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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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Honeywell Delivers Third-Quarter Reported Sales Growth Of 6%, Operating Cash
Flow Growth Of 33%
- Organic Sales up 7% Driven by Aerospace and Safety and Productivity Solutions
- Operating Income Margin up 40 Basis Points, Segment Margin up 70 Basis Points
to 19.4%
- Reported Earnings per Share of $3.11; Adjusted EPS(1) of $2.03, up 17%
- Adjusted Free Cash Flow(2) up 51%, Conversion 119%
- Updated Guidance Reflects Broad-Based Strength in Business Outlook and Impact
from Two Spin-Offs
MORRIS PLAINS, N.J., Oct. 19, 2018 /PRNewswire/ -- Honeywell (NYSE: HON) today
announced financial results for the third quarter of 2018 and revised its
full-year 2018 guidance to reflect the impact of the spin-offs.
"Honeywell continued to build on its strong first-half performance, delivering
exceptional results across the board. Organic sales were up 7 percent driven by
continued double-digit growth in our warehouse automation business; strong
growth across the Aerospace business; demand for Solstice® low global-warming
materials and short-cycle Process Solutions software and services; and
continued momentum in Homes and ADI global distribution. The increased volumes,
coupled with our operational excellence initiatives, drove 70 basis points of
segment margin expansion, which is 20 basis points above the high end of our
guidance. This resulted in adjusted earnings per share1 of $2.03, up 17 percent
year-over-year," said Darius Adamczyk, Chairman and Chief Executive Officer of
Honeywell. "In the third quarter, we generated more than $1.8 billion of
adjusted free cash flow2, up 51 percent year-over-year, with conversion of 119
percent. We also repurchased approximately $600 million in Honeywell shares in
the third quarter and increased our dividend by 10 percent - the ninth
double-digit increase since 2010. Through the third quarter of 2018, we have
committed more than $4.5 billion in capital deployment through share
repurchases, dividends and acquisitions.
"This has been an exciting year for Honeywell. The portfolio changes we
announced at this time last year are nearly complete, and we recently announced
the acquisition of Transnorm, a leading provider of warehouse automation
solutions with a large and growing installed base and an attractive
aftermarket. We are well positioned to deliver strong results in 2019 and are
committed to delivering outstanding returns for our shareowners over the long
term," Adamczyk concluded.
The company revised its full-year guidance3 to reflect the strong operational
performance in the first three quarters of 2018, the completion of the spin-off
of Garrett Motion Inc. (NYSE: GTX), which separated from Honeywell on October
1, and the expected completion of the spin-off of Resideo Technologies, Inc. on
October 29. Sales are now expected to be $41.7 billion to $41.8 billion;
organic sales growth is now expected to be approximately 6 percent; segment
margin expansion is now expected to be 50 to 60 basis points; and adjusted
earnings per share4 is now expected to be $7.95 to $8.00. The new guidance
range takes into account $0.27 of net earnings dilution from the separation of
the Garrett and Resideo businesses, partially offset by a $0.07 increase to
reflect the company's improved fourth-quarter outlook.
The company also updated its cash flow guidance. A summary of the company's
full-year guidance changes can be found in Table 1.
Honeywell will discuss the results during an investor conference call today
starting at 8:30 a.m. Eastern Daylight Time.
Third-Quarter Performance
Honeywell sales for the third quarter were up 6 percent on a reported basis and
up 7 percent on an organic basis. The difference between reported and organic
sales primarily relates to the impact of foreign currency translation.
Third-quarter reported earnings per share was $3.11, which includes $233
million of separation costs (including net tax impacts) associated with the
Garrett and Resideo spin-offs and a $1 billion favorable adjustment to the
charge the company took in the fourth quarter of 2017 related to U.S. tax
legislation. The third-quarter financial results can be found in Tables 2 and
3.
Aerospace sales for the third quarter were up 10 percent on an organic basis
driven by robust demand from business aviation original equipment
manufacturers, continued strength in the U.S. and international defense
business, growth in the air transport and business aviation aftermarket, and
demand for light vehicle gas turbochargers in Transportation Systems (which was
spun-off as Garrett Motion Inc. effective October 1). Segment margin expanded
80 basis points to 22.1 percent, primarily driven by higher defense and
aftermarket volumes, Commercial Excellence and lower customer incentives.
