TIDMHON
Honeywell Reports First Quarter 2013 Sales Of $9.3 Billion; EPS Up 16% To $1.21
Per Share
- Strong Productivity Driving EPS Growth of 16%, Up 12% Using Expected
Full-Year Tax Rate
- Segment Margin Increase of 100 Bps to 16.2%, Operating Margin Up 120 Bps
- Increasing Low-End 2013 Proforma EPS Guidance to $4.80 - $4.95, From $4.75 -
$4.95
MORRIS TOWNSHIP, N.J., April 19, 2013 -- Honeywell (NYSE: HON) today announced
its results for the first quarter of 2013:
Total Honeywell
($ Millions, except Earnings Per Share) 1Q 2012 1Q 2013 Change
Sales 9,307 9,328 flat
Segment Margin 15.2% 16.2% 100 bps
Operating Income Margin 12.9% 14.1% 120 bps
Earnings Per Share $1.04 $1.21 16%
Cash Flow from Operations 196 341 74%
Free Cash Flow * 300 327 9%
* Free Cash Flow (cash flow from operations less capital expenditures) prior to
cash pension contributions
"Honeywell delivered better than expected quarterly earnings and margins even
in a continued slow global growth environment," said Honeywell Chairman and CEO
Dave Cote. "We had strong productivity in the quarter, and our balanced
portfolio of both short- and long-cycle businesses continues to drive our
outperformance. As a result of our strong start to 2013, we're raising the
low-end of our full-year earnings guidance by five cents. We're achieving these
results in a slow growth environment while also maintaining our seed planting
for the future by investing in new products and technologies, geographic
expansion, and driving our key process initiatives. And, it will continue. It's
what will help Honeywell deliver top-tier earnings performance this year and
over the long-term."
First quarter 2013 earnings per share (EPS) reflects a 23.1% effective tax rate
compared to 26.5% last year. Using the expected full-year tax rate of 26.5%,
EPS growth would have been 12%.
The company is updating its full-year 2013 sales and EPS guidance and now
expects:
Full-Year Guidance
2013 2013 Change
Prior Guidance Revised Guidance vs. 2012
Sales $39.0 - $39.5B $38.8 - $39.3B 3 - 4%
Segment Margin 15.8 - 16.1% 15.9 - 16.2% 30 - 60 bps
Operating Income Margin(1) 14.2 - 14.5% 14.3 - 14.6% 70 - 100 bps
Earnings Per Share(1) $4.75 - $4.95 $4.80 - $4.95 7% - 11%
Free Cash Flow(2) $3.7B $3.7B Flat
1. Proforma, V% / BPS exclude any pension mark-to-market adjustment
2. Free Cash Flow (cash flow from operations less capital expenditures) prior
to any NARCO related payments and cash pension contributions
First Quarter Segment Performance
Aerospace
($ Millions) 1Q 2012 1Q 2013 % Change
Sales 2,950 2,911 (1%)
Segment Profit 534 551 3%
Segment Margin 18.1% 18.9% 80 bps
* Sales were down (1%) compared with the first quarter of 2012 driven by a
(1%) decline in our Commercial businesses primarily driven by higher than
normal prior year shipments to commercial airline and BGA original
equipment customers, and a (1%) decline in Defense and Space, as expected.
* Segment profit was up 3%, and segment margins expanded 80 bps to 18.9%,
primarily due to commercial excellence and productivity net of inflation
(including prior year impact of customer bankruptcy), partially offset by
lower aftermarket volumes.
Automation and Control Solutions
($ Millions) 1Q 2012 1Q 2013 % Change
Sales 3,788 3,786 flat
Segment Profit 491 523 7%
Segment Margin 13.0% 13.8% 80 bps
* Sales were approximately flat on both a reported and organic basis compared
with the first quarter of 2012. Energy, Safety, and Security sales were up
primarily due to growth in ECC and Security products, partially offset by
lower sales in Process Solutions and Building Solutions and Distribution.
* Segment profit was up 7% and segment margins were up 80 bps to 13.8% driven
by commercial excellence and productivity net of inflation.
Performance Materials and Technologies
($ Millions) 1Q 2012 1Q 2013 % Change
Sales 1,615 1,717 6%
Segment Profit 319 374 17%
Segment Margin 19.8% 21.8% 200 bps
* Sales were up 6% reported, down (2%) organic, compared with the first
quarter of 2012, resulting from the Thomas Russell acquisition, higher
petrochemical catalyst shipments and equipment sales in UOP, partially
offset by planned plant outages in Resins & Chemicals and Fluorine
Products.
* Segment profit was up 17% and segment margins increased 200 bps to 21.8%,
primarily due to higher sales at UOP and favorable price net of inflation,
partially offset by lower volume in Advanced Materials and continued
investments for growth.
