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Press release from PR Newswire

Honeywell Reports Full Year Sales Up 3% to $37.7 Billion; Proforma Earnings Per Share Up 11% to $4.48 Per Share; Reported Earnings Per Share of $3.69

Friday, January 25, 2013

Honeywell Reports Full Year Sales Up 3% to $37.7 Billion; Proforma Earnings Per Share Up 11% to $4.48 Per Share; Reported Earnings Per Share of $3.6907:00 EST Friday, January 25, 2013- 2012 Earnings Growth Driven By Strong Operational Performance - Record Segment Margin Of 15.6%, Up 90 bps YoY; Operating Margin 13.6% Up 160 bps YoY - Pension Mark-to-Market Adjustment As Expected - ($0.79) Per Share - Reaffirming 2013 Proforma EPS Guidance Of $4.75-4.95, Up Another 6-11% Over 2012MORRIS TOWNSHIP, N.J., Jan. 25, 2013 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the fourth quarter and full year 2012:Total Honeywell($ Millions, except Earnings Per Share)FY 2011FY 2012ChangeSales36,52937,6653%Segment Margin14.7%15.6%90 bpsOperating Income Margin112.0%13.6%160 bpsEarnings Per Share (Reported)$2.61$3.6941%Earnings Per Share (Proforma) 1$4.05$4.4811%Cash Flow from Operations2,8333,51724%Free Cash Flow23,7803,672(3%)4Q 20114Q 2012ChangeSales9,4739,5811%Segment Margin15.1%15.6%50 bpsOperating Income Margin112.9%13.9%100 bpsEarnings Per Share (Reported)($0.40)$0.32N/AEarnings Per Share (Proforma) 1$1.05$1.105%Cash Flow from Operations1,4771,349(9%)Free Cash Flow21,4171,311(7%)1. Proforma, V%/bps Exclude Any Pension Mark-to-Market Adjustment 2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Cash Pension Contributions"Honeywell had another year of terrific performance in 2012," said Honeywell Chairman and CEO Dave Cote. "In a weak global economy, we grew sales 3% and earnings by 11%, while expanding margins to record levels and continuing to generate strong cash flow. We outperformed while also continuing to invest in seed planting initiatives like new products and services, global growth, cost competitiveness, and strengthening our key processes -- Honeywell Operating System, Velocity Product Development?, and Functional Transformation. Our balanced mix of long- and short-cycle businesses and expansion in high growth regions has offset lower demand in some of our short-cycle businesses, European weakness, and foreign exchange headwinds. We've also maintained a strong long-cycle backlog, now a record $15.8 billion, with new platform wins across many of our businesses last year. These positive trends, combined with our great positions in good industries, conservative planning, and the continued evolution of our internal processes will help Honeywell drive sales, margin growth, cash generation, and EPS outperformance in 2013 and over the long-term."The company is also reaffirming its full-year 2013 sales and EPS guidance:Full Year Guidance2013ChangeCurrent Guidancevs. 2012 Sales$39.0 - $39.5B 4 - 5%Segment Margin15.8 - 16.1%20 - 50 bpsOperating Income Margin114.2 - 14.5%60 - 90 bpsEarnings Per Share1$4.75 - $4.956 - 11%Free Cash Flow2~$3.7B ~Flat1. Proforma, V% / bps Exclude Any Pension Mark-to-Market Adjustment2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension ContributionsSegment PerformanceAerospace($ Millions)FY 2011FY 2012% ChangeSales11,47512,0405%Segment Profit2,0232,27913%Segment Margin17.6%18.9%130 bps4Q 20114Q 2012% ChangeSales3,0473,020(1%)Segment Profit5736015%Segment Margin18.8%19.9%110 bpsSales were down (1%) compared with the fourth quarter of 2011 driven by a (6%) decline in Defense and Space, partially offset by a 3% increase in our commercial end markets. Commercial original equipment (OE) sales were up 5% driven by increased production rates at our major OE customers. Commercial aftermarket sales were up 3% driven by higher maintenance activity. Segment profit was up 5%, and segment margins expanded 110 bps to 19.9%, primarily due to commercial excellence, productivity net of inflation, and lower BGA OE payments, partially offset by investments for growth.Automation and Control Solutions($ Millions)FY 2011FY 2012% ChangeSales15,53515,8802%Segment Profit2,0832,2327%Segment Margin13.4%14.1%70 bps($ Millions)4Q 20114Q 2012% ChangeSales4,0514,1723%Segment Profit58464510%Segment Margin14.4%15.5%110 bpsSales were up 3% compared with the fourth quarter of 2011 as volume growth and the favorable impact of