Honeywell Reports First Quarter 2013 Sales Of $9.3 Billion; EPS Up 16% To $1.21 Per Share

• Strong Productivity Driving EPS Growth of 16%, Up 12% Using Expected Full-Year Tax Rate
• Segment Margin Increase of 100 Bps to 16.2%, Operating Margin Up 120 Bps
• Increasing Low-End 2013 Proforma EPS Guidance to $4.80 – $4.95, From $4.75 – $4.95

Honeywell (NYSE: HON) today announced its results for the first quarter of 2013:

“Honeywell delivered better than expected quarterly earnings and margins even in a continued slow global growth environment,” said Honeywell Chairman and CEO Dave Cote. “We had strong productivity in the quarter, and our balanced portfolio of both short- and long-cycle businesses continues to drive our outperformance. As a result of our strong start to 2013, we’re raising the low-end of our full-year earnings guidance by five cents. We’re achieving these results in a slow growth environment while also maintaining our seed planting for the future by investing in new products and technologies, geographic expansion, and driving our key process initiatives. And, it will continue. It’s what will help Honeywell deliver top-tier earnings performance this year and over the long-term.”

First quarter 2013 earnings per share (EPS) reflects a 23.1% effective tax rate compared to 26.5% last year. Using the expected full-year tax rate of 26.5%, EPS growth would have been 12%.

The company is updating its full-year 2013 sales and EPS guidance and now expects:

First Quarter Segment Performance

• Sales were down (1%) compared with the first quarter of 2012 driven by a (1%) decline in our Commercial businesses primarily driven by higher than normal prior year shipments to commercial airline and BGA original equipment customers, and a (1%) decline in Defense and Space, as expected.
• Segment profit was up 3%, and segment margins expanded 80 bps to 18.9%, primarily due to commercial excellence and productivity net of inflation (including prior year impact of customer bankruptcy), partially offset by lower aftermarket volumes.

•  Sales were approximately flat on both a reported and organic basis compared with the first quarter of 2012. Energy, Safety, and Security sales were up primarily due to growth in ECC and Security products, partially offset by lower sales in Process Solutions and Building Solutions and Distribution.
• Segment profit was up 7% and segment margins were up 80 bps to 13.8% driven by commercial excellence and productivity net of inflation.

• Sales were up 6% reported, down (2%) organic, compared with the first quarter of 2012, resulting from the Thomas Russell acquisition, higher petrochemical catalyst shipments and equipment sales in UOP, partially offset by planned plant outages in Resins & Chemicals and Fluorine Products.
• Segment profit was up 17% and segment margins increased 200 bps to 21.8%, primarily due to higher sales at UOP and favorable price net of inflation, partially offset by lower volume in Advanced Materials and continued investments for growth.

•  Sales were down (4%) on both a reported and organic basis compared with the first quarter of 2012, driven by approximately 10% lower European light vehicle production volumes and declining aftermarket sales, partially offset by the positive impact of new platform launches, including higher turbo gas launches in North America and China.
• Segment profit was down (8%) and segment margins decreased (50) bps to 12.1% primarily driven by lower sales, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (800) 894-5910(domestic) or (785) 424-1052(international) a few minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s first quarter 2013 investor conference call or provide the conference code HONQ113. 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 12:00 p.m. EDT, April 19, until 11:59 p.m. EDT, April 26, by dialing (800) 753-6121 (domestic) or (402) 220-2676 (international).

