- Sales of $9.1 Billion,
Reported and Organic1 Sales Up 3%
- Operating Margin Up 130 Basis Points to 20.4%; Segment
Margin1 Up 20 Basis Points to 22.2%
- Earnings Per Share of $2.23
and Adjusted Earnings Per Share1 of $2.25, Above High End of Previous
Guidance
- Backlog Up 6% Year Over Year to $32.0
Billion on $10.2 Billion in
Orders
- Deployed $1.6 Billion of
Capital to Dividends, Share Repurchases, and Capital
Expenditures
CHARLOTTE, N.C., April 25,
2024 /PRNewswire/ -- Honeywell (NASDAQ: HON)
today announced results for the first quarter that met or exceeded
the company's guidance. The company also reiterated its full-year
sales, segment margin2, adjusted earnings per
share2,3, and cash flow guidance ranges.
Honeywell reported first-quarter year-over-year reported and
organic1 sales growth of 3%, led by another quarter of
strong growth in Aerospace Technologies, which was up 18% on an
organic1 basis, and Energy and Sustainability Solutions,
which was up 5% organically1. Additionally, Honeywell
Connected Enterprise offerings once again generated sales growth of
more than 20% across the portfolio, led by cyber and buildings
offerings. Operating margin expanded 130 basis points to 20.4% and
segment margin1 expanded by 20 basis points to 22.2%,
driven by expansion in Aerospace Technologies. Earnings per share
for the first quarter was $2.23, up
8% year over year, and adjusted earnings per share1 was
$2.25, up 9% year over year.
Operating cash flow was $0.4 billion
and free cash flow1 was $0.2
billion.
"Honeywell delivered a strong start to 2024. Organic1
growth was led by double-digit growth in both our commercial
aviation and defense and space businesses," said Vimal Kapur, chief executive officer of
Honeywell. "As long-cycle customer demand remained strong, our
robust backlog increased 6% year over year and was up sequentially,
ending the quarter at a record level of $32.0 billion. We also experienced pockets of
recovery in short cycle, and expect broader participation as the
year unfolds and channels normalize further. Improving business
mix, continued focus on commercial excellence, and productivity
actions enabled us to expand margins in line with the high end of
our guidance range and overdeliver on our adjusted earnings per
share2,3 guidance.
"Concurrently, we executed on our capital deployment strategy,
putting our robust balance sheet to work through $1.6 billion in dividends, share repurchases, and
high-return capital expenditures. In addition, we announced our
intention to acquire Civitanavi Systems, which will further
strengthen our navigation offerings in Aerospace and expand our
footprint in Europe."
Kapur continued, "Building on this quarter's momentum, we are
poised for another year of significant transformation at Honeywell
as we remain well-positioned to deliver on our commitments and
accelerate growth in 2024. Our portfolio is aligned to three
powerful megatrends - automation, the future of aviation, and
energy transition, all underpinned by digitalization. Looking
ahead, I remain confident in our ability to create value as we
continue to execute on our M&A playbook and leverage our
differentiated Accelerator operating system to unlock the full
value of our latest acquisitions, as well as in our core
businesses."
As a result of the company's first-quarter performance and
management's outlook for the remainder of the year, Honeywell
maintained its full-year sales, segment margin2,
adjusted earnings per share2,3, and cash flow guidance.
Full-year sales are expected to be $38.1
billion to $38.9 billion, with
organic1 sales growth in the range of 4% to 6%. Segment
margin2 is expected to be in the range of 23.0% to
23.3%, with segment margin expansion2 of 30 to 60 basis
points. Adjusted earnings per share2,3 is expected to be
in the range of $9.80 to $10.10, up 7% to 10%. Operating cash flow is
expected to be in the range of $6.7
billion to $7.1 billion, with
free cash flow1 of $5.6
billion to $6.0 billion. A
summary of the company's full-year guidance can be found in Table
1.
First-Quarter Performance
Honeywell sales for the first quarter were up 3%
year over year on a reported basis and 3% year over year on an
organic1 basis. The first-quarter financial results
can be found in Tables 2 and 3.
