- Fourth Quarter Earnings Per Share of $1.91 and Adjusted Earnings Per Share1
of $2.60, Above Midpoint of Previous
Guidance
- Fourth Quarter Sales of $9.4
Billion, Reported Sales Up 3%, Organic1 Sales Up
2%
- Full Year Operating Cash Flow of $5.3
Billion and Free Cash Flow1 of
$4.3B, at High End of Previous
Guidance
- Deployed $8.3 Billion of
Capital to Share Repurchases, Dividends, Capital Expenditures, and
M&A in 2023
- Expect 2024 Adjusted Earnings Per Share2,3 of
$9.80 - $10.10, Up 7% - 10%
- Vimal Kapur to Become
Chairman of the Board; New Independent Lead Director
Announced
CHARLOTTE, N.C.,
Feb. 1,
2024 /PRNewswire/ -- Honeywell (NASDAQ:
HON) today announced results for the fourth quarter and 2023
that met or exceeded the company's original full-year guidance. The
company also provided its outlook for 2024 and, separately,
announced that CEO Vimal Kapur will
succeed Darius Adamczyk as Chairman
of the Board in June 2024 and
William S. Ayer will become
independent Lead Director in May
2024.
The company reported fourth-quarter year-over-year sales growth
of 3% and organic1 sales growth of 2%, led by another
quarter of double-digit organic sales growth in commercial
aviation. Operating margin contracted 290 basis points to 16.8% and
segment margin1 expanded by 60 basis points to 23.5%,
driven by expansion in Performance Materials and Technologies and
Aerospace. Earnings per share for the fourth quarter was
$1.91, up 26% year over year, and
adjusted earnings per share1 was $2.60, up 3% year over year. An adjustment to our
estimated future Bendix liability at the end of the year drove the
majority of the difference between earnings per share and adjusted
earnings per share1. Excluding a 13-cent non-cash pension headwind, adjusted
earnings per share1 was up 8%. Operating cash flow was
$3.0 billion with operating cash flow
margin of 31.3%, and free cash flow1 was $2.6 billion with free cash flow
margin1 of 27.4%, led by a reduction in working
capital.
For the full year, sales increased 3%, or 4% on an
organic1 basis. Operating income grew 10% with operating
margin expansion of 120 basis points, while segment
profit1 grew 8% with segment margin1
expansion of 100 basis points. Honeywell reported full-year
earnings per share of $8.47 and
adjusted earnings per share1 of $9.16.
"Honeywell once again demonstrated its resilience by delivering
on our commitments and finishing strong in another economically
challenging year," said Vimal Kapur,
chief executive officer of Honeywell. "Our organic1
growth was led by the eleventh consecutive quarter of double-digit
growth in our commercial aerospace business. Honeywell Connected
Enterprise offerings across the portfolio also saw growth of over
20% in the quarter. Our continued focus on operational excellence
enabled us to achieve this growth while expanding margins above the
high end of our guidance range. In the fourth quarter, we also
executed on our capital allocation priorities, not only by
deploying $2.6 billion of cash flow
to share repurchases, dividends, and high-return capex, but through
the announcement of the $5 billion
acquisition of Carrier's Global Access Solutions business, which
will enhance our building automation capabilities to become a
leading provider of security solutions. Full-year capital
deployment totaled $8.3 billion in
2023, once again in excess of our cash flow, and we expect our
capital deployment to accelerate next year as we close on the
security acquisition."
Kapur continued, "As we look toward 2024, our portfolio is well
positioned to accelerate both our top line and earnings growth,
underpinned by three compelling megatrends — automation, the future
of aviation, and energy transition. I am confident that 2024 will
be another year of value creation for our shareowners, our
customers, and our employees."
Honeywell's backlog remains at a record level, ending the year
up 8% at $31.8 billion,
providing support for the company's outlook. Long-cycle markets
remain robust while the short-cycle recovery will provide a further
boost to Honeywell's results.
