HONEYWELL INTERNATIONAL INC. 
(Dollars in tables and graphs in millions)
The following Management Discussion and Analysis is intended to help the reader understand the results of operations and financial condition ofHoneywell International Inc. and its consolidated subsidiaries (Honeywell or the Company) for the three and six months endedJune 30, 2022 . The financial information as ofJune 30, 2022 , should be read in conjunction with the Consolidated Financial Statements for the year endedDecember 31, 2021 , contained in our 2021 Annual Report on Form 10-K. See Note 3 Acquisitions and Divestitures of Notes to Consolidated Financial Statements for a discussion of acquisition and divestiture activity during the six months endedJune 30, 2022 .
BUSINESS UPDATE
We continue to monitor several macroeconomic and geopolitical trends, that have impacted our business, including changing conditions from the COVID-19 pandemic, the on-goingRussia -Ukraine conflict, inflationary cost pressures, supply chain disruptions, and labor shortages. InJuly 2022 , we will realign certain business units within the Safety and Productivity Solutions reportable business segment. This realignment will not impact the four reportable business segments identified by the Company. We intend to report financial performance based on this realignment effective with the reporting of third quarter 2022 results. See Note 18 Subsequent Events of Notes to the Consolidated Financial Statements for additional information.
COVID-19 UPDATE
The COVID-19 pandemic continues to impact our business operations, and our customers' and suppliers' ability to operate at normal levels. Disruptions in normal operating levels continue to create supply chain disruptions and inflationary cost pressures within our end-markets. We anticipate supply chain constraints, and the inflationary environment will continue during 2022. As such, we implemented short-term and long-term strategies to reduce the impact of current and future effects. During the first half of 2022, governments around the world removed many restrictions on businesses and the general public. We continue to operate our manufacturing sites at normal production levels. As ofJune 30, 2022 , we have returned nearly all of our non-manufacturing employees to the workplace.
We continue to actively monitor regional COVID-19 outbreaks, and the related government restrictions and lockdown activities in the areas we operate. To date, the impacts of these actions have not been material.
See the section titled Review of Business Segments for additional information on the impacts of COVID-19, inflationary cost pressures, supply chain disruptions, and labor shortages, to our businesses.
In response to the Russian invasion ofUkraine , inMarch 2022 , we suspended substantially all of our sales, distribution, and service activities inRussia andBelarus (the Suspension), and inJune 2022 , we decided to wind down our existing businesses and operations inRussia (the Wind down). Through the Wind down of our businesses and operations, we will seek to collect outstanding accounts receivables, liquidate our inventory and fixed assets, negotiate and settle existing contractual obligations, trade payables and guarantees, and terminate and payout severance to impacted employees. The Suspension and Wind down impacts all of our reportable business segments, with the most significant impact to our Performance Materials and Technologies segment. In early 2022, we created aUkraine Relief Fund , allowing employees to make donations to support organizations that are providing direct assistance to Ukrainians and those that are assisting them in the midst of this humanitarian crisis.
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During the three and six months endedJune 30, 2022 , we recognized$126 million and$309 million , respectively, of charges and the accrual of reserves due to the initial Suspension and Wind down of our businesses and operations. The charges and accrual of reserves during the second quarter of 2022 were primarily related to foreign exchange revaluation on an intercompany loan with a Russian affiliate, inventory reserves, the write-down of other assets, impairment of property, plant and equipment, employee severance, and a tax valuation allowance. The respective impacts to revenues, net income, net assets, cash flow from operations, or our global workforce are not material for the periods recognized. For the year endedDecember 31, 2021 , revenues from sales inRussia represented approximately 1% of our global revenues, while assets inRussia represented less than 1% of our total assets. Based on available information to date, the Company's estimate of potential future losses or other contingencies related to the Suspension and Wind down activities, including any guarantee payments or any litigation costs or as otherwise related to our Wind down inRussia , could adversely affect the Company's consolidated results of operations in the periods recognized but would not be material with respect to the Company's consolidated financial position. As the conflict continues to evolve, existing conditions may worsen or other impacts that are unknown at this time may arise that could have a material adverse effect on our consolidated financial position. TheRussia -Ukraine conflict caused certain commodity prices to spike, adding to the inflationary pressures in the global economy. We considered the impacts of the conflict on oil and gas prices in our short-term and long-term strategies discussed in the above. Additionally, we continue to assess the current and future impacts of the conflict on already constrained supply chains.
