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Press Release

Honeywell International Inc. - Honeywell Delivers Earnings of $2.10

Company Release - 7/18/2019 6:30 AM ET

Honeywell Delivers Earnings Of $2.10, At High End Of Guidance; Raises Full-Year Sales, Earnings, And Cash Guidance

- Reported Sales Down 15% Due to Impact of Spin-Offs; Organic Sales up 5% Driven by Commercial Aerospace, Defense, Process Automation, and Building Technologies

- Operating Income Margin up 280 Basis Points to 19.1%; Segment Margin up 170 Basis Points to 21.3%

- Operating Cash Flow of $1.7 Billion; Adjusted Free Cash Flow(1) of $1.5 Billion, Conversion 100%

MORRIS PLAINS, N.J., July 18, 2019 /PRNewswire/ -- Honeywell (NYSE: HON) today announced financial results for the second quarter of 2019 and raised its full-year organic sales, earnings per share, and adjusted free cash flow guidance.

"Honeywell delivered another strong quarter of top-line growth, margin expansion, and adjusted free cash flow. Organic sales grew 5% led by our long-cycle businesses including U.S. and international defense, business and general aviation, and oil and gas. Our long-cycle backlog was up over 10%, which positions us well for the second half of 2019. We also saw robust demand in our short-cycle commercial fire, process automation services and software, and aerospace aftermarket businesses. Segment margin expanded 170 basis points year-over-year, which was 30 basis points above the high end of our guidance. We delivered earnings per share of $2.10, which was up 9%2 adjusted, excluding the impact of the spin-offs, and at the high end of our second-quarter guidance," said Darius Adamczyk, chairman and chief executive officer of Honeywell. "In the quarter, we repurchased approximately $1.9 billion in Honeywell shares and generated $1.5 billion of adjusted free cash flow1, with conversion of 100%. We remain on a path to deliver approximately 100% conversion for the full year."

Adamczyk continued, "We are making significant progress in transforming Honeywell into a premier software-industrial company, with connected software sales continuing to grow at a double-digit rate organically. The Honeywell Connected Enterprise foundation is firmly in place, supported by the launch of Honeywell Forge, a comprehensive IIoT software solution. Our digitization and supply chain transformation initiatives are underway, which will enhance our commercial efforts and drive continued segment margin expansion. We are pleased with our progress to date.

"Given our first-half performance and our confidence in our ability to continue to deliver for our shareowners even in an uncertain environment, we are raising our full-year earnings per share guidance by 5 cents to a new range of $7.95 to $8.15, and raising our organic sales guidance to a new range of 4% to 6%," Adamczyk concluded.

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 down 15% on a reported basis and up 5% on an organic basis. The difference between reported and organic sales primarily relates to the spin-offs of the Transportation Systems business (formerly in Aerospace) and the Homes and ADI Global Distribution business (formerly in Honeywell Building Technologies) as well as the unfavorable impact of foreign currency translation. The second-quarter financial results can be found in Tables 2 and 3.

Aerospace sales for the second quarter were up 11% on an organic basis driven by double-digit growth in business aviation original equipment; continued strength in the U.S. and international Defense and Space business, which grew 20% organically; and commercial aftermarket demand across air transport and business aviation. Segment margin expanded 330 basis points to 25.9%, primarily driven by commercial excellence, higher organic sales volumes, and the favorable impact from the spin-off of the Transportation Systems business in 2018.

Honeywell Building Technologies sales for the second quarter were up 5% on an organic basis driven by ongoing strength in commercial fire products and building management software, and global building solutions projects growth. Segment margin expanded 390 basis points to 20.7% driven by the favorable impact from the spin-off of the Homes and ADI Global Distribution business in 2018.

Performance Materials and Technologies sales for the second quarter were up 4% on an organic basis driven by short-cycle demand in Process Solutions; strong licensing, engineering, and refining catalyst sales growth in UOP; and demand for Solstice® low global warming products in Advanced Materials. Segment margin expanded 140 basis points to 23.5%, primarily driven by productivity net of inflation and commercial excellence.

Safety and Productivity Solutions sales for the second quarter were down 4% on an organic basis driven by lower sales volumes in productivity products due to inventory destocking and fewer large project rollouts, partially offset by demand for gas sensing and detection, and Intelligrated aftermarket and voice solutions growth. Segment margin contracted 420 basis points to 12.3%, primarily driven by lower sales volumes in productivity products and higher sales of lower margin products.

