HONEYWELL INTERNATIONAL INC - FORM 8-K - EX-99 - April 20, 2011

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    Contacts:        
    Media       Investor Relations
    Robert C. Ferris       Elena Doom
    (973) 455-3388       (973) 455-2222
    rob.ferris@honeywell.com       elena.doom@honeywell.com

HONEYWELL REPORTS FIRST QUARTER SALES UP 15% TO $8.9 BILLION; EARNINGS PER SHARE INCREASES 40% TO $0.88

  • Higher Than Expected Q1 Sales, Segment Margins, and EPS – Broad-Based Overdrive
     
  		•

    11% Organic Growth Reflects Traction On New Products and Geographic Expansion
     
  		•

    Momentum Expected To Continue, Raising 2011 Sales and EPS Guidance
     
     

  • 2011 Sales Outlook Increased to $36.0 - 36.6B, Up 8-10% Year-Over-Year
     
     

  • 2011 EPS Outlook Increased to $3.80 - 3.95, Up 27-32% Vs. 2010 Proforma EPS
     

         MORRIS TOWNSHIP, N.J., April 20, 2011 -- Honeywell (NYSE: HON) today announced first quarter 2011 sales were up 15% to $8.9 billion versus $7.8 billion in 2010. Excluding the net impact from acquisitions and foreign exchange, sales were up a record 11% organically with stronger than anticipated growth across each of the company’s businesses. Earnings per share were up 40% to $0.88 versus $0.63 in the first quarter last year. Free cash flow (cash flow from operations less Capex) in the first quarter was $0.4 billion excluding pension contributions (cash flow from operations of a negative $0.4 billion due to a $1 billion contribution to the company’s U.S. pension fund).

         “Honeywell is executing well and delivering terrific results, highlighted by another quarter of record organic sales growth, margin expansion, and higher than expected earnings per share,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “I’m very pleased with our start to the year and the continued momentum we’re seeing across the portfolio. We had a particularly robust finish to the quarter with strength in our short-cycle businesses, as well as growth in commercial aerospace spares and the residential and commercial retrofit businesses. Orders in our short-cycle businesses have now increased eight consecutive quarters and our long-cycle backlog continues at near record levels. As a result of our strong first quarter and continued favorable outlook for our major markets, we’re raising our 2011 sales and EPS guidance.”

         Honeywell now expects 2011 sales of $36.0 -36.6 billion, up from $35.0 -36.0 billion, reflecting an increase of 8-10% over 2010; and earnings in the range of $3.80 -3.95 per share versus a previous estimate of $3.60 -3.80 per share, an increase of 27-32% over 2010 proforma EPS of $3.00 (in each case, this excludes any mark-to-market pension adjustments). The company also reaffirmed that it expects free cash flow of $3.5 -3.7 billion excluding any U.S. pension contributions in 2011 (cash flow from operations of $3.3 -3.5 billion including pension contributions).

    Q1’11 Results - 2

    First Quarter Segment Highlights

    Aerospace

    • Sales were up 8% compared with the first quarter of 2010, primarily due to strong increases in Commercial OEM and aftermarket volumes, slightly offset by lower military and government services sales.

    • Segment profit was up 13% and segment margin increased 80 bps to 17.3%, primarily due to increased volume, favorable mix, and productivity net of inflation.

    • Honeywell SmartRunway™ and SmartLanding™ flight safety upgrades – which utilize the industry’s most trusted terrain and runway information (Honeywell’s Enhanced Ground Proximity Warning System) – are being installed in more than 245 new aircraft and 171 in- service aircraft across several fleets operating in North America and Asia. The Honeywell systems help break the chain of events that can lead to a runway excursion or incursion by providing timely aural and/or visual advisories to the flight crew.

    • Honeywell has renewed a five-year contract with the U.S. Army valued at $153 million to supply, manage, and provide logistical process improvements to the Corpus Christi Army Depot for the repair and overhaul of Honeywell’s T-55 engine that powers the Chinook helicopter.

    • Honeywell and Aspen Avionics are collaborating to deliver a NextGen-ready, multi-function, and touchscreen cockpit display to general aviation customers. The two companies have completed a development agreement to bring Honeywell’s open-interface Bendix/King KSN 770 to market before the end of 2011.

