TIDMHON
Honeywell Delivers Strong First Quarter; Raises 2019 Sales And Earnings Per
Share Guidance
- Earnings per Share of $1.92, up 2%, up 13% Ex-Spins(1); Exceeding High End of
Guidance by 7 Cents
- Reported Sales Down 15% Due to Impact of Spin-Offs; Organic Sales up 8%
Driven by Strength in Long-Cycle Businesses
- Operating Income Margin up 190 Basis Points to 18.5%, Segment Margin up 120
Basis Points to 20.4%
- Operating Cash Flow of $1.1 Billion; Adjusted Free Cash Flow(2) of $1.2
Billion, Conversion 82% vs. 68% in First Quarter 2018
MORRIS PLAINS, N.J., April 18, 2019 /PRNewswire/ -- Honeywell (NYSE: HON) today
announced financial results for the first quarter of 2019 and raised its
full-year sales and earnings per share guidance.
"Honeywell delivered a very strong start to 2019 with first-quarter results
that exceeded the high end of our sales and earnings guidance. Organic sales
grew 8% led by our long-cycle businesses in commercial aerospace, defense, and
warehouse and process automation, and strong demand for commercial fire and
security products. Our robust sales growth, supported by winning positions in
attractive end markets and the continuous improvements we are making across our
supply chain, drove earnings per share of $1.92, seven cents above the high end
of our first-quarter guidance and up 13%1 excluding the impact of the
spin-offs." said Darius Adamczyk, chairman and chief executive officer of
Honeywell. "Segment margin was above 20% for the second quarter in a row with
120 basis points of segment margin expansion year-over-year driven by the
favorable impact of the spin-offs, increased sales volumes, and operational
improvements. We also continued to make progress on cash, generating $1.2
billion of adjusted free cash flow2, with conversion of 82%, up 14 percentage
points year-over-year, while repurchasing $750 million in Honeywell shares in
the quarter. We remain on a path to 95% to 100% conversion for the full year."
Adamczyk continued, "As a result of our first-quarter performance and our
confidence in our ability to continue to deliver for our shareowners, we are
raising our full-year earnings per share guidance to a new range of $7.90 to
$8.15, and organic sales guidance to a new range of 3% to 6%." A summary of the
company's full-year guidance changes can be found in Table 1.
"We are very pleased with the start to 2019. Organic sales growth was strong in
all of our segments this quarter. Our long-cycle backlog increased more than
10%, and our investments in new product development and commercial excellence
are delivering results, while positioning the company for short- and long-term
success," Adamczyk concluded.
First-Quarter Performance
Honeywell sales for the first quarter were down 15% on a reported basis and up
8% on an organic basis. The difference between reported and organic sales
primarily relates to the spin-offs of the Transportation Systems business
(formerly in Aerospace) and the Homes and ADI Global Distribution business
(formerly in Honeywell Building Technologies) as well as the unfavorable impact
of foreign currency translation. First-quarter reported earnings per share was
$1.92. The first-quarter financial results can be found in Tables 2 and 3.
Aerospace sales for the first quarter were up 10% on an organic basis driven by
robust demand from business aviation original equipment manufacturers,
continued strength in the U.S. and international defense business, and growth
in the commercial aviation aftermarket. Segment margin expanded 260 basis
points to 25.1%, primarily driven by commercial excellence and the favorable
impact from the spin-off of the Transportation Systems business.
Honeywell Building Technologies sales for the first quarter were up 9% on an
organic basis driven by strong demand for commercial fire and security
offerings, and global building projects growth. Segment margin expanded 240
basis points to 19.5%, primarily driven by the favorable impact from the
spin-off of the Homes and ADI Global Distribution business, partially offset by
stranded cost impacts related to the spin, which the company intends to
eliminate by the end of 2019 as planned, and unfavorable mix.
Performance Materials and Technologies sales for the first quarter were up 5%
on an organic basis driven by broad-based growth in automation projects and
maintenance and migration services in Process Solutions, as well as continued
demand for fluorine products. Segment margin expanded 140 basis points to
21.9%, primarily driven by higher sales volumes and commercial excellence.
Safety and Productivity Solutions sales for the first quarter were up 10% on an
organic basis driven by continued double-digit sales growth in the
Intelligrated warehouse automation business, robust demand in sensing and IoT,
and strong demand across China. Segment margin contracted 260 basis points to
13.4%, primarily driven by lower sales volumes in productivity products, impact
of inflation, and unfavorable mix due to higher sales in Intelligrated,
partially offset by commercial excellence.
