Honeywell Reports First Quarter Sales of $7.6 Billion; Earnings of $0.54 Per Share

April 24, 2009

Company Reports First Quarter In-Line; Anticipating Continued Tough Economic Conditions; Targets Full-Year 2009 Earnings of $2.85 - 3.20 Per Share

MORRIS TOWNSHIP, N.J. , April 24 /PRNewswire-FirstCall/ -- Honeywell (NYSE: HON) today announced first quarter 2009 sales of $7.6 billion versus $8.9 billion in 2008. Earnings were $0.54 per share, versus $0.85 per share in the prior year. Cash flow from operations was $341 million versus $721 million in the first quarter of 2008 and free cash flow (cash flow from operations less capital expenditures) was $232 million, compared to $571 million last year.

"Honeywell delivered first quarter results that were in line with our expectations," said Honeywell Chairman and CEO Dave Cote . "While we anticipated a difficult first half of 2009, slow global economic conditions continue and we are adjusting our outlook accordingly."

"The seed planting that we've done over the past several years, combined with the benefits from our global productivity initiatives, are helping in this tough economic environment," concluded Cote. "Honeywell is a stronger and more flexible company today that can perform in both good times and bad. We continue to invest in new technology, geographic expansion, and process improvements, and will emerge from this downturn an even more efficient and productive growth company."

Honeywell expects full-year sales of $32.3 - 33.2 billion, earnings per share of $2.85 - 3.20, and free cash flow conversion greater than 100% of net income.

First Quarter Segment Highlights


-- Sales were down 9%, compared with the first quarter of 2008, resulting from lower volumes in Commercial Aerospace and the unfavorable impact of divestitures partially offset by growth in Defense and Space. -- Segment profit declined 13% and segment margin decreased by 90 bps to 17.7%, due to lower sales volumes partially offset by increased net productivity. -- Honeywell and Qantas Airlines received approval by the Australian Civil Aviation Safety Authority to use the Honeywell SmartPath(TM) Ground-Based Augmentation System (GBAS) at Sydney International Airport for satellite-based landings on their A380 aircraft. Honeywell's SmartPath GBAS is the next-generation navigation technology that supports precision approach and landings using Global Positioning System satellite data and transmits digital guidance signals to aircraft. -- Honeywell was awarded a $70 million contract by the U.S. Air Force for development of new technologies for small gas turbine engines. Funding from the contract will be used to develop and mature a number of technologies, including thermal management, power, controls, health management, and alternative fuels, for the Versatile Affordable Advanced Turbine Engine. -- Honeywell will provide safety and navigational avionics products including IntuVue(TM), Honeywell's 3-D weather radar, and the 131-9A Auxiliary Power Unit (APU) for installation on 70 new Airbus A320 aircraft and on 25 optional A320 aircraft to Wizz Air Hungary Ltd. Honeywell and Wizz Air also finalized a long-term service agreement on the Honeywell APU.

Automation and Control Solutions

-- Sales were down 6%, compared with the first quarter of 2008, resulting from the unfavorable impact of foreign exchange partially offset by net growth from acquisitions. -- Segment profit declined 5%, primarily due to volume declines, while segment margin increased by 10 bps to 10.4%, due to net productivity improvements. -- Process Solutions announced that Shire Human Genetic Therapies will use several Honeywell solutions - including Experion(R) Process Knowledge System(R), Experion Batch Manager, the OneWireless(TM) industrial wireless network, and Uniformance Process Historian Database - to control manufacturing processes at its new $250 million production facility in Lexington, Massachusetts. -- Building Solutions was selected by the U.S. Army Corps of Engineers to help the Department of Defense and other federal agencies address energy consumption in their facilities. Honeywell was one of 16 energy services companies to receive a contract for this new program, which could involve as much as $900 million in energy efficiency, renewable energy, and water conservation projects over the next 10 years. -- Honeywell introduced the 5870API Wireless Asset Protection Sensor that guards against theft in both residential and commercial security settings. One of the newest additions of Honeywell's popular 5800 Series of wireless devices, the 5870API attaches easily to virtually any valuable requiring protection within a home or business, including paintings, flat screen televisions, and other electronics, family heirlooms, safes, machinery, office equipment, and more.

