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Honeywell Reports Full-Year Sales Up 3% to $40.3 Billion; EPS (Ex-Pension Mark-to-Market) Up 12% to $5.56; Reported EPS of $5.33

  • 4Q14 Organic Sales Growth Of 4%; EPS (Ex-Pension MTM) Of $1.43, Up 15%
  • Aerospace OEM Incentives ($0.14 Expense) - Position Aerospace Well For Growth And Margin Expansion Over Five-Year Plan
  • Completed Sale Of Remaining BEAV Shares In 4Q14, $0.14 Gain
  • Reaffirming 2015 EPS Guidance (Ex-Pension MTM) Of $5.95 - $6.15, Up 7-11%
MORRIS TOWNSHIP, N.J., January 23, 2015 -- Honeywell (
NYSE: HON ) today announced its results for the fourth quarter and full-year 2014:
Total Honeywell
($ Millions, except Earnings Per Share) FY 2013 FY 2014 Change
Sales (1) 39,055 40,306 3%
Organic Growth 3%
Segment Margin (2) 16.30% 16.60% 30 bps
Operating Income Margin (Ex-Pension MTM) 14.20% 15.10% 90 bps
Earnings Per Share (Reported) $4.92 $5.33 8%
Earnings Per Share (Ex-Pension MTM) $4.97 $5.56 12%
Cash Flow from Operations 4,335 5,024 16%
Free Cash Flow (3) 3,388 3,930 16%

4Q 2013 4Q 2014 Change
Sales (1) 10,387 10,266 -1%
Organic Growth 10,387 4%
Segment Margin (2) 16.10% 15.90% (20) bps
Operating Income Margin (Ex-Pension MTM) 13.40% 14.50% 110 bps
Earnings Per Share (Reported) $1.19 $1.20 1%
Earnings Per Share (Ex-Pension MTM) $1.24 $1.43 15%
Cash Flow from Operations 1,668 1,762 6%
Free Cash Flow (3) 1,268 1,348 6%
"In the fourth quarter, Honeywell delivered 4% organic sales growth and achieved 15% earnings per share growth (excluding the pension mark-to-market adjustment), exceeding the high end of our guidance range and capping off another year of terrific performance in 2014," said Honeywell Chairman and CEO Dave Cote. "Strong execution in our businesses and continued momentum across the portfolio throughout the year helped us to deliver on our aggressive 2014 sales, margin, and EPS targets. We achieved significant margin expansion in 2014 with benefits from our key process and productivity initiatives, and increased organic growth by continuing to 'seed plant' with investments in new products and technologies, high ROI capex, and expansion of our global footprint. Consistent with what we guided in December, we sold the remaining BEAV shares in the fourth quarter and proactively funded Aerospace OEM incentives related to new platform wins. We remain cautious in our planning with regard to the global economy, but are confident that our balanced portfolio mix of short- and long-cycle businesses is well-positioned to deliver on our 2015 commitments that include higher organic sales, continued margin expansion, and double-digit earnings growth. Honeywell's five year plan is on target and we expect that improving end markets, new product introductions, penetration in high-growth regions, and benefits from our HOS Gold initiative will drive both growth and productivity throughout the company."
The company also reaffirms its full-year 2015 guidance:

Full-Year Guidance


2015
Change
Current Guidance vs. 2014
Sales $40.5 - $41.1B 1% - 2%
Organic Growth ~4%
Segment Margin 17.6% - 17.9% 100 - 130 bps (2)
Operating Income Margin (Ex-Pension MTM) 16.7% - 17.0% 160 - 190 bps (2)
Earnings Per Share (Ex-Pension MTM) $5.95 - $6.15 7% - 11%

Cash Flow from Operations Less Capital Expenditures

Segment Margin ex-4Q14 $184M OEM Incentives Up 60 - 90 bps; Operating Margin ex-4Q14 OEM IncentivesUp 120 - 150 bps

Segment Performance

Aerospace

($ Millions) FY 2013 FY 2014 % Change
Sales 15,735 15,598 -1%
Segment Profit 2,870 2,915 2%
Segment Margin 18.20% 18.70% 50 bps

($ Millions) 4Q 2013 4Q 2014 % Change
Sales 4,077 3,842 -6%
Segment Profit 769 663 -14%
Segment Margin 18.90% 17.30% (160) bps

