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Honeywell International: Honeywell Reports First Quarter 2016 Sales Of $9.5 Billion; EARNINGS UP 9% TO $1.53 PER SHARE

The following excerpt is from the company's SEC filing.

Core Organic Sales Growth 1%*; Reported Up 3% Due to Sales From Acquisitions

Segment Margin Improvement of 20 bps Excluding the Impact of M&A

Repurchased Over $1 Billion of Shares, Deployed ~$1 Billion to Acquisitions

Raising Low-End of 2016 EPS Guidance Range (Ex-Pension MTM) to $6.55 - $6.70, Up 7% - 10%

MORRIS PLAINS, N.J., April 22, 2016 -- Honeywell (

NYSE: HON

) today announced its results for the first quarter of 2016:

Total Honeywell

$ Millions, Except Earnings Per Share)

1Q 2015

1Q 2016

Change

(60) bps

Operating Income Margin

Earnings Per Share

Cash Flow from Operations

Free Cash Flow

Cash Flow from Operations Less Capital Expenditures

“Honeywell had a strong start to 2016, delivering on our sales and earnings commitments in the first quarter,” said Honeywell Chairman and CEO, Dave Cote. “Earnings per share increased 9% on continued execution across the portfolio. Core organic sales were up 1%, above the high-end of our guidance, driven by acceleration in Commercial Aftermarket and Transportation Systems within Aerospace, continued growth in our residential, commercial, and China businesses within ACS, and higher sales in Process Solutions and Fluorine Products in PMT. We announced and closed three acquisitions within ACS and acquired the remaining 30% interest in UOP Russell, which further strengthens our Great Positions in Good Industries. We also opportunistically repurchased over $1 billion of shares during the quarter, and funded approximately

*Throughout this press release, core organic sales growth refers to reported sales growth less the impacts from foreign currency translation, M&A and raw materials pass-through pricing in the Resins & Chemicals business of PMT. The raw materials pricing impact is excluded in instances where raw materials costs are passed through to customers, which drives fluctuations in selling prices not tied to volume growth. A reconciliation of core organic sales growth to reported sales growth is provided in the attached financial tables.

- MORE -

Q1’16 Results - 2

$40 million in new restructuring projects. As a result of the first quarter performance, we are raising the low-end of our full-year earnings guidance range to $6.55-$6.70, up 7%-10%, and remain committed to our full-year core organic sales growth and free cash flow outlook.”

“Looking ahead, our message and our planning will not change. We will support growth where there are opportunities to drive outperformance, be cautious in our sales planning, plan costs and spending conservatively, and continue to support the seed planting for new products, services, geographies, and process improvements that allow us to perform well now and in the future,” concluded Cote.

The company is updating its full-year 2016 guidance and now expects:

2016 Full-Year Guidance

Prior Guidance

Revised Guidance

Change vs. 2015

$39.9 - $40.9B

$40.3 - $40.9B

4% - 6%

Core Organic Growth

1% -2%

1% -2%

18.9% - 19.3%

10 - 50 bps

Operating Income Margin (Ex-Pension MTM)

18.0% - 18.4%

Earnings Per Share (Ex-Pension MTM)

$6.45 - $6.70

7% - 10%

$4.6 - $4.8B

5% - 10%

Cash Flow from Operations Less Capital Expenditures

Segment Margin ex-M&A Up 80 - 110 bps

Operating Margin ex-M&A Up 80 - 110 bps

First quarter 2016 results by business segment are provided below.

Segment Performance

($ Millions)

% Change

Segment Profit

70 bps

Sales for the first quarter were up 3% on a reported and core organic basis. Core organic sales growth was driven by higher repair and overhaul activities, new platform launches and higher global turbo penetration on passenger vehicles, and strong shipments to Business and General Aviation (BGA) and Air Transport and Regional (ATR) OEMs.

Segment profit was up 6% and segment margin expanded 70 bps to 21.5%, driven by productivity net of inflation, and commercial excellence, partially offset by continued investments for growth including higher OEM incentives, and the dilutive impact of acquisitions. Excluding the impact of acquisitions, segment margin expanded 90 bps.

