Delaware | 1-8974 | 22-2640650 | ||||||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, par value $1 per share | HON | The Nasdaq Stock Market LLC | ||||||||||||
3.500% Senior Notes due 2027 | HON 27 | The Nasdaq Stock Market LLC | ||||||||||||
2.250% Senior Notes due 2028 | HON 28A | The Nasdaq Stock Market LLC | ||||||||||||
3.375% Senior Notes due 2030 | HON 30 | The Nasdaq Stock Market LLC | ||||||||||||
0.750% Senior Notes due 2032 | HON 32 | The Nasdaq Stock Market LLC | ||||||||||||
3.750% Senior Notes due 2032 | HON 32A | The Nasdaq Stock Market LLC | ||||||||||||
4.125% Senior Notes due 2034 | HON 34 | The Nasdaq Stock Market LLC | ||||||||||||
3.750% Senior Notes due 2036 | HON 36 | The Nasdaq Stock Market LLC |
Exhibit # |
Description |
|||||||
99 | ||||||||
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
Date: | July 25, 2024 | HONEYWELL INTERNATIONAL INC. | |||||||||||||||
By: /s/ Su Ping Lu |
|||||||||||||||||
Su Ping Lu | |||||||||||||||||
Vice President and Corporate Secretary | |||||||||||||||||
Contacts: |
|||||
Media | Investor Relations | ||||
Stacey Jones | Sean Meakim | ||||
(980) 378-6258 | (704) 627-6200 | ||||
stacey.jones@honeywell.com | sean.meakim@honeywell.com |
Previous Guidance | Current Guidance | |||||||||||||
Sales | $38.5B - $39.3B | $39.1B - $39.7B | ||||||||||||
Organic1 Growth |
4% - 6% | 5% - 6% | ||||||||||||
Segment Margin | 23.8% - 24.1% | 23.3% - 23.5% | ||||||||||||
Expansion | Up 30 - 60 bps | Down 20 - Flat bps | ||||||||||||
Adjusted Earnings Per Share3 |
$10.15 - $10.45 | $10.05 - $10.25 | ||||||||||||
Adjusted Earnings Growth3 |
7% - 10% | 6% - 8% | ||||||||||||
Operating Cash Flow | $6.7B - $7.1B | $6.6B - $7.0B | ||||||||||||
Free Cash Flow1 |
$5.6B - $6.0B | $5.5B - $5.9B |
2Q 2024 | 2Q 2023 | Change | ||||||||||||||||||
Sales | $9,577 | $9,146 | 5% | |||||||||||||||||
Organic1 Growth |
4% | |||||||||||||||||||
Operating Income Margin | 20.7% | 20.6% | 10 bps | |||||||||||||||||
Segment Profit1 |
$2,199 | $2,113 | 4% | |||||||||||||||||
Segment Margin1 |
23.0% | 23.1% | -10 bps | |||||||||||||||||
Earnings Per Share | $2.36 | $2.22 | 6% | |||||||||||||||||
Adjusted Earnings Per Share1 |
$2.49 | $2.30 | 8% | |||||||||||||||||
Operating Cash Flow | $1,371 | $1,360 | 1% | |||||||||||||||||
Free Cash Flow1 |
$1,112 | $1,127 | (1%) | |||||||||||||||||
AEROSPACE TECHNOLOGIES | 2Q 2024 | 2Q 2023 | Change | |||||||||||||||||
Sales | $3,891 | $3,341 | 16% | |||||||||||||||||
Organic1 Growth |
16% | |||||||||||||||||||
Segment Profit | $1,060 | $930 | 14% | |||||||||||||||||
Segment Margin | 27.2% | 27.8% | -60 bps | |||||||||||||||||
INDUSTRIAL AUTOMATION | ||||||||||||||||||||
Sales | $2,506 | $2,727 | (8%) | |||||||||||||||||
Organic1 Growth |
(8%) | |||||||||||||||||||
Segment Profit | $477 | $544 | (12%) | |||||||||||||||||
Segment Margin | 19.0% | 19.9% | -90 bps | |||||||||||||||||
BUILDING AUTOMATION | ||||||||||||||||||||
Sales | $1,571 | $1,510 | 4% | |||||||||||||||||
Organic1 Growth |
1% | |||||||||||||||||||
Segment Profit | $397 | $391 | 2% | |||||||||||||||||
Segment Margin | 25.3% | 25.9% | -60 bps | |||||||||||||||||
ENERGY AND SUSTAINABILITY SOLUTIONS | ||||||||||||||||||||
Sales | $1,604 | $1,567 | 2% | |||||||||||||||||
Organic1 Growth |
3% | |||||||||||||||||||
Segment Profit | $405 | $363 | 12% | |||||||||||||||||
Segment Margin | 25.2% | 23.2% | 200 bps | |||||||||||||||||
1 | See additional information at the end of this release regarding non-GAAP financial measures. |
|||||||
2 | Segment margin and adjusted EPS are non-GAAP financial measures. Management cannot reliably predict or estimate, without unreasonable effort, the impact and timing on future operating results arising from items excluded from segment margin or adjusted EPS. We therefore, do not present a guidance range, or a reconciliation to, the nearest GAAP financial measures of operating margin or EPS. |