Conference Call Details
Honeywell will discuss its first quarter results and updated full-year guidance
during an investor conference call starting at 8:30 a.m. Eastern Daylight Time
today. To participate on the conference call, please dial (800) 239-9838
(domestic) or (323) 794-2551 (international) approximately ten minutes before
the 8:30 a.m. EDT start. Please mention to the operator that you are dialing in
for Honeywell's first quarter 2019 earnings call or provide the conference code
HON1Q19. 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, April 18, until 12:30 p.m. EDT, April
25, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The
access code is 7279499.
TABLE 1: FULL-YEAR 2019 GUIDANCE
Previous Guidance Current Guidance
Sales $36.0B - $36.9B $36.5B - $37.2B
Organic Growth 2% - 5% 3% - 6%
Segment Margin 20.7% - 21.0% 20.7% - 21.0%
Expansion Up 110 - 140 bps Up 110 - 140 bps
Expansion Ex-Spins3 Up 30 - 60 bps Up 30 - 60 bps
Earnings Per Share $7.80 - $8.10 $7.90 - $8.15
Earnings Growth Ex-Spins4 6% - 10% 7% - 10%
Operating Cash Flow $5.9B - $6.5B $6.0B - $6.5B
Adjusted Free Cash Flow5 $5.4B - $6.0B $5.5B - $6.0B
Conversion 95% - 100% 95% - 100%
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
1Q 2018 1Q 2019 Change
Sales 10,392 8,884 (15%)
Organic Growth 8%
Segment Margin 19.2% 20.4% 120 bps
Operating Income Margin 16.6% 18.5% 190 bps
Reported Earnings Per Share $1.89 $1.92 2%
Adjusted Earnings Per Share Ex-Spins6 $1.70 $1.92 13%
Cash Flow from Operations 1,136 1,134 Flat
Adjusted Free Cash Flow7 1,006 1,158 15%
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE 1Q 2018 1Q 2019 Change
Sales 3,977 3,341 (16%)
Organic Growth 10%
Segment Profit 893 838 (6%)
Segment Margin 22.5% 25.1% 260 bps
HONEYWELL BUILDING TECHNOLOGIES
Sales 2,433 1,389 (43%)
Organic Growth 9%
Segment Profit 416 271 (35%)
Segment Margin 17.1% 19.5% 240 bps
PERFORMANCE MATERIALS AND TECHNOLOGIES
Sales 2,534 2,572 2%
Organic Growth 5%
Segment Profit 519 564 9%
Segment Margin 20.5% 21.9% 140 bps
SAFETY AND PRODUCTIVITY SOLUTIONS
Sales 1,448 1,582 9%
Organic Growth 10%
Segment Profit 231 212 (8%)
Segment Margin 16.0% 13.4% (260) bps
Honeywell (www.honeywell.com) is a Fortune 100 technology company that delivers
industry specific solutions that include aerospace products and services;
control technologies for buildings and industry; and performance materials
globally. Our technologies help everything from aircraft, buildings,
manufacturing plants, supply chains, and workers become more connected to make
our world smarter, safer, and more sustainable. For more news and information
on Honeywell, please visit www.honeywell.com/newsroom.
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.
This release contains financial measures presented on a non-GAAP basis.
Honeywell's non-GAAP financial measures used in this release are as follows:
segment profit, on an overall Honeywell basis, a measure by which we assess
operating performance, which we define as operating income adjusted for certain
items as presented in the Appendix; segment margin, on an overall Honeywell
basis, which we define as segment profit divided by sales and which we adjust
to exclude sales and segment profit contribution from Resideo and Garrett in
2018, if and as noted in the release; organic sales growth, which we define as
sales growth less the impacts from foreign currency translation, and
acquisitions and divestitures for the first 12 months following transaction
date; adjusted free cash flow, which we define as cash flow from operations
less capital expenditures and which we adjust to exclude the impact of
separation costs related to the spin-offs of Resideo and Garrett, if and as
noted in the release; adjusted free cash flow conversion, which we define as
adjusted free cash flow divided by net income attributable to Honeywell,
excluding pension mark-to-market expenses, separation costs related to the
spin-offs, and adjustments to the 4Q17 U.S. tax legislation charge, if and as
noted in the release; and adjusted earnings per share, which we adjust to
exclude pension mark-to-market expenses, as well as for other components, such
as separation costs related to the spin-offs, adjustments to the 4Q17 U.S. tax
legislation charge, and after-tax segment profit contribution from Resideo and
Garrett in the periods noted in the release, net of spin indemnification
impacts assuming both indemnification agreements were effective in such
periods, if and as noted in the release. The respective tax rates applied when
adjusting earnings per share for these items are identified in the release or
in the reconciliations presented in the Appendix. Management believes that,
when considered together with reported amounts, these measures are useful to
investors and management in understanding our ongoing operations and in the
analysis of ongoing operating trends. These metrics should be considered in
addition to, and not as replacements for, the most comparable GAAP measure.
