Company Reports Second Quarter In Line; Delivers More Than $1 Billion in
Cash Flow; Anticipating Continued Tough Economic Conditions
MORRIS TOWNSHIP, N.J., July 27, 2009 -- Honeywell (NYSE: HON) today
announced second quarter 2009 sales of $7.6 billion versus $9.7 billion in the
second quarter of 2008 and earnings of $0.60 per share, compared to $0.96 per
share in the second quarter last year. Cash flow from operations was $1,126
million versus $1,042 million in the second quarter of 2008 and free cash flow
(cash flow from operations less capital expenditures) was $1,009 million,
compared to $853 million in the second quarter of last year.
“Honeywell had good second quarter performance in a tough environment,” said
Honeywell Chairman and CEO Dave Cote. “We are particularly pleased with our
strong free cash flow conversion performance, which reflects our emphasis on
effectively managing working capital in these very dynamic market conditions.
We also had several important long-term contract wins, including Europe’s Air
Traffic Modernization program, and we announced a key acquisition in the
attractive gas transmission segment to bolster our Process Solutions business.
We continue to invest in new products and services that will help strengthen
our great positions in good industries and prepare Honeywell for growth when
the economy rebounds.”
“Economic conditions, however, remain challenging and we are not planning for
any recovery in 2009,” continued Cote. “Our key process initiatives, such as
the Honeywell Operating System, Velocity Product Development™, and Functional
Transformation, are enabling the aggressive, company-wide repositioning and
cost actions that will help Honeywell continue to deliver earnings and free
cash flow in this tough environment.”
Honeywell expects full-year 2009 sales of approximately $31.5 billion and
earnings of approximately $2.85 per share, which is at the low end of the
company’s previously stated earnings range.
Second Quarter Segment Highlights
• Sales were down 17%, compared with the second quarter of 2008, resulting from
lower volumes in Commercial Aerospace, particularly Business Aviation, and the
unfavorable impact of divestitures. Excluding the net impact of acquisitions
and divestitures, sales were down 14%.
• Segment profit declined 25% and segment margin decreased by 160 bps to 16.7%,
due to lower sales volumes partially offset by increased net
• Honeywell was selected as one of 15 companies to join Eurocontrol and the
European Commission in the Single European Sky Air Traffic Management (ATM)
Research Joint Undertaking (SESAR JU). The SESAR JU represents the technology
pillar of the Single European Sky, an initiative from the European Commission
to reform the architecture of the European Air Traffic Management System. The
objectives of the initiative are to improve air traffic capacity by three
times, improve safety 10 times, reduce ATM costs by 50%, and reduce
environmental impact by 10%.
• Honeywell won a contract with the U.S. Marine Corps for Prepositioning and
Logistics Support Services, which ensures Marine Corps ships are stocked and
available for deployment to combat zones. The 10-year contract is valued at
$700 million if all options are exercised.
• Honeywell was selected to provide avionics and its fuel-efficient Auxiliary
Power Unit (APU) for Aviation Capital Group’s fleet of 68 new Airbus A320
aircraft in a contract valued at more than $40 million. Honeywell’s 131-9A APU
delivers a 5% fuel savings versus competitors’ engines, lowers carbon dioxide
emissions, increases power, and produces class-leading reliability and lower
Automation and Control Solutions
• Sales were down 17%, compared with the second quarter of 2008, resulting from
lower volumes and the unfavorable impact of foreign exchange partially offset
by the net favorable impact from acquisitions and divestitures.
• Segment profit declined 11%, primarily due to volume declines, while segment
margin increased by 70 bps to 11.5%, due to net productivity
• Process Solutions signed a definitive agreement valued at approximately $400
million to acquire RMG Group, a Germany-based global leader in natural gas
measuring and control products, services, and integrated solutions. The
acquisition will build Honeywell’s presence in natural gas transportation,
storage, distribution, and industrial consumption.
• Building Solutions was awarded a $23 million contract from the Royal Canadian
Mounted Police to provide a perimeter intrusion detection system for major
venues that will be used during the Vancouver 2010 Olympic and Paralympic
Winter Games. Honeywell is
responsible for the installation, support, and eventual removal of the system,
which will help secure approximately 27 kilometers of event perimeter.
• Safety Products, part of Honeywell Life Safety, received a $3 million order
from the New York City Fire Department for firefighter turnout gear and a $2.3
million order from the U.S. military for safety butyl gloves.
• Sales were down 41%, compared with the second quarter of 2008, resulting from
lower volumes and the negative impact of foreign exchange.
• Segment profit declined 83% and segment margin decreased by 800 bps to 3.2%,
due to lower sales volumes partially offset by increased productivity driven by
cost savings initiatives.
• Turbo Technologies was awarded contracts estimated at more than $500 million
in revenue over the life of these new platforms. The contracts include new
technology solutions for downsized gasoline and small diesel passenger vehicle
engines and large on-road commercial applications. The engines will be produced
for the European, U.S., and Japanese markets beginning in 2011.
• Honeywell launched its new variable geometry turbocharger on the latest
Volkswagen Golf TDI, which is now on sale in Europe. This new 1.6L turbocharged
engine will also be fitted on several models throughout the Volkswagen group
including the Audi A3, Seat Leon, Skoda Octavia, and Seat Altea.
• Sales were down 28%, compared with the second quarter of 2008, primarily
resulting from lower volumes at UOP and pass through of raw material price
declines at our Resins and Chemicals business.
• Segment profit declined 19%, primarily due to volume declines, while segment
margin increased 150 bps to 14.3%, due to the positive impact of cost savings
• Honeywell UOP's proprietary biofuel process technology produced jet fuel made
from biofeedstocks that performed as well or better than jet fuel produced from
petroleum in test flights. The test results were announced by Boeing and its
partners at the 2009 Paris Air Show.
• Advanced Fibers and Composites introduced a new Gold Shield® ballistic
material with improved ability to stop bullets and fragments in military and
police armor applications. The business also announced that protective storm
curtains for residential homes made with its Spectra® fiber are now certified
to withstand category five hurricanes.
Honeywell will discuss its results during its investor conference call today
starting at 8:00 a.m. EDT. To participate, please dial (719) 325-4821 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. EDT, July
27, until midnight, August 3, by dialing (719) 457-0820. The access code is
Honeywell International (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; 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. 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
Robert C. Ferris