Previous Statements by HON
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Sales were $8.2 billion, up 8%, and that’s reported and organic. With continued growth and new products, geographic expansion, and overall improving conditions. We generated earnings per share of $0.60 on an operating basis that is excluding pension.Our earnings were up 24% in the quarter. Our segment margin rate was 13.6%, up 130 basis points from prior year, reflecting margin expansion in 3 out of 4 businesses. This really reinforces the quality of our earnings performance, and continued cost discipline while maintaining our growth investments for the future. Further reflecting that earnings quality, we generated just under a billion dollars of free cash flow, representing over 200% free cash flow conversion. Given the strength of our first half financial performance, and improving in market condition, we are raising our full-year guidance. We now expect sales in the range 324 to 329 and earnings in the range of 240 to 250 a share. We’re also raising our free cash flow estimate to 3.1 to 3.3 billion for the year, up from 2.8 to 3.1. We believe the recovery is happening. However, given ongoing economy uncertainty, we remain cautious about the future. Our early cycle businesses are seeing the biggest improvement year-over-year, such as Turbo, Sensitive Control, Scanning Mobility, Field Instrument, Gas, Detection, and Safety Products. Further, we’re benefiting in the market place from the steps we took in each of our businesses, to insure that we and our suppliers were repaired for the recovery; especially around things like electronic components. And we are seeing better growth because of it. What’s also impressive are the orders growth rate in the long-cycle businesses, which we think of ACS Solutions, UOP, Commercial Aero, OE with book-to-bill rate above 1. We saw strong double digit increases across the group with backlog for the company growing approximately 15% year-over-year.
The growth we seen in our end market is being complimented by the results of our seed planting initiatives. We’re excited about the acquisition we announced in the quarter, Sperian Protection, a leader in personal protection equipment.We think the combination of Sperian with our safety products business and life safety will generate significant synergies, including expanded access to global manufacturing distribution channel and a strong retail presence. The combination will operate full range of complimentary head-to-toe products to those who work in environments where safety is paramount; including the general industrial, construction, fire service, and electrical safety industries. Dave will provide more details on the transaction and timing in a couple of minutes. Our investments and focus in emerging regions are also paying off. Sales in Asia-Pacific are up strongly, about 17%, reflecting good growth in China and transportation ACS, and also growth in Japan, India, and Korea. We continue to build on our platforms for growth, as evidence by the number of wins in aerospace and process solutions in the quarter. Honeywell is awarded additional systems from C919, the single-aisle Commercial Airliner in China. In addition to the APU announced previously, CalMax selected Honeywell to provide our wheels and brakes and flight control, bringing our total wins with CalMax to more than $11 billion over the life of the program. And there’s still more to be decided. In addition, Process Solutions was selected by Petro China to provide the control and safety systems for the world’s longest gas pipeline. And to be the integrated main automation contractor with Abu Dhabi Gas Development Company for its Shah Gas Development Project to help the site operate safely, reliably, and efficiently. The first phase of the projects is valued at more than $80 million with a total potential of more than $200 million over subsequent [inaudible].
The Shah Gas Project is one of the largest, and most complex projects in the industry, and is expected to process 1 billion cubic feet of gas per day when the site reaches full production capacity in 2014.Overall, some very impressive wins in the quarter. Also, Honeywell Fluorine Products entered into a supply agreement with General Motors for a new refrigerant to use in automotive air-conditioning systems. HFO-1234yf, don’t you love the marketing names we assigned to these things? In addition to its non-ozone depleting characteristics, 1234yf has 99.7% lower global warming potential than the current refrigerant, helping General Motors meet new environmental regulations in the United States and Europe. In addition, we continue to invest in our big process initiative as well as other seed planting across the organization. Our philosophy product development initiative helps to bring new products that customers want, to market faster. This quarter ACS introduced approximately 100 new products, including the new Xenon imager, which redefines the standards for handheld scanners by delivering 1-D laser performance with all the benefits of 2-D imaging. It incorporates the best imaging technology from handheld products and a decoder technology for Metrologic delivering extended depth of field, faster reading, and improved scanning performance on poor quality barcodes. Read the rest of this transcript for free on seekingalpha.com