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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 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMHON
HONEYWELL OVERDELIVERS ON SALES AND EARNINGS WITH STRONG SECOND QUARTER
RESULTS; RAISES ORGANIC GROWTH, SEGMENT MARGIN, AND ADJUSTED EPS GUIDANCE FOR
THE FULL YEAR
* Sales Growth and Margin Expansion in Aerospace, Honeywell Building
Technologies, and Performance Materials and Technologies
* Reported Sales up 2%, Organic Sales up 4%, Exceeding High End of Guidance
Range
* Earnings Per Share of $1.84, Adjusted Earnings Per Share1 of $2.10,
Exceeding High End of Guidance Range
* Orders up 12%; Backlog2 up 12% to $29.5 Billion, Led by Our Long-Cycle
Businesses
* Deployed $2.3 Billion in Capital, including $1.4 Billion to Share
Repurchases
CHARLOTTE, N.C., July 28, 2022 /PRNewswire/ -- Honeywell (NASDAQ: HON) today
announced results for the second quarter, which met or exceeded the company's
guidance. The company also raised the low end of its full-year organic growth
and adjusted EPS guidance ranges and raised its full-year segment margin
guidance range.
The company reported second quarter organic sales growth of 4%, or 7% excluding
the impact of lower COVID-mask volumes and the wind down of operations in
Russia,3 exceeding the high end of the company's guidance range. Operating
margin contracted by 20 basis points to 17.9% primarily due to an additional
charge related to Russia. Segment margin expanded by 50 basis points to 20.9%,
or 80 basis points excluding the year-over-year impact of Quantinuum. Adjusted
earnings per share1 was $2.10, up 4% year over year and 2 cents above the high
end of the company's guidance range. Operating cash flow was $0.8 billion, down
38% year over year, and free cash flow was $0.8 billion, down 43% year over
year, due to higher working capital as expected ahead of anticipated volume
growth in the back half.
"Honeywell met or exceeded guidance for all metrics in the second quarter
despite a challenging macroeconomic backdrop," said Darius Adamczyk, chairman
and chief executive officer of Honeywell. "Organic sales grew 4% led by strong
double-digit growth in our commercial aerospace, building products, advanced
sensing technologies, and advanced materials businesses. Aerospace, Honeywell
Building Technologies, and Performance Materials and Technologies all grew
organically and expanded margins in the quarter. While we recognize macro
crosscurrents are clouding the global economic growth outlook, we remain
confident in our demand outlook for the back half of the year with orders up
12% year over year and closing backlog2 of $29.5 billion, up 12% year over
year, led by our long-cycle businesses, which will help drive growth for
quarters to come. We once again demonstrated our operational agility by staying
ahead of the inflation curve, enabling us to expand margins and beat the high
end of our adjusted EPS guidance. We also continued to execute on our capital
deployment strategy, deploying $2.3 billion in the quarter, including $1.4
billion of share repurchases."
Adamczyk continued, "As we have shown, our rigorous operating principles enable
us to mitigate external challenges and deliver results that maximize
shareholder value. The continued recovery of our key commercial aviation,
defense, energy, and non-residential end markets, our commercial excellence,
and our technologically differentiated portfolio of solutions will allow us to
capitalize on near-term growth opportunities and remain highly resilient amid
ongoing uncertainties."
As a result of the company's second-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 $36.1 billion, up 5% to 7% organically, or up
7% to 9% excluding the one-point impact of COVID-driven mask sales declines and
one-point impact of lost Russian sales. Segment margin expansion4 is now
expected to be in the range of 30 to 70 basis points, including an approximate
(30) basis point impact from investments in the Quantinuum business. Adjusted
earnings per share4,5 is now expected to be in the range of $8.55 to $8.80.
Operating cash flow is expected to be in the range of $5.5 billion to $5.9
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.
Second-Quarter Performance
Honeywell sales for the second quarter were up 2% year over year on a reported
basis and 4% year over year on an organic basis. The second-quarter financial
results can be found in Tables 2 and 3.
