments
|
(28)
|
|
|
(13)
|
|
|
(78)
|
|
|
(80)
|
|
Stock compensation
expense
|
41
|
|
|
44
|
|
|
153
|
|
|
175
|
|
Deferred income
taxes
|
477
|
|
|
(104)
|
|
|
179
|
|
|
(586)
|
|
Other
|
(385)
|
|
|
(531)
|
|
|
(287)
|
|
|
(694)
|
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures:
|
|
|
|
|
|
|
|
Accounts
receivable
|
89
|
|
|
(367)
|
|
|
11
|
|
|
(236)
|
|
Inventories
|
176
|
|
|
(44)
|
|
|
(100)
|
|
|
(503)
|
|
Other current
assets
|
(362)
|
|
|
(138)
|
|
|
(430)
|
|
|
218
|
|
Accounts
payable
|
207
|
|
|
267
|
|
|
118
|
|
|
733
|
|
Accrued
liabilities
|
578
|
|
|
486
|
|
|
445
|
|
|
74
|
|
Net cash provided by
(used for) operating activities
|
2,614
|
|
|
1,559
|
|
|
6,897
|
|
|
6,434
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(335)
|
|
|
(306)
|
|
|
(839)
|
|
|
(828)
|
|
Proceeds from
disposals of property, plant and equipment
|
2
|
|
|
11
|
|
|
43
|
|
|
15
|
|
Increase in
investments
|
(1,035)
|
|
|
(1,177)
|
|
|
(4,253)
|
|
|
(4,059)
|
|
Decrease in
investments
|
1,146
|
|
|
1,398
|
|
|
4,464
|
|
|
6,032
|
|
Cash paid for
acquisitions, net of cash acquired
|
(46)
|
|
|
(484)
|
|
|
(50)
|
|
|
(535)
|
|
Other
|
(143)
|
|
|
152
|
|
|
102
|
|
|
402
|
|
Net cash provided by
(used for) investing activities
|
(411)
|
|
|
(406)
|
|
|
(533)
|
|
|
1,027
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
issuance of commercial paper and other short-term
borrowings
|
3,907
|
|
|
4,591
|
|
|
14,199
|
|
|
23,891
|
|
Payments of
commercial paper and other short-term borrowings
|
(3,906)
|
|
|
(4,942)
|
|
|
(14,199)
|
|
|
(24,095)
|
|
Proceeds from
issuance of common stock
|
73
|
|
|
25
|
|
|
498
|
|
|
267
|
|
Proceeds from
issuance of long-term debt
|
1
|
|
|
1
|
|
|
2,726
|
|
|
27
|
|
Payments of long-term
debt
|
(2,783)
|
|
|
(27)
|
|
|
(2,903)
|
|
|
(1,330)
|
|
Repurchases of common
stock
|
(750)
|
|
|
(1,692)
|
|
|
(4,400)
|
|
|
(4,000)
|
|
Cash dividends
paid
|
(644)
|
|
|
(603)
|
|
|
(2,442)
|
|
|
(2,272)
|
|
Pre-separation
funding
|
—
|
|
|
1,197
|
|
|
—
|
|
|
2,801
|
|
Spin-off
cash
|
—
|
|
|
(179)
|
|
|
—
|
|
|
(179)
|
|
Other
|
(7)
|
|
|
(1)
|
|
|
(79)
|
|
|
(142)
|
|
Net cash provided by
(used for) financing activities
|
(4,109)
|
|
|
(1,630)
|
|
|
(6,600)
|
|
|
(5,032)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
65
|
|
|
(39)
|
|
|
16
|
|
|
(201)
|
|
Net increase
(decrease) in cash and cash equivalents
|
(1,841)
|
|
|
(516)
|
|
|
(220)
|
|
|
2,228
|
|
Cash and cash
equivalents at beginning of period
|
10,908
|
|
|
9,803
|
|
|
9,287
|
|
|
7,059
|
|
Cash and cash
equivalents at end of period
|
$
|
9,067
|
|
|
$
|
9,287
|
|
|
$
|
9,067
|
|
|
$
|
9,287
|
|
Honeywell
International Inc.
