Toggle SGML Header (+)


Section 1: 8-K

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

--------------------

 

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT – January 27, 2017

(Date of earliest event reported)

 

 

honeywell international inc.

(Exact name of Registrant as specified in its Charter)

 

DELAWARE

(State or other jurisdiction of incorporation)

1-8974

(Commission File Number)

22-2640650

(I.R.S. Employer Identification Number)

 

 

 

115 TABOR ROAD, MORRIS PLAINS, NEW JERSEY 07950
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (973) 455-2000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

   
 

ITEM 2.02  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On January 27, 2017, Honeywell International Inc. (the “Company”) issued a press release announcing its fourth quarter and full year 2016 earnings, which is furnished herewith as Exhibit 99. The information furnished pursuant to this Item 2.02, including Exhibit 99, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.

 

 

ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS.

 

(d)       Exhibit 99 Honeywell International Inc. Earnings Press Release dated January 27, 2017

 

 

 

 

   
 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date:  January 27, 2017 HONEYWELL INTERNATIONAL INC.
   
 

By: /s/ Jeffrey N. Neuman

Jeffrey N. Neuman

Vice President, Corporate Secretary and

Deputy General Counsel

 

 

 

 

   
(Back To Top)

Section 2: EX-99

Exhibit 99

 

 

Contacts:

 

Media Investor Relations
Robert C. Ferris Mark Macaluso
(973) 455-3388 (973) 455-2222
rob.ferris@honeywell.com mark.macaluso@honeywell.com

 

HONEYWELL REPORTS STRONG FINISH TO 2016

 

  Fourth-Quarter Growth Led By UOP, Solstice®, And Home And Building Technologies
  Strong Fourth-Quarter Segment Margin Expansion Driven By Productivity And Repositioning Benefits
  Fourth-Quarter Free Cash Flow Conversion Of 126%1
  Full-Year Sales of $39.3 Billion, Up 2%, Driven By Acquisitions

 

MORRIS PLAINS, N.J., January 27, 2017 -- Honeywell (NYSE: HON) today announced results for the fourth quarter and full-year of 2016, and reaffirmed 2017 earnings guidance.

 

“We finished 2016 with a strong fourth quarter, achieving 14% earnings growth (excluding divestitures and charges for pension mark-to-market and debt refinancing), 90 basis points of segment margin expansion excluding M&A, and free cash flow conversion of 126%,” said Honeywell Chairman and CEO Dave Cote. “For the full year, we delivered earnings growth of 8% (excluding charges for pension mark-to-market and debt refinancing) and drove strong operational segment margin expansion while making significant investments for the future, including over $250 million in incremental Aerospace OEM incentives (the equivalent of four percentage points of EPS). We funded high-return capital projects through more than $1 billion in capital expenditures, marking the third consecutive year of reinvesting at over 150% of depreciation, and we continued to upgrade our growth profile through acquisitions totaling more than $2.5 billion and divestitures with aggregate annual revenues in excess of $1 billion. To better drive top-line growth and improve our overall decision-making speed, we realigned our business segments and funded more than $250 million in internal restructuring projects. In addition, our debt refinancing will reduce our expected 2017 interest expense by about 8% despite increasing total borrowings by $4 billion, and we returned nearly $4.5 billion to our shareowners through dividends and share repurchases.”

 

Cote concluded, “We delivered outstanding returns again in 2016 with a total shareowner return of 15%, which exceeded the S&P’s total shareowner return by 300 basis points. More importantly, we set the stage for a successful 2017. I am confident in our ability to continue to outperform under Darius Adamczyk. It has been an honor to lead Honeywell for the past 15 years, and I know that our best days are ahead of us.”

 

 

1 Cash Flow From Operations Less Capital Expenditures; Free Cash Flow Conversion = Free Cash Flow / Net Income, Excluding Pension Mark-To-Market Adjustment And Debt Refinancing Charges

 

Throughout this press release, core organic sales growth refers to reported sales growth less the impacts from foreign currency translation, M&A and raw materials pass-through pricing in the former Resins & Chemicals business previously part of Performance Materials and Technologies. 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 tied to volume growth. A reconciliation of core organic sales growth to reported sales growth is provided in the attached financial tables.

