Honeywell Reports Full Year Sales Up 3% to $37.7 Billion; Proforma Earnings Per
Share Up 11% to $4.48 Per Share;
Reported Earnings Per Share of $3.69
- 2012 Earnings Growth Driven By Strong Operational
Performance
- Record Segment Margin Of 15.6%, Up 90 bps YoY; Operating
Margin 13.6% Up 160 bps YoY
- Pension Mark-to-Market Adjustment As Expected - ($0.79) Per Share
- Reaffirming 2013 Proforma EPS Guidance Of $4.75-4.95, Up Another 6-11% Over 2012
MORRIS TOWNSHIP, N.J.,
Jan. 25, 2013 -- Honeywell (NYSE:
HON) today announced its results for the fourth quarter and full
year 2012:
Total Honeywell
($ Millions, except Earnings Per Share) FY 2011 FY 2012 Change
Sales 36,529 37,665 3%
Segment Margin 14.7% 15.6% 90 bps
Operating Income Margin(1) 12.0% 13.6% 160 bps
Earnings Per Share (Reported) $2.61 $3.69 41%
Earnings Per Share (Proforma)(1) $4.05 $4.48
11%
Cash Flow from Operations 2,833 3,517 24%
Free Cash Flow(2) 3,780 3,672 (3%)
4Q 2011 4Q 2012 Change
Sales 9,473 9,581 1%
Segment Margin 15.1% 15.6% 50 bps
Operating Income Margin(1) 12.9% 13.9% 100 bps
Earnings Per Share (Reported) ($0.40) $0.32 N/A
Earnings Per Share (Proforma)(1) $1.05 $1.10
5%
Cash Flow from Operations 1,477 1,349 (9%)
Free Cash Flow(2) 1,417 1,311 (7%)
1. Proforma, V%/bps Exclude Any Pension Mark-to-Market Adjustment
2. Free Cash Flow (Cash Flow from Operations Less Capital
Expenditures) Prior
to Cash Pension Contributions
"Honeywell had another year of terrific performance in 2012," said Honeywell
Chairman and CEO Dave Cote. "In a weak global economy, we grew sales 3% and
earnings by 11%, while expanding margins to record levels and continuing to
generate strong cash flow. We outperformed while also continuing to invest in
seed planting initiatives like new products and services, global growth, cost
competitiveness, and strengthening our key processes -- Honeywell Operating
System, Velocity Product Development™, and Functional Transformation. Our
balanced mix of long- and short-cycle businesses and expansion in high growth
regions has offset lower demand in some of our short-cycle businesses, European
weakness, and foreign exchange headwinds. We've also maintained a strong
long-cycle backlog, now a record $15.8 billion, with new platform wins across
many of our businesses last year. These positive trends, combined with our
great positions in good industries, conservative planning, and the continued
evolution of our internal processes will help Honeywell drive sales, margin
growth, cash generation, and EPS outperformance in 2013 and over the
long-term."
The company is also reaffirming its full-year 2013 sales and EPS guidance:
Full Year Guidance
2013 Change
Current Guidance vs. 2012
Sales $39.0 - $39.5B 4 - 5%
Segment Margin 15.8 - 16.1% 20 - 50 bps
Operating Income Margin(1) 14.2 - 14.5% 60 - 90 bps
Earnings Per Share(1) $4.75 - $4.95 6 - 11%
Free Cash Flow(2) ~$3.7B ~Flat
1. Proforma, V% / bps Exclude Any Pension Mark-to-Market
Adjustment
2. Free Cash Flow (Cash Flow from Operations Less Capital
Expenditures) Prior to Any NARCO Related Payments and Cash Pension
Contributions
Segment Performance
Aerospace
($ Millions) FY 2011 FY 2012 % Change
Sales 11,475 12,040 5%
Segment Profit 2,023 2,279 13%
Segment Margin 17.6% 18.9% 130 bps
4Q 2011 4Q 2012 % Change
Sales 3,047 3,020 (1%)
Segment Profit 573 601 5%
Segment Margin 18.8% 19.9% 110 bps
* Sales were down (1%) compared with the fourth quarter of 2011
driven by a
(6%) decline in Defense and Space, partially offset by a 3%
increase in our
commercial end markets. Commercial original equipment (OE) sales
were up 5%
driven by increased production rates at our major OE customers.