Aerospace Technologies sales for the first quarter
were up 18% on an organic1 basis year over year, the
seventh consecutive quarter of double-digit organic growth, as a
result of ongoing strength in both commercial aviation and defense
and space. Sales growth was led by commercial original equipment,
up over 20% year over year for the second straight quarter as
shipset deliveries continued to increase sequentially. Commercial
aftermarket grew 17% on increased flight activity, led by air
transport. Defense and space grew 16% year over year as demand
remained strong, while supply chain improvements allowed us to
execute on our robust order book. Segment margin expanded 150 basis
points year over year to 28.1%, driven by commercial excellence and
volume leverage, partially offset by cost inflation and mix
pressure within our original equipment business.
Industrial Automation sales for the first quarter
were down 13% on an organic1 basis year over year. Sales
decline was primarily due to lower volumes in warehouse and
workflow solutions. Sales in our short-cycle productivity solutions
and services business were down versus the prior year, but orders
grew double digits year over year and sequentially for the second
straight quarter, an encouraging sign of recovering demand. Our
lifecycle solutions and services business was a bright spot in the
quarter, up double-digits year over year. Segment margin contracted
200 basis points to 16.8% driven by lower volume leverage and cost
inflation, partially offset by productivity actions and commercial
excellence.
Building Automation sales for the first quarter were
down 3% on an organic1 basis year over year. Building
solutions continues to be a bright spot, with double-digit growth
in projects and another quarter of growth in services. Strength in
building solutions was offset by building products, where lower
volumes led to sales declines across fire, security, and building
management systems. Segment margin contracted 120 basis points to
24.0%, slightly above fourth quarter levels, due to product mix
headwinds and cost inflation, partially offset by productivity
actions and commercial excellence.
Energy and Sustainability Solutions sales for the
first quarter were up 5% on an organic1 basis year over
year. Advanced materials led ESS with 6% sales growth, primarily
driven by another quarter of double-digit improvement in fluorine
products. UOP sales grew 3% in the quarter as a result of
double-digit growth in petrochemical catalyst shipments and
refining equipment, partially offset by expected challenging
year-over-year comps from large gas processing equipment projects.
Segment margin contracted 70 basis points to 19.8% as one-time
factory restart costs were partially offset by favorable business
mix and productivity actions.
Conference Call Details
Honeywell will discuss its first-quarter results and full-year
2024 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 2024 GUIDANCE2
|
|
Previous
Guidance
|
|
Current
Guidance
|
Sales
|
|
$38.1B -
$38.9B
|
|
$38.1B -
$38.9B
|
Organic1 Growth
|
|
4% -
6%
|
|
4% -
6%
|
Segment
Margin
|
|
23.0% -
23.3%
|
|
23.0% -
23.3%
|
Expansion
|
|
Up 30 - 60
bps
|
|
Up 30 - 60
bps
|
Adjusted Earnings Per
Share3
|
|
$9.80 -
$10.10
|
|
$9.80 -
$10.10
|
Adjusted Earnings
Growth3
|
|
7% -
10%
|
|
7% -
10%
|
Operating Cash
Flow
|
|
$6.7B -
$7.1B
|
|
$6.7B -
$7.1B
|
Free Cash
Flow1
|
|
$5.6B -
$6.0B
|
|
$5.6B -
$6.0B
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
1Q
2024
|
|
1Q
2023
|
|
Change
|
Sales
|
|
$9,105
|
|
$8,864
|
|
3 %
|
Organic1 Growth
|
|
|
|
|
|
3 %
|
Operating Income
Margin
|
|
20.4 %
