Honeywell Reports
Third Quarter 2015 Sales Of $9.6
Billion; EPS Of $1.60 Per
Share; Confirms 2015 EPS Guidance At ~$6.10, Up ~10%
- Third Quarter EPS Up 9% Reported, Up 10% Normalized at
26.5% Tax Rate
- Core Organic Sales Growth 1%*; Segment Margin Improvement
of 190 bps to 19.3%
- Reported Sales Down 5% Due to F/X, Lower Pass-Through
Pricing (Resins & Chemicals)
- Announced Acquisition of Elster, A Leader in Thermal Gas
Solutions and Metering Technology
MORRIS PLAINS, N.J.,
Oct. 16, 2015 -- Honeywell
(NYSE: HON) today announced results for the third quarter of
2015:
| Total Honeywell |
|
|
|
|
|
|
|
| ($ Millions, except Earnings Per
Share) |
3Q 2014 |
3Q 2015 |
Change |
| Sales |
10,108 |
9,611 |
(5%) |
| Segment Margin |
17.4% |
19.3% |
190 bps |
| Operating Income Margin |
16.2% |
18.3% |
210 bps |
| Earnings Per Share |
$1.47 |
$1.60 |
9% |
| Earnings Per Share (At 26.5% Tax Rate) |
$1.43 |
$1.57 |
10% |
| Cash Flow from
Operations |
1,233 |
1,666 |
35% |
| Free Cash Flow
(1) |
974 |
1,389 |
43% |
|
|
|
|
| (1) Cash Flow from Operations
Less Capital Expenditures |
"Honeywell delivered another strong quarter of earnings growth
and exceptional margin expansion," said Honeywell Chairman and CEO
Dave Cote. "On 1% core organic
sales growth, segment margins expanded 190 basis points driven by
new product introductions, our key process initiatives including
HOS Gold, continued productivity improvements, and the benefits
from ongoing restructuring projects. In a slower growth
environment, we generated earnings growth of 10% when normalized
for tax, reaching the high end of our EPS guidance range. This
included $34 million in net
restructuring charges in the quarter, which position us for
continued long-term margin expansion. In addition, Free Cash Flow
for the quarter of $1.4 billion
increased 43%, with Free Cash Flow conversion of 110%. We are
confirming our full-year EPS guidance at approximately $6.10, representing estimated full-year earnings
growth of approximately 10% and our sixth consecutive year of
double-digit earnings growth. We also announced the $5.1 billion acquisition of Elster in July, and
are on track to close in the first quarter of 2016. Looking
ahead to 2016, we're planning for a continuation of the slow growth
macro environment, but we expect to deliver continued margin
expansion and earnings outperformance driven by our balanced
portfolio, relentless seed planting in new products and
technologies, High Growth Region penetration, over $300 million of funded restructuring, and the
deployment of our key process initiatives."
| 2015 Full-Year
Guidance |
|
|
|
|
Prior Guidance |
Current Guidance |
Change
vs. 2014 |
| Sales |
$39.0 - $39.6B |
~$38.7B |
(~4%) |
| Core Organic Growth |
~3% |
~2% |
|
| Segment Margin |
18.4% - 18.6% |
~18.8% |
~220 bps (2) |
| Operating Income Margin (Ex-Pension MTM) |
17.5% - 17.7% |
~17.9% |
~280 bps (3) |
| Earnings Per Share (Ex-Pension MTM) |
$6.05 - $6.15 |
~$6.10 |
~10% |
| Free Cash Flow (1) |
$4.2 - $4.3B |
$4.2 - $4.3B |
8% - 10% |
| 1. |
Cash Flow from Operations Less Capital
Expenditures |
| 2. |
Segment Margin ex-4Q14 $184M OEM Incentives Up
~180 bps |
| 3. |
Operating Margin ex-4Q14 $184M OEM Incentives
Up ~240 bps |
Third Quarter Segment Performance
|
|
|
|
| Aerospace |
|
|
|
| ($ Millions) |
3Q 2014 |
3Q 2015 |
% Change |
| Sales |
3,895 |
3,820 |
(2%) |
| Segment Profit |
790 |
833 |
5% |
| Segment Margin |
20.3% |
21.8% |
150 bps |
- Sales for the third quarter were up 2% on a core organic basis,
and were down 2% reported driven by the unfavorable impact of
foreign currency and the Friction Materials divestiture.
