• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation
 

Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation

on

  • 764 views

 

Statistics

Views

Total Views
764
Views on SlideShare
764
Embed Views
0

Actions

Likes
0
Downloads
10
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation Presentation Transcript

    • Gabelli Asset Management Aircraft Supplier Conference Dave Anderson, Senior V.P. and CFO New York, NY September 7, 2006
    • Forward Looking Statements This report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not 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, which can affect our performance in both the near- and long-term. 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. 2 Gabelli Conference – September 7, 2006
    • The New Honeywell • Building Performance Track Record • Businesses Well Positioned • Aerospace – Positive Long Term Outlook • 2006 – On Track For Record Performance 3 Gabelli Conference – September 7, 2006
    • Value Drivers Quantitative Qualitative Disciplined Capital Allocation +5% Organic Sales Growth Portfolio For Growth Margin Expansion Setting/Meeting Expectations Double Digit EPS Growth World Class Leadership Team 100% Cash Conversion Continuous Improvement Expanding ROI Honeywell Benchmarks 4 Gabelli Conference – September 7, 2006
    • 2003 – 2006 Financials Sales EPS ($B) ($) 18% CAGR 10% CAGR 3.00 35 30 2.50 25 2.00 20 1.50 15 1.00 10 0.50 5 - - 2003 2004 2005 2006E 2003 2004 2005 2006E (1) Free Cash Flow ROI ($B) +3.0 Points 14% CAGR 2.5 15% 2.0 10% 1.5 1.0 5% 0.5 0% - 2003 2004 2005 2006E 2003 2004 2005 2006E (1) ROI calculated as NIBI (net income plus after-tax interest) divided by Invested Capital (2 point average of the sum of the book value of equity and total debt). Building Track Record Of Results 5 Gabelli Conference – September 7, 2006
    • Cash Deployment Business Investment Dividends $1.00 Capex ($M) Reinvestment $.9075 900 2.00 $.825 800 $.75 $.75 700 $0.75 Dividend/Share 600 500 Dividend Yield ~ 2.4% 1.00 400 $0.50 300 200 100 - 0.00 $0.25 2003 2004 2005 2006E 2003 2004 2005 2006E Acquisitions Repurchases • Process Completely Redesigned • Repurchases Total $2.7B Last 2 Years – 39 Acquisitions / 21 Divestitures – $1.1B in 2005 – $0.8B through 2Q 2006 – Over $3.0B Cash Deployed • 36 acquisitions ahead of HON model • Shares Outstanding Reduced by 5% – From 862M to 819M Shares Disciplined And Balanced 6 Gabelli Conference – September 7, 2006
    • Portfolio Overview Aerospace Automation & Control 35% 35% 15% 15% Transportation Specialty Materials $31B In Sales In 2006 * Pie Chart calculated using 2006E Sales 7 Gabelli Conference – September 7, 2006
    • Automation And Control Solutions – $11.0B Macro Trends Honeywell Position Safety and Security Concerns Strong Channels / Brands Energy Efficiency – Homes/Buildings Upgraded Technology / Sales & Marketing Technology Content Increasing Significant Installed Base Global Infrastructure Needs Expanded Geographic Scope Sales Verticals ($B) 14% CAGR 12.0 10.0 Homes Industrial 8.0 6.0 Buildings 4.0 2.0 - 2003 2004 2005 2006E Momentum Building In Strengthened Portfolio 8 Gabelli Conference – September 7, 2006
    • Transportation Systems – $4.5B Macro Trends Honeywell Position Tougher Emissions Regulations Technology Leadership / Differentiation Need for Fuel Economy / Efficiency Global Presence Productivity / Cost Focus Growth in Turbo Boosting Channel / Brand Leadership Increased Auto Ownership in Emerging Regions Sales Global Mix ($B) 7% CAGR 5.0 4.0 Americas Asia 42% 11% 3.0 2.0 Europe 47% 1.0 - 2003 2004 2005 2006E Technology Leader In Long-term Growth Segment 9 Gabelli Conference – September 7, 2006
    • Specialty Materials – $4.5B Macro Trends Honeywell Position Strong Growth in Energy Demand / Established Leader in Process, Catalyst, Refining Needs Adsorbent Technologies HFC Leader Serving HVAC Industry Increased Environmental Regulations Spectra Fiber Armor Applications Safety and Security 2/3 Resins and Chemicals Insulated from Energy Efficiency Raws Sales Segments ($B) 12% CAGR 5.0 4.5 4.0 UOP 3.5 $1.4B 3.0 2.5 Specialty Fluorines 2.0 Products $0.9B 1.5 $1.1B Resins & 1.0 Chemicals 0.5 $1.1B - 2003 2004 2005 2006E Transformed To Strong, Differentiated Positions 10 Gabelli Conference – September 7, 2006
