Honeywell Reports
Strong Finish to 2016
- Fourth-Quarter Growth Led By UOP,
Solstice®, And Home And Building Technologies
- Strong Fourth-Quarter Segment Margin Expansion Driven By
Productivity And Repositioning Benefits
- Fourth-Quarter Free Cash Flow Conversion Of 126%(1)
- Full-Year Sales of $39.3
Billion, Up 2%, Driven By Acquisitions
MORRIS PLAINS, N.J.,
Jan. 27, 2017 -- Honeywell (NYSE:
HON) today announced results for the fourth quarter and full-year
of 2016, and reaffirmed 2017 earnings guidance.
"We finished 2016 with a strong fourth quarter, achieving 14%
earnings growth (excluding divestitures and charges for pension
mark-to-market and debt refinancing), 90 basis points of segment
margin expansion excluding M&A, and free cash flow conversion
of 126%," said Honeywell Chairman and CEO Dave Cote. "For the full year, we delivered
earnings growth of 8% (excluding charges for pension mark-to-market
and debt refinancing) and drove strong operational segment margin
expansion while making significant investments for the future,
including over $250 million in
incremental Aerospace OEM incentives (the equivalent of four
percentage points of EPS). We funded high-return capital projects
through more than $1 billion in
capital expenditures, marking the third consecutive year of
reinvesting at over 150% of depreciation, and we continued to
upgrade our growth profile through acquisitions totaling more than
$2.5 billion and divestitures with
aggregate annual revenues in excess of $1
billion. To better drive top-line growth and improve our
overall decision-making speed, we realigned our business segments
and funded more than $250 million in
internal restructuring projects. In addition, our debt refinancing
will reduce our expected 2017 interest expense by about 8% despite
increasing total borrowings by $4
billion, and we returned nearly $4.5
billion to our shareowners through dividends and share
repurchases."
Cote concluded, "We delivered outstanding returns again in 2016
with a total shareowner return of 15%, which exceeded the S&P's
total shareowner return by 300 basis points. More importantly, we
set the stage for a successful 2017. I am confident in our ability
to continue to outperform under Darius
Adamczyk. It has been an honor to lead Honeywell for the
past 15 years, and I know that our best days are ahead of us."
1 Cash Flow From
Operations Less Capital Expenditures; Free Cash Flow Conversion =
Free Cash Flow / Net Income, Excluding Pension Mark-To-Market
Adjustment And Debt Refinancing Charges |
|
Throughout this press release, core organic
sales growth refers to reported sales growth less the impacts from
foreign currency translation, M&A and raw materials
pass-through pricing in the former Resins & Chemicals business
previously part of Performance Materials and Technologies. The
raw materials pricing impact is excluded in instances where raw
materials costs are passed through to customers, which drives
fluctuations in selling prices not tied to volume growth. A
reconciliation of core organic sales growth to reported sales
growth is provided in the attached financial tables. |
Darius Adamczyk, President and
Chief Operating Officer said, "Our business will benefit in the
future from the investments we made in 2016. All of these actions,
combined with our focus on enhancing organic growth, and the power
of our connected businesses, make us optimistic about 2017 and
beyond. We are reaffirming our 2017 earnings guidance today. As I
discussed on our December outlook call, Honeywell will continue our
focus on driving organic growth and margin expansion through new
software opportunities, breakthrough initiatives, and an improved
customer experience. We look forward to discussing this more at our
annual investor conference on March 1
in New York City."
Honeywell will discuss the results during its investor
conference call today starting at 9:30 a.m.
EST.
Fourth Quarter Performance
Honeywell sales for the fourth quarter were flat on a
reported basis and down 1% on a core organic basis. The difference
between reported and core organic sales is due to the impact of
acquisitions, primarily Elster and Intelligrated, partially offset
by the spin-off of Resins and Chemicals in Performance Materials
and Technologies and the divestiture of the Aerospace government
services business. The fourth-quarter and full-year 2016 financial
results can be found in Tables 1 and 2 below.
Aerospace sales for the fourth quarter were down 5% on a
core organic basis. The decrease was primarily driven by lower
volumes in Business and General Aviation, higher OEM incentives,
program completions in U.S. Space and International Defense, and
continued weakness in the commercial helicopter business, as
expected. This was partially offset by global gas turbo penetration
in passenger vehicles in Transportation Systems. Segment margin
declined 130 bps to 20.2%, due to higher OEM incentives, product
mix, and lower volumes, partially offset by productivity net of
inflation and commercial excellence. Excluding the impact of
acquisitions and higher OEM incentives, segment margin contracted
by 10 basis points.
