01—Abstract
Summary
Summary of the 10-K filed February 14, 2014. Cited figures are marked; the original filing is the authoritative source.
Honeywell International Inc.'s 2013 10-K filing reveals a robust year with a 4% increase in revenue to $39.1 billiona, driven by strong performance across its diversified business segments.
The company demonstrated effective operational excellence, with segment profit growing 8%, outpacing revenue growth. This profitability was supported by the "Honeywell Enablers" – the Honeywell Operating System (HOS), Velocity Product Development (VPD), and Functional Transformation (FT) – which drive efficiency and cost-effectiveness. Key strategic initiatives in 2013 included significant investments in Research and Development (R&D) at 4.6% of revenue, focusing on high-growth areas, and capital expenditures of $947 millionb.
The company also completed strategic acquisitions, notably Intermec, Inc. and RAE Systems, Inc., enhancing its capabilities in mobile computing and detection systems, while also actively divesting non-core assets. Honeywell generated strong operating cash flow, enabling increased capital expenditures, acquisitions, a 10%c dividend increase, and significant share repurchases, underscoring a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue increased by 4% to $39.1 billion in 2013, demonstrating growth across diversified segments.
- Segment profit grew by 8%, indicating strong operational efficiency and profitability improvement, supported by 'Honeywell Enablers'.
- Significant investments were made in R&D ($1.8 billion) and capital expenditures ($947 million) to drive future growth in key areas.
- Strategic acquisitions of Intermec, Inc. and RAE Systems, Inc. were completed to bolster Automation and Control Solutions segment capabilities.
- Operating cash flow increased by 23% to $4.3 billion, supporting shareholder returns through dividends and share repurchases.
- The company maintained a stable financial position with total debt of $8.8 billion and shareowner's equity of $17.6 billion at year-end.
- Sales to customers outside the United States represented 55% of total revenues, highlighting a significant international presence.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Honeywell International kept $0.10.
- Revenue$39.05B100.0%
- Cost of revenue−$28.36B72.6%
- Gross profit$10.69B27.4%
- Operating costs−$6.77B17.3%
- Operating income$3.92B10.0%
- Interest, other & tax$-00.0%
- Net income$3.92B10.0%
Where FY2013 revenue went
$39.05B- Cost of revenue: $28.36B, 73% of revenue
- SG&A: $5.19B, 13% of revenue
- Net income: $3.92B, 10% of revenue
- R&D: $1.80B, 4.6% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 14, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $39.05B$37.66B | +3.7% |
| Cost of Revenue | $28.36B$28.29B | +0.3% |
| Gross Profit | $10.69B$9.37B | +14.0% |
| R&D Expenses | $1.80B$1.85B | −2.3% |
| SG&A Expenses | $5.19B$5.22B | −0.5% |
| Operating Income | $3.92B$2.93B | +34.1% |
| Net Income | $3.92B$2.93B | +34.1% |
| EPS (Basic) | $4.99$3.74 | +33.4% |
| EPS (Diluted) | $4.92$3.69 | +33.3% |
| Shares Outstanding (Basic) | 786.40M782.40M | +0.5% |
| Shares Outstanding (Diluted) | 797.30M791.90M | +0.7% |
05—Questions
Frequently Asked Questions
What were Honeywell's primary revenue drivers in 2013?
Honeywell's revenue in 2013 was primarily driven by its four reportable segments: Aerospace, Automation and Control Solutions (ACS), Performance Materials and Technologies (PMT), and Transportation Systems. The Aerospace segment saw sales of $12.0 billion, ACS achieved $16.6 billion, PMT generated $6.8 billion, and Transportation Systems had $3.8 billion in sales. Growth within these segments was influenced by factors such as new aircraft production, demand for building automation and control systems, performance materials, and automotive turbochargers.
How did Honeywell manage its profitability and costs in 2013?
Honeywell focused on operational excellence and cost management through its 'Honeywell Enablers' (HOS, VPD, FT). The company reported an 8% increase in segment profit, outperforming revenue growth. Key factors contributing to improved profitability included lower pension expenses (primarily due to a reduced mark-to-market adjustment), favorable segment gross margins across most businesses, and disciplined selling, general, and administrative (SG&A) expenses, which decreased as a percentage of sales.
What significant strategic moves did Honeywell make in 2013?
In 2013, Honeywell pursued a balanced strategy of investment and portfolio optimization. It completed strategic acquisitions of Intermec, Inc. (mobile computing and RFID) and RAE Systems, Inc. (gas and radiation detection systems) to strengthen its Automation and Control Solutions segment. Simultaneously, the company continued to divest non-core businesses, with an agreement to sell its Friction Materials business announced in January 2014. The company also repurchased $1.1 billion of its common stock and increased its dividend by 10%.
What is Honeywell's exposure to government contracts and international markets?
Sales to the U.S. Government, primarily through its Aerospace segment, amounted to $3.9 billion in 2013, a slight decrease from prior years. The company noted an expected slight decline in defense and space revenue for 2014 due to anticipated lower U.S. government spending. Internationally, Honeywell had a strong presence, with 55% of its total sales generated outside the U.S., including 29% in Europe and 13% in Asia, indicating significant reliance on global economic conditions and diverse geographic markets.
06—Continue