• 3Q16 Reported EPS of $1.60, or $1.67 Excluding $0.07 Deployed to Restructuring
• 4Q16 EPS Guidance of $1.74-$1.78 (Ex-Pension MTM)1, Up 10%-13%
• Full-Year EPS Guidance of $6.60 - $6.64 (Ex-Pension MTM)1, Up 8%-9%

MORRIS PLAINS, N.J., October 21, 2016 -- Honeywell (NYSE: HON) today announced its results for the third quarter of 2016:



Total Honeywell

 

($ Millions, Except Earnings Per Share) 3Q 2015 3Q 2016 Change
Sales 9,611 9,804 2%
Segment Margin 19.3% 17.5% (180) bps
Operating Income Margin  18.3% 15.6% (270) bps
Earnings Per Share  $1.60 $1.60 Flat
Earnings Per Share (Excluding $0.07 Deployed to Restructuring) $1.67 4%
Cash Flow from Operations  1,693 1,554 (8%)
Free Cash Flow 1,416 1,280 (10%)

“The third-quarter results came in as we outlined on our October 7 conference call. We are well-positioned for double-digit earnings growth in the fourth quarter, leading to 8%-9% earnings growth in 2016,” said Honeywell Chairman and CEO Dave Cote. “It was a quarter of important changes in many areas. We split the former Automation and Control Solutions business into two new reporting segments; closed the acquisition of Intelligrated and sold Honeywell Technology Solutions, Inc.; and spun off our Resins and Chemicals business as a freestanding publicly-traded company named AdvanSix Inc. (NYSE: ASIX). We also funded approximately $250 million in restructuring and other actions from a $0.07 increase in first- and second-quarter EPS caused by an accounting standard adoption, and the $0.14 gain related to the sale of our government services business. These actions will drive more than $175 million of benefits in 2017 alone. We also intend in the fourth quarter to refinance outstanding debt maturing in 2017-2019, which will lower interest expense by approximately $60 million annually beginning in 2017.”

“Combined with our ongoing productivity initiatives driven by the Honeywell Operating System, and the strength of our underlying portfolio, the actions we announced this quarter position Honeywell for future outperformance,” continued Cote. “Moving ahead, we are targeting low single-digit core organic sales growth, continued segment margin improvement, and a double-digit increase in EPS in 2017. Darius Adamczyk, Chief Operating Officer, and Tom Szlosek, Chief Financial Officer, will provide more details about 2017 during our annual outlook call in December.”



“We are committed to creating sustainable long-term shareowner value,” concluded Cote. “We remain focused on disciplined capital deployment, aggressive organic sales growth, seed planting for new products and technologies, penetrating High Growth Regions, and executing on our key process initiatives. 2017 will be an inflection year for several core business units: growing demand for our UOP catalysts and modular equipment, Jetwave™ and other products and services tied to connected aircraft, further turbo penetration, and strong sales growth from Solstice® (HFOs), our line of low-global-warming refrigerants and blowing agents. Revenue and earnings from the nearly $8 billion in M&A investments during the past two years should also be a significant contributor to 2017 performance. We are confident in our position and expect to continue to outperform.”



The Company’s current 2016 full-year guidance, which reflects our October 6, 2016 announcement, is as follows:


2016 Full-Year Guidance       

Current Guidance Change vs. 2015 
Sales  $39.4 - $39.6  2% - 3%
Core Organic Growth (1%)-(2%) 
Segment Margin ~18.1% ~(70) bps3
Operating Income Margin (Ex-Pension MTM) ~17.6% ~(30) bps4
Earnings Per Share (Ex-Pension MTM)5
$6.60 - $6.64
8% - 9%
Free Cash Flow6
$4.2 - $4.3B
(2%) - (5%)

Segment Performance

Aerospace          

                     

($ Millions)  

3Q 2015

3Q 2016

% Change

Sales

3,820

3,601

(6%)

Segment Profit 

833

663

(20%)

Segment Margin

21.8%

18.4%

(340) bps

                                                                                                                                          

  • Sales for the third quarter were down (6%) on a reported and core organic basis. The decrease was primarily driven by the unfavorable impact of third-quarter OEM incentives, lower volumes in Business and General Aviation, program completions in the U.S. Space and international Defense businesses, and continued weakness in the commercial helicopter business. This was partially offset by increased Air Transport OE deliveries and repair and overhaul activities, and new turbo platform launches on passenger vehicles in Transportation Systems.
  • Segment profit was down (20%) and segment margin declined (340) bps to 18.4%, due to higher Aerospace OEM incentives and lower volumes in Business Jet and Defense, partially offset by productivity net of inflation and commercial excellence.