Commercial OE sales were up 4% on a core organic basis (3%
reported) driven by strong Business and General Aviation (BGA)
engine shipments. Commercial Aftermarket sales were up 3% on
a core organic basis (2% reported) driven by continued growth in
repair and overhaul activities, partially offset by a decline in
RMU (Retrofit, Modifications, and Upgrades) sales in BGA.
Defense & Space sales increased 2% on a core organic basis (1%
reported) driven by strong international growth, partially offset
by lower sales to the U.S. government. Transportation Systems
sales were up 1% on a core organic basis driven by new platform
launches and higher gas turbo penetration on passenger vehicles,
partially offset by lower commercial vehicle production. TS
sales were down 16% reported due to the unfavorable impact of
foreign currency and the Friction Materials divestiture.
- Segment profit was up 5% and segment margins expanded 150 bps
to 21.8%, driven by commercial excellence, productivity net of
inflation, foreign currency hedges, and the favorable impact of the
Friction Materials divestiture, partially offset by the margin
impact of higher OE shipments and continued investments for
growth.
|
|
|
|
| Automation and Control
Solutions |
| ($ Millions) |
3Q 2014 |
3Q 2015 |
% Change |
| Sales |
3,671 |
3,571 |
(3%) |
| Segment Profit |
583 |
614 |
5% |
| Segment Margin |
15.9% |
17.2% |
130 bps |
- Sales for the third quarter were up 3% on a core organic basis
and down 3% reported driven by the unfavorable impact of foreign
currency. Energy, Safety, and Security (ESS) sales increased
4% on a core organic basis (down 1% reported) driven primarily by
continued growth in Security and Fire (HSF) and Sensing &
Productivity Solutions (S&PS). Building Solutions &
Distribution (BSD) sales increased 1% on a core organic basis (down
6% reported) driven by continued strength in Americas Distribution
partially offset by slower Building Solutions backlog
conversion.
- Segment profit was up 5% and segment margins expanded 130 bps
to 17.2% driven by productivity net of inflation, higher volume,
and commercial excellence, partially offset by continued
investments for growth.
- On July 28, 2015, we signed a
definitive agreement to acquire the Elster Division of Melrose
Industries plc, a leading provider of thermal gas solutions for
commercial, industrial, and residential heating systems and gas,
water, and electricity meters, including smart meters and software
and data analytics solutions, for approximately $5.1 billion. Elster also manufactures flow
computers and regulators for the gas industry. Elster had
reported 2014 revenues of $1.7
billion. We anticipate the acquisition will close in
the first quarter of 2016, pending regulatory review. Upon
closing, we expect that Elster will primarily be integrated into
our Automation and Control Solutions segment.
| Performance Materials and
Technologies |
| ($ Millions) |
3Q 2014 |
3Q 2015 |
% Change |
| Sales |
2,542 |
2,220 |
(13%) |
| Segment Profit |
444 |
461 |
4% |
| Segment Margin |
17.5% |
20.8% |
330 bps |
- Sales were down 3% on a core organic basis and down 13%
reported driven by the unfavorable impact of foreign currency and
lower raw materials pass-through pricing in Resins &
Chemicals. The decrease in core organic sales was primarily
driven by lower UOP gas processing, equipment and licensing sales,
and lower volume in HPS associated with projects and field products
weakness, partially offset by higher UOP catalyst shipments and
higher volume in Fluorine Products.
- Segment profit was up 4% and segment margins increased 330 bps
to 20.8%, driven by productivity net of inflation, commercial
excellence, and the favorable impact of raw materials pass-through
pricing in Resins & Chemicals (pricing model protects profit
dollars), partially offset by continued investments for
growth.
Honeywell will discuss its results during its investor
conference call today starting at 9:30 a.m.
EDT. To participate on the conference call, please
dial (888) 634-7543 (domestic) or (719) 457-2631 (international)
approximately ten minutes before the 9:30
a.m. EDT start. Please mention to the operator that you are
dialing in for Honeywell's third quarter 2015 earnings call. 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
(www.honeywell.com/investor). Investors can hear a replay of
the conference call from 12:30 p.m.
