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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Honeywell International Incorporated | LSE:HON | London | Ordinary Share | COM STK USD1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 159.07 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMHON
HONEYWELL DELIVERS STRONG FIRST QUARTER RESULTS, ADJUSTED EPS EXCEEDS HIGH
OF GUIDANCE RANGE; RAISES FULL-YEAR ADJUSTED EPS RANGE BY 10 CENTS AND MIDPOINT
OF SALES GUIDANCE
* Sales of $8.4 Billion at High End of Previous Guidance, Down 1% Year Over
Year, Up 1% on an Organic Basis
* Earnings Per Share of $1.64, Adjusted Earnings Per Share1 of $1.91,
Exceeding High End of Guidance Range
* Deployed $2.0 Billion in Capital, including $1.0 Billion to Share
Repurchases as Part of $4 Billion Commitment in 2022
* Company Raises 2022 Adjusted EPS Range and Midpoint of Sales Guidance
CHARLOTTE, N.C., April 29, 2022 /PRNewswire/ -- Honeywell (NASDAQ: HON) today
announced results for the first quarter that met or exceeded the company's
guidance in a challenging operating environment. The company also raised the
midpoint of its full-year sales guidance and increased its full-year adjusted
earnings per share guidance.
Logo - https://mma.prnewswire.com/media/1420781/Honeywell_Logo.jpg
The company reported first quarter organic sales growth of 1%, or 3% excluding
the impact of lower COVID-mask volumes. Operating margin contracted by 260
basis points to 15.2% due to a $183 million charge related to the substantial
suspension of its operations in Russia, which translated to a loss of
approximately $30M in sales in the first quarter. Segment margin expanded by 10
basis points to 21.1%, or 40 basis points excluding the year over year
Quantinuum impact, exceeding the high end of the company's guidance range by 10
basis points as a result of the company's commercial excellence efforts.
Adjusted earnings per share1 was $1.91, down 1% year over year but one cent
above the high end of the company's guidance range.
"Honeywell delivered a strong start to 2022, meeting or exceeding expectations
in the first quarter despite considerable new macroeconomic challenges and the
ongoing impact of supply chain constraints," said Darius Adamczyk, chairman and
chief executive officer of Honeywell. "Organic sales growth was underpinned by
double-digit growth in our commercial aviation aftermarket, building products,
productivity solutions and services, and advanced materials businesses. Demand
remained strong, with orders up 13% year over year and long-cycle orders growth
of over 20%, which will help drive growth as we progress through 2022. Closing
backlog was $28.5 billion2, up 9% year over year, led by strength in Aero, HBT,
and PMT. Our strategic pricing actions allowed us to continue to stay ahead of
the inflation curve, enabling us to expand segment margins and exceed the high
end of our EPS guidance range. We also continued to leverage our strong balance
sheet, deploying $2.0 billion of total capital in the quarter with $1.0 billion
allocated to share repurchases as we executed on our updated commitment to buy
back $4 billion in shares in 2022. From an M&A perspective, we closed the
acquisition of U.S. Digital Designs, a public safety communications hardware
and software solutions provider."
Adamczyk continued, "As we look toward the rest of 2022, we are well positioned
to navigate the macroeconomic environment and remain confident in our ability
to execute on our rigorous operating principles and deliver strong results. We
see solid recovery in our key commercial aerospace and energy end markets, and
our ongoing investments in areas like our sustainable technology solutions
business will provide additional sources of growth. Our operational excellence
is enabling us to absorb the impact of external macroeconomic factors, and
today I am pleased to announce that we are raising the midpoint of our sales
guidance and improving our EPS outlook."
As a result of the company's first-quarter performance and management's outlook
for the remainder of the year, full-year sales are now expected to be in the
range of $35.5 billion to $36.4 billion, up 4% to 7% organically, or up 6% to
9% excluding the one-point impact of COVID-driven mask sales declines and
one-point impact of lost Russian sales. Segment margin expansion3 is expected
to be in the range of 10 to 50 basis points, including an approximate (30)
basis point impact from investments in the Quantinuum business. Adjusted
earnings per share3 is now expected to be in the range of $8.50 to $8.80, up 10
cents on both ends to reflect the updated share repurchase target announced at
our investor day. Operating cash flow is expected to be in the range of $5.7
billion to $6.1 billion, and free cash flow is expected to be $4.7 billion to
$5.1 billion. A summary of the company's full year guidance changes can be
found in Table 1.