Home and Building Technologies sales for the fourth
quarter were up 2% on a core organic basis driven by continued
strength in our Building Solutions and Distribution businesses,
double-digit growth in China and
India, and new product
introductions in Environmental and Energy Solutions. Segment margin
declined 30 bps to 16.8%, primarily driven by acquisition
amortization and integration costs. Excluding the impact of
acquisitions, segment margin expanded 60 basis points driven by
benefits from previously-funded restructuring and commercial
excellence, partially offset by the unfavorable impact of higher
Distribution sales and growth investments.
Performance Materials and Technologies sales for the
fourth quarter were up 5% on a core organic basis driven by strong
catalyst, licensing, and equipment growth in UOP and a continued
ramp in Solstice® sales in Advanced Materials. Segment
margin expanded 520 bps to 25.4%, driven by productivity net of
inflation, the favorable impact from the spin-off of AdvanSix,
higher catalyst volumes, and commercial excellence. Excluding the
impact of acquisitions, segment margin expanded by 560 bps.
Safety and Productivity Solutions sales for the fourth
quarter were down 6% on a core organic basis as a result of lower
volumes in the Productivity and Safety businesses and supply chain
delays. Segment margin contracted 100 bps to 14.3%, primarily
driven by acquisition amortization and integration costs. Excluding
the impact of acquisitions, segment margin expanded by 100 bps
driven by restructuring benefits and commercial excellence,
partially offset by lower volumes across the portfolio.
To participate in today's conference call, please dial (800)
263-0877 (domestic) or (719) 457-1036 (international) approximately
ten minutes before the 9:30 a.m. EST
start. Please mention to the operator that you are dialing in
for Honeywell's fourth quarter 2016 earnings call or provide the
conference code HON4Q16. The live webcast of the investor call
as well as related presentation materials will be available through
the "Investor Relations" section of the company's Website
(www.honeywell.com/investor). Investors can hear a replay of the
conference call from 12:30 p.m. EST,
January 27, until 12:30 p.m. EST, February
3, by dialing (888) 203-1112 (domestic) or (719) 457-0820
(international). The access code is 2675177.
TABLE 1: SUMMARY OF FINANCIAL RESULTS
– TOTAL HONEYWELL
($ Millions, except Earnings
Per Share) |
FY 2015 |
FY 2016 |
Change |
Sales |
38,581 |
39,302 |
2% |
Core Organic |
|
|
(1%) |
Segment Margin |
18.8% |
18.3% |
(50) bps |
Ex-M&A |
|
|
10 bps |
Operating Income Margin |
17.7% |
17.0% |
(70) bps |
Ex-Pension MTM And Debt Refinancing |
17.9% |
18.0% |
10 bps |
Earnings Per Share |
|
|
|
Reported |
$6.04 |
$6.20 |
3% |
Ex-Pension MTM And Debt Refinancing |
$6.10 |
$6.60 |
8% |
Cash Flow From Operations |
5,519 |
5,498 |
~Flat |
Free Cash Flow2 |
4,446 |
4,403 |
(1%) |
|
|
|
|
|
4Q 2015 |
4Q 2016 |
|
Sales |
9,982 |
9,985 |
~Flat |
Core Organic |
|
|
(1%) |
Segment Margin |
18.8% |
19.0% |
20 bps |
Ex-M&A |
|
|
90 bps |
Operating Income Margin |
17.4% |
16.2% |
(120) bps |
Ex-Pension MTM And Debt Refinancing |
18.0% |
20.2% |
220 bps |
Earnings Per Share |
|
|
|
Reported |
$1.53 |
$1.34 |
(12%) |
Ex-Pension MTM And Debt Refinancing |
$1.58 |
$1.74 |
10% |
Ex-Divestitures, Pension MTM, Debt
Refinancing |
$1.53 |
$1.74 |
14% |
Cash Flow From Operations |
1,963 |
2,042 |
4% |
Free Cash Flow2 |
1,575 |
1,696 |
8% |
|
|
|
|
2 Cash Flow From
Operations Less Capital Expenditures |
TABLE 2: SUMMARY OF FINANCIAL RESULTS
– SEGMENTS
|
|
|
|
AEROSPACE |
FY 2015 |
FY 2016 |
Change |
Sales |
15,237 |
14,751 |
(3%) |
Segment Profit |
3,218 |
2,991 |
(7%) |
Segment Margin |
21.1% |
20.3% |