  • Sales for the fourth quarter were down (6%) on a reported basis driven by the unfavorable impact of OEM incentives, the Friction Materials divestiture, and the unfavorable impact of foreign exchange. Excluding these items, sales in the fourth quarter were up 4% on an organic basis. Commercial OE sales were up 7% on an organic basis, reflecting an increase in Business and General Aviation (BGA) engine shipments. Commercial Aftermarket sales were up 4% on an organic basis, driven by continued Air Transport and Regional (ATR) spares growth, and higher Repair & Overhaul activities. Defense & Space sales were up 2% on an organic basis as a result of strong international growth. Transportation Systems sales were up 4% on an organic basis, primarily driven by new platform launches and higher turbo gas penetration globally.
  • Segment profit for the fourth quarter was down (14%), and segment margins contracted (160) bps to 17.3%, driven by the unfavorable impact of fourth quarter OEM incentives, partially offset by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture. Excluding the impact of the $184 million fourth quarter 2014 OEM incentives, segment profit was up 10%, and segment margins expanded 210 basis points.

Automation and Control Solutions

($ Millions) FY 2013 FY 2014 % Change
Sales 13,465 14,487 8%
Segment Profit 1,983 2,200 11%
Segment Margin 14.70% 15.20% 50 bps
($ Millions) 4Q 2013 4Q 2014 % Change
Sales 3,741 3,847 3%
Segment Profit 570 613 8%
Segment Margin 15.20% 15.90% 70 bps
  • Sales for the fourth quarter were up 3% reported, or 6% on an organic basis, primarily driven by strong organic growth across the portfolio, partia
ly offset by the unfavorable impact of foreign exchange. Energy, Safety, and Security (ESS) sales increased, particularly in Scanning & Mobility, Fire and Industrial Safety, and Security; and Building Solutions & Distribution (BSD) saw continued strength in the Americas Distribution business as well as acceleration in Building Solutions, most notably in the Americas region.
  • Segment profit for the fourth quarter was up 8% and segment margins expanded 70 bps to 15.9% driven primarily by higher volumes, M&A integration execution, and productivity net of inflation, partially offset by continued investments for growth. On December 18, 2014, we signed a definitive agreement to acquire Datamax-O'Neil, a global manufacturer of fixed and mobile printers used in a variety of retail, warehouse and distribution, and health care applications, for an aggregate purchase price of approximately $185 million. The transaction is expected to close in the first quarter of 2015 subject to customary closing conditions, including regulatory review.

Performance Materials and Technologies

($ Millions) FY 2013 FY 2014 % Change
Sales 9,855 10,221 4%
Segment Profit 1,725 1,817 5%
Segment Margin 17.50% 17.80% 30 bps

($ Millions) 4Q 2013 4Q 2014 % Change
Sales 2,569 2,577 ~Flat
Segment Profit 400 425 6%
Segment Margin 15.60% 16.50% 90 bps

  • Sales for the fourth quarter were approximately flat reported, or up 3% on an organic basis, driven by higher UOP licensing sales, software and services growth in Process Solutions, and higher sales in Advanced Materials, particularly in Fluorine Products, offset by the unfavorable impact of foreign exchange and lower UOP catalyst sales.
  • Segment profit for the fourth quarter was up 6% and segment margins expanded 90 bps to 16.5% in the fourth quarter, driven by higher volume, the favorable impact of higher UOP licensing sales, and productivity net of inflation, partially offset by continued investments for growth.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EST. To participate, please dial(888) 487-0361 (domestic) or(719) 457-2710 (international) approximately ten minutes before the 9:30 a.m. EST start. Please mention to the operator that you are dialing in for Honeywell's fourth quarter 2014 earnings call. 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 (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 2:00 p.m. EST, January 23, until 11:59 p.m. EST, January 30, by dialing(888) 203-1112 (domestic) or(719) 457-0820 (international). The access code is 1280015.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.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 Robert C. Ferris (973) 455-3388 rob.ferris@honeywell.comInvestor Relations Mark Macaluso (973) 455-2222 mark.macaluso@honeywell.com

Q4 and Full Year 2014 Financials.pdf