HON.L Regulatory News (HON)

Honeywell Reports Second Quarter 2013 Sales Of $9.7 Billion; EPS Up 12% To $1.28 Per Share -- Strong Productivity Driving EPS Growth Of 12%, Up 8% Using ExpectedFull-Year Tax Rate -- Continued Proactive Funding Of Repositioning To Align With Global GrowthOutlook -- Increasing Proforma EPS Guidance To $4.85 - $4.95, From $4.80 - $4.95 MORRIS TOWNSHIP, N.J., July 19, 2013 -- Honeywell (NYSE: HON)today announced its results for the second quarter of 2013: Total Honeywell($ Millions, except Earnings Per Share) 2Q 2012 2Q 2013 ChangeSales 9,435 9,693 3% Segment Margin 15.8% 16.1% 30 bpsOperating Income Margin 13.6% 14.3% 70 bps Earnings Per Share $1.14 $1.28 12% Cash Flow from Operations 973 1,256 29%Free Cash Flow * 1,040 1,142 10% * Free Cash Flow (cash flow from operations less capital expenditures) prior toany NARCO Trust establishment payments and cash pension contributions "Honeywell had another good quarter and a strong first half of 2013," saidHoneywell Chairman and CEO Dave Cote. "Despite operating in a slow growth macroenvironment, we saw good organic growth in ACS's Energy, Safety and Securitybusiness and in Turbo Technologies, both of which continue to outgrow the keyend markets in which they compete. Our long-cycle businesses, includingCommercial Aerospace, Process Solutions, and UOP, also continue to performwell, benefitting from favorable macro-trends, winning new contracts, andmaintaining a strong backlog, which currently stands at $15.5B. We remainfocused on seed planting, funding cost savings initiatives across theportfolio, and remaining flexible given the continued uncertain global economicoutlook. And, as a result of our first half performance, we are raising thelow-end of our 2013 guidance by $0.05 with the expectation of modestly improvedorganic growth and continued margin expansion in the second half outlook." Second quarter 2013 earnings per share (EPS) reflect a 23.1% effective tax ratecompared to 26.0% last year. Using the 2012 actual / 2013 expected full-yeartax rate of 26.5% before any pension mark-to-market adjustment, EPS growthwould have been 8%. The company is updating its full-year 2013 guidance and now expects: Full-Year Guidance 2013 2013 Change Prior Guidance Revised Guidance vs. 2012Sales $38.8 - $39.3B $38.9 - $39.3B 3 - 4% Segment Margin 15.9 - 16.2% 16.0 - 16.2% 40 - 60 bpsOperating Income Margin(1) 14.3 - 14.6% 14.5 - 14.7% 90 - 110 bps Earnings Per Share(1) $4.80 - $4.95 $4.85 - $4.95 8 - 11% Free Cash Flow(2) ~$3.7B ~$3.7B ~ Flat 1. Proforma, V% / BPS exclude any pension mark-to-market adjustment2. Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO Trust establishment payments and cash pension contributions Second Quarter Segment Performance Aerospace($ Millions) 2Q 2012 2Q 2013 % ChangeSales 3,027 2,997 (1%)Segment Profit 562 583 4%Segment Margin 18.6% 19.5% 90 bps * Sales were down (1%) compared with the second quarter of 2012 driven by an (8%) decline in Defense & Space sales as a result of planned ramp downs and program delays, largely offset by Commercial growth. Commercial OE sales were up 8% in the quarter driven by continued strong OE build rates and favorable platform mix. Commercial Aftermarket growth of 3% was driven by improved flight hour growth and spares sales, partially offset by lower maintenance events. * Segment profit was up 4%, and segment margins expanded 90 bps to 19.5%, driven by commercial excellence and productivity net of inflation, partially offset by lower Defense & Space sales. Automation and Control Solutions($ Millions) 2Q 2012 2Q 2013 % ChangeSales 3,962 4,065 3%Segment Profit 525 585 11%Segment Margin 13.3% 14.4% 110 bps * Sales were up 3% on both a reported and organic basis compared with the second quarter of 2012. All three businesses experienced growth driven by new product introductions, stronger services and software uptake, and improved residential end market conditions, partially offset by non-residential end markets, which remain suppressed. * Segment profit was up 11% and segment margins were up 110 bps to 14.4% driven by commercial excellence and productivity net of inflation. Performance Materials and Technologies($ Millions) 2Q 2012 2Q 2013 % ChangeSales 1,546 1,684 9%Segment Profit 350 320 (9%)Segment Margin 22.6% 