Transportation Systems
($ Millions) 1Q 2012 1Q 2013 % Change
Sales 954 914 (4%)
Segment Profit 120 111 (8%)
Segment Margin 12.6% 12.1% (50) bps
* Sales were down (4%) on both a reported and organic basis compared with the
first quarter of 2012, driven by approximately 10% lower European light
vehicle production volumes and declining aftermarket sales, partially
offset by the positive impact of new platform launches, including higher
turbo gas launches in North America and China.
* Segment profit was down (8%) and segment margins decreased (50) bps to
12.1% primarily driven by lower sales, 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 9:30 a.m. EDT. To participate, please dial (800) 894-5910
(domestic) or (785) 424-1052 (international) a few minutes before the 9:30 a.m.
EDT start. Please mention to the operator that you are dialing in for
Honeywell's first quarter 2013 investor conference call or provide the
conference code HONQ113. The live webcast of the investor call as well as
related presentation materials will be available through the "Investor
Relations" section of the company's Website (http://www.honeywell.com/investor).
Investors can access a replay of the conference call from 12:00 p.m. EDT,
April 19, until 11:59 p.m. EDT, April 26, by dialing (800) 753-6121 (domestic)
or (402) 220-2676 (international).
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;
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. We identify the principal risks and uncertainties
that affect our performance in our Form 10-K and other filings with the
Securities and Exchange Commission.
Honeywell International Inc
Consolidated Statement of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
2013 2012
Product sales $ 7,474 $ 7,377
Service sales 1,854 1,930
Net sales 9,328 9,307
Costs, expenses and other
Cost of products sold (A) 5,567 5,571
Cost of services sold (A) 1,216 1,309
6,783 6,880
Selling, general and administrative expenses (A) 1,229 1,231
Other (income) expense (28) (15)
Interest and other financial charges 84 89
8,068 8,185
Income before taxes 1,260 1,122
Tax expense 291 297
Net income 969 825
Less: Net income attributable to the noncontrolling interest 3 2
Net income attributable to Honeywell $ 966 $ 823
Earnings per share of common stock - basic $ 1.23 $ 1.06
Earnings per share of common stock - assuming dilution $ 1.21 $ 1.04
Weighted average number of shares outstanding-basic 785.8 777.3
Weighted average number of shares outstanding -
assuming dilution 797.1 788.1
(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.
Honeywell International Inc.
Segment Data (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
Net Sales 2013 2012
Aerospace $ 2,911 $ 2,950
Automation and Control Solutions 3,786 3,788
Performance Materials and Technologies 1,717 1,615
Transportation Systems 914 954
Total $ 9,328 $ 9,307
Reconciliation of Segment Profit to Income Before Taxes
Three Months Ended
March 31,
Segment Profit 2013 2012
Aerospace $ 551 $ 534
Automation and Control Solutions 523 491
Performance Materials and Technologies 374 319
Transportation Systems 111 120
Corporate (51) (49)
Total Segment Profit 1,508 1,415
Other income (expense) (A) 19 5
Interest and other financial charges (84) (89)
Stock compensation expense (B) (54) (51)
Pension ongoing income (expense) (B) 21 (13)
Other postretirement income (expense) (B) (22) (23)
Repositioning and other charges (B) (128) (122)
Income before taxes $ 1,260 $ 1,122
(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,
2013 2012
ASSETS
Current assets:
Cash and cash equivalents $ 4,539 $ 4,634
Accounts, notes and other receivables 7,585 7,429
Inventories 4,297 4,235
Deferred income taxes 672 669
Investments and other current assets 588 631
Total current assets 17,681 17,598
Investments and long-term receivables 738 623
Property, plant and equipment - net 4,948 5,001
Goodwill 12,386 12,425
Other intangible assets - net 2,384 2,449
Insurance recoveries for asbestos related liabilities 654 663
Deferred income taxes 1,842 1,889
Other assets 1,167 1,205
Total assets $ 41,800 $ 41,853
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 4,444 $ 4,736
Short-term borrowings 86 76
Commercial paper 1,200 400
Current maturities of long-term debt 626 625
Accrued liabilities 6,755 7,208
Total current liabilities 13,111 13,045
Long-term debt 5,787 6,395
Deferred income taxes 683 628
Postretirement benefit obligations other than pensions 1,338 1,365
Asbestos related liabilities 1,300 1,292
Other liabilities 5,896 5,913
Redeemable noncontrolling interest 152 150
Shareowners' equity 13,533 13,065
Total liabilities, redeemable noncontrolling
interest and shareowners' equity $ 41,800 $ 41,853
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
