- Sales of $9.2 Billion,
Reported Sales Up 3%, Organic1 Sales Up 2%
- Orders Up 10%, Backlog Up 8% Year Over Year to a Record
Level of $31.4 Billion
- Aerospace Sales Up 18%, Double-Digit Growth in Both
Commercial Aviation and Defense and Space
- Operating Margin Up 140 Basis Points to 20.9%; Segment
Margin1 Up 80 Basis Points to 22.6%
- Earnings Per Share of $2.27,
Exceeding High End of Guidance Range
- Deployed $2.0 Billion of
Capital, Including Repurchasing 5.3 Million Honeywell
Shares
CHARLOTTE, N.C., Oct. 26,
2023 /PRNewswire/ -- Honeywell (NASDAQ: HON)
today announced results for the third quarter that met or exceeded
the company's guidance. The company also updated its full-year
sales, segment margin2, and adjusted earnings per
share2,3 guidance ranges.
The company reported third-quarter year-over-year sales growth
of 3% and organic1 sales growth of 2%, led by
double-digit organic sales growth in commercial aviation, defense
and space, and process solutions. Operating margin expanded 140
basis points to 20.9% and segment margin1 expanded by 80
basis points to 22.6%, led by expansion in Honeywell Building
Technologies. Earnings per share for the third quarter was
$2.27, roughly flat year over year on
a reported basis and up 1% year over year adjusted1.
Excluding a 14-cent non-cash pension
headwind, adjusted earnings per share1 was up 7%.
Operating cash flow was $1.8 billion
with operating cash flow margin of 19.6%, and free cash
flow1 was $1.6 billion
with free cash flow margin1 of 16.9%, driven by strong
net income and collections.
"Honeywell executed through a challenging environment in the
third quarter, meeting or exceeding guidance for all metrics and
demonstrating once again our culture of execution and
accountability," said Vimal Kapur,
chief executive officer of Honeywell. "Organic1 sales
growth was led by our Aerospace segment, where continued supply
chain improvements enabled significant sales growth in both
commercial aviation and defense and space. We also saw strong
growth in other pockets of the portfolio, including double-digit
organic sales growth in our process solutions business, and 20%
organic sales growth in our Honeywell Connected Enterprise
offerings. Orders growth of 10% in the quarter, led by strength in
Aerospace and our other long-cycle businesses, drove our backlog to
a new record level of $31.4 billion,
up 8% year over year. Continued mix benefits combined with our
laser focus on productivity across the Honeywell portfolio enabled
us to expand margins in line with the high end of our guidance
range. We remain committed to our capital deployment strategy and
put our robust balance sheet to work in the third quarter by
deploying $2.0 billion to dividends,
high-return capex, M&A, and share repurchases, including more
than doubling our share repurchases sequentially to 5.3 million
shares. The result of all these efforts was increased adjusted
earnings per share1 in the face of uncertain
macroeconomic dynamics."
Kapur continued, "I am very excited about the future of
Honeywell. Our portfolio is aligned to powerful megatrends:
automation, the future of aviation, and energy transition, all
underpinned by our robust digitalization capabilities. Our
technologically differentiated portfolio of solutions and
world-class Honeywell Accelerator operating system will enable us
to capitalize on these trends and drive the profitable growth we
outlined in our long-term financial framework."
As a result of the company's third-quarter performance and
management's outlook for the remainder of the year, Honeywell
updated its full-year sales, segment margin2, and
adjusted earnings per share2,3 guidance. Full-year sales
are now expected to be $36.8 billion
to $37.1 billion with
organic1 sales growth in the range of 4% to 5%. Segment
margin2 is now expected to be in the range of 22.5% to
22.6%, with segment margin expansion2 of 80 to 90 basis
points, up 10 basis points on the low end from the prior guidance
range. Adjusted earnings per share2,3 is now expected to
be in the range of $9.10 to
$9.20, narrowing the range by
5 cents on both ends from the prior
guidance range. Operating cash flow is still expected to be in the
range of $4.9 billion to $5.3 billion, and free cash flow1 is
still expected to be in the range of $3.9
billion to $4.3 billion, or
$5.1 billion to $5.5 billion excluding the net impact of
settlements signed in the fourth quarter of 2022. A summary of the
company's full-year guidance changes can be found in Table 1.
