Honeywell
Overdelivers On Sales, Announces Four Acquisitions In The Fourth
Quarter; Issues 2021 Guidance
- Reported Fourth Quarter Earnings Per Share of $1.91 and Adjusted EPS¹ of $2.07, Above High End of Guidance
- Delivered Fourth Quarter Operating
Cash Flow of $2.8 Billion, Conversion
of 205%, and Free Cash Flow of $2.5
Billion, Adjusted Conversion² of 170%
- Completed Three M&A Deals Aligned to Key Growth Vectors
and Announced Agreement to Acquire Sparta Systems for $1.3 Billion
- Expect 2021 Earnings Per Share of $7.60 - $8.00, Up
13% - 19%, 7% - 13% Adjusted³
CHARLOTTE, N.C., Jan. 29, 2021 /PRNewswire/ -- Honeywell (NYSE:
HON) today announced results for the fourth quarter and full
year 2020 that exceeded investor expectations, as well as its
outlook for 2021.
The company reported a fourth-quarter year-over-year sales
decline of 6%, down 7% on an organic basis, and a full-year sales
decline of 11% on a reported and organic basis. For the full year,
operating margin contracted 120 basis points and segment margin
contracted 70 basis points, with earnings per share of $6.72 and adjusted earnings per share4
of $7.10, above the high end of our
guidance.
"We finished a challenging 2020 with another quarter of
sequential improvements in sales growth, margin expansion, and
adjusted earnings per share," said Darius
Adamczyk, chairman and chief executive officer of Honeywell.
"Our focus on delivering differentiated solutions drove
double-digit organic sales growth in our defense and space,
warehouse automation, personal protective equipment, and recurring
connected software businesses for the second consecutive quarter.
We continued to prudently reduce costs in the quarter, bringing our
full-year total fixed cost savings to $1.5
billion. Our fourth quarter adjusted earnings per share was
$2.07, flat year-over-year on an
adjusted basis1 and above the high end of our guidance.
We also continued our focus on generating cash and
achieved 170% adjusted free cash flow conversion2
in the quarter. For the year, we generated $6.2 billion in operating cash flow with 130%
conversion and $5.3 billion in free
cash flow with 105% adjusted free cash flow
conversion5.
"Honeywell's strong balance sheet put us in a good position to
weather the challenges of 2020 while investing for future growth.
We invested in high-return capital expenditures, repurchased
$3.7 billion of Honeywell shares,
completed three acquisitions, made six new investments within
Honeywell Ventures, and announced our 11th consecutive dividend
increase. Even with this level of cash deployment, we ended 2020
with $15.2 billion of cash and
short-term investments on hand," Adamczyk said.
The company also announced its outlook for 2021. Honeywell
expects sales of $33.4 billion to
$34.4 billion, representing
year-over-year organic growth of 1% to 4%; segment margin expansion
of 30 to 70 basis points; earnings per share of $7.60 to $8.00, up
7% to 13% adjusted3; operating cash flow of $5.7 billion to $6.1
billion, and free cash flow6 of $5.1 billion to $5.5
billion. A summary of the company's 2021 guidance can be
found in Table 1.
Adamczyk concluded, "I am very proud of the way Honeywell
responded to the crisis in 2020. We quickly focused on liquidity,
cost management, and execution, while rapidly innovating and
ramping up production of a wide array of offerings to help the
world recover, including critical personal protective equipment. We
also remained focused on growth and investing in new markets and
technologies. We entered 2021 with positive momentum following two
quarters of sequential improvement. I am confident we are
well-positioned for the economic recovery and will continue to
perform for our shareowners, our customers, and our employees in
the short and long term."
Fourth-Quarter Performance
Honeywell sales for the fourth quarter were down 6% on
a reported basis and down 7% on an organic basis. The
fourth-quarter financial results can be found in Tables 2 and
3.
Aerospace sales for the fourth quarter were down 19%
on an organic basis driven by lower commercial aftermarket demand
due to the ongoing impact of reduced flight hours and lower volumes
in commercial original equipment, partially offset by double-digit
growth in Defense and Space. Segment margin expanded 150 basis
points to 27.6% driven by productivity actions and commercial
excellence.
Honeywell Building Technologies sales for the fourth
quarter were down 4% on an organic basis driven by timing of
Building Solutions projects and lower demand for security products
and building management systems, partially offset by growth in
commercial fire. Building Solutions orders were up double digits
year-over-year, driven by large project bookings in the Americas
and Europe. Segment margin
expanded 110 basis points to 21.4%. Margin performance was driven
by commercial excellence and productivity actions.
Performance Materials and Technologies sales for the
fourth quarter were down 12% on an organic basis driven by
continued delays in Process Solutions automation projects as well
as volume declines in smart energy and thermal solutions, and lower
gas processing projects, catalyst shipments, licensing, and
engineering due to softness in the oil and gas sector in UOP,
partially offset by return to growth in Advanced Materials driven
by demand for fluorine products. Segment margin contracted 380
basis points to 18.7% driven by the impact of lower sales volumes
and mix, partially offset by productivity actions.
Safety and Productivity Solutions sales for the
fourth quarter were up 27% on an organic basis driven by
double-digit Intelligrated and personal protective equipment growth
as well as strength in productivity solutions and services. Orders
were up double digits year-over-year for the fifth straight
quarter, driven by strong personal protective equipment and
productivity solutions and services orders growth. Backlog remained
at a record high. Segment margin expanded 260 basis points to 15.3%
driven by productivity actions and higher volumes.
