PR Newswire | Jul 23, 2021 06:30AM EDT

By Sales And Profit Growth; Raises Midpoint Of Adjusted EPS Guidance By 15 Cents

07/23 05:30 CDT

Honeywell Beats Guidance And Delivers Outstanding Second-Quarter Results Driven By Sales And Profit Growth; Raises Midpoint Of Adjusted EPS Guidance By 15 Cents- Sales Growth and Margin Expansion in All Four Segments; Orders up Over 20%- Reported Sales up 18%, Organic Sales up 15%- Operating Margin up 450 Basis Points to 18.1%; Segment Margin up 190 Basis Points to 20.4%- Earnings Per Share of $2.04, Adjusted Earnings Per Share? of $2.02, up 60%- Generated $1.3 Billion in Operating Cash Flow with Conversion of 89%, $1.5 Billion of Free Cash Flow with Adjusted Conversion of 103% CHARLOTTE, N.C., July 23, 2021

CHARLOTTE, N.C., July 23, 2021 /PRNewswire/ -- Honeywell (NASDAQ: HON) today announced outstanding results for the second quarter that were driven by sales and segment margin growth in all four businesses. The company also raised its full-year sales, segment margin, adjusted earnings per share, and cash flow guidance.

"Building on our first-quarter momentum, we executed extremely well in the second quarter. Our results were driven by top-line growth and margin expansion in all four segments. Organic sales grew 15%, led by double-digit growth in Performance Materials and Technologies, Honeywell Building Technologies, and Safety and Productivity Solutions," said Darius Adamczyk, chairman and chief executive officer of Honeywell. "Our increased volumes, streamlined cost base, and relentless focus on execution enabled us to expand segment margin by 190 basis points to 20.4%, exceeding the high end of our guidance by 10 basis points. As a result, we delivered adjusted earnings per share1 of $2.02, up 60% year over year and above the high end of our second-quarter guidance range. Our cash performance in the second quarter was strong, as we generated $1.5 billion of free cash flow with adjusted conversion2 of 103%, all while repurchasing $1.0 billion in Honeywell shares."

Adamczyk continued, "Our strong performance in the second quarter took place in a recovering but challenging global environment. We are especially pleased to see a turnaround in several of our key end markets that were hardest hit by the pandemic, with commercial aerospace aftermarket and the UOP business returning to growth in the quarter. We are well positioned to capitalize on improving conditions as they unfold around the world and to execute on near-term growth opportunities across our portfolio, including in the warehouse automation, productivity, building products, and advanced materials markets."

As a result of the company's second-quarter performance and management's outlook for the remainder of the year, Honeywell raised its full-year sales, adjusted earnings per share, and cash flow guidance and raised the midpoint of its segment margin guidance. Full-year sales are now expected to be in the range of $34.6 billion to $35.2 billion with organic sales growth in the range of 4% to 6%. Segment margin is expected to be in the range of 20.8% - 21.1%. Adjusted earnings per share3 is expected to be $7.95 to $8.10, up 10 cents from the high end of the prior guidance range. Operating cash flow is now expected to be in the range of $5.9 billion to $6.2 billion and free cash flow is now expected to be in the range of $5.3 billion to $5.6 billion. A summary of the company's full-year guidance changes can be found in Table 1.

Second-Quarter PerformanceHoneywell sales for the second quarter were up 18% on a reported basis and up 15% on an organic basis. The second-quarter financial results can be found in Tables 2 and 3.

Aerospace sales for the second quarter were up 7% on an organic basis driven by a strong recovery in business and general aviation aftermarket demand as flight hours returned to 2019 levels, partially offset by lower defense volumes and a more gradual recovery in commercial original equipment build rates. Air transport aftermarket returned to growth as increased flight hours drove aftermarket demand. Segment margin expanded 490 basis points to 25.7%.

