Honeywell Delivers
Outstanding First-Quarter Results Driven By Strong Sales
Performance; Raises 2018 Guidance
- Reported Earnings per Share of
$1.89, Up 11%; Excluding Separation
Costs, EPS of $1.95, Up 14%
- Reported Sales Up 9%; Organic Sales
Up 5% Driven by Aerospace, Intelligrated, and Process Solutions
- Operating Cash Flow of $1.1 Billion and Free Cash Flow(1) (Excl.
Separation Costs) of $1.0 Billion, Up
30%
- Deployed Nearly $950 Million in Capital to Share Repurchases in
the First Quarter
- Raising Full-Year Sales, EPS(2) and
Free Cash Flow(3) Guidance to Reflect Stronger Expectations
MORRIS PLAINS, N.J.,
April 20, 2018 -- Honeywell
(NYSE: HON) today announced financial results for the first
quarter of 2018 and raised its full-year sales, earnings per
share2 and free cash flow3 guidance.
"Honeywell had a very strong start to 2018, with first-quarter
results that were driven by exceptional sales and operational
performance. Organic sales grew 5 percent, driven by strong demand
for original equipment for commercial aviation; U.S. defense;
continued sales and orders growth in the warehouse automation
business, Intelligrated; and short-cycle demand in process
automation. Segment margin expanded by 40 basis points as a result
of our Commercial Excellence efforts and from the Honeywell
Operating System, including material productivity and volume
leverage. Earnings per share (excluding separation costs) were
$1.95, up 14 percent year-over-year,
exceeding the high end of our guidance range," said Darius Adamczyk, President and Chief Executive
Officer of Honeywell. "Our balance sheet remains strong, and we
continue to aggressively deploy capital. In the first quarter, we
repurchased nearly $950 million in
Honeywell shares.
"As a result of our strong first-quarter performance, the
healthy demand environment, and our continued confidence in our
ability to execute, we are raising our full-year organic sales
guidance to a new range of 3 percent to 5 percent and our earnings
per share guidance2 to a new range of $7.85 to $8.05. We
are also raising our free cash flow guidance3 by
$0.1 billion after a strong first
quarter," Adamczyk continued.
"We are making great progress in transforming Honeywell into a
software-industrial leader. In the first quarter, we had
significant new Connected product launches and commercial wins
across our portfolio. The preparations to spin-off our
Transportation Systems and Homes businesses are well underway, and
we expect those to be complete by the end of the year. This is an
exciting time to be a customer, shareowner, or employee of
Honeywell, and I am confident in our ability to continue to
outperform," Adamczyk concluded.
A summary of the Company's full-year guidance changes can be
found in Table 1.
Honeywell will discuss the results during an investor conference
call today starting at 7:30 a.m. Eastern
Daylight Time.
First Quarter Performance
Honeywell sales for the first quarter were up 9 percent
on a reported basis and up 5 percent on an organic basis. The
difference between reported and organic sales primarily relates to
the impact of foreign currency translation. The first-quarter
financial results can be found in Tables 2 and 3.
Aerospace sales for the first quarter were up 8 percent
on an organic basis driven by growth in commercial OE and U.S.
defense, and strength in light vehicle gas and commercial vehicle
turbochargers in Transportation Systems. Segment margin expanded 10
bps to 22.5 percent, with benefits from commercial excellence,
productivity, and lower customer incentives partially offset by
higher volumes of lower-margin OE shipments, inflation, and foreign
exchange.
Home and Building Technologies sales for the first
quarter were up 2 percent on an organic basis driven by demand for
residential thermal solutions and thermostats, continued strength
in ADI on a global basis, and strong backlog conversion in the
energy vertical within Building Solutions. Segment margin expanded
50 bps to 17.1 percent, primarily driven by commercial excellence,
the benefits from previously funded and executed restructuring, and
material productivity.
