HON.L Regulatory News (HON)

Honeywell Reports First Quarter 2015 Sales Of $9.2 Billion; EPS Up 10% To $1.41 Per Share -- Core Organic Sales Growth 2%* -- Reported Sales Decline 5% Due To Foreign Currency And FM Divestiture -- Segment Margin Improvement Of 220 bps To 18.7% -- Continuing Investments For Growth, Repositioning -- Raising 2015 EPS Guidance Range To $6.00 - $6.15, Up 8%-11% MORRIS TOWNSHIP, N.J., April 17, 2015 -- Honeywell (NYSE: HON)today announced its results for the first quarter of 2015: Total Honeywell ($ Millions, except Earnings Per Share) 1Q 2014 1Q 2015 ChangeSales 9,679 9,213 (5%) Segment Margin 16.5% 18.7% 220 bpsOperating Income Margin 14.2% 17.6% 340 bps Earnings Per Share $1.28 $1.41 10%Cash Flow from Operations 688 4 (39%)Free Cash Flow (1) 496 256 (48%) (1) Cash Flow from Operations Less Capital Expenditures "Honeywell had a good start to 2015 delivering double-digit earnings growth atthe high end of our guidance range and experiencing improving momentum over thecourse of the quarter," said Honeywell Chairman and CEO Dave Cote. "Each of ourbusinesses grew on a core organic basis and generated significant marginimprovement in the first quarter as a result of new product introductions, HighGrowth Region performance, other commercial excellence and prudent costmanagement. Free cash flow was adversely impacted by the payment of the OEMincentives we accrued in the fourth quarter and the timing of tax payments, andwe remain on track to our full-year guidance. While we are off to a strongstart to 2015, we will continue to plan conservatively as the global economicenvironment continues to evolve, and in the first quarter we funded additionalrepositioning, which will continue to improve our cost position. We are raisingthe low end of our full-year EPS guidance range to $6.00-$6.15. We expect coreorganic sales for the full year to be up ~3%, while our reported sales areexpected to be down 2% - 3% due to the impact of foreign currency, thedivestiture of Friction Materials, and raw materials pricing in Resins &Chemicals. We're able to raise our full-year earnings guidance and maintain ourcash outlook while continuing to invest for the future in seed planting andadditional repositioning because of new products and technologies, furtherpenetration of High Growth Regions, conservative cost planning, and deploymentof our key process initiatives as part of HOS Gold. We're confident that ourbalanced portfolio mix of short- and long-cycle businesses is well-positionedto deliver on our 2015 commitments and our 2018 targets." The company is updating its full-year 2015 guidance and now expects: 2015 Full-Year Guidance Change Prior Guidance Revised Guidance vs. 2014Sales $40.5 - $41.1B $39.0 - $39.6B (2%) - (3%) Core Organic Growth ~5% ~3%Segment Margin 17.6% - 17.9% 18.3% - 18.6% 170 - 200 bps (2)Operating Income Margin (Ex-Pension MTM) 16.7% - 17.0% 17.4% - 17.7% 230 - 260 bps (3) Earnings Per Share (Ex-Pension MTM) $5.95 - $6.15 $6.00 - $6.15 8% - 11% Free Cash Flow (1) $4.2 - $4.3B $4.2 - $4.3B 8% - 10% 1. Cash Flow from Operations Less Capital Expenditures2. Segment Margin ex-4Q14 $184M OEM Incentives Up 130 - 160 bps3. Operating Margin ex-4Q14 $184M OEM Incentives Up 190 - 220 bps First Quarter Segment Performance Aerospace ($ Millions) 1Q 2014 1Q 2015 % ChangeSales 3,851 3,607 (6%)Segment Profit 703 752 7%Segment Margin 18.3% 20.8% 250 bps * Sales for the first quarter were up 1% on a core organic basis, and were down (6%) reported driven by the Friction Materials divestiture and the unfavorable impact of foreign exchange. Commercial OE sales were up 1% on a core organic basis driven by strong deliveries, partially offset by timing delays on certain business jet platforms. Commercial Aftermarket sales were up 1% on a core organic basis driven by continued growth in repair and overhaul activities, partially offset by lower spares sales. Defense & Space sales declined (1%) on a core organic basis driven by lower U.S. government deliveries, partially offset by double-digit growth in international defense. Transportation Systems sales were down (23%) reported, due to the Friction Materials divestiture and unfavorable impact of foreign exchange. On a core organic basis, TS sales were up 5% driven by higher gas turbo volumes globally. * Segment profit was up 7% and segment margins expanded 250 bps to 20.8%, driven by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture. Automation and Control Solutions ($ Millions) 1Q 2014 1Q 2015 % ChangeSales 3,362 3,264 (3%)Segment Profit 471 51 10%Segment Margin 14.0% 15.8% 180 bps * Sales for the first quarter were up 3% on a core organic basis and down (3%) reported driven by the unfavorable impact of foreign exchange. Energy, Safety, and Security (ESS) sales increased 3% on a core organic basis, driven most significantly by volume growth in Scanning & Mobility. Building Solutions & Distribution (BSD) sales increased 