Honeywell International Inc. (NASDAQ:HON)

The carrying value of goodwill exhibited volatility over the analyzed period. Beginning at US$17,756 million in 2021, it decreased to US$17,497 million in 2022 before increasing to US$18,049 million in 2023. A significant rise was then observed in 2024, reaching US$21,825 million, followed by a slight decrease to US$21,079 million in 2025. This suggests potential acquisitions or impairments impacting the goodwill balance.

Definite-life intangible assets, both gross and net of accumulated amortization, demonstrated a substantial increase from 2023 to 2024, followed by a slight decrease in 2025. The gross carrying amount rose from US$7,259 million in 2023 to US$10,883 million in 2024, and then decreased to US$10,568 million in 2025. Simultaneously, accumulated amortization decreased from US$4,999 million in 2023 to US$4,666 million in 2024, and further to US$4,226 million in 2025. The net carrying amount of definite-life intangibles increased significantly from US$2,260 million in 2023 to US$6,217 million in 2024, before decreasing to US$6,342 million in 2025.

Within definite-life intangibles, customer relationships experienced the most pronounced growth. The value of customer relationships increased from US$4,199 million in 2023 to US$6,411 million in 2024, and then decreased slightly to US$6,325 million in 2025. Patents and technology also increased, but to a lesser extent, from US$2,399 million in 2023 to US$3,513 million in 2024, and then decreased to US$3,354 million in 2025. Trademarks and other definite-life intangibles also showed increases in 2024, followed by decreases in 2025.

Goodwill Trend

The fluctuations in goodwill suggest active portfolio management through acquisitions and potential impairment charges. The increase in 2024 warrants further investigation to understand the underlying drivers.

Definite-Life Intangibles

The significant increase in definite-life intangibles in 2024, particularly in customer relationships, indicates substantial investment in or acquisition of assets with defined useful lives. The subsequent decrease in 2025 could be due to amortization or impairment.

Indefinite-Life Intangibles

Indefinite-life intangibles, primarily consisting of trademarks, experienced a decrease from US$1,014 million in 2021 to US$394 million in 2025. This decline may be attributable to impairment or reclassification of these assets.

Total Intangible Assets

The combined net value of goodwill and other intangible assets increased from US$20,719 million in 2022 to US$28,481 million in 2024, before decreasing to US$27,815 million in 2025. This overall trend mirrors the changes observed in goodwill and definite-life intangibles.

The decreasing accumulated amortization suggests a relatively young age profile for the amortizing intangible assets, or potentially a change in estimated useful lives. The overall trend indicates a growing reliance on intangible assets, with a notable concentration in customer relationships and goodwill.

An examination of the financial information reveals significant adjustments related to goodwill and intangible assets, resulting in substantial changes to reported equity and asset values. The adjustments appear to systematically reduce both total assets and total shareowners’ equity over the five-year period.

Total Assets

Reported total assets decreased from US$64,470 million in 2021 to US$61,525 million in 2023, before increasing to US$75,196 million in 2024 and decreasing again to US$73,681 million in 2025. However, adjusted total assets demonstrate a consistent downward trend, declining from US$46,714 million in 2021 to US$52,602 million in 2025. The difference between reported and adjusted total assets widens over time, indicating an increasing impact from the adjustments.

Shareowners’ Equity

Reported total shareowners’ equity experienced a decline from US$18,569 million in 2021 to US$15,856 million in 2023, followed by a recovery to US$18,619 million in 2024, and a substantial decrease to US$13,904 million in 2025. The adjusted shareowners’ equity exhibits a far more dramatic decline, moving from a positive value of US$813 million in 2021 to a negative value of US$-7,175 million in 2025. This suggests a significant write-down of intangible assets and/or goodwill impacting equity.

Net Income

Reported net income attributable to Honeywell fluctuates between US$4,729 million and US$5,705 million throughout the period. The adjusted net income remains largely consistent with the reported net income, with a minor adjustment in 2025, increasing to US$5,453 million from the reported US$4,729 million. This indicates that the adjustments primarily affect the balance sheet and have a limited direct impact on reported earnings.

