Honeywell Beats
Guidance And Delivers Outstanding Second-Quarter Results Driven By
Sales And Profit Growth; Raises Midpoint Of Adjusted EPS Guidance
By 15 Cents
- Sales Growth and Margin Expansion
in All Four Segments; Orders up Over 20%
- Reported Sales up 18%, Organic
Sales up 15%
- Operating Margin up 450 Basis
Points to 18.1%; Segment Margin up 190 Basis Points to 20.4%
- Earnings Per Share of $2.04, Adjusted Earnings Per Share¹ of
$2.02, up 60%
- Generated $1.3 Billion in Operating Cash Flow with
Conversion of 89%, $1.5 Billion of
Free Cash Flow with Adjusted Conversion² of 103%
CHARLOTTE, N.C., July 23, 2021 /PRNewswire/ -- Honeywell
(NASDAQ: HON) today announced outstanding results for the
second quarter that were driven by sales and segment margin growth
in all four businesses. The company also raised its full-year
sales, segment margin, adjusted earnings per share, and cash flow
guidance.
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"Building on our first-quarter momentum, we executed extremely
well in the second quarter. Our results were driven by top-line
growth and margin expansion in all four segments. Organic sales
grew 15%, led by double-digit growth in Performance Materials and
Technologies, Honeywell Building Technologies, and Safety and
Productivity Solutions," said Darius
Adamczyk, chairman and chief executive officer of Honeywell.
"Our increased volumes, streamlined cost base, and relentless focus
on execution enabled us to expand segment margin by 190 basis
points to 20.4%, exceeding the high end of our guidance by 10 basis
points. As a result, we delivered adjusted earnings per
share1 of $2.02, up 60%
year over year and above the high end of our second-quarter
guidance range. Our cash performance in the second quarter was
strong, as we generated $1.5 billion
of free cash flow with adjusted conversion2 of 103%, all
while repurchasing $1.0 billion in
Honeywell shares."
Adamczyk continued, "Our strong performance in the second
quarter took place in a recovering but challenging global
environment. We are especially pleased to see a turnaround in
several of our key end markets that were hardest hit by the
pandemic, with commercial aerospace aftermarket and the UOP
business returning to growth in the quarter. We are well positioned
to capitalize on improving conditions as they unfold around the
world and to execute on near-term growth opportunities across our
portfolio, including in the warehouse automation, productivity,
building products, and advanced materials markets."
As a result of the company's second-quarter performance and
management's outlook for the remainder of the year, Honeywell
raised its full-year sales, adjusted earnings per share, and cash
flow guidance and raised the midpoint of its segment margin
guidance. Full-year sales are now expected to be in the range of
$34.6 billion to $35.2 billion with organic sales growth in the
range of 4% to 6%. Segment margin is expected to be in the range of
20.8% - 21.1%. Adjusted earnings per share3 is expected
to be $7.95 to $8.10, up 10 cents
from the high end of the prior guidance range. Operating cash flow
is now expected to be in the range of $5.9
billion to $6.2 billion and
free cash flow is now expected to be in the range of $5.3 billion to $5.6
billion. A summary of the company's full-year guidance
changes can be found in Table 1.
Second-Quarter Performance
Honeywell sales for the second quarter were up 18% on a
reported basis and up 15% on an organic basis. The second-quarter
financial results can be found in Tables 2 and 3.
Aerospace sales for the second quarter were up 7% on
an organic basis driven by a strong recovery in business and
general aviation aftermarket demand as flight hours returned to
2019 levels, partially offset by lower defense volumes and a more
gradual recovery in commercial original equipment build rates. Air
transport aftermarket returned to growth as increased flight hours
drove aftermarket demand. Segment margin expanded 490 basis points
to 25.7%.
Honeywell Building Technologies sales for the second
quarter were up 13% on an organic basis driven by broad-based
global strength across the portfolio. Orders were up over 35% year
over year, driven by strong bookings for building products and
solutions. The buildings solutions services backlog was up over 30%
year over year driven by strong bookings in North America and Asia. In addition, demand continued for our
portfolio of healthy buildings solutions, with approximately
$150 million of orders in the first
half. Segment margin expanded 120 basis points to 22.4%.
