Honeywell International Inc revenue started to decline in 2019: dropped 12.2% vs. 3.1% growth a year earliner
31 Jan 2020 • About Honeywell International Inc (
$HON) • By InTwits
Honeywell International Inc reported 2019 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 2.5%. At the same time it's a lot of higher than industry average of 1.8%.
- CAPEX is quite volatile: €852m in 2019, €943m in 2018, €777m in 2017, €1,312m in 2016, €2,171m in 2015
- The company has highly profitable business model: ROIC is 18.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 12.2%. During the last 5 years Revenue growth topped in 2017 at 3.1% and was decelerating since that time. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.5 pp from 18.7% to 22.2% in 2019.
Gross Margin increased on 3.2 pp from 30.5% to 33.7% in 2019. SG&A as a % of Revenue increased slightly on 0.56 pp from 14.5% to 15.0% in 2019. SG&A as a % of Revenue stuck to a growing trend at 0.47 pp per annum in 2015-2019.
Net Income margin increased slightly on 0.55 pp from 16.2% to 16.7% in 2019. During 2015-2019 Net Income margin bottomed in 2017 at 4.1% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2019 Honeywell International Inc had CAPEX/Revenue of 2.3%. The company showed small CAPEX/Revenue decline of 0.50 pp from 2.8% in 2016 to 2.3% in 2019. It's average CAPEX/Revenue for the last three years was 2.3%.
Return on investment
The company operates at high and attractive ROE (33.5%) while ROIC is a bit lower (18.5%). ROIC showed almost no change in 2019. ROE decreased on 5.5 pp from 39.0% to 33.5% in 2019. During 2015-2019 ROIC bottomed in 2018 at 18.1%.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 0.9x to 0.9x in 2019. Debt increased on 3.0% while cash decreased on 2.4%.
Honeywell International Inc has no short term refinancing risk: cash is higher than short term debt (179.1%).
Valuation and dividends
The company's trades at EV/EBITDA 1.1x and P/E 0.2x.
Management team
Honeywell International Inc's CEO Darius Adamczyk is a founder and has spent 1 year with the company. Gregory P Lewis "Greg" is a the company's CFO. Gregory P Lewis "Greg" has spent 1 year at the company.
Financial and operational results
FY ended 31 Dec 2019
Honeywell International Inc ($HON) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 38,581 | 39,302 | 40,534 | 41,802 | 36,709 | -12.2% |
| Gross Profit | 11,834 | 12,152 | 12,959 | 12,756 | 12,370 | -3.0% |
| SG&A | 5,006 | 5,469 | 5,808 | 6,051 | 5,519 | -8.8% |
| EBITDA | 7,711 | 7,713 | 8,266 | 7,821 | 8,161 | 4.3% |
| EBIT | | | | 6,705 | | |
| Interest expence | | | | 367 | | |
| Tax | | | | 659 | | |
| Net Income | 4,768 | 4,809 | 1,655 | 6,765 | 6,143 | -9.2% |
| Stock Based Compensation | | | | 175 | | |
Balance Sheet
|
|---|
| Cash | 5,455 | 7,843 | 7,059 | 9,287 | 9,067 | -2.4% |
| Inventory | | | | 4,326 | | |
| Accounts Payable | | | | 5,607 | | |
| Short Term Debt | 6,514 | 3,593 | 5,309 | 6,458 | 5,063 | -21.6% |
| Long Term Debt | 5,554 | 12,182 | 12,573 | 9,756 | 11,644 | 19.4% |
Cash flow
|
|---|
| Capex | 1,073 | 1,095 | 1,031 | 828 | 839 | 1.3% |
| Dividends | | | | 2,272 | | |
| Acquisitions | | | | 535 | | |
Ratios
|
|---|
| Revenue growth | -4.3% | 1.9% | 3.1% | 3.1% | -12.2% | |
| EBITDA growth | 14.2% | 0.0% | 7.2% | -5.4% | 4.3% | |
|
|---|
| Gross Margin | 30.7% | 30.9% | 32.0% | 30.5% | 33.7% | 3.2% |
| EBITDA Margin | 20.0% | 19.6% | 20.4% | 18.7% | 22.2% | 3.5% |
| EBIT Margin | | | | 16.0% | |
| SG&A, % of revenue | 13.0% | 13.9% | 14.3% | 14.5% | 15.0% | 0.6% |
