MORRIS PLAINS, N.J., July 22, 2016 /PRNewswire/ — Honeywell (NYSE: HON) today announced its results for the second quarter of 2016:
“Honeywell grew earnings 10% in the second quarter, capping off a strong first half of 2016,” said Honeywell Chairman and CEO Dave Cote. “Sales in the quarter of $10.0B were in-line with our expectations driven by contributions from each of our business groups. In Aerospace, we saw continued momentum in Commercial Aviation Aftermarket and Transportation Systems. ACS had strong growth in Security and Fire, Buildings Solutions and Distribution, and its China business. And, PMT saw higher sales in Process Solutions and Fluorine Products, where we continue to outperform.”
“In the second quarter, we also continued to smartly deploy capital to position our businesses for sustainable growth, to add to our Great Positions in Good Industries, and to drive shareowner value. Earlier this month, we announced the acquisition of Intelligrated, a leader in supply chain and warehouse automation technologies, for $1.5 billion. This business complements our suite of transportation and logistics technologies with warehouse execution software and other technologies enabling superior efficiency in warehouse and distribution operations. We also repurchased approximately $500 million of shares during the quarter, bringing our year-to-date total to $1.6 billion, and funded $97 million in new restructuring projects.”
“As a result of our first half performance, we are raising the low-end of our full-year earnings guidance range to $6.60-$6.70, up 8%-10%. We will continue to support growth, focusing on winning in High Growth Regions, advancing our superior software capabilities, and effectively using HOS Gold to drive breakthrough initiatives and deliver high-quality products to our customers globally,” continued Cote.
The company is updating its full-year 2016 guidance and now expects:
Automation and Control Solutions Realignment
Honeywell also announced today that it is realigning its ACS business segment into two new segments: Home and Building Technologies (HBT) and Safety and Productivity Solutions (SPS). Financial performance for the third quarter of 2016 will be reported based on this realignment. For 2015, HBT and SPS would have had estimated revenues of approximately $9.4 billion and $4.7 billion, respectively.
“ACS is coming off a strong quarter and has established momentum in key software-driven markets where our products and services give us a competitive advantage, especially given our recent acquisitions such as Elster, Xtralis, Intelligrated, and Movilizer,” said Cote. “We have removed layers from our organizational structure and are well-positioned to implement a more focused segment reporting alignment that fits our HOS Gold approach to drive breakthrough strategies and speed up new product introduction. This new structure will also help us better serve our customers. Our success through acquisition and NPI has resulted in a much broader portfolio that has outgrown the existing ACS construct. Having two more nimble segments will promote greater customer intimacy and responsiveness. The separation into two businesses will also enable increased efficiency and speed of decision-making as well as a more comprehensive integrated suite of technologies for the respective end markets.”
HBT benefits from Honeywell’s advanced software and connectivity capability combined with an installed base of products and technologies in more than 150 million homes and 10 million buildings worldwide that help homeowners stay connected and in control of home comfort, security, fire systems, and air and water purification, and that help building owners and occupants ensure their facilities are safe, comfortable, and sustainable. It will include Honeywell’s Environmental & Energy Solutions (E&ES), Security and Fire, and Building Solutions and Distribution businesses. E&ES’ Industrial Combustion and Thermal business will be reclassified to Honeywell Performance Materials and Technologies (PMT). HBT will be led by Terrence Hahn, who previously ran Honeywell’s Transportation Systems unit for the past three years, launching more than 100 new engine programs per annum and overseeing the divestiture of Friction Materials. Prior to that, Hahn led the Fluorine Products business within PMT, where he established the Solstice® product line, and prior to his employment with Honeywell, held several senior leadership positions within Air Products and Chemicals Inc. He earned bachelor’s and master’s degrees in materials science from Lehigh University and an M.B.A. from The Wharton School of the University of Pennsylvania.
SPS technologies support the productivity and safety of more than half a billion workers worldwide with offerings such as rugged mobile computers, voice-enabled software and workflows, bar-code scanners, printing solutions, gas sensing technologies, and personal protective equipment. It will include Honeywell’s Sensing & Productivity Solutions and Industrial Safety business units, as well as the Intelligrated acquisition after it closes. SPS will be led by John Waldron, who has served for the past year as president of the Sensing and Productivity Solutions business unit that had been formed by the combination of Honeywell’s Scanning and Mobility (HSM) and Sensing and Controls businesses. Previously, Waldron led the HSM business and served as chief marketing officer while leading the marketing integration of several acquired businesses within the SPS portfolio, including Hand Held Products, Metrologic Instruments, and EMS Technologies. Waldron earned a bachelor’s degree in electrical engineering from the University of Dayton and an M.B.A. from the University of Notre Dame.
Succeeding Hahn as president and CEO of Transportation Systems will be Olivier Rabiller, who has held positions of increasing responsibility since joining Honeywell in 2002. For the past two years, he has managed the Transportation Systems businesses in China, India, and Brazil as part of his responsibilities for generating growth in the fastest-growing geographies around the world. His responsibilities have also included the global aftermarket; business development; mergers, acquisitions and divestitures; and licensing. He was previously vice president and general manager of the Aftermarket business within Transportation Systems. Prior to Honeywell, Rabiller served seven years at Renault in Customer Service, Engine Project Management, and Purchasing. He holds an engineering degree from Ecole Centrale Nantes and an M.B.A. from INSEAD.
“Our new business group leaders demonstrate the depth and talent of our leadership bench, and they will drive continued outperformance in their respective businesses,” said Cote.
Alex Ismail, who served as president and CEO of Automation and Control Solutions for the past two years, will leave the company. “I would like to thank Alex for a long and successful career at Honeywell, during which he led several different significant business units over many years,” concluded Cote. “Alex was instrumental in building our Turbo business into a global technology powerhouse, with rapid growth in all regions and world-leading technologies that have greatly benefited from their proximity to our Aerospace business. He then moved to Automation and Control Solutions, where he delivered strong operating margin expansion and improved operational excellence; completed several acquisitions in new strategic adjacencies such as smart meters; accelerated growth in High Growth Regions, and built a strong pipeline of new products, Internet of Things (IoT) solutions, and software for home, building, and worker applications. Alex is a well-liked and respected leader, and we wish him the best in his next endeavor.”
This realignment has no impact on Honeywell’s historical consolidated financial position, results of operations or cash flows.
Additional commentary on the second quarter 2016 results by business segment are provided below.
Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate on the conference call, please dial (877) 879-6207 (domestic) or (719) 325-4942 (international) approximately ten minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s second quarter 2016 earnings call or provide the conference code HON2Q16. The live webcast of the investor call as well as related presentation materials will be available through the “Investor Relations” section of the company’s Website (www.honeywell.com/investor). Investors can hear a replay of the conference call from 12:30 p.m. EDT, July 22, until 12:30 p.m. EDT, July 29, by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 6704637.
Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; turbochargers; and performance materials. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.
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, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. 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.