Third-Quarter Performance
Honeywell sales for the third quarter were up 3%
year over year on a reported basis and 2% year over year on an
organic1 basis. The third-quarter financial results
can be found in Tables 2 and 3.
Aerospace sales for the third quarter were up 18%
year over year on an organic1 basis, the fifth
consecutive quarter of double-digit organic growth, with strength
in both commercial aviation and defense and space. Commercial
aviation growth was led by robust aftermarket demand driven by
increased flight activity, particularly in air transport, with
commercial aftermarket sales up more than 20% year over year.
Commercial original equipment sales also increased in the third
quarter on increased deliveries, particularly in business and
general aviation. Defense and space sales grew 18% year over year
as supply chain improvements and strengthened orders enabled us to
convert our strong order book into sales. Segment margin remained
unchanged year over year at 27.5%, as higher volume leverage and
commercial excellence were offset by cost inflation and mix
pressure in our original equipment business.
Honeywell Building Technologies sales for the third
quarter were flat on an organic1 basis year over year.
Building solutions sales grew 4% organically driven by strong
execution of building projects, particularly energy projects.
Building products sales declined modestly on lower volumes of
security offerings. Segment margin expanded 110 basis points to
25.2% driven by productivity actions and commercial excellence,
partially offset by cost inflation.
Performance Materials and Technologies sales for the
third quarter were up 3% on an organic1 basis year over
year. HPS sales grew 11% organically, led by another quarter of
double-digit growth in projects and lifecycle solutions and
services. UOP grew 6% organically as a result of increased
petrochemical catalyst shipments, and double-digit growth in
sustainable technology solutions. Orders in our sustainable
technology solutions business once again grew triple digits.
Segment margin contracted 50 basis points to 22.1% as a result of
lower volumes in advanced materials.
Safety and Productivity Solutions sales for the
third quarter decreased by 25% year over year on an
organic1 basis. Sales declines were due to lower volumes
in warehouse and workflow solutions, which continues to be impacted
by softness in the warehouse automation market. However, our
pipeline remains robust, which translated into double-digit year
over year and over 50% sequential orders growth in the third
quarter. Additionally, we continue to see strong double-digit
growth in the aftermarket services business. Volume declines in
productivity solutions and services also impacted sales as we
continue to work through the impact of lower demand and distributor
destocking. Segment margin contracted 120 basis points year over
year to 14.5% driven by lower volume leverage, partially offset by
productivity and commercial excellence.
Conference Call Details
Honeywell will discuss its third-quarter results and updated
full-year 2023 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 2023 GUIDANCE2
|
|
Previous Guidance
|
|
Current Guidance
|
Sales
|
|
$36.7B -
$37.3B
|
|
$36.8B -
$37.1B
|
Organic1 Growth
|
|
4% - 6%
|
|
4% - 5%
|
Segment
Margin
|
|
22.4% -
22.6%
|
|
22.5% -
22.6%
|
Expansion
|
|
Up 70 - 90 bps
|
|
Up 80 - 90 bps
|
Adjusted Earnings Per
Share3
