Honeywell Reports Second Quarter 2016 Sales Of $10.0 Billion, Up 2%; Earnings Up 10% To
$1.66 Per Share; Announces Split Of
Automation And Control Solutions Business Group
- Sales Up 2% Due to Acquisitions; Core Organic Sales Down 2%*
- Segment Margin Improvement of 10 bps; 110 bps Operational
Improvement
- Announced $1.5B Intelligrated
Acquisition, R&C Spin-Off, and Repurchased ~$0.5 Billion of Shares
- Raising Low-End of 2016 EPS Guidance Range (Ex-Pension MTM) to
$6.60 - $6.70, Up 8% - 10%
- Two New Reporting Segments – Home And Building Technologies,
Safety And Productivity Solutions – Provide Greater Customer and
Growth Focus
MORRIS PLAINS, New Jersey,
July 22, 2016 -- Honeywell (NYSE:
HON) today announced its results for the second quarter of
2016:
Total Honeywell |
|
($ Millions, Except Earnings Per Share) |
2Q 2015 |
2Q 2016 |
Change |
Sales |
9,775 |
9,991 |
2% |
Segment Margin |
18.4% |
18.5% |
10 bps |
Operating Income Margin |
17.6% |
18.4% |
80 bps |
Earnings Per Share |
$1.51 |
$1.66 |
10% |
Cash Flow from Operations |
1,408 |
1,544 |
10% |
Free Cash Flow
(1) |
1,165 |
1,263 |
8% |
|
(1) Cash Flow
from Operations Less Capital Expenditures |
*Throughout this press release, core organic sales growth refers to
reported sales growth less the impacts from foreign currency
translation, M&A and raw materials pass-through pricing in the
Resins & Chemicals business of PMT. The raw materials pricing
impact is excluded in instances where raw materials costs are
passed through to customers, which drives fluctuations in selling
prices not tied to volume growth. A reconciliation of core organic
sales growth to reported sales growth is provided in the attached
financial tables.
"Honeywell grew earnings 10% in the second quarter, capping off
a strong first half of 2016," said Honeywell Chairman and CEO
Dave Cote. "Sales in the quarter of
$10.0B were in-line with our
expectations driven by contributions from each of our business
groups. In Aerospace, we saw continued momentum in Commercial
Aviation Aftermarket and Transportation Systems. ACS had strong
growth in Security and Fire, Buildings Solutions and Distribution,
and its China business. And, PMT
saw higher sales in Process Solutions and Fluorine Products, where
we continue to outperform."
"In the second quarter, we also continued to smartly deploy
capital to position our businesses for sustainable growth, to add
to our Great Positions in Good Industries, and to drive shareowner
value. Earlier this month, we announced the acquisition of
Intelligrated, a leader in supply chain and warehouse automation
technologies, for $1.5 billion. This
business complements our suite of transportation and logistics
technologies with warehouse execution software and other
technologies enabling superior efficiency in warehouse and
distribution operations. We also repurchased approximately
$500 million of shares during the
quarter, bringing our year-to-date total to $1.6 billion, and funded $97 million in new restructuring projects."
"As a result of our first half performance, we are raising the
low-end of our full-year earnings guidance range to $6.60-$6.70, up 8%-10%. We will continue to
support growth, focusing on winning in High Growth Regions,
advancing our superior software capabilities, and effectively using
HOS Gold to drive breakthrough initiatives and deliver high-quality
products to our customers globally," continued Cote.
