Exhibit 99

 

 

News Release

 

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 FULL-YEAR SALES UP 3% TO $40.3 BILLION;
EPS (EX-PENSION MARK-TO-MARKET) UP 12% TO $5.56;
REPORTED EPS OF $5.33

 

●	4Q14 Organic Sales Growth Of 4%; EPS (Ex-Pension MTM) Of $1.43, Up 15%

 

●	Aerospace OEM Incentives ($0.14 Expense) – Position Aerospace Well For Growth And Margin Expansion Over Five-Year Plan

 

●	Completed Sale Of Remaining BEAV Shares In 4Q14, $0.14 Gain

 

●	Reaffirming 2015 EPS Guidance (Ex-Pension MTM) Of $5.95 - $6.15, Up 7-11%

 

MORRIS TOWNSHIP, N.J., January 23, 2015 -- Honeywell (NYSE: HON) today announced its results for the fourth quarter and full-year 2014:

 

Total Honeywell
($ Millions, except Earnings Per Share)		FY 2013		FY 2014		Change
Sales (1)		39,055		40,306		3%
Organic Growth						3%
Segment Margin (2)		16.3%		16.6%		30 bps
Operating Income Margin (Ex-Pension MTM)		14.2%		15.1%		90 bps
Earnings Per Share (Reported)		$4.92		$5.33		8%
Earnings Per Share (Ex-Pension MTM)		$4.97		$5.56		12%
Cash Flow from Operations		4,335		5,024		16%
Free Cash Flow (3)		3,388		3,930		16%
		4Q 2013		4Q 2014		Change
Sales (1)		10,387		10,266		(1%)
Organic Growth						4%
Segment Margin (2)		16.1%		15.9%		(20) bps
Operating Income Margin (Ex-Pension MTM)		13.4%		14.5%		110 bps
Earnings Per Share (Reported)		$1.19		$1.20		1%
Earnings Per Share (Ex-Pension MTM)		$1.24		$1.43		15%
Cash Flow from Operations		1,668		1,762		6%
Free Cash Flow (3)		1,268		1,348		6%

1.

Sales Ex-4Q14 $184M OEM Incentives Up 4% in FY14 and 1% in 4Q14

2.

Segment Margin Ex-4Q14 $184M OEM Incentives Up 70 bps in FY14 and 130 bps in 4Q14

3.

Cash Flow from Operations Less Capital Expenditures

 

- MORE -

Q4’14 Results - 2

 

“In the fourth quarter, Honeywell delivered 4% organic sales growth and achieved 15% earnings per share growth (excluding the pension mark-to-market adjustment), exceeding the high end of our guidance range and capping off another year of terrific performance in 2014,” said Honeywell Chairman and CEO Dave Cote. “Strong execution in our businesses and continued momentum across the portfolio throughout the year helped us to deliver on our aggressive 2014 sales, margin, and EPS targets. We achieved significant margin expansion in 2014 with benefits from our key process and productivity initiatives, and increased organic growth by continuing to ‘seed plant’ with investments in new products and technologies, high ROI capex, and expansion of our global footprint. Consistent with what we guided in December, we sold the remaining BEAV shares in the fourth quarter and proactively funded Aerospace OEM incentives related to new platform wins. We remain cautious in our planning with regard to the global economy, but are confident that our balanced portfolio mix of short- and long-cycle businesses is well-positioned to deliver on our 2015 commitments that include higher organic sales, continued margin expansion, and double-digit earnings growth. Honeywell’s five year plan is on target and we expect that improving end markets, new product introductions, penetration in high-growth regions, and benefits from our HOS Gold initiative will drive both growth and productivity throughout the company.”