Commercial
aftermarket sales were up 3% driven by higher maintenance
activity.
* Segment profit was up 5%, and segment margins expanded 110 bps
to 19.9%,
primarily due to commercial excellence, productivity net of
inflation, and
lower BGA OE payments, partially offset by investments for
growth.
Automation and Control Solutions
($ Millions) FY 2011 FY 2012 % Change
Sales 15,535 15,880 2%
Segment Profit 2,083 2,232 7%
Segment Margin 13.4% 14.1% 70 bps
($ Millions) 4Q 2011 4Q 2012 % Change
Sales 4,051 4,172 3%
Segment Profit 584 645 10%
Segment Margin 14.4% 15.5% 110 bps
* Sales were up 3% compared with the fourth quarter of 2011 as
volume growth
and the favorable impact of acquisitions, net of divestitures
was partially
offset by foreign exchange headwinds. Energy, Safety, and Security was up
4% organically due to acceleration of growth in Environmental and
Combustion Controls and continued growth in Scanning & Mobility and
Security. Process Solutions and Building Solutions and
Distribution grew at
a slower rate, reflecting a more challenging capital
investment
environment.
* Segment profit was up 10% and segment margins were up 110 bps
to 15.5%
driven by commercial excellence and strong productivity net of
inflation
and other investments for growth, including the favorable impact
of
previously completed restructuring actions.
Performance Materials and Technologies
($ Millions) FY 2011 FY 2012 % Change
Sales 5,659 6,184 9%
Segment Profit 1,042 1,154 11%
Segment Margin 18.4% 18.7% 30 bps
($ Millions) 4Q 2011 4Q 2012 % Change
Sales 1,430 1,545 8%
Segment Profit 223 210 (6%)
Segment Margin 15.6% 13.6% (200 bps)
* Sales were up 8% reported, 2% organic, compared with the
fourth quarter of
2011, resulting from the Thomas Russell acquisition in UOP,
partially
offset by lower volume of petrochemical and refining catalysts.
Advanced
Materials sales were up 5% driven by new products and
applications,
partially offset by challenging end market conditions.
* Segment profit declined (6%) and segment margins contracted
(200 bps) to
13.6% in the fourth quarter primarily due to lower catalyst
sales in UOP,
unfavorable price/raws spread in Resins and Chemicals and
challenging end
market conditions, partially offset by productivity net of labor
inflation
and investments for growth.
Transportation Systems
($ Millions) FY 2011 FY 2012 % Change
Sales 3,859 3,561 (8%)
Segment Profit 485 432 (11%)
Segment Margin 12.6% 12.1% (50 bps)
($ Millions) 4Q 2011 4Q 2012 % Change
Sales 944 844 (11%)
Segment Profit 117 94 (20%)
Segment Margin 12.4% 11.1% (130 bps)
* Sales were down (11%), down (8%) organic, compared with the
fourth quarter
of 2011, driven by lower European light vehicle production and
aftermarket
sales, partially offset by new platform launches and higher gas
turbo
penetration, primarily in the U.S. and China.
* Segment profit was down (20%) in the fourth quarter and
segment margins
decreased (130 bps) to 11.1% primarily driven by lower sales
volumes and
price, unfavorable foreign exchange, and ongoing projects to
drive
operational improvement in the Friction Materials business,
partially
offset by productivity benefits.
