TIDMHON
Honeywell's Third Quarter Sales Up 14% to $9.3 Billion and
Earnings Up 45% to $1.10 Per Share
MORRIS TOWNSHIP, N.J., Oct. 21, 2011 -- Honeywell (NYSE: HON) today
announced:
- 3Q11 sales were up 14% to $9.3 billion versus $8.1 billion
in 3Q10
- 8% organic growth reflects continued strength in end markets
- 3Q11 earnings of $1.10 per share, an increase of 45% over
$0.76 in 3Q10
- Segment profit growth and margin expansion in all segments
- Includes $0.04 benefit from lower tax rate; tax rate
favorability expected to be offset in 4Q11
- Includes $0.33 repositioning and other actions funded by the
gain on sale of the divested Consumer Products Group (CPG) business
($0.23, discontinued operations) and OPEB curtailment ($0.10) in the
quarter, which will better position the company for 2012 and beyond
- 3Q11 cash flow from operations of $0.7 billion, includes
$400 million cash pension contribution
- 3Q11 free cash flow (cash flow from operations less capital
expenditures) of $884 million, excludes $400 million cash pension
contribution
The company is raising its 2011 sales and EPS outlook and now expects:
- 2011 sales of $36.5 - 36.7 billion, up approximately 13%
over 2010
- Excludes the divested CPG business, treated as discontinued
operations
- 2011 proforma earnings per share of $4.00 - 4.05, up 33 -
35% over 2010
- Mark-to-market pension adjustments in both periods excluded
- 2011 free cash flow guidance of approximately $3.5 billion,
prior to any cash pension contribution
"Honeywell's strong third quarter results are a continuation of the
momentum we've seen across our businesses in 2011," said Honeywell Chairman
and CEO Dave Cote. "Our third quarter sales growth reflects a particularly
robust Commercial Aerospace upcycle, with growth in both original equipment
and aftermarket sales. It also highlights the company's extensive innovation
pipeline and increasing presence in high growth regions in all our
businesses. Our long-cycle backlog continues at near record levels, with
sustained strong orders growth particularly at UOP, ACS Solutions, and
Commercial Aerospace. Further, our short-cycle businesses, such as Turbo
Technologies, Advanced Materials, and ACS Products are performing well
overall."
"Despite signals of slower economic growth, we expect positive organic
growth to continue the rest of this year and into 2012," concluded Cote.
"The repositioning actions we took in the third quarter, funded by
non-operational gains, better position our businesses for 2012 and beyond.
These repositioning tailwinds, combined with our great positions in good
industries, execution track record, and disciplined playbook, will be keys
to our continued outperformance."
Segment Highlights
Aerospace
- Sales were up 8% compared with the third quarter of 2010,
primarily due to 20% growth in Commercial original equipment and
aftermarket volumes, partially offset by lower military and government
services sales.
- Segment profit was up 16% and segment margin increased 120 bps
to 18.2%, primarily due to increased volume, favorable mix, and
productivity net of inflation, partially offset by higher research and
development costs.
- Honeywell has been chosen by Air China to provide a
comprehensive suite of avionics components for its new fleet of 30
B737NG aircraft. Air China also selected Honeywell's SmartRunway on all
of its future incoming aircraft.
- Honeywell was selected by Tibet Airlines to provide technology
for high altitude transportation routes. Honeywell will also become the
sole provider of auxiliary power units (APUs) and aftermarket service
and support for Tibet Airlines' A319 current fleet of nine aircraft with
an option for an additional nine aircraft over the life of the contract.
- Honeywell won a five-year, $450 million contract with NASA's
Goddard Space Flight Center (GSFC) to provide Ground Systems and Mission
Operations (GSMO) services for the agency's fleet of scientific research
satellites. Honeywell will work with GSFC to help extend the life of
existing research satellites and increase optimization for new
satellites that will support greater scientific space research
activities in the future.
