Honeywell
Overdelivers On All Guided Metrics In The First Quarter; Raises
Full-Year Sales And Adjusted EPS Guidance
- Delivered Double-Digit Sales Growth in Safety
and Productivity Solutions; Returned to Sales Growth in Honeywell
Building Technologies
- Expanded Segment Margin in Aerospace,
Honeywell Building Technologies, and Safety and Productivity
Solutions
- Delivered Earnings Per Share of $2.03, Adjusted EPS¹ of $1.92, Exceeding High End of Guidance Range by
9 Cents
- Deployed $3.0
Billion in Capital to Acquisitions, Share Repurchases,
Dividends, and Capital Expenditures
CHARLOTTE, N.C., April 23, 2021 /PRNewswire/ -- Honeywell
(NYSE: HON) today announced results for the first quarter
that exceeded the company's guidance. The company also raised its
full-year sales guidance and raised the midpoint of its adjusted
earnings per share and cash flow guidance.
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"Honeywell delivered a strong start to 2021 with first-quarter
results that exceeded our expectations. We are seeing promising
signs of a rapid recovery in some of our markets, and we are poised
to capitalize on new business opportunities as they arise," said
Darius Adamczyk, chairman and chief
executive officer of Honeywell. "We reported first-quarter sales of
$8.5 billion, flat year over year, or
a decline of 2% on an organic basis. Our first-quarter sales
exceeded the high end of our guidance range by approximately
$250 million driven by continued
double-digit growth in our Warehouse and Workflow Solutions and
personal protective equipment businesses as well as demand for our
building products and services, advanced materials, and connected
software. Operating margin contracted 220 basis points for the
quarter to 17.8%, with segment margin contracting 80 basis points
to 21.0%, which exceeded the high end of our guidance by 10 basis
points. We delivered segment margin expansion in Aerospace,
Honeywell Building Technologies, and Safety and Productivity
Solutions for the second consecutive quarter, supported by our
streamlined cost base following the cost actions we took in 2020.
We delivered earnings per share of $2.03, with adjusted earnings per
share1 of $1.92, down 13%
year over year but 9 cents above the
high end of the previously provided guidance range. We continued to
take advantage of our strong balance sheet, and deployed capital to
high-return opportunities in the quarter, including closing our
acquisition of quality management software leader Sparta Systems
and announcing the acquisition of a majority stake in Fiplex, a
leading provider of in-building communications systems. In
addition, we repurchased $0.8 billion
in Honeywell shares and made five strategic investments through
Honeywell Ventures."
Adamczyk continued, "As we look to the rest of 2021 and beyond,
we are well positioned for the recovery to come. Our new offerings
in growing markets like life sciences are gaining traction and the
industries that were hardest hit by the pandemic are expected to
improve throughout the year. We have a robust portfolio of
technologies that help our customers meet their environmental and
social goals. In fact, about half of Honeywell's new product
introduction research and development investment is directed toward
products that improve environmental and social outcomes for
customers. Earlier this month, we pledged to become carbon neutral
in our operations and facilities by 2035, building on our
commitment to reduce our carbon footprint in 2024 by 10% from 2018
levels. Our confidence in this commitment is underpinned by our
history of setting aggressive environmental targets and beating
them, which has enabled us to reduce our greenhouse gas intensity
by more than 90% since 2004. We look forward to continuing to
deliver outstanding results for our shareowners, customers, and
employees."
As a result of the company's first-quarter performance and
management's outlook for the remainder of the year, Honeywell
raised its full-year sales guidance and raised the midpoint of its
adjusted earnings per share and cash flow guidance. Full-year
organic sales growth is now expected to be in the range of 3% to
5%. Adjusted earnings per share2 is expected to be
$7.75 to $8.00, up 15 cents
from the low end of the prior guidance range. Operating cash flow
is now expected to be in the range of $5.8
billion to $6.1 billion and
free cash flow is now expected to be in the range of $5.2 billion to $5.5
billion. A summary of the company's full-year guidance
changes can be found in Table 1.
First-Quarter Performance
Honeywell sales for the first quarter were flat on a
reported basis and down 2% on an organic basis. The first-quarter
financial results can be found in Tables 2 and 3.