EDT, October 16, until
12:30 p.m. EDT, October 23, by dialing (888) 203-1112 (domestic)
or (719) 457-0820 (international). The access code is 669711.
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. For more news and information on Honeywell, please
visit 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. 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.
*Throughout this press release, core
organic sales growth refers to reported sales growth less the
impacts from foreign currency translation, M&A and raw
materials pass-through pricing in the Resins & Chemicals
business of PMT. The raw materials pricing impact is excluded in
instances where raw materials costs are passed through to
customers, which drives fluctuations in selling prices not tied to
volume growth. A reconciliation of core organic sales growth
to reported sales growth is provided in the attached financial
tables.
| Honeywell International
Inc. |
| Consolidated Statement
of Operations (Unaudited) |
| (Dollars in millions,
except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
| Product sales |
$
7,573 |
|
$
8,090 |
|
$
22,735 |
|
$
24,213 |
| Service sales |
2,038 |
|
2,018 |
|
5,864 |
|
5,827 |
| Net sales |
9,611 |
|
10,108 |
|
28,599 |
|
30,040 |
|
|
|
|
|
|
|
|
|
| Costs, expenses and other |
|
|
|
|
|
|
|
| Cost of products
sold (A) |
5,372 |
|
5,860 |
|
16,126 |
|
17,686 |
| Cost of services
sold (A) |
1,282 |
|
1,268 |
|
3,704 |
|
3,705 |
|
|
6,654 |
|
7,128 |
|
19,830 |
|
21,391 |
|
Selling, general and administrative expenses (A) |
1,202 |
|
1,344 |
|
3,674 |
|
4,058 |
| Other (income)
expense |
(24) |
|
(21) |
|
(64) |
|
(159) |
| Interest and other
financial charges |
72 |
|
77 |
|
226 |
|
236 |
|
|
7,904 |
|
8,528 |
|
23,666 |
|
25,526 |
|
|
|
|
|
|
|
|
|
| Income before taxes |
1,707 |
|
1,580 |
|
4,933 |
|
4,514 |
| Tax expense |
431 |
|
388 |
|
1,289 |
|
1,160 |
|
|
|
|
|
|
|
|
|
| Net income |
1,276 |
|
1,192 |
|
3,644 |
|
3,354 |
|
|
|
|
|
|
|
|
|
| Less: Net income attributable to the
noncontrolling interest |
12 |
|
25 |
|
70 |
|
71 |
|
|
|
|
|
|
|
|
|
| Net income attributable to
Honeywell |
$
1,264 |
|
$ 1,167 |
|
$
3,574 |
|
$
3,283 |
|
|
|
|
|
|
|
|
|
| Earnings per share of common stock -
basic |
$
1.62 |
|
$
1.49 |
|
$
4.57 |
|
$
4.18 |
|
|
|
|
|
|
|
|
|
| Earnings per share of common stock -
assuming dilution |
$
1.60 |
|
$
1.47 |
|
$
4.51 |
|
$
4.13 |
|
|
|
|
|
|
|
|
|
| Weighted average number of shares
outstanding - basic |
780.4 |
|
784.5 |
|
782.5 |
|
784.6 |
|
|
|
|
|
|
|
|
|
| Weighted average number of shares
outstanding - assuming dilution |
789.5 |
|
795.0 |
|
792.1 |
|
795.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (A) Cost of products and services sold
and selling, general and administrative expenses include amounts
for repositioning and other charges, pension and other
postretirement (income) 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 |
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
| Aerospace |
$
3,820 |
|
$
3,895 |
|
$
11,254 |
|
$
11,756 |
|
|
|
|
|
|
|
|
|
| Automation and Control Solutions |
3,571 |
|
3,671 |
|
10,388 |
|
10,640 |
|
|
|
|
|
|
|
|
|
| Performance Materials and
Technologies |
2,220 |
|
2,542 |
|
6,957 |
|
7,644 |
|
|
|
|
|
|
|
|
|
| Total |
$
9,611 |
|
$ 10,108 |
|
$ 28,599 |
|