"As discussed in our recent investor day, we are turning our focus to the next
phase of Honeywell's growth, including driving innovation that builds on our
long-standing expertise in controls, automation, and software, as well as
successful breakthrough initiatives," Adamczyk concluded. "We are executing on
the capital deployment commitments we announced in March, which will help us
achieve faster growth and innovation while delivering significant value to our
shareholders now and in the future."
First-Quarter Performance
Honeywell sales for the first quarter were down 1% year over year on a reported
basis and up 1% year over year on an organic basis. The first-quarter financial
results can be found in Tables 2 and 3.
Aerospace sales for the first quarter were up 5% year over year on an organic
basis. Both air transport aftermarket and business and general aviation
aftermarket sales grew by over 25% in the first quarter as flight hours
continued to improve. Commercial original equipment grew double digits in the
first quarter as air transport original equipment returned to growth, partially
offset by lower volumes in business and general aviation original equipment.
Growth in commercial aerospace was partially offset by lower defense volumes.
Segment margin contracted 160 basis points in the first quarter to 27.4%,
driven by increased sales mix from lower margin original equipment products,
cost inflation, and the absence of a one-time gain in 2021, partially offset by
favorable pricing.
Honeywell Building Technologies sales for the first quarter were up 8% on an
organic basis year over year driven by strength across the building products
portfolio, partially offset by lower projects volume. Orders were up double
digits as a result of strong demand for fire products and building management
systems. Segment margin expanded 100 basis points to 23.5% due to pricing
actions and favorable sales mix, partially offset by cost inflation.
Performance Materials and Technologies sales for the first quarter were up 6%
on an organic basis year over year despite an approximately 1% headwind from
Russia. Sales growth was led by strength across the advanced materials
portfolio and demand for thermal solutions and lifecycle solutions and services
within process solutions. This growth was partially offset by lower process
technologies equipment within UOP. Orders increased double digits year over
year, headlined by over 20% growth in process solutions. Segment margin
expanded 230 basis points to 20.8% led by favorable pricing and sales mix,
partially offset by cost inflation.
Safety and Productivity Solutions sales for the first quarter decreased 15% on
an organic basis year over year due to lower personal protective equipment and
warehouse automation volume. Excluding the impact of lower COVID-mask volumes,
sales decreased by 6% in the quarter. However, productivity solutions and
services, advanced sensing technologies, and gas detection sales all grew at
double-digit rates in the quarter, highlighting the strength in much of the
underlying SPS portfolio. Segment margin expanded 20 basis points to 14.5% led
by favorable pricing and sales mix, partially offset by lower volume leverage
and cost inflation.
Conference Call Details
Honeywell will discuss its first-quarter results and updated full-year guidance
during an investor conference call starting at 8:30 a.m. Eastern Daylight Time
today. A 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). A replay of the webcast will be
available for 30 days following the presentation.
TABLE 1: FULL-YEAR 2022 GUIDANCE3
Previous Current
Guidance Guidance
Sales $35.4B - $35.5B -
$36.4B $36.4B
Organic Growth 4% - 7% 4% - 7%
Organic Growth Excluding Impact of 5% - 8% 6% - 9%
COVID-Driven Mask Sales
Declines and Lost Russian Sales4
Segment Margin 21.1% - 21.5% 21.1% - 21.5%
Expansion Up 10 - 50 Up 10 - 50
bps bps
Expansion Excluding the Impact of Quantinuum Up 40 - 80 Up 40 - 80
bps bps
Adjusted Earnings Per Share5 $8.40 - $8.70 $8.50 - $8.80
Adjusted Earnings Growth6 4% - 8% 5% - 9%
Operating Cash Flow $5.7B - $6.1B $5.7B - $6.1B
Free Cash Flow $4.7B - $5.1B $4.7B - $5.1B
Excluding Impact of Quantinuum $4.9B - $5.3B $4.9B - $5.3B
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
1Q 2022 1Q 2021 Change
Sales 8,376 8,454 (1%)
Organic Growth 1%
Segment Margin 21.1% 21.0% 10 bps
Operating Income Margin 15.2% 17.8% -260 bps
Earnings Per Share $1.64 $2.03 (19%)
Adjusted Earnings Per Share1 $1.91 $1.92 (1%)
Cash Flow from Operations 36 978 (96%)
Operating Cash Flow Conversion 3% 69% (66%)
Free Cash Flow 50 757 (93%)
Adjusted Free Cash Flow Conversion7 4% 56% (52%)
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE 1Q 2022 1Q 2021 Change
Sales 2,749 2,632 4%
Organic Growth 5%
Segment Profit 753 762 (1%)
Segment Margin 27.4% 29.0% -160 bps
HONEYWELL BUILDING TECHNOLOGIES
Sales 1,429 1,358 5%
Organic Growth 8%
Segment Profit 336 305 10%
Segment Margin 23.5% 22.5% 100 bps
PERFORMANCE MATERIALS AND TECHNOLOGIES
Sales 2,453 2,346 5%
Organic Growth 6%
Segment Profit 510 434 18%
Segment Margin 20.8% 18.5% 230 bps
SAFETY AND PRODUCTIVITY SOLUTIONS
Sales 1,744 2,118 (18%)
Organic Growth (15%)
Segment Profit 253 303 (17%)
Segment Margin 14.5% 14.3% 20 bps
1Adjusted EPS and adjusted EPS V% exclude a charge to reserve against
outstanding accounts receivable, contract assets, and impairments of other
assets due to the Russia-Ukraine conflict, and gain on the sale of the retail
footwear business.
