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    Honeywell Overdelivers on All Guided Metrics in the First Quarter; Raises Full-Year Sales and Adjusted Eps Guidance

    • Delivered Double-Digit Sales Growth in Safety and Productivity Solutions; Returned to Sales Growth in Honeywell Building Technologies
    • Expanded Segment Margin in Aerospace, Honeywell Building Technologies, and Safety and Productivity Solutions
    • Delivered Earnings Per Share of $2.03, Adjusted EPS1 of $1.92, Exceeding High End of Guidance Range by 9 Cents
    • Deployed $3.0 Billion in Capital to Acquisitions, Share Repurchases, Dividends, and Capital Expenditures

    CHARLOTTE, N.C., April 23, 2021 -- Honeywell (NYSE: HON) today announced results for the first quarter that exceeded the company's guidance. The company also raised its full-year sales guidance and raised the midpoint of its adjusted earnings per share and cash flow guidance.

    “Honeywell delivered a strong start to 2021 with first-quarter results that exceeded our expectations. We are seeing promising signs of a rapid recovery in some of our markets, and we are poised to capitalize on new business opportunities as they arise,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “We reported first-quarter sales of $8.5 billion, flat year over year, or a decline of 2% on an organic basis. Our first-quarter sales exceeded the high end of our guidance range by approximately $250 million driven by continued double-digit growth in our Warehouse and Workflow Solutions and personal protective equipment businesses as well as demand for our building products and services, advanced materials, and connected software. Operating margin contracted 220 basis points for the quarter to 17.8%, with segment margin contracting 80 basis points to 21.0%, which exceeded the high end of our guidance by 10 basis points. We delivered segment margin expansion in Aerospace, Honeywell Building Technologies, and Safety and Productivity Solutions for the second consecutive quarter, supported by our streamlined cost base following the cost actions we took in 2020. We delivered earnings per share of $2.03, with adjusted earnings per share1 of $1.92, down 13% year over year but 9 cents above the high end of the previously provided guidance range. We continued to take advantage of our strong balance sheet, and deployed capital to high-return opportunities in the quarter, including closing our acquisition of quality management software leader Sparta Systems and announcing the acquisition of a majority stake in Fiplex, a leading provider of in-building communications systems. In addition, we repurchased $0.8 billion in Honeywell shares and made five strategic investments through Honeywell Ventures.”

    Adamczyk continued, “As we look to the rest of 2021 and beyond, we are well positioned for the recovery to come. Our new offerings in growing markets like life sciences are gaining traction and the industries that were hardest hit by the pandemic are expected to improve throughout the year. We have a robust portfolio of technologies that help our customers meet their environmental and social goals. In fact, about half of Honeywell’s new product introduction research and development investment is directed toward products that improve environmental and social outcomes for customers. Earlier this month, we pledged to become carbon neutral in our operations and facilities by 2035, building on our commitment to reduce our carbon footprint in 2024 by 10% from 2018 levels. Our confidence in this commitment is underpinned by our history of setting aggressive environmental targets and beating them, which has enabled us to reduce our greenhouse gas intensity by more than 90% since 2004. We look forward to continuing to deliver outstanding results for our shareowners, customers, and employees."

    As a result of the company’s first-quarter performance and management’s outlook for the remainder of the year, Honeywell raised its full-year sales guidance and raised the midpoint of its adjusted earnings per share and cash flow guidance. Full-year organic sales growth is now expected to be in the range of 3% to 5%. Adjusted earnings per share2 is expected to be $7.75 to $8.00, up 15 cents from the low end of the prior guidance range. Operating cash flow is now expected to be in the range of $5.8 billion to $6.1 billion and free cash flow is now expected to be in the range of $5.2 billion to $5.5 billion. A summary of the company’s full-year guidance changes can be found in Table 1.

     

    First-Quarter Performance

    Honeywell sales for the first quarter were flat on a reported basis and down 2% on an organic basis. The first-quarter financial results can be found in Tables 2 and 3.

    Aerospace sales for the first quarter were down 22% on an organic basis driven by lower commercial aftermarket demand due to the ongoing impact of reduced flight hours, softness in commercial original equipment, and lower volumes in international defense, partially offset by growth in U.S. defense and space. Segment margin expanded 110 basis points to 29.0%. Margin performance was due to a number of factors, including commercial excellence, cost management, and a one-time benefit.

    Honeywell Building Technologies sales for the first quarter were up 2% on an organic basis driven by demand for Products and growth in Building Solutions services. Orders were up mid-single digits year over year, driven by strong bookings for services and security products. Segment margin expanded 200 basis points to 22.5% driven by commercial excellence and productivity, net of inflation.

    Performance Materials and Technologies sales for the first quarter were down 6% on an organic basis driven by continued delays in Process Solutions automation projects, lower volumes in smart energy, and lower demand for licensing and catalysts in UOP, partially offset by continued growth in Advanced Materials driven by strong demand for fluorine products and specialty materials. Segment margin contracted 290 basis points to 18.5% driven by the impact of sales mix, partially offset by commercial excellence.

    Safety and Productivity Solutions sales for the first quarter were up 47% on an organic basis driven by double-digit Warehouse and Workflow Solutions, personal protective equipment, and Productivity Solutions and Services growth. Orders were up double digits year over year for the sixth straight quarter, led by continued demand for personal protective equipment and Productivity Solutions and Services, and backlog remained above $4 billion for the third quarter in a row. Segment margin expanded 180 basis points to 14.3% driven by the impact of higher sales volumes.