Transportation Systems

-- Sales were down 41%, compared with the first quarter of 2008, resulting from lower volumes and the negative impact of foreign exchange. -- Segment profit declined 102% and segment margin decreased by 1,210 bps to (0.4)%, due to lower sales volumes partially offset by increased productivity driven by cost savings initiatives. -- Honeywell launched its new sequential boosting technology, a groundbreaking turbo technology that enables the new Jaguar XF 3.0L V6 diesel to reduce fuel consumption by 12% and C02 emissions by 10% compared to its predecessor. This new boosting system allows the V6 engine to achieve performance levels of current V8 engines with a staggering 600Nm of torque. -- Honeywell turbochargers were featured on 25 vehicles launched at the 79th International Motor Show of Geneva in March. Honeywell's applications ranged from 1.4 to 6.0L diesel and gasoline engines, reflecting the global trend toward turbocharging in delivering automotive performance and fuel efficiency.

Specialty Materials

-- Sales were down 25%, compared with the first quarter of 2008, primarily resulting from lower volumes at UOP and price declines due to formula pricing at our Resins and Chemicals business. -- Segment profit declined 53% and segment margin decreased by 690 bps to 11.9%, due to lower volumes partially offset by lower raw material costs and the positive impact of cost savings initiatives. -- Honeywell's UOP launched Envergent Technologies, a new joint venture with Ensyn Corp. that will offer technology and equipment to convert second-generation biomass into pyrolysis oil for power generation, heating fuel, and conversion into transportation fuels. -- Honeywell is developing a new low-global-warming-potential (LGWP) blowing agent for energy efficient polyurethane foam insulation. The new material is part of a larger LGWP platform that also includes new refrigerants for mobile applications.

Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EDT . To participate, please dial (719) 325-4846 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 ( Investors can access a replay of the investor call starting at 11:00 a.m. EDT , April 24 , until midnight, May 1 , by dialing (719) 457-0820. The access code is 2142307.