$ 30,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Segment Profit to Income Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
| Segment Profit |
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
| Aerospace |
$
833 |
|
$
790 |
|
$
2,362 |
|
$
2,252 |
|
|
|
|
|
|
|
|
|
| Automation and Control Solutions |
614 |
|
583 |
|
1,697 |
|
1,587 |
|
|
|
|
|
|
|
|
|
| Performance Materials and
Technologies |
461 |
|
444 |
|
1,473 |
|
1,392 |
|
|
|
|
|
|
|
|
|
| Corporate |
(56) |
|
(58) |
|
(156) |
|
(167) |
|
|
|
|
|
|
|
|
|
| Total segment
profit |
1,852 |
|
1,759 |
|
5,376 |
|
5,064 |
|
|
|
|
|
|
|
|
|
| Other income (A) |
15 |
|
11 |
|
39 |
|
132 |
| Interest and other financial
charges |
(72) |
|
(77) |
|
(226) |
|
(236) |
| Stock compensation expense (B) |
(41) |
|
(41) |
|
(132) |
|
(143) |
| Pension ongoing income (B) |
96 |
|
62 |
|
299 |
|
187 |
| Other postretirement expense (B) |
(10) |
|
(12) |
|
(30) |
|
(37) |
| Repositioning and other charges
(B) |
(133) |
|
(122) |
|
(393) |
|
(453) |
|
|
|
|
|
|
|
|
|
| Income before taxes |
$
1,707 |
|
$
1,580 |
|
$
4,933 |
|
$
4,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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 30, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$
6,563 |
|
$
6,959 |
|
Accounts, notes and other receivables |
|
7,936 |
|
7,960 |
|
Inventories |
|
4,441 |
|
4,405 |
|
Deferred income taxes |
|
739 |
|
722 |
|
Investments and other current assets |
|
3,800 |
|
2,145 |
|
Total current assets |
|
23,479 |
|
22,191 |
|
|
|
|
|
|
| Investments and
long-term receivables |
|
471 |
|
465 |
| Property, plant and
equipment - net |
|
5,451 |
|
5,383 |
| Goodwill |
|
12,684 |
|
12,788 |
| Other intangible
assets - net |
|
2,071 |
|
2,208 |
| Insurance recoveries
for asbestos related liabilities |
|
414 |
|
454 |
| Deferred income
taxes |
|
329 |
|
404 |
| Other assets |
|
1,726 |
|
1,558 |
|
Total assets |
|
$
46,625 |
|
$
45,451 |
|
|
|
|
|
|
| LIABILITIES AND
SHAREOWNERS' EQUITY |
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$
5,363 |
|
$
5,365 |
|
Short-term borrowings |
|
4 |
|
51 |
|
Commercial paper |
|
3,696 |
|
1,647 |
|
Current maturities of long-term debt |
|
1,268 |
|
939 |
|
Accrued liabilities |
|
6,036 |
|
6,771 |
|
Total current liabilities |
|
16,367 |
|
14,773 |
|
|
|
|
|
|
| Long-term debt |
|
5,599 |
|
6,046 |
| Deferred income
taxes |
|
499 |
|
236 |
| Postretirement benefit
obligations other than pensions |
|
892 |
|
911 |
| Asbestos related
liabilities |
|
1,198 |
|
1,200 |
| Other liabilities |
|
3,903 |
|
4,282 |
| Redeemable
noncontrolling interest |
|
271 |
|
219 |
| Shareowners'
equity |
|
17,896 |
|
17,784 |
|
Total liabilities, redeemable noncontrolling
interest and shareowners' equity |
|
$
46,625 |
|
$
45,451 |
| Honeywell International
Inc. |
| Consolidated
Statement of Cash Flows (Unaudited) |
| (Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| Net income |
|
$ 1,276 |
|
$ 1,192 |
|
$ 3,644 |
|
$ 3,354 |
| Less: Net income attributable
to the noncontrolling interest |
|
12 |
|
25 |
|
70 |
|
71 |
| Net income attributable to
Honeywell |
|
1,264 |
|
1,167 |
|
3,574 |
|
3,283 |
| Adjustments to
reconcile net income attributable to Honeywell to net cash |
|
|
|
|
|
|
|
|
| provided by operating
activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
