Honeywell Intl 1st Quarter Results
April 17 2014 - 8:34AM
UK Regulatory
TIDMHON
Honeywell Reports First Quarter 2014 Sales Of $9.7 Billion; EPS Of $1.28 Per
Share
- Organic Sales Growth 1%, Up 3% Excluding Defense & Space
- EPS Up 6% Year-Over-Year Reported, Up 10% Using Normalized Tax Rate
- $0.10 EPS Gain Funding $0.11 EPS Restructuring And Other Actions
- Increasing Proforma EPS Guidance To $5.40 - $5.55, From $5.35 - $5.55
MORRIS TOWNSHIP, N.J., April 17, 2014 -- Honeywell (NYSE: HON)
today announced its results for the first quarter of 2014:
Total Honeywell
($ Millions, except Earnings Per Share) 1Q 2013 1Q 2014 Change
Sales 9,328 9,679 4%
Segment Margin 16.2% 16.5% 30 bps
Operating Income Margin 14.1% 14.2% 10 bps
Earnings Per Share $1.21 $1.28 6%
Earnings Per Share (At 26.5% Tax Rate) $1.16 $1.28 10%
Cash Flow from Operations 341 688 102%
Free Cash Flow * 193 496 157%
* Cash Flow from Operations Less Capital Expenditures
"Honeywell had a good start to the year with strong margin expansion driving
better than expected earnings," said Honeywell Chairman and CEO Dave Cote. "We
saw 3% organic sales growth ex-Defense & Space, with strong execution across
each of the businesses driving earnings above the high-end of our guidance. We
remain cautiously optimistic on the macro environment, even with some nice
momentum exiting the quarter in our short-cycle and long-cycle businesses
driving organic sales growth acceleration as we progress through the year. As a
result of the first quarter performance and overall favorable outlook for our
key end markets, we're raising the low-end of our 2014 Proforma EPS outlook by
$0.05 and our new guidance range is $5.40-$5.55. We are also increasing our
cash flow forecast for the year given the strong first quarter working capital
performance. We remain confident in our outlook and intend to perform better
than our peers driven by our diversity of opportunity, relentless seed planting
in new products and technologies, continued penetration of High Growth Regions
(HGRs), and growing traction on key process initiatives. We've also proactively
redeployed non-operating gains and operational earnings to fund smart new
repositioning projects benefiting 2015 and beyond. Our recently announced
organizational changes demonstrate the strength of our organization, add
further evidence to the effectiveness of the Honeywell operating model, and
reaffirm our belief that the best is yet to come for Honeywell."
The company is updating its full-year 2014 guidance and now expects:
Full-Year Guidance
2014 2014 Change
Prior Guidance Revised Guidance vs. 2013
Sales $40.3 - $40.7B $40.3 - $40.7B 3% - 4%
Segment Margin 16.6% - 16.9% 16.6% - 16.9% 30 - 60 bps(3)
Operating Income Margin(1) 15.2% - 15.5% 15.2% - 15.5% 100 - 130 bps
Earnings Per Share(1) $5.35 - $5.55 $5.40 - $5.55 9% - 12%
Free Cash Flow(2) $3.5 - $3.7B $3.8 - $4.0B 15%
1. Proforma, V% / bps Exclude Pension Mark-to-Market Adjustment
2. Cash Flow from Operations Less Capital Expenditures; Definition of Free Cash
Flow No Longer Excludes NARCO Trust Establishment Payments, Cash Pension
Contributions, and Cash Taxes Relating to the Sale of Available for Sale
Investments
3. Segment Margin ex-M&A up 50 - 80 bps
In April 2014, Honeywell announced the realignment of our Honeywell Process
Solutions (HPS) business from Automation and Control Solutions (ACS) into
Performance Materials and Technologies (PMT). Effective with the reporting of
second quarter 2014 results, Honeywell will report its financial performance
based on the inclusion of HPS in PMT. During the second quarter of 2014
Honeywell will make available segment results revised for the new reporting
structure to provide financial information on a basis consistent with the new
reporting structure.
First Quarter Segment Performance
Aerospace
($ Millions) 1Q 2013 1Q 2014 % Change
Sales 2,911 2,858 (2%)
Segment Profit 551 549 Flat
Segment Margin 18.9% 19.2% 30 bps
* Sales were down (2%) compared with the first quarter of 2013 driven by an
(8%) decline in Defense & Space sales as a result of planned program ramp
downs and delays, as well as lower Government Services, partially offset by
Commercial growth. Commercial OE sales were up 1% in the quarter driven by
continued strong OE build rates and favorable platform mix, partially
offset by lower regional jet sales. Commercial Aftermarket growth of 4% was
driven by a 14% increase in spares sales, partially offset by lower
maintenance activities.
* Segment profit was approximately flat, and segment margins expanded 30 bps
to 19.2%, driven by commercial excellence, productivity net of inflation
and favorable aftermarket mix, partially offset by lower volume.
Automation and Control Solutions
($ Millions) 1Q 2013 1Q 2014 % Change
Sales 3,786 4,074 8%
Segment Profit 523 580 11%
Segment Margin 13.8% 14.2% 40 bps
* Sales were up 8% reported, 2% organic, compared with the first quarter of
2013, primarily driven by the favorable impact of acquisitions, growth in
Energy, Safety, and Security, particularly Environmental and Combustion
Controls (ECC) and Life Safety, with continued strong sales in U.S.
residential end markets, new product introductions, and improving
non-residential activity, partially offset by anticipated program ramp
downs in Scanning & Mobility. ACS also had higher service and software
sales in Process Solutions.
* Segment profit was up 11% and segment margins expanded 40 bps to 14.2%
driven by higher sales volume, commercial excellence and productivity net
of inflation, partially offset by the dilutive impact of acquisitions and
continued investments for growth.
Performance Materials and Technologies
($ Millions) 1Q 2013 1Q 2014 % Change
Sales 1,717 1,754 2%
Segment Profit 374 364 (3%)
Segment Margin 21.8% 20.8% (100) bps
* Sales were up 2% compared with the first quarter of 2013, driven by
increased UOP catalyst and gas processing volume and higher volumes in
Advanced Materials, partially offset by lower equipment, licensing and
service sales, and pricing headwinds in Fluorine Products and Resins &
Chemicals, which are expected to moderate over the remainder of the year.
* Segment profit was down (3%) and segment margins decreased (100) bps to
20.8%, driven by unfavorable petrochemical catalyst shipment mix versus the
prior year, price/raw headwinds in Fluorine Products and Resins &
Chemicals, and continued investments for growth, partially offset by
productivity net of inflation.
Transportation Systems
($ Millions) 1Q 2013 1Q 2014 % Change
Sales 914 993 9%
Segment Profit 111 154 39%
Segment Margin 12.1% 15.5% 340 bps
* Sales were up 9% reported, 7% organic, compared with the first quarter of
2013, driven by continued growth from new platform launches, higher global
turbo gas penetration and light vehicle production, and increased
commercial vehicle demand globally.
* Segment profit was up 39% and segment margins increased 340 bps to 15.5%
primarily driven by strong Turbo productivity and volume leverage, and
operational improvements.
Honeywell will discuss its results during its investor conference call today
starting at 9:30 a.m. EDT. To participate, please dial (800) 862-9098
(domestic) or (785) 424-1051 (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 2014 investor conference call or provide the
conference code HONQ114. 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 17, until 11:59 p.m. EDT, April 24, by dialing (800) 839-1162 (domestic)
or (402) 220-0398 (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
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