Honeywell Building Technologies sales for the second quarter were up 13% on an organic basis driven by broad-based global strength across the portfolio. Orders were up over 35% year over year, driven by strong bookings for building products and solutions. The buildings solutions services backlog was up over 30% year over year driven by strong bookings in North America and Asia. In addition, demand continued for our portfolio of healthy buildings solutions, with approximately $150 million of orders in the first half. Segment margin expanded 120 basis points to 22.4%.

Performance Materials and Technologiessales for the second quarter were up 10% on an organic basis driven by demand for process solutions products and thermal solutions, higher equipment volumes, licensing, and petrochemical catalyst shipments in UOP, and continued strong growth across advanced materials. Orders were up 20% year over year driven by robust demand for services, thermal solutions, catalysts, and fluorine products. Segment margin expanded 190 basis points to 20.8%.

Safety and Productivity Solutions sales for the second quarter were up 35% on an organic basis driven by another quarter of double-digit growth in the warehouse and workflow solutions, personal protective equipment, and productivity solutions and services businesses. In addition, short-cycle demand accelerated in the gas analysis and advanced sensing businesses, which both grew by high single-digits sequentially from the first quarter. Orders were up triple digits year over year in productivity solutions and services, giving us confidence in continued growth for that business. Segment margin expanded 20 basis points to 14.0%.

Conference Call DetailsHoneywell will discuss its second-quarter results and updated full-year guidance during an investor conference call starting at 8:30 a.m. Eastern Daylight Time today. To participate on the conference call, please dial (866) 548-4713 (domestic) or (323) 794-2093 (international) approximately ten minutes before the 8:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell's second-quarter 2021 earnings call or provide the conference code HON2Q21. 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. EDTJuly 23 until 12:30 p.m. EDTJuly 30 by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international). The access code is 7208292.

TABLE 1: FULL-YEAR 2021 GUIDANCE5

Previous GuidanceCurrent Guidance

Sales $34.0B - $34.8B $34.6B - $35.2B

Organic Growth 3% - 5% 4% - 6%

Segment Margin 20.7% - 21.1% 20.8% - 21.1%

Expansion Up 30 - 70 bps Up 40 - 70 bps

Adjusted Earnings Per Share^3 $7.75 - $8.00 $7.95 - $8.10

Adjusted Earnings Growth^49% - 13% 12% - 14%

Operating Cash Flow $5.8B - $6.1B $5.9B - $6.2B

Free Cash Flow $5.2B - $5.5B $5.3B - $5.6B

TABLE 2: SUMMARY OF HONEYWELL FINANCIAL RESULTS

2Q 20212Q 2020Change

Sales 8,808 7,477 18%

Organic Growth 15%

Segment Margin 20.4% 18.5% 190 bps

Operating Income Margin 18.1% 13.6% 450 bps

Earnings Per Share $2.04 $1.53 33%

Adjusted Earnings Per Share^1 $2.02 $1.26 60%

Cash Flow from Operations 1,278 1,480 (14%)

Operating Cash Flow Conversion 89% 137% (48%)

Free Cash Flow 1,468 1,253 17%

Adjusted Free Cash Flow Conversion^2103% 140% (37%)

TABLE 3: SUMMARY OF SEGMENT FINANCIAL RESULTS

AEROSPACE 2Q 20212Q 2020Change

Sales 2,766 2,543 9%

Organic Growth 7%

Segment Profit 710 528 34%

Segment Margin 25.7% 20.8% 490 bps

HONEYWELL BUILDING TECHNOLOGIES

Sales 1,407 1,177 20%

Organic Growth 13%

Segment Profit 315 250 26%

Segment Margin 22.4% 21.2% 120 bps

PERFORMANCE MATERIALS AND TECHNOLOGIES

Sales 2,552 2,218 15%

Organic Growth 10%

Segment Profit 530 419 26%

Segment Margin 20.8% 18.9% 190 bps

SAFETY AND PRODUCTIVITY SOLUTIONS

Sales 2,083 1,539 35%

Organic Growth 35%

Segment Profit 292 213 37%

Segment Margin 14.0% 13.8% 20 bps

^1Adjusted EPS and adjusted EPS V% exclude 2Q20 favorable resolution of aforeign tax matter related to the spin-off transactions, changes in fair valuefor Garrett Motion Inc. (Garrett) equity securities, and a non-cash chargeassociated with a further reduction in value of reimbursement receivablesfollowing Garrett's emergence from bankruptcy on April 30, 2021