acquisitions, net of divestitures was partially offset by foreign exchange headwinds. Energy, Safety, and Security was up 4% organically due to acceleration of growth in Environmental and Combustion Controls and continued growth in Scanning & Mobility and Security. Process Solutions and Building Solutions and Distribution grew at a slower rate, reflecting a more challenging capital investment environment. Segment profit was up 10% and segment margins were up 110 bps to 15.5% driven by commercial excellence and strong productivity net of inflation and other investments for growth, including the favorable impact of previously completed restructuring actions.Performance Materials and Technologies($ Millions)FY 2011FY 2012% ChangeSales5,6596,1849%Segment Profit1,0421,15411%Segment Margin18.4%18.7%30 bps($ Millions)4Q 20114Q 2012% ChangeSales1,4301,5458%Segment Profit223210(6%)Segment Margin15.6%13.6%(200 bps)Sales were up 8% reported, 2% organic, compared with the fourth quarter of 2011, resulting from the Thomas Russell acquisition in UOP, partially offset by lower volume of petrochemical and refining catalysts. Advanced Materials sales were up 5% driven by new products and applications, partially offset by challenging end market conditions. Segment profit declined (6%) and segment margins contracted (200 bps) to 13.6% in the fourth quarter primarily due to lower catalyst sales in UOP, unfavorable price/raws spread in Resins and Chemicals and challenging end market conditions, partially offset by productivity net of labor inflation and investments for growth. Transportation Systems($ Millions)FY 2011FY 2012% ChangeSales3,8593,561(8%)Segment Profit485432(11%)Segment Margin12.6%12.1%(50 bps)($ Millions)4Q 20114Q 2012% ChangeSales944844(11%)Segment Profit11794(20%)Segment Margin12.4%11.1%(130 bps)Sales were down (11%), down (8%) organic, compared with the fourth quarter of 2011, driven by lower European light vehicle production and aftermarket sales, partially offset by new platform launches and higher gas turbo penetration, primarily in the U.S. and China. Segment profit was down (20%) in the fourth quarter and segment margins decreased (130 bps) to 11.1% primarily driven by lower sales volumes and price, unfavorable foreign exchange, 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 9:00 a.m. EST. To participate on the conference call, please dial (800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes before the 9:00 a.m. EST start. Please mention to the operator that you are dialing in for Honeywell's fourth quarter 2012 earnings call or provide the conference code, HONQ412. You can hear a replay of the conference call from 12:00 p.m. EST, January 25, until 11:59 p.m. EST, February 1, by dialing (800) 374-1216 (domestic) or (402) 220-0681 (international).A real-time audio webcast of the presentation can be accessed at, where related materials will be posted prior to the presentation. The presentation materials will be in Adobe Acrobat format. A replay of the webcast will be available following the presentation at the same link listed above for 30 days.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 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 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 EndedTwelve Months Ended December 31,December 31, 2012201120122011Product sales$ 7,628$ 7,478$ 29,812$ 28,745Service sales1,9531,9957,8537,784Net sales9,5819,47337,66536,529Costs, expenses and other      Cost of products sold (A)6,3026,86222,92923,220      Cost of services sold (A)1,3791,5735,3625,3367,6818,43528,29128,556      Selling, general and administrative expenses (A)1,5231,6165,2185,399      Other (income) expense(16)(12)(70)(84)      Interest and other financial charges87913513769,27510,13033,79034,247Income (loss) from continuing operations before taxes306(657)3,8752,282Tax expense (benefit)51(350)944417Income (loss) from continuing operations after taxes255(307)2,9311,865Income from discontinued operations after taxes---209Net income (loss)255(307)2,9312,074Less: Net income attributable to the noncontrolling interest4357Net income (loss) attributable to Honeywell$ 251$ (310)$ 2,926$ 2,067Amounts attributable to Honeywell:Income (loss) from continuing operations less net income attributable to the noncontrolling interest251(310)2,9261,858Income from discontinued