The consistent reduction in adjusted total assets and the significant decline in adjusted shareowners’ equity strongly suggest a systematic removal of goodwill or other intangible assets from the balance sheet. While reported net income remains relatively stable, the adjustments have a substantial effect on the company’s reported asset base and equity position. The increasing divergence between reported and adjusted figures warrants further investigation into the nature and magnitude of these adjustments.

The financial performance metrics demonstrate notable differences between reported and adjusted values following the removal of goodwill and intangible assets. Several key ratios exhibit altered trends when goodwill is excluded from the calculations. Generally, the adjusted ratios suggest a significantly different, and in some cases, more robust financial picture than the reported figures.

Profitability

The reported net profit margin experienced fluctuations between 14.00% and 16.11% from 2021 to 2025, with a slight decline observed in the most recent year. The adjusted net profit margin remained consistently higher, mirroring the reported margin’s trajectory but showing a more stable trend, ending at 14.56% in 2025. The adjusted ROA consistently exceeded the reported ROA, increasing from 11.86% in 2021 to 10.37% in 2025, indicating improved asset utilization when goodwill is excluded. A dramatic increase is observed in the adjusted ROE in 2021 (681.67%), but subsequent years are unavailable for comparison.

Asset Efficiency

Reported total asset turnover showed an initial increase from 0.53 in 2021 to 0.60 in 2023, followed by a decrease to 0.51 in both 2024 and 2025. In contrast, the adjusted total asset turnover consistently remained higher, ranging from 0.74 to 0.84, and also decreased in the later years, ending at 0.71 in 2025. This suggests that the company’s revenue generation relative to its assets is considerably higher when goodwill is not considered.

Financial Leverage

Reported financial leverage increased steadily from 3.47 in 2021 to 5.30 in 2025, indicating a growing reliance on debt financing. The adjusted financial leverage shows a very high value of 57.46 in 2021, with subsequent years missing. This substantial difference suggests that the inclusion of goodwill significantly impacts the calculation of financial leverage, potentially masking the true extent of the company’s debt-financed activities.

The absence of adjusted values for financial leverage and ROE beyond 2021 limits a comprehensive trend analysis for these metrics. However, the available information indicates that removing goodwill from the asset base results in substantially altered financial ratios, particularly concerning profitability and leverage. The consistent difference between reported and adjusted asset turnover suggests that the presence of goodwill may be distorting the perceived efficiency of asset utilization.

The period under review demonstrates fluctuations in both reported and adjusted net profit margins. While the reported and adjusted net income figures diverge slightly in 2025, the corresponding margin figures show a more consistent pattern over the five-year period.

Reported Net Profit Margin

The reported net profit margin experienced a decline from 16.11% in 2021 to 14.00% in 2022. A subsequent recovery was observed, with the margin increasing to 15.43% in 2023 and 14.82% in 2024. However, a further decrease to 12.63% occurred in 2025, representing the lowest value within the observed timeframe. This indicates increasing pressure on profitability as measured by reported earnings.

Adjusted Net Profit Margin

The adjusted net profit margin mirrored the trend of the reported margin, decreasing from 16.11% in 2021 to 14.00% in 2022. It then rose to 15.43% in 2023 and 14.82% in 2024. In 2025, the adjusted net profit margin increased to 14.56%, a notable difference from the reported margin of 12.63%. This suggests that adjustments made to net income in 2025 had a positive impact on the calculated margin.

Comparison of Reported and Adjusted Margins

From 2021 through 2024, the reported and adjusted net profit margins remained identical. The divergence in 2025, where the adjusted margin exceeded the reported margin, suggests the presence of non-recurring items or accounting adjustments that positively influenced the adjusted figure. The nature of these adjustments would require further investigation to fully understand their impact on the company’s underlying performance.

