Honeywell Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

hon-20200930

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

__________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission file number 1-8974

Honeywell International Inc.

(Exact name of registrant as specified in its charter)


Delaware		22-2640650
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 South Tryon Street		28202
Charlotte,	NC
(Address of principal executive offices)		(Zip Code)


			704			627-6200
			(Registrant’s telephone number, including area code)

			Not Applicable
			(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1 per share*

HON

The New York Stock Exchange

1.300% Senior Notes due 2023

HON 23A

The New York Stock Exchange

0.000% Senior Notes due 2024

HON 24A

The New York Stock Exchange

2.250% Senior Notes due 2028

HON 28A

The New York Stock Exchange

0.750% Senior Notes due 2032

HON 32

The New York Stock Exchange

* The common stock is also listed on the London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer	x	Accelerated filer	☐
Non-Accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

There were 701,685,768 shares of Common Stock outstanding at September 30, 2020.

Honeywell International Inc.

Index


Part I.		Financial Information	Page No.
	Item 1.	Financial Statements:

		Consolidated Statement of Operations (unaudited) – Three and Nine Months Ended September 30, 2020 and 2019	3

		Consolidated Statement of Comprehensive Income (unaudited) – Three and Nine Months Ended September 30, 2020 and 2019	4

		Consolidated Balance Sheet (unaudited) – September 30 , 2020 and December 31, 2019	5

		Consolidated Statement of Cash Flows (unaudited) – Nine Months Ended September 30, 2020 and 2019	6

		Consolidated Statement of Shareowners' Equity (unaudited) – Three and Nine Months Ended September 30, 2020 and 2019	7

		Notes to Consolidated Financial Statements (unaudited)	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

	Item 3.	Quantitative and Qualitative Disclosures About Market Risks	51

	Item 4.	Controls and Procedures	51

Part II.		Other Information

	Item 1.	Legal Proceedings	52

	Item 1A.	Risk Factors	52

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

	Item 4.	Mine Safety Disclosures	55

	Item 5.	Other Information	55

	Item 6.	Exhibits	56

Signatures			57

Cautionary Statement about Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future. They are based on management’s assumptions and assessments in the light of past experience and trends, current economic and industry conditions, expected future developments and other relevant factors. They are no guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, including the impact of the coronavirus pandemic (COVID-19), which can affect our performance and financial results in both the near- and long-term. These forward-looking statements should be considered in the light of the information included in this report and our other filings with the Securities and Exchange Commission, including, without limitation, the Risk Factors, as well as the description of trends and other factors in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in this report and our 2019 Annual Report on Form 10-K.

PART I. FINANCIAL INFORMATION

The financial statements and related footnotes as of September 30, 2020 should be read in conjunction with the financial statements for the year ended December 31, 2019 contained in our 2019 Annual Report on Form 10-K.

ITEM 1. FINANCIAL STATEMENTS

Honeywell International Inc.

Consolidated Statement of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Dollars in millions, except per share amounts)
Product sales	$	5,885	$	6,793	$	17,933	$	20,496
Service sales	1,912		2,293		5,804		6,717
Net sales	7,797		9,086		23,737		27,213
Costs, expenses and other
Cost of products sold	4,315		4,775		12,852		14,244
Cost of services sold	1,068		1,263		3,341		3,767
	5,383		6,038		16,193		18,011
Selling, general and administrative expenses	1,103		1,296		3,524		4,046
Other (income) expense	62		(311)		(546)		(901)
Interest and other financial charges	101		96		264		266
	6,649		7,119		19,435		21,422
Income before taxes	1,148		1,967		4,302		5,791
Tax expense (benefit)	367		319		816		1,151
Net income	781		1,648		3,486		4,640
Less: Net income attributable to the noncontrolling interest	23		24		66		59
Net income attributable to Honeywell	$	758	$	1,624	$	3,420	$	4,581
Earnings per share of common stock - basic	$	1.08	$	2.26	$	4.85	$	6.33
Earnings per share of common stock - assuming dilution	$	1.07	$	2.23	$	4.81	$	6.25

The Notes to Consolidated Financial Statements are an integral part of this statement.

Honeywell International Inc.

Consolidated Statement of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Dollars in millions)
Net income	$	781	$	1,648	$	3,486	$	4,640
Other comprehensive income (loss), net of tax
Foreign exchange translation adjustment	(82)		163		(237)		177


Prior service (credit) cost recognized	(20)		(20)		(60)		(59)
Pension and other postretirement benefit adjustments	(20)		(20)		(60)		(59)
Cash flow hedges recognized in other comprehensive income (loss)	(54)		62		50		110
Less: Reclassification adjustment for gains (losses) included in net income	(30)		47		(8)		86
Changes in fair value of effective cash flow hedges	(24)		15		58		24
Other comprehensive income (loss), net of tax	(126)		158		(239)		142
Comprehensive income	655		1,806		3,247		4,782
Less: Comprehensive income attributable to the noncontrolling interest	29		19		68		56
Comprehensive income attributable to Honeywell	$	626	$	1,787	$	3,179	$	4,726

The Notes to Consolidated Financial Statements are an integral part of this statement.