|||||||
3 | Adjusted EPS and adjusted EPS V% guidance excludes items identified in the non-GAAP reconciliation of adjusted EPS at the end of this release, and any potential future one-time items that we cannot reliably predict or estimate such as pension mark-to-market. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Product sales | $ | 6,477 | $ | 6,441 | $ | 12,740 | $ | 12,751 | |||||||||||||||
Service sales | 3,100 | 2,705 | 5,942 | 5,259 | |||||||||||||||||||
Net sales | 9,577 | 9,146 | 18,682 | 18,010 | |||||||||||||||||||
Costs, expenses and other | |||||||||||||||||||||||
Cost of products sold1 |
4,247 | 4,133 | 8,282 | 8,201 | |||||||||||||||||||
Cost of services sold1 |
1,609 | 1,493 | 3,157 | 2,923 | |||||||||||||||||||
Total Cost of products and services sold | 5,856 | 5,626 | 11,439 | 11,124 | |||||||||||||||||||
Research and development expenses | 382 | 375 | 742 | 732 | |||||||||||||||||||
Selling, general and administrative expenses1 |
1,361 | 1,262 | 2,663 | 2,579 | |||||||||||||||||||
Other (income) expense | (246) | (208) | (477) | (468) | |||||||||||||||||||
Interest and other financial charges | 250 | 187 | 470 | 357 | |||||||||||||||||||
Total costs, expenses and other | 7,603 | 7,242 | 14,837 | 14,324 | |||||||||||||||||||
Income before taxes | 1,974 | 1,904 | 3,845 | 3,686 | |||||||||||||||||||
Tax expense | 414 | 403 | 810 | 777 | |||||||||||||||||||
Net income | 1,560 | 1,501 | 3,035 | 2,909 | |||||||||||||||||||
Less: Net income attributable to the noncontrolling interest | 16 | 14 | 28 | 28 | |||||||||||||||||||
Net income attributable to Honeywell | $ | 1,544 | $ | 1,487 | $ | 3,007 | $ | 2,881 | |||||||||||||||
Earnings per share of common stock - basic | $ | 2.37 | $ | 2.24 | $ | 4.62 | $ | 4.32 | |||||||||||||||
Earnings per share of common stock - assuming dilution | $ | 2.36 | $ | 2.22 | $ | 4.59 | $ | 4.29 | |||||||||||||||
Weighted average number of shares outstanding - basic | 650.2 | 665.3 | 651.3 | 666.5 | |||||||||||||||||||
Weighted average number of shares outstanding - assuming dilution | 654.2 | 670.2 | 655.5 | 671.9 |
1 | Cost of products and services sold and Selling, general and administrative expenses include amounts for repositioning and other charges, the service cost component of pension and other postretirement (income) expense, and stock compensation expense. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Net Sales | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Aerospace Technologies | $ | 3,891 | $ | 3,341 | $ | 7,560 | $ | 6,452 | |||||||||||||||
Industrial Automation | 2,506 | 2,727 | 4,984 | 5,530 | |||||||||||||||||||
Building Automation | 1,571 | 1,510 | 2,997 | 2,997 | |||||||||||||||||||
Energy and Sustainability Solutions | 1,604 | 1,567 | 3,129 | 3,028 | |||||||||||||||||||
Corporate and All Other | 5 | 1 | 12 | 3 | |||||||||||||||||||
Total | $ | 9,577 | $ | 9,146 | $ | 18,682 | $ | 18,010 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Segment Profit | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Aerospace Technologies | $ | 1,060 | $ | 930 | $ | 2,095 | $ | 1,761 | |||||||||||||||
Industrial Automation | 477 | 544 | 951 | 1,130 | |||||||||||||||||||
Building Automation | 397 | 391 | 747 | 772 | |||||||||||||||||||
Energy and Sustainability Solutions | 405 | 363 | 708 | 665 | |||||||||||||||||||
Corporate and All Other | (140) | (115) | (208) | (200) | |||||||||||||||||||
Total segment profit | 2,199 | 2,113 | 4,293 | 4,128 | |||||||||||||||||||
Interest and other financial charges | (250) | (187) | (470) | (357) | |||||||||||||||||||
Interest income | 110 | 76 | 215 | 152 | |||||||||||||||||||
Amortization of acquisition-related intangibles | (85) | (61) | (155) | (129) | |||||||||||||||||||
Stock compensation expense1 |
(55) | (50) | (108) | (109) | |||||||||||||||||||
