HONEYWELL ANNOUNCES PLAN TO SPIN OFF ADVANCED MATERIALS BUSINESS TO SHAREOWNERS
Honeywell (Nasdaq: HON) has announced plans to spin off its Advanced Materials business into an independent, publicly traded company. The spin-off is expected to be completed by the end of 2025 or early 2026 in a tax-free manner to shareowners. The Advanced Materials business, with an estimated FY24 revenue of $3.7-$3.9 billion and an EBITDA margin over 25%, will focus on sustainability-focused specialty chemicals and materials.
This move is part of Honeywell's strategy to simplify and optimize its portfolio around three megatrends: automation, the future of aviation, and energy transition. The spin-off aims to create value for stakeholders by allowing both Honeywell and the new company to have greater strategic focus and financial flexibility. Following the spin-off, Honeywell expects to improve its organic sales growth, reduce cyclicality, and enhance free cash flow generation.
Honeywell (Nasdaq: HON) ha annunciato piani per separare la sua divisione Materiali Avanzati in un'azienda indipendente quotata in borsa. Si prevede che la separazione avvenga entro la fine del 2025 o all'inizio del 2026 in modo fiscalmente neutro per gli azionisti. L'unità Materiali Avanzati, con un fatturato stimato per l'anno fiscale 2024 di 3.7-3.9 miliardi di dollari e un margine EBITDA superiore al 25%, si concentrerà su chimiche e materiali specializzati focalizzati sulla sostenibilità.
Questa mossa fa parte della strategia di Honeywell per semplificare e ottimizzare il proprio portafoglio attorno a tre megatrend: automazione, futuro dell'aviazione e transizione energetica. L'obiettivo della separazione è creare valore per gli stakeholder consentendo sia a Honeywell che alla nuova azienda di avere un maggiore focus strategico e flessibilità finanziaria. Dopo la separazione, Honeywell prevede di migliorare la crescita delle vendite organiche, ridurre la ciclicità e aumentare la generazione di flusso di cassa libero.
Honeywell (Nasdaq: HON) ha anunciado planes para escindir su negocio de Materiales Avanzados en una compañía independiente que cotizará en bolsa. Se espera que la escisión se complete a finales de 2025 o principios de 2026, de manera fiscalmente neutral para los accionistas. El negocio de Materiales Avanzados, con un ingreso estimado para el año fiscal 2024 de 3.7-3.9 mil millones de dólares y un margen EBITDA superior al 25%, se enfocará en químicos y materiales especiales orientados a la sostenibilidad.
Este movimiento es parte de la estrategia de Honeywell para simplificar y optimizar su cartera en torno a tres megatendencias: automatización, el futuro de la aviación y la transición energética. La escisión tiene como objetivo crear valor para los interesados al permitir que tanto Honeywell como la nueva compañía tengan un mayor enfoque estratégico y flexibilidad financiera. Después de la escisión, Honeywell espera mejorar su crecimiento de ventas orgánicas, reducir la cíclica y aumentar la generación de flujo de caja libre.
하니웰(Honeywell, Nasdaq: HON)은 첨단 소재 사업 부문을 분사하여 독립적인 상장 회사로 만들 계획을 발표했습니다. 분사는 2025년 말 또는 2026년 초에 주주에게 세금이 없는 방식으로 완료될 것으로 예상됩니다. 첨단 소재 사업 부문은 2024 회계연도에 37억~39억 달러의 매출을 예상하며, EBITDA 마진은 25% 이상으로, 지속 가능성에 초점을 맞춘 특수 화학 물질 및 소재에 집중할 것입니다.
이번 결정은 하니웰이 자동화, 항공의 미래, 에너지 전환이라는 세 가지 메가 트렌드를 중심으로 포트폴리오를 단순화하고 최적화하기 위한 전략의 일환입니다. 분사는 하니웰과 새 회사 모두가 더 큰 전략적 집중과 재정적 유연성을 가질 수 있도록 함으로써 이해관계자에게 가치를 창출하는 것을 목표로 합니다. 분사 이후 하니웰은 유기적 판매 성장 개선, 경기 변동성 감소, 자유 현금 흐름 창출을 향상시킬 것으로 기대하고 있습니다.
