DA
Thank you, and good morning, everyone. Before we turn to slides, I would like to make a few opening remarks. We’re clearly holding this call during unprecedented times. The COVID-19 pandemic has widespread impacts on our communities, from our families, friends and neighbors to our employees, customers and suppliers.
At Honeywell, our number one priority is the health and safety of our employees. We are taking many precautions to preserve their well-being over 100,000 employees around the world, results in very few infections across the company. Each of our employees is demonstrating a strong commitment to our company and to our customers during these challenging times.
I sincerely thank them for their strength, resilience and courage. I would also like to express my gratitude to the men and women on the frontlines of this fight. The healthcare workers are working every day to overcome this global health emergency. They are the heroes and we’re doing everything we can to support them with increased production of personal protective equipment and other critical supplies.
This morning, we’ll discuss six key topics. First, we’ll review our first quarter performance, a quarter during, which we over-delivered on our original EPS and segment margin commitments despite a rapidly deteriorating environment. I am particularly proud of this outcome as, even in a crisis, we demonstrated that our investors can count on our reliable say-do outcome. Second, we will discuss how we are working to keep our employees and the men and women on the frontline safe and healthy.
Third, we’ll discuss our outlook for the second quarter. The next few quarters are likely to be among the most unpredictable quarters we’ve ever experienced and our visibility is limited under the current circumstances. Accordingly, our outlook for the second quarter will have less detail than usual, but we’ll provide a level of detail that is commensurate with our visibility in the current environment. We’re also suspending our full year financial guidance until the economic environment stabilizes and we can once again provide a reliable forecast.
Fourth, we will provide an overview of our strong balance sheet and the liquidity position, which will take years of responsible balance sheet management. Fifth, we will outline decisive and expeditious actions we have already taken to manage through the crisis, protect shareholder value and emerge stronger than ever.
We cannot control the pandemic, but we can control how we’re mitigating risk to our operations and supply chain, engaging with customers, managing costs and preserving liquidity. As you’ll see, we are applying Honeywell’s usual level of discipline and diligence to this unprecedented situation. We’ve already locked in plans, which we are executing so that we are not searching for answers as the crisis continues to unfold. And finally, we’ll provide an overview of some new opportunities that are well aligned to our portfolio.
In some cases, access to customer sites was restricted, impacting our ability to complete deliveries and provide services. COVID-19 and the OPEC-plus dispute also caused demand weakness, particularly in our short cycle businesses and in the Aerospace and Oil and Gas end markets. The combination of these effects resulted in an organic sales decline of 4%. As you have come to expect from Honeywell, we responded quickly to changing conditions by implementing cost control measures, which combined with our productivity rigor and commercial excellence drove 140 basis points of segment margin expansion, 90 basis points above the high end of our first quarter guidance.
We also generated $800 million of free cash flow despite lower cash collections from customers at the end of the quarter due to the challenging macroeconomic conditions. We continue to implement our responsible and balanced capital deployment program during the first quarter. We deployed $2.7 billion of capital across share repurchases, dividends and high return CapEx investments to position our company for the future. This was a challenging first quarter due to the rapid escalation of the COVID-19 pandemic and the OPEC-plus dispute. We’re effectively – but we effectively managed through the challenge to over-deliver on our profit commitments, demonstrating our strong say-do.
Let’s turn to Slide 3 to discuss our response to the pandemic. As the COVID-19 pandemic started to evolve, we reacted quickly to ensure the safety of our employees as well as to aiding the frontline response to the crisis. We implemented several precautionary measures to keep our employees safe, including travel restrictions for all employees and full-time work-from-home for nearly all of our non-manufacturing employees.
At Honeywell locations where work cannot be performed remotely such as manufacturing sites, we implemented measures to protect our employees including restricting visitors, enhancing site cleaning and sanitation regimens, providing hand sanitizers, staggering shifts and lunch breaks and putting safe distance practices in place where possible. Where social distancing isn’t possible, we have also provided employees with masks. We have also implemented mandatory temperature screening at several locations and are putting capabilities in place to expand that practice as needed. We’ll continue to comply with all local and national guidance from governments and health authorities.
In addition, we announced that Honeywell will pay for coronavirus testing and treatment costs that are not covered by employees insurance and will provide a full year of paid sick-time upfront for U.S. non-exempt employees. Finally, we announced a $10 million employee relief fund to help employees in financial distress. We also recognize the urgency to keep medical professionals safe. We have quickly ramped up production of our personal protective equipment to address unprecedented demand.
We recently announced that we’re adding manufacturing capabilities to our existing sites in Smithfield, Rhode Island and Phoenix, Arizona to produce millions of N95 masks to help support the urgent need for critical safety equipment. The additional capacity at these two facilities is expected to create more than 1,000 new jobs and produce more than 20 million N95 disposable masks monthly to support the U.S. government’s efforts to combat the virus. Our Smithfield, Rhode Island facility is already producing N95 masks. We installed a production line in only five weeks, a process that normally takes nine months to complete.
Honeywell is supporting the fight against COVID-19 in other ways as well, including increasing production of our other critical personal protective equipment such as safety eyewear and facials, increasing production of sensors used in ventilators and providing testing services to ventilator manufacturers.
Finally, we recently announced that we will shift manufacturing operations at two chemical manufacturing sites in the U.S. and Germany to produce and donate hand sanitizers to government agencies in response to shortages created by the COVID-19 pandemic. These sites which manufactures a high-purity solutions for laboratory research and testing applications will produce hand sanitizers over the next two months for government agencies to distribute to entities in need. These are certainly challenging times and we’re proud of our role and the many actions we have taken to produce essential personal protective equipment to keep the heroes on the frontlines safe.