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Honeywell Reports Third Quarter 2013 Sales Of $9.6 Billion; EPS Of $1.24 Per Share

  • EPS Up 3% Year-Over-Year Reported, Up 10% Using Normalized Tax Rate
  • Continued Proactive Funding Of Repositioning To Align With Global Growth Outlook
  • Increasing EPS Guidance To $4.90 - $4.95, From $4.85 - $4.95

MORRIS TOWNSHIP, N.J., October 18, 2013 -- Honeywell (NYSE: HON) today announced its results for the third quarter of 2013: Total Honeywell

($ Millions, except Earnings Per Share) 3Q 2012 3Q 2013 Change
Sales 9,342 9,647 3%
Segment Margin 15.80% 16.70% 90 bps
Operating Income Margin 13.90% 15.20% 130 bps
Earnings Per Share (EPS) $1.20 $1.24 3%
Earnings Per Share (At 26.5% Tax Rate) $1.14 $1.25 10%
Cash Flow from Operations 999 1,070 7%
Free Cash Flow * 1,021 937 -8%
* Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO Trustestablishment payments and cash pension contributions "Honeywell executed well in the quarter, building on the momentum we've seen throughout 2013," said Honeywell Chairman and CEO Dave Cote. "We delivered another quarter of double digit EPS growth (when normalized for tax). Despite lower than expected sales in the quarter, primarily related to the delay in closing Intermec and lower Defense & Space sales, strong execution across the portfolio helped drive earnings at the high-end of our guidance range. Our short-cycle businesses, particularly Energy, Safety and Security, and Turbo Technologies, are benefitting from improving end markets, new product introductions, and geographic expansion, while our long-cycle businesses are maintaining a robust backlog, driven by favorable macro trends and strong win rates. Productivity was impressive across the portfolio, enabling further segment margin expansion in all four businesses and continued proactive funding of new repositioning projects. As a result of the year-to-date performance, we are raising the low-end of our 2013 EPS outlook by $0.05 to $4.90-4.95, which is the high-end of the initial guidance range we provided almost a year ago. Looking ahead to 2014, we are planning for a continued slow growth macro environment, but see a path to strong earnings growth driven by our relentless seed planting in new products and technologies, continued penetration of high growth regions, and growing traction on key process initiatives." Third quarter 2013 EPS reflect a 27.2% effective tax rate compared to 22.7% last year. Using the 2012 actual / 2013 expected full-year tax rate of 26.5% before any pension mark-to-market adjustment, EPS growth was 10%.The company is updating its full-year 2013 guidance and now expects: Full-Year Guidance

2013 Prior Guidance
2013 Revised Guidance Change vs. 2012
Sales $38.9 - $39.3B $38.8 - $39.0B 3 - 4%
Segment Margin 16.0 - 16.2% 16.2 - 16.3% 60 - 70 bps
Operating Income Margin1 14.5 - 14.7% 14.7 - 14.8% 110 - 120 bps
Earnings Per Share1 $4.85 - $4.95 $4.90 - $4.95 9 - 11%
Free Cash Flow2 ~$3.7B ~$3.7B ~ Flat
1. Proforma, V% / BPS exclude any pension mark-to-market adjustment 2. Free Cash Flow (cash flow from operations less capital expenditures) prior to any NARCO Trust establishment payments and cash pension contributions Third Quarter Segment Performance Aerospace
($ Millions) 3Q 2012 3Q 2013 % Change
Sales 3,043 2,973 -2%
Segment Profit 582 602 3%
Segment Margin 19.10% 20.20% 110 bps
  • Sales were down (2%) compared with the third quarter of 2012 driven by an (11%) decline in Defense & Space sales as a result of planned ramp downs and program delays, as well as supply chain constraints, partially offset by Commercial growth. Commercial OE sales were up 3% in the quarter driven by continued strong OE build rates and favorable platform mix. Commercial Aftermarket growth of 5% was driven by improved flight hour growth and strong RMU (Repairs, Modifications, and Upgrades) sales.
  • Segment profit was up 3%, and segment margins expanded 110 bps to 20.2%, driven by commercial growth, including productivity net of inflation and commercial excellence, partially offset by lower Defense & Space volume.
Automation and Control Solutions
($ Millions) 3Q 2012 3Q 2013 % Change
Sales 3,958 4,129 4%
Segment Profit 571 631 11%
Segment Margin 14.40% 15.30% 90 bps
  • Sales were up 4% reported, 3% organic, compared with the third quarter of 2012, primarily driven by growth in Energy, Safety, and Security due to strong residential end markets, improving commercial retrofit activity, new product introductions, and the favorable impact of acquisitions net of divestitures.
  • Segment profit was up 11% and segment margins expanded 90 bps to 15.3% driven by strong sales conversion, commercial excellence, and productivity net of inflation.
Performance Materials and Technologies
($ Millions) 3Q 2012 3Q 2013 % Change
Sales 1,478 1,629 10%
Segment Profit 275 305 11%
Segment Margin 18.60% 18.70% 10 bps
  • Sales were up 10% reported, but down (1%) organic, compared with the third quarter of 2012, driven by the favorable impact of the Thomas Russell acquisition, partially offset by challenging global market conditions in Advanced Materials.
  • Segment profit was up 11% and segment margins increased 10 bps to 18.7%, driven by the favorable margin impact of higher UOP licensing and productivity partially offset by inflation and continued investments for growth.
Transportation Systems
($ Millions) 3Q 2012 3Q 2013 % Change
Sales 863 916 6%
Segment Profit 104 128 23%
Segment Margin 12.10% 14.00% 190 bps
  • Sales were up 6% reported, 5% organic, compared with the third quarter of 2012, driven by strong growth from new platform launches and higher turbo gas penetration in all regions, partially offset by slightly lower European light vehicle production and lower off-highway sales in the U.S.
  • Segment profit was up 23% and segment margins increased 190 bps to 14.0% primarily driven by strong Turbo material productivity and volume leverage, and operational improvements in Friction Materials, partially offset by unfavorable price.
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 third quarter 2013 investor conference call or provide the conference code HONQ313. 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, October 18, until 11:59 p.m. EDT, October 25, by dialing(800) 283-4799 (domestic) or(402) 220-0860 (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 news and information on Honeywell, please visit 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 Q3 2013 Press Release Financials (vF).pdf