 

– MORE –

 

Honeywell Q4’16 Results - 2

 

Darius Adamczyk, President and Chief Operating Officer said, “Our business will benefit in the future from the investments we made in 2016. All of these actions, combined with our focus on enhancing organic growth, and the power of our connected businesses, make us optimistic about 2017 and beyond. We are reaffirming our 2017 earnings guidance today. As I discussed on our December outlook call, Honeywell will continue our focus on driving organic growth and margin expansion through new software opportunities, breakthrough initiatives, and an improved customer experience. We look forward to discussing this more at our annual investor conference on March 1 in New York City.”

 

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

 

Fourth Quarter Performance

 

Honeywell sales for the fourth quarter were flat on a reported basis and down 1% on a core organic basis. The difference between reported and core organic sales is due to the impact of acquisitions, primarily Elster and Intelligrated, partially offset by the spin-off of Resins and Chemicals in Performance Materials and Technologies and the divestiture of the Aerospace government services business. The fourth-quarter and full-year 2016 financial results can be found in Tables 1 and 2 below.

 

Aerospace sales for the fourth quarter were down 5% on a core organic basis. The decrease was primarily driven by lower volumes in Business and General Aviation, higher OEM incentives, program completions in U.S. Space and International Defense, and continued weakness in the commercial helicopter business, as expected. This was partially offset by global gas turbo penetration in passenger vehicles in Transportation Systems. Segment margin declined 130 bps to 20.2%, due to higher OEM incentives, product mix, and lower volumes, partially offset by productivity net of inflation and commercial excellence. Excluding the impact of acquisitions and higher OEM incentives, segment margin contracted by 10 basis points.

 

Home and Building Technologies sales for the fourth quarter were up 2% on a core organic basis driven by continued strength in our Building Solutions and Distribution businesses, double-digit growth in China and India, and new product introductions in Environmental and Energy Solutions. Segment margin declined 30 bps to 16.8%, primarily driven by acquisition amortization and integration costs. Excluding the impact of acquisitions, segment margin expanded 60 basis points driven by benefits from previously-funded restructuring and commercial excellence, partially offset by the unfavorable impact of higher Distribution sales and growth investments.

 

Performance Materials and Technologies sales for the fourth quarter were up 5% on a core organic basis driven by strong catalyst, licensing, and equipment growth in UOP and a continued ramp in Solstice® sales in Advanced Materials. Segment margin expanded 520 bps to 25.4%, driven by productivity net of inflation, the favorable impact from the spin-off of AdvanSix, higher catalyst volumes, and commercial excellence. Excluding the impact of acquisitions, segment margin expanded by 560 bps.

 

Safety and Productivity Solutions sales for the fourth quarter were down 6% on a core organic basis as a result of lower volumes in the Productivity and Safety businesses and supply chain delays. Segment margin contracted 100 bps to 14.3%, primarily driven by acquisition amortization and integration costs. Excluding the impact of acquisitions, segment margin expanded by 100 bps driven by restructuring benefits and commercial excellence, partially offset by lower volumes across the portfolio.

 

- MORE -

 

Honeywell Q4’16 Results - 3

 

To participate in today’s conference call, please dial (800) 263-0877 (domestic) or (719) 457-1036 (international) approximately ten minutes before the 9:30 a.m. EST start. Please mention to the operator that you are dialing in for Honeywell’s fourth quarter 2016 earnings call or provide the conference code HON4Q16. 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. EST, January 27, until 12:30 p.m. EST, February 3, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 2675177.

 

- MORE -

 

Honeywell Q4’16 Results - 4

 

TABLE 1: SUMMARY OF FINANCIAL RESULTS – TOTAL HONEYWELL

 

       
($ Millions, except Earnings Per Share) FY 2015 FY 2016 Change
Sales 38,581 39,302 2%
Core Organic     (1%)
Segment Margin 18.8% 18.3% (50) bps
Ex-M&A     10 bps
Operating Income Margin 17.7% 17.0% (70) bps
Ex-Pension MTM And Debt Refinancing 17.9% 18.0% 10 bps
Earnings Per Share      
Reported $6.04 $6.20 3%
Ex-Pension MTM And Debt Refinancing $6.10 $6.60 8%
Cash Flow From Operations 5,519 5,498 ~Flat
Free Cash Flow2 4,446 4,403 (1%)
       
