Honeywell Security Business Up 20 Per Cent
The company reported earnings of 55 cents per share in the third quarter, an increase of 28 per cent versus 43 cents per share in the third quarter of 2004. Net income was $470 million for the quarter compared with $372 million last year. Cash flow from operations was $705 million and free cash flow (cash flow from operations less capital expenditures) was $543 million. “This was another strong quarter for Honeywell, highlighted by 5 per cent organic growth and a full point of margin expansion,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “We continued to make significant progress in positioning the business for growth. We announced our intent to acquire the remaining 50 per cent interest in our UOP joint venture, a leading technology provider to the petroleum refining, petrochemical and gas processing industries. In addition, we are divesting our non-core U.S. nylon carpet fiber operations. Both transactions are expected to close in the fourth quarter and will substantially complete the portfolio transformation of our Specialty Materials business. We also reached a definitive agreement to sell Indalex Aluminum Solutions, one of the two non-core Novar businesses, at terms that are in line with prior expectations.” The company also updated its previously announced 2005 financial guidance. Sales for the full year are anticipated to be up 8 per cent to approximately $27.6 billion and free cash flow is expected to be $1.7 – $1.8 billion (cash flow from operations of $2.5 – $2.6 billion). Earnings per share (excluding the tax charge associated with the repatriation of foreign earnings related to the provisions of the American Jobs Creation Act of 2004) is expected to be $2.11 – $2.13 ($1.93 – $1.95 per share on a reported basis), up 30 per cent on a reported basis. Third Quarter Segment Highlights Aerospace — Sales were up 6 per cent compared with the third quarter of 2004, with 9 per cent growth in commercial markets and 3 per cent growth in defense and space sales. — Segment margins were 16.8 per cent compared with 15.4 per cent a year ago, due to strong volume growth. — Aerospace received European Aviation Safety Agency certification for its Runway Awareness and Advisory System (RAAS) on a range of business aviation aircraft. French regulatory authorities also approved RAAS for the Boeing 777 aircraft. — Defense and Space delivered RDR-4000M, the first of its next-generation weather radar systems, to the United States Air Force for installation in a C-17 Globemaster III. This system is the military variant of the commercial RDR-4000 system, selected for the new Airbus A380, and recently selected for Singapore Airlines new fleet of Boeing 777’s. — Defense and Space was selected by Bell Helicopter to provide the HTS900 engine, the Radar Altimeter and the Embedded Global Positioning System/Inertial Navigation System for the Armed Reconnaissance Helicopter. Automation and Control Solutions — Sales were up 23 per cent compared with the third quarter of 2004, driven by organic sales growth of 4 per cent, primarily in the Security and Life Safety businesses, and the impact of acquisitions of 19 per cent. — Segment margins were 12.3 per cent compared with 11.8 per cent a year ago, as productivity gains more than offset the anticipated dilutive impact of acquisitions. Excluding the impact of acquisitions, segment margins would have expanded to 12.8 per cent. — VisionPRO(TM) and FocusPRO(TM), the award-winning centerpieces of Honeywell’s new thermostat offerings, continued to experience strong customer acceptance, which helped drive 15 per cent growth in the North American trade channel of the Environmental and Combustion Controls business. — Building Solutions signed energy savings performance contracts totaling more than $50 million in the third quarter, including Altus Air Force Base in Oklahoma and Rochester, N.H. schools, and introduced Honeywell MiniRetrofit(TM) Service, a new facility-optimization program that allows building managers in the commercial/industrial sector to replace aging infrastructure with high-efficiency equipment and systems. — Process Solutions won a $48 million agreement to provide comprehensive e-retail solutions to the Indian Oil Corporation Ltd and the Hindustan Petroleum Corporation, as well as a $10 million five-year oil and gas process automation solutions contract to service four Sonatrach sites in Algeria.