Honeywell International Inc.

Consolidated Balance Sheet

(Unaudited)


	September 30, 2020		December 31, 2019
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	14,036	$	9,067
Short-term investments	972		1,349
Accounts receivable - net	6,878		7,493
Inventories	4,705		4,421
Other current assets	1,609		1,973
Total current assets	28,200		24,303
Investments and long-term receivables	673		588
Property, plant and equipment - net	5,419		5,325
Goodwill	15,666		15,563
Other intangible assets - net	3,494		3,734
Insurance recoveries for asbestos related liabilities	374		392
Deferred income taxes	154		86
Other assets	9,479		8,688
Total assets	$	63,459	$	58,679
LIABILITIES
Current liabilities:
Accounts payable	$	5,270	$	5,730
Commercial paper and other short-term borrowings	3,550		3,516
Current maturities of long-term debt	985		1,376
Accrued liabilities	7,379		7,476
Total current liabilities	17,184		18,098
Long-term debt	17,687		11,110
Deferred income taxes	1,474		1,670
Postretirement benefit obligations other than pensions	309		326
Asbestos related liabilities	1,845		1,996
Other liabilities	6,640		6,766
Redeemable noncontrolling interest	7		7
SHAREOWNERS’ EQUITY
Capital - common stock issued	958		958
- additional paid-in capital	7,155		6,876
Common stock held in treasury, at cost	(25,806)		(23,836)
Accumulated other comprehensive loss	(3,436)		(3,197)
Retained earnings	39,203		37,693
Total Honeywell shareowners’ equity	18,074		18,494
Noncontrolling interest	239		212
Total shareowners’ equity	18,313		18,706
Total liabilities, redeemable noncontrolling interest and shareowners’ equity	$	63,459	$	58,679

The Notes to Consolidated Financial Statements are an integral part of this statement.

Honeywell International Inc.

Consolidated Statement of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2020		2019
	(Dollars in millions)
Cash flows from operating activities:
Net income	$	3,486	$	4,640
Less: Net income attributable to the noncontrolling interest	66		59
Net income attributable to Honeywell	3,420		4,581
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:
Depreciation	480		500
Amortization	268		319

Repositioning and other charges	486		306
Net payments for repositioning and other charges	(652)		(157)
Pension and other postretirement income	(633)		(484)
Pension and other postretirement benefit payments	(37)		(50)
Stock compensation expense	118		112
Deferred income taxes	(289)		(298)
Reimbursement receivables charge	350		—
Other	(369)		98
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable	615		(78)
Inventories	(284)		(276)
Other current assets	246		(68)
Accounts payable	(460)		(89)
Accrued liabilities	167		(133)
Net cash provided by (used for) operating activities	3,426		4,283
Cash flows from investing activities:
Expenditures for property, plant and equipment	(615)		(504)
Proceeds from disposals of property, plant and equipment	17		41
Increase in investments	(2,371)		(3,218)
Decrease in investments	2,634		3,318
Receipts (payments) from settlements of derivative contracts	(75)		245
Other	—		(4)
Net cash provided by (used for) investing activities	(410)		(122)
Cash flows from financing activities:
Proceeds from issuance of commercial paper and other short-term borrowings	8,577		10,292
Payments of commercial paper and other short-term borrowings	(8,512)		(10,293)
Proceeds from issuance of common stock	163		425
Proceeds from issuance of long-term debt	10,105		2,725
Payments of long-term debt	(4,237)		(120)
Repurchases of common stock	(2,149)		(3,650)
Cash dividends paid	(1,921)		(1,798)
Other	(54)		(72)
Net cash provided by (used for) financing activities	1,972		(2,491)
Effect of foreign exchange rate changes on cash and cash equivalents	(19)		(49)
Net increase (decrease) in cash and cash equivalents	4,969		1,621
Cash and cash equivalents at beginning of period	9,067		9,287
Cash and cash equivalents at end of period	$	14,036	$	10,908

The Notes to Consolidated Financial Statements are an integral part of this statement.

Honeywell International Inc.

