CHARLOTTE, N.C., Oct. 30, 2020 /PRNewswire/ -- Honeywell (NYSE:
HON) today announced results for the third quarter of 2020, which
improved sequentially versus the second quarter of 2020.
The company reported a third-quarter year-over-year sales
decline of 14% reported and organic, operating margin contraction
of 250 basis points, and segment margin contraction of 130 basis
points, with adjusted earnings per share2 of
$1.56.
"I am pleased with the quarter-over-quarter improvements in
sales growth, margin expansion and adjusted earnings per share that
we delivered in the third quarter," said Darius Adamczyk, chairman and chief executive
officer of Honeywell. "We continued to focus on driving sales
growth in areas that have not been as impacted by the current
downturn, including defense and space, warehouse automation and
personal protective equipment, all of which grew by double-digits
organically year-over-year. Recurring software sales also grew
double-digits organically, continuing our transformation to a
premier software-industrial company.
"We also focused on aggressively managing cost, and delivered
over $450 million in savings in the
quarter, bringing our year-to-date total to $1.1 billion. We now expect to generate
$1.5 billion to $1.6 billion of cost savings during 2020, up from
our previous estimate of $1.4 billion
to $1.6 billion," Adamczyk continued.
"Honeywell's balance sheet remains strong, with $15 billion of cash and short-term investments on
hand, and we further enhanced our financial flexibility this
quarter by issuing $3 billion of
bonds at attractive rates and repaying in full the $3 billion term loan borrowed earlier this year.
Capital deployment remains a focus for us. In the third quarter, we
resumed opportunistic share repurchases and announced the 11th
consecutive increase to our dividend. We also recently announced
two acquisitions that will provide emerging technologies in our
Aerospace business. I am confident we are well-positioned for the
economic recovery."
Adamczyk concluded, "Last month we celebrated two significant
milestones: Honeywell's 100th anniversary on the New York Stock
Exchange and our return to the Dow Jones Industrial Average.
Honeywell is a company that has weathered the toughest of times and
emerged from them stronger than before. This crisis is no
exception. We have moved very quickly to introduce new offerings to
help people get back to the workplace, back to play, back to
travel, and back to life, and I am pleased with the strong demand
we are seeing for these solutions. We remain focused on cost
management and execution, while also investing in new markets and
new technologies that will shape the next 100 years for our
customers, shareowners and employees."
Honeywell expects fourth quarter sales of $8.2 billion to $8.5
billion, representing a year-over-year organic sales decline
of 11% to 14%; segment margin of 21.1% to 21.3%, down 10 to 30
basis points; and earnings per share of $1.97 to $2.02,
down 2% to 4% adjusted. Full-year sales are expected to be in the
range of $31.9 billion to
$32.2 billion, representing a
year-over-year organic sales decline of 12% to 13%; segment margin
of 20.4% to 20.5%, down 60 to 70 basis points; and adjusted
earnings per share1 of $7.00 to $7.05,
down 14%. A summary of the company's 2020 guidance can be found in
Table 1.
Adjusted EPS in the
headline excludes the impact of a non-cash $350M pre-tax and
after-tax charge associated with the reduction in carrying value to
present value of reimbursement receivables due from Garrett in
relation to Garrett's September 20, 2020 Chapter 11 bankruptcy
filing
|
Third-Quarter Performance
Honeywell sales
for the third quarter were down 14% on a reported and organic
basis. The third-quarter financial results can be found in Tables 2
and 3.
Aerospace sales for the third quarter were down 25%
on an organic basis driven by lower commercial aftermarket demand
due to the ongoing impact of reduced flight hours and lower volumes
in commercial original equipment, partially offset by double-digit
growth in Defense and Space. Segment margin contracted 240 basis
points to 23.2% driven by lower volumes and sales mix.
Honeywell Building Technologies sales for the third
quarter were down 8% on an organic basis driven by lower demand for
building products and delays in Building Solutions projects,
partially offset by growth in the services verticals. Segment
margin expanded 60 basis points to 21.6%. Margin performance was
driven by commercial excellence and productivity actions.
Performance Materials and Technologies sales for the
third quarter were down 16% on an organic basis driven by delays in
Process Solutions services and automation projects as well as
volume declines in smart energy; lower gas processing projects,
catalyst shipments, licensing, and engineering due to softness in
the oil and gas sector in UOP; and lower fluorine products volumes
in Advanced Materials, partially offset by packaging and composites
growth. Segment margin contracted 220 basis points to 19.6% driven
by the impact of lower sales volumes, partially offset by
productivity actions.