^2Adjusted free cash flow conversion is free cash flow (cash flow fromoperations less capital expenditures plus cash receipts from Garrett) dividedby adjusted net income attributable to Honeywell. Adjusted net incomeattributable to Honeywell excludes changes in fair value for Garrett equitysecurities, a non-cash charge associated with a further reduction in value ofreimbursement receivables following Garrett's emergence from bankruptcy onApril 30, 2021, and the 2Q20 favorable resolution of a foreign tax matterrelated to the spin-off transactions from net income attributable to Honeywell

^3Adjusted EPS guidance excludes the $0.11 impact of the sale of the retailfootwear business, a non-cash charge associated with a further reduction invalue of reimbursement receivables following Garrett's emergence frombankruptcy on April 30, 2021, and any potential future one-time items that wecannot reliably predict or estimate such as pension mark-to-market and changesin fair value for Garrett equity securities

^4Adjusted EPS V% guidance excludes the $0.11 impact of the sale of the retailfootwear business, a non-cash charge associated with a further reduction invalue of reimbursement receivables following Garrett's emergence frombankruptcy on April 30, 2021, 4Q20 pension mark-to-market, 2Q20 favorableresolution of a foreign tax matter related to the spin-off transactions,non-cash charges associated with the 2020 reduction in value of reimbursementreceivables due from Garrett, net of proceeds from the settlement of relatedhedging transactions, and any potential future one-time items that we cannotreliably predict or estimate such as pension mark-to-market or changes in fairvalue for Garrett equity securities

^5As discussed in the notes to the attached reconciliations, we do not provideguidance 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.

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 Securities and Exchange Commission.

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, a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, and the 2Q20 favorable resolution of a foreign tax matter related to the spin-off transactions, if and as noted in the release; and adjusted earnings per share, which we adjust to exclude pension mark-to-market, the favorable resolution of a foreign tax matter related to the spin-off transactions, non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett, net of proceeds from settlement of related hedging transactions, the gain on sale of the retail footwear business, and changes in fair value for Garrett equity securities, if and as noted in the release. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain metrics presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Refer to the Appendix attached to this release for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.

Honeywell International Inc.

Consolidated Statement of Operations (Unaudited)

(Dollars in millions, except per share amounts)



Three Months Ended June 30,Six Months Ended June 30,

2021 2020 2021 2020

Product sales $6,639 $ 5,743 $ 13,048 $12,048

Service sales 2,169 1,734 4,214 3,892

Net sales 8,808 7,477 17,262 15,940

Costs, expenses and other

Cost of products sold^(1) 4,734 4,163 9,285 8,537

Cost of services sold^(1) 1,269 1,113 2,427 2,273

6,003 5,276 11,712 10,810

Selling, general and administrative expenses^(1) 1,207 1,183 2,443 2,421

Other (income) expense (366) (291) (808) (608)

Interest and other financial charges 83 90 173 163

6,927 6,258 13,520 12,786

Income before taxes 1,881 1,219 3,742 3,154

Tax expense (benefit) 434 120 847 449

Net income 1,447 1,099 2,895 2,705

Less: Net income attributable to the noncontrolling interest 17 18 38 43

Net income attributable to Honeywell $1,430 $ 1,081 $ 2,857 $2,662

Earnings per share of common stock - basic $2.06 $ 1.54 $ 4.11 $3.77

Earnings per share of common stock - assuming dilution $2.04 $ 1.53 $ 4.06 $3.74

Weighted average number of shares outstanding - basic 693.8 702.3 695.0 705.9

Weighted average number of shares outstanding - assuming dilution702.5 708.1 703.5 712.6

Cost of products and services sold and Selling, general and administrative(1) expenses include amounts for repositioning and other charges, the service cost component of pension and other postretirement (income) expense, and stock compensation expense.