The company is updating its full-year 2016 guidance and now
expects:
2016 Full-Year Guidance |
|
|
Prior Guidance |
Revised Guidance |
Change vs. 2015 |
Sales |
$40.3 -
$40.9B |
$40.0 -
$40.6B |
4% - 5% |
Core Organic
Growth |
1% - 2% |
~1% |
|
Segment Margin |
18.9% - 19.3% |
18.9% - 19.3% |
10 - 50 bps
(2) |
Operating Income
Margin (Ex-Pension MTM) |
18.0% - 18.4% |
18.0% - 18.4% |
10 - 50 bps
(3) |
|
|
|
|
Earnings Per Share
(Ex-Pension MTM) |
$6.55 - $6.70 |
$6.60 - $6.70 |
8% - 10% |
|
|
|
|
Free Cash Flow
(1) |
$4.6 -
$4.8B |
$4.6 -
$4.8B |
5% - 10% |
|
1. Cash Flow from
Operations Less Capital Expenditures |
2. Segment Margin
ex-M&A Up 80 - 110 bps |
3. Operating Margin
ex-M&A Up 80 - 110 bps |
Automation and Control Solutions
Realignment
Honeywell also announced today that it is realigning its ACS
business segment into two new segments: Home and Building
Technologies (HBT) and Safety and Productivity Solutions (SPS).
Financial performance for the third quarter of 2016 will be
reported based on this realignment. For 2015, HBT and SPS would
have had estimated revenues of approximately $9.4 billion and $4.7
billion, respectively.
"ACS is coming off a strong quarter and has established momentum
in key software-driven markets where our products and services give
us a competitive advantage, especially given our recent
acquisitions such as Elster, Xtralis, Intelligrated, and
Movilizer," said Cote. "We have removed layers from our
organizational structure and are well-positioned to implement a
more focused segment reporting alignment that fits our HOS Gold
approach to drive breakthrough strategies and speed up new product
introduction. This new structure will also help us better serve our
customers. Our success through acquisition and NPI has resulted in
a much broader portfolio that has outgrown the existing ACS
construct. Having two more nimble segments will promote greater
customer intimacy and responsiveness. The separation into two
businesses will also enable increased efficiency and speed of
decision-making as well as a more comprehensive integrated suite of
technologies for the respective end markets."
HBT benefits from Honeywell's advanced software and connectivity
capability combined with an installed base of products and
technologies in more than 150 million homes and 10 million
buildings worldwide that help homeowners stay connected and in
control of home comfort, security, fire systems, and air and water
purification, and that help building owners and occupants ensure
their facilities are safe, comfortable, and sustainable. It will
include Honeywell's Environmental & Energy Solutions
(E&ES), Security and Fire, and Building Solutions and
Distribution businesses. E&ES' Industrial Combustion and
Thermal business will be reclassified to Honeywell Performance
Materials and Technologies (PMT). HBT will be led by Terrence Hahn, who previously ran Honeywell's
Transportation Systems unit for the past three years, launching
more than 100 new engine programs per annum and overseeing the
divestiture of Friction Materials. Prior to that, Hahn led the
Fluorine Products business within PMT, where he established the
Solstice® product line, and prior to his employment with
Honeywell, held several senior leadership positions within Air
Products and Chemicals Inc. He earned bachelor's and master's
degrees in materials science from Lehigh
University and an M.B.A. from The Wharton School of the
University of Pennsylvania.
SPS technologies support the productivity and safety of more
than half a billion workers worldwide with offerings such as rugged
mobile computers, voice-enabled software and workflows, bar-code
scanners, printing solutions, gas sensing technologies, and
personal protective equipment. It will include Honeywell's Sensing
& Productivity Solutions and Industrial Safety business units,
as well as the Intelligrated acquisition after it closes. SPS will
be led by John Waldron, who has
served for the past year as president of the Sensing and
Productivity Solutions business unit that had been formed by the
combination of Honeywell's Scanning and Mobility (HSM) and Sensing
and Controls businesses. Previously, Waldron led the HSM business
and served as chief marketing officer while leading the marketing
integration of several acquired businesses within the SPS
portfolio, including Hand Held Products, Metrologic Instruments,
and EMS Technologies. Waldron earned a bachelor's degree in
electrical engineering from the University of
Dayton and an M.B.A. from the University of Notre Dame.