  4Q 2015 4Q 2016  
Sales 9,982 9,985 ~Flat
Core Organic     (1%)
Segment Margin 18.8% 19.0% 20 bps
Ex-M&A     90 bps
Operating Income Margin 17.4% 16.2% (120) bps
Ex-Pension MTM And Debt Refinancing 18.0% 20.2% 220 bps
Earnings Per Share      
Reported $1.53 $1.34 (12%)
Ex-Pension MTM And Debt Refinancing $1.58 $1.74 10%
Ex-Divestitures, Pension MTM, Debt Refinancing $1.53 $1.74 14%
Cash Flow From Operations 1,963 2,042 4%
Free Cash Flow2 1,575 1,696 8%
       

 

 

 

2 Cash Flow From Operations Less Capital Expenditures

 

- MORE -

 

Honeywell Q4’16 Results - 5

 

TABLE 2: SUMMARY OF FINANCIAL RESULTS – SEGMENTS

 

       
AEROSPACE FY 2015 FY 2016 Change
Sales 15,237 14,751 (3%)
Segment Profit 3,218 2,991 (7%)
Segment Margin 21.1% 20.3% (80) bps
Ex-M&A     (60) bps
       
  4Q 2015 4Q 2016  
Sales 3,983 3,666 (8%)
Segment Profit 856 739 (14%)
Segment Margin 21.5% 20.2% (130) bps
Ex-M&A, Other3     (10) bps
       
       
HOME AND BUILDING TECHNOLOGIES FY 2015 FY 2016 Change
Sales 9,161 10,654 16%
Segment Profit 1,512 1,683 11%
Segment Margin 16.5% 15.8% (70) bps
Ex-M&A     40 bps
       
  4Q 2015 4Q 2016  
Sales 2,475 2,800 13%
Segment Profit 424 470 11%
Segment Margin 17.1% 16.8% (30) bps
Ex-M&A     60 bps
       

     
PERFORMANCE MATERIALS AND TECHNOLOGIES FY 2015 FY 2016 Change
Sales 9,475 9,272 (2%)
Segment Profit 1,990 2,050 3%
Segment Margin 21.0% 22.1% 110 bps
Ex-M&A     150 bps
       
  4Q 2015 4Q 2016  
Sales 2,338 2,228 (5%)
Segment Profit 473 566 20%
Segment Margin 20.2% 25.4% 520 bps
Ex-M&A     560 bps
       
       
SAFETY AND PRODUCTIVITY SOLUTIONS FY 2015 FY 2016 Change
Sales 4,708 4,625 (2%)
Segment Profit 746 680 (9%)
Segment Margin 15.8% 14.7% (110) bps
Ex-M&A     (40) bps
       
  4Q 2015 4Q 2016  
Sales 1,186 1,291 9%
Segment Profit 181 185 2%
Segment Margin 15.3% 14.3% (100) bps
Ex-M&A     100 bps
       

 

 

 

3 Excludes ~$48M Increase In Aero OEM Incentives YoY

 

- MORE -

 

Honeywell Q4’16 Results - 6

 

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.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, 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.

 

#  #  #

 

Honeywell Q4’16 Results - 7

 

Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)

 

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
   2016  2015  2016  2015
             
Product sales  $7,964   $7,960   $31,362   $30,695 
Service sales   2,021    2,022    7,940    7,886 
Net sales   9,985    9,982    39,302    38,581 
                     
Costs, expenses and other                    
Cost of products sold (A)   5,625    5,649    22,170    21,775 
Cost of services sold (A)   1,254    1,268    4,980    4,972 
    6,879    6,917    27,150    26,747 
Selling, general and administrative expenses (A)   1,493    1,332    5,469    5,006 
Other (income) expense   95    (4)   (102)   (68)
Interest and other financial charges   86    84    338    310 
    8,553    8,329    32,855    31,995 
                     
Income before taxes   1,432    1,653    6,447    6,586 
Tax expense   387    450    1,601    1,739 
                     