Honeywell also announced its outlook for 2024. The company
expects sales of $38.1 billion to
$38.9 billion, representing
year-over-year organic1 growth of 4% to 6%; segment
margin expansion2 of 30 to 60 basis points; adjusted
earnings per share2,3 of $9.80 to $10.10, up
7% to 10%; operating cash flow of $6.7
billion to $7.1 billion, and
free cash flow1 of $5.6
billion to $6.0 billion. A
summary of the company's 2024 guidance can be found in Table 1.
Fourth-Quarter Performance
Honeywell sales for the fourth quarter were up 3%
year over year on a reported basis and 2% on an organic1
basis year over year. The fourth-quarter financial results can
be found in Tables 2 and 3.
Aerospace sales for the fourth quarter were up 15%
on an organic1 basis year over year, the
sixth 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,
increasing 25% year over year on increased shipset deliveries.
Commercial aftermarket once again grew double digits in the fourth
quarter as flight hours continue to improve, including 29% growth
in air transport. Defense and space sales were up 5% as robust
demand was partially offset by supply chain challenges. Segment
margin expanded 20 basis points to 28.0%, driven by commercial
excellence and volume leverage, partially offset by cost inflation
and mix pressure in our original equipment business.
Honeywell Building Technologies sales for the fourth
quarter were down 1% on an organic1 basis year over
year. Building products sales declined due to lower volumes of fire
and security offerings, offsetting 6% organic growth in building
solutions driven by continued strength in both services and
projects. Segment margin contracted by 90 basis points to 23.9% due
to cost inflation and mix headwinds, partially offset by
productivity actions and commercial excellence.
Performance Materials and Technologies sales for the
fourth quarter were up 4% on an organic1 basis year over
year. Advanced Materials led PMT with 6% organic sales growth,
driven by double-digit growth in fluorine products and strength in
life sciences. HPS grew 4% organically, led by another strong
quarter in lifecycle solutions and services and smart energy. UOP
sales were up 1% in the quarter as strength in petrochemical
catalyst shipments and sustainable technology solutions was
partially offset by lower volumes in gas processing. Segment margin
expanded 200 basis points to 24.0% as a result of productivity
actions, favorable business mix, and commercial excellence net of
inflation.
Safety and Productivity Solutions sales for the
fourth quarter decreased by 24% on an organic1 basis
year over year. Sales declines were due to lower volumes in
warehouse and workflow solutions. Softness in the short-cycle
productivity solutions and services business also impacted sales,
but orders growth of over 30% in the quarter provided signs of
improvement. Segment margin contracted 290 basis points to 17.3%
driven by lower volume leverage and cost inflation, partially
offset by productivity actions and commercial excellence.
Conference Call Details
Honeywell will discuss its fourth-quarter results and full-year
2024 guidance during an investor conference call starting at
8:30 a.m. Eastern Standard 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
Sales
|
|
$38.1B -
$38.9B
|
Organic1
Growth
|
|
4% -
6%
|
Segment
Margin
|
|
23.0% -
23.3%
|
Expansion
|
|
Up 30 - 60
bps
|
Adjusted Earnings Per
Share3
|
|
$9.80 -
$10.10
|
Adjusted Earnings
Growth3
|
|
7% -
10%
|
Operating Cash
Flow
|
|
