20th Apr 2012 13:39
Honeywell First Quarter Sales Up 7% To $9.3 Billion; And Earnings Up 18% To $1.04 Per Share
- Higher Than Expected Organic Sales, Segment Margin and EPS - Broad Based Overdrive
- 6% Organic Growth Reflects New Products and Technologies, Geographic Expansion
- Raising 2012 Proforma EPS Guidance to $4.35 - $4.55, Up From $4.25 - $4.50
MORRIS TOWNSHIP, N.J., April 20, 2012 -- Honeywell today announced its results for the first quarter of 2012:
Total Honeywell ($ Millions, except Earnings Per Share) 1Q 2011 1Q 2012 % Change Sales 8,672 9,307 7% Earnings Per Share from Continuing Operations $0.86 $1.04 21% Earnings Per Share $0.88 $1.04 18% Cash Flow from Operations (443) 196 N/A Free Cash Flow* 446 300 (33%) * Free Cash Flow (cash flow from operations less capital expenditures) prior tocash pension contributions "Honeywell had a terrific start to the year highlighted by higher than expectedorganic sales, 70 basis points of margin expansion, and strong double-digitearnings growth," said Honeywell Chairman and Chief Executive Officer DaveCote. "We've seen good momentum in the U.S. and our key high growth regions,which is more than offsetting softness in Europe impacting our short-cyclebusinesses. Our long-cycle businesses, namely commercial aerospace and UOP, hadparticularly strong growth, overdriving expectations in the quarter. As aresult of our strong first quarter and continued favorable outlook for ourmajor markets, we're raising our 2012 earnings per share outlook. Our continuedseed planting, coupled with great positions in good industries and the FiveInitiatives - growth, productivity, cash, people, and our enablers - willremain the keys to our continued outperformance in 2012 and over thelong-term."The company is updating its full-year 2012 sales and EPS guidance and nowexpects: Full Year Guidance 2012 2012 % Change Prior Revised vs. 2011 Guidance Guidance Sales $37.8 - $38.0 - 38.6B 4% - 6% 38.9B
Earnings Per Share from Continuing $4.25 - $4.35 - $4.55 9% - 14%
Operations(1) $4.50 Earnings Per Share(2) $4.25 - $4.35 - $4.55 7% - 12% $4.50 Free Cash Flow(3) ~$3.5B ~$3.5B ~100% conversion
(1) Proforma (Ongoing Operations); V% Excludes Any Mark-to-Market Pension
Adjustments and Excludes 3Q11 Repo and Other Actions Funded by CPG Gain (in Disc. Ops)
(2) Proforma, V% Excludes Any Mark-to-Market Pension Adjustments
(3) Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions
First Quarter Segment Performance
Aerospace ($ Millions) 1Q 1Q % 2011 2012 Change Sales 2,696 2,950 9% Segment Profit 467 534 14% Segment Margin 17.3% 18.1% 80 bps
* Sales were up 9% compared with the first quarter of 2011. Organic growth
was 8% which was primarily driven by an 18% increase in our Commercial end
markets, partially offset by lower services revenue in Defense and Space.
Commercial OE sales were up 22%, or 18% organic excluding the impact of the
EMS acquisition. Commercial aftermarket sales were up 16% with growth in
both spares and R&O.
* Segment profit was up 14% and segment margin increased 80 bps to 18.1%,
primarily due to strong commercial aftermarket volume and productivity, net
of inflation and higher investments in R&D.
Automation and Control Solutions
($ Millions) 1Q 1Q % 2011 2012 Change Sales 3,656 3,788 4% Segment Profit 459 491 7% Segment Margin 12.6% 13.0% 40 bps * Sales were up 4%, 3% organic, compared with the first quarter of 2011 driven by growth in Process Solutions and Building Solutions and
Distribution, partially offset by a modest (1%) organic decline in Energy,
Safety and Security as a result of market headwinds in several of our short
cycle businesses. ACS continues to benefit from new product introductions,
geographic expansion, and favorable macro trends such as safety, security,
and energy efficiency.
* Segment profit was up 7% and segment margins were up 40 bps to 13.0% driven
by productivity benefits net of inflation, and the absence of prior year
dilution from acquisitions.
Performance Materials and Technologies ($ Millions) 1Q 2011 1Q 2012 % Change Sales 1,355 1,615 19% Segment Profit 284 319 12% Segment Margin 21.0% 19.8% (120) bps
* Sales were up 19%, 12% organic, compared with the first quarter of 2011,
resulting from strong UOP catalyst and licensing sales, the phenol plant
acquisition, and strong volumes in Resins & Chemicals, offsetting softer
demand in Asia and Europe in Specialty Products and the impact of unfavorable pricing due to more challenging global supply conditions in Fluorines. Demand for UOP technology offerings and services remained strong with new orders up over 50%. * Segment profit was up 12% due to higher volumes, partially offset by continued investment to support growth in the business. Segment margin
decreased (120) bps to 19.8%, primarily due to the dilutive impact of the
phenol plant acquisition. This is better than expected performance due to
less price/raws headwinds than originally planned.