(80) bps |
Ex-M&A |
|
|
(60) bps |
|
|
|
|
|
4Q 2015 |
4Q 2016 |
|
Sales |
3,983 |
3,666 |
(8%) |
Segment Profit |
856 |
739 |
(14%) |
Segment Margin |
21.5% |
20.2% |
(130) bps |
Ex-M&A, Other3 |
|
|
(10) bps |
|
|
|
|
|
|
|
|
HOME AND BUILDING
TECHNOLOGIES |
FY 2015 |
FY 2016 |
Change |
Sales |
9,161 |
10,654 |
16% |
Segment Profit |
1,512 |
1,683 |
11% |
Segment Margin |
16.5% |
15.8% |
(70) bps |
Ex-M&A |
|
|
40 bps |
|
|
|
|
|
4Q 2015 |
4Q 2016 |
|
Sales |
2,475 |
2,800 |
13% |
Segment Profit |
424 |
470 |
11% |
Segment Margin |
17.1% |
16.8% |
(30) bps |
Ex-M&A |
|
|
60 bps |
|
|
|
|
|
|
|
|
PERFORMANCE MATERIALS AND TECHNOLOGIES |
FY 2015 |
FY 2016 |
Change |
Sales |
9,475 |
9,272 |
(2%) |
Segment Profit |
1,990 |
2,050 |
3% |
Segment Margin |
21.0% |
22.1% |
110 bps |
Ex-M&A |
|
|
150 bps |
|
|
|
|
|
4Q 2015 |
4Q 2016 |
|
Sales |
2,338 |
2,228 |
(5%) |
Segment Profit |
473 |
566 |
20% |
Segment Margin |
20.2% |
25.4% |
520 bps |
Ex-M&A |
|
|
560 bps |
|
|
|
|
|
|
|
|
SAFETY AND PRODUCTIVITY SOLUTIONS |
FY 2015 |
FY 2016 |
Change |
Sales |
4,708 |
4,625 |
(2%) |
Segment Profit |
746 |
680 |
(9%) |
Segment Margin |
15.8% |
14.7% |
(110) bps |
Ex-M&A |
|
|
(40) bps |
|
|
|
|
|
4Q 2015 |
4Q 2016 |
|
Sales |
1,186 |
1,291 |
9% |
Segment Profit |
181 |
185 |
2% |
Segment Margin |
15.3% |
14.3% |
(100) bps |
Ex-M&A |
|
|
100 bps |
|
|
|
|
3 Excludes ~$48M Increase In
Aero OEM Incentives YoY |
Honeywell (http://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; turbochargers; and
performance materials. For more news and information on Honeywell,
please visit www.honeywell.com/newsroom.
This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934. All statements, other than
statements of historical fact, that address activities, events or
developments that we or our management intends, expects, projects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based upon certain
assumptions and assessments made by our management in light of
their experience and their perception of historical trends, current
economic and industry conditions, expected future developments and
other factors they believe to be appropriate. The forward-looking
statements included in this release are also subject to a number of
material risks and uncertainties, including but not limited to
economic, competitive, governmental, and technological factors
affecting our operations, markets, products, services and prices.
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. We identify the principal risks and uncertainties that
affect our performance in our Form 10-K and other filings with the
Securities and Exchange Commission.
Honeywell International
Inc |
Consolidated Statement
of Operations (Unaudited) |
(Dollars in millions,
except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Product sales |
$
7,964 |
|
$
7,960 |
|
$
31,362 |
|
$
30,695 |
Service sales |
2,021 |
|
2,022 |
|
7,940 |
|
7,886 |
Net sales |
9,985 |
|
9,982 |
|
39,302 |
|
38,581 |
|
|
|
|
|
|
|
|
|
Costs, expenses and other |
|
|
|
|
|
|
|
Cost of products
sold (A) |
5,625 |
|
5,649 |
|
22,170 |
|
21,775 |
Cost of services
sold (A) |
1,254 |
|
1,268 |
|
4,980 |
|
4,972 |
|
|
6,879 |
|
6,917 |
|
27,150 |
|
26,747 |
Selling, general and administrative expenses (A) |
1,493 |
|
1,332 |
|
5,469 |
|
5,006 |
Other (income)
expense |
95 |
|
(4) |
|
(102) |
|
(68) |
Interest and other
financial charges |
86 |
|
84 |
|
338 |
|
310 |
|
|
8,553 |
|
8,329 |
|
32,855 |
|
31,995 |
|
|
|
|
|
|
|
|
|
Income before taxes |
1,432 |
|
1,653 |
|
6,447 |
|
6,586 |
Tax expense |
387 |
|
450 |
|
1,601 |
|
1,739 |
|
|
|
|
|
|
|
|
|
Net income |
1,045 |
|
1,203 |
|
4,846 |
|
4,847 |
|
|
|
|
|
|
|
|
|
Less: Net income attributable to the
noncontrolling interest |
11 |
|
9 |
|
37 |