$6.7B -
$7.1B
|
Free Cash
Flow1
|
|
$5.6B -
$6.0B
|
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
|
|
FY
2023
|
|
FY
2022
|
|
Change
|
Sales
|
|
36,662
|
|
35,466
|
|
3 %
|
Organic1
Growth
|
|
|
|
|
|
4 %
|
Operating Income
Margin
|
|
19.3 %
|
|
18.1 %
|
|
120 bps
|
Segment
Margin1
|
|
22.7 %
|
|
21.7 %
|
|
100 bps
|
Reported Earnings Per
Share
|
|
$8.47
|
|
$7.27
|
|
17 %
|
Adjusted Earnings Per
Share1
|
|
$9.16
|
|
$8.76
|
|
5 %
|
Cash Flow from
Operations
|
|
5,340
|
|
5,274
|
|
1 %
|
Operating Cash Flow
Margin
|
|
14.6 %
|
|
14.9 %
|
|
(30)
bps
|
Free Cash
Flow1
|
|
4,301
|
|
4,917
|
|
(13) %
|
Free Cash Flow
Margin1
|
|
11.7 %
|
|
13.9 %
|
|
(220)
bps
|
|
|
4Q
2023
|
|
4Q
2022
|
|
Change
|
Sales
|
|
9,440
|
|
9,186
|
|
3 %
|
Organic1
Growth
|
|
|
|
|
|
2 %
|
Operating Income
Margin
|
|
16.8 %
|
|
19.7 %
|
|
-290 bps
|
Segment
Margin1
|
|
23.5 %
|
|
22.9 %
|
|
60 bps
|
Reported Earnings Per
Share
|
|
$1.91
|
|
$1.51
|
|
26 %
|
Adjusted Earnings Per
Share1
|
|
$2.60
|
|
$2.52
|
|
3 %
|
Cash Flow from
Operations
|
|
2,955
|
|
2,366
|
|
25 %
|
Operating Cash Flow
Margin
|
|
31.3 %
|
|
25.8 %
|
|
550 bps
|
Free Cash
Flow1
|
|
2,591
|
|
2,125
|
|
22 %
|
Free Cash Flow
Margin1
|
|
27.4 %
|
|
23.1 %
|
|
430 bps
|
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
|
|
FY
2023
|
|
FY
2022
|
|
Change
|
Sales
|
|
13,624
|
|
11,827
|
|
15 %
|
Organic1
Growth
|
|
|
|
|
|
15 %
|
Segment
Profit
|
|
3,741
|
|
3,228
|
|
16 %
|
Segment
Margin
|
|
27.5 %
|
|
27.3 %
|
|
20 bps
|
|
|
4Q
2023
|
|
4Q
2022
|
|
|
Sales
|
|
3,673
|
|
3,204
|
|
15 %
|
Organic1
Growth
|
|
|
|
|
|
15 %
|
Segment
Profit
|
|
1,027
|
|
890
|
|
15 %
|
Segment
Margin
|
|
28.0 %
|
|
27.8 %
|
|
20 bps
|
HONEYWELL BUILDING
TECHNOLOGIES
|
|
FY
2023
|
|
FY
2022
|
|
Change
|
Sales
|
|
6,031
|
|
6,000
|
|
1 %
|
Organic1
Growth
|
|
|
|
|
|
2 %
|
Segment
Profit
|
|
1,505
|
|
1,439
|
|
5 %
|
Segment
Margin
|
|
25.0 %
|
|
24.0 %
|
|
100 bps
|
|
|
4Q
2023
|
|
4Q
2022
|
|
|
Sales
|
|
1,504
|
|
1,514
|
|
(1) %
|
Organic1
Growth
|
|
|
|
|
|
(1) %
|
Segment
Profit
|
|
359
|
|
375
|
|
(4) %
|
Segment
Margin
|
|
23.9 %
|
|
24.8 %
|
|
-90 bps
|
PERFORMANCE
MATERIALS AND TECHNOLOGIES
|
|
FY
2023
|
|
FY
2022
|
|
Change
|
Sales
|
|
11,506
|
|
10,727
|
|
7 %
|
Organic1
Growth
|
|
|
|
|
|
7 %
|
Segment
Profit
|
|
2,549
|
|
2,354
|
|
8 %
|
Segment
Margin
|
|
22.2 %
|
|
21.9 %
|
|
30 bps
|
|
|
4Q
2023
|
|
4Q
2022
|
|
|
Sales
|
|
3,029
|
|
2,860
|
|
6 %
|
Organic1
Growth
|
|
|
|
|
|
4 %
|
Segment
Profit
|
|
728
|
|
628
|
|
16 %
|
Segment
Margin
|
|
24.0 %
|
|
22.0 %
|
|
200 bps
|
SAFETY AND
PRODUCTIVITY SOLUTIONS
|
|
FY
2023
|
|
FY
2022
|
|
Change
|
Sales
|
|
5,489
|
|
6,907
|
|
(21) %
|
Organic1
Growth
|
|
|
|
|
|
(20) %
|
Segment
Profit
|
|
901
|
|
1,080
|
|
(17) %
|
Segment
Margin
|
|
16.4 %
|
|
15.6 %
|
|
80 bps
|
|
|
4Q
2023
|
|
4Q
2022
|
|
|
Sales
|
|
1,227
|
|
1,607
|
|
(24) %
|
Organic1
Growth
|
|
|
|
|
|
(24) %
|
Segment
Profit
|
|
212
|
|
325
|
|
(35) %
|
Segment
Margin
|
|
17.3 %
|
|
20.2 %
|
|
-290 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 (www.honeywell.com) delivers industry specific
solutions that include aerospace products and services; control
technologies for buildings and industry; and performance materials
globally. Our technologies help everything from aircraft,
buildings, manufacturing plants, supply chains, and workers become
more connected to make our world smarter, safer, and more
sustainable. For more news and information on Honeywell, please
visit www.honeywell.com/newsroom.