|
|
19.1 %
|
|
130 bps
|
Segment
Margin1
|
|
22.2 %
|
|
22.0 %
|
|
20 bps
|
Earnings Per
Share
|
|
$2.23
|
|
$2.07
|
|
8 %
|
Adjusted Earnings Per
Share1
|
|
$2.25
|
|
$2.07
|
|
9 %
|
Cash Flow from
Operations
|
|
$448
|
|
$(784)
|
|
N/A
|
Free Cash
Flow1
|
|
$215
|
|
$(977)
|
|
N/A
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
TECHNOLOGIES
|
|
1Q
2024
|
|
1Q
2023
|
|
Change
|
Sales
|
|
$3,669
|
|
$3,111
|
|
18 %
|
Organic
Growth1
|
|
|
|
|
|
18 %
|
Segment
Profit
|
|
$1,031
|
|
$827
|
|
25 %
|
Segment
Margin
|
|
28.1 %
|
|
26.6 %
|
|
150 bps
|
INDUSTRIAL
AUTOMATION
|
|
|
|
|
|
|
Sales
|
|
$2,478
|
|
$2,803
|
|
(12 %)
|
Organic
Growth1
|
|
|
|
|
|
(13 %)
|
Segment
Profit
|
|
$417
|
|
$526
|
|
(21 %)
|
Segment
Margin
|
|
16.8 %
|
|
18.8 %
|
|
-200 bps
|
BUILDING
AUTOMATION
|
|
|
|
|
|
|
Sales
|
|
$1,426
|
|
$1,487
|
|
(4 %)
|
Organic
Growth1
|
|
|
|
|
|
(3 %)
|
Segment
Profit
|
|
$342
|
|
$375
|
|
(9 %)
|
Segment
Margin
|
|
24.0 %
|
|
25.2 %
|
|
-120 bps
|
ENERGY AND
SUSTAINABILITY SOLUTIONS
|
|
|
|
|
|
|
Sales
|
|
$1,525
|
|
$1,461
|
|
4 %
|
Organic
Growth1
|
|
|
|
|
|
5 %
|
Segment
Profit
|
|
$302
|
|
$300
|
|
1 %
|
Segment
Margin
|
|
19.8 %
|
|
20.5 %
|
|
-70 bps
|
1
|
|
See additional
information at the end of this release regarding non-GAAP financial
measures.
|
2
|
|
Segment margin and
adjusted EPS are non-GAAP financial measures. Management cannot
reliably predict or estimate, without unreasonable effort, the
impact and timing on future operating results arising from items
excluded from segment margin or adjusted EPS. We therefore, do not
present a guidance range, or a reconciliation to, the nearest GAAP
financial measures of operating margin or EPS.
|
3
|
|
Adjusted EPS and
adjusted EPS V% guidance excludes items identified in the non-GAAP
reconciliation of adjusted EPS at the end of this release, and any
potential future one-time items that we cannot reliably predict or
estimate such as pension mark-to-market.
|
Honeywell is an integrated operating company serving a broad
range of industries and geographies around the world. Our business
is aligned with three powerful megatrends - automation, the future
of aviation, and energy transition - underpinned by our Honeywell
Accelerator operating system and Honeywell Connected Enterprise
integrated software platform. As a trusted partner, we help
organizations solve the world's toughest, most complex challenges,
providing actionable solutions and innovations that help make the
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.
We describe many of the trends and other factors that drive our
business and future results in this release. Such discussions
contain forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act). 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, many of which are difficult to predict and
outside of our control. 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 material risks and uncertainties, including ongoing
macroeconomic and geopolitical risks, such as lower GDP growth or
recession, capital markets volatility, inflation, and certain
regional conflicts, 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. These
forward-looking statements should be considered in light of the
information included in this release, our Form 10-K and other
filings with the Securities and Exchange Commission. Any
forward-looking plans described herein are not final and may be
modified or abandoned at any time.
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;
- Segment profit margin, on an overall Honeywell basis;
- Organic sales growth;
- Free cash flow; and
- Adjusted earnings per share.
