- Sales of $8.9 Billion,
Reported Sales Up 6%, Organic1 Sales Up 8%
- Operating Margin up 390 Basis Points to 19.1%; Segment
Margin1 up 90 Basis Points to 22.0%
- Earnings Per Share and Adjusted Earnings Per
Share1 of $2.07, Exceeding
High End of Guidance by 11
Cents
- Backlog2 Increased to a Record $30.3 Billion, Up 6% Year over Year
- Announced $670 Million
Acquisition of Compressor Controls Corporation
- Company Raises Midpoint of Full-Year Adjusted
EPS3 Guidance by 13 Cents;
Reaffirms Full-Year Cash Flow1 Guidance
CHARLOTTE, N.C., April 27,
2023 /PRNewswire/ -- Honeywell (NASDAQ: HON) today
announced results for the first quarter that exceeded the company's
guidance across all metrics. The company also raised the midpoint
of its full-year organic1 growth, segment
margin3, and adjusted EPS3 guidance
ranges.
The company reported first-quarter year-over-year sales growth
of 6% and organic1 sales growth of 8%, with another
quarter of double-digit organic sales growth in Performance
Materials and Technologies and Aerospace. Operating margin expanded
390 basis points to 19.1% and segment margin1 expanded
by 90 basis points to 22.0%, led by continued robust expansion in
Safety and Productivity Solutions and Honeywell Building
Technologies. Honeywell first-quarter earnings per share was
$2.07, up 26% year over year, or up
8% adjusted1 year over year. Operating cash flow was
negative $0.8 billion and free cash
flow1 was negative $1.0
billion. Excluding the net impact of settlements signed in
the fourth quarter of 2022, the company generated $0.3 billion of free cash flow1 in the
first quarter, $250 million better
than the first quarter of 2022.
"Honeywell delivered an outstanding start to 2023, exceeding
expectations for all guided metrics in the first quarter," said
Darius Adamczyk, chairman and chief
executive officer of Honeywell. "Organic sales growth1
was underpinned by double-digit growth in our commercial aviation,
UOP, process solutions, building solutions, and advanced materials
businesses. Backlog2 increased to a record $30.3 billion, up 6% year over year, with
particular strength in our aerospace business that gives us
confidence in our full-year guidance. Our continued focus on
commercial excellence and productivity enabled us to remain ahead
of the inflation curve and overdeliver on our segment
margin3 and earnings per share3 guidance.
Excluding the net impact of settlements signed in the fourth
quarter of 2022, we delivered free cash flow1 of
$0.3 billion. We also continued to
leverage our strong balance sheet, deploying $1.6 billion in the quarter to share repurchases,
dividends, and capex. In addition, we announced the acquisition of
Compressor Controls Corporation, a leading provider of
turbomachinery controls and automation solutions, which combined
with our process solutions installed base and Honeywell Forge
capabilities will help customers accelerate their energy
transition."
Adamczyk continued, "As we look to the rest of 2023, we are well
positioned to continue outperforming despite an uncertain
macroeconomic environment. Our businesses are poised for sustained
growth, our backlog will support our projections, and our
technologically differentiated portfolio of solutions is allowing
us to address the world's toughest automation, digitalization, and
sustainability challenges. This setup is enabling us to raise our
full-year 2023 guidance, and I am confident that Honeywell will
continue to outperform under Vimal
Kapur's leadership. I am grateful for the opportunity I have
had to lead Honeywell, and I know our future is bright."
As a result of the company's first-quarter performance and
management's outlook for the remainder of the year, Honeywell
raised the midpoint of its full-year sales, segment
margin3, and adjusted earnings per share3
guidance. Full-year sales are now expected to be $36.5 billion to $37.3
billion with organic1 sales growth in the range
of 3% to 6%. Segment margin3 is now expected to be in
the range of 22.3% to 22.6%, with segment margin
expansion3 of 60 to 90 basis points. Adjusted earnings
per share3,4 is now expected to be in the range of
$9.00 to $9.25, up 20 cents
on the low end and 5 cents on the
high end from the prior guidance range. Operating cash flow is
still expected to be in the range of $4.9
billion to $5.3 billion. Free
cash flow1 is still expected to be in the range of
$3.9 billion to $4.3 billion, or $5.1
billion to $5.5 billion
excluding the net impact of settlements signed in the fourth
quarter of 2022. A summary of the company's full-year guidance
changes can be found in Table 1.