Conference Call Details
Honeywell will discuss its fourth-quarter and full-year results as
well as its 2021 outlook during an investor conference call
starting at 8:30 a.m. Eastern Standard
Time today. To participate on the conference call, please
dial (866) 548-4713 (domestic) or (323) 794-2093 (international)
approximately ten minutes before the 8:30
a.m. EST start. Please mention to the operator that you are
dialing in for Honeywell's fourth quarter 2020 earnings and 2021
outlook call or provide the conference code HON2021. 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
29 until 12:30 p.m. EST
February 5 by dialing (888) 203-1112
(domestic) or (719) 457-0820 (international). The access code is
1005277.
TABLE 1: FULL-YEAR 2021 GUIDANCE
Sales |
|
$33.4B - $34.4B |
Organic Growth |
|
1% - 4% |
Segment Margin |
|
20.7% - 21.1% |
Expansion |
|
Up 30 - 70 bps |
Earnings Per Share |
|
$7.60 - $8.00 |
Adjusted Earnings Growth3 |
|
7% - 13% |
Operating Cash Flow |
|
$5.7B - $6.1B |
Free Cash Flow6 |
|
$5.1B - $5.5B |
TABLE 2: SUMMARY OF HONEYWELL
FINANCIAL RESULTS
|
|
FY 2020 |
|
FY 2019 |
|
Change |
Sales |
|
32,637 |
|
36,709 |
|
(11)% |
Organic Growth |
|
|
|
|
|
(11)% |
Segment Margin |
|
20.4% |
|
21.1% |
|
-70 bps |
Operating Income Margin |
|
17.5% |
|
18.7% |
|
-120 bps |
Reported Earnings Per Share |
|
$6.72 |
|
$8.41 |
|
(20)% |
Adjusted Earnings Per Share4 |
|
$7.10 |
|
$8.16 |
|
(13)% |
Cash Flow from Operations |
|
6,208 |
|
6,897 |
|
(10)% |
Conversion |
|
130% |
|
112% |
|
18% |
Adjusted Free Cash Flow7 |
|
5,302 |
|
6,271 |
|
(15)% |
Adjusted Free Cash Flow
Conversion5 |
|
105% |
|
105% |
|
—% |
|
|
4Q 2020 |
|
4Q 2019 |
|
Change |
Sales |
|
8,900 |
|
9,496 |
|
(6)% |
Organic Growth |
|
|
|
|
|
(7)% |
Segment Margin |
|
21.1% |
|
21.4% |
|
-30 bps |
Operating Income Margin |
|
18.8% |
|
17.8% |
|
100 bps |
Reported Earnings Per Share |
|
$1.91 |
|
$2.16 |
|
(12)% |
Adjusted Earnings Per Share1 |
|
$2.07 |
|
$2.06 |
|
—% |
Cash Flow from Operations |
|
2,782 |
|
2,614 |
|
6% |
Conversion |
|
205% |
|
167% |
|
38% |
Adjusted Free Cash Flow7 |
|
2,491 |
|
2,292 |
|
9% |
Adjusted Free Cash Flow
Conversion2 |
|
170% |
|
154% |
|
16% |
TABLE 3: SUMMARY OF SEGMENT FINANCIAL
RESULTS
AEROSPACE |
|
FY 2020 |
|
FY 2019 |
|
Change |
Sales |
|
11,544 |
|
14,054 |
|
(18)% |
Organic Growth |
|
|
|
|
|
(18)% |
Segment Profit |
|
2,904 |
|
3,607 |
|
(19)% |
Segment Margin |
|
25.2% |
|
25.7% |
|
-50 bps |
|
|
4Q 2020 |
|
4Q 2019 |
|
|
Sales |
|
2,978 |
|
3,661 |
|
(19)% |
Organic Growth |
|
|
|
|
|
(19)% |
Segment Profit |
|
822 |
|
954 |
|
(14)% |
Segment Margin |
|
27.6% |
|
26.1% |
|
150 bps |
HONEYWELL BUILDING TECHNOLOGIES |
|
FY 2020 |
|
FY 2019 |
|
Change |
Sales |
|
5,189 |
|
5,717 |
|
(9)% |
Organic Growth |
|
|
|
|
|
(9)% |
Segment Profit |
|
1,099 |
|
1,165 |
|
(6)% |
Segment Margin |
|
21.2% |
|
20.4% |
|
80 bps |
|
|
4Q 2020 |
|
4Q 2019 |
|
|
Sales |
|
1,426 |
|
1,463 |
|
(3)% |
Organic Growth |
|
|
|
|
|
(4)% |
Segment Profit |
|
305 |
|
297 |
|
3% |
Segment Margin |
|
21.4% |
|
20.3% |
|
110 bps |
PERFORMANCE MATERIALS AND TECHNOLOGIES |
|
FY 2020 |
|
FY 2019 |
|
Change |
Sales |
|
9,423 |
|
10,834 |
|
(13)% |
Organic Growth |
|
|
|
|
|
(13)% |
Segment Profit |
|
1,851 |
|
2,433 |
|
(24)% |
Segment Margin |
|
19.6% |
|
22.5% |
|
-290 bps |
|
|
4Q 2020 |
|
4Q 2019 |
|
|
Sales |
|
2,556 |
|
2,857 |
|
(11)% |
Organic Growth |
|
|
|
|
|
(12)% |
Segment Profit |
|
478 |
|
643 |
|
(26)% |
Segment Margin |
|
18.7% |
|
22.5% |
|
-380 bps |
SAFETY AND PRODUCTIVITY SOLUTIONS |
|
FY 2020 |
|
FY 2019 |
|
Change |
Sales |
|
6,481 |
|
6,104 |
|
6% |
Organic Growth |
|
|
|
|
|
6% |
Segment Profit |
|
907 |
|
790 |
|
15% |
Segment Margin |
|
14.0% |
|
12.9% |
|
110 bps |
|
|
4Q 2020 |
|
4Q 2019 |
|
|
Sales |
|
1,940 |
|
1,515 |
|
28% |
Organic Growth |
|
|
|
|
|
27% |
Segment Profit |
|
297 |
|
192 |
|
55% |
Segment Margin |
|
15.3% |
|
12.7% |
|
260 bps |
|
1Adjusted EPS and adjusted
EPS V% exclude pension mark-to-market, non-cash charges associated
with the reduction in value of reimbursement receivables due from
Garrett Motion Inc. (Garrett), net of proceeds from settlement of
related hedging transaction, and 2019 adjustments to the charges
taken in connection with the 4Q17 U.S. tax legislation charge. |
2Adjusted free cash flow
conversion excludes impacts from 2019 separation cost payments
related to the spin-offs, pension mark-to-market, non-cash charges
associated with the reduction in value of reimbursement receivables
due from Garrett, net of proceeds from settlement of related
hedging transaction, and 2019 adjustments to the charges taken in
connection with the 4Q17 U.S. tax legislation charge, if
applicable. |
3Adjusted EPS V% guidance
excludes pension mark-to-market, non-cash charges associated with