Performance Materials and Technologies sales for the
first quarter were up 3 percent on an organic basis driven by
strong short-cycle demand in thermal solutions, smart energy,
maintenance services, and field instrumentation in Process
Solutions, and engineering and catalyst growth in UOP. Segment
margin was unchanged at 20.5 percent, primarily driven by
productivity net of inflation and commercial excellence, offset by
unfavorable mix, primarily in UOP; catalyst shipment timing; and
foreign exchange.
Safety and Productivity Solutions sales for the first
quarter were up 6 percent on an organic basis driven by strong
organic sales and orders growth at Intelligrated and higher volumes
in Sensing. Segment margin expanded 130 bps to 16.0 percent,
primarily driven by higher sales volumes and productivity net of
inflation.
To participate on the conference call, please dial (888)
394-8218 (domestic) or (323) 701-0225 (international) approximately
ten minutes before the 7:30 a.m. EDT
start. Please mention to the operator that you are dialing in
for Honeywell's first quarter 2018 earnings call or provide the
conference code HON1Q18. 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 11:30 a.m. EDT,
April 20, until 11:30 a.m. EDT, April
27, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 7398687.
TABLE 1: FULL-YEAR 2018
GUIDANCE[4]
|
Previous Guidance |
Current Guidance |
Sales |
$41.8B - $42.5B |
$42.7B - $43.5B |
Organic Growth |
2% - 4% |
3% - 5% |
Segment Margin |
19.3% - 19.6% |
19.3% - 19.6% |
Expansion |
Up 30 - 60 bps |
Up 30 - 60 bps |
Earnings Per Share |
$7.75 - $8.00 |
$7.85 - $8.05 |
Earnings Growth |
9% - 13% |
10% - 13% |
Free Cash Flow5 |
$5.2B - $5.9B |
$5.3B - $5.9B |
TABLE 2: SUMMARY OF FINANCIAL RESULTS
– TOTAL HONEYWELL
|
1Q 2017 |
1Q 2018 |
Change |
Sales |
9,492 |
10,392 |
9% |
Organic |
|
|
5% |
Segment Margin |
18.8% |
19.2% |
40 bps |
Operating Income Margin |
16.2% |
16.6% |
40 bps |
Earnings Per Share |
|
|
|
Reported |
$1.71 |
$1.89 |
11% |
Excluding Separation Costs of $49M (Net of
Tax) |
$1.71 |
$1.95 |
14% |
Cash Flow from Operations |
940 |
1,136 |
21% |
Free Cash Flow5 (Excluding Cash
Separation Costs of $10M) |
772 |
1,006 |
30% |
|
|
|
|
TABLE 3: SUMMARY OF FINANCIAL RESULTS
– SEGMENTS
|
|
|
|
|
|
|
|
AEROSPACE |
1Q 2017 |
1Q 2018 |
Change |
Sales |
3,546 |
3,977 |
12% |
Organic |
|
|
8% |
Segment Profit |
796 |
893 |
12% |
Segment Margin |
22.4% |
22.5% |
10 bps |
|
|
|
|
|
|
|
|
HOME AND BUILDING TECHNOLOGIES |
|
|
|
|
|
|
|
Sales |
2,269 |
2,433 |
7% |
Organic |
|
|
2% |
Segment Profit |
377 |
416 |
10% |
Segment Margin |
16.6% |
17.1% |
50 bps |
|
|
|
|
|
|
|
|
PERFORMANCE MATERIALS AND TECHNOLOGIES |
|
|
|
Sales |
2,353 |
2,534 |
8% |
Organic |
|
|
3% |
Segment Profit |
483 |
519 |
7% |
Segment Margin |
20.5% |
20.5% |
0 bps |
|
|
|
|
|
|
|
|
|
|
|
|
SAFETY AND PRODUCTIVITY SOLUTIONS |
|
|
|
Sales |
1,324 |
1,448 |
9% |
Organic |
|
|
6% |
Segment Profit |
194 |
231 |
19% |
Segment Margin |
14.7% |
16.0% |
130 bps |
|
|
|
|
|
|
|
|
Honeywell (www.honeywell.com) is a Fortune 100
software-industrial company that delivers industry specific
solutions that include aerospace and automotive products and
services; control technologies for buildings, homes, and industry;
and performance materials globally. Our technologies help
everything from aircraft, cars, homes and buildings, manufacturing
plants, supply chains, and workers become more connected to make
our world smarter, safer, and more sustainable. For more news
and information on Honeywell, please visit
www.honeywell.com/newsroom.