See Item 1A. Risk Factors for additional information on potential risks to our business.
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RESULTS OF OPERATIONS
Consolidated Financial Results
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TABLE OF CONTENTSNet Sales by Segment
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Segment Profit by Segment
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CONSOLIDATED OPERATING RESULTS
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The change in net sales was attributable to the following:
Year to Date 2022 vs.
Q2 2022 vs. Q2 2021 2021
Volume (5) % (5) %
Price 9 % 8 %
Foreign Currency Translation (2) % (3) %
2 % - %
Q2 2022 compared with Q2 2021
Net sales increased due to the following:
•Favorable pricing to offset higher direct and indirect material costs and higher labor costs,
•Partially offset by lower sales volumes in our Safety and Productivity Solutions segment, and
•The unfavorable impact of foreign currency translation, driven by the
strengthening of the
YTD 2022 compared with YTD 2021 Net sales increased due to the following:
•Favorable pricing to offset higher direct and indirect material costs and higher labor costs,
•Partially offset by lower sales volumes in our Safety and Productivity Solutions segment, and
•The unfavorable impact of foreign currency translation, driven by the
strengthening of the
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Cost of Products and Services Sold
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Q2 2022 compared with Q2 2021 Cost of products and services sold increased due to the following:
•Higher direct and indirect material costs and higher labor costs, and
•Higher repositioning and other charges,
•Partially offset by lower sales volumes in our Safety and Productivity Solutions segment, and favorable impact of foreign currency translation.
YTD 2022 compared with YTD 2021 Cost of products and services sold increased due to the following:
•Higher direct and indirect material costs and higher labor costs, and
•Higher repositioning and other charges,
•Partially offset by lower sales volumes in our Safety and Productivity Solutions segment, and favorable impact of foreign currency translation.
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Gross Margin
[[Image Removed: hon-20220630_g12.jpg]][[Image Removed: hon-20220630_g13.jpg]][[Image Removed: hon-20220630_g14.jpg]] Q2 2022 compared with Q2 2021 Gross margin as a percentage of net sales increased due to the following:
•Favorable pricing,
•Partially offset by lower gross margins due to higher direct and indirect material costs and higher labor costs, higher repositioning and other charges and lower sales volumes in our Safety and Productivity Solutions segment. YTD 2022 compared with YTD 2021 Gross margin and Gross margin as a percentage of net sales increased due to the following: •Favorable pricing, •Partially offset by lower gross margins due to higher direct and indirect material costs and higher labor costs, higher repositioning and other charges and lower sales volumes in our Safety and Productivity Solutions segment.
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Selling, General and Administrative Expenses
[[Image Removed: hon-20220630_g15.jpg]][[Image Removed: hon-20220630_g16.jpg]][[Image Removed: hon-20220630_g17.jpg]] Q2 2022 compared with Q2 2021 Selling, general and administrative expenses increased due to the following:
•Higher repositioning costs, and
•Higher labor costs.
YTD 2022 compared to YTD 2021 Selling, general and administrative expenses increased due to the following:
•Higher repositioning costs,
•Higher labor costs, and
•Charges and accrual of reserves directly attributable to the initial Suspension
and Wind down of businesses and operations in
Other (Income) Expense
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Other (Income) Expense $ (190) $ (366) Q2 2022 compared with Q2 2021 Other income decreased due to the following:
•Charges and accrual of reserves directly attributable to the initial Suspension
and Wind down of businesses and operations in
•Recognition of an expense related to UOP matters, and
•Lower pension income.
YTD 2022 compared with YTD 2021 Other income decreased due to the following:
•Prior year gain on sale of the retail footwear business,
•Charges and accrual of reserves directly attributable to the initial Suspension
and Wind down of businesses and operations in
•Lower pension income, and
•Recognition of an expense related to UOP matters.
