- Forecasts Fourth Quarter EPS up 7 - 11% Despite Tougher Economic Environment
- Narrows Full Year EPS Range to Increase of 19 - 20% Versus Prior Year
MORRIS TOWNSHIP, N.J. , Oct. 17 /PRNewswire-FirstCall/ -- Honeywell (NYSE: HON) today announced third quarter 2008 sales of
"We believe that demand for Honeywell's differentiated technologies and solutions, combined with our great positions in good industries, will help the company outperform despite tougher global economic conditions. We continue to benefit from our large installed base, emerging regions presence and balance of long- and short-cycle businesses," said Honeywell Chairman and Chief Executive Officer Dave Cote . "In a more difficult environment, our conservative planning, proactive cost management, and common systems, processes and productivity initiatives are helping the company to deliver sustained earnings growth."
Honeywell forecasts 2008 sales of approximately
Segment Highlights
Aerospace
-- Sales were flat compared with the third quarter of 2007 as a result of a net decrease from acquisitions and divestitures (primarily the sale of the Consumables Solutions business) and accruals for amounts due to Business and General Aviation original equipment manufacturers (OEMs) to partially offset pre-production costs associated with new aircraft platforms. Sales, excluding the impact of acquisitions and divestitures and accruals for amounts due to OEMs, were up 5%. -- Segment profit was down by 8% while segment margin decreased by 150 bps to 16.6% due to accruals for amounts due to Business and General Aviation OEMs, the Consumables Solutions divestiture, inflation, and higher spending to support new platform growth, partially offset by increased prices, productivity and volume growth. Excluding the impact of acquisitions and divestitures and accruals for amounts due to OEMs, segment profit was up 5% while segment margin increased 10 bps. -- Honeywell's HTF7250G, the newest member of the HTF7000 family of engines, was selected to power the new Gulfstream G250 business jet in an agreement valued at more than $4 billion over the life of the program, including aftermarket sales. Honeywell will also provide the G250's auxiliary power unit, Environmental and Cabin Pressurization Equipment, Aircraft Lighting, Select Attitude and Heading Reference System and Terrain Awareness and Warning System. -- Honeywell's IntuVue 3D Weather Radar was selected by Airbus for its A320s, A330s and A340s in a contract valued at $300 million over the life of the program, including aftermarket sales. IntuVue offers flight crews the ability to detect and avoid previously unforeseen turbulence, wind shears and dangerous storm activity. Deliveries are planned to start in the first quarter of 2010. -- Bendix King by Honeywell announced three new systems in the AV8OR(TM) Series for general aviation pilots: the AV8OR(TM) Handheld Multi-Function Display, and AV8OR(TM) Horizon 3D and AV8OR(TM) Vision 3D Cockpit Information Systems with synthetic vision.Automation and Control Solutions
-- Sales were up 15%, compared with the third quarter of 2007, driven by net growth from acquisitions and divestitures and the favorable impact of foreign exchange. -- Segment profit grew 15% while segment margin was flat at 11.7% due principally to productivity savings, improved pricing, acquisitions and the favorable impact of foreign exchange, partially offset by inflation. -- Buildings Solutions signed a $140 million contract with the province of Alberta, Canada to manage and maintain 18 new schools over the next 30 years. Climate control, fire and security systems are being installed in each school and will be linked together with Honeywell's Enterprise Buildings Integrator(TM) platform, which will help them meet Leadership in Energy and Environmental Design(R) (LEED) Silver certification requirements. The work is part of a public-private partnership (P3) for the construction and upkeep of schools in the province and the first P3 project for Honeywell in North America. -- Process Solutions announced that Hoku Materials, Inc., a wholly-owned subsidiary of Hoku Scientific, Inc., will use Honeywell's Experion Process Knowledge System, Safety Manager and batch management and gas detection technologies. Honeywell's products will help support the production of polysilicon, a key material needed for solar panels. -- Honeywell Life Safety announced a $3 million contract with the Mexico City Fire Department for head-to-toe personal protective equipment. In May, Honeywell acquired Norcross Safety Products, which manufactures protective clothing and helmets, boots, gloves, hoods and other protective garments.Transportation Systems
-- Sales were down 6% compared with the third quarter of 2007, due to lower volumes, partially offset by the favorable impact of foreign exchange. -- Segment profit was down 18% while segment margin decreased 130 bps to 8.8% primarily due to volume declines, inflation and investments in product development to support future turbo platforms, partially offset by increased productivity and the favorable impact of foreign exchange. -- Turbo Technologies was awarded contracts totaling more than $2 billion over the life of the programs in the third quarter. The programs awarded included both gasoline and diesel platforms using Honeywell's 2-stage technology and the latest Variable Nozzle Turbine (VNT) technology. The vehicle engines range from 1.2L passenger vehicle engines to large 7L commercial vehicle engines on models in Europe and the U.S. -- Honeywell's turbocharging technologies were featured on more than 50 of the vehicles introduced during the 2008 Paris Motor Show. The new turbocharged vehicles launched at the show include gasoline, diesel and hybrid powertrains from BMW, Citroen, Hyundai, Kia, Opel and Renault and reflect a trend toward engine downsizing to maximize fuel efficiency across the global automotive industry.Specialty Materials