 

The company also reaffirms its full-year 2015 guidance:

 

Full-Year Guidance

 

		2015		Change
		Current Guidance		vs. 2014
Sales		$40.5 - $41.1B		1% - 2%
Organic Growth				~4%
Segment Margin		17.6% - 17.9%		100 - 130 bps (2)
Operating Income Margin (Ex-Pension MTM)		16.7% - 17.0%		160 - 190 bps (2)
Earnings Per Share (Ex-Pension MTM)		$5.95 - $6.15		7% - 11%
Free Cash Flow (1)		$4.2 - $4.3B		8% - 10%

	1.	Cash Flow from Operations Less Capital Expenditures
	2.	Segment Margin ex-4Q14 $184M OEM Incentives Up 60 - 90 bps; Operating Margin ex-4Q14 OEM Incentives Up 120 - 150 bps

 

Segment Performance

 

Aerospace
($ Millions)		FY 2013		FY 2014		% Change
Sales		15,735		15,598		(1%)
Segment Profit		2,870		2,915		2%
Segment Margin		18.2%		18.7%		50 bps
($ Millions)		4Q 2013		4Q 2014		% Change
Sales		4,077		3,842		(6%)
Segment Profit		769		663		(14%)
Segment Margin		18.9%		17.3%		(160) bps

 

- MORE -

Q4’14 Results - 3

 

●

Sales for the fourth quarter were down (6%) on a reported basis driven by the unfavorable impact of OEM incentives, the Friction Materials divestiture, and the unfavorable impact of foreign exchange. Excluding these items, sales in the fourth quarter were up 4% on an organic basis. Commercial OE sales were up 7% on an organic basis, reflecting an increase in Business and General Aviation (BGA) engine shipments. Commercial Aftermarket sales were up 4% on an organic basis, driven by continued Air Transport and Regional (ATR) spares growth, and higher Repair & Overhaul activities. Defense & Space sales were up 2% on an organic basis as a result of strong international growth. Transportation Systems sales were up 4% on an organic basis, primarily driven by new platform launches and higher turbo gas penetration globally.

 

●

Segment profit for the fourth quarter was down (14%), and segment margins contracted (160) bps to 17.3%, driven by the unfavorable impact of fourth quarter OEM incentives, partially offset by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture. Excluding the impact of the $184 million fourth quarter 2014 OEM incentives, segment profit was up 10%, and segment margins expanded 210 basis points.

 

Automation and Control Solutions
($ Millions)		FY 2013		FY 2014		% Change
Sales		13,465		14,487		8%
Segment Profit		1,983		2,200		11%
Segment Margin		14.7%		15.2%		50 bps
($ Millions)		4Q 2013		4Q 2014		% Change
Sales		3,741		3,847		3%
Segment Profit		570		613		8%
Segment Margin		15.2%		15.9%		70 bps

●

Sales for the fourth quarter were up 3% reported, or 6% on an organic basis, primarily driven by strong organic growth across the portfolio, partially offset by the unfavorable impact of foreign exchange. Energy, Safety, and Security (ESS) sales increased, particularly in Scanning & Mobility, Fire and Industrial Safety, and Security; and Building Solutions & Distribution (BSD) saw continued strength in the Americas Distribution business as well as acceleration in Building Solutions, most notably in the Americas region.

 

●	Segment profit for the fourth quarter was up 8% and segment margins expanded 70 bps to 15.9% driven primarily by higher volumes, M&A integration execution, and productivity net of inflation, partially offset by continued investments for growth.

 

●

On December 18, 2014, we signed a definitive agreement to acquire Datamax-O’Neil, a global manufacturer of fixed and mobile printers used in a variety of retail, warehouse and distribution, and health care applications, for an aggregate purchase price of approximately $185 million. The transaction is expected to close in the first quarter of 2015 subject to customary closing conditions, including regulatory review.

 

- MORE -

Q4’14 Results - 4

 

Performance Materials and Technologies
($ Millions)		FY 2013		FY 2014		% Change
Sales		9,855		10,221		4%
Segment Profit		1,725		1,817		5%
Segment Margin		17.5%		17.8%		30 bps
($ Millions)		4Q 2013		4Q 2014		% Change
Sales		2,569		2,577		~Flat
Segment Profit		400		425		6%
Segment Margin		15.6%		16.5%		90 bps

●	Sales for the fourth quarter were approximately flat reported, or up 3% on an organic basis, driven by higher UOP licensing sales, software and services growth in Process Solutions, and higher sales in Advanced Materials, particularly in Fluorine Products, offset by the unfavorable impact of foreign exchange and lower UOP catalyst sales.