This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934. All statements, other than
statements of historical fact, that address activities, events or
developments that we or our management intends, expects, projects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based upon certain
assumptions and assessments made by our management in light of
their experience and their perception of historical trends, current
economic and industry conditions, expected future developments and
other factors they believe to be appropriate. The forward-looking
statements included in this release are also subject to a number of
material risks and uncertainties, including but not limited to
economic, competitive, governmental, and technological factors
affecting our operations, markets, products, services and prices,
as well as the ability to effect the separations. 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, including with respect to any changes in or abandonment
of the proposed separations. 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, acquisitions and divestitures for the first
12 months following transaction date, and impacts from adoption of
the new accounting guidance on revenue from contracts with
customers that arise solely due to non-comparable accounting
treatment of contracts existing in the prior period; free cash
flow, which we define as cash flow from operations less capital
expenditures and which we adjust to exclude impact of separation
cost and adjustments to the provisional charge related to Tax
Legislation, if and as noted in the release; and earnings per
share, which we adjust to exclude pension mark-to-market expenses,
as well as for other components, such as separation costs, the
provisional charge related to Tax Legislation, and adjustments to
such provisional charge, if and as noted in the release. Other than
references to reported earnings per share, all references to
earnings per share in this release are so adjusted. The respective
tax rates applied when adjusting earnings per share for these items
are identified in the release or in the reconciliations presented
in the Appendix. Management believes that, when considered together
with reported amounts, these measures are useful to investors and
management in understanding our ongoing operations and in the
analysis of ongoing operating trends. These metrics should be
considered in addition to, and not as replacements for, the most
comparable GAAP measure. Refer to the Appendix attached to this
release for reconciliations of non-GAAP financial measures to the
most directly comparable GAAP measures.
1 Cash flow from operations less capital
expenditures
2 EPS guidance excludes pension mark-to-market,
separation costs, and adjustments to the provisional charge related
to tax legislation
3 Free cash flow guidance excludes impacts from
separation costs and tax legislation
4 EPS, EPS V% exclude pension mark-to-market, separation
costs related to the spin-offs of the Homes and Transportation
Systems businesses, the provisional charge related to tax
legislation and adjustments to such charge; free cash flow, free
cash flow V% exclude impacts from separation costs and tax
legislation.