Safety and Productivity Solutions sales for the
third quarter were up 8% on an organic basis driven by double-digit
Intelligrated and personal protective equipment growth as well as a
return to growth in productivity solutions and services, partially
offset by lower gas sensing volumes. Orders were up double-digits
year-over-year for the fourth straight quarter, driven by
approximately 150% personal protective equipment orders growth, and
backlog remained at a record high. Segment margin expanded 50 basis
points to 13.9% driven by productivity actions and commercial
excellence.
Conference Call Details
Honeywell will discuss its
third-quarter results and fourth-quarter outlook during an investor
conference call starting at 8:30 a.m.
Eastern Daylight Time today. 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. EDT start. Please
mention to the operator that you are dialing in for Honeywell's
third-quarter 2020 earnings call or provide the conference code
HON3Q20. The live webcast of the investor call as well as related
presentation materials will be available through the Investor
Relations section of the company's website
(www.honeywell.com/investor). Investors can hear a replay of the
conference call from 12:30 p.m. EDT,
October 30, until 12:30 p.m. EST, November
6, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 1772801.
TABLE 1: 4Q AND FULL-YEAR 2020
GUIDANCE3
|
4Q
Guidance
|
FY
Guidance
|
Sales
|
$8.2B -
$8.5B
|
$31.9B -
$32.2B
|
Organic
Growth
|
Down (14%) -
(11%)
|
Down (13%) -
(12%)
|
Segment
Margin
|
21.1% -
21.3%
|
20.4% -
20.5%
|
Expansion
|
Down (30) - (10)
bps
|
Down (70) - (60)
bps
|
Earnings Per
Share
|
$1.97 -
$2.02
|
$6.78 -
$6.83
|
Adjusted Earnings Per
Share1
|
$1.97 -
$2.02
|
$7.00 -
$7.05
|
Adjusted Earnings
Growth1
|
Down (4%) -
(2%)
|
Down
(14%)
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
3Q
2020
|
|
3Q
2019
|
|
Change
|
Sales
|
|
7,797
|
|
9,086
|
|
(14%)
|
Organic
Growth
|
|
|
|
|
|
(14%)
|
Segment
Margin
|
|
19.9%
|
|
21.2%
|
|
-130 bps
|
Operating Income
Margin
|
|
16.8%
|
|
19.3%
|
|
-250 bps
|
Earnings Per
Share
|
|
$1.07
|
|
$2.23
|
|
(52%)
|
Adjusted Earnings Per
Share2
|
|
$1.56
|
|
$2.08
|
|
(25%)
|
Cash Flow from
Operations
|
|
1,007
|
|
1,471
|
|
(32%)
|
Operating Cash
Flow Conversion
|
|
133%
|
|
91%
|
|
42%
|
Free Cash
Flow
|
|
758
|
|
1,279
|
|
(41%)
|
Adjusted Free Cash
Flow4
|
|
758
|
|
1,286
|
|
(41%)
|
Adjusted Free Cash
Flow Conversion5
|
|
68%
|
|
85%
|
|
(17%)
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
|
|
3Q
2020
|
|
3Q
2019
|
|
Change
|
Sales
|
|
2,662
|
|
3,544
|
|
(25%)
|
Organic
Growth
|
|
|
|
|
|
(25%)
|
Segment
Profit
|
|
617
|
|
908
|
|
(32%)
|
Segment
Margin
|
|
23.2%
|
|
25.6%
|
|
-240 bps
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
1,305
|
|
1,415
|
|
(8%)
|
Organic
Growth
|
|
|
|
|
|
(8%)
|
Segment
Profit
|
|
282
|
|
297
|
|
(5%)
|
Segment
Margin
|
|
21.6%
|
|
21.0%
|
|
60 bps
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
2,252
|
|
2,670
|
|
(16%)
|
Organic
Growth
|
|
|
|
|
|
(16%)
|
Segment
Profit
|
|
442
|
|
582
|
|
(24%)
|
Segment
Margin
|
|
19.6%
|
|
21.8%
|
|
-220 bps
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
|
|
|
|
|
Sales
|
|
1,578
|
|
1,457
|
|
8%
|
Organic
Growth
|
|
|
|
|
|
8%
|
Segment
Profit
|
|
219
|
|
195
|
|
12%
|
Segment
Margin
|
|
13.9%
|
|
13.4%
|
|
50 bps
|
|
1Adjusted
EPS and adjusted EPS V% guidance exclude 4Q19 pension
mark-to-market, adjustments to the charges taken in connection with
the 4Q17 U.S. tax legislation charge, 2Q20 favorable resolution of
a foreign tax matter related to the spin-off transactions, and the
impact of a non-cash $350M pre-tax and after-tax charge associated
