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Honeywell Reports Second Quarter 2013 Sales Of $9.7 Billion; EPS Up 12% To $1.28 Per Share

  • Strong Productivity Driving EPS Growth Of 12%, Up 8% Using Expected Full-Year Tax Rate
  • Continued Proactive Funding Of Repositioning To Align With Global Growth Outlook
  • Increasing Proforma EPS Guidance To $4.85 - $4.95, From $4.80 - $4.95
MORRIS TOWNSHIP, N.J., July 19, 2013 -- Honeywell ( NYSE: HON) today announced its results for the second quarter of 2013: Total Honeywell
($ Millions, except Earnings Per Share) 2Q 2012 2Q 2013 Change
Sales 9,435 9,693 3%
Segment Margin 15.80% 16.10% 30 bps
Operating Income Margin 13.60% 14.30% 70 bps
Earnings Per Share $1.14 $1.28 12%
Cash Flow from Operations 973 1,256 29%
Free Cash Flow * 1,040 1,142 10%
* Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO Trust establishmentpayments and cash pension contributions"Honeywell had another good quarter and a strong first half of 2013," said Honeywell Chairman and CEO Dave Cote. "Despite operating in a slow growth macro environment, we saw good organic growth in ACS's Energy, Safety and Security business and in Turbo Technologies, both of which continue to outgrow the key end markets in which they compete. Our long-cycle businesses, including Commercial Aerospace, Process Solutions, and UOP, also continue to perform well, benefitting from favorable macro-trends, winning new contracts, and maintaining a strong backlog, which currently stands at $15.5B. We remain focused on seed planting, funding cost savings initiatives across the portfolio, and remaining flexible given the continued uncertain global economic outlook. And, as a result of our first half performance, we are raising the low-end of our 2013 guidance by $0.05 with the expectation of modestly improved organic growth and continued margin expansion in the second half outlook."Second quarter 2013 earnings per share (EPS) reflect a 23.1% effective tax rate compared to 26.0% last year. Using the 2012 actual / 2013 expected full-year tax rate of 26.5% before any pension mark-to-market adjustment, EPS growth would have been 8%.The company is updating its full-year 2013 guidance and now expects:

Full-Year Guidance

Prior Guidance
Revised Guidance vs. 2012
Sales $38.8 - $39.3B $38.9 - $39.3B 3 - 4%
Segment Margin 15.9 - 16.2% 16.0 - 16.2% 40 - 60 bps
Operating Income Margin1 14.3 - 14.6% 14.5 - 14.7% 90 - 110 bps
Earnings Per Share1 $4.80 - $4.95 $4.85 - $4.95 8% - 11%
Free Cash Flow2 ~$3.7B ~$3.7B ~ Flat
1. Proforma, V% / BPS exclude any pension mark-to-market adjustment 2. Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO Trust establishment payments and cash pension contributionsSecond Quarter Segment Performance Aerospace
($ Millions) 2Q 2012 2Q 2013 % Change
Sales 3,027 2,997 (1%)
Segment Profit 562 583 4%
Segment Margin 18.60% 19.50% 90 bps
  • Sales were down (1%) compared with the second quarter of 2012 driven by an (8%) decline in Defense & Space sales as a result of planned ramp downs and program delays, largely offset by Commercial growth. Commercial OE sales were up 8% in the quarter driven by continued strong OE build rates and favorable platform mix. Commercial Aftermarket growth of 3% was driven by improved flight hour growth and spares sales, partially offset by lower maintenance events.
  • Segment profit was up 4%, and segment margins expanded 90 bps to 19.5%, driven by commercial excellence and productivity net of inflation, partially offset by lower Defense& Space sales.
Automation and Control Solutions
($ Millions) 2Q 2012 2Q 2013 % Change
Sales 3,962 4,065 3%
Segment Profit 525 585 11%
Segment Margin 13.30% 14.40% 110 bps
  • Sales were up 3% on both a reported and organic basis compared with the second quarter of 2012. All three businesses experienced growth driven by new product introductions, stronger services and software uptake, and improved residential end market conditions, partially offset by non-residential end markets, which remain suppressed.
  • Segment profit was up 11% and segment margins were up 110 bps to 14.4% driven by commercial excellence and productivity net of inflation.
Performance Materials and Technologies
($ Millions) 2Q 2012 2Q 2013 % Change
Sales 1,546 1,684 9%
Segment Profit 350 320 (9%)
Segment Margin 22.60% 19.00% (360) bps
  • Sales were up 9% reported, approximately flat organically, compared with the second quarter of 2012, driven by higher UOP petrochemical catalyst shipments and equipment sales, and the favorable impact of the Thomas Russell acquisition, partially offset by lower production volume in Advanced Materials and the unfavorable impact of unseasonably cool weather on Fluorine Products refrigerant volume.
  • Segment profit was down (9%) and segment margins decreased (360) bps to 19.0%, primarily driven by the impact of lower UOP licensing sales compared to prior year, lower Advanced Materials volumes, investments for growth, inflation, and the dilutive impact of the Thomas Russell acquisition.
Transportation Systems
($ Millions) 2Q 2012 2Q 2013 % Change
Sales 900 947 5%
Segment Profit 114 126 11%
Segment Margin 12.70% 13.30% 60 bps
  • Sales were up 5% on both a reported and organic basis, compared with the second quarter of 2012, driven by higher turbo gas penetration in all regions, strong growth from new platform launches, and improving China commercial vehicle sales, partially offset by the impact of an approximately (1%) decline in European light vehicle production volumes.
  • Segment profit was up 11% and segment margins increased 60 bps to 13.3% primarily driven by strong productivity and volume leverage, partially offset by unfavorable price, and ongoing projects to drive operational improvement in the Friction Materials business.
Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial(800) 862-9098 (domestic) or(785) 424-1051 (international) a few minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell's second quarter 2013 investor conference call or provide the conference code HONQ213. 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 ( Investors can access a replay of the conference call from 12:00 p.m. EDT, July 19, until 11:59 p.m. EDT, July 26, by dialing(800) 723-0498 (domestic) or(402) 220-2652 (international). Honeywell ( 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. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, and Chicago Stock Exchanges. For more newsand information on Honeywell, please 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 Investor Relations Elena Doom (973) 455-2222 Q2 2013 Press Release Financials_vF.pdf