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    Honeywell Beats Guidance and Delivers Outstanding Second-Quarter Results Driven by Sales and Profit Growth; Raises Midpoint of Adjusted EPS Guidance by 15 Cents

    • Sales Growth and Margin Expansion in All Four Segments; Orders up Over 20%
    • Reported Sales up 18%, Organic Sales up 15%
    • Operating Margin up 450 Basis Points to 18.1%; Segment Margin up 190 Basis Points to 20.4%
    • Earnings Per Share of $2.04, Adjusted Earnings Per Share1 of $2.02, up 60%
    • Generated $1.3 Billion in Operating Cash Flow with Conversion of 89%, $1.5 Billion of Free Cash Flow with Adjusted Conversion2 of 103%

    CHARLOTTE, N.C., July 23, 2021 -- Honeywell (NASDAQ: HON) today announced outstanding results for the second quarter that were driven by sales and segment margin growth in all four businesses. The company also raised its full-year sales, segment margin, adjusted earnings per share, and cash flow guidance.

    “Building on our first-quarter momentum, we executed extremely well in the second quarter. Our results were driven by top-line growth and margin expansion in all four segments. Organic sales grew 15%, led by double-digit growth in Performance Materials and Technologies, Honeywell Building Technologies, and Safety and Productivity Solutions,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “Our increased volumes, streamlined cost base, and relentless focus on execution enabled us to expand segment margin by 190 basis points to 20.4%, exceeding the high end of our guidance by 10 basis points. As a result, we delivered adjusted earnings per share1 of $2.02, up 60% year over year and above the high end of our second-quarter guidance range. Our cash performance in the second quarter was strong, as we generated $1.5 billion of free cash flow with adjusted conversion2 of 103%, all while repurchasing $1.0 billion in Honeywell shares.”

     Adamczyk continued, “Our strong performance in the second quarter took place in a recovering but challenging global environment. We are especially pleased to see a turnaround in several of our key end markets that were hardest hit by the pandemic, with commercial aerospace aftermarket and the UOP business returning to growth in the quarter. We are well positioned to capitalize on improving conditions as they unfold around the world and to execute on near-term growth opportunities across our portfolio, including in the warehouse automation, productivity, building products, and advanced materials markets."

    As a result of the company’s second-quarter performance and management’s outlook for the remainder of the year, Honeywell raised its full-year sales, adjusted earnings per share, and cash flow guidance and raised the midpoint of its segment margin guidance. Full-year sales are now expected to be in the range of $34.6 billion to $35.2 billion with organic sales growth in the range of 4% to 6%. Segment margin is expected to be in the range of 20.8% - 21.1%. Adjusted earnings per share3 is expected to be $7.95 to $8.10, up 10 cents from the high end of the prior guidance range. Operating cash flow is now expected to be in the range of $5.9 billion to $6.2 billion and free cash flow is now expected to be in the range of $5.3 billion to $5.6 billion. A summary of the company’s full-year guidance changes can be found in Table 1.

     

    Second-Quarter Performance

    Honeywell sales for the second quarter were up 18% on a reported basis and up 15% on an organic basis. The second-quarter financial results can be found in Tables 2 and 3.

    Aerospace sales for the second quarter were up 7% on an organic basis driven by a strong recovery in business and general aviation aftermarket demand as flight hours returned to 2019 levels, partially offset by lower defense volumes and a more gradual recovery in commercial original equipment build rates. Air transport aftermarket returned to growth as increased flight hours drove aftermarket demand. Segment margin expanded 490 basis points to 25.7%.

    Honeywell Building Technologies sales for the second quarter were up 13% on an organic basis driven by broad-based global strength across the portfolio. Orders were up over 35% year over year, driven by strong bookings for building products and solutions. The buildings solutions services backlog was up over 30% year over year driven by strong bookings in North America and Asia. In addition, demand continued for our portfolio of healthy buildings solutions, with approximately $150 million of orders in the first half. Segment margin expanded 120 basis points to 22.4%.

    Performance Materials and Technologies sales for the second quarter were up 10% on an organic basis driven by demand for process solutions products and thermal solutions, higher equipment volumes, licensing, and petrochemical catalyst shipments in UOP, and continued strong growth across advanced materials. Orders were up 20% year over year driven by robust demand for services, thermal solutions, catalysts, and fluorine products. Segment margin expanded 190 basis points to 20.8%.

    Safety and Productivity Solutions sales for the second quarter were up 35% on an organic basis driven by another quarter of double-digit growth in the warehouse and workflow solutions, personal protective equipment, and productivity solutions and services businesses. In addition, short-cycle demand accelerated in the gas analysis and advanced sensing businesses, which both grew by high single-digits sequentially from the first quarter. Orders were up triple digits year over year in productivity solutions and services, giving us confidence in continued growth for that business. Segment margin expanded 20 basis points to 14.0%.

