Industrial conglomerate Honeywell International Inc. (HON, Financial) reported strong fourth-quarter and full-year 2017 results before the opening bell on Friday.
The Morris Plains, New Jersey-based company posted a net loss of $2.41 billion, or $3.18 per share, for the quarter as a result of a $3.8 billion tax provision related to the recently passed Tax Cuts and Jobs Act. Adjusted earnings, though, were $1.85 per share, beating Thomas Reuters’ estimates of $1.84.
Quarterly revenue grew 9% from the prior-year quarter to $10.84 billion, topping expectations of $10.75 billion.
For the year, the company reported adjusted earnings of $7.11 per share on $40.53 billion in revenue.
Honeywell’s shares rose 1% in premarket trading following the announcement.
In a statement, President and CEO Darius Adamczyk praised the company’s performance.
“Honeywell delivered a strong fourth quarter, capping an exceptional year for the company," he said. "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.”
The company said its quarterly performance was driven by strong growth in its major divisions.
Quarterly sales in the aerospace unit, which is its largest by revenue, increased 6% to $3.9 billion due to growth in the commercial aviation aftermarket as a result of increased travel demand. As oil prices have been stabilizing, the company is also benefiting from increased demand from oil and gas customers.
The company’s performance materials and technologies unit saw sales increase 12% to $2.85 billion during the quarter. Sales in the home and building technologies segment grew 5% to $2.6 billion and safety and productivity’s sales swelled 14% to $1.47 billion.
As a result of the recent tax reform legislation, which reduced the corporate income tax rate to 21%, Honeywell said it is updating it guidance for full-year 2018. The company now expects earnings for the year to range from $7.75 to $8 per share, up 20 cents from its previous guidance of $7.55 to $7.80 per share.
In addition, Honeywell said it plans to boost its employee 401(k) match in the U.S. as a result of the tax law. According to CNBC, the increased match will begin in April and is the third increase to the retirement savings plan the company has implemented since the Great Recession.
“This is a sustained, annual benefit that will provide a more secure retirement for our employees, Adamczyk said. “We believe that enhancing this benefit is extremely valuable and important to our employees over the long term."
With a market cap of $123.78 billion, Honeywell’s shares were up 1.16% at $163.71 on Friday morning. GuruFocus data shows the stock gained approximately 33% in 2017. It is up 6% year to date.
Disclosure: I do not own any stocks mentioned.
