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Company Raises 2007 Guidance for Sales, EPS, and Free Cash Flow MORRIS TOWNSHIP, N.J., July 19, 2007 -- Honeywell (NYSE: HON) today announced second quarter 2007 sales increased 8% to $8.5 billion from $7.9 billion last year. Earnings were up 24% to $0.78 per share, versus $0.63 per share last year. Cash flow from operations was $983 million versus $935 million in the second quarter of 2006 and free cash flow (cash flow from operations less capital expenditures) was $820 million, compared to $786 million last year.
“Honeywell’s second quarter was driven by strong organic sales growth, double-digit earnings growth, and robust free cash flow,” said Honeywell Chairman and CEO Dave Cote. “We continue to benefit from our global footprint, great positions in good industries, and our effective deployment of cash through dividends, acquisitions, and share repurchases.”
Honeywell repurchased more than 40 million shares of stock in the second quarter, reducing the amount remaining under its previously announced authorization to approximately $200 million. The company’s Board of Directors has authorized the repurchase of up to an additional $3 billion of Honeywell common stock. Honeywell expects to repurchase shares to maintain an essentially flat share count through the remainder of 2007.
“We had a great first half of 2007 with sales increasing 10%, EPS up 25%, and free cash flow up 42%. As a result of this performance, our share repurchases, and confident outlook for the second half, we are raising full-year sales, EPS, and free cash flow guidance,” concluded Cote.
Honeywell increased its previously stated 2007 sales guidance to $33.9 billion, its earnings per share range to $3.10 - 3.16 and free cash flow range to $2.8 - 3.0 billion (cash flow from operations of $3.6 – 3.8 billion).
Second Quarter Segment Highlights
Aerospace
Sales were up 13%, compared with the second quarter of 2006, driven by 15% growth in Commercial and 9% growth in Defense and Space sales. Commercial sales reflected growth of 18% in original equipment and 12% in aftermarket spares and services.
• Segment margins were 17.3%, compared with 15.4% a year ago, driven by volume growth, price and productivity gains, which more than offset the negative impact from inflation.
• Honeywell announced the acquisition of defense logistics leader Dimensions International. The acquisition expands Honeywell’s ability to support the Department of Defense’s needs for equipment repair, refurbishment, and reset.
• Defense and Space secured contracts worth more than $14 million with the U.S. Navy for its Micro Air Vehicle (MAV) and with Sikorsky Aircraft Corporation for synthetic vision technology. Total MAV-related contract wins to date top $100 million across all branches of the U.S. military. Honeywell’s synthetic vision technology will be included in the Black Hawk helicopter cockpit as part of the Defense Advanced Research Projects Agency (DARPA) Sandblaster program designed to enhance situational awareness for pilots in brownout conditions.
• Honeywell has been selected by Northwest Airlines to provide comprehensive repair and overhaul services with an estimated value of $490 million over 20 years for auxiliary power units and wheels and brakes. Automation and Control Solutions
• Sales were up 10%, compared with the second quarter of 2006, driven by 9% growth in the Products businesses and 11% growth in the Solutions businesses.
• Segment margins were 11.0% compared with 10.4% a year ago, due to volume growth and productivity savings, which more than offset the negative impact from inflation.
• Honeywell Security Group’s ADI security and low voltage products distribution business completed its acquisition of Burtek Systems Corporation. Burtek is a distributor of low voltage products for commercial and residential audio, burglar and fire alarm, CCTV, access control, and data communications.
• Honeywell Building Solutions won an approximately $33 million energy savings performance contract with the City of Quincy, Massachusetts, which will reduce the city’s energy costs and cut greenhouse gas emissions. Building Solutions also announced a $15 million contract with the U.S. Coast Guard to cut energy costs and greenhouse gas emissions at nine locations.
• Honeywell Process Solutions signed a definitive agreement, subject to regulatory review, to acquire Enraf Holding B.V., which offers comprehensive solutions for the control and management of transportation, storage, and blending operations in the oil and gas industry.
Transportation Systems
• Sales were up 5%, compared with the second quarter of 2006, driven by increased Turbo Technologies light vehicle sales and the positive impact of foreign exchange, which were partially offset by an expected decline in Turbo Technologies commercial vehicle sales in North America and the impact of lower sales of automotive aftermarket products.
• Segment margins were 12.5% compared with 13.8% a year ago, due to investments in new products and inflation, which more than offset pricing actions and productivity savings.
• Turbo Technologies was awarded two passenger vehicle diesel platforms worth approximately $50 million in estimated annual revenues at full production that will be introduced in Korea, Europe, and the U.S. These platforms are expected to launch in 2011.
• Consumer Products Group launched several new products, including FRAM Syn-wash, a long-lasting, washable air filter, and Autolite Xtreme Sport and Xtreme Lawn, premium spark plugs for the growing small engine segment.
Specialty Materials
• Sales were down 3% compared with the second quarter of 2006, driven by anticipated timing with respect to UOP catalyst sales.
• Segment margins were 14.4% compared with 17.3% a year ago, due primarily to lower UOP volume, inflation, and a temporary plant outage, which more than offset increased pricing.
• UOP announced that Eni S.p.A., a leading European oil company, will build a production facility using UOP/Eni Ecofining™ technology to produce “green” diesel for the European market. Green diesel is produced from renewable resources and generates lower emissions than either biodiesel or traditional petroleum-based diesel. It can be used as a drop in replacement fuel in current diesel engines without modifications. As a result of its high cetane levels (a measure of the combustion quality of diesel), it can also be used as a blending agent to improve the performance of other diesel fuels. UOP also announced it is developing technology to convert oils from plants and algae to military jet fuel for use by the U.S. and NATO as part of a program funded by DARPA.
• Specialty Materials announced a new line of materials for body and vehicle armor called Spectra Shield® II, which has demonstrated up to 20% greater ballistic performance than existing Spectra products. Honeywell will discuss its results during its investor conference call today starting at 10:00 a.m. EDT. To participate, please dial (706) 643-7681 a few minutes before the 10:00 a.m. start. Please mention to the operator that you are dialing in for Honeywell’s investor conference call. The live webcast of the investor call will be available through the “Investor Relations” section of the company’s Website (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 1:00 p.m. EDT, July 19, until midnight, July 26, by dialing
(706) 645-9291. The access code is 4735919. Honeywell International is a $33 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London and Chicago Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit www.honeywell.com. This release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. 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
Murray Grainger
(973) 455-2222
murray.grainger@honeywell.com
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