10-QPeriod: Q1 FY2015

HONEYWELL INTERNATIONAL INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 17, 2015For Securities:HONHONIV

Summary

Honeywell International Inc. reported its first-quarter 2015 financial results, showing a 5% decrease in net sales to $9.21 billion compared to $9.68 billion in the prior year. This decline was primarily driven by unfavorable foreign exchange rates and divestitures, partially offset by organic growth and improved gross margins. Net income attributable to Honeywell increased by approximately 10% to $1.116 billion, or $1.41 per diluted share, up from $1.017 billion, or $1.28 per diluted share, in the first quarter of 2014. The company managed its costs effectively, with cost of goods sold decreasing by 9% due to lower material, labor, and repositioning costs, leading to an improved gross margin percentage. The company also continued its share repurchase program and maintained a strong liquidity position.

Financial Highlights

49 data points
Beta

Revenue

$9.21B

30.9% Gross Margin

Net Income

$1.12B

12.1% Net Margin

EPS (Diluted)

$1.41

Total Assets

$45.36B

Cash & Equivalents

$6.58B

Free Cash Flow

$256.00M

Financial Statements
Beta
Revenue$9.21B
Cost of Revenue$6.36B
Gross Profit$2.85B
SG&A Expenses$1.23B
Net Income$1.12B
EPS (Basic)$1.42
EPS (Diluted)$1.41
Shares Outstanding (Basic)783.80M
Shares Outstanding (Diluted)794.00M

Key Highlights

  • 1Net sales decreased by 5% to $9.21 billion, impacted by foreign exchange and divestitures, but organic sales showed resilience.
  • 2Net income attributable to Honeywell increased by 10% to $1.116 billion, reflecting strong cost management and operational improvements.
  • 3Diluted Earnings Per Share (EPS) grew by 10% to $1.41, indicating enhanced profitability on a per-share basis.
  • 4Gross margin percentage improved to 30.9% from 28.0% in the prior year, driven by lower costs and higher segment margins.
  • 5The company repurchased $363 million of its common stock in the quarter, demonstrating a commitment to returning capital to shareholders.
  • 6Cash flow from operations decreased by $267 million, impacted by an Aerospace OEM incentive payment and increased tax payments, but overall liquidity remained strong.
  • 7Significant repositioning charges of $131 million were recorded, primarily related to workforce reductions aimed at future cost savings.

Frequently Asked Questions

The primary drivers for the 5% decrease in net sales were unfavorable foreign exchange rates, which accounted for a 4% impact, and divestitures contributing a 2% decrease. This was partially offset by 2% organic growth and a 1% increase from pricing.

Honeywell effectively managed its costs, with Cost of Products and Services Sold decreasing by 9%. This reduction was driven by lower direct and indirect material costs (benefiting from foreign exchange and productivity), decreased labor costs, and lower repositioning and other charges. Selling, General, and Administrative expenses also decreased as a percentage of sales.

Honeywell demonstrated its commitment to returning capital through share repurchases. In the first quarter of 2015, the company repurchased $363 million of its common stock, with approximately $3.7 billion remaining available under its share repurchase program. The company intends to use these repurchases to offset the dilutive impact of employee stock-based compensation and potentially for additional repurchases if net cash exceeds certain thresholds.

All segments contributed positively to operational segment profit, with Aerospace showing a 7% increase, Automation and Control Solutions (ACS) a 10% increase, and Performance Materials and Technologies (PMT) a 6% increase. This growth was driven by productivity gains, pricing, and organic sales volume, partially offset by unfavorable foreign exchange impacts in ACS and PMT.