3% on a core organic basis driven by continued strength in Americas Distribution. In addition, we closed the acquisition of Datamax-O'Neil, a global manufacturer of fixed and mobile printers, in March. * Segment profit was up 10% and segment margins expanded 180 bps to 15.8% driven by productivity net of inflation and higher volume, partially offset by continued investments for growth. In addition, ESS continues to realize incremental synergies from the integration of Intermec into Scanning & Mobility. Performance Materials and Technologies ($ Millions) 1Q 2014 1Q 2015 % ChangeSales 2,466 2,342 (5%)Segment Profit 473 503 6%Segment Margin 19.2% 21.5% 230 bps * Sales were up 3% on a core organic basis, and were down (5%) reported driven by the unfavorable impact of foreign exchange and raw materials pricing in Resins & Chemicals. The increase in core organic sales was primarily driven by UOP gas processing growth and higher sales in Fluorine Products and Specialty Products, partially offset by lower volumes in Resins & Chemicals (resulting primarily from unplanned plant outages) and Process Solutions. * Segment profit was up 6% and segment margins increased 230 bps to 21.5%, driven by commercial excellence, productivity net of inflation, and higher volumes, partially offset by unplanned plant outages in Resins & Chemicals and continued investments for growth. Honeywell will discuss its results during its investor conference call todaystarting at 9:30 a.m. EDT. To participate, please dial (888) 857-6930(domestic) or (719) 457-2631 (international) approximately ten minutes beforethe 9:30 a.m. EDT start. Please mention to the operator that you are dialing infor Honeywell's first quarter 2015 earnings call or provide the conference codeHON1Q15. The live webcast of the investor call as well as related presentationmaterials will be available through the "Investor Relations" section of thecompany's Website (http://www.honeywell.com/investor). Investors can hear areplay of the conference call from 2:00 p.m. EDT, April 17, until 1:30 p.m.EDT, April 24, by dialing (888) 203-1112 (domestic) or (719) 457-0820(international). The access code is 2361738. Honeywell (www.honeywell.com) is a Fortune 100 diversified technology andmanufacturing leader, serving customers worldwide with aerospace products andservices; control technologies for buildings, homes, and industry;turbochargers; and performance materials. For more news and information onHoneywell, please visit www.honeywellnow.com. This release contains certain statements that may be deemed "forward-lookingstatements" within the meaning of Section 21E of the Securities Exchange Act of1934. All statements, other than statements of historical fact, that addressactivities, events or developments that we or our management intends, expects,projects, believes or anticipates will or may occur in the future areforward-looking statements. Such statements are based upon certain assumptionsand assessments made by our management in light of their experience and theirperception 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 anumber of material risks and uncertainties, including but not limited toeconomic, competitive, governmental, and technological factors affecting ouroperations, markets, products, services and prices. Such forward-lookingstatements are not guarantees of future performance, and actual results,developments and business decisions may differ from those envisaged by suchforward-looking statements. We identify the principal risks and uncertaintiesthat affect our performance in our Form 10-K and other filings with theSecurities and Exchange Commission. Contacts:Media Investor RelationsRobert C. Ferris Mark Macaluso(973) 455-3388 (973) 455-2222rob.ferris@honeywell.com mark.macaluso@honeywell.com \* Throughout this press release, core organic growth refers to reported growthless the impacts from foreign currency movement, M&A and raw materials pricingin the Resins & Chemicals business of PMT. The raw materials pricing impact isexcluded in instances where raw materials costs are passed through tocustomers, which drives fluctuations in selling prices not necessarily tied tovolume growth. A reconciliation of core organic growth to organic growth isprovided in the attached financial tables. Honeywell International Inc. Consolidated Statement of Operations (Unaudited) (Dollars in millions, except per share amounts) Three Months Ended March 31, 2015 2014 Product sales $ 7,364 $ 7,845Service sales 1,849 1,834Net sales 9,213 9,679 Costs, expenses and other Cost of products sold (A) 5,213 5,779 Cost of services sold (A) 1,149 1,188 6,362 6,967 Selling, general and administrative expenses (A) 1,230 1,339 Other (income) expense (20) (117) Interest and other financial charges 77 79 7,649 8,268 Income before taxes 1,564 1,411Tax expense 418 375 Net income 1,146 1,036 Less: Net income attributable to the noncontrolling interest 30 19 