the reduction in value of reimbursement receivables due from
Garrett, net of proceeds from settlement of related hedging
transaction, and 2Q20 favorable resolution of a foreign tax matter
related to the spin-off transactions. |
4Adjusted EPS and adjusted
EPS V% exclude pension mark-to-market, non-cash charges associated
with the reduction in value of reimbursement receivables due from
Garrett, net of proceeds from settlement of related hedging
transaction, 2Q20 favorable resolution of a foreign tax matter
related to the spin-off transactions, and 2019 adjustments to the
charges taken in connection with the 4Q17 U.S. tax legislation
charge. |
5Adjusted free cash flow
conversion excludes impacts from 2019 separation cost payments
related to the spin-offs, pension mark-to-market, non-cash charges
associated with the reduction in value of reimbursement receivables
due from Garrett, net of proceeds from settlement of related
hedging transaction, 2Q20 favorable resolution of a foreign tax
matter related to the spin-off transactions, and 2019 adjustments
to the charges taken in connection with the 4Q17 U.S. tax
legislation charge, if applicable. |
6Free cash flow guidance
assumes proposed reorganization plan contemplated in the plan
support agreement signed by Garrett is confirmed; should such plan
be confirmed free cash flow definition would be revised to include
cash payment from Garrett to Honeywell under such proposed
reorganization plan. See appendix for details. |
7Adjusted free cash flow
excludes impacts from 2019 separation cost payments related to the
spin-offs. |
Honeywell (www.honeywell.com) is a Fortune 100 technology
company that delivers industry-specific solutions that include
aerospace products and services; control technologies for buildings
and industry; and performance materials globally. Our technologies
help 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.
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, technological, and COVID-19
public health factors affecting our operations, markets, products,
services and prices. Such forward-looking statements are not
guarantees of future performance, and actual results, and other
developments, including the potential impact of the COVID-19
pandemic, and business decisions may differ from those envisaged by
such forward-looking statements. Any forward-looking plans
described herein are not final and may be modified or abandoned at
any time. 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.
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, a
measure by which we assess operating performance, which we define
as operating income adjusted for certain items as presented in the
Appendix; segment margin, on an overall Honeywell basis, which we
define as segment profit divided by sales; organic sales growth,
which we define as sales growth less the impacts from foreign
currency translation, and acquisitions and divestitures for the
first 12 months following transaction date; free cash flow, which
we define as cash flow from operations less capital expenditures
and should the proposed reorganization plan contemplated in the
plan support agreement signed by Garrett be confirmed, free cash
flow definition would be revised to include cash payment from
Garrett to Honeywell under such proposed reorganization plan;
adjusted free cash flow, which we define as cash flow from
operations less capital expenditures and which we adjust to exclude
the impact of separation costs related to the spin-offs of Resideo
and Garrett, if and as noted in the release; adjusted free cash
flow conversion, which we define as adjusted free cash flow divided
by net income attributable to Honeywell, excluding pension
mark-to-market, adjustments to the charges taken in connection with
the 4Q17 U.S. tax legislation charge, non-cash charges associated
with the reduction in value of reimbursement receivables due from
Garrett, net of proceeds from settlement of related hedging
transaction, and 2Q20 favorable resolution of a foreign tax matter
related to the spin-off transactions, if and as noted in the
release; and adjusted earnings per share, which we adjust to
exclude pension mark-to-market, adjustments to the charges taken in
connection with the 4Q17 U.S. tax legislation charge, non-cash
charges associated with the reduction in value of reimbursement
receivables due from Garrett, net of proceeds from settlement of
related hedging transaction, and 2Q20 favorable resolution of a
foreign tax matter related to the spin-off transactions, if and as
noted in the release. The respective tax rates applied when
adjusting earnings per share for these items are identified in the
release or in the reconciliations presented in the Appendix.