Pension ongoing income2 |
140 | 130 | 285 | 260 | |||||||||||||||||||
Other postretirement income2 |
4 | 7 | 10 | 13 | |||||||||||||||||||
Repositioning and other charges3,4 |
(44) | (102) | (137) | (243) | |||||||||||||||||||
Other5 |
(45) | (22) | (88) | (29) | |||||||||||||||||||
Income before taxes | $ | 1,974 | $ | 1,904 | $ | 3,845 | $ | 3,686 |
1 | Amounts included in Selling, general and administrative expenses. | |||||||
2 | Amounts included in Cost of products and services sold (service cost component), Selling, general and administrative expenses (service cost component), Research and development expenses (service cost component), and Other (income) expense (non-service cost component). | |||||||
3 | Amounts included in Cost of products and services sold, Selling, general and administrative expenses, and Other (income) expense. | |||||||
4 | Includes repositioning, asbestos, and environmental expenses. | |||||||
5 | Amounts include the other components of Other (income) expense not included within other categories in this reconciliation. Equity income of affiliated companies is included in segment profit. |
June 30, 2024 | December 31, 2023 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 9,576 | $ | 7,925 | |||||||
Short-term investments | 231 | 170 | |||||||||
Accounts receivable, less allowances of $312 and $323, respectively | 7,759 | 7,530 | |||||||||
Inventories | 6,324 | 6,178 | |||||||||
Other current assets | 1,479 | 1,699 | |||||||||
Total current assets | 25,369 | 23,502 | |||||||||
Investments and long-term receivables | 1,472 | 939 | |||||||||
Property, plant and equipment—net | 5,752 | 5,660 | |||||||||
Goodwill | 20,824 | 18,049 | |||||||||
Other intangible assets—net | 5,208 | 3,231 | |||||||||
Insurance recoveries for asbestos-related liabilities | 163 | 170 | |||||||||
Deferred income taxes | 374 | 392 | |||||||||
Other assets | 10,167 | 9,582 | |||||||||
Total assets | $ | 69,329 | $ | 61,525 | |||||||
LIABILITIES | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 6,470 | $ | 6,849 | |||||||
Commercial paper and other short-term borrowings | 4,548 | 2,085 | |||||||||
Current maturities of long-term debt | 2,519 | 1,796 | |||||||||
Accrued liabilities | 7,507 | 7,809 | |||||||||
Total current liabilities | 21,044 | 18,539 | |||||||||
Long-term debt | 20,865 | 16,562 | |||||||||
Deferred income taxes | 2,137 | 2,094 | |||||||||
Postretirement benefit obligations other than pensions | 126 | 134 | |||||||||
Asbestos-related liabilities | 1,444 | 1,490 | |||||||||
Other liabilities | 6,196 | 6,265 | |||||||||
Redeemable noncontrolling interest | 7 | 7 | |||||||||
Shareowners’ equity | 17,510 | 16,434 | |||||||||
Total liabilities, redeemable noncontrolling interest and shareowners’ equity | $ | 69,329 | $ | 61,525 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Net income | $ | 1,560 | $ | 1,501 | $ | 3,035 | $ | 2,909 | |||||||||||||||
Less: Net income attributable to noncontrolling interest |
16 | 14 | 28 | 28 | |||||||||||||||||||
Net income attributable to Honeywell | 1,544 | 1,487 | 3,007 | 2,881 | |||||||||||||||||||
Adjustments to reconcile net income attributable to Honeywell to net cash provided by (used for) operating activities | |||||||||||||||||||||||
Depreciation | 163 | 166 | 329 | 327 | |||||||||||||||||||
Amortization | 146 | 118 | 271 | 240 | |||||||||||||||||||
Repositioning and other charges | 44 | 102 | 137 | 243 | |||||||||||||||||||
Net payments for repositioning and other charges | (87) | (154) | (211) | (195) | |||||||||||||||||||
NARCO Buyout payment | — | — | — | (1,325) | |||||||||||||||||||
Pension and other postretirement income | (144) | (137) | (295) | (273) | |||||||||||||||||||
Pension and other postretirement benefit payments | (7) | (8) | (15) | (23) | |||||||||||||||||||
Stock compensation expense | 55 | 50 | 108 | 109 | |||||||||||||||||||