21Q22 backlog excludes contracts for sales or services shipped to or produced
in Russia, or sales or services with entities nationalized by the Russian
Federation.
3As discussed in the notes to the attached reconciliations, we do not provide
guidance for margin or EPS on a GAAP basis.
4Previous guidance did not contemplate lost Russian sales.
5Adjusted EPS guidance excludes a charge to reserve against outstanding
accounts receivable, contract assets, and impairments of other assets due to
the Russia-Ukraine conflict, and any potential future one-time items that we
cannot reliably predict or estimate such as pension mark-to-market.
6Adjusted EPS V% guidance excludes a charge to reserve against outstanding
accounts receivable, contract assets, and impairments of other assets due to
the Russia-Ukraine conflict, pension mark-to-market, changes in fair value for
Garrett equity securities, a non-cash charge associated with the reduction in
value of reimbursement receivables following Garrett's emergence from
bankruptcy on April 30, 2021, an expense related to UOP matters, gain on the
sale of the retail footwear business, and any potential future one-time items
that we cannot reliably predict or estimate such as pension mark-to-market.
7Adjusted free cash flow conversion is free cash flow (cash flow from
operations less capital expenditures plus cash receipts from Garrett) divided
by adjusted net income attributable to Honeywell. Adjusted net income
attributable to Honeywell excludes a charge to reserve against outstanding
accounts receivable, contract assets, and impairments of other assets due to
the Russia-Ukraine conflict, and gain on the sale of the retail footwear
business.
Honeywell (www.honeywell.com) is a Fortune 100 technology company that delivers
industry specific solutions that include aerospace products and services;
control technologies for buildings and industry; and performance materials
globally. Our technologies help everything from aircraft, buildings,
manufacturing plants, supply chains, and workers become more connected to make
our world smarter, safer, and more sustainable. For more news and information
on Honeywell, please visit www.honeywell.com/newsroom.
Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a
means of disclosing information which may be of interest or material to our
investors and for complying with disclosure obligations under Regulation FD.
Accordingly, investors should monitor our Investor Relations website, in
addition to following our press releases, SEC filings, public conference calls,
webcasts, and social media.
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. Forward-looking statements are those that address activities, events or
developments that management intends, expects, projects, believes or
anticipates will or may occur in the future. They are based on management's
assumptions and assessments in light of past experience and trends, current
economic and industry conditions, expected future developments and other
relevant factors. They are not guarantees of future performance, and actual
results, developments and business decisions may differ significantly from
those envisaged by our forward-looking statements. We do not undertake to
update or revise any of our forward-looking statements, except as required by
applicable securities law. Our forward-looking statements are also subject to
risks and uncertainties, including the impact of the COVID-19 pandemic and the
Russia-Ukraine conflict, that can affect our performance in both the near- and
long-term. In addition, no assurance can be given that any plan, initiative,
projection, goal commitment, expectation, or prospect set forth in this release
can or will be achieved. Any forward-looking plans described herein are not
final and may be modified or abandoned at any time. 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.
This release contains financial measures presented on a non-GAAP basis.