    Automation and Control Solutions

    • Sales were up 17%, compared with the first quarter of 2010, with 9% growth from net acquisitions, 7% organic growth due to general industrial recovery and new product introductions in all businesses and regions, execution of global industrial infrastructure projects, and the 1% impact from favorable foreign exchange.

    • Segment profit was up 19% and segment margin increased 20 bps to 12.6% driven by higher volumes and project sales, partially offset by material inflation and investment for growth across the portfolio.

    • Honeywell Building Solutions will implement China’s first commercial smart grid demand-side management pilot and feasibility study. The project is part of the China-U.S. Energy Cooperation Program (ECP), initiated between the U.S. Trade and Development Agency and the National Energy Administration of China. The results of the demonstration will be used to determine the feasibility of broader deployment of smart grid solutions in China.

    • Honeywell Process Solutions signed a global five-year agreement to be a Main Automation Contractor (MAC) for Shell. As a MAC, Honeywell will design automation and safety systems that will help Shell meet its customers’ energy demands in economically and environmentally responsible ways. Honeywell has served as a MAC on hundreds of Shell projects for more than three decades. Currently, Honeywell is working on a number of Shell’s largest projects, including its new gas–to-liquids (GTL) plant in Qatar and the expansion of its Port Arthur Refinery.

    • Honeywell Security Group announced the latest in its LYNX self-contained alarm system and also launched Honeywell Software Development Kit (HSDK), which helps integrators tie together commercial security technology into larger business automation systems, eliminating the need to manually write code and configure servers. Honeywell Scanning & Mobility launched Voyager® 1200g single-line laser scanner that excels at reading poor quality and damaged bar codes; and Dolphin® 99EX mobile computer, which is designed to increase productivity and reduce operating costs.

    Q1’11 Results - 3

    Transportation Systems

    • Sales were up 19% compared with the first quarter of 2010, due to higher Turbo volumes globally, robust new platform launches, higher European diesel penetration, and higher sales of friction materials.

    • Segment profit was up 50% and segment margin increased 240 bps to 12.0% driven by higher volumes and increased productivity, partially offset by material inflation.

    • Honeywell launched more than 20 new turbo applications in the first quarter on gasoline and diesel powertrains for both passenger and commercial vehicle applications. In 2011, Honeywell expects to launch its turbochargers on more than 100 new vehicle applications in China, Europe, India, Brazil, and the U.S.

    • Honeywell announced that it would build a new manufacturing plant in Presov, Slovakia to produce turbochargers for light vehicle and light commercial vehicle applications. The additional capacity will help address the rapid increase in turbo adoption worldwide, which Honeywell expects will nearly double the turbo segment in the next five years. The new plant is expected to be operational by 2012 and will supplement its global footprint.

    • Over the last three years, Honeywell has secured nearly 50% of all new turbocharger application opportunities for light vehicles and commercial vehicles in all regions, which it expects will total over $8 billion over the life of the programs.

    Specialty Materials

    • Sales were up 19% compared with the first quarter of 2010, resulting from improved global markets, commercial excellence, and new product applications in the Advanced Materials business, coupled with strong UOP growth.

    • Segment profit was up 67% and segment margin increased 610 bps to 21% due to higher sales, commercial excellence, and cost productivity, partially offset by raw material inflation.

    • Honeywell’s new low-global-warming refrigerant HFO-1234yf has received final approval from the U.S. Environmental Protection Agency for use in motor vehicle air conditioning systems. The new refrigerant has global-warming-potential that is 99.7% less than the refrigerant currently used in most car and light truck air conditioning systems today. Use of the refrigerant can help vehicle manufacturers meet new federal standards for reducing greenhouse gas emissions from light-duty motor vehicles.

    • Honeywell’s UOP announced collaboration with the King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia, for the development of catalytic processes for petrochemicals production. The five-year agreement will allow university professors and researchers to collaborate with company scientists on catalyst development and processes for aromatics production.

    • Honeywell’s Envergent Technologies joint venture will provide biofuels technology to Crane & Co. to convert biomass feedstock into renewable oil to heat and power the Massachusetts facility where Crane produces paper used for U.S. currency. We were also selected to perform engineering design for a project that will use the joint venture’s technology to convert palm biomass to renewable heat and electricity.

