Workflow
Honeywell(HON) - 2024 Q4 - Annual Report
HONHoneywell(HON)2025-02-14 19:50
Transcript
Slide

Financial Performance - In 2024, Honeywell achieved sales growth of 5%, totaling 38.5billion,withdouble−digitgrowthintheAerospaceTechnologiessegment[15].−Operatingcashflowsfortheyearwere38.5 billion, with double-digit growth in the Aerospace Technologies segment[15]. - Operating cash flows for the year were 6.1 billion, reflecting a focus on revenue growth and improved working capital turnover[20]. - Net sales increased by 5% in 2024 compared to 2023, driven by a 2% increase from pricing and a 2% contribution from acquisitions and divestitures[82]. - Gross margin increased by approximately 1.0billion,withthegrossmarginpercentagerisingto38.11.0 billion, with the gross margin percentage rising to 38.1% from 37.3% in 2023[87]. - Segment profit for 2024 was 3,988 million, reflecting a 6% increase from 3,760millionin2023anda163,760 million in 2023 and a 16% increase from 3,247 million in 2022[106]. - Net sales for 2024 reached 15,458million,a1315,458 million, a 13% increase compared to 13,624 million in 2023, and a 15% increase from 11,827millionin2022[106].−TheIndustrialAutomationsegmentreportedfull−yearrevenueof11,827 million in 2022[106]. - The Industrial Automation segment reported full-year revenue of 10,051 million, with significant contributions from Sensing and Safety Technologies and Process Solutions[26]. - The Building Automation segment reported an 8% increase in net sales to 6,540million,withsegmentprofitrising106,540 million, with segment profit rising 10% to 1,681 million[120]. - Energy and Sustainability Solutions net sales increased by 3% to 6,425million,withsegmentprofitrising26,425 million, with segment profit rising 2% to 1,522 million[123]. Strategic Initiatives - The company deployed 9billionacrossfouracquisitions,includingCarrierGlobalCorporation′sGlobalAccessSolutionsbusinessandCAESSystemsHoldingsLLC[16].−HoneywellannouncedplanstospinoffitsAdvancedMaterialsbusinessintoanindependent,publiclytradedcompany,andseparateitsAutomationandAerospaceTechnologiesbusinesses[16].−HoneywellplanstospinoffitsAdvancedMaterialsbusinessandseparateitsAerospaceTechnologiessegment,whichmayfacedelaysorunfavorableconditions[144].−ThecompanyplanstoseparateitsAutomationandAerospaceTechnologiesbusinessesintoindependentpubliclytradedcompaniesbyFebruary2025[110].−HoneywellintendstospinoffitsAdvancedMaterialsbusinessintoanindependentpubliclytradedcompanybytheendof2025orearly2026[179].ShareholderValue−Honeywellincreaseditsdividendforthefifteenthtimeinthelastfourteenyears,demonstratingacommitmenttoreturningvaluetoshareholders[18].−Aquarterlydividendrateincreaseof59 billion across four acquisitions, including Carrier Global Corporation's Global Access Solutions business and CAES Systems Holdings LLC[16]. - Honeywell announced plans to spin off its Advanced Materials business into an independent, publicly traded company, and separate its Automation and Aerospace Technologies businesses[16]. - Honeywell plans to spin off its Advanced Materials business and separate its Aerospace Technologies segment, which may face delays or unfavorable conditions[144]. - The company plans to separate its Automation and Aerospace Technologies businesses into independent publicly traded companies by February 2025[110]. - Honeywell intends to spin off its Advanced Materials business into an independent publicly traded company by the end of 2025 or early 2026[179]. Shareholder Value - Honeywell increased its dividend for the fifteenth time in the last fourteen years, demonstrating a commitment to returning value to shareholders[18]. - A quarterly dividend rate increase of 5% to 1.13 per share was announced, effective with the fourth quarter 2024 dividend[179]. - The company has 5.5billionavailableforsharerepurchasesasofDecember31,2024,tooffsetstock−basedcompensationdilution[179].GovernmentContractsandSales−TotalsalestotheU.S.governmentreached5.5 billion available for share repurchases as of December 31, 2024, to