|
|
$9.05 -
$9.25
|
|
$9.10 -
$9.20
|
Adjusted Earnings
Growth3
|
|
3% - 6%
|
|
4% - 5%
|
Adjusted Earnings Per
Share Excluding Pension Headwind3
|
|
$9.60 -
$9.80
|
|
$9.65 -
$9.75
|
Adjusted Earnings Growth Excluding Pension
Headwind3
|
|
10% - 12%
|
|
10% - 11%
|
Operating Cash
Flow
|
|
$4.9B -
$5.3B
|
|
$4.9B -
$5.3B
|
Free Cash
Flow1
|
|
$3.9B -
$4.3B
|
|
$3.9B -
$4.3B
|
Free Cash Flow
Excluding Impact of Settlements1
|
|
$5.1B -
$5.5B
|
|
$5.1B -
$5.5B
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
3Q 2023
|
|
3Q 2022
|
|
Change
|
Sales
|
|
$9,212
|
|
$8,951
|
|
3 %
|
Organic1 Growth
|
|
|
|
|
|
2 %
|
Operating Income
Margin
|
|
20.9 %
|
|
19.5 %
|
|
140 bps
|
Segment
Margin1
|
|
22.6 %
|
|
21.8 %
|
|
80 bps
|
Earnings Per
Share
|
|
$2.27
|
|
$2.28
|
|
— %
|
Adjusted Earnings Per
Share1
|
|
$2.27
|
|
$2.25
|
|
1 %
|
Cash Flow from
Operations
|
|
$1,809
|
|
$2,083
|
|
(13 %)
|
Free Cash
Flow1
|
|
$1,560
|
|
$1,899
|
|
(18 %)
|
Free cash flow
margin1
|
|
16.9 %
|
|
21.2 %
|
|
(430 bps)
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
|
|
3Q 2023
|
|
3Q 2022
|
|
Change
|
Sales
|
|
$3,499
|
|
$2,976
|
|
18 %
|
Organic Growth1
|
|
|
|
|
|
18 %
|
Segment
Profit
|
|
$963
|
|
$818
|
|
18 %
|
Segment
Margin
|
|
27.5 %
|
|
27.5 %
|
|
0 bps
|
HONEYWELL BUILDING TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
$1,530
|
|
$1,526
|
|
— %
|
Organic Growth1
|
|
|
|
|
|
— %
|
Segment
Profit
|
|
$386
|
|
$368
|
|
5 %
|
Segment
Margin
|
|
25.2 %
|
|
24.1 %
|
|
110 bps
|
PERFORMANCE MATERIALS AND
TECHNOLOGIES
|
|
|
|
|
|
|
Sales
|
|
$2,867
|
|
$2,720
|
|
5 %
|
Organic Growth1
|
|
|
|
|
|
3 %
|
Segment
Profit
|
|
$633
|
|
$615
|
|
3 %
|
Segment
Margin
|
|
22.1 %
|
|
22.6 %
|
|
-50 bps
|
SAFETY AND PRODUCTIVITY
SOLUTIONS
|
|
|
|
|
|
|
Sales
|
|
$1,314
|
|
$1,727
|
|
(24 %)
|
Organic Growth1
|
|
|
|
|
|
(25 %)
|
Segment
Profit
|
|
$190
|
|
$271
|
|
(30 %)
|
Segment
Margin
|
|
14.5 %
|
|
15.7 %
|
|
-120 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;
- Free cash flow excluding impact of settlements;
- Free cash flow margin;
- Adjusted earnings per share; and
- Adjusted earnings per share excluding pension headwind.
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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Product
sales
|
$
6,294
|
|
$
6,588
|
|
$
19,045
|
|
$
19,404
|
Service
sales
|
2,918
|
|
2,363
|
|
8,177
|
|
6,876
|
Net
sales
|
9,212
|
|
8,951
|
|
27,222
|
|
26,280
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products
sold1
|
4,090
|
|
4,286
|
|
12,291
|
|
12,674
|
Cost of services
sold1
|
1,580
|
|
1,308
|
|
4,503
|
|
3,904
|
Total Cost of
products and services sold
|
5,670
|
|
5,594
|
|
16,794
|
|
16,578
|
Research and
development expenses
|
364
|
|
387
|
|
1,096
|
|
1,123
|
Selling, general and
administrative expenses1
|
1,252
|
|
1,228
|
|
3,831
|
|
3,965
|
Other (income)
expense
|
(247)
|
|
(337)
|
|
(715)
|
|
(846)
|
Interest and other
financial charges
|
206
|
|
98
|
|
563
|
|
270
|
Total costs,
expenses and other
|
7,245
|
|
6,970
|
|
21,569
|
|
21,090
|
Income before
taxes
|
1,967
|
|
1,981
|
|
5,653
|
|
5,190
|
Tax expense
|
452
|
|
432
|
|
1,229
|
|
1,244
|
Net
income
|
1,515
|
|
1,549
|
|
4,424
|
|
3,946
|
Less: Net income (loss)
attributable to the noncontrolling interest
|
1
|
|
(3)
|
|
29
|
|
(1)
|
Net income
attributable to Honeywell
|
$
1,514
|
|
$
1,552
|
|
$
4,395
|
|
$
3,947
|
Earnings per share
of common stock - basic
|