Succeeding Hahn as president and CEO of Transportation Systems
will be Olivier Rabiller, who has held positions of increasing
responsibility since joining Honeywell in 2002. For the past two
years, he has managed the Transportation Systems businesses in
China, India, and Brazil as part of his responsibilities for
generating growth in the fastest-growing geographies around the
world. His responsibilities have also included the global
aftermarket; business development; mergers, acquisitions and
divestitures; and licensing. He was previously vice president and
general manager of the Aftermarket business within Transportation
Systems. Prior to Honeywell, Rabiller served seven years at Renault
in Customer Service, Engine Project Management, and Purchasing. He
holds an engineering degree from Ecole Centrale Nantes and an
M.B.A. from INSEAD.
"Our new business group leaders demonstrate the depth and talent
of our leadership bench, and they will drive continued
outperformance in their respective businesses," said Cote.
Alex Ismail, who served as
president and CEO of Automation and Control Solutions for the past
two years, will leave the company. "I would like to thank Alex for
a long and successful career at Honeywell, during which he led
several different significant business units over many years,"
concluded Cote. "Alex was instrumental in building our Turbo
business into a global technology powerhouse, with rapid growth in
all regions and world-leading technologies that have greatly
benefited from their proximity to our Aerospace business. He then
moved to Automation and Control Solutions, where he delivered
strong operating margin expansion and improved operational
excellence; completed several acquisitions in new strategic
adjacencies such as smart meters; accelerated growth in High Growth
Regions, and built a strong pipeline of new products, Internet of
Things (IoT) solutions, and software for home, building, and worker
applications. Alex is a well-liked and respected leader, and we
wish him the best in his next endeavor."
This realignment has no impact on Honeywell's historical
consolidated financial position, results of operations or cash
flows.
Additional commentary on the second quarter 2016 results by
business segment are provided below.
Segment Performance |
|
Aerospace |
|
($ Millions) |
2Q 2015 |
2Q 2016 |
% Change |
Sales |
3,827 |
3,779 |
(1%) |
Segment Profit |
777 |
791 |
2% |
Segment Margin |
20.3% |
20.9% |
60 bps |
- Sales for the second quarter were down (1%) reported and down
(2%) on a core organic basis. The decrease in core organic sales
was primarily driven by program delays and completions in the
international, U.S., and services businesses within Defense &
Space (D&S), lower shipments to Business and General Aviation
(BGA) OEMs, and higher OEM incentives. This was partially offset by
higher spares sales, higher repair and overhaul activities, and new
turbo platform launches on passenger vehicles in Transportation
Systems. The difference between reported and core organic sales was
due to the favorable impact from acquisitions.
- Segment profit was up 2% and segment margin expanded 60 bps to
20.9%, driven by productivity net of inflation, and commercial
excellence, partially offset by continued investments for growth
including higher OEM incentives, and acquisition amortization and
integration costs. Excluding the impact of acquisitions, segment
margin expanded 80 bps.
Automation and Control
Solutions |
|
($ Millions) |
2Q 2015 |
2Q 2016 |
% Change |
Sales |
3,553 |
3,886 |
9% |
Segment Profit |
567 |
615 |
8% |
Segment Margin |
16.0% |
15.8% |
(20) bps |
- Sales for the second quarter were up 9% reported. Core organic
sales were down 1% in the quarter as a result of lower volume in
Sensing & Productivity Solutions (S&PS) due to the USPS
roll-out in the second quarter of 2015 partially offset by
continued global growth in Security and Fire, strength in our
Americas Distribution business, and further penetration of High
Growth Regions. The difference between reported and core organic
sales was due to the favorable impact from acquisitions, primarily
Elster.
- Segment profit was up 8% and segment margin contracted (20) bps
to 15.8%, primarily driven by acquisition amortization and
integration costs. Excluding the impact of acquisitions, segment
margin expanded 50 bps driven by productivity, net of inflation,
the benefits of previous restructuring actions, and commercial
excellence, partially offset by continued investments for
growth.