19.0% (360) bps * Sales were up 9% reported, approximately flat organically, compared with the second quarter of 2012, driven by higher UOP petrochemical catalyst shipments and equipment sales, and the favorable impact of the Thomas Russell acquisition, partially offset by lower production volume in Advanced Materials and the unfavorable impact of unseasonably cool weather on Fluorine Products refrigerant volume. * Segment profit was down (9%) and segment margins decreased (360) bps to 19.0%, primarily driven by the impact of lower UOP licensing sales compared to prior year, lower Advanced Materials volumes, investments for growth, inflation, and the dilutive impact of the Thomas Russell acquisition. Transportation Systems($ Millions) 2Q 2012 2Q 2013 % ChangeSales 900 947 5%Segment Profit 114 126 11%Segment Margin 12.7% 13.3% 60 bps * Sales were up 5% on both a reported and organic basis, compared with the second quarter of 2012, driven by higher turbo gas penetration in all regions, strong growth from new platform launches, and improving China commercial vehicle sales, partially offset by the impact of an approximately (1%) decline in European light vehicle production volumes. * Segment profit was up 11% and segment margins increased 60 bps to 13.3% primarily driven by strong productivity and volume leverage, partially offset by unfavorable price, and ongoing projects to drive operational improvement in the Friction Materials business. Honeywell will discuss its results during its investor conference call todaystarting at 9:30 a.m. EDT. To participate, please dial (800) 862-9098(domestic) or (785) 424-1051 (international) a few minutes before the 9:30 a.m.EDT start. Please mention to the operator that you are dialing in forHoneywell's second quarter 2013 investor conference call or provide theconference code HONQ213. The live webcast of the investor call as well asrelated presentation materials will be available through the "InvestorRelations" section of the company's Website (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 12:00 p.m. EDT,July 19, until 11:59 p.m. EDT, July 26, by dialing (800) 723-0498 (domestic) or(402) 220-2652 (international). 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. 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 visitwww.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 Elena Doom(973) 455-3388 (973) 455-2222rob.ferris@honeywell.com elena.doom@honeywell.com Honeywell International Inc.Consolidated Statement of Operations (Unaudited)(In millions, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 Product sales $ 7,744 $ 7,475 $ 15,218 $ 14,852Service sales 1,949 1,960 3,803 3,890Net sales 9,693 9,435 19,021 18,742 Costs, expenses and other Cost of products sold (A) 5,750 5,582 11,317 11,153 Cost of services sold (A) 1,277 1,340 2,493 2,649 7,027 6,922 13,810 13,802 Selling, general and administrative expenses (A) 1,281 1,226 2,510 2,457 Other (income) expense (24) (23) (52) (38) Interest and other financial charges 80 87 164 176 8,364 8,212 16,432 16,397 Income before taxes 1,329 1,223 2,589 2,345Tax expense 307 318 598 615 Net income 1,022 905 1,991 1,730 Less: Net income attributable to the noncontrolling interest 1 3 4 5 Net income attributable to Honeywell $ 1,021 $ 902 $ 1,987 $ 1,725 Earnings per share of common stock - basic $ 1.30 $ 1.15 $ 2.53 $ 2.21 Earnings per share of common stock - assuming dilution $ 1.28 $ 1.14 $ 2.49 $ 2.19 Weighted average number of shares outstanding-basic 787.6 781.4 786.7 779.3 Weighted average number of shares outstanding - assuming dilution 798.1 790.5 797.6 789.3 (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 Six Months Ended June 30, June 30,Net Sales 2013 2012 2013 2012 Aerospace $ 2,997 $ 3,027 $ 5,908 $ 5,977 Automation andControl 4,065 3,962 7,851 7,750Solutions PerformanceMaterials and 1,684 1,546 3,401 3,161Technologies Transportation 947 900 1,861 1,854Systems Total $ 9,693 $ 9,435 $ 19,021 $ 18,742 Reconciliation of Segment Profit to Income Before Taxes Three Months Ended Six Months Ended June 30, June 30,Segment Profit 2013 2012 2013 2012 Aerospace $ 583 $ 562 $ 1,134 $ 1,096 Automation andControlSolutions 585 525 1,108 1,016 PerformanceMaterials andTechnologies 320 350 694 669 TransportationSystems 126 114 237 234 Corporate (55) (58) (106) (107) Total segment profit 1,559 1,493 3,067 2,908 Other income (expense) (A) 13 9 32 14Interest and other financial charges (80) (87) (164) (176)Stock compensation expense (B) (37) (40) (91) (91)Pension ongoing income (expense) (B) 25 (9) 46 (22)Other postretirement income (expense) (B) 20 (9) (2) (32)Repositioning and other charges (B) (171) (134) (299) (256) Income before taxes $ 1,329 $ 1,223 $ 2,589 $ 2,345 (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) June 30, December 31, 2013 2012 ASSETSCurrent assets: Cash and cash equivalents $ 4,549 $ 4,634 Accounts, notes and other receivables 7,655 7,429 Inventories 4,295 4,235 Deferred income taxes 670 669 Investments and other current assets 680 631 Total current assets 17,849 17,598 Investments and long-term receivables 756 623Property, plant and equipment - net 4,997 5,001Goodwill 12,640 12,425Other intangible assets - net 2,393 2,449Insurance recoveries for asbestos related liabilities 658 663Deferred income taxes 1,701 1,889Other assets 1,172 1,205 Total assets $ 42,166 $ 41,853 LIABILITIES AND SHAREOWNERS' EQUITYCurrent liabilities: Accounts payable $ 4,718 $ 4,736 Short-term borrowings 91 76 Commercial paper 1,200 400 Current maturities of long-term debt 632 625 Accrued liabilities 6,839 7,208 Total current liabilities 13,480 13,045 Long-term debt 5,779 6,395Deferred income taxes 643 628Postretirement benefit obligations other than pensions 1,317 1,365Asbestos related liabilities 1,154 1,292Other liabilities 5,781 5,913Redeemable noncontrolling interest 154 150Shareowners' equity 13,858 13,065 Total liabilities, redeemable noncontrolling interest and shareowners' equity $ 42,166 $ 41,853 Honeywell International Inc.Consolidated Statement of Cash Flows (Unaudited)(Dollars in millions) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012Cash flows from operating activities: Net income attributable to Honeywell $ 1,021 $ 902 $ 1,987 $ 1,725 Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities: Depreciation and amortization 247 225 495 455 Loss on sale of non-strategic businesses and assets - 1 - 1 Repositioning and other charges 171 134 299 256 Net payments for repositioning and other charges (199) (122) (297) (226) Pension and other postretirement (income) expense (45) 18 (44) 54 Pension and other postretirement benefit payments (42) (308) (213) (597) Stock compensation expense 37 40 91 91 Deferred income taxes 158 57 185 189 Excess tax benefits from share based payment arrangements (57) (4) (81) (16) Other (101) (97) (134) (104) Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables (53) 20 (195) (20) Inventories 15 30 (36) (78) Other current assets (14) 13 4 (15) Accounts payable 265 12 (30) (191) Accrued liabilities (147) 52 (434) (355)Net cash provided by operating activities 1,256 973 1,597 1,169 Cash flows from investing activities: Expenditures for property, plant and equipment (196) (200) (344) (352) Proceeds from disposals of property, plant and equipment 6 - 6 1 Increase in investments (286) (161) (460) (245) Decrease in investments 210 66 376 158 Cash paid for acquisitions, net of cash acquired (338) (63) (460) (64) Proceeds from sales of businesses, net of fees paid - 18 - 18 Other 52 (81) 19 (59)Net cash used for investing activities (552) (421) (863) (543) Cash flows from financing activities: Net increase in commercial paper - - 800 349 Net increase in short-term borrowings 13 4 21 11 Proceeds from issuance of common stock 139 26 303 116 Proceeds from issuance of long-term debt 6 40 13 42 Payments of long-term debt (1) - (601) - Excess tax benefits from share based payment arrangements 57 4 81 16 Repurchases of common stock (463) - (602) - Cash dividends paid (343) (291) (665) (582)Net cash used for financing activities (592) (217) (650) (48) Effect of foreign exchange rate changes on cash and cash equivalents (102) (102) (169) (55)Net increase (decrease) in cash and cash equivalents 10 233 (85) 523Cash and cash equivalents at beginning of period 4,539 3,988 4,634 3,698Cash and cash equivalents at end of period $ 4,549 $ 4,221 $ 4,549 $ 4,221 Honeywell International Inc.Reconciliation of Cash Provided by Operating Activities to Free Cash Flow(Unaudited)(Dollars in millions) Three Months Ended June 30, 2013 2012Cash provided by operating