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 measures should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
Certain measures 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,
|
|
2024
|
|
2023
|
Product
sales
|
$
6,263
|
|
$
6,310
|
Service
sales
|
2,842
|
|
2,554
|
Net
sales
|
9,105
|
|
8,864
|
Costs, expenses and
other
|
|
|
|
Cost of products
sold1
|
4,035
|
|
4,068
|
Cost of services
sold1
|
1,548
|
|
1,430
|
Total Cost of
products and services sold
|
5,583
|
|
5,498
|
Research and
development expenses
|
360
|
|
357
|
Selling, general and
administrative expenses1
|
1,302
|
|
1,317
|
Other (income)
expense
|
(231)
|
|
(260)
|
Interest and other
financial charges
|
220
|
|
170
|
Total costs,
expenses and other
|
7,234
|
|
7,082
|
Income before
taxes
|
1,871
|
|
1,782
|
Tax expense
|
396
|
|
374
|
Net
income
|
1,475
|
|
1,408
|
Less: Net income
attributable to the noncontrolling interest
|
12
|
|
14
|
Net income
attributable to Honeywell
|
$
1,463
|
|
$
1,394
|
Earnings per share
of common stock - basic
|
$
2.24
|
|
$
2.09
|
Earnings per share
of common stock - assuming dilution
|
$
2.23
|
|
$
2.07
|
Weighted average
number of shares outstanding - basic
|
652.3
|
|
667.8
|
Weighted average
number of shares outstanding - assuming dilution
|
656.6
|
|
673.0
|
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
|
2024
|
|
2023
|
Aerospace
Technologies
|
$
3,669
|
|
$
3,111
|
Industrial
Automation
|
2,478
|
|
2,803
|
Building
Automation
|
1,426
|
|
1,487
|
Energy and
Sustainability Solutions
|
1,525
|
|
1,461
|
Corporate and All
Other
|
7
|
|
2
|
Total
|
$
9,105
|
|
$
8,864
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months Ended
March 31,
|
Segment
Profit
|
2024
|
|
2023
|
Aerospace
Technologies
|
$
1,031
|
|
$
827
|
Industrial
Automation
|
417
|
|
526
|
Building
Automation
|
342
|
|
375
|
Energy and
Sustainability Solutions
|
302
|
|
300
|
Corporate and All
Other
|
(71)
|
|
(81)
|
Total segment
profit
|
2,021
|
|
1,947
|
Interest and other
financial charges
|
(220)
|
|
(170)
|
Interest
income
|
105
|
|
76
|
Stock compensation
expense1
|
(53)
|
|
(59)
|
Pension ongoing
income2
|
145
|
|
130
|
Other postretirement
income2
|
6
|
|
6
|
Repositioning and other
charges3,4
|
(93)
|
|
(141)
|
Other5
|
(40)
|
|
(7)
|
Income before
taxes
|
$
1,871
|
|
$
1,782
|
1
|
|
Amounts included in
Selling, general and administrative expenses.
|
2
|
|
Amounts included in
Cost of products and services sold (service cost component),
Selling, general and administrative expenses (service cost
component), Research and development expenses (service cost
component), and Other (income) expense (non-service cost
component).
|
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,
2024
|
|
December 31,
2023
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
11,756
|
|
$
7,925
|
Short-term
investments
|
249
|
|
170
|
Accounts receivable,
less allowances of $324 and $323, respectively
|
7,476
|
|
7,530
|
Inventories
|
6,318
|
|
6,178
|
Other current
assets
|
1,635
|
|
1,699
|
Total current
assets
|
27,434
|
|
23,502
|
Investments and
long-term receivables
|
975
|
|
939
|
Property, plant and
equipment—net
|
5,698
|
|
5,660
|
Goodwill
|
17,985
|
|
18,049
|
Other intangible
assets—net
|
3,136
|
|
3,231
|
Insurance recoveries
for asbestos-related liabilities
|
164
|
|
170
|
Deferred income
taxes
|
374
|
|
392
|
Other assets
|
9,879
|
|
9,582
|
Total
assets
|
$
65,645
|
|
$
61,525
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
6,468
|
|
$
6,849
|
Commercial paper and
other short-term borrowings
|
1,819
|
|
2,085
|
Current maturities of
long-term debt
|
1,254
|
|
1,796
|
Accrued
liabilities
|
6,947
|
|
7,809
|
Total current
liabilities
|
16,488
|
|
18,539
|
Long-term
debt
|
22,183
|
|
16,562
|
Deferred income
taxes
|
2,063
|
|
2,094
|
Postretirement benefit
obligations other than pensions
|
129
|
|
134
|
Asbestos-related
liabilities
|
1,467
|
|
1,490
|
Other
liabilities
|
6,263
|
|
6,265
|
Redeemable
noncontrolling interest
|
7
|
|
7
|
Shareowners'
equity
|
17,045
|
|
16,434
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
65,645
|
|
$
61,525
|
Honeywell International
Inc.
