10-QPeriod: Q2 FY2013

HONEYWELL INTERNATIONAL INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed July 19, 2013For Securities:HONHONIV

Summary

Honeywell International Inc. reported solid financial results for the second quarter and first half of 2013. Net sales saw a modest increase of 3% in the quarter and 1% year-to-date, demonstrating resilience across its diverse business segments. Net income attributable to Honeywell grew by approximately 13% and 15% for the three and six months ended June 30, 2013, respectively, compared to the prior year. Diluted Earnings Per Share (EPS) also showed positive growth, reflecting improved profitability and effective cost management. The company successfully integrated the acquisition of RAE Systems, Inc. and continues to advance its strategy of portfolio enhancement. While facing some headwinds like increased repositioning and other charges, Honeywell's operational performance, driven by strong segment profits particularly in Automation and Control Solutions and Aerospace, coupled with a lower effective tax rate, contributed to the overall positive financial outcome. The company maintained a strong liquidity position and continued its share repurchase program, signaling confidence in its financial health and future prospects.

Financial Highlights

50 data points
Beta

Revenue

$9.69B

27.5% Gross Margin

Net Income

$1.02B

10.5% Net Margin

EPS (Diluted)

$1.28

Total Assets

$42.17B

Cash & Equivalents

$4.55B

Free Cash Flow

$1.06B

Financial Statements
Beta
Revenue$9.69B
Cost of Revenue$7.03B
Gross Profit$2.67B
SG&A Expenses$1.28B
Net Income$1.02B
EPS (Basic)$1.30
EPS (Diluted)$1.28
Shares Outstanding (Basic)787.60M
Shares Outstanding (Diluted)798.10M

Key Highlights

  • 1Net sales increased by 3% to $9.7 billion for the quarter ended June 30, 2013, and by 1% to $19.0 billion for the first six months.
  • 2Net income attributable to Honeywell increased by 13% to $1.02 billion for the quarter and 15% to $1.99 billion for the six months, compared to the prior year.
  • 3Diluted Earnings Per Share (EPS) rose to $1.28 for the quarter and $2.49 for the six months, up from $1.14 and $2.19, respectively, in the prior year.
  • 4The Automation and Control Solutions segment showed significant profit growth, with segment profit up 11% for the quarter and 9% year-to-date.
  • 5Aerospace segment profit increased by 4% for the quarter and 3% year-to-date, driven by commercial OE and aftermarket sales, partially offset by defense and space volume declines.
  • 6The company acquired RAE Systems, Inc. for $338 million in June 2013, integrating it into the Automation and Control Solutions segment.
  • 7Cash provided by operating activities increased significantly by $428 million to $1.6 billion for the six months ended June 30, 2013, driven by reduced pension contributions and higher net income.

Frequently Asked Questions

Revenue growth in the second quarter of 2013 was primarily driven by a 3% increase in net sales, totaling $9.7 billion. Key contributing factors included organic sales growth across various segments, particularly in Automation and Control Solutions (3% increase) and Transportation Systems (5% increase). The acquisition of RAE Systems, Inc. also contributed to the consolidated sales increase, alongside positive pricing and volume trends in certain areas of the Aerospace segment.

Honeywell demonstrated improved profitability. Net income attributable to Honeywell grew by approximately 13% to $1.02 billion for the three months ended June 30, 2013, and by 15% to $1.99 billion for the six months ended June 30, 2013. This was reflected in a substantial increase in diluted EPS, which rose to $1.28 for the quarter and $2.49 for the six-month period, compared to $1.14 and $2.19 respectively in the prior year. This improvement was supported by strong segment profits, cost management initiatives, and a lower effective tax rate.

During the period, Honeywell completed the acquisition of RAE Systems, Inc., a manufacturer of gas and radiation detection systems, for $338 million, integrating it into its Automation and Control Solutions segment. The company also has a pending agreement to acquire Intermec, Inc., a provider of mobile computing and RFID solutions, for approximately $600 million, expected to close in the third quarter of 2013.

Honeywell maintained a strong liquidity position. Cash provided by operating activities increased significantly by $428 million to $1.6 billion for the first six months of 2013, primarily due to reduced pension contributions and higher net income. The company also continued its share repurchase program, with $1 billion remaining under its existing program as of June 30, 2013, alongside its ongoing investment in core businesses and strategic acquisitions.