Home and Building Technologies sales for the third quarter were up 3 percent
on an organic basis driven by continued strength in the ADI Global Distribution
business, demand for commercial fire products and residential thermal
solutions, and growth in Building Solutions. Segment margin expanded 10 basis
points to 17.1 percent, primarily driven by Commercial Excellence and
productivity (including benefits from previously funded and executed
restructuring), largely offset by inflation and unfavorable mix.
Performance Materials and Technologies sales for the third quarter were up 4
percent on an organic basis driven by demand for Solstice® low global warming
products in Advanced Materials; short-cycle products, services and software
demand in Process Solutions; and growth in engineering sales in UOP. Segment
margin contracted, as anticipated, by 70 basis points to 21.2 percent,
primarily driven by unfavorable mix in UOP.
Safety and Productivity Solutions sales for the third quarter were up 12
percent on an organic basis driven by continued double-digit sales growth in
the Intelligrated business, strong demand for new mobility solutions in
productivity products, and higher volumes in sensing and industrial safety.
Segment margin expanded 150 basis points to 16.6 percent, primarily driven by
Commercial Excellence, productivity and higher sales volumes.
To participate on the conference call, please dial (866) 548-4713 (domestic) or
(323) 794-2093 (international) approximately ten minutes before the 8:30 a.m.
EDT start. Please mention to the operator that you are dialing in for
Honeywell's third quarter 2018 earnings call or provide the conference code
HON3Q18. The 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). Investors can hear a replay of
the conference call from 12:30 p.m. EDT, October 19, until 12:30 p.m. EDT,
October 26, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 5040626.
TABLE 1: FULL-YEAR 2018 GUIDANCE - NOW UPDATED TO REFLECT SPIN-OFFS5
Previous Guidance Current Guidance
Sales $43.1B - $43.6B $41.7B - $41.8B
Organic Growth 5% - 6% 6%
Segment Margin 19.4% - 19.6% 19.5% - 19.6%
Expansion Up 40 - 60 bps Up 50 - 60 bps
Adjusted Earnings Per Share $8.10 - $8.20 $7.95 - $8.00
Earnings Growth 13% - 15% 11% - 12%
Operating Cash Flow N/A $6.2B - $6.8B
Growth 4% - 14%
Adjusted Free Cash Flow $5.6B - $6.2B $5.8B - $6.2B
Growth 13% - 26% 18% - 26%
TABLE 2: SUMMARY OF FINANCIAL RESULTS - TOTAL HONEYWELL
3Q 3Q Change
2017 2018
Sales 10,121 10,762 6%
Organic 7%
Segment Margin 18.7% 19.4% 70 bps
Operating Income Margin 15.2% 15.6% 40 bps
Earnings Per Share
Reported $1.74 $3.11 79%
Adjusted (Excluding Separation Costs of $233M and $1B $1.74 $2.03 17%
Favorable Adjustment to the 4Q17 U.S. Tax Legislation
Charge)
Cash Flow from Operations 1,407 1,878 33%
Adjusted Free Cash Flow (Excluding Separation Cost Impacts 1,195 1,809 51%
of $114M)
TABLE 3: SUMMARY OF FINANCIAL RESULTS - SEGMENTS
AEROSPACE 3Q 2017 3Q 2018 Change
Sales 3,657 4,030 10%
Organic 10%
Segment Profit 780 891 14%
Segment Margin 21.3% 22.1% 80 bps
HOME AND BUILDING TECHNOLOGIES
Sales 2,479 2,517 2%
Organic 3%
Segment Profit 421 430 2%
Segment Margin 17.0% 17.1% 10 bps
PERFORMANCE MATERIALS AND TECHNOLOGIES
Sales 2,571 2,640 3%
Organic 4%
Segment Profit 563 560 Flat
Segment Margin 21.9% 21.2% (70) bps
SAFETY AND PRODUCTIVITY SOLUTIONS
Sales 1,414 1,575 11%
Organic 12%
Segment Profit 213 262 23%
Segment Margin 15.1% 16.6% 150 bps
Honeywell (www.honeywell.com) is a Fortune 100 software-industrial company that
delivers industry specific solutions that include aerospace and automotive
products and services; control technologies for buildings, homes, and industry;
and performance materials globally. Our technologies help everything from
aircraft, cars, homes and 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.