Performance Materials and Technologies sales for the
second quarter were up 10% on an organic basis driven by demand for
process solutions products and thermal solutions, higher equipment
volumes, licensing, and petrochemical catalyst shipments in UOP,
and continued strong growth across advanced materials. Orders were
up 20% year over year driven by robust demand for services, thermal
solutions, catalysts, and fluorine products. Segment margin
expanded 190 basis points to 20.8%.
Safety and Productivity Solutions sales for the
second quarter were up 35% on an organic basis driven by another
quarter of double-digit growth in the warehouse and workflow
solutions, personal protective equipment, and productivity
solutions and services businesses. In addition, short-cycle demand
accelerated in the gas analysis and advanced sensing businesses,
which both grew by high single-digits sequentially from the first
quarter. Orders were up triple digits year over year in
productivity solutions and services, giving us confidence in
continued growth for that business. Segment margin expanded 20
basis points to 14.0%.
Conference Call Details
Honeywell will discuss its second-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 (866)
548-4713 (domestic) or (323) 794-2093 (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 second-quarter 2021 earnings call or provide the
conference code HON2Q21. 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
July 23 until 12:30 p.m. EDT July
30 by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 7208292.
TABLE 1: FULL-YEAR 2021 GUIDANCE5
|
Previous Guidance |
Current Guidance |
Sales |
$34.0B - $34.8B |
$34.6B - $35.2B |
Organic Growth |
3% - 5% |
4% - 6% |
Segment Margin |
20.7% - 21.1% |
20.8% - 21.1% |
Expansion |
Up 30 - 70 bps |
Up 40 - 70 bps |
Adjusted Earnings Per Share3 |
$7.75 - $8.00 |
$7.95 - $8.10 |
Adjusted Earnings
Growth4 |
9% - 13% |
12% - 14% |
Operating Cash Flow |
$5.8B - $6.1B |
$5.9B - $6.2B |
Free Cash Flow |
$5.2B - $5.5B |
$5.3B - $5.6B |
TABLE 2: SUMMARY OF HONEYWELL
FINANCIAL RESULTS
|
|
2Q 2021 |
|
2Q 2020 |
|
Change |
Sales |
|
8,808 |
|
7,477 |
|
18% |
Organic Growth |
|
|
|
|
|
15% |
Segment Margin |
|
20.4% |
|
18.5% |
|
190 bps |
Operating Income Margin |
|
18.1% |
|
13.6% |
|
450 bps |
Earnings Per Share |
|
$2.04 |
|
$1.53 |
|
33% |
Adjusted Earnings Per Share1 |
|
$2.02 |
|
$1.26 |
|
60% |
Cash Flow from Operations |
|
1,278 |
|
1,480 |
|
(14%) |
Operating Cash Flow Conversion |
|
89% |
|
137% |
|
(48%) |
Free Cash Flow |
|
1,468 |
|
1,253 |
|
17% |
Adjusted Free Cash Flow
Conversion2 |
|
103% |
|
140% |
|
(37%) |
TABLE 3: SUMMARY OF SEGMENT FINANCIAL
RESULTS
AEROSPACE |
|
2Q 2021 |
|
2Q 2020 |
|
Change |
Sales |
|
2,766 |
|
2,543 |
|
9% |
Organic Growth |
|
|
|
|
|
7% |
Segment Profit |
|
710 |
|
528 |
|
34% |
Segment Margin |
|
25.7% |
|
20.8% |
|
490 bps |
HONEYWELL BUILDING TECHNOLOGIES |
|
|
|
|
|
|
Sales |
|
1,407 |
|
1,177 |
|
20% |
Organic Growth |
|
|
|
|
|
13% |
Segment Profit |
|
315 |
|
250 |
|
26% |
Segment Margin |
|
22.4% |
|
21.2% |
|
120 bps |
PERFORMANCE MATERIALS AND TECHNOLOGIES |
|
|
|
|
|
|
Sales |
|
2,552 |
|
2,218 |
|
15% |
Organic Growth |
|
|
|
|
|
10% |
Segment Profit |
|
530 |
|
419 |
|
26% |
Segment Margin |
|
20.8% |
|
18.9% |
|
190 bps |
SAFETY AND PRODUCTIVITY SOLUTIONS |
|
|
|
|
|
|
Sales |
|
2,083 |
|
1,539 |
|
35% |
Organic Growth |
|
|
|
|
|