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 metrics should be considered in addition
to, and not as replacements for, the most comparable GAAP measure.
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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Product sales |
$ |
6,804 |
|
|
$ |
7,133 |
|
|
$ |
24,737 |
|
|
$ |
27,629 |
|
Service sales |
2,096 |
|
|
2,363 |
|
|
7,900 |
|
|
9,080 |
|
Net sales |
8,900 |
|
|
9,496 |
|
|
32,637 |
|
|
36,709 |
|
Costs, expenses and other |
|
|
|
|
|
|
|
Cost of products sold (1) |
4,786 |
|
|
5,025 |
|
|
17,638 |
|
|
19,269 |
|
Cost of services sold (1) |
1,190 |
|
|
1,303 |
|
|
4,531 |
|
|
5,070 |
|
|
5,976 |
|
|
6,328 |
|
|
22,169 |
|
|
24,339 |
|
Selling, general and administrative expenses
(1) |
1,248 |
|
|
1,473 |
|
|
4,772 |
|
|
5,519 |
|
Other (income) expense |
(129) |
|
|
(164) |
|
|
(675) |
|
|
(1,065) |
|
Interest and other financial charges |
95 |
|
|
91 |
|
|
359 |
|
|
357 |
|
|
7,190 |
|
|
7,728 |
|
|
26,625 |
|
|
29,150 |
|
Income before taxes |
1,710 |
|
|
1,768 |
|
|
6,012 |
|
|
7,559 |
|
Tax expense |
331 |
|
|
178 |
|
|
1,147 |
|
|
1,329 |
|
Net income |
1,379 |
|
|
1,590 |
|
|
4,865 |
|
|
6,230 |
|
Less: Net income attributable to the
noncontrolling interest |
20 |
|
|
28 |
|
|
86 |
|
|
87 |
|
Net income attributable to Honeywell |
$ |
1,359 |
|
|
$ |
1,562 |
|
|
$ |
4,779 |
|
|
$ |
6,143 |
|
Earnings per share of common stock - basic |
$ |
1.94 |
|
|
$ |
2.19 |
|
|
$ |
6.79 |
|
|
$ |
8.52 |
|
Earnings per share of common stock - assuming
dilution |
$ |
1.91 |
|
|
$ |
2.16 |
|
|
$ |
6.72 |
|
|
$ |
8.41 |
|
Weighted average number of shares outstanding -
basic |
701.8 |
|
|
713.5 |
|
|
704.1 |
|
|
721.0 |
|
Weighted average number of shares outstanding
-
assuming dilution |
710.0 |
|
|
722.6 |
|
|
711.2 |
|
|
730.3 |
|
|
|
(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
December 31, |
|
Twelve Months
Ended
December 31, |
Net Sales |
2020 |
|
2019 |
|
2020 |
|
2019 |
Aerospace |
$ |
2,978 |
|
|
$ |
3,661 |
|
|
$ |
11,544 |
|
|
$ |
14,054 |
|
Honeywell Building Technologies |
1,426 |
|
|
1,463 |
|
|
5,189 |
|
|
5,717 |
|
Performance Materials and Technologies |
2,556 |
|
|
2,857 |
|
|
9,423 |
|
|
10,834 |
|
Safety and Productivity Solutions |
1,940 |
|
|
1,515 |
|
|
6,481 |
|
|
6,104 |
|
Total |
$ |
8,900 |
|
|
$ |
9,496 |
|
|
$ |
32,637 |
|
|
$ |
36,709 |
|
|
|
Reconciliation of
Segment Profit to Income Before Taxes |
|
|
Three Months
Ended
December 31, |
|
Twelve Months
Ended
December 31, |
Segment Profit |
2020 |
|
2019 |
|
2020 |
|
2019 |
Aerospace |
$ |
822 |
|
|
$ |
954 |
|
|
$ |
2,904 |
|
|
$ |
3,607 |
|
Honeywell Building Technologies |
305 |
|
|
297 |
|
|
1,099 |
|
|
1,165 |
|
Performance Materials and Technologies |
478 |
|
|
643 |
|
|
1,851 |
|
|
2,433 |
|
Safety and Productivity Solutions |
297 |
|
|
192 |
|
|
907 |
|
|
790 |
|
Corporate |
(23) |
|
|
(54) |
|
|
(96) |
|
|
(256) |
|
Total segment profit |
1,879 |
|
|
2,032 |
|
|
6,665 |
|
|
7,739 |
|
Interest and other financial charges |
(95) |
|
|
(91) |
|
|
(359) |
|
|
(357) |
|
Stock compensation expense (1) |
(50) |
|
|
(41) |
|
|
(168) |
|
|
(153) |
|
Pension ongoing income (2) |
192 |
|
|
143 |
|
|
785 |
|
|
592 |
|
Pension mark-to-market expense |
(44) |
|
|
(123) |
|
|
(44) |
|
|
(123) |
|
Other postretirement income (2) |
17 |
|
|
12 |
|
|
57 |
|
|
47 |
|
Repositioning and other charges
(3,4) |
(89) |
|
|
(240) |
|
|
(575) |
|
|
(546) |
|
Other (5) |
(100) |
|
|
76 |
|
|
(349) |
|
|
360 |
|
Income before taxes |
$ |
1,710 |
|
|
$ |
1,768 |
|
|
$ |
6,012 |
|
|
$ |
7,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Amounts included in Selling, general and
administrative expenses. |
(2) |
Amounts included in Cost of products and services
sold and 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 (loss) of affiliated companies is
included in segment profit. |
Honeywell International
Inc. |
Consolidated Balance
Sheet (Unaudited) |
(Dollars in
millions) |
|
|
December 31,