with the reduction in carrying value to present value of
reimbursement receivables due from Garrett in relation to Garrett's
September 20, 2020 Chapter 11 bankruptcy filing
|
2Adjusted
EPS and adjusted EPS V% exclude adjustments to the charges taken in
connection with the 4Q17 U.S. tax legislation charge and the impact
of a non-cash $350M pre-tax and after-tax charge associated with
the reduction in carrying value to present value of reimbursement
receivables due from Garrett in relation to Garrett's September 20,
2020 Chapter 11 bankruptcy filing
|
3As
discussed in the notes to the attached reconciliations, we do not
provide guidance for margin or EPS on a GAAP basis
|
4Adjusted
free cash flow and adjusted free cash flow V% exclude impacts from
separation costs related to the spin-offs of $7M in 3Q19
|
5Adjusted
free cash flow conversion excludes impacts from separation costs
related to the spin-offs of $7M in 3Q19, adjustments to the charges
taken in connected with the 4Q17 U.S. tax legislation charge, and
the impact of a non-cash $350M pre-tax and after-tax charge
associated with the reduction in carrying value to present value of
reimbursement receivables due from Garrett in relation to Garrett's
September 20, 2020 Chapter 11 bankruptcy filing
|
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, technological, and COVID-19
public health factors affecting our operations, markets, products,
services and prices. Such forward-looking statements are not
guarantees of future performance, and actual results, and other
developments, including the potential impact of the COVID-19
pandemic, and business decisions may differ from those envisaged by
such forward-looking statements. Any forward-looking plans
described herein are not final and may be modified or abandoned at
any time.
No final decision will be taken with respect to such plans or
proposals without prior satisfaction of any applicable requirements
with respect to informing, consulting or negotiating with employees
or their representatives. 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, and acquisitions and divestitures for the
first 12 months following transaction date; free cash flow, which
we define as cash flow from operations less capital expenditures;
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 the impact of a non-cash $350M pre-tax and after-tax charge associated
with the reduction in carrying value to present value of
reimbursement receivables due from Garrett in relation to Garrett's
September 20, 2020 Chapter 11
bankruptcy filing, if and as noted in the release; and adjusted
earnings per share, which we adjust to exclude pension
mark-to-market, adjustments to the charges taken in connection with
the 4Q17 U.S. tax legislation charge, the favorable resolution of a
foreign tax matter related to the spin-off transactions, and the
impact of a non-cash $350M pre-tax
and after-tax charge associated with the reduction in carrying
value to present value of reimbursement receivables due from
Garrett in relation to Garrett's September
20, 2020 Chapter 11 bankruptcy filing, if and as noted in
the release. Management believes that, when considered together
with reported amounts, these measures are useful to investors and
management in understanding our ongoing operations and in the
analysis of ongoing operating trends. These metrics should be
considered in addition to, and not as replacements for, the most
comparable GAAP measure. Refer to the Appendix attached to this
release for reconciliations of non-GAAP financial measures to the
most directly comparable GAAP measures.
Honeywell
International Inc.