Honeywell uses our Investor Relations website,
www.honeywell.com/investor, as a means of disclosing information
which may be of interest or material to our investors and for
complying with disclosure obligations under Regulation FD.
Accordingly, investors should monitor our Investor Relations
website, in addition to following our press releases, SEC filings,
public conference calls, webcasts, and social media.
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 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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Product
sales
|
$
6,728
|
|
$
6,556
|
|
$
25,773
|
|
$
25,960
|
Service
sales
|
2,712
|
|
2,630
|
|
10,889
|
|
9,506
|
Net
sales
|
9,440
|
|
9,186
|
|
36,662
|
|
35,466
|
Costs, expenses and
other
|
|
|
|
|
|
|
|
Cost of products
sold1
|
4,686
|
|
4,281
|
|
16,977
|
|
16,955
|
Cost of services
sold1
|
1,515
|
|
1,488
|
|
6,018
|
|
5,392
|
|
6,201
|
|
5,769
|
|
22,995
|
|
22,347
|
Research and
development expenses
|
360
|
|
355
|
|
1,456
|
|
1,478
|
Selling, general and
administrative expenses1
|
1,296
|
|
1,249
|
|
5,127
|
|
5,214
|
Other (income)
expense
|
(125)
|
|
480
|
|
(840)
|
|
(366)
|
Interest and other
financial charges
|
202
|
|
144
|
|
765
|
|
414
|
|
7,934
|
|
7,997
|
|
29,503
|
|
29,087
|
Income before
taxes
|
1,506
|
|
1,189
|
|
7,159
|
|
6,379
|
Tax expense
|
258
|
|
168
|
|
1,487
|
|
1,412
|
Net
income
|
1,248
|
|
1,021
|
|
5,672
|
|
4,967
|
Less: Net income
attributable to the noncontrolling interest
|
(15)
|
|
2
|
|
14
|
|
1
|
Net income
attributable to Honeywell
|
$
1,263
|
|
$
1,019
|
|
$
5,658
|
|
$
4,966
|
Earnings per share
of common stock - basic
|
$
1.92
|
|
$
1.52
|
|
$
8.53
|
|
$
7.33
|
Earnings per share
of common stock - assuming dilution
|
$
1.91
|
|
$
1.51
|
|
$
8.47
|
|
$
7.27
|
Weighted average
number of shares outstanding - basic
|
656.5
|
|
670.6
|
|
663.0
|
|
677.1
|
Weighted average
number of shares outstanding - assuming dilution
|
660.9
|
|
676.5
|
|
668.2
|
|
683.1
|
|
|
|
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
December 31,
|
|
Twelve Months
Ended
December 31,
|
Net
Sales
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Aerospace
|
$
3,673
|
|
$
3,204
|
|
$
13,624
|
|
$
11,827
|
Honeywell Building
Technologies
|
1,504
|
|
1,514
|
|
6,031
|
|
6,000
|
Performance Materials
and Technologies
|
3,029
|
|
2,860
|
|
11,506
|
|
10,727
|
Safety and Productivity
Solutions
|
1,227
|
|
1,607
|
|
5,489
|
|
6,907
|
Corporate and all
other
|
7
|
|
1
|
|
12
|
|
5
|
Total
|
$
9,440
|
|
$
9,186
|
|
$
36,662
|
|
$
35,466
|
Reconciliation of
Segment Profit to Income Before Taxes
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
Segment
Profit
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Aerospace
|
$
1,027
|
|
$
890
|
|
$
3,741
|
|
$
3,228
|
Honeywell Building
Technologies
|
359
|
|
375
|
|
1,505
|
|
1,439
|
Performance Materials
and Technologies
|
728
|
|
628
|
|
2,549
|
|
2,354
|
Safety and Productivity
Solutions
|
212
|
|
325
|
|
901
|
|
1,080
|
Corporate and all
other
|
(103)
|
|
(114)
|
|
(392)
|
|
(412)
|
Total segment
profit
|
2,223
|
|
2,104
|
|
8,304
|
|
7,689
|
Interest and other