First-Quarter Performance
Honeywell sales
for the first quarter were up 6% year over year on a reported basis
and 8% year over year on an organic1 basis. The
first-quarter financial results can be found in Tables 2 and 3.
Aerospace sales for the first quarter were up 14%
year over year on an organic1 basis led by commercial
aviation. Commercial aviation aftermarket sales grew over 20%,
supported by continued flight hour recovery in air transport.
Commercial original equipment also had double-digit sales growth in
the quarter, including over 30% growth in business and general
aviation original equipment. Defense and space sales returned to
growth in the first quarter and maintained a book-to-bill greater
than one. Segment margin contracted 80 basis points to 26.6%,
driven by higher sales of lower margin products partially offset by
commercial excellence.
Honeywell Building Technologies sales for the first
quarter were up 9% on an organic1 basis year over year.
Building solutions grew 13% organically driven by the fourth
consecutive quarter of double-digit project sales growth. Strong
demand for our fire offerings resulted in 7% organic sales growth
in building products. Segment margin expanded 170 basis points to
25.2% due to commercial excellence partially offset by cost
inflation.
Performance Materials and Technologies sales for the
first quarter were up 15% on an organic1 basis year over
year. Sales growth was led by UOP, which grew 19% organically due
to strength in refining catalyst shipments and gas processing. In
HPS, strength in projects and smart energy led to 16% organic
growth in the quarter. Demand remained robust in fluorine products,
which led to 12% growth in advanced materials. Segment margin
contracted 20 basis points to 20.6% as a result of cost inflation
and higher sales of lower margin products, partially offset by
commercial excellence and volume leverage.
Safety and Productivity Solutions sales for the
first quarter decreased 11% on an organic1 basis year
over year. Sales declines were led by lower volumes in warehouse
and workflow solutions and productivity solutions and services,
partially offset by the sensing portion of sensing and safety
technologies. Segment margin remained a positive contributor to
Honeywell, expanding 270 basis points year over year to 17.2%,
driven by productivity actions and commercial excellence, partially
offset by lower volume leverage and cost inflation.
Conference Call Details
Honeywell will discuss its
first-quarter results and updated full-year 2023 guidance during an
investor conference call starting at 8:30
a.m. Eastern Daylight Time today. A 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). A replay of the webcast will
be available for 30 days following the presentation.
TABLE 1: FULL-YEAR 2023 GUIDANCE3
|
|
Previous
Guidance
|
|
Current
Guidance
|
Sales
|
|
$36.0B -
$37.0B
|
|
$36.5B -
$37.3B
|
Organic
Growth
|
|
2% -
5%
|
|
3% -
6%
|
Segment
Margin
|
|
22.2% -
22.6%
|
|
22.3% -
22.6%
|
Expansion
|
|
Up 50 - 90
bps
|
|
Up 60 - 90
bps
|
Adjusted Earnings Per
Share4
|
|
$8.80 -
$9.20
|
|
$9.00 -
$9.25
|
Adjusted Earnings
Growth4
|
|
0% -
5%
|
|
3% -
6%
|
Adjusted Earnings Per
Share Excluding Pension Headwind
|
|
$9.35 -
$9.75
|
|
$9.55 -
$9.80
|
Adjusted Earnings
Growth Excluding Pension Headwind
|
|
7% -
11%
|
|
9% -
12%
|
Operating Cash
Flow
|
|
$4.9B -
$5.3B
|
|
$4.9B -
$5.3B
|
Free Cash
Flow
|
|
$3.9B -
$4.3B
|
|
$3.9B -
$4.3B
|
Free Cash Flow
Excluding Impact of Settlements
|
|
$5.1B -
$5.5B
|
|
$5.1B -
$5.5B
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
1Q
2023
|
|
1Q
2022
|
|
Change
|
Sales
|
|
8,864
|
|
8,376
|
|
6 %
|
Organic
Growth1
|
|
|
|
|
|
8 %
|
Operating Income
Margin
|
|
19.1 %
|
|
15.2 %
|
|
390 bps
|
Segment
Margin1
|
|
22.0 %
|
|
21.1 %
|
|
90 bps
|
Earnings Per
Share
|
|
$2.07
|
|
$1.64
|
|
26 %
|
Adjusted Earnings Per
Share1
|
|
$2.07
|
|
$1.91
|
|
8 %
|