operations---209Net income (loss) attributable to Honeywell$ 251$ (310)$ 2,926$ 2,067Earnings per share of common stock - basic:  Income (loss) from continuing operations0.32(0.40)3.742.38  Income from discontinued operations---0.27  Net income (loss) attributable to Honeywell$ 0.32$ (0.40)$ 3.74$ 2.65Earnings per share of common stock - assuming dilution:  Income (loss) from continuing operations0.32(0.40)3.692.35  Income from discontinued operations---0.26  Net income (loss) attributable to Honeywell$ 0.32$ (0.40)$ 3.69$ 2.61Weighted average number of shares outstanding-basic787.2774.7782.4780.8Weighted average number of shares outstanding -       assuming dilution796.4784.3791.9791.6(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. (B) Below is a reconciliation of Earnings per share to Earnings per share, excluding mark-to-market pension expense. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Three Months EndedTwelve Months EndedDecember 31,December 31,20121201112012120111Earnings per share of common stock - assuming dilution$ 0.32$ (0.40)$ 3.69$ 2.61Mark-to-market pension expense0.781.450.791.44Earnings per share of common stock - assuming dilution, excluding mark-to-market pension expense$ 1.10$ 1.05$ 4.48$ 4.051- EPS utilizes weighted average shares outstanding and the effective tax rate for the period. Mark-to-market uses a blended tax rate of 35.0% and 36.9% for 2012 and 2011, respectively Honeywell International IncSegment Data (Unaudited) (Dollars in millions)Three Months EndedTwelve Months EndedDecember 31,December 31,Net Sales2012201120122011Aerospace$   3,020$   3,047$   12,040$    11,475Automation and Control Solutions4,1724,05115,88015,535Performance Materials and Technologies1,5451,4306,1845,659Transportation Systems8449443,5613,859Corporate-1-1     Total$   9,581$   9,473$   37,665$   36,529Reconciliation of Segment Profit to Income From Continuing Operations Before TaxesThree Months EndedTwelve Months EndedDecember 31,December 31,Segment Profit2012201120122011Aerospace$      601$      573$     2,279$     2,023Automation and Control Solutions6455842,2322,083Performance Materials and Technologies2102231,1541,042Transportation Systems94117432485Corporate(54)(68)(218)(276)     Total Segment Profit1,4961,4295,8795,357Other income (expense) (A)7(3)2533Interest and other financial charges(87)(91)(351)(376)Stock compensation expense (B)(39)(39)(170)(168)Pension ongoing expense (B)(7)(22)(36)(105)Pension mark-to-market expense (B)(957)(1,802)(957)(1,802)Other postretirement income/(expense) (B)(20)(23)(72)86Repositioning and other charges (B)(87)(106)(443)(743)Income (loss) from continuing operations before taxes$      306$     (657)$     3,875$    2,282    (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)December 31,December 31, 20122011ASSETSCurrent assets:    Cash and cash equivalents$         4,634$           3,698    Accounts, notes and other receivables7,4297,228    Inventories4,2354,264    Deferred income taxes669460    Investments and other current assets631484Total current assets17,59816,134Investments and long-term receivables623494Property, plant and equipment - net5,0014,804Goodwill12,42511,858Other intangible assets - net2,4492,477Insurance recoveries for asbestos related liabilities663709Deferred income taxes1,8892,132Other assets1,2051,200Total assets$       41,853$         39,808LIABILITIES AND SHAREOWNERS' EQUITYCurrent liabilities:    Accounts payable$         4,736$           4,738    Short-term borrowings7660    Commercial paper400599    Current maturities of long-term debt62515    Accrued liabilities7,2086,863Total current liabilities13,04512,275Long-term debt6,3956,881Deferred income taxes628676Postretirement benefit obligations other than pensions1,3651,417Asbestos related liabilities1,2921,499Other liabilities5,9136,158Redeemable noncontrolling interest150-Shareowners' equity13,06510,902Total liabilities, redeemable noncontrolling interest and shareowners' equity$       41,853$         39,808Honeywell International Inc Consolidated Statement of Cash Flows (Unaudited)(Dollars in millions)Three Months EndedTwelve Months EndedDecember 31,December 31,2012201120122011Cash flows from operating activities:    Net income (loss) attributable to Honeywell$    251$   (310)$ 2,926$ 2,067    Adjustments to reconcile net income (loss) attributable to Honeywell