Financial Release
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Honeywell Reports First Quarter 2013 Sales Of $9.3 Billion; EPS Up 16% To $1.21 Per Share
- Strong Productivity Driving EPS Growth of 16%, Up 12% Using Expected Full-Year Tax Rate
- Segment Margin Increase of 100 Bps to 16.2%, Operating Margin Up 120 Bps
- Increasing Low-End 2013 Proforma EPS Guidance to $4.80 - $4.95, From $4.75 - $4.95

MORRIS TOWNSHIP, N.J., April 19, 2013 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the first quarter of 2013:

Total Honeywell




($ Millions, except Earnings Per Share)

1Q 2012

1Q 2013

Change

Sales

9,307

9,328

~ flat





Segment Margin

15.2%

16.2%

100 bps

Operating Income Margin

12.9%

14.1%

120 bps





Earnings Per Share

$1.04

$1.21

16%





Cash Flow from Operations

196

341

74%

Free Cash Flow *

300

327

9%





* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions

"Honeywell delivered better than expected quarterly earnings and margins even in a continued slow global growth environment," said Honeywell Chairman and CEO Dave Cote.  "We had strong productivity in the quarter, and our balanced portfolio of both short- and long-cycle businesses continues to drive our outperformance.  As a result of our strong start to 2013, we're raising the low-end of our full-year earnings guidance by five cents.  We're achieving these results in a slow growth environment while also maintaining our seed planting for the future by investing in new products and technologies, geographic expansion, and driving our key process initiatives.  And, it will continue.  It's what will help Honeywell deliver top-tier earnings performance this year and over the long-term."

First quarter 2013 earnings per share (EPS) reflects a 23.1% effective tax rate compared to 26.5% last year.  Using the expected full-year tax rate of 26.5%, EPS growth would have been 12%. 

The company is updating its full-year 2013 sales and EPS guidance and now expects:


Full-Year Guidance





2013

2013

Change


Prior Guidance

Revised Guidance

vs. 2012 

Sales

 $39.0 - $39.5B

 $38.8 - $39.3B

3 - 4%





Segment Margin

15.8 – 16.1%

15.9 - 16.2%

30 - 60 bps

Operating Income Margin1

14.2 – 14.5%

14.3 – 14.6%

70 - 100 bps





Earnings Per Share1

$4.75 - $4.95

$4.80 - $4.95

7% - 11%





Free Cash Flow2

 ~$3.7B

 ~$3.7B

~ Flat





1. Proforma, V% / BPS exclude any pension mark-to-market adjustment





2. Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO related payments and cash pension contributions

 

 

First Quarter Segment Performance

Aerospace




($ Millions)

1Q 2012

1Q 2013

% Change

Sales

2,950

2,911

(1%)

Segment Profit

534

551

3%

Segment Margin

18.1%

18.9%

80 bps

  • Sales were down (1%) compared with the first quarter of 2012 driven by a (1%) decline in our Commercial businesses primarily driven by higher than normal prior year shipments to commercial airline and BGA original equipment customers, and a (1%) decline in Defense and Space, as expected.
  • Segment profit was up 3%, and segment margins expanded 80 bps to 18.9%, primarily due to commercial excellence and productivity net of inflation (including prior year impact of customer bankruptcy), partially offset by lower aftermarket volumes.

Automation and Control Solutions




($ Millions)

1Q 2012

1Q 2013

% Change

Sales

3,788

3,786

~ flat

Segment Profit

491

523

7%

Segment Margin

13.0%

13.8%

80 bps

  • Sales were approximately flat on both a reported and organic basis compared with the first quarter of 2012. Energy, Safety, and Security sales were up primarily due to growth in ECC and Security products, partially offset by lower sales in Process Solutions and Building Solutions and Distribution.
  • Segment profit was up 7% and segment margins were up 80 bps to 13.8% driven by commercial excellence and productivity net of inflation.

Performance Materials and Technologies




($ Millions)

1Q 2012

1Q 2013

% Change

Sales

1,615

1,717

6%

Segment Profit

319

374

17%

Segment Margin

19.8%

21.8%

200 bps

  • Sales were up 6% reported, down (2%) organic, compared with the first quarter of 2012, resulting from the Thomas Russell acquisition, higher petrochemical catalyst shipments and equipment sales in UOP, partially offset by planned plant outages in Resins & Chemicals and Fluorine Products.
  • Segment profit was up 17% and segment margins increased 200 bps to 21.8%, primarily due to higher sales at UOP and favorable price net of inflation, partially offset by lower volume in Advanced Materials and continued investments for growth.

