TIDMHON
Honeywell First Quarter Sales Up 7% To $9.3 Billion; And Earnings Up 18% To
$1.04 Per Share
- Higher Than Expected Organic Sales, Segment Margin and EPS - Broad Based
Overdrive
- 6% Organic Growth Reflects New Products and Technologies, Geographic
Expansion
- Raising 2012 Proforma EPS Guidance to $4.35 - $4.55, Up From $4.25 - $4.50
MORRIS TOWNSHIP, N.J., April 20, 2012 -- Honeywell (NYSE: HON) today announced
its results for the first quarter of 2012:
Total Honeywell
($ Millions, except Earnings Per Share) 1Q 2011 1Q 2012 % Change
Sales 8,672 9,307 7%
Earnings Per Share from Continuing Operations $0.86 $1.04 21%
Earnings Per Share $0.88 $1.04 18%
Cash Flow from Operations (443) 196 N/A
Free Cash Flow* 446 300 (33%)
* Free Cash Flow (cash flow from operations less capital expenditures) prior to
cash pension contributions
"Honeywell had a terrific start to the year highlighted by higher than expected
organic sales, 70 basis points of margin expansion, and strong double-digit
earnings growth," said Honeywell Chairman and Chief Executive Officer Dave
Cote. "We've seen good momentum in the U.S. and our key high growth regions,
which is more than offsetting softness in Europe impacting our short-cycle
businesses. Our long-cycle businesses, namely commercial aerospace and UOP, had
particularly strong growth, overdriving expectations in the quarter. As a
result of our strong first quarter and continued favorable outlook for our
major markets, we're raising our 2012 earnings per share outlook. Our continued
seed planting, coupled with great positions in good industries and the Five
Initiatives - growth, productivity, cash, people, and our enablers - will
remain the keys to our continued outperformance in 2012 and over the
long-term."
The company is updating its full-year 2012 sales and EPS guidance and now
expects:
Full Year Guidance
2012 2012 % Change
Prior Revised vs. 2011
Guidance Guidance
Sales $37.8 - $38.0 - 38.6B 4% - 6%
38.9B
Earnings Per Share from Continuing $4.25 - $4.35 - $4.55 9% - 14%
Operations(1) $4.50
Earnings Per Share(2) $4.25 - $4.35 - $4.55 7% - 12%
$4.50
Free Cash Flow(3) $3.5B $3.5B 100%
conversion
(1) Proforma (Ongoing Operations); V% Excludes Any Mark-to-Market Pension
Adjustments and Excludes 3Q11 Repo and Other Actions Funded by CPG Gain
(in Disc. Ops)
(2) Proforma, V% Excludes Any Mark-to-Market Pension Adjustments
(3) Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior
to Any NARCO Related Payments and Cash Pension Contributions
First Quarter Segment Performance
Aerospace
($ Millions) 1Q 1Q %
2011 2012 Change
Sales 2,696 2,950 9%
Segment Profit 467 534 14%
Segment Margin 17.3% 18.1% 80 bps
* Sales were up 9% compared with the first quarter of 2011. Organic growth
was 8% which was primarily driven by an 18% increase in our Commercial end
markets, partially offset by lower services revenue in Defense and Space.
Commercial OE sales were up 22%, or 18% organic excluding the impact of the
EMS acquisition. Commercial aftermarket sales were up 16% with growth in
both spares and R&O.
* Segment profit was up 14% and segment margin increased 80 bps to 18.1%,
primarily due to strong commercial aftermarket volume and productivity, net
of inflation and higher investments in R&D.
Automation and Control Solutions
($ Millions) 1Q 1Q %
2011 2012 Change
Sales 3,656 3,788 4%
Segment Profit 459 491 7%
Segment Margin 12.6% 13.0% 40 bps
* Sales were up 4%, 3% organic, compared with the first quarter of 2011
driven by growth in Process Solutions and Building Solutions and
Distribution, partially offset by a modest (1%) organic decline in Energy,
Safety and Security as a result of market headwinds in several of our short
cycle businesses. ACS continues to benefit from new product introductions,
geographic expansion, and favorable macro trends such as safety, security,
and energy efficiency.
* Segment profit was up 7% and segment margins were up 40 bps to 13.0% driven
by productivity benefits net of inflation, and the absence of prior year
dilution from acquisitions.
