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7/18/2012 
Honeywell Second Quarter 2012 Sales Up 4% To $9.4 Billion; EPS Up 12% To $1.14 Per Share 

 

• 14% Earnings Growth From Continuing Operations Driven By Strong Sales Conversion
• Continued Robust Americas And Emerging Region Performance, Europe As Expected
• Strong Margin Expansion – Segment Margin Up 150 bps, Operating Income Margin Up 70 bps
• Raising 2012 Proforma EPS Guidance to $4.40 - $4.55, Up From $4.35 - $4.55

 

MORRIS TOWNSHIP, N.J., July 18, 2012 -- Honeywell (NYSE: HON) today announced its results for the second quarter of 2012:

 

Total Honeywell
($ Millions, except Earnings Per Share) 2Q 2011 2Q 2012 Change
Sales 9,086 9,435 4%
Segment Margin 14.30% 15.80% 150 bps
Operating Income Margin 12.90% 13.60% 70 bps
Earnings Per Share from Continuing Operations $1.00 $1.14 14%
Earnings Per Share $1.02 $1.14 12%
Cash Flow from Operations 1,138 973 (14%)
Free Cash Flow* 995 1,040 5%

* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions

 

“Honeywell had another terrific quarter, capping off a very strong first half of 2012,”said Honeywell Chairman and CEO Dave Cote. “Despite a more challenging macro environment, particularly in Europe, Honeywell delivered strong sales conversion and double-digit earnings growth in the second quarter and executed well against our growth and productivity playbook. Our short cycle businesses, such as ESS and Advanced Materials, were strong in the U.S., and our long cycle businesses continued to grow globally, benefitting from favorable macro trends and strong backlog. As such, we’re raising the low end of our 2012 guidance by $0.05, with the expectation of continued margin expansion in the second half driving our strong full-year outlook. Given the increasingly uncertain global economic environment, we’ll remain flexible, but also continue to invest in sustainable growth through seed planting in new products and technologies, geographic expansion, and our key process initiatives, all supporting our Great Positions in Good Industries throughout the world.”

The company is updating its full-year 2012 sales and EPS guidance and now expects:

 

Full-Year Guidance

2012 2012 Change
Prior Guidance Revised Guidance vs. 2011  
Sales  $38.0 - 38.6B   $37.8 - 38.4B  3% - 5%
Segment Margin 15.3 - 15.5% 15.4 - 15.6% 70 - 90 bps
Operating Income Margin1 13.2 - 13.5% 13.4 - 13.6% 140 - 160 bps
Earnings Per Share from Continuing Operations2 $4.35 - $4.55 $4.40 - $4.55 10% - 14%
Earnings Per Share1 $4.35 - $4.55 $4.40 - $4.55 9% - 12%
Free Cash Flow3  ~$3.5B   ~$3.5B  ~100% conversion
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

 

Second Quarter Segment Performance

 

Aerospace
($ Millions) 2Q 2011 2Q 2012 % Change
Sales 2,810 3,027 8%
Segment Profit 451 562 25%
Segment Margin 16.00% 18.60% 260 bps

 

 • Sales were up 8% compared with the second quarter of 2011. Organic growth was 7%, or 4% organic excluding the absence of prior year payments to Business and General Aviation customers to offset preproduction costs (OE payments). Aerospace growth was driven by an 18% increase in our Commercial end markets, partially offset by lower Defense and Space revenue. Commercial original equipment (OE) sales were up 38%, or 16% excluding the impact of the EMS acquisition and lower OE payments year over year. Commercial aftermarket sales were up 9% with growth in both spares and repair and overhaul sales.


• Segment profit was up 25%, and segment margins expanded 260 bps to 18.6%, primarily due to the absence of prior year OE payments, higher commercial volumes, commercial excellence and productivity net of inflation, partially offset by higher investments in research and development to support future growth.

 

Automation and Control Solutions

($ Millions) 2Q 2011 2Q 2012 % Change
Sales 3,880 3,962 2%
Segment Profit 496 525 6%
Segment Margin 12.80% 13.30% 50 bps

 

• Sales were up 2%, 4% organic, compared with the second quarter of 2011 driven by volume growth and the favorable impact of acquisitions, partially offset by foreign exchange headwinds. Process Solutions, Building Solutions and Distribution, and Energy, Safety and Security all grew on an organic basis. The ACS long cycle businesses saw continued good global growth, while the short cycle businesses had good growth in the Americas, partially offset by continued declines in Europe. ACS continues to benefit from new product introductions, geographic expansion, and favorable macro trends such as safety, security, and energy efficiency.

 

• Segment profit was up 6% and segment margins were up 50 bps to 13.3% driven by higher productivity benefits net of inflation.

 

Performance Materials and Technologies
($ Millions) 2Q 2011 2Q 2012 % Change
Sales 1,406 1,546 10%
Segment Profit 281 350 25%
Segment Margin 20.00% 22.60% 260 bps

 

• Sales were up 10%, 4% organic, compared with the second quarter of 2011, resulting from strong UOP licensing, equipment, and service sales, the phenol plant acquisition, and strong volumes in Resins & Chemicals (R&C), offsetting decreased UOP catalyst sales primarily due to timing of deliveries, and the impact of more challenging global end market conditions for Fluorine Products.

 

• Segment profit was up 25% and segment margins increased 260 bps to 22.6%, a record for PMT, primarily due to higher UOP licensing and service revenues, R&C volumes, and productivity, partially offset by more challenging end market conditions.

 

Transportation Systems
($ Millions) 2Q 2011 2Q 2012 % Change
Sales 990 900 (9%)
Segment Profit 129 114 (12%)
Segment Margin 13.00% 12.70% (30) bps

 

• Sales were down (9%), (1%) organic, compared with the second quarter of 2011, due to the unfavorable impact of foreign exchange and significantly lower European light vehicle production volume and aftermarket sales, partially offset by new platform launches, including higher turbo gas penetration in North America.


• Segment profit was down (12%) and segment margins decreased (30) bps to 12.7% primarily driven by inflation and the impact of 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 9:00 a.m. EDT. To participate, please dial (631) 291-4830 a few minutes before the 9:00 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 12:00 p.m. EDT, July 18, until midnight, July 25, by dialing (404) 537-3406. The access code is 77820901.

 

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 performance 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.

 

Contacts:
Media

Robert C. Ferris

(973) 455-3388

rob.ferris@honeywell.com

 

Investor Relations

Elena Doom
(973) 455-2222
elena.doom@honeywell.com

Q2 2012 Press Release Financials (vF).xlsx

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