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Honeywell Reports 2007 Full Year Sales Up 10% to $34.6 Billion; Earnings Per Share Up 25% to $3.16Fourth Quarter Sales Up 12% to $9.3 Billion; EPS Up 26% to $0.91
MORRIS TOWNSHIP, N.J., Jan. 24 /PRNewswire-FirstCall/ -- Honeywell (NYSE: HON) today announced full-year 2007 sales increased 10% to $34.6 billion from $31.4 billion in 2006. Earnings per share were up 25% to $3.16 versus $2.52 in the prior year. Cash flow from operations increased 22% to $3.9 billion versus $3.2 billion in 2006, and free cash flow (cash flow from operations less capital expenditures) was up 27% to $3.1 billion versus $2.5 billion in the prior year. Fourth quarter sales were up 12% to $9.3 billion versus $8.3 billion in 2006. Earnings per share increased 26% to $0.91 versus $0.72 in the prior year fourth quarter. Cash flow from operations was up 16% to $1.4 billion versus $1.2 billion in the prior year, and free cash flow was up approximately 20% to $1.1 billion versus $0.9 billion in the fourth quarter of 2006. "2007 was another terrific year for Honeywell," said Honeywell Chairman and Chief Executive Officer Dave Cote. "Our great positions in good industries, together with favorable macro trends, drove growth across each of our four business segments in 2007. The year's highlights included major contract wins, more than $1 billion in acquisitions, and approximately $4 billion in share repurchases, all driving shareowner value." "While we anticipate softer global economic conditions in 2008, we remain confident in Honeywell's ability to outperform," added Cote. "We will continue to invest in innovation, expand globally, and execute on productivity initiatives to drive double digit earnings per share growth and higher free cash flow in 2008."
Segment Highlights
Aerospace
---------
* Sales were up 11%, compared with the fourth quarter of 2006, driven by
12% growth in Commercial and 9% growth in Defense and Space sales.
Commercial sales reflected growth of 15% in original equipment and 10%
in aftermarket spares and services. Defense and Space sales included
the positive impact of the Dimensions International acquisition.
* Segment profit grew 14%, while segment margin increased by 60 bps to
18.8%, driven by productivity gains, price, and volume growth, which
more than offset the negative impact from inflation.
* Honeywell signed a $1 billion contract with AirTran Airways to supply
avionics on new aircraft and provide maintenance on AirTran's entire
fleet through 2030. AirTran selected Honeywell's full avionics
portfolio, including Enhanced Ground Proximity Warning System, Airborne
Collision Avoidance System, Weather Radar with Forward-Looking Windshear
Detection, Flight Data Recorder and Cockpit Voice Recorders, for up to
150 new Boeing 737s. Honeywell will also provide maintenance services
for all of its equipment on AirTran's entire fleet -- up to 250 aircraft
-- including avionics, lighting, mechanical components, Auxiliary Power
Units, and wheels and brakes. This is the largest commercial
aftermarket services contract ever awarded to Honeywell Aerospace.
* Honeywell has been selected to provide its Runway Awareness and Advisory
System to Emirates Airlines to assist its pilots with increased
situational awareness during taxi, takeoff, and landing. Honeywell's
system helps prevent runway incursions as airports are becoming
increasingly more crowded. In addition to Emirates, the system has also
been installed on Air France, Alaska Airlines, Fed Ex, Thai Airways,
Malaysia Airlines, and Lufthansa Airlines.
* Honeywell received Technical Standard Order approval for Synthetic
Vision from the Federal Aviation Administration. Synthetic Vision
utilizes a digitized database of worldwide terrain and obstacles to
provide pilots with a 3-dimensional, real-time view of terrain and
obstacles on an aircraft's primary display in any weather condition.
The first application for this technology will be for Gulfstream
aircraft.
Automation and Control Solutions
--------------------------------
* Sales were up 13%, compared with the fourth quarter of 2006, driven by
9% growth in the Products businesses and 20% growth in the Solutions
businesses.