Net income   1,045    1,203    4,846    4,847 
                     
Less: Net income attributable to the noncontrolling interest   11    9    37    79 
                     
Net income attributable to Honeywell  $1,034   $1,194   $4,809   $4,768 
                     
Earnings per share of common stock - basic  $1.36   $1.55   $6.29   $6.11 
                     
Earnings per share of common stock - assuming dilution  $1.34   $1.53   $6.20   $6.04 
                     
Weighted average number of shares outstanding - basic   762.4    771.8    764.3    779.8 
                     
Weighted average number of shares outstanding - assuming dilution   772.3    780.8    775.3    789.3 

 

(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement (income) expense, and stock compensation expense.

 

Below is a reconciliation of earnings per share to earnings per share, excluding pension mark-to-market expense, debt refinancing expense and earnings attributable to 2016 divestitures. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Earnings per share utilizes weighted average number of shares outstanding, assuming dilution, for the period.

 

   Three Months Ended   Twelve Months Ended 
   December 31,   December 31, 
   2016  2015  2016  2015
Earnings per share of common stock - assuming dilution  $1.34   $1.53   $6.20   $6.04 
Pension mark-to-market expense (1)   0.28    0.05    0.28    0.06 
Debt refinancing expense (2)   0.12    -    0.12    - 
                     
Earnings per share of common stock - assuming dilution, excluding pension mark-to-market expense and debt refinancing expense  $1.74   $1.58   $6.60   $6.10 
                     
Earnings attributable to 2016 Divestitures (3)   -    (0.05)   (0.14)   (0.19)
                     
Earnings per share of common stock - assuming dilution, excluding pension mark-to-market expense, debt refinancing expense, and 2016 divestitures  $1.74   $1.53   $6.46   $5.91 
                     

(1) Pension mark-to-market expense uses a blended tax rate of 21.3% and 36.1% for 2016 and 2015.

 

(2) Debt refinancing expense uses a tax rate of 26.5% for 2016.

 

(3) Earnings attributable to 2016 divestitures use a blended tax rate of 30.8% for three months ended December 31, 2015, 33.9% for 2016 and 33.2% for 2015.

 

Honeywell Q4’16 Results - 8

 

Honeywell International Inc.

Segment Data (Unaudited)

(Dollars in millions)

 

   Three Months Ended   Twelve Months Ended 
   December 31,   December 31, 
Net Sales  2016  2015  2016  2015
                 
Aerospace  $3,666   $3,983   $14,751   $15,237 
                     
Home and Building Technologies   2,800    2,475    10,654    9,161 
                     
Performance Materials and Technologies   2,228    2,338    9,272    9,475 
                     
Safety and Productivity Solutions   1,291    1,186    4,625    4,708 
                     
Corporate   -    -    -    - 
                     
Total  $9,985   $9,982   $39,302   $38,581 
                     
Reconciliation of Segment Profit to Income Before Taxes
                     
   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
Segment Profit  2016  2015  2016  2015
                     
Aerospace  $739   $856   $2,991   $3,218 
                     
Home and Building Technologies   470    424    1,683    1,512 
                     
Performance Materials and Technologies   566    473    2,050    1,990 
                     
Safety and Productivity Solutions   185    181    680    746 
                     
Corporate   (61)   (54)   (218)   (210)
                     
Total segment profit   1,899    1,880    7,186    7,256 
                     
Other income (expense) (A)   (103)   (1)   71    38 
Interest and other financial charges   (86)   (84)   (338)   (310)
Stock compensation expense (B)   (39)   (43)   (184)   (175)
Pension ongoing income (B)   154    131    601    430 
Pension mark-to-market expense (B)   (273)   (67)   (273)   (67)
Other postretirement income (expense) (B)   8    (10)   32    (40)
Repositioning and other charges (B)   (128)   (153)   (648)   (546)
                     
Income before taxes  $1,432   $1,653   $6,447   $6,586 

 

(A) Equity income (loss) of affiliated companies is included in segment profit.

 

(B) Amounts included in cost of products and services sold and selling, general and administrative expenses.

 

Honeywell Q4’16 Results - 9

 

Honeywell International Inc.

