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 (A) |
1,363 |
|
1,475 |
|
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
noncontrolling interest |
20 |
|
13 |
|
|
|
|
|
|
|
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 dilution |
$
1.92 |
|
$ 1.89 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - basic |
729.7 |
|
750.6 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - assuming dilution |
738.8 |
|
761.0 |
|
|
|
|
|
|
|
(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 liabilities |
|
429 |
|
437 |
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 pensions |
|
333 |
|
344 |
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 interest |
|
20 |
|
13 |
|
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 equipment |
|
2 |
|
2 |
|
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 short-term borrowings |
|
3,318 |
|
6,676 |
|
Payments of commercial paper
and other short-term borrowings |
|
(3,319) |
|
(5,329) |
|
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 equivalents |
|
48 |
|
156 |
|
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 Ended |
|
Three Months Ended |
|
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
|
|
|
Cash provided by operating activities |
$
1,134 |
|
$
1,136 |
|
|
Expenditures for property, plant and
equipment |
(141) |
|
(140) |
|
|
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
impact |
|
20.4% |
|
|
|
|
|
|
|
|
|
(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 activities |
$
6,434 |
|
~$6.0 - $6.5 |
Expenditures for property, plant and
equipment |
(828) |
|
~(0.8) |
Free cash flow |
5,606 |
|
~5.2 - 5.7 |
Separation cost payments |
424 |
|
~0.3 |
Adjusted free cash flow |
$
6,030 |
|
~$5.5 - $6.0 |
|
|
|
|
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. |