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TABLE OF CONTENTS Tax Expense [[Image Removed: hon-20220630_g18.jpg]][[Image Removed: hon-20220630_g19.jpg]][[Image Removed: hon-20220630_g20.jpg]] Q2 2022 compared with Q2 2021 The effective tax rate increased, and was higher than theU.S. federal statutory rate of 21%, due to the following: •Charges and accrual of reserves directly attributable to the initial Suspension and Wind down of our businesses and operations inRussia with no corresponding tax benefit,
•Expense related to UOP matters with no corresponding tax benefit,
•Lower tax benefits for employee share-based compensation, and
•Incremental tax reserves and state taxes,
•Partially offset by the favorable resolution of certain foreign tax matters.
For further discussion of changes in the effective tax rate, see Note 6 Income Taxes of Notes to Consolidated Financial Statements.
YTD 2022 compared with YTD 2021 The effective tax rate increased, and was higher than theU.S. federal statutory rate of 21%, due to the following: •Charges and accrual of reserves directly attributable to the initial Suspension and Wind down of our businesses and operations inRussia with no corresponding tax benefit,
•Expense related to UOP matters with no corresponding tax benefit,
•Lower tax benefits for employee share-based compensation, and
•Incremental tax reserves and state taxes,
•Partially offset by the favorable resolution of certain foreign tax matters.
For further discussion of changes in the effective tax rate, see Note 6 Income Taxes of Notes to Consolidated Financial Statements.
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Net Income Attributable to Honeywell
[[Image Removed: hon-20220630_g21.jpg]][[Image Removed: hon-20220630_g22.jpg]][[Image Removed: hon-20220630_g23.jpg]] Q2 2022 compared to Q2 2021 Earnings per share of common stock-assuming dilution decreased, driven by the following:
•Higher repositioning and other charges, including charges and accrual of
reserves directly attributable to the initial Suspension and Wind down of
businesses and operations in
•The recognition of an expense related to UOP matters, and
•Lower pension income,
•Partially offset by higher segment profit and the favorable impact of lower share count.
YTD 2022 compared to YTD 2021 Earnings per share of common stock-assuming dilution decreased, driven by the following:
•Higher repositioning and other charges, including charges and accrual of
reserves directly attributable to the initial Suspension and Wind down of
businesses and operations in
•Prior year gain on sale of the retail footwear business,
•The recognition of an expense related to UOP matters, and
•Lower pension income,
•Partially offset by higher segment profit, and the favorable impact of lower share count.
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REVIEW OF BUSINESS SEGMENTS
We globally manage our business operations through four segments: Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.
AEROSPACE
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Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Net sales $ 2,898 $ 2,766 5 % $ 5,647 $ 5,398 5 %
Cost of products and services sold 1,922 1,846 3,681 3,502
Selling, general and administrative and
other expenses 209 210 446 424
Segment profit $ 767 $ 710 8 % $ 1,520 $ 1,472 3 %
2022 vs. 2021
Three Months Ended Six Months Ended
June 30, June 30,
Net Segment Net Segment
Factors Contributing to Year-Over-Year Change Sales Profit Sales Profit
Organic(1) 5 % 8 % 5 % 4 %
Foreign currency translation - % - % - % (1) %
Acquisitions, divestitures and other, net - % - % - % - %
Total % Change 5 % 8 % 5 % 3 %
(1) Organic sales % change, presented for all of our reportable business
segments, is defined as the change in net sales, excluding the impact on sales
from foreign currency translation and acquisitions, net of divestitures, for the
first 12 months following the transaction date. We believe this non-GAAP measure
is useful to investors and management in understanding the ongoing operations
and analysis of ongoing operating trends.
Q2 2022 compared to Q2 2021
Sales increased due to favorable pricing, higher demand for our aftermarket
products and services as flight hours increase from pandemic lows, and higher
demand from commercial OEMs, partially offset by lower volumes in domestic and
international defense.
•Commercial Aviation Original Equipment sales increased 21% (increased 22% organic) due to higher demand in air transport and regional and business aviation.
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•Commercial Aviation Aftermarket sales increased 19% (increased 19% organic) due to higher demand and favorable pricing in air transport and regional and business aviation.
•Defense and Space sales decreased 12% (decreased 11% organic) due to lower sales volumes in domestic and international defense.
Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs.
Segment profit increased due to favorable pricing, partially offset by higher direct and indirect material costs and higher labor costs.