Aerospace sales for the second quarter were up 5% year over year on an organic
basis. Commercial aftermarket demand improved in the second quarter as flight
hours continued to increase, resulting in approximately 20% growth in both air
transport aftermarket and business and general aviation aftermarket. Business
and general aviation original equipment grew double digits, while air transport
original equipment grew over 25% year over year as we continue to see strong
build rates. Growth in commercial aerospace was partially offset by lower
defense volumes. Segment margin expanded 80 basis points to 26.5% in the second
quarter, led by commercial excellence partially offset by cost inflation.
Honeywell Building Technologies sales for the second quarter were up 14% on an
organic basis year over year driven by strength in both building products and
building solutions. Orders were up double digits for the second consecutive
quarter, led by building projects, building management systems, and security
products. Segment margin expanded 110 basis points to 23.5% due to pricing
actions partially offset by cost inflation.
Performance Materials and Technologies sales for the second quarter were up 10%
on an organic basis year over year despite an approximately 3% headwind from
Russia. Sales growth was led by solid pricing and greater volumes in advanced
materials, as well as strength in petrochemical catalyst shipments and thermal
solutions, which both grew over 20% in the quarter. This growth was partially
offset by lower equipment volumes and lost Russian sales in UOP. Segment margin
expanded 150 basis points to 22.3%, primarily driven by price actions partially
offset by cost inflation.
Safety and Productivity Solutions sales for the second quarter decreased 10% on
an organic basis year over year as strength in advanced sensing technologies
and productivity solutions and services was offset by lower personal protective
equipment and warehouse automation volumes. Excluding the impact of lower
COVID-mask volumes, organic sales decreased by 5% in the quarter. Advanced
sensing technologies grew 25% and productivity solutions and services grew 19%,
demonstrating excellent execution in a difficult supply constrained
environment. Segment margin contracted 140 basis points to 12.6%, primarily
driven by lower volume leverage, cost inflation, and a one-time write-down of
excess COVID-related mask inventory, partially offset by pricing and a
favorable licensing agreement with a competitor.
Conference Call Details
Honeywell will discuss its second-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 GUIDANCE4
Previous Current
Guidance Guidance
Sales $35.5B - $35.5B -
$36.4B $36.1B
Organic Growth 4% - 7% 5% - 7%
Organic Growth Excluding Impact of COVID-Driven Mask 6% - 9% 7% - 9%
Sales Declines and Lost Russian Sales
Segment Margin 21.1% - 21.3% -
21.5% 21.7%
Expansion Up 10 - 50 Up 30 - 70
bps bps
Expansion Excluding the Impact of Quantinuum Up 40 - 80 Up 60 -
bps 100 bps
Adjusted Earnings Per Share5 $8.50 - $8.55 -
$8.80 $8.80
Adjusted Earnings Growth6 5% - 9% 6% - 9%
Operating Cash Flow $5.7B - $5.5B -
$6.1B $5.9B
Free Cash Flow $4.7B - $4.7B -
$5.1B $5.1B
Excluding Impact of Quantinuum $4.9B - $4.9B -
$5.3B $5.3B
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
2Q 2022 2Q 2021 Change
Sales 8,953 8,808 2 %
Organic Growth 4 %
Operating Income Margin 17.9 % 18.1 % -20 bps
Segment Margin 20.9 % 20.4 % 50 bps
Earnings Per Share $1.84 $2.04 (10 %)
Adjusted Earnings Per Share1 $2.10 $2.02 4 %
Cash Flow from Operations 789 1,278 (38 %)
Operating Cash Flow Conversion 63 % 89 % (26 %)
Free Cash Flow 843 1,468 (43 %)
