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    Honeywell Delivers Earnings Per Share Of $1.75 And Sales Of $10.1 Billion

    Honeywell Delivers Earnings Per Share Of $1.75 And Sales Of $10.1 Billion

    • Reported Sales Up 3%; Organic Sales Up 5% Driven by Strength in the Aerospace Aftermarket, Performance Materials and Technologies, and Intelligrated
    • Operating Income Margin Expansion of 220 bps, Segment Margin Expansion of 120 bps
    • Funded Approximately $120 Million in Restructuring and Other Projects
    • Year-To-Date Operating Cash Flow Up 10% and Free Cash Flow1 Up 18%; Third-Quarter Free Cash Flow Conversion of ~90%

    MORRIS PLAINS, N.J., October 20, 2017 --Honeywell (NYSE: HON) today announced financial results for the third quarter of 2017.

    “Honeywell delivered another quarter of high-quality financial results, with organic growth of five percent, segment margin expansion of 120 basis points, and earnings per share of $1.75, up 16 percent2 year-over-year,” said Darius Adamczyk, President and Chief Executive Officer of Honeywell. “This was a standout quarter for us when it comes to organic growth. Our Aerospace aftermarket business grew more than seven percent, our warehouse automation business continued to grow at a double-digit pace, and there was broad strength across Performance Materials and Technologies, led by 25 percent organic sales growth in UOP. We also saw good momentum in orders and backlog, with double-digit backlog growth in UOP, Intelligrated, Defense, and Honeywell Building Solutions, positioning us for future growth.

    “The investments we have made in people, capital expenditures, research and development, and M&A are delivering outstanding growth for our shareowners,” Adamczyk said. “Also, we continue to improve the cost structure of our businesses through ongoing restructuring actions, and in the third quarter, we dedicated approximately $120 million to new projects.

    “Last week, we announced our intention to spin our Homes and Global Distribution business and our Transportation Systems business into two independent public companies by the end of next year. The spun businesses will benefit from being able to make independent investment decisions that will better position them for growth and value creation for decades to come. After completion of the spins, Honeywell will have a more focused and growth-oriented portfolio that benefits from cross-Honeywell synergies. These actions will position the company to deliver sustained financial outperformance,” Adamczyk continued. “Honeywell is well-positioned in both the short and long term, and we anticipate a strong finish to 2017.”

    Honeywell also reaffirmed its full-year earnings-per-share guidance of $7.05 to $7.10, up to nine to 10 percent year-over-year, excluding divestitures, any pension mark-to-market adjustments, and 2016 debt refinancing charges. Earlier this month, the company raised the low end of the range by five cents.

    Honeywell will discuss the results during its investor conference call today starting at 9:30 a.m. Eastern Daylight Time.

    Third Quarter Performance

    Honeywell sales for the third quarter were up five percent on an organic basis and up three percent on a reported basis. The difference between reported and organic sales relates to the 2016 spin-off of the former Resins and Chemicals business in Performance Materials and Technologies and the 2016 divestiture of the Aerospace government services business, partially offset by the acquisition of Intelligrated Safety and Productivity Solutions and the impact of foreign currency translation. The third-quarter financial results can be found in Tables 1 and2, below.

    Aerospace sales for the third quarter were up four percent on an organic basis driven by growth in Commercial Aftermarket and lower year-over-year customer incentives, strength in U.S.defense, and continued recovery in commercial vehicles in transportation systems. Segment margin expanded 290 bps to 21.3 percent, primarily driven by the lower customer incentives, productivity net of inflation, and the favorable impact of the 2016 divestiture of the government services.

    Home and Building Technologies sales for the third quarter were up two percent on an organic basis driven by SmartEnergy program roll-outs, air and water product sales in China, and continued growth in the Distribution business. Segment margin expanded 10 bps to 16.4percent, driven by restructuring benefits, productivity net of inflation, and commercial excellence, partially offset by the unfavorable impact of higher sales from lower-margin products and investments for growth, including research and development.