* Segment profit grew 10%, while segment margin decreased by 20 bps to
12.4%, due to volume growth and productivity savings, which were more
than offset by the negative impact of inflation, ERP implementation
costs, and sales mix.
* Building Solutions announced a $4 million project with Arnot Ogden
Medical Center in Elmira, N.Y., to install renewable energy technology,
including the installation of a wood chip-fired boiler and an upgrade of
the facility's infrastructure, which will provide nearly 60% of the
energy consumed by the center's Main Medical Center. The business also
won a $5 million energy performance project with Fort Jackson, Columbia,
S.C., to provide a variety of energy conservation measures to ensure
that the 10-million-square-foot Fort's building control systems are
running at peak efficiency.
* Process Solutions introduced OneWireless(TM) Equipment Health
Monitoring (EHM), the latest addition to Honeywell's portfolio of
industrial wireless solutions. OneWireless EHM will wirelessly transmit
performance information from the field to the plant control room,
helping reduce equipment failures and lower maintenance costs.
* Honeywell announced a project with Shell Perdido in Louisiana for 59
Excel Optima Shortrange detectors and accessories for their Fire and
Emergency Equipment Systems project. The project will help Shell
standardize all offshore oil and gas production platforms in the Gulf of
Mexico region.
Transportation Systems
----------------------
* Sales were up 11% compared with the fourth quarter of 2006, driven by
the favorable impact of foreign exchange and pricing actions.
* Segment profit was up 6% as a result of the net benefit from price and
productivity actions, while segment margin decreased 60 bps to 11.0% due
to investments in new products and inflation.
* Turbo Technologies won two programs estimated at approximately $95
million in annual revenues at full production. The programs include
commercial diesel and passenger vehicle gasoline engines and will both
be launched in Europe beginning in 2009.
* Consumer Products Group announced that Wal-Mart will add its premium
spark plug, Autolite(R) Double Platinum, at 2,400 Wal-Mart stores in
2008.
Specialty Materials
-------------------
* Sales were up 14% compared with the fourth quarter of 2006, driven by
growth in all businesses, particularly in UOP and Resins & Chemicals.
* Segment profit grew 70%, while segment margin increased by 350 bps to
10.8%, primarily due to increased prices and productivity savings.
* Honeywell's Enovate(R) blowing agent is helping insulate walls in
China's National Stadium, host to the 2008 Olympic Games. The
technology will help the stadium meet strict energy efficiency and
environmental guidelines that are required by government construction
authorities and the international Olympic Committee. The stadium is the
first major public building in China to incorporate Enovate.
* UOP's Ecofining technology was selected by Galp Energia, Portugal's
largest refiner, to produce diesel fuel from vegetable oils. Galp
Energia will process 6,500 barrels of vegetable oils per day, supplying
European refineries with a high-cetane "green" diesel fuel to help meet
increased demand for high-quality, clean fuels, and biofuels. Green
diesel is produced from renewable resources and generates lower
emissions than either biodiesel or traditional petroleum-based diesel.
It can be used as a drop in replacement fuel in current diesel engines
without modifications. In addition, Newfoundland & Labrador Refining
Corp. selected UOP to supply technology, basic engineering services, and
equipment for the first new fuel refinery to be built in North America
since 1984.
Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EST. To participate, please dial (706) 643-7681 a few minutes before the 8:00 a.m. start. Please mention to the operator that you are dialing in for Honeywell's investor conference call. The live webcast of the investor call 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 11:00 a.m. EST, January 25, until midnight, February 1, by dialing (706) 645-9291. The access code is 29135611. Honeywell International is a $36 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London and Chicago Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit www.honeywell.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 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.