|
79 |
|
|
|
|
|
|
|
|
|
Net income attributable to
Honeywell |
$
1,034 |
|
$ 1,194 |
|
$ 4,809 |
|
$ 4,768 |
|
|
|
|
|
|
|
|
|
Earnings per share of common stock -
basic |
$
1.36 |
|
$ 1.55 |
|
$
6.29 |
|
$
6.11 |
|
|
|
|
|
|
|
|
|
Earnings per share of common stock -
assuming dilution |
$
1.34 |
|
$ 1.53 |
|
$
6.20 |
|
$
6.04 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - basic |
762.4 |
|
771.8 |
|
764.3 |
|
779.8 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding - assuming dilution |
772.3 |
|
780.8 |
|
775.3 |
|
789.3 |
|
|
|
|
|
|
|
|
|
(A) Cost of products and services sold
and selling, general and administrative expenses include amounts
for repositioning and other charges, pension and other
postretirement (income) expense, and stock compensation
expense. |
Below is a reconciliation of earnings
per share to earnings per share, excluding pension mark-to-market
expense, debt refinancing expense and earnings attributable to 2016
divestitures. We believe this measure is useful to investors
and management in understanding our ongoing operations and in
analysis of ongoing operating trends. Earnings per share utilizes
weighted average number of shares outstanding, assuming dilution,
for the period. |
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock - assuming
dilution |
$
1.34 |
|
$
1.53 |
|
$
6.20 |
|
$
6.04 |
|
Pension mark-to-market expense (1) |
0.28 |
|
0.05 |
|
0.28 |
|
0.06 |
|
Debt refinancing expense (2) |
0.12 |
|
- |
|
0.12 |
|
- |
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock - assuming
dilution, excluding pension |
|
|
|
|
|
|
|
|
mark-to-market expense and debt refinancing
expense |
$
1.74 |
|
$ 1.58 |
|
$
6.60 |
|
$
6.10 |
|
|
|
|
|
|
|
|
|
|
Earnings attributable to 2016 Divestitures
(3) |
- |
|
(0.05) |
|
(0.14) |
|
(0.19) |
|
Earnings per share of common stock - assuming
dilution, excluding pension |
|
|
|
|
|
|
|
|
mark-to-market expense, debt refinancing expense,
and 2016 divestitures |
$
1.74 |
|
$ 1.53 |
|
$
6.46 |
|
$
5.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Pension mark-to-market expense
uses a blended tax rate of 21.3% and 36.1% for 2016 and 2015. |
|
(2) Debt refinancing expense uses a
tax rate of 26.5% for 2016. |
|
(3) Earnings attributable to 2016
divestitures use a blended tax rate of 30.8% for three months ended
December 31, 2015, 33.9% for 2016 and 33.2% for 2015. |
Honeywell
International Inc |
Segment Data
(Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
Net Sales |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Aerospace |
$
3,666 |
|
$
3,983 |
|
$ 14,751 |
|
$
15,237 |
|
|
|
|
|
|
|
|
|
Home and Building Technologies |
2,800 |
|
2,475 |
|
10,654 |
|
9,161 |
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
2,228 |
|
2,338 |
|
9,272 |
|
9,475 |
|
|
|
|
|
|
|
|
|
Safety and Productivity Solutions |
1,291 |
|
1,186 |
|
4,625 |
|
4,708 |
|
|
|
|
|
|
|
|
|
Corporate |
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
Total |
$
9,985 |
|
$
9,982 |
|
$ 39,302 |
|
$
38,581 |
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
Segment Profit |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Aerospace |
$
739 |
|
$
856 |
|
$
2,991 |
|
$
3,218 |
|
|
|
|
|
|
|
|
|
Home and Building Technologies |
470 |
|
424 |
|
1,683 |
|
1,512 |
|
|
|
|
|
|
|
|
|
Performance Materials and
Technologies |
566 |
|
473 |
|
2,050 |
|
1,990 |
|
|
|
|
|
|
|
|
|
Safety and Productivity Solutions |
185 |
|
181 |
|
680 |
|
746 |
|
|
|
|
|
|
|
|
|
Corporate |
(61) |
|
(54) |
|
(218) |
|
(210) |
|
|
|
|
|
|
|
|
|
Total segment
profit |
1,899 |
|
1,880 |
|
7,186 |
|
7,256 |
|
|
|
|
|
|
|
|
|
Other income (expense) (A) |
(103) |
|
(1) |
|
71 |
|
38 |
Interest and other financial
charges |
(86) |
|
(84) |
|
(338) |
|
(310) |
