• 4Q15 EPS (Ex-Pension MTM) of $1.58, Up 10%; Core Organic Sales ~Flat
  • 4Q15 Segment Margin Improvement of 290 bps to 18.8%, Up 140 bps Ex-4Q14 $184M OEM Incentives
  • Completed Acquisition of Elster on December 29, 2015, Integration Underway
  • Reaffirming 2016 EPS Guidance (Ex-Pension MTM) of $6.45-$6.70, Up 6-10% 


MORRIS PLAINS, N.J., January 29, 2016 -- Honeywell (NYSE: HON) today announced results for the fourth quarter and full-year of 2015: 

Total Honeywell  

($ Millions, except Earnings Per Share)  FY 2014 FY 2015 Change
Sales 40,306 38,581 -4%
Segment Margin 16.60% 18.80% 220 bps
Operating Income Margin (Ex-Pension MTM) 15.10% 17.90% 280 bps
Earnings Per Share (Reported) $5.33 $6.04 13%
Earnings Per Share (Ex-Pension MTM) $5.56 $6.10 10%
Cash Flow from Operations  5,024 5,454 9%
Free Cash Flow (1)  3,930 4,381 11%
4Q 2014 4Q 2015 Change
Sales 10,266 9,982 -3%
Segment Margin 15.90% 18.80% 290 bps
Operating Income Margin (Ex-Pension MTM) 14.50% 18.00% 350 bps
Earnings Per Share (Reported) $1.20 $1.53 28%
Earnings Per Share (Ex-Pension MTM) $1.43 $1.58 10%
Cash Flow from Operations  1,762 1,959 11%
Free Cash Flow (1)  1,348 1,571 17%

 

 (1) Cash Flow from Operations Less Capital Expenditures


*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 Resins & Chemicals business of PMT. 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.

 “Honeywell delivered a strong fourth quarter, capping off another year of robust margin expansion, earnings growth, and cash flow,” said Honeywell Chairman and CEO Dave Cote.  “We grew earnings 10% in a tough environment, representing our sixth consecutive year of double-digit earnings growth.  Segment margins grew by 220 basis points driven by strong execution across the portfolio and our key process initiatives, including HOS Gold.  Free Cash Flow for the full year increased 11% to $4.4 billion, which exceeded the high-end of our guidance range and included over 125% conversion in the fourth quarter.  We committed to more than $6 billion in acquisitions in 2015 to bolster our Great Positions in Good Industries, reinvested $1.1 billion in our businesses through high-return capital expenditure projects, and returned more than $3.5 billion to our shareowners, including a 15% increase in our dividend.  We also funded more than $160 million in new restructuring projects, including $60 million in the fourth quarter, which will put us in an even stronger position for the future.” 

“We are planning conservatively in 2016 as we are expecting another year of slow global economic growth,” continued Cote.  “But, we remain confident in Honeywell’s ability to outperform.  We will support growth where there are opportunities to drive outperformance, be cautious in our sales planning, plan costs and spending conservatively, and continue to support the seed planting for new products, services, geographies, and process improvements that allow us to perform well now and in the future.  We expect continued margin expansion and earnings outperformance in 2016 and over the long term, supported by our balanced portfolio, HOS Gold breakthrough goals, further penetration of High Growth Regions, and funded restructuring projects.”

 The company also reaffirms its full-year 2016 guidance.

 

2016 Full-Year Guidance 

2016 Change
Current Guidance vs. 2015
Sales $39.9B - $40.9B 3% - 6%
    Core Organic Growth  1% - 2%
Segment Margin 18.9% - 19.3% 10 - 50 bps (2)
Operating Income Margin (Ex-Pension MTM) 18.0% - 18.4% 10 - 50 bps (3)
Earnings Per Share (Ex-Pension MTM)  $6.45 - $6.70 6% - 10%
Free Cash Flow (1) $4.6 - $4.8B 5% - 10%

 

1.  Cash Flow from Operations Less Capital Expenditures
2.  Segment Margin Ex-M&A Up 80 - 110 bps
3.  Operating Margin Ex-M&A Up 80 - 110 bps

 Full-year and fourth quarter 2015 results by business segment are provided below.

