• 9% EPS Growth Driven By Strong Operational Performance And Sales Conversion
• Continued Americas And High Growth Region Expansion, Europe As Expected
• Segment Margin Increase Of 110 Bps To 15.8%, Operating Margin Up 360 Bps
• Narrowing 2012 Proforma EPS Guidance To $4.45 - $4.50, From $4.40 - $4.55
MORRIS TOWNSHIP, N.J., October 19, 2012 -- Honeywell (NYSE: HON
) today announced its results for the third quarter of 2012:
|($ Millions, except Earnings Per Share)
|Operating Income Margin
|Earnings Per Share from Continuing Operations
|Earnings Per Share
|Cash Flow from Operations
|Free Cash Flow *
* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions
“Honeywell delivered 2% organic sales growth, strong sales conversion and higher earnings per share in the third quarter,” said Honeywell Chairman and CEO Dave Cote. “Our balanced mix of long- and short-cycle businesses, combined with growth in new products and continued expansion in high growth regions, offset European weakness, lower demand for products in some of our short-cycle businesses in China and the U.S., and foreign exchange headwinds in the quarter. Further, we maintained strong backlogs with new platform wins across a number of our businesses. We continue to be encouraged by the commercial aerospace outlook, increasing infrastructure spending, and oil and gas investments. These trends, combined with our great positions in good industries, leverage to other macro-trends like safety and security, energy efficiency, and clean energy generation are expected to drive our continued outperformance. Looking ahead to 2013, we are planning for a continued challenging macro environment, but expect to deliver good growth driven by new products, geographic expansion, and traction on key initiatives. Further, we will remain flexible and adhere to our disciplined focus on cost and productivity.”
Third quarter 2012 Earnings Per Share (EPS) reflects a 22.7% effective tax rate compared to 23.2% last year. Adjusting for a normalized tax rate of 26.5% in 2011 and 2012, EPS growth would be 8%. The tax rate favorability in the third quarter of this year, representing $0.06 of EPS relative to guidance, is expected to be offset in the fourth quarter, with an estimated full year 2012 effective tax rate of 26.5%.
The company is updating its full-year 2012 sales and EPS guidance and now expects:
|Full Year Guidance
||vs. 2011 |
|| $37.8 - $38.4B
|| $37.5 - $37.7B
||15.4 - 15.6%
||15.6 - 15.7%
||90 - 100 bps|
|Operating Income Margin1
||13.4 - 13.6%
||13.5 - 13.7%
||150 - 170 bps|
|Earnings Per Share from Continuing Operations2
||$4.40 - $4.55
||$4.45 - $4.50
||11% - 12%|
|Earnings Per Share1
||$4.40 - $4.55
||$4.45 - $4.50
||10% - 11%|
|Free Cash Flow3
|| ~$3.5 - $3.6B
|1. Proforma, V% / BPS Excludes Any Pension Mark to Market Adjustment
|2. Proforma (Cont. Operations); Excludes Any Pension Mark to Market Adjustment; V% Also Excludes 3Q11 Repo and Other Actions Funded by Gain on Sale of CPG Business (in Disc. Ops)|
3. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions
Third Quarter Segment Performance
• Sales were up 4% compared with the third quarter of 2011 driven by a 9% increase in our Commercial end markets, partially offset by a (1%) decline in Defense and Space. Commercial original equipment (OE) sales were up 14% driven by increased production rates at our major OE customers. Commercial aftermarket sales were up 6% with growth in both business jet spares and repair and overhaul events.
• Segment profit was up 9%, and segment margins expanded 90 bps to 19.1%, primarily due to higher commercial volumes and productivity net of inflation and increased investments to support future growth.
|Automation and Control Solutions
• Sales were approximately flat, up 2% on an organic basis, compared with the third quarter of 2011. Volume growth and the favorable impact of acquisitions were offset by foreign exchange headwinds. Process Solutions and Building Solutions and Distribution grew on an organic basis reflecting increased conversion of sales from backlog and increased sales volume in our Fire and Security Distribution business in the Americas. Energy, Safety, and Security was flat organically due to weak industrial end markets globally.
• Segment profit was up 5% and segment margins were up 60 bps to 14.4% driven by commercial excellence and productivity benefits net of inflation.
|Performance Materials and Technologies
• Sales were up 1%, reported and organic, compared with the third quarter of 2011, resulting from higher licensing and equipment sales in UOP and new products and applications in Specialty Products and Electronic Materials, partially offset by challenging global end market conditions in Fluorine Products and Resins and Chemicals.
• Segment profit was up 8% and segment margins increased 130 bps to 18.6%, primarily due to
higher sales at UOP and productivity net of inflation and continued growth investments, partially offset by challenging global end market conditions in Fluorine Products and Resins and Chemicals.
• Sales were down (10%), down (2%) organic, compared with the third quarter of 2011, as new platform launches and higher turbo gas penetration in the U.S. nearly offset the unfavorable impact of foreign exchange, and lower European light vehicle production volume and aftermarket sales.
• Segment profit was down (14%) and segment margins decreased (50) bps to 12.1% primarily driven by unfavorable foreign exchange, lower sales, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.
Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (877) 303-4382 (domestic) or (631) 291-4830 (international) a few minutes before the 9:30 a.m. EDT 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 conference call from 12:30 p.m. EDT, October 19, until midnight, October 26, dialing (855) 859-2056 (domestic) or (404) 537-3406 (international). The access code is 18261327.
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; 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. For more news and information on Honeywell, please visit www.honeywellnow.com.
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.
Robert C. Ferris
3Q 2012 Release - vF.pdf