5 Cash flow from operations less capital
expenditures
Contacts: |
|
|
|
Media |
Investor Relations |
Scott Sayres |
Mark Macaluso |
(480) 257-5921 |
(973) 455-2222 |
scott.sayres@honeywell.com |
mark.macaluso@honeywell.com |
Honeywell International
Inc. |
Consolidated Statement
of Operations (Unaudited) |
(Dollars in millions,
except per share amounts) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Product sales |
$ 8,234 |
|
$ 7,540 |
|
Service sales |
2,158 |
|
1,952 |
|
Net sales |
10,392 |
|
9,492 |
|
|
|
|
|
|
|
Costs, expenses and other |
|
|
|
|
Cost of products
sold (A) |
5,905 |
|
5,381 |
|
Cost of services
sold (A) |
1,288 |
|
1,148 |
|
|
|
7,193 |
|
6,529 |
|
Selling, general
and administrative expenses (A) |
1,475 |
|
1,422 |
|
Other (income)
expense |
(268) |
|
(258) |
|
Interest and other
financial charges |
83 |
|
75 |
|
|
|
8,483 |
|
7,768 |
|
|
|
|
|
|
|
Income before taxes |
1,909 |
|
1,724 |
|
Tax expense |
458 |
|
392 |
|
|
|
|
|
|
|
Net income |
1,451 |
|
1,332 |
|
|
|
|
|
|
|
Less: Net income attributable to the
noncontrolling interest |
13 |
|
6 |
|
|
|
|
|
|
|
Net income attributable to
Honeywell |
$ 1,438 |
|
$ 1,326 |
|
|
|
|
|
|
|
Earnings per share of common stock -
basic |
$ 1.92 |
|
$ 1.74 |
|
|
|
|
|
|
|
Earnings per share of common stock -
assuming dilution |
$ 1.89 |
|
$ 1.71 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - basic |
750.6 |
|
763.1 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - assuming dilution |
761.0 |
|
773.9 |
|
|
|
|
|
|
|
(A) Cost of products and services sold
and selling, general and administrative expenses include amounts
for repositioning and other charges, the service cost component of
pension and other postretirement (income) expense, and stock
compensation expense. |
Honeywell International
Inc. |
Segment Data
(Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
Net Sales |
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace |
$ 3,977 |
|
$ 3,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Home and Building Technologies |
2,433 |
|
2,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
2,534 |
|
2,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Productivity Solutions |
1,448 |
|
1,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ 10,392 |
|
$ 9,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
Segment Profit |
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace |
$ 893 |
|
$ 796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Home and Building Technologies |
416 |
|
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
519 |
|
483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety and Productivity Solutions |
231 |
|
194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
(64) |
|
(61) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment
profit |
1,995 |
|
1,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other financial
charges |
(83) |
|
(75) |
|
|
|
|
Stock compensation expense (A) |
(52) |
|
(50) |
|
|
|
|
Pension ongoing income (B) |
248 |
|
179 |
|
|
|
|
Other postretirement income (B) |
6 |
|
4 |
|
|
|
|
Repositioning and other charges
(C,D) |
(193) |
|
(129) |
|
|
|
|
Other (E) |
(12) |
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes |
$ 1,909 |
|
$ 1,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
Amounts included in Selling, general and
administrative expenses. |
(B) |
Amounts included in Cost of products and services
sold and Selling, general and administrative expenses (service
costs) and Other income/expense (non-service cost components). |
(C) |
Amounts included in Cost of products and services
sold, Selling, general and administrative expenses, and Other
income/expense. |
(D) |
Includes repositioning, asbestos, and
environmental expenses. |
(E) |
Amounts include the other components of Other
income/expense not included within other categories in this
reconciliation. Equity income (loss) of affiliated companies is
included in segment profit. |
|
Honeywell International
Inc. |
Consolidated Balance
Sheet (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2018 |
|
2017 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
|
$ 7,897 |
|
$ 7,059 |
Short-term
investments |
|
2,383 |
|
3,758 |
Accounts receivable
- net |
|
8,778 |
|
8,866 |
Inventories |
|
4,766 |
|
4,613 |
Other current
assets |
|
1,763 |
|
1,706 |
|
Total current assets |
|
25,587 |
|
26,002 |
|
|
|
|
|
|
Investments and long-term
receivables |
|
737 |
|