to net    cash provided  by operating activities:        Depreciation and amortization245253926957        Gain on sale of non-strategic businesses and assets(2)(9)(5)(362)        Repositioning and other charges87106443743        Net payments for repositioning and other charges(151)(133)(503)(468)        Pension and other postretirement expense9841,8471,0651,823        Pension and other postretirement benefit payments(295)(315)(1,183)(1,883)        Stock compensation expense3939170168        Deferred income taxes(235)(528)84(331)        Excess tax benefits from share based payment arrangements(28)(11)(56)(42)        Other69233108289        Changes in assets and liabilities, net of the effects of        acquisitions and divestitures:           Accounts, notes and other receivables41117(119)(316)           Inventories7813025(310)           Other current assets(1)78(78)25           Accounts payable207162(13)527           Accrued liabilities60(182)(273)(54)Net cash provided by operating activities1,3491,4773,5172,833Cash flows from investing activities:    Expenditures for property, plant and equipment(298)(332)(884)(798)    Proceeds from disposals of property, plant and equipment3356    Increase in investments(220)(58)(702)(380)    Decrease in investments27266559354    Cash paid for acquisitions, net of cash acquired(376)(346)(438)(973)    Proceeds from sales of businesses, net of fees paid3(14)211,156    Other53(43)1124Net cash used for investing activities(563)(724)(1,428)(611)Cash flows from financing activities:    Net (decrease)/increase in commercial paper(499)(101)(199)300    Net increase/(decrease) in short-term borrowings3222(2)    Payment of debt assumed with acquisitions-(33)-(33)    Proceeds from issuance of common stock16372342304    Proceeds from issuance of long-term debt1611021,390    Payments of long-term debt(1)(500)(1)(939)    Excess tax benefits from share based payment arrangements28115642    Repurchases of common stock(317)(76)(317)(1,085)    Cash dividends paid(331)(295)(1,211)(1,091)Net cash used for financing activities(938)(919)(1,206)(1,114)Effect of foreign exchange rate changes on cash and cash equivalents26(21)53(60)Net (decrease)/increase in cash and cash equivalents(126)(187)9361,048Cash and cash equivalents at beginning of period4,7603,8853,6982,650Cash and cash equivalents at end of period$ 4,634$ 3,698$ 4,634$ 3,698Honeywell International IncReconciliation 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 December 31,December 31,2012201120122011Cash provided by operating activities$     1,349$  1,477$      3,517$    2,833Expenditures for property, plant and equipment (298)(332)(884)(798)Free cash flow$     1,051$  1,145$      2,633$    2,035Cash pension contributions2602721,0391,745Free cash flow, prior to cash pension contributions$     1,311$  1,417$      3,672$    3,780We 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 Excluding Pension Mark-to-Market Adjustment and Calculation of Segment Profit and Operating Income Margin Excluding Pension Mark-to-Market Adjustment (Unaudited)(Dollars in millions)Three Months Ended Twelve Months Ended December 31,December 31,2012201120122011Segment Profit$      1,496$    1,429$     5,879$   5,357Stock compensation expense (A)(39)(39)(170)(168)Repositioning and other (A, B)(96)(121)(488)(794)Pension ongoing expense (A)(7)(22)(36)(105)Pension mark-to-market adjustment (A)(957)(1,802)(957)(1,802)Other postretirement income/(expense) (A)(20)(23)(72)86Operating Income (Loss)$         377$      (578)$     4,156$   2,574Pension mark-to-market adjustment (A)$       (957)$   (1,802)$      (957)$  (1,802)Operating Income excluding pension mark-to-market adjustment$      1,334$    1,224$     5,113$   4,376Segment Profit$      1,496$    1,429$     5,879$   5,357÷ Sales$      9,581$    9,473$   37,665$ 36,529Segment Profit Margin %15.6%15.1%15.6%14.7%Operating Income (Loss)$         377$     (578)$     4,156$   2,574÷ Sales$      9,581$    9,473$   37,665$ 36,529Operating Income (Loss) Margin %3.9%(6.1%)11.0%7.0%Operating Income excluding pension mark-to-market adjustment$      1,334$    1,224$     5,113$   4,376÷ Sales$      9,581$    9,473$   37,665$ 36,529Operating Income Margin excluding pension mark-to-market adjustment %13.9%12.9%13.6%12.0%(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.  SOURCE Honeywell