         Honeywell will discuss its results during its investor conference call Thursday, April 21, 2011 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 (http://www.honeywell.com/investor). Investors can access a replay of the investor call starting at 12:30 p.m. EDT, April 21, until midnight, April 28, by dialing (706) 645-9291. The access code is 52965295.

    - MORE -

    Q1’11 Results - 4

    Honeywell International (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; 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 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.

    Q1'11 Results - 5

    Honeywell International Inc.
    Consolidated Statement of Operations (Unaudited)
    (In millions except per share amounts)

     

     

     

     

     

     

     

     

     

     

    Three Months Ended
    March 31,

     

     

     

    2011

     

    2010

     

     

     

     

     

     

     

     

     

     

     

     

     

    Product sales

     

    $

    7,050

     

    $

    6,047

     

    Service sales

     

     

    1,859

     

     

    1,729

     

     

     

     

     

    Net sales

     

     

    8,909

     

     

    7,776

     

     

     

     

     

     

     

     

     

     

     

     

     

    Costs, expenses and other

     

     

     

     

     

     

     

    Cost of products sold (A)

     

     

    5,380

     

     

    4,687

     

    Cost of services sold (A)

     

     

    1,230

     

     

    1,171

     

     

     

     

     

     

     

     

    6,610

     

     

    5,858

     

    Selling, general and administrative expenses (A)

     

     

    1,254

     

     

    1,111

     

    Other (income) expense

     

     

    (29

    )

     

    (2

    )

    Interest and other financial charges

     

     

    99

     

     

    107

     

     

     

     

     

     

     

     

    7,934

     

     

    7,074

     

     

     

     

     

     

     

     

     

     

     

     

     

    Income before taxes

     

     

    975

     

     

    702

     

    Tax expense

     

     

    267

     

     

    206

     

     

     

     

     

    Net income

     

     

    708

     

     

    496

     

    Less: Net income attributable to the noncontrolling interest

     

     

    3

     

     

    7

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net income attributable to Honeywell

     

    $

    705

     

    $

    489

     

     

     

     

     

     

     

     

     

     

     

     

     

    Earnings per share of common stock - basic

     

    $

    0.90

     

    $

    0.63

     

     

     

     

     

     

     

     

     

     

     

     

     

    Earnings per share of common stock - assuming dilution

     

    $

    0.88

     

    $

    0.63

     

     

     

     

     

     

     

     

     

     

     

     

     

    Weighted average number of shares outstanding-basic

     

     

    785.5

     

     

    765.7

     

     

     

     

     

     

     

     

     

     

     

     

     

    Weighted average number of shares outstanding - assuming dilution

     

     

    797.7

     

     

    771.7

     

     

     

     

     

    (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.

    Q1'11 Results - 6

    Honeywell International Inc.
    Segment Data (Unaudited)
    (Dollars in millions)

     

     

     

     

     

     

     

     

     

     

    Three Months Ended
    March 31,

     

    Net Sales

     

    2011

     

    2010

     

     

     

     

     

     

     

     

     

     

    Aerospace

     

    $

    2,696

     

    $

    2,506

     

     

     

     

     

     

     

     

     

    Automation and Control Solutions

     

     

    3,656

     

     

    3,124

     

     

     

     

     

     

     

     

     

    Specialty Materials

     

     

    1,355

     

     

    1,139

     

     

     

     

     

     

     

     

     

    Transportation Systems

     

     

    1,202

     

     

    1,007

     

     

     

     

     

     

     

     

     

    Corporate

     

     

    —

     

     

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total

     

    $

    8,909

     

    $

    7,776

     

     

     

     

     

    Reconciliation of Segment Profit to Income Before Taxes

     

     

     

     

     

     

     

     

     

     

    Three Months Ended
    March 31,

     

     

     

     

    Segment Profit

     

    2011

     

    2010

     

     

     

     

     

     

     

     

     

     

     

     

    Aerospace

     

    $

    467

     

    $

    413

     

     

     

     

     

     

     

     

     

    Automation and Control Solutions

     

     

    459

     

     

    386

     

     

     

     

     

     

     

     

     

    Specialty Materials

     

     

    284

     

     

    170

     

     

     

     

     

     

     

     

     

    Transportation Systems

     