$
2.29
|
|
$
2.30
|
|
$
6.61
|
|
$
5.81
|
Earnings per share
of common stock - assuming dilution
|
$
2.27
|
|
$
2.28
|
|
$
6.56
|
|
$
5.76
|
Weighted average
number of shares outstanding - basic
|
662.4
|
|
674.1
|
|
665.2
|
|
679.3
|
Weighted average
number of shares outstanding - assuming dilution
|
667.0
|
|
679.6
|
|
670.4
|
|
685.3
|
|
|
|
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
September 30,
|
|
Nine Months
Ended
September 30,
|
Net
Sales
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Aerospace
|
$
3,499
|
|
$
2,976
|
|
$
9,951
|
|
$
8,623
|
Honeywell Building
Technologies
|
1,530
|
|
1,526
|
|
4,527
|
|
4,486
|
Performance Materials
and Technologies
|
2,867
|
|
2,720
|
|
8,477
|
|
7,867
|
Safety and Productivity
Solutions
|
1,314
|
|
1,727
|
|
4,262
|
|
5,300
|
Corporate and All
Other
|
2
|
|
2
|
|
5
|
|
4
|
Total
|
$
9,212
|
|
$
8,951
|
|
$
27,222
|
|
$
26,280
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
Segment
Profit
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Aerospace
|
$
963
|
|
$
818
|
|
$
2,714
|
|
$
2,338
|
Honeywell Building
Technologies
|
386
|
|
368
|
|
1,146
|
|
1,064
|
Performance Materials
and Technologies
|
633
|
|
615
|
|
1,821
|
|
1,726
|
Safety and Productivity
Solutions
|
190
|
|
271
|
|
689
|
|
755
|
Corporate and All
Other
|
(90)
|
|
(120)
|
|
(289)
|
|
(298)
|
Total segment
profit
|
2,082
|
|
1,952
|
|
6,081
|
|
5,585
|
Interest and other
financial charges
|
(206)
|
|
(98)
|
|
(563)
|
|
(270)
|
Stock compensation
expense1
|
(39)
|
|
(50)
|
|
(148)
|
|
(163)
|
Pension ongoing
income2
|
131
|
|
247
|
|
391
|
|
748
|
Other postretirement
income2
|
6
|
|
10
|
|
19
|
|
30
|
Repositioning and other
charges3,4
|
(88)
|
|
(100)
|
|
(331)
|
|
(714)
|
Other5
|
81
|
|
20
|
|
204
|
|
(26)
|
Income before
taxes
|
$
1,967
|
|
$
1,981
|
|
$
5,653
|
|
$
5,190
|
|
|
|
1
|
|
Amounts included in
Selling, general and administrative expenses.
|
2
|
|
Amounts included in
Cost of products and services sold, 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)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
7,770
|
|
$
9,627
|
Short-term
investments
|
164
|
|
483
|
Accounts receivable,
less allowances of $342 and $326, respectively
|
7,833
|
|
7,440
|
Inventories
|
6,000
|
|
5,538
|
Other current
assets
|
1,553
|
|
1,894
|
Total
current assets
|
23,320
|
|
24,982
|
Investments and
long-term receivables
|
895
|
|
945
|
Property, plant and
equipment—net
|
5,486
|
|
5,471
|
Goodwill
|
17,793
|
|
17,497
|
Other intangible
assets—net
|
3,310
|
|
3,222
|
Insurance recoveries
for asbestos-related liabilities
|
200
|
|
224
|
Deferred income
taxes
|
377
|
|
421
|
Other assets
|
9,915
|
|
9,513
|
Total
assets
|
$
61,296
|
|
$
62,275
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
6,428
|
|
$
6,329
|
Commercial paper and
other short-term borrowings
|
1,933
|
|
2,717
|
Current maturities of
long-term debt
|
1,670
|
|
1,730
|
Accrued
liabilities
|
7,196
|
|
9,162
|
Total
current liabilities
|
17,227
|
|
19,938
|
Long-term
debt
|
16,683
|
|
15,123
|
Deferred income
taxes
|
2,225
|
|
2,093
|
Postretirement benefit
obligations other than pensions
|
131
|
|
146
|
Asbestos-related
liabilities
|
1,102
|
|
1,180
|
Other
liabilities
|
6,146
|
|
6,469
|
Redeemable
noncontrolling interest
|
7
|
|
7
|
Shareowners'
equity
|
17,775
|
|
17,319
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
61,296
|
|
$
62,275
|
Honeywell International
Inc.