- Honeywell received FAA certification for its SmartTraffic system
that will allow aircraft to change their altitudes during transoceanic
routes and other areas not controlled by radar, enabling airlines to
save millions of dollars in annual fuel costs. With SmartTraffic,
airlines will have the capability to significantly increase their flight
efficiency and routing, while substantially reducing their operating
costs.
Automation and Control Solutions
- Sales were up 14%, compared with the third quarter of 2010,
with 6% growth from acquisitions net of divestitures, 4% impact from
favorable foreign exchange and 4% organic growth due to higher Products
volumes and Solutions sales. ACS continues to benefit from new product
introductions, emerging region expansion, and favorable macro trends
such as safety, security, and energy efficiency.
- Segment profit was up 15% and segment margins increased 20 bps
to 13.8% driven by higher volumes and project sales, partially offset by
inflation and investment for growth across the portfolio.
- Building Solutions was awarded a $20.5 million contract at
Heathrow Airport's new Terminal 2 in London to provide an integrated
fire safety, public address, and voice alarm system that will help
ensure the more than 20 million passengers expected to pass through the
terminal have a safe and comfortable travel experience.
- Process Solutions was awarded a $2.5 million contract by
PetroChina Company Limited in Dalian, China for an integrated process
control system in a liquid natural gas (LNG) facility. The contract
expands Honeywell's position in the highly competitive LNG marketplace
in China. Honeywell will provide its Experion Process Knowledge System
(PKS), Safety Instrumented Systems, Operator Training Systems, and fire
and gas solutions to fully automate the facility, optimize the
maintenance and testing of process safety instruments, and improve
overall reliability. The facility will store six million tons of LNG and
supply 8.4 billion cubic meters annually.
- Honeywell Life Safety was selected by the Department of Fire &
Rescue in Prince William County, Virginia to provide personal protective
equipment for 600 fire fighters and more than 1,000 volunteers. The
five-year deal valued at up to $3 million includes Morning Pride coats,
pants, rubber boots, and hoods, as well as a cleaning and care contract.
Life Safety was also selected by Landis+Gyr to provide up to 4,000
Honeywell Optima Plus gas detectors, valued at a potential $4 million,
for the 2014 World Cup and the 2016 Olympics in Rio de Janeiro, Brazil.
Transportation Systems
- Sales were up 22% compared with the third quarter of 2010,
due to higher global passenger and commercial vehicle Turbo volumes
overall, new platform launches, and 9% favorable impact from foreign
exchange.
- Segment profit was up 32% and segment margins increased 90 bps
to 12.6%, primarily driven by higher volumes and increased productivity,
partially offset by inflation.
- Honeywell Turbo Technologies launched more than 20 new turbo
applications in the quarter on gasoline and diesel powertrains for both
passenger and commercial vehicle applications around the world.
Honeywell expects to launch close to 100 new vehicle applications this
year as global manufacturers turn to engine downsizing and turbocharging
to meet increasing regulatory requirements and satisfy customers.
- Honeywell highlighted innovative turbocharging technologies at
the 2011 Frankfurt Motor Show, including: a two-stage turbocharger for
Audi's 3L diesel engine, the most powerful 3L diesel in the market; the
small twinscroll turbocharger for BMW's 1.6L gasoline engine, which set
a new benchmark in driveability for small gas engines; and the high
temperature, ball bearing turbo for the Mercedes 3L diesel engine, which
enables both power and fuel economy.
Specialty Materials
- Sales were up 25% compared with the third quarter of 2010,
resulting from strong UOP project sales and catalyst growth, favorable
price over raws spreads, the phenol plant acquisition, and new product
applications in Advanced Materials.
- Segment profit was up 31% and segment margins increased 80 bps
to 17.3% due to favorable price over raws spreads, higher project sales
and catalyst growth, and productivity, partially offset by inflation and
the unfavorable margin impact from the phenol plant acquisition.