667 |
Property, plant and equipment -
net |
|
6,083 |
|
5,926 |
Goodwill |
|
18,520 |
|
18,277 |
Other intangible assets - net |
|
4,462 |
|
4,496 |
Insurance recoveries for asbestos
related liabilities |
|
404 |
|
411 |
Deferred income taxes |
|
402 |
|
236 |
Other assets |
|
4,753 |
|
3,372 |
|
|
|
|
|
|
|
Total assets |
|
$ 60,948 |
|
$ 59,387 |
|
|
|
|
|
|
LIABILITIES AND SHAREOWNERS'
EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts
payable |
|
$ 6,641 |
|
$ 6,584 |
Commercial paper
and other short-term borrowings |
|
5,406 |
|
3,958 |
Current maturities
of long-term debt |
|
143 |
|
1,351 |
Accrued
liabilities |
|
6,565 |
|
6,968 |
|
Total current liabilities |
|
18,755 |
|
18,861 |
|
|
|
|
|
|
Long-term debt |
|
12,738 |
|
12,573 |
Deferred income taxes |
|
2,782 |
|
2,894 |
Postretirement benefit obligations
other than pensions |
|
495 |
|
512 |
Asbestos related liabilities |
|
1,178 |
|
1,173 |
Other liabilities |
|
7,221 |
|
5,930 |
Redeemable noncontrolling
interest |
|
5 |
|
5 |
Shareowners' equity |
|
17,774 |
|
17,439 |
|
|
|
|
|
|
|
Total liabilities, redeemable noncontrolling
interest and shareowners' equity |
|
$ 60,948 |
|
$ 59,387 |
Honeywell International
Inc. |
Consolidated
Statement of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
2018 |
|
2017 |
Cash flows from operating activities: |
|
|
|
Net income |
$ 1,451 |
|
$ 1,332 |
Less: Net income attributable
to the noncontrolling interest |
13 |
|
6 |
Net income attributable to
Honeywell |
1,438 |
|
1,326 |
Adjustments to reconcile net
income attributable to Honeywell to net |
|
|
|
cash provided by operating
activities: |
|
|
|
Depreciation |
179 |
|
170 |
Amortization |
109 |
|
101 |
(Gain)
loss on sale of non-strategic businesses and assets |
- |
|
- |
Repositioning and other charges |
193 |
|
129 |
Net
payments for repositioning and other charges |
(141) |
|
(137) |
Pension
and other postretirement income |
(254) |
|
(183) |
Pension
and other postretirement benefit payments |
(36) |
|
(24) |
Stock
compensation expense |
52 |
|
50 |
Deferred income taxes |
46 |
|
(42) |
Other |
2 |
|
14 |
Changes
in assets and liabilities, net of the effects of |
|
|
|
acquisitions and divestitures: |
|
|
|
Accounts receivable |
(61) |
|
23 |
Inventories |
(163) |
|
(286) |
Other
current assets |
(43) |
|
(25) |
Accounts payable |
57 |
|
115 |
Accrued liabilities |
(242) |
|
(291) |
Net cash provided by operating activities |
1,136 |
|
940 |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Expenditures for property,
plant and equipment |
(140) |
|
(168) |
Proceeds from disposals of
property, plant and equipment |
2 |
|
24 |
Increase in investments |
(583) |
|
(1,256) |
Decrease in investments |
1,838 |
|
825 |
Other |
(123) |
|
(29) |
Net cash provided by (used for) investing
activities |
994 |
|
(604) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of
commercial paper and other short-term borrowings |
6,676 |
|
2,468 |
Payments of commercial paper
and other short-term borrowings |
(5,329) |
|
(2,467) |
Proceeds from issuance of
common stock |
60 |
|
221 |
Proceeds from issuance of
long-term debt |
3 |
|
11 |
Payments of long-term debt |
(1,246) |
|
(5) |
Repurchases of common
stock |
(940) |
|
(310) |
Cash dividends paid |
(556) |
|
(503) |
Other |
(116) |
|
(33) |
Net cash used for financing activities |
(1,448) |
|
(618) |
|
|
|
|
Effect of foreign exchange rate changes on cash
and cash equivalents |
156 |
|
149 |
Net increase (decrease) in cash and cash
equivalents |
838 |
|
(133) |
Cash and cash equivalents at beginning of
period |
7,059 |
|
7,843 |
Cash and cash equivalents at end of period |
$ 7,897 |
|
$ 7,710 |
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, |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Segment Profit |
|
$ 1,995 |
|
$ 1,789 |
|
|
|
|
|
|
|
Stock compensation expense (A) |
|
(52) |
|
(50) |
|
Repositioning and other (B, C) |
|
(163) |
|
(135) |
|
Pension and other postretirement
service costs (C) |
|
(56) |
|
(63) |
|
|
|
|
|
|
|
Operating Income |
|
$
1,724 |
|
$ 1,541 |
|
|
|
|
|
|
|
Segment Profit |
|
$
1,995 |
|
$ 1,789 |
|
÷ Sales |
|
10,392 |
|
9,492 |
|
Segment Profit Margin % |
|
19.2% |
|
18.8% |
|
|
|
|
|
|
|
Operating Income |
|
$
1,724 |
|
$ 1,541 |
|
÷ Sales |
|
10,392 |
|
9,492 |
|
Operating Income Margin % |
|
16.6% |
|
16.2% |
|
|
|
|
|
|
|
(A) Included in Selling, general and
administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment.
