10-KPeriod: FY2015

HONEYWELL INTERNATIONAL INC Annual Report, Year Ended Dec 31, 2015

Filed February 12, 2016For Securities:HONHONIV

Summary

Honeywell International Inc. reported strong financial performance in 2015, with diluted Earnings Per Share (EPS) growing 13% to $6.04 and net income attributable to Honeywell increasing 12% to $4,768 million. This growth was achieved despite a challenging macroeconomic environment, driven by strategic deployment of capital, which included over $5 billion in acquisitions focused on technology and alignment with global trends like energy efficiency and security. The company also returned significant capital to shareholders through a 15% dividend increase and share repurchases aimed at offsetting dilution. Operationally, Honeywell saw segment margin expansion and maintained its commitment to R&D, investing 5% of sales. Productivity initiatives, including the Honeywell Operating System (HOS) Gold and Honeywell User Experience (HUE), were intensified to drive efficiency across manufacturing, supply chain, and operations. The company's diversified business segments—Aerospace, Automation and Control Solutions (ACS), and Performance Materials and Technologies (PMT)—collectively contributed to the positive results, with Aerospace showing growth in commercial original equipment and aftermarket, ACS benefiting from security and sensing solutions, and PMT navigating market shifts. Looking ahead, Honeywell highlighted its focus on profitable growth, margin expansion through operational improvements, strong cash flow generation, and disciplined M&A. The company is well-positioned with a stable outlook and credit ratings, supported by its strong liquidity and diverse end-market exposure.

Financial Highlights

52 data points
Beta

Revenue

$38.58B

30.7% Gross Margin

Net Income

$4.77B

12.4% Net Margin

EPS (Diluted)

$6.04

Total Assets

$49.32B

Cash & Equivalents

$5.46B

Free Cash Flow

$4.45B

Financial Statements
Beta
Revenue$38.58B
Cost of Revenue$26.75B
Gross Profit$11.83B
R&D Expenses$1.86B
SG&A Expenses$5.01B
Net Income$4.77B
EPS (Basic)$6.11
EPS (Diluted)$6.04
Shares Outstanding (Basic)779.80M
Shares Outstanding (Diluted)789.30M

Key Highlights

  • 1Diluted EPS grew 13% to $6.04 in 2015, and net income attributable to Honeywell rose 12% to $4,768 million.
  • 2Capital deployment exceeded $10 billion, including over $5 billion in strategic acquisitions, a 15% dividend increase, and share repurchases.
  • 3Segment margin expanded by 220 basis points compared to 2014.
  • 4R&D spending was maintained at 5% of sales, supporting future growth initiatives.
  • 5Productivity improvements were driven by HOS Gold and HUE initiatives across operations.
  • 6Aerospace segment profit increased 10% due to organic growth and favorable OEM incentives.
  • 7The company maintained a stable financial outlook with strong liquidity and credit ratings.

Frequently Asked Questions

In 2015, Honeywell reported a 13% increase in diluted Earnings Per Share (EPS) to $6.04 and a 12% increase in net income attributable to Honeywell to $4,768 million. Net sales were $38,581 million, a decrease of 4% compared to 2014, impacted by foreign currency translation and divestitures.

Honeywell deployed over $10 billion in capital in 2015. This included over $5 billion in mergers and acquisitions, a 15% increase in its annual dividend rate, and approximately $1.9 billion in share repurchases to offset the dilutive impact of employee stock-based compensation plans. The company also invested over $1 billion in capital expenditures for growth projects.

Honeywell operates through three main segments: Aerospace, Automation and Control Solutions (ACS), and Performance Materials and Technologies (PMT). Aerospace sales decreased 2% but segment profit increased 10%, driven by organic growth and a favorable impact from acquisitions/divestitures. ACS sales decreased 3% but segment profit increased 5%, supported by organic sales growth and acquisitions. PMT sales decreased 10%, with segment profit increasing 6%, primarily due to lower organic sales volumes and foreign currency impacts.

Key risks include adverse impacts from macroeconomic and industry conditions, increased exposure to international operations and related risks (political, regulatory, foreign exchange), risks related to defined benefit pension plans, raw material price fluctuations, challenges in executing acquisitions and divestitures, the need for successful new product development and market acceptance, operational productivity improvements, government contract risks, environmental liabilities, and cybersecurity threats. Changes in legislation and government regulations are also highlighted as significant risks.