Adjusted Free Cash Flow Conversion7 59 % 103 % (44 %)
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE 2Q 2022 2Q 2021 Change
Sales 2,898 2,766 5 %
Organic Growth 5 %
Segment Profit 767 710 8 %
Segment Margin 26.5 % 25.7 % 80 bps
HONEYWELL BUILDING TECHNOLOGIES
Sales 1,531 1,407 9 %
Organic Growth 14 %
Segment Profit 360 315 14 %
Segment Margin 23.5 % 22.4 % 110 bps
PERFORMANCE MATERIALS AND TECHNOLOGIES
Sales 2,694 2,552 6 %
Organic Growth 10 %
Segment Profit 601 530 13 %
Segment Margin 22.3 % 20.8 % 150 bps
SAFETY AND PRODUCTIVITY SOLUTIONS
Sales 1,829 2,083 (12 %)
Organic Growth (10 %)
Segment Profit 231 292 (21 %)
Segment Margin 12.6 % 14.0 % -140 bps
1Adjusted EPS and adjusted EPS V% exclude charges and the accrual of reserves
related to foreign exchange revaluation, inventory reserves, the write-down of
other assets, impairment of property, plant and equipment, employee severance,
and a tax valuation allowance, related to the initial suspension and wind down
of our businesses and operations in Russia, expenses related to UOP matters,
changes in fair value for Garrett equity securities, and a non-cash charge
associated with the reduction in value of reimbursement receivables following
Garrett's emergence from bankruptcy on April 30, 2021.
2Effective March 31, 2022, performance obligations exclude contracts with
customers related to Russia as collectability is not reasonably assured.
Backlog V% includes prior year revisions to reflect a prior period correction,
which had no impact on our results of operations.
3Lost Russian sales is defined as the year-over-year decline in sales due to
the decision to wind down our businesses and operations in Russia. This does
not reflect management's estimate of 2022 Russian sales absent the decision to
wind down our businesses and operations in Russia.
4As discussed in the notes to the attached reconciliations, we do not provide
guidance for margin or EPS on a GAAP basis.
5Adjusted EPS guidance excludes charges and the accrual of reserves related to
outstanding accounts receivable and contract assets, impairment of intangible
assets, foreign exchange revaluation, inventory reserves, the write-down of
other assets, impairment of property, plant and equipment, employee severance,
and a tax valuation allowance, related to the initial suspension and wind down
of our businesses and operations in Russia, expenses related to UOP matters,
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 charges and the accrual of reserves related
to outstanding accounts receivable and contract assets, impairment of
intangible assets, foreign exchange revaluation, inventory reserves, the
write-down of other assets, impairment of property, plant and equipment,
employee severance, and a tax valuation allowance, related to the initial
suspension and wind down of our businesses and operations in Russia, expenses
related to UOP matters, 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, gain on the sale of the retail footwear business,
and any potential future one-time items that we cannot reliably predict or
estimate.
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 charges and the accrual of reserves related
to foreign exchange revaluation, inventory reserves, the write-down of other
assets, impairment of property, plant and equipment, employee severance, and a
tax valuation allowance, related to the initial suspension and wind down of our
businesses and operations in Russia, expenses related to UOP matters, changes
in fair value for Garrett equity securities, and a non-cash charge associated
with a reduction in value of reimbursement receivables following Garrett's
emergence from bankruptcy on April 30, 2021.