Honeywell International Inc.

Segment Data (Unaudited)

(Dollars in millions)



Three Months Ended June 30,Six Months Ended June 30,

Net Sales 2021 2020 2021 2020

Aerospace $2,766 $ 2,543 $5,398 $5,904

Honeywell Building Technologies 1,407 1,177 2,765 2,458

Performance Materials and Technologies2,552 2,218 4,898 4,615

Safety and Productivity Solutions 2,083 1,539 4,201 2,963

Total $8,808 $ 7,477 $17,262 $15,940

Reconciliation of Segment Profit to Income Before Taxes



Three Months Ended June 30,Six Months Ended June 30,

Segment Profit 2021 2020 2021 2020

Aerospace $710 $ 528 $1,472 $1,465

Honeywell Building Technologies 315 250 620 512

Performance Materials and Technologies530 419 964 931

Safety and Productivity Solutions 292 213 595 391

Corporate (54) (25) (83) (66)

Total segment profit 1,793 1,385 3,568 3,233

Interest and other financial charges (83) (90) (173) (163)

Stock compensation expense ^(1) (39) (34) (116) (78)

Pension ongoing income ^(2) 272 198 548 396

Other postretirement income ^(2) 18 14 35 27

Repositioning and other charges ^(3,4)(101) (280) (242) (342)

Other ^(5) 21 26 122 81

Income before taxes $1,881 $ 1,219 $3,742 $3,154

(1) Amounts included in Selling, general and administrative expenses.

Amounts included in Cost of products and services sold and Selling, general(2) and administrative expenses (service costs) and Other income (expense) (non-service cost components).

(3) Amounts included in Cost of products and services sold, Selling, general and administrative expenses, and Other (income) expense.

(4) Includes repositioning, asbestos, and environmental expenses.

Amounts include the other components of Other (income) expense not included(5) within other categories in this reconciliation. Equity income of affiliated companies is included in segment profit.

Honeywell International Inc.

Consolidated Balance Sheet (Unaudited)

(Dollars in millions)



June 30, 2021December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $11,427 $14,275

Short-term investments 891 945

Accounts receivable - net 6,947 6,827

Inventories 4,723 4,489

Other current assets 1,664 1,639

Total current assets 25,652 28,175

Investments and long-term receivables 1,358 685

Property, plant and equipment - net 5,520 5,570

Goodwill 17,135 16,058

Other intangible assets - net 3,748 3,560

Insurance recoveries for asbestos related liabilities 342 366

Deferred income taxes 762 760

Other assets 9,428 9,412

Total assets $63,945 $64,586

LIABILITIES

Current liabilities:

Accounts payable $6,139 $5,750

Commercial paper and other short-term borrowings 3,573 3,597

Current maturities of long-term debt 1,645 2,445

Accrued liabilities 6,786 7,405

Total current liabilities 18,143 19,197

Long-term debt 16,138 16,342

Deferred income taxes 2,302 2,113

Postretirement benefit obligations other than pensions 225 242

Asbestos-related liabilities 1,819 1,920

Other liabilities 7,109 6,975

Redeemable noncontrolling interest 7 7

Shareowners' equity 18,202 17,790

Total liabilities, redeemable noncontrolling interest and shareowners'$63,945 $64,586 equity

Honeywell International Inc.

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in millions)



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Cash flows from operating activities:

Net income $1,447 $1,099 $2,895 $2,705

Less: Net income attributable to the noncontrolling interest 17 18 38 43

Net income attributable to Honeywell 1,430 1,081 2,857 2,662

Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:

Depreciation 164 161 335 314

Amortization 120 89 290 179

Gain on sale of non-strategic businesses and assets - - (90) -

Repositioning and other charges 101 280 242 342

Net payments for repositioning and other charges (163) (198) (358) (309)

Pension and other postretirement income (290) (211) (583) (423)

Pension and other postretirement benefit payments (13) (9) (27) (23)