35% |
Segment Profit |
|
292 |
|
213 |
|
37% |
Segment Margin |
|
14.0% |
|
13.8% |
|
20 bps |
1Adjusted EPS and adjusted EPS V%
exclude 2Q20 favorable resolution of a foreign tax matter related
to the spin-off transactions, changes in fair value for Garrett
Motion Inc. (Garrett) equity securities, and a non-cash charge
associated with a further reduction in value of reimbursement
receivables following Garrett's emergence from bankruptcy on April
30, 2021 |
2Adjusted free cash flow conversion is
free cash flow (cash flow from operations less capital expenditures
plus cash receipts from Garrett) divided by adjusted net income
attributable to Honeywell. Adjusted net income attributable to
Honeywell excludes changes in fair value for Garrett equity
securities, a non-cash charge associated with a further reduction
in value of reimbursement receivables following Garrett's emergence
from bankruptcy on April 30, 2021, and the 2Q20 favorable
resolution of a foreign tax matter related to the spin-off
transactions from net income attributable to Honeywell |
3Adjusted EPS guidance excludes the
$0.11 impact of the sale of the retail footwear business, a
non-cash charge associated with a further reduction in value of
reimbursement receivables following Garrett's emergence from
bankruptcy on April 30, 2021, and any potential future one-time
items that we cannot reliably predict or estimate such as pension
mark-to-market and changes in fair value for Garrett equity
securities |
4Adjusted EPS V% guidance excludes the
$0.11 impact of the sale of the retail footwear business, a
non-cash charge associated with a further reduction in value of
reimbursement receivables following Garrett's emergence from
bankruptcy on April 30, 2021, 4Q20 pension mark-to-market, 2Q20
favorable resolution of a foreign tax matter related to the
spin-off transactions, non-cash charges associated with the 2020
reduction in value of reimbursement receivables due from Garrett,
net of proceeds from the settlement of related hedging
transactions, and any potential future one-time items that we
cannot reliably predict or estimate such as pension mark-to-market
or changes in fair value for Garrett equity securities |
5As discussed in the notes to the
attached reconciliations, we do not provide guidance for margin or
EPS on a GAAP basis |
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, 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 the transaction date; free cash flow,
which we define as cash flow from operations less capital
expenditures plus 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 adjusted net income attributable to
Honeywell; adjusted net income attributable to Honeywell, which we
define as net income attributable to Honeywell which we adjust to
exclude changes in fair value for Garrett equity securities, a
non-cash charge associated with a further reduction in value of
reimbursement receivables following Garrett's emergence from
bankruptcy on April 30, 2021, and the
2Q20 favorable resolution of a foreign tax matter related to the
spin-off transactions, 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, the gain on sale of the retail footwear business, and
changes in fair value for Garrett equity securities, 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. Certain metrics presented on a
non-GAAP basis represent the impact of adjusting items net of tax.