Consolidated Statement
of Cash Flows (Unaudited)
(Dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
1,475
|
|
$
1,408
|
Less: Net income
attributable to noncontrolling interest
|
12
|
|
14
|
Net income
attributable to Honeywell
|
1,463
|
|
1,394
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by (used for) operating activities
|
|
|
|
Depreciation
|
166
|
|
161
|
Amortization
|
125
|
|
122
|
Repositioning and
other charges
|
93
|
|
141
|
Net payments for
repositioning and other charges
|
(124)
|
|
(41)
|
NARCO Buyout
payment
|
—
|
|
(1,325)
|
Pension and other
postretirement income
|
(151)
|
|
(136)
|
Pension and other
postretirement benefit payments
|
(8)
|
|
(15)
|
Stock compensation
expense
|
53
|
|
59
|
Deferred income
taxes
|
3
|
|
225
|
Other
|
(163)
|
|
(350)
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures
|
|
|
|
Accounts
receivable
|
53
|
|
(422)
|
Inventories
|
(140)
|
|
(238)
|
Other current
assets
|
64
|
|
110
|
Accounts
payable
|
(381)
|
|
114
|
Accrued
liabilities
|
(605)
|
|
(583)
|
Net cash provided
by (used for) operating activities
|
448
|
|
(784)
|
Cash flows from
investing activities
|
|
|
|
Capital
expenditures
|
(233)
|
|
(193)
|
Proceeds from disposals
of property, plant and equipment
|
—
|
|
11
|
Increase in
investments
|
(238)
|
|
(226)
|
Decrease in
investments
|
155
|
|
386
|
Receipts (payments)
from settlements of derivative contracts
|
43
|
|
(7)
|
Net cash used for
investing activities
|
(273)
|
|
(29)
|
Cash flows from
financing activities
|
|
|
|
Proceeds from issuance
of commercial paper and other short-term borrowings
|
2,223
|
|
4,105
|
Payments of commercial
paper and other short-term borrowings
|
(2,470)
|
|
(3,294)
|
Proceeds from issuance
of common stock
|
144
|
|
37
|
Proceeds from issuance
of long-term debt
|
5,710
|
|
—
|
Payments of long-term
debt
|
(573)
|
|
(1,363)
|
Repurchases of common
stock
|
(671)
|
|
(699)
|
Cash dividends
paid
|
(703)
|
|
(725)
|
Other
|
36
|
|
(34)
|
Net cash provided
by (used for) financing activities
|
3,696
|
|
(1,973)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(40)
|
|
28
|
Net increase
(decrease) in cash and cash equivalents
|
3,831
|
|
(2,758)
|
Cash and cash
equivalents at beginning of period
|
7,925
|
|
9,627
|
Cash and cash
equivalents at end of period
|
$
11,756
|
|
$
6,869
|
Appendix
Non-GAAP Financial Measures
The following information provides definitions and
reconciliations of certain non-GAAP financial measures presented in
this press release to which this reconciliation is attached to the
most directly comparable financial measures calculated and
presented in accordance with generally accepted accounting
principles (GAAP).
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 measures should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
Certain measures 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. Other
companies may calculate these non-GAAP measures differently,
limiting the usefulness of these measures for comparative
purposes.