    • Aerospace – $11.0B Macro Trends Honeywell Position Increasing Commercial Air Travel Significant Installed Base Tremendous Breadth / Depth of Capacity / Efficiency Needs Drive Technologies and Products OEM Builds Customer Focused and Cost Effective Safety Continues as Top Concern Broad Based Defense Supplier Defense Budget Stable / Shrinking Sales Product Mix ($B) 8% CAGR 12.0 10.0 Mechanical 8.0 55% Electronics 6.0 45% 4.0 2.0 - 2003 2004 2005 2006E Strong Franchise With Great Future 11 Gabelli Conference – September 7, 2006
    • Aerospace Outlook Air Transport Business & Defense & &Regional General Aviation Space 2006E Sales $4.2B $2.4B $4.4B Drivers/Priorities • MRO / Spares • Avionics • Helicopters • Narrow Body • Engines • Total Logistics • Safety Systems • Aftermarket • Precision Strike Composition Missiles Space Surface Mechanical Electronics Electronics Aircraft Mechanical Services Broad Portfolio In Growing Segments 12 Gabelli Conference – September 7, 2006
    • Air Transport & Regional Deliveries: Strong Near Term Growth Strategic Priorities 1,200 1,000 • Successful Launch AC Deliveries 800 A380, 787 600 400 • New Narrow Bodies - 737-RS 200 - Airbus NSR 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • A350XWB Sustained Growth: +4% CAGR 2006-2016 25,000 Fleet including Cargo AC • Preserve / Grow 20,000 Aftermarket (MRO, spares) 15,000 - Flying Hours +5% 10,000 • Safety Mandates 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Delivery Growth, New Business Opportunities, Aftermarket Momentum 13 Gabelli Conference – September 7, 2006
    • Business & General Aviation Major HON (Honeywell’s 14th Annual Industry Outlook, November 2005) $156B in New Deliveries products 18,000 Eng. Avionics Histor y For ecast 16,000 Primus Epic™ 14,000 Ultr a Long C n ta t 2 0 ($ ) os n 0 5 M 12,000 Range 10,000 Long Range 8,000 Large 7000 HTF 6,000 M ed-Lr g 4,000 M e dium Apex TFE 731 Light-M e d 2,000 Light V -Light 0 93 94 95 96 97 98 99 00 01 2 03 04 5 06 07 8 09 10 1 12 13 4 15 0 0 0 1 1 19 9 19 19 19 19 19 20 20 20 20 20 20 20 0 20 20 0 20 20 0 20 20 1 2 2 2 Strategic Priorities AM (excluding mandates): Rapid expansion (7% CAGR) $4,000 • New Platforms $3,500 $3,000 • Aftermarket Growth $2,500 - Maintain industry leading $2,000 aftermarket service programs $1,500 $1,000 • Safety Mandates $500 $- • Civil Helos 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 HON Well Positioned In High Growth Segments 14 Gabelli Conference – September 7, 2006
    • Defense & Space Comprehensive Product & Platform Breadth Service Offerings Including: Aircraft Propulsion Systems 60+ platforms Engine Systems and Accessories Landing Systems Helicopters Power Systems 20+ platforms Avionics & Electronics Services Surface Vehicles Space Systems 10+ platforms Wide Range of Customers Missile Systems 40+ systems Space 40+ programs Installed Base: 25,000+ Vehicles Worldwide* 8th Largest Defense Supplier * Excludes missiles & missile systems Strong Installed Base, Diversified Platforms, Products And Customers 15 Gabelli Conference – September 7, 2006
    • US Defense Budgets Strategic Priorities CAGR 00-05 06-11 • Global War on Terror Without Supplementals 5% 4% 600 With Supplementals 9% -1% - Helicopters - Total Logistics 500 Supplem entals Current Year ($B) • Precision Strike 400 Other - Navigation RDT&E 300 - Sensors Procurement 200 • Information O&M Superiority 100 MILPERS - FCS 0 - UAV FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 • International Growth Source: National Defense Est. (Greenbook). Honeywell supplemental estimates. QDR And FY07 Budget Requests Match Strengths 16 Gabelli Conference – September 7, 2006