financial charges
|
(202)
|
|
(144)
|
|
(765)
|
|
(414)
|
Interest
income
|
80
|
|
61
|
|
321
|
|
138
|
Stock compensation
expense1
|
(54)
|
|
(25)
|
|
(202)
|
|
(188)
|
Pension ongoing
income2
|
137
|
|
245
|
|
528
|
|
993
|
Pension mark-to-market
expense
|
(153)
|
|
(523)
|
|
(153)
|
|
(523)
|
Other postretirement
income2
|
10
|
|
11
|
|
29
|
|
41
|
Repositioning and other
charges3,4
|
(529)
|
|
(552)
|
|
(860)
|
|
(1,266)
|
Other income
(expense)5
|
(6)
|
|
12
|
|
(43)
|
|
(91)
|
Income before
taxes
|
$
1,506
|
|
$
1,189
|
|
$
7,159
|
|
$
6,379
|
|
|
|
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 (loss) of
affiliated companies is included in segment profit.
|
Honeywell International
Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
7,925
|
|
$
9,627
|
Short-term
investments
|
170
|
|
483
|
Accounts
receivable—net
|
7,530
|
|
7,440
|
Inventories
|
6,178
|
|
5,538
|
Other current
assets
|
1,699
|
|
1,894
|
Total current
assets
|
23,502
|
|
24,982
|
Investments and
long-term receivables
|
939
|
|
945
|
Property, plant and
equipment—net
|
5,660
|
|
5,471
|
Goodwill
|
18,049
|
|
17,497
|
Other intangible
assets—net
|
3,231
|
|
3,222
|
Insurance recoveries
for asbestos related liabilities
|
170
|
|
224
|
Deferred income
taxes
|
392
|
|
421
|
Other assets
|
9,582
|
|
9,513
|
Total
assets
|
$
61,525
|
|
$
62,275
|
LIABILITIES
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
6,849
|
|
$
6,329
|
Commercial paper and
other short-term borrowings
|
2,085
|
|
2,717
|
Current maturities of
long-term debt
|
1,796
|
|
1,730
|
Accrued
liabilities
|
7,809
|
|
9,162
|
Total current
liabilities
|
18,539
|
|
19,938
|
Long-term
debt
|
16,562
|
|
15,123
|
Deferred income
taxes
|
2,094
|
|
2,093
|
Postretirement benefit
obligations other than pensions
|
134
|
|
146
|
Asbestos related
liabilities
|
1,490
|
|
1,180
|
Other
liabilities
|
6,265
|
|
6,469
|
Redeemable
noncontrolling interest
|
7
|
|
7
|
Shareowners'
equity
|
16,434
|
|
17,319
|
Total liabilities,
redeemable noncontrolling interest and shareowners'
equity
|
$
61,525
|
|
$
62,275
|
Honeywell International
Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
$
1,248
|
|
$
1,021
|
|
$
5,672
|
|
$
4,967
|
Less: Net income
attributable to noncontrolling interest
|
(15)
|
|
2
|
|
14
|
|
1
|
Net income
attributable to Honeywell
|
1,263
|
|
1,019
|
|
5,658
|
|
4,966
|
Adjustments to
reconcile net income attributable to Honeywell to net cash provided
by
operating activities
|
|
|
|
|
|
|
|
Depreciation
|
166
|
|
163
|
|
659
|
|
657
|
Amortization
|
135
|
|
136
|
|
517
|
|
547
|
Gain on sale of
non-strategic businesses and assets
|
(5)
|
|
(12)
|
|
(5)
|
|
(22)
|
Repositioning and
other charges
|
529
|
|
552
|
|
860
|
|
1,266
|
Net payments for
repositioning and other charges
|
(136)
|
|
(196)
|
|
(459)
|
|
(512)
|
NARCO Buyout
payment
|
—
|
|
—
|
|
(1,325)
|
|
—
|
Pension and other
postretirement income
|
4
|
|
268
|
|
(406)
|
|
(510)
|
Pension and other
postretirement benefit payments
|
(13)
|
|
(9)
|
|
(38)
|
|
(23)
|
Stock compensation
expense
|
54
|
|
25
|
|
202
|
|
188
|
Deferred income
taxes
|
(15)
|
|
(388)
|
|
153
|
|
(180)
|
Other