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 (888) 394-8218 (domestic) or (323) 701-0225 (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 2019 earnings call or provide the conference code HON2Q19. 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 18, until 12:30 p.m. EDT, July 25, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 3915869.

TABLE 1: FULL-YEAR 2019 GUIDANCE


                                   Previous Guidance Current Guidance

Sales                               $36.5B - $37.2B  $36.7B - $37.2B

Organic Growth                          3% - 6%          4% - 6%

Segment Margin                       20.7% - 21.0%    20.7% - 21.0%

Expansion                          Up 110 - 140 bps  Up 110 - 140 bps

Expansion Ex-Spins3                 Up 30 - 60 bps    Up 30 - 60 bps

Earnings Per Share                   $7.90 - $8.15    $7.95 - $8.15

Earnings Growth Adjusted Ex-Spins4     7% - 10%          8% - 10%

Operating Cash Flow                  $6.0B - $6.5B    $6.2B - $6.5B

Adjusted Free Cash Flow5             $5.5B - $6.0B    $5.7B - $6.0B

Conversion                            95% - 100%        98% - 100%



TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS


                                      2Q 2018 2Q 2019 Change

Sales                                 10,919   9,243   (15%)

Organic Growth                                          5%

Segment Margin                         19.6%   21.3%  170 bps

Operating Income Margin                16.3%   19.1%  280 bps

Reported Earnings Per Share            $1.68   $2.10    25%

Adjusted Earnings Per Share Ex-Spins6  $1.93   $2.10    9%

Cash Flow from Operations              1,861   1,678   (10%)

Adjusted Free Cash Flow7               1,729   1,535   (11%)



TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS


AEROSPACE                              2Q 2018 2Q 2019  Change

Sales                                   4,058   3,508    (14%)

Organic Growth                                            11%

Segment Profit                           918     907     (1%)

Segment Margin                          22.6%   25.9%   330 bps

HONEYWELL BUILDING TECHNOLOGIES

Sales                                   2,546   1,450    (43%)

Organic Growth                                            5%

Segment Profit                           427     300     (30%)

Segment Margin                          16.8%   20.7%   390 bps

PERFORMANCE MATERIALS AND TECHNOLOGIES

Sales                                   2,698   2,735     1%

Organic Growth                                            4%

Segment Profit                           597     644      8%

Segment Margin                          22.1%   23.5%   140 bps

SAFETY AND PRODUCTIVITY SOLUTIONS

Sales                                   1,617   1,550    (4%)

Organic Growth                                           (4%)

Segment Profit                           267     191     (28%)

Segment Margin                          16.5%   12.3%  (420) bps



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, 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.

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 and which we adjust to exclude sales and segment profit contribution from Resideo and Garrett in 2018, if and as noted in the release; organic sales growth, which we define as sales growth less the impacts from foreign currency translation, and acquisitions and divestitures for the first 12 months following transaction date; adjusted free cash flow, which we define as cash flow from operations less capital expenditures and which we adjust to exclude the impact of separation costs related to the spin-offs of Resideo and Garrett, if and as noted in the release; adjusted free cash flow conversion, which we define as adjusted free cash flow divided by net income attributable to Honeywell, excluding separation costs related to the spin-offs, and adjustments to the 4Q17 U.S. tax legislation charge, if and as noted in the release; and adjusted earnings per share, which we adjust to exclude pension mark-to-market expenses, as well as for other components, such as separation costs related to the spin-offs, adjustments to the 4Q17 U.S. tax legislation charge, and after-tax segment profit contribution from Resideo and Garrett in the periods noted in the release, net of spin indemnification impacts assuming both indemnification agreements were effective in such periods, if and as noted in the release. 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 Adjusted free cash flow and associated conversion exclude impacts from separation costs related to the spin-offs of $28M.
Adjusted EPS V% ex-spins excludes 2Q18 after-tax separation costs related to the spin-offs of Resideo and Garrett, the 2Q18 after-tax segment profit contribution from Resideo and Garrett, net of the spin indemnification impacts assuming both indemnification agreements were effective in 2Q18, and 2Q18 adjustments to the 4Q17 U.S. tax legislation charge.
Segment margin expansion ex-spins guidance excludes sales and segment profit contribution from Resideo and Garrett in 2018.
4 Adjusted EPS V% ex-spins guidance excludes 2018 pension mark-to-market, 2018 after-tax separation costs related to the spin-offs of Resideo and Garrett, and 2018 adjustments to the 4Q17 U.S. tax legislation charge. Also excludes the 2018 after-tax segment profit contribution from the spin-offs, net of spin indemnification impacts assuming both indemnification agreements were effective for all of 2018, of $0.62.
Adjusted free cash flow guidance and associated conversion excludes estimated payments of ~$0.3B for separation costs incurred in 2018 related to the spin-offs of Resideo and Garrett.
6 Adjusted EPS ex-spins and adjusted EPS V% ex-spins exclude 2Q18 after-tax separation costs related to the spin-offs of Resideo and Garrett of $346M, and the favorable 2Q18 adjustments to the 4Q17 U.S. tax legislation charge of $12M. Also excludes the 2Q18 after-tax segment profit contribution from the spin-offs, net of spin indemnification impacts assuming both indemnification agreements were effective in 2Q18, of $0.19.
7 Adjusted free cash flow and adjusted free cash flow V% exclude impacts from separation costs related to the spin-offs of $28M in 2Q19 and $67M in 2Q18.