Performance Materials and
Technologies |
|
($ Millions) |
2Q 2015 |
2Q 2016 |
% Change |
Sales |
2,395 |
2,326 |
(3%) |
Segment Profit |
509 |
490 |
(4%) |
Segment Margin |
21.3% |
21.1% |
(20) bps |
- Sales for the second quarter were down (3%) reported. Core
organic sales were down (4%) primarily driven by lower UOP gas
processing, licensing, and equipment sales and lower market pricing
in Resins & Chemicals, partially offset by higher projects,
software, and services sales in Process Solutions (HPS) and
stronger volume in Fluorine Products. The difference between
reported and core organic sales was due to the favorable impact
from acquisitions, partially offset by the unfavorable impact of
foreign currency and lower raw materials pass-through pricing in
Resins & Chemicals.
- Segment profit was down (4%) and segment margins contracted
(20) bps to 21.1%, driven by lower volume and continued investments
for growth, partially offset by the benefits of previous
restructuring actions and commercial excellence.
Honeywell will discuss its results during its investor
conference call today starting at 9:30 a.m.
EDT. To participate on the conference call, please dial
(877) 879-6207 (domestic) or (719) 325-4942 (international)
approximately ten minutes before the 9:30
a.m. EDT start. Please mention to the operator that you are
dialing in for Honeywell's second quarter 2016 earnings call or
provide the conference code HON2Q16. 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 22, until
12:30 p.m. EDT, July 29, by dialing (888) 203-1112 (domestic) or
(719) 457-0820 (international). The access code is 6704637.
Honeywell (http://www.honeywell.com/) is a Fortune 100
diversified technology and manufacturing leader, serving customers
worldwide with aerospace products and services; control
technologies for buildings, homes, and industry; turbochargers; and
performance materials. 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.
Contacts: |
|
|
|
Media |
Investor Relations |
Robert C. Ferris |
Mark Macaluso |
(973) 455-3388 |
(973) 455-2222 |
rob.ferris@honeywell.com |
mark.macaluso@honeywell.com |
|
Honeywell International
Inc |
Consolidated Statement
of Operations (Unaudited) |
(Dollars in millions,
except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months
Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Product sales |
$
8,035 |
|
$
7,798 |
|
$
15,654 |
|
$
15,162 |
Service sales |
1,956 |
|
1,977 |
|
3,859 |
|
3,826 |
Net sales |
9,991 |
|
9,775 |
|
19,513 |
|
18,988 |
|
|
|
|
|
|
|
|
|
Costs, expenses and
other |
|
|
|
|
|
|
|
Cost
of products sold (A) |
5,602 |
|
5,541 |
|
10,951 |
|
10,754 |
Cost
of services sold (A) |
1,219 |
|
1,273 |
|
2,417 |
|
2,422 |
|
|
6,821 |
|
6,814 |
|
13,368 |
|
13,176 |
Selling, general and administrative expenses (A) |
1,329 |
|
1,242 |
|
2,609 |
|
2,472 |
Other
(income) expense |
1 |
|
(20) |
|
(17) |
|
(40) |
Interest and other financial charges |
85 |
|
77 |
|
170 |
|
154 |
|
|
8,236 |
|
8,113 |
|
16,130 |
|
15,762 |
|
|
|
|
|
|
|
|
|
Income before taxes |
1,755 |
|
1,662 |
|
3,383 |
|
3,226 |
Tax expense |
465 |
|
440 |
|
897 |
|
858 |
|
|
|
|
|
|
|
|
|
Net income |
1,290 |
|
1,222 |
|
2,486 |
|
2,368 |
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to the noncontrolling interest |
8 |
|
28 |
|
18 |
|
58 |
|
|
|
|
|
|
|
|
|