2020 |
|
December 31,
2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
14,275 |
|
|
$ |
9,067 |
|
Short-term investments |
945 |
|
|
1,349 |
|
Accounts receivable—net |
6,827 |
|
|
7,493 |
|
Inventories |
4,489 |
|
|
4,421 |
|
Other current assets |
1,639 |
|
|
1,973 |
|
Total current assets |
28,175 |
|
|
24,303 |
|
Investments and long-term receivables |
685 |
|
|
588 |
|
Property, plant and equipment—net |
5,570 |
|
|
5,325 |
|
Goodwill |
16,058 |
|
|
15,563 |
|
Other intangible assets—net |
3,560 |
|
|
3,734 |
|
Insurance recoveries for asbestos related
liabilities |
366 |
|
|
392 |
|
Deferred income taxes |
760 |
|
|
86 |
|
Other assets |
9,412 |
|
|
8,688 |
|
Total assets |
$ |
64,586 |
|
|
$ |
58,679 |
|
LIABILITIES |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
5,750 |
|
|
$ |
5,730 |
|
Commercial paper and other short-term
borrowings |
3,597 |
|
|
3,516 |
|
Current maturities of long-term debt |
2,445 |
|
|
1,376 |
|
Accrued liabilities |
7,405 |
|
|
7,476 |
|
Total current liabilities |
19,197 |
|
|
18,098 |
|
Long-term debt |
16,342 |
|
|
11,110 |
|
Deferred income taxes |
2,113 |
|
|
1,670 |
|
Postretirement benefit obligations other than
pensions |
242 |
|
|
326 |
|
Asbestos related liabilities |
1,920 |
|
|
1,996 |
|
Other liabilities |
6,975 |
|
|
6,766 |
|
Redeemable noncontrolling interest |
7 |
|
|
7 |
|
Shareowners' equity |
17,790 |
|
|
18,706 |
|
Total liabilities, redeemable noncontrolling
interest and shareowners' equity |
$ |
64,586 |
|
|
$ |
58,679 |
|
Honeywell
International Inc. |
Consolidated Statement
of Cash Flows (Unaudited) |
(Dollars in
millions) |
|
|
Three
Months Ended
December 31, |
|
Twelve Months
Ended
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
1,379 |
|
|
$ |
1,590 |
|
|
$ |
4,865 |
|
|
$ |
6,230 |
|
Less: Net income attributable to the
noncontrolling interest |
20 |
|
|
28 |
|
|
86 |
|
|
87 |
|
Net income attributable to Honeywell |
1,359 |
|
|
1,562 |
|
|
4,779 |
|
|
6,143 |
|
Adjustments to reconcile net income attributable
to Honeywell to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation |
164 |
|
|
173 |
|
|
644 |
|
|
673 |
|
Amortization |
90 |
|
|
96 |
|
|
358 |
|
|
415 |
|
Repositioning and other charges |
89 |
|
|
240 |
|
|
575 |
|
|
546 |
|
Net payments for repositioning and other
charges |
(181) |
|
|
(219) |
|
|
(833) |
|
|
(376) |
|
Pension and other postretirement income |
(165) |
|
|
(32) |
|
|
(798) |
|
|
(516) |
|
Pension and other postretirement benefit
payments |
(10) |
|
|
(28) |
|
|
(47) |
|
|
(78) |
|
Stock compensation expense |
50 |
|
|
41 |
|
|
168 |
|
|
153 |
|
Deferred income taxes |
114 |
|
|
477 |
|
|
(175) |
|
|
179 |
|
Reimbursement receivables charge |
159 |
|
|
— |
|
|
509 |
|
|
— |
|
Other |
34 |
|
|
(384) |
|
|
(335) |
|
|
(286) |
|
Changes in assets and liabilities, net of the
effects of acquisitions and divestitures: |
|
|
|
|
|
|
|
Accounts receivable |
54 |
|
|
89 |
|
|
669 |
|
|
11 |
|
Inventories |
217 |
|
|
176 |
|
|
(67) |
|
|
(100) |
|
Other current assets |
(55) |
|
|
(362) |
|
|
191 |
|
|
(430) |
|
Accounts payable |
475 |
|
|
207 |
|
|
15 |
|
|
118 |
|
Accrued liabilities |
388 |
|
|
578 |
|
|
555 |
|
|
445 |
|
Net cash provided by (used for) operating
activities |
2,782 |
|
|
2,614 |
|
|
6,208 |
|
|
6,897 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Expenditures for property, plant and
equipment |
(291) |
|
|
(335) |
|
|
(906) |
|
|
(839) |
|
Proceeds from disposals of property, plant and
equipment |
40 |
|
|
2 |
|
|
57 |
|
|
43 |
|
Increase in investments |
(865) |
|
|
(1,035) |
|
|
(3,236) |
|
|
(4,253) |
|
Decrease in investments |
874 |
|
|
1,146 |
|
|
3,508 |
|
|
4,464 |
|
Receipts (payments) from settlements of derivative
contracts |
(74) |
|
|
(143) |
|
|
(149) |
|
|
102 |
|
Cash paid for acquisitions, net of cash
acquired |
(261) |
|
|
(46) |
|
|
(261) |
|
|
(50) |
|
Net cash provided by (used for) investing
activities |
(577) |
|
|
(411) |
|
|
(987) |
|
|
