27 Jan 2012 13:41
Honeywell Reports Full-Year Sales Up 13% to $36.5 Billion; Proforma Earnings Up
35% to $4.05 Per Share; And Reported Earnings Per Share of $2.61
MORRIS TOWNSHIP, N.J., Jan. 27, 2012 -- Honeywell today announced fourth quarter and full-year 2011 results as follows:
* 4Q11 sales were up 8% to $9.5 billion versus $8.7 billion in 4Q10
+ 7% organic growth reflects continued strength in most end markets and
the contribution of new product launches and geographic expansion
* 4Q11 proforma earnings (excluding the impact of pension mark-to-market
adjustments) of $1.05 per share, up 21% over $0.87 in 4Q10; Reported 4Q11
earnings reflected a loss of ($0.40) per share versus earnings of $0.47 per
share in the prior year
+ Pension mark-to-market adjustment of $1.45 per share calculated using
784.3 million weighted average shares outstanding assuming dilution
* 4Q11 cash flow from operations of $1.5 billion, includes $250 million cash
pension contribution in the quarter + 4Q11 free cash flow (cash flow from operations less capital expenditures) of $1.4 billion, prior to $250 million cash pension contribution
The company reported full-year 2011 results including:
* 2011 sales of $36.5 billion, up approximately 13% over 2010
+ 8% organic sales growth, again reflecting strong end markets,
successful new product launches, and continued expansion in high growth
regions
* 2011 proforma earnings (excluding the impact of pension mark-to-market
adjustments) of $4.05 per share, up 35% over $3.00 in 2010; Reported EPS of
$2.61 in 2011 versus $2.59 in the prior year
+ Pension mark-to-market adjustment of $1.44 per share calculated using
791.6 million weighted average shares outstanding assuming dilution
* 2011 cash flow from operations of $2.8 billion, includes $1.7 billion cash
pension contribution in the year + 2011 free cash flow of approximately $3.7 billion, prior to $1.7 billion cash pension contribution
"Honeywell had a terrific 2011," said Honeywell Chairman and CEO Dave Cote. "Weexecuted across the portfolio with record organic sales growth and segmentmargins. Our 2011 performance reflects the operational and financialdisciplines that underpin the transformation that has taken place at thecompany over the last 10 years. We deployed the Honeywell 5 Initiatives -Growth, Productivity, Cash, People, and our Enablers, and created a common OneHoneywell culture committed to continuous improvement. As a result, we built abetter set of businesses with Great Positions in Good Industries, a terrificperformance track record, a great leadership team with a truly global focus, avery full pipeline of new products and technologies, and our key processinitiatives that are gaining momentum. We've come a long way, and we feel evenbetter about our future.""While we expect a more challenging macro environment ahead in 2012, primarilydriven by softness in Europe impacting the short-cycle businesses, we'reconfident that Honeywell is well positioned to continue to outperform,"continued Cote. "Our long-cycle businesses are accelerating, with CommercialAerospace OE, UOP, Building Solutions & Distribution, and Process Solutions allhaving substantial backlog, in total just under $16 billion. While we expectgrowth to moderate in the first half of 2012, we're confident that we can drivestrong sales conversion leading to higher segment margins over the course ofthe year. The investments we've made, coupled with our execution track recordand disciplined playbook, will be key to our continued outperformance in 2012and beyond."
Fourth Quarter Segment Highlights
Aerospace
* Sales were up 8% compared with the fourth quarter of 2010, primarily due to
20% growth in Commercial original equipment and aftermarket volumes, partially offset by lower military sales and government services. * Segment profit was up 10% and segment margin increased 40 bps to 18.8%, primarily due to strong commercial aftermarket volume and productivity benefits net of inflation, partially offset by higher research and
development costs, and the dilution associated with the EMS acquisition.