Total Honeywell

($ Millions, except Earnings Per Share)   1Q 2012   1Q 2013   Change

Sales   9,307   9,328   ~ flat

Segment Margin   15.20%   16.20%   100 bps

Operating Income Margin   12.90%   14.10%   120 bps

Earnings Per Share   $1.04

$1.21

16%

Cash Flow from Operations   196   341   74%

Free Cash Flow *   300   327   9%

* Free Cash Flow (cash flow from operations less capital expenditures) prior to cash pension contributions

“Honeywell delivered better than expected quarterly earnings and margins even in a continued slow global growth environment,” said Honeywell Chairman and CEO Dave Cote. “We had strong productivity in the quarter, and our balanced portfolio of both short- and long-cycle businesses continues to drive our outperformance. As a result of our strong start to 2013, we’re raising the low-end of our full-year earnings guidance by five cents. We’re achieving these results in a slow growth environment while also maintaining our seed planting for the future by investing in new products and technologies, geographic expansion, and driving our key process initiatives. And, it will continue. It’s what will help Honeywell deliver top-tier earnings performance this year and over the long-term.”     First quarter 2013 earnings per share (EPS) reflects a 23.1% effective tax rate compared to 26.5% last year. Using the expected full-year tax rate of 26.5%, EPS growth would have been 12%.

The company is updating its full-year 2013 sales and EPS guidance and now expects:

Full Year Guidance

2013   2013   Change

Prior Guidance   Revised Guidance   vs. 2012

Sales    $39.0 – $39.5B    $38.8 – $39.3B   3 – 4%

Segment Margin   15.8 – 16.1%   15.9 – 16.2%   30 – 60 bps

Operating Income Margin1   14.2 – 14.5%   14.3 – 14.6%   70 – 100 bps

Earnings Per Share1   $4.75 – $4.95   $4.80 – $4.95   7% – 11%

Free Cash Flow2    ~$3.7B    ~$3.7B   ~ Flat

1.     Proforma, V% / BPS Exclude Any Pension Mark-to-Market Adjustment

2.     Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions

First Quarter Segment Performance

Aerospace

($ Millions)   1Q 2012   1Q 2013   % Change

Sales   2,950   2,911   -1%

Segment Profit   534   551   3%

Segment Margin   18.10%   18.90%   80 bps

• Sales were down (1%) compared with the first quarter of 2012 driven by a (1%) decline in our Commercial businesses primarily driven by higher than normal prior year shipments to commercial airline and BGA original equipment customers, and a (1%) decline in Defense and Space, as expected. • Segment profit was up 3%, and segment margins expanded 80 bps to 18.9%, primarily due to commercial excellence and productivity net of inflation (including prior year impact of customer bankruptcy), partially offset by lower aftermarket volumes.

Automation and Control Solutions

($ Millions)   1Q 2012   1Q 2013   % Change

Sales   3,788   3,786   ~ flat

Segment Profit   491   523   7%

Segment Margin   13.00%   13.80%   80 bps

• Sales were approximately flat on both a reported and organic basis compared with the first quarter of 2012. Energy, Safety, and Security sales were up primarily due to growth in ECC and Security products, partially offset by lower sales in Process Solutions and Building Solutions and Distribution. • Segment profit was up 7% and segment margins were up 80 bps to 13.8% driven by commercial excellence and productivity net of inflation.

• Sales were up 6% reported, down (2%) organic, compared with the first quarter of 2012, resulting from the Thomas Russell acquisition, higher petrochemical catalyst shipments and equipment sales in UOP, partially offset by planned plant outages in Resins & Chemicals and Fluorine Products. • Segment profit was up 17% and segment margins increased 200 bps to 21.8%, primarily due to higher sales at UOP and favorable price net of inflation, partially offset by lower volume in Advanced Materials and continued investments for growth.

• Sales were down (4%) on both a reported and organic basis compared with the first quarter of 2012, driven by approximately 10% lower European light vehicle production volumes and declining aftermarket sales, partially offset by the positive impact of new platform launches, including higher turbo gas launches in North America and China. • Segment profit was down (8%) and segment margins decreased (50) bps to 12.1% primarily driven by lower sales, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (800) 894-5910 (domestic) or (785) 424-1052 (international) a few minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s first quarter 2013 investor conference call or provide the conference code HONQ113. 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 12:00 p.m. EDT, April 19, until 11:59 p.m. EDT, April 26, by dialing (800) 753-6121 (domestic) or (402) 220-2676 (international).