The tax-effect for adjusting items is determined individually and
on a case-by-case basis. 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
June 30, |
|
Six Months Ended
June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Product sales |
$ |
6,639 |
|
|
$ |
5,743 |
|
|
$ |
13,048 |
|
|
$ |
12,048 |
|
Service sales |
2,169 |
|
|
1,734 |
|
|
4,214 |
|
|
3,892 |
|
Net sales |
8,808 |
|
|
7,477 |
|
|
17,262 |
|
|
15,940 |
|
Costs, expenses and other |
|
|
|
|
|
|
|
Cost of products sold(1) |
4,734 |
|
|
4,163 |
|
|
9,285 |
|
|
8,537 |
|
Cost of services sold(1) |
1,269 |
|
|
1,113 |
|
|
2,427 |
|
|
2,273 |
|
|
6,003 |
|
|
5,276 |
|
|
11,712 |
|
|
10,810 |
|
Selling, general and administrative
expenses(1) |
1,207 |
|
|
1,183 |
|
|
2,443 |
|
|
2,421 |
|
Other (income) expense |
(366) |
|
|
(291) |
|
|
(808) |
|
|
(608) |
|
Interest and other financial charges |
83 |
|
|
90 |
|
|
173 |
|
|
163 |
|
|
6,927 |
|
|
6,258 |
|
|
13,520 |
|
|
12,786 |
|
Income before taxes |
1,881 |
|
|
1,219 |
|
|
3,742 |
|
|
3,154 |
|
Tax expense (benefit) |
434 |
|
|
120 |
|
|
847 |
|
|
449 |
|
Net income |
1,447 |
|
|
1,099 |
|
|
2,895 |
|
|
2,705 |
|
Less: Net income attributable to the
noncontrolling interest |
17 |
|
|
18 |
|
|
38 |
|
|
43 |
|
Net income attributable to Honeywell |
$ |
1,430 |
|
|
$ |
1,081 |
|
|
$ |
2,857 |
|
|
$ |
2,662 |
|
Earnings per share of common stock - basic |
$ |
2.06 |
|
|
$ |
1.54 |
|
|
$ |
4.11 |
|
|
$ |
3.77 |
|
Earnings per share of common stock - assuming
dilution |
$ |
2.04 |
|
|
$ |
1.53 |
|
|
$ |
4.06 |
|
|
$ |
3.74 |
|
Weighted average number of shares outstanding -
basic |
693.8 |
|
|
702.3 |
|
|
695.0 |
|
|
705.9 |
|
Weighted average number of shares outstanding -
assuming dilution |
702.5 |
|
|
708.1 |
|
|
703.5 |
|
|
712.6 |
|
|
|
(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
June 30, |
|
Six Months Ended
June 30, |
Net Sales |
2021 |
|
2020 |
|
2021 |
|
2020 |
Aerospace |
$ |
2,766 |
|
|
$ |
2,543 |
|
|
$ |
5,398 |
|
|
$ |
5,904 |
|
Honeywell Building Technologies |
1,407 |
|
|
1,177 |
|
|
2,765 |
|
|
2,458 |
|
Performance Materials and Technologies |
2,552 |
|
|
2,218 |
|
|
4,898 |
|
|
4,615 |
|
Safety and Productivity Solutions |
2,083 |
|
|
1,539 |
|
|
4,201 |
|
|
2,963 |
|
Total |
$ |
8,808 |
|
|
$ |
7,477 |
|
|
$ |
17,262 |
|
|
$ |
15,940 |
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
Segment Profit |
2021 |
|
2020 |
|
2021 |
|
2020 |
Aerospace |
$ |
710 |
|
|
$ |
528 |
|
|
$ |
1,472 |
|
|
$ |
1,465 |
|
Honeywell Building Technologies |
315 |
|
|
250 |
|
|
620 |
|
|
512 |
|
Performance Materials and Technologies |
530 |
|
|
419 |
|
|
964 |
|
|
931 |
|
Safety and Productivity Solutions |
292 |
|
|
213 |
|
|
595 |
|
|
391 |
|
Corporate |
(54) |
|
|
(25) |
|
|
(83) |
|
|
(66) |
|
Total segment profit |
1,793 |
|
|
1,385 |
|
|
3,568 |
|
|
3,233 |
|
Interest and other financial charges |
(83) |
|
|
(90) |
|
|
(173) |
|
|
(163) |
|
Stock compensation expense (1) |
(39) |
|
|
(34) |
|
|
(116) |
|
|
(78) |
|
Pension ongoing income (2) |
272 |
|
|
198 |
|
|
548 |
|
|
396 |
|
Other postretirement income (2) |
18 |
|
|
14 |
|
|
35 |
|
|
27 |
|
Repositioning and other charges
(3,4) |
(101) |
|
|
(280) |
|
|
