Honeywell (HON) Tops Q4 EPS by 1c, Raises FY EPS Guidance

(Updated - January 26, 2018 6:41 AM EST)

Honeywell (NYSE: HON) reported Q4 EPS of $1.85, $0.01 better than the analyst estimate of $1.84. Revenue for the quarter came in at $10.84 billion versus the consensus estimate of $10.75 billion.

GUIDANCE:

Honeywell sees 2018 EPS of $7.75-$8.00, versus the consensus of $7.83. Honeywell sees 2018 revenue of $41.8-42.5 billion, versus the consensus of $42.23 billion.

"Honeywell delivered a strong fourth quarter, capping an exceptional year for the company," said Darius Adamczyk, president and chief executive officer of Honeywell. "Fourth-quarter sales grew six percent organically, leading to full-year organic sales growth of four percent, driven by robust growth in Aerospace aftermarket, UOP, Advanced Materials, and Intelligrated. We leveraged HOS Gold to drive outstanding growth and expand segment margins by 70 basis points for the year. Earnings per share3 were $1.85 in the fourth quarter and $7.11 for the full year, up 10 percent year over year, excluding the fourth-quarter charge related to U.S. tax reform and other items, as a result of our strong focus on growth and productivity. Our businesses achieved exceptional free cash flow, with 123 percent conversion in the fourth quarter and 90 percent conversion for the full year, exceeding the high end of our guidance for 2017.

"While delivering outstanding 2017 results, we also made significant investments in our future, including funding more than $350 million in restructuring projects," Adamczyk continued. "We generated significant value for our shareowners in 2017 through a 12 percent increase in our dividend; $2.9 billion in share repurchases, including $1.6 billion in the fourth quarter; and the closing of three acquisitions. Our financial performance and aggressive capital deployment led to a total shareowner return of 35 percent, well ahead of the S&P's total shareowner return of 22 percent and the median return of our multi-industry peers of 24 percent.

"Honeywell's transformation to a software-industrial leader is well underway, and in 2018, we expect to complete the spin-offs of our Homes and Global Distribution business, and our Transportation Systems business, which will position Honeywell for future growth and margin expansion. After the spins, these businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets," Adamczyk said.

"I am confident in Honeywell's future, and our ability to continue to deliver for our shareowners and our employees. Our strong performance in 2017, together with the enactment of new U.S. tax legislation, has enabled us to increase our 401(k) match in the U.S. This is a sustained, annual benefit that will provide a more secure retirement for our employees. We believe that enhancing this benefit is extremely valuable and important to our employees over the long term," Adamczyk concluded.

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