 

●	Segment profit for the fourth quarter was up 6% and segment margins expanded 90 bps to 16.5% in the fourth quarter, driven by higher volume, the favorable impact of higher UOP licensing sales, and productivity net of inflation, partially offset by continued investments for growth.

 

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EST. To participate, please dial (888) 487-0361 (domestic) or (719) 457-2710 (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 2014 earnings call. 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 (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 2:00 p.m. EST, January 23, until 11:59 p.m. EST, January 30, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 1280015.

 

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.honeywellnow.com.

 

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.

 

#   #   #

Q4’14 Results - 5

 

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,
		2014				2013				2014				2013
Product sales		$	8,185			$	8,303			$	32,398			$	31,214
Service sales			2,081				2,084				7,908				7,841
Net sales			10,266				10,387				40,306				39,055
Costs, expenses and other
Cost of products sold (A)			6,203				6,278				23,889				23,317
Cost of services sold (A)			1,363				1,334				5,068				5,047
			7,566				7,612				28,957				28,364
Selling, general and administrative expenses (A)			1,460				1,438				5,518				5,190
Other (income) expense			(146	)			(185	)			(305	)			(238	)
Interest and other financial charges			82				83				318				327
			8,962				8,948				34,488				33,643
Income before taxes			1,304				1,439				5,818				5,412
Tax expense			329				475				1,489				1,450
Net income			975				964				4,329				3,962
Less: Net income attributable to the noncontrolling interest			19				17				90				38
Net income attributable to Honeywell		$	956			$	947			$	4,239			$	3,924
Earnings per share of common stock - basic		$	1.22			$	1.20			$	5.40			$	4.99
Earnings per share of common stock - assuming dilution		$	1.20			$	1.19			$	5.33			$	4.92
Weighted average number of shares outstanding - basic			783.8				785.9				784.4				786.4
Weighted average number of shares outstanding - assuming dilution			794.1				797.0				795.2				797.3

 

(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 mark-to-market pension expense. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014 1				2013 1				2014 1				2013 1
Earnings per share of common stock - assuming dilution		$	1.20			$	1.19			$	5.33			$	4.92
Mark-to-market pension expense		$	0.23				0.05			$	0.23				0.05
Earnings per share of common stock - assuming dilution, excluding mark-to-market pension expense		$	1.43			$	1.24			$	5.56			$	4.97

 

1- EPS utilizes weighted average shares outstanding and the effective tax rate for the period. Mark-to-market uses a blended tax rate of 28.1% and 25.5% for 2014 and 2013, respectively.

Q4’14 Results - 6

 

Honeywell International Inc.

Segment Data (Unaudited)

(Dollars in millions)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
Net Sales		2014				2013				2014				2013
Aerospace		$	3,842			$	4,077			$	15,598			$	15,735
Automation and Control Solutions			3,847				3,741				14,487				13,465
Performance Materials and Technologies			2,577				2,569				10,221				9,855
Total		$	10,266			$	10,387			$	40,306			$	39,055

 

Reconciliation of Segment Profit to Income Before Taxes

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
Segment Profit		2014				2013				2014				2013
Aerospace		$	663			$	769			$	2,915			$	2,870
Automation and Control Solutions			613				570				2,200				1,983
Performance Materials and Technologies			425				400				1,817				1,725
Corporate			(69	)			(70	)			(236	)			(227	)
Total segment profit			1,632				1,669				6,696				6,351
Other income (expense) (A)			137				180				269				202
Interest and other financial charges			(82	)			(83	)			(318	)			(327	)
Stock compensation expense (B)			(44	)			(41	)			(187	)			(170	)
Pension ongoing income (B)			67				22				254				90
Pension mark-to-market expense (B)			(249	)			(51	)			(249	)			(51	)
Other postretirement expense (B)			(12	)			(13	)			(49	)			(20	)
Repositioning and other charges (B)			(145	)			(244	)			(598	)			(663	)
Income before taxes		$	1,304			$	1,439			$	5,818			$	5,412

 

(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.