Net income attributable
to Honeywell |
$
1,282 |
|
$
1,194 |
|
$
2,468 |
|
$
2,310 |
|
|
|
|
|
|
|
|
|
Earnings per share of
common stock - basic |
$
1.68 |
|
$
1.52 |
|
$
3.22 |
|
$
2.95 |
|
|
|
|
|
|
|
|
|
Earnings per share of
common stock - assuming dilution |
$
1.66 |
|
$
1.51 |
|
$
3.19 |
|
$
2.91 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding - basic |
763.3 |
|
783.3 |
|
765.5 |
|
783.5 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding - assuming dilution |
772.4 |
|
792.9 |
|
774.6 |
|
793.4 |
|
|
|
|
|
|
|
|
|
(A) Cost of products and
services sold and selling, general and administrative expenses
include amounts for repositioning and other charges, pension and
other postretirement (income) expense, and stock compensation
expense. |
Honeywell International
Inc |
Segment Data
(Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
Net Sales |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Aerospace |
$
3,779 |
|
$
3,827 |
|
$
7,484 |
|
$
7,434 |
|
|
|
|
|
|
|
|
|
Automation and Control
Solutions |
3,886 |
|
3,553 |
|
7,563 |
|
6,817 |
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
2,326 |
|
2,395 |
|
4,466 |
|
4,737 |
|
|
|
|
|
|
|
|
|
Total |
$
9,991 |
|
$
9,775 |
|
$
19,513 |
|
$
18,988 |
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
Segment Profit |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Aerospace |
$
791 |
|
$
777 |
|
$
1,589 |
|
$
1,529 |
|
|
|
|
|
|
|
|
|
Automation and Control
Solutions |
615 |
|
567 |
|
1,145 |
|
1,083 |
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
490 |
|
509 |
|
931 |
|
1,012 |
|
|
|
|
|
|
|
|
|
Corporate |
(49) |
|
(50) |
|
(98) |
|
(100) |
|
|
|
|
|
|
|
|
|
Total segment profit |
1,847 |
|
1,803 |
|
3,567 |
|
3,524 |
|
|
|
|
|
|
|
|
|
Other income (expense)
(A) |
(7) |
|
12 |
|
5 |
|
24 |
Interest and other
financial charges |
(85) |
|
(77) |
|
(170) |
|
(154) |
Stock compensation
expense (B) |
(43) |
|
(39) |
|
(96) |
|
(91) |
Pension ongoing income
(B) |
151 |
|
103 |
|
301 |
|
203 |
Other postretirement
income (expense) (B) |
8 |
|
(11) |
|
17 |
|
(20) |
Repositioning and other
charges (B) |
(116) |
|
(129) |
|
(241) |
|
(260) |
|
|
|
|
|
|
|
|
|
Income before taxes |
$
1,755 |
|
$
1,662 |
|
$
3,383 |
|
$
3,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) |
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
Cash
and cash equivalents |
|
$
5,045 |
|
$
5,455 |
Accounts, notes and other receivables |
|
8,730 |
|
8,075 |
Inventories |
|
4,678 |
|
4,420 |
Investments and other current assets |
|
1,927 |
|
2,103 |
|
Total current assets |
|
20,380 |
|
20,053 |
|
|
|
|
|
|
Investments and long-term
receivables |
|
561 |
|
517 |
Property, plant and
equipment - net |
|
6,086 |
|
5,789 |
Goodwill |
|
16,688 |
|
15,895 |
Other intangible assets -
net |
|
4,557 |
|
4,577 |
Insurance recoveries for
asbestos related liabilities |
|
428 |
|
426 |
Deferred income
taxes |
|
328 |
|
283 |
Other assets |
|
2,153 |
|
1,776 |
|
|
|
|
|
|
|
Total assets |
|
$
51,181 |
|
$
49,316 |
|
|
|
|
|
|
LIABILITIES AND SHAREOWNERS' EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$
5,598 |
|
$
5,580 |
Commercial paper and other short-term borrowings |
|
3,788 |
|
5,937 |
Current maturities of long-term debt |
|
618 |
|
577 |
Accrued liabilities |
|
5,907 |
|
6,277 |
|
Total current liabilities |
|