Consolidated Statement of Shareowners' Equity

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	Shares	$		Shares	$		Shares	$		Shares	$
	(Dollars in millions, except per share amounts)
Common stock, par value	957.6	958		957.6	958		957.6	958		957.6	958
Additional paid-in capital
Beginning balance		7,104			6,780			6,876			6,452
Issued for employee savings and option plans		11			(11)			161			242
Stock-based compensation expense		40			37			118			112

Ending balance		7,155			6,806			7,155			6,806
Treasury stock
Beginning balance	(255.8)	(25,685)		(238.1)	(22,156)		(246.5)	(23,836)		(228.0)	(19,771)
Reacquired stock or repurchases of common stock	(1.0)	(164)		(5.9)	(1,000)		(13.1)	(2,149)		(22.1)	(3,650)
Issued for employee savings and option plans	0.9	43		0.9	21		3.7	179		7.0	286
Ending balance	(255.9)	(25,806)		(243.1)	(23,135)		(255.9)	(25,806)		(243.1)	(23,135)
Retained earnings
Beginning balance		39,080			35,741			37,693			33,978

Net income attributable to Honeywell		758			1,624			3,420			4,581
Dividends on common stock		(635)			(590)			(1,910)			(1,784)


Ending balance		39,203			36,775			39,203			36,775
Accumulated other comprehensive income (loss)
Beginning balance		(3,310)			(3,453)			(3,197)			(3,437)
Foreign exchange translation adjustment		(82)			163			(237)			177
Pension and other postretirement benefit adjustments		(20)			(20)			(60)			(59)
Changes in fair value of effective cash flow hedges		(24)			15			58			24
Ending balance		(3,436)			(3,295)			(3,436)			(3,295)
Noncontrolling interest
Beginning balance		219			190			212			178
Acquisitions, divestitures, and other		—			1			(6)			1
Net income attributable to noncontrolling interest		23			24			66			59
Foreign exchange translation adjustment		6			(5)			2			(3)
Dividends paid		(9)			(13)			(35)			(38)
Ending balance		239			197			239			197
Total shareowners' equity	701.7	18,313		714.5	18,306		701.7	18,313		714.5	18,306
Cash dividends per share of common stock		$	0.900		$	0.820		$	2.700		$	2.460

Notes to Consolidated Financial Statements are an integral part of this statement.

Honeywell International Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Dollars in millions, except per share amounts)

Note 1. Basis of Presentation

In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Honeywell International Inc. and its consolidated subsidiaries (“Honeywell” or “the Company”) at September 30, 2020 and December 31, 2019, the cash flows for the nine months ended September 30, 2020 and September 30, 2019 and the results of operations for the three and nine months ended September 30, 2020 and September 30, 2019. The results of operations for the three and nine months ended September 30, 2020 and cash flows for the nine months ended September 30, 2020 should not necessarily be taken as indicative of the entire year.

Honeywell reports its quarterly financial information using a calendar convention; the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It has been Honeywell's practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires Honeywell's businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, Honeywell will provide appropriate disclosures. Honeywell's actual closing dates for the three and nine months ended September 30, 2020 and September 30, 2019 were September 26, 2020 and September 28, 2019.

Note 2. Summary of Significant Accounting Policies

The accounting policies of the Company are set forth in Note 1 to the Company's Consolidated Financial Statements contained in the Company’s 2019 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.

Reclassifications—Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements—The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated results of operations, financial position and cash flows (Consolidated Financial Statements).

In December 2019, the FASB issued an accounting standard update to simplify the accounting for income taxes. The standard's amendments include changes in various subtopics of accounting for income taxes including, but not limited to, accounting for "hybrid" tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intraperiod tax allocation exception to incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. The guidance is effective for fiscal years beginning after December 15, 2020 with early adoption permitted, including the interim periods within those years. The Company is currently evaluating impacts of these amendments on the Company's Consolidated Financial Statements, and related notes to the Financial Statements. The Company does not expect the adoption of this standard to have a material impact on the Company's Consolidated Financial Statements.

In June 2016, the FASB issued an accounting standard that requires companies to utilize an impairment model (current expected credit loss, or CECL) for most financial assets measured at amortized cost and certain other financial instruments, which include, but are not limited to, trade and other receivables. This accounting standard replaced the incurred loss model with a model that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate those losses. Effective January 1, 2020, the Company adopted this standard. The adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements.

Honeywell International Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Dollars in millions, except per share amounts)

Note 3. Repositioning and Other Charges

A summary of repositioning and other charges follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Severance	$	113	$	41	$	433	$	147
Asset impairments	5		15		11		26
Exit costs	17		33		47		62
Reserve adjustments	(11)		(3)		(42)		(7)
Total net repositioning charge	124		86		449		228
Asbestos related litigation charges, net of insurance and reimbursements	13		9		33		26
Probable and reasonably estimable environmental liabilities, net of reimbursements	6		6		20		59
Other	1		(5)		(16)		(7)
Total net repositioning and other charges	$	144	$	96	$	486	$	306

The following table summarizes the pretax distribution of total net repositioning and other charges by classification:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of products and services sold	$	91	$	75	$	286	$	204
Selling, general and administrative expenses	53