|
(283)
|
|
(558)
|
|
(837)
|
|
(358)
|
Changes in assets and
liabilities, net of the effects of acquisitions and
divestitures
|
|
|
|
|
|
|
|
Accounts
receivable
|
302
|
|
(79)
|
|
(42)
|
|
(739)
|
Inventories
|
(178)
|
|
(50)
|
|
(626)
|
|
(440)
|
Other current
assets
|
(124)
|
|
107
|
|
17
|
|
232
|
Accounts
payable
|
422
|
|
210
|
|
518
|
|
(155)
|
Accrued
liabilities
|
834
|
|
1,178
|
|
494
|
|
357
|
Net cash provided
by operating activities
|
2,955
|
|
2,366
|
|
5,340
|
|
5,274
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(364)
|
|
(241)
|
|
(1,039)
|
|
(766)
|
Proceeds from disposals
of property, plant and equipment
|
22
|
|
18
|
|
43
|
|
29
|
Increase in
investments
|
(156)
|
|
(377)
|
|
(560)
|
|
(1,211)
|
Decrease in
investments
|
163
|
|
371
|
|
971
|
|
1,255
|
Receipts from Garrett
Motion Inc.
|
—
|
|
—
|
|
—
|
|
409
|
Receipts (payments)
from settlements of derivative contracts
|
(206)
|
|
(404)
|
|
6
|
|
369
|
Cash paid for
acquisitions, net of cash acquired
|
(2)
|
|
—
|
|
(718)
|
|
(178)
|
Proceeds from sales of
businesses, net of fees paid
|
4
|
|
—
|
|
4
|
|
—
|
Net cash used for
investing activities
|
(539)
|
|
(633)
|
|
(1,293)
|
|
(93)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Proceeds from issuance
of commercial paper and other short-term borrowings
|
2,264
|
|
2,351
|
|
12,991
|
|
7,661
|
Payments of commercial
paper and other short-term borrowings
|
(2,179)
|
|
(3,123)
|
|
(13,663)
|
|
(8,447)
|
Proceeds from issuance
of common stock
|
45
|
|
199
|
|
196
|
|
320
|
Proceeds from issuance
of long-term debt
|
1
|
|
2,951
|
|
2,986
|
|
2,953
|
Payments of long-term
debt
|
(321)
|
|
(32)
|
|
(1,731)
|
|
(1,850)
|
Repurchases of common
stock
|
(1,528)
|
|
(1,373)
|
|
(3,715)
|
|
(4,200)
|
Cash dividends
paid
|
(711)
|
|
(691)
|
|
(2,855)
|
|
(2,719)
|
Other
|
93
|
|
(3)
|
|
28
|
|
(48)
|
Net cash provided
by (used for) financing activities
|
(2,336)
|
|
279
|
|
(5,763)
|
|
(6,330)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
75
|
|
166
|
|
14
|
|
(183)
|
Net increase
(decrease) in cash and cash equivalents
|
155
|
|
2,178
|
|
(1,702)
|
|
(1,332)
|
Cash and cash
equivalents at beginning of period
|
7,770
|
|
7,449
|
|
9,627
|
|
10,959
|
Cash and cash
equivalents at end of period
|
$
7,925
|
|
$
9,627
|
|
$
7,925
|
|
$
9,627
|
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
December 31,
2023
|
|
Year Ended
December 31,
2023
|
Honeywell
|
|
|
|
Reported sales %
change
|
3 %
|
|
3 %
|
Less: Foreign currency
translation
|
1 %
|
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
|
— %
|
Organic sales %
change
|
2 %
|
|
4 %
|
|
|
|
|
Aerospace
|
|
|
|
Reported sales %
change
|
15 %
|
|
15 %
|
Less: Foreign currency
translation
|
— %
|
|
— %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
|
— %
|
Organic sales %
change
|
15 %
|
|
15 %
|
|
|
|
|
Honeywell Building
Technologies
|
|
|
|
Reported sales %
change
|
(1) %
|
|
1 %
|
Less: Foreign currency
translation
|
— %
|
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
|
— %
|
Organic sales %
change
|
(1) %
|
|
2 %
|
|
|
|
|
Performance
Materials and Technologies
|
|
|
|
Reported sales %
change