Aerospace sales for the first quarter were down 22%
on an organic basis driven by lower commercial aftermarket demand
due to the ongoing impact of reduced flight hours, softness in
commercial original equipment, and lower volumes in international
defense, partially offset by growth in U.S. defense and space.
Segment margin expanded 110 basis points to 29.0%. Margin
performance was due to a number of factors, including commercial
excellence, cost management, and a one-time benefit.
Honeywell Building Technologies sales for the first
quarter were up 2% on an organic basis driven by demand for
Products and growth in Building Solutions services. Orders were up
mid-single digits year over year, driven by strong bookings for
services and security products. Segment margin expanded 200 basis
points to 22.5% driven by commercial excellence and productivity,
net of inflation.
Performance Materials and Technologies sales for the
first quarter were down 6% on an organic basis driven by continued
delays in Process Solutions automation projects, lower volumes in
smart energy, and lower demand for licensing and catalysts in UOP,
partially offset by continued growth in Advanced Materials driven
by strong demand for fluorine products and specialty materials.
Segment margin contracted 290 basis points to 18.5% driven by the
impact of sales mix, partially offset by commercial excellence.
Safety and Productivity Solutions sales for the
first quarter were up 47% on an organic basis driven by
double-digit Warehouse and Workflow Solutions, personal protective
equipment, and Productivity Solutions and Services growth. Orders
were up double digits year over year for the sixth straight
quarter, led by continued demand for personal protective equipment
and Productivity Solutions and Services, and backlog remained above
$4 billion for the third quarter in a
row. Segment margin expanded 180 basis points to 14.3% driven by
the impact of higher sales volumes.
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)
263-0877 (domestic) or (646) 828-8143 (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 2021 earnings call or provide the
conference code HON1Q21. 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 23 until 12:30 p.m. EDT April
30 by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 8053208.
TABLE 1: FULL-YEAR 2021 GUIDANCE4
|
Previous Guidance |
Current Guidance |
Sales |
$33.4B - $34.4B |
$34.0B - $34.8B |
Organic Growth |
1% - 4% |
3% - 5% |
Segment Margin |
20.7% - 21.1% |
20.7% - 21.1% |
Expansion |
Up 30 - 70 bps |
Up 30 - 70 bps |
Adjusted Earnings Per Share2 |
$7.60 - $8.00 |
$7.75 - $8.00 |
Adjusted Earnings
Growth3 |
7% - 13% |
9% - 13% |
Operating Cash Flow |
$5.7B - $6.1B |
$5.8B - $6.1B |
Free Cash Flow |
$5.1B - $5.5B |
$5.2B - $5.5B |
TABLE 2: SUMMARY OF HONEYWELL
FINANCIAL RESULTS
|
|
1Q 2021 |
|
1Q 2020 |
|
Change |
Sales |
|
8,454 |
|
8,463 |
|
—% |
Organic Growth |
|
|
|
|
|
(2%) |
Segment Margin |
|
21.0% |
|
21.8% |
|
-80 bps |
Operating Income Margin |
|
17.8% |
|
20.0% |
|
-220 bps |
Earnings Per Share |
|
$2.03 |
|
$2.21 |
|
(8%) |
Adjusted Earnings Per Share1 |
|
$1.92 |
|
$2.21 |
|
(13%) |
Cash Flow from Operations |
|
978 |
|
939 |
|
4% |
Operating Cash Flow Conversion |
|
69% |
|
59% |
|
10% |
Free Cash Flow |
|
757 |
|
800 |
|
(5%) |
Adjusted Free Cash Flow
Conversion5 |
|
56% |
|
51% |
|
5% |
TABLE 3: SUMMARY OF SEGMENT FINANCIAL
RESULTS
AEROSPACE |
|
1Q 2021 |
|
1Q 2020 |
|
Change |
Sales |
|
2,632 |
|
3,361 |
|
(22%) |
Organic Growth |
|
|
|
|
|
(22%) |
Segment Profit |
|
762 |
|
937 |
|
(19%) |
Segment Margin |
|
29.0% |
|
27.9% |
|
110 bps |
HONEYWELL BUILDING TECHNOLOGIES |
|
|
|
|
|
|
Sales |
|
1,358 |
|
1,281 |
|
6% |
Organic Growth |
|
|
|