Contacts:

Media                     Investor Relations

Nina Krauss               Mark Macaluso

(704) 627-6035            (973) 455-2222

nina.krauss@honeywell.com mark.macaluso@honeywell.com



   


                          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,

                            2019          2018           2019          2018

Product sales             $ 6,990   $ 8,703            $ 13,703   $ 16,937

Service sales               2,253     2,216               4,424      4,374

Net sales                   9,243    10,919              18,127     21,311

Costs, expenses and other

Cost of products sold (1)   4,848     6,202               9,470     12,107

Cost of services sold (1)   1,246     1,412               2,503      2,698

                            6,094     7,614              11,973     14,805

Selling, general and        1,387     1,528               2,750      3,003
administrative expenses
(1)

Other (income) expense      (305)     (316)               (590)      (584)

Interest and other             85        95                 170        178
financial charges

                            7,261     8,921              14,303     17,402

Income before taxes         1,982     1,998               3,824      3,909

Tax expense                   426       718                 832      1,177

Net income                  1,556     1,280               2,992      2,732

Less: Net income               15        13                  35         26
attributable to the
noncontrolling interest

Net income attributable   $ 1,541   $ 1,267            $  2,957   $  2,706
to Honeywell

Earnings per share of     $  2.13   $  1.70            $   4.07   $   3.62
common stock - basic

Earnings per share of     $  2.10   $  1.68            $   4.02   $   3.57
common stock - assuming
dilution

Weighted average number     723.2     745.5               726.4      748.0
of shares outstanding -
basic

Weighted average number     733.0     755.0               735.9      758.0
of shares outstanding -
assuming dilution

(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           2019          2018           2019          2018

Aerospace                 $ 3,508   $  4,058           $  6,849   $  8,035

Honeywell Building          1,450      2,546              2,839      4,979
Technologies

Performance Materials and   2,735      2,698              5,307      5,232
Technologies

Safety and Productivity     1,550      1,617              3,132      3,065
Solutions

Total                     $ 9,243   $ 10,919           $ 18,127   $ 21,311



   


            Reconciliation of Segment Profit to Income Before Taxes

                          Three Months Ended June 30,  Six Months Ended June 30,

Segment Profit              2019          2018           2019         2018

Aerospace                 $   907   $   918            $ 1,745   $ 1,811

Honeywell Building            300       427                571       843
Technologies

Performance Materials and     644       597              1,208     1,116
Technologies

Safety and Productivity       191       267                403       498
Solutions

Corporate                    (72)      (64)              (148)     (128)

Total segment profit        1,970     2,145              3,779     4,140

Interest and other           (85)      (95)              (170)     (178)
financial charges

Stock compensation           (34)      (38)               (75)      (90)
expense (1)

Pension ongoing income        148       250                299       498
(2)

Other postretirement           11         6                 23        12
income (2)

Repositioning and other     (126)     (266)              (210)     (457)
charges (3,4)

Other (5)                      98       (4)                178      (16)

Income before taxes       $ 1,982   $ 1,998            $ 3,824   $ 3,909

(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 (loss) of affiliated companies is included in
segment profit.