|
6 %
|
|
7 %
|
Less: Foreign currency
translation
|
1 %
|
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
1 %
|
|
1 %
|
Organic sales %
change
|
4 %
|
|
7 %
|
|
|
|
|
Safety and
Productivity Solutions
|
|
|
|
Reported sales %
change
|
(24) %
|
|
(21) %
|
Less: Foreign currency
translation
|
— %
|
|
(1) %
|
Less: Acquisitions,
divestitures and other, net
|
— %
|
|
— %
|
Organic sales %
change
|
(24) %
|
|
(20) %
|
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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
$
1,583
|
|
$
1,813
|
|
$
7,084
|
|
$
6,427
|
Stock compensation
expense1
|
54
|
|
25
|
|
202
|
|
188
|
Repositioning,
Other2,3
|
569
|
|
233
|
|
952
|
|
942
|
Pension and other
postretirement service costs3
|
17
|
|
33
|
|
66
|
|
132
|
Segment
profit
|
$
2,223
|
|
$
2,104
|
|
$
8,304
|
|
$
7,689
|
|
|
|
|
|
|
|
|
Operating
income
|
$
1,583
|
|
$
1,813
|
|
$
7,084
|
|
$
6,427
|
÷ Net sales
|
$
9,440
|
|
$
9,186
|
|
$ 36,662
|
|
$ 35,466
|
Operating income
margin %
|
16.8 %
|
|
19.7 %
|
|
19.3 %
|
|
18.1 %
|
Segment
profit
|
$
2,223
|
|
$
2,104
|
|
$
8,304
|
|
$
7,689
|
÷ Net sales
|
$
9,440
|
|
$
9,186
|
|
$ 36,662
|
|
$ 35,466
|
Segment profit
margin %
|
23.5 %
|
|
22.9 %
|
|
22.7 %
|
|
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 December 31, 2022, other
charges include an expense of $7 million primarily related to a
loss on the sale of inventory due 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 and twelve months ended
December 31, 2022, other charges include $9 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
December 31,
|
|
Twelve Months
Ended December
31,
|
|
Twelve
Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2024E
|
Earnings per share
of common stock - diluted1
|
$
1.91
|
|
$
1.51
|
|
$
8.47
|
|
$
7.27
|
|
$9.80 -
$10.10
|
Pension mark-to-market
expense2
|
0.19
|
|
0.65
|
|
0.19
|
|
0.64
|
|
No Forecast
|
Expense (benefit)
related to UOP Matters3
|
—
|
|
(0.01)
|
|
—
|
|
0.07
|
|
—
|
Russian-related
charges4
|
—
|
|
0.01
|
|
—
|
|
0.43
|
|
—
|
Gain on sale of Russian
entities5
|
—
|
|
(0.02)
|
|
—
|
|
(0.03)
|
|
—
|
Net expense related to
the NARCO Buyout and HWI Sale6
|
—
|
|
0.38
|
|
0.01
|
|
0.38
|
|
—
|
Adjustment to estimated
future Bendix liability7
|
0.49
|
|
—
|
|
0.49
|
|
—
|
|
—
|
Adjusted earnings
per share of common stock - diluted
|
$
2.60
|
|
$
2.52
|
|
$
9.16
|
|
$
8.76
|
|
$9.80 -
10.10
|
Pension
headwind8
|
0.13
|
|
—
|
|
0.55
|
|
—
|
|
No Forecast
|
Adjusted earnings
per share of common stock
excluding Pension headwind - diluted
|
$
2.73
|
|
$
2.52
|
|
$
9.71
|
|
$
8.76
|
|
$9.80 -
$10.10
|
|
|
|
1
|
|
For the three months
ended December 31, 2023, and 2022, adjusted earnings per share
utilizes weighted average shares of approximately 660.9 million and
676.5 million, respectively. For the twelve months ended December
31, 2023, and 2022, adjusted earnings per share utilizes weighted
average shares of approximately 668.2 million and 683.1 million,
respectively. 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 expense of $27
million, for 2023 and a blended tax rate of 16%, net of tax expense
of $83 million, for 2022.