Consolidated Statement
of Cash Flows (Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
$
1,515
|
|
$
1,549
|
|
$
4,424
|
|
$
3,946
|
Less: Net income (loss)
attributable to noncontrolling interest
|
1
|
|
(3)
|
|
29
|
|
(1)
|
Net income
attributable to Honeywell
|
1,514
|
|
1,552
|
|
4,395
|
|
3,947
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by (used for) operating activities
|
|
|
|
|
|
|
|
Depreciation
|
166
|
|
166
|
|
493
|
|
494
|
Amortization
|
142
|
|
134
|
|
382
|
|
411
|
Gain on sale of
non-strategic businesses and assets
|
—
|
|
(10)
|
|
—
|
|
(10)
|
Repositioning and
other charges
|
88
|
|
100
|
|
331
|
|
714
|
Net payments for
repositioning and other charges
|
(128)
|
|
(96)
|
|
(323)
|
|
(316)
|
NARCO Buyout
payment
|
—
|
|
—
|
|
(1,325)
|
|
—
|
Pension and other
postretirement income
|
(137)
|
|
(257)
|
|
(410)
|
|
(778)
|
Pension and other
postretirement benefit receipts (payments)
|
(2)
|
|
(9)
|
|
(25)
|
|
(14)
|
Stock compensation
expense
|
39
|
|
50
|
|
148
|
|
163
|
Deferred income
taxes
|
(28)
|
|
88
|
|
168
|
|
208
|
Other
|
89
|
|
119
|
|
(554)
|
|
200
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures
|
|
|
|
|
|
|
|
Accounts
receivable
|
161
|
|
244
|
|
(344)
|
|
(660)
|
Inventories
|
(110)
|
|
44
|
|
(448)
|
|
(390)
|
Other current
assets
|
(67)
|
|
163
|
|
141
|
|
125
|
Accounts
payable
|
(18)
|
|
(125)
|
|
96
|
|
(365)
|
Accrued
liabilities
|
100
|
|
(80)
|
|
(340)
|
|
(821)
|
Net cash provided
by operating activities
|
1,809
|
|
2,083
|
|
2,385
|
|
2,908
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(249)
|
|
(184)
|
|
(675)
|
|
(525)
|
Proceeds from disposals
of property, plant and equipment
|
8
|
|
—
|
|
21
|
|
11
|
Increase in
investments
|
(175)
|
|
(364)
|
|
(404)
|
|
(834)
|
Decrease in
investments
|
176
|
|
238
|
|
808
|
|
884
|
Receipts from Garrett
Motion Inc.
|
—
|
|
—
|
|
—
|
|
409
|
Receipts (payments)
from settlements of derivative contracts
|
250
|
|
436
|
|
212
|
|
773
|
Cash paid for
acquisitions, net of cash acquired
|
(55)
|
|
—
|
|
(716)
|
|
(178)
|
Net cash provided
by (used for) investing activities
|
(45)
|
|
126
|
|
(754)
|
|
540
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Proceeds from issuance
of commercial paper and other short-term borrowings
|
2,727
|
|
2,386
|
|
10,727
|
|
5,310
|
Payments of commercial
paper and other short-term borrowings
|
(3,554)
|
|
(2,398)
|
|
(11,484)
|
|
(5,324)
|
Proceeds from issuance
of common stock
|
36
|
|
46
|
|
151
|
|
121
|
Proceeds from issuance
of long-term debt
|
19
|
|
1
|
|
2,985
|
|
2
|
Payments of long-term
debt
|
(26)
|
|
(1,729)
|
|
(1,410)
|
|
(1,818)
|
Repurchases of common
stock
|
(1,011)
|
|
(390)
|
|
(2,187)
|
|
(2,827)
|
Cash dividends
paid
|
(728)
|
|
(669)
|
|
(2,144)
|
|
(2,028)
|
Other
|
(27)
|
|
(24)
|
|
(65)
|
|
(45)
|
Net cash used for
financing activities
|
(2,564)
|
|
(2,777)
|
|
(3,427)
|
|
(6,609)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(56)
|
|
(231)
|
|
(61)
|
|
(349)
|
Net decrease in cash
and cash equivalents
|
(856)
|
|
(799)
|
|
(1,857)
|
|
(3,510)
|
Cash and cash
equivalents at beginning of period
|
8,626
|
|
8,248
|
|
9,627
|
|
10,959
|
Cash and cash
equivalents at end of period
|
$
7,770
|
|
$
7,449
|
|
$
7,770
|
|
$
7,449
|
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
September 30, 2023
|
Honeywell
|
|
Reported sales %
change
|
3 %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
1 %
|
Organic sales %
change
|
2 %
|
|
|
Aerospace
|
|
Reported sales %
change
|
18 %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
18 %
|
|
|
Honeywell Building
Technologies