Refer to the Appendix attached to this release for reconciliations of non-GAAP
financial measures to the most directly comparable GAAP measures.
1 Adjusted EPS V% ex-spins excludes 1Q18 after-tax separation costs related to
the spin-offs of Resideo and Garrett and 1Q18 after-tax segment profit
contribution from Resideo and Garrett, net of the spin indemnification impacts
assuming both indemnification agreements were effective in 1Q18.
2 Adjusted free cash flow and associated conversion exclude impacts from
separation costs related to the spin-offs of $165M in 1Q19 and $10M in 1Q18.
Associated conversion for 1Q18 also excludes after-tax separation costs related
to the spin-offs of Resideo and Garrett.
3 Segment margin expansion ex-spins guidance excludes sales and segment profit
contribution from Resideo and Garrett in 2018.
4 EPS V% ex-spins guidance excludes 2018 pension mark-to-market, 2018 after-tax
separation costs related to the spin-offs of Resideo and Garrett, and 2018
adjustments to the 4Q17 U.S. tax legislation charge. Also excludes the 2018
after-tax segment profit contribution from the spin-offs, net of spin
indemnification impacts assuming both indemnification agreements were effective
for all of 2018, of $0.62.
5 Adjusted free cash flow guidance and associated conversion excludes estimated
payments of $0.3B for separation costs incurred in 2018 related to the
spin-offs of Resideo and Garrett.
6 Adjusted EPS ex-spins and adjusted EPS V% ex-spins exclude 1Q18 after-tax
separation costs related to the spin-offs of Resideo and Garrett of $49M. Also
excludes the 1Q18 after-tax segment profit contribution from the spin-offs, net
of spin indemnification impacts assuming both indemnification agreements were
effective in 1Q18, of $0.25.
7 Adjusted free cash flow and adjusted free cash flow V% exclude impacts from
separation costs related to the spin-offs of $165M in 1Q19 and $10M in 1Q18.
Contacts:
Media Investor Relations
Nina Krauss Mark Macaluso
(973) 455-4253 (973) 455-2222
nina.krauss@honeywell.com mark.macaluso@honeywell.com
Honeywell International Inc
Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended
March 31,
2019 2018
Product sales $ 6,713 $ 8,234
Service sales 2,171 2,158
Net sales 8,884 10,392
Costs, expenses and other
Cost of products sold (A) 4,622 5,905
Cost of services sold (A) 1,257 1,286
5,879 7,191
Selling, general and administrative expenses 1,363 1,475
(A)
Other (income) expense (285) (268)
Interest and other financial charges 85 83
7,042 8,481
Income before taxes 1,842 1,911
Tax expense 406 459
Net income 1,436 1,452
Less: Net income attributable to the 20 13
noncontrolling interest
Net income attributable to Honeywell $ 1,416 $ 1,439
Earnings per share of common stock - basic $ 1.94 $ 1.92
Earnings per share of common stock - assuming $ 1.92 $ 1.89
dilution
Weighted average number of shares outstanding - 729.7 750.6
basic
Weighted average number of shares outstanding - 738.8 761.0
assuming dilution
(A) Cost of products and services sold and selling, general and administrative
expenses include amounts for repositioning and other charges, the service cost
component of pension and other postretirement (income) expense, and stock
compensation expense.