(242) |
|
|
(342) |
|
Other (5) |
21 |
|
|
26 |
|
|
122 |
|
|
81 |
|
Income before taxes |
$ |
1,881 |
|
|
$ |
1,219 |
|
|
$ |
3,742 |
|
|
$ |
3,154 |
|
|
|
(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) |
|
|
June 30,
2021 |
|
December 31,
2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
11,427 |
|
|
$ |
14,275 |
|
Short-term investments |
891 |
|
|
945 |
|
Accounts receivable - net |
6,947 |
|
|
6,827 |
|
Inventories |
4,723 |
|
|
4,489 |
|
Other current assets |
1,664 |
|
|
1,639 |
|
Total current assets |
25,652 |
|
|
28,175 |
|
Investments and long-term receivables |
1,358 |
|
|
685 |
|
Property, plant and equipment - net |
5,520 |
|
|
5,570 |
|
Goodwill |
17,135 |
|
|
16,058 |
|
Other intangible assets - net |
3,748 |
|
|
3,560 |
|
Insurance recoveries for asbestos related
liabilities |
342 |
|
|
366 |
|
Deferred income taxes |
762 |
|
|
760 |
|
Other assets |
9,428 |
|
|
9,412 |
|
Total assets |
$ |
63,945 |
|
|
$ |
64,586 |
|
LIABILITIES |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
6,139 |
|
|
$ |
5,750 |
|
Commercial paper and other short-term
borrowings |
3,573 |
|
|
3,597 |
|
Current maturities of long-term debt |
1,645 |
|
|
2,445 |
|
Accrued liabilities |
6,786 |
|
|
7,405 |
|
Total current liabilities |
18,143 |
|
|
19,197 |
|
Long-term debt |
16,138 |
|
|
16,342 |
|
Deferred income taxes |
2,302 |
|
|
2,113 |
|
Postretirement benefit obligations other than
pensions |
225 |
|
|
242 |
|
Asbestos-related liabilities |
1,819 |
|
|
1,920 |
|
Other liabilities |
7,109 |
|
|
6,975 |
|
Redeemable noncontrolling interest |
7 |
|
|
7 |
|
Shareowners' equity |
18,202 |
|
|
17,790 |
|
Total liabilities, redeemable noncontrolling
interest and shareowners'
equity |
$ |
63,945 |
|
|
$ |
64,586 |
|
Honeywell
International Inc. |
Consolidated Statement
of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
Three Months
Ended
June 30, |
|
Six Months Ended
June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
1,447 |
|
|
$ |
1,099 |
|
|
$ |
2,895 |
|
|
$ |
2,705 |
|
Less: Net income attributable to the
noncontrolling interest |
17 |
|
|
18 |
|
|
38 |
|
|
43 |
|
Net income attributable to Honeywell |
1,430 |
|
|
1,081 |
|
|
2,857 |
|
|
2,662 |
|
Adjustments to reconcile net income attributable
to Honeywell to net cash
provided by operating activities: |
|
|
|
|
|
|
|
Depreciation |
164 |
|
|
161 |
|
|
335 |
|
|
314 |
|
Amortization |
120 |
|
|
89 |
|
|
290 |
|
|
179 |
|
Gain on sale of non-strategic businesses and
assets |
— |
|
|
— |
|
|
(90) |
|
|
— |
|
Repositioning and other charges |
101 |
|
|
280 |
|
|
242 |
|
|
342 |
|
Net payments for repositioning and other
charges |
(163) |
|
|
(198) |
|
|
(358) |
|
|
(309) |
|
Pension and other postretirement income |
(290) |
|
|
(211) |
|
|
(583) |
|
|
(423) |
|
Pension and other postretirement benefit
payments |
(13) |
|
|
(9) |
|
|
(27) |
|
|
(23) |
|
Stock compensation expense |
39 |
|
|
34 |
|
|
116 |
|
|
78 |
|
Deferred income taxes |
38 |
|
|
(219) |
|
|
101 |
|
|
(277) |
|
Other |
(181) |
|
|
(106) |
|
|
(277) |
|
|
(285) |
|
Changes in assets and liabilities, net of the
effects of acquisitions and
divestitures: |
|
|
|
|
|
|
|
Accounts receivable |
(270) |
|
|
735 |
|
|