Net income attributable to Honeywell $ 1,116 $ 1,017 Earnings per share of common stock - basic $ 1.42 $ 1.30 Earnings per share of common stock - assuming dilution $ 1.41 $ 1.28 Weighted average number of shares outstanding- basic 783.8 784.9 Weighted average number of shares outstanding- assuming dilution 794.0 796.4 (A) Cost of products and services sold and selling, general and administrativeexpenses include amounts for repositioning and other charges, pension and otherpostretirement (income) expense, and stock compensation expense. Honeywell International Inc. Segment Data (Unaudited) (Dollars in millions) Three Months Ended March 31,Net Sales 2015 2014 Aerospace $ 3,607 $ 3,851 Automation and Control Solutions 3,264 3,362 Performance Materials and Technologies 2,342 2,466 Total $ 9,213 $ 9,679 Reconciliation of Segment Profit to Income Before Taxes Three Months Ended March 31,Segment Profit 2015 2014 Aerospace $ 752 $ 703 Automation and Control Solutions 516 471 Performance Materials and Technologies 503 473 Corporate (50) (51) Total segment profit 1,721 1,596 Other income (expense) (A) 12 111Interest and other financial charges (77) (79)Stock compensation expense (B) (52) (52)Pension ongoing income (B) 100 61Other postretirement expense (B) (9) (12)Repositioning and other charges (B) (131) (214) Income before taxes $ 1,564 $ 1,411 (A) Equity income (loss) of affiliated companies is included in segmentprofit.(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, 2015 2014ASSETSCurrent assets: Cash and cash equivalents $ 6,575 $ 6,959 Accounts, notes and other receivables 8,158 7,960 Inventories 4,507 4,405 Deferred income taxes 656 722 Investments and other current assets 2,376 2,145 Total current assets 22,272 22,191 Investments and long-term receivables 464 465Property, plant and equipment - net 5,300 5,383Goodwill 12,685 12,788Other intangible assets - net 2,190 2,208Insurance recoveries for asbestos related liabilities 445 454Deferred income taxes 329 404Other assets 1,672 1,558 Total assets $ 45,357 $ 45,451 LIABILITIES AND SHAREOWNERS' EQUITYCurrent liabilities: Accounts payable $ 5,263 $ 5,365 Short-term borrowings 47 51 Commercial paper 2,695 1,647 Current maturities of long-term debt 1,304 939 Accrued liabilities 6,123 6,771 Total current liabilities 15,432 14,773 Long-term debt 5,661 6,046Deferred income taxes 210 236Postretirement benefit obligations other than pensions 911 911Asbestos related liabilities 1,197 1,200Other liabilities 4,027 4,282Redeemable noncontrolling interest 242 219Shareowners' equity 17,677 17,784 Total liabilities, redeemable noncontrolling interest and shareowners' equity $ 45,357 $ 45,451 Honeywell International Inc. Consolidated Statement of Cash Flows (Unaudited) (Dollars in millions) Three Months Ended March 31, 2015 2014Cash flows from operating activities: Net income $ 1,146 $ 1,036 Less: Net income attributable to the noncontrolling interest 30 19 Net income attributable to Honeywell 1,116 1,017 Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities: Depreciation 163 168 Amortization 53 70 Gain on sale of available for sale investments - (105) Repositioning and other charges 131 214 Net payments for repositioning and other charges (100) (125) Pension and other postretirement income (91) (49) Pension and other postretirement benefit payments (9) (36) Stock compensation expense 52 52 Deferred income taxes 93 2 Excess tax benefits from share based payment arrangements (47) (30) Other (102) (24) Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables (170) (154) Inventories (86) (115) Other current assets 58 236 Accounts payable (112) (41) Accrued liabilities (528) (392)Net cash provided by operating activities 421 688 Cash flows from investing activities: Expenditures for property, plant and equipment (165) (192) Proceeds from disposals of property, plant and equipment 1 7 Increase in investments (1,501) (631) Decrease in investments 1,106 410 Cash paid for acquisitions, net of cash acquired (185) - Proceeds from sales of businesses, net of fees paid 2 - Other (178) 61Net cash used for investing activities (920) (345) Cash flows from financing activities: Net increase in commercial paper 1,048 1,100 Net increase (decrease) in short-term borrowings 4 (10) Proceeds from issuance of common stock 78 92 Proceeds from issuance of long-term debt 3 25 Payments of long-term debt (35) (602) Excess tax benefits from share based payment arrangements 47 30 Repurchases of common stock (363) (320) Cash dividends paid (415) (363)Net cash provided by (used for) financing activities 367 (48) Effect of foreign exchange rate changes on cash and cash equivalents (252) (45)Net (decrease) increase in cash and cash equivalents (384) 250Cash and cash equivalents at beginning of period 6,959 6,422Cash and cash equivalents at end of period $ 6,575 $ 6,672 Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited) (Dollars in millions) Three