10-QPeriod: Q1 FY2010

HONEYWELL INTERNATIONAL INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 23, 2010For Securities:HONHONIV

Summary

Honeywell International Inc. reported its first-quarter 2010 financial results, showing a modest increase in net sales driven by favorable foreign exchange rates and growth in specific segments, partially offset by declines in others. Net income attributable to Honeywell was $386 million, or $0.50 per diluted share, a slight decrease from the prior year's $397 million, or $0.54 per diluted share. This was influenced by higher pension expenses and a decrease in segment profit from the Aerospace division. The company's financial condition remained stable, with total assets at $36.0 billion. Significant items impacting the quarter included repositioning charges related to workforce reductions and facility shutdowns, as well as ongoing environmental and asbestos-related liabilities. Honeywell's liquidity position appears strong, with operating activities generating $743 million in cash, an improvement from the previous year. The company also repaid $1 billion in long-term debt during the quarter and continues to manage its capital through investments, share repurchases, and dividends.

Financial Highlights

45 data points
Beta

Revenue

$7.54B

24.8% Gross Margin

Net Income

$489.00M

6.5% Net Margin

EPS (Diluted)

$0.63

Total Assets

$36.03B

Cash & Equivalents

$2.85B

Free Cash Flow

$673.00M

Financial Statements
Beta
Revenue$7.54B
Cost of Revenue$5.86B
Gross Profit$1.87B
SG&A Expenses$1.11B
Operating Income$471.00M
Net Income$489.00M
EPS (Basic)$0.63
EPS (Diluted)$0.63
Shares Outstanding (Diluted)771.70M

Key Highlights

  • 1Net sales increased by 3% to $7.776 billion for the first quarter of 2010, driven by a 3% positive impact from foreign exchange rates.
  • 2Net income attributable to Honeywell decreased to $386 million ($0.50 per diluted share) from $397 million ($0.54 per diluted share) in the prior year's quarter.
  • 3Operating cash flow significantly improved, increasing by $402 million to $743 million for the first quarter of 2010.
  • 4The Aerospace segment experienced a 9% decrease in sales and a 15% decrease in segment profit, largely due to declines in commercial and business aviation markets.
  • 5Automation and Control Solutions and Transportation Systems segments showed positive growth, with sales up 4% and 33% respectively, driven by foreign exchange and increased volumes.
  • 6The company repaid $1 billion of its 7.50% notes in the first quarter of 2010, utilizing commercial paper issuance and operating cash.
  • 7Total assets stood at $36.0 billion as of March 31, 2010, with total shareowners' equity at $9.1 billion.

Frequently Asked Questions

Honeywell reported a 3% increase in net sales to $7.776 billion for the first quarter of 2010, primarily driven by favorable foreign exchange. However, net income attributable to Honeywell decreased slightly to $386 million ($0.50 per diluted share) from $397 million ($0.54 per diluted share) in the prior year's quarter. This decline was influenced by higher pension expenses and lower profitability in the Aerospace segment.

Performance varied across segments. The Aerospace segment saw a significant decline in both sales (-9%) and profit (-15%) due to market conditions. In contrast, Automation and Control Solutions reported a 4% sales increase and a 24% profit jump, while Transportation Systems experienced a strong 33% sales increase. Specialty Materials also showed positive growth with an 8% sales increase.

Honeywell's liquidity appears robust. Operating activities generated $743 million in cash, a substantial improvement from the prior year. The company also repaid $1 billion in long-term debt during the quarter. As of March 31, 2010, total assets were $36.0 billion and shareowners' equity was $9.1 billion. The company also has access to committed credit lines and commercial paper markets for additional liquidity.

Yes, Honeywell incurred $142 million in repositioning and other charges in Q1 2010, related to workforce reductions and facility closures. The company also continues to manage significant long-term liabilities related to environmental matters and asbestos claims, with recorded liabilities totaling $1.7 billion for asbestos and $801 million for environmental matters as of March 31, 2010.