Consolidated
Statement of Operations (Unaudited)
(Dollars in millions,
except per share amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Product
sales
|
$
|
5,885
|
|
|
$
|
6,793
|
|
|
$
|
17,933
|
|
|
$
|
20,496
|
|
Service
sales
|
1,912
|
|
|
2,293
|
|
|
5,804
|
|
|
6,717
|
|
Net sales
|
7,797
|
|
|
9,086
|
|
|
23,737
|
|
|
27,213
|
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products sold
(1)
|
4,315
|
|
|
4,775
|
|
|
12,852
|
|
|
14,244
|
|
Cost of services sold
(1)
|
1,068
|
|
|
1,263
|
|
|
3,341
|
|
|
3,767
|
|
|
5,383
|
|
|
6,038
|
|
|
16,193
|
|
|
18,011
|
|
Selling, general and
administrative expenses (1)
|
1,103
|
|
|
1,296
|
|
|
3,524
|
|
|
4,046
|
|
Other (income)
expense
|
62
|
|
|
(311)
|
|
|
(546)
|
|
|
(901)
|
|
Interest and other
financial charges
|
101
|
|
|
96
|
|
|
264
|
|
|
266
|
|
|
6,649
|
|
|
7,119
|
|
|
19,435
|
|
|
21,422
|
|
Income before
taxes
|
1,148
|
|
|
1,967
|
|
|
4,302
|
|
|
5,791
|
|
Tax expense
(benefit)
|
367
|
|
|
319
|
|
|
816
|
|
|
1,151
|
|
Net income
|
781
|
|
|
1,648
|
|
|
3,486
|
|
|
4,640
|
|
Less: Net income
attributable to the noncontrolling interest
|
23
|
|
|
24
|
|
|
66
|
|
|
59
|
|
Net income
attributable to Honeywell
|
$
|
758
|
|
|
$
|
1,624
|
|
|
$
|
3,420
|
|
|
$
|
4,581
|
|
Earnings per share of
common stock - basic
|
$
|
1.08
|
|
|
$
|
2.26
|
|
|
$
|
4.85
|
|
|
$
|
6.33
|
|
Earnings per share of
common stock - assuming dilution
|
$
|
1.07
|
|
|
$
|
2.23
|
|
|
$
|
4.81
|
|
|
$
|
6.25
|
|
Weighted average
number of shares outstanding - basic
|
702.6
|
|
|
717.6
|
|
|
704.8
|
|
|
723.5
|
|
Weighted average
number of shares outstanding - assuming dilution
|
709.6
|
|
|
726.7
|
|
|
711.6
|
|
|
732.8
|
|
|
|
(1)
|
Cost of products and
services sold and selling, general and administrative expenses
include amounts for repositioning and other charges, the service
cost component of pension and other postretirement (income)
expense, and stock compensation expense.
|
Honeywell
International Inc.
Segment Data
(Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
Net Sales
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Aerospace
|
$
|
2,662
|
|
|
$
|
3,544
|
|
|
$
|
8,566
|
|
|
$
|
10,393
|
|
Honeywell Building
Technologies
|
1,305
|
|
|
1,415
|
|
|
3,763
|
|
|
4,254
|
|
Performance Materials
and Technologies
|
2,252
|
|
|
2,670
|
|
|
6,867
|
|
|
7,977
|
|
Safety and
Productivity Solutions
|
1,578
|
|
|
1,457
|
|
|
4,541
|
|
|
4,589
|
|
Total
|
$
|
7,797
|
|
|
$
|
9,086
|
|
|
$
|
23,737
|
|
|
$
|
27,213
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
Segment
Profit
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Aerospace
|
$
|
617
|
|
|
$
|
908
|
|
|
$
|
2,082
|
|
|
$
|
2,653
|
|
Honeywell Building
Technologies
|
282
|
|
|
297
|
|
|
794
|
|
|
868
|
|
Performance Materials
and Technologies
|
442
|
|
|
582
|
|
|
1,373
|
|
|
1,790
|
|
Safety and
Productivity Solutions
|
219
|
|
|
195
|
|
|
610
|
|
|
598
|
|
Corporate
|
(7)
|
|
|
(54)
|
|
|
(73)
|
|
|
(202)
|
|
Total segment
profit
|
1,553
|
|
|
1,928
|
|
|
4,786
|
|
|
5,707
|
|
Interest and other
financial charges
|
(101)
|
|
|
(96)
|
|
|
(264)
|
|
|
(266)
|
|
Stock compensation
expense (1)
|
(40)
|
|
|
(37)
|
|
|
(118)
|
|
|
(112)
|
|
Pension ongoing
income (2)
|
197
|
|
|
150
|
|
|
593
|
|
|
449
|
|
Other postretirement
income (2)
|
13
|
|
|
12
|
|
|
40
|
|
|
35
|
|
Repositioning and
other charges (3,4)
|
(144)
|
|
|
(96)
|
|
|
(486)
|
|
|
(306)
|
|
Other (5)
|
(330)
|
|
|
106
|
|
|
(249)
|
|
|
284
|
|
Income before
taxes
|
$
|
1,148
|
|
|
$
|
1,967
|
|
|
$
|
4,302
|
|
|
$
|
5,791
|
|
|
|
(1)
|
Amounts included in
Selling, general and administrative expenses.
|
(2)
|
Amounts included in
Cost of products and services sold and Selling, general and
administrative expenses (service costs) and Other income/expense
(non-service cost components).
|
(3)
|
Amounts included in
Cost of products and services sold, Selling, general and
administrative expenses, and Other income/expense.
|
(4)
|
Includes
repositioning, asbestos, and environmental expenses.
|
(5)
|
Amounts include the
other components of Other income/expense not included within other
categories in this reconciliation. Equity income (loss) of
affiliated companies is included in segment profit.
|
Honeywell
International Inc.