(533) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of commercial paper and
other short-term borrowings |
1,897 |
|
|
3,907 |
|
|
10,474 |
|
|
14,199 |
|
Payments of commercial paper and other short-term
borrowings |
(1,888) |
|
|
(3,906) |
|
|
(10,400) |
|
|
(14,199) |
|
Proceeds from issuance of common stock |
230 |
|
|
73 |
|
|
393 |
|
|
498 |
|
Proceeds from issuance of long-term debt |
20 |
|
|
1 |
|
|
10,125 |
|
|
2,726 |
|
Payments of long-term debt |
(71) |
|
|
(2,783) |
|
|
(4,308) |
|
|
(2,903) |
|
Repurchases of common stock |
(1,565) |
|
|
(750) |
|
|
(3,714) |
|
|
(4,400) |
|
Cash dividends paid |
(671) |
|
|
(644) |
|
|
(2,592) |
|
|
(2,442) |
|
Other |
(5) |
|
|
(7) |
|
|
(59) |
|
|
(79) |
|
Net cash provided by (used for) financing
activities |
(2,053) |
|
|
(4,109) |
|
|
(81) |
|
|
(6,600) |
|
Effect of foreign exchange rate changes on cash
and cash equivalents |
87 |
|
|
65 |
|
|
68 |
|
|
16 |
|
Net increase (decrease) in cash and cash
equivalents |
239 |
|
|
(1,841) |
|
|
5,208 |
|
|
(220) |
|
Cash and cash equivalents at beginning of
period |
14,036 |
|
|
10,908 |
|
|
9,067 |
|
|
9,287 |
|
Cash and cash equivalents at end of period |
$ |
14,275 |
|
|
$ |
9,067 |
|
|
$ |
14,275 |
|
|
$ |
9,067 |
|
Honeywell International
Inc. |
Reconciliation of
Organic Sales % Change (Unaudited) |
|
|
Three Months
Ended
December 31,
2020 |
|
Twelve Months
Ended
December 31,
2020 |
Honeywell |
|
|
|
Reported sales % change |
(6)% |
|
(11)% |
Less: Foreign currency translation |
1% |
|
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
|
—% |
Organic sales % change |
(7)% |
|
(11)% |
|
|
|
|
Aerospace |
|
|
|
Reported sales % change |
(19)% |
|
(18)% |
Less: Foreign currency translation |
—% |
|
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
|
—% |
Organic sales % change |
(19)% |
|
(18)% |
|
|
|
|
Honeywell Building Technologies |
|
|
|
Reported sales % change |
(3)% |
|
(9)% |
Less: Foreign currency translation |
1% |
|
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
|
—% |
Organic sales % change |
(4)% |
|
(9)% |
|
|
|
|
Performance Materials and Technologies |
|
|
|
Reported sales % change |
(11)% |
|
(13)% |
Less: Foreign currency translation |
1% |
|
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
|
—% |
Organic sales % change |
(12)% |
|
(13)% |
|
|
|
|
Safety and Productivity Solutions |
|
|
|
Reported sales % change |
28% |
|
6% |
Less: Foreign currency translation |
1% |
|
—% |
Less: Acquisitions, divestitures and other,
net |
—% |
|
—% |
Organic sales % change |
27% |
|
6% |
We define organic sales percent 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. 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 Segment Profit to Operating Income and
Calculation of Segment Profit and Operating Income
Margins (Unaudited) |
(Dollars in millions) |
|
|
Three
Months Ended
December 31, |
|
Three
Months
Ended
September 30,
2020 |
|
Twelve
Months Ended
December 31, |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Segment profit |
$ |
1,879 |
|
|
$ |
2,032 |
|
|
$ |
1,553 |
|
|
$ |
6,665 |
|
|
$ |
7,739 |
|
Stock compensation expense (1) |
(50) |
|
|
(41) |
|
|
(40) |
|
|
(168) |
|
|
(153) |
|
Repositioning, Other (2,3) |
(111) |
|
|
(259) |
|
|
(161) |
|
|
(641) |
|
|
(598) |
|
Pension and other postretirement service costs
(4) |
(42) |
|
|
(37) |
|
|
(41) |
|
|
(160) |
|
|
(137) |
|
Operating income |
$ |
1,676 |
|
|
$ |
1,695 |
|
|
$ |
1,311 |
|
|
$ |
5,696 |
|
|
$ |
6,851 |
|
Segment profit |
$ |
1,879 |
|
|
$ |
2,032 |
|
|
$ |
1,553 |
|
|
$ |
6,665 |
|
|
$ |
7,739 |
|
÷ Net sales |
$ |
8,900 |
|
|
$ |
9,496 |
|
|
$ |
7,797 |
|
|
$ |
32,637 |
|
|
$ |
36,709 |
|
Segment profit margin % |
21.1 |
% |
|
21.4 |
% |
|
19.9 |
% |
|
20.4 |
% |
|
21.1 |
% |
Operating income |
$ |
1,676 |
|
|
$ |
1,695 |
|
|
$ |
1,311 |
|
|
$ |
5,696 |
|
|
$ |
6,851 |
|
÷ Net sales |
$ |
8,900 |
|
|
$ |
9,496 |
|
|
$ |
7,797 |
|
|
$ |
32,637 |
|
|
$ |
36,709 |
|
Operating income margin % |
18.8 |
% |
|
17.8 |
% |
|
16.8 |
% |
|
17.5 |
% |
|