Honeywell will discuss its results during its investor conference call today
starting at 9:00 a.m. EST. To participate on the conference call, please dial
(800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes
before the 9:00 a.m. EST start. Please mention to the operator that you are
dialing in for Honeywell's fourth quarter 2012 earnings call or provide the
conference code, HONQ412. You can hear a replay of the conference call from 12:
00 p.m. EST, January 25, until 11:59 p.m. EST, February 1, by dialing (800)
374-1216 (domestic) or (402) 220-0681 (international).
A real-time audio webcast of the presentation can be accessed at
http://www.honeywell.com/investor , where related materials will be posted
prior to the presentation. The presentation materials will be in Adobe Acrobat
format. A replay of the webcast will be available following the presentation
at the same link listed above for 30 days.
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 performance 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 Twelve Months
Ended Ended
December 31, December 31,
2012 2011 2012 2011
Product sales $ 7,628 $ 7,478 $ 29,812 $ 28,745
Service sales 1,953 1,995 7,853 7,784
Net sales 9,581 9,473 37,665 36,529
Costs, expenses and other
Cost of products sold (A) 6,302 6,862 22,929 23,220
Cost of services sold (A) 1,379 1,573 5,362 5,336
7,681 8,435 28,291 28,556
Selling, general and administrative expenses (A) 1,523 1,616 5,218 5,399
Other (income) expense (16)
(12) (70) (84)
Interest and other financial charges 87 91 351 376
9,275 10,130 33,790 34,247
Income (loss) from continuing operations before taxes 306 (657) 3,875 2,282
Tax expense (benefit) 51 (350) 944 417
Income (loss) from continuing operations after taxes 255 (307)
2,931 1,865
Income from discontinued operations after taxes - -
- 209
Net income (loss) 255 (307) 2,931 2,074
Less: Net income attributable to the noncontrolling
interest 4 3 5 7
Net income (loss) attributable to Honeywell $ 251 $
(310) $ 2,926 $ 2,067
Amounts attributable to Honeywell:
Income (loss) from continuing operations less net income
attributable to the noncontrolling interest 251
(310) 2,926 1,858
Income from discontinued operations - - - 209
Net income (loss) attributable to Honeywell $ 251 $
(310) $ 2,926 $ 2,067
Earnings per share of common stock - basic:
Income (loss) from continuing operations 0.32
(0.40) 3.74 2.38
Income from discontinued operations - -
- 0.27
Net income (loss) attributable to Honeywell $ 0.32 $
(0.40) $ 3.74 $ 2.65
Earnings per share of common stock - assuming dilution:
Income (loss) from continuing operations 0.32
(0.40) 3.69 2.35
Income from discontinued operations - -
- 0.26
Net income (loss) attributable to Honeywell $ 0.32 $
(0.40) $ 3.69 $ 2.61
Weighted average number of shares outstanding-basic 787.2
774.7
782.4 780.8
Weighted average number of shares outstanding -
assuming dilution 796.4 784.3 791.9 791.6
(A) Cost of products and services sold and selling, general and
administrative
expenses include amounts for repositioning and other charges,
pension and other
postretirement expense, and stock compensation expense.