Honeywell's non-GAAP financial measures used in this release are as follows:
* Segment profit, on an overall Honeywell basis, a measure by which we assess
operating performance, which we define as operating income adjusted for
certain items as presented in the Appendix;
* Segment profit excluding Quantinuum, which we define as segment profit
excluding segment profit attributable to Quantinuum;
* Segment margin, on an overall Honeywell basis, which we define as segment
profit divided by net sales;
* Segment margin excluding Quantinuum, which we define as segment profit
excluding Quantinuum divided by net sales excluding Quantinuum;
* Expansion in segment profit margin percentage, which we define as the
year-over-year increase in segment profit margin percentage;
* Expansion in segment profit margin percentage excluding Quantinuum, which
we define as the year-over-year increase in segment profit margin
percentage excluding Quantinuum;
* Year-over-year segment profit margin percentage impact of Quantinuum, which
we define as the difference in expansion in segment profit margin
percentage excluding Quantinuum and expansion in segment profit margin
percentage;
* Organic sales growth, which we define as net sales growth less the impacts
from foreign currency translation, and acquisitions and divestitures for
the first 12 months following transaction date;
* Organic sales growth excluding COVID-Driven Masks, which we define as
organic sales excluding any sales attributable to COVID-Driven Masks;
* Organic sales growth excluding COVID-driven mask sales and lost Russian
sales, which we define as organic sales growth excluding any sales
attributable to COVID-driven mask sales and substantial suspension of
operations in Russia;
* Free cash flow, which we define as cash flow from operations less capital
expenditures plus cash receipts from Garrett, if and as noted in the
release;
* Free cash flow excluding Quantinuum which we define as free cash flow less
free cash flow attributable to Quantinuum;
* Adjusted net income attributable to Honeywell, which we define as net
income attributable to Honeywell which we adjust to exclude: a charge to
reserve against outstanding accounts receivable, contract assets, and
impairments of other assets due to the Russia-Ukraine conflict and the gain
on the sale of the retail footwear business, if and as noted in the
release;
* Adjusted free cash flow conversion, which we define as free cash flow
divided by adjusted net income attributable to Honeywell; and
* Adjusted earnings per share, which we adjust to exclude a charge to reserve
against outstanding accounts receivable, contract assets, and impairments
of other assets due to the Russia-Ukraine conflict, pension mark-to-market,
changes in fair value for Garrett equity securities, a non-cash charge
associated with the reduction in value of reimbursement receivables
following Garrett's emergence from bankruptcy on April 30, 2021, an expense
related to UOP matters, gain on the sale of the retail footwear business,
if and as noted in the release.
Management believes that, when considered together with reported amounts, these
measures are useful to investors and management in understanding our ongoing
operations and in the analysis of ongoing operating trends. These metrics
should be considered in addition to, and not as replacements for, the most
comparable GAAP measure. Certain metrics presented on a non-GAAP basis
represent the impact of adjusting items net of tax. The tax-effect for
adjusting items is determined individually and on a case-by-case basis. Refer
to the Appendix attached to this release for reconciliations of non-GAAP
financial measures to the most directly comparable GAAP measures.
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended
March 31,
2022 2021
Product sales $ 6,132 $ 6,409
Service sales 2,244 2,045
Net sales 8,376 8,454
Costs, expenses and
other
Cost of products 4,373 4,551
sold(1)
Cost of services 1,301 1,158
sold(1)
5,674 5,709
Selling, general 1,431 1,236
and administrative
expenses(1)
Other (income) (319) (442)
expense
Interest and 85 90
other financial
charges
6,871 6,593
Income before taxes 1,505 1,861
Tax expense (benefit) 371 413
Net income 1,134 1,448
Less: Net income - 21
attributable to the
noncontrolling
interest
Net income $ 1,134 $ 1,427
attributable to
Honeywell
Earnings per share of $ 1.66 $ 2.05
common stock - basic
Earnings per share of $ 1.64 $ 2.03
common stock -
assuming dilution
Weighted average 684.7 696.2
number of shares
outstanding - basic
Weighted average 691.3 704.5
number of shares
outstanding -
assuming dilution
(1) Cost of products and services sold and Selling, general
and administrative expenses include amounts for
repositioning and other charges, the service cost
component of pension and other postretirement (income)
expense, and stock compensation expense.
Honeywell International Inc.