Honeywell (Nasdaq: HON) a annoncé des projets pour scinder son activité Matériaux Avancés en une entreprise indépendante cotée en bourse. La scission devrait être complétée d'ici fin 2025 ou début 2026 d'une manière fiscalement avantageuse pour les actionnaires. L'activité Matériaux Avancés, avec un chiffre d'affaires estimé pour l'exercice 2024 de 3,7 à 3,9 milliards de dollars et une marge EBITDA supérieure à 25%, se concentrera sur des produits chimiques et matériaux spéciaux axés sur la durabilité.
Cette initiative fait partie de la stratégie de Honeywell visant à simplifier et optimiser son portefeuille autour de trois mégatendances : l'automatisation, l'avenir de l'aviation et la transition énergétique. La scission vise à créer de la valeur pour les parties prenantes en permettant à la fois à Honeywell et à la nouvelle entreprise d'avoir une plus grande concentration stratégique et une flexibilité financière. Après la scission, Honeywell s'attend à améliorer sa croissance des ventes organiques, à réduire la cyclicité et à augmenter la génération de flux de trésorerie disponible.
Honeywell (Nasdaq: HON) hat Pläne angekündigt, sein Geschäftsbereich Advanced Materials abzuspalten und in ein unabhängiges, börsennotiertes Unternehmen zu überführen. Die Abspaltung wird voraussichtlich bis Ende 2025 oder Anfang 2026 steuerfrei für die Aktionäre vollzogen. Der Geschäftsbereich Advanced Materials, mit einem geschätzten Umsatz im Geschäftsjahr 2024 von 3,7 bis 3,9 Milliarden US-Dollar und einer EBITDA-Marge von über 25%, wird sich auf nachhaltigkeitsorientierte Spezialchemikalien und -materialien konzentrieren.
Dieser Schritt ist Teil von Honeywells Strategie, das Portfolio um drei Megatrends zu vereinfachen und zu optimieren: Automatisierung, Zukunft der Luftfahrt und Energiewende. Die Abspaltung zielt darauf ab, Wert für die Stakeholder zu schaffen, indem sowohl Honeywell als auch das neue Unternehmen eine größere strategische Ausrichtung und finanzielle Flexibilität erhalten. Nach der Abspaltung erwartet Honeywell, das organische Umsatzwachstum zu verbessern, die Zyklizität zu reduzieren und die freie Cashflow-Generierung zu steigern.
- Spin-off expected to be tax-free for shareowners
- Advanced Materials business has strong financials with FY24 estimated revenue of $3.7-$3.9 billion
- Advanced Materials business has high profitability with EBITDA margin greater than 25%
- Spin-off aligns with Honeywell's portfolio optimization strategy
- Potential for improved organic sales growth and enhanced free cash flow generation for Honeywell post-spin-off
- Potential loss of revenue stream for Honeywell after spin-off
- Execution risks associated with completing the spin-off transaction
Insights
This spin-off announcement is a significant strategic move for Honeywell. The Advanced Materials business, with expected FY24 revenue of
Key points to consider:
- The spin-off allows Honeywell to focus on its core megatrends: automation, aviation future and energy transition.
- It may improve Honeywell's organic growth rate and reduce cyclicality.
- The new company will have more flexibility to pursue growth in specialty chemicals and materials.
- Honeywell's recent acquisitions (over
$9 billion ) show its commitment to strategic growth.
This move aligns with the trend of large conglomerates streamlining their operations. While it may result in short-term volatility, it could unlock value for shareholders in the long run by creating two more focused entities.
The spin-off of Honeywell's Advanced Materials business is a strategic move that capitalizes on the growing demand for sustainable specialty chemicals. This new entity will be well-positioned in the market with leading brands like Solstice®, Spectra® and Aclar®.
The sustainability focus, particularly the Solstice® HFO technology which has helped avoid 326 million metric tons of CO2 equivalent emissions, aligns well with global environmental trends. This could be a significant growth driver as industries seek more eco-friendly solutions.
The diverse portfolio spanning fluorine products, electronic materials and healthcare packaging provides multiple avenues for growth and helps mitigate sector-specific risks. With a strong EBITDA margin and the flexibility to pursue targeted innovations, the new company could potentially outperform as a standalone entity in the specialty chemicals market.