(B) Below is a reconciliation of Earnings per share to Earnings per share,
excluding mark-to-market pension expense. We believe this
measure is useful to
investors and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
Three Months Ended Twelve Months Ended
December 31, December 31,
2012(1) 2011(1) 2012(1) 2011(1)
Earnings per share of common stock - assuming dilution
$ 0.32 $
(0.40) $ 3.69 $ 2.61
Mark-to-market pension expense 0.78
1.45 0.79 1.44
Earnings per share of common stock - assuming dilution,
excluding mark-to-market pension expense $ 1.10 $ 1.05 $ 4.48 $ 4.05
1- EPS utilizes weighted average shares outstanding and the
effective tax rate
for the period. Mark-to-market uses a blended tax rate of 35.0% and 36.9% for
2012 and 2011, respectively
Honeywell International Inc
Segment Data (Unaudited)
(Dollars in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
Net Sales 2012 2011 2012 2011
Aerospace $ 3,020 $ 3,047 $ 12,040 $ 11,475
Automation and Control Solutions 4,172 4,051 15,880
15,535
Performance Materials and Technologies 1,545 1,430 6,184
5,659
Transportation Systems 844 944 3,561 3,859
Corporate - 1 - 1
Total $ 9,581 $ 9,473 $ 37,665 $ 36,529
Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes
Three Months Ended Twelve Months Ended
December 31, December 31,
Segment Profit 2012 2011 2012 2011
Aerospace $ 601 $ 573 $ 2,279 $ 2,023
Automation and Control Solutions 645 584 2,232
2,083
Performance Materials and Technologies 210 223 1,154
1,042
Transportation Systems 94 117 432 485
Corporate (54) (68) (218) (276)
Total Segment Profit 1,496 1,429 5,879 5,357
Other income (expense) (A) 7 (3) 25 33
Interest and other financial charges (87) (91) (351) (376)
Stock compensation expense (B) (39) (39) (170) (168)
Pension ongoing expense (B) (7) (22) (36) (105)
Pension mark-to-market expense (B) (957) (1,802) (957) (1,802)
Other postretirement
income/(expense) (B) (20) (23) (72) 86
Repositioning and other charges (B) (87) (106) (443)
(743)
Income (loss) from continuing
operations before taxes $ 306 $ (657) $ 3,875 $ 2,282
(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)
December 31, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 4,634 $
3,698
Accounts, notes and other receivables 7,429
7,228
Inventories 4,235 4,264
Deferred income taxes 669 460
Investments and other current assets 631 484
Total current assets 17,598 16,134
Investments and long-term receivables 623 494
Property, plant and equipment - net 5,001 4,804
Goodwill 12,425 11,858
Other intangible assets - net 2,449 2,477
Insurance recoveries for asbestos related
liabilities 663 709
Deferred income taxes 1,889 2,132
Other assets 1,205 1,200
Total assets $ 41,853 $ 39,808
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 4,736 $ 4,738
Short-term borrowings 76 60
Commercial paper 400 599
Current maturities of long-term debt 625
15
Accrued liabilities 7,208
6,863
Total current liabilities 13,045 12,275
Long-term debt 6,395 6,881
Deferred income taxes 628 676
Postretirement benefit obligations other
than pensions 1,365 1,417
Asbestos related liabilities 1,292 1,499
Other liabilities 5,913 6,158
Redeemable noncontrolling interest 150 -
Shareowners' equity 13,065 10,902
Total liabilities, redeemable
noncontrolling interest and
shareowners' equity $ 41,853 $ 39,808
Honeywell International Inc
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2012 2011 2012 2011
Cash flows from operating activities:
Net income (loss) attributable to Honeywell $
251 $ (310) $ 2,926 $ 2,067
Adjustments to reconcile net income (loss) attributable to
Honeywell to net cash provided by operating activities:
Depreciation and amortization 245 253 926 957
Gain on sale of non-strategic businesses and assets (2) (9) (5) (362)
Repositioning and other charges 87 106 443 743
Net payments for repositioning and other charges (151) (133) (503) (468)
Pension and other postretirement expense 984 1,847 1,065 1,823
Pension and other postretirement benefit payments (295) (315) (1,183) (1,883)
Stock compensation expense 39 39 170 168
Deferred income taxes (235) (528) 84 (331)