Segment Data (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
Net Sales 2022 2021
Aerospace $ 2,749 $ 2,632
Honeywell Building Technologies 1,429 1,358
Performance Materials and Technologies 2,453 2,346
Safety and Productivity Solutions 1,744 2,118
Corporate and All Other 1 -
Total $ 8,376 $ 8,454
Reconciliation of Segment Profit to Income Before Taxes
Three Months Ended
March 31,
Segment Profit 2022 2021
Aerospace $ 753 $ 762
Honeywell 336 305
Building
Technologies
Performance 510 434
Materials and
Technologies
Safety and 253 303
Productivity
Solutions
Corporate and (86) (29)
All Other
Total 1,766 1,775
segment profit
Interest and (85) (90)
other financial
charges
Stock (60) (77)
compensation
expense (1)
Pension ongoing 251 276
income (2)
Other 10 17
postretirement
income (2)
Repositioning (387) (141)
and other
charges (3,4)
Other (5) 10 101
Income before $ 1,505 $ 1,861
taxes
(1) Amounts included in Selling, general and administrative
expenses.
(2) Amounts included in Cost of products and services sold and
Selling, general and administrative expenses (service costs)
and Other income (expense) (non-service cost components).
(3) Amounts included in Cost of products and services sold,
Selling, general and administrative expenses, and Other
(income) expense.
(4) Includes repositioning, asbestos, and environmental expenses.
(5) Amounts include the other components of Other (income) expense
not included within other categories in this reconciliation.
Equity income of affiliated companies is included in segment
profit.
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
March 31, December 31,
2022 2021
ASSETS
Current assets:
Cash and cash equivalents $ $
9,281 10,959
Short-term investments 493 564
Accounts receivable, less 7,119 6,830
allowances of $326 and $177,
respectively
Inventories 5,472 5,138
Other current assets 1,916 1,881
Total current assets 24,281 25,372
Investments and long-term 1,035 1,222
receivables
Property, plant and equipment - net 5,470 5,562
Goodwill 17,863 17,756
Other intangible assets - net 3,534 3,613
Insurance recoveries for asbestos 314 322
related liabilities
Deferred income taxes 494 489
Other assets 10,361 10,134
Total assets $ $
63,352 64,470
LIABILITIES
Current liabilities:
Accounts payable $ $
6,285 6,484
Commercial paper and other 3,526 3,542
short-term borrowings
Current maturities of 3,207 1,803
long-term debt
Accrued liabilities 7,009 7,679
Total current liabilities 20,027 19,508
Long-term debt 12,636 14,254
Deferred income taxes 2,387 2,364
Postretirement benefit obligations 220 208
other than pensions
Asbestos-related liabilities 1,807 1,800
Other liabilities 7,217 7,087
Redeemable noncontrolling interest 7 7
Shareowners' equity 19,051 19,242
Total liabilities, $ $
redeemable noncontrolling interest 63,352 64,470
and shareowners' equity
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months
Ended
March 31,
2022 2021
Cash flows from operating activities:
Net income $ $
1,134 1,448
Less: Net income attributable to the noncontrolling - 21
interest
Net income attributable to Honeywell 1,134 1,427
Adjustments to reconcile net income attributable to
Honeywell to net cash provided by operating activities:
Depreciation 167 171
Amortization 163 170
Gain on sale of non-strategic businesses and - (90)
assets
Repositioning and other charges 387 141
Net payments for repositioning and other (108) (195)
charges
Pension and other postretirement income (261) (293)
Pension and other postretirement benefit (14) (14)
payments
Stock compensation expense 60 77
Deferred income taxes 21 63
Other (67) (96)
Changes in assets and liabilities, net of
the effects of acquisitions and divestitures:
Accounts receivable (285) 143
Inventories (331) (158)
Other current assets (29) (66)
Accounts payable (199) 57
Accrued liabilities (602) (359)
Net cash provided by operating 36 978
activities
Cash flows from investing activities:
Expenditures for property, plant and equipment (183) (221)
Proceeds from disposals of property, plant and equipment 10 14
Increase in investments (223) (736)
Decrease in investments 304 612
Receipts from Garrett Motion Inc. 197 -
Receipts (payments) from settlements of derivative 61 140
contracts
Cash paid for acquisitions, net of cash acquired (176) (1,303)
Proceeds from sales of businesses, net of fees paid - 190
Net cash used for investing (10) (1,304)
activities
Cash flows from financing activities:
Proceeds from issuance of commercial paper and other 1,228 1,268
short-term borrowings
Payments of commercial paper and other short-term (1,228) (1,266)
borrowings
Proceeds from issuance of common stock 23 67
Proceeds from issuance of long-term debt 1 23
Payments of long-term debt (40) (817)
Repurchases of common stock (1,018) (822)
Cash dividends paid (668) (640)
Other (17) (30)
Net cash used for financing (1,719) (2,217)
activities
Effect of foreign exchange rate changes on cash and cash 15 (14)
equivalents
Net increase (decrease) in cash and cash equivalents (1,678) (2,557)
Cash and cash equivalents at beginning of period 10,959 14,275
Cash and cash equivalents at end of period $ $11,718
9,281
Honeywell International Inc.