Management does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitations of these non-GAAP
financial measures are that they exclude significant expenses and
income that are required by GAAP to be recognized in the
consolidated financial statements. In addition, they are subject to
inherent limitations as they reflect the exercise of judgments by
management about which expenses and income are excluded or included
in determining these non-GAAP financial measures. Investors are
urged to review the reconciliation of the non-GAAP financial
measures to the comparable GAAP financial measures and not to rely
on any single financial measure to evaluate Honeywell's
business.
Honeywell International
Inc.
Reconciliation of
Organic Sales % Change
(Unaudited)
|
|
|
Three Months
Ended
March 31, 2024
|
Honeywell
|
|
Reported sales %
change
|
3 %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
3 %
|
|
|
Aerospace
Technologies
|
|
Reported sales %
change
|
18 %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
18 %
|
|
|
Industrial
Automation
|
|
Reported sales %
change
|
(12) %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
1 %
|
Organic sales %
change
|
(13) %
|
|
|
Building
Automation
|
|
Reported sales %
change
|
(4) %
|
Less: Foreign currency
translation
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
(3) %
|
|
|
Energy and
Sustainability Solutions
|
|
Reported sales %
change
|
4 %
|
Less: Foreign currency
translation
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
5 %
|
We define organic sales percentage 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.
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
Operating Income to Segment Profit, Calculation of Operating Income
and Segment Profit Margins
(Unaudited)
(Dollars in
millions)
|
|
|
Three Months Ended
March 31,
|
|
Twelve Months
Ended
December
31,
|
|
2024
|
|
2023
|
|
2023
|
Operating
income
|
$
1,860
|
|
$
1,692
|
|
$
7,084
|
Stock compensation
expense1
|
53
|
|
59
|
|
202
|
Repositioning,
Other2,3
|
92
|
|
180
|
|
952
|
Pension and other
postretirement service costs3
|
16
|
|
16
|
|
66
|
Segment
profit
|
$
2,021
|
|
$
1,947
|
|
$
8,304
|
|
|
|
|
|
|
Operating
income
|
$
1,860
|
|
$
1,692
|
|
$
7,084
|
÷ Net sales
|
$
9,105
|
|
$
8,864
|
|
$
36,662
|
Operating income
margin %
|
20.4 %
|
|
19.1 %
|
|
19.3 %
|
Segment
profit
|
$
2,021
|
|
$
1,947
|
|
$
8,304
|
÷ Net sales
|
$
9,105
|
|
$
8,864
|
|
$
36,662
|
Segment profit
margin %
|
22.2 %
|
|
22.0 %
|
|
22.7 %
|
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, 2024, and 2023,
other charges include $17 million of expense and $2 million of
benefit, respectively, due to the Russia-Ukraine
conflict.
|
3
|
|
Included in Cost of
products and services sold and Selling, general and administrative
expenses.
|
We define segment profit, on an overall Honeywell basis, as
operating income, excluding stock compensation expense, pension and
other postretirement service costs, and repositioning and other
charges. We define segment profit margin, on an overall Honeywell
basis, as segment profit divided by net sales. 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 operating income to segment
profit, on an overall Honeywell basis, has not been provided for
all forward-looking measures of segment profit and segment profit
margin included herein. 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
operating income to segment profit will be included within future
filings.
Honeywell International
Inc.
Reconciliation of
Earnings per Share to Adjusted Earnings per Share
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
Twelve Months Ended
December 31,
|
|
2024
|
|
2023
|
|
2023
|
|
2024(E)
|
Earnings per share
of common stock - diluted1
|
$
2.23
|
|
$
2.07
|
|
$
8.47
|
|
$9.78 -
$10.08
|
Pension mark-to-market
expense2
|
—
|
|
—
|
|
0.19
|
|
No Forecast
|
Russian-related
charges3
|
0.02
|
|
—
|
|
—
|
|
0.02
|
Net expense related to
the NARCO Buyout and HWI Sale4
|
—
|
|
—
|
|
0.01
|
|
—
|
Adjustment to estimated
future Bendix liability5
|
—
|
|
—
|
|
0.49
|
|
—
|
Adjusted earnings
per share of common stock - diluted
|
$
2.25
|
|
$
2.07
|
|
$
9.16
|
|
$9.80 -
$10.10
|
1
|
|
For the three months
ended March 31, 2024, and 2023, adjusted earnings per share
utilizes weighted average shares of approximately 656.6 million and
673.0 million, respectively. For the twelve months ended December
31, 2023, adjusted earnings per share utilizes weighted average
shares of approximately 668.2 million. For the twelve months ended
December 31, 2024, expected earnings per share utilizes weighted
average shares of approximately 656 million.