offset stock-based compensation dilution[179]. Government Contracts and Sales - Total sales to the U.S. government reached 3,441 million in 2023, slightly up from 3,432millionin2022,withaprojectedincreaseto3,432 million in 2022, with a projected increase to 4,346 million in 2024[33]. - Sales to the U.S. Department of Defense were 2,933millionin2023,comparedto2,933 million in 2023, compared to 2,886 million in 2022, with an expected rise to 3,830millionin2024[33].SustainabilityandEnvironmentalGoals−Thecompanyaimstoachievecarbonneutralityinitsfacilitiesandoperationsby2035,havingexceededits10−10−10commitmentsin2023[48].−ThecompanyhascommittedtoreducingU.S.Scope1and2GHGemissionsby503,830 million in 2024[33]. Sustainability and Environmental Goals - The company aims to achieve carbon neutrality in its facilities and operations by 2035, having exceeded its 10-10-10 commitments in 2023[48]. - The company has committed to reducing U.S. Scope 1 and 2 GHG emissions by 50% from a 2018 baseline as part of its participation in the U.S. Department of Energy's Better Climate Challenge[48]. - The company continues to implement sustainability projects, including energy management systems and renewable energy initiatives, to enhance energy efficiency[48]. - Honeywell has increased its focus on environmental, social, and governance (ESG) practices in response to stakeholder interest, but faces risks related to achieving its ESG goals[159]. Risks and Challenges - Honeywell's operational risks include reliance on single-source suppliers for critical components, which could impact delivery and performance[141]. - The company faces risks from increased tariffs and trade restrictions, particularly on imports from China, which could raise product costs[133]. - Cybersecurity threats pose a critical risk to Honeywell's operations, with potential consequences including financial loss and reputational damage[151]. - Climate change may create financial risks for Honeywell, affecting material availability, supply chain stability, and operational costs[161]. - Regulatory changes aimed at reducing greenhouse gas emissions could impact demand for Honeywell's products that rely on fossil fuels and refrigerants[162]. Financial Position and Cash Flow - As of December 31, 2024, the company held 11.0 billion in cash and cash equivalents, an increase from 8.1billionin2023[171].−Netcashprovidedbyoperatingactivitiesfor2024was8.1 billion in 2023[171]. - Net cash provided by operating activities for 2024 was 6.1 billion, up 757millionfrom2023,primarilydrivenbynetincomeattributabletoHoneywellof757 million from 2023, primarily driven by net income attributable to Honeywell of 5.7 billion[173][176]. - The company used 10.2billionforinvestingactivitiesin2024,asignificantincreaseof10.2 billion for investing activities in 2024, a significant increase of 8.9 billion compared to 2023, mainly due to 8.9billionpaidforacquisitions[174][176].−Totalborrowingsincreasedto8.9 billion paid for acquisitions[174][176]. - Total borrowings increased to 31.1 billion as of December 31, 2024, from 20.4billionin2023,representinga52.520.4 billion in 2023, representing a 52.5% increase[182]. - The weighted average interest rate on commercial paper and other short-term borrowings was 4.22% in 2024, down from 4.29% in 2023[184]. Compliance and Legal Matters - The company incurred operating costs of approximately 124 million in 2024 for compliance with environmental regulations, up from 110millionin2023[194].−Paymentsrelatedtoknownasbestosmatterswere110 million in 2023[194]. - Payments related to known asbestos matters were 209 million in 2024, with an estimated 157millionexpectedin2025[191].−Accrualsforenvironmentalmatterswere157 million expected in 2025[191]. - Accruals for environmental matters were 261 million in 2024, up from 222millionin2023[194].−Paymentsrelatedtoknownenvironmentalmatterswere222 million in 2023[194]. - Payments related to known environmental matters were 224 million in 2024, with an estimated $244 million expected in 2025[195].