Stock compensation expense 39 34 116 78

Deferred income taxes 38 (219) 101 (277)

Other (181) (106) (277) (285)

Changes in assets and liabilities, net of the effects of acquisitions and divestitures:

Accounts receivable (270) 735 (127) 776

Inventories (113) (168) (271) (331)

Other current assets (32) (60) (98) 106

Accounts payable 345 (310) 402 (364)

Accrued liabilities 103 381 (256) (26)

Net cash provided by (used for) operating activities 1,278 1,480 2,256 2,419

Cash flows from investing activities:

Expenditures for property, plant and equipment (185) (227) (406) (366)

Proceeds from disposals of property, plant and equipment - - 14 7

Increase in investments (661) (1,023) (1,397) (1,671)

Decrease in investments 719 746 1,331 1,589

Receipts from Garrett Motion Inc. 375 - 375 -

Receipts (payments) from settlements of derivative contracts (163) (204) (23) 83

Cash paid for acquisitions, net of cash acquired (24) - (1,327) -

Proceeds from sales of businesses, net of fees paid - - 190 -

Net cash provided by (used for) investing activities 61 (708) (1,243) (358)

Cash flows from financing activities:

Proceeds from issuance of commercial paper and other short-term borrowings1,090 3,710 2,358 7,165

Payments of commercial paper and other short-term borrowings (1,089) (3,721) (2,355) (7,094)

Proceeds from issuance of common stock 47 31 114 97

Proceeds from issuance of long-term debt 4 5,974 27 7,101

Payments of long-term debt (18) (93) (835) (1,218)

Repurchases of common stock (1,027) (62) (1,849) (1,985)

Cash dividends paid (664) (650) (1,304) (1,285)

Other (3) (2) (33) (40)

Net cash provided by (used for) financing activities (1,660) 5,187 (3,877) 2,741

Effect of foreign exchange rate changes on cash and cash equivalents 30 98 16 (91)

Net increase (decrease) in cash and cash equivalents (291) 6,057 (2,848) 4,711

Cash and cash equivalents at beginning of period 11,718 7,721 14,275 9,067

Cash and cash equivalents at end of period $11,427$13,778$11,427$13,778

Honeywell International Inc.

Reconciliation of Organic Sales % Change (Unaudited)



Three Months Ended June 30, 2021

Honeywell

Reported sales % change 18%

Less: Foreign currency translation 3%

Less: Acquisitions, divestitures and other, net-%

Organic sales % change 15%



Aerospace

Reported sales % change 9%

Less: Foreign currency translation 1%

Less: Acquisitions, divestitures and other, net1%

Organic sales % change 7%



Honeywell Building Technologies

Reported sales % change 20%

Less: Foreign currency translation 7%

Less: Acquisitions, divestitures and other, net-%

Organic sales % change 13%



Performance Materials and Technologies

Reported sales % change 15%

Less: Foreign currency translation 4%

Less: Acquisitions, divestitures and other, net1%

Organic sales % change 10%



Safety and Productivity Solutions

Reported sales % change 35%

Less: Foreign currency translation 3%

Less: Acquisitions, divestitures and other, net(3)%

Organic sales % change 35%

We define organic sales percent as the year over year change in reported sales relative to the comparable period, 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 measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

A quantitative reconciliation of reported sales percent change to organic sales percent change has not been provided for forward-looking measures of organic sales percent change because management cannot reliably predict or estimate, without unreasonable effort, the fluctuations in global currency markets that impact foreign currency translation, nor is it reasonable for management to predict the timing, occurrence and impact of acquisition and divestiture transactions, all of which could significantly impact our reported sales percent change.

Honeywell International Inc.

