Honeywell 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 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 in Safety and Productivity Solutions and the impact of foreign currency translation. The third-quarter financial results can be found in Tables 1 and 2, 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 Smart Energy program roll-outs, air and water product sales in China, and continued growth in the Distribution business. Segment margin expanded 10 bps to 16.4 percent, 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 expanded 170 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 3 percent 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, until 1:30 p.m. EDT, October 27, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 1952662.
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