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, as well as the ability to
effect the Resideo separation. 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,
including with respect to any changes in or abandonment of the proposed Resideo
separation. 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 margin, on an overall Honeywell
basis, which we define as segment profit divided by sales; organic sales
growth, which we define as sales growth less the impacts from foreign currency
translation, acquisitions and divestitures for the first 12 months following
transaction date, and impacts from adoption of the new accounting guidance on
revenue from contracts with customers that arise solely due to non-comparable
accounting treatment of contracts existing in the prior period; adjusted free
cash flow, which we define as cash flow from operations less capital
expenditures and which we adjust to exclude the impact of separation costs
related to the spin-offs of Resideo and Garrett, if and as noted in the
release; adjusted free cash flow conversion, which we define as adjusted free
cash flow divided by net income attributable to Honeywell, excluding pension
mark-to-market expenses, separation costs related to the spin-offs, the 4Q17
U.S. tax legislation charge, and adjustments to such charge, if and as noted in
the release; and adjusted earnings per share, which we adjust to exclude
pension mark-to-market expenses, as well as for other components, such as
separation costs related to the spin-offs, the 4Q17 U.S. tax legislation
charge, and adjustments to such charge, if and as noted in the release. Other
than references to reported earnings per share, all references to earnings per
share in this release are so adjusted. The respective tax rates applied when
adjusting earnings per share for these items are identified in the release or
in the reconciliations presented in the Appendix. 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.
Refer to the Appendix attached to this release for reconciliations of non-GAAP
financial measures to the most directly comparable GAAP measures.
Contacts:
Media Investor Relations
Scott Sayres Mark Macaluso
(480) 257-8921 (973) 455-2222
scott.sayres@honeywell.com mark.macaluso@honeywell.com
1 Adjusted EPS and adjusted EPS V% excludes separation costs related to the
spin-offs of Resideo and Garrett, and adjustments to the 4Q17 U.S. tax
legislation charge.
2 Adjusted free cash flow, associated conversion and adjusted free cash flow V%
exclude impacts from separation costs related to the spin-offs. Conversion also
excludes adjustments to the 4Q17 U.S. tax legislation charge.
3 As discussed in the attached reconciliations, we do not publish margin or EPS
guidance on a GAAP basis.
4 Adjusted EPS guidance excludes pension mark-to-market, separation costs
related to the spin-offs of Resideo and Garrett, and adjustments to the 4Q17
U.S. tax legislation charge.
5 Guidance reflects the completion of the spin-off of Garrett Motion Inc. on
Oct. 1 and the expected completion of the spin-off of Resideo Technologies,
Inc. on Oct. 29. Guidance for EPS and EPS V% excludes pension mark-to-market,
separation costs related to the spin-offs, and the 4Q17 U.S. tax legislation
charge and adjustments to such charge; guidance for adjusted free cash flow and
adjusted free cash flow V% exclude impacts from separation costs related to the
spin-offs. As discussed in the attached reconciliation, we do not publish
margin or EPS guidance on a GAAP basis.