     

    144

     

     

    96

     

     

     

     

     

     

     

     

     

    Corporate

     

     

    (64

    )

     

    (29

    )

     

     

     

     

     

     

     

     

     

     

     

     

    Total Segment Profit

     

     

    1,290

     

     

    1,036

     

     

     

     

     

     

     

     

     

    Other income/(expense) (A)

     

     

    20

     

     

    (2

    )

    Interest and other financial charges

     

     

    (99

    )

     

    (107

    )

    Stock compensation expense (B)

     

     

    (49

    )

     

    (50

    )

    Pension expense ongoing (B)

     

     

    (36

    )

     

    (51

    )

    Other postretirement income/(expense) (B)

     

     

    (18

    )

     

    18

     

    Repositioning and other charges (B)

     

     

    (133

    )

     

    (142

    )

     

     

     

     

     

     

     

     

     

     

     

     

    Income before taxes

     

    $

    975

     

    $

    702

     

     

     

     

     

     

     

    (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.

    Q1'11 Results - 7

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

     

     

     

     

     

     

     

     

     

     

    March 31,
    2011

     

    December 31,
    2010

     

     

     

     

     

     

     

     

     

     

     

     

     

    ASSETS

     

     

     

     

     

     

     

    Current assets:

     

     

     

     

     

     

     

    Cash and cash equivalents

     

    $

    3,076

     

    $

    2,650

     

    Accounts, notes and other receivables

     

     

    7,201

     

     

    7,068

     

    Inventories

     

     

    4,290

     

     

    3,958

     

    Deferred income taxes

     

     

    882

     

     

    877

     

    Investments and other current assets

     

     

    582

     

     

    458

     

     

     

     

     

    Total current assets

     

     

    16,031

     

     

    15,011

     

     

     

     

     

     

     

     

     

    Investments and long-term receivables

     

     

    476

     

     

    616

     

    Property, plant and equipment - net

     

     

    4,832

     

     

    4,840

     

    Goodwill

     

     

    11,805

     

     

    11,597

     

    Other intangible assets - net

     

     

    2,456

     

     

    2,574

     

    Insurance recoveries for asbestos related liabilities

     

     

    825

     

     

    825

     

    Deferred income taxes

     

     

    1,232

     

     

    1,218

     

    Other assets

     

     

    1,245

     

     

    1,153

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total assets

     

    $

    38,902

     

    $

    37,834

     

     

     

     

     

     

     

     

     

     

     

     

     

    LIABILITIES AND SHAREOWNERS’ EQUITY

     

     

     

     

     

     

     

    Current liabilities:

     

     

     

     

     

     

     

    Accounts payable

     

    $

    4,308

     

    $

    4,344

     

    Short-term borrowings

     

     

    59

     

     

    67

     

    Commercial paper

     

     

    300

     

     

    299

     

    Current maturities of long-term debt

     

     

    516

     

     

    523

     

    Accrued liabilities

     

     

    6,587

     

     

    6,484

     

     

     

     

     

    Total current liabilities

     

     

    11,770

     

     

    11,717

     

     

     

     

     

     

     

     

     

    Long-term debt

     

     

    6,763

     

     

    5,755

     

    Deferred income taxes

     

     

    671

     

     

    636

     

    Postretirement benefit obligations other than pensions

     

     

    1,461

     

     

    1,477

     

    Asbestos related liabilities

     

     

    1,556

     

     

    1,557

     

    Other liabilities

     

     

    4,871

     

     

    5,905

     

    Shareowners’ equity

     

     

    11,810

     

     

    10,787

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total liabilities and shareowners’ equity

     

    $

    38,902

     

    $

    37,834

     

     

     

     

     

    Q1'11 Results - 8

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

     

     

     

     

     

     

     

     

     

     

    Three Months Ended
    March 31,

     

     

     

     

     

     

    2011

     

    2010

     

     

     

     

     

    Cash flows from operating activities:

     

     

     

     

     

     

     

    Net income attributable to Honeywell

     

    $

    705

     

    $

    489

     

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

     

     

     

     

     

     

     

    Depreciation and amortization

     

     

    242

     

     

    233

     

    Gain on sale of non-strategic businesses and assets

     

     

    (44

    )

     

    —

     

