Honeywell Reports First Quarter Sales Up 12% to $7.2
Billion; Earnings Up 24% to 52 Cents Per Share
More Than a Full Point of Margin Expansion in the Quarter
MORRIS TOWNSHIP, N.J., April 19 -- Honeywell (NYSE: HON) today announced
first-quarter 2006 sales of $7.2 billion, up 12% over the prior year.
Earnings per share were $0.52, a 24% increase versus 2005. Cash flow from
operations was $239 million and free cash flow (cash flow from operations
less capital expenditures) was $117 million.
"Honeywell is off to a terrific start in what we expect to be another great
year," said Honeywell Chairman and CEO Dave Cote. "The quarter's highlights
include strong organic growth, margin expansion and better than expected
earnings. Our first-quarter performance builds on the company's growing
track record of strong operational execution and financial results.
Honeywell's businesses are well positioned in attractive industries, and we
remain confident in our outlook for 25 to 30% earnings growth in 2006."
"We also completed the acquisition of First Technology plc at the end of the
quarter and expect to complete the divestiture of the non-core First
Technology Safety & Analysis business in the second quarter," continued
Cote. "Together with last year's acquisition of Zellweger Analytics, First
Technology positions our Automation and Control Solutions business as a
global leader in gas sensing and detection technologies."
First-Quarter Segment Highlights
Aerospace
* Sales were up 5% compared with the first quarter of 2005, with 10%
growth in commercial sales partially offset by a 1% reduction in Defense
and Space sales.
* Segment margins were 16.7% compared with 15.1% a year ago, due to volume
growth and realization of the expected savings from the 2005 Aerospace
reorganization, partially offset by inflation.
* Airbus selected Honeywell's HGT1500 auxiliary power unit (APU) for its
new long-range, wide-body A350 aircraft. The agreement is valued at an
estimated $4 billion in original equipment and aftermarket revenue for
Honeywell over the life of the platform.
* Honeywell received U.S. Federal Aviation Administration certification
for its Nitrogen Generation System (NGS) for Boeing's 737 airplanes.
NGS reduces the risk of flammability of an aircraft fuel tank by
injecting nitrogen-enriched air into the tank. The certification came
less than two months after the company received similar approval for the
NGS on Boeing 747 airplanes.
* Honeywell was selected by the Netherlands Ministry of Defense to provide
a fully-integrated avionics cockpit for Boeing's CH-47F (NL) Chinook
Helicopter fleet valued at an estimated $60 million over the life of the
contract.
Automation and Control Solutions
* Sales were up 19%, compared with the first quarter of 2005, driven by
the impact of acquisitions of 15% and organic sales growth of 4%, or 6%
before the negative impact of foreign exchange.
* Segment margins were 9.3% compared with 10.1% a year ago, due to planned
ERP implementation costs and a charge related to liquidity issues being
experienced by a Honeywell Building Solutions customer, which more than
offset volume growth and productivity gains.
* Sensing and Control won a $4.1 million project with BAE Systems to
provide position sensing devices for more than 440 new M2A3 Bradley
Fighting Vehicles used by the U.S. military.
* Honeywell agreed to acquire Gardiner Groupe Europe, a leading
distributor of CCTV systems, fire alarm, intrusion alarm, access
control, public address and integrated systems. The acquisition, which
is expected to close in the second quarter, will significantly enhance
Honeywell Security Group's distribution footprint in Europe with more
than 77 branch locations in 10 European countries.
Transportation Systems
* Sales were down 5%, compared with the first quarter of 2005, due to the
negative impact of foreign exchange of 4%, an anticipated decline in
European Turbo Technologies sales and the 2005 exit of the Friction
Materials OE business in North America.
* Segment margins were 13.0%, compared to 13.4% a year ago, due to planned
unfavorable mix and higher raw material costs, partially offset by
productivity gains, which include savings from previous restructuring
actions.
* Honeywell Turbo Technologies won several gas and diesel turbo contracts
with expected total revenues of more than $200 million annually through
their maturity. Additionally, Honeywell Turbo products are being
featured on Ford's new gas turbo Territory SUV.
* Honeywell's Consumer Products Group expanded its presence in the
high-performance automotive aftermarket segment with the introduction of
FRAM Boost(TM), a cold air intake system that increases engine torque
and horsepower.
Specialty Materials
* Sales were up 44% compared with the first quarter of 2005, driven by the
net impact of acquisitions and divestitures of 37% and organic sales
growth of 7%.
* Segment margins were 14.1% compared with 7.4% a year ago, due to the
positive net impact of acquisitions and divestitures and price increases
more than offsetting higher raw material costs.
* UOP LLC announced an alliance for hydroprocessing technology with
Albemarle Corp. focused on the petroleum refining industry. The
alliance will offer a wide range of hydroprocessing technologies,
catalysts and services to help refiners meet demand for refined products
and ultra-low-sulfur fuels.
* Fluorine Products announced a patented developmental refrigerant for
automotive air conditioning applications that will meet 2011 European
Union environmental standards for reducing use of global warming
substances.
Honeywell will discuss its results during its investor conference call today
starting at 8:00 a.m. EDT. To participate, please dial (706) 643-7681 a few
minutes before the 8:00 a.m. start. Please mention to the operator that you
are dialing in for Honeywell's Investor Conference Call. The live webcast of
the investor call will be available through the "Investor Relations" section
of the company's Website (http://www.honeywell.com/investor). Investors can
access a replay of the investor call starting at 11:00 a.m. EDT, April 19,
until 5:00 p.m. EDT, April 26, by dialing (706) 645-9291. The access code is
7350377.
Honeywell International is a $30 billion diversified technology and
manufacturing leader, serving customers worldwide with aerospace products
and services; control technologies for buildings, homes and industry;
automotive products; turbochargers; and specialty materials. Based in Morris
Township, N.J., Honeywell's shares are traded on the New York, London,
Chicago and Pacific Stock Exchanges. It is one of the 30 stocks that make up
the Dow Jones Industrial Average and is also a component of the Standard &
Poor's 500 Index. For additional information, please visit http://www.honeywell.com.
This release contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934. All statements, other
than statements of fact, that address activities, events or developments
that we or our management intend, expect, project, believe or anticipate
will or may occur in the future are forward-looking statements.
Forward-looking statements are based on management's assumptions and
assessments in light of past experience and trends, current conditions,
expected future developments and other relevant factors. They are not
guarantees of future performance, and actual results, developments and
business decisions may differ from those envisaged by our forward-looking
statements. Our forward-looking statements are also subject to risks and
uncertainties, which can affect our performance in both the near- and
long-term. We identify the principal risks and uncertainties that affect our
performance in our Form 10-K and other filings with the Securities and
Exchange Commission.
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