Honeywell beats by $0.02, beats on revs; reaffirms FY14 EPS guidance, revs guidance
Reports Q4 (Dec) earnings of $1.24 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $1.22; revenues rose 8.4% year/year to $10.39 bln vs the $10.2 bln consensus.
Co reaffirms guidance for FY14, sees EPS of $5.35-5.55, excluding non-recurring items, vs. $5.54 Capital IQ Consensus; sees FY14 revs of $40.3-40.7 bln vs. $40.78 bln Capital IQ Consensus.
Aerospace
Sales were up 3% compared with the fourth quarter of 2012 driven by 3% Commercial growth and a 2% increase in Defense and Space. Commercial original equipment (OE) sales were ~flat driven by continued strong OE build rates and favorable platform mix offset by higher payments due to BGA OEM customers. Commercial aftermarket sales were up 5% driven by higher airline spares and strong BGA RMU (Repairs, Modifications, and Upgrades) sales. Defense and Space sales increased 2% driven by a royalty gain and international strength offsetting planned program ramp downs.
Segment profit was up 6%, and segment margins expanded 60 bps to 20.5%, primarily due to productivity net of inflation, and commercial excellence, partially offset by investments for growth. BGA OEM payments were offset by a royalty gain in Defense and Space.
Automation and Control Solutions
Sales were up 10% reported, up 4% organic, compared with the fourth quarter of 2012, primarily driven by the favorable impact of acquisitions, growth in Energy, Safety, and Security due to strong residential end markets, new product introductions, and strength in the Americas Distribution business.
Segment profit was up 8% and segment margins were down (20) bps to 15.3% driven by the dilutive impact of acquisitions, higher Building Solutions and Distribution sales, and continued investments for growth partially offset by volume and productivity net of inflation, including benefits from prior period repositioning.
Performance Materials and Technologies
Sales were up 12% reported, 9% organic, compared with the fourth quarter of 2012, driven by the favorable impact of the Thomas Russell acquisition, increased UOP catalyst and gas processing volume, and improved production volumes in Advanced Materials.
Segment profit was up 30% and segment margins expanded 210 bps to 15.7% in the fourth quarter primarily due to strong volume and productivity, partially offset by continued investments for growth.
Transportation Systems
Sales were up 16% reported, 15% organic, compared with the fourth quarter of 2012, driven by continued growth from new platform launches, higher global turbo gas penetration and light vehicle production, and an uptick in China commercial vehicle demand.
Segment profit was up 41% in the fourth quarter and segment margins expanded 250 bps to 13.6% primarily driven by strong Turbo material productivity and volume leverage, and operational improvements in Friction Materials.
"Honeywell had a very strong fourth quarter, capping off a terrific year across the board with record sales, margins, and earnings. Even in a continued slow-growth environment, our 2013 sales grew 4% and proforma earnings were up 11%, above our guidance, exiting the year with better than expected sales in every business... Our short-cycle businesses accelerated as we ended the year and our long-cycle order backlog stood at an impressive $15.5 billion. While we think it's prudent to remain cautious on the global economy at this time, we're increasingly confident in our 2014 outlook based on the momentum from the fourth quarter. And, the benefits from smart gain deployment actions position the Company for strong earnings growth and outperformance over the next 5 years."