168 |
|
166 |
|
503 |
|
499 |
|
Amortization |
|
51 |
|
61 |
|
158 |
|
199 |
| (Gain)
loss on sale of non-strategic businesses and assets |
|
(1) |
|
1 |
|
(1) |
|
11 |
| Gain on
sale of available for sale investments |
|
- |
|
- |
|
- |
|
(105) |
|
Repositioning and other charges |
|
133 |
|
122 |
|
393 |
|
453 |
| Net
payments for repositioning and other charges |
|
(114) |
|
(167) |
|
(329) |
|
(301) |
| Pension
and other postretirement income |
|
(86) |
|
(50) |
|
(269) |
|
(150) |
| Pension
and other postretirement benefit payments |
|
(36) |
|
(38) |
|
(84) |
|
(123) |
| Stock
compensation expense |
|
41 |
|
41 |
|
132 |
|
143 |
|
Deferred income taxes |
|
158 |
|
187 |
|
284 |
|
255 |
| Excess
tax benefits from share based payment arrangements |
|
(13) |
|
(22) |
|
(69) |
|
(71) |
|
Other |
|
(13) |
|
(274) |
|
90 |
|
(207) |
| Changes
in assets and liabilities, net of the effects of |
|
|
|
|
|
|
|
|
|
acquisitions and divestitures: |
|
|
|
|
|
|
|
|
|
Accounts, notes and other receivables |
|
302 |
|
(104) |
|
52 |
|
(529) |
|
Inventories |
|
5 |
|
(57) |
|
(20) |
|
(279) |
|
Other
current assets |
|
(73) |
|
49 |
|
(111) |
|
181 |
|
Accounts payable |
|
11 |
|
54 |
|
(13) |
|
154 |
|
Accrued liabilities |
|
(131) |
|
97 |
|
(795) |
|
(151) |
| Net cash provided by operating activities |
|
1,666 |
|
1,233 |
|
3,495 |
|
3,262 |
|
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Expenditures for property,
plant and equipment |
|
(277) |
|
(259) |
|
(685) |
|
(680) |
| Proceeds from disposals of
property, plant and equipment |
|
- |
|
1 |
|
3 |
|
12 |
| Increase in investments |
|
(1,835) |
|
(1,415) |
|
(5,701) |
|
(3,139) |
| Decrease in investments |
|
1,991 |
|
1,181 |
|
4,050 |
|
2,124 |
| Cash paid for acquisitions, net
of cash acquired |
|
- |
|
(2) |
|
(185) |
|
(4) |
| Proceeds from sales of
businesses, net of fees paid |
|
1 |
|
156 |
|
3 |
|
157 |
| Other |
|
81 |
|
(96) |
|
(69) |
|
(109) |
| Net cash used for investing activities |
|
(39) |
|
(434) |
|
(2,584) |
|
(1,639) |
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Net increase (decrease) in
commercial paper |
|
901 |
|
(400) |
|
2,049 |
|
550 |
| Net (decrease) increase in
short-term borrowings |
|
(19) |
|
1 |
|
(38) |
|
(5) |
| Proceeds from issuance of
common stock |
|
25 |
|
45 |
|
150 |
|
206 |
| Proceeds from issuance of
long-term debt |
|
34 |
|
34 |
|
48 |
|
79 |
| Payments of long-term debt |
|
(91) |
|
(1) |
|
(148) |
|
(607) |
| Excess tax benefits from share
based payment arrangements |
|
13 |
|
22 |
|
69 |
|
71 |
| Repurchases of common
stock |
|
(1,235) |
|
(138) |
|
(1,721) |
|
(689) |
| Cash dividends paid |
|
(410) |
|
(365) |
|
(1,261) |
|
(1,101) |
| Other |
|
- |
|
(7) |
|
- |
|
(7) |
| Net cash used for financing activities |
|
(782) |
|
(809) |
|
(852) |
|
(1,503) |
|
|
|
|
|
|
|
|
|
| Effect of foreign exchange rate changes on cash
and cash equivalents |
|
(236) |
|
(144) |
|
(455) |
|
(114) |
| Net increase (decrease) in cash and cash
equivalents |
|
609 |
|
(154) |
|
(396) |
|
6 |
| Cash and cash equivalents at beginning of
period |
|
5,954 |
|
6,582 |
|
6,959 |
|
6,422 |
| Cash and cash equivalents at end of period |
|
$ 6,563 |
|
$ 6,428 |
|
$ 6,563 |
|
$ 6,428 |
| Honeywell International
Inc. |
| Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow (Unaudited) |