Excess tax benefits from share based payment arrangements (28) (11) (56) (42)
Other 69 233 108 289
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures:
Accounts, notes and other receivables 41 117 (119) (316)
Inventories 78 130 25 (310)
Other current assets (1) 78 (78) 25
Accounts payable 207 162 (13) 527
Accrued liabilities 60 (182) (273) (54)
Net cash provided by operating activities
1,349 1,477 3,517 2,833
Cash flows from investing activities:
Expenditures for property, plant and equipment
(298) (332) (884) (798)
Proceeds from disposals of property, plant and equipment 3 3 5 6
Increase in investments (220) (58) (702) (380)
Decrease in investments 272 66 559 354
Cash paid for acquisitions, net of cash acquired
(376) (346) (438) (973)
Proceeds from sales of businesses, net of fees paid 3 (14) 21 1,156
Other 53 (43) 11 24
Net cash used for investing activities
(563) (724) (1,428) (611)
Cash flows from financing activities:
Net (decrease)/increase in commercial paper
(499) (101) (199) 300
Net increase/(decrease) in short-term borrowings
3 2 22 (2)
Payment of debt assumed with acquisitions
- (33) - (33)
Proceeds from issuance of common stock
163 72 342 304
Proceeds from issuance of long-term debt
16 1 102 1,390
Payments of long-term debt
(1) (500) (1) (939)
Excess tax benefits from share based payment arrangements
28 11 56 42
Repurchases of common stock
(317) (76) (317) (1,085)
Cash dividends paid
(331) (295) (1,211) (1,091)
Net cash used for financing activities
(938) (919) (1,206) (1,114)
Effect of foreign exchange rate changes on cash and cash equivalents 26 (21) 53 (60)
Net (decrease)/increase in cash and cash equivalents (126) (187) 936 1,048
Cash and cash equivalents at beginning of period 4,760 3,885 3,698 2,650
Cash and cash equivalents at end of period $
4,634 $ 3,698 $ 4,634 $ 3,698
Honeywell International Inc
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow,
Prior to Cash Pension Contributions (Unaudited)
(Dollars in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Cash provided by operating activities $ 1,349 $
1,477 $ 3,517 $ 2,833
Expenditures for property, plant and equipment (298) (332) (884) (798)
Free cash flow $ 1,051 $ 1,145 $ 2,633 $ 2,035
Cash pension contributions 260 272 1,039 1,745
Free cash flow, prior to cash pension contributions $ 1,311 $ 1,417 $ 3,672 $ 3,780
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 Segment Profit to Operating Income Excluding Pension
Mark-to-Market Adjustment and Calculation of Segment Profit and Operating
Income Margin Excluding Pension Mark-to-Market Adjustment
(Unaudited)
(Dollars in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Segment Profit $ 1,496 $ 1,429 $ 5,879 $ 5,357
Stock compensation expense (A) (39) (39)
(170) (168)
Repositioning and other (A, B) (96) (121)
(488) (794)
Pension ongoing expense (A) (7) (22) (36) (105)
Pension mark-to-market adjustment (A) (957) (1,802)
(957) (1,802)
Other postretirement income/(expense) (A) (20) (23) (72) 86
Operating Income (Loss) $ 377 $ (578) $ 4,156 $ 2,574
Pension mark-to-market adjustment (A) $ (957) $ (1,802) $ (957)
$ (1,802)
Operating Income excluding pension
mark-to-market adjustment $ 1,334 $ 1,224 $ 5,113 $ 4,376
Segment Profit $ 1,496 $ 1,429 $ 5,879 $ 5,357
÷ Sales $ 9,581 $ 9,473 $ 37,665 $ 36,529
Segment Profit Margin % 15.6% 15.1% 15.6% 14.7%
Operating Income (Loss) $ 377 $ (578) $ 4,156 $ 2,574
÷ Sales $ 9,581 $ 9,473 $ 37,665 $ 36,529
Operating Income (Loss) Margin % 3.9% (6.1%)
11.0% 7.0%
Operating Income excluding pension
mark-to-market adjustment $ 1,334 $ 1,224 $ 5,113 $ 4,376
÷ Sales $ 9,581 $ 9,473 $ 37,665 $ 36,529
Operating Income Margin excluding
pension mark-to-market adjustment % 13.9% 12.9%
13.6% 12.0%
(A) Included in cost of products and services sold and selling, general and
administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity
income adjustment.
We believe these measures are useful to investors and management in
understanding our ongoing operations and in analysis of ongoing operating
trends.
SOURCE Honeywell