Earnings Per Share of
Organic Sales up 8%;
Operating Margin up
Deployed
Orders up High Single Digits, up Double Digits Ex-COVID Mask Demand; Backlog up 7% to
'The third quarter was another strong one for Honeywell, with sales growth in all four segments, significant margin expansion, and exceptional execution even as we faced tough challenges in the supply chain environment,' said
Adamczyk continued, 'Our disciplined approach to productivity and pricing helped deliver a strong third quarter despite an uncertain global environment marked by supply chain constraints, increasing raw material inflation, and labor market challenges. We continue to focus on mitigating these challenges in the fourth quarter, while capitalizing on near-term growth opportunities across our portfolio.'
Honeywell updated its full-year guidance to reflect the persistent effects of the macro-challenged environment as well as the third-quarter results. Full-year sales are now expected to be in the range of
Third-Quarter Performance
Honeywell sales for the third quarter were up 9% on a reported basis and up 8% on an organic basis. The third-quarter financial results can be found in Tables 2 and 3.
Aerospace sales for the third quarter were up 2% on an organic basis driven by an ongoing recovery in commercial aftermarket demand as flight hours continued to increase as well as by strong growth in business and general aviation original equipment, partially offset by lower defense volumes, which were impacted by supply chain constraints. Commercial aftermarket sales were up 38% year over year and air transport aftermarket sales were up double digits sequentially from the second quarter, demonstrating momentum in the aftermarket recovery. Segment margin expanded 390 basis points to 27.1% driven by commercial excellence, favorable sales mix, and productivity net of inflation.
Honeywell Building Technologies sales for the third quarter were up 3% on an organic basis driven by strength across the building products portfolio and continued growth in building solutions services. Orders were up double digits year over year, driven by strong demand for building projects and products. The services backlog was up over 35% driven by strong global bookings, positioning the business for continued growth. Segment margin expanded 190 basis points to 23.5% driven by commercial excellence and productivity, partially offset by inflation.
Performance Materials and Technologies sales for the third quarter were up 9% on an organic basis driven by demand for process solutions services and thermal solutions, petrochemical catalyst shipments and equipment volumes in
Safety and Productivity Solutions sales for the third quarter were up 21% on an organic basis driven by another quarter of double-digit growth in the warehouse and workflow solutions, productivity solutions and services, and gas analysis businesses, partially offset by lower personal protective equipment volumes. Orders were up double digits year over year driven by over 50% orders growth in warehouse and workflow solutions, productivity solutions and services, and advanced sensing, which should drive continued growth. Segment margin contracted 70 basis points to 13.2% driven by unfavorable business mix and Intelligrated supply chain challenges, partially offset by commercial excellence.
Conference Call Details
Honeywell will discuss its third-quarter results and updated full-year guidance during an investor conference call starting at
TABLE 1: FULL-YEAR 2021 GUIDANCE5
Previous Guidance
Current Guidance
Sales
Organic Growth
4% - 6%
4% - 5%
Segment Margin
20.8% - 21.1%
20.9% - 21.1%
Expansion
Up 40 - 70 bps
Up 50 - 70 bps
Adjusted Earnings Per Share2
Adjusted Earnings Growth3
12% - 14%
13% - 14%
Operating Cash Flow
Free Cash Flow
TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS
3Q 2021
3Q 2020
Change
Sales
8,473
7,797
9%
Organic Growth
8%
Segment Margin
21.2%
19.9%
130 bps
Operating Income Margin
18.6%
16.8%
180 bps
Earnings Per Share
68%
Adjusted Earnings Per Share1
29%
Cash Flow from Operations
1,119
1,007
11%
Operating Cash Flow Conversion
89%
133%
(44%)
Free Cash Flow
911
758
20%
Adjusted Free Cash Flow Conversion4
64%
68%
(4%)
TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS
AEROSPACE
3Q 2021
3Q 2020
Change
Sales
2,732
2,662
3%
Organic Growth
2%
Segment Profit
740
617
20%
Segment Margin
27.1%
23.2%
390 bps
HONEYWELL BUILDING TECHNOLOGIES
Sales
1,370
1,305
5%
Organic Growth
3%
Segment Profit
322
282
14%
Segment Margin
23.5%
21.6%
190 bps
PERFORMANCE MATERIALS AND TECHNOLOGIES
Sales
2,510
2,252
11%
Organic Growth
9%
Segment Profit
558
442
26%
Segment Margin
22.2%
19.6%
260 bps
SAFETY AND PRODUCTIVITY SOLUTIONS
Sales
1,861
1,578
18%
Organic Growth
21%
Segment Profit
245
219
12%
Segment Margin
13.2%
13.9%
70 bps
Q3 Financial Release Tables
1Adjusted EPS and adjusted EPS V% exclude changes in fair value for
2Adjusted EPS guidance excludes an expense related to
3Adjusted EPS V% guidance excludes an expense related to
4Adjusted free cash flow conversion is free cash flow (cash flow from operations less capital expenditures plus cash receipts from Garrett) divided by adjusted net income attributable to Honeywell. Adjusted net income attributable to Honeywell excludes 3Q20 non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett, changes in fair value for Garrett equity securities, an expense related to
5As discussed in the notes to the attached reconciliations, we do not provide guidance for margin or EPS on a GAAP basis.
Honeywell (www.honeywell.com) is a Fortune 100 technology company that delivers industry specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help everything from aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.
Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases,
This release contains certain statements that may be deemed 'forward-looking statements' within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, technological, and COVID-19 public health factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, and other developments, including the potential impact of the COVID-19 pandemic, and business decisions may differ from those envisaged by such forward-looking statements. Any forward-looking plans described herein are not final and may be modified or abandoned at any time. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the
This release contains financial measures presented on a non-GAAP basis. Honeywell's non-GAAP financial measures used in this release are as follows: segment profit, on an overall Honeywell basis, a measure by which we assess operating performance, which we define as operating income adjusted for certain items as presented in the Appendix; segment margin, on an overall Honeywell basis, which we define as segment profit divided by sales; organic sales growth, which we define as sales growth less the impacts from foreign currency translation and acquisitions and divestitures for the first 12 months following the transaction date; free cash flow, which we define as cash flow from operations less capital expenditures plus cash receipts from Garrett, if and as noted in the release; adjusted free cash flow conversion, which we define as free cash flow divided by adjusted net income attributable to Honeywell; adjusted net income attributable to Honeywell, which we define as net income attributable to Honeywell which we adjust to exclude changes in fair value for Garrett equity securities, an expense related to
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