Transportation Systems ($ Millions) 1Q 1Q % 2011 2012 Change Sales 965 954 (1%) Segment Profit 118 120 2% Segment Margin 12.2% 12.6% 40 bps * Sales were down (1%), but up 1% on an organic basis, compared with the first quarter of 2011, due to new business launches and higher diesel penetration, partially offset by lower European vehicle production and aftermarket sales volume. * Segment profit was up 2% and segment margins increased 40 bps to 12.6%
primarily driven by productivity gains including benefits from prior period
restructuring actions.
Honeywell will discuss its results during its investor conference call todaystarting at 9:30 a.m. EDT. To participate, please dial (631) 291-4830 a fewminutes before the 9:30 a.m. EDT start. Please mention to the operator that youare dialing in for Honeywell's investor conference call. The live webcast ofthe investor call will be available through the "Investor Relations" section ofthe company's Website (http://www.honeywell.com/investor). Investors can accessa replay of the conference call from 12:30 p.m. EDT, April 20, until midnight,April 27, by dialing (404) 537-3406. The access code is 65469116.Honeywell (www.honeywell.com) is a Fortune 100 diversified technology andmanufacturing leader, serving customers worldwide with aerospace products andservices; control technologies for buildings, homes, and industry; automotiveproducts; turbochargers; and specialty materials. Based in Morris Township,N.J., Honeywell's shares are traded on the New York, London, and Chicago StockExchanges. For more news and information on Honeywell, please visit www.honeywellnow.com.This release contains certain statements that may be deemed "forward-lookingstatements" within the meaning of Section 21E of the Securities Exchange Act of1934. All statements, other than statements of historical fact, that addressactivities, events or developments that we or our management intends, expects,projects, believes or anticipates will or may occur in the future areforward-looking statements. Such statements are based upon certain assumptionsand assessments made by our management in light of their experience and theirperception 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 anumber of material risks and uncertainties, including but not limited toeconomic, competitive, governmental, and technological factors affecting ouroperations, markets, products, services and prices. Such forward-lookingstatements are not guarantees of future performance, and actual results,developments and business decisions may differ from those envisaged by suchforward-looking statements.Contacts: Media Investor Relations Robert C. Ferris Elena Doom (973) 455-3388 (973) 455-2222 [email protected] [email protected] Honeywell International Inc Consolidated Statement of Operations (Unaudited) (In millions, except per share amounts) Three Months Ended March 31, 2012 2011 Product sales $ 7,377 $ 6,813 Service sales 1,930 1,859 Net sales 9,307 8,672 Costs, expenses and other Cost of products sold (A) 5,571 5,194 Cost of services sold (A) 1,309 1,230 6,880 6,424 Selling, general and administrative expenses (A) 1,231 1,232 Other (income) expense (15) (29) Interest and other financial charges 89 99 8,185 7,726
Income from continuing operations before taxes 1,122
946 Tax expense 297 256
Income from continuing operations after taxes 825
690
Income from discontinued operations after taxes -
18 Net income 825 708
Less: Net income attributable to the noncontrolling interest 2
3
Net income attributable to Honeywell $ 823
$ 705
Amounts attributable to Honeywell: Income from continuing operations less net income attributable to the noncontrolling interest 823
687
Income from discontinued operations -
18
Net income attributable to Honeywell $ 823
$ 705
Earnings per share of common stock - basic: Income from continuing operations 1.06
0.87
Income from discontinued operations -
0.03
Net income attributable to Honeywell $ 1.06 $
0.90
Earnings per share of common stock - assuming dilution: Income from continuing operations 1.04
0.86
Income from discontinued operations -
0.02
Net income attributable to Honeywell $ 1.04 $
0.88 Weighted average number of shares outstanding-basic 777.3 785.5
Weighted average number of shares outstanding -
assuming dilution 788.1 797.7 (A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other post-retirement expense, and stock compensation expense Honeywell International Inc Segment Data (Unaudited) (Dollars in millions) Three Months Ended March 31, Net Sales 2012 2011 Aerospace $ 2,950 $ 2,696
Automation and Control Solutions 3,788 3,656
Performance Materials and Technologies 1,615 1,355
Transportation Systems 954 965 Corporate - - Total $ 9,307 $ 8,672 Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes Three Months Ended March 31, Segment Profit 2012 2011 Aerospace $ 534 $ 467
Automation and Control Solutions 491 459
Performance Materials and Technologies 319 284
Transportation Systems 120 118 Corporate (49) (68) Total Segment Profit 1,415 1,260 Other income/(expense) (A) 5 20 Interest and other financial charges (89)
(99)
Stock compensation expense (B) (51) (49) Pension ongoing expense (B) (13) (35) Other postretirement income/(expense) (B) (23)
(18)
Repositioning and other charges (B) (122) (133) Income from continuing operations before taxes $ 1,122 $ 946
