10-QPeriod: Q3 FY2007

HONEYWELL INTERNATIONAL INC Quarterly Report for Q3 Ended Sep 30, 2007

Filed October 19, 2007For Securities:HONHONIV

Summary

Honeywell International Inc. reported solid financial results for the third quarter and the first nine months of 2007. Net sales increased by 10% year-over-year for both periods, reaching $8.735 billion in Q3 and $25.314 billion year-to-date. This growth was driven by a combination of price, volume, foreign exchange, and acquisitions across its key segments. Profitability also showed improvement, with income from continuing operations rising to $618 million ($0.83 per diluted share) for Q3 and $1.755 billion ($2.25 per diluted share) for the nine-month period. The company's balance sheet remains strong, with total assets of $32.902 billion. Honeywell continued its strategic acquisition activity, notably the purchases of Dimensions International and Enraf Holding B.V., and also announced its intention to acquire Hand Held Products Inc. Shareholder returns were supported by a $0.25 per share dividend in Q3 and significant share repurchases. The company's performance was broad-based, with the Aerospace and Automation and Control Solutions segments showing particularly strong sales growth. While the company faces ongoing environmental and asbestos-related legal matters, the report indicates these are being managed within established reserves and insurance coverage, with no expected material adverse effect on the consolidated financial position.

Key Highlights

  • 1Net sales increased by 10% year-over-year for both the third quarter and the first nine months of 2007, indicating robust top-line growth.
  • 2Income from continuing operations saw a significant increase, with Q3 rising to $618 million and the nine-month total reaching $1.755 billion, demonstrating improved profitability.
  • 3Diluted earnings per share (EPS) grew to $0.81 for Q3 and $2.25 for the nine-month period, reflecting strong performance on a per-share basis.
  • 4The company actively pursued strategic growth through acquisitions, completing the purchases of Dimensions International and Enraf Holding B.V. and announcing an agreement to acquire Hand Held Products Inc.
  • 5Operating cash flow strengthened significantly, increasing by $501 million for the nine-month period compared to the prior year, indicating effective cash generation.
  • 6Shareholder returns were supported by consistent dividend payments and substantial share repurchases, totaling $3.783 billion in the nine-month period, which contributed to a reduction in outstanding shares.
  • 7The Aerospace and Automation and Control Solutions segments were key drivers of sales growth, with increases of 9-10% and 12-13% respectively in the reported periods.

Frequently Asked Questions

Honeywell reported a 10% increase in net sales for both the third quarter and the first nine months of 2007 compared to the prior year. Net sales reached $8.735 billion in the third quarter and $25.314 billion for the nine-month period.

Profitability improved significantly. Income from continuing operations was $618 million ($0.83 per diluted share) for the third quarter and $1.755 billion ($2.25 per diluted share) for the nine months ended September 30, 2007, up from $541 million ($0.66 per diluted share) and $1.493 billion ($1.80 per diluted share) respectively in the prior year.

Honeywell continued its strategy of growth through acquisitions. In the third quarter of 2007, it acquired Dimensions International and Enraf Holding B.V., and also entered into a definitive agreement to acquire Hand Held Products Inc., indicating a focus on strengthening its core businesses.

Honeywell continues to manage its significant asbestos and environmental liabilities through existing reserves and insurance coverage. While these matters present ongoing legal and financial considerations, the company's reporting suggests they are being managed within these frameworks, and they are not expected to have a material adverse effect on the consolidated financial position. Specific liabilities for NARCO and Bendix asbestos claims are detailed, along with corresponding insurance receivables.