Months Ended March 31, 2015 2014 Cash provided by operating activities $ 421 $ 688Expenditures for property, plant and equipment (165) (192) Free cash flow $ 256 $ 496 We define free cash flow as cash provided by operating activities less cashexpenditures for property, plant and equipment. We believe that this metric is useful to investors and management as a measureof cash generated by business operations that will be used to repay scheduleddebt maturities and can be used to invest in future growth through new businessdevelopment activities or acquisitions, and to pay dividends, repurchase stock,or repay debt obligations prior to their maturities. This metric can also beused to evaluate our ability to generate cash flow from business operations andthe 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, 2015 2014 Segment Profit $ 1,721 $ 1,596 Stock compensation expense (A) (52) (52)Repositioning and other (A, B) (139) (220)Pension ongoing income (A) 100 61Other postretirement expense (A) (9) (12) Operating Income $ 1,621 $ 1,373 Segment Profit $ 1,721 $ 1,596÷ Sales $ 9,213 $ 9,679Segment Profit Margin % 18.7% 16.5% Operating Income $ 1,621 $ 1,373÷ Sales $ 9,213 $ 9,679Operating Income Margin % 17.6% 14.2% (A) Included in cost of products and services sold and selling, general andadministrative expenses.(B) Includes repositioning, asbestos, environmental expenses and equityincome adjustment. We believe these measures are useful to investors and management inunderstanding our ongoing operations and in analysis of ongoing operatingtrends. 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, 2014 Segment Profit $ 6,696 Stock compensation expense (A) (187)Repositioning and other (A, B) (634)Pension ongoing income (A) 254Pension mark-to-market adjustment (A) (249)Other postretirement expense (A) (49) Operating Income $ 5,831Pension mark-to-market adjustment (A) (249)Operating Income excluding pension mark-to-market adjustment $ 6,080 Segment Profit $ 6,696÷ Sales $ 40,306Segment Profit Margin % 16.6% Operating Income $ 5,831÷ Sales $ 40,306Operating Income Margin % 14.5% Operating Income excluding pension mark-to-market adjustment $ 6,080÷ Sales $ 40,306Operating Income Margin excluding pension mark-to-market adjustment % 15.1% (A) Included in cost of products and services sold and selling, general andadministrative expenses.(B) Includes repositioning, asbestos, environmental expenses and equityincome adjustment. We believe these measures are useful to investors and management inunderstanding our ongoing operations and in analysis of ongoing operatingtrends. Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited) (Dollars in millions) Twelve Months Ended December 31, 2014 Cash provided by operating activities $ 5,024 Expenditures for property, plant and equipment (1,094) Free cash flow $ 3,930 We define free cash flow as cash provided by operating activities less cashexpenditures for property, plant and equipment. We believe that this metric is useful to investors and management as a measureof cash generated by business operations that will be used to repay scheduleddebt maturities and can be used to invest in future growth through new businessdevelopment activities or acquisitions, and to pay dividends, repurchase stock,or repay debt obligations prior to their maturities. This metric can also beused to evaluate our ability to generate cash flow from business operations andthe impact that this cash flow has on our liquidity. Honeywell International Inc. Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Adjustment (Unaudited) Twelve Months Ended December 31, 2014 EPS $ 5.33 Pension mark-to-market adjustment 0.23 EPS, excluding pension mark-to-market adjustment $ 5.56 We believe EPS, excluding pension mark-to-market adjustment is a measure thatis useful to investors and management in understanding our ongoing operationsand in analysis of ongoing operating trends. EPS utilizes weighted average shares outstanding - assuming dilution of 795.2million. Mark-to-market uses a blended tax rate of 28.1%. Honeywell International Inc. Reconciliation of Core Organic Sales Growth Three Months Ended March 31, 2015 HoneywellOrganic sales growth 1%Raw Materials Pricing in R&C 1% Core organic sales growth 2% PMTOrganic sales growth (1%)Raw Materials Pricing in R&C 4% Core organic sales growth 3% Throughout this press release, Core organic sales growth refers to reportedgrowth less the impacts from foreign currency movement, M&A and raw materialspricing in the Resins & Chemicals business of PMT. The raw materials pricingimpact is excluded in instances where raw materials costs are passed through tocustomers, which drives fluctuations in selling prices not necessarily tied tovolume growth. We believe Core organic sales growth is a measure that is useful to investorsand management in understanding our ongoing operations and in analysis ofongoing operating trends. SOURCE Honeywell