Stock compensation expense (B) |
(39) |
|
(43) |
|
(184) |
|
(175) |
Pension ongoing income (B) |
154 |
|
131 |
|
601 |
|
430 |
Pension mark-to-market expense
(B) |
(273) |
|
(67) |
|
(273) |
|
(67) |
Other postretirement
income (expense) (B) |
8 |
|
(10) |
|
32 |
|
(40) |
Repositioning and other charges
(B) |
(128) |
|
(153) |
|
(648) |
|
(546) |
|
|
|
|
|
|
|
|
|
Income before taxes |
$
1,432 |
|
$
1,653 |
|
$
6,447 |
|
$
6,586 |
|
|
|
|
|
|
|
|
|
(A) |
Equity income (loss) of affiliated
companies is included in segment profit. |
|
|
|
|
|
|
|
|
|
(B) |
Amounts included in cost of products
and services sold and selling, general and administrative
expenses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Honeywell International
Inc |
Consolidated Balance
Sheet (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
2015 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
|
$
7,843 |
|
$
5,455 |
Accounts, notes and
other receivables |
|
8,818 |
|
8,075 |
Inventories |
|
4,366 |
|
4,420 |
Investments and
other current assets |
|
2,031 |
|
2,103 |
|
Total current assets |
|
23,058 |
|
20,053 |
|
|
|
|
|
|
Investments and long-term
receivables |
|
587 |
|
517 |
Property, plant and equipment -
net |
|
5,793 |
|
5,789 |
Goodwill |
|
17,707 |
|
15,895 |
Other intangible assets - net |
|
4,634 |
|
4,577 |
Insurance recoveries for asbestos
related liabilities |
|
417 |
|
426 |
Deferred income taxes |
|
347 |
|
283 |
Other assets |
|
1,603 |
|
1,776 |
|
|
|
|
|
|
|
Total assets |
|
$ 54,146 |
|
$ 49,316 |
|
|
|
|
|
|
LIABILITIES AND SHAREOWNERS'
EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts
payable |
|
$
5,690 |
|
$
5,580 |
Commercial paper
and other short-term borrowings |
|
3,366 |
|
5,937 |
Current maturities
of long-term debt |
|
227 |
|
577 |
Accrued
liabilities |
|
7,048 |
|
6,277 |
|
Total current liabilities |
|
16,331 |
|
18,371 |
|
|
|
|
|
|
Long-term debt |
|
12,182 |
|
5,554 |
Deferred income taxes |
|
486 |
|
558 |
Postretirement benefit obligations
other than pensions |
|
473 |
|
526 |
Asbestos related liabilities |
|
1,014 |
|
1,251 |
Other liabilities |
|
4,110 |
|
4,348 |
Redeemable noncontrolling
interest |
|
3 |
|
290 |
Shareowners' equity |
|
19,547 |
|
18,418 |
|
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interest and shareowners' equity |
|
$ 54,146 |
|
$ 49,316 |
Honeywell International
Inc |
Consolidated
Statement of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ 1,045 |
|
$ 1,203 |
|
$ 4,846 |
|
$ 4,847 |
Less: Net income attributable
to the noncontrolling interest |
|
11 |
|
9 |
|
37 |
|
79 |
Net income attributable to
Honeywell |
|
1,034 |
|
1,194 |
|
4,809 |
|
4,768 |
Adjustments to
reconcile net income attributable to Honeywell to net |
|
|
|
|
|
|
|
|
cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
180 |
|
169 |
|
726 |
|
672 |
Amortization |
|
77 |
|
53 |
|
304 |
|
211 |
(Gain) loss on sale of
non-strategic businesses and assets |
|
(2) |
|
2 |
|
(178) |
|
1 |
Repositioning and other charges |
|
128 |
|
153 |
|
695 |
|
546 |
Net payments for
repositioning and other charges |
|
(205) |
|
(208) |
|
(625) |
|
(537) |
Pension
and other postretirement expense (income) |
|
111 |
|
(54) |
|
(360) |
|
(323) |
Pension
and other postretirement benefit payments |
|
(33) |
|
(38) |
|
(143) |
|
(122) |
Stock
compensation expense |
|
39 |
|
43 |
|
184 |
|
175 |
Deferred income taxes |
|
(70) |
|
31 |
|
76 |
|
315 |
Excess
tax benefits from share based payment arrangements |
|
- |
|
(12) |
|
- |
|
(81) |
Other |
|
227 |
|
(94) |
|
194 |
|
57 |
Changes
in assets and liabilities, net of the effects of |
|
|
|
|
|
|
|
|
acquisitions and divestitures: |
|
|
|
|
|
|
|
|
Accounts, notes and other receivables |
|
(200) |
|
159 |
|
(770) |
|
211 |
Inventories |
|
215 |