Performance Materials and Technologies
($ Millions) 1Q 2011 1Q 2012 % Change
Sales 1,355 1,615 19%
Segment Profit 284 319 12%
Segment Margin 21.0% 19.8% (120) bps
* Sales were up 19%, 12% organic, compared with the first quarter of 2011,
resulting from strong UOP catalyst and licensing sales, the phenol plant
acquisition, and strong volumes in Resins & Chemicals, offsetting softer
demand in Asia and Europe in Specialty Products and the impact of
unfavorable pricing due to more challenging global supply conditions in
Fluorines. Demand for UOP technology offerings and services remained
strong with new orders up over 50%.
* Segment profit was up 12% due to higher volumes, partially offset by
continued investment to support growth in the business. Segment margin
decreased (120) bps to 19.8%, primarily due to the dilutive impact of the
phenol plant acquisition. This is better than expected performance due to
less price/raws headwinds than originally planned.
Transportation Systems
($ Millions) 1Q 1Q %
2011 2012 Change
Sales 965 954 (1%)
Segment Profit 118 120 2%
Segment Margin 12.2% 12.6% 40 bps
* Sales were down (1%), but up 1% on an organic basis, compared with the
first quarter of 2011, due to new business launches and higher diesel
penetration, partially offset by lower European vehicle production and
aftermarket sales volume.
* Segment profit was up 2% and segment margins increased 40 bps to 12.6%
primarily driven by productivity gains including benefits from prior period
restructuring actions.
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, April 20, until midnight,
April 27, by dialing (404) 537-3406. The access code is 65469116.
Honeywell (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.
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.
Contacts:
Media Investor Relations
Robert C. Ferris Elena Doom
(973) 455-3388 (973) 455-2222
rob.ferris@honeywell.com elena.doom@honeywell.com
Honeywell International Inc
Consolidated Statement of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
2012 2011
Product sales $ 7,377 $ 6,813
Service sales 1,930 1,859
Net sales 9,307 8,672
Costs, expenses and other
Cost of products sold (A) 5,571 5,194
Cost of services sold (A) 1,309 1,230
6,880 6,424
Selling, general and administrative expenses (A) 1,231 1,232
Other (income) expense (15) (29)
Interest and other financial charges 89 99
8,185 7,726
Income from continuing operations before taxes 1,122 946
Tax expense 297 256
Income from continuing operations after taxes 825 690
Income from discontinued operations after taxes - 18
Net income 825 708
Less: Net income attributable to the noncontrolling interest 2 3
Net income attributable to Honeywell $ 823 $ 705
Amounts attributable to Honeywell:
Income from continuing operations less net income
attributable to the noncontrolling interest 823 687
Income from discontinued operations - 18
Net income attributable to Honeywell $ 823 $ 705
Earnings per share of common stock - basic:
Income from continuing operations 1.06 0.87
Income from discontinued operations - 0.03
Net income attributable to Honeywell $ 1.06 $ 0.90
Earnings per share of common stock - assuming dilution:
Income from continuing operations 1.04 0.86
Income from discontinued operations - 0.02
Net income attributable to Honeywell $ 1.04 $ 0.88
Weighted average number of shares outstanding-basic 777.3 785.5
Weighted average number of shares outstanding -
assuming dilution 788.1 797.7
(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
March 31,
Net Sales 2012 2011
Aerospace $ 2,950 $ 2,696
Automation and Control Solutions 3,788 3,656
Performance Materials and Technologies 1,615 1,355
Transportation Systems 954 965
Corporate - -
Total $ 9,307 $ 8,672
Reconciliation of Segment Profit to Income From Continuing Operations Before
Taxes
Three Months Ended
March 31,
Segment Profit 2012 2011
Aerospace $ 534 $ 467
Automation and Control Solutions 491 459
Performance Materials and Technologies 319 284
Transportation Systems 120 118
Corporate (49) (68)
Total Segment Profit 1,415 1,260
Other income/(expense) (A) 5 20
Interest and other financial charges (89) (99)
Stock compensation expense (B) (51) (49)
Pension ongoing expense (B) (13) (35)
Other postretirement income/(expense) (B) (23) (18)
Repositioning and other charges (B) (122) (133)
Income from continuing operations before taxes $ 1,122 $ 946
(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)
March 31, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 3,988 $ 3,698
Accounts, notes and other receivables 7,268 7,228
Inventories 4,368 4,264
Deferred income taxes 428 460
Investments and other current assets 501 484
Total current assets 16,553 16,134
