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Honeywell Reports First Quarter 2015 Sales Of $9.2 Billion; EPS UP 10% TO $1.41 Per Share

  • Core Organic Sales Growth 2%*
  • Reported Sales Decline 5% Due To Foreign Currency And FM Divestiture
  • Segment Margin Improvement Of 220 bps To 18.7%
  • Continuing Investments For Growth, Repositioning
  • 2015 EPS Guidance Range To $6.00 - $6.15, Up 8%-11%
MORRIS TOWNSHIP, N.J., April 17, 2015 -- Honeywell ( NYSE: HON) today announced its results for the first quarter of 2015: Total Honeywell
($ Millions, except Earnings Per Share) 1Q 2014 1Q 2015 Change
Sales 9,679 9,213 -5%
Segment Margin 16.50% 18.70% 220 bps
Operating Income Margin 14.20% 17.60% 340 bps
Earnings Per Share $1.28 $1.41 10%
Cash Flow from Operations 688 421 -39%
Free Cash Flow (1) 496 256 -48%
(1) Cash Flow from Operations Less Capital Expenditures "Honeywell had a good start to 2015 delivering double-digit earnings growth at the high end of our guidance range and experiencing improving momentum over the course of the quarter," said Honeywell Chairman and CEO Dave Cote. "Each of our businesses grew on a core organic basis and generated significant margin improvement in the first quarter as a result of new product introductions, High Growth Region performance, other commercial excellence and prudent cost management. Free cash flow was adversely impacted by the payment of the OEM incentives we accrued in the fourth quarter and the timing of tax payments, and we remain on track to our full-year guidance. While we are off to a strong start to 2015, we will continue to plan conservatively as the global economic environment continues to evolve, and in the first quarter we funded additional repositioning, which will continue to improve our cost position. We are raising the low end of our full-year EPS guidance range to $6.00-$6.15. We expect core organic sales for the full year to be up ~3%, while our reported sales are expected to be down 2% - 3% due to the impact of foreign currency, the divestiture of Friction Materials, and raw materials pricing in Resins & Chemicals. We're able to raise our full-year earnings guidance and maintain our cash outlook while continuing to invest for the future in seed planting and additional repositioning because of new products and technologies, further penetration of High Growth Regions, conservative cost planning, and deployment of our key process initiatives as part of HOS Gold. We're confident that our balanced portfolio mix of short- and long-cycle businesses is well-positioned to deliver on our 2015 commitments and our 2018 targets." The company is updating its full-year 2015 guidance and now expects: 2015 Full-Year Guidance

Prior Guidance
Revised Guidance Change vs. 2014
Sales $40.5 - $41.1B $39.0 - $39.6B (2%) - (3%)
Core Organic Growth ~5% ~3%
Segment Margin 17.6% - 17.9% 18.3% - 18.6% 170 - 200 bps (2)
Operating Income Margin (Ex-Pension MTM) 16.7% - 17.0% 17.4% - 17.7% 230 - 260 bps (3)
Earnings Per Share (Ex-Pension MTM) $5.95 - $6.15 $6.00 - $6.15 8% - 11%
Free Cash Flow (1) $4.2 - $4.3B $4.2 - $4.3B 8% - 10%
1. Cash Flow from Operations Less Capital Expenditures 2. Segment Margin ex-4Q14 $184M OEM Incentives Up 130 - 160 bps 3. Operating Margin ex-4Q14 $184M OEM Incentives Up 190 - 220 bps First Quarter Segment Performance Aerospace
($ Millions) 1Q 2014 1Q 2015 % Change
Sales 3,851 3,607 -6%
Segment Profit 703 752 7%
Segment Margin 18.30% 20.80% 250 bps
  • Sales for the first quarter were up 1% on a core organic basis, and were down (6%) reported driven by the Friction Materials divestiture and the unfavorable impact of foreign exchange. Commercial OE sales were up 1% on a core organic basis driven by strong deliveries, partially offset by timing delays on certain business jet platforms. Commercial Aftermarket sales were up 1% on a core organic basis driven by continued growth in repair and overhaul activities, partially offset by lower spares sales. Defense & Space sales declined (1%) on a core organic basis driven by lower U.S. government deliveries, partially offset by double-digit growth in international defense. Transportation Systems sales were down (23%) reported, due to the Friction Materials divestiture and unfavorable impact of foreign exchange. On a core organic basis, TS sales were up 5% driven by higher gas turbo volumes globally.
  • Segment profit was up 7% and segment margins expanded 250 bps to 20.8%, driven by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture.
Automation and Control Solutions
($ Millions) 1Q 2014 1Q 2015 % Change
Sales 3,362 3,264 -3%
Segment Profit 471 516 10%
Segment Margin 14.00% 15.80% 180 bps
  • Sales for the first quarter were up 3% on a core organic basis and down (3%) reported driven by the unfavorable impact of foreign exchange. Energy, Safety, and Security (ESS) sales increased 3% on a core organic basis, driven most significantly by volume growth in Scanning & Mobility. Building Solutions & Distribution (BSD) sales increased 3% on a core organic basis driven by continued strength in Americas Distribution. In addition, we closed the acquisition of Datamax-O'Neil, a global manufacturer of fixed and mobile printers, in March.
  • Segment profit was up 10% and segment margins expanded 180 bps to 15.8% driven by productivity net of inflation and higher volume, partially offset by continued investments for growth. In addition, ESS continues to realize incremental synergies from the integration of Intermec into Scanning & Mobility.
Performance Materials and Technologies
($ Millions) 1Q 2014 1Q 2015 % Change
Sales 2,466 2,342 -5%
Segment Profit 473 503 6%
Segment Margin 19.20% 21.50% 230 bps
  • Sales were up 3% on a core organic basis, and were down (5%) reported driven by the unfavorable impact of foreign exchange and raw materials pricing in Resins & Chemicals. The increase in core organic sales was primarily driven by UOP gas processing growth and higher sales in Fluorine Products and Specialty Products, partially offset by lower volumes in Resins & Chemicals (resulting primarily from unplanned plant outages) and Process Solutions.
  • Segment profit was up 6% and segment margins increased 230 bps to 21.5%, driven by commercial excellence, productivity net of inflation, and higher volumes, partially offset by unplanned plant outages 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(888) 857-6930 (domestic) or(719) 457-2631 (international) approximately ten minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell's first quarter 2015 earnings call or provide the conference code HON1Q15. 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 hear a replay of the conference call from 2:00 p.m. EDT, April 17, until 1:30 p.m. EDT, April 24, by dialing(888) 203-1112 (domestic) or(719) 457-0820 (international). The access code is 2361738.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.*Throughout this press release, core organic growth refers to reported growth less the impacts from foreign currency movement, M&A and raw materials pricing in the Resins & Chemicals business of PMT. The raw materials pricing impact is excluded in instances where raw materials costs are passed through to customers, which drives fluctuations in selling prices not necessarily tied to volume growth. A reconciliation of core organic growth to organic growth is provided in the attached financial tables. Contacts: Media Robert C. Ferris (973) 455-3388 rob.ferris@honeywell.com Investor Relations Mark Macaluso (973) 455-2222 mark.macaluso@honeywell.com Q1 2015 Press Release Financials (vF).pdf