(C) Included in Cost of products and services sold 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
Organic Sales % Change (Unaudited) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2018 |
|
Honeywell |
|
|
|
Reported sales % change |
|
9% |
|
Less: Foreign currency translation |
|
4% |
|
Less: Acquisitions, divestitures and other,
net |
|
- |
|
Organic sales % change |
|
5% |
|
|
|
|
|
Aerospace |
|
|
|
Reported sales % change |
|
12% |
|
Less: Foreign currency translation |
|
3% |
|
Less: Acquisitions, divestitures and other,
net |
|
1% |
|
Organic sales % change |
|
8% |
|
|
|
|
|
Home and Building Technologies |
|
|
|
Reported sales % change |
|
7% |
|
Less: Foreign currency translation |
|
5% |
|
Less: Acquisitions, divestitures and other,
net |
|
- |
|
Organic sales % change |
|
2% |
|
|
|
|
|
Performance Materials and Technologies |
|
|
|
Reported sales % change |
|
8% |
|
Less: Foreign currency translation |
|
5% |
|
Less: Acquisitions, divestitures and other,
net |
|
- |
|
Organic sales % change |
|
3% |
|
|
|
|
|
Safety and Productivity Solutions |
|
|
|
Reported sales % change |
|
9% |
|
Less: Foreign currency translation |
|
3% |
|
Less: Acquisitions, divestitures and other,
net |
|
- |
|
Organic sales % change |
|
6% |
|
|
|
|
|
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, acquisitions, net of divestitures, and non-comparable
impacts from adoption of the new revenue recognition
standard. 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 Cash
Provided by Operating Activities to Free Cash Flow, Excluding
Separation Cost Payments (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
Three Months
Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
Cash provided by operating activities |
$
1,136 |
|
$
940 |
|
Expenditures for property, plant and
equipment |
(140) |
|
(168) |
|
|
|
|
|
|
Free cash flow |
996 |
|
772 |
|
Separation cost payments |
10 |
|
- |
|
|
|
|
|
|
Free cash flow, excluding separation cost
payments |
$
1,006 |
|
$
772 |
|
|
|
|
|
|
|
|
|
|
|
We define free cash flow as cash
provided by operating activities less cash expenditures for
property, plant and equipment. |
|
|
|
|
|
We believe that this metric is useful
to investors and management as a measure of cash generated by
business operations that will be used to repay scheduled debt
maturities and can be used to invest in future growth through new
business development activities or acquisitions, pay dividends,
repurchase stock or repay debt obligations prior to their
maturities. This metric can also be used to evaluate our ability to
generate cash flow from business operations and the impact that
this cash flow has on our liquidity. |
|
Honeywell International
Inc. |
Reconciliation of
Earning per Share to Earning per Share, Excluding Separation Costs
(Unaudited) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
Earnings per share of common stock - assuming
dilution (1) |
$
1.89 |
|
$
1.71 |
|
Separation costs (2) |
0.06 |
|
- |
|
|
|
|
|
|
Earnings per share of common stock - assuming
dilution, excluding separation costs |
$
1.95 |
|
$
1.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three months ended March
31, 2018 and 2017, utilizes weighted average shares of
approximately 761.0 million and 773.9 million. |
|
|
|
|
|
(2) Separation costs of $55 million
($49 million net of tax) uses a blended tax rate of 11%. |
We believe earnings per share,
excluding separation costs 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
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited) |
(Dollars in
millions) |
|
|
|
Twelve Months Ended
December 31, 2017 |
|
|
Segment Profit |
$
7,690 |
|
|
Stock compensation expense (A) |
(176) |
Repositioning and other (B, C) |
(1,010) |
Pension and other postretirement service costs
(C) |
(247) |
Operating Income |
$
6,257 |
|
|
Segment Profit |
$
7,690 |
÷ Sales |
$
40,534 |
Segment Profit Margin % |
19.0% |
|
|
Operating Income |
$
6,257 |
÷ Sales |
$
40,534 |
Operating Income Margin % |
15.4% |
|
|
(A) Included in Selling, general and
administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment.