Investments and long-term receivables 533 494
Property, plant and equipment - net 4,814 4,804
Goodwill 11,910 11,858
Other intangible assets - net 2,420 2,477
Insurance recoveries for asbestos related liabilities 680 709
Deferred income taxes 2,061 2,132
Other assets 1,399 1,200
Total assets $ 40,370 $ 39,808
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 4,535 $ 4,738
Short-term borrowings 69 60
Commercial paper 948 599
Current maturities of long-term debt 615 15
Accrued liabilities 6,499 6,863
Total current liabilities 12,666 12,275
Long-term debt 6,269 6,881
Deferred income taxes 707 676
Postretirement benefit obligations other than pensions 1,400 1,417
Asbestos related liabilities 1,509 1,499
Other liabilities 5,977 6,158
Shareowners' equity 11,842 10,902
Total liabilities and shareowners' equity $ 40,370 $ 39,808
Honeywell International Inc
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
2012 2011
Cash flows from operating activities:
Net income attributable to Honeywell $ 823 $ 705
Adjustments to reconcile net income attributable to
Honeywell to net cash provided by operating activities:
Depreciation and amortization 230 242
Gain on sale of non-strategic businesses and assets - (44)
Repositioning and other charges 122 133
Net payments for repositioning and other charges (104) (109)
Pension and other postretirement expense 36 54
Pension and other postretirement benefit payments (289) (1,050)
Stock compensation expense 51 49
Deferred income taxes 132 68
Excess tax benefits from share based payment
arrangements (12) (13)
Other (7) 108
Changes in assets and liabilities, net of the
effects of acquisitions and divestitures:
Accounts, notes and other receivables (40) (172)
Inventories (108) (330)
Other current assets (28) (14)
Accounts payable (203) (4)
Accrued liabilities (407) (66)
Net cash provided by/(used for) operating activities 196 (443)
Cash flows from investing activities:
Expenditures for property, plant and equipment (152) (124)
Proceeds from disposals of property, plant and equipment 1 1
Increase in investments (84) (164)
Decrease in investments 92 62
Cash paid for acquisitions, net of cash acquired (1) (7)
Proceeds from sales of businesses, net of fees paid - 217
Other 22 31
Net cash (used for)/provided by investing activities (122) 16
Cash flows from financing activities:
Net increase in commercial paper 349 1
Net increase/(decrease) in short-term borrowings 7 (9)
Proceeds from issuance of common stock 90 101
Proceeds from issuance of long-term debt 2 1,381
Payments of long-term debt - (437)
Excess tax benefits from share based payment
arrangements 12 13
Cash dividends paid (291) (264)
Net cash provided by financing activities 169 786
Effect of foreign exchange rate changes on cash and cash
equivalents 47 67
Net increase in cash and cash equivalents 290 426
Cash and cash equivalents at beginning of period 3,698 2,650
Cash and cash equivalents at end of period $ 3,988 $ 3,076
Honeywell International Inc
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow,
Prior to Pension Cash Contributions
(Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
2012 2011
Cash provided by operating activities $ 196 $ (443)
Expenditures for property, plant and equipment (152) (124)
Free cash flow $ 44 $ (567)
Pension cash contributions 256 1,013
Free cash flow, prior to pension cash $ 300 $ 446
contributions
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,
repay debt obligations prior to their maturities, or make cash pension
contributions. 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 Earnings Per Share to Earnings Per Share, Excluding
Mark-to-Market Pension Adjustments and Third Quarter 2011 Repositioning
and Other Actions Funded by CPG Gain
2011
EPS - continuing operations assuming dilution $ 2.35
Mark-to-market pension adjustment $ 1.44
EPS - continuing operations assuming dilution, excluding
mark-to-market pension adjustment $ 3.79
Third quarter 2011 repositioning and other actions funded by CPG gain $ 0.22
EPS - continuing operations assuming dilution, excluding mark-to-market
pension adjustment and third quarter 2011 repositioning and other
actions funded by CPG gain $ 4.01
2011
EPS - Total Honeywell assuming dilution $ 2.61
Mark-to-market pension adjustment $ 1.44
EPS - Total Honeywell assuming dilution, excluding mark-to-market
pension adjustment $ 4.05
We believe EPS, excluding mark-to-market pension expense and third quarter 2011
repositioning and other actions funded by CPG gain, 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 of 791.6 million and the
effective tax rate for the period. Mark-to-market uses a blended tax rate of 36.9%
SOURCE Honeywell
END
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