Reconciliation of Organic Sales % Change (Unaudited)
Three Months
Ended March
31,
2022
Honeywell
Reported sales % change (1)%
Less: Foreign currency translation (2)%
Less: Acquisitions, divestitures and other, net -%
Organic sales % change 1%
Sales decline attributable to COVID-driven masks 2%
Organic sales % change excluding COVID-driven masks 3%
Sales decline attributable to lost Russian sales -%
Organic sales % change excluding COVID-driven masks and lost 3%
Russian sales
Aerospace
Reported sales % change 4%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net -%
Organic sales % change 5%
Honeywell Building Technologies
Reported sales % change 5%
Less: Foreign currency translation (3)%
Less: Acquisitions, divestitures and other, net -%
Organic sales % change 8%
Performance Materials and Technologies
Reported sales % change 5%
Less: Foreign currency translation (2)%
Less: Acquisitions, divestitures and other, net 1%
Organic sales % change 6%
Safety and Productivity Solutions
Reported sales % change (18)%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net (2)%
Organic sales % change (15)%
Sales decline attributable to COVID-driven masks 9%
Organic sales % change excluding COVID-driven masks (6)%
We define organic sales percent as the year-over-year change in reported sales
relative to the comparable period, excluding the impact on sales from foreign
currency translation and acquisitions, net of divestitures, for the first 12
months following the transaction date. We believe this measure is useful to
investors and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
We define organic sales growth excluding COVID-driven mask sales as organic
sales growth excluding any sales attributable to COVID-driven mask sales. We
define organic sales growth excluding COVID-driven mask sales and lost Russian
sales as organic sales growth excluding any sales attributable to COVID-driven
mask sales and substantial suspension of operations in Russia. We believe
organic sales growth excluding COVID-driven mask sales, and organic sales
growth excluding COVID-driven mask sales and lost Russian sales are useful to
investors and management in understanding our ongoing operations and in
analysis of ongoing operating trends.
A quantitative reconciliation of reported sales percent change to organic sales
percent change has not been provided for forward-looking measures of organic
sales percent change, organic sales percent change excluding COVID-driven masks
or organic sales percent change excluding COVID-driven masks and lost Russian
sales because management cannot reliably predict or estimate, without
unreasonable effort, the fluctuations in global currency markets that impact
foreign currency translation, nor is it reasonable for management to predict
the timing, occurrence and impact of acquisition and divestiture transactions,
all of which could significantly impact our reported sales percent change.
Honeywell International Inc.
Reconciliation of Segment Profit to Operating Income, Calculation of Segment
Profit and Operating Income Margins and
Calculation of Segment Profit Margin excluding Quantinuum(Unaudited)
(Dollars in millions)
Three Months Ended March 31, Twelve Months
Ended
December 31,
2022 2021 2021
Segment profit $ 1,766 $ 1,775 $ 7,212
Stock (60) (77) (217)
compensation
expense (1)
Repositioning, (401) (155) (636)
Other (2,3)
Pension and (34) (34) (159)
other
postretirement
service costs
(4)
Operating $ 1,271 $ 1,509 $ 6,200
income
Segment profit $ 1,766 $ 1,775 $ 7,212
÷ Net sales $ 8,376 $ 8,454 $ 34,392
Segment profit 21.1% 21.0% 21.0%
margin %
Operating $ $ 1,509 $ 6,200
income 1,271
÷ Net sales $ 8,376 $ 8,454 $ 34,392
Operating 15.2% 17.8% 18.0%
income margin
%
Segment profit $ 1,766 $ 1,775 $ 7,212
Add: 34 12 62
Quantinuum
Segment Loss
(5)
Segment Profit $ 1,800 $ 1,787 $ 7,274
Excluding
Quantinuum
Net Sales $ 8,376 $ 8,454 $ 34,392
Less: 1 1 5
Quantinuum Net
Sales
Net Sales $ 8,375 $ 8,453 $ 34,387
Excluding
Quantinuum
Segment profit 21.5% 21.1% 21.2%
margin %
excluding
Quantinuum
Expansion in 40 bps Not Reported Not Reported
segment profit
margin %
excluding
Quantinuum
Expansion in 10 bps Not Reported Not Reported
segment profit
margin %
Year-over-year 30 bps Not Reported Not Reported
segment profit
margin %
impact of
Quantinuum
(1) Included in Selling, general and administrative expenses.
