Honeywell Reports First Quarter Sales Up 15% To $8.9 Billion; Earnings Per Share Increases 40% To $0.88

MORRIS TOWNSHIP, N.J., April 20, 2011 — Honeywell (NYSE: HON) today announced first quarter 2011 sales were up 15% to $8.9 billion versus $7.8 billion in 2010. Excluding the net impact from acquisitions and foreign exchange, sales were up a record 11% organically with stronger than anticipated growth across each of the company’s businesses. Earnings per share were up 40% to $0.88 versus $0.63 in the first quarter last year. Free cash flow (cash flow from operations less Capex) in the first quarter was $0.4 billion excluding pension contributions (cash flow from operations of a negative $0.4 billion due to a $1 billion contribution to the company’s U.S. pension fund).

“Honeywell is executing well and delivering terrific results, highlighted by another quarter of record organic sales growth, margin expansion, and higher than expected earnings per share,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “I’m very pleased with our start to the year and the continued momentum we’re seeing across the portfolio. We had a particularly robust finish to the quarter with strength in our short-cycle businesses, as well as growth in commercial aerospace spares and the residential and commercial retrofit businesses. Orders in our short-cycle businesses have now increased eight consecutive quarters and our long-cycle backlog continues at near record levels. As a result of our strong first quarter and continued favorable outlook for our major markets, we’re raising our 2011 sales and EPS guidance.”

Honeywell now expects 2011 sales of $36.0-36.6 billion, up from $35.0-36.0 billion, reflecting an increase of 8-10% over 2010; and earnings in the range of $3.80-3.95 per share versus a previous estimate of $3.60-3.80 per share, an increase of 27-32% over 2010 proforma EPS of $3.00 (in each case, this excludes any mark-to-market pension adjustments). The company also reaffirmed that it expects free cash flow of $3.5-3.7 billion excluding any U.S. pension contributions in 2011 (cash flow from operations of $3.3-3.5 billion including pension contributions).

First Quarter Segment Highlights

Aerospace
• Sales were up 8% compared with the first quarter of 2010, primarily due to strong increases in Commercial OEM and aftermarket volumes, slightly offset by lower military and government services sales.
• Segment profit was up 13% and segment margin increased 80 bps to 17.3%, primarily due to increased volume, favorable mix, and productivity net of inflation.
• Honeywell SmartRunway™ and SmartLanding™ flight safety upgrades – which utilize the industry’s most trusted terrain and runway information (Honeywell’s Enhanced Ground Proximity Warning System) – are being installed in more than 245 new aircraft and 171 in-service aircraft across several fleets operating in North America and Asia. The Honeywell systems help break the chain of events that can lead to a runway excursion or incursion by providing timely aural and/or visual advisories to the flight crew.
• Honeywell has renewed a five-year contract with the U.S. Army valued at $153 million to supply, manage, and provide logistical process improvements to the Corpus Christi Army Depot for the repair and overhaul of Honeywell’s T-55 engine that powers the Chinook helicopter.
• Honeywell and Aspen Avionics are collaborating to deliver a NextGen-ready, multi-function, and touchscreen cockpit display to general aviation customers. The two companies have completed a development agreement to bring Honeywell’s open-interface Bendix/King KSN 770 to market before the end of 2011.