Honeywell International Inc
Segment Data (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
Net Sales 2019 2018
Aerospace $ $
3,341 3,977
Honeywell Building Technologies 1,389 2,433
Performance Materials and Technologies 2,572 2,534
Safety and Productivity Solutions 1,582 1,448
Total $ $
8,884 10,392
Reconciliation of Segment Profit to Income Before Taxes
Three Months Ended
March 31,
Segment Profit 2019 2018
Aerospace $ $
838 893
Honeywell Building Technologies 271 416
Performance Materials and Technologies 564 519
Safety and Productivity Solutions 212 231
Corporate (76) (64)
Total segment profit 1,809 1,995
Interest and other financial charges (85) (83)
Stock compensation expense (A) (41) (52)
Pension ongoing income (B) 151 248
Other postretirement income (B) 12 6
Repositioning and other charges (C,D) (84) (191)
Other (E) 80 (12)
Income before taxes $ $
1,842 1,911
(A) Amounts included in Selling, general and
administrative expenses.
(B) Amounts included in Cost of products and services sold and Selling, general
and administrative expenses (service costs) and Other income/expense
(non-service cost components).
(C) Amounts included in Cost of products and services sold, Selling, general
and administrative expenses, and Other income/expense.
(D) Includes repositioning, asbestos, and environmental expenses.
(E) Amounts include the other components of Other income/expense not included
within other categories in this reconciliation. Equity income (loss) of
affiliated companies is included in segment profit.
Honeywell International Inc
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
March 31, December
31,
2019 2018
ASSETS
Current assets:
Cash and cash equivalents $ $
8,625 9,287
Short-term investments 2,059 1,623
Accounts receivable - net 7,307 7,508
Inventories 4,548 4,326
Other current assets 1,795 1,618
Total current assets 24,334 24,362
Investments and long-term receivables 747 742
Property, plant and equipment - net 5,276 5,296
Goodwill 15,555 15,546
Other intangible assets - net 4,039 4,139
Insurance recoveries for asbestos related 429 437
liabilities
Deferred income taxes 362 382
Other assets 7,818 6,869
Total assets $ $
58,560 57,773
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ $
5,582 5,607
Commercial paper and other short-term borrowings 3,514 3,586
Current maturities of long-term debt 4,000 2,872
Accrued liabilities 6,497 6,859
Total current liabilities 19,593 18,924
Long-term debt 8,598 9,756
Deferred income taxes 1,850 1,713
Postretirement benefit obligations other than 333 344
pensions
Asbestos related liabilities 2,246 2,269
Other liabilities 6,977 6,402
Redeemable noncontrolling interest 7 7
Shareowners' equity 18,956 18,358
Total liabilities, redeemable noncontrolling $ $
interest and shareowners' equity 58,560 57,773
Honeywell International Inc
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
2019 2018
Cash flows from operating activities:
Net income $ $
1,436 1,452
Less: Net income attributable to the noncontrolling 20 13
interest
Net income attributable to Honeywell 1,416 1,439
Adjustments to reconcile net income attributable to
Honeywell to net
cash provided by operating activities:
Depreciation 163 179
Amortization 98 109
Repositioning and other charges 84 191
Net payments for repositioning and other charges (34) (141)
Pension and other postretirement income (163) (254)
Pension and other postretirement benefit payments (30) (36)
Stock compensation expense 41 52
Deferred income taxes 80 47
Other (4) 2
Changes in assets and liabilities, net of the
effects of
acquisitions and divestitures:
Accounts receivable 198 (61)
Inventories (221) (163)
Other current assets (217) (43)
Accounts payable (29) 57
Accrued liabilities (248) (242)
Net cash provided by operating activities 1,134 1,136
Cash flows from investing activities:
Expenditures for property, plant and equipment (141) (140)
Proceeds from disposals of property, plant and 2 2
equipment
Increase in investments (1,226) (583)
Decrease in investments 796 1,838
Other (40) (123)
Net cash (used for) provided by investing activities (609) 994
Cash flows from financing activities:
Proceeds from issuance of commercial paper and other 3,318 6,676
short-term borrowings
Payments of commercial paper and other short-term (3,319) (5,329)
borrowings
Proceeds from issuance of common stock 145 60
Proceeds from issuance of long-term debt 20 3
Payments of long-term debt (13) (1,246)
Repurchases of common stock (750) (940)
Cash dividends paid (606) (556)
Other (30) (116)
Net cash used for financing activities (1,235) (1,448)
Effect of foreign exchange rate changes on cash and cash 48 156
equivalents
Net (decrease) increase in cash and cash equivalents (662) 838
Cash and cash equivalents at beginning of period 9,287 7,059