Cash Flow from
Operations
|
|
(784)
|
|
36
|
|
(2,278 %)
|
Free Cash
Flow1
|
|
(977)
|
|
50
|
|
(2,054 %)
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
|
|
1Q
2023
|
|
1Q
2022
|
|
Change
|
Sales
|
|
3,111
|
|
2,749
|
|
13 %
|
Organic
Growth1
|
|
|
|
|
|
14 %
|
Segment
Profit
|
|
827
|
|
753
|
|
10 %
|
Segment
Margin
|
|
26.6 %
|
|
27.4 %
|
|
-80 bps
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
1,487
|
|
1,429
|
|
4 %
|
Organic
Growth1
|
|
|
|
|
|
9 %
|
Segment
Profit
|
|
375
|
|
336
|
|
12 %
|
Segment
Margin
|
|
25.2 %
|
|
23.5 %
|
|
170 bps
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
2,749
|
|
2,453
|
|
12 %
|
Organic
Growth1
|
|
|
|
|
|
15 %
|
Segment
Profit
|
|
566
|
|
510
|
|
11 %
|
Segment
Margin
|
|
20.6 %
|
|
20.8 %
|
|
-20 bps
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
|
|
|
|
|
Sales
|
|
1,515
|
|
1,744
|
|
(13 %)
|
Organic
Growth1
|
|
|
|
|
|
(11 %)
|
Segment
Profit
|
|
260
|
|
253
|
|
3 %
|
Segment
Margin
|
|
17.2 %
|
|
14.5 %
|
|
270 bps
|
|
|
|
|
|
|
|
1 See
additional information at the end of this release regarding
non-GAAP financial measures.
|
2 Effective
March 31, 2022, performance obligations exclude contracts with
customers related to Russia as collectability is not reasonably
assured.
|
3 Segment
margin and adjusted EPS are non-GAAP financial measures. Management
cannot reliably predict or estimate, without unreasonable effort,
the impact and timing on future operating results arising from
items excluded from segment margin or adjusted EPS. We therefore,
do not present a guidance range, or a reconciliation to, the
nearest GAAP financial measures of operating margin or
EPS.
|
4 Adjusted EPS and adjusted EPS V%
guidance excludes items identified in the non-GAAP reconciliation
of adjusted EPS at the end of this release, and any potential
future one-time items that we cannot reliably predict or estimate
such as pension mark-to-market.
|
Honeywell (www.honeywell.com) 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.
Honeywell uses our Investor Relations website,
www.honeywell.com/investor, as a means of disclosing information
which may be of interest or material to our investors and for
complying with disclosure obligations under Regulation FD.
Accordingly, investors should monitor our Investor Relations
website, in addition to following our press releases, SEC filings,
public conference calls, webcasts, and social media.
We describe many of the trends and other factors that drive our
business and future results in this release. Such discussions
contain forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act). Forward-looking statements are those that address
activities, events, or developments that management intends,
expects, projects, believes or anticipates will or may occur in the
future. They are based on management's assumptions and assessments
in light of past experience and trends, current economic and
industry conditions, expected future developments and other
relevant factors. They are not guarantees of future performance,
and actual results, developments and business decisions may differ
significantly from those envisaged by our forward-looking
statements. We do not undertake to update or revise any of our
forward-looking statements, except as required by applicable
securities law. Our forward-looking statements are also subject to
material risks and uncertainties that can affect our performance in
both the near- and long-term. In addition, no assurance can be
given that any plan, initiative, projection, goal, commitment,
expectation, or prospect set forth in this release can or will be
achieved. These forward-looking statements should be considered in
light of the information included in this release, our Form 10-K
and other filings with the Securities and Exchange Commission. Any
forward-looking plans described herein are not final and may be
modified or abandoned at any time.
