Summary

  • Honeywell International, Inc. is a leading software-industrial company.
  • Honeywell offers delivers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally.
  • The company is a leading developer of quantum computing and quantum software via Honeywell Quantum Solution.

HON0.webp

Honeywell International, Inc. (Nasdaq: HON) is a leading software-industrial company. Honeywell offers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally.

Recent Acquisitions

On January 18, 2022, the Company acquired 100% of the issued and outstanding shares of US Digital Designs, Inc., a leading provider of technologies for first responders, for total consideration of $186 million. The business is included within the Honeywell Building Technologies reportable business segment. The Company completed a preliminary evaluation of the fair value of all the assets and liabilities acquired with US Digital Designs, Inc., which will be finalized during the first quarter of 2023. Management recorded intangible assets of $53 million and allocated $130 million to goodwill, which is deductible for tax purposes.1

On November 29, 2021, Honeywell Quantum Solutions, a wholly-owned subsidiary of Honeywell, and Cambridge Quantum Computing, a leading developer of quantum computing and quantum software, combined to form Quantinuum. Prior to closing the transaction, Honeywell held a 4.2% ownership interest in Cambridge Quantum Computing. At closing of the business combination, Honeywell contributed an additional $270 million of cash and is the controlling majority-owner of Quantinuum, with an overall 54% ownership in the business. Quantinuum is well positioned to lead the quantum computing industry by offering advanced, fully integrated hardware and software solutions at an unprecedented pace, scale, and level of performance to large high-growth markets worldwide. Quantinuum supports customer needs for improved computation in cyber security, drug discovery and delivery, material science, finance, and optimization across all major industrial markets. The business is included within Corporate and All Other, which is not a reportable business segment. The combination was accounted for under the acquisition method of accounting; as such, assets and liabilities of Quantinuum are consolidated by Honeywell and included in the Consolidated Balance Sheet. Upon close of the transaction, Honeywell recorded a non-cash adjustment of $460 million in Additional paid-in capital in the Consolidated Balance Sheet as the contribution of ownership interest in Honeywell Quantum Solutions and Cambridge Quantum Computing for the formation of Quantinuum. In addition, Honeywell recognized a gain of $22 million related to the fair value remeasurement of Honeywell's existing 4.2% ownership interest in Cambridge Quantum Computing, which was recorded in Other (income) expense in the Consolidated Statement of Operations. At close of the transaction, the fair value of Cambridge Quantum Computing's noncontrolling interest in Quantinuum was $419 million. In December 2021, Cambridge Quantum Computing contributed cash of $12 million to Quantinuum, increasing their noncontrolling interest and decreasing Honeywell's additional paid-in capital. In the fourth quarter of 2022, the Company completed its evaluation of the fair value of all the assets and liabilities acquired. Management recorded intangible assets of $90 million and allocated $945 million to goodwill, which is non-deductible for tax purposes.

On February 12, 2021, the Company acquired 100% of the shares outstanding of Sparta Systems, a leading provider of enterprise quality management software for the life sciences industry, for $1,303 million. Sparta Systems is expected to further strengthen the Company's leadership in industrial automation, digital transformation solutions, and enterprise performance management software. The business is included within the Performance Materials and Technologies reportable business segment. The assets and liabilities acquired with Sparta Systems are included in the Consolidated Balance Sheet as of December 31, 2021, including $383 million of intangible assets and $1,011 million allocated to goodwill, which is non-deductible for tax purposes.

During 2020, the Company acquired businesses for an aggregate cost (net of cash and debt assumed) of $261 million, which included the October 2020 acquisition of Rocky Research and the December 2020 acquisition of Sine Group. Rocky Research is a technology leader specializing in thermal, energy, and power management solutions and is included within the Aerospace reportable business segment. Sine Group offers a Software-as-a-Service (SaaS) that handles visitor management, workplace, and supply chain solutions and is included in the Honeywell Building Technologies reportable business segment. The acquisitions of Rocky Research and Sine Group included approximately $167 million allocated to goodwill, which is non-deductible for tax purposes.

HON1.jpg

Financial Highlights

February 2, 2023; Honeywell announced results for the fourth quarter and full year 20222

The company reported fourth-quarter year-over-year sales growth of 6% and organic sales growth of 10%, or 11% excluding the impact of the wind down in operations in Russia, with another quarter of double-digit organic sales growth in Honeywell Building Technologies, Performance Materials and Technologies, and Aerospace. Demand remained strong, with closing backlog of $29.6 billion, up 7% year over year. Fourth-quarter operating margin expanded 220 basis points to 19.7%, or 240 basis points excluding the year-over-year impact of Quantinuum. Segment margin expanded 150 basis points to 22.9%, or 180 basis points excluding the year-over-year impact of Quantinuum, led by another strong quarter of margin expansion in Safety and Productivity Solutions and Honeywell Building Technologies. Honeywell delivered fourth-quarter earnings per share of $1.51, down 26% year over year, and adjusted earnings per share of $2.52, up 21% year over year. Operating cash flow was $2.4 billion with operating cash flow margin of 25.8%, and free cash flow was $2.1 billion with free cash flow margin of 23.1%, driven by strong net income and reduced working capital quarter over quarter.