|
3
|
|
For the three and
twelve months ended December 31, 2022, the adjustments were a
benefit of $5 million and expense of $45 million, respectively,
without tax benefit, due to an expense related to UOP
matters.
|
4
|
|
For the three and
twelve months ended December 31, 2023, the adjustments were
benefits of $2 million and $3 million, respectively, without tax
expense. For the three months ended December 31, 2022, the
adjustment was $4 million, without tax benefit, to exclude expenses
primarily related to a loss on the sale of inventory offset by
favorable foreign exchange revaluation on an intercompany loan with
a Russian affiliate 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 and
twelve months ended December 31, 2022, the adjustments were $12
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, the adjustment was $8 million, net of tax
benefit of $3 million, due to the net expense related to the NARCO
Buyout and HWI Sale. For the three and twelve months ended December
31, 2022, the adjustment was $260 million, net of tax benefit of
$82 million, due to the net expense related to the NARCO Buyout and
HWI Sale.
|
7
|
|
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 three and 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 is 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.
|
8
|
|
For the three and
twelve months ended December 31, 2023, the adjustments were the
decline of $91 million and $378 million, of pension ongoing and
other postretirement income between 2022 and 2023, net of tax
expense of $18 million and $99 million, respectively.
|
Note: Amounts
may not foot due to rounding.
|
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 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
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash provided by
operating activities
|
$
2,955
|
|
$
2,366
|
|
$
5,340
|
|
$
5,274
|
Capital
expenditures
|
(364)
|
|
(241)
|
|
(1,039)
|
|
(766)
|
Garrett cash
receipts
|
—
|
|
—
|
|
—
|
|
409
|
Free cash
flow
|
2,591
|
|
2,125
|
|
4,301
|
|
4,917
|
Cash provided by
operating activities
|
$
2,955
|
|
$
2,366
|
|
$
5,340
|
|
$
5,274
|
÷ Net sales
|
$
9,440
|
|
$
9,186
|
|
$ 36,662
|
|
$ 35,466
|
Operating cash flow
margin %
|
31.3 %
|
|
25.8 %
|
|
14.6 %
|
|
14.9 %
|
Free cash
flow
|
$
2,591
|
|
$
2,125
|
|
$
4,301
|
|
$
4,917
|
÷ Net sales
|
$
9,440
|
|
$
9,186
|
|
$ 36,662
|
|
$ 35,466
|
Free cash flow
margin %
|
27.4 %
|
|
23.1 %
|
|
11.7 %
|
|
13.9 %
|
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
(Unaudited)
|
|
|
Twelve Months
Ended
December 31,
2024(E) ($B)
|
Cash provided by
operating activities
|
~$6.7 -
$7.1
|
Capital
expenditures
|
~(1.1)
|
Garrett cash
receipts
|
—
|
Free cash
flow
|
~$5.6 -
$6.0
|
We define free cash flow as cash provided by operating
activities less cash for capital expenditures plus anticipated cash
receipts from Garrett.
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
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/honeywell-announces-fourth-quarter-and-full-year-2023-results-issues-2024-guidance-302050038.html
SOURCE Honeywell