Cash and cash equivalents at end of period $ $
8,625 7,897
Honeywell International Inc
Reconciliation of Organic Sales % Change (Unaudited)
Three Months Ended
March 31, 2019
Honeywell
Reported sales % change (15)%
Less: Foreign currency translation (3)%
Less: Acquisitions, divestitures and other, net (20)%
Organic sales % change 8%
Aerospace
Reported sales % change (16)%
Less: Foreign currency translation -
Less: Acquisitions, divestitures and other, net (26)%
Organic sales % change 10%
Honeywell Building Technologies
Reported sales % change (43)%
Less: Foreign currency translation (3)%
Less: Acquisitions, divestitures and other, net (49)%
Organic sales % change 9%
Performance Materials and Technologies
Reported sales % change 2%
Less: Foreign currency translation (3)%
Less: Acquisitions, divestitures and other, net -
Organic sales % change 5%
Safety and Productivity Solutions
Reported sales % change 9%
Less: Foreign currency translation (3)%
Less: Acquisitions, divestitures and other, net 2%
Organic sales % change 10%
We define organic sales percent as the year-over-year change in reported sales
relative to the comparable period, excluding the impact on sales from foreign
currency translation, and acquisitions, net of divestitures. We believe this
measure is useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends.
A quantitative reconciliation of reported sales percent change to organic sales
percent change has not been provided for forward-looking measures of organic
sales percent change because management cannot reliably predict or estimate,
without unreasonable effort, the fluctuations in global currency markets that
impact foreign currency translation, nor is it reasonable for management to
predict the timing, occurrence and impact of acquisition and divestiture
transactions, all of which could significantly impact our reported sales
percent change.
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,
2019 2018
Segment profit $ 1,809 $ 1,995
Stock compensation expense (A) (41) (52)
Repositioning, Other (B,C) (93) (161)
Pension and other postretirement service costs (D) (33) (56)
Operating income $ 1,642 $ 1,726
Segment profit $ 1,809 $ 1,995
÷ Net sales $ 8,884 $ 10,392
Segment profit margin % 20.4% 19.2%
Operating income $ 1,642 $ 1,726
÷ Net sales $ 8,884 $ 10,392
Operating income margin % 18.5% 16.6%
(A) Included in Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income
adjustment.
(C) Included in Cost of products and services sold, Selling, general and
administrative expenses and Other income/expense.
(D) Included in Cost of products and services sold and Selling, general and
administrative expenses.
We define segment profit as operating income, excluding stock compensation
expense, pension and other postretirement service costs, and repositioning and
other charges. We believe these measures are useful to investors and
management in understanding our ongoing operations and in analysis of ongoing
operating trends.
A quantitative reconciliation of segment profit, on an overall Honeywell basis,
to operating income has not been provided for all forward-looking measures of
segment profit and segment margin included herewithin. Management cannot
reliably predict or estimate, without unreasonable effort, the impact and
timing on future operating results arising from items excluded from segment
profit. The information that is unavailable to provide a quantitative
reconciliation could have a significant impact on our reported financial
results. To the extent quantitative information becomes available without
unreasonable effort in the future, and closer to the period to which the
forward-looking measures pertain, a reconciliation of segment profit to
operating income will be included within future filings.
Honeywell International Inc
Reconciliation of Earnings per Share to Adjusted Earnings per
Share and Adjusted Earnings per Share Excluding Spin-off Impact
(Unaudited)
Three Months Ended Twelve Months
Ended
March 31, December 31,
2019 2018 2018
Earnings per share of common stock - $ $ $
assuming dilution (1)
1.92 1.89 8.98
Pension mark-to-market expense - - 0.04
Separation costs (2) - 0.06 0.97
Impacts from U.S. Tax Reform - - (1.98)
Adjusted earnings per share of common $ $ $
stock - assuming dilution
1.92 1.95 8.01
Less: EPS, attributable to spin-offs 0.25 0.62
Adjusted earnings per share of common $ $
stock - assuming dilution, excluding
spin-off impact 1.70 7.39
(1) For the three months ended March 31, 2019 and 2018, adjusted earnings per
share utilizes weighted average shares of approximately 738.8 million and 761
million. For the twelve months ended December 31, 2018, adjusted earnings per
share utilizes weighted average shares of approximately 753 million.