(A) Equity income/(loss) of affiliated companies is
included in Segment Profit
(B) Amounts included in cost of products and services sold and selling, general and administrative expenses. Honeywell International Inc Consolidated Balance Sheet (Unaudited) (Dollars in millions) March 31, December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 3,988 $ 3,698 Accounts, notes and other receivables 7,268 7,228 Inventories 4,368 4,264 Deferred income taxes 428 460 Investments and other current assets 501 484 Total current assets 16,553 16,134
Investments and long-term receivables 533 494 Property, plant and equipment - net 4,814 4,804
Goodwill 11,910 11,858
Other intangible assets - net 2,420 2,477 Insurance recoveries for asbestos related liabilities 680 709
Deferred income taxes 2,061 2,132 Other assets 1,399 1,200 Total assets $ 40,370 $ 39,808
LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Accounts payable $ 4,535 $ 4,738 Short-term borrowings 69 60 Commercial paper 948 599 Current maturities of long-term debt 615 15 Accrued liabilities 6,499 6,863 Total current liabilities 12,666 12,275 Long-term debt 6,269 6,881 Deferred income taxes 707 676
Postretirement benefit obligations other than pensions 1,400 1,417
Asbestos related liabilities 1,509 1,499 Other liabilities 5,977 6,158 Shareowners' equity 11,842 10,902 Total liabilities and shareowners' equity $ 40,370 $ 39,808 Honeywell International Inc Consolidated Statement of Cash Flows (Unaudited) (Dollars in millions) Three Months Ended March 31, 2012 2011
Cash flows from operating activities: Net income attributable to Honeywell $ 823 $
705
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities: Depreciation and amortization 230 242 Gain on sale of non-strategic businesses and assets - (44) Repositioning and other charges 122 133 Net payments for repositioning and other charges (104) (109) Pension and other postretirement expense 36 54 Pension and other postretirement benefit payments (289) (1,050) Stock compensation expense 51 49 Deferred income taxes 132 68 Excess tax benefits from share based payment arrangements (12) (13) Other (7) 108 Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables (40) (172) Inventories (108) (330) Other current assets (28) (14) Accounts payable (203) (4) Accrued liabilities (407) (66) Net cash provided by/(used for) operating activities 196 (443)
Cash flows from investing activities: Expenditures for property, plant and equipment (152)
(124)
Proceeds from disposals of property, plant and equipment 1 1 Increase in investments (84) (164) Decrease in investments 92 62 Cash paid for acquisitions, net of cash acquired (1)
(7)
Proceeds from sales of businesses, net of fees paid - 217 Other 22 31 Net cash (used for)/provided by investing activities (122) 16
Cash flows from financing activities:
Net increase in commercial paper 349 1 Net increase/(decrease) in short-term borrowings 7 (9) Proceeds from issuance of common stock 90 101 Proceeds from issuance of long-term debt 2
1,381
Payments of long-term debt -
(437)
Excess tax benefits from share based payment arrangements 12 13 Cash dividends paid (291) (264) Net cash provided by financing activities 169 786 Effect of foreign exchange rate changes on cash and cash equivalents 47
67
Net increase in cash and cash equivalents 290
426
Cash and cash equivalents at beginning of period 3,698
2,650
Cash and cash equivalents at end of period $ 3,988 $ 3,076 Honeywell International Inc Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to Pension Cash Contributions (Unaudited) (Dollars in millions) Three Months Ended March 31, 2012 2011
Cash provided by operating activities $ 196 $ (443) Expenditures for property, plant and equipment (152) (124)
Free cash flow $ 44 $ (567) Pension cash contributions 256 1,013
Free cash flow, prior to pension cash $ 300 $ 446 contributions
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 measureof cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, and to pay dividends, repurchase stock, repay debt obligations prior to their maturities, or make cash pension contributions. 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 Earnings Per Share to Earnings Per Share, Excluding
Mark-to-Market Pension Adjustments and Third Quarter 2011 Repositioning and Other Actions Funded by CPG Gain 2011
EPS - continuing operations assuming dilution $
2.35
Mark-to-market pension adjustment $
1.44
EPS - continuing operations assuming dilution, excluding mark-to-market pension adjustment
$
3.79
Third quarter 2011 repositioning and other actions funded by CPG gain $
0.22
EPS - continuing operations assuming dilution, excluding mark-to-market
pension adjustment and third quarter 2011 repositioning and other actions funded by CPG gain $ 4.01 2011
EPS - Total Honeywell assuming dilution $
2.61
Mark-to-market pension adjustment $
1.44
EPS - Total Honeywell assuming dilution, excluding mark-to-market pension adjustment
$
4.05
We believe EPS, excluding mark-to-market pension expense and third quarter 2011 repositioning and other actions funded by CPG gain, is a metric that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends
EPS utilizes weighted average shares outstanding of 791.6 million and the effective tax rate for the period. Mark-to-market uses a blended tax rate of 36.9%
SOURCE Honeywell
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