01—Abstract
Summary
Summary of the 10-K filed February 9, 2018. Cited figures are marked; the original filing is the authoritative source.
Honeywell International Inc. reported net sales of $40.53 billiona for the fiscal year ended December 31, 2017, a 3% increase from the prior year, driven by organic sales growth and operational improvements.
Net income attributable to Honeywell was $1.66 billionb, a significant decrease from $4.81 billion in 2016, largely impacted by a provisional charge of approximately $3.8 billion related to the U.S. Tax Cuts and Jobs Act. The company continued its strategy of portfolio review and capital deployment, announcing its intent to spin off its Homes and Global Distribution business and its Transportation Systems business into two separate publicly-traded companies. Key financial activities in 2017 included deploying over $6 billion in capital, with $2.9 billion allocated to share repurchases and $2.1 billion for dividends, which saw a 12% increase in the annual rate.
Capital expenditures totaled over $1 billionc, focused on high-return projects. The company's diversified business segments—Aerospace, Home and Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions—all contributed to overall performance, with Aerospace and Home and Building Technologies showing sales growth.
02—Key points
Key Highlights
- Net sales increased by 3% to $40.53 billion in 2017, reflecting organic growth and operational improvements.
- Net income attributable to Honeywell decreased significantly to $1.66 billion from $4.81 billion in 2016, primarily due to a substantial provisional charge related to the U.S. Tax Cuts and Jobs Act.
- The company announced its intention to spin off its Homes and Global Distribution business and Transportation Systems business into two independent public companies.
- Capital deployment in 2017 exceeded $6 billion, including $2.9 billion in share repurchases and $2.1 billion in dividends.
- The Aerospace segment's sales remained flat year-over-year at $14.78 billion, driven by growth in Commercial Aftermarket offsetting declines in Defense and Space and Commercial Original Equipment.
- The Safety and Productivity Solutions segment saw a notable 22% increase in sales to $5.64 billion, largely due to acquisitions.
- The company anticipates an effective tax rate of 22.0%-23.0% for 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 9, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $40.53B$39.30B | +3.1% |
| Cost of Revenue | $28.14B$27.68B | +1.7% |
| Gross Profit | $12.39B$12.15B | +2.0% |
| R&D Expenses | $1.83B$1.86B | −1.6% |
| SG&A Expenses | $6.09B$5.57B | +9.2% |
| Net Income | $1.54B$4.81B | −67.9% |
| EPS (Basic) | $2.03$6.30 | −67.8% |
| EPS (Diluted) | $2.00$6.21 | −67.8% |
| Shares Outstanding (Basic) | 762.10M764.30M | −0.3% |
| Shares Outstanding (Diluted) | 772.10M775.30M | −0.4% |
05—Questions
Frequently Asked Questions
What was Honeywell's financial performance in 2017?
In 2017, Honeywell reported net sales of $40.53 billion, an increase of 3% from 2016, driven by organic sales growth and operational improvements. However, net income attributable to Honeywell decreased to $1.66 billion from $4.81 billion in 2016, significantly impacted by a provisional charge of approximately $3.8 billion related to the Tax Cuts and Jobs Act.
What are the major strategic initiatives announced in this filing?
Honeywell announced its intent to spin off its Homes and Global Distribution business and its Transportation Systems business into two separate, publicly-traded companies. This strategic move is part of a broader portfolio review aimed at focusing on high-growth industrial end markets and becoming a leading software-industrial company.
How did Honeywell manage its capital in 2017?
Honeywell deployed over $6 billion in capital in 2017. This included approximately $2.9 billion in share repurchases, aiming to offset dilution and reduce share count, and $2.1 billion in dividends paid to shareholders, with an annual dividend rate increase of 12%.
What is the impact of the Tax Cuts and Jobs Act on Honeywell's financials?
The Tax Cuts and Jobs Act of 2017 had a significant impact, resulting in a provisional tax charge of approximately $3.8 billion for the year ended December 31, 2017. This charge includes a tax benefit of $235 million from the rate reduction and a provisional charge of $1.9 billion for the mandatory transition tax on foreign earnings, along with $2.1 billion related to the change in intent regarding permanent reinvestment of foreign earnings.
06—Continue