Honeywell Reports Full Year Sales Up 3% to $37.7 Billion; Proforma Earnings Per Share Up 11% to $4.48 Per Share; Reported Earnings Per Share of $3.69 - 2012 Earnings Growth Driven By Strong Operational Performance

- Record Segment Margin Of 15.6%, Up 90 bps YoY; Operating Margin 13.6% Up 160 bps YoY

- Pension Mark-to-Market Adjustment As Expected - ($0.79) Per Share

- Reaffirming 2013 Proforma EPS Guidance Of $4.75-4.95, Up Another 6-11% Over 2012

MORRIS TOWNSHIP, N.J., Jan. 25, 2013 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the fourth quarter and full year 2012:

Total Honeywell




($ Millions, except Earnings Per Share)

FY 2011

FY 2012

Change

Sales

36,529

37,665

3%





Segment Margin

14.7%

15.6%

90 bps

Operating Income Margin1

12.0%

13.6%

160 bps





Earnings Per Share (Reported)

$2.61

$3.69

41%

Earnings Per Share (Proforma) 1

$4.05

$4.48

11%





Cash Flow from Operations

2,833

3,517

24%

Free Cash Flow2

3,780

3,672

(3%)






4Q 2011

4Q 2012

Change

Sales

9,473

9,581

1%





Segment Margin

15.1%

15.6%

50 bps

Operating Income Margin1

12.9%

13.9%

100 bps





Earnings Per Share (Reported)

($0.40)

$0.32

N/A

Earnings Per Share (Proforma) 1

$1.05

$1.10

5%





Cash Flow from Operations

1,477

1,349

(9%)

Free Cash Flow2

1,417

1,311

(7%)





1. Proforma, V%/bps Exclude Any Pension Mark-to-Market Adjustment

2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Cash Pension Contributions

"Honeywell had another year of terrific performance in 2012," said Honeywell Chairman and CEO Dave Cote. "In a weak global economy, we grew sales 3% and earnings by 11%, while expanding margins to record levels and continuing to generate strong cash flow. We outperformed while also continuing to invest in seed planting initiatives like new products and services, global growth, cost competitiveness, and strengthening our key processes -- Honeywell Operating System, Velocity Product Development™, and Functional Transformation. Our balanced mix of long- and short-cycle businesses and expansion in high growth regions has offset lower demand in some of our short-cycle businesses, European weakness, and foreign exchange headwinds. We've also maintained a strong long-cycle backlog, now a record $15.8 billion, with new platform wins across many of our businesses last year. These positive trends, combined with our great positions in good industries, conservative planning, and the continued evolution of our internal processes will help Honeywell drive sales, margin growth, cash generation, and EPS outperformance in 2013 and over the long-term."

The company is also reaffirming its full-year 2013 sales and EPS guidance:

Full Year Guidance






2013

Change



Current Guidance

vs. 2012

Sales


$39.0 - $39.5B

4 - 5%





Segment Margin


15.8 - 16.1%

20 - 50 bps

Operating Income Margin1


14.2 - 14.5%

60 - 90 bps





Earnings Per Share1


$4.75 - $4.95

6 - 11%





Free Cash Flow2


~$3.7B

~Flat

1. Proforma, V% / bps Exclude Any Pension Mark-to-Market Adjustment

2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions

Segment Performance

Aerospace




($ Millions)

FY 2011

FY 2012

% Change

Sales

11,475

12,040

5%

Segment Profit

2,023

2,279

13%

Segment Margin

17.6%

18.9%

130 bps






4Q 2011

4Q 2012

% Change

Sales

3,047

3,020

(1%)

Segment Profit

573

601

5%

Segment Margin

18.8%

19.9%

110 bps

  • Sales were down (1%) compared with the fourth quarter of 2011 driven by a (6%) decline in Defense and Space, partially offset by a 3% increase in our commercial end markets. Commercial original equipment (OE) sales were up 5% driven by increased production rates at our major OE customers. Commercial aftermarket sales were up 3% driven by higher maintenance activity.
  • Segment profit was up 5%, and segment margins expanded 110 bps to 19.9%, primarily due to commercial excellence, productivity net of inflation, and lower BGA OE payments, partially offset by investments for growth.

Automation and Control Solutions




($ Millions)

FY 2011

FY 2012

% Change

Sales

15,535

15,880

2%

Segment Profit

2,083

2,232

7%

Segment Margin

13.4%

14.1%

70 bps





($ Millions)

4Q 2011

4Q 2012

% Change

Sales

4,051

4,172

3%

Segment Profit

584

645

10%

Segment Margin

14.4%

15.5%

110 bps

  • Sales were up 3% compared with the fourth quarter of 2011 as volume growth and the favorable impact of acquisitions, net of divestitures was partially offset by foreign exchange headwinds. Energy, Safety, and Security was up 4% organically due to acceleration of growth in Environmental and Combustion Controls and continued growth in Scanning & Mobility and Security. Process Solutions and Building Solutions and Distribution grew at a slower rate, reflecting a more challenging capital investment environment.
  • Segment profit was up 10% and segment margins were up 110 bps to 15.5% driven by commercial excellence and strong productivity net of inflation and other investments for growth, including the favorable impact of previously completed restructuring actions.