15,911 |
|
18,371 |
|
|
|
|
|
|
Long-term debt |
|
9,607 |
|
5,554 |
Deferred income
taxes |
|
767 |
|
558 |
Postretirement benefit
obligations other than pensions |
|
489 |
|
526 |
Asbestos related
liabilities |
|
1,259 |
|
1,251 |
Other liabilities |
|
4,203 |
|
4,348 |
Redeemable noncontrolling
interest |
|
3 |
|
290 |
Shareowners' equity |
|
18,942 |
|
18,418 |
|
|
|
|
|
|
|
Total liabilities, redeemable noncontrolling interest
and shareowners' equity |
|
$
51,181 |
|
$
49,316 |
Honeywell International
Inc |
Consolidated
Statement of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ 1,290 |
|
$ 1,222 |
|
$
2,486 |
|
$
2,368 |
Less: Net income attributable to
the noncontrolling interest |
|
8 |
|
28 |
|
18 |
|
58 |
Net income attributable to
Honeywell |
|
1,282 |
|
1,194 |
|
2,468 |
|
2,310 |
Adjustments to
reconcile net income attributable to Honeywell to net |
|
|
|
|
|
|
|
|
cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
185 |
|
172 |
|
364 |
|
335 |
Amortization |
|
75 |
|
54 |
|
149 |
|
107 |
Repositioning and other charges |
|
140 |
|
129 |
|
265 |
|
260 |
Net
payments for repositioning and other charges |
|
(132) |
|
(115) |
|
(266) |
|
(215) |
Pension and
other postretirement income |
|
(159) |
|
(92) |
|
(318) |
|
(183) |
Pension and
other postretirement benefit payments |
|
(43) |
|
(39) |
|
(81) |
|
(48) |
Stock
compensation expense |
|
43 |
|
39 |
|
96 |
|
91 |
Deferred
income taxes |
|
134 |
|
33 |
|
182 |
|
126 |
Excess tax benefits from
share based payment arrangements |
|
(38) |
|
(9) |
|
(68) |
|
(56) |
Other |
|
(77) |
|
205 |
|
9 |
|
103 |
Changes in
assets and liabilities, net of the effects of |
|
|
|
|
|
|
|
|
acquisitions and divestitures: |
|
|
|
|
|
|
|
|
Accounts, notes and other receivables |
|
(310) |
|
(80) |
|
(513) |
|
(250) |
Inventories |
|
29 |
|
61 |
|
(212) |
|
(25) |
Other
current assets |
|
77 |
|
(96) |
|
18 |
|
(38) |
Accounts payable |
|
113 |
|
88 |
|
- |
|
(24) |
Accrued liabilities |
|
225 |
|
(136) |
|
(292) |
|
(664) |
Net cash provided by operating activities |
|
1,544 |
|
1,408 |
|
1,801 |
|
1,829 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Expenditures for property, plant
and equipment |
|
(281) |
|
(243) |
|
(475) |
|
(408) |
Proceeds from
disposals of property, plant and equipment |
|
- |
|
2 |
|
1 |
|
3 |
Increase in investments |
|
(985) |
|
(2,365) |
|
(1,821) |
|
(3,866) |
Decrease in investments |
|
905 |
|
953 |
|
1,785 |
|
2,059 |
Cash paid for acquisitions, net of
cash acquired |
|
(28) |
|
- |
|
(1,084) |
|
(185) |
Proceeds from sales of businesses,
net of fees paid |
|
- |
|
- |
|
- |
|
2 |
Other |
|
43 |
|
28 |
|
52 |
|
(150) |
Net cash used for investing activities |
|
(346) |
|
(1,625) |
|
(1,542) |
|
(2,545) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net increase
(decrease) in commercial paper and other short-term borrowings |
|
226 |
|
77 |
|
(2,224) |
|
1,129 |
Proceeds from issuance of common
stock |
|
138 |
|
47 |
|
243 |
|
125 |
Proceeds from issuance of long-term
debt |
|
25 |
|
11 |
|
4,473 |
|
14 |
Payments of long-term debt |
|
(51) |
|
(22) |
|
(470) |
|
(57) |
Excess tax benefits
from share based payment arrangements |
|
38 |
|
9 |
|
68 |
|
56 |
Repurchases of common stock |
|
(477) |
|
(123) |
|
(1,633) |
|
(486) |
Cash dividends paid |
|
(458) |
|
(436) |
|
(957) |
|