-- Sales were up 9% compared with the third quarter of 2007, driven by increased pricing reflecting the pass-through of higher raw material costs and other pricing actions (including benefits from formula based pricing arrangements) most significantly in Resins and Chemicals and Fluorine Products, partially offset by lower UOP catalyst sales and unfavorable impact of hurricanes Gustav and Ike. -- Segment profit grew 1% while segment margin decreased by 100 bps to 12.0% due principally to increased Resins and Chemicals and Fluorine Products sales including the pass-through of higher raw material costs and higher income from joint ventures, substantially offset by lower UOP sales and the impacts of hurricanes Gustav and Ike. -- UOP joined Boeing and nine leading airlines to accelerate the development and commercialization of sustainable new aviation fuels. UOP also announced an agreement to form a joint venture with Ensyn Corp. to offer technology and equipment to convert second-generation biomass into oil for power generation, heating fuel and for conversion into transportation fuels. -- Resins and Chemicals developed a patented new technology to produce a highly-effective, safer ammonium nitrate-based fertilizer with significantly lower explosive potential. The new technology received SAFETY Act Designation from the U.S. Department of Homeland Security under the Support Anti-terrorism by Fostering Effective Technologies Act, which was created to provide incentives, including liability protections, for the development and deployment of anti-terrorism technologies.Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EDT . To participate, please dial (719) 325-4906 a few minutes before the 8:00 a.m. 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 webcast starting at 11:00 a.m. EDT , October 17 , until midnight EDT , October 24 , by dialing (719) 457-0820. The access code is 6396348.
Honeywell International is a
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 [email protected] Investor Relations Murray Grainger (973) 455-2222 [email protected] Honeywell International Inc. Consolidated Statement of Operations (Unaudited) ------------------------------------------------ (In millions except per share amounts) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 2008 2007 2008 2007 ---- ---- ---- ---- Product sales $7,375 $7,008 $22,363 $20,330 Service sales 1,900 1,727 5,481 4,984 ----- ----- ----- ----- Net sales 9,275 8,735 27,844 25,314 ----- ----- ------ ------ Costs, expenses and other Cost of products sold (A) 6,153 5,450 17,749 15,778 Cost of services sold (A) 1,323 1,196 3,722 3,509 ----- ----- ----- ----- 7,476 6,646 21,471 19,287 Selling, general and administrative expenses (A) 1,309 1,144 3,854 3,360 Other (income) expense (656) (16) (716) (47) Interest and other financial charges 112 124 342 331 --- --- --- --- 8,241 7,898 24,951 22,931 ----- ----- ------ ------ Income before taxes 1,034 837 2,893 2,383 Tax expense 315 219 808 628 --- --- --- --- Net income $719 $618 $2,085 $1,755 ==== ==== ====== ====== Earnings per share of common stock - basic $0.98 $0.83 $2.82 $2.28 ===== ===== ===== ===== Earnings per share of common stock - assuming dilution $0.97 $0.81 $2.79 $2.25 ===== ===== ===== ===== Weighted average number of shares outstanding-basic 731 748 739 770 === === === === Weighted average number of shares outstanding - assuming dilution 738 758 748 780 === === === === (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. Honeywell International Inc. Segment Data (Unaudited) ------------------------- (Dollars in millions) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- Net Sales 2008 2007 2008 2007 --------- ---- ---- ---- ---- Aerospace $3,110 $3,102 $9,421 $8,969 Automation and Control Solutions 3,688 3,196 10,484 9,036 Specialty Materials 1,321 1,211 4,180 3,626 Transportation Systems 1,156 1,226 3,759 3,683 Corporate - - - - ------ ------ ------ ------ Total $9,275 $8,735 $27,844 $25,314 ====== ====== ======= ======= Reconciliation of Segment Profit to Income Before Taxes ------------------------------------------------------- Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- Segment Profit 2008 2007 2008 2007 -------------- ---- ---- ---- ---- Aerospace $516 $560 $1,681 $1,583 Automation and Control Solutions 430 373 1,148 980 Specialty Materials 158 157 609 524 Transportation Systems 102 124 400 437 Corporate (48) (47) (153) (144) --- --- ---- ---- Total Segment Profit 1,158 1,167 3,685 3,380 Other income/ (expense) (A) 629 16 667 47 Interest and other financial charges (112) (124) (342) (331) Stock compensation expense (B), (C) (31) (13) (107) (54) Pension and other postretirement expense (B) (36) (105) (89) (251) Repositioning and other charges (B) (574) (104) (921) (408) ---- ---- ---- ---- Income before taxes $1,034 $837 $2,893 $2,383 ====== ==== ====== ====== (A) Equity income/(loss) of affiliated companies is included in Segment Profit, on a prospective basis, commencing January 1, 2008. Other income/(expense) as presented above includes equity income/(loss) of affiliated companies of $5 and $7 million for the three and nine months ended September 30, 2007, respectively. (B) Amounts included in cost of products and services sold and selling, general and administrative expenses. (C) Costs associated with restricted stock units ("RSU") are excluded from Segment Profit, on a prospective basis, commencing January 1, 2008. Stock compensation expense, including RSU expense, totaled $24 and $95 million for the three and nine months ended September 30, 2007, respectively. Stock option expense is included for all periods presented. Honeywell International Inc. Consolidated Balance Sheet (Unaudited) -------------------------------------- (Dollars in millions) September 30, December 31, 2008 2007 ---- ---- ASSETS Current assets: Cash and cash equivalents $2,292 $1,829 Accounts, notes and other receivables 6,950 6,387 Inventories 4,082 3,861 Deferred income taxes 1,294 1,241 Other current assets 378 367 --- --- Total current assets 14,996 13,685 Investments and long-term receivables 703 500 Property, plant and equipment - net 4,986 4,985 Goodwill 10,178 9,175 Other intangible assets - net 2,334 1,498 Insurance recoveries for asbestos related liabilities 960 1,086 Deferred income taxes 617 637 Prepaid pension benefit cost 1,361 1,256 Other assets 947 983 --- --- Total assets $37,082 $33,805 ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Accounts payable $4,149 $3,962 Short-term borrowings 86 64 Commercial paper 2,215 1,756 Current maturities of long-term debt 929 418 Accrued liabilities 6,231 5,741 ----- ----- Total current liabilities 13,610 11,941 Long-term debt 5,963 5,419 Deferred income taxes 1,253 734 Postretirement benefit obligations other than pensions 1,986 2,025 Asbestos related liabilities 1,455 1,405 Other liabilities 3,277 3,059 Shareowners' equity 9,538 9,222 ----- ----- Total liabilities and shareowners' equity $37,082 $33,805 ======= ======= Honeywell International Inc. Consolidated Statement of Cash Flows (Unaudited) (Dollars in millions) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2008 2007 2008 2007 ---- ---- ---- ---- Cash flows from operating activities: Net income $719 $618 $2,085 $1,755 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 247 207 693 620 Gain on sale of non- strategic businesses and assets (623) (6) (635) (21) Repositioning and other charges 574 104 921 408 Net payments for repositioning and other charges (97) (182) (237) (355) Pension and other postretirement expense 36 105 89 251 Pension and other postretirement benefit payments (50) (58) (153) (166) Stock compensation expense 31 13 107 54 Deferred income taxes 5 (28) 248 169 Excess tax benefits from share based payment arrangements (2) (17) (21) (68) Other (61) 134 28 175 Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables 155 (251) (465) (603) Inventories (49) (88) (393) (290) Other current assets 16 - (4) 36 Accounts payable (76) 130 210 273 Accrued liabilities (56) 229 59 233 ---- ---- ---- ---- Net cash provided by operating activities 769 910 2,532 2,471 ---- ---- ---- ---- Cash flows from investing activities: Expenditures for property, plant and equipment (213) (174) (552) (457) Proceeds from disposals of property, plant and equipment 2 5 52 87 Decrease in investments - - 14 - Increase in investments (4) (20) (4) (20) Cash paid for acquisitions, net of cash acquired (800) (458) (2,108) (566) Proceeds from sales of businesses, net of fees paid 921 (1) 921 51 Other - - 7 - ---- ---- ---- ---- Net cash used for investing activities (94) (648) (1,670) (905) ---- ---- ---- ---- Cash flows from financing activities: Net increase/(decrease) in commercial paper 689 (614) 459 1,299 Net increase in short-term borrowings 1 4 22 4 Payment of debt assumed with acquisitions - (40) - (40) Proceeds from issuance of common stock 16 93 142 517 Proceeds from issuance of long-term debt - 897 1,487 1,885 Payments of long-term debt - (8) (425) (415) Excess tax benefits from share based payment arrangements 2 17 21 68 Repurchases of common stock (1,018) (296) (1,459) (3,783) Cash dividends paid on common stock (201) (188) (610) (580) ---- ---- ---- ---- Net cash used for financing activities (511) (135) (363) (1,045) ---- ---- ---- ---- Effect of foreign exchange rate changes on cash and cash equivalents (76) 27 (36) 42 ---- ---- ---- ---- Net increase in cash and cash equivalents 88 154 463 563 Cash and cash equivalents at beginning of period 2,204 1,633 1,829 1,224 ----- ----- ----- ----- Cash and cash equivalents at end of period $2,292 $1,787 $2,292 $1,787 ===== ===== ===== ===== Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited) --------------------------------------------------------------- (Dollars in millions) Three Months Nine Months Ended Ended September 30, September 30, ------------ ------------- 2008 2007 2008 2007 ---- ---- ---- ---- Cash provided by operating activities $769 $910 $2,532 $2,471 Expenditures for property, plant and equipment (213) (174) (552) (457) ---- ---- ---- ---- Free cash flow $556 $736 $1,980 $2,014 ==== ==== ====== ====== 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.SOURCE Honeywell