Overall Trend

Generally, a cyclical pattern is apparent, with margins declining initially, recovering over the subsequent two years, and then declining again in the final year. The 2025 results indicate a potential shift in the profitability trend, although the impact of adjustments to net income needs to be considered when evaluating the true underlying performance.

An examination of the financial information reveals trends in both total asset values and associated turnover ratios over a five-year period. Reported total assets experienced a decrease from 2021 to 2023, followed by a substantial increase in 2024, with a slight decrease in 2025. Adjusted total assets mirrored this pattern, exhibiting a similar decline initially and subsequent increase, though to a lesser extent in the final year.

Reported Total Asset Turnover

The reported total asset turnover ratio demonstrated an increasing trend from 0.53 in 2021 to 0.60 in 2023. However, this was followed by a decline to 0.51 in both 2024 and 2025, indicating a reduced efficiency in generating sales relative to reported total assets in the latter two years. The ratio remained relatively stable at 0.51 in the most recent two periods.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio consistently exceeded the reported ratio throughout the period. It showed a clear upward trend, increasing from 0.74 in 2021 to a peak of 0.84 in 2023. Similar to the reported ratio, the adjusted ratio decreased in 2024 to 0.72 and remained nearly unchanged at 0.71 in 2025. This suggests that when goodwill and intangible assets are excluded from the asset base, the company demonstrates a higher efficiency in utilizing its assets to generate sales. The stabilization in 2024 and 2025 indicates a potential plateauing of this efficiency.

The divergence between the reported and adjusted ratios highlights the impact of goodwill and intangible assets on the overall asset turnover calculation. The increasing gap between the two ratios as adjusted assets decreased suggests that these items represent a significant portion of the total asset base and contribute to a lower overall turnover when included. The recent stabilization of both ratios warrants further investigation to determine the underlying causes and potential implications for future performance.

An examination of the financial information reveals significant trends in reported and adjusted asset and equity figures, impacting calculated financial leverage ratios. Reported total assets decreased from 2021 to 2022, continued to decline through 2023, then experienced a substantial increase in 2024, followed by a slight decrease in 2025. Reported total Honeywell shareowners’ equity mirrored the asset trend with declines in 2022 and 2023, a recovery in 2024, and a significant decrease in 2025.

Reported Financial Leverage

Reported financial leverage, calculated as total assets divided by total Honeywell shareowners’ equity, increased steadily from 3.47 in 2021 to 4.04 in 2024. This indicates a growing reliance on assets funded by equity. A substantial increase to 5.30 was observed in 2025, coinciding with the significant decline in reported equity.

Adjusted figures present a markedly different picture. Adjusted total assets follow a similar pattern to reported total assets, decreasing from 2021 to 2023 and increasing in 2024 and 2025. However, adjusted total Honeywell shareowners’ equity exhibits a consistent and substantial decline throughout the period, moving from a positive value in 2021 to a significantly negative value by 2025.

Adjusted Financial Leverage

Adjusted financial leverage demonstrates a dramatic increase in 2021, reaching 57.46. No values are available for 2022, 2023, 2024, or 2025. The initial value suggests a very high degree of financial risk based on the adjusted asset and equity figures. The absence of subsequent values hinders a trend analysis, but the initial reading indicates a considerable difference between reported and adjusted leverage.

The divergence between reported and adjusted figures, particularly concerning shareowners’ equity, warrants further investigation. The substantial decline in adjusted equity suggests the exclusion of significant items from the reported equity calculation, potentially related to goodwill or intangible assets. The lack of adjusted financial leverage calculations beyond 2021 limits the ability to assess the evolving financial risk profile based on these adjustments.

Reported net income attributable to Honeywell fluctuated over the five-year period, beginning at US$5,542 million in 2021, decreasing to US$4,966 million in 2022, increasing to US$5,658 million in 2023, slightly increasing to US$5,705 million in 2024, and then decreasing to US$4,729 million in 2025. Adjusted net income mirrored this trend, with a final value of US$5,453 million in 2025.