Q1’16 Results - 3

Automation and Control Solutions

($ Millions)

(140) bps

Sales for the first quarter were up 4% on a core organic basis and up 13% reported primarily driven by sales from the Elster acquisition partially offset by the unfavorable impact of foreign currency. Energy, Safety & Security (ESS) sales were flat on a core organic basis (up 16% reported) driven by continued growth in Security and Fire (HSF) on a global basis and further penetration of High Growth Regions (HGR), particularly in China, offset by lower volume in Sensing & Productivity Solutions (S&PS). Building Solutions & Distribution (BSD) sales increased 11% on a core organic basis (up 5% reported) driven by continued strength in Americas Distribution and growth in project installation and services in Building Solutions (HBS).

Segment profit was up 3% and segment margin contracted (140) bps to 14.4% driven by the unfavorable impact of acquisitions. Excluding the impact of acquisitions, segment margin expanded 10 bps driven by productivity, net of inflation, benefits of previously funded restructuring projects, and commercial excellence, partially offset by the unfavorable impact of project installation, services, and distribution sales on margin, and continued investments for growth.

Performance Materials and Technologies

(90) bps

Sales for the first quarter were down (8%) on a core organic basis and down (9%) reported driven by the unfavorable impact of foreign currency and lower raw materials pass-through pricing in Resins & Chemicals, partially offset by the favorable impact of acquisitions. The decrease in core organic sales was primarily driven by lower UOP gas processing, catalyst, and equipment sales as anticipated, partially offset by higher projects and services sales in HPS and higher volume in Fluorine Products.

Segment profit was down (12%) and segment margins contracted (90) bps to 20.6%, driven by the unfavorable impact of lower UOP catalyst shipments and acquisitions, partially offset by the benefits of previously funded restructuring, commercial excellence, and the impact of raw materials pass-through pricing in Resins & Chemicals. Excluding the impact of acquisitions, segment margin contracted (70) bps.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate on the conference call, please dial (877) 879-6207 (domestic) or (719) 325-4942 (international) approximately ten minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are

Q1’16 Results - 4

dialing in for Honeywell’s first quarter 2016 earnings call or provide the conference code HON1Q16. The live webcast of the investor call as well as related presentation materials will be available through the “Investor Relations” section of the company’s Website (www.honeywell.com/investor). Investors can hear a replay of the conference call from 12:30 p.m. EDT, April 22, until 12:30 p.m. EDT, April 29, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 3464694.

Honeywell (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; turbochargers; and performance materials. For more news and information on Honeywell, please visit

www.honeywell.com/newsroom

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. 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.

Q1’16 Results - 5

Honeywell International Inc.

Consolidated Statement of Operations (Unaudited)

(Dollars in millions, except per share amounts)

Three Months Ended

March 31,

Product sales

Service sales

Net sales

Costs, expenses and other

Cost of products sold (A)

Cost of services sold (A)

Selling, general and administrative expenses (A)

Other (income) expense

Interest and other financial charges

Income before taxes

Tax expense

Net income

Less: Net income attributable to the noncontrolling interest

Net income attributable to Honeywell

Earnings per share of common stock - basic

Earnings per share of common stock - assuming dilution

Weighted average number of shares outstanding - basic

Weighted average number of shares outstanding - assuming dilution

(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement (income) expense, and stock compensation expense.

Q1’16 Results - 6

Segment Data (Unaudited)

(Dollars in millions)

Net Sales

Aerospace

Reconciliation of Segment Profit to Income Before Taxes

Corporate

Total segment profit

Other income (A)

Stock compensation expense (B)

Pension ongoing income (B)

Other postretirement income (expense) (B)

Repositioning and other charges (B)

Equity income (loss) of affiliated companies is included in segment profit.

Amounts included in cost of products and services sold and selling, general and administrative expenses.