18.7 |
% |
|
|
(1) |
Included in Selling, general and
administrative expenses. |
(2) |
Includes repositioning, asbestos,
environmental expenses and equity income adjustment. |
(3) |
Included in Cost of products and
services sold, Selling, general and administrative expenses and
Other income/expense. |
(4) |
Included in Cost of products and
services sold and Selling, general and administrative
expenses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We define segment profit as operating income, excluding stock
compensation expense, pension and other postretirement service
costs, and repositioning and other charges. 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 segment profit, on an overall
Honeywell basis, to operating income has not been provided for all
forward-looking measures of segment profit and segment margin
included herewithin. Management cannot reliably predict or
estimate, without unreasonable effort, the impact and timing on
future operating results arising from items excluded from segment
profit. 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 segment profit to operating income 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
Spin-off Impact (Unaudited) |
|
|
Three
Months Ended
December 31, |
|
Three
Months
Ended
September
30, 2020 |
|
Twelve
Months Ended
December 31, |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Earnings per share of common stock -
assuming dilution (1) |
$ |
1.91 |
|
|
$ |
2.16 |
|
|
$ |
1.07 |
|
|
$ |
6.72 |
|
|
$ |
8.41 |
|
Pension mark-to-market expense (2) |
0.05 |
|
|
0.13 |
|
|
— |
|
|
0.04 |
|
|
0.13 |
|
Separation related tax adjustment
(3) |
— |
|
|
— |
|
|
— |
|
|
(0.26) |
|
|
— |
|
Impacts from U.S. Tax Reform |
— |
|
|
(0.23) |
|
|
— |
|
|
— |
|
|
(0.38) |
|
Garrett related adjustment (4)(5) |
0.11 |
|
|
— |
|
|
0.49 |
|
|
0.60 |
|
|
— |
|
Adjusted earnings per share of common stock
- assuming dilution |
$ |
2.07 |
|
|
$ |
2.06 |
|
|
$ |
1.56 |
|
|
$ |
7.10 |
|
|
$ |
8.16 |
|
|
|
(1) |
For the three months
ended December 31, 2020 and 2019, adjusted earnings per share
utilizes weighted average shares of approximately 710.0 million and
722.6 million. For the twelve months ended December 31, 2020 and
2019, adjusted earnings per share utilizes weighted average shares
of approximately 711.2 million and 730.3 million. For the three
months ended September 30, 2020, adjusted earnings per share
utilizes weighted average shares of approximately 709.6
million. |
(2) |
Pension mark-to-market
expense uses a blended tax rate of 25% and 24% for 2020 and
2019. |
(3) |
For the twelve months
ended December 31, 2020, separation-related tax adjustment of $186
million ($186 million net of tax) includes the favorable resolution
of a foreign tax matter related to the spin-off transactions. |
(4) |
For the three months
ended September 30, 2020, the adjustment was $350 million net of
tax due to the non-cash charge associated with the reduction in
value of reimbursement receivables due from Garrett. |
(5) |
For the three and
twelve months ended December 31, 2020, adjustments were $77 million
and $427 million net of tax due to the non-cash charges associated
with the reduction in value of reimbursement receivables due from
Garrett, net of proceeds from settlement of related hedging
transactions. |
We believe adjusted earnings per share, excluding spin-off
impact, is a measure that is useful to investors and management in
understanding our ongoing operations and in analysis of ongoing
operating trends. For forward looking information, management
cannot reliably predict or estimate, without unreasonable effort,
the pension mark-to-market expense as it is dependent on
macroeconomic factors, such as interest rates and the return
generated on invested pension plan assets. We therefore do not
include an estimate for the pension mark-to-market expense. Based
on economic and industry conditions, future developments and other
relevant factors, these assumptions are subject to change.