Transportation Systems




($ Millions)

1Q 2012

1Q 2013

% Change

Sales

954

914

(4%)

Segment Profit

120

111

(8%)

Segment Margin

12.6%

12.1%

(50) bps

  • Sales were down (4%) on both a reported and organic basis compared with the first quarter of 2012, driven by approximately 10% lower European light vehicle production volumes and declining aftermarket sales, partially offset by the positive impact of new platform launches, including higher turbo gas launches in North America and China.
  • Segment profit was down (8%) and segment margins decreased (50) bps to 12.1% primarily driven by lower sales, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT.  To participate, please dial (800) 894-5910 (domestic) or (785) 424-1052 (international) a few minutes before the 9:30 a.m. EDT start.  Please mention to the operator that you are dialing in for Honeywell's first quarter 2013 investor conference call or provide the conference code HONQ113.  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 (http://www.honeywell.com/investor).  Investors can access a replay of the conference call from 12:00 p.m. EDT, April 19, until 11:59 p.m. EDT, April 26, by dialing (800) 753-6121 (domestic) or (402) 220-2676 (international).

Honeywell (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. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, and Chicago Stock Exchanges.  For more news and information on Honeywell, please visit www.honeywellnow.com.

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.

Honeywell International Inc

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)









Three Months Ended




March 31,




2013


2012








Product sales

$     7,474


$   7,377


Service sales

1,854


1,930


Net sales

9,328


9,307








Costs, expenses and other





    Cost of products sold  (A)

5,567


5,571


    Cost of services sold  (A)

1,216


1,309




6,783


6,880


    Selling, general and administrative expenses (A)

1,229


1,231


    Other (income) expense

(28)


(15)


    Interest and other financial charges

84


89




8,068


8,185








Income before taxes

1,260


1,122


Tax expense

291


297








Net income

969


825








Less: Net income attributable to the noncontrolling interest

3


2








Net income attributable to Honeywell

$        966


$     823








Earnings per share of common stock - basic

$       1.23


$    1.06








Earnings per share of common stock - assuming dilution

$       1.21


$    1.04








Weighted average number of shares outstanding-basic

785.8


777.3








Weighted average number of shares outstanding -





    assuming dilution

797.1


788.1








(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement expense, and stock compensation expense. 







 

 




Honeywell International Inc.


Segment Data (Unaudited)


(Dollars in millions)








Three Months Ended



March 31,


Net Sales

2013


2012







Aerospace

$         2,911


$         2,950







Automation and Control Solutions

3,786


3,788







Performance Materials and Technologies

1,717


1,615







Transportation Systems

914


954







     Total

$         9,328


$         9,307












Reconciliation of Segment Profit to Income Before Taxes








Three Months Ended



March 31,


Segment Profit

2013


2012







Aerospace

$            551


$            534







Automation and Control Solutions

523


491







Performance Materials and Technologies

374


319







Transportation Systems

111


120







Corporate

(51)


(49)







     Total Segment Profit

1,508


1,415







Other income (expense) (A)

19


5


Interest and other financial charges

(84)


(89)


Stock compensation expense (B)

(54)


(51)


Pension ongoing income (expense) (B)

21


(13)


Other postretirement income (expense) (B)

(22)


(23)


Repositioning and other charges (B)

(128)


(122)







Income before taxes

$         1,260


$         1,122












(A)  Equity income (loss) of affiliated companies is included in Segment Profit.


(B) Amounts included in cost of products and services sold and selling, general and administrative expenses.

 

 


Honeywell International Inc.

Consolidated Balance Sheet (Unaudited)

(Dollars in millions)












March 31,



December 31,





2013



2012










ASSETS








Current assets:







    Cash and cash equivalents


$      4,539



$      4,634


    Accounts, notes and other receivables


7,585



7,429


    Inventories


4,297



4,235


    Deferred income taxes


672



669


    Investments and other current assets


588



631



Total current assets


17,681



17,598










Investments and long-term receivables


738



623


Property, plant and equipment - net


4,948



5,001


Goodwill



12,386



12,425


Other intangible assets - net


2,384



2,449


Insurance recoveries for asbestos related liabilities


654



663


Deferred income taxes


1,842



1,889


Other assets


1,167



1,205











Total assets


$    41,800



$    41,853










LIABILITIES AND SHAREOWNERS' EQUITY







Current liabilities:







    Accounts payable


$      4,444



$      4,736


    Short-term borrowings


86



76


    Commercial paper


1,200



400


    Current maturities of long-term debt


626



625


    Accrued liabilities


6,755



7,208



Total current liabilities


13,111



13,045










Long-term debt


5,787



6,395


Deferred income taxes


683



628


Postretirement benefit obligations other than pensions


1,338



1,365


Asbestos related liabilities


1,300



1,292


Other liabilities


5,896



5,913


Redeemable noncontrolling interest


152



150


Shareowners' equity


13,533



13,065










Total liabilities, redeemable noncontrolling interest and shareowners' equity


$    41,800



$    41,853


 

 

Honeywell International Inc.