    • 1H Financials 1H05 1H06 ($M) Sales $13,477 $15,139 • 12% Growth 7% Acq./Div. 5% Organic Segment Profit $1,595 $1,954 • 23% Growth - Margin % • +110 bps 11.8% 12.9% • 47% Growth EPS, Reported $0.78 $1.15 • 28% Growth EPS, Adjusted (1) $0.93 $1.19 Free Cash Flow $604 $903 • Up 50% (1) Reflects 1H05 tax charge for cash repatriation ($0.18) and Income from Discontinued Operations ($0.03), as well as 1H06 FAS 123R stock option expense ($0.04) Strong Financial Performance 17 Gabelli Conference – September 7, 2006
    • 2006 Financial Summary 2005 2006E V’05 ($B) $27.6 ~$31.0 12% Sales Ex. Acquisitions/Divestitures 6% $3.4 ~$4.1 22% Segment Profit - Margin % 12.2% ~13.4% 120 bps $1.92 $2.48 - 2.53 29 - 32% EPS, Reported $1.8 $2.1 - 2.3 20 - 31% Free Cash Flow Conversion 107% +100% Significant Growth On All Fronts 18 Gabelli Conference – September 7, 2006
    • Honeywell Summary • Macro Trends Support Business Growth • Organic Growth and Margin Expansion Focus • ACS – Global Expansion, New Products / Customers • TS – Program Wins, New Markets / Technologies • SM – UOP, Strong Cycle • AERO – Program Wins, Breadth / Depth of Technologies • Strong Financial Performance and Cash Generation 19 Gabelli Conference – September 7, 2006
    • 20 Gabelli Conference – September 7, 2006
    • Appendix Reconciliation of non-GAAP Measures to GAAP Measures 21 Gabelli Conference – September 7, 2006
    • Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion 2003 2004 ($M ) Cash Provided by Operating Activities $2,199 $2,253 Expenditures for Property, Plant and Equipment (655) (629) Free Cash Flow 1,544 1,624 Cash Provided by Operating Activities $2,199 $2,253 ÷ Net Income 1,289 1,246 Operating Cash Flow Conversion % 171% 181% Free Cash Flow $1,544 $1,624 ÷ Net Income 1,289 1,246 Free Cash Flow Conversion % 120% 130% 22 Gabelli Conference – September 7, 2006
    • Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin 1H05 1H06 ($M ) Sales $13,477 $15,139 Cost of Products and Services Sold (10,585) (11,627) Selling, General and Administrative Expenses (1,789) (2,088) Operating Income $1,103 $1,424 (1) FAS 123R, Stock Option Expense $0 $41 Repositioning and Other Charges (1) 210 245 (1) Pension and OPEB Expense 282 244 Segment Profit $1,595 $1,954 Operating Income $1,103 $1,424 ÷ Sales $13,477 $15,139 Operating Income Margin % 8.2% 9.4% Segment Profit $1,595 $1,954 ÷ Sales $13,477 $15,139 Segment Profit Margin % 11.8% 12.9% (1) Included in costs of products and services sold and selling, general and administrative expenses 23 Gabelli Conference – September 7, 2006
    • Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion 1H05 1H06 ($M ) Cash Provided by Operating Activities $898 $1,174 Expenditures for Property, Plant and Equipment (294) (271) Free Cash Flow 604 903 Cash Provided by Operating Activities $898 $1,174 ÷ Net Income 660 957 Operating Cash Flow Conversion % 136% 123% Free Cash Flow $604 $903 ÷ Net Income 660 957 Free Cash Flow Conversion % 92% 94% 24 Gabelli Conference – September 7, 2006
    • Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin 2005 2006E ($B) Sales $27.6 $31.0 Cost of Products and Services Sold (21.5) (23.9) Selling, General and Administrative Expenses (3.7) (4.0) Operating Income $2.4 $3.1 (1) FAS 123R, Stock Option Expense 0.0 0.1 (1) Repositioning and Other Charges 0.4 0.4 (1) Pension and OPEB Expense 0.6 0.5 Segment Profit $3.4 $4.1 Operating Income $2.4 $3.1 ÷ Sales $27.6 $31.0 Operating Income Margin % 8.7% 10.0% Segment Profit $3.4 $4.1 ÷ Sales $27.6 $31.0 Segment Profit Margin % 12.2% 13.4% (1) Included in costs of products and services sold and selling, general and administrative expenses 25 Gabelli Conference – September 7, 2006
    • Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion 2005 2006E ($M) Cash Provided by Operating Activities $2,442 $2,900 - 3,100 Expenditures for Property, Plant and Equipment (684) (800) Free Cash Flow $1,758 $2,100 - 2,300 Cash Provided by Operating Activities $2,442 $2,900 - 3,100 ÷ Net Income $1,638 $2,050 - 2,100 Operating Cash Flow Conversion % 149% +135% Free Cash Flow $1,758 $2,100 - 2,300 ÷ Net Income $1,638 $2,050 - 2,100 Free Cash Flow Conversion % 107% +100% 26 Gabelli Conference – September 7, 2006