|
2
|
|
Pension mark-to-market
expense uses a blended tax rate of 18%, net of tax benefit of $27
million, for 2023.
|
3
|
|
For the three months
ended March 31, 2024, the adjustment was a $17 million expense,
without tax benefit, due to the settlement of a contractual dispute
with a Russian entity associated with the Company's suspension and
wind down activities in Russia. For the three months ended March
31, 2023, the adjustment was a benefit of $2 million, without tax
expense. For the twelve months ended December 31, 2023, the
adjustment was a benefit $3 million, without tax
expense.
|
4
|
|
For the twelve months
ended December 31, 2023, the adjustment was $8 million, net of tax
of benefit of $3 million, due to the net expense related to the
NARCO Buyout and HWI Sale.
|
5
|
|
Bendix Friction
Materials ("Bendix") is a business no longer owned by the Company.
In 2023, the Company changed its valuation methodology for
calculating legacy Bendix liabilities. For the twelve months ended
December 31, 2023, the adjustment was $330 million, net of tax
benefit of $104 million (or $434 million pre-tax) due to a change
in the estimated liability for resolution of asserted (claims filed
as of the financial statement date) and unasserted Bendix-related
asbestos claims. The Company experienced fluctuations in average
resolution values year-over-year in each of the past five years
with no well-established trends in either direction. In 2023, the
Company observed two consecutive years of increasing average
resolution values (2023 and 2022), with more volatility in the
earlier years of the five-year period (2019 through 2021). Based on
these observations, the Company, during its annual review in the
fourth quarter of 2023, reevaluated its valuation methodology and
elected to give more weight to the two most recent years by
shortening the look-back period from five years to two years (2023
and 2022). The Company believes that the average resolution values
in the last two consecutive years are likely more representative of
expected resolution values in future periods. The $434 million
pre-tax amount was attributable primarily to shortening the
look-back period to the two most recent years, and to a lesser
extent to increasing expected resolution values for a subset of
asserted claims to adjust for higher claim values in that subset
than in the modelled two-year data set. It is not possible to
predict whether such resolution values will increase, decrease, or
stabilize in the future, given recent litigation trends within the
tort system and the inherent uncertainty in predicting the outcome
of such trends. The Company will continue to monitor Bendix claim
resolution values and other trends within the tort system to assess
the appropriate look-back period for determining average resolution
values going forward.
|
We define adjusted earnings per share as diluted earnings per
share adjusted to exclude various charges as listed above. 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
(Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended
March 31,
2024
|
|
Three Months
Ended
March 31,
2023
|
Cash provided by
operating activities
|
$
448
|
|
$
(784)
|
Capital
expenditures
|
(233)
|
|
(193)
|
Free cash
flow
|
$
215
|
|
$
(977)
|
We define free cash flow as cash provided by operating
activities less cash for capital expenditures.
We believe that free cash flow is a non-GAAP measure 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
measure 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
(Unaudited)
|
|
|
Twelve Months
Ended
December 31,
2024(E) ($B)
|
Cash provided by
operating activities
|
~$6.7 -
$7.1
|
Capital
expenditures
|
~(1.1)
|
Free cash
flow
|
~$5.6 -
$6.0
|
We define free cash flow as cash provided by operating
activities less cash for capital expenditures.
We believe that free cash flow is a non-GAAP measure 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
measure 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
|
Stacey Jones
|
Sean Meakim
|
(980)
378-6258
|
(704)
627-6200
|
stacey.jones@honeywell.com
|
sean.meakim@honeywell.com
|
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SOURCE Honeywell