|
Reconciliation of
Organic Sales % Change (Unaudited)
|
|
|
Three Months
Ended
December 31,
2019
|
|
Twelve Months
Ended
December 31,
2019
|
Honeywell
|
|
|
|
Reported sales %
change
|
(2)%
|
|
(12)%
|
Less: Foreign
currency translation
|
—%
|
|
(1)%
|
Less: Acquisitions,
divestitures and other, net
|
(4)%
|
|
(16)%
|
Organic sales %
change
|
2%
|
|
5%
|
|
|
|
|
Aerospace
|
|
|
|
Reported sales %
change
|
7%
|
|
(9)%
|
Less: Foreign
currency translation
|
—%
|
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
|
(18)%
|
Organic sales %
change
|
7%
|
|
9%
|
|
|
|
|
Honeywell Building
Technologies
|
|
|
|
Reported sales %
change
|
(19)%
|
|
(39)%
|
Less: Foreign
currency translation
|
(1)%
|
|
(2)%
|
Less: Acquisitions,
divestitures and other, net
|
(21)%
|
|
(42)%
|
Organic sales %
change
|
3%
|
|
5%
|
|
|
|
|
Performance
Materials and Technologies
|
|
|
|
Reported sales %
change
|
2%
|
|
1%
|
Less: Foreign
currency translation
|
(1)%
|
|
(3)%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
|
—%
|
Organic sales %
change
|
3%
|
|
4%
|
|
|
|
|
Safety and
Productivity Solutions
|
|
|
|
Reported sales %
change
|
(11)%
|
|
(4)%
|
Less: Foreign
currency translation
|
(1)%
|
|
(2)%
|
Less: Acquisitions,
divestitures and other, net
|
1%
|
|
2%
|
Organic sales %
change
|
(11)%
|
|
(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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
profit
|
$
|
2,032
|
|
|
$
|
1,960
|
|
|
$
|
7,739
|
|
|
$
|
8,190
|
|
Stock compensation
expense (1)
|
(41)
|
|
|
(44)
|
|
|
(153)
|
|
|
(175)
|
|
Repositioning, Other
(2,3)
|
(259)
|
|
|
(347)
|
|
|
(598)
|
|
|
(1,100)
|
|
Pension and other
postretirement service costs (4)
|
(37)
|
|
|
(49)
|
|
|
(137)
|
|
|
(210)
|
|
Operating
income
|
$
|
1,695
|
|
|
$
|
1,520
|
|
|
$
|
6,851
|
|
|
$
|
6,705
|
|
Segment
profit
|
$
|
2,032
|
|
|
$
|
1,960
|
|
|
$
|
7,739
|
|
|
$
|
8,190
|
|
÷ Net
sales
|
$
|
9,496
|
|
|
$
|
9,729
|
|
|
$
|
36,709
|
|
|
$
|
41,802
|
|
Segment profit margin
%
|
21.4
|
%
|
|
20.1
|
%
|
|
21.1
|
%
|
|
19.6
|
%
|
Operating
income
|
$
|
1,695
|
|
|
$
|
1,520
|
|
|
$
|
6,851
|
|
|
$
|
6,705
|
|
÷ Net
sales
|
$
|
9,496
|
|
|
$
|
9,729
|
|
|
$
|
36,709
|
|
|
$
|
41,802
|
|
Operating income
margin %
|
17.8
|
%
|
|
15.6
|
%
|
|
18.7
|
%
|
|
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, 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
Earnings per Share to Adjusted Earnings per Share and Adjusted
Earnings per Share Excluding Spin-off Impact (Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Earnings per share of
common stock - assuming dilution (1)
|
$
|
2.16
|
|
|
$
|
2.31
|
|
|
$
|
8.41
|
|
|
$
|
8.98
|
|
Pension
mark-to-market expense (2)
|
0.13
|
|
|
0.04
|
|
|
0.13
|
|
|
0.04
|
|
Separation costs
(3)
|
—
|
|
|
0.14
|
|
|
—
|
|
|
0.97
|
|
Impacts from U.S. Tax
Reform
|
(0.23)
|
|
|
(0.58)
|
|
|
(0.38)
|
|
|
(1.98)
|
|
Adjusted earnings per
share of common stock - assuming
dilution
|
$
|
2.06
|
|
|
$
|
1.91
|
|
|
$
|
8.16
|
|
|
$
|
8.01
|
|
Less: EPS,
attributable to spin-offs
|
|
|
0.05
|
|
|
—
|
|
|
0.62
|
|
Adjusted earnings per
share of common stock - assuming
dilution, excluding spin-off impact
|
|
|
$
|
1.86
|
|
|
$
|
8.16
|
|
|
$
|
7.39
|
|
|
(1)
|
For the three months
ended December 31, 2019 and 2018, adjusted earnings per share
utilizes weighted average shares of approximately 722.6 million and
743.9 million. For the twelve months ended December 31, 2019
and 2018, adjusted earnings per share utilizes weighted average
shares of approximately 730.3 million and 753.0 million.
|
|
|
(2)
|
Pension
mark-to-market expense uses a blended tax rate of 24% for 2019 and
2018.