Honeywell International ( 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

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 Investor Relations Robert C. Ferris Murray Grainger (973) 455-3388 (973) 455-2222 [email protected] [email protected] Honeywell International Inc. Consolidated Statement of Operations (Unaudited) ------------------------------------------------ (In millions except per share amounts) Three Months Ended March 31, ---------------------------- 2009 2008 ---- ---- Product sales $5,818 $7,156 Service sales 1,752 1,739 ----- ----- Net sales 7,570 8,895 ----- ----- Costs, expenses and other Cost of products sold (A) 4,608 5,507 Cost of services sold (A) 1,148 1,165 ----- ----- 5,756 6,672 Selling, general and administrative expenses (A) 1,152 1,255 Other (income) expense 2 (26) Interest and other financial charges 117 115 --- --- 7,027 8,016 ----- ----- Income before taxes 543 879 Tax expense 144 232 --- --- Net income 399 647 Less: Net income attributable to the noncontrolling interest 2 4 --- --- Net income attributable to Honeywell $397 $643 ==== ==== Earnings per share of common stock - basic $0.54 $0.87 ===== ===== Earnings per share of common stock - assuming dilution $0.54 $0.85 ===== ===== Weighted average number of shares outstanding - basic 738 743 === === Weighted average number of shares outstanding - assuming dilution 739 753 === === (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) Net Sales Three Months Ended March 31, --------- ----------------------------- 2009 2008 ---- ---- Aerospace $2,759 $3,030 Automation and Control Solutions 3,001 3,180 Specialty Materials 1,054 1,409 Transportation Systems 756 1,276 Corporate - - --- --- Total $7,570 $8,895 ====== ====== Reconciliation of Segment Profit to Income Before Taxes ------------------------------------------------------- Segment Profit Three Months Ended March 31, -------------- ---------------------------- 2009 2008 ---- ---- Aerospace $488 $563 Automation and Control Solutions 311 328 Specialty Materials 125 265 Transportation Systems (3) 149 Corporate (45) (56) --- --- Total Segment Profit 876 1,249 Other income/ (expense) (A) (8) 10 Interest and other financial charges (117) (115) Stock compensation expense (B) (42) (41) Pension and other postretirement expense (B) (55) (27) Repositioning and other charges (B) (111) (197) ---- ---- Income before taxes $543 $879 ==== ==== (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) March 31, December 31, 2009 2008 ---- ---- ASSETS Current assets: Cash and cash equivalents $2,052 $2,065 Accounts, notes and other receivables 5,667 6,129 Inventories 3,797 3,848 Deferred income taxes 934 922 Other current assets 331 299 --- --- Total current assets 12,781 13,263 Investments and long-term receivables 622 670 Property, plant and equipment - net 4,777 4,934 Goodwill 10,141 10,185 Other intangible assets - net 2,183 2,267 Insurance recoveries for asbestos related liabilities 1,034 1,029 Deferred income taxes 1,842 2,135 Prepaid pension benefit cost 40 62 Other assets 937 945 --- --- Total assets $34,357 $35,490 ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Accounts payable $3,144 $3,773 Short-term borrowings 62 56 Commercial paper 500 1,431 Current maturities of long-term debt 1,630 1,023 Accrued liabilities 5,602 6,006 ----- ----- Total current liabilities 10,938 12,289 Long-term debt 6,266 5,865 Deferred income taxes 715 698 Postretirement benefit obligations other than pensions 1,782 1,799 Asbestos related liabilities 1,550 1,538 Other liabilities 5,605 6,032 Shareowners' equity 7,501 7,269 ----- ----- Total liabilities and shareowners' equity $34,357 $35,490 ======= ======= Honeywell International Inc. Consolidated Statement of Cash Flows (Unaudited) ------------------------------------------------ (Dollars in millions) Three Months Ended March 31, ------------------ 2009 2008 ---- ---- Cash flows from operating activities: Net income attributable to Honeywell $397 $643 Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities: Depreciation and amortization 234 217 Repositioning and other charges 111 197 Net payments for repositioning and other charges (148) (21) Pension and other postretirement expense 55 27 Pension and other postretirement benefit payments (47) (61) Stock compensation expense 42 41 Deferred income taxes 272 108 Excess tax benefits from share based payment arrangements - (7) Other (142) 45 Changes in assets and liabilities, net of the effects of acquisitions and divestitures: Accounts, notes and other receivables 461 (224) Inventories 49 (289) Other current assets (31) (35) Accounts payable (629) 135 Accrued liabilities (283) (55) ---- --- Net cash provided by operating activities 341 721 --- --- Cash flows from investing activities: Expenditures for property, plant and equipment (109) (150) Proceeds from disposals of property, plant and equipment 8 12 Decrease in investments 1 6 Cash paid for acquisitions, net of cash acquired (20) (55) Other (6) (2) --- --- Net cash used for investing activities (126) (189) ---- ---- Cash flows from financing activities: Net decrease in commercial paper (931) (860) Net increase/(decrease) in short-term borrowings 6 (3) Proceeds from issuance of common stock 4 51 Proceeds from issuance of long-term debt 1,488 1,487 Payments of long-term debt (493) (225) Excess tax benefits from share based payment arrangements - 7 Repurchases of common stock - (441) Cash dividends paid on common stock (224) (204) ---- ---- Net cash used for financing activities (150) (188) ---- ---- Effect of foreign exchange rate changes on cash and cash equivalents (78) 61 --- --- Net (decrease)/increase in cash and cash equivalents (13) 405 Cash and cash equivalents at beginning of period 2,065 1,829 ----- ----- Cash and cash equivalents at end of period $2,052 $2,234 ====== ====== Honeywell International Inc. Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited) ---------------------------------------------------------- (Dollars in millions) Three Months Ended March 31, --------- 2009 2008 ---- ---- Cash provided by operating activities $341 $721 Expenditures for property, plant and equipment (109) (150) ---- ---- Free cash flow $232 $571 ==== ==== 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