For the full year, sales increased by 3%, or 6% on an organic basis, and operating margin expanded 10 basis points, with segment margin expanding 70 basis points. Honeywell reported full-year earnings per share of $7.27 and adjusted earnings per share of $8.76, above the high end of the company's initial guidance of $8.40 - $8.70.

Honeywell also announced its outlook for 2023. The company expects sales of $36.0 billion to $37.0 billion, representing year-over-year organic growth of 2% to 5%; segment margin expansion of 50 to 90 basis points; adjusted earnings per share of $8.80 to $9.20, flat to up 5% despite an approximately $0.55 non-cash pension headwind; operating cash flow of $4.9 billion to $5.3 billion, and free cash flow of $3.9 billion to $4.3 billion, or $5.1 billion to $5.5 billion excluding the net impact of settlements signed in the fourth quarter of 2022.

Fourth-Quarter Performance

Honeywell sales for the fourth quarter were up 6% year over year on a reported basis and 10% year over year on an organic basis.

Aerospace sales for the fourth quarter were up 11% year over year on an organic basis led by commercial aviation. Sales growth was the strongest in commercial original equipment, increasing 25% organically year over year on increased shipset deliveries, especially to business and general aviation customers. Commercial aftermarket sales also grew over 20% organically year over year as flight hours continue on their recovery path to pre-COVID levels. Air transport aftermarket was particularly strong, growing 25% organically in the quarter. Increased commercial aviation sales were partially offset by lower defense volumes year over year, although defense and space sales increased 15% sequentially in the fourth quarter. Segment margin contracted 120 basis points to 27.8% driven by increased sales of lower margin original equipment products, partially offset by commercial excellence.

Honeywell Building Technologies sales for the fourth quarter were up 15% on an organic basis year over year with strength in both building products and building solutions. Building products sales increased 21% organically, primarily driven by increased sales of fire products and building management systems. Project sales grew double digits organically for the third consecutive quarter, leading the growth in building solutions. Segment margin expanded 370 basis points to 24.8% due to commercial excellence, partially offset by cost inflation.

Performance Materials and Technologies sales for the fourth quarter were up 15% on an organic basis year over year despite an approximately 4% headwind from Russia. Sales growth was led by more than 30% organic growth in fluorine products within advanced materials and refining catalyst shipments in UOP, as well as double-digit organic growth in thermal solutions and lifecycle solutions and services within process solutions. Segment margin contracted 100 basis points to 22.0%, primarily driven by cost inflation and higher sales of lower margin products, partially offset by commercial excellence.

Safety and Productivity Solutions sales for the fourth quarter decreased 5% on an organic basis year over year. Growth in sensing and safety technologies was offset by lower volumes in productivity solutions and services and warehouse and workflow solutions. Segment margin grew at the fastest rate ever for SPS, expanding 940 basis points to 20.2% because of commercial excellence, improved sales mix, and productivity actions, partially offset by volume leverage and cost inflation.

HON2.jpg

Company Overview

Honeywell International, Inc. (Nasdaq: HON) is a leading software-industrial company. Honeywell offers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally.

Business Segments

The company operations through four business segments: Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions

Aerospace

Aerospace is a supplier of products, software, and services for aircrafts that it sells to original equipment manufacturers (OEM) and other customers in a variety of end markets including: air transport, regional, business and general aviation aircraft, airlines, aircraft operators, and defense and space contractors. Aerospace products and services include auxiliary power units, propulsion engines, environmental control systems, integrated avionics, wireless connectivity services, electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, management and technical services, advanced systems and instruments, satellite and space components, aircraft wheels and brakes, repair and overhaul services, and thermal systems. Aerospace also provides spare parts, repair, overhaul, and maintenance services (principally to aircraft operators) for the aftermarket. Honeywell Forge solutions are leveraged by its customers as tools to turn data into predictive maintenance and predictive analytics to enable better fleet management and make flight operations more efficient.

Honeywell Building Technologies

Honeywell Building Technologies is a provider of products, software, solutions, and technologies that enable building owners and occupants to ensure their facilities are safe, energy efficient, sustainable, and productive. Honeywell Building Technologies products and services include advanced software applications for building control and optimization; sensors, switches, control systems, and instruments for energy management; access control; video surveillance; fire products; and installation, maintenance, and upgrades of systems. Honeywell Forge solutions enable its customers to digitally manage buildings, connecting data from different assets to enable smart maintenance, improve building performance, and even protect from incoming security threats.