|
|
2% |
Segment Profit |
|
305 |
|
262 |
|
16% |
Segment Margin |
|
22.5% |
|
20.5% |
|
200 bps |
PERFORMANCE MATERIALS AND TECHNOLOGIES |
|
|
|
|
|
|
Sales |
|
2,346 |
|
2,397 |
|
(2%) |
Organic Growth |
|
|
|
|
|
(6%) |
Segment Profit |
|
434 |
|
512 |
|
(15%) |
Segment Margin |
|
18.5% |
|
21.4% |
|
-290 bps |
SAFETY AND PRODUCTIVITY SOLUTIONS |
|
|
|
|
|
|
Sales |
|
2,118 |
|
1,424 |
|
49% |
Organic Growth |
|
|
|
|
|
47% |
Segment Profit |
|
303 |
|
178 |
|
70% |
Segment Margin |
|
14.3% |
|
12.5% |
|
180 bps |
1Adjusted EPS and adjusted
EPS V% exclude the $0.11 impact of the sale of the retail footwear
business |
2Adjusted EPS guidance
excludes the $0.11 impact of the sale of the retail footwear
business and any potential future one-time items that we cannot
reliably predict or estimate such as pension mark-to-market |
3Adjusted EPS V% guidance
excludes the $0.11 impact of the sale of the retail footwear
business, any potential future one-time items that we cannot
reliably predict or estimate such as pension mark-to-market, 4Q20
pension mark-to-market, 2Q20 favorable resolution of a foreign tax
matter related to the spin-off transactions, and non-cash charges
associated with the reduction in value of reimbursement receivables
due from Garrett Motion Inc. (Garrett), net of proceeds from the
settlement of related hedging transactions |
4As discussed in the notes
to the attached reconciliations, we do not provide guidance for
margin or EPS on a GAAP basis |
5Adjusted free cash flow
conversion excludes the gain on sale of the retail footwear
business |
Honeywell (http://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, technological, and COVID-19
public health factors affecting our operations, markets, products,
services and prices. Such forward-looking statements are not
guarantees of future performance, and actual results, and other
developments, including the potential impact of the COVID-19
pandemic, and business decisions may differ from those envisaged by
such forward-looking statements. Any forward-looking plans
described herein are not final and may be modified or abandoned at
any time. 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; 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; free cash flow, which
we define as cash flow from operations less capital expenditures
plus anticipated cash receipts from Garrett, if and as noted in the
release; adjusted free cash flow conversion, which we define as
free cash flow divided by net income attributable to Honeywell,
excluding the gain on sale of the Retail footwear business, if and
as noted in the release; and adjusted earnings per share, which we
adjust to exclude pension mark-to-market, the favorable resolution
of a foreign tax matter related to the spin-off transactions,
non-cash charges associated with the reduction in value of
reimbursement receivables due from Garrett, net of proceeds from
settlement of related hedging transactions, and the gain on sale of
the Retail footwear business, if and as noted in the release.
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.
Honeywell International
Inc. |
Consolidated Statement
of Operations (Unaudited) |
(Dollars in millions,
except per share amounts) |
|
|
Three Months Ended
March 31, |
|
2021 |
|
2020 |
Product sales |
$ |
6,409 |
|
|
$ |
6,305 |
|
Service sales |
2,045 |
|
|
2,158 |
|
Net sales |
8,454 |
|
|
8,463 |
|
Costs, expenses and other |
|
|
|
Cost of products sold(1) |
4,551 |
|
|
4,374 |
|
Cost of services sold(1) |
1,158 |
|
|
1,160 |
|
|
5,709 |
|
|
5,534 |
|
Selling, general and administrative
expenses(1) |
1,236 |
|
|
1,238 |
|
Other (income) expense |
(442) |
|
|
(317) |
|
Interest and other financial charges |
90 |
|
|
73 |