   


                        Honeywell International Inc.
                   Consolidated Balance Sheet (Unaudited)
                           (Dollars in millions)

                                                 June 30, 2019  December 31,
                                                                    2018

ASSETS

Current assets:

Cash and cash equivalents                        $  8,225       $  9,287

Short-term investments                              1,718          1,623

Accounts receivable - net                           7,407          7,508

Inventories                                         4,600          4,326

Other current assets                                1,818          1,618

Total current assets                               23,768         24,362

Investments and long-term receivables,                747            742

Property, plant and equipment - net                 5,260          5,296

Goodwill                                           15,573         15,546

Other intangible assets - net                       3,933          4,139

Insurance recoveries for asbestos related             422            437
liabilities

Deferred income taxes                                 259            382

Other assets                                        7,788          6,869

Total assets                                     $ 57,750       $ 57,773

LIABILITIES

Current liabilities:

Accounts payable                                 $  5,602       $  5,607

Commercial paper and other short-term borrowings    3,558          3,586

Current maturities of long-term debt                4,017          2,872

Accrued liabilities                                 6,717          6,859

Total current liabilities                          19,894         18,924

Long-term debt                                      8,608          9,756

Deferred income taxes                               1,722          1,713

Postretirement benefit obligations other than         326            344
pensions

Asbestos related liabilities                        2,226          2,269

Other liabilities                                   6,907          6,402

Redeemable noncontrolling interest                      7              7

Shareowners' equity                                18,060         18,358

Total liabilities, redeemable noncontrolling     $ 57,750       $ 57,773
interest and shareowners' equity



   


                          Honeywell International Inc.
                Consolidated Statement of Cash Flows (Unaudited)
                             (Dollars in millions)

                                          Three Months Ended   Six Months Ended
                                               June 30,            June 30,

                                            2019      2018      2019      2018

Cash flows from operating activities:

Net income                                $ 1,556   $ 1,280   $ 2,992   $ 2,732

Less: Net income attributable to the           15        13        35        26
noncontrolling interest

Net income attributable to Honeywell        1,541     1,267     2,957     2,706

Adjustments to reconcile net income
attributable to Honeywell to net
cash provided by operating activities:

Depreciation                                  172       193       335       372

Amortization                                  123        95       221       204

Repositioning and other charges               126       266       210       457

Net payments for repositioning and other     (51)     (187)      (85)     (328)
charges

Pension and other postretirement income     (159)     (256)     (322)     (510)

Pension and other postretirement benefit     (15)       (8)      (45)      (44)
payments

Stock compensation expense                     34        38        75        90

Deferred income taxes                        (36)        67        44       114

Other                                           9        76         5        78

Changes in assets and liabilities, net of
the effects of acquisitions
and divestitures:

Accounts receivable                         (100)       158        98        97

Inventories                                  (52)      (26)     (273)     (189)

Other current assets                         (22)       217     (239)       174

Accounts payable                               21       167       (8)       224

Accrued liabilities                            87     (206)     (161)     (448)

Net cash provided by (used for) operating   1,678     1,861     2,812     2,997
activities

Cash flows from investing activities:

Expenditures for property, plant and        (171)     (199)     (312)     (339)
equipment

Proceeds from disposals of property,            8         1        10         3
plant and equipment

Increase in investments                   (1,048)   (1,204)   (2,274)   (1,787)

Decrease in investments                     1,367     1,670     2,163     3,508

Other                                         110       343        70       220

Net cash provided by (used for) investing     266       611     (343)     1,605
activities

Cash flows from financing activities:

Proceeds from issuance of commercial        3,796     6,073     7,114    12,749
paper and other short-term
borrowings

Payments of commercial paper and other    (3,796)   (6,823)   (7,115)   (12,152)
short-term borrowings

Proceeds from issuance of common stock        233        67       378       127

Proceeds from issuance of long-term debt        9         2        29         5

Payments of long-term debt                   (71)      (31)      (84)   (1,277)

Repurchases of common stock               (1,900)     (764)   (2,650)   (1,704)

Cash dividends paid                         (597)     (560)   (1,203)   (1,116)

Other                                         (2)       (2)      (32)     (118)

