10-QPeriod: Q1 FY2011

HONEYWELL INTERNATIONAL INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 21, 2011For Securities:HONHONIV

Summary

Honeywell International Inc. reported strong first-quarter 2011 results, with net sales increasing 15% year-over-year to $8.91 billion, driven by a broad-based performance across its key business segments. Net income attributable to Honeywell rose significantly to $705 million from $489 million in the prior year, resulting in diluted EPS of $0.88, up from $0.63. This growth was fueled by improved segment profits, particularly in Aerospace, Automation and Control Solutions, and Specialty Materials, alongside effective cost management. The company also highlighted a $1 billion voluntary contribution to its U.S. pension plans, demonstrating a commitment to financial health. Despite some ongoing legal and environmental matters, Honeywell's liquidity remains strong, supported by robust operating cash flows and a new credit facility, positioning the company for continued performance.

Financial Highlights

46 data points
Beta

Revenue

$8.67B

25.9% Gross Margin

Net Income

$705.00M

8.1% Net Margin

EPS (Diluted)

$0.88

Cash & Equivalents

$3.08B

Free Cash Flow

-$567.00M

Financial Statements
Beta
Revenue$8.67B
Cost of Revenue$6.42B
Gross Profit$2.25B
SG&A Expenses$1.23B
Operating Income$687.00M
Net Income$705.00M
EPS (Basic)$0.90
EPS (Diluted)$0.88
Shares Outstanding (Diluted)797.70M

Key Highlights

  • 1Net sales grew 15% to $8.91 billion, driven by 8% organic growth, 3% from acquisitions/divestitures, and favorable foreign exchange and pricing.
  • 2Net income attributable to Honeywell significantly increased to $705 million, up from $489 million in Q1 2010.
  • 3Diluted earnings per share (EPS) rose to $0.88, a substantial increase from $0.63 in the prior year's quarter.
  • 4All major business segments (Aerospace, Automation and Control Solutions, Specialty Materials, Transportation Systems) reported sales growth, with Specialty Materials and Automation and Control Solutions showing particularly strong gains.
  • 5The company made a significant voluntary cash contribution of $1 billion to its U.S. pension plans to improve funded status.
  • 6A new $2.8 billion Five-Year Credit Agreement was entered into, replacing the previous one, enhancing liquidity without financial covenants or dividend restrictions.
  • 7The company repurchased $400 million of its 5.625% Notes due 2012.

Frequently Asked Questions

Honeywell experienced a strong increase in net sales, growing by 15% to $8.91 billion in the first quarter of 2011, compared to $7.78 billion in the same period of 2010. This growth was attributed to organic volume increases, strategic acquisitions and divestitures, positive foreign exchange impacts, and favorable pricing.

The substantial rise in net income to $705 million and EPS to $0.88 was driven by improved performance across all business segments, particularly Aerospace, Automation and Control Solutions, and Specialty Materials, leading to higher segment profits. Additionally, effective management of selling, general, and administrative expenses, and a lower effective tax rate also contributed to the improved profitability.

Honeywell continues to manage various environmental and asbestos-related legal matters. While the company has recorded liabilities for these matters and believes its reserves are adequate, these ongoing issues, as detailed in Note 14, present potential future financial impacts. The company also reported a $11.8 million fine related to a RCRA investigation at its Metropolis, Illinois facility and ongoing investigations at its Hopewell, Virginia facility.

In January 2011, Honeywell made a significant voluntary cash contribution of $1 billion to its U.S. pension plans to improve their funded status. Additionally, the company entered into a new $2.8 billion credit agreement to support general corporate purposes and repurchased $400 million of its outstanding notes due 2012.