(2) Includes repositioning, asbestos, environmental expenses, equity
income adjustment, and other charges. For the three months ended
March 31, 2022 other charges include $183 million of reserves
against outstanding accounts receivables, contract assets, and
impairments of other assets due to the Russia-Ukraine conflict.
For the three months ended March 31, 2022 and twelve months
ended December 31, 2021, other charges include $9 million and
$105 million, respectively, of incremental long-term contract
labor cost inefficiencies due to severe supply chain disruptions
(attributable to the COVID-19 pandemic) relating to the
warehouse automation business within the Safety and Productivity
Solutions segment. These costs include incurred amounts and
provisions for anticipated losses recognized during the first
and fourth quarters when total estimated costs at completion for
certain of the business' long-term contracts exceeded total
estimated revenue. These certain costs represent unproductive
labor costs due to unexpected supplier delays and the resulting
downstream installation issues, demobilization and
remobilization of contract workers, and resolution of contractor
disputes.
(3) Included in Cost of products and services sold, Selling, general
and administrative expenses and Other (income) expense.
(4) Included in Cost of products and services sold and Selling,
general and administrative expenses.
(5) For the three months ended March 31, 2021, and the twelve months
ended December 31, 2021, Quantinuum Segment Loss includes the
segment loss of Honeywell Quantum Solutions, a wholly-owned
subsidiary of Honeywell, prior to the November 29, 2021
combination of Honeywell Quantum Solutions and Cambridge Quantum
Computing, resulting in the formation of Quantinuum.
We define segment profit as operating income, excluding stock compensation
expense, pension and other postretirement service costs, and repositioning and
other charges. We define segment profit excluding Quantinuum as segment profit
excluding segment profit attributable to Quantinuum. We believe these measures
are useful to investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends.
We define expansion in segment profit margin percentage as the year-over-year
increase in segment profit margin percentage. We define expansion in segment
profit margin percentage excluding Quantinuum as the year-over-year increase in
segment profit margin percentage excluding Quantinuum. We define year-over-year
segment profit margin percentage impact of Quantinuum as the difference in
expansion in segment profit margin percentage excluding Quantinuum and
expansion in segment profit margin percentage. We believe these measures are
useful to investors and management in understanding our ongoing operations and
in analysis of ongoing operating trends.
A quantitative reconciliation of segment profit and segment profit excluding
the impact of Quantinuum, on an overall Honeywell basis, to operating income
has not been provided for all forward-looking measures of segment profit and
segment margin included herewithin. Management cannot reliably predict or
estimate, without unreasonable effort, the impact and timing on future
operating results arising from items excluded from segment profit. The
information that is unavailable to provide a quantitative reconciliation could
have a significant impact on our reported financial results. To the extent
quantitative information becomes available without unreasonable effort in the
future, and closer to the period to which the forward-looking measures pertain,
a reconciliation of segment profit to operating income will be included within
future filings.
Honeywell International Inc.
Reconciliation of Earnings per Share to Adjusted Earnings per Share (Unaudited)
Three Months Ended Twelve Months Ended
March 31, December 31,
2022 2021 2021 2022(E)
Earnings per $ $ $ $8.23 -
share of common 1.64 2.03 7.91 $8.53
stock -
diluted (1)
Pension - - 0.05 No
mark-to-market Forecast
expense (2)
Changes in fair - - (0.03) -
value for
Garrett equity
securities (3)
Garrett related - - 0.01 -
adjustments (4)
Gain on sale of - (0.11) (0.11) -
retail footwear
business (5)
Expense related - - 0.23 -
to UOP Matters
(6)
Russian-related 0.27 - - 0.27
Charges (7)
Adjusted $ $ $ $8.50 -
earnings per 1.91 1.92 8.06 $8.80
share of common
stock - diluted
(1) For the three months ended March 31, 2022 and 2021, adjusted
earnings per share utilizes weighted average shares of approximately
691.3 million and 704.5 million. For the twelve months ended
December 31, 2021, adjusted earnings per share utilizes weighted
average shares of approximately 700.4 million. For the twelve months
ended December 31, 2022, expected earnings per share utilizes
weighted average shares of 686 million (midpoint of the expected
range of 684 million to 687 million).