Home and Building Technologies
     
                           

($ Millions)  

3Q 2015

3Q 2016

% Change

Sales

2,313

2,701

17%

Segment Profit 

408

441

8%

Segment Margin

17.6%

16.3%

(130) bps7

                                                                                                                                                                                               

  • Sales for the third quarter were up 17% reported and up 5% on a core organic basis. The increase was primarily driven by continued strength in our Distribution and Building Solutions businesses, and Products growth in Environmental & Energy Solutions and in China. The difference between reported and core organic sales was due to the favorable impact from acquisitions, primarily Elster.
  • Segment profit was up 8% and segment margin declined (130) bps to 16.3%, driven by acquisition amortization and integration costs, continued growth investments in salespeople and research and development, and the unfavorable mix impact of increased sales in Building Solutions and Distribution, partially offset by benefits from previously-funded restructuring, higher sales volumes, and commercial excellence.

Performance Materials and Technologies      
                            

($ Millions)  

3Q 2015

3Q 2016

% Change

Sales

2,279

2,329

2%

Segment Profit 

474

503

6%

Segment Margin

20.8%

21.6%

80 bps


  • Sales for the third quarter were up 2% reported. Core organic sales were down (3%) primarily driven by declines in UOP gas processing, licensing, and engineering, partially offset by strong catalyst shipments and conversion of global mega projects in Process Solutions. The difference between reported and core organic sales was due to the favorable impact from acquisitions, partially offset by the unfavorable impact of foreign currency and market pricing headwinds in Resins & Chemicals.
  • Segment profit was up 6% and segment margins expanded 80 bps to 21.6%, driven by productivity net of inflation, higher catalyst volumes, and acquisition integration excellence, partially offset by continued investments for growth.


Safety and Productivity Solutions
    
                            

($ Millions)  

3Q 2015

3Q 2016

% Change

Sales

1,199

1,173

(2%)

Segment Profit 

193

172

(11%)

Segment Margin

16.1%

14.7%

(140) bps


  • Sales for the third quarter were down (2%) reported. Core organic sales were down (8%) in the quarter as a result of lower volume in Productivity Solutions associated with the USPS contract (which was completed in the third quarter of 2015), continued channel headwinds, and lower volumes in our Safety business. The difference between reported and core organic sales was due to the favorable impact from acquisitions, primarily Intelligrated.
  • Segment profit was down (11%) and segment margin contracted (140) bps to 14.7%, primarily driven by lower volumes and acquisition amortization and integration costs, partially offset by restructuring benefits and commercial excellence.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate on the conference call, please dial (877) 795-3635 (domestic) or (719) 325-4816 (international) approximately ten minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s third quarter 2016 earnings call or provide the conference code HON3Q16. 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. EDT, October 21, until 12:30 p.m. EDT, October 28, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 7056857.


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.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.


Contacts:


Media                                                 

Robert C. Ferris                                     

(973) 455-3388                                       

rob.ferris@honeywell.com                     


Investor Relations

Mark Macaluso 

(973) 455-2222

mark.macaluso@honeywell.com


1 Excludes Impact From Contemplated Q4 Debt Refinancing
2 Cash Flow from Operations Less Capital Expenditures
3 Segment Margin ex-M&A Down ~(10) bps
4 Operating Margin ex-M&A Up ~30 bps
5 Excludes Impact From Contemplated Q4 Debt Refinancing
6 Cash Flow From Operations Less Capital Expenditures
7 Segment Profit Down (20) bps Ex-M&A

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.


3Q 2016 Press Release Financials.pdf