YTD 2022 compared to YTD 2021 Sales increased due to favorable pricing, and higher demand for our aftermarket products and services, as flight hours increase from pandemic lows, and commercial OEMs, partially offset by lower volumes in domestic and international defense.
•Commercial Aviation Original Equipment sales increased 16% (increased 16% organic) due to higher demand in air transport.
•Commercial Aviation Aftermarket sales increased 23% (increased 24% organic) due to higher demand, and favorable pricing in air transport and regional and business aviation.
•Defense and Space sales decreased 13% (decreased 13% organic) due to lower sales volumes in domestic and international defense.
Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs and higher sales volumes.
Segment profit increased due to favorable pricing and higher sales volumes, partially offset by offset by higher direct and indirect material costs and higher labor costs.
HONEYWELL BUILDING TECHNOLOGIES
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Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Net sales $ 1,531 $ 1,407 9 % $ 2,960 $ 2,765 7 %
Cost of products and services sold 884 822 1,723 1,611
Selling, general and administrative and
other expenses 287 270 541 534
Segment profit $ 360 $ 315 14 % $ 696 $ 620 12 %
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2022 vs. 2021
Three Months Ended Six Months Ended
June 30, June 30,
Net Segment Net Segment
Factors Contributing to Year-Over-Year Change Sales Profit Sales Profit
Organic 14 % 20 % 11 % 17 %
Foreign currency translation (6) % (7) % (5) % (6) %
Acquisitions, divestitures and other, net 1 % 1 % 1 % 1 %
Total % Change 9 % 14 % 7 % 12 %
Q2 2022 compared to Q2 2021
Sales increased due to favorable pricing and higher volumes, partially offset by
the unfavorable impact of foreign currency translation.
•Sales in Products increased 15% (increased 20% organic) due to favorable pricing and higher demand for certain product offerings, partially offset by the unfavorable impact of foreign currency translation.
•Sales in
Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs and higher volumes of lower margin products, partially offset by the favorable impact of foreign currency translation.
Segment profit increased due to favorable pricing and higher demand for certain product offerings, partially offset by higher direct and indirect material costs and higher labor costs, and the unfavorable impact of foreign currency translation. YTD 2022 compared to YTD 2021 Sales increased due to favorable pricing and higher sales volumes, partially offset by the unfavorable impact of foreign currency translation.
•Sales in Products increased 14% (increased 17% organic) due to favorable pricing and higher demand for certain product offerings, partially offset by the unfavorable impact of foreign currency translation.
•Sales in
Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs, lower productivity, and higher sales volumes of lower margin products, partially offset by the favorable impact of foreign currency translation. Segment profit increased due to favorable pricing, partially offset by higher direct and indirect material costs and higher labor costs and the unfavorable impact of foreign currency translation.
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PERFORMANCE MATERIALS AND TECHNOLOGIES
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Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Net sales $ 2,694 $ 2,552 6 % $ 5,147 $ 4,898 5 %
Cost of products and services sold 1,734 1,696 3,335 3,287
Selling, general and administrative and
other expenses 359 326 701 647
Segment profit $ 601 $ 530 13 % $ 1,111 $ 964 15 %
2022 vs. 2021
Three Months Ended Six Months Ended
June 30, June 30,
Net Segment Net Segment
Factors Contributing to Year-Over-Year Change Sales Profit Sales Profit
Organic 10 % 18 % 8 % 19 %
Foreign currency translation (4) % (5) % (3) % (4) %
Acquisitions, divestitures and other, net - % - % - % - %
Total % Change 6 % 13 % 5 % 15 %
Q2 2022 compared to Q2 2021
Sales increased due to favorable pricing, partially offset by the unfavorable
impact of foreign currency translation and lower sales volumes due to the impact
of the Russia -Ukraine conflict.
•UOP sales decreased 1% (decreased 1% organic) due to lower demand for new oil
and gas projects and the impact of the Russia -Ukraine conflict, partially offset
by favorable pricing.
•Process Solutions sales increased 1% (increased 7% organic) due to favorable
pricing and higher demand for certain products and services, partially offset by
the unfavorable impact of foreign currency translation, and the impact of the
Russia -Ukraine conflict.