Performance Materials and Technologies




($ Millions)

FY 2011

FY 2012

% Change

Sales

5,659

6,184

9%

Segment Profit

1,042

1,154

11%

Segment Margin

18.4%

18.7%

30 bps





($ Millions)

4Q 2011

4Q 2012

% Change

Sales

1,430

1,545

8%

Segment Profit

223

210

(6%)

Segment Margin

15.6%

13.6%

(200 bps)

  • Sales were up 8% reported, 2% organic, compared with the fourth quarter of 2011, resulting from the Thomas Russell acquisition in UOP, partially offset by lower volume of petrochemical and refining catalysts. Advanced Materials sales were up 5% driven by new products and applications, partially offset by challenging end market conditions.
  • Segment profit declined (6%) and segment margins contracted (200 bps) to 13.6% in the fourth quarter primarily due to lower catalyst sales in UOP, unfavorable price/raws spread in Resins and Chemicals and challenging end market conditions, partially offset by productivity net of labor inflation and investments for growth.

Transportation Systems




($ Millions)

FY 2011

FY 2012

% Change

Sales

3,859

3,561

(8%)

Segment Profit

485

432

(11%)

Segment Margin

12.6%

12.1%

(50 bps)





($ Millions)

4Q 2011

4Q 2012

% Change

Sales

944

844

(11%)

Segment Profit

117

94

(20%)

Segment Margin

12.4%

11.1%

(130 bps)

  • Sales were down (11%), down (8%) organic, compared with the fourth quarter of 2011, driven by lower European light vehicle production and aftermarket sales, partially offset by new platform launches and higher gas turbo penetration, primarily in the U.S. and China.
  • Segment profit was down (20%) in the fourth quarter and segment margins decreased (130 bps) to 11.1% primarily driven by lower sales volumes and price, unfavorable foreign exchange, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.

Honeywell will discuss its results during its investor conference call today starting at 9:00 a.m. EST. To participate on the conference call, please dial (800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes before the 9:00 a.m. EST start. Please mention to the operator that you are dialing in for Honeywell's fourth quarter 2012 earnings call or provide the conference code, HONQ412. You can hear a replay of the conference call from 12:00 p.m. EST, January 25, until 11:59 p.m. EST, February 1, by dialing (800) 374-1216 (domestic) or (402) 220-0681 (international).

A real-time audio webcast of the presentation can be accessed at http://www.honeywell.com/investor, where related materials will be posted prior to the presentation. The presentation materials will be in Adobe Acrobat format. A replay of the webcast will be available following the presentation at the same link listed above for 30 days.

Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; automotive products; turbochargers; and performance materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, and Chicago Stock Exchanges. For more news and information on Honeywell, please visit www.honeywellnow.com.

This release contains certain statements that may be deemed "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements.

Contacts:


Media

Investor Relations

Robert C. Ferris

Elena Doom

(973) 455-3388

(973) 455-2222

rob.ferris@honeywell.com

elena.doom@honeywell.com










Honeywell International Inc

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2012


2011


2012


2011










Product sales

$ 7,628


$ 7,478


$ 29,812


$ 28,745

Service sales

1,953


1,995


7,853


7,784

Net sales

9,581


9,473


37,665


36,529










Costs, expenses and other








      Cost of products sold (A)

6,302


6,862


22,929


23,220

      Cost of services sold (A)

1,379


1,573


5,362


5,336



7,681


8,435


28,291


28,556

      Selling, general and administrative expenses (A)

1,523


1,616


5,218


5,399

      Other (income) expense

(16)


(12)


(70)


(84)

      Interest and other financial charges

87


91


351


376



9,275


10,130


33,790


34,247










Income (loss) from continuing operations before taxes

306


(657)


3,875


2,282

Tax expense (benefit)

51


(350)


944


417










Income (loss) from continuing operations after taxes

255


(307)


2,931


1,865










Income from discontinued operations after taxes

-


-


-


209










Net income (loss)

255


(307)


2,931


2,074










Less: Net income attributable to the noncontrolling interest

4


3


5


7










Net income (loss) attributable to Honeywell

$ 251


$ (310)


$ 2,926


$ 2,067










Amounts attributable to Honeywell:









Income (loss) from continuing operations less net income









attributable to the noncontrolling interest

251


(310)


2,926


1,858


Income from discontinued operations

-


-


-


209


Net income (loss) attributable to Honeywell

$ 251


$ (310)


$ 2,926


$ 2,067










Earnings per share of common stock - basic:








  Income (loss) from continuing operations

0.32


(0.40)


3.74


2.38

  Income from discontinued operations

-


-


-


0.27

  Net income (loss) attributable to Honeywell

$ 0.32


$ (0.40)


$ 3.74


$ 2.65










Earnings per share of common stock - assuming dilution:








  Income (loss) from continuing operations

0.32


(0.40)


3.69


2.35

  Income from discontinued operations

-


-


-


0.26

  Net income (loss) attributable to Honeywell

$ 0.32


$ (0.40)


$ 3.69


$ 2.61










Weighted average number of shares outstanding-basic

787.2


774.7


782.4


780.8










Weighted average number of shares outstanding -  








    assuming dilution

796.4


784.3


791.9


791.6










(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement expense, and stock compensation expense.

(B) Below is a reconciliation of Earnings per share to Earnings per share, excluding mark-to-market pension expense. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.








Three Months Ended


Twelve Months Ended



December 31,


December 31,



20121


20111


20121


20111











Earnings per share of common stock - assuming dilution

$ 0.32


$ (0.40)


$ 3.69


$ 2.61


Mark-to-market pension expense

0.78


1.45


0.79


1.44











Earnings per share of common stock - assuming dilution,









excluding mark-to-market pension expense

$ 1.10


$ 1.05


$ 4.48


$ 4.05











1- EPS utilizes weighted average shares outstanding and the effective tax rate for the period. Mark-to-market uses a blended tax rate of 35.0% and 36.9% for 2012 and 2011, respectively