| SBC, % of revenue | | | | 0.4% | |
| Net Income Margin | 12.4% | 12.2% | 4.1% | 16.2% | 16.7% | 0.6% |
| CAPEX, % of revenue | 2.8% | 2.8% | 2.5% | 2.0% | 2.3% | 0.3% |
|
|---|
| ROIC | 23.2% | 19.6% | 19.0% | 18.1% | 18.5% | 0.4% |
| ROE | 26.5% | 25.5% | 9.0% | 39.0% | 33.5% | -5.5% |
| Net Debt/EBITDA | 0.9x | 1.0x | 1.3x | 0.9x | 0.9x | 0.1x |
| Interest expence / Average debt | | | | 2.2% | | |
People
|
|---|
| Insider ownership | | | | 0.1% | | |
| Employees | | | | 114,000 | | |
| Revenue/Employee, th. $ | | | | 367 | | |
Peers in General Industrials
Below we provide Honeywell International Inc benchmarking against other companies in General Industrials industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Coral Products ($CRU) | 1.2% | 7.4% | 14.5% | 9.2% | |
| Smurfit Kappa Group ($SKG) | 0.3% | 0.6% | 4.9% | 4.5% | |
| Barloworld ($BWO) | 1.0% | -1.0% | -0.2% | 2.4% | |
| General Electric Co. ($GEC) | | 3.9% | 0.7% | 1.0% | -21.7% |
| Thyssenkrupp Ag ($0O1C) | 3.8% | -8.2% | 5.6% | -16.1% | |
| |
|---|
| Median (5 companies) | 2.5% | 0.6% | 6.2% | 2.4% | -21.7% |
|---|
| Honeywell International Inc ($HON) | | 1.9% | 3.1% | 3.1% | -12.2% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Coral Products ($CRU) | 29.6% | 33.1% | 34.1% | 34.6% | |
| Smurfit Kappa Group ($SKG) | 30.0% | 30.3% | 29.8% | 33.1% | |
| General Electric Co. ($GEC) | 23.9% | 21.4% | 9.5% | 19.1% | 20.3% |
| Thyssenkrupp Ag ($0O1C) | 16.1% | 16.9% | 16.8% | 14.2% | |
| |
|---|
| Median (4 companies) | 25.5% | 25.8% | 25.7% | 26.1% | 20.3% |
|---|
| Honeywell International Inc ($HON) | 30.7% | 30.9% | 32.0% | 30.5% | 33.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Smurfit Kappa Group ($SKG) | 14.3% | 14.9% | 14.0% | 16.3% | |
| Barloworld ($BWO) | 10.3% | 10.7% | 11.0% | 14.6% | |
| Coral Products ($CRU) | 8.5% | 7.1% | 8.7% | 5.9% | |
| Thyssenkrupp Ag ($0O1C) | 5.5% | 6.3% | 5.5% | 3.3% | |
| General Electric Co. ($GEC) | 10.4% | 12.7% | -3.0% | -9.9% | |
| |
|---|
| Median (5 companies) | 10.3% | 12.7% | 9.9% | 5.9% | |
|---|
| Honeywell International Inc ($HON) | 20.0% | 19.6% | 20.4% | 18.7% | 22.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| General Electric Co. ($GEC) | 6.3% | 6.0% | 6.1% | 6.3% | |
| Smurfit Kappa Group ($SKG) | 5.3% | 5.2% | 5.2% | 5.9% | |
| Coral Products ($CRU) | 2.5% | 8.9% | 4.3% | 3.9% | |
| Thyssenkrupp Ag ($0O1C) | 2.7% | 3.1% | 3.3% | 2.3% | |
| Barloworld ($BWO) | 2.2% | 1.6% | 1.2% | 1.0% | |
| |
|---|
| Median (5 companies) | 2.9% | 5.2% | 4.3% | 3.9% | |
|---|
| Honeywell International Inc ($HON) | 2.8% | 2.8% | 2.5% | 2.0% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Smurfit Kappa Group ($SKG) | 13.9% | 14.1% | 13.4% | 16.3% | |
| Barloworld ($BWO) | 12.9% | 12.7% | 13.2% | 13.2% | |
| Thyssenkrupp Ag ($0O1C) | 9.5% | 12.7% | 12.2% | 5.2% | |
| Coral Products ($CRU) | 6.7% | 3.2% | 3.6% | -0.9% | |
| General Electric Co. ($GEC) | 2.0% | 4.0% | -4.1% | -11.5% | 0.5% |
| |
|---|
| Median (6 companies) | 9.5% | 12.7% | 11.9% | 5.2% | 0.5% |
|---|
| Honeywell International Inc ($HON) | 23.2% | 19.6% | 19.0% | 18.1% | 18.5% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Coral Products ($CRU) | 2.7x | 2.5x | 3.0x | 5.3x | |
| Thyssenkrupp Ag ($0O1C) | 1.8x | 1.8x | 1.3x | 2.5x | |
| Smurfit Kappa Group ($SKG) | 2.6x | 2.4x | 2.4x | 2.1x | |
| Barloworld ($BWO) | 1.7x | 1.2x | 0.8x | 0.4x | |
| |
|---|
| Median (4 companies) | 1.7x | 1.4x | 1.2x | 2.3x | |
|---|
| Honeywell International Inc ($HON) | 0.9x | 1.0x | 1.3x | 0.9x | 0.9x |