Consolidated Balance Sheet (Unaudited)

(Dollars in millions)

 

   December 31,  December 31,
   2016  2015
ASSETS          
Current assets:          
Cash and cash equivalents  $7,843   $5,455 
Accounts, notes and other receivables   8,818    8,075 
Inventories   4,366    4,420 
Investments and other current assets   2,031    2,103 
Total current assets   23,058    20,053 
           
Investments and long-term receivables   587    517 
Property, plant and equipment - net   5,793    5,789 
Goodwill   17,707    15,895 
Other intangible assets - net   4,634    4,577 
Insurance recoveries for asbestos related liabilities   417    426 
Deferred income taxes   347    283 
Other assets   1,603    1,776 
Total assets  $54,146   $49,316 
           
LIABILITIES AND SHAREOWNERS’ EQUITY          
Current liabilities:          
Accounts payable  $5,690   $5,580 
Commercial paper and other short-term borrowings   3,366    5,937 
Current maturities of long-term debt   227    577 
Accrued liabilities   7,048    6,277 
Total current liabilities   16,331    18,371 
           
Long-term debt   12,182    5,554 
Deferred income taxes   486    558 
Postretirement benefit obligations other than pensions   473    526 
Asbestos related liabilities   1,014    1,251 
Other liabilities   4,110    4,348 
Redeemable noncontrolling interest   3    290 
Shareowners’ equity   19,547    18,418 
Total liabilities, redeemable noncontrolling interest and shareowners’ equity  $54,146   $49,316 
 

Honeywell Q4’16 Results - 10

 

Honeywell International Inc.

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in millions)

 

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
   2016  2015  2016  2015
Cash flows from operating activities:                    
Net income  $1,045   $1,203   $4,846   $4,847 
Less: Net income attributable to the noncontrolling interest   11    9    37    79 
Net income attributable to Honeywell    1,034    1,194    4,809    4,768 
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:                    
Depreciation   180    169    726    672 
Amortization   77    53    304    211 
(Gain) loss on sale of non-strategic businesses and assets   (2)   2    (178)   1 
Repositioning and other charges   128    153    695    546 
Net payments for repositioning and other charges   (205)   (208)   (625)   (537)
Pension and other postretirement expense (income)   111    (54)   (360)   (323)
Pension and other postretirement benefit payments   (33)   (38)   (143)   (122)
Stock compensation expense   39    43    184    175 
Deferred income taxes   (70)   31    76    315 
Excess tax benefits from share based payment arrangements   -    (12)   -    (81)
Other   227    (94)   194    57 
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:                    
Accounts, notes and other receivables   (200)   159    (770)   211 
Inventories   215    250    (18)   230 
Other current assets   39    191    117    80 
Accounts payable   272    (4)   254    (17)
Accrued liabilities   230    128    233    (667)
Net cash provided by operating activities   2,042    1,963    5,498    5,519 
                     
Cash flows from investing activities:                    
Expenditures for property, plant and equipment   (346)   (388)   (1,095)   (1,073)
Proceeds from disposals of property, plant and equipment   17    12    21    15 
Increase in investments   (871)   (1,013)   (3,954)   (6,714)
Decrease in investments   1,023    2,537    3,681    6,587 
Cash paid for acquisitions, net of cash acquired   (5)   (5,043)   (2,573)   (5,228)
Proceeds from sales of businesses, net of fees paid   (8)   (2)   296    1 
Other   124    (33)   282    (102)
Net cash used for investing activities   (66)   (3,930)   (3,342)   (6,514)
                     
Cash flows from financing activities:                    
Net increase (decrease) in commercial paper and other short-term borrowings   (2,039)   2,254    (2,464)   4,265 
Proceeds from issuance of common stock   23    36    409    186 
Proceeds from issuance of long-term debt   4,735    12    9,245    60 
Payments of long-term debt   (2,361)   (732)   (2,839)   (880)
Excess tax benefits from share based payment arrangements   -    12    -    81 
Repurchases of common stock   (213)   (163)   (2,079)   (1,884)
Cash dividends paid   (505)   (465)   (1,915)   (1,726)
Payments to purchase the noncontrolling interest   -    -    (238)   - 
AdvanSix pre-separation funding   -    -    269    - 
AdvanSix pre-spin borrowing   -    -    38    - 
AdvanSix cash at spin-off   -    -    (38)   - 
Other   (2)   (4)   (42)   (65)
Net cash provided by (used for) financing activities   (362)   950    346    37 
                     
