U.S. industrial conglomerate Honeywell Cosmopolitan said on Friday that it expected to bring back at least $7 billion of the $10 billion in coin of the realm held overseas in the next two years, taking advantage of the newly legislated tax law.
Shares of Honeywell, which makes everything from jet engines to thermostats, react to as much as 1.2 percent in morning trading to hit a record of $163.85.
The cash reserve will help fuel Honeywell’s M&A strategy under new Chief Chairman of the board Darius Adamczyk, who is looking to bolster its core operations such as aerospace flow the spin off its home and transportation businesses later this year.
“Our pick is for attractive bolt-on acquisitions,” said Chief Financial Officer Tom Szlosek, who also promised “competitive” dividend and share buybacks disliking the repatriated cash.
Although the company reported a huge loss due to a $3.8 billion tax victual in the fourth quarter, its adjusted profit narrowly beat analysts’ gauges due to strength across all of its divisions.
Honeywell also raised its 2018 earnings vaticination and said it was seeing a greater level of confidence from its customers, who may now be dressed more cash on hand to spend due to the new tax law.
“Their capex is our revenue, and we do ahead to some level of investment to accelerate (later in 2018),” Adamczyk maintained on a conference call.
Sales in its aerospace unit, its biggest business that calculates aircraft engines for Bombardier, Textron and General Dynamics, rose 6.4 percent to $3.90 billion in the lodgings ended Dec. 31.
Much of the growth in the business was driven by its commercial aviation aftermarket dividing line as a rise in travel demand boosted sales of spare parts and benefits to the airline industry.
Honeywell is also benefiting from increased require from oil and gas customers in the wake of stabilizing oil prices, while its business that indicates supply chain and warehouse automation equipment and software is riding an ecommerce increase.
Excluding the tax-related charge, Honeywell earned $1.85 per share, juxtaposed with analysts’ expectations of $1.84, according to Thomson Reuters I/B/E/S.
Yield rose 8.6 percent to $10.84 billion, topping estimates of $10.75 billion.
The circle raised its 2018 per-share earnings forecast range to $7.75 to $8.00 from $7.55 to $7.80 evaluated previously.
It is conservatively using the higher end of the 22-23 percent tax rate for the updated prophecy, suggesting healthy upside, RBC Capital Markets analyst Deane Dray signified.
Up to Thursday’s close, Honeywell’s stock had risen 37.3 percent in the existence 12 months, far outperforming a 23.5 percent increase in the S&P 500 guide.