10-QPeriod: Q1 FY2017

HONEYWELL INTERNATIONAL INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 21, 2017For Securities:HONHONIV

Summary

Honeywell International Inc. (HON) reported its first-quarter 2017 financial results, showing a slight decrease in net sales but an increase in net income and earnings per share compared to the prior year period. Net sales for the quarter were $9.49 billion, down 0.3% from $9.52 billion in Q1 2016, primarily due to unfavorable foreign currency translation and divestitures, partially offset by organic growth. Net income attributable to Honeywell increased by 9.1% to $1.326 billion, leading to a diluted EPS of $1.71, up from $1.56 in the prior year. The company demonstrated improved operational performance across several segments, notably Safety and Productivity Solutions and Home and Building Technologies. Operating cash flow saw a significant increase to $940 million from $319 million in the prior year, bolstered by favorable working capital management. Honeywell also continued its capital return strategy, repurchasing $310 million of its shares during the quarter. The company reaffirmed its full-year 2017 outlook, expecting an effective tax rate of approximately 25%.

Financial Highlights

53 data points
Beta

Revenue

$9.49B

31.2% Gross Margin

Net Income

$1.33B

14.0% Net Margin

EPS (Diluted)

$1.72

Total Assets

$54.78B

Cash & Equivalents

$7.71B

Free Cash Flow

$772.00M

Financial Statements
Beta
Revenue$9.49B
Cost of Revenue$6.53B
Gross Profit$2.97B
SG&A Expenses$1.42B
Net Income$1.33B
EPS (Basic)$1.74
EPS (Diluted)$1.72
Shares Outstanding (Basic)763.10M
Shares Outstanding (Diluted)773.90M

Key Highlights

  • 1Net sales slightly declined by 0.3% to $9.49 billion, impacted by foreign exchange and divestitures, though organic growth provided some offset.
  • 2Net income attributable to Honeywell grew by 9.1% to $1.326 billion, leading to a 9.6% increase in diluted EPS to $1.71.
  • 3Operating cash flow significantly improved, reaching $940 million in Q1 2017 compared to $319 million in Q1 2016.
  • 4The Safety and Productivity Solutions segment experienced strong growth with a 25% increase in net sales, driven by acquisitions and organic volume.
  • 5The Home and Building Technologies segment also saw sales increase by 3%, fueled by organic growth and acquisitions.
  • 6The company repurchased $310 million of its common stock during the quarter, reflecting its commitment to returning capital to shareholders.
  • 7Honeywell reaffirmed its full-year 2017 guidance, expecting an effective tax rate of approximately 25%.

Frequently Asked Questions

Net sales decreased slightly by 0.3% to $9.49 billion. The primary factors contributing to this change were unfavorable foreign currency translation (-1%) and divestitures (-1%), which were partially offset by organic growth (+2%).

Net income attributable to Honeywell increased by 9.1% to $1.326 billion, and diluted earnings per share rose by 9.6% to $1.71. This improvement was driven by increased segment profit in Safety and Productivity Solutions, Home and Building Technologies, and Performance Materials and Technologies, along with a lower effective tax rate and higher pension and other postretirement income.

Honeywell reported a significant improvement in cash flow from operating activities, which increased by $621 million to $940 million in the first quarter of 2017, largely due to favorable working capital management and higher net income. Cash used in investing activities decreased substantially due to lower acquisition spending, while cash used in financing activities increased due to lower net proceeds from debt issuances.

The company is involved in ongoing asbestos-related litigation concerning former subsidiaries Bendix and NARCO, with significant liabilities and insurance receivables recorded. While considerable progress has been made in resolving these matters, they continue to be monitored. The company also faces environmental remediation costs and other legal proceedings, but management believes current reserves and insurance are sufficient to cover potential impacts without a material adverse effect on the consolidated financial position, although outcomes are subject to uncertainty.