(C) Included in Cost of products and services sold 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, particularly 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. 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 Earnings Per Share, Excluding Pension
Mark-to-Market Expense, Separation Costs and Impacts from Tax
Legislation (Unaudited) |
|
|
|
|
|
|
|
Twelve Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2017 (1) |
|
2018 |
|
|
|
|
|
|
Earnings per share of common stock - assuming
dilution (EPS) |
$2.14 |
|
TBD |
|
|
|
|
|
|
Pension mark-to-market expense |
0.09 |
|
TBD |
|
Separation costs |
0.02 |
|
TBD |
|
Impacts from tax legislation |
4.86 |
|
TBD |
|
|
|
|
|
|
EPS, excluding pension mark-to-market expense,
separation costs, and impacts from tax legislation |
$7.11 |
|
$7.85 - $8.05 |
|
|
|
|
|
|
|
|
|
|
|
(1) Utilizes weighted average shares
of approximately 772.1 million for full year. Pension
mark-to-market expense uses a blended tax rate of 23%. |
|
|
|
|
|
|
We believe earnings per share,
excluding pension mark-to-market expense, separation costs and
impacts from tax legislation 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, the separation costs given the preliminary nature of the
estimates, and any adjustments to charges from tax legislation as
the amounts are provisional. We therefore do not include an
estimate for the pension mark-to-market expense, separation costs,
or adjustments to charges from tax legislation in this
reconciliation. 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 Free Cash Flow, Excluding
Separation Cost Payments and Impacts from Tax Legislation
(Unaudited) |
(Dollars in
billions) |
|
|
|
Twelve Months Ended |
|
December 31, 2018 |
|
|
Cash provided by operating activities |
TBD |
Expenditures for property, plant and
equipment |
~(0.9) |
|
|
Free cash flow |
TBD |
|
|
Separation cost payments |
TBD |
Impacts from tax legislation |
TBD |
|
|
Free cash flow, excluding separation cost payments
and impacts from tax legislation |
~$5.3 - $5.9 |
|
|
We define free cash flow as cash
provided by operating activities less cash expenditures for
property, plant and equipment. |
|
|
We believe that this metric is useful
to investors and management as a measure of cash generated by
business operations that will be used to repay scheduled debt
maturities and can be used to invest in future growth through new
business development activities or acquisitions, pay dividends,
repurchase stock or repay debt obligations prior to their
maturities. This metric can also be used to evaluate our ability to
generate cash flow from business operations and the impact that
this cash flow has on our liquidity. For forward looking
information, management cannot reliably predict or estimate,
without unreasonable effort, the separation cost payments given the
preliminary nature of the estimates or the amounts from tax reform
as the charges are provisional. We therefore do not include
an estimate for the separation cost payments or impacts from tax
reform in this reconciliation. |