     

    Conference Call Details

    Honeywell will discuss its second-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 (866) 548-4713 (domestic) or (323) 794-2093 (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 second-quarter 2021 earnings call or provide the conference code HON2Q21. 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 July 23 until 12:30 p.m. EDT July 30 by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 7208292.

     

    TABLE 1: FULL-YEAR 2021 GUIDANCE5

     

    Previous Guidance

    Current Guidance

    Sales

    $34.0B - $34.8B

    $34.6B - $35.2B

    Organic Growth

    3% - 5%

    4% - 6%

    Segment Margin

    20.7% - 21.1%

    20.8% - 21.1%

    Expansion

    Up 30 - 70 bps

    Up 40 - 70 bps

    Adjusted Earnings Per Share3

    $7.75 - $8.00

    $7.95 - $8.10

        Adjusted Earnings Growth4

    9% - 13%

    12% - 14%

    Operating Cash Flow

    $5.8B - $6.1B

    $5.9B - $6.2B

    Free Cash Flow

    $5.2B - $5.5B

    $5.3B - $5.6B

    TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS

     

    2Q 2021

    2Q 2020

    Change

    Sales

    8,808

    7,477

    18%

    Organic Growth

     

     

    15%

    Segment Margin

    20.4%

    18.5%

    190 bps

    Operating Income Margin

    18.1%

    13.6%

    450 bps

    Earnings Per Share

    $2.04

    $1.53

    33%

    Adjusted Earnings Per Share1

    $2.02

    $1.26

    60%

    Cash Flow from Operations

    1,278

    1,480

    (14%)

    Operating Cash Flow Conversion

    89%

    137%

    (48%)

    Free Cash Flow

    1,468

    1,253

    17%

    Adjusted Free Cash Flow Conversion2

    103%

    140%

    (37%)

    TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS

    AEROSPACE

    2Q 2021

    2Q 2020

    Change

    Sales

    2,766

    2,543

    9%

    Organic Growth

     

     

    7%

    Segment Profit

    710

    528

    34%

    Segment Margin

    25.7%

    20.8%

    490 bps

    HONEYWELL BUILDING TECHNOLOGIES

     

     

     

    Sales

    1,407

    1,177

    20%

    Organic Growth

     

     

    13%

    Segment Profit

    315

    250

    26%

    Segment Margin

    22.4%

    21.2%

    120 bps

    PERFORMANCE MATERIALS AND TECHNOLOGIES

     

     

     

    Sales

    2,552

    2,218

    15%

    Organic Growth

     

     

    10%

    Segment Profit

    530

    419

    26%

    Segment Margin

    20.8%

    18.9%

    190 bps

    SAFETY AND PRODUCTIVITY SOLUTIONS

     

     

     

    Sales

    2,083

    1,539

    35%

    Organic Growth

     

     

    35%

    Segment Profit

    292

    213

    37%

    Segment Margin

    14.0%

    13.8%

    20 bps

    Q2 Financial Release Tables 

     

    1Adjusted EPS and adjusted EPS V% exclude 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions, changes in fair value for Garrett Motion Inc. (Garrett) equity securities, and a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021

    2Adjusted free cash flow conversion is free cash flow (cash flow from operations less capital expenditures plus cash receipts from Garrett) divided by adjusted net income attributable to Honeywell. Adjusted net income attributable to Honeywell excludes changes in fair value for Garrett equity securities, a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, and the 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions from net income attributable to Honeywell

    3Adjusted EPS guidance excludes the $0.11 impact of the sale of the retail footwear business, a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, and any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market and changes in fair value for Garrett equity securities

    4Adjusted EPS V% guidance excludes the $0.11 impact of the sale of the retail footwear business, a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, 4Q20 pension mark-to-market, 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions, non-cash charges associated with the 2020 reduction in value of reimbursement receivables due from Garrett, net of proceeds from the settlement of related hedging transactions, and any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market or changes in fair value for Garrett equity securities

    5As discussed in the notes to the attached reconciliations, we do not provide guidance for margin or EPS on a GAAP basis.

     

    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 the transaction date; free cash flow, which we define as cash flow from operations less capital expenditures plus 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 adjusted net income attributable to Honeywell; adjusted net income attributable to Honeywell, which we define as net income attributable to Honeywell which we adjust to exclude changes in fair value for Garrett equity securities, a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, and the 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions, 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, the gain on sale of the retail footwear business, and changes in fair value for Garrett equity securities, 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. Certain metrics presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. 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
    Reena Vaidya
    Investor Relations