- Fluorine Products announced it has signed an agreement with
China's Sinochem Group, forming a 50/50 joint venture to produce and
sell blowing agents for energy efficient foam insulation in China. The
venture, which is subject to Chinese government approval, would produce
HFC-245fa, a non-ozone-depleting rigid foam blowing agent used in
insulation for appliances, construction, transportation, and other
applications where maximum energy efficiency is required. The venture is
expected to begin production in late 2013.
- Honeywell's UOP began construction of a biofuels demonstration
unit in Hawaii that will convert forest residuals, algae, and other
cellulosic biomass into green transportation fuels. Backed by a $25
million U.S. Department of Energy award, the Honeywell UOP Integrated
Biorefinery will upgrade biomass into high-quality renewable gasoline,
diesel, and jet fuel. These renewable fuels are drop-in replacements for
existing petroleum-based fuels and do not require changes to the
distribution network or the engines they power.
Honeywell will discuss its results during its investor conference call
today starting at 9:30 a.m. EDT. To participate, please dial (631) 291-4830
a few minutes before the 9:30 a.m. EDT start. Please mention to the operator
that you are dialing in for Honeywell's investor conference call. The live
webcast of the investor call will be available through the "Investor
Relations" section of the company's Website
(http://www.honeywell.com/investor). Investors can access a replay of the
conference call from 12:30 p.m. EDT, October 21, until midnight, October 28,
by dialing (404) 537-3406. The access code is 96818244.
Honeywell International (www.honeywell.com [http://www.honeywell.com ])
is a Fortune 100 diversified technology and manufacturing leader, serving
customers worldwide with aerospace products and services; control
technologies for buildings, homes, and industry; automotive products;
turbochargers; and specialty materials. Based in Morris Township, N.J.,
Honeywell's shares are traded on the New York, London, and Chicago Stock
Exchanges. For more news and information on Honeywell, please visit
www.honeywellnow.com [http://www.honeywellnow.com ].
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.
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
(In millions except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
2011 2010 2011 2010
Product sales $ 7,308 $ 6,329 $ 21,267 $ 18,320
Service sales 1,990 1,810 5,789 5,281
Net sales 9,298 8,139 27,056 23,601
Costs, expenses and other
Cost of products sold (A) 5,739 4,959 16,358 14,238
Cost of services sold (A) 1,294 1,211 3,763 3,566
7,033 6,170 20,121 17,804
Selling, general and
administrative expenses (A) 1,303 1,129 3,783 3,329
Other (income) expense (21) (78) (72) (89)
Interest and other financial
charges 90 96 285 294
8,405 7,317 24,117 21,338
Income from continuing
operations before taxes 893 822 2,939 2,263
Tax expense 207 245 767 650
Income from continuing
operations after taxes 686 577 2,172 1,613
Income from discontinued
operations after taxes 177 19 209 53
Net income 863 596 2,381 1,666
Less: Net income attributable
to the noncontrolling interest 1 (2) 4 13
Net income attributable to
Honeywell $ 862 $ 598 $ 2,377 $ 1,653
Amounts attributable to
Honeywell:
Income from continuing
operations less net income
attributable to the
noncontrolling interest 685 579 2,168 1,600
Income from discontinued
operations 177 19 209 53
Net income attributable to
Honeywell $ 862 $ 598 $ 2,377 $ 1,653
Earnings per share of common
stock - basic:
Income from continuing
operations 0.88 0.75 2.77 2.08
Income from discontinued
operations 0.23 0.02 0.27 0.07
Net Income $ 1.11 $ 0.77 $ 3.04 $ 2.15
Earnings per share of common
stock - assuming dilution:
Income from continuing
operations 0.87 0.74 2.73 2.06
Income from discontinued
operations 0.23 0.02 0.26 0.07
Net Income $ 1.10 $ 0.76 $ 2.99 $ 2.13
Weighted average number of
shares outstanding-basic 778.2 776.5 782.9 770.6
Weighted average number of
shares outstanding -
assuming dilution 786.9 782.8 794.0 777.3
(A) Cost of products and services sold and selling, general and
administrative expenses include amounts for repositioning and
other charges, pension and other post-retirement expense, and
stock compensation expense.
