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Press release from PR Newswire

Honeywell First Quarter Sales Up 7% To $9.3 Billion; And Earnings Up 18% To $1.04 Per Share

Friday, April 20, 2012

Honeywell First Quarter Sales Up 7% To $9.3 Billion; And Earnings Up 18% To $1.04 Per Share07:30 EDT Friday, April 20, 2012- Higher Than Expected Organic Sales, Segment Margin and EPS - Broad Based Overdrive - 6% Organic Growth Reflects New Products and Technologies, Geographic Expansion - Raising 2012 Proforma EPS Guidance to $4.35 - $4.55, Up From $4.25 - $4.50MORRIS TOWNSHIP, N.J., April 20, 2012 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the first quarter of 2012: Total Honeywell    ($ Millions, except Earnings Per Share)  1Q 2011  1Q 2012 % Change Sales 8,6729,3077%Earnings Per Share from Continuing Operations $0.86$1.0421%Earnings Per Share $0.88$1.0418%Cash Flow from Operations (443)196N/A Free Cash Flow* 446300(33%)* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions"Honeywell had a terrific start to the year highlighted by higher than expected organic sales, 70 basis points of margin expansion, and strong double-digit earnings growth," said Honeywell Chairman and Chief Executive Officer Dave Cote. "We've seen good momentum in the U.S. and our key high growth regions, which is more than offsetting softness in Europe impacting our short-cycle businesses. Our long-cycle businesses, namely commercial aerospace and UOP, had particularly strong growth, overdriving expectations in the quarter.  As a result of our strong first quarter and continued favorable outlook for our major markets, we're raising our 2012 earnings per share outlook. Our continued seed planting, coupled with great positions in good industries and the Five Initiatives ? growth, productivity, cash, people, and our enablers - will remain the keys to our continued outperformance in 2012 and over the long-term."The company is updating its full-year 2012 sales and EPS guidance and now expects:Full Year Guidance 20122012% ChangePrior Guidance Revised Guidance vs. 2011 Sales $37.8 - 38.9B $38.0 - 38.6B 4% - 6% Earnings Per Share from Continuing Operations(1) $4.25 - $4.50 $4.35 - $4.559% - 14% Earnings Per Share(2) $4.25 - $4.50 $4.35 - $4.55 7% - 12% Free Cash Flow(3) ~$3.5B ~$3.5B ~100% conversion (1) Proforma (Ongoing Operations); V% Excludes Any Mark-to-Market Pension Adjustments and Excludes 3Q11 Repo and Other Actions      Funded by CPG Gain (in Disc. Ops) (2) Proforma, V% Excludes Any Mark-to-Market Pension Adjustments  (3) Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension ContributionsFirst Quarter Segment PerformanceAerospace    ($ Millions) 1Q 2011 1Q 2012 % ChangeSales2,6962,9509%Segment Profit 46753414%Segment Margin                                               17.3%18.1% 80 bpsSales were up 9% compared with the first quarter of 2011.  Organic growth was 8% which was primarily driven by an 18% increase in our Commercial end markets, partially offset by lower services revenue in Defense and Space.  Commercial OE sales were up 22%, or 18% organic excluding the impact of the EMS acquisition.  Commercial aftermarket sales were up 16% with growth in both spares and R&O. Segment profit was up 14% and segment margin increased 80 bps to 18.1%, primarily due to strong commercial aftermarket volume and productivity, net of inflation and higher investments in R&D.Automation and Control Solutions   ($ Millions) 1Q 2011 1Q 2012 % ChangeSales3,6563,7884%Segment Profit                                                 4594917%Segment Margin12.6%13.0% 40 bpsSales were up 4%, 3% organic, compared with the first quarter of 2011 driven by growth in Process Solutions and Building Solutions and Distribution, partially offset by a modest (1%) organic decline in Energy, Safety and Security as a result of market headwinds in several of our short cycle businesses.  ACS continues to benefit from new product introductions, geographic expansion, and favorable macro trends such as safety, security, and energy efficiency.  Segment profit was up 7% and segment margins were up 40 bps to 13.0% driven by productivity benefits net of inflation, and the absence of prior year dilution from acquisitions.Performance Materials and Technologies   ($ Millions) 1Q 2011 1Q 2012 % ChangeSales1,3551,61519%Segment Profit 28431912%Segment Margin21.0%19.8% (120) bpsSales were up 19%, 12% organic, compared with the first quarter of 2011, resulting from strong UOP catalyst and licensing sales, the phenol plant acquisition, and strong volumes in Resins & Chemicals, offsetting softer demand in Asia and Europe in Specialty Products and the impact of unfavorable pricing due to more challenging global supply conditions in Fluorines.  Demand for UOP technology offerings and services remained strong with new orders up over 50%.Segment profit was up 12% due to higher volumes, partially offset by continued investment to support growth in the business.  