|
|
|
(3)
|
For the three months
ended December 31, 2018, separation costs of $104 million. 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
December
31, 2019
|
|
Three
Months
Ended
December
31, 2018
|
|
Twelve
Months
Ended
December
31, 2019
|
|
Twelve
Months
Ended
December
31, 2018
|
Cash provided by
operating activities
|
$
|
2,614
|
|
|
$
|
1,559
|
|
|
$
|
6,897
|
|
|
$
|
6,434
|
|
Expenditures for
property, plant and equipment
|
(335)
|
|
|
(306)
|
|
|
(839)
|
|
|
(828)
|
|
Free cash
flow
|
2,279
|
|
|
1,253
|
|
|
6,058
|
|
|
5,606
|
|
Separation cost
payments
|
13
|
|
|
233
|
|
|
213
|
|
|
424
|
|
Adjusted free cash
flow
|
$
|
2,292
|
|
|
$
|
1,486
|
|
|
$
|
6,271
|
|
|
$
|
6,030
|
|
Net income
attributable to Honeywell
|
$
|
1,562
|
|
|
$
|
1,721
|
|
|
$
|
6,143
|
|
|
$
|
6,765
|
|
Separation costs,
includes net tax impacts
|
—
|
|
|
104
|
|
|
—
|
|
|
732
|
|
Impacts from U.S. Tax
Reform
|
(167)
|
|
|
(435)
|
|
|
(281)
|
|
|
(1,494)
|
|
Pension
mark-to-market
|
94
|
|
|
28
|
|
|
94
|
|
|
28
|
|
Adjusted net income
attributable to Honeywell
|
$
|
1,489
|
|
|
$
|
1,418
|
|
|
$
|
5,956
|
|
|
$
|
6,031
|
|
Cash provided by
operating activities
|
$
|
2,614
|
|
|
$
|
1,559
|
|
|
$
|
6,897
|
|
|
$
|
6,434
|
|
÷ Net income (loss)
attributable to Honeywell
|
$
|
1,562
|
|
|
$
|
1,721
|
|
|
$
|
6,143
|
|
|
$
|
6,765
|
|
Operating cash flow
conversion
|
167
|
%
|
|
91
|
%
|
|
112
|
%
|
|
95
|
%
|
Adjusted free cash
flow
|
$
|
2,292
|
|
|
$
|
1,486
|
|
|
$
|
6,271
|
|
|
$
|
6,030
|
|
÷ Adjusted net income
attributable to Honeywell
|
$
|
1,489
|
|
|
$
|
1,418
|
|
|
$
|
5,956
|
|
|
$
|
6,031
|
|
Adjusted free cash
flow conversion %
|
154
|
%
|
|
105
|
%
|
|
105
|
%
|
|
100
|
%
|
|
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
Cash Provided by Operating Activities to Adjusted Free Cash Flow
(Unaudited)
|
|
|
Twelve Months
Ended
December 31,
2019
|
|
Twelve Months
Ended
December 31,
2020(E) ($B)
|
Cash provided by
operating activities
|
6,897
|
|
~$6.6 -
$7.1
|
Expenditures for
property, plant and equipment
|
(839)
|
|
~(0.9)
|
Free cash
flow
|
6,058
|
|
~5.7 - 6.2
|
Separation cost
payments
|
213
|
|
—
|
Adjusted free cash
flow
|
6,271
|
|
~$5.7 -
$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, 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.
|
Honeywell
International Inc.
|
Calculation of
Adjusted Free Cash Flow Conversion Excluding Pension Ongoing Income
Impact (Unaudited)
|
(Dollars in
millions)
|
|
|
Three
Months
Ended
December
31, 2019
|
|
Three
Months
Ended
December
31, 2018
|
|
Twelve
Months
Ended
December
31, 2019
|
|
Twelve
Months
Ended
December
31, 2018
|
Adjusted net income
attributable to Honeywell
|
$
|
1,489
|
|
|
$
|
1,418
|
|
|
$
|
5,956
|
|
|
$
|
6,031
|
|
Pension ongoing
income(1)
|
(111)
|
|
|
(192)
|
|
|
(459)
|
|
|
(770)
|
|
Adjusted net income
attributable to Honeywell, excluding
pension ongoing income
|
$
|
1,378
|
|
|
$
|
1,226
|
|
|
$
|
5,497
|
|
|
$
|
5,261
|
|
Adjusted free cash
flow
|
$
|
2,292
|
|
|
$
|
1,486
|
|
|
$
|
6,271
|
|
|
$
|
6,030
|
|
÷ Adjusted net income
attributable to Honeywell, excluding
pension ongoing income
|
$
|
1,378
|
|
|
$
|
1,226
|
|
|
$
|
5,497
|
|
|
$
|
5,261
|
|
Adjusted free cash
flow conversion %, excluding pension
ongoing income
|
166
|
%
|
|
121
|
%
|
|
114
|
%
|
|
115
|
%
|
|
(1)
|
Pension ongoing
income uses a blended tax rate of 22.5% and 22.4% for 2019 and
2018.
|
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-expands-operating-margin-220-basis-points-segment-margin-130-basis-points-and-generates-over-2-billion-of-cash-during-the-quarter-expects-2020-earnings-per-share-of-8-60---9-00--300996699.html
SOURCE Honeywell