|
|
6,593 |
|
|
6,528 |
|
Income before taxes |
1,861 |
|
|
1,935 |
|
Tax expense (benefit) |
413 |
|
|
329 |
|
Net income |
1,448 |
|
|
1,606 |
|
Less: Net income attributable to the
noncontrolling interest |
21 |
|
|
25 |
|
Net income attributable to Honeywell |
$ |
1,427 |
|
|
$ |
1,581 |
|
Earnings per share of common stock - basic |
$ |
2.05 |
|
|
$ |
2.23 |
|
Earnings per share of common stock - assuming
dilution |
$ |
2.03 |
|
|
$ |
2.21 |
|
Weighted average number of shares outstanding -
basic |
696.2 |
|
|
709.6 |
|
Weighted average number of shares outstanding -
assuming dilution |
704.5 |
|
|
717.0 |
|
|
|
(1) |
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 |
2021 |
|
2020 |
Aerospace |
$ |
2,632 |
|
|
$ |
3,361 |
|
Honeywell Building Technologies |
1,358 |
|
|
1,281 |
|
Performance Materials and Technologies |
2,346 |
|
|
2,397 |
|
Safety and Productivity Solutions |
2,118 |
|
|
1,424 |
|
Total |
$ |
8,454 |
|
|
$ |
8,463 |
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
Three Months Ended
March 31, |
Segment Profit |
2021 |
|
2020 |
Aerospace |
$ |
762 |
|
|
$ |
937 |
|
Honeywell Building Technologies |
305 |
|
|
262 |
|
Performance Materials and Technologies |
434 |
|
|
512 |
|
Safety and Productivity Solutions |
303 |
|
|
178 |
|
Corporate |
(29) |
|
|
(41) |
|
Total segment profit |
1,775 |
|
|
1,848 |
|
Interest and other financial charges |
(90) |
|
|
(73) |
|
Stock compensation expense (1) |
(77) |
|
|
(44) |
|
Pension ongoing income (2) |
276 |
|
|
198 |
|
Other postretirement income (2) |
17 |
|
|
13 |
|
Repositioning and other charges
(3,4) |
(141) |
|
|
(62) |
|
Other (5) |
101 |
|
|
55 |
|
Income before taxes |
$ |
1,861 |
|
|
$ |
1,935 |
|
|
|
(1) |
Amounts included in Selling, general
and administrative expenses. |
(2) |
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). |
(3) |
Amounts included in Cost of products
and services sold, Selling, general and administrative expenses,
and Other (income) expense. |
(4) |
Includes repositioning, asbestos, and
environmental expenses. |
(5) |
Amounts include the other components
of Other (income) expense not included within other categories in
this reconciliation. Equity income of affiliated companies is
included in segment profit. |
Honeywell International
Inc. |
Consolidated Balance
Sheet (Unaudited) |
(Dollars in
millions) |
|
|
March 31,
2021 |
|
December 31,
2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
11,718 |
|
|
$ |
14,275 |
|
Short-term investments |
942 |
|
|
945 |
|
Accounts receivable - net |
6,675 |
|
|
6,827 |
|
Inventories |
4,607 |
|
|
4,489 |
|
Other current assets |
1,645 |
|
|
1,639 |
|
Total current assets |
25,587 |
|
|
28,175 |
|
Investments and long-term receivables |
746 |
|
|
685 |
|
Property, plant and equipment - net |
5,547 |
|
|
5,570 |
|
Goodwill |
16,981 |
|
|
16,058 |
|
Other intangible assets - net |
3,799 |
|
|
3,560 |
|
Insurance recoveries for asbestos related
liabilities |
347 |
|
|
366 |
|
Deferred income taxes |
762 |
|
|
760 |
|
Other assets |
9,792 |
|
|
9,412 |
|
Total assets |
$ |
63,561 |
|
|
$ |
64,586 |
|
LIABILITIES |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
5,792 |
|
|
$ |
5,750 |
|
Commercial paper and other short-term
borrowings |
3,568 |
|
|
3,597 |
|
Current maturities of long-term debt |
1,635 |
|
|
2,445 |
|
Accrued liabilities |
6,955 |
|
|
7,405 |
|
Total current liabilities |
17,950 |
|
|
19,197 |
|
Long-term debt |
16,124 |
|
|
16,342 |
|
Deferred income taxes |
2,309 |
|
|
2,113 |
|
Postretirement benefit obligations other than
pensions |
234 |
|
|
242 |
|
Asbestos-related liabilities |
1,873 |
|
|
1,920 |
|
Other liabilities |
6,812 |
|
|
6,975 |
|
Redeemable noncontrolling interest |
7 |
|
|
7 |
|