|
|
Reported sales %
change
|
— %
|
Less: Foreign currency
translation
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
— %
|
|
|
Performance
Materials and Technologies
|
|
Reported sales %
change
|
5 %
|
Less: Foreign currency
translation
|
1 %
|
Less: Acquisitions,
divestitures and other, net
|
1 %
|
Organic sales %
change
|
3 %
|
|
|
Safety and
Productivity Solutions
|
|
Reported sales %
change
|
(24) %
|
Less: Foreign currency
translation
|
1 %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
Organic sales %
change
|
(25) %
|
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
September 30,
|
|
Twelve Months
Ended
December
31,
|
|
2023
|
|
2022
|
|
2022
|
Operating
income
|
$
1,926
|
|
$
1,742
|
|
$
6,427
|
Stock compensation
expense1
|
39
|
|
50
|
|
188
|
Repositioning,
Other2,3
|
100
|
|
128
|
|
942
|
Pension and other
postretirement service costs3
|
17
|
|
32
|
|
132
|
Segment
profit
|
$
2,082
|
|
$
1,952
|
|
$
7,689
|
|
|
|
|
|
|
Operating
income
|
$
1,926
|
|
$
1,742
|
|
$
6,427
|
÷ Net sales
|
$
9,212
|
|
$
8,951
|
|
$
35,466
|
Operating income
margin %
|
20.9 %
|
|
19.5 %
|
|
18.1 %
|
Segment
profit
|
$
2,082
|
|
$
1,952
|
|
$
7,689
|
÷ Net sales
|
$
9,212
|
|
$
8,951
|
|
$
35,466
|
Segment profit
margin %
|
22.6 %
|
|
21.8 %
|
|
21.7 %
|
|
|
|
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 September 30, 2022, other
charges include a benefit of $16 million primarily related to a
favorable foreign exchange revaluation on an intercompany loan with
a Russian affiliate, in addition to the recovery of outstanding
accounts receivable previously reserved against, partially offset
by additional charges for called guarantees, related to the initial
suspension and wind down of our businesses and operations in
Russia. For the twelve months ended December 31, 2022, other
charges include an expense of $250 million related to reserves
against outstanding accounts receivables, contract assets, and
inventory, as well as 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
September 30, 2022, and twelve months ended December 31, 2022,
other charges include $17 million and $41 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
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.
|
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 and Adjusted
Earnings per Share Excluding Pension Headwind
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2022
|
|
2023(E)
|
Earnings per share
of common stock - diluted1
|
$
2.27
|
|
$
2.28
|
|
$
7.27
|
|
$9.09 -
$9.19
|
Pension mark-to-market
expense2
|
—
|
|
—
|
|
0.64
|
|
No Forecast
|
Expense related to UOP
Matters3
|
—
|
|
—
|
|
0.07
|
|
—
|
Russian-related
charges4
|
—
|
|
(0.02)
|
|
0.43
|
|
—
|
Gain on sale of Russian
entities5
|
—
|
|
(0.01)
|
|
(0.03)
|
|
—
|
Net expense related to
the NARCO Buyout and HWI Sale6
|
—
|
|
—
|
|
0.38
|
|
0.01
|
Adjusted earnings
per share of common stock - diluted
|
$
2.27
|
|
$
2.25
|
|
$
8.76
|
|
$9.10 -
$9.20
|
Pension
headwind7
|
$
0.14
|
|
—
|
|
—
|
|
~$0.55
|
Adjusted earnings
per share of common stock
excluding Pension headwind - diluted
|
$
2.41
|
|
$
2.25
|
|
$
8.76
|
|
$9.65 -
$9.75
|
|
|
|
1
|
|
For the three months
September 30, 2023, and 2022, adjusted earnings per share utilizes
weighted average shares of approximately 667.0 million and 679.6
million, respectively. For the twelve months ended December 31,
2022, adjusted earnings per share utilizes weighted average shares
of approximately 683.1 million. For the twelve months ended
December 31, 2023, expected earnings per share utilizes weighted
average shares of approximately 669.0 million.