Net cash provided by (used for) financing (2,328)   (2,038)   (3,563)   (3,486)
activities

Effect of foreign exchange rate changes      (16)     (249)        32      (93)
on cash and cash equivalents

Net increase (decrease) in cash and cash    (400)       185   (1,062)     1,023
equivalents

Cash and cash equivalents at beginning of   8,625     7,897     9,287     7,059
period

Cash and cash equivalents at end of       $ 8,225   $ 8,082   $ 8,225   $ 8,082
period



   


                   Honeywell International Inc.
       Reconciliation of Organic Sales % Change (Unaudited)

                                                   Three Months
                                                Ended June 30, 2019

Honeywell

Reported sales % change                                (15)%

Less: Foreign currency translation                     (2)%

Less: Acquisitions, divestitures and other, net        (18)%

Organic sales % change                                  5%

Aerospace

Reported sales % change                                (14)%

Less: Foreign currency translation                      —%

Less: Acquisitions, divestitures and other, net        (25)%

Organic sales % change                                  11%

Honeywell Building Technologies

Reported sales % change                                (43)%

Less: Foreign currency translation                     (2)%

Less: Acquisitions, divestitures and other, net        (46)%

Organic sales % change                                  5%

Performance Materials and Technologies

Reported sales % change                                 1%

Less: Foreign currency translation                     (3)%

Less: Acquisitions, divestitures and other, net         —%

Organic sales % change                                  4%

Safety and Productivity Solutions

Reported sales % change                                (4)%

Less: Foreign currency translation                     (2)%

Less: Acquisitions, divestitures and other, net         2%

Organic sales % change                                 (4)%

We define organic sales percent as the year-over-year change in
reported sales relative to the comparable period,
excluding the impact on sales from foreign currency translation,
and acquisitions, net of divestitures. We believe this
measure is useful to investors and management in understanding our
ongoing operations and in analysis of ongoing
operating trends.

A quantitative reconciliation of reported sales percent change to
organic sales percent change has not been provided
for forward-looking measures of organic sales percent change
because management cannot reliably predict or
estimate, without unreasonable effort, the fluctuations in global
currency markets that impact foreign currency
translation, nor is it reasonable for management to predict the
timing, occurrence and impact of acquisition and
divestiture transactions, all of which could significantly impact
our reported sales percent change.



   


                         Honeywell International Inc.
   Reconciliation of Segment Profit to Operating Income and Calculation of
                     Segment Profit and Operating Income
                             Margins (Unaudited)
                            (Dollars in millions)

                                                   Three Months Ended June 30,

                                                     2019          2018

Segment profit                                     $ 1,970   $  2,145

Stock compensation expense (1)                        (34)       (38)

Repositioning, Other (2,3)                           (137)      (279)

Pension and other postretirement service costs (4)    (37)       (51)

Operating income                                   $ 1,762   $  1,777

Segment profit                                     $ 1,970   $  2,145

÷ Net sales                                        $ 9,243   $ 10,919

Segment profit margin %                              21.3%      19.6%

Operating income                                   $ 1,762   $  1,777

÷ Net sales                                        $ 9,243   $ 10,919

Operating income margin %                            19.1%      16.3%

(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.



   


                          Honeywell International Inc.
Reconciliation of Earnings per Share to Adjusted Earnings per Share and Adjusted
                          Earnings per Share Excluding
                          Spin-off Impact (Unaudited)

                                      Three Months Ended June 30,  Twelve Months
                                                                       Ended
                                                                   December 31,

                                       2019           2018             2018

Earnings per share of common stock -  $ 2.10   $ 1.68              $ 8.98
assuming dilution (1)

Pension mark-to-market expense             —        —                0.04

Separation costs (2)                       —     0.46                0.97

Impacts from U.S. Tax Reform               —   (0.02)              (1.98)

Adjusted earnings per share of common $ 2.10   $ 2.12              $ 8.01
stock - assuming
dilution

Less: EPS, attributable to spin-offs             0.19                0.62

Adjusted earnings per share of common          $ 1.93              $ 7.39
stock - assuming
dilution, excluding spin-off impact

(1) For the three months ended June 30, 2019 and 2018, adjusted earnings per
share utilizes weighted average
shares of approximately 733.0 million and 755.0 million. For the twelve months
ended December 31, 2018,
adjusted earnings per share utilizes weighted average shares of approximately
753.0 million.