Q4’14 Results - 7

 

Honeywell International Inc.

Consolidated Balance Sheet (Unaudited)

(Dollars in millions)

 

		December 31,				December 31,
		2014				2013
ASSETS
Current assets:
Cash and cash equivalents		$	6,959			$	6,422
Accounts, notes and other receivables			7,960				7,929
Inventories			4,405				4,293
Deferred income taxes			722				849
Investments and other current assets			2,145				1,671
Total current assets			22,191				21,164
Investments and long-term receivables			465				393
Property, plant and equipment - net			5,383				5,278
Goodwill			12,788				13,046
Other intangible assets - net			2,208				2,514
Insurance recoveries for asbestos related liabilities			454				595
Deferred income taxes			404				368
Other assets			1,558				2,077
Total assets		$	45,451			$	45,435
LIABILITIES AND SHAREOWNERS’ EQUITY
Current liabilities:
Accounts payable		$	5,365			$	5,174
Short-term borrowings			51				97
Commercial paper			1,647				1,299
Current maturities of long-term debt			939				632
Accrued liabilities			6,771				6,979
Total current liabilities			14,773				14,181
Long-term debt			6,046				6,801
Deferred income taxes			236				804
Postretirement benefit obligations other than pensions			911				1,019
Asbestos related liabilities			1,200				1,150
Other liabilities			4,282				3,734
Redeemable noncontrolling interest			219				167
Shareowners’ equity			17,784				17,579
Total liabilities, redeemable noncontrolling interest and shareowners’ equity		$	45,451			$	45,435

Q4’14 Results - 8

 

Honeywell International Inc.

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in millions)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014				2013				2014				2013
Cash flows from operating activities:
Net income		$	975			$	964			$	4,329			$	3,962
Less: Net income attributable to the noncontrolling interest			19				17				90				38
Net income attributable to Honeywell			956				947				4,239				3,924
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:
Depreciation and amortization			226				249				924				989
Loss on sale of non-strategic businesses and assets			—				20				11				20
Gain on sale of available for sale investments			(116	)			(195	)			(221	)			(195	)
Repositioning and other charges			145				244				598				663
Net payments for repositioning and other charges			(229	)			(246	)			(530	)			(763	)
Pension and other postretirement income			194				42				44				(19	)
Pension and other postretirement benefit payments			(44	)			(45	)			(167	)			(298	)
Stock compensation expense			44				41				187				170
Deferred income taxes			(123	)			5				132				262
Excess tax benefits from share based payment arrangements			(31	)			(31	)			(102	)			(132	)
Other			(120	)			273				(327	)			308
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts, notes and other receivables			357				17				(172	)			(365	)
Inventories			79				135				(200	)			41
Other current assets			(61	)			(393	)			120				(421	)
Accounts payable			153				384				307				352
Accrued liabilities			332				221				181				(201	)
Net cash provided by operating activities			1,762				1,668				5,024				4,335
Cash flows from investing activities:
Expenditures for property, plant and equipment			(414	)			(400	)			(1,094	)			(947	)
Proceeds from disposals of property, plant and equipment			6				8				18				15
Increase in investments			(935	)			(517	)			(4,074	)			(1,220	)
Decrease in investments			1,164				474				3,288				1,122
Cash paid for acquisitions, net of cash acquired			—				(70	)			(4	)			(1,133	)
Proceeds from sales of businesses, net of fees paid			3				3				160				3
Other			(61	)			97				(170	)			201
Net cash used for investing activities			(237	)			(405	)			(1,876	)			(1,959	)
Cash flows from financing activities:
Net (decrease) increase in commercial paper			(202	)			(800	)			348				899
Net (decrease) increase in short-term borrowings			(34	)			13				(39	)			31
Proceeds from issuance of common stock			59				85				265				447
Proceeds from issuance of long-term debt			18				1,036				97				1,063
Payments of long-term debt			(2	)			(3	)			(609	)			(607	)
Excess tax benefits from share based payment arrangements			31				31				102				132
Repurchases of common stock			(235	)			(304	)			(924	)			(1,073	)
Cash dividends paid			(409	)			(358	)			(1,510	)			(1,353	)
Other			5				—				(2	)			28
Net cash used for financing activities			(769	)			(300	)			(2,272	)			(433	)
Effect of foreign exchange rate changes on cash and cash equivalents			(225	)			(40	)			(339	)			(155	)
Net increase in cash and cash equivalents			531				923				537				1,788
Cash and cash equivalents at beginning of period			6,428				5,499				6,422				4,634
Cash and cash equivalents at end of period		$	6,959			$	6,422			$	6,959			$	6,422

