20 Apr 2007 15:02
Honeywell Reports First Quarter Sales Up 11% to $8.0 Billion; Earnings Up 27% to 66 Cents Per Share; Free Cash Flow of $458 Million Company Increases 2007 Sales, EPS and Free Cash Flow Guidance
MORRIS TOWNSHIP, N.J., April 20 -- Honeywell today announced first quarter 2007 sales increased 11% to $8.0 billion from $7.2 billion in 2006, driven by 9% organic sales growth. Earnings were up 27% to $0.66 per share, versus $0.52 per share in the prior year. Cash flow from operations was $578 million versus $239 million in the first quarter of 2006 and free cash flow (cash flow from operations less capital expenditures) was $458 million, compared to $117 million last year. The company repurchased more than 25 million shares of stock in the quarter, reducing its average fully diluted share count to 802 million shares.
"Honeywell had a terrific start to 2007 with strong sales, double-digit earnings growth and higher free cash flow," said Honeywell Chairman and CEO Dave Cote. "Our great positions in good industries and global presence helped drive organic growth in each of our businesses. While we are maintaining a conservative view of global growth this year, we are increasing our full-year financial guidance to reflect strong first quarter performance and continued confidence in our businesses for the remainder of 2007."
Honeywell is increasing its previously stated 2007 sales guidance by $700 million to $33.5 billion, its earnings per share range by 15 cents to $3.00 - 3.10 and free cash flow range by $100 million to $2.6 - 2.8 billion (cash flow from operations of $3.4 - 3.6 billion).
First-Quarter Segment Highlights Aerospace -- Sales were up 8%, compared with the first quarter of 2006, driven by 9% growth in Commercial and 6% growth in Defense and Space sales. Commercial sales reflected growth of 10% in original equipment and 9% in aftermarket spares and services. -- Segment margins were 17.6%, compared with 16.7% a year ago, driven by volume growth, price and productivity gains, which more than offset the negative impact from inflation. -- Honeywell was selected by the U.S. Army to refurbish medium-sized tactical vehicles in Kuwait (five and eight ton tankers, cargo vehicles and wreckers) as part of the Theater Provided Equipment Refurbishment program. The program is expected to generate sales of up to $125 million over four years. -- Honeywell's Military Airborne Collision Avoidance System - Formation Rendezvous (MILACAS-FR) has been certified by the FAA for use on all military aircraft. The company is currently producing 180 MILACAS-FR systems for Boeing's entire C-17 fleet under a contract valued at $20 million. -- Honeywell's 131-9A Auxiliary Power Unit (APU) has been selected by Skybus Airlines for its fleet of 65 new Airbus A319 aircraft. The company will also provide an Integrated Service Solutions support program for the assets and APU maintenance throughout the term of the 12-year, $37 million agreement. Automation and Control Solutions -- Sales were up 18%, compared with the first quarter of 2006, driven by organic sales growth of 12% (9% in the Products and 18% in the Solutions businesses) and the net impact of acquisitions and divestitures of 6%. -- Segment margins were 9.8% compared with 9.3% a year ago, due to volume growth and productivity savings, which more than offset the negative impacts of inflation, sales mix and the dilutive impact of acquisitions. -- Honeywell Life Safety recorded over $4 million of contract wins in the quarter related to continued non-residential construction growth and business expansion in emerging regions. -- Building Solutions announced a $28 million contract by the U.S. General Services Administration (GSA) to upgrade building systems and reduce energy costs at the new Food and Drug Administration headquarters in Silver Spring, MD. The upgrades are expected to help the GSA cut energy costs by $3 million per year while improving comfort for building occupants. -- Process Solutions announced a $7 million contract to implement an Experion(R) Process Knowledge System at a new chemical plant operated by Kuwait Paraxylene Production Company to reduce installation and maintenance costs while boosting the plant's performance. Transportation Systems -- Sales were up 10%, compared with the first quarter of 2006, driven by increased light vehicle Turbo Technologies sales, the positive impact of foreign exchange and higher sales of aftermarket products, which were partially offset by an expected decline in Turbo Technologies commercial vehicle sales in North America. -- Segment margins were 13.0%, flat to last year, due to pricing actions and productivity savings, which were offset by inflation and increased spending for new product launches. -- Turbo Technologies won programs on four new passenger vehicle diesel platforms and one gasoline platform estimated to be worth approximately $300 million in annual revenues at full production. The programs represent platforms in Europe, Asia and the United States. The first of these platforms is expected to launch in 2008. -- Consumer Products Group launched Blink, an innovative new line of products designed for quick interior car clean-up. Initial acceptance by retailers has been positive and at full launch the Blink product line will be available in 30,000 outlets throughout the U.S., including Wal-Mart. Specialty Materials -- Sales were up 4% compared with the first quarter of 2006, driven by stronger than anticipated performance on UOP projects, which were partially offset by lower refrigerant sales. -- Segment margins were 16.0% compared with 14.1% a year ago, due to favorable sales mix, price and productivity actions, which more than offset the negative impact of inflation. -- Specialty Materials and DuPont signed an agreement to accelerate development and commercialization of next generation, low global warming refrigerants for the automotive air conditioning industry. -- UOP commissioned its 200th CCR Platforming(TM) process unit, a significant milestone for refining process technology. Located in the Hainan Province of China, the unit will enable Sinopec, the region's largest producer and supplier of oil and petrochemical products to supply clean fuel and chemical feedstocks throughout China.
Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EDT. To participate, please dial (706) 643-7681 a few minutes before the 8:00 a.m. 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 11:00 a.m. EDT, April 20, until midnight, April 27, by dialing (706) 645-9291. The access code is 3774642.
Honeywell International is a $33 billion 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. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit www.honeywell.com.
This release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management's assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. 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.
Contacts: Media Investor Relations Robert C. Ferris Nicholas Noviello (973) 455-3388 (973) 455-2222 rob.ferris@honeywell.com nicholas.noviello@honeywell.com Honeywell International Inc. Consolidated Statement of Operations (Unaudited) ------------------------------------------------ (In millions except per share amounts) Three Months Ended March 31, ---------------------------- 2007 2006 ------ ------ Product sales $6,450 $5,806 Service sales 1,591 1,435 ------ ------ Net sales 8,041 7,241 ------ ------ Costs, expenses and other Cost of products sold 5,010 (A) 4,566 (A) Cost of services sold 1,140 (A) 1,034 (A) ------ ------ 6,150 5,600 Selling, general and administrative expenses 1,089 (A) 1,002 (A) Other (income) expense (11) (25) Interest and other financial charges 97 89 ------ ------ 7,325 6,666 ------ ------ Income from continuing operations before taxes 716 575 Tax expense 190 144 ------ ------ Income from continuing operations 526 431 Income from discontinued operations, net of taxes - 5 ------ ------ Net income $526 $436 ====== ====== Earnings per share of common stock - basic: Income from continuing operations $0.66 $0.51 Income from discontinued operations - 0.01 ------ ------ Net income $0.66 $0.52 ====== ====== Earnings per share of common stock - assuming dilution: Income from continuing operations $0.66 $0.51 Income from discontinued operations - 0.01 ------ ------ Net income $0.66 $0.52 ====== ====== Weighted average number of shares outstanding-basic 795 830 ====== ====== Weighted average number of shares outstanding - assuming dilution 802 836 ====== ====== (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 option expense. Honeywell International Inc. Segment Data (Unaudited) ------------------------ (Dollars in millions) Net Sales Three Months Ended March 31, --------- ----------------------------- 2007 2006 ------ ------ Aerospace $2,840 $2,629 Automation and Control Solutions 2,801 2,365 Specialty Materials 1,199 1,152 Transportation Systems 1,201 1,095 Corporate - - ------ ------ Total $8,041 $7,241 ====== ====== Reconciliation of Segment Profit to Income From Continuing Operations --------------------------------------------------------------------- Before Taxes ------------ Segment Profit Three Months Ended March 31, -------------- ---------------------------- 2007 2006 ------ ------ Aerospace $500 $440 Automation and Control Solutions 274 221 Specialty Materials 192 162 Transportation Systems 156 142 Corporate (43) (45) ------ ------ Total Segment Profit 1,079 920 Other income / (expense) 11 25 Interest and other financial charges (97) (89) Stock option expense (A) (24) (25) Pension and other postretirement expense (A) (74) (126) Repositioning and other charges (A) (179) (130) ------ ------ Income from continuing operations before taxes $716 $575 ====== ====== (A) 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, 2007 2006 ASSETS ------- ------- Current assets: Cash and cash equivalents $1,378 $1,224 Accounts, notes and other receivables 5,873 5,740 Inventories 3,749 3,588 Deferred income taxes 1,197 1,215 Other current assets 433 470 Assets held for disposal 66 67 ------- ------- Total current assets 12,696 12,304 Investments and long-term receivables 405 382 Property, plant and