Honeywell International Inc.
Segment Data (Unaudited)
(Dollars in millions)
Three Months
Ended Nine Months Ended
September 30, September 30,
Net Sales 2011 2010 2011 2010
Aerospace $ 2,922 $ 2,704 $ 8,428 $ 7,857
Automation and Control
Solutions 3,948 3,474 11,484 9,835
Specialty Materials 1,468 1,175 4,229 3,573
Transportation Systems 960 786 2,915 2,336
Corporate - - - -
Total $ 9,298 $ 8,139 $ 27,056 $ 23,601
Reconciliation of Segment Profit to Income From Continuing
Operations Before Taxes
Three Months
Ended Nine Months Ended
September 30, September 30,
Segment Profit 2011 2010 2011 2010
Aerospace $ 532 $ 458 $ 1,450 $ 1,314
Automation and Control
Solutions 544 471 1,499 1,258
Specialty Materials 254 194 819 578
Transportation Systems 121 92 368 250
Corporate (84) (56) (208) (156)
Total Segment Profit 1,367 1,159 3,928 3,244
Other income/(expense) (A) 8 75 36 73
Interest and other financial
charges (90) (96) (285) (294)
Stock compensation expense (B) (38) (36) (129) (122)
Pension expense ongoing (B) (26) (50) (83) (146)
Other postretirement
income/(expense) (B) 82 (18) 109 (12)
Repositioning and other
charges (B) (410) (212) (637) (480)
Income from continuing
operations before taxes $ 893 $ 822 $ 2,939 $ 2,263
(A) Equity income/(loss) of affiliated companies is included in
Segment Profit
(B) Amounts included in cost of products and services sold and
selling, general and administrative expenses.
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
September December
30, 31,
2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 3,885 $ 2,650
Accounts, notes and other receivables 7,316 6,841
Inventories 4,369 3,822
Deferred income taxes 867 877
Investments and other current assets 607 455
Assets held for sale - 841
Total current assets $ 17,044 15,486
Investments and long-term receivables 465 616
Property, plant and equipment - net 4,725 4,724
Goodwill 11,645 11,275
Other intangible assets - net 2,376 2,537
Insurance recoveries for asbestos related
liabilities 748 825
Deferred income taxes 1,056 1,221
Other assets 1,386 1,150
Total assets $ 39,445 $ 37,834
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 4,570 $ 4,199
Short-term borrowings 60 67
Commercial paper 700 299
Current maturities of long-term debt 515 523
Accrued liabilities 7,014 6,446
Liabilities related to assets held for sale - 190
Total current liabilities 12,859 11,724
Long-term debt 6,880 5,755
Deferred income taxes 505 636
Postretirement benefit obligations other
than pensions 1,386 1,477
Asbestos related liabilities 1,574 1,557
Other liabilities 4,474 5,898
Shareowners' equity 11,767 10,787
Total liabilities and
shareowners' equity $ 39,445 $ 37,834
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Cash flows from operating
activities:
Net income attributable to
Honeywell $ 862 $ 598 $ 2,377 $ 1,653
Adjustments to reconcile net
income attributable to
Honeywell to net
cash provided by operating
activities:
Depreciation and amortization 226 242 704 716
Gain on sale of non-strategic
businesses and assets (307) - (353) -
Repositioning and other
charges 410 212 637 482
Net payments for
repositioning and other
charges (128) (8) (335) (229)
Pension and other
postretirement expense (56) 69 (24) 161
Pension and other
postretirement benefit
payments (448) (47) (1,495) (136)
Stock compensation expense 38 37 129 123
Deferred income taxes 39 201 197 688
Excess tax benefits from
share based payment
arrangements (1) (1) (31) (5)
Other (122) 97 (17) (97)
Changes in assets and
liabilities, net of the
effects of