Effect of foreign exchange rate changes on cash and cash equivalents   (202)   (91)   (114)   (546)
Net increase (decrease) in cash and cash equivalents   1,412    (1,108)   2,388    (1,504)
Cash and cash equivalents at beginning of period   6,431    6,563    5,455    6,959 
Cash and cash equivalents at end of period  $7,843   $5,455   $7,843   $5,455 
 

Honeywell Q4’16 Results - 11

 

Honeywell International Inc.

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow and Calculation of Free Cash Flow Conversion (Unaudited)

(Dollars in millions)

 

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
   2016  2015  2016  2015
                     
Cash provided by operating activities  $2,042   $1,963   $5,498   $5,519 
Expenditures for property, plant and equipment   (346)   (388)   (1,095)   (1,073)
Free cash flow  $1,696   $1,575   $4,403   $4,446 
                     
Net income, attributable to Honeywell  $1,034   $1,194   $4,809   $4,768 
Pension mark-to-market expense, net of tax (A)   215    43    215    43 
Debt refinancing expense (B)   93    -    93    - 
Net income, attributable to Honeywell, excluding pension mark-to-market expense and debt refinancing expense  $1,342   $1,237   $5,117   $4,811 
                     
Cash provided by operating activities  $2,042   $1,963   $5,498   $5,519 
÷ Net income attributable to Honeywell  $1,034   $1,194   $4,809   $4,768 
Operating cash flow conversion   197%   164%   114%   116%
                     
Free cash flow  $1,696   $1,575   $4,403   $4,446 
Net income, attributable to Honeywell, excluding pension mark-to-market expense and debt refinancing expense  $1,342   $1,237   $5,117   $4,811 
Free cash flow conversion   126%   127%   86%   92%

 

(A) Pension mark-to-market expense uses a blended tax rate of 21.3% and 36.1% for 2016 and 2015.

(B) Debt refinancing expense uses a tax rate of 26.5% for 2016.

 

We define free cash flow as cash provided by operating activities less cash expenditures for property, plant and equipment.

 

We believe that this metric is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock or repay debt obligations prior to their maturities. This metric can also be used to evaluate our ability to generate cash flow from business operations and the impact that this cash flow has on our liquidity.

 

Honeywell Q4’16 Results - 12

 

Honeywell International Inc.

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins (Unaudited)

(Dollars in millions)

 

   Three Months Ended  Twelve Months Ended
   December 31,  December 31,
   2016  2015  2016  2015
                     
Segment Profit  $1,899   $1,880   $7,186   $7,256 
                     
Stock compensation expense (A)   (39)   (43)   (184)   (175)
Repositioning and other (A, B)   (136)   (158)   (679)   (576)
Pension ongoing income (A)   154    131    601    430 
Pension mark-to-market expense (A)   (273)   (67)   (273)   (67)
Other postretirement income (expense) (A)   8    (10)   32    (40)
Operating Income  $1,613   $1,733   $6,683   $6,828 
Pension mark-to-market adjustment (A)   (273)   (67)   (273)   (67)
Debt refinancing expense   (126)   -    (126)   - 
Operating Income excluding pension mark-to-market adjustment and debt refinancing expense  $2,012   $1,800   $7,082   $6,895 
                     
Segment Profit  $1,899   $1,880   $7,186   $7,256 
÷ Sales   9,985    9,982    39,302    38,581 
Segment Profit Margin %   19.0%    18.8%     18.3%    18.8% 
                     
Operating Income  $1,613   $1,733   $6,683   $6,828 
÷ Sales   9,985    9,982    39,302    38,581 
Operating Income Margin %   16.2%    17.4%    17.0%    17.7% 
                     
Operating Income excluding pension mark-to-market adjustment and debt refinancing expense  $2,012   $1,800   $7,082   $6,895 
÷ Sales   9,985    9,982    39,302    38,581 
Operating Income excluding pension mark-to-market adjustment and debt refinancing expense %   20.2%    18.0%    18.0%    17.9% 

 

(A) Included in cost of products and services sold and selling, general and administrative expenses.