    Repositioning and other charges

     

     

    133

     

     

    142

     

    Net payments for repositioning and other charges

     

     

    (109

    )

     

    (119

    )

    Pension and other postretirement expense

     

     

    54

     

     

    33

     

    Pension and other postretirement benefit payments

     

     

    (1,037

    )

     

    (36

    )

    Stock compensation expense

     

     

    49

     

     

    50

     

    Deferred income taxes

     

     

    68

     

     

    72

     

    Excess tax benefits from share based payment arrangements

     

     

    (13

    )

     

    (2

    )

    Other

     

     

    95

     

     

    (96

    )

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

     

     

     

     

     

     

     

    Accounts, notes and other receivables

     

     

    (152

    )

     

    90

     

    Inventories

     

     

    (342

    )

     

    (122

    )

    Other current assets

     

     

    (22

    )

     

    (28

    )

    Accounts payable

     

     

    (19

    )

     

    (80

    )

    Accrued liabilities

     

     

    (51

    )

     

    117

     

     

     

     

     

    Net cash (used for)/provided by operating activities

     

     

    (443

    )

     

    743

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash flows from investing activities:

     

     

     

     

     

     

     

    Expenditures for property, plant and equipment

     

     

    (124

    )

     

    (70

    )

    Proceeds from disposals of property, plant and equipment

     

     

    1

     

     

    1

     

    Increase in investments

     

     

    (164

    )

     

    (296

    )

    Decrease in investments

     

     

    62

     

     

    —

     

    Cash paid for acquisitions, net of cash acquired

     

     

    (7

    )

     

    —

     

    Proceeds from sales of businesses, net of fees paid

     

     

    217

     

     

    —

     

    Other

     

     

    31

     

     

    (16

    )

     

     

     

     

    Net cash provided by/(used for) investing activities

     

     

    16

     

     

    (381

    )

     

     

     

     

     

     

     

     

     

     

     

     

    Cash flows from financing activities:

     

     

     

     

     

     

     

    Net increase in commercial paper

     

     

    1

     

     

    950

     

    Net decrease in short-term borrowings

     

     

    (9

    )

     

    (1

    )

    Proceeds from issuance of common stock

     

     

    101

     

     

    32

     

    Proceeds from issuance of long-term debt

     

     

    1,381

     

     

    —

     

    Payments of long-term debt

     

     

    (437

    )

     

    (1,001

    )

    Excess tax benefits from share based payment arrangements

     

     

    13

     

     

    2

     

    Cash dividends paid

     

     

    (264

    )

     

    (231

    )

     

     

     

     

    Net cash provided by/(used for) financing activities

     

     

    786

     

     

    (249

    )

     

     

     

     

     

     

     

     

     

     

     

     

    Effect of foreign exchange rate changes on cash and cash equivalents

     

     

    67

     

     

    (63

    )

     

     

     

     

    Net increase in cash and cash equivalents

     

     

    426

     

     

    50

     

    Cash and cash equivalents at beginning of period

     

     

    2,650

     

     

    2,801

     

     

     

     

     

    Cash and cash equivalents at end of period

     

     

    3,076

     

     

    2,851

     

     

     

     

     

    Q1'11 Results - 9

    Honeywell International Inc.
    Reconciliation of Cash Provided by Operating Activities to Free Cash Flow
    (Dollars in millions)

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended
    March 31,

     

     

     

     

     

     

     

     

     

     

    2011

     

    2010

     

    2011 Guidance

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash provided by operating activities

     

    $

    (443

    )

    $

    743

     

    $

    3,300-3,500

     

     

     

     

     

     

     

     

     

     

     

     

    Expenditures for property, plant and equipment

     

     

    (124

    )

     

    (70

    )

     

    ~ (800

    )

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Free cash flow

     

    $

    (567

    )

    $

    673

     

    $

    2,500-2,700

     

     

     

     

     

     

     

     

     

     

     

     

    U.S. pension contributions

     

     

    1,000

     

     

    —

     

     

    ~ 1,000

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Free cash flow, excluding U.S. pension contributions

     

    $

    433

     

    $

    673

     

    $

    3,500-3,700

     

     

     

     

     

     

    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, 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.

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    HONEYWELL INTERNATIONAL INC Reports