Q1’16 Results - 7

Consolidated Balance Sheet (Unaudited)

December 31,

ASSETS

Current assets:

Cash and cash equivalents

Accounts, notes and other receivables

Inventories

Investments and other current assets

Total current assets

19,532

20,053

Investments and long-term receivables

Property, plant and equipment - net

Goodwill

16,708

15,895

Other intangible assets - net

Insurance recoveries for asbestos related liabilities

Deferred income taxes

Other assets

Total assets

50,365

49,316

LIABILITIES AND SHAREOWNERS’ EQUITY

Current liabilities:

Accounts payable

Commercial paper and other short-term borrowings

Current maturities of long-term debt

Accrued liabilities

Total current liabilities

15,659

18,371

Long-term debt

Postretirement benefit obligations other than pensions

Asbestos related liabilities

Other liabilities

Redeemable noncontrolling interest

Shareowners’ equity

18,372

18,418

Total liabilities, redeemable noncontrolling interest and shareowners’ equity

Q1’16 Results - 8

Consolidated Statement of Cash Flows (Unaudited)

Cash flows from operating activities:

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

Depreciation

Amortization

Net payments for repositioning and other charges

Pension and other postretirement income

Pension and other postretirement benefit payments

Excess tax benefits from share based payment arrangements

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

Other current assets

Net cash provided by operating activities

Cash flows from investing activities:

Expenditures for property, plant and equipment

Proceeds from disposals of property, plant and equipment

Increase in investments

(1,501

Decrease in investments

Cash paid for acquisitions, net of cash acquired

(1,056

Proceeds from sales of businesses, net of fees paid

Net cash used for investing activities

(1,196

Cash flows from financing activities:

Net (decrease) increase in commercial paper and other short-term borrowings

(2,450

Proceeds from issuance of common stock

Proceeds from issuance of long-term debt

Payments of long-term debt

Repurchases of common stock

(1,156

Cash dividends paid

Payments to purchase the noncontrolling interest

Net cash (used for) provided by financing activities

Effect of foreign exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Q1’16 Results - 9

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)

Twelve Months Ended

Cash provided by operating activities

(1,073

Free cash flow

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.

Q1’16 Results - 10

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins (Unaudited)

Stock compensation expense (A)

Repositioning and other (A, B)

Pension ongoing income (A)

Other postretirement income (expense) (A)

÷ Sales

Segment Profit Margin %

Segment Profit excluding mergers and acquisitions

÷ Sales excluding mergers and acquisitions

Segment Profit Margin excluding mergers and acquisitions %

Operating Income Margin %

(A) Included in cost of products and services sold and selling, general and administrative expenses.

(B) Includes repositioning, asbestos, environmental expenses and equity income adjustment.

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Q1’16 Results - 11

Calculation of Segment Profit Margin Excluding Mergers and Acqusitions (Unaudited)

Q1’16 Results - 12

Reconciliation of Core Organic Sales Growth (Unaudited)

Reported sales growth

Less: Foreign currency translation, acquisitions, divestitures and other

Less: Raw materials pricing in R&C

Throughout this press release, core organic sales growth refers to reported sales growth less the impacts from foreign currency translation, M&A and raw materials pass-through pricing in the Resins & Chemicals business of PMT. The raw materials pricing impact is excluded in instances where raw materials costs are passed through to customers, which drives fluctuations in selling prices not tied to volume growth.

We believe core organic sales growth is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Q1’16 Results - 13

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)

Pension mark-to-market adjustment (A)

Other postretirement expense (A)

Operating Income excluding pension mark-to-market adjustment

38,581

Operating Income Margin excluding pension mark-to-market adjustment %

Q1’16 Results - 14

Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Adjustment

EPS, excluding pension mark-to-market adjustment

(A) - Utilizes weighted average shares of 789.3 million. Mark-to-market uses a blended tax rate of 36.1%.

We believe EPS, excluding pension mark-to-market adjustment is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Additional definitive proxy soliciting materials and Rule 14(a)(12) material - April 21, 2016
Honeywell International Inc.'s Vice Chairman just picked up 25,990 shares - April 19, 2016
Honeywell International Inc.'s Vice Chairman just picked up 86,580 shares - April 19, 2016