Consolidated Balance
Sheet (Unaudited)
(Dollars in
millions)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
14,036
|
|
|
$
|
9,067
|
|
Short-term
investments
|
972
|
|
|
1,349
|
|
Accounts receivable -
net
|
6,878
|
|
|
7,493
|
|
Inventories
|
4,705
|
|
|
4,421
|
|
Other current
assets
|
1,609
|
|
|
1,973
|
|
Total current
assets
|
28,200
|
|
|
24,303
|
|
Investments and
long-term receivables
|
673
|
|
|
588
|
|
Property, plant and
equipment - net
|
5,419
|
|
|
5,325
|
|
Goodwill
|
15,666
|
|
|
15,563
|
|
Other intangible
assets - net
|
3,494
|
|
|
3,734
|
|
Insurance recoveries
for asbestos related liabilities
|
374
|
|
|
392
|
|
Deferred income
taxes
|
154
|
|
|
86
|
|
Other
assets
|
9,479
|
|
|
8,688
|
|
Total
assets
|
$
|
63,459
|
|
|
$
|
58,679
|
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
5,270
|
|
|
$
|
5,730
|
|
Commercial paper and
other short-term borrowings
|
3,550
|
|
|
3,516
|
|
Current maturities of
long-term debt
|
985
|
|
|
1,376
|
|
Accrued
liabilities
|
7,379
|
|
|
7,476
|
|
Total current
liabilities
|
17,184
|
|
|
18,098
|
|
Long-term
debt
|
17,687
|
|
|
11,110
|
|
Deferred income
taxes
|
1,474
|
|
|
1,670
|
|
Postretirement
benefit obligations other than pensions
|
309
|
|
|
326
|
|
Asbestos related
liabilities
|
1,845
|
|
|
1,996
|
|
Other
liabilities
|
6,640
|
|
|
6,766
|
|
Redeemable
noncontrolling interest
|
7
|
|
|
7
|
|
Shareowners'
equity
|
18,313
|
|
|
18,706
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
|
63,459
|
|
|
$
|
58,679
|
|
Honeywell
International Inc.
Consolidated
Statement of Cash Flows (Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
781
|
|
|
$
|
1,648
|
|
|
$
|
3,486
|
|
|
$
|
4,640
|
|
Less: Net income
attributable to the noncontrolling interest
|
23
|
|
|
24
|
|
|
66
|
|
|
59
|
|
Net income
attributable to Honeywell
|
758
|
|
|
1,624
|
|
|
3,420
|
|
|
4,581
|
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
166
|
|
|
165
|
|
|
480
|
|
|
500
|
|
Amortization
|
89
|
|
|
98
|
|
|
268
|
|
|
319
|
|
Repositioning and
other charges
|
144
|
|
|
96
|
|
|
486
|
|
|
306
|
|
Net payments for
repositioning and other charges
|
(343)
|
|
|
(72)
|
|
|
(652)
|
|
|
(157)
|
|
Pension and other
postretirement income
|
(210)
|
|
|
(162)
|
|
|
(633)
|
|
|
(484)
|
|
Pension and other
postretirement benefit payments
|
(14)
|
|
|
(5)
|
|
|
(37)
|
|
|
(50)
|
|
Stock compensation
expense
|
40
|
|
|
37
|
|
|
118
|
|
|
112
|
|
Deferred income
taxes
|
(12)
|
|
|
(342)
|
|
|
(289)
|
|
|
(298)
|
|
Reimbursement
receivables charge
|
350
|
|
|
—
|
|
|
350
|
|
|
—
|
|
Other
|
(84)
|
|
|
93
|
|
|
(369)
|
|
|
98
|
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(161)
|
|
|
(176)
|
|
|
615
|
|
|
(78)
|
|
Inventories
|
47
|
|
|
(3)
|
|
|
(284)
|
|
|
(276)
|
|
Other current
assets
|
140
|
|
|
171
|
|
|
246
|
|
|
(68)
|
|
Accounts
payable
|
(96)
|
|
|
(81)
|
|
|
(460)
|
|
|
(89)
|
|
Accrued
liabilities
|
193
|
|
|
28
|
|
|
167
|
|
|
(133)
|
|
Net cash provided by
(used for) operating activities
|
1,007
|
|
|
1,471
|
|
|
3,426
|
|
|
4,283
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(249)
|
|
|
(192)
|
|
|
(615)
|
|
|
(504)
|
|
Proceeds from
disposals of property, plant and equipment
|
10
|
|
|
31
|
|
|
17
|
|
|
41
|
|
Increase in
investments
|
(700)
|
|
|
(944)
|
|
|
(2,371)
|
|
|
(3,218)
|
|
Decrease in
investments
|
1,045
|
|
|