- Independent company to be a leading provider of sustainability-focused specialty chemicals and materials with approximately
$3.8 billion 25% expected in FY24 - Advanced Materials portfolio includes leading brands such as Solstice®, Spectra®, Hydranal® and Aclar®, among others
- Honeywell continues to simplify and optimize its portfolio around three compelling megatrends: automation, the future of aviation and energy transition
- Tax-free spin to shareowners targeted to be completed by the end of 2025 or early 2026
As a leading global provider of sustainability-focused specialty chemicals and materials, this pure-play business will be well-positioned to benefit from an enhanced strategic focus and the financial flexibility to pursue innovation and growth opportunities through investment cycles. Further, the planned spin-off will enable Honeywell to progress its strategic priorities of accelerating organic growth, evolving its Accelerator operating system, and optimizing its portfolio.
"Given the sustained market demand for advanced specialty chemicals and materials around the globe, we are confident now is the right time for this business to grow independently, leveraging its leading technologies and deep customer relationships. As a sector leader, this new company will have a greater strategic focus on innovation, enabling it to develop new, more sustainable solutions and products with next-generation chemistry to create further value for shareowners," said Vimal Kapur, Chairman and CEO of Honeywell.
Kapur added, "Today's announcement is the latest step in the optimization of the Honeywell portfolio, a key priority I laid out in my first year leading the company. Through the powerful combination of strategic bolt-on acquisitions and subtractions of high quality but non-core business lines, we continue to enhance our portfolio mix and further tighten Honeywell's alignment to three compelling megatrends: automation, the future of aviation, and energy transition—underpinned by our Accelerator business models."
The planned spin-off is expected to create value for all stakeholders as both Honeywell and the Advanced Materials business will benefit from:
- A simplified strategic focus;
- A greater financial flexibility to pursue prioritized organic growth opportunities throughout investment cycles;
- An improved ability to customize capital allocation priorities in alignment with strategic focus; and
- Distinct investment profiles that position each company to unlock greater long-term value for shareowners.
Honeywell's Continued Simplification and Portfolio Optimization
The planned spin-off of the Advanced Materials business follows four recent acquisitions Honeywell announced as part of its disciplined capital deployment strategy. The company is focused on high-return acquisitions that will drive future growth across its portfolio in alignment with the three powerful megatrends. In the past 12 months, Honeywell completed the acquisitions of: Carrier Access Solutions, Civitanavi, CAES and Air Products' liquified natural gas (LNG) business.
Honeywell is currently on pace to exceed its commitment to deploy at least
Following the completion of the planned spin of the Advanced Materials business, Honeywell will be positioned to further improve its organic sales growth, lower capital intensity, reduce cyclicality of sales and enhance free cash flow generation capability.
Advanced Materials
Upon completion of the spin-off, the Advanced Materials business will be a sustainability-focused specialty chemicals and materials pure play with leading positions across fluorine products, electronic materials, industrial grade fibers, and healthcare packaging solutions. The business offers technologies that include the breakthrough low global warming Solstice® hydrofluoro-olefin (HFO) technology, which has helped avoid the potential release of the equivalent of more than 326 million metric tons of carbon dioxide into the atmosphere.[1] Additionally, the business manufactures a wide variety of high-performance specialty materials technologies ranging from Spectra®, a fiber used in high-end armor technology to protect in law enforcement and military applications, to Hydranal®, the most trusted brand in Karl Fischer titration, to Aclar®, a high-performance pharmaceutical packaging material critical to preserving prescription drugs and keeping them safe.
Advanced Materials is expected to have FY24 estimated revenue of between
Transaction Details
The planned spin-off transaction is targeted for completion by the end of 2025 or early 2026, subject to certain customary conditions, including, among others, the filing and effectiveness of applicable filings (including a Form 10 registration statement) with the
The spin transaction will not impact Honeywell's FY24 guidance.
As the process progresses, Honeywell intends to provide additional information regarding the future management team and board of directors for the independent Advanced Materials company.
Goldman Sachs & Co. LLC is serving as financial advisor to Honeywell. Skadden, Arps, Slate, Meagher & Flom LLP is providing external legal counsel.