Honeywell
International Inc. |
Reconciliation of Cash
Provided by Operating Activities to Adjusted Free Cash Flow and
Calculation of Adjusted
Free Cash Flow Conversion (Unaudited) |
(Dollars in
millions) |
|
|
Three Months
Ended
December 31,
2020 |
|
Three Months
Ended
December 31,
2019 |
|
Three Months
Ended
September 30,
2020 |
|
Twelve
Months Ended
December 31,
2020 |
|
Twelve
Months Ended
December 31,
2019 |
Cash provided by operating activities |
$ |
2,782 |
|
|
$ |
2,614 |
|
|
$ |
1,007 |
|
|
$ |
6,208 |
|
|
$ |
6,897 |
|
Expenditures for property, plant and
equipment |
(291) |
|
|
(335) |
|
|
(249) |
|
|
(906) |
|
|
(839) |
|
Free cash flow |
2,491 |
|
|
2,279 |
|
|
758 |
|
|
5,302 |
|
|
6,058 |
|
Separation cost payments |
— |
|
|
13 |
|
|
— |
|
|
— |
|
|
213 |
|
Adjusted free cash flow |
$ |
2,491 |
|
|
$ |
2,292 |
|
|
$ |
758 |
|
|
$ |
5,302 |
|
|
$ |
6,271 |
|
Net income attributable to Honeywell |
$ |
1,359 |
|
|
$ |
1,562 |
|
|
$ |
758 |
|
|
$ |
4,779 |
|
|
$ |
6,143 |
|
Separation related tax adjustment |
— |
|
|
— |
|
|
— |
|
|
(186) |
|
|
— |
|
Impacts from U.S. Tax Reform |
— |
|
|
(167) |
|
|
— |
|
|
— |
|
|
(281) |
|
Pension mark-to-market |
33 |
|
|
94 |
|
|
— |
|
|
33 |
|
|
94 |
|
Garrett related adjustment(1)(2) |
77 |
|
|
— |
|
|
350 |
|
|
427 |
|
|
— |
|
Adjusted net income attributable to Honeywell |
$ |
1,469 |
|
|
$ |
1,489 |
|
|
$ |
1,108 |
|
|
$ |
5,053 |
|
|
$ |
5,956 |
|
Cash provided by operating activities |
$ |
2,782 |
|
|
$ |
2,614 |
|
|
$ |
1,007 |
|
|
$ |
6,208 |
|
|
$ |
6,897 |
|
÷ Net income (loss) attributable to Honeywell |
$ |
1,359 |
|
|
$ |
1,562 |
|
|
$ |
758 |
|
|
$ |
4,779 |
|
|
$ |
6,143 |
|
Operating cash flow conversion |
205 |
% |
|
167 |
% |
|
133 |
% |
|
130 |
% |
|
112 |
% |
Adjusted free cash flow |
$ |
2,491 |
|
|
$ |
2,292 |
|
|
$ |
758 |
|
|
$ |
5,302 |
|
|
$ |
6,271 |
|
÷ Adjusted net income attributable to
Honeywell |
$ |
1,469 |
|
|
$ |
1,489 |
|
|
$ |
1,108 |
|
|
$ |
5,053 |
|
|
$ |
5,956 |
|
Adjusted free cash flow conversion % |
170 |
% |
|
154 |
% |
|
68 |
% |
|
105 |
% |
|
105 |
% |
|
(1) For the three months ended
September 30, 2020, the adjustment was $350 million net of tax due
to the non-cash charge associated with the reduction in value of
reimbursement receivables due from Garrett. |
(2) For the three and twelve months
ended December 31, 2020, adjustments were $77 million and $427
million net of tax due to the non-cash charges associated with the
reduction in value of reimbursement receivables due from Garrett,
net of proceeds from settlement of related hedging
transactions. |
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and
equipment.
We believe that this metric is useful to investors and
management as a measure of cash generated by business operations
that will be used to repay scheduled debt maturities and can be
used to invest in future growth through new business development
activities or acquisitions, pay dividends, repurchase stock or
repay debt obligations prior to their maturities. This metric can
also be used to evaluate our ability to generate cash flow from
business operations and the impact that this cash flow has on our
liquidity.
Honeywell International
Inc. |
Reconciliation of Cash
Provided by Operating Activities to Adjusted Free Cash Flow
(Unaudited) |
|
|
Twelve Months
Ended
December 31,
2021(E) ($B) |
Cash provided by operating activities |
~$5.7 - $6.1 |
Expenditures for property, plant and
equipment |
~(1) |
Garrett cash receipts |
0.4 |
Free cash flow |
~$5.1 - $5.5 |
We define free cash flow as cash provided by operating
activities less cash expenditures for property, plant and equipment
plus Garrett cash receipts.
We believe that free cash flow is a non-GAAP metric 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
metric 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. For forward looking information, we do not provide cash
flow conversion guidance on a GAAP basis as 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.
Should the proposed reorganization plan contemplated in the Plan
Support Agreement signed by Centerbridge, Oaktree, Honeywell,
Garrett and certain other parties thereto (the "Reorganization
Plan") be confirmed by the bankruptcy court, we will revise our
definition of free cash flow to include cash payments from Garrett
to Honeywell. We believe this revised definition will be
useful to investors and management because, under the IRA and TMA,
cash reimbursements from Garret were classified as cash flow from
operations, which offset cash payments made by the Company for
asbestos and tax related matters. Should the Reorganization Plan be
confirmed, the IRA and TMA will terminate, and instead of
reimbursements classified as cash flow from operations, Honeywell
will receive the cash payment stream contemplated under the
Reorganization Plan. However, because the underlying reason for a
cash payment stream from Garrett will not have changed, we believe
that continuing to include cash payments from Garrett in free cash
flow is useful to investors and management for comparability to
prior periods.
Contacts: |
|
|
|
Media |
Investor Relations |
Nina Krauss |
Mark Bendza |
(704) 627-6035 |
(704) 627-6200 |
nina.krauss@honeywell.com |
mark.bendza@honeywell.com |