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;
- Segment margin, on an overall Honeywell basis;
- Organic sales growth;
- Free cash flow;
- Free cash flow excluding impact of settlements;
- Adjusted earnings per share; and
- Adjusted earnings per share excluding pension headwind.
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 measures should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
Certain measures presented on a non-GAAP basis represent the impact
of adjusting items net of tax. The tax-effect for adjusting items
is determined individually and on a case-by-case basis. 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
March
31,
|
|
2023
|
|
2022
|
Product
sales
|
$
6,310
|
|
$
6,132
|
Service
sales
|
2,554
|
|
2,244
|
Net
sales
|
8,864
|
|
8,376
|
Costs, expenses and
other
|
|
|
|
Cost of products
sold(1)
|
4,068
|
|
4,059
|
Cost of services
sold(1)
|
1,430
|
|
1,265
|
Total Cost of
products and services sold
|
5,498
|
|
5,324
|
Research and
development expenses
|
357
|
|
350
|
Selling, general and
administrative expenses(1)
|
1,317
|
|
1,431
|
Other (income)
expense
|
(260)
|
|
(319)
|
Interest and other
financial charges
|
170
|
|
85
|
Total costs,
expenses and other
|
7,082
|
|
6,871
|
Income before
taxes
|
1,782
|
|
1,505
|
Tax expense
|
374
|
|
371
|
Net
income
|
1,408
|
|
1,134
|
Less: Net income (loss)
attributable to the noncontrolling interest
|
14
|
|
—
|
Net income
attributable to Honeywell
|
$
1,394
|
|
$
1,134
|
Earnings per share
of common stock - basic
|
$
2.09
|
|
$
1.66
|
Earnings per share
of common stock - assuming dilution
|
$
2.07
|
|
$
1.64
|
Weighted average
number of shares outstanding - basic
|
667.8
|
|
684.7
|
Weighted average
number of shares outstanding - assuming dilution
|
673.0
|
|
691.3
|
|
|
|
|
|
(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
March
31,
|
Net
Sales
|
2023
|
|
2022
|
Aerospace
|
$
3,111
|
|
$
2,749
|
Honeywell Building
Technologies
|
1,487
|
|
1,429
|
Performance Materials
and Technologies
|
2,749
|
|
2,453
|
Safety and Productivity
Solutions
|
1,515
|
|
1,744
|
Corporate and All
Other
|
2
|
|
1
|
Total
|
$
8,864
|
|
$
8,376
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
|
Three Months Ended
March
31,
|
Segment
Profit
|
2023
|
|
2022
|
Aerospace
|
$
827
|
|
$
753
|
Honeywell Building
Technologies
|
375
|
|
336
|
Performance Materials
and Technologies
|
566
|
|
510
|
Safety and Productivity
Solutions
|
260
|
|
253
|
Corporate and All
Other
|
(81)
|
|
(86)
|
Total segment
profit
|
1,947
|
|
1,766
|
Interest and other
financial charges
|
(170)
|
|
(85)
|
Stock compensation
expense (1)
|
(59)
|
|
(60)
|
Pension ongoing income
(2)
|
130
|
|
251
|
Other postretirement
income (2)
|
6
|
|
10
|
Repositioning and other
charges (3,4)
|
(141)
|
|
(387)
|
Other
(5)
|
69
|
|
10
|
Income before
taxes
|
$
1,782
|
|
$
1,505
|
|
|
|
|
|
(1)
|
|
Amounts included in
Selling, general and administrative expenses.
|
|
(2)
|
|
Amounts included in
Cost of products and services sold, 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 of
affiliated companies is included in segment profit.
|
Honeywell International
Inc.
