10-KPeriod: FY2018

HONEYWELL INTERNATIONAL INC Annual Report, Year Ended Dec 31, 2018

Filed February 8, 2019For Securities:HONHONIV

Summary

Honeywell International Inc. reported solid financial performance for the fiscal year ending December 30, 2018, with net sales of $41.8 billion, a 3% increase year-over-year. The company highlighted strong operational improvements contributing to a 8% increase in income before taxes. This growth was underpinned by the rigorous deployment of the Honeywell Operating System and investments in productivity initiatives, alongside a strategic focus on becoming a leading software-industrial company. Significant strategic moves during the year included the spin-off of its Transportation Systems business and its Homes and Global Distribution business. Honeywell also continued its commitment to shareholder returns, deploying $7.6 billion in capital, including $2.3 billion in dividends (a 10% increase year-over-year) and $4.0 billion in share repurchases. The company's robust capital deployment strategy and focus on high-growth, high-margin businesses position it for continued value creation.

Financial Highlights

56 data points
Beta

Revenue

$41.80B

30.5% Gross Margin

Net Income

$6.76B

16.2% Net Margin

EPS (Diluted)

$8.98

Total Assets

$57.77B

Cash & Equivalents

$9.29B

Free Cash Flow

$5.61B

Financial Statements
Beta
Revenue$41.80B
Cost of Revenue$29.05B
Gross Profit$12.76B
R&D Expenses$1.81B
SG&A Expenses$6.05B
Net Income$6.76B
EPS (Basic)$9.10
EPS (Diluted)$8.98
Shares Outstanding (Basic)743.00M
Shares Outstanding (Diluted)753.00M

Key Highlights

  • 1Net sales reached $41.8 billion, a 3% increase over the previous year, driven by sales growth and operational improvements.
  • 2Income before taxes grew by 8%, demonstrating effective operational execution and productivity initiatives.
  • 3Completed spin-offs of Transportation Systems and Homes and Global Distribution businesses, aligning the company with its strategy to focus on software-industrial capabilities.
  • 4Deployed $7.6 billion in capital, including $2.3 billion in dividends (up 10% from prior year) and $4.0 billion in share repurchases.
  • 5Aerospace segment sales increased by 5% to $15.5 billion, driven by strong performance in Commercial Aviation Aftermarket and Defense and Space.
  • 6Safety and Productivity Solutions segment saw a notable 12% increase in sales to $6.3 billion, fueled by growth in both Safety and Productivity Solutions product lines.
  • 7The company maintained a stable outlook on its credit ratings, with S&P, Fitch, and Moody's all providing stable outlooks as of December 31, 2018.

Frequently Asked Questions

In 2018, Honeywell completed two significant strategic spin-offs: its Transportation Systems business and its Homes and Global Distribution business. These actions are part of the company's strategy to focus on becoming a leading software-industrial company and to concentrate on high-growth industrial end markets.

Honeywell deployed $7.6 billion in capital during 2018. This included over $0.8 billion in capital expenditures, $2.3 billion in dividends paid (with a 10% increase in the annual dividend rate), $4.0 billion in share repurchases aimed at offsetting dilution and reducing share count, and approximately $0.5 billion on acquisitions.

The Safety and Productivity Solutions segment showed the strongest sales growth, increasing by 12% to $6.3 billion. The Aerospace segment also demonstrated healthy growth, with sales rising by 5% to $15.5 billion, benefiting from strong performance across its key sub-segments.

U.S. Tax Reform had a significant impact, particularly in 2017, leading to a higher effective tax rate in that year due to provisional estimates. In 2018, Honeywell recorded a tax benefit of approximately $440 million as a reduction to its 2017 provisional estimate for Tax Reform, and also benefited from internal restructuring initiatives that reduced accrued withholding taxes related to unremitted foreign earnings.