 Consolidated Statement of Cash Flows (Unaudited)

(Dollars in millions)








Three Months Ended



March 31,



2013


2012

Cash flows from operating activities:





    Net income attributable to Honeywell


$     966


$    823

    Adjustments to reconcile net income attributable to Honeywell to net





    cash provided  by operating activities:





        Depreciation and amortization


248


230

        Repositioning and other charges


128


122

        Net payments for repositioning and other charges


(98)


(104)

        Pension and other postretirement expense


1


36

        Pension and other postretirement benefit payments


(171)


(289)

        Stock compensation expense


54


51

        Deferred income taxes


27


132

        Excess tax benefits from share based payment arrangements


(24)


(12)

        Other


(33)


(7)

        Changes in assets and liabilities, net of the effects of





        acquisitions and divestitures:





           Accounts, notes and other receivables


(142)


(40)

           Inventories


(51)


(108)

           Other current assets


18


(28)

           Accounts payable


(295)


(203)

           Accrued liabilities


(287)


(407)

Net cash provided by operating activities


341


196






Cash flows from investing activities:





    Expenditures for property, plant and equipment


(148)


(152)

    Proceeds from disposals of property, plant and equipment


-


1

    Increase in investments


(174)


(84)

    Decrease in investments


166


92

    Cash paid for acquisitions, net of cash acquired


(122)


(1)

    Other


(33)


22

Net cash used for investing activities


(311)


(122)






Cash flows from financing activities:





    Net increase in commercial paper


800


349

    Net increase in short-term borrowings


8


7

    Proceeds from issuance of common stock


164


90

    Proceeds from issuance of long-term debt


7


2

    Payments of long-term debt


(600)


-

    Excess tax benefits from share based payment arrangements


24


12

    Repurchases of common stock


(139)


-

    Cash dividends paid


(322)


(291)

Net cash (used for)/provided by financing activities


(58)


169






Effect of foreign exchange rate changes on cash and cash equivalents


(67)


47

Net (decrease)/increase in cash and cash equivalents


(95)


290

Cash and cash equivalents at beginning of period


4,634


3,698

Cash and cash equivalents at end of period


$  4,539


$ 3,988

 

 

 

Honeywell International Inc.

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to Cash Pension Contributions (Unaudited)

(Dollars in millions)










 Three Months Ended


 Twelve Months Ended



March 31,


December 31,



2013


2012


2012








Cash provided by operating activities


$     341


$     196


$3,517








Expenditures for property, plant and equipment


(148)


(152)


(884)








Free cash flow


$     193


$       44


$2,633








Cash pension contributions


134


256


1,039








Free cash flow, prior to cash pension contributions


$     327


$     300


$3,672








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, repay debt obligations prior to their maturities, or make cash pension contributions. This metric can also be used to evaluate our ability
to generate cash flow from business operations and the impact that this cash flow has on our liquidity.

 

 

Honeywell International Inc

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins  (Unaudited)

(Dollars in millions)






























Three Months Ended







March 31,







2013


2012














Segment Profit


$   1,508


$   1,415














Stock compensation expense (A)


(54)


(51)





Repositioning and other (A, B)


(137)


(132)





Pension ongoing income (expense) (A)


21


(13)





Other postretirement income (expense) (A)


(22)


(23)














Operating Income


$   1,316


$   1,196














Segment Profit


$   1,508


$   1,415





÷ Sales


$   9,328


$   9,307





Segment Profit Margin %


16.2%


15.2%














Operating Income


$   1,316


$   1,196





÷ Sales


$   9,328


$   9,307





Operating Income Margin %


14.1%


12.9%























(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 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,






2012


2013 Guidance










Segment Profit



$    5,879



$6,200 - 6,400










Stock compensation expense (A)



(170)



~(200)


Repositioning and other (A, B)



(488)



(450) - (500)


Pension ongoing expense (A)



(36)



~75


Pension mark-to-market adjustment (A)



(957)



TBD


Other postretirement income (expense) (A)



(72)



~(80)










Operating Income



$    4,156



$5,545 - 5,695


Pension mark-to-market adjustment (A)



$     (957)



TBD


Operating Income excluding pension mark-to-market adjustment



$    5,113



$5,545 - 5,695










Segment Profit



$    5,879



$6,200 - 6,400


÷ Sales



$  37,665



$38,800 - 39,300


Segment Profit Margin %



15.6%



15.9 - 16.2%










Operating Income



$    4,156



$5,545 - 5,695


÷ Sales



$  37,665



$38,800 - 39,300


Operating Income Margin %



11.0%



14.3 - 14.6%










Operating Income excluding pension mark-to-market adjustment



$    5,113



$5,545 - 5,695


÷ Sales



$  37,665



$38,800 - 39,300


Operating Income Margin excluding pension mark-to-market adjustment %



13.6%



14.3 - 14.6%










(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

Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Adjustment










2012







EPS

$      3.69







Pension mark-to-market adjustment

0.79







EPS, excluding pension mark-to-market adjustment

$      4.48







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.


EPS utilizes weighted average shares outstanding of 791.9 million. Mark-to-market uses a blended tax rate of 35.0%.

 

 

Contacts:

Media

Investor Relations

Robert C. Ferris

Elena Doom

(973) 455-3388

(973) 455-2222

rob.ferris@honeywell.com

elena.doom@honeywell.com

SOURCE Honeywell

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