* Honeywell secured more than $100 million in safety product wins including
contracts with Lufthansa Airlines to introduce Intuvue Radar and
SmartLanding airport and runway awareness technology on its full fleet of
A320 aircraft. Air China will introduce Honeywell's Intuvue Radar on its
B777-300ER in addition to Satellite Communication System, Traffic Collision
Avoidance System, and Voice and Data recorders. Additionally, Emirates
Airlines will forward fit and retrofit Honeywell Satellite Communication
Systems on its fleet of 777, A380, and A340 aircraft.
* Honeywell was awarded more than $150 million in Global Aftermarket support
contracts in the quarter. These include a Maintenance Cost Agreement with
Flydubai for the carrier's auxiliary power units (APUs) installed on its
fleet of Boeing 737-800 passenger aircraft, aftermarket support with Air
France to provide multiple avionics components across several aircraft
platforms, and wheels and brakes support with Ethiopian Airlines and Air
China.
* Honeywell has delivered the latest version of its industry leading HTF7000
family of jet engines, the HTF7500E, to Embraer for flight testing on
Embraer's family of Legacy 450 and 500 series jets. The HTF7500E is
Honeywell's newest fuel efficient engine that encompasses SABER (Single
Annular Combustor for Emissions Reduction) combustor technology reducing
jet engine emissions by 25%.
Automation and Control Solutions
* Sales were up 4%, compared with the fourth quarter of 2010, driven by
organic growth across the portfolio. The favorable impact of net
acquisitions offset negative foreign currency translation in the quarter.
ACS continues to benefit from new product introductions, emerging region
expansion, and favorable macro trends such as safety, security, and energy
efficiency.
* Segment profit was up 14% and segment margins increased 130 bps to 14.4%
driven by higher volumes, commercial excellence, and productivity benefits
net of inflation, and the absence of prior year dilution from acquisitions.
* Process Solutions was awarded an $88.6 million contract by the city of Los
Angeles to completely overhaul and modernize the technology controlling the
city's wastewater treatment system. The project will allow the city's
Bureau of Sanitation to replace the current control systems, some of which
have been in place for two decades and are outdated, with a city- and
network-wide integrated system, simplifying operations and reducing
environmental risks from the aging infrastructure.
* Life Safety acquired King's Safetywear, a leading international provider of
branded safety footwear and other personal protective equipment (PPE).
Headquartered in Singapore, King's will be integrated into the global
Safety Products business and further broadens Honeywell's head-to-toe PPE
portfolio, offering a range of respected protective footwear brands to key
markets including Southeast Asia, Australia, and other regions. Life
Safety also acquired Fire Sentry Corporation, a privately-held manufacturer
of innovative fire detection and control products for a broad range of
industrial markets. Fire Sentry's product portfolio consists of
fast-responding electro-optical flame detectors, portable test lamps, and
dedicated control panels that are used by customers in industrial settings
such as petrochemical, semiconductor, and other plants.
* Building Solutions announced a smart grid project that will help Scottish
and Southern Energy Power Distribution connect up to 30 commercial and
industrial buildings in the Thames Valley area west of London, which will
help alleviate the potential for future transmission and distribution
bottlenecks as the peak demand for energy grows. The project will help to
create a more robust, agile grid without the public disruption or expense
of major infrastructure upgrades. Honeywell will install automated demand
response (Auto DR) technology in the selected facilities.
Performance Materials and Technologies
* Sales were up 24% compared with the fourth quarter of 2010, resulting from
strong UOP project and catalyst sales, the phenol plant acquisition, and
favorable pricing and new product applications in Advanced Materials.
* Segment profit was up 30% and segment margins increased 80 bps to 15.6% due
to higher project sales and catalyst growth, favorable price over raws
spreads, and continued productivity benefits, partially offset by inflation
and the unfavorable margin impact from the phenol plant acquisition.
* UOP announced that its adsorbent ion exchange products are successfully
being used by Toshiba Corp. and Shaw Global Services for the cleanup of
radiation-contaminated water at the Fukushima Daiichi nuclear power plant
in Japan. The Simplified Active Water Retrieve and Recovery System (SARRY)
is utilizing UOP IONSIVâ„¢ Ion Exchangers to remove and reduce radioactive
materials in the contaminated wastewater caused by the earthquake and
tsunami in Japan in 2011.