Consolidated Balance
Sheet (Unaudited)
(Dollars in
millions)
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
6,869
|
|
$
9,627
|
Short-term
investments
|
371
|
|
483
|
Accounts receivable,
less allowances of $336 and $326, respectively
|
7,862
|
|
7,440
|
Inventories
|
5,776
|
|
5,538
|
Other current
assets
|
1,632
|
|
1,894
|
Total current
assets
|
22,510
|
|
24,982
|
Investments and
long-term receivables
|
905
|
|
945
|
Property, plant and
equipment—net
|
5,472
|
|
5,471
|
Goodwill
|
17,587
|
|
17,497
|
Other intangible
assets—net
|
3,168
|
|
3,222
|
Insurance recoveries
for asbestos-related liabilities
|
239
|
|
224
|
Deferred income
taxes
|
383
|
|
421
|
Other assets
|
9,619
|
|
9,513
|
Total
assets
|
$
59,883
|
|
$
62,275
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
6,443
|
|
$
6,329
|
Commercial paper and
other short-term borrowings
|
3,555
|
|
2,717
|
Current maturities of
long-term debt
|
937
|
|
1,730
|
Accrued
liabilities
|
6,961
|
|
9,162
|
Total current
liabilities
|
17,896
|
|
19,938
|
Long-term
debt
|
14,670
|
|
15,123
|
Deferred income
taxes
|
2,303
|
|
2,093
|
Postretirement benefit
obligations other than pensions
|
137
|
|
146
|
Asbestos-related
liabilities
|
1,154
|
|
1,180
|
Other
liabilities
|
6,201
|
|
6,469
|
Redeemable
noncontrolling interest
|
7
|
|
7
|
Shareowners'
equity
|
17,515
|
|
17,319
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
59,883
|
|
$
62,275
|
Honeywell International
Inc.
Consolidated Statement
of Cash Flows (Unaudited)
(Dollars in
millions)
|
|
|
|
Three Months
Ended
March 31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
1,408
|
|
$
1,134
|
Less: Net income
attributable to noncontrolling interest
|
14
|
|
—
|
Net income
attributable to Honeywell
|
1,394
|
|
1,134
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by (used for) operating activities
|
|
|
|
Depreciation
|
161
|
|
167
|
Amortization
|
122
|
|
163
|
Repositioning and
other charges
|
141
|
|
387
|
Net payments for
repositioning and other charges
|
(41)
|
|
(108)
|
NARCO Buyout
payment
|
(1,325)
|
|
—
|
Pension and other
postretirement income
|
(136)
|
|
(261)
|
Pension and other
postretirement benefit receipts (payments)
|
(15)
|
|
(14)
|
Stock compensation
expense
|
59
|
|
60
|
Deferred income
taxes
|
225
|
|
21
|
Other
|
(350)
|
|
(67)
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures
|
|
|
|
Accounts
receivable
|
(422)
|
|
(285)
|
Inventories
|
(238)
|
|
(331)
|
Other current
assets
|
110
|
|
(29)
|
Accounts
payable
|
114
|
|
(199)
|
Accrued
liabilities
|
(583)
|
|
(602)
|
Net cash provided
by (used for) operating activities
|
(784)
|
|
36
|
Cash flows from
investing activities
|
|
|
|
Capital
expenditures
|
(193)
|
|
(183)
|
Proceeds from disposals
of property, plant and equipment
|
11
|
|
10
|
Increase in
investments
|
(226)
|
|
(223)
|
Decrease in
investments
|
386
|
|
304
|
Receipts from Garrett
Motion Inc.
|
—
|
|
197
|
Receipts (payments)
from settlements of derivative contracts
|
(7)
|
|
61
|
Cash paid for
acquisitions, net of cash acquired
|
—
|
|
(176)
|
Net cash used for
investing activities
|
(29)
|
|
(10)
|
Cash flows from
financing activities
|
|
|
|
Proceeds from issuance
of commercial paper and other short-term borrowings
|
4,105
|
|
1,228
|
Payments of commercial
paper and other short-term borrowings
|
(3,294)
|
|
(1,228)
|
Proceeds from issuance
of common stock
|
37
|
|
23
|
Proceeds from issuance
of long-term debt
|
—
|
|
1
|
Payments of long-term
debt
|
(1,363)
|
|
(40)
|
Repurchases of common
stock
|
(699)
|
|
(1,018)
|
Cash dividends
paid
|
(725)
|
|
(668)
|
Other
|
(34)
|
|
(17)
|
Net cash used for
financing activities
|
(1,973)
|
|
(1,719)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
28
|
|
15
|
Net decrease in cash
and cash equivalents
|
(2,758)
|
|
(1,678)
|
Cash and cash
equivalents at beginning of period
|
9,627
|
|
10,959
|
Cash and cash
equivalents at end of period
|
$
6,869
|
|
$
9,281
|
Appendix
Non-GAAP Financial Measures
The following information provides definitions and
reconciliations of certain non-GAAP financial measures presented in
this press release to which this reconciliation is attached to the
most directly comparable financial measures calculated and
presented in accordance with generally accepted accounting
principles (GAAP).