(127) |
|
|
776 |
|
Inventories |
(113) |
|
|
(168) |
|
|
(271) |
|
|
(331) |
|
Other current assets |
(32) |
|
|
(60) |
|
|
(98) |
|
|
106 |
|
Accounts payable |
345 |
|
|
(310) |
|
|
402 |
|
|
(364) |
|
Accrued liabilities |
103 |
|
|
381 |
|
|
(256) |
|
|
(26) |
|
Net cash provided by (used for) operating
activities |
1,278 |
|
|
1,480 |
|
|
2,256 |
|
|
2,419 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Expenditures for property, plant and
equipment |
(185) |
|
|
(227) |
|
|
(406) |
|
|
(366) |
|
Proceeds from disposals of property, plant and
equipment |
— |
|
|
— |
|
|
14 |
|
|
7 |
|
Increase in investments |
(661) |
|
|
(1,023) |
|
|
(1,397) |
|
|
(1,671) |
|
Decrease in investments |
719 |
|
|
746 |
|
|
1,331 |
|
|
1,589 |
|
Receipts from Garrett Motion Inc. |
375 |
|
|
— |
|
|
375 |
|
|
— |
|
Receipts (payments) from settlements of derivative
contracts |
(163) |
|
|
(204) |
|
|
(23) |
|
|
83 |
|
Cash paid for acquisitions, net of cash
acquired |
(24) |
|
|
— |
|
|
(1,327) |
|
|
— |
|
Proceeds from sales of businesses, net of fees
paid |
— |
|
|
— |
|
|
190 |
|
|
— |
|
Net cash provided by (used for) investing
activities |
61 |
|
|
(708) |
|
|
(1,243) |
|
|
(358) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of commercial paper and
other short-term borrowings |
1,090 |
|
|
3,710 |
|
|
2,358 |
|
|
7,165 |
|
Payments of commercial paper and other short-term
borrowings |
(1,089) |
|
|
(3,721) |
|
|
(2,355) |
|
|
(7,094) |
|
Proceeds from issuance of common stock |
47 |
|
|
31 |
|
|
114 |
|
|
97 |
|
Proceeds from issuance of long-term debt |
4 |
|
|
5,974 |
|
|
27 |
|
|
7,101 |
|
Payments of long-term debt |
(18) |
|
|
(93) |
|
|
(835) |
|
|
(1,218) |
|
Repurchases of common stock |
(1,027) |
|
|
(62) |
|
|
(1,849) |
|
|
(1,985) |
|
Cash dividends paid |
(664) |
|
|
(650) |
|
|
(1,304) |
|
|
(1,285) |
|
Other |
(3) |
|
|
(2) |
|
|
(33) |
|
|
(40) |
|
Net cash provided by (used for) financing
activities |
(1,660) |
|
|
5,187 |
|
|
(3,877) |
|
|
2,741 |
|
Effect of foreign exchange rate changes on cash
and cash equivalents |
30 |
|
|
98 |
|
|
16 |
|
|
(91) |
|
Net increase (decrease) in cash and cash
equivalents |
(291) |
|
|
6,057 |
|
|
(2,848) |
|
|
4,711 |
|
Cash and cash equivalents at beginning of
period |
11,718 |
|
|
7,721 |
|
|
14,275 |
|
|
9,067 |
|
Cash and cash equivalents at end of period |
$ |
11,427 |
|
|
$ |
13,778 |
|
|
$ |
11,427 |
|
|
$ |
13,778 |
|
Honeywell International
Inc. |
Reconciliation of
Organic Sales % Change (Unaudited) |
|
|
Three Months Ended
June 30, 2021 |
Honeywell |
|
Reported sales % change |
18% |
Less: Foreign currency translation |
3% |
Less: Acquisitions, divestitures and other,
net |
—% |
Organic sales % change |
15% |
|
|
Aerospace |
|
Reported sales % change |
9% |
Less: Foreign currency translation |
1% |
Less: Acquisitions, divestitures and other,
net |
1% |
Organic sales % change |
7% |
|
|
Honeywell Building Technologies |
|
Reported sales % change |
20% |
Less: Foreign currency translation |
7% |
Less: Acquisitions, divestitures and other,
net |
—% |
Organic sales % change |
13% |
|
|
Performance Materials and Technologies |
|
Reported sales % change |
15% |
Less: Foreign currency translation |