1,155
|
|
|
2,634
|
|
|
3,318
|
|
Receipts (payments)
from settlements of derivative contracts
|
(158)
|
|
|
175
|
|
|
(75)
|
|
|
245
|
|
Other
|
—
|
|
|
(4)
|
|
|
—
|
|
|
(4)
|
|
Net cash provided by
(used for) investing activities
|
(52)
|
|
|
221
|
|
|
(410)
|
|
|
(122)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance
of commercial paper and other short-term borrowings
|
1,412
|
|
|
3,178
|
|
|
8,577
|
|
|
10,292
|
|
Payments of commercial
paper and other short-term borrowings
|
(1,418)
|
|
|
(3,178)
|
|
|
(8,512)
|
|
|
(10,293)
|
|
Proceeds from issuance
of common stock
|
66
|
|
|
47
|
|
|
163
|
|
|
425
|
|
Proceeds from issuance
of long-term debt
|
3,004
|
|
|
2,696
|
|
|
10,105
|
|
|
2,725
|
|
Payments of long-term
debt
|
(3,019)
|
|
|
(36)
|
|
|
(4,237)
|
|
|
(120)
|
|
Repurchases of common
stock
|
(164)
|
|
|
(1,000)
|
|
|
(2,149)
|
|
|
(3,650)
|
|
Cash dividends
paid
|
(636)
|
|
|
(595)
|
|
|
(1,921)
|
|
|
(1,798)
|
|
Other
|
(14)
|
|
|
(40)
|
|
|
(54)
|
|
|
(72)
|
|
Net cash provided by
(used for) financing activities
|
(769)
|
|
|
1,072
|
|
|
1,972
|
|
|
(2,491)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
72
|
|
|
(81)
|
|
|
(19)
|
|
|
(49)
|
|
Net increase
(decrease) in cash and cash equivalents
|
258
|
|
|
2,683
|
|
|
4,969
|
|
|
1,621
|
|
Cash and cash
equivalents at beginning of period
|
13,778
|
|
|
8,225
|
|
|
9,067
|
|
|
9,287
|
|
Cash and cash
equivalents at end of period
|
$
|
14,036
|
|
|
$
|
10,908
|
|
|
$
|
14,036
|
|
|
$
|
10,908
|
|
Honeywell
International Inc.
Reconciliation of
Organic Sales % Change (Unaudited)
|
|
|
Three Months
Ended
September 30, 2020
|
Honeywell
|
|
Reported sales %
change
|
(14)%
|
Less: Foreign currency
translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
(14)%
|
|
|
Aerospace
|
|
Reported sales %
change
|
(25)%
|
Less: Foreign currency
translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
(25)%
|
|
|
Honeywell Building
Technologies
|
|
Reported sales %
change
|
(8)%
|
Less: Foreign currency
translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
(8)%
|
|
|
Performance
Materials and Technologies
|
|
Reported sales %
change
|
(16)%
|
Less: Foreign currency
translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
(16)%
|
|
|
Safety and
Productivity Solutions
|
|
Reported sales %
change
|
8%
|
Less: Foreign currency
translation
|
—%
|
Less: Acquisitions,
divestitures and other, net
|
—%
|
Organic sales %
change
|
8%
|
We define organic sales percent as the year-over-year change in
reported sales relative to the comparable period, excluding the
impact on sales from foreign currency translation and acquisitions,
net of divestitures. We believe this measure is useful to investors
and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
A quantitative reconciliation of reported sales percent change
to organic sales percent change has not been provided for
forward-looking measures of organic sales percent change because
management cannot reliably predict or estimate, without
unreasonable effort, the fluctuations in global currency markets
that impact foreign currency translation, nor is it reasonable for
management to predict the timing, occurrence and impact of
acquisition and divestiture transactions, all of which could
significantly impact our reported sales percent change.
Honeywell
International Inc.
