Honeywell International Inc reports 309% Net Income growth in 2018 and 3.1% Revenue growth
01 Feb 2019 • About Honeywell International Inc (
$HON) • By InTwits
Honeywell International Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Honeywell International Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 4.1%
- CAPEX is quite volatile: ₹1,929m in FY2018, ₹638m in FY2017, ₹1,437m in FY2016, ₹2,086m in FY2015, ₹2,963m in FY2014
- The company has highly profitable business model: ROIC is 18.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Honeywell International Inc's Revenue increased on 3.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018.
Gross Margin decreased slightly on 1.5 pp from 32.0% to 30.5% in 2018. During 2014-2018 Gross Margin topped in 2017 at 32.0%. SG&A as a % of Revenue showed almost no change in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2015 at 13.0% and was growing since that time.
Net Income margin surged on 12.1 pp from 4.1% to 16.2% in 2018. The efficient tax rate was 8.9% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.0%. Honeywell International Inc showed small CAPEX/Revenue decline of 0.80 pp from 2.8% in 2015 to 2.0% in 2018. It's average level of CAPEX/Revenue for the last three years was 2.4%. During the last 5 years CAPEX as a % of Revenue topped in 2016 at 2.8% and was declining since that time.
Honeywell International Inc has spent
$535m on M&A in 2018 which accounts for 1.3% of revenue.
Return on investment
The company operates at high and attractive ROE (39.0%) while ROIC is a bit lower (18.1%). ROIC decreased slightly on 0.95 pp from 19.0% to 18.1% in 2018. ROE surged on 30.0 pp from 9.0% to 39.0% in 2018. During the last 5 years ROIC topped in 2015 at 23.2% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 2.1x. Net Debt / EBITDA dropped on 0.4x from 1.3x to 0.9x in 2018. Debt decreased on 9.3% while cash jumped on 31.6%. During the last 5 years Net Debt/EBITDA topped in 2017 at 1.3x.
Honeywell International Inc has good short term financial stability: Interest coverage ratio (ICR) is 18.3x. Honeywell International Inc has no short term refinancing risk: cash is higher than short term debt (143.8%).
Average interest expence charged on company's debt was 2.3% in 2018.
Valuation and dividends
Honeywell International Inc's trades at EV/EBITDA 1.0x and P/E 0.2x.
The company paid 33.6% of Net Income as dividends in 2018.
Management team
Darius Adamczyk is a Honeywell International Inc's CEO. Darius Adamczyk has spent 1 year with the company. CEO total compensation was
$19,246,604 in 2018 which included
$1,571,154 salary. Honeywell International Inc's CFO is Gregory P Lewis "Greg". Gregory P Lewis "Greg" has 1 year tenure at the company.
At the end of financial year the company had 0.13% shares owned by insiders.
At the end of financial year the company had 114,000 employees. Average revenue per employee in 2018 was
$366,684.
Financial and operational results
FY ended 31 Dec 2018
Honeywell International Inc ($HON) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 40,306 | 38,581 | 39,302 | 40,534 | 41,802 | 3.1% |
| Gross Profit | 11,349 | 11,834 | 12,152 | 12,959 | 12,756 | -1.6% |
| SG&A | 5,518 | 5,006 | 5,469 | 5,808 | 6,051 | 4.2% |
| EBITDA | 6,755 | 7,711 | 7,713 | 8,266 | 7,821 | -5.4% |
| EBIT | | | | | 6,705 | |
| Interest expence | | | | | 367 | |
| Tax | | | | | 659 | |
| Net Income | 4,239 | 4,768 | 4,809 | 1,655 | 6,765 | 308.8% |
| Stock Based Compensation | | | | | 175 | |
Balance Sheet
|
|---|
| Cash | 6,959 | 5,455 | 7,843 | 7,059 | 9,287 | 31.6% |
| Inventory | | | | | 4,326 | |
| Accounts Payable | | | | | 5,607 | |
| Short Term Debt | 2,637 | 6,514 | 3,593 | 5,309 | 6,458 | 21.6% |
| Long Term Debt | 6,046 | 5,554 | 12,182 | 12,573 | 9,756 | -22.4% |
Cash flow
|
|---|
| Capex | 1,094 | 1,073 | 1,095 | 1,031 | 828 | -19.7% |
| Dividends | | | | | 2,272 | |
| Acquisitions | | | | | 535 | |
Ratios
|
|---|
| Revenue growth | 3.2% | -4.3% | 1.9% | 3.1% | 3.1% | |