4% |
Less: Acquisitions, divestitures and other,
net |
1% |
Organic sales % change |
10% |
|
|
Safety and Productivity Solutions |
|
Reported sales % change |
35% |
Less: Foreign currency translation |
3% |
Less: Acquisitions, divestitures and other,
net |
(3)% |
Organic sales % change |
35% |
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, for the first 12 months following the
transaction date. 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
June 30, |
|
Twelve Months
Ended
December 31, |
|
2021 |
|
2020 |
|
2020 |
Segment profit |
$ |
1,793 |
|
|
$ |
1,385 |
|
|
$ |
6,665 |
|
Stock compensation expense (1) |
(39) |
|
|
(34) |
|
|
(168) |
|
Repositioning, Other (2,3) |
(119) |
|
|
(295) |
|
|
(641) |
|
Pension and other postretirement service costs
(4) |
(37) |
|
|
(38) |
|
|
(160) |
|
Operating income |
$ |
1,598 |
|
|
$ |
1,018 |
|
|
$ |
5,696 |
|
Segment profit |
$ |
1,793 |
|
|
$ |
1,385 |
|
|
$ |
6,665 |
|
÷ Net sales |
$ |
8,808 |
|
|
$ |
7,477 |
|
|
$ |
32,637 |
|
Segment profit margin % |
20.4 |
% |
|
18.5 |
% |
|
20.4 |
% |
Operating income |
$ |
1,598 |
|
|
$ |
1,018 |
|
|
$ |
5,696 |
|
÷ Net sales |
$ |
8,808 |
|
|
$ |
7,477 |
|
|
$ |
32,637 |
|
Operating income margin % |
18.1 |
% |
|
13.6 |
% |
|
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
June 30, |
|
Twelve Months
Ended
December 31, |
|
2021 |
|
2020 |
|
2020 |
Earnings per share of common stock - assuming
dilution (1) |
$ |
2.04 |
|
|
$ |
1.53 |
|
|
$ |
6.72 |
|
Pension mark-to-market expense (2) |
— |
|
|
— |
|
|
0.04 |
|
Separation related tax adjustment
(3) |
— |
|
|
(0.27) |
|
|
(0.26) |
|
Changes in fair value for Garrett equity
securities (4) |
(0.03) |
|
|
— |
|
|
— |
|
Garrett-related adjustments (5) |
0.01 |
|
|
— |
|
|
0.60 |
|
Adjusted earnings per share of common stock -
assuming dilution |
$ |
2.02 |
|
|
$ |
1.26 |
|
|
$ |
7.10 |
|
|
|
(1) |
For the three months ended June 30, 2021 and 2020,
adjusted earnings per share utilizes weighted average shares of
approximately 702.5 million and 708.1 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 three months ended June 30, 2020 and
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 June 30, 2021, the
adjustment was $16 million net of tax due to changes in fair value
for Garrett equity securities. |
(5) |
For the three months ended June 30, 2021, the
adjustment was $7 million net of tax due to a non-cash charge
associated with a further reduction in value of reimbursement
receivables following Garrett's emergence from bankruptcy on April
30, 2021. For the twelve months ended December 31, 2020, the
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 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 and the changes in fair value for Garrett equity
securities. Pension mark-to-market expense is dependent on
macroeconomic factors, such as interest rates and the return
generated on invested pension plan assets. Based on economic and
industry conditions, future developments and other relevant
factors, these assumptions are subject to change. Changes in fair
value for Garrett equity securities cannot be forecasted due to the
inherent nature of changing conditions in the overall
market.