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins (Unaudited)

(Dollars in millions)



Twelve Months Three Months Ended June 30, Ended December 31,

2021 2020 2020

Segment profit $ 1,793 $ 1,385 $6,665

Stock compensation expense ^(1) (39) (34) (168)

Repositioning, Other ^(2,3) (119) (295) (641)

Pension and other postretirement service costs ^(4) (37) (38) (160)

Operating income $ 1,598 $ 1,018 $5,696

Segment profit $ 1,793 $ 1,385 $6,665

/ Net sales $ 8,808 $ 7,477 $32,637

Segment profit margin % 20.4 % 18.5 % 20.4 %

Operating income $ 1,598 $ 1,018 $5,696

/ Net sales $ 8,808 $ 7,477 $32,637

Operating income margin % 18.1 % 13.6 % 17.5 %

(1) Included in Selling, general and administrative expenses.

(2) Includes repositioning, asbestos, environmental expenses, and equity income adjustment.

(3) Included in Cost of products and services sold, Selling, general and administrative expenses and Other (income) expense.

(4) Included in Cost of products and services sold and Selling, general and administrative expenses.

We define segment profit as operating income, excluding stock compensation expense, pension and other postretirement service costs, and repositioning and other charges. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

A quantitative reconciliation of segment profit, on an overall Honeywell basis, to operating income has not been provided for all forward-looking measures of segment profit and segment margin included herewithin. Management cannot reliably predict or estimate, without unreasonable effort, the impact and timing on future operating results arising from items excluded from segment profit. The information that is unavailable to provide a quantitative reconciliation could have a significant impact on our reported financial results. To the extent quantitative information becomes available without unreasonable effort in the future, and closer to the period to which the forward-looking measures pertain, a reconciliation of segment profit to operating income will be included within future filings.

Honeywell International Inc.

Reconciliation of Earnings per Share to Adjusted Earnings per Share (Unaudited)



Twelve Months Three Months Ended June 30,Ended December 31,

2021 2020 2020

Earnings per share of common stock - assuming dilution ^(1) $2.04 $1.53 $6.72

Pension mark-to-market expense ^(2) - - 0.04

Separation related tax adjustment ^(3) - (0.27) (0.26)

Changes in fair value for Garrett equity securities ^(4) (0.03) - -

Garrett-related adjustments ^(5) 0.01 - 0.60

Adjusted earnings per share of common stock - assuming dilution$2.02 $1.26 $7.10

For the three months ended June 30, 2021 and 2020, adjusted earnings per(1) share utilizes weighted average shares of approximately 702.5 million and 708.1 million. For the twelve months ended December 31, 2020, adjusted earnings per share utilizes weighted average shares of 711.2 million.

(2) Pension mark-to-market expense uses a blended tax rate of 25% for 2020.

For the three months ended June 30, 2020 and twelve months ended December(3) 31, 2020, separation related tax adjustment of $186 million ($186 million net of tax) includes the favorable resolution of a foreign tax matter related to the spin-off transactions.

(4) For the three months ended June 30, 2021, the adjustment was $16 million net of tax due to changes in fair value for Garrett equity securities.

For the three months ended June 30, 2021, the adjustment was $7 million net of tax due to a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from(5) bankruptcy on April 30, 2021. For the twelve months ended December 31, 2020, the adjustment was $427 million net of tax due to the non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett, net of proceeds from settlement of related hedging transactions.

We believe adjusted earnings per share is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. For forward looking information, management cannot reliably predict or estimate, without unreasonable effort, the pension mark-to-market expense and the changes in fair value for Garrett equity securities. Pension mark-to-market expense is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. Based on economic and industry conditions, future developments and other relevant factors, these assumptions are subject to change. Changes in fair value for Garrett equity securities cannot be forecasted due to the inherent nature of changing conditions in the overall market.

Honeywell International Inc.