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;
* 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 and wind
down 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: charges and
the accrual of reserves related to foreign exchange revaluation, inventory
reserves, the write-down of other assets, impairment of property, plant and
equipment, employee severance, and a tax valuation allowance related to the
initial suspension and wind down of our businesses and operations in
Russia, expenses related to UOP matters, changes in fair value for Garrett
equity securities, and a non-cash charge associated with a reduction in
value of reimbursement receivables following Garrett's emergence from
bankruptcy on April 30, 2021, 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: charges and the
accrual of reserves related to outstanding accounts receivable and contract
assets, impairment of intangible assets, foreign exchange revaluation,
inventory reserves, the write-down of other assets, impairment of property,
plant and equipment, employee severance, and a tax valuation allowance,
related to the initial suspension and wind down of our businesses and
operations in Russia, expenses related to UOP matters, 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, and a 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 June Six Months Ended June 30,
30,
2022 2021 2022 2021
Product sales $ $ $ $
6,684 6,639 12,816 13,048
Service sales 2,269 2,169 4,513 4,214
Net sales 8,953 8,808 17,329 17,262
Costs, expenses and
other
Cost of products sold 4,673 4,734 9,046 9,285
(1)
Cost of services sold 1,373 1,269 2,674 2,427
(1)
6,046 6,003 11,720 11,712
Selling, general and 1,306 1,207 2,737 2,443
administrative
expenses(1)
Other (income) (190) (366) (509) (808)
expense
Interest and other 87 83 172 173
financial charges
7,249 6,927 14,120 13,520
Income before taxes 1,704 1,881 3,209 3,742
Tax expense (benefit) 441 434 812 847
Net income 1,263 1,447 2,397 2,895
Less: Net income 2 17 2 38
attributable to the
noncontrolling
interest
Net income $ $ $ $
attributable to 1,261 1,430 2,395 2,857
Honeywell
Earnings per share of $ $ $ $
common stock - basic 1.86 2.06 3.51 4.11
Earnings per share of $ $ $ $
common stock - 1.84 2.04 3.48 4.06
assuming dilution
Weighted average 679.0 693.8 681.8 695.0
number of shares
outstanding - basic
Weighted average 685.0 702.5 688.1 703.5
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 June Six Months Ended June 30,
30,
Net Sales 2022 2021 2022 2021
Aerospace $ $ $ $
2,898 2,766 5,647 5,398
Honeywell Building 1,531 1,407 2,960 2,765
Technologies
Performance Materials and 2,694 2,552 5,147 4,898
Technologies
Safety and Productivity 1,829 2,083 3,573 4,201
Solutions
Corporate and All Other 1 - 2 -
Total $ $ $ $
8,953 8,808 17,329 17,262
Reconciliation of Segment Profit to Income Before Taxes
Three Months Ended June 30, Six Months Ended June 30,
Segment Profit 2022 2021 2022 2021
Aerospace $ $ $ $
767 710 1,520 1,472
Honeywell Building 360 315 696 620
Technologies
Performance 601 530 1,111 964
Materials and
Technologies
Safety and 231 292 484 595
Productivity
Solutions
Corporate and All (92) (54) (178) (83)
Other
Total segment profit 1,867 1,793 3,633 3,568
Interest and other (87) (83) (172) (173)
financial charges
Stock compensation (53) (39) (113) (116)
expense (1)
Pension ongoing 250 272 501 548
income (2)
Other postretirement 10 18 20 35
income (2)
Repositioning and (227) (101) (614) (242)
other charges (3,4)
Other (5) (56) 21 (46) 122
Income before taxes $ $ $ $
1,704 1,881 3,209 3,742
(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)
June 30, 2022 December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents $ $
8,248 10,959
Short-term investments 411 564
Accounts receivable, less allowances 7,738 6,830
of $378 and $177, respectively