Contacts:
Media Investor Relations
Robert C. Ferris Murray Grainger
(973) 455-3388 (973) 455-2222
rob.ferris@honeywell.com murray.grainger@honeywell.com
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
------------------------------------------------
(In millions except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ -------------
2007 2006 2007 2006
---- ---- ---- ----
Product sales $7,475 $6,644 $27,805 $25,165
Service sales 1,800 1,632 6,784 6,202
----- ----- ------ ------
Net sales 9,275 8,276 34,589 31,367
----- ----- ------ ------
Costs, expenses and other
Cost of products sold (A) 5,851 5,179 21,629 19,649
Cost of services sold (A) 1,162 1,179 4,671 4,447
----- ----- ------ ------
7,013 6,358 26,300 24,096
Selling, general and
administrative expenses (A) 1,205 1,085 4,565 4,210
Other (income) expense (6) (42) (53) (111)
Interest and other financial
charges 125 94 456 374
----- ----- ------ ------
8,337 7,495 31,268 28,569
----- ----- ------ ------
Income from continuing
operations before taxes 938 781 3,321 2,798
Tax expense 249 196 877 720
----- ----- ----- -----
Income from continuing
operations 689 585 2,444 2,078
Income from discontinued
operations, net of taxes - - - 5
----- ----- ----- -----
Net income $689 $585 $2,444 $2,083
===== ===== ====== ======
Earnings per share of common
stock - basic:
Income from continuing
operations $0.92 $0.72 $3.20 $2.53
Income from discontinued
operations - - - 0.01
----- ----- ----- -----
Net income $0.92 $0.72 $3.20 $2.54
===== ===== ====== ======
Earnings per share of common
stock - assuming dilution:
Income from continuing
operations $0.91 $0.72 $3.16 $2.51
Income from discontinued
operations - - - 0.01
----- ----- ----- -----
Net income $0.91 $0.72 $3.16 $2.52
===== ===== ====== ======
Weighted average number of
shares outstanding-basic 747 811 765 821
===== ===== ====== ======
Weighted average number of
shares outstanding -
assuming dilution 758 817 774 826
===== ===== ====== ======
(A) Cost of products and services sold and selling, general and
administrative expenses include amounts for repositioning and
other charges, pension and other post-retirement benefits
expense, and stock option expense.
Honeywell International Inc.
Segment Data (Unaudited)
-----------------------
(Dollars in millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ -------------
2007 2006 2007 2006
Net Sales ---- ---- ---- ----
Aerospace $3,267 $2,955 $12,236 $11,124
Automation and Control Solutions 3,442 3,045 12,478 11,020
Specialty Materials 1,240 1,083 4,866 4,631
Transportation Systems 1,326 1,193 5,009 4,592
Corporate - - - -
----- ----- ----- -----
Total $9,275 $8,276 $34,589 $31,367
====== ====== ====== ======
Reconciliation of Segment Profit to Income From Continuing
Operations Before Taxes
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ -------------
2007 2006 2007 2006
Segment Profit ---- ---- ---- ----
Aerospace $614 $538 $2,197 $1,892
Automation and Control Solutions 425 385 1,405 1,223
Specialty Materials 134 79 658 568
Transportation Systems 146 138 583 574
Corporate (45) (43) (189) (177)
----- ----- ----- -----
Total Segment Profit 1,274 1,097 4,654 4,080
Other income (expense) 6 42 53 111
Interest and other financial
charges (125) (94) (456) (374)
Stock option expense (A) (11) (16) (65) (77)
Pension and other postretirement
expense (A) (71) (115) (322) (459)
Repositioning and other charges
(A) (135) (133) (543) (483)
------ ------ ------ ------
Income from continuing
operations before taxes $938 $781 $3,321 $2,798
====== ====== ====== ======
(A) Amounts included in cost of products and services sold and
selling, general and administrative expenses.