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Reconciliation of Net Income Attributable to Honeywell to Adjusted Net Income Attributable to Honeywell, and Calculation of Adjusted Free Cash Flow Conversion (Unaudited)

(Dollars in millions)



Three Months Three Months Ended Ended June 30, 2021June 30, 2020

Cash provided by operating activities $ 1,278 $ 1,480

Expenditures for property, plant and equipment (185) (227)

Garrett cash receipts 375 -

Free cash flow 1,468 1,253

Net income attributable to Honeywell 1,430 1,081

Separation related tax adjustment - (186)

Changes in fair value for Garrett equity securities^ (1) (16) -

Garrett related adjustment ^(2) 7 -

Adjusted net income attributable to Honeywell $ 1,421 $ 895

Cash provided by operating activities $ 1,278 $ 1,480

/ Net income (loss) attributable to Honeywell $ 1,430 $ 1,081

Operating cash flow conversion % 89 % 137 %

Free cash flow $ 1,468 $ 1,253

/ Adjusted net income attributable to Honeywell $ 1,421 $ 895

Adjusted free cash flow conversion % 103 % 140 %

(1) The adjustment due to changes in fair value for Garrett equity securities.

For the three months ended June 30, 2021, the adjustment was $7 million net(2) of tax due to a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021.

We define free cash flow as cash provided by operating activities less cash expenditures for property, plant and equipment plus cash receipts from Garrett.

We believe that free cash flow is a non-GAAP metric that is useful to investors and management as a measure of cash generated by operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock or repay debt obligations prior to their maturities. This metric can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity. For forward looking information, we do not provide cash flow conversion guidance on a GAAP basis as management cannot reliably predict or estimate, without unreasonable effort, the pension mark-to-market expense and the changes in fair value for Garrett equity securities. Pension mark-to-market is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. Based on economic and industry conditions, future developments and other relevant factors, these assumptions are subject to change. Changes in fair value of Garrett equity securities cannot be forecasted due to the inherent nature of changing conditions in the overall market.

Honeywell International Inc.

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)



Twelve Months Ended December 31, 2021(E) ($B)

Cash provided by operating activities ~$5.9 - $6.2

Expenditures for property, plant and equipment ~(1)

Garrett cash receipts 0.4

Free cash flow ~$5.3 - $5.6

We define free cash flow as cash provided by operating activities less cash expenditures for property, plant and equipment plus cash receipts from Garrett.

We believe that free cash flow is a non-GAAP metric that is useful to investors and management as a measure of cash generated by operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, pay dividends, repurchase stock or repay debt obligations prior to their maturities. This metric can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity. For forward looking information, we do not provide cash flow conversion guidance on a GAAP basis as management cannot reliably predict or estimate, without unreasonable effort, the pension mark-to-market expense or changes in fair value of Garrett equity securities. Pension mark-to-market is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. Based on economic and industry conditions, future developments and other relevant factors, these assumptions are subject to change. Changes in fair value of Garrett equity securities cannot be forecasted due to the inherent nature of changing conditions in the overall market.

Honeywell International Inc.

Reconciliation of Expected Earnings per Share to Adjusted Earnings per Share (Unaudited)



Twelve Months Ended December 31, 2021(E)

Earnings per share of common stock - assuming dilution ^(1) $8.05 - $8.20

Gain on sale of retail footwear business ^(2) (0.11)

Garrett-related adjustments ^(3) 0.01

Adjusted earnings per share of common stock - assuming dilution $7.95 - $8.10

(1) For the twelve months ended December 31, 2021, expected earnings per share utilizes weighted average shares of approximately 703 million.

(2) For the twelve months ended December 31, 2021, the adjustment was $72 million net of tax due to the gain on sale of the retail footwear business.

For the twelve months ended December 31, 2021, adjustment was $7 million(3) net of tax due to a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021.

We believe adjusted earnings per share is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. For forward looking information, management cannot reliably predict or estimate any potential future one-time items, such as pension mark-to-market or changes in fair value for Garrett equity securities, without unreasonable effort. Pension mark-to-market expense is dependent on macroeconomic factors, such as interest rates and the return generated on invested pension plan assets. Based on economic and industry conditions, future developments and other relevant factors, these assumptions are subject to change. Changes in fair value for Garrett equity securities cannot be forecasted due to the inherent nature of changing conditions in the overall market.

Contacts:



Media Investor Relations

Nina Krauss Reena Vaidya

(704) 627-6035 (704) 627-6200

nina.krauss@honeywell.comreena.vaidya@honeywell.com

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SOURCE Honeywell