Honeywell 2008 Full-Year Sales Up 6%, Earnings Per Share up 19%
Company Delivers Fourth Quarter EPS Growth of 7% Despite Tough Economic Environment
MORRIS TOWNSHIP, N.J., January 30, 2009: Honeywell today announced full-year 2008 sales increased 6% to $36.6 billion from $34.6 billion in 2007. Earnings per share were up 19% to $3.76 versus $3.16 in the prior year. Cash flow from operations was $3.8 billion and free cash flow (cash flow from operations less capital expenditures), excluding cash taxes relating to the sale of the Consumables Solutions (CS) business, was $3.1 billion. Free cash flow conversion (free cash flow divided by net income) was 110% of net income for the full-year, excluding the CS taxes.
Fourth quarter sales were $8.7 billion versus $9.3 billion in 2007. Earnings per share were $0.97 versus $0.91 in the prior year fourth quarter. Cash flow from operations was $1.3 billion and excluding CS taxes, free cash flow was $1.1 billion. Fourth quarter free cash flow conversion was 155% of net income, excluding the CS taxes.
"Having great positions in good industries combined with strong execution drove Honeywell's performance and growth in a tough 2008 economic environment," said Honeywell Chairman and Chief Executive Officer Dave Cote. "Our key initiatives, including the Honeywell Operating System, Velocity Product Development and Functional Transformation, are working, and we're a much stronger company today because of their ongoing global implementation. In 2008, we were awarded large multi-year contracts and continued to be a strong cash generator. We also made acquisitions to bolster our portfolio, completed meaningful share repurchases, and increased the dividend rate."
"2009 will be a more challenging year," concluded Cote. "However, the actions we've taken over the past several years will benefit us in this economic downturn and have made Honeywell a more efficient, innovative, and productive company. We are well positioned and confident in our ability to outperform in 2009 and over the long-term."
Honeywell also reaffirmed its previously stated 2009 earnings per share guidance of $3.20-3.55.
Fourth Quarter Segment Highlights Aerospace -- Sales declined 1%, compared with the fourth quarter of 2007, as a result of a net decrease from acquisitions and divestitures (primarily the sale of the Consumables Solutions business), partially offset by strong sales to Business and General Aviation Original Equipment customers. Sales, excluding the impact of acquisitions and divestitures, were up 2%. -- Segment profit grew 1%, while segment margin increased by 40 bps to 19.2%, driven by sales mix, partially offset by inflation. -- Honeywell was selected to provide main engine propulsion, Auxiliary Power Unit, environmental system and cabin pressurization equipment and aircraft lighting for the new Gulfstream G250 business aircraft in an agreement valued at more than $4 billion over the life of the program (including aftermarket). -- Honeywell received a $65 million production contract for its Micro Air Vehicle, known as the T-Hawk(TM), from the U.S. military. Deliveries of 90 systems will begin in the second quarter of 2009 and conclude in December 2009. The autonomous vehicle, weighing 17 pounds and measuring 14 inches in diameter, can fly to inspect hazardous areas for threats without exposing warfighters to enemy fire. -- Honeywell was awarded a $52 million contract to deliver F124-GA-200 engines to Alenia Aermacchi, a Finmeccanica Company, for the production of the Advanced Jet Trainer M-346. The design and durability of this engine delivers unrivaled performance over other aircraft engines, enabling it to maintain specified thrust levels for a longer period of time. Automation and Control Solutions -- Sales were up 3%, compared with the fourth quarter of 2007, with net growth from acquisitions and divestitures, offset by the unfavorable impact of foreign exchange. -- Segment profit grew 12%, while segment margin increased by 110 bps to 13.4%, driven by increased productivity, partially offset by inflation. -- Building Solutions was awarded an Indefinite Delivery Indefinite Quantity Energy Savings Performance Contract (ESPC) by the U.S. Department of Energy, which allows Honeywell to implement up to $5 billion of energy efficiency, renewable energy and water conservation projects at federally owned buildings and facilities globally over the next 10 years. -- Process Solutions announced an $11 million contract to provide process control hardware and software to Nuon's Magnum plant, a 1,300 megawatt combined-cycle power station under construction in Eemshaven, Netherlands. The Magnum plant will use Honeywell's Experion(R) Process Knowledge System to monitor and control the state-of-the-art power station and Honeywell's Safety Manager system to establish safety practices such as process and emergency shutdowns, equipment protection, and fire and gas monitoring. -- Honeywell signed Public-Private Partnership (P3) contracts for 18 new schools in Alberta, Canada and a new hospital in Woodstock, Ontario. The projects include the design and installation of building automation, security, and life safety systems and management of the performance and maintenance of the facilities over the course of the 30-year contracts. Transportation Systems -- Sales declined 35% compared with the fourth quarter of 2007, due to lower volumes and the unfavorable impact of foreign exchange. -- Segment profit was down 96% primarily due to volume declines and inflation. -- Turbo Technologies was awarded contracts expected to total more than $90 million over the life of the programs. The programs awarded were for both passenger and commercial vehicle platforms using Honeywell's performance-enhancing, emission-compliant technologies including the latest Variable Nozzle Turbine (VNT) technology. The applications range from 1.7L passenger vehicle engines to large 7L commercial vehicle engines on models in Europe and Japan. Specialty Materials -- Sales declined 12% compared with the fourth quarter of 2007, due to lower volumes and the unfavorable impact of foreign exchange. -- Segment profit was down 16% due to volume declines and inflation. -- UOP's process technology helped develop second-generation biofuels used by Air New Zealand, Japan Airlines and Continental Airlines, which each successfully completed demonstration flights using this new alternative fuel. -- Advanced Fibers and Composites announced that its high-strength Spectra fiber is now being used in industrial slings for offshore oil and gas exploration and has also expanded its line of Spectra Shield II ballistic material for body and vehicle armor.
Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EST. To participate, please dial (719) 325-4755 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 HONEYWELL INVESTOR. Investors can access a replay of the conference call from 11:00 a.m. EST, January 30, until midnight, February 6, by dialing (719) 457-0820. The access code is 3381490.