•Advanced Materials sales increased 17% (increased 21% organic) due to favorable pricing and higher demand for specialty products, partially offset by the unfavorable impact of foreign currency translation.
Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs, partially offset by lower sales volumes due to the impact of theRussia -Ukraine conflict and the favorable impact of foreign currency translation.
Segment profit increased due to favorable pricing, partially offset by higher direct and indirect material costs and higher labor costs and lower sales volumes of higher margin products.
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YTD 2022 compared to YTD 2021 Sales increased due to favorable pricing, partially offset by the unfavorable impact of foreign currency translation and lower sales volumes primarily due to the impact of theRussia -Ukraine conflict. •UOP sales decreased 5% (decreased 5% organic) due to lower demand for new oil and gas projects and the impact of theRussia -Ukraine conflict, partially offset by favorable pricing. •Process Solutions sales increased 3% (increased 7% organic) due to favorable pricing and higher demand for certain products and services, partially offset by the unfavorable impact of foreign currency translation and the impact of theRussia -Ukraine conflict. •Advanced Materials sales increased 15% (increased 19% organic) due to favorable pricing and higher demand for specialty products, partially offset by the unfavorable impact of foreign currency translation and lower demand for fluorine products. Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs, partially offset by lower sales volumes primarily due to the impact of theRussia -Ukraine conflict and the favorable impact of foreign currency translation.
Segment profit increased due to favorable pricing, partially offset by higher direct and indirect material costs and higher labor costs.
SAFETY AND PRODUCTIVITY SOLUTIONS
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Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Net sales $ 1,829 $ 2,083 (12) % $ 3,573 $ 4,201 (15) %
Cost of products and services sold 1,310 1,523 2,528 3,073
Selling, general and administrative and
other expenses 288 268 561 533
Segment profit $ 231 $ 292 (21) % $ 484 $ 595 (19) %
2022 vs. 2021
Three Months Ended Six Months Ended
June 30, June 30,
Net Segment Net Segment
Factors Contributing to Year-Over-Year Change Sales Profit Sales Profit
Organic (10) % (18) % (12) % (16) %
Foreign currency translation (2) % (3) % (2) % (2) %
Acquisitions, divestitures and other, net - % - % (1) % (1) %
Total % Change (12) % (21) % (15) % (19) %
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Q2 2022 compared to Q2 2021 Sales decreased due to lower sales volumes and the unfavorable impact of foreign currency translation, partially offset by favorable pricing.
•Sales in Safety and Retail decreased 21% (decreased 18% organic) due to lower demand for personal protective equipment, partially offset by favorable pricing.
•Sales in Productivity Solutions and Services increased 14% (increased 19% organic) due to favorable pricing and higher sales volumes (driven by a licensing agreement executed in the second quarter of 2022, discussed below), partially offset by the unfavorable impact of foreign currency translation.
•Sales in Warehouse and Workflow Solutions decreased 26% (decreased 25% organic) due to lower demand and timing of projects.
•Sales in Advanced Sensing Technologies increased 21% (increased 25% organic) due to higher demand and favorable pricing, partially offset by the unfavorable impact of foreign currency translation. Cost of products and services sold decreased due to lower sales volumes and the favorable impact of foreign currency translation, partially offset by higher direct and indirect material costs and higher labor costs and lower productivity including a write-down of mask inventory.
Segment profit decreased primarily due to lower productivity and lower sales volumes, partially offset by favorable pricing.
YTD 2022 compared to YTD 2021 Sales decreased due to lower sales volumes, the unfavorable impact of foreign currency translation, and the sale of the retail footwear business, partially offset by favorable pricing. •Sales in Safety and Retail decreased 27% (decreased 22% organic) due to lower demand for personal protective equipment and the sale of the retail footwear business, partially offset by favorable pricing. •Sales in Productivity Solutions and Services increased 14% (increased 17% organic) due to favorable pricing and higher sales volumes (driven by a licensing agreement executed in the second quarter of 2022, discussed below), partially offset by the unfavorable impact of foreign currency translation.
•Sales in Warehouse and Workflow Solutions decreased 27% (decreased 26% organic) due to lower demand and timing of projects.
