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Honeywell Reports Third Quarter 2014 Sales Up 5% To $10.1 Billion; EPS Of $1.47 Per Share; Raising 2014 EPS Guidance

  • Organic Sales Growth 5%; Strong Execution Across The Portfolio
  • EPS Up 19% Reported, Up 14% Using Normalized Tax Rate
  • Raising Low-End Proforma EPS Guidance To $5.50 - $5.55, From $5.45 - $5.55
MORRIS TOWNSHIP, N.J., October 17, 2014 -- Honeywell (NYSE: HON) today announced its results for the third quarter of 2014: Total Honeywell
($ Millions, except Earnings Per Share) 3Q 2013 3Q 2014 Change
Sales 9,647 10,108 5%
Segment Margin 16.70% 17.40% 70 bps
Operating Income Margin 15.20% 16.20% 100 bps
Earnings Per Share $1.24 $1.47 19%
Earnings Per Share (At 26.5% Tax Rate) $1.25 $1.43 14%
Cash Flow from Operations 1,070 1,233 15%
Free Cash Flow * 867 974 12%

* Cash Flow from Operations Less Capital Expenditures

"Organic sales growth and a double-digit earnings increase highlighted Honeywell's strong third quarter," said Honeywell Chairman and CEO Dave Cote. "The continued integration and maturation of the Honeywell Operating System throughout our global portfolio is helping to drive sales, margin, earnings, and cash flow higher, and plenty of runway remains. We are committed to our ongoing seed planting investments to bolster our great positions in good industries and continuous process improvements to mitigate ongoing global macroeconomic uncertainties. We are raising the low-end of our 2014 proforma EPS outlook by $0.05 to $5.50-5.55 (up 11%-12%), which brings us to the high-end of the initial guidance we provided almost a year ago. Looking ahead to 2015, we're once again planning for a slow growth macro environment, but expect to continue delivering strong earnings growth. We're confident that Honeywell will continue to outperform now and over the long-term driven by a relentless focus on new products and technologies, continued penetration of high-growth regions, and sustained implementation of our key process initiatives." The company is updating its full-year 2014 guidance and now expects: 2014 Full-Year Guidance


Prior Guidance
Revised Guidance Change vs. 2013
Sales $40.2 - $40.4B $40.3 - $40.4B 3% - 4%
Segment Margin 16.8% - 17.0% ~17.0% ~70 bps
Operating Income Margin1 15.4% - 15.6% ~15.6% ~140 bps
Earnings Per Share1 $5.45 - $5.55 $5.50 - $5.55 11% - 12%
Free Cash Flow2 $3.8 - $4.0B ~$3.9B ~15%
1. Proforma, V% / bps Exclude Pension Mark-to-Market Adjustment 2. Cash Flow from Operations Less Capital Expenditures Third Quarter Segment Performance Aerospace
($ Millions) 3Q 2013 3Q 2014 % Change
Sales 3,889 3,895 ~Flat
Segment Profit 730 790 8%
Segment Margin 18.80% 20.30% 150 bps
  • Sales for the third quarter were up 3% organically, driven by growth across the portfolio, but were approximately flat on a reported basis due to the Friction Materials divestiture. Commercial OE sales were up 5% reflecting continued strong OE build rates, as well as an increase in Business and General Aviation (BGA) engine shipments. Commercial Aftermarket sales increased 2% driven by strong Air Transport and Regional (ATR) spares growth, partially offset by a decline in RMU (Retrofit, Modifications, and Upgrades) sales in BGA and lower repair and overhaul activities. Defense & Space sales grew 3% as a result of strong international growth and stabilization in U.S. government sales. Transportation Systems sales were down (10%) reported, primarily reflecting the Friction Materials divestiture, and up 4% organically driven by new platform launches, higher turbo gas penetration globally, and increased commercial vehicle demand in Europe, partially offset by moderating EU light vehicle production.
  • Segment profit was up 8%, and segment margins expanded 150 bps to 20.3%, driven by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture.
Automation and Control Solutions
($ Millions) 3Q 2013 3Q 2014 % Change
Sales 3,375 3,671 9%
Segment Profit 523 583 11%
Segment Margin 15.50% 15.90% 40 bps
  • Sales were up 9% reported, 4% organically, compared with the third quarter of 2013, primarily driven by the favorable impact of the Intermec acquisition and strong organic growth across Energy, Safety, and Security (ESS), particularly in Scanning & Mobility, Industrial Safety, Security, and Fire. Building Solutions & Distribution (BSD) saw continued strength in the Americas Distribution business.
  • Segment profit was up 11% and segment margins expanded 40 bps to 15.9% driven by higher volume, commercial excellence, and productivity net of inflation, partially offset by the dilutive impact of the Intermec acquisition.
Performance Materials and Technologies
($ Millions) 3Q 2013 3Q 2014 % Change
Sales 2,383 2,542 7%
Segment Profit 413 444 8%
Segment Margin 17.30% 17.50% 20 bps
  • Sales were up 7% on both an organic and reported basis compared with the third quarter of 2013, driven by UOP catalyst and gas processing growth, an acceleration of sales growth in Process Solutions, and higher sales across Advanced Materials, particularly Fluorine Products.
  • Segment profit was up 8% and segment margins increased 20 bps to 17.5%, driven by higher volume and productivity net of inflation, partially offset by price/raws headwinds in Resins & Chemicals and continued investments for growth.
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 2014 investor conference call or provide the conference code HONQ314. The live webcast of the investor call as well as related presentation materials will be availablethroughthe "Investor Relations" section of the company's Website(http://www.honeywell.com/investor). Investors can access a replay of the conference call from 12:00 p.m. EDT, October 17, until 11:59 p.m.EDT, October 24, by dialing (800) 723-5154 (domestic) or (402) 220-2661 (international). 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 visitwww.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 Investor RelationsRobert C. Ferris Elena Doom(973) 455-3388 (973) 455-2222rob.ferris@honeywell.com elena.doom@honeywell.comPress Release Financials - Final.pdf