| (Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
2015 |
|
2014 |
|
|
|
|
|
|
| Cash provided by operating activities |
$
1,666 |
|
$
1,233 |
|
| Expenditures for property, plant and
equipment |
(277) |
|
(259) |
|
|
|
|
|
|
| Free cash flow |
$
1,389 |
|
$
974 |
|
|
|
|
|
|
| Free cash flow |
$
1,389 |
|
$
974 |
|
| ÷ Net income, attributable to Honeywell |
1,264 |
|
1,167 |
|
|
|
|
|
|
| Free cash flow conversion |
110% |
|
83% |
|
|
|
|
|
|
|
|
|
|
|
| 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. |
| Reconciliation of
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited) |
| (Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
| Segment Profit |
|
$
1,852 |
|
$
1,759 |
|
$
5,376 |
|
$
5,064 |
|
|
|
|
|
|
|
|
|
| Stock compensation expense (A) |
|
(41) |
|
(41) |
|
(132) |
|
(143) |
| Repositioning and other (A, B) |
|
(142) |
|
(132) |
|
(418) |
|
(480) |
| Pension ongoing income (A) |
|
96 |
|
62 |
|
299 |
|
187 |
| Other postretirement expense (A) |
|
(10) |
|
(12) |
|
(30) |
|
(37) |
|
|
|
|
|
|
|
|
|
| Operating Income |
|
$
1,755 |
|
$
1,636 |
|
$ 5,095 |
|
$ 4,591 |
|
|
|
|
|
|
|
|
|
| Segment Profit |
|
$
1,852 |
|
$
1,759 |
|
$ 5,376 |
|
$ 5,064 |
| ÷ Sales |
|
$
9,611 |
|
$ 10,108 |
|
$ 28,599 |
|
$ 30,040 |
| Segment Profit Margin % |
|
19.3% |
|
17.4% |
|
18.8% |
|
16.9% |
|
|
|
|
|
|
|
|
|
| Operating Income |
|
$
1,755 |
|
$
1,636 |
|
$ 5,095 |
|
$ 4,591 |
| ÷ Sales |
|
$
9,611 |
|
$ 10,108 |
|
$ 28,599 |
|
$ 30,040 |
| Operating Income Margin % |
|
18.3% |
|
16.2% |
|
17.8% |
|
15.3% |
|
| (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. |
| Calculation of EPS at
26.5% Tax Rate (Unaudited) |
| (Dollars in millions,
except per share amounts) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
| Income before taxes |
|
$ 1,707 |
|
$ 1,580 |
|
|
|
|
|
|
|
| Taxes at 26.5% |
|
452 |
|
419 |
|
|
|
|
|
|
|
| Net income at 26.5% tax rate |
|
$ 1,255 |
|
$ 1,161 |
|
|
|
|
|
|
|
| Less: Net income attributable to the
noncontrolling interest |
|
12 |
|
25 |
|
|
|
|
|
|
|
| Net income attributable to Honeywell at 26.5% tax
rate |
|
$ 1,243 |
|
$ 1,136 |
|
|
|
|
|
|
|
| Weighted average number of shares outstanding -
assuming dilution |
|
789.5 |
|
795.0 |
|
|
|
|
|
|
|
| EPS at 26.5% tax rate |
|
$
1.57 |
|
$
1.43 |
|
|
|
|
|
|
|
| We believe EPS adjusted to expected
full-year tax rate at 26.5% is a measure that is useful to
investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends. |
| Honeywell International
Inc. |
| Reconciliation of Core
Organic Sales Growth (Unaudited) |
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
2015 |
| Honeywell |
|
| Reported sales growth |
(5)% |
| Foreign currency translation, acquisitions,
divestitures and other |
5% |
| Raw materials pricing in R&C |
1% |
|
|
| Core organic sales growth |
1% |
|
|
| PMT |
|
| Reported sales growth |
(13)% |
| Foreign currency translation, acquisitions,
divestitures and other |
5% |
| Raw materials pricing in R&C |
5% |
|
|
| Core organic sales growth |
(3)% |
|
|
|
|
| Throughout this press release, core
organic sales growth refers to reported sales growth less the
impacts from foreign currency translation, M&A and raw
materials pass-through pricing in the Resins & Chemicals
business of PMT. The raw materials pricing impact is excluded in
