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Honeywell Reports Second Quarter 2015 Sales Of $9.8 Billion; EPS Of $1.51 Per Share; Raising 2015 EPS Guidance

  • EPS Up 9% Reported, Up 10% Normalized at 26.5% Tax Rate
  • Core Organic Sales Growth 3%* Driven By Commercial Aero, ESS and Advanced Materials
  • Reported Sales Decline 5% Due to Foreign Currency and FM Divestiture
  • Segment Margin Improvement of 170 bps to 18.4%
  • Raising 2015 EPS Guidance Range to $6.05 - $6.15, Up 9%-11%
MORRIS TOWNSHIP, N.J., July 17, 2015 -- Honeywell ( NYSE: HON ) today announced its results for the second quarter of 2015: Total Honeywell
($ Millions, except Earnings Per Share) 2Q 2014 2Q 2015 Change
Sales 10,253 9,775 (-5%)
Segment Margin 16.7% 18.4% 170 bps
Operating Income Margin 15.4% 17.6% 220 bps
Earnings Per Share $1.38 $1.51 9%
Earnings Per Share (At 26.5% Tax Rate) $1.37 $1.51 10%
Cash Flow from Operations 1,341 1,408 5%
Free Cash Flow (1) 1,112 1,165 5%
(1) Cash Flow from Operations Less Capital Expenditures "Honeywell had a terrific second quarter capping off a strong first half of 2015," said Honeywell Chairman and CEO Dave Cote. "We delivered 3% core organic sales growth and had another quarter of double-digit earnings growth when normalized for tax. We saw growth acceleration in both the short- and long-cycle businesses within Aerospace, continued growth in our commercial and industrial businesses within ACS, and higher volume across our Advanced Materials portfolio, particularly in Fluorine Products. We saw margin expansion in each segment, with a significant portion from gross margin, as our new products, process focus, disciplined cost management, and restructuring continue to distinguish Honeywell's performance. We remain committed to seed planting and process improvements throughout our portfolio. Once again we proactively funded repositioning actions that will improve our cost position and drive the efficiencies necessary for winning in a slow growth global economy. Our great first half performance gives us confidence to again raise the low end of our full-year EPS guidance range by $0.05 to $6.05-$6.15, and we remain committed to our full-year core organic sales growth and free cash flow estimates. We believe that our balanced portfolio of short- and long-cycle businesses, penetration in High Growth Regions, and the deployment of our key process initiatives will continue to drive results this year and over the long term." The company is updating its full-year 2015 guidance and now expects: 2015 Full-Year Guidance

Prior Guidance
Revised Guidance vs. 2014
Sales $39.0 - $39.6B $39.0 - $39.6B (2%) - (3%)
Core Organic Growth ~3% ~3%
Segment Margin 18.3% - 18.6% 18.4% - 18.6% 180 - 200 bps (2)
Operating Income Margin (Ex-Pension MTM) 17.4% - 17.7% 17.5% - 17.7% 240 - 260 bps (3)
Earnings Per Share (Ex-Pension MTM) $6.00 - $6.15 $6.05 - $6.15 9% - 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 140 - 160 bps 3 Operating Margin ex-4Q14 $184M OEM Incentives Up 200 - 220 bps Second Quarter Segment Performance Aerospace
($ Millions) 2Q 2014 2Q 2015 % Change
Sales 4,010 3,827 (-5%)
Segment Profit 759 777 2%
Segment Margin 18.9% 20.3% 140 bps
  • Sales for the second quarter were up 3% on a core organic basis, and were down 5% reported driven by the Friction Materials divestiture and the unfavorable impact of foreign currency in Transportation Systems. Commercial OE sales were up 6% on a reported and core organic basis driven by strong Business and General Aviation (BGA) engine shipments. Commercial Aftermarket sales were up 3% on a core organic basis (2% reported) driven by continued growth in repair and overhaul activities and Air Transport and Regional (ATR) spares growth, partially offset by a decline in RMU (Retrofit, Modifications, and Upgrades) sales in BGA. Defense & Space sales increased 1% on a core organic basis (flat reported) driven by strong international growth, partially offset by lower sales to the U.S. government. Transportation Systems sales were up 5% on a core organic basis driven by new platform launches and higher gas turbo penetration globally. TS sales were down 25% reported due to the Friction Materials divestiture and the unfavorable impact of foreign currency.
  • Segment profit was up 2% and segment margins expanded 140 bps to 20.3%, driven by commercial excellence, the favorable impact of the Friction Materials divestiture, foreign currency hedges, and productivity net of inflation, partially offset by the margin impact of higher OE shipments.
Automation and Control Solutions
($ Millions)
2Q 2014
2Q 2015
% Change
Segment Profit
Segment Margin
120 bps
  • Sales for the second quarter were up 4% on a core organic basis and down 1% reported driven by the unfavorable impact of foreign currency. Energy, Safety, and Security (ESS) sales increased 5% on a core organic basis (flat reported) driven primarily by continued growth in Scanning & Mobility, Security, and Fire Safety. Building Solutions & Distribution (BSD) sales increased 3% on a core organic basis (down 4% reported) driven by continued strength in Americas Distribution.
  • Segment profit was up 6% and segment margins expanded 120 bps to 16.0% driven by productivity net of inflation and higher volume, partially offset by continued investments for growth.
Performance Materials and Technologies
($ Millions) 2Q 2014 2Q 2015 % Change
Sales 2,636 2,395 -9%
Segment Profit 475 509 7%
Segment Margin 18.0% 21.3% 330 bps
  • Sales were down 1% on a core organic basis and down 9% reported driven by the unfavorable impact of foreign currency and raw materials pricing in Resins & Chemicals. The decrease in core organic sales was primarily driven by lower volume in UOP and HPS associated with delays in customer projects and lower UOP catalyst shipments, partially offset by higher volume across Advanced Materials, particularly in Fluorine Products.
  • Segment profit was up 7% and segment margins increased 330 bps to 21.3%, driven by productivity net of inflation, commercial excellence, and the impact of raw materials pricing in Resins & Chemicals.
Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (888) 298-3451 (domestic) or (719) 457-2605 (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 second quarter 2015 earnings call or provide the conference code HON2Q15. 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 hear a replay of the conference call from 12:30 p.m. EDT, July 17, until 12:30 p.m. EDT, July 24, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 8213026. 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. 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 Mark Macaluso (973) 455-2222 2Q 2015 Press Release Financials_8-K vF