     

    Conference Call Details

    Honeywell will discuss its first-quarter results and updated full-year guidance during an investor conference call starting at 8:30 a.m. Eastern Daylight Time today. To participate on the conference call, please dial (800) 263-0877 (domestic) or (646) 828-8143 (international) approximately ten minutes before the 8:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s first-quarter 2021 earnings call or provide the conference code HON1Q21. 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 12:30 p.m. EDT April 23 until 12:30 p.m. EDT April 30 by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 8053208.

     

     

    TABLE 1: FULL-YEAR 2021 GUIDANCE4

     

    Previous Guidance

    Current Guidance

    Sales

    $33.4B - $34.4B

    $34.0B - $34.8B

    Organic Growth

    1% - 4%

    3% - 5%

    Segment Margin

    20.7% - 21.1%

    20.7% - 21.1%

    Expansion

    Up 30 - 70 bps

    Up 30 - 70 bps

    Adjusted Earnings Per Share2

    $7.60 - $8.00

    $7.75 - $8.00

        Adjusted Earnings Growth3

    7% - 13%

    9% - 13%

    Operating Cash Flow

    $5.7B - $6.1B

    $5.8B - $6.1B

    Free Cash Flow

    $5.1B - $5.5B

    $5.2B - $5.5B

     

    TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS

     

    1Q 2021

    1Q 2020

    Change

    Sales  

    8,454

    8,463

    —%

    Organic Growth

     

     

    (2%)

    Segment Margin

    21.0%

    21.8%

    -80 bps

    Operating Income Margin

    17.8%

    20.0%

    -220 bps

    Earnings Per Share

    $2.03

    $2.21

    (8%)

    Adjusted Earnings Per Share1

    $1.92

    $2.21

    (13%)

    Cash Flow from Operations

    978

    939

    4%

    Operating Cash Flow Conversion

    69%

    59%

    10%

    Free Cash Flow

    757

    800

    (5%)

    Adjusted Free Cash Flow Conversion5

    56%

    51%

    5%

     

    TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS

    AEROSPACE

    1Q 2021

    1Q 2020

    Change

    Sales

    2,632

    3,361

    (22%)

    Organic Growth

     

     

    (22%)

    Segment Profit

    762

    937

    (19%)

    Segment Margin

    29.0%

    27.9%

    110 bps

    HONEYWELL BUILDING TECHNOLOGIES

     

     

     

    Sales

    1,358

    1,281

    6%

    Organic Growth

     

     

    2%

    Segment Profit

    305

    262

    16%

    Segment Margin

    22.5%

    20.5%

    200 bps

    PERFORMANCE MATERIALS AND TECHNOLOGIES

     

     

     

    Sales

    2,346

    2,397

    (2%)

    Organic Growth

     

     

    (6%)

    Segment Profit

    434

    512

    (15%)

    Segment Margin

    18.5%

    21.4%

    -290 bps

    SAFETY AND PRODUCTIVITY SOLUTIONS

     

     

     

    Sales

    2,118

    1,424

    49%

    Organic Growth

     

     

    47%

    Segment Profit

    303

    178

    70%

    Segment Margin

    14.3%

    12.5%

    180 bps


    2
    Adjusted EPS guidance excludes the $0.11 impact of the sale of the retail footwear business and any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market1Adjusted EPS and adjusted EPS V% exclude the $0.11 impact of the sale of the retail footwear business

     

    3Adjusted EPS V% guidance excludes the $0.11 impact of the sale of the retail footwear business, any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market, 4Q20 pension mark-to-market, 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions, and non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett Motion Inc. (Garrett), net of proceeds from the settlement of related hedging transactions

    4As discussed in the notes to the attached reconciliations, we do not provide guidance for margin or EPS on a GAAP basis

    5Adjusted free cash flow conversion excludes the gain on sale of the retail footwear business

    View here Q1 2021 Financials

     

    Honeywell (www.honeywell.com) is a Fortune 100 technology company that delivers industry specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help everything from aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit 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 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, technological, and COVID-19 public health factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, and other developments, including the potential impact of the COVID-19 pandemic, and business decisions may differ from those envisaged by such forward-looking statements. Any forward-looking plans described herein are not final and may be modified or abandoned at any time. 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.

     

    This release contains financial measures presented on a non-GAAP basis. Honeywell’s non-GAAP financial measures used in this release are as follows: segment profit, on an overall Honeywell basis, a measure by which we assess operating performance, which we define as operating income adjusted for certain items as presented in the Appendix; segment margin, on an overall Honeywell basis, which we define as segment profit divided by sales; organic sales growth, which we define as sales growth less the impacts from foreign currency translation, and acquisitions and divestitures for the first 12 months following transaction date; free cash flow, which we define as cash flow from operations less capital expenditures plus anticipated cash receipts from Garrett, if and as noted in the release; adjusted free cash flow conversion, which we define as free cash flow divided by net income attributable to Honeywell, excluding the gain on sale of the Retail footwear business, if and as noted in the release; and adjusted earnings per share, which we adjust to exclude pension mark-to-market, the favorable resolution of a foreign tax matter related to the spin-off transactions, non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett, net of proceeds from settlement of related hedging transactions, and the gain on sale of the Retail footwear business, if and as noted in the release. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Refer to the Appendix attached to this release for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.   

    Nina Krauss
    Media Relations
    Mark Bendza
    Investor Relations