|
250 |
|
(18) |
|
230 |
Other
current assets |
|
39 |
|
191 |
|
117 |
|
80 |
Accounts payable |
|
272 |
|
(4) |
|
254 |
|
(17) |
Accrued liabilities |
|
230 |
|
128 |
|
233 |
|
(667) |
Net cash provided by operating activities |
|
2,042 |
|
1,963 |
|
5,498 |
|
5,519 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Expenditures for property,
plant and equipment |
|
(346) |
|
(388) |
|
(1,095) |
|
(1,073) |
Proceeds from disposals of
property, plant and equipment |
|
17 |
|
12 |
|
21 |
|
15 |
Increase in investments |
|
(871) |
|
(1,013) |
|
(3,954) |
|
(6,714) |
Decrease in investments |
|
1,023 |
|
2,537 |
|
3,681 |
|
6,587 |
Cash paid for acquisitions, net
of cash acquired |
|
(5) |
|
(5,043) |
|
(2,573) |
|
(5,228) |
Proceeds from sales of
businesses, net of fees paid |
|
(8) |
|
(2) |
|
296 |
|
1 |
Other |
|
124 |
|
(33) |
|
282 |
|
(102) |
Net cash used for investing activities |
|
(66) |
|
(3,930) |
|
(3,342) |
|
(6,514) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net increase (decrease) in
commercial paper and other short-term borrowings |
|
(2,039) |
|
2,254 |
|
(2,464) |
|
4,265 |
Proceeds from issuance of
common stock |
|
23 |
|
36 |
|
409 |
|
186 |
Proceeds from issuance of
long-term debt |
|
4,735 |
|
12 |
|
9,245 |
|
60 |
Payments of long-term debt |
|
(2,361) |
|
(732) |
|
(2,839) |
|
(880) |
Excess tax benefits from share
based payment arrangements |
|
- |
|
12 |
|
- |
|
81 |
Repurchases of common
stock |
|
(213) |
|
(163) |
|
(2,079) |
|
(1,884) |
Cash dividends paid |
|
(505) |
|
(465) |
|
(1,915) |
|
(1,726) |
Payments to purchase the
noncontrolling interest |
|
- |
|
- |
|
(238) |
|
- |
AdvanSix pre-separation
funding |
|
- |
|
- |
|
269 |
|
- |
AdvanSix pre-spin
borrowing |
|
- |
|
- |
|
38 |
|
- |
AdvanSix cash at spin-off |
|
- |
|
- |
|
(38) |
|
- |
Other |
|
(2) |
|
(4) |
|
(42) |
|
(65) |
Net cash provided by (used for) financing
activities |
|
(362) |
|
950 |
|
346 |
|
37 |
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash
and cash equivalents |
|
(202) |
|
(91) |
|
(114) |
|
(546) |
Net increase (decrease) in cash and cash
equivalents |
|
1,412 |
|
(1,108) |
|
2,388 |
|
(1,504) |
Cash and cash equivalents at beginning of
period |
|
6,431 |
|
6,563 |
|
5,455 |
|
6,959 |
Cash and cash equivalents at end of period |
|
$ 7,843 |
|
$ 5,455 |
|
$ 7,843 |
|
$ 5,455 |
Honeywell International
Inc |
Reconciliation of Cash
Provided by Operating Activities to Free Cash Flow and Calculation
of Free Cash Flow Conversion (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
$
2,042 |
|
$
1,963 |
|
$
5,498 |
|
$
5,519 |
|
Expenditures for property, plant and
equipment |
(346) |
|
(388) |
|
(1,095) |
|
(1,073) |
|
Free cash flow |
$
1,696 |
|
$
1,575 |
|
$
4,403 |
|
$
4,446 |
|
|
|
|
|
|
|
|
|
|
Net income, attributable to Honeywell |
$
1,034 |
|
$
1,194 |
|
$
4,809 |
|
$
4,768 |
|
Pension mark-to-market expense, net of tax
(A) |
215 |
|
43 |
|
215 |
|
43 |
|
Debt refinancing expense (B) |
93 |
|
- |
|
93 |
|
- |
|
Net income, attributable to
Honeywell, excluding pension mark-to-market expense |
|
|
|
|
|
|
|
|
and debt
refinancing expense |
$
1,342 |
|
$
1,237 |
|
$
5,117 |
|
$
4,811 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating
activities |
$
2,042 |
|
$
1,963 |
|
$
5,498 |
|
$
5,519 |
|
÷ Net income attributable to
Honeywell |
$
1,034 |
|
$
1,194 |
|
$
4,809 |
|
$
4,768 |
|
Operating cash flow conversion |
197% |
|
164% |
|
114% |
|
116% |
|
|
|
|
|
|
|
|
|
|
Free cash flow |
$
1,696 |
|
$
1,575 |
|
$
4,403 |
|
$
4,446 |
|
Net income, attributable to Honeywell, excluding
pension mark-to-market expense |
|
|
|
|
|
|
|
|
and debt refinancing
expense |
$
1,342 |
|
$
1,237 |
|
$
5,117 |
|
$
4,811 |
|
|
|
|
|
|
|
|
|
|
Free cash flow conversion |
126% |
|
127% |