(851) |
Payments to
purchase the noncontrolling interest |
|
- |
|
- |
|
(238) |
|
- |
Other |
|
- |
|
- |
|
18 |
|
- |
Net cash used for financing activities |
|
(559) |
|
(437) |
|
(720) |
|
(70) |
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and
cash equivalents |
|
(67) |
|
33 |
|
51 |
|
(219) |
Net increase (decrease) in cash and cash
equivalents |
|
572 |
|
(621) |
|
(410) |
|
(1,005) |
Cash and cash equivalents at beginning of period |
|
4,473 |
|
6,575 |
|
5,455 |
|
6,959 |
Cash and cash equivalents at end of period |
|
$ 5,045 |
|
$ 5,954 |
|
$
5,045 |
|
$
5,954 |
Honeywell International
Inc |
|
Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow (Unaudited) |
|
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
June 30, |
|
|
December 31, |
|
|
2016 |
|
2015 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
$
1,544 |
|
$
1,408 |
|
|
$
5,454 |
|
Expenditures for property, plant and equipment |
(281) |
|
(243) |
|
|
(1,073) |
|
Free cash flow |
$
1,263 |
|
$
1,165 |
|
|
$
4,381 |
|
|
|
|
|
|
|
|
|
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, and to 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) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months
Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Segment Profit |
|
$
1,847 |
|
$
1,803 |
|
$
3,567 |
|
$
3,524 |
|
|
|
|
|
|
|
|
|
Stock compensation expense (A) |
|
(43) |
|
(39) |
|
(96) |
|
(91) |
Repositioning and other (A, B) |
|
(122) |
|
(137) |
|
(253) |
|
(276) |
Pension ongoing income (A) |
|
151 |
|
103 |
|
301 |
|
203 |
Other postretirement income (expense)
(A) |
|
8 |
|
(11) |
|
17 |
|
(20) |
Operating Income |
|
$
1,841 |
|
$
1,719 |
|
$
3,536 |
|
$
3,340 |
|
|
|
|
|
|
|
|
|
Segment Profit |
|
$
1,847 |
|
$
1,803 |
|
$
3,567 |
|
$
3,524 |
÷ Sales |
|
$
9,991 |
|
$
9,775 |
|
$
19,513 |
|
$
18,988 |
Segment Profit Margin % |
|
18.5% |
|
18.4% |
|
18.3% |
|
18.6% |
|
|
|
|
|
|
|
|
|
Operating Income |
|
$
1,841 |
|
$
1,719 |
|
$
3,536 |
|
$
3,340 |
÷ Sales |
|
$
9,991 |
|
$
9,775 |
|
$
19,513 |
|
$
18,988 |
Operating Income Margin % |
|
18.4% |
|
17.6% |
|
18.1% |
|
17.6% |
|
|
|
|
|
|
|
|
|
|
(A) Included in cost of
products and services sold and selling, general and administrative
expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment. |
|
We believe these measures
are useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends. |
|
|
Honeywell International
Inc |
Calculation of SBG
Segment Profit Margin Excluding Mergers and Acquisitions
(Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
Three Months
Ended |
|
June 30, |
|
|
2016 |
|
Aerospace |
|
|
|
Segment Profit excluding mergers and acquisitions |
|
$
786 |
|
÷ Sales excluding mergers and acquisitions |
|
$
3,733 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
21.1% |
|
|
|
|
|
Automation and Control Solutions |
|
|
|
Segment Profit excluding mergers and acquisitions |
|
$
577 |
|
÷ Sales excluding mergers and acquisitions |
|
$
3,493 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
16.5% |
|
|
|
|
|
Performance Materials and Technologies |
|
|
|
Segment Profit excluding mergers and acquisitions |
|
$
476 |
|
÷ Sales excluding mergers and acquisitions |
|
$
2,250 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
21.2% |
|
|
|
|
|
|
|
|
|
We believe these measures
are useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends. |
|
Honeywell International
Inc |
Reconciliation of
Segment Profit to Operating Income Excluding Pension Mark-to-Market
Adjustment and |
Calculation of Segment
Profit and Operating Income Margins Excluding Pension
Mark-to-Market Adjustment (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
Twelve Months
Ended |
|
|
|
December 31, |
|
|
|
2015 |
|
|
|
|
|
|
|
Segment Profit |
|
|
$
7,256 |
|
|
|
|
|
|
|
|
Stock compensation expense (A) |
|
|
(175) |
|
|
Repositioning and other (A, B) |
|
|
(576) |
|
|
Pension ongoing income (A) |
|
|
430 |
|
|
Pension mark-to-market adjustment
(A) |
|
|
(67) |
|
|
Other postretirement expense (A) |
|
|
(40) |
|
|
|
|
|
|
|
|
Operating Income |
|
|
$
6,828 |
|
|
Pension mark-to-market adjustment
(A) |
|
|
(67) |
|
|
Operating Income excluding pension
mark-to-market adjustment |
|
|
$
6,895 |
|
|
|
|
|
|
|
|
Segment Profit |
|
|
$
7,256 |
|
|
÷ Sales |
|
|
$
38,581 |
|
|
Segment Profit Margin % |
|
|
18.8% |
|
|
|
|
|
|
|
|
Operating Income |
|
|
$
6,828 |
|
|
÷ Sales |
|
|
$
38,581 |
|
|
Operating Income Margin % |
|
|
17.7% |
|
|
|
|
|
|
|
|
Operating Income excluding pension
mark-to-market adjustment |
|
|
$
6,895 |
|
|
÷ Sales |
|
|
$ 38,581 |
|
|
Operating Income Margin excluding
pension mark-to-market adjustment % |
|
|
17.9% |
|
|
|
|
|
|
|
|
(A) Included in cost of
products and services sold and selling, general and administrative
expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment. |
|
We believe these measures
are useful to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends. |
|
|
|
Honeywell International
Inc |
Reconciliation of
Earnings Per Share to Earnings Per Share, Excluding Pension
Mark-to-Market Adjustment |
Unaudited |
|
|
|
|
|
Twelve Months
Ended |
|
December 31, |
|
|
2015 |
|
|
|
|
|
EPS |
|
$
6.04 |
|
|
|
|
|
Pension mark-to-market adjustment
(A) |
|
0.06 |
|
|
|
|
|
EPS, excluding pension mark-to-market
adjustment |
|
$
6.10 |
|
|
|
|
|
|
|
|
|
(A) - Utilizes weighted
average shares of 789.3 million. Mark-to-market uses a
blended tax rate of 36.1%. |
|
|
|
|
|
We believe EPS, excluding pension
mark-to-market adjustment 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 Core
Organic Sales Growth (Unaudited) |
|
|
|
Three Months Ended |
|
June 30, |
|
2016 |
Honeywell |
|
Reported sales growth |
2% |
Less: Foreign currency translation, acquisitions,
divestitures and other |
4% |
Less: Raw materials pricing in R&C |
- |
|
|
Core organic sales growth |
(2%) |
|
|
PMT |
|
Reported sales growth |
(3%) |
Less: Foreign currency translation, acquisitions,
divestitures and other |
2% |
Less: Raw materials pricing in R&C |
(1%) |
|
|
Core organic sales growth |
(4%) |
|
|
|
|
Throughout this press release, core organic sales growth refers to
reported sales growth less the impacts from foreign currency
translation, M&A and raw materials pass-through pricing in the
Resins & Chemicals business of PMT. The raw materials pricing
impact is excluded in instances where raw materials costs are
passed through to customers, which drives fluctuations in selling
prices not tied to volume growth. |
|
We believe core organic
sales growth is a measure that is useful to investors and
management in understanding our ongoing operations and in analysis
of ongoing operating trends. |
|
|