Inventories 5,576 5,138
Other current assets 1,874 1,881
Total current assets 23,847 25,372
Investments and long-term receivables 797 1,222
Property, plant and equipment - net 5,342 5,562
Goodwill 17,528 17,756
Other intangible assets - net 3,385 3,613
Insurance recoveries for asbestos 272 322
related liabilities
Deferred income taxes 491 489
Other assets 10,596 10,134
Total assets $ $
62,258 64,470
LIABILITIES
Current liabilities:
Accounts payable $ $
6,245 6,484
Commercial paper and other short-term 3,487 3,542
borrowings
Current maturities of long-term debt 3,099 1,803
Accrued liabilities 7,116 7,679
Total current liabilities 19,947 19,508
Long-term debt 12,491 14,254
Deferred income taxes 2,421 2,364
Postretirement benefit obligations 212 208
other than pensions
Asbestos-related liabilities 1,780 1,800
Other liabilities 7,210 7,087
Redeemable noncontrolling interest 7 7
Shareowners' equity 18,190 19,242
Total liabilities, redeemable $ $
noncontrolling interest and 62,258 64,470
shareowners' equity
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Six Months Ended
Ended June 30,
June 30,
2022 2021 2022 2021
Cash flows from operating activities:
Net income $ $ $ $
1,263 1,447 2,397 2,895
Less: Net income attributable to the 2 17 2 38
noncontrolling interest
Net income attributable to Honeywell 1,261 1,430 2,395 2,857
Adjustments to reconcile net income
attributable to Honeywell to net cash
provided
by operating activities:
Depreciation 161 164 328 335
Amortization 114 120 277 290
Gain on sale of non-strategic businesses and - - - (90)
assets
Repositioning and other charges 227 101 614 242
Net payments for repositioning and other (112) (163) (220) (358)
charges
Pension and other postretirement income (260) (290) (521) (583)
Pension and other postretirement benefit 9 (13) (5) (27)
receipts (payments)
Stock compensation expense 53 39 113 116
Deferred income taxes 99 38 120 101
Other 148 (181) 81 (277)
Changes in assets and liabilities, net of the
effects of acquisitions and
divestitures:
Accounts receivable (619) (270) (904) (127)
Inventories (103) (113) (434) (271)
Other current assets (9) (32) (38) (98)
Accounts payable (41) 345 (240) 402
Accrued liabilities (139) 103 (741) (256)
Net cash provided by operating activities 789 1,278 825 2,256
Cash flows from investing activities:
Expenditures for property, plant and (158) (185) (341) (406)
equipment
Proceeds from disposals of property, plant 1 - 11 14
and equipment
Increase in investments (247) (661) (470) (1,397)
Decrease in investments 342 719 646 1,331
Receipts from Garrett Motion Inc. 212 375 409 375
Receipts (payments) from settlements of 276 (163) 337 (23)
derivative contracts
Cash paid for acquisitions, net of cash (2) (24) (178) (1,327)
acquired
Proceeds from sales of businesses, net of - - - 190
fees paid
Net cash provided by (used for) investing 424 61 414 (1,243)
activities
Cash flows from financing activities:
Proceeds from issuance of commercial paper 1,696 1,090 2,924 2,358
and other short-term borrowings
Payments of commercial paper and other (1,698) (1,089) (2,926) (2,355)
short-term borrowings
Proceeds from issuance of common stock 52 47 75 114
Proceeds from issuance of long-term debt - 4 1 27
Payments of long-term debt (49) (18) (89) (835)
Repurchases of common stock (1,419) (1,027) (2,437) (1,849)
Cash dividends paid (691) (664) (1,359) (1,304)
Other (4) (3) (21) (33)
Net cash used for financing activities (2,113) (1,660) (3,832) (3,877)
Effect of foreign exchange rate changes on (133) 30 (118) 16
cash and cash equivalents
Net decrease in cash and cash equivalents (1,033) (291) (2,711) (2,848)
Cash and cash equivalents at beginning of 9,281 11,718 10,959 14,275
period
Cash and cash equivalents at end of period $ $ $ $
8,248 11,427 8,248 11,427
Honeywell International Inc.