|
86% |
|
92% |
|
|
|
|
|
|
|
|
|
|
(A) Pension mark-to-market expense
uses a blended tax rate of 21.3% and 36.1% for 2016 and 2015. |
|
(B) Debt refinancing expense uses a
tax rate of 26.5% for 2016. |
|
|
|
|
|
|
|
|
|
|
We define free cash flow as cash
provided by operating activities less cash expenditures for
property, plant and equipment. |
|
|
|
|
|
|
|
|
|
We believe that this metric is useful
to investors and management as a measure of cash generated by
business operations that will be used to repay scheduled debt
maturities and can be used to invest in future growth through new
business development activities or acquisitions, pay dividends,
repurchase stock or repay debt obligations prior to their
maturities. This metric can also be used to evaluate our ability to
generate cash flow from business operations and the impact that
this cash flow has on our liquidity. |
Honeywell International
Inc |
Reconciliation of
Segment Profit to Operating Income and Calculation of Segment
Profit and Operating Income Margins (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months
Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Segment Profit |
|
$
1,899 |
|
$
1,880 |
|
$
7,186 |
|
$
7,256 |
|
|
|
|
|
|
|
|
|
Stock compensation expense (A) |
|
(39) |
|
(43) |
|
(184) |
|
(175) |
Repositioning and other (A, B) |
|
(136) |
|
(158) |
|
(679) |
|
(576) |
Pension ongoing income (A) |
|
154 |
|
131 |
|
601 |
|
430 |
Pension mark-to-market expense (A) |
|
(273) |
|
(67) |
|
(273) |
|
(67) |
Other postretirement income
(expense) (A) |
|
8 |
|
(10) |
|
32 |
|
(40) |
Operating Income |
|
$ 1,613 |
|
$ 1,733 |
|
$
6,683 |
|
$
6,828 |
Pension mark-to-market adjustment (A) |
|
(273) |
|
(67) |
|
(273) |
|
(67) |
Debt refinancing expense |
|
(126) |
|
- |
|
(126) |
|
- |
Operating Income excluding pension mark-to-market
adjustment |
|
|
|
|
|
|
|
|
and debt refinancing expense |
|
$ 2,012 |
|
$ 1,800 |
|
$
7,082 |
|
$
6,895 |
|
|
|
|
|
|
|
|
|
Segment Profit |
|
$ 1,899 |
|
$ 1,880 |
|
$
7,186 |
|
$
7,256 |
÷ Sales |
|
9,985 |
|
9,982 |
|
39,302 |
|
38,581 |
Segment Profit Margin % |
|
19.0% |
|
18.8% |
|
18.3% |
|
18.8% |
|
|
|
|
|
|
|
|
|
Operating Income |
|
$ 1,613 |
|
$ 1,733 |
|
$
6,683 |
|
$
6,828 |
÷ Sales |
|
9,985 |
|
9,982 |
|
39,302 |
|
38,581 |
Operating Income Margin % |
|
16.2% |
|
17.4% |
|
17.0% |
|
17.7% |
|
|
|
|
|
|
|
|
|
Operating Income excluding pension mark-to-market
adjustment |
|
|
|
|
|
|
|
|
and debt refinancing expense |
|
$ 2,012 |
|
$ 1,800 |
|
$
7,082 |
|
$
6,895 |
÷ Sales |
|
9,985 |
|
9,982 |
|
39,302 |
|
38,581 |
Operating Income excluding pension
mark-to-market adjustment |
|
|
|
|
|
|
|
|
and debt refinancing expense % |
|
20.2% |
|
18.0% |
|
18.0% |
|
17.9% |
(A) Included in cost of products and services sold
and selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and
equity income adjustment. |
|
We believe these measures are useful to investors
and management in understanding our ongoing operations and in
analysis of ongoing operating trends. |
Honeywell International
Inc |
Calculation of Segment
Profit Margin Excluding Mergers and Acqusitions (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
Three Months
Ended |
|
December 31 |
|
|
2016 |
|
Honeywell |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
1,833 |
|
÷ Sales excluding mergers and acquisitions |
|
$
9,284 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
19.7% |
|
|
|
|
|
Aerospace (1) |
|
|
|
Segment Profit excluding mergers and acquisitions
and other |
|
$
786 |
|
÷ Sales excluding mergers and acquisitions and
other |
|
$
3,677 |
|
Segment Profit Margin excluding mergers and
acquisitions and other % |
|
21.4% |
|
|
|
|
|
Home and Building Technologies |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