Honeywell International Inc
Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Product sales $ 8,477 $ $ 25,414 $ 23,671
8,052
Service sales 2,285 2,069 6,659 6,020
Net sales 10,762 10,121 32,073 29,691
Costs, expenses and other
Cost of products 6,127 5,795 18,234 16,982
sold (A)
Cost of services 1,429 1,259 4,127 3,622
sold (A)
7,556 7,054 22,361 20,604
Selling, general and 1,524 1,524 4,527 4,403
administrative expenses
(A)
Other (income) (275) (316) (859) (834)
expense
Interest and other 99 81 277 235
financial charges
8,904 8,343 26,306 24,408
Income before taxes 1,858 1,778 5,767 5,283
Tax expense (benefit) (498) 416 679 1,188
Net income 2,356 1,362 5,088 4,095
Less: Net income 18 17 44 31
attributable to the
noncontrolling interest
Net income attributable $ 2,338 $ $ 5,044 $ 4,064
to Honeywell 1,345
Earnings per share of $ 3.15 $ $ 6.76 $ 5.33
common stock - basic 1.76
Earnings per share of $ 3.11 $ $ 6.67 $ 5.26
common stock - assuming 1.74
dilution
Weighted average number 741.8 762.2 746.0 763.1
of shares outstanding -
basic
Weighted average number 752.0 771.4 756.0 773.1
of shares outstanding -
assuming dilution
(A) 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 Nine Months Ended
September 30, September 30,
Net Sales 2018 2017 2018 2017
Aerospace $ $ $ $
4,030 3,657 12,065 10,877
Home and Building 2,517 2,479 7,496 7,162
Technologies
Performance Materials and 2,640 2,571 7,872 7,485
Technologies
Safety and Productivity 1,575 1,414 4,640 4,167
Solutions
Total $ 10,762 $ 10,121 $ $
32,073 29,691
Reconciliation of Segment Profit to Income Before Taxes
Three Months Ended Nine Months Ended
September 30, September 30,
Segment Profit 2018 2017 2018 2017
Aerospace $ $ $ $
891 780 2,702 2,395
Home and Building 430 421 1,273 1,189
Technologies
Performance Materials and 560 563 1,676 1,599
Technologies
Safety and Productivity 262 213 760 621
Solutions
Corporate (53) (82) (181) (210)
Total segment profit 2,090 1,895 6,230 5,594
Interest and other (99) (81) (277) (235)
financial charges
Stock compensation (41) (39) (131) (133)
expense (A)
Pension ongoing income 247 183 745 546
(B)
Other postretirement 12 6 24 16
income (B)
Repositioning and other (299) (235) (756) (586)
charges (C,D)
Other (E) (52) 49 (68) 81
Income before taxes $ $ $ $
1,858 1,778 5,767 5,283
(A) Amounts included in Selling, general and administrative
expenses.
(B) 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).
(C) Amounts included in Cost of products and services sold, Selling, general
and administrative expenses, and Other
income/expense.
(D) Includes repositioning, asbestos, and environmental expenses.
(E) Amounts include the other components of Other income/expense not included
within other categories in this
reconciliation. Equity income (loss) of affiliated companies is included
in segment profit.
Honeywell International Inc
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
September December
30, 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ $
9,803 7,059
Short-term investments 1,850 3,758
Accounts receivable - net 8,568 8,866
Inventories 5,061 4,613
Other current assets 1,346 1,706
Total current assets 26,628 26,002
Investments and long-term receivables 754 667
Property, plant and equipment - net 5,966 5,926
Goodwill 18,186 18,277
Other intangible assets - net 4,202 4,496
Insurance recoveries for asbestos related liabilities 465 479
Deferred income taxes 376 251
Other assets 5,350 3,372
Total assets $ $
61,927 59,470
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ $
7,050 6,584
Commercial paper and other short-term borrowings 3,977 3,958
Current maturities of long-term debt 215 1,351
Accrued liabilities 6,658 6,968
Total current liabilities 17,900 18,861
Long-term debt 14,059 12,573
Deferred income taxes 1,905 2,664
Postretirement benefit obligations other than 440 512
pensions
Asbestos related liabilities 2,252 2,260
Other liabilities 6,948 5,930
Redeemable noncontrolling interest 7 5
Shareowners' equity 18,416 16,665
Total liabilities, redeemable noncontrolling $ $
interest and shareowners' equity 61,927 59,470
Honeywell International Inc
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Nine Months Ended
Ended
September 30, September 30,
2018 2017 2018 2017
Cash flows from operating activities:
Net income $ $ $ $
2,356 1,362 5,088 4,095
Less: Net income attributable to the 18 17 44 31
noncontrolling interest
Net income attributable to Honeywell 2,338 1,345 5,044 4,064
Adjustments to reconcile net income
attributable to Honeywell to net
cash provided by operating activities:
Depreciation 186 180 558 534
Amortization 100 105 304 298
Repositioning and other charges 299 236 756 586
Net payments for repositioning and (191) (130) (519) (394)
other charges
Pension and other postretirement (259) (189) (769) (562)
income
Pension and other postretirement (23) (24) (67) (71)
benefit payments
Stock compensation expense 41 39 131 133
Deferred income taxes (596) 13 (482) (77)
Other (241) (30) (163) (38)
Changes in assets and liabilities,
net of the effects of
acquisitions and divestitures:
Accounts receivable 34 (132) 131 (408)
Inventories (270) (102) (459) (400)
Other current assets 182 16 356 13
Accounts payable 242 90 466 404
Accrued liabilities 36 (10) (412) (288)
Net cash provided by operating activities 1,878 1,407 4,875 3,794
Cash flows from investing activities:
Expenditures for property, plant and (183) (212) (522) (613)
equipment
Proceeds from disposals of property, 1 21 4 46
plant and equipment
Increase in investments (1,095) (1,820) (2,882) (4,149)
Decrease in investments 1,126 952 4,634 2,793
Cash paid for acquisitions, net of cash (51) (57) (51) (72)
acquired
Other 30 (83) 250 (196)
Net cash provided by (used for) investing (172) (1,199) 1,433 (2,191)
activities
Cash flows from financing activities:
Proceeds from issuance of commercial 6,551 3,772 19,300 8,808
paper and other short-term borrowings
Payments of commercial paper and other (7,001) (3,773) (19,153) (8,608)
short-term borrowings
Proceeds from issuance of common stock 115 87 242 463
Proceeds from issuance of long-term 21 23 26 39
debt
Payments of long-term debt (26) (39) (1,303) (69)
Repurchases of common stock (604) (343) (2,308) (1,335)
Cash dividends paid (553) (505) (1,669) (1,554)
Pre-separation funding 1,604 - 1,604 -
Other (23) (26) (141) (131)
Net cash provided by (used for) by 84 (804) (3,402) (2,387)
financing activities
Effect of foreign exchange rate changes on (69) 108 (162) 330
cash and cash equivalents
Net increase (decrease) in cash and cash 1,721 (488) 2,744 (454)
equivalents
Cash and cash equivalents at beginning of 8,082 7,877 7,059 7,843
period
Cash and cash equivalents at end of period $ $ $ $
9,803 7,389 9,803 7,389
Honeywell International Inc
Reconciliation of Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Segment profit $ $ $ $
2,090 1,895 6,230 5,594
Stock compensation expense (A) (41) (39) (131) (133)
Repositioning and other (B,C) (313) (249) (753) (591)
Pension and other postretirement (54) (64) (161) (186)
service costs (D)
Operating income $ $ $ $
1,682 1,543 5,185 4,684
Segment profit $ $ $ $
2,090 1,895 6,230 5,594
÷ Net sales $ $ $ $
10,762 10,121 32,073 29,691
Segment profit margin % 19.4% 18.7% 19.4% 18.8%
Operating income $ $ $ $
1,682 1,543 5,185 4,684
÷ Net sales $ $ $ $
10,762 10,121 32,073 29,691
Operating income margin % 15.6% 15.2% 16.2% 15.8%
(A) Included in Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income
adjustment.
(C) Included in Cost of products and services sold, Selling, general and
administrative expenses and Other income/expense.
(D) Included in Cost of products and services sold and Selling, general and
administrative expenses.
We define segment profit as operating income, excluding stock compensation
expense, pension and other postretirement service costs, and repositioning and
other charges. 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, 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 Organic Sales % Change (Unaudited)
Three Months Ended
September 30, 2018
Honeywell
Reported sales % change 6%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net -
Organic sales % change 7%
Aerospace
Reported sales % change 10%
Less: Foreign currency translation -
Less: Acquisitions, divestitures and other, net -
Organic sales % change 10%
Home and Building Technologies
Reported sales % change 2%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net -
Organic sales % change 3%
Performance Materials and Technologies
Reported sales % change 3%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net -
Organic sales % change 4%
Safety and Productivity Solutions
Reported sales % change 11%
Less: Foreign currency translation (1)%
Less: Acquisitions, divestitures and other, net -
Organic sales % change 12%
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, acquisitions, net of
divestitures, and non-comparable impacts from adoption of the new revenue
recognition standard. We
believe this measure is 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 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 Cash Provided by Operating Activities to Adjusted Free Cash
Flow and Calculation of Adjusted Free Cash Flow Conversion (Unaudited)
(Dollars in millions)
Three Months Ended Three Months Ended
September 30, 2018 September 30, 2017
Cash provided by operating $ $
activities 1,878 1,407
Expenditures for property, (183) (212)
plant and equipment
Free cash flow 1,695 1,195
Separation cost payments 114 -
Adjusted free cash flow $ $
1,809 1,195
Net income attributable to $ $
Honeywell 2,338 1,345
Separation costs, includes net 233 -
tax impacts
Adjustments to 4Q17 U.S tax (1,047) -
legislation charge
Adjusted net income $ $
attributable to Honeywell 1,524 1,345
Cash provided by operating $ $
activities 1,878 1,407
÷ Net income attributable to $ $
Honeywell 2,338 1,345
Operating cash flow conversion 80% 105%
Adjusted free cash flow $ $
1,809 1,195
÷ Adjusted net income $ $
attributable to Honeywell 1,524 1,345
Adjusted free cash flow 119% 89%
conversion %
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, 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.