equipment - net 4,710 4,797 Goodwill 8,400 8,403 Other intangible assets - net 1,223 1,247 Insurance recoveries for asbestos related liabilities 1,104 1,100 Deferred income taxes 1,002 1,075 Prepaid pension benefit cost 733 695 Other assets 940 938 ------- ------- Total assets $31,213 $30,941 ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Accounts payable $3,582 $3,518 Short-term borrowings 65 62 Commercial paper 997 669 Current maturities of long- term debt 227 423 Accrued liabilities 5,493 5,455 Liabilities related to assets held for disposal 10 8 ------- ------- Total current liabilities 10,374 10,135 Long-term debt 4,704 3,909 Deferred income taxes 367 352 Postretirement benefit obligations other than pensions 2,085 2,090 Asbestos related liabilities 1,249 1,262 Other liabilities 3,271 3,473 Shareowners' equity 9,163 9,720 ------- ------- Total liabilities and shareowners' equity $31,213 $30,941 ======= ======= Honeywell International Inc. Consolidated Statement of Cash Flows (Unaudited) ------------------------------------------------ (Dollars in millions) Three Months Ended March 31, ----------------------- 2007 2006 Cash flows from operating -------- -------- activities: Net income $526 $436 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 200 188 Repositioning and other charges 179 130 Net (payments) receipts for repositioning and other charges (132) 7 Pension and other postretirement expense 74 126 Pension and other postretirement benefit payments (45) (115) Stock option expense 24 25 Deferred income taxes 17 56 Excess tax benefits from share based payment arrangements (8) - Other 6 (57) Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables (136) (147) Inventories (161) (183) Other current assets 36 (11) Accounts payable 65 10 Accrued liabilities (67) (226) Net cash provided by operating -------- -------- activities 578 239 -------- -------- Cash flows from investing activities: Expenditures for property, plant and equipment (120) (122) Proceeds from disposals of property, plant and equipment 33 37 Cash paid for acquisitions, net of cash acquired (13) (56) Proceeds from sales of businesses, net of fees paid 9 475 Net cash (used for)/ provided by -------- -------- investing activities (91) 334 -------- -------- Cash flows from financing activities: Net increase/(decrease) in commercial paper 328 (637) Net increase/(decrease) in short-term borrowings 3 (180) Payment of debt assumed with acquisitions - (209) Proceeds from issuance of common stock 119 174 Proceeds from issuance of long-term debt 988 1,239 Payments of long-term debt (398) (237) Excess tax benefits from share based payment arrangements 8 - Repurchases of common stock (1,186) (325) Cash dividends paid on common stock (199) (189) Net cash (used for) financing -------- -------- activities (337) (364) -------- -------- Effect of foreign exchange rate changes on cash and cash equivalents 4 (1) -------- -------- Net increase in cash and cash equivalents 154 208 Cash and cash equivalents at beginning of period 1,224 1,234 Cash and cash equivalents at end -------- -------- of period $1,378 $1,442 ======== ======== Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow ------------------------------------------------------------------------- (Unaudited) (Dollars in millions) Three Months Ended March 31, ----------------------- 2007 2006 ------ ------ Cash provided by operating activities $578 $239 Expenditures for property, plant and equipment (120) (122) ------ ------ Free cash flow $458 $117 ====== ====== 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.
SOURCE Honeywell
04/20/2007
/CONTACT: Media: Robert C. Ferris, +1-973-455-3388, rob.ferris@honeywell.com; Investor Relations: Nicholas Noviello, +1-973-455- 2222, nicholas.noviello@honeywell.com, both of Honeywell/
/Web site: http://www.honeywell.com /
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HONEYWELL INTERNATIONAL INC