|
2
|
|
Pension mark-to-market
expense uses a blended tax rate of 16%, net of tax benefit of $83
million, for 2022.
|
3
|
|
For the twelve months
ended December 31, 2022, the adjustment was $45 million, without
tax benefit, due to an expense related to UOP matters.
|
4
|
|
For the twelve months
ends December 31, 2023, the adjustment was $1 million, without tax
expense. For the three months ended September 30, 2022, the
adjustment was $16 million, without tax expense, primarily related
to favorable foreign exchange revaluation on an intercompany loan
with a Russian affiliate, in addition to the recovery of
outstanding accounts receivable previously reserved against,
partially offset by additional charges for called guarantees,
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 $297 million, without tax benefit, to
exclude charges and the accrual of reserves related to outstanding
accounts receivable, 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 called guarantees related to the
initial suspension and wind down of our businesses and operations
in Russia.
|
5
|
|
For the three months
ended September 30, 2022, and twelve months ended December 31,
2022, the adjustments were $10 million and $22 million,
respectively, without tax expense, due to the gain on sale of
Russian entities.
|
6
|
|
For the twelve months
ended December 31, 2023, and December 31, 2022, the adjustments
were $8 million and $260 million, net of tax of benefit of $3
million and $82 million, respectively, due to the net expense
related to the NARCO Buyout and HWI Sale.
|
7
|
|
For the
three months ended September 30, 2023,
the adjustment was the decline of $92 million of pension ongoing
and other postretirement income compared to the three months ended
September 30, 2022, net of tax expense of $28 million. For the
twelve months ended December 31, 2023, the adjustment is the
forecasted decline of approximately $370 million of pension ongoing
and other postretirement income between 2022 and 2023, net of
estimated tax expense of approximately $100 million.
|
We define adjusted earnings per share as diluted earnings per
share adjusted to exclude various charges as listed above. We
define adjusted earnings per share excluding pension headwind as
adjusted earnings per share adjusted for an actual or forecasted
decline of pension ongoing and other postretirement income
between the comparative periods in 2022 and 2023. We believe
adjusted earnings per share and adjusted earnings per share
excluding pension headwind are measures that are 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 and Calculation
of Free Cash Flow Margin (Unaudited)
(Dollars in
millions)
|
|
|
Three Months
Ended
September 30,
2023
|
|
Three Months
Ended
September 30,
2022
|
Cash provided by
operating activities
|
$
1,809
|
|
$
2,083
|
Capital
expenditures
|
(249)
|
|
(184)
|
Garrett cash
receipts
|
—
|
|
—
|
Free cash
flow
|
1,560
|
|
1,899
|
Cash provided by
operating activities
|
$
1,809
|
|
$
2,083
|
÷ Net sales
|
$
9,212
|
|
$
8,951
|
Operating cash flow
margin %
|
19.6 %
|
|
23.3 %
|
Free cash
flow
|
$
1,560
|
|
$
1,899
|
÷ Net sales
|
$
9,212
|
|
$
8,951
|
Free cash flow
margin %
|
16.9 %
|
|
21.2 %
|
We define free cash flow as cash provided by operating
activities less cash for capital expenditures plus cash receipts
from Garrett. We define free cash flow margin as free cash flow
divided by net sales.
We believe that free cash flow and free cash flow margin are
non-GAAP measures 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. These measures 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 to Expected Free Cash Flow
Excluding Impact of Settlements (Unaudited)
|
|
|
Twelve Months
Ended
December 31,
2023(E) ($B)
|
Cash provided by
operating activities
|
~$4.9 -
$5.3
|
Capital
expenditures
|
~(1.0)
|
Garrett cash
receipts
|
—
|
Free cash
flow
|
~$3.9 -
$4.3
|
Impact of
settlements
|
~1.2
|
Free cash flow
excluding impact of settlements
|
~$5.1 -
$5.5
|
We define free cash flow as cash provided by operating
activities less cash for capital expenditures plus anticipated cash
receipts from Garrett. We define free cash flow excluding impact of
settlements as free cash flow less settlements related to the NARCO
Buyout, HWI Sale, and UOP Matters.
We believe that free cash flow and free cash flow excluding
impact of settlements are non-GAAP measures 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. These
measures 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