Shareowners' equity |
18,252 |
|
|
17,790 |
|
Total liabilities, redeemable noncontrolling
interest and shareowners'
equity |
$ |
63,561 |
|
|
$ |
64,586 |
|
Honeywell International
Inc. |
Consolidated Statement
of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
Three Months
Ended
March 31, |
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
|
Net income |
$ |
1,448 |
|
|
$ |
1,606 |
|
Less: Net income attributable to the
noncontrolling interest |
21 |
|
|
25 |
|
Net income attributable to Honeywell |
1,427 |
|
|
1,581 |
|
Adjustments to reconcile net income attributable
to Honeywell to net cash provided by operating
activities: |
|
|
|
Depreciation |
171 |
|
|
153 |
|
Amortization |
170 |
|
|
90 |
|
Gain on sale of non-strategic businesses and
assets |
(90) |
|
|
— |
|
Repositioning and other charges |
141 |
|
|
62 |
|
Net payments for repositioning and other
charges |
(195) |
|
|
(111) |
|
Pension and other postretirement income |
(293) |
|
|
(212) |
|
Pension and other postretirement benefit
payments |
(14) |
|
|
(14) |
|
Stock compensation expense |
77 |
|
|
44 |
|
Deferred income taxes |
63 |
|
|
(58) |
|
Other |
(96) |
|
|
(179) |
|
Changes in assets and liabilities, net of the
effects of acquisitions and divestitures: |
|
|
|
Accounts receivable |
143 |
|
|
41 |
|
Inventories |
(158) |
|
|
(163) |
|
Other current assets |
(66) |
|
|
166 |
|
Accounts payable |
57 |
|
|
(54) |
|
Accrued liabilities |
(359) |
|
|
(407) |
|
Net cash provided by (used for) operating
activities |
978 |
|
|
939 |
|
Cash flows from investing activities: |
|
|
|
Expenditures for property, plant and
equipment |
(221) |
|
|
(139) |
|
Proceeds from disposals of property, plant and
equipment |
14 |
|
|
7 |
|
Increase in investments |
(736) |
|
|
(648) |
|
Decrease in investments |
612 |
|
|
843 |
|
Receipts (payments) from settlements of derivative
contracts |
140 |
|
|
287 |
|
Cash paid for acquisitions, net of cash
acquired |
(1,303) |
|
|
— |
|
Proceeds from sales of businesses, net of fees
paid |
190 |
|
|
— |
|
Net cash provided by (used for) investing
activities |
(1,304) |
|
|
350 |
|
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of commercial paper and
other short-term borrowings |
1,268 |
|
|
3,455 |
|
Payments of commercial paper and other short-term
borrowings |
(1,266) |
|
|
(3,373) |
|
Proceeds from issuance of common stock |
67 |
|
|
66 |
|
Proceeds from issuance of long-term debt |
23 |
|
|
1,127 |
|
Payments of long-term debt |
(817) |
|
|
(1,125) |
|
Repurchases of common stock |
(822) |
|
|
(1,923) |
|
Cash dividends paid |
(640) |
|
|
(635) |
|
Other |
(30) |
|
|
(38) |
|
Net cash provided by (used for) financing
activities |
(2,217) |
|
|
(2,446) |
|
Effect of foreign exchange rate changes on cash
and cash equivalents |
(14) |
|
|
(189) |
|
Net increase (decrease) in cash and cash
equivalents |
(2,557) |
|
|
(1,346) |
|
Cash and cash equivalents at beginning of
period |
14,275 |
|
|
9,067 |
|
Cash and cash equivalents at end of period |
$ |
11,718 |
|
|
$ |
7,721 |
|
Honeywell International
Inc. |
Reconciliation of
Organic Sales % Change (Unaudited) |
|
|
Three Months Ended
March 31, 2021 |
Honeywell |
|
Reported sales % change |
—% |
Less: Foreign currency translation |
2% |
Less: Acquisitions, divestitures and other,
net |
—% |
Organic sales % change |
(2)% |
|
|
Aerospace |
|
Reported sales % change |
(22)% |
Less: Foreign currency translation |
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
Organic sales % change |
(22)% |
|
|
Honeywell Building Technologies |
|
Reported sales % change |
6% |
Less: Foreign currency translation |
4% |
Less: Acquisitions, divestitures and other,
net |
—% |
Organic sales % change |
2% |
|
|
Performance Materials and Technologies |