Reported total Honeywell shareowners’ equity exhibited volatility. It decreased from US$18,569 million in 2021 to US$16,697 million in 2022 and further to US$15,856 million in 2023, before increasing to US$18,619 million in 2024, and then significantly decreasing to US$13,904 million in 2025. In contrast, adjusted total Honeywell shareowners’ equity demonstrated a consistent downward trend, moving from US$813 million in 2021 to negative US$7,175 million in 2025.

Reported Return on Equity (ROE)

Reported ROE remained relatively stable, fluctuating between 29.74% and 35.68% throughout the period. It began at 29.85% in 2021, decreased slightly to 29.74% in 2022, increased to 35.68% in 2023, decreased to 30.64% in 2024, and then increased to 34.01% in 2025. This suggests consistent profitability relative to shareowners’ equity as conventionally measured.

Adjusted Return on Equity (ROE)

Adjusted ROE began at a very high level of 681.67% in 2021, but subsequent values are unavailable for 2022, 2023, 2024, and 2025. The initial value is significantly higher than the reported ROE, indicating a substantial difference between the two calculations. The absence of further adjusted ROE figures prevents any trend analysis. The negative trend in adjusted shareowners’ equity suggests that the adjustments are significantly reducing the equity base, which would likely result in a highly volatile, and potentially negative, adjusted ROE if calculated for subsequent years.

The divergence between reported and adjusted equity, and consequently ROE, warrants further investigation. The substantial decline in adjusted equity suggests the adjustments are related to items that significantly reduce the book value of equity, potentially including intangible asset impairments or other non-cash charges. The lack of continued adjusted ROE calculations hinders a complete understanding of the impact of these adjustments on overall profitability.

Analysis of the presented financial information reveals distinct trends in reported and adjusted return on assets (ROA) over the five-year period. While reported ROA demonstrates fluctuations, adjusted ROA consistently exhibits a stronger performance and a more stable trajectory.

Reported ROA

Reported ROA began at 8.60% in 2021, decreased to 7.97% in 2022, and then increased to 9.20% in 2023. A subsequent decline to 7.59% was observed in 2024, followed by a further decrease to 6.42% in 2025. This indicates a generally downward trend in profitability relative to reported total assets over the period.

Adjusted ROA

Adjusted ROA started at 11.86% in 2021, decreased to 11.09% in 2022, and then rose significantly to 13.01% in 2023. It experienced a decrease to 10.69% in 2024, and a slight decrease to 10.37% in 2025. Despite these fluctuations, adjusted ROA remained consistently higher than reported ROA throughout the entire period, suggesting that adjustments to total assets significantly impact profitability metrics.

Net Income Trends

Reported net income attributable to Honeywell decreased from US$5,542 million in 2021 to US$4,966 million in 2022, increased to US$5,658 million in 2023 and US$5,705 million in 2024, before decreasing to US$4,729 million in 2025. Adjusted net income mirrored the reported net income trend through 2024, but showed an increase to US$5,453 million in 2025, indicating the adjustments impacted net income in the final year.

Asset Trends

Reported total assets decreased from US$64,470 million in 2021 to US$62,275 million in 2022 and US$61,525 million in 2023, then increased substantially to US$75,196 million in 2024, before decreasing slightly to US$73,681 million in 2025. Adjusted total assets followed a similar pattern of decline through 2023, followed by a significant increase in 2024 and a slight decrease in 2025, but at lower absolute values. The difference between reported and adjusted total assets grew over time, suggesting a substantial impact from the adjustments made to the asset base.

ROA Discrepancy

The consistent difference between reported and adjusted ROA highlights the impact of the asset adjustments. The adjustments appear to remove items from the asset base, resulting in a higher ROA calculation. The magnitude of this difference suggests that a significant portion of the reported total assets may not be contributing to profitability as measured by net income. The increasing gap between the two ROA figures over the period warrants further investigation into the nature of these adjustments.

In conclusion, while reported ROA experienced volatility, adjusted ROA demonstrated a more robust and stable performance. The substantial difference between the two metrics underscores the importance of considering asset adjustments when evaluating the company’s profitability.