* Resins and Chemicals signed an agreement with the J.R. Simplot Company, one
of the world's largest privately-held food and agribusiness companies, to
build a facility that will produce Honeywell's Sulf-N® 26, a
highly-effective fertilizer with all the agronomic benefits of traditional
nitrate-based fertilizers but with significantly lower explosive potential.
* UOP announced that its Uniflexâ„¢ process technology, designed to help
refiners get more high-value product from each barrel of crude oil, has
been selected by National Refinery Limited to maximize diesel and lubricant
production in Pakistan. Uniflexâ„¢ technology was developed to help refiners
processing the bottom of the barrel (the heaviest portions of a barrel of
crude also known as vacuum residue) into higher-value transportation fuels.
This technology can deliver 90% conversion of vacuum residue to
transportation fuels.Transportation Systems
* Sales were up 10% compared with the fourth quarter of 2010, due to higher
light vehicle turbo volumes overall, new launches, and higher diesel
penetration, partially offset by the unfavorable impact of foreign
exchange.
* Segment profit was up 14% and segment margins increased 40 bps to 12.4%,
primarily driven by higher volumes and increased productivity benefits,
partially offset by inflation.
* Honeywell Turbo Technologies launched approximately 25 new turbo
applications in the fourth quarter on gasoline and diesel powertrains for
both passenger and commercial vehicle applications around the world
bringing the 2011 total to nearly 100 applications and reflecting a record
number of deliveries in 2011 surpassing the previous record set in pre-recession 2007. * As global manufacturers continue to turn to engine downsizing and turbocharging to meet increasing regulatory requirements and satisfy
customers, Honeywell Turbo Technologies was awarded more than $500 million
in new platform wins in Q4 bringing its year-to-date total to nearly $2.8
billion in revenue realized throughout the life of the future programs
won. The wins in Q4 reflect new business from global customers including
Audi, Nissan, Fiat, Chrysler, and Caterpillar.
Honeywell will discuss its results during its investor conference call todaystarting at 9:30 a.m. EST. To participate, please dial (631) 291-4830 a fewminutes before the 9:30 a.m. EST start. Please mention to the operator that youare dialing in for Honeywell's investor conference call. The live webcast ofthe investor call will be available through the "Investor Relations" section ofthe company's Website (http://www.honeywell.com/investor). Investors can accessa replay of the conference call from 12:30 p.m. EST, January 27, untilmidnight, February 3, by dialing (404) 537-3406. The access code is 34690390.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; automotiveproducts; turbochargers; and performance materials. Based in Morris Township,N.J., Honeywell's shares are traded on the New York, London, and Chicago StockExchanges. For more news and information on Honeywell, 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. Honeywell International Inc. Consolidated Statement of Operations (Unaudited) (In millions except per share amounts) Three Months Twelve Months Ended Ended December 31, December 31, 2011 2010 2011 2010 Product sales $ 7,478 $ 6,922 $ 28,745 $ 25,242 Service sales 1,995 1,827 7,784 7,108 Net sales 9,473 8,749 36,529 32,350 Costs, expenses and other
Cost of products sold (A) 6,862 5,665 23,220
19,903
Cost of services sold (A) 1,573 1,252 5,336
4,818 8,435 6,917 28,556 24,721 Selling, general and administrative expenses (A) 1,616 1,289 5,399 4,618 Other (income) expense (12) (8) (84) (97) Interest and other financial charges 91 92 376 386 10,130 8,290 34,247 29,628
Income (loss) from continuing operations
before taxes (657) 459 2,282 2,722 Tax expense (benefit) (350) 115 417 765
Income (loss) from continuing operations