Conference Call Details
Honeywell will discuss the transaction during an investor conference call starting at 8:30 a.m. Eastern Time today. A live webcast of the investor call as well as related presentation materials will be available through the Investor Relations section of the company's website (www.honeywell.com/investor). A replay of the webcast will be available for 30 days following the presentation.
About Honeywell
Honeywell is an integrated operating company serving a broad range of industries and geographies around the world. Our business is aligned with three powerful megatrends – automation, the future of aviation and energy transition – underpinned by our Honeywell Accelerator operating system and Honeywell Forge IoT platform. As a trusted partner, we help organizations solve the world's toughest, most complex challenges, providing actionable solutions and innovations through our Aerospace Technologies, Industrial Automation, Building Automation and Energy and Sustainability Solutions business segments that help make the world smarter, safer and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.
Non-GAAP Measure
This release references EBITDA, a non-GAAP measure which we define as earnings before tax, depreciation and amortization. Management believes that, when considered together with reported amounts, this measure is useful to investors and management in understanding ongoing operations and in the analysis of ongoing operating trends.
Management does not consider this non-GAAP measure in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of this non-GAAP financial measure is that it excludes significant expenses that are required by GAAP to be recognized in the consolidated financial statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgments by management about which expenses are excluded or included in determining this non-GAAP financial measure.
Forward-Looking Statements
We describe many of the trends and other factors that drive our business and future results in this release. Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes, or anticipates will or may occur in the future. They are based on management's assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors, many of which are difficult to predict and outside of our control. They are not guarantees of future performance, and actual results, developments and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties, including ongoing macroeconomic and geopolitical risks, such as lower GDP growth or recession, capital markets volatility, inflation, and certain regional conflicts, that can affect our performance in both the near- and long-term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this release can or will be achieved. Some of the important factors that could cause Honeywell's actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) the ability of Honeywell to effect the spin-off transaction described above and to meet the conditions related thereto; (ii) the possibility that the spin-off transaction will not be completed within the anticipated time period or at all; (iii) the possibility that the spin-off transaction will not achieve its intended benefits; (iv) the impact of the spin-off transaction on Honeywell's businesses and the risk that the spin-off transaction may be more difficult, time-consuming or costly than expected, including the impact on Honeywell's resources, systems, procedures and controls, diversion of management's attention and the impact and possible disruption of existing relationships with regulators, customers, suppliers, employees and other business counterparties; (v) the possibility of disruption, including disputes, litigation or unanticipated costs, in connection with the spin-off transaction; (vi) the uncertainty of the expected financial performance of Honeywell or the new company following completion of the spin-off transaction; (vii) negative effects of the announcement or pendency of the spin-off transaction on the market price of Honeywell's securities and/or on the financial performance of Honeywell; (viii) the ability to achieve anticipated capital structures in connection with the spin-off transaction, including the future availability of credit ad factors that may affect such availability; (ix) the ability to achieve anticipated credit ratings in connection with the spin-off transaction; (x) the ability to achieve anticipated tax treatments in connection with the spin-off transaction and future, if any, divestitures, mergers, acquisitions and other portfolio changes and the impact of changes in relevant tax and other laws; (xi) the failure to realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with the spin-off transaction and completed and future, if any, divestitures, mergers, acquisitions, and other portfolio management, productivity and infrastructure actions; (xii) the risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs from, among other events, pandemics and responsive actions; (xiii) adverse changes in worldwide economic, political, regulatory, international trade, geopolitical, capital markets and other external conditions; and other factors beyond Honeywell's control, including inflation, recession, military conflicts, natural and other disasters or weather-related events, that impact the operations of the company, its customers and/or its suppliers; (xiv) the ability to offset increases in cost of inputs, including raw materials, energy and logistics; (xv) the risks, including ability to achieve, and costs associated with Honeywell's sustainability strategy, including the actual conduct of the company's activities and results thereof, and the development, implementation, achievement or continuation of any goal, program, policy or initiative discussed or expected; (xvi) other risks to Honeywell's business and operations, including the risk of impairment; and (xvii) other risk factors discussed in Honeywell's most recent annual report and subsequent current and periodic reports filed with the
1 Calculations are based on actual sales of Solstice products (in lbs) from January 2010 through December 2022.
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