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Honeywell

Honeywell's Aerospace business is the company's largest segment, accounting for 36% of FY17 revenues, and sells a range of products to OEM's ranging from aircraft engines to turbochargers for passenger cars. The Performance Materials & Technologies (PMT) segment is the next largest business, with 26% of FY17 revenues, and is engaged in developing and manufacturing materials, process technologies, and automation solutions for a wide range of end markets. Home & Building Technologies (HBT) is the third largest, making up 24% of FY17 sales, selling a variety of integrated products and software designed to home owners. Lastly, Safety & Product Solutions (SPS), HON's smallest segment with 14% of FY17 sales, provides products, software, and connected solutions to facilitate improved productivity, workplace safety, and asset performance. When looking across the peer group of industrials, HON generated higher than average sales from the U.S. in 2017 (56%). The rest of its revenues are generated from Europe (26%) and other international regions (18%). (22 Oct 2018)

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3M: 3Q18 | Event Risk Brewing?

Worth Watching: 23 Oct 2018, 9:51 PM ET - 3M (A1/AA-) had a downright ugly quarter especially when compared to other Industrial behemoths that were on the screen today including United Technologies and Caterpillar. Reported revenue sank 0.2% $8.15 bn, due primarily to currency, and cam ..
Focused

Honeywell: 3Q18 | Crushing It

Earnings Note: 21 Oct 2018, 8:14 PM ET - After raising guidance several times this year and transforming its portfolio along the way, HON reported outstanding results and offered reassuring tones on the broader macro environment with exceptions being China and tariffs. 

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

Honeywell: EPG Conference Highlights

Worth Watching: 07 Jun 2018, 2:41 PM ET - Honeywell (A2/A): In addition to discussing key macro takeaways from the EPG conference at the end of May and featuring more than fifteen other Industrial credits in our sector report, we highlight color specifically from Honeywell. CEO Dari ..
Focused

US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.

United Technologies Scenarios: United to Divided?

Company Spotlight: 16 Apr 2018, 4:15 AM ET - We see a modest multiple expansion opportunity if management does go down the break-up route and while there is also a case whereby the SpinCos could have IG ratings, we would not rule out seeing the Climate division move into HY territory.

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

JCI: Power Solutions in Play

IG Note: 12 Mar 2018, 9:44 PM ET - We had been flagging JCI as a credit with high event risk. Now JCI is joining other Industrials under pressure by putting Power Solutions under strategic review. We maintain our Underperform until we obtain more capital structure clarity.
Focused

Honeywell: Capital Allocation Update

IG Note: 06 Mar 2018, 8:18 PM ET - The message from HON's Investor Day last week was that capital will be allocated in a prudent manner. However, we remain guarded on the credit at current levels with a “new” CEO legacy building and there being an activist in the scene.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

United Technologies: Break-Up Concerns Validated

IG Note: 21 Feb 2018, 7:03 PM ET - For several years we have highlighted that there was break-up risk at United Technologies and at the Barclay’s Industrial conference, management legitimized that concern.

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.

Dover: Risks Ratings with Spin-off Route

Worth Watching: 07 Dec 2017, 9:28 PM ET - Dover (A3/A-) placed its upstream Oil & Gas business, Wellsite under strategic review back in September and today we learned that the firm is going the spin-off route. This trend has been picking up steam across the US Industrials with recent e ..

GE: Early Innings of a Long Game

IG Note: 13 Nov 2017, 10:50 PM ET - Encouraging for bondholders was seeing the dividend cut and hearing A1/P1 ratings being a target, but at this juncture we do not take such ambitions at face value and maintain our Underperform on the credit.
Focused

Honeywell: Refi-led Benchmark Issuance

Worth Watching: 23 Oct 2017, 7:47 PM ET - Honeywell: Fresh after reporting better than expected third quarter results on Friday, Honeywell (A2/A) priced a $1.2 bn offering today: $750 mn fixed rates notes (FRNs) at T+28 (versus IPT in the low T+40 area) and $450 mn floating rates notes ..

GE: 3Q17 | Can GE Bring Itself Back to Life?

Earnings Note: 20 Oct 2017, 11:10 PM ET - GE missed expectations by a wide margin and slashed full-year expectations. We continue to be at an Underperform on the credit until we obtain further clarity on management’s portfolio vision hopefully in a few weeks.

Dover 3Q17: The Waiting Game

Earnings Note: 19 Oct 2017, 2:58 PM ET - Dover released a solid set of third quarter results ahead of the separation of its upstream energy business, Wellsite. Until we obtain greater clarity on the company’s capital structure, we remain at an Underperform on the credit.
Focused

Honeywell: Aero Wins, Others Get the Spin

IG Note: 10 Oct 2017, 8:42 PM ET - Dan Loeb was pushing for a meaningful Aero-spin, but he is still pleased with plans to spin the Homes and Transportation businesses. We continue to see event risk at HON as high and maintain our U/P on the name for now.

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