Deferred income taxes | (39) | (29) | (36) | 196 | |||||||||||||||||||
Other | (420) | (293) | (583) | (643) | |||||||||||||||||||
Changes in assets and liabilities, net of the effects of acquisitions and divestitures | |||||||||||||||||||||||
Accounts receivable | (202) | (83) | (149) | (505) | |||||||||||||||||||
Inventories | 63 | (100) | (77) | (338) | |||||||||||||||||||
Other current assets | 163 | 98 | 227 | 208 | |||||||||||||||||||
Accounts payable | (42) | — | (423) | 114 | |||||||||||||||||||
Accrued liabilities | 134 | 143 | (471) | (440) | |||||||||||||||||||
Net cash provided by operating activities | 1,371 | 1,360 | 1,819 | 576 | |||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Capital expenditures | (259) | (233) | (492) | (426) | |||||||||||||||||||
Proceeds from disposals of property, plant and equipment | — | 2 | — | 13 | |||||||||||||||||||
Increase in investments | (230) | (3) | (468) | (229) | |||||||||||||||||||
Decrease in investments | 237 | 246 | 392 | 632 | |||||||||||||||||||
Receipts (payments) from settlements of derivative contracts | 33 | (31) | 76 | (38) | |||||||||||||||||||
Cash paid for acquisitions, net of cash acquired | (4,913) | (661) | (4,913) | (661) | |||||||||||||||||||
Net cash used for investing activities | (5,132) | (680) | (5,405) | (709) | |||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Proceeds from issuance of commercial paper and other short-term borrowings | 4,770 | 3,895 | 6,993 | 8,000 | |||||||||||||||||||
Payments of commercial paper and other short-term borrowings | (2,019) | (4,636) | (4,489) | (7,930) | |||||||||||||||||||
Proceeds from issuance of common stock | 165 | 78 | 309 | 115 | |||||||||||||||||||
Proceeds from issuance of long-term debt | — | 2,966 | 5,710 | 2,966 | |||||||||||||||||||
Payments of long-term debt | (32) | (21) | (605) | (1,384) | |||||||||||||||||||
Repurchases of common stock | (529) | (477) | (1,200) | (1,176) | |||||||||||||||||||
Cash dividends paid | (743) | (691) | (1,446) | (1,416) | |||||||||||||||||||
Other | (10) | (4) | 26 | (38) | |||||||||||||||||||
Net cash provided by (used for) financing activities | 1,602 | 1,110 | 5,298 | (863) | |||||||||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (21) | (33) | (61) | (5) | |||||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
(2,180) | 1,757 | 1,651 | (1,001) | |||||||||||||||||||
Cash and cash equivalents at beginning of period | 11,756 | 6,869 | 7,925 | 9,627 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 9,576 | $ | 8,626 | $ | 9,576 | $ | 8,626 |
Three Months Ended June 30, 2024 | |||||
Honeywell | |||||
Reported sales % change | 5% | ||||
Less: Foreign currency translation | —% | ||||
Less: Acquisitions, divestitures and other, net | 1% | ||||
Organic sales % change | 4% | ||||
Aerospace Technologies | |||||
Reported sales % change | 16% | ||||
Less: Foreign currency translation | —% | ||||
Less: Acquisitions, divestitures and other, net | —% | ||||
Organic sales % change | 16% | ||||
Industrial Automation | |||||
Reported sales % change | (8)% | ||||
Less: Foreign currency translation | (1)% | ||||
Less: Acquisitions, divestitures and other, net | 1% | ||||
Organic sales % change | (8)% | ||||
Building Automation | |||||
Reported sales % change | 4% | ||||
Less: Foreign currency translation | (1)% | ||||
Less: Acquisitions, divestitures and other, net | 4% | ||||
Organic sales % change | 1% | ||||
Energy and Sustainability Solutions | |||||
Reported sales % change | 2% | ||||
Less: Foreign currency translation | (1)% | ||||
Less: Acquisitions, divestitures and other, net | —% | ||||
Organic sales % change | 3% | ||||
Three Months Ended June 30, | Twelve Months Ended December 31, |
||||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||
Operating income | $ | 1,978 | $ | 1,883 | $ | 7,084 | |||||||||||