Performance Materials and Technologies

Performance Materials and Technologies is a provider in developing and manufacturing high-quality performance chemicals and materials, process technologies, and automation solutions. The reportable business segment is comprised of Process Solutions, UOP, and Advanced Materials. Process Solutions provides automation control, instrumentation, advanced software, and related services for the oil and gas, refining, pulp and paper, industrial power generation, chemicals and petrochemicals, biofuels, life sciences, and metals, minerals, and mining industries. Through its smart energy products, Process Solutions enables utilities and distribution companies to deploy advanced capabilities to improve operations, reliability, and environmental sustainability. UOP provides process technology, products, including catalysts and adsorbents, equipment, and consulting services that enable customers to efficiently produce gasoline, diesel, jet fuel, petrochemicals, and renewable fuels for the petroleum refining, gas processing, petrochemical, and other industries. Advanced Materials manufactures a wide variety of high-performance products, including materials used to manufacture end products such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, and provides reduced and low global warming potential materials based on hydrofluoro-olefin technology. In the industrial environment, Honeywell Forge solutions enable integration and connectivity to provide a holistic view of operations and turn data into clear actions to maximize productivity and efficiency. Honeywell Forge's cybersecurity capabilities help identify risks and act on cyber-related incidents, together enabling improved operations and protecting processes, people, and assets.

Safety and Productivity Solutions

Safety and Productivity Solutions is a provider of products and software that improve productivity, workplace safety, and asset performance to customers around the globe. Sensing and Safety Technologies products include personal protection equipment (PPE), apparel, gear, and footwear; gas detection technology; custom-engineered sensors, switches, and controls for sensing and productivity solutions; and cloud-based notification and emergency messaging. Productivity Solutions and Services products and services include mobile devices and software for computing, data collection, and thermal printing; and software based data and asset management productivity solutions. Warehouse and Workflow Solutions products and services include system design and simulation, automation solutions, performance optimization software, and lifecycle services to enable accuracy, productivity, and predictability of warehouse operations. Honeywell Forge solutions digitally automate processes to improve efficiency while reducing downtime and safety costs.

HON3.jpg

Global Presence

The company present in about 80 Countries.3

EuropeAsia PacificAfricaMiddle EastLatin AmericaNorth America
AustriaAustralia and New ZealandAlgeriaEGYPTBrazilCanada
BelgiumChinaAngolaSAUDI ARABIAMexicoUSA
BulgariaIndiaKenyaUAE  
Czech RepublicIndonesiaMorocco   
DenmarkJapanNIGERIA   
FinlandMalaysiaSOUTH AFRICA   
FranceRepublic of KoreaTUNISIA   
GermanyPhilippines    
HUNGARYThailand    
ItalyVietnam    
Norway     
Poland     
Romania     
Slovakia     
Switzerland     
Turkey     
United Kingdom     

Company History

Honeywell was incorporated in Delaware in 1985.4

YearMilestone
1885Considered the official beginning ofthe company that became Honeywell, in 1885, inventor Albert Butz patented the furnace regulator and alarm.
1906Young engineer Mark Honeywell formed the Honeywell Heating Specialty Co. Incorporated.
1927Minneapolis Heat Regulator Company and Honeywell Heatinng Specialty Co. merged to form the Minneapolis-Honeywell Regulator Co.
1969

On July 20, 1969, Neil Armstrong and Buzz Aldrin walked on the moon during the Apollo 11 mission.

Honeywell was critical to that mission. For example, 16,000 Honeywell parts went into the 14 separate electronic devices that made up the Stabilization and Control Systems (SCS). Meanwhile, Honeywell pilots helped with flight testing.

1999

In 1985, Allied merged with Signal Companies, adding to its aerospace, automotive and engineered materials business.

Then in 1999, Honeywell was acquired by AlliedSignal, who elected to retain the Honeywell name for its brand recognitiom The headquarters were moved to the AlliedSignal headquarters in Morristown, N.J.

2005-2016

At the start ofthe 21st century, Honeymell continued to grow by acquiring businesses across industries. In 2005, compnay acquired Universal Oil Products

Three years later, company added Metrologic Instruments, which made laser, mobile imaging and remote scanners.

In 2016, Intelligrated came on board. They provide automation solutions for distribution centers and warehouses.

2018Honeywell spun off its homes business into an independent, publicly-traded company: Resideo, which still creates Honeywell Home products as a licensed brand. The same year, the Transportation Systems business was also spun off as Garrett Motiom
2019

In June of 2019, Honeywell launched its Enterprise Performance Management software solution called Honeywell Forge. The software, called Honeywell Forge.

The software leverages Honeywell's expertise in asset and process control technology across industries, including buildings, airlines, industrials and critical infrastructure

References

  1. ^ https://fintel.io/doc/sec-honeywell-international-inc-773840-10k-2023-february-10-19398-755
  2. ^ https://investor.honeywell.com/news-releases/news-release-details/honeywell-delivers-strong-fourth-quarter-results-full-year-0
  3. ^ https://www.honeywell.com/us/en/global
  4. ^ https://www.honeywell.com/us/en/company/our-history
Tags: US:HON USA
Created by Asif Farooqui on 2023/03/03 15:20
     
This site is funded and maintained by Fintel.io