instances where raw materials costs are passed through to
customers, which drives fluctuations in selling prices not tied to
volume growth. |
|
| We believe core organic sales growth
is a measure that is 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
billions) |
|
|
|
|
|
2015 Guidance |
|
|
|
| Segment Profit |
|
~$7.3 |
|
|
|
| Stock compensation expense (A) |
|
~(0.2) |
| Repositioning and other (A, B) |
|
~(0.5) |
| Pension ongoing income (A) |
|
~0.4 |
| Pension mark-to-market adjustment (A) |
|
TBD |
| Other postretirement expense (A) |
|
~(0.0) |
|
|
|
| Operating Income |
|
~$6.9 |
| Pension mark-to-market adjustment (A) |
|
TBD |
| Operating Income excluding pension mark-to-market
adjustment |
|
~$6.9 |
|
|
|
| Segment Profit |
|
~$7.3 |
| ÷ Sales |
|
~$38.7 |
| Segment Profit Margin % |
|
~18.8% |
|
|
|
| Operating Income |
|
~$6.9 |
| ÷ Sales |
|
~$38.7 |
| Operating Income Margin % |
|
~17.9% |
|
|
|
| Operating Income excluding pension mark-to-market
adjustment |
|
~$6.9 |
| ÷ Sales |
|
~$38.7 |
| Operating Income Margin excluding pension
mark-to-market adjustment % |
|
~17.9% |
|
|
|
|
| (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, |
|
|
|
2014 |
|
|
|
|
|
|
|
| Segment Profit |
|
|
$
6,696 |
|
|
|
|
|
|
|
|
| Stock compensation expense
(A) |
|
|
(187) |
|
|
| Repositioning and other (A,
B) |
|
|
(634) |
|
|
| Pension ongoing income (A) |
|
|
254 |
|
|
| Pension mark-to-market adjustment
(A) |
|
|
(249) |
|
|
| Other postretirement expense
(A) |
|
|
(49) |
|
|
|
|
|
|
|
|
| Operating Income |
|
|
$
5,831 |
|
|
| Pension mark-to-market adjustment
(A) |
|
|
(249) |
|
|
| Operating Income excluding pension
mark-to-market adjustment |
|
|
$
6,080 |
|
|
|
|
|
|
|
|
| Segment Profit |
|
|
$
6,696 |
|
|
| ÷ Sales |
|
|
$
40,306 |
|
|
| Segment Profit Margin % |
|
|
16.6% |
|
|
|
|
|
|
|
|
| Operating Income |
|
|
$
5,831 |
|
|
| ÷ Sales |
|
|
$
40,306 |
|
|
| Operating Income Margin % |
|
|
14.5% |
|
|
|
|
|
|
|
|
| Operating Income excluding pension
mark-to-market adjustment |
|
|
$
6,080 |
|
|
| ÷ Sales |
|
|
$
40,306 |
|
|
| Operating Income Margin excluding
pension mark-to-market adjustment % |
|
|
15.1% |
|
|
|
|
|
|
|
|
| (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 |
| Unaudited |
|
Twelve Months
Ended |
|
December 31, |
|
2014 |
|
|
|
| EPS |
$
5.33 |
|
|
|
|
| Pension mark-to-market adjustment |
0.23 |
|
|
|
|
| EPS, excluding pension
mark-to-market adjustment |
$ 5.56 |
|
|
|
|
|
|
| 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 - assuming dilution of 795.2 million. Mark-to-market
uses a blended tax rate of 28.1%. |
|
|
|
|
| Honeywell International
Inc. |
| Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow (Unaudited) |
| (Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended |
|
|
|
December 31, |
|
|
|
2014 |
|
|
|
|
|
|
|
| Cash provided by operating activities |
|
|
$ 5,024 |
|
|
|
|
|
|
|
|
| Expenditures for property, plant and
equipment |
|
|
(1,094) |
|
|
|
|
|
|
|
|
| Free cash flow |
|
|
$ 3,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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. |
| Contacts: |
|
| Media
|
Investor Relations |
| Robert C.
Ferris |
Mark Macaluso |
| (973)
455-3388 |
(973) 455-2222 |
| rob.ferris@honeywell.com |
mark.macaluso@honeywell.com |