Reconciliation of Organic Sales % Change (Unaudited)
Three Months
Ended
June 30, 2022
Honeywell
Reported sales % change 2 %
Less: Foreign currency translation (2) %
Less: Acquisitions, divestitures and other, net - %
Organic sales % change 4 %
Sales decline attributable to COVID-driven masks 2 %
Organic sales % change excluding COVID-driven masks 6 %
Sales decline attributable to lost Russian sales 1 %
Organic sales % change excluding COVID-driven masks and lost 7 %
Russian sales
Aerospace
Reported sales % change 5 %
Less: Foreign currency translation - %
Less: Acquisitions, divestitures and other, net - %
Organic sales % change 5 %
Honeywell Building Technologies
Reported sales % change 9 %
Less: Foreign currency translation (6) %
Less: Acquisitions, divestitures and other, net 1 %
Organic sales % change 14 %
Performance Materials and Technologies
Reported sales % change 6 %
Less: Foreign currency translation (4) %
Less: Acquisitions, divestitures and other, net - %
Organic sales % change 10 %
Safety and Productivity Solutions
Reported sales % change (12) %
Less: Foreign currency translation (2) %
Less: Acquisitions, divestitures and other, net - %
Organic sales % change (10) %
Sales decline attributable to COVID-driven masks 5 %
Organic sales % change excluding COVID-driven masks (5) %
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 and wind down 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 Operating Income to Segment Profit, Calculation of Operating
Income and Segment Profit
Margins and Calculation of Segment Profit Margin excluding Quantinuum
(Unaudited)
(Dollars in millions)
Three Months Ended June 30, Twelve Months
Ended
December 31,
2022 2021 2021
Operating income $ $ $
1,601 1,598 6,200
Stock compensation expense (1) 53 39 217
Repositioning, Other (2,3) 180 119 636
Pension and other postretirement 33 37 159
service costs (3)
Segment profit $ $ $
1,867 1,793 7,212
Operating income $ $ $
1,601 1,598 6,200
÷ Net sales $ $ $
8,953 8,808 34,392
Operating income margin % 17.9 % 18.1 % 18.0 %
Segment profit $ $ $
1,867 1,793 7,212
÷ Net sales $ $ $
8,953 8,808 34,392
Segment profit margin % 20.9 % 20.4 % 21.0 %
Segment profit $ $ $
1,867 1,793 7,212
Add: Quantinuum segment loss (4) 38 14 62
Segment profit excluding $ $ $
Quantinuum 1,905 1,807 7,274
Net sales $ $ $
8,953 8,808 34,392
Less: Quantinuum net sales 1 1 5
Net sales excluding Quantinuum $ $ $
8,952 8,807 34,387
Segment profit margin % 21.3 % 20.5 % 21.2 %
excluding Quantinuum
Expansion in segment profit 80 bps Not Reported Not Reported
margin % excluding Quantinuum
Expansion in segment profit 50 bps Not Reported Not Reported
margin %
(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 June 30, 2022,
other charges include $67 million related to inventory reserves, the
write-down of other assets, and employee severance, related to the initial
suspension and wind down of our businesses and operations in Russia. For
the three months ended June 30, 2022 and twelve months ended December 31,
2021, other charges include $6 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 and Selling, general and
administrative expenses.
(4) For the three months ended June 30, 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 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 June 30, Twelve Months Ended December
31,
2022 2021 2021 2022(E)
Earnings per share $ $ $ $8.02 -
of common stock - 1.84 2.04 7.91 $8.27
diluted (1)
Pension - - 0.05 No
mark-to-market Forecast
expense (2)
Changes in fair - (0.03) (0.03) -
value for Garrett
equity securities
(3)
Garrett related - 0.01 0.01 -
adjustments (4)
Gain on sale of - - (0.11) -
retail footwear
business (5)
Expense related to 0.07 - 0.23 0.07
UOP Matters (6)
Russian-related 0.19 - - 0.46
charges (7)
Adjusted earnings $ $ $ $8.55 -
per share of 2.10 2.02 8.06 $8.80
common stock -
diluted
(1) For the three months ended June 30, 2022, and 2021, adjusted earnings per
share utilizes weighted average shares of approximately 685.0 million and
702.5 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 three months ended June 30, 2021, and twelve months ended December
31, 2021, the adjustments were $16 million and $19 million, respectively,
net of tax due, to changes in fair value for Garrett equity securities.