(2) Pension mark-to-market expense uses a blended tax rate of 25% for
2021.
(3) For the twelve months ended December 31, 2021, the adjustment was
$19 million net of tax due to changes in fair value for Garrett
equity securities.
(4) For the twelve months ended December 31, 2021, the adjustment was $7
million net of tax due to a non-cash charge associated with the
reduction in value of reimbursement receivables following Garrett's
emergence from bankruptcy on April 30, 2021.
(5) For the three months ended March 31, 2021, the adjustment was $72
million net of tax due to the gain on sale of the retail footwear
business. For the twelve months ended December 31, 2021, the
adjustment was $76 million net of tax due to the gain on sale of the
retail footwear business.
(6) For the twelve months ended December 31, 2021, the adjustment was
$160 million with no tax benefit due to an expense related to UOP
matters.
(7) For the three months ended March 31, 2022 and twelve months ended
December 31, 2022, the adjustment was a $183 million charge, with no
tax benefit, to reserve against outstanding accounts receivable,
contract assets, and impairments of other assets due to the
Russia-Ukraine conflict.
We believe adjusted earnings per share is a measure that is useful to investors
and management in understanding our ongoing operations and in analysis of
ongoing operating trends. For forward looking information, management cannot
reliably predict or estimate, without unreasonable effort, the pension
mark-to-market expense as it is dependent on macroeconomic factors, such as
interest rates and the return generated on invested pension plan assets. We
therefore do not include an estimate for the pension mark-to-market expense.
Based on economic and industry conditions, future developments and other
relevant factors, these assumptions are subject to change.
Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow,
Reconciliation of Net Income Attributable to Honeywell
to Adjusted Net Income Attributable to Honeywell, and Calculation of Adjusted
Free Cash Flow Conversion (Unaudited)
(Dollars in millions)
Three Months Three Months
Ended Ended
March 31, 2022 March 31, 2021
Cash provided by operating $ $
activities 36 978
Expenditures for property, plant and (183) (221)
equipment
Garrett cash receipts 197 -
Free cash flow 50 757
Net income attributable to Honeywell 1,134 1,427
Gain on sale of retail footwear - (72)
business
Russian-related Charges 183 -
Adjusted net income attributable to $ $
Honeywell 1,317 1,355
Cash provided by operating $ $
activities 36 978
÷ Net income attributable to $ $
Honeywell 1,134 1,427
Operating cash flow conversion % 3% 69%
Free cash flow $ $
50 757
÷ Adjusted net income attributable $ $
to Honeywell 1,317 1,355
Adjusted free cash flow conversion % 4% 56%
We define free cash flow as cash provided by operating activities less cash
expenditures for property, plant and equipment plus cash receipts from Garrett.
We define adjusted free cash flow conversion as free cash flow divided by
adjusted net income attributable to Honeywell.
We believe that free cash flow is a non-GAAP metric that is useful to investors
and management as a measure of cash generated by 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, 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
operations and the impact that this cash flow has on our liquidity.
Honeywell International Inc.
Reconciliation of Expected Cash Provided by Operating Activities to Expected
Free Cash Flow and Expected Free Cash Flow
Excluding Quantinuum (Unaudited)
Twelve Months
Ended
December 31,
2022(E) ($B)
Cash provided by operating activities $5.7 - $6.1
Expenditures for property, plant and equipment (1.2)
Garrett cash receipts 0.2
Free cash flow $4.7 - $5.1
Free Cash flow attributable to Quantinuum 0.2
Free cash flow excluding Quantinuum $4.9 - $5.3
We define free cash flow as cash provided by operating activities less cash
expenditures for property, plant and equipment plus anticipated cash receipts
from Garrett. We define free cash flow excluding Quantinuum as free cash flow
less free cash flow attributable to Quantinuum.
We believe that free cash flow and free cash flow excluding Quantinuum are
non-GAAP metrics that are useful to investors and management as a measure of
cash generated by 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, 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 operations and the impact
that this cash flow has on our liquidity.
Contacts:
Media Investor Relations
Nina Krauss Sean Meakim
(704) 627-6035 (704) 627-6200
nina.krauss@honeywell.com sean.meakim@honeywell.com
END
(END) Dow Jones Newswires
April 29, 2022 06:30 ET (10:30 GMT)
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