Reconciliation of
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income
Margins (Unaudited)
(Dollars in
millions)
|
|
|
Three Months Ended
September 30,
|
|
2020
|
|
2019
|
Segment
profit
|
$
|
1,553
|
|
|
$
|
1,928
|
|
Stock compensation
expense (1)
|
(40)
|
|
|
(37)
|
|
Repositioning, Other
(2,3)
|
(161)
|
|
|
(109)
|
|
Pension and other
postretirement service costs (4)
|
(41)
|
|
|
(30)
|
|
Operating
income
|
$
|
1,311
|
|
|
$
|
1,752
|
|
Segment
profit
|
$
|
1,553
|
|
|
$
|
1,928
|
|
÷ Net
sales
|
$
|
7,797
|
|
|
$
|
9,086
|
|
Segment profit margin
%
|
19.9
|
%
|
|
21.2
|
%
|
Operating
income
|
$
|
1,311
|
|
|
$
|
1,752
|
|
÷ Net
sales
|
$
|
7,797
|
|
|
$
|
9,086
|
|
Operating income
margin %
|
16.8
|
%
|
|
19.3
|
%
|
|
|
(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
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Three Months
Ended June 30,
2020
|
|
Three Months
Ended December 31, 2019
|
|
Twelve Months
Ended December 31, 2019
|
|
2020
|
|
2019
|
|
|
|
Earnings per share of
common stock - assuming dilution (1)
|
$
|
1.07
|
|
|
$
|
2.23
|
|
|
$
|
1.53
|
|
|
$
|
2.16
|
|
|
$
|
8.41
|
|
Pension
mark-to-market expense (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.13
|
|
|
0.13
|
|
Separation-related
tax adjustment (3)
|
—
|
|
|
—
|
|
|
(0.27)
|
|
|
—
|
|
|
—
|
|
Impacts from U.S. Tax
Reform
|
—
|
|
|
(0.15)
|
|
|
—
|
|
|
(0.23)
|
|
|
(0.38)
|
|
Reimbursement
receivable charge (4)
|
$
|
0.49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted earnings per
share of common stock - assuming dilution
|
$
|
1.56
|
|
|
$
|
2.08
|
|
|
$
|
1.26
|
|
|
$
|
2.06
|
|
|
$
|
8.16
|
|
|
|
(1)
|
For the three months
ended September 30, 2020 and 2019, adjusted earnings per share
utilizes weighted average shares of approximately 709.6 million and
726.7 million. For the three months ended June 30, 2020, adjusted
earnings per share utilizes weighted average shares of
approximately 708.1 million. For the three and twelve months ended
December 31, 2019 adjusted earnings per share utilizes weighted
average shares of approximately 722.6 million and 730.3.
|
(2)
|
Pension
mark-to-market expense uses a blended tax rate of 24% for
2019.
|
(3)
|
For the three months
ended June 30, 2020, separation-related tax adjustment of $186
million ($186 million net of tax) includes the favorable resolution
of a foreign tax matter related to the spin-off
transactions.
|
(4)
|
The impact due to a
non-cash $350M pre-tax and after-tax charge associated with the
reduction in carrying value to present value of reimbursement
receivables due from Garrett in relation to Garrett's September 20,
2020 Chapter 11 bankruptcy filing.
|
Honeywell
International Inc.
Reconciliation of
Cash Provided by Operating Activities to Adjusted Free Cash Flow
and Calculation of Adjusted
Free Cash Flow Conversion (Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended September 30,
2020
|
|
Three Months
Ended September 30,
2019
|
Cash provided by
operating activities
|
$
|
1,007
|
|
|
$
|
1,471
|
|
Expenditures for
property, plant and equipment
|
(249)
|
|
|
(192)
|
|
Free cash
flow
|
758
|
|
|
1,279
|
|
Separation cost
payments
|
—
|
|
|
7
|
|
Adjusted free cash
flow
|
$
|
758
|
|
|
$
|
1,286
|
|
Net income
attributable to Honeywell
|
758
|
|
|
1,624
|
|
Impacts from U.S. Tax
Reform
|
—
|
|
|
(114)
|
|
Reimbursement
receivable charge (1)
|
350
|
|
|
—
|
|
Adjusted net income
attributable to Honeywell
|
$
|
1,108
|
|
|
$
|
1,510
|
|
Cash provided by
operating activities
|
$
|
1,007
|
|
|
$
|
1,471
|
|
÷ Net income (loss)
attributable to Honeywell
|
$
|
758
|
|
|
$
|
1,624
|
|
Operating cash flow
conversion
|
133
|
%
|
|
91
|
%
|
Adjusted free cash
flow
|
$
|
758
|
|
|
$
|
1,286
|
|
÷ Adjusted net income
attributable to Honeywell
|
$
|
1,108
|
|
|
$
|
1,510
|
|
Adjusted free cash
flow conversion %
|
68
|
%
|
|
85
|
%
|
|
|
(1)
|
A non-cash $350M
pre-tax and after-tax charge associated with the reduction in
carrying value to present value of reimbursement receivables due
from Garrett in relation to Garrett's September 20, 2020 Chapter 11
bankruptcy filing.