(2) For the three months ended March 31, 2018, separation costs
of $49 million including net tax impacts. For the twelve months
ended December 31, 2018, separation costs of $732 million
including net tax impacts.
We believe adjusted earnings per share, excluding spin-off impact, 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 Cash Provided by Operating Activities to Adjusted Free Cash
Flow and Calculation of Adjusted Free Cash Flow
Conversion (Unaudited)
(Dollars in millions)
Three Months Three Months
Ended Ended
March 31, 2019 March 31, 2018
Cash provided by operating activities $ $
1,134 1,136
Expenditures for property, plant and (141) (140)
equipment
Free cash flow 993 996
Separation cost payments 165 10
Adjusted free cash flow $ $
1,158 1,006
$ $
Net income attributable to Honeywell
1,416 1,439
Separation costs, includes net tax impacts - 49
Adjusted net income attributable to $ $
Honeywell
1,416 1,488
Cash provided by operating activities $ $
1,134 1,136
÷ Net income (loss) attributable to $ $
Honeywell
1,416 1,439
Operating cash flow conversion 80% 79%
Adjusted free cash flow $ $
1,158 1,006
÷ Adjusted net income attributable to $ $
Honeywell
1,416 1,488
Adjusted free cash flow conversion % 82% 68%
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, 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)
Twelve Months Ended
December 31
2018
Segment profit $ 8,190
Stock compensation expense (A) (175)
Repositioning, Other (B,C) (1,100)
Pension and other postretirement service costs (D) (210)
Operating income $ 6,705
Segment profit $ 8,190
÷ Net sales $ 41,802
Segment profit margin % 19.6%
Operating income $ 6,705
÷ Net sales $ 41,802
Operating income margin % 16.0%
(A) Included in Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income
adjustment.
(C) Included in Cost of products and services sold, Selling, general and
administrative expenses and Other income/expense.
(D) Included in Cost of products and services sold and Selling, general and
administrative expenses.
We define segment profit as operating income, excluding stock compensation
expense, pension and other postretirement service costs, and repositioning and
other charges. We believe these measures are useful to investors and
management in understanding our ongoing operations and in analysis of ongoing
operating trends.
A quantitative reconciliation of segment profit, on an overall Honeywell
basis, to operating income has not been provided for all forward-looking
measures of segment profit and segment margin included herewithin. Management
cannot reliably predict or estimate, without unreasonable effort, the impact
and timing on future operating results arising from items excluded from
segment profit. The information that is unavailable to provide a quantitative
reconciliation could have a significant impact on our reported financial
results. To the extent quantitative information becomes available without
unreasonable effort in the future, and closer to the period to which the
forward-looking measures pertain, a reconciliation of segment profit to
operating income will be included within future filings.
Honeywell International Inc
Calculation of Segment Profit Excluding Spin-off Impact and Segment Margin
Excluding Spin-off Impact
(Dollars in millions)
Twelve Months Ended
December 31
2018
Segment profit $
8,190
Spin-off impact (A) (1,011)
Segment profit excluding spin-off impact $
7,179
Sales $
41,802
Spin-off impact (A) (6,551)
Sale excluding spin-off impact $
35,251
Segment profit margin % excluding spin-off 20.4%
impact
(A) Amount computed as the portion of Aerospace and Honeywell Building
Technologies segment profit and sales in the applicable prior year period for
Transportation Systems and Homes and Global Distribution spin-off businesses.
Honeywell International Inc
Reconciliation of Cash Provided by Operating Activities to Adjusted Free Cash
Flow (Unaudited)
Twelve Months Ended Twelve Months
Ended
December 31, 2018 ($M) December 31, 2019
(E)($B)
Cash provided by operating $ $6.0 - $6.5
activities 6,434
Expenditures for property, (828) (0.8)
plant and equipment
Free cash flow 5,606 5.2 - 5.7
Separation cost payments 424 0.3
Adjusted free cash flow $ $5.5 - $6.0
6,030
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, 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.
END
(END) Dow Jones Newswires
April 18, 2019 06:31 ET (10:31 GMT)
Honeywell (LSE:HON)
Historical Stock Chart
From Jun 2024 to Jul 2024
Honeywell (LSE:HON)
Historical Stock Chart
From Jul 2023 to Jul 2024