Q4’14 Results - 9

 

Honeywell International Inc.

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

(Dollars in millions)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014				2013				2014				2013
Cash provided by operating activities		$	1,762			$	1,668			$	5,024			$	4,335
Expenditures for property, plant and equipment			(414	)			(400	)			(1,094	)			(947	)
Free cash flow		$	1,348			$	1,268			$	3,930			$	3,388

 

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, and to 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.

Q4’14 Results - 10

 

Honeywell International Inc.

Reconciliation of Segment Profit to Operating Income Excluding Pension Mark-to-Market Adjustment and

Calculation of Segment Profit and Operating Income Margins Excluding Pension Mark-to-Market Adjustment (Unaudited)

(Dollars in millions)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014				2013				2014				2013
Segment Profit		$	1,632			$	1,669			$	6,696			$	6,351
Stock compensation expense (A)			(44	)			(41	)			(187	)			(170	)
Repositioning and other (A, B)			(154	)			(249	)			(634	)			(699	)
Pension ongoing income (A)			67				22				254				90
Pension mark-to-market adjustment (A)			(249	)			(51	)			(249	)			(51	)
Other postretirement expense (A)			(12	)			(13	)			(49	)			(20	)
Operating Income		$	1,240			$	1,337			$	5,831			$	5,501
Pension mark-to-market adjustment (A)		$	(249	)		$	(51	)		$	(249	)		$	(51	)
Operating Income excluding pension mark-to-market adjustment		$	1,489			$	1,388			$	6,080			$	5,552
Segment Profit		$	1,632			$	1,669			$	6,696			$	6,351
÷ Sales		$	10,266			$	10,387			$	40,306			$	39,055
Segment Profit Margin %			15.9	%			16.1	%			16.6	%			16.3	%
Operating Income		$	1,240			$	1,337			$	5,831			$	5,501
÷ Sales		$	10,266			$	10,387			$	40,306			$	39,055
Operating Income Margin %			12.1	%			12.9	%			14.5	%			14.1	%
Operating Income excluding pension mark-to-market adjustment		$	1,489			$	1,388			$	6,080			$	5,552
÷ Sales		$	10,266			$	10,387			$	40,306			$	39,055
Operating Income Margin excluding pension mark-to-market adjustment %			14.5	%			13.4	%			15.1	%			14.2	%

 

(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.

Q4’14 Results - 11

 

Honeywell International Inc.

EPS Impact of Gain on Sale of BEAV Shares (Unaudited)

(Dollars in millions, except per share amounts)

 

		Three Months Ended
		December 31,
		2014
Gain on sale of BEAV shares		$	116
Tax expense			2
After-tax gain on sale of BEAV shares		$	114
Weighted average number of shares outstanding - assuming dilution			794.1
EPS impact of gain on sale of BEAV Shares		$	0.14

Q4’14 Results - 12

 

Honeywell International Inc.

EPS Impact of Aerospace OEM Incentives (Unaudited)

(Dollars in millions, except per share amounts)

 

		Three Months Ended
		December 31,
		2014
Aerospace OEM incentives		$	(184	)
Tax benefit			70
After-tax Aerospace OEM incentives		$	(114	)
Weighted average number of shares outstanding - assuming dilution			794.1
EPS impact of Aerospace OEM incentives		$	(0.14	)