| EBITDA growth | 4.1% | 14.2% | 0.0% | 7.2% | -5.4% | |
|
|---|
| Gross Margin | 28.2% | 30.7% | 30.9% | 32.0% | 30.5% | -1.5% |
| EBITDA Margin | 16.8% | 20.0% | 19.6% | 20.4% | 18.7% | -1.7% |
| EBIT Margin | | | | | 16.0% |
| SG&A, % of revenue | 13.7% | 13.0% | 13.9% | 14.3% | 14.5% | 0.1% |
| SBC, % of revenue | | | | | 0.4% |
| Net Income Margin | 10.5% | 12.4% | 12.2% | 4.1% | 16.2% | 12.1% |
| CAPEX, % of revenue | 2.7% | 2.8% | 2.8% | 2.5% | 2.0% | -0.6% |
|
|---|
| ROIC | 21.3% | 23.2% | 19.6% | 19.0% | 18.1% | -0.9% |
| ROE | 24.1% | 26.5% | 25.5% | 9.0% | 39.0% | 30.0% |
| Net Debt/EBITDA | 0.3x | 0.9x | 1.0x | 1.3x | 0.9x | -0.4x |
| Interest expence / Average debt | | | | | 2.3% | |
People
|
|---|
| Insider ownership | | | | | 0.1% | |
| Employees | | | | | 114,000 | |
| Revenue/Employee, th. $ | | | | | 367 | |
Peers in General Industrials
Below you can find Honeywell International Inc benchmarking vs. other companies in General Industrials industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Coral Products ($CRU) | | 1.2% | 7.4% | 14.5% | 9.2% |
| Macfarlane Group ($MACF) | 6.9% | 10.0% | 6.3% | 9.0% | |
| Robinson ($RBN) | | 3.8% | -5.8% | 8.6% | |
| Jardine Strategic Hldgs ($88EI) | -1.3% | -8.8% | 0.5% | 6.8% | |
| Press Corp ($PESD) | 20.3% | 17.8% | 17.2% | 6.2% | |
| |
|---|
| Median (9 companies) | 4.2% | 1.2% | 0.6% | 6.2% | 1.7% |
|---|
| Honeywell International Inc ($HON) | | -4.3% | 1.9% | 3.1% | 3.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Press Corp ($PESD) | 56.0% | 54.5% | 59.6% | 59.1% | |
| Coral Products ($CRU) | 23.7% | 29.6% | 33.1% | 34.1% | 34.6% |
| Macfarlane Group ($MACF) | 30.9% | 31.5% | 31.0% | 30.8% | |
| Smurfit Kappa Group ($SKG) | 29.5% | 30.0% | 30.3% | 29.8% | |
| Jardine Strategic Hldgs ($88EI) | 25.4% | 25.5% | 25.8% | 25.7% | |
| |
|---|
| Median (9 companies) | 24.5% | 25.5% | 25.8% | 25.7% | 19.1% |
|---|
| Honeywell International Inc ($HON) | 28.2% | 30.7% | 30.9% | 32.0% | 30.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Press Corp ($PESD) | 29.2% | 25.3% | 27.7% | 35.2% | |
| Jardine Strategic Hldgs ($88EI) | 13.5% | 15.1% | 21.4% | 27.4% | |
| Smurfit Kappa Group ($SKG) | 12.7% | 14.3% | 14.9% | 14.0% | |
| Barloworld ($BWO) | 10.0% | 10.3% | 10.7% | 11.0% | 14.6% |
| Robinson ($RBN) | 15.1% | 4.1% | 14.3% | 9.9% | |
| |
|---|
| Median (9 companies) | 12.7% | 10.3% | 12.7% | 9.9% | 4.6% |
|---|
| Honeywell International Inc ($HON) | 16.8% | 20.0% | 19.6% | 20.4% | 18.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Press Corp ($PESD) | 12.1% | 9.0% | 8.8% | 11.3% | |
| Robinson ($RBN) | 3.5% | 3.7% | 6.5% | 8.8% | |
| General Electric Co. ($GEC) | 6.1% | 6.3% | 6.0% | 6.1% | 6.3% |
| Smurfit Kappa Group ($SKG) | 5.3% | 5.3% | 5.2% | 5.2% | |
| Coral Products ($CRU) | 2.2% | 2.5% | 8.9% | 4.3% | 3.9% |
| |
|---|
| Median (9 companies) | 3.5% | 2.9% | 5.2% | 4.3% | 3.1% |
|---|
| Honeywell International Inc ($HON) | 2.7% | 2.8% | 2.8% | 2.5% | 2.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Macfarlane Group ($MACF) | 19.0% | 17.8% | 16.9% | 15.4% | |
| Smurfit Kappa Group ($SKG) | 11.8% | 13.9% | 14.1% | 13.4% | |
| Barloworld ($BWO) | 14.1% | 12.9% | 12.7% | 13.2% | 13.2% |
| Thyssenkrupp Ag ($0O1C) | 10.8% | 9.5% | 12.7% | 12.2% | 5.2% |
| Jardine Strategic Hldgs ($88EI) | 6.2% | 6.3% | 9.2% | 11.7% | |
| |
|---|
| Median (9 companies) | 10.8% | 9.5% | 12.7% | 11.9% | 2.2% |
|---|
| Honeywell International Inc ($HON) | 21.3% | 23.2% | 19.6% | 19.0% | 18.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Coral Products ($CRU) | 3.4x | 2.7x | 2.5x | 3.0x | 5.3x |
| Smurfit Kappa Group ($SKG) | 2.7x | 2.6x | 2.4x | 2.4x | |
| Robinson ($RBN) | 1.0x | 0.9x | 1.2x | 2.2x | |
| Thyssenkrupp Ag ($0O1C) | 2.0x | 1.8x | 1.8x | 1.3x | 2.5x |
| Macfarlane Group ($MACF) | 1.3x | 1.3x | 1.4x | 1.1x | |
| |
|---|
| Median (8 companies) | 1.3x | 1.7x | 1.4x | 1.2x | 2.5x |
|---|
| Honeywell International Inc ($HON) | 0.3x | 0.9x | 1.0x | 1.3x | 0.9x |