Price	167.14	EPS	9
Shares	733	P/E	19
MCap	122,480	P/FCF	29
Net Debt	4,281	EBIT	7,512
TEV	126,761	TEV/EBIT	17
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-30
10-Q	2020-06-30	Filed 2020-07-24
10-Q	2020-03-31	Filed 2020-05-01
10-K	2019-12-31	Filed 2020-02-14
10-Q	2019-09-30	Filed 2019-10-17
10-Q	2019-06-30	Filed 2019-07-18
10-Q	2019-03-31	Filed 2019-04-18
10-K	2018-12-31	Filed 2019-02-08
10-Q	2018-09-30	Filed 2018-10-19
10-Q	2018-06-30	Filed 2018-07-20
10-Q	2018-03-31	Filed 2018-04-20
10-K	2017-12-31	Filed 2018-02-09
10-Q	2017-09-30	Filed 2017-10-20
10-Q	2017-06-30	Filed 2017-07-21
10-Q	2017-03-31	Filed 2017-04-21
10-K	2016-12-31	Filed 2017-02-10
10-Q	2016-09-30	Filed 2016-10-21
10-Q	2016-06-30	Filed 2016-07-22
10-Q	2016-03-31	Filed 2016-04-22
10-K	2015-12-31	Filed 2016-02-12
10-Q	2015-09-30	Filed 2015-10-16
10-Q	2015-06-30	Filed 2015-07-17
10-Q	2015-03-31	Filed 2015-04-17
10-K	2014-12-31	Filed 2015-02-13
10-Q	2014-09-30	Filed 2014-10-17
10-Q	2014-06-30	Filed 2014-07-18
10-Q	2014-03-31	Filed 2014-04-17
10-K	2013-12-31	Filed 2014-02-14
10-Q	2013-09-30	Filed 2013-10-18
10-Q	2013-06-30	Filed 2013-07-19
10-Q	2013-03-31	Filed 2013-04-19
10-K	2012-12-31	Filed 2013-02-15
10-Q	2012-09-30	Filed 2012-10-19
10-Q	2012-06-30	Filed 2012-07-18
10-Q	2012-03-31	Filed 2012-04-20
10-K	2011-12-31	Filed 2012-02-17
10-Q	2011-09-30	Filed 2011-10-21
10-Q	2011-06-30	Filed 2011-07-22
10-Q	2011-03-31	Filed 2011-04-21
10-K	2010-12-31	Filed 2011-02-11
10-Q	2010-09-30	Filed 2010-10-22
10-Q	2010-06-30	Filed 2010-07-23
10-Q	2010-03-31	Filed 2010-04-23
10-K	2009-12-31	Filed 2010-02-12

8-K	2020-10-30	Earnings, Exhibits
8-K	2020-10-23	Earnings, Other Events, Exhibits
8-K	2020-08-19	Off-BS Arrangement, Other Events, Exhibits
8-K	2020-07-24	Earnings, Exhibits
8-K	2020-06-05
8-K	2020-05-18
8-K	2020-05-14
8-K	2020-05-01
8-K	2020-04-29
8-K	2020-04-10
8-K	2020-03-31
8-K	2020-03-10
8-K	2020-02-28
8-K	2020-01-31
8-K	2019-12-04
8-K	2019-10-17
8-K	2019-10-15
8-K	2019-10-07
8-K	2019-08-28
8-K	2019-08-08
8-K	2019-08-01
8-K	2019-07-26
8-K	2019-07-18
8-K	2019-07-08
8-K	2019-04-29
8-K	2019-04-29
8-K	2019-04-26
8-K	2019-04-18
8-K	2019-02-01
8-K	2018-10-29
8-K	2018-10-19
8-K	2018-10-19
8-K	2018-10-14
8-K	2018-10-02
8-K	2018-10-01
8-K	2018-09-12
8-K	2018-09-05
8-K	2018-08-23
8-K	2018-07-27
8-K	2018-07-20
8-K	2018-06-14
8-K	2018-05-30
8-K	2018-04-30
8-K	2018-04-27
8-K	2018-04-23
8-K	2018-04-23
8-K	2018-04-20
8-K	2018-02-16
8-K	2018-02-09
8-K	2018-01-30
8-K	2018-01-26

EX-10.1	exhibit10109302020.htm
EX-10.2	exhibit10209302020.htm
EX-18	exhibit1809302020.htm
EX-31.1	exhibit31-109302020.htm
EX-31.2	exhibit31-209302020.htm
EX-32.1	exhibit32-109302020.htm
EX-32.2	exhibit32-209302020.htm
EX-95	exhibit9509302020.htm

HON 10Q Quarterly Report

Honeywell Earnings 2020-09-30