Home » Honeywell Q3 2014 Results Earnings Call Transcript

Honeywell Q3 2014 Results Earnings Call Transcript

In our Scanning and Mobility business we’re working with the United States Postal Service, one of the largest global mail carriers, to deploy more than 75,000 units of our next-generation mobile delivery device by year’s end. This custom-branded mobile device is based on our market-leading mobile computing technology, the Dolphin 99ex – clever name, right? Used by postal carriers and mail processing employees, the device improves critical activities related to making on-time deliveries including reliable tracking information, proof of delivery for Priority Mail and postal route navigation support.

We’re also excited about the growth we’re seeing from Solstice, our new line of refrigerants, insulation materials, aerosols and solvents that have global warming potential lower than CO2.

In September, at a White House event, we announced that we will increase production of Solstice products and as a result will drive a 50% reduction in our annual production of high-GWP hydrofluorocarbons or HFCs on a CO2 equivalent basis prior to 2020. We project that the use of our Solstice products will eliminate more than 350 million metric tons of CO2 equivalent by 2025. That’s equal to removing 70 million cars from the road for one year.

And in mobile air conditioning we’ve had significant wins from global customers and expect our sales to continue to ramp, as Solstice helps customers meet CAP A standards in the US and the new MAC regulation in Europe which goes into full effect in 2017. So with the increased order book for Solstice applications and the new capacity coming online, Fluorines is positioned for terrific growth in 2015.

If I take a look at where we stand for the year with just about two months left, we’re confident in our ability to deliver at the high end of the guidance we set for this year last December. As a reminder, we’ve stuck by our sales and earnings outlook all year, steadily increasing the low end of our pro forma EPS guidance to reflect the strong year-to-date performance. And we’re doing it again this quarter, raising the low end of our 2014 EPS guidance by a nickel to $5.50 to $5.55. That’s up 11% to 12% year-over-year – not bad at all.

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So turning to 2015 — and you’ll hear more from Tom on this — we’re going to continue to remain conservative on the global economy. We haven’t counted on much from the macro environment historically and so far that has been a good call. We’re confident in our continued outperformance because one, our portfolio is aligned to favorable trends like energy efficiency, clean energy generation, safety and security, urbanization, and customer productivity that continue to trend positive.

And two, we have been conservative on costs. We’re in the process of completing our annual operating plans and overall we see prospects for another good year in 2015.

As I mentioned already we have a very healthy backlog and see positive order and win rates across the portfolio. We’re also expecting another year of margin expansion. We’re going to continue executing on our key strategies for growth, including penetration in high-growth regions and sustaining our investments in high ROI CapEx and new products and technologies, while maintaining our cost discipline and ensuring we deliver the savings from restructuring projects that we’ve funded for the last few years.

Our strength of execution has led Honeywell in the past to strong earnings growth and another year of outperformance in 2015, remaining on track to the long-term targets we gave you back in March.

So with that I’ll turn it over to Tom.

Tom Szlosek – CFO

Okay, thanks Dave and good morning.

On Slide 4, let me walk you through the financial results for Q3. As you can see, some very strong numbers and every metric came in at or above the guidance we provided in July.

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