(2) For the three months ended June 30, 2018, separation costs of $354 million
($346 million net of tax) includes
$291 million of tax costs we incurred in the restructuring of the ownership of
various legal entities in anticipation
of the spin-off transactions ("frictional tax costs") and $63 million ($55
million net of tax) of other separation
costs. For the twelve months ended December 31, 2018, separation costs of $732
million including net tax
impacts.

We believe adjusted earnings per share, excluding spin-off impact, is a measure
that is useful to investors and
management in understanding our ongoing operations and in analysis of ongoing
operating trends.



   


                        Honeywell International Inc.
  Reconciliation of Cash Provided by Operating Activities to Adjusted Free
                   Cash Flow and Calculation of Adjusted
                   Free Cash Flow Conversion (Unaudited)
                           (Dollars in millions)

                                                Three Months   Three Months
                                                    Ended          Ended
                                                June 30, 2019  June 30, 2018

Cash provided by operating activities           $ 1,678        $ 1,861

Expenditures for property, plant and equipment    (171)          (199)

Free cash flow                                    1,507          1,662

Separation cost payments                             28             67

Adjusted free cash flow                         $ 1,535        $ 1,729

Net income attributable to Honeywell            $ 1,541        $ 1,267

Separation costs, includes net tax impacts            —            346

Adjustments to 4Q17 U.S tax legislation charge        —           (12)

Adjusted net income attributable to Honeywell   $ 1,541        $ 1,601

Cash provided by operating activities           $ 1,678        $ 1,861

÷ Net income (loss) attributable to Honeywell   $ 1,541        $ 1,267

Operating cash flow conversion                     109%           147%

Adjusted free cash flow                         $ 1,535        $ 1,729

÷ Adjusted net income attributable to Honeywell $ 1,541        $ 1,601

Adjusted free cash flow conversion %               100%           108%

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 Segment Profit to Operating Income and Calculation of
                     Segment Profit and Operating Income
                             Margins (Unaudited)
                            (Dollars in millions)

                                                         Twelve Months
                                                             Ended
                                                          December 31,
                                                              2018

Segment profit                                     $  8,190

Stock compensation expense (1)                        (175)

Repositioning, Other (2,3)                          (1,100)

Pension and other postretirement service costs (4)    (210)

Operating income                                   $  6,705

Segment profit                                     $  8,190

÷ Net sales                                        $ 41,802

Segment profit margin %                               19.6%

Operating income                                   $  6,705

÷ Net sales                                        $ 41,802

Operating income margin %                             16.0%

(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 margin, on an overall
Honeywell basis, to operating income margin has
not been provided for all forward-looking measures of segment profit margin
included herewithin, however, operating
income margin is expected to be up 210 to 240 bps in 2019 full year, with the
differences between segment profit
margin and operating income margin driven by expected full year stock
compensation expense, repositioning
and other, and pension and other postretirement service costs.



   


                        Honeywell International Inc.
 Calculation of Segment Profit Excluding Spin-off Impact and Segment Margin
                         Excluding Spin-off Impact
                           (Dollars in millions)

                                                        Twelve Months
                                                            Ended
                                                         December 31,
                                                             2018

Segment profit                                    $  8,190

Spin-off impact (1)                                (1,011)

Segment profit excluding spin-off impact          $  7,179

Sales                                             $ 41,802

Spin-off impact (1)                                (6,551)

Sale excluding spin-off impact                    $ 35,251

Segment profit margin % excluding spin-off impact    20.4%

(1) Amount computed as the portion of Aerospace and Honeywell Building
Technologies segment profit and sales
in the applicable prior year period for Transportation Systems and Homes and
Global Distribution spin-off
businesses.



   


                Honeywell International Inc.
 Reconciliation of Cash Provided by Operating Activities to
            Adjusted Free Cash Flow (Unaudited)

                                               Twelve Months
                                                   Ended
                                               December 31,
                                               2019(E) ($B)

Cash provided by operating activities           ~$6.2 - $6.5

Expenditures for property, plant and equipment        ~(0.8)

Free cash flow                                    ~5.4 - 5.7

Separation cost payments                                ~0.3

Adjusted free cash flow                         ~$5.7 - $6.0

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.