•Sales in Advanced Sensing Technologies increased 22% (increased 25% organic) due to higher demand and favorable pricing, partially offset by the unfavorable impact of foreign currency translation. Cost of products and services sold decreased due to lower sales volumes and the favorable impact of foreign currency translation, partially offset by higher direct and indirect material costs and higher labor costs and lower productivity including a write-down of mask inventory.
Segment profit decreased primarily due to lower productivity and lower sales volumes, partially offset by favorable pricing.
During the second quarter of 2022, our Productivity Solutions and Services business entered into a license and settlement agreement (the Agreement). Under the Agreement, we will receive up to$360 million , paid in equal quarterly installments over eight quarters, beginning with the second quarter of 2022. The Agreement provides each party a license to its existing patent portfolio for use by the other party's existing products and, resolves all patent-related litigation between the parties.
CORPORATE AND ALL OTHER
Corporate and All Other primarily includes unallocated corporate costs, interest expense on holding-company debt, and the controlling majority-owned interest in Quantinuum. Corporate and All Other is not considered a separate reportable business segment as segment reporting criteria is not met for the activities reported with Corporate and All Other. The Company continues to monitor the activities in Corporate and All Other to determine the need for further reportable business segment disaggregation.
REPOSITIONING CHARGES
See Note 5 Repositioning and Other Charges of Notes to Consolidated Financial Statements for a discussion of our repositioning actions and related charges incurred in the six months endedJune 30, 2022 and 2021. Cash spending related to our repositioning actions was$157 million in the six months endedJune 30, 2022 , and was funded through operating cash flows.
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LIQUIDITY AND CAPITAL RESOURCES
(Dollars in tables in millions)
We continue to manage our businesses to maximize operating cash flows as the primary source of liquidity. Each of our businesses is focused on increasing operating cash flows through revenue growth, margin expansion, and improved working capital turnover. Additional sources of liquidity include committed credit lines, short-term debt from the commercial paper market, long-term borrowings, access to the public debt and equity markets,U.S. cash balances, and the ability to access non-U.S. cash balances.
CASH
We monitor the third-party depository institutions that hold our cash and cash equivalents on a daily basis. Our emphasis is primarily safety of principal and secondarily maximizing yield of those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities. As ofJune 30, 2022 , andDecember 31, 2021 , we held$8.7 billion and$11.5 billion , respectively, of cash and cash equivalents, including our short-term investments.
BORROWINGS
Consolidated total borrowings were
June 30, 2022 December 31, 2021
Commercial paper and other short-term borrowings $ 3,487 $ 3,542
Variable rate notes 622 622
Fixed rate notes 15,048 15,314
Other 123 332
Debt issuance costs (203) (211)
Total borrowings $ 19,077 $ 19,599
A source of liquidity is our ability to access the commercial paper market.
Commercial paper notes are sold at a discount or premium and have a maturity of
not more than 365 days from date of issuance. Borrowings under the commercial
paper program are available for general corporate purposes as well as for
financing acquisitions.
We also have the following revolving credit agreements:
•A$1.5 billion 364-Day Credit Agreement (the 364-Day Credit Agreement) with a syndicate of banks, datedMarch 24, 2022 . Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later thanMarch 23, 2023 , unless (i) we elect to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full onMarch 23, 2024 , or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 364-Day Credit Agreement replaced the previously reported$1.5 billion 364-day credit agreement dated as ofMarch 31, 2021 , which was terminated in accordance with its terms effectiveMarch 24, 2022 . As ofJune 30, 2022 , there were no outstanding borrowings under our 364-Day Credit Agreement. •A$4.0 billion Five Year Credit Agreement (the 5-Year Credit Agreement) with a syndicate of banks, datedMarch 24, 2022 . Commitments under the 5-Year Credit Agreement can be increased pursuant to the terms of the 5-Year Credit Agreement to an aggregate amount not to exceed$4.5 billion . The 5-Year Credit Agreement amended and restated the previously reported$4.0 billion amended and restated five year credit agreement dated as ofMarch 31, 2021 . As ofJune 30, 2022 , there were no outstanding borrowings under our 5-Year Credit Agreement. We also have a current shelf registration statement filed with theSecurities and Exchange Commission (SEC) under which we may issue additional debt securities, common stock, and preferred stock that may be offered in one or more offerings on terms to be determined at the time of the offering. We anticipate that net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, share repurchases, capital expenditures and acquisitions.