2013 2012
Cash flows from operating activities:
Net income attributable to Honeywell $ 966 $ 823
Adjustments to reconcile net income attributable to Honeywell to net
cash provided by operating activities:
Depreciation and amortization 248 230
Repositioning and other charges 128 122
Net payments for repositioning and other charges (98) (104)
Pension and other postretirement expense 1 36
Pension and other postretirement benefit payments (171) (289)
Stock compensation expense 54 51
Deferred income taxes 27 132
Excess tax benefits from share based payment arrangements (24) (12)
Other (33) (7)
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures:
Accounts, notes and other receivables (142) (40)
Inventories (51) (108)
Other current assets 18 (28)
Accounts payable (295) (203)
Accrued liabilities (287) (407)
Net cash provided by operating activities 341 196
Cash flows from investing activities:
Expenditures for property, plant and equipment (148) (152)
Proceeds from disposals of property, plant and equipment - 1
Increase in investments (174) (84)
Decrease in investments 166 92
Cash paid for acquisitions, net of cash acquired (122) (1)
Other (33) 22
Net cash used for investing activities (311) (122)
Cash flows from financing activities:
Net increase in commercial paper 800 349
Net increase in short-term borrowings 8 7
Proceeds from issuance of common stock 164 90
Proceeds from issuance of long-term debt 7 2
Payments of long-term debt (600) -
Excess tax benefits from share based payment arrangements 24 12
Repurchases of common stock (139) -
Cash dividends paid (322) (291)
Net cash (used for)/provided by financing activities (58) 169
Effect of foreign exchange rate changes on cash and cash equivalents (67) 47
Net (decrease)/increase in cash and cash equivalents (95) 290
Cash and cash equivalents at beginning of period 4,634 3,698
Cash and cash equivalents at end of period $ 4,539 $ 3,988
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
March 31, December 31,
2013 2012 2012
Cash provided by operating activities $ 341 $ 196 $3,517
Expenditures for property, plant and equipment (148) (152) (884)
Free cash flow $ 193 $ 44 $2,633
Cash pension contributions 134 256 1,039
Free cash flow, prior to cash pension contributions $ 327 $ 300 $3,672
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 and Calculation of Segment
Profit and Operating Income Margins (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
2013 2012
Segment Profit $ 1,508 $ 1,415
Stock compensation expense (A) (54) (51)
Repositioning and other (A, B) (137) (132)
Pension ongoing income (expense) (A) 21 (13)
Other postretirement income (expense) (A) (22) (23)
Operating Income $ 1,316 $ 1,196
Segment Profit $ 1,508 $ 1,415
÷ Sales $ 9,328 $ 9,307
Segment Profit Margin % 16.2% 15.2%
Operating Income $ 1,316 $ 1,196
÷ Sales $ 9,328 $ 9,307
Operating Income Margin % 14.1% 12.9%
(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.
Honeywell International Inc
Reconciliation of Segment Profit to Operating Income Excluding Pension
Mark-to-Market Adjustment and Calculation of Segment Profit and
Operating Income Margins Excluding Pension Mark-to-Market Adjustment (Unaudited)
(Dollars in millions)
Twelve Months Ended
December 31, 2012 2013 Guidance
Segment Profit $ 5,879 $6,200 - 6,400
Stock compensation expense (A) (170) (200)
Repositioning and other (A, B) (488) (450) - (500)
Pension ongoing expense (A) (36) 75
Pension mark-to-market adjustment (A) (957) TBD
Other postretirement income (expense) (A) (72) (80)
Operating Income $ 4,156 $5,545 - 5,695
Pension mark-to-market adjustment (A) $ (957) TBD
Operating Income excluding pension mark-to-market adjustment $ 5,113 $5,545 - 5,695
Segment Profit $ 5,879 $6,200 - 6,400
÷ Sales $ 37,665 $38,800 - 39,300
Segment Profit Margin % 15.6% 15.9 - 16.2%
Operating Income $ 4,156 $5,545 - 5,695
÷ Sales $ 37,665 $38,800 - 39,300
Operating Income Margin % 11.0% 14.3 - 14.6%
Operating Income excluding pension mark-to-market adjustment $ 5,113 $5,545 - 5,695
÷ Sales $ 37,665 $38,800 - 39,300
Operating Income Margin excluding pension mark-to-market adjustment % 13.6% 14.3 - 14.6%
(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.
Honeywell International Inc
Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension
Mark-to-Market Adjustment
2012
EPS $ 3.69
Pension mark-to-market adjustment 0.79
EPS, excluding pension mark-to-market adjustment $ 4.48
We believe EPS, excluding pension mark-to-market adjustment is a measure 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 791.9 million.
Mark-to-market uses a blended tax rate of 35.0%.
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
END
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