Honeywell International
Inc. |
Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow, Reconciliation
of Net Income Attributable
to Honeywell to Adjusted Net Income Attributable to Honeywell, and
Calculation of Adjusted Free Cash Flow
Conversion (Unaudited) |
(Dollars in
millions) |
|
|
Three Months
Ended
June 30, 2021 |
|
Three Months
Ended
June 30, 2020 |
Cash provided by operating activities |
$ |
1,278 |
|
|
$ |
1,480 |
|
Expenditures for property, plant and
equipment |
(185) |
|
|
(227) |
|
Garrett cash receipts |
375 |
|
|
— |
|
Free cash flow |
1,468 |
|
|
1,253 |
|
Net income attributable to Honeywell |
1,430 |
|
|
1,081 |
|
Separation related tax adjustment |
— |
|
|
(186) |
|
Changes in fair value for Garrett equity
securities (1) |
(16) |
|
|
— |
|
Garrett related adjustment (2) |
7 |
|
|
— |
|
Adjusted net income attributable to Honeywell |
$ |
1,421 |
|
|
$ |
895 |
|
Cash provided by operating activities |
$ |
1,278 |
|
|
$ |
1,480 |
|
÷ Net income (loss) attributable to Honeywell |
$ |
1,430 |
|
|
$ |
1,081 |
|
Operating cash flow conversion % |
89 |
% |
|
137 |
% |
Free cash flow |
$ |
1,468 |
|
|
$ |
1,253 |
|
÷ Adjusted net income attributable to
Honeywell |
$ |
1,421 |
|
|
$ |
895 |
|
Adjusted free cash flow conversion % |
103 |
% |
|
140 |
% |
|
|
(1) |
The adjustment due to changes in fair value for
Garrett equity securities. |
(2) |
For the three months ended June 30, 2021, the
adjustment was $7 million net of tax due to a non-cash charge
associated with a further reduction in value of reimbursement
receivables following Garrett's emergence from bankruptcy on April
30, 2021. |
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus cash receipts from Garrett.
We believe that free cash flow is a non-GAAP metric that is
useful to investors and management as a measure of cash generated
by operations that will be used to repay scheduled debt maturities
and can be used to invest in future growth through new business
development activities or acquisitions, pay dividends, repurchase
stock or repay debt obligations prior to their maturities. This
metric can also be used to evaluate our ability to generate cash
flow from operations and the impact that this cash flow has on our
liquidity. For forward looking information, we do not provide cash
flow conversion guidance on a GAAP basis as management cannot
reliably predict or estimate, without unreasonable effort, the
pension mark-to-market expense and the changes in fair value for
Garrett equity securities. Pension mark-to-market is dependent on
macroeconomic factors, such as interest rates and the return
generated on invested pension plan assets. Based on economic and
industry conditions, future developments and other relevant
factors, these assumptions are subject to change. Changes in fair
value of Garrett equity securities cannot be forecasted due to the
inherent nature of changing conditions in the overall market.
Honeywell International
Inc. |
Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow (Unaudited) |
|
|
Twelve Months
Ended
December 31,
2021(E) ($B) |
Cash provided by operating activities |
~$5.9 - $6.2 |
Expenditures for property, plant and
equipment |
~(1) |
Garrett cash receipts |
0.4 |
Free cash flow |
~$5.3 - $5.6 |
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus 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 or changes in fair value of Garrett
equity securities. Pension mark-to-market is dependent on
macroeconomic factors, such as interest rates and the return
generated on invested pension plan assets. Based on economic and
industry conditions, future developments and other relevant
factors, these assumptions are subject to change. Changes in fair
value of Garrett equity securities cannot be forecasted due to the
inherent nature of changing conditions in the overall market.
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) |
|
$8.05 - $8.20 |
Gain on sale of retail footwear business
(2) |
|
(0.11) |
Garrett-related adjustments (3) |
|
0.01 |
Adjusted earnings per share of common stock -
assuming dilution |
|
$7.95 - $8.10 |
|
|
(1) |
For the twelve months ended December 31, 2021,
expected earnings per share utilizes weighted average shares of
approximately 703 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. |
(3) |
For the twelve months ended December 31, 2021,
adjustment was $7 million net of tax due to a non-cash charge
associated with a further reduction in value of reimbursement
receivables following Garrett's emergence from bankruptcy on April
30, 2021. |
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
or changes in fair value for Garrett equity securities, 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. Based on economic and
industry conditions, future developments and other relevant
factors, these assumptions are subject to change. Changes in fair
value for Garrett equity securities cannot be forecasted due to the
inherent nature of changing conditions in the overall market.
Contacts: |
|
|
|
Media |
Investor Relations |
Nina Krauss |
Reena Vaidya |
(704) 627-6035 |
(704) 627-6200 |
nina.krauss@honeywell.com |
reena.vaidya@honeywell.com |