Honeywell International Inc
Reconciliation of Earnings per Share to Adjusted Earnings per Share (Unaudited)
Three Months Ended
September 30,
2018 2017
Earnings per share of common stock - assuming $ $
dilution (1) 3.11 1.74
Separation costs (2) 0.31 -
Adjustments to 4Q17 U.S. tax legislation (1.39) -
charge
Adjusted earnings per share of common stock - $ $
assuming dilution 2.03 1.74
(1) For the three months ended September 30, 2018 and 2017, utilizes weighted
average shares of approximately 752 million and 771.4 million.
(2) Separation costs of $248 million ($233 million including net tax impacts)
includes $132 million of tax costs we incurred in the restructuring of the
ownership of
various legal entities in anticipation of the spin-off transactions
("frictional tax costs") and $116 million ($101 million including net tax
impacts)of other separation
costs.
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
Honeywell International Inc
Reconciliation of Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited)
(Dollars in millions)
Twelve Months Ended
December 31, 2017
Segment profit $
7,690
Stock compensation expense (A) (176)
Repositioning and other (B,C) (962)
Pension and other postretirement service costs (249)
(D)
Operating income $
6,303
Segment profit $
7,690
÷ Net sales $
40,534
Segment profit margin % 19.0%
Operating income $
6,303
÷ Net sales $
40,534
Operating income margin % 15.5%
(A) Included in Selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income
adjustment.
(C) Included in Cost of products and services sold, Selling, general and
administrative expenses and Other income/expense.
(D) Included in Cost of products and services sold and Selling, general and
administrative expenses.
We define segment profit as operating income, excluding stock compensation
expense, pension and other postretirement service costs, and
repositioning and other charges. 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, 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, particularly 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. 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)
Twelve Months Twelve Months
Ended Ended
December 31, December 31,
2017 (1) 2018
Earnings per share of common stock - $ TBD
assuming dilution (EPS) 2.00
Pension mark-to-market expense 0.09 TBD
Separation costs 0.02 TBD
Adjustments to 4Q17 U.S. tax legislation 5.04 TBD
charge
Adjusted EPS $ $7.95 -
7.15 $8.00
(1) Utilizes weighted average shares of approximately 772.1 million for full
year. Pension mark-to-market expense uses a blended tax rate of 23%.
We believe adjusted earnings per share is a measure that is useful to
investors and management in understanding our ongoing operations and in
analysis of ongoing operating
trends. For forward looking information, management cannot reliably predict
or estimate, without unreasonable effort, the pension mark-to-market expense
as it is dependent on
macroeconomic factors, such as interest rates and the return generated on
invested pension plan assets, the separation costs given the inherent
uncertainty in the estimates,
and any adjustments to the 4Q17 U.S. tax legislation charge as the amounts
are provisional. We therefore do not include an estimate for the pension
mark-to-market expense,
separation costs, or adjustments to 4Q17 U.S. tax legislation charge in this
reconciliation. Based on economic and industry conditions, future
developments and other relevant
factors, these assumptions are subject to change.
Honeywell International Inc
Reconciliation of Cash Provided by Operating Activities to Adjusted Free Cash
Flow (Unaudited)
Twelve Months Ended Twelve Months
Ended
December 31, 2017 ($M) December 31,
2018 ($B)
Cash provided by operating $ $6.2 - $6.8
activities 5,966
Expenditures for property, plant (1,031) (0.9)
and equipment
Free cash flow 4,935 5.3 - 5.9
- 0.3 - 0.5
Separation cost payments
Adjusted free cash flow $ $5.8 - $6.2
4,935
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, 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
END
(END) Dow Jones Newswires
October 19, 2018 06:30 ET (10:30 GMT)
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