after taxes (307) 344 1,865 1,957
Income from discontinued operations after
taxes - 25 209 78 Net income (loss) (307) 369 2,074 2,035
Less: Net income attributable to the
noncontrolling interest 3 - 7 13
Net income (loss) attributable to
Honeywell $ (310) $ 369 $ 2,067 $ 2,022
Amounts attributable to Honeywell:
Income (loss)from continuing
operations less net income attributable to the noncontrolling interest (310) 344 1,858
1,944
Income from discontinued operations - 25 209 78 Net income (loss) attributable to Honeywell $ (310) $ 369 $ 2,067 $
2,022
Earnings per share of common stock - basic:
Income (loss) from continuing operations (0.40) 0.44 2.38 2.51 Income from discontinued operations - 0.03 0.27 0.10 Net income (loss) $ (0.40) $ 0.47 $ 2.65 $ 2.61
Earnings per share of common stock - assuming dilution: Income (loss) from continuing operations (0.40) 0.44 2.35 2.49 Income from discontinued operations - 0.03 0.26 0.10 Net income (loss) $ (0.40) $ 0.47 $ 2.61 $ 2.59
Weighted average number of shares
outstanding-basic 774.7 782.3 780.8 773.5
Weighted average number of shares
outstanding - assuming dilution 784.3 792.0 791.6 780.9 (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. (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 Twelve Months Ended Ended December 31, December 31, 2011(1) 2010(1) 2011(1) 2010(1)
Earnings per share of common stock -
assuming dilution $ (0.40) $ 0.47 $ 2.61 $ 2.59
Mark-to-market pension expense 1.45 0.40 1.44
0.41
Earnings per share of common stock - assuming dilution, excluding mark-to-market pension expense $ 1.05 $ 0.87 $ 4.05 $ 3.00
(1) EPS utilizes weighted average shares outstanding and the effective tax rate for the period. Mark-to-market uses a tax rate of 36.9% and 32.3% for 2011 and 2010 respectively. Honeywell International Inc. Segment Data (Unaudited) (Dollars in millions) Three Months Ended Twelve Months Ended December 31, December 31, Net Sales 2011 2010 2011 2010 Aerospace $ 3,047 $ 2,826 $ 11,475 $ 10,683 Automation and Control Solutions 4,051 3,914 15,535 13,749 Performance Materials and Technologies 1,430 1,153 5,659 4,726 Transportation Systems 944 856 3,859 3,192 Corporate 1 - 1 - Total $ 9,473 $ 8,749 $ 36,529 $ 32,350 Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes Three Months Ended Twelve Months Ended December 31, December 31, Segment Profit 2011 2010 2011 2010 Aerospace $ 573 $ 521 $ 2,023 $ 1,835 Automation and Control Solutions 584 512 2,083 1,770 Performance Materials and Technologies 223 171 1,042 749 Transportation Systems 117 103 485 353 Corporate (68) (66) (276) (222) Total Segment Profit 1,429 1,241 5,357 4,485 Other income/ (expense) (A) (3) (4) 33 69 Interest and other financial charges (91) (92) (376) (386) Stock compensation expense (B) (39) (41) (168) (163) Pension expense ongoing (B) (22) (39) (105) (185) Pension expense mark-to-market (B) (1,802) (471) (1,802) (471) Other postretirement income/(expense) (B) (23) (17) 86 (29) Repositioning and other charges (B) (106) (118) (743) (598) Income (loss) from continuing operations before taxes $ (657) $ 459 $ 2,282 $ 2,722
(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 Inc. Consolidated Balance Sheet (Unaudited) (Dollars in millions) December 31, December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 3,698 $ 2,650 Accounts, notes and other receivables 7,228 6,841 Inventories 4,264 3,822 Deferred income taxes 460 877 Investments and other current assets 484 455 Assets held for sale - 841 Total current assets 16,134 15,486
Investments and long-term receivables 494 616 Property, plant and equipment - net 4,804 4,724
Goodwill 11,858 11,275
Other intangible assets - net 2,477 2,537 Insurance recoveries for asbestos related
liabilities 709 825 Deferred income taxes 2,132 1,221 Other assets 1,200 1,150 Total assets $ 39,808 $ 37,834
LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Accounts payable $ 4,738 $ 4,199 Short-term borrowings 60 67 Commercial paper 599 299 Current maturities of long-term debt 15 523 Accrued liabilities 6,863 6,446 Liabilities related to assets held for sale - 190 Total current liabilities 12,275 11,724 Long-term debt 6,881 5,755 Deferred income taxes 676 636 Postretirement benefit obligations other
than pensions 1,417 1,477
Asbestos related liabilities 1,499 1,557 Other liabilities 6,158 5,898 Shareowners' equity 10,902 10,787 Total liabilities and shareowners' equity $ 39,808 $ 37,834 Honeywell International Inc. Consolidated Statement of Cash Flows (Unaudited) (Dollars in millions) Three Months Twelve Months Ended Ended December 31, December 31, 2011 2010 2011 2010
Cash flows from operating activities:
Net income (loss) attributable to Honeywell $ (310) $ 369 $ 2,067 $
2,022
Adjustments to reconcile net income (loss) attributable to Honeywell to net cash provided by operating activities: Depreciation and amortization 253 271 957 987 Gain on sale of non-strategic businesses and assets (9) - (362) - Repositioning and other charges 106 118 743 600 Net payments for repositioning and other charges (133) (210) (468) (439) Pension and other postretirement expense 1,847 528 1,823 689 Pension and other postretirement benefit payments (293) (651) (1,788) (787) Stock compensation expense 39 41 168 164 Deferred income taxes (528) 190 (331) 878 Excess tax benefits from share based payment arrangements (11) (8) (42) (13) Other 211 73 194 (24) Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables 117 (119) (316) (688) Inventories 130 56 (310) (300) Other current assets 78 20 25 (26) Accounts payable 162 263 527 592 Accrued liabilities (182) 104 (54) 548 Net cash provided by operating activities 1,477 1,045 2,833 4,203
Cash flows from investing activities:
Expenditures for property, plant and equipment (332) (300) (798) (651) Proceeds from disposals of property, plant and equipment 3 6 6 14 Increase in investments (58) (18) (380) (453) Decrease in investments 66 18 354 112 Cash paid for acquisitions, net of cash acquired (346) 15 (973) (1,303) Proceeds from sales of businesses, net of fees paid (14) 7 1,156 7 Other (43) (17) 24 5 Net cash used for investing activities (724) (289) (611) (2,269)
Cash flows from financing activities:
Net (decrease)/increase in commercial paper (101) (598) 300 1 Net increase/(decrease) in short-term borrowings 2 2 (2) 20 Payment of debt assumed with acquisitions (33) - (33) (326)
Proceeds from issuance of common stock 72 84 304 195
Proceeds from issuance of long-term debt 1 - 1,390 - Payments of long-term debt (500) (2) (939)
(1,006)
Excess tax benefits from share based payment arrangements 11 8 42 13 Repurchases of common stock (76) - (1,085) - Cash dividends paid (295) (240) (1,091) (944) Net cash used for financing activities (919) (746) (1,114) (2,047)
Effect of foreign exchange rate changes on cash and cash equivalents (21) - (60)
(38)
Net (decrease)/increase in cash and cash
equivalents (187) 10 1,048 (151)
Cash and cash equivalents at beginning of
period 3,885 2,640 2,650 2,801
Cash and cash equivalents at end of
period $ 3,698 $ 2,650 $ 3,698 $ 2,650 Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to U.S. Pension Cash Contributions (Unaudited) (Dollars in millions) Three Months Ended Twelve Months Ended December 31, December 31, 2011 2010 2011 2010 Cash provided by operating activities $ 1,477 $ 1,045 $ 2,833 $ 4,203 Expenditures for property, plant and equipment (332) (300) (798) (651) Free cash flow $ 1,145 $ 745 $ 2,035 $ 3,552 U.S. pension cash contributions 250 600 1,650 600
Free cash flow, prior to U.S.
pension cash contributions $ 1,395 $ 1,345 $ 3,685 $ 4,152
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. Contacts: Media Investor Relations Robert C. Ferris Elena Doom (973) 455-3388 (973) 455-2222 rob.ferris@honeywell.com elena.doom@honeywell.com SOURCE Honeywell
XLON