|
Reported sales % change |
(2)% |
Less: Foreign currency translation |
3% |
Less: Acquisitions, divestitures and other,
net |
1% |
Organic sales % change |
(6)% |
|
|
Safety and Productivity Solutions |
|
Reported sales % change |
49% |
Less: Foreign currency translation |
3% |
Less: Acquisitions, divestitures and other,
net |
(1)% |
Organic sales % change |
47% |
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, |
|
Twelve Months
Ended
December 31, |
|
2021 |
|
2020 |
|
2020 |
Segment profit |
$ |
1,775 |
|
|
$ |
1,848 |
|
|
$ |
6,665 |
|
Stock compensation expense (1) |
(77) |
|
|
(44) |
|
|
(168) |
|
Repositioning, Other (2,3) |
(155) |
|
|
(74) |
|
|
(641) |
|
Pension and other postretirement service costs
(4) |
(34) |
|
|
(39) |
|
|
(160) |
|
Operating income |
$ |
1,509 |
|
|
$ |
1,691 |
|
|
$ |
5,696 |
|
Segment profit |
$ |
1,775 |
|
|
$ |
1,848 |
|
|
$ |
6,665 |
|
÷ Net sales |
$ |
8,454 |
|
|
$ |
8,463 |
|
|
$ |
32,637 |
|
Segment profit margin % |
21.0 |
% |
|
21.8 |
% |
|
20.4 |
% |
Operating income |
$ |
1,509 |
|
|
$ |
1,691 |
|
|
$ |
5,696 |
|
÷ Net sales |
$ |
8,454 |
|
|
$ |
8,463 |
|
|
$ |
32,637 |
|
Operating income margin % |
17.8 |
% |
|
20.0 |
% |
|
17.5 |
% |
|
|
(1) |
Included in Selling, general and
administrative expenses. |
(2) |
Includes repositioning, asbestos,
environmental expenses and equity income adjustment. |
(3) |
Included in Cost of products and
services sold, Selling, general and administrative expenses and
Other (income) expense. |
(4) |
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 (Unaudited) |
|
|
Three Months Ended
March 31, |
|
Twelve Months
Ended
December 31, |
|
2021 |
|
2020 |
|
2020 |
Earnings per share of common stock - assuming
dilution (1) |
$ |
2.03 |
|
|
$ |
2.21 |
|
|
$ |
6.72 |
|
Pension mark-to-market expense (2) |
— |
|
|
— |
|
|
0.04 |
|
Separation related tax adjustment
(3) |
— |
|
|
— |
|
|
(0.26) |
|
Gain on sale of retail footwear business
(4) |
(0.11) |
|
|
— |
|
|
— |
|
Garrett related adjustment (5) |
— |
|
|
— |
|
|
0.60 |
|
Adjusted earnings per share of common stock -
assuming dilution |
$ |
1.92 |
|
|
$ |
2.21 |
|
|
$ |
7.10 |
|
|
|
(1) |
For the three months ended March 31,
2021 and 2020, adjusted earnings per share utilizes weighted
average shares of approximately 704.5 million and 717.0 million.
For the twelve months ended December 31, 2020, adjusted earnings
per share utilizes weighted average shares of 711.2 million. |
(2) |
Pension mark-to-market expense uses a
blended tax rate of 25% for 2020. |
(3) |
For the twelve months ended December
31, 2020, separation related tax adjustment of $186 million ($186
million net of tax) includes the favorable resolution of a foreign
tax matter related to the spin-off transactions. |
(4) |
For the three months ended March 31,
2021, the adjustment was $72 million net of tax due to the gain on
sale of the retail footwear business. |
(5) |
For the twelve months ended December
31, 2020, adjustment was $427 million net of tax due to the
non-cash charges associated with the reduction in value of
reimbursement receivables due from Garrett, net of proceeds from
settlement of related hedging transactions. |
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. For forward looking information, management
cannot reliably predict or estimate, without unreasonable effort,
the pension mark-to-market expense as it is dependent on
macroeconomic factors, such as interest rates and the return
generated on invested pension plan assets. We therefore do not
include an estimate for the pension mark-to-market expense. Based
on economic and industry conditions, future developments and other
relevant factors, these assumptions are subject to change.