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 measures should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
Certain measures presented on a non-GAAP basis represent the impact
of adjusting items net of tax. The tax-effect for adjusting items
is determined individually and on a case-by-case basis. Included
below are reconciliations of non-GAAP financial measures to the
most directly comparable GAAP measures. Other companies may
calculate these non-GAAP measures differently, limiting the
usefulness of these measures for comparative purposes.
Management does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitations of these non-GAAP
financial measures are that they exclude significant expenses and
income that are required by GAAP to be recognized in the
consolidated financial statements. In addition, they are subject to
inherent limitations as they reflect the exercise of judgments by
management about which expenses and income are excluded or included
in determining these non-GAAP financial measures. Investors are
urged to review the reconciliation of the non-GAAP financial
measures to the comparable GAAP financial measures and not to rely
on any single financial measure to evaluate Honeywell's
business.
Honeywell International
Inc.
Reconciliation of
Organic Sales % Change (Unaudited)
|
|
|
|
Three Months
Ended
March 31, 2023
|
Honeywell
|
|
Reported sales %
change
|
6 %
|
Less: Foreign currency
translation
|
(2) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
8 %
|
|
|
Aerospace
|
|
Reported sales %
change
|
13 %
|
Less: Foreign currency
translation
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
14 %
|
|
|
Honeywell Building
Technologies
|
|
Reported sales %
change
|
4 %
|
Less: Foreign currency
translation
|
(5) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
9 %
|
|
|
Performance
Materials and Technologies
|
|
Reported sales %
change
|
12 %
|
Less: Foreign currency
translation
|
(3) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
15 %
|
|
|
Safety and
Productivity Solutions
|
|
Reported sales %
change
|
(13) %
|
Less: Foreign currency
translation
|
(2) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
(11) %
|
We define organic sales percentage 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, for the first 12 months following the
transaction date. 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
Operating Income to Segment Profit, Calculation of Operating Income
and Segment Profit Margins
(Unaudited)
(Dollars in
millions)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Twelve Months
Ended
December
31,
|
|
2023
|
|
2022
|
|
2022
|
Operating
income
|
$
1,692
|
|
$
1,271
|
|
$
6,427
|
Stock compensation
expense (1)
|
59
|
|
60
|
|
188
|
Repositioning, Other
(2,3)
|
180
|
|
401
|
|
942
|
Pension and other
postretirement service costs (3)
|
16
|
|
34
|
|
132
|
Segment
profit
|
$
1,947
|
|
$
1,766
|
|
$
7,689
|
|
|
|
|
|
|
Operating
income
|
$
1,692
|
|
$
1,271
|
|
$
6,427
|
÷ Net sales
|
$
8,864
|
|
$
8,376
|
|
$
35,466
|
Operating income
margin %
|
19.1 %
|
|
15.2 %
|
|
18.1 %
|
Segment
profit
|
$
1,947
|
|
$
1,766
|
|
$
7,689
|
÷ Net sales
|
$
8,864
|
|
$
8,376
|
|
$
35,466
|
Segment profit
margin %
|
22.0 %
|
|
21.1 %
|
|
21.7 %
|
|
|
|
(1)
|
|
Included in Selling,
general and administrative expenses.