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CREDIT RATINGS
Our ability to access the global debt capital markets and the related cost of these borrowings is affected by the strength of our credit rating and market conditions. Our credit ratings are periodically reviewed by the major independent debt-rating agencies. As ofJune 30, 2022 , S&P Global Inc. (S&P),Fitch Ratings Inc. (Fitch), and Moody's Investor Service (Moody's) have ratings on our debt set forth in the table below: S&P Fitch Moody's Outlook Stable Stable Stable Short-term A-1 F1 P1 Long-term A A A2 CASH FLOW SUMMARY
Our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows, are summarized as follows:
Six Months
Ended
2022 2021 Variance
Cash and cash equivalents at beginning of period $ 10,959 $
14,275
Operating activities Net income attributable to Honeywell 2,395 2,857 (462) Noncash adjustments 931 411 520 Changes in working capital (1,578) 4 (1,582) Other operating activities (923) (1,016) 93 Net cash provided by operating activities 825 2,256 (1,431) Net cash provided by (used for) investing activities 414 (1,243) 1,657 Net cash used for financing activities (3,832) (3,877) 45 Effect of exchange rate changes on cash (118) 16 (134) Net increase (decrease) in cash and cash equivalents (2,711) (2,848) 137 Cash and cash equivalents at end of period$ 8,248 $
11,427
Cash related to operating activities decreased due to an unfavorable impact to working capital and a decrease in net income, partially offset by an increase in noncash adjustments, primarily driven by an increase in repositioning and other charges, and a gain from the 2021 sale of the retail footwear business. Cash related to investing activities increased by$1,657 million primarily due to a$1,149 million decrease in cash paid for acquisitions, and$360 million increase in cash receipts from settlements of derivative contracts, partially offset by$242 million net increase in investments, and$190 million in proceeds from the 2021 sale of the retail footwear business. Cash related to financing activities increased by$45 million primarily due to$746 million decrease in payments of long-term debt, partially offset by$588 million increase in repurchases of common stock and$55 million increase in cash dividends paid.
CASH REQUIREMENTS AND ASSESSMENT OF CURRENT LIQUIDITY
In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures, share repurchases, dividends, strategic acquisitions and debt repayments. OnFebruary 12, 2021 , the Board of Directors authorized the repurchase of up to a total of$10 billion of Honeywell common stock, which included amounts remaining under, and replaced, the previously approved share repurchase program. During the six months endedJune 30, 2022 , the Company repurchased common stock of$2,437 million . Refer to the section titled Liquidity and Capital Resources of our 2021 Form 10-K for a discussion of our expected capital expenditures, share repurchases, and dividends for 2022.
We continue to identify opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers and sales of our trade receivables to unaffiliated financial institutions without recourse. The impact of these programs is not material to our overall liquidity.
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We continue to assess the relative strength of each business in our portfolio as to strategic fit, market position, profit, and cash flow contribution in order to identify target investment and acquisition opportunities in order to upgrade our combined portfolio. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also identify businesses that do not fit into our long-term strategic plan based on their market position, relative profitability, or growth potential. These businesses are considered for potential divestiture, restructuring, or other repositioning actions, subject to regulatory constraints. Based on past performance and current expectations, we believe that our operating cash flows will be sufficient to meet our future operating cash needs. Our available cash, committed credit lines and access to the public debt and equity markets provide additional sources of short-term and long-term liquidity to fund current operations, debt maturities, and future investment opportunities.
See Note 8 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional discussion of items impacting our liquidity.
OTHER MATTERS LITIGATION We are subject to a number of lawsuits, investigations, and claims (some of which involve substantial amounts) arising out of the conduct of our business. See Note 14 Commitments and Contingencies of Notes to Consolidated Financial Statements for further discussion of environmental, asbestos and other litigation matters.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes to our Critical Accounting Estimates presented in our 2021 Annual Report on Form 10-K. For a discussion of the Company's Critical Accounting Estimates, see the section titled Critical Accounting Estimates in our 2021 Annual Report on Form 10-K.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 2 Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements.
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