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
March 31, 2021 |
|
Three Months
Ended
March 31, 2020 |
Cash provided by operating activities |
$ |
978 |
|
|
$ |
939 |
|
Expenditures for property, plant and
equipment |
(221) |
|
|
(139) |
|
Free cash flow |
757 |
|
|
800 |
|
Separation cost payments |
— |
|
|
— |
|
Adjusted free cash flow |
$ |
757 |
|
|
$ |
800 |
|
Net income attributable to Honeywell |
1,427 |
|
|
1,581 |
|
Separation related tax adjustment |
— |
|
|
— |
|
Pension mark-to-market |
— |
|
|
— |
|
Gain on sale of retail footwear business
(1) |
(72) |
|
|
— |
|
Adjusted net income attributable to Honeywell |
$ |
1,355 |
|
|
$ |
1,581 |
|
Cash provided by operating activities |
$ |
978 |
|
|
$ |
939 |
|
÷ Net income (loss) attributable to Honeywell |
$ |
1,427 |
|
|
$ |
1,581 |
|
Operating cash flow conversion |
69 |
% |
|
59 |
% |
Adjusted free cash flow |
$ |
757 |
|
|
$ |
800 |
|
÷ Adjusted net income attributable to
Honeywell |
$ |
1,355 |
|
|
$ |
1,581 |
|
Adjusted free cash flow conversion % |
56 |
% |
|
51 |
% |
|
|
(1) |
The adjustment due to a gain on sale
of the retail footwear business. |
|
|
|
|
|
|
|
|
|
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus anticipated cash receipts from Garrett.
We believe that free cash flow is a non-GAAP metric that is
useful to investors and management as a measure of cash generated
by 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 operations and the impact that this cash flow has on our
liquidity. For forward looking information, we do not provide cash
flow conversion guidance on a GAAP basis as management cannot
reliably predict or estimate, without unreasonable effort, the
pension mark-to-market expense as it is dependent on macroeconomic
factors, such as interest rates and the return generated on
invested pension plan assets.
Honeywell International
Inc. |
Reconciliation of Cash
Provided by Operating Activities to Adjusted Free Cash Flow
(Unaudited) |
|
|
Twelve Months
Ended
December 31,
2021(E) ($B) |
Cash provided by operating activities |
~$5.8 - $6.1 |
Expenditures for property, plant and
equipment |
~(1) |
Garrett cash receipts |
0.4 |
Free cash flow |
~$5.2 - $5.5 |
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus anticipated cash receipts from Garrett.
We believe that free cash flow is a non-GAAP metric that is
useful to investors and management as a measure of cash generated
by 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 operations and the impact that this cash flow has on our
liquidity. For forward looking information, we do not provide cash
flow conversion guidance on a GAAP basis as management cannot
reliably predict or estimate, without unreasonable effort, the
pension mark-to-market expense as it is dependent on macroeconomic
factors, such as interest rates and the return generated on
invested pension plan assets.
Honeywell International
Inc. |
Reconciliation of
Expected Earnings per Share to Adjusted Earnings per Share
(Unaudited) |
|
|
|
Twelve Months
Ended
December 31,
2021(E) |
|
|
Earnings per share of common stock - assuming
dilution (1) |
|
$7.86 - $8.11 |
Gain on sale of retail footwear business
(2) |
|
(0.11) |
Adjusted earnings per share of common stock -
assuming dilution |
|
$7.75 - $8.00 |
|
|
(1) |
For the twelve months ended December
31, 2021, expected earnings per share utilizes weighted average
shares of approximately 705 million. |
(2) |
For the twelve months ended December
31, 2021, the adjustment was $72 million net of tax due to the gain
on sale of the retail footwear business. |
We believe adjusted earnings per share is a measure that is
useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends. For forward
looking information, management cannot reliably predict or estimate
any potential future one-time items, such as pension
mark-to-market, without unreasonable effort. Pension mark-to-market
expense is dependent on macroeconomic factors, such as interest
rates and the return generated on invested pension plan assets. We
therefore do not include an estimate for the pension mark-to-market
expense. Based on economic and industry conditions, future
developments and other relevant factors, these assumptions are
subject to change.
Contacts: |
|
|
|
Media |
Investor Relations |
Nina Krauss |
Mark Bendza |
(704) 627-6035 |
(704) 627-6200 |
nina.krauss@honeywell.com |
mark.bendza@honeywell.com |