|
(2)
|
|
Includes repositioning,
asbestos, environmental expenses, equity income adjustment, and
other charges. For the three
months ended March 31, 2023, other charges include $2 million of
expenses due to the Russia-Ukraine conflict. For the
three months ended March 31, 2022, other charges include $183
million of reserves against outstanding accounts
receivables, contract assets, and impairments of other assets due
to the Russia-Ukraine conflict. For the twelve months
ended December 31, 2022, other charges include an expense of $250
million related to reserves against outstanding
accounts receivables, contract assets, and inventory, as well as
the write-down of other assets and employee severance
related to the initial suspension and wind down of our businesses
and operations in Russia. For the three months ended
March 31, 2022, and twelve months ended December 31, 2022, other
charges include $9 million and $41 million,
respectively, of incremental long-term contract labor cost
inefficiencies due to severe supply chain disruptions
(attributable
to the COVID-19 pandemic) relating to the warehouse automation
business within the Safety and Productivity Solutions
segment. These costs include incurred amounts and provisions for
anticipated losses recognized when total estimated costs
at completion for certain of the business' long-term contracts
exceeded total estimated revenue. These certain costs
represent unproductive labor costs due to unexpected supplier
delays and the resulting downstream installation issues,
demobilization and remobilization of contract workers, and
resolution of contractor disputes.
|
(3)
|
|
Included in Cost of
products and services sold and Selling, general and administrative
expenses.
|
We define segment profit, on an overall Honeywell basis, as
operating income, excluding stock compensation expense, pension and
other postretirement service costs, and repositioning and other
charges. We define segment profit margin, on an overall Honeywell
basis, as segment profit divided by net sales. 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 operating income to segment
profit, on an overall Honeywell basis, has not been provided for
all forward-looking measures of segment profit and segment margin
included herein. 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 operating income to segment profit 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 Pension
Headwind (Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Twelve Months Ended
December
31,
|
|
2023
|
|
2022
|
|
2022
|
|
2023(E)
|
Earnings per share
of common stock - diluted (1)
|
$
2.07
|
|
$
1.64
|
|
$
7.27
|
|
$9.00 -
$9.25
|
Pension mark-to-market
expense (2)
|
—
|
|
—
|
|
0.64
|
|
No Forecast
|
Expense related to UOP
Matters (3)
|
—
|
|
—
|
|
0.07
|
|
—
|
Russian-related charges
(4)
|
—
|
|
0.27
|
|
0.43
|
|
—
|
Gain on sale of Russian
entities (5)
|
—
|
|
—
|
|
(0.03)
|
|
—
|
Net expense related to
the NARCO Buyout and HWI Sale (6)
|
—
|
|
—
|
|
0.38
|
|
—
|
Adjusted earnings
per share of common stock - diluted
|
$
2.07
|
|
$
1.91
|
|
$
8.76
|
|
$9.00 -
$9.25
|
Pension headwind
(7)
|
$
0.15
|
|
—
|
|
—
|
|
~$0.55
|
Adjusted earnings
per share of common stock excluding
Pension headwind - diluted
|
$
2.22
|
|
$
1.91
|
|
$
8.76
|
|
$9.55 -
$9.80
|
|
|
|
(1)
|
|
For the three months
ended March 31, 2023, and 2022, adjusted earnings per share
utilizes weighted average shares of approximately 673.0 million and
691.3 million, respectively. For the twelve months ended December
31, 2022, adjusted earnings per share utilizes weighted average
shares of approximately 683.1 million. For the twelve months ended
December 31, 2023, expected earnings per share utilizes weighted
average shares of approximately 670 million.
|
(2)
|
|
Pension mark-to-market
expense uses a blended tax rate of 16%, net of tax expense of $83
million for 2022.
|
(3)
|
|
For the twelve months
ended December 31, 2022, the adjustment was an expense of $45
million, without tax benefit, due to an expense related to UOP
matters.
|
(4)
|
|
For the three months
ended March 31, 2023, the adjustment was a $2 million benefit,
without tax expense. For the three months ended March 31, 2022, the
adjustment was a $183 million charge, without tax benefit, to
reserve against outstanding accounts receivable, contract assets,
and impairments of other assets due to the Russia-Ukraine conflict.