|
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)
|
|
|
Three Months
Ended December 31, 2019
|
|
Twelve Months
Ended December 31, 2019
|
|
Three Months
Ended June 30,
2020
|
Segment
profit
|
$
|
2,032
|
|
|
$
|
7,739
|
|
|
$
|
1,385
|
|
|
|
|
|
|
|
Stock compensation
expense (1)
|
(41)
|
|
|
(153)
|
|
|
(34)
|
|
Repositioning, Other
(2,3)
|
(259)
|
|
|
(598)
|
|
|
(295)
|
|
Pension and other
postretirement service costs (4)
|
(37)
|
|
|
(137)
|
|
|
(38)
|
|
|
|
|
|
|
|
Operating
income
|
$
|
1,695
|
|
|
$
|
6,851
|
|
|
$
|
1,018
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
2,032
|
|
|
$
|
7,739
|
|
|
$
|
1,385
|
|
÷ Net
sales
|
$
|
9,496
|
|
|
$
|
36,709
|
|
|
$
|
7,477
|
|
Segment profit margin
%
|
21.4
|
%
|
|
21.1
|
%
|
|
18.5
|
%
|
|
|
|
|
|
|
Operating
income
|
$
|
1,695
|
|
|
$
|
6,851
|
|
|
$
|
1,018
|
|
÷ Net
sales
|
$
|
9,496
|
|
|
$
|
36,709
|
|
|
$
|
7,477
|
|
Operating income
margin %
|
17.8
|
%
|
|
18.7
|
%
|
|
13.6
|
%
|
|
|
(1)
|
Included in Selling,
general and administrative expenses.
|
(2)
|
Includes
repositioning, asbestos, environmental expenses and equity income
adjustment.
|
(3)
|
Included in Cost of
products and services sold, Selling, general and administrative
expenses and Other income/expense.
|
(4)
|
Included in Cost of
products and services sold and Selling, general and administrative
expenses.
|
We define segment profit as operating income, excluding stock
compensation expense, pension and other postretirement service
costs, and repositioning and other charges. We believe these
measures are useful to investors and management in understanding
our ongoing operations and in analysis of ongoing operating
trends.
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
Expected Earnings per Share to Adjusted Earnings per Share
(Unaudited)
|
|
|
|
Three Months
Ended December 31, 2020
(E)
|
|
Twelve Months
Ended December 31, 2020 (E)
|
|
|
|
Earnings per share of
common stock - assuming dilution (1)
|
|
$1.97 -
$2.02
|
|
$6.78 -
$6.83
|
Pension
mark-to-market expense
|
|
—
|
|
—
|
Separation-related
tax adjustment (2)
|
|
—
|
|
(0.27)
|
Reimbursement
receivable charge (3)
|
|
—
|
|
0.49
|
Adjusted earnings per
share of common stock - assuming dilution
|
|
$1.97 -
$2.02
|
|
$7.00 -
$7.05
|
|
|
(1)
|
For the three and
twelve months ended December 31, 2020, expected adjusted earnings
per share utilizes weighted average shares of approximately 710
million and 711 million.
|
(2)
|
For the twelve months
ended December 31, 2020, separation-related tax adjustment of $186
million ($186 million net of tax) includes the favorable resolution
of a foreign tax matter related to the spin-off
transactions.
|
(3)
|
The impact due to a
non-cash $350M pre-tax and after-tax charge associated with the
reduction in carrying value to present value of reimbursement
receivables due from Garrett in relation to Garrett's September 20,
2020 Chapter 11 bankruptcy filing.
|
We believe adjusted earnings per share, 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.
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-reports-third-quarter-eps-of-1-07--adjusted-eps-of-1-56-generates-sequential-sales-and-segment-profit-growth-in-all-segments-301163583.html
SOURCE Honeywell