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
-------------------------------------
(Dollars in millions)
December 31, December 31,
2007 2006
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $1,829 $1,224
Accounts, notes and other
receivables 6,387 5,740
Inventories 3,861 3,588
Deferred income taxes 1,241 1,215
Other current assets 367 537
------ ------
Total current assets 13,685 12,304
Investments and long-term
receivables 500 382
Property, plant and equipment -
net 4,985 4,797
Goodwill 9,175 8,403
Other intangible assets - net 1,498 1,247
Insurance recoveries for asbestos
related liabilities 1,086 1,100
Deferred income taxes 611 1,075
Prepaid pension benefit cost 1,444 695
Other assets 984 938
------- -------
Total assets $33,968 $30,941
======= =======
LIABILITIES AND SHAREOWNERS'
EQUITY
Current liabilities:
Accounts payable $3,962 $3,518
Short-term borrowings 64 62
Commercial paper 1,756 669
Current maturities of long-
term debt 418 423
Accrued liabilities 5,741 5,463
------- -------
Total current liabilities 11,941 10,135
Long-term debt 5,419 3,909
Deferred income taxes 795 352
Postretirement benefit obligations
other than pensions 2,016 2,090
Asbestos related liabilities 1,405 1,262
Other liabilities 3,010 3,473
Shareowners' equity 9,382 9,720
------- -------
Total liabilities and
shareowners' equity $33,968 $30,941
======= =======
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
------------------------------------------------
(Dollars in millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ -------------
2007 2006 2007 2006
---- ---- ---- ----
Cash flows from operating activities:
Net income $689 $585 $2,444 $2,083
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 217 198 837 794
Repositioning and other
charges 135 133 543 483
Net (payments) for
repositioning and other
charges (149) (224) (504) (559)
Pension and other
postretirement expense 71 115 322 459
Pension and other
postretirement benefit
payments (134) (95) (300) (353)
Stock option expense 11 16 65 77
Deferred income taxes 163 27 332 450
Excess tax benefits from
share based payment
arrangements (18) (31) (86) (31)
Other 7 18 161 20
Changes in assets and
liabilities, net of the
effects of
acquisitions and
divestitures:
Accounts, notes and
other receivables 136 (28) (467) (573)
Inventories 107 137 (183) (128)
Other current assets (19) (5) 17 (11)
Accounts payable 124 301 397 516
Accrued liabilities 100 94 333 (16)
------- ------- ------- -------
Net cash provided by operating
activities 1,440 1,241 3,911 3,211
------- ------- ------- -------
Cash flows from investing
activities:
Expenditures for property,
plant and equipment (310) (300) (767) (733)
Proceeds from disposals of
property, plant and equipment 11 42 98 87
Increase in investments - - (20) -
Decrease in investments 6 - 6 -
Cash paid for acquisitions,
net of cash acquired (584) (10) (1,150) (633)
Proceeds from sales of
businesses, net of fees paid - 86 51 665
------- ------- ------- -------
Net cash (used for) investing
activities (877) (182) (1,782) (614)
------- ------- ------- -------
Cash flows from financing
activities:
Net increase/(decrease) in
commercial paper (221) 299 1,078 (86)
Net decrease in short-term
borrowings (7) (9) (3) (224)
Payment of debt assumed with
acquisitions - - (40) (346)
Proceeds from issuance of
common stock 86 118 603 396
Proceeds from issuance of
long-term debt - - 1,885 1,239
Payments of long-term debt (15) (648) (430) (1,019)
Excess tax benefits from share
based payment arrangements 18 31 86 31
Repurchases of common stock (203) (876) (3,986) (1,896)
Cash dividends paid on common
stock (187) (184) (767) (744)
------- ------- ------- -------
Net cash (used for) financing
activities (529) (1,269) (1,574) (2,649)
------- ------- ------- -------
Effect of foreign exchange rate
changes on cash and cash
equivalents 8 19 50 42
------ ------ ------ ------
Net increase/(decrease) in cash
and cash equivalents 42 (191) 605 (10)
Cash and cash equivalents at
beginning of period 1,787 1,415 1,224 1,234
------ ------ ------ ------
Cash and cash equivalents at end
of period $1,829 $1,224 $1,829 $1,224
====== ====== ====== ======
Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash
----------------------------------------------------------------------
Flow (Unaudited)
----------------
(Dollars in millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ -------------
2007 2006 2007 2006
---- ---- ---- ----
Cash provided by operating
activities $1,440 $1,241 $3,911 $3,211
Expenditures for property, plant
and equipment (310) (300) (767) (733)
------- ------- ------- -------
Free cash flow $1,130 $941 $3,144 $2,478
======= ======= ======= =======
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.
Website: http://www.honeywell.com/investor/Website: http://www.honeywell.com/ |
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