 Segment Performance

  Aerospace

    ($ Millions)  FY 2014 FY 2015 % Change
Sales 15,598 15,237 -2%
Segment Profit  2,915 3,218 10%
Segment Margin 18.70% 21.10% 240 bps
    ($ Millions)  4Q 2014 4Q 2015 % Change
Sales 3,842 3,983 4%
Segment Profit  663 856 29%
Segment Margin 17.30% 21.50% 420 bps

 

  • Sales for the fourth quarter were up 2% on a core organic basis, and were up 4% reported driven by the $184 million OEM incentives incurred in the fourth quarter of 2014 partially offset by the unfavorable impact of foreign currency.  Commercial OE sales were up 9% on a core organic basis (45% reported) driven by strong Business and General Aviation (BGA) engine shipments and higher shipments to large Air Transport and Regional (ATR) OEMs.  Commercial Aftermarket sales were up 3% on a core organic basis (2% reported) driven by continued growth in repair and overhaul activities.  Defense & Space sales decreased (1%) on a core organic basis (down 3% reported) driven by lower sales to the U.S. government and a difficult prior year comparison in the international business.  Transportation Systems sales were up 1% on a core organic basis driven by new platform launches and higher diesel and gas turbo penetration on passenger vehicles, partially offset by lower commercial vehicle production.  TS sales were down (10%) reported due to the unfavorable impact of foreign currency.
  • Segment profit for the fourth quarter was up 29% and segment margins expanded 420 bps to 21.5%, driven by the fourth quarter 2014 OEM incentives, productivity net of inflation, and commercial excellence, partially offset by the margin impact of higher OE shipments and continued investments for growth.  Excluding the fourth quarter 2014 OEM incentives, segment profit was up 1%, and segment margins expanded 50 basis points.


Automation and Control Solutions

 

     ($ Millions)  FY 2014 FY 2015 % Change
Sales 14,487 14,109 -3%
Segment Profit  2,200 2,313 5%
Segment Margin 15.20% 16.40% 120 bps
    ($ Millions)  4Q 2014 4Q 2015 % Change
Sales 3,847 3,721 -3%
Segment Profit  613 616 Flat
Segment Margin 15.90% 16.60% 70 bps

  • Sales for the fourth quarter were flat on a core organic basis and down (3%) reported driven by the unfavorable impact of foreign currency.  Energy, Safety & Security (ESS) sales decreased (1%) on a core organic basis (down 3% reported) driven primarily by a difficult prior year comparison in Sensing & Productivity Solutions (S&PS), partially offset by continued growth in Security and Fire (HSF) on a global basis.  Building Solutions & Distribution (BSD) sales increased 3% on a core organic basis (down 3% reported) driven by continued strength in Americas Distribution partially offset by slowing Building Solutions backlog conversion. 
  • Segment profit for the fourth quarter was flat and segment margins expanded 70 bps to 16.6% driven by productivity net of inflation, benefits of previously funded restructuring projects, and commercial excellence, partially offset by continued investments for growth. 


Performance Materials and Technologies

 

    ($ Millions)  FY 2014 FY 2015 % Change
Sales 10,221 9,235 -10%
Segment Profit  1,817 1,935 6%
Segment Margin 17.80% 21.00% 320 bps
    ($ Millions)  4Q 2014 4Q 2015 % Change
Sales 2,577 2,278 -12%
Segment Profit  425 462 9%
Segment Margin 16.50% 20.30% 380 bps

 

  • Sales for the fourth quarter were down (4%) on a core organic basis and down (12%) reported driven by the unfavorable impact of foreign currency and lower raw materials pass-through pricing in Resins & Chemicals.  The decrease in core organic sales was primarily driven by lower UOP gas processing, equipment and licensing sales, HPS field products weakness, and lower volume in Resins & Chemicals, partially offset by higher UOP catalyst shipments and higher volume in Fluorine Products.
  • Segment profit for the fourth quarter was up 9% and segment margins increased 380 bps to 20.3%, driven by productivity net of inflation, commercial excellence, and the favorable impact of raw materials pass-through pricing in Resins & Chemicals (pricing model protects profit dollars).


Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EST.  To participate on the conference call, please dial (877) 780-3381 (domestic) or (719) 325-2336 (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 2015 earnings call. 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 4078904

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; turbochargers; and performance materials.  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. 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.

 

Contacts:

 

Media

Robert C. Ferris

(973) 455-3388

rob.ferris@honeywell.com

 

Investor Relations

Mark Macaluso

(973) 455-2222

mark.macaluso@honeywell.com

 


Press Release Financial Statements 4Q 2015vF pdf