10-KPeriod: FY2014

HONEYWELL INTERNATIONAL INC Annual Report, Year Ended Dec 31, 2014

Filed February 13, 2015For Securities:HONHONIV

Summary

Honeywell International Inc. reported strong performance in 2014, with revenues reaching $40.3 billion, a 3% increase from the previous year. The company demonstrated effective operational excellence, with segment profit growing by 5%, outpacing revenue growth. This was driven by strategic reinvestments in research and development (R&D), capital expenditures for facility expansion, and a focus on high-growth regions. Honeywell also continued its portfolio management strategy, divesting non-core assets like the Friction Materials business while actively pursuing strategic acquisitions, such as the planned acquisition of Datamax-O’Neil. The company's financial health remained robust, with operating cash flow increasing by 16% to $5,024 million. This strong cash generation enabled significant returns to shareholders, including a 15% increase in dividends and substantial share repurchases. Honeywell maintained a stable credit rating outlook, underscoring its sound financial management and ability to fund its strategic initiatives.

Financial Highlights

53 data points
Beta

Revenue

$40.31B

28.2% Gross Margin

Net Income

$4.24B

10.5% Net Margin

EPS (Diluted)

$5.33

Total Assets

$45.45B

Cash & Equivalents

$6.96B

Free Cash Flow

$3.99B

Financial Statements
Beta
Revenue$40.31B
Cost of Revenue$28.96B
Gross Profit$11.35B
R&D Expenses$1.89B
SG&A Expenses$5.52B
Net Income$4.24B
EPS (Basic)$5.40
EPS (Diluted)$5.33
Shares Outstanding (Basic)784.40M
Shares Outstanding (Diluted)795.20M

Key Highlights

  • 1Net sales increased by 3% to $40.3 billion in 2014, driven by growth across key segments.
  • 2Segment profit grew by 5%, outpacing sales growth, indicating improved operational efficiency.
  • 3R&D spending increased to 4.7% of revenues, with investments focused on high-growth areas like natural gas processing and advanced avionics.
  • 4Operating cash flow saw a significant increase of 16% to $5,024 million, supporting investments and shareholder returns.
  • 5The company returned capital to shareholders through a 15% dividend increase and share repurchases, with $4.1 billion remaining available under its repurchase program.
  • 6Strategic portfolio actions included the divestiture of the Friction Materials business and the agreement to acquire Datamax-O’Neil.
  • 7International sales represented approximately 55% of total revenues, reflecting a growing global footprint.

Frequently Asked Questions

Honeywell's operations were managed through three reportable segments: Aerospace, Automation and Control Solutions (ACS), and Performance Materials and Technologies (PMT). The company realigned its Transportation Systems business into Aerospace and its Process Solutions business into PMT during 2014.

Honeywell generated strong operating cash flow of $5,024 million in 2014. This cash flow supported capital expenditures, a 15% increase in dividends per share, and share repurchases. The company had $4.1 billion available for additional share repurchases at the end of 2014.

Sales growth was driven by organic growth in various segments, including Commercial Aftermarket (Aerospace), Energy, Safety & Security (ACS), and UOP (PMT). Acquisitions also contributed to overall sales growth, particularly in the ACS segment.

Key risks include macroeconomic and industry-specific conditions affecting customer demand, exposure to international operations and associated geopolitical and regulatory risks, fluctuations in raw material prices, the inability to develop and market new technologies, and risks associated with acquisitions and divestitures. Cybersecurity threats and environmental liabilities were also highlighted.