    Performance Materials and Technologies sales for the third quarter were up 10 percent on an organic basis driven by strong growth in every business, including 25 percent growth in UOP driven by robust catalyst, licensing, equipment, and gas processing volumes; continued demand for Solstice® low-global-warming products in Advanced Materials; and short-cycle demand within Honeywell Process Solutions. Segment margin expanded170 bps to 23.3 percent, primarily driven by commercial excellence, productivity net of inflation, and the favorable impact from the spin-off of the former Resins and Chemicals business.

    Safety and Productivity Solutions sales for the third quarter were up 3percent on an organic basis driven by increased demand for industrial safety products, voice-enabled workflow solutions and Movilizer software, and double-digit organic sales growth at Intelligrated, a leading provider of warehouse automation solutions, which Honeywell acquired in 2016. Segment margin expanded 40 bps to 15.1 percent, primarily driven by productivity net of inflation, partially offset by acquisition amortization and integration costs. Excluding the impact of acquisitions, segment margin expanded 190 bps.

    To participate on the conference call, please dial (866) 548-4713 (domestic) or (719) 457-1036 (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 third quarter 2017 earnings call or provide the conference code HON3Q17. 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 (www.honeywell.com/investor). Investors can hear a replay of the conference call from 1:30 p.m. EDT, October 20, until1:30 p.m. EDT, October 27, by dialing (888) 203-1112 (domestic) or (719)457-0820 (international). The access code is 1952662.

     

    TABLE1: SUMMARY OF FINANCIAL RESULTS &endash; TOTAL HONEYWELL

     

    3Q 2016

    3Q 2017

    Change

    Sales

    9,804

    10,121

    3%

    Organic

     

     

    5%

    Segment Margin

    17.5%

    18.7%

    120 bps

    Operating Income Margin

    15.6%

    17.8%

    220 bps

    Earnings Per Share

     

     

     

    Reported

    $1.60

    $1.75

    9%

    Ex-Divestitures & Additional 3Q17 Restructuring, Normalized for Tax

    $1.51

    $1.75

    16%

    Cash Flow From Operations

    1,554

    1,407

    (9%)

    Free Cash Flow3

    1,280

    1,195

    (7%)

     

    TABLE 2: SUMMARY OF FINANCIAL RESULTS & SEGMENTS

    AEROSPACE

    3Q 2016

    3Q 2017

    Change

    Sales

    3,601

    3,657

    2%

    Organic

     

     

    4%

    Segment Profit

    663

    780

    18%

    Segment Margin

    18.4%

    21.3%

    290 bps

     

     

     

     

       

     

     

    HOME AND BUILDING TECHNOLOGIES

     

     

     

    Sales

    2,701

    2,790

    3%

    Organic

     

     

    2%

    Segment Profit

    441

    458

    4%

    Segment Margin

    16.3%

    16.4%

    10 bps

     

     

     

     


     

     

     

    PERFORMANCE MATERIALS AND TECHNOLOGIES

         

    Sales

    2,329

    2,260

    (3%)

    Organic

     

     

    10%

    Segment Profit

    503

    526

    5%

    Segment Margin

    21.6%

    23.3%

    170 bps

     

     

     

     

     

     

     

     

    SAFETY AND PRODUCTIVITY SOLUTIONS

         

    Sales

    1,173

    1,414

    21%

    Organic

     

     

    3%

    Segment Profit

    172

    213

    24%

    Segment Margin

    14.7%

    15.1%

    40 bps

    Ex-M&A

     

     

    190 bps

    1 Cash Flow From Operations Less Capital Expenditures
    2 Earnings per share variance excludes 2016 divestitures and additional 3Q17 restructuring funding enabled by a lower than planned effective tax rate, normalized for tax at 26 percent
    3 Cash Flow From Operations Less Capital Expenditures
     

    Honeywell (www.honeywell.com/newsroom).

    This release contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of1934. 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, as well as the ability to effect the separations. 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, including with respect to any changes in or abandonment of the proposed separations. 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.

    Q3 2017 Press Release Financials.pdf

    Mark Macaluso

    Investor Relations

    Scott Sayres