Stock compensation expense1 |
55 | 50 | 202 | ||||||||||||||
Repositioning, Other2,3 |
58 | 103 | 952 | ||||||||||||||
Pension and other postretirement service costs3 |
16 | 16 | 66 | ||||||||||||||
Amortization of acquisition-related intangibles | 85 | 61 | 292 | ||||||||||||||
Acquisition-related costs4 |
7 | — | 2 | ||||||||||||||
Segment profit | $ | 2,199 | $ | 2,113 | $ | 8,598 | |||||||||||
Operating income | $ | 1,978 | $ | 1,883 | $ | 7,084 | |||||||||||
÷ Net sales | $ | 9,577 | $ | 9,146 | $ | 36,662 | |||||||||||
Operating income margin % | 20.7 | % | 20.6 | % | 19.3 | % | |||||||||||
Segment profit | $ | 2,199 | $ | 2,113 | $ | 8,598 | |||||||||||
÷ Net sales | $ | 9,577 | $ | 9,146 | $ | 36,662 | |||||||||||
Segment profit margin % | 23.0 | % | 23.1 | % | 23.5 | % | |||||||||||
1 | Included in Selling, general and administrative expenses. | |||||||
2 | Includes repositioning, asbestos, environmental expenses, equity income adjustment, and other charges. For the three months ended June 30, 2023, other charges include $2 million of benefit due to the Russia-Ukraine conflict. |
|||||||
3 | Included in Cost of products and services sold and Selling, general and administrative expenses. | |||||||
4 | Includes acquisition-related fair value adjustments to inventory. | |||||||
Three Months Ended June 30, | Twelve Months Ended December 31, | ||||||||||||||||||||||
2024 | 2023 | 2023 | 2024(E) | ||||||||||||||||||||
Earnings per share of common stock - diluted1 |
$ | 2.36 | $ | 2.22 | $ | 8.47 | $9.48 - $9.68 | ||||||||||||||||
Pension mark-to-market expense2 |
— | — | 0.19 | No Forecast | |||||||||||||||||||
Amortization of acquisition-related intangibles3 |
0.10 | 0.07 | 0.35 | 0.48 | |||||||||||||||||||
Acquisition-related costs4 |
0.03 | — | 0.01 | 0.07 | |||||||||||||||||||
Russian-related charges5 |
— | — | — | 0.02 | |||||||||||||||||||
Net expense related to the NARCO Buyout and HWI Sale6 |
— | 0.01 | 0.01 | — | |||||||||||||||||||
Adjustment to estimated future Bendix liability7 |
— | — | 0.49 | — | |||||||||||||||||||
Adjusted earnings per share of common stock - diluted | $ | 2.49 | $ | 2.30 | $ | 9.52 | $10.05 - $10.25 | ||||||||||||||||
1 | For the three months ended June 30, 2024, and 2023, adjusted earnings per share utilizes weighted average shares of approximately 654.2 million and 670.2 million, respectively. For the twelve months ended December 31, 2023, adjusted earnings per share utilizes weighted average shares of approximately 668.2 million. For the twelve months ended December 31, 2024, expected earnings per share utilizes weighted average shares of approximately 655 million. |
|||||||
2 | Pension mark-to-market expense uses a blended tax rate of 18%, net of tax benefit of $27 million, for 2023. |
|||||||
3 | For the three months ended June 30, 2024, acquisition-related intangibles amortization includes approximately $66 million, net of tax benefit of approximately $19 million. For the three months ended June 30, 2023, and twelve months ended December 31, 2023, acquisition-related intangibles amortization includes $48 million and $231 million, net of tax benefit of approximately $13 million and $61 million, respectively. For the twelve months ended December 31, 2024, expected acquisition-related intangibles amortization includes approximately $315 million, net of tax benefit of approximately $85 million. | |||||||