436 |
|
÷ Sales excluding mergers and acquisitions |
|
$
2,463 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
17.7% |
|
|
|
|
|
Performance Materials and Technologies |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
540 |
|
÷ Sales excluding mergers and acquisitions |
|
$
2,093 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
25.8% |
|
|
|
|
|
Safety and Productivity Solutions |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
180 |
|
÷ Sales excluding mergers and acquisitions |
|
$
1,105 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
16.3% |
|
|
|
|
|
(1) Other includes year-over-year incremental OEM
incentives |
|
|
|
|
|
|
|
We believe these measures are useful
to investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends. |
|
Honeywell International
Inc |
Calculation of Segment
Profit Margin Excluding Mergers and Acqusitions (Unaudited) |
(Dollars in
millions) |
|
|
|
|
|
Twelve Months
Ended |
|
December 31 |
|
|
2016 |
|
Honeywell |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
6,980 |
|
÷ Sales excluding mergers and acquisitions |
|
$
37,023 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
18.9% |
|
|
|
|
|
Aerospace |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
2,992 |
|
÷ Sales excluding mergers and acquisitions |
|
$
14,590 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
20.5% |
|
|
|
|
|
Home and Building Technologies |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
1,588 |
|
÷ Sales excluding mergers and acquisitions |
|
$
9,374 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
16.9% |
|
|
|
|
|
Performance Materials and Technologies |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
1,959 |
|
÷ Sales excluding mergers and acquisitions |
|
$
8,721 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
22.5% |
|
|
|
|
|
Safety and Productivity Solutions |
|
|
|
Segment Profit excluding mergers and
acquisitions |
|
$
670 |
|
÷ Sales excluding mergers and acquisitions |
|
$
4,338 |
|
Segment Profit Margin excluding mergers and
acquisitions % |
|
15.4% |
|
|
|
|
|
|
|
|
|
We believe these measures are useful
to investors and management in understanding our ongoing operations
and in analysis of ongoing operating trends. |
|
Honeywell International
Inc |
Reconciliation of Core
Organic Sales Growth (Unaudited) |
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
2016 |
|
2016 |
Honeywell |
|
|
|
Reported sales growth |
- |
|
2% |
Less: Foreign currency translation, acquisitions,
divestitures and other |
1% |
|
3% |
Less: Raw materials pricing in R&C |
- |
|
- |
|
|
|
|
Core organic sales growth |
(1%) |
|
(1%) |
|
|
|
|
Performance Materials and Technologies |
|
|
|
Reported sales growth |
(5%) |
|
(2%) |
Less: Foreign currency translation, acquisitions,
divestitures and other |
(10%) |
|
1% |
Less: Raw materials pricing in R&C |
- |
|
(1%) |
|
|
|
|
Core organic sales growth |
5% |
|
(2%) |
Throughout this press release, core
organic sales growth refers to reported sales growth less the
impacts from foreign currency translation, M&A and raw
materials pass-through pricing in the former Resins & Chemicals
business previously part of Performance Materials and Technologies.
The raw materials pricing impact is excluded in instances where raw
materials costs are passed through to customers, which drives
fluctuations in selling prices not tied to volume growth. |
|
We believe core organic sales growth
is a measure that is useful to investors and management in
understanding our ongoing operations and in analysis of ongoing
operating trends. |
Contacts: |
|
|
|
Media |
Investor Relations |
Robert C. Ferris |
Mark Macaluso |
(973) 455-3388 |
(973) 455-2222 |
rob.ferris@honeywell.com |
mark.macaluso@honeywell.com |