acquisitions and
divestitures:
Accounts, notes and other
receivables 104 (381) (433) (569)
Inventories (51) (225) (440) (356)
Other current assets (30) (43) (53) (46)
Accounts payable 105 232 365 329
Accrued liabilities 20 342 128 444
Net cash provided by
operating activities 661 1,325 1,356 3,158
Cash flows from investing
activities:
Expenditures for property,
plant and equipment (177) (166) (466) (351)
Proceeds from disposals of
property, plant and equipment - 6 3 8
Increase in investments (93) (124) (322) (435)
Decrease in investments 112 84 288 94
Cash paid for acquisitions,
net of cash acquired (619) (322) (627) (1,318)
Proceeds from sales of
businesses, net of fees paid 955 - 1,170 -
Other 9 34 67 22
Net cash provided by/(used
for) investing activities 187 (488) 113 (1,980)
Cash flows from financing
activities:
Net increase/(decrease) in
commercial paper 350 (251) 401 599
Net (decrease)/increase in
short-term borrowings (2) 6 (4) 18
Payment of debt assumed with
acquisitions - (326) - (326)
Proceeds from issuance of
common stock 32 56 232 111
Proceeds from issuance of
long-term debt 5 - 1,389 -
Payments of long-term debt - (3) (439) (1,004)
Excess tax benefits from
share based payment
arrangements 1 1 31 5
Repurchases of common stock (505) - (1,009) -
Cash dividends paid (266) (240) (796) (704)
Net cash used for financing
activities (385) (757) (195) (1,301)
Effect of foreign exchange
rate changes on cash and cash
equivalents (126) 109 (39) (38)
Net increase in cash and cash
equivalents 337 189 1,235 (161)
Cash and cash equivalents at
beginning of period 3,548 2,451 2,650 2,801
Cash and cash equivalents at
end of period 3,885 2,640 3,885 2,640
Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free
Cash Flow
(Dollars in millions)
Three Months
Ended Nine Months Ended
September 30, September 30,
2011
2011 2010 2011 2010 Guidance
Cash provided by
operating
activities $ 661 $ 1,325 $ 1,356 $ 3,158 $2,900
Expenditures for
property, plant
and equipment (177) (166) (466) (351) (800)
Free cash flow $ 484 $ 1,159 $ 890 $ 2,807 $2,100
U.S. Pension Cash
Contributions (1) 400 - 1,400 - 1,400
Free cash flow,
excluding U.S.
pension cash
contributions $ 884 $ 1,159 $ 2,290 $ 2,807 $3,500
(1) Represents cash contribution to date.
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, and to 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.
Discontinued Operations Reconciliation (Unaudited)
2010(1) 2011E(2) V%
Sales - Total Honeywell 33,370 37.0 - 37.2
Sales - CPG 1,020 0.5
Sales - Continuing Operations 32,350 36.5 - 36.7 13%
EPS - Continuing Operations -
assuming dilution 2.49 3.74 - 3.79
EPS - CPG - assuming dilution 0.10 0.26
EPS - Total Honeywell - assuming
dilution $2.59 $4.00 - $4.05
Mark-to-Market Pension
Adjustment 0.41 TBD
EPS - Total Honeywell - assuming
dilution,
excluding mark-to-market pension
expense $3.00 $4.00 - $4.05 33% - 35%
(1) Dollars in millions, except per share amount
(2) Dollars in billions, except per share amount
We believe EPS, excluding mark-to-market pension expense, is a metric
that is useful to investors and management in understanding
our ongoing operations and in analysis of ongoing operating trends.
EPS utilizes weighted average shares outstanding and the effective
tax rate for the period. Mark-to-market uses a blended tax rate of
32.3% for 2010.
Contacts:
Media Investor Relations
Robert C. Ferris Elena Doom
(973) 455-3388 (973) 455-2222
rob.ferris@honeywell.com elena.doom@honeywell.com
SOURCE Honeywell
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