For the twelve months ended December 31, 2022, the adjustment was
$297 million, including a tax valuation allowance benefit of $2
million, to exclude charges and the accrual of reserves related to
outstanding accounts receivable, contract assets, impairment of
intangible assets, foreign exchange revaluation, inventory
reserves, the write-down of other assets, impairment of property,
plant and equipment, employee severance, and called guarantees
related to the initial suspension and wind down of our businesses
and operations in Russia.
|
(5)
|
|
For the twelve months
ended December 31, 2022, the adjustment was $22 million, without
tax benefit, due to the gain on sale of Russian
entities.
|
(6)
|
|
For the twelve months
ended December 31, 2022, the adjustment was $260 million, net of
tax expense of $82 million, due to the net expense related to the
NARCO Buyout and HWI Sale.
|
(7)
|
|
For the three months
ended March 31, 2023, the adjustment is the decline of $99 million
of pension ongoing income compared to the three months ended March
31, 2022, and three months ended March 31, 2023, net of tax expense
of $26 million. For the twelve
months ended December 31, 2023, the adjustment is the forecasted
decline of approximately $370 million of pension ongoing income
between 2022 and 2023, net of estimated tax expense of
approximately $100 million.
|
We define adjusted earnings per share as diluted earnings per
share adjusted to exclude various charges as listed above. We
define adjusted earnings per share excluding pension headwind as
adjusted earnings per share adjusted for an actual or forecasted
decline of pension ongoing income between the comparative periods
in 2022 and 2023. We believe adjusted earnings per share and
adjusted earnings per share excluding pension headwind are measures
that are 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 Free Cash Flow
(Unaudited)
(Dollars in
millions)
|
|
|
|
|
|
Three Months
Ended
March 31,
2023
|
|
Three Months
Ended
March 31,
2022
|
Cash provided by
operating activities
|
$
(784)
|
|
$
36
|
Expenditures for
property, plant and equipment
|
(193)
|
|
(183)
|
Garrett cash
receipts
|
—
|
|
197
|
Free cash
flow
|
(977)
|
|
50
|
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus cash receipts from Garrett.
We believe that free cash flow is a non-GAAP measure that is
useful to investors and management as a measure of cash generated
by 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
measure can also be used to evaluate our ability to generate cash
flow from operations and the impact that this cash flow has on our
liquidity.
Honeywell International
Inc.
Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow and Free Cash
Flow to Free Cash Flow Excluding
Impact of Settlements (Unaudited)
(Dollars in
millions)
|
|
|
|
Three Months
Ended
March 31,
2023
|
Cash provided by
operating activities
|
$
(784)
|
Expenditures for
property, plant and equipment
|
(193)
|
Garrett cash
receipts
|
—
|
Free cash
flow
|
(977)
|
Impact of
settlements
|
1,272
|
Free cash flow
excluding impact of settlements
|
$
295
|
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus cash receipts from Garrett. We define free cash flow excluding
impact of settlements as free cash flow less settlements related to
the NARCO Buyout, HWI Sale, and UOP Matters.
We believe that free cash flow and free cash flow excluding
impact of settlements are non-GAAP measures that are useful to
investors and management as a measure of cash generated by
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. These
measures can also be used to evaluate our ability to generate cash
flow from operations and the impact that this cash flow has on our
liquidity.
Honeywell International
Inc.
Reconciliation of
Expected Cash Provided by Operating Activities to Expected Free
Cash Flow and Expected Free Cash Flow to
Expected Free Cash Flow Excluding Impact of Settlements
(Unaudited)
|
|
|
|
Twelve Months
Ended
December 31,
2023(E) ($B)
|
Cash provided by
operating activities
|
~$4.9 -
$5.3
|
Expenditures for
property, plant and equipment
|
~(1.0)
|
Garrett cash
receipts
|
—
|
Free cash
flow
|
~$3.9 -
$4.3
|
Impact of
settlements
|
~1.2
|
Free cash flow
excluding impact of settlements
|
~$5.1 -
$5.5
|
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus anticipated cash receipts from Garrett. We define free cash
flow excluding impact of settlements as free cash flow less
settlements related to the NARCO Buyout, HWI Sale, and UOP
Matters.
We believe that free cash flow and free cash flow excluding
impact of settlements are non-GAAP measures that are useful to
investors and management as a measure of cash generated by
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. These
measures can also be used to evaluate our ability to generate cash
flow from operations and the impact that this cash flow has on our
liquidity.
Contacts:
|
|
|
|
Media
|
Investor
Relations
|
Mike Hockey
|
Sean Meakim
|
(832)
285-4933
|
(704)
627-6200
|
mike.hockey@honeywell.com
|
sean.meakim@honeywell.com
|
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