01—Abstract
Summary
Summary of the 10-K filed February 8, 2019. Cited figures are marked; the original filing is the authoritative source.
Honeywell International Inc. reported solid financial performance for the fiscal year ending December 30, 2018, with net sales of $41.8 billiona, a 3% increase year-over-year.
The company highlighted strong operational improvements contributing to a 8%b 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 billionc 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.
02—Key points
Key Highlights
- Net sales reached $41.8 billion, a 3% increase over the previous year, driven by sales growth and operational improvements.
- Income before taxes grew by 8%, demonstrating effective operational execution and productivity initiatives.
- Completed spin-offs of Transportation Systems and Homes and Global Distribution businesses, aligning the company with its strategy to focus on software-industrial capabilities.
- Deployed $7.6 billion in capital, including $2.3 billion in dividends (up 10% from prior year) and $4.0 billion in share repurchases.
- Aerospace segment sales increased by 5% to $15.5 billion, driven by strong performance in Commercial Aviation Aftermarket and Defense and Space.
- Safety 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.
- The 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.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 8, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $41.80B$40.53B | +3.1% |
| Cost of Revenue | $29.05B$28.14B | +3.2% |
| Gross Profit | $12.76B$12.39B | +3.0% |
| R&D Expenses | $1.81B$1.83B | −1.4% |
| SG&A Expenses | $6.05B$6.09B | −0.6% |
| Net Income | $6.76B$1.54B | +337.9% |
| EPS (Basic) | $9.10$2.03 | +348.3% |
| EPS (Diluted) | $8.98$2.00 | +349.0% |
| Shares Outstanding (Basic) | 743.00M762.10M | −2.5% |
| Shares Outstanding (Diluted) | 753.00M772.10M | −2.5% |
05—Questions
Frequently Asked Questions
What were Honeywell's key strategic actions taken in 2018?
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.
How did Honeywell manage its capital in 2018?
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.
Which business segments performed strongest in terms of sales growth?
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.
What was the impact of U.S. Tax Reform on Honeywell's financials?
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.
06—Continue