Honeywell International Inc.

Overview Key strengths Key risks Diverse business mix, with a roughly 60%-40% split between short- and long-cycle orders, and spread across aerospace and defense, building technologies, safety, automation, and performance materials markets. Exposed to cyclical and competitive industries, with the potential for multiyear periods of slow or contracting growth in some markets. Strong leadership positions (generally No. 1 or No. 2) in its addressable markets. Appetite for acquisitions and aggressive capital deployment policies could lead to weaker-than-expected credit measures. Good geographic diversity with an increasing exposure to high-growth regions, such as India, China, and the Middle East. Despite a largely in-country and for-country supply chain, trade tensions could limit its business performance in high-growth regions. A solid track record of

...Honeywell International Inc.'s margins have improved in the last seven years with a higher- quality portfolio of businesses. Honeywell's EBTIDA margins have improved to the low-20% area over the last few years from the high-teens percent area. The mix of businesses has gradually evolved over time with the acquisition of high-growth, highly profitable businesses such as Intelligrated and Sparta replacing the divestures of less profitable, lower-growth businesses. We expect this trend to continue as the company focuses on more sustainable solutions offerings and investments tied to mega trends and increases its focus on innovation and capital deployment to improve its current margin profile and growth rates. Moreover, we believe Honeywell continues to maintain a balanced mix of short- and long-cycle businesses and good geographic diversity, which we believe counterbalance each other and generally support decent overall operating trends while providing a degree of revenue and earnings stability...

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