Segment margin decreased (120) bps to 19.8%, primarily due to the dilutive impact of the phenol plant acquisition. This is better than expected performance due to less price/raws headwinds than originally planned.Transportation Systems   ($ Millions) 1Q 2011 1Q 2012 % ChangeSales                                                                   965954(1%)Segment Profit 1181202%Segment Margin 12.2%12.6%40 bps Sales were down (1%), but up 1% on an organic basis, compared with the first quarter of 2011, due to new business launches and higher diesel penetration, partially offset by lower European vehicle production and aftermarket sales volume.Segment profit was up 2% and segment margins increased 40 bps to 12.6% primarily driven by productivity gains including benefits from prior period restructuring actions.Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT.  To participate, please dial (631) 291-4830 a few minutes before the 9:30 a.m. EDT start.  Please mention to the operator that you are dialing in for Honeywell's investor conference call.  The live webcast of the investor call will be available through the "Investor Relations" section of the company's Website (  Investors can access a replay of the conference call from 12:30 p.m. EDT, April 20, until midnight, April 27, by dialing (404) 537-3406.  The access code is 65469116.Honeywell ( is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; automotive products; turbochargers; and specialty 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 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.Contacts:Media Investor Relations Robert C. Ferris  Elena Doom (973) 455-3388  (973)   Honeywell International IncConsolidated Statement of Operations (Unaudited)(In millions, except per share amounts)Three Months EndedMarch 31,20122011Product sales$     7,377$   6,813Service sales1,9301,859Net sales9,3078,672Costs, expenses and other    Cost of products sold  (A)5,5715,194    Cost of services sold  (A)1,3091,2306,8806,424    Selling, general and administrative expenses (A)1,2311,232    Other (income) expense(15)(29)    Interest and other financial charges89998,1857,726Income from continuing operations before taxes1,122946Tax expense297256Income from continuing operations after taxes825690Income from discontinued operations after taxes-18Net income825708Less: Net income attributable to the noncontrolling interest23Net income attributable to Honeywell$        823$     705Amounts attributable to Honeywell:Income from continuing operations less net income   attributable to the noncontrolling interest823687Income from discontinued operations-18Net income attributable to Honeywell$        823$     705Earnings per share of common stock - basic:Income from continuing operations1.060.87Income from discontinued operations-0.03Net income attributable to Honeywell$       1.06$    0.90Earnings per share of common stock - assuming dilution:Income from continuing operations1.040.86Income from discontinued operations-0.02Net income attributable to Honeywell$       1.04$    0.88Weighted average number of shares outstanding-basic777.3785.5Weighted average number of shares outstanding -    assuming dilution788.1797.7(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other post-retirement expense, and stock compensation expense         Honeywell International IncSegment Data (Unaudited) (Dollars in millions)Three Months EndedMarch 31,Net Sales20122011Aerospace$ 2,950$ 2,696Automation and Control Solutions3,7883,656Performance Materials and Technologies1,6151,355Transportation Systems954965Corporate--     Total$ 9,307$ 8,672Reconciliation of Segment Profit to Income From Continuing Operations Before TaxesThree Months EndedMarch 31,Segment Profit20122011Aerospace$    534$    467Automation and Control Solutions491459Performance Materials and Technologies319284Transportation Systems120118Corporate(49)(68)     Total Segment Profit1,4151,260Other income/(expense) (A)520Interest and other financial charges(89)(99)Stock compensation expense (B)(51)(49)Pension ongoing expense (B)(13)(35)Other postretirement income/(expense) (B)(23)(18)Repositioning and other charges (B)(122)(133)Income from continuing operations before taxes$ 1,122$    946(A)Equity income/(loss) of affiliated companies is included in Segment Profit(B)Amounts included in cost of products and services sold and selling, general and administrative expenses.         