(4) For the three months ended June 30, 2021, and 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 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 three months ended June 30, 2022, and twelve months ended December
31, 2022, the adjustment was $50 million, with no tax benefit, due to an
expense related to UOP matters. 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 June 30, 2022, the adjustment was $126 million,
with no tax benefit, to exclude charges and the accrual of reserves
related to foreign exchange revaluation, inventory reserves, the
write-down of other assets, impairment of property, plant and equipment,
employee severance, and a tax valuation allowance related to the initial
suspension and wind down of our businesses and operations in Russia. For
the twelve months ended December 31, 2022, the adjustment was $309
million, to exclude charges and the accrual of reserves related to
outstanding accounts receivable and contract assets, impairment of
intangible assets, foreign exchange revaluation, inventory reserves, the
write-down of other assets, impairment of property, plant and equipment,
employee severance, and a tax valuation allowance related to the initial
suspension and wind down of our businesses and operations in Russia.
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
June 30, 2022 June 30, 2021
Cash provided by operating activities $ $
789 1,278
Expenditures for property, plant and (158) (185)
equipment
Garrett cash receipts 212 375
Free cash flow 843 1,468
Net income attributable to Honeywell 1,261 1,430
Changes in fair value for Garrett equity - (16)
securities (1)
Garrett related adjustment (2) - 7
Expense related to UOP Matters (3) 50 -
Russian-related charges (4) 126 -
Adjusted net income attributable to $ $
Honeywell 1,437 1,421
Cash provided by operating activities $ $
789 1,278
÷ Net income attributable to Honeywell $ $
1,261 1,430
Operating cash flow conversion % 63 % 89 %
Free cash flow $ $
843 1,468
÷ Adjusted net income attributable to $ $
Honeywell 1,437 1,421
Adjusted free cash flow conversion % 59 % 103 %
(1) For the three months ended June 30, 2021, the adjustment was $16 million,
net of tax, due to changes in fair value for Garrett equity securities.
(2) For the three months ended June 30, 2021, the adjustment was $7 million,
net of tax, due to a non-cash charge associated with a reduction in value
of reimbursement receivables following Garrett's emergence from bankruptcy
on April 30, 2021.
(3) For the three months ended June 30, 2022, the adjustment was $50 million,
with no tax benefit, due to an expense related to UOP matters.
(4) For the three months ended June 30, 2022, the adjustment was $126 million,
with no tax benefit, to exclude charges and the accrual of reserves
related to foreign exchange revaluation, inventory reserves, the
write-down of other assets, impairment of property, plant and equipment,
employee severance, and a tax valuation allowance related to the initial
suspension and wind down of our businesses and operations in Russia.
We define free cash flow as cash provided by operating activities less cash
expenditures for property, plant and equipment plus cash receipts from Garrett.
We define adjusted free cash flow conversion as free cash flow divided by
adjusted net income attributable to Honeywell.
We believe that free cash flow is a non-GAAP metric that is useful to investors
and management as a measure of cash generated by operations that will be used
to repay scheduled debt maturities and can be used to invest in future growth
through new business development activities or acquisitions, pay dividends,
repurchase stock or repay debt obligations prior to their maturities. This
metric can also be used to evaluate our ability to generate cash flow from
operations and the impact that this cash flow has on our liquidity.
Honeywell International Inc.
Reconciliation of Expected Cash Provided by Operating Activities to Expected
Free Cash Flow and Expected Free
Cash Flow Excluding Quantinuum (Unaudited)
Twelve Months
Ended December 31,
2022(E) ($B)
Cash provided by operating activities $5.5 - $5.9
Expenditures for property, plant and equipment (1.2)
Garrett cash receipts 0.4
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.
Media Investor Relations
Bevin Maguire Sean Meakim
(704) 654-7023 (704) 627-6200
bevin.maguire@honeywell.com sean.meakim@honeywell.com
END
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July 28, 2022 06:30 ET (10:30 GMT)
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