activities $1,256 $973Expenditures for property, plant and equipment (196) (200) $1,060 $773Cash pension contributions 9 267NARCO Trust establishment payments 73 -Free cash flow $1,142 $1,040 We define free cash flow as cash provided by operating activities, less cashexpenditures for property, plant and equipment, cash pension contributionsand NARCO Trust establishment payments. We believe that this metric is useful to investors and management as a measureof cash generated by business operations that will be used to repayscheduled debt maturities and can be used to invest in future growth throughnew business development activities or acquisitions, and to pay dividends,repurchase stock, or repay debt obligations prior to their maturities. Thismetric can also be used to evaluate our ability to generate cash flow frombusiness operations and the impact that this cash flow has on our liquidity. Honeywell International Inc.Reconciliation of Segment Profit to Operating Income and Calculation of SegmentProfit and Operating Income(Dollars in millions) Three Months Ended June 30, 2013 2012 Segment Profit $ 1,559 $ 1,493 Stock compensation expense (A) (37) (40)Repositioning and other (A, B) (182) (148)Pension ongoing income (expense) (A) 25 (9)Other postretirement income (expense) (A) 20 (9) Operating Income $ 1,385 $ 1,287 Segment Profit $ 1,559 $ 1,493÷ Sales $ 9,693 $ 9,435Segment Profit Margin % 16.1% 15.8% Operating Income $ 1,385 $ 1,287÷ Sales $ 9,693 $ 9,435Operating Income Margin % 14.3% 13.6% (A) Included in cost of products and services sold and selling, general andadministrative expenses.(B) Includes repositioning, asbestos, environmental expenses and equity incomeadjustment. 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 PensionMark-to-Market Adjustment andSegment Profit and Operating Income Margins Excluding PensionMark-to-Market Adjustment (Unaudited)(Dollars in millions) Twelve Months Ended December 31, 2012 Segment Profit $ 5,879 Stock compensation expense (A) (170)Repositioning and other (A, B) (488)Pension ongoing expense (A) (36)Pension mark-to-market adjustment (A) (957)Other postretirement expense (A) (72) Operating Income $ 4,156Pension mark-to-market adjustment (A) $ (957)Operating Income excluding pension mark-to-marketadjustment $ 5,113 Segment Profit $ 5,879÷ Sales $ 37,665Segment Profit Margin % 15.6% Operating Income $ 4,156÷ Sales $ 37,665Operating Income Margin % 11.0% Operating Income excluding pension mark-to-market adjustment $ 5,113÷ Sales $ 37,665 Operating Income Margin excluding pension mark-to-market adjustment % 13.6% (A) Included in cost of products and services sold and selling, generaland administrative 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 PensionMark-to-Market AdjustmentSegment Profit and Operating Income Margins Excluding Pension Mark-to-MarketAdjustment(Dollars in billions) 2013 Guidance Segment Profit $6.2 - 6.4 Stock compensation expense (A) ~(0.2)Repositioning and other (A, B) ~(0.5)Pension ongoing income (A) ~0.1Pension mark-to-market adjustment (A) TBDOther postretirement expense (A) ~(0.0) Operating Income $5.6 - 5.8Pension mark-to-market adjustment (A) TBDOperating Income excluding pension mark-to-market adjustment $5.6 - 5.8 Segment Profit $6.2 - 6.4÷ Sales $38.9 - 39.3Segment Profit Margin % 16.0 - 16.2% Operating Income $5.6 - 5.8÷ Sales $38.9 - 39.3Operating Income Margin % 14.5 - 14.7% Operating Income excluding pension mark-to-market adjustment $5.6 - 5.8÷ Sales $38.9 - 39.3Operating Income Margin excluding pension mark-to-market 14.5 - 14.7%adjustment % (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 andmanagement in understanding our ongoing operations and inanalysis of ongoing operating trends. Honeywell International Inc.Reconciliation of Earnings Per Share to Earnings Per Share, Excluding PensionMark-to-Market Adjustment 2012 EPS $3.69 Pension mark-to-market adjustment 0.79 EPS, excluding pension mark-to-market adjustment $4.48 We believe EPS, excluding pension mark-to-market adjustment is a measurethat is useful to investors and management in understanding our ongoingoperations and in analysis of ongoing operating trends. EPS utilizes weighted average shares outstanding of 791.9 million.Mark-to-market uses a blended tax rate of 35.0%. SOURCE Honeywell