Honeywell International IncConsolidated Balance Sheet (Unaudited)(Dollars in millions)March 31,December 31, 20122011ASSETSCurrent assets:    Cash and cash equivalents$   3,988$   3,698    Accounts, notes and other receivables7,2687,228    Inventories4,3684,264    Deferred income taxes428460    Investments and other current assets501484Total current assets16,55316,134Investments and long-term receivables533494Property, plant and equipment - net4,8144,804Goodwill11,91011,858Other intangible assets - net2,4202,477Insurance recoveries for asbestos related liabilities680709Deferred income taxes2,0612,132Other assets1,3991,200Total assets$ 40,370$ 39,808LIABILITIES AND SHAREOWNERS' EQUITYCurrent liabilities:    Accounts payable$   4,535$   4,738    Short-term borrowings6960    Commercial paper948599    Current maturities of long-term debt61515    Accrued liabilities6,4996,863Total current liabilities12,66612,275Long-term debt6,2696,881Deferred income taxes707676Postretirement benefit obligations other than pensions1,4001,417Asbestos related liabilities1,5091,499Other liabilities5,9776,158Shareowners' equity11,84210,902Total liabilities and shareowners' equity$ 40,370$ 39,808   Honeywell International Inc Consolidated Statement of Cash Flows (Unaudited)(Dollars in millions)Three Months EndedMarch 31,20122011Cash flows from operating activities:    Net income attributable to Honeywell$    823$    705    Adjustments to reconcile net income attributable to Honeywell to net    cash provided  by operating activities:        Depreciation and amortization230242        Gain on sale of non-strategic businesses and assets-(44)        Repositioning and other charges122133        Net payments for repositioning and other charges(104)(109)        Pension and other postretirement expense3654        Pension and other postretirement benefit payments(289)(1,050)        Stock compensation expense5149        Deferred income taxes13268        Excess tax benefits from share based payment arrangements(12)(13)        Other(7)108        Changes in assets and liabilities, net of the effects of        acquisitions and divestitures:           Accounts, notes and other receivables(40)(172)           Inventories(108)(330)           Other current assets(28)(14)           Accounts payable(203)(4)           Accrued liabilities(407)(66)Net cash provided by/(used for) operating activities196(443)Cash flows from investing activities:    Expenditures for property, plant and equipment(152)(124)    Proceeds from disposals of property, plant and equipment11    Increase in investments(84)(164)    Decrease in investments9262    Cash paid for acquisitions, net of cash acquired(1)(7)    Proceeds from sales of businesses, net of fees paid-217    Other2231Net cash (used for)/provided by investing activities(122)16Cash flows from financing activities:    Net increase in commercial paper3491    Net increase/(decrease) in short-term borrowings7(9)    Proceeds from issuance of common stock90101    Proceeds from issuance of long-term debt21,381    Payments of long-term debt-(437)    Excess tax benefits from share based payment arrangements1213    Cash dividends paid(291)(264)Net cash provided by financing activities169786Effect of foreign exchange rate changes on cash and cash equivalents4767Net increase in cash and cash equivalents290426Cash and cash equivalents at beginning of period3,6982,650Cash and cash equivalents at end of period$ 3,988$ 3,076  Honeywell International IncReconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to Pension Cash Contributions (Unaudited)(Dollars in millions)Three Months EndedMarch 31,20122011Cash provided by operating activities$       196$       (443)Expenditures for property, plant and equipment (152)(124)Free cash flow$         44$       (567)Pension cash contributions2561,013Free cash flow, prior to pension cash contributions                                              $       300$        446We define free cash flow as cash provided by operating activities, less cash expenditures for property, plant and equipmentWe believe that this metric is useful to investors and management as a measure of cash generated by business operationsthat will be used to repay scheduled debt maturities and can be used to invest in future growth through new businessdevelopment activities or acquisitions, and to pay dividends, repurchase stock, repay debt obligations prior to theirmaturities, 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 IncReconciliation of Earnings Per Share to Earnings Per Share, Excluding Mark-to-Market Pension Adjustmentsand Third Quarter 2011 Repositioning and Other Actions Funded by CPG Gain2011EPS - continuing operations assuming dilution$   2.35Mark-to-market pension adjustment$   1.44EPS - continuing operations assuming dilution, excluding mark-to-market pension adjustment$   3.79Third quarter 2011 repositioning and other actions funded by CPG gain$   0.22EPS - continuing operations assuming dilution, excluding mark-to-market   pension adjustment and third quarter 2011 repositioning and other actions funded by CPG gain$   4.012011EPS - Total Honeywell assuming dilution$   2.61Mark-to-market pension adjustment$   1.44EPS - Total Honeywell assuming dilution, excluding mark-to-market pension adjustment$   4.05We believe EPS, excluding mark-to-market pension expense and third quarter 2011 repositioning and other actionsfunded by CPG gain, is a metric that is useful to investors and management in understanding our ongoing operationsand in analysis of ongoing operating trendsEPS utilizes weighted average shares outstanding of 791.6 million and the effective tax rate for the period. Mark-to-market uses ablended tax rate of 36.9% SOURCE Honeywell