01—Abstract
Summary
Summary of the 10-K filed February 12, 2016. Cited figures are marked; the original filing is the authoritative source.
Honeywell International Inc. reported strong financial performance in 2015, with diluted Earnings Per Share (EPS) growing 13% to $6.04a 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 billionb 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.
02—Key points
Key Highlights
- Diluted EPS grew 13% to $6.04 in 2015, and net income attributable to Honeywell rose 12% to $4,768 million.
- Capital deployment exceeded $10 billion, including over $5 billion in strategic acquisitions, a 15% dividend increase, and share repurchases.
- Segment margin expanded by 220 basis points compared to 2014.
- R&D spending was maintained at 5% of sales, supporting future growth initiatives.
- Productivity improvements were driven by HOS Gold and HUE initiatives across operations.
- Aerospace segment profit increased 10% due to organic growth and favorable OEM incentives.
- The company maintained a stable financial outlook with strong liquidity and credit ratings.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 12, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $38.58B$40.31B | −4.3% |
| Cost of Revenue | $26.75B$28.96B | −7.6% |
| Gross Profit | $11.83B$11.35B | +4.3% |
| R&D Expenses | $1.86B$1.89B | −1.9% |
| SG&A Expenses | $5.01B$5.52B | −9.3% |
| Net Income | $4.77B$4.24B | +12.5% |
| EPS (Basic) | $6.11$5.40 | +13.1% |
| EPS (Diluted) | $6.04$5.33 | +13.3% |
| Shares Outstanding (Basic) | 779.80M784.40M | −0.6% |
| Shares Outstanding (Diluted) | 789.30M795.20M | −0.7% |
05—Questions
Frequently Asked Questions
What were Honeywell's key financial performance indicators in 2015?
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.
How did Honeywell deploy its capital in 2015?
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.
What are the main business segments of Honeywell, and how did they perform in 2015?
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.
What are the primary risks Honeywell identified in its 10-K filing?
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.
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