4 | For the three months ended June 30, 2024, the adjustment for acquisition-related costs, which is principally comprised of third-party transaction and integration costs and acquisition-related fair value adjustments to inventory, is approximately $22 million, net of tax benefit of approximately $7 million. For the three months ended June 30, 2023, and twelve months ended December 31, 2023, the adjustment for acquisition-related costs, which is principally comprised of third-party transaction and integration costs and acquisition-related fair value adjustments to inventory, is approximately $1 million and $7 million, net of tax benefit of approximately $0 million and $2 million, respectively. For the twelve months ended December 31, 2024, the expected adjustment for acquisition-related costs, which is principally comprised of third-party transaction and integration costs and acquisition-related fair value adjustments to inventory, is approximately $45 million, net of tax benefit of approximately $15 million. | |||||||
5 | For the three months ended June 30, 2023, the adjustment was $1 million, without tax benefit. For the twelve months ended December 31, 2023, the adjustment was a benefit $3 million, without tax expense. For the twelve months ended December 31, 2024, the expected adjustment is a $17 million expense, without tax benefit, due to the settlement of a contractual dispute with a Russian entity associated with the Company’s suspension and wind down activities in Russia. |
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6 | For the three months ended June 30, 2023 and the twelve months ended December 31, 2023, the adjustment was $8 million, net of tax benefit of $3 million, due to the net expense related to the NARCO Buyout and HWI Sale. | |||||||
7 | Bendix Friction Materials (“Bendix”) is a business no longer owned by the Company. In 2023, the Company changed its valuation methodology for calculating legacy Bendix liabilities. For the twelve months ended December 31, 2023, the adjustment was $330 million, net of tax benefit of $104 million (or $434 million pre-tax) due to a change in the estimated liability for resolution of asserted (claims filed as of the financial statement date) and unasserted Bendix-related asbestos claims. The Company experienced fluctuations in average resolution values year-over-year in each of the past five years with no well-established trends in either direction. In 2023, the Company observed two consecutive years of increasing average resolution values (2023 and 2022), with more volatility in the earlier years of the five-year period (2019 through 2021). Based on these observations, the Company, during its annual review in the fourth quarter of 2023, reevaluated its valuation methodology and elected to give more weight to the two most recent years by shortening the look-back period from five years to two years (2023 and 2022). The Company believes that the average resolution values in the last two consecutive years are likely more representative of expected resolution values in future periods. The $434 million pre-tax amount was attributable primarily to shortening the look-back period to the two most recent years, and to a lesser extent to increasing expected resolution values for a subset of asserted claims to adjust for higher claim values in that subset than in the modelled two-year data set. It is not possible to predict whether such resolution values will increase, decrease, or stabilize in the future, given recent litigation trends within the tort system and the inherent uncertainty in predicting the outcome of such trends. The Company will continue to monitor Bendix claim resolution values and other trends within the tort system to assess the appropriate look-back period for determining average resolution values going forward. | |||||||
Three Months Ended June 30, 2024 |
Three Months Ended June 30, 2023 |
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Cash provided by operating activities | $ | 1,371 | $ | 1,360 | |||||||
Capital expenditures | (259) | (233) | |||||||||
Free cash flow | $ | 1,112 | $ | 1,127 | |||||||
Twelve Months Ended December 31, 2024(E) ($B) | |||||
Cash provided by operating activities | ~$6.6 - $7.0 | ||||
Capital expenditures | ~(1.1) | ||||
Free cash flow | ~$5.5 - $5.9 | ||||