(B) Includes repositioning, asbestos, environmental expenses and equity income adjustment.

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Honeywell Q4’16 Results - 13

 

Honeywell International Inc.

Calculation of Segment Profit Margin Excluding Mergers and Acqusitions (Unaudited)

(Dollars in millions)

 

   Three Months Ended
December 31
2016
Honeywell     
Segment Profit excluding mergers and acquisitions  $1,833 
÷ Sales excluding mergers and acquisitions  $9,284 
Segment Profit Margin excluding mergers and acquisitions %   19.7% 
      
Aerospace (1)     
Segment Profit excluding mergers and acquisitions and other  $786 
÷ Sales excluding mergers and acquisitions and other  $3,677 
Segment Profit Margin excluding mergers and acquisitions and other %   21.4% 
      
Home and Building Technologies     
Segment Profit excluding mergers and acquisitions  $436 
÷ Sales excluding mergers and acquisitions  $2,463 
Segment Profit Margin excluding mergers and acquisitions %   17.7% 
      
Performance Materials and Technologies     
Segment Profit excluding mergers and acquisitions  $540 
÷ Sales excluding mergers and acquisitions  $2,093 
Segment Profit Margin excluding mergers and acquisitions %   25.8% 
      
Safety and Productivity Solutions     
Segment Profit excluding mergers and acquisitions  $180 
÷ Sales excluding mergers and acquisitions  $1,105 
Segment Profit Margin excluding mergers and acquisitions %   16.3% 

 

(1) Other includes year-over-year incremental OEM incentives.

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Honeywell Q4’16 Results - 14

 

Honeywell International Inc.

Calculation of Segment Profit Margin Excluding Mergers and Acqusitions (Unaudited)

(Dollars in millions)

 

   Twelve Months Ended
December 31
2016
Honeywell     
Segment Profit excluding mergers and acquisitions  $6,980 
÷ Sales excluding mergers and acquisitions  $37,023 
Segment Profit Margin excluding mergers and acquisitions %   18.9% 
      
Aerospace     
Segment Profit excluding mergers and acquisitions  $2,992 
÷ Sales excluding mergers and acquisitions  $14,590 
Segment Profit Margin excluding mergers and acquisitions %   20.5% 
      
Home and Building Technologies     
Segment Profit excluding mergers and acquisitions  $1,588 
÷ Sales excluding mergers and acquisitions  $9,374 
Segment Profit Margin excluding mergers and acquisitions %   16.9% 
      
Performance Materials and Technologies     
Segment Profit excluding mergers and acquisitions  $1,959 
÷ Sales excluding mergers and acquisitions  $8,721 
Segment Profit Margin excluding mergers and acquisitions %   22.5% 
      
Safety and Productivity Solutions     
Segment Profit excluding mergers and acquisitions  $670 
÷ Sales excluding mergers and acquisitions  $4,338 
Segment Profit Margin excluding mergers and acquisitions %   15.4% 

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Honeywell Q4’16 Results - 15

 

Honeywell International Inc.

Reconciliation of Core Organic Sales Growth (Unaudited)

 

   Three Months Ended
December 31,
  Twelve Months Ended
December 31,
   2016  2016
Honeywell          
Reported sales growth   -    2% 
Less: Foreign currency translation, acquisitions, divestitures and other   1%    3% 
Less: Raw materials pricing in R&C   -    - 
Core organic sales growth   (1%)    (1%) 
           
Performance Materials and Technologies          
Reported sales growth   (5%)    (2%) 
Less: Foreign currency translation, acquisitions, divestitures and other   (10%)    1% 
Less: Raw materials pricing in R&C   -    (1%) 
Core organic sales growth   5%    (2%) 

 

Throughout this press release, core organic sales growth refers to reported sales growth less the impacts from foreign currency translation, M&A and raw materials pass-through pricing in the former Resins & Chemicals business previously part of Performance Materials and Technologies. 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 tied to volume growth.

 

We believe core organic sales growth is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 
(Back To Top)