Honeywell International Inc. (NASDAQ:HON)

Current Tax Expense

The current tax expense exhibited an overall increasing trend over the five-year period, rising from US$1322 million in 2020 to US$1706 million in 2024. There was a notable increase from 2020 to 2022, peaking at US$1592 million, followed by a decrease in 2023 to US$1334 million, and then a significant rise again in 2024.

Deferred Tax Expense (Benefit)

The deferred tax expense (benefit) showed considerable volatility throughout the years. In 2020 and 2022, it reported a benefit (negative values), with amounts of -US$175 million and -US$180 million respectively. However, in 2021 and 2023, it shifted to expenses (positive values) of US$178 million and US$153 million respectively. In 2024, it again presented a benefit of -US$233 million, marking the largest magnitude of deferred tax benefit in the period analyzed.

Total Tax Expense

The total tax expense, which combines current and deferred amounts, showed less volatility compared to the deferred tax component alone but still exhibited fluctuations. It increased from US$1147 million in 2020 to a peak of US$1625 million in 2021, then declined to US$1412 million in 2022. Subsequently, it increased again in 2023 to US$1487 million before a slight decrease to US$1473 million in 2024. Overall, total tax expense remained within a relatively narrow range after 2021.

Insights

The fluctuations in deferred tax expense (benefit) contributed notably to the variations in total tax expense across the years. The presence of both deferred tax benefits and expenses in alternating years suggests the impact of timing differences and tax planning strategies on the financial statements. The consistent increase in current tax expense, despite some fluctuations, indicates rising taxable income or changes in tax rates or jurisdictions. The total tax expense, being more stable relative to individual components, portrays how deferred tax items offset some of the variability in current taxes.

The analysis of the annual income tax-related financial data reveals several trends over the five-year period under review.

U.S. Federal Statutory Income Tax Rate

The U.S. federal statutory income tax rate remained stable at 21% throughout the entire period, indicating no change in the statutory tax environment at the federal level.

Taxes on Non-U.S. Earnings

This item exhibited fluctuations, starting from a negative impact of -0.8% in 2020, increasing to -1.4% in 2021, decreasing significantly in 2022 to -0.4%, again falling to -2% in 2023, and then rebounding to -0.5% in 2024. The variability suggests changing profitability or tax environments for non-U.S. operations.

U.S. State Income Taxes

The state income tax percentage increased slightly from 1.3% in 2020 to 1.5% in 2021, then declined to 1.4% in 2022, followed by a sharper reduction to 0.5% in 2023, before rising again to 0.9% in 2024. This pattern indicates moderate variation in state-level tax impacts.

Reserves for Tax Contingencies

This line item showed notable volatility, starting with a negative 2.6% in 2020, shifting to a positive 2.2% in 2021, maintaining a positive 1.1% in 2022, rising to a peak of 3.4% in 2023, and then decreasing to 1.4% in 2024. The data reflect considerable changes in the provisions set aside for uncertain tax liabilities.

Employee Stock Compensation

Employee stock compensation tax impacts were negative across all periods, fluctuating from -1.2% in 2020 to -0.7% in 2021, then moving to -0.9% in 2022, lessening to -0.3% in 2023, and finally returning to -0.7% in 2024. This category consistently reduced the effective tax rate but with varying magnitude.

Reduction of Certain Receivables

Reported only in 2020 at 2%, this item was not present in subsequent years, suggesting a one-time effect or discontinuation of this tax benefit or adjustment.

Restructuring

Data available from 2021 onward show a negative tax impact of -1.4% in 2021, a positive 0.7% in 2022, no reported impact in 2023, and a small negative effect of -0.3% in 2024. These changes indicate sporadic tax consequences related to restructuring activities.

U.S. Federal Tax Credits

This item increased in magnitude as a negative percentage reducing tax liability: from -0.6% in 2021, to -0.9% in 2022, further to -1.6% in 2023, and -2% in 2024. This trend demonstrates an increasing utilization or availability of federal tax credits over time.

U.S. Valuation Allowance

The valuation allowance fluctuated, starting near zero at 0.1% in 2020, rising sharply to 2% in 2021, then dipping to -0.2% in 2022, -0.1% in 2023, and back up to 0.9% in 2024. The varying allowance suggests adjustments in deferred tax asset realizability assessments.

All Other Items, Net

These items were negative or negligible, ranging from -0.7% in 2020 to -0.1% in 2024, with a small positive 0.3% in 2022. The overall minor fluctuation implies limited aggregate impact from miscellaneous items.

Effective Income Tax Rate

The effective income tax rate increased from 19.1% in 2020 to a peak of 22.5% in 2021, followed by a slight decline to 22.1% in 2022, then continuing downward to 20.8% in 2023 and 20.4% in 2024. The effective tax rate remained below the statutory federal rate, reflecting the combined influences of the various adjustments, credits, and geographic tax differentials detailed above.

The analysis of the financial data reveals several notable trends and changes over the examined periods.

Postretirement Benefits Other Than Pensions

There is a consistent decline in the liabilities related to postretirement benefits other than pensions, decreasing steadily from 85 million USD in 2020 to 50 million USD in 2024.

Asbestos and Environmental

This category shows fluctuation, starting at 508 million USD in 2020, dipping slightly in 2021, rising to 545 million USD in 2022, and then decreasing significantly to 373 million USD by 2024.

Capitalized Research and Development

This item is absent prior to 2023, but appears at 582 million USD in 2023 and increases further to 947 million USD in 2024, indicating a substantial increase in capitalized R&D investment.

Employee Compensation and Benefits

A general downward trend is observed, starting at 180 million USD in 2020 and declining to 143 million USD in 2024, with a minor increase noted in 2023.

Lease Liabilities

Lease liabilities exhibit a steady increase over the years, from 197 million USD in 2020 to 263 million USD in 2024, reflecting possibly increased leasing activities or re-measurement adjustments.

Other Accruals and Reserves

This category shows notable volatility, rising from 110 million USD in 2020 to 396 million USD in 2024, with a peak in 2022 at 363 million USD, a drop in 2023, and a sharp rise again in 2024.

Net Operating Losses

Net operating losses steadily decrease from 779 million USD in 2020 to 618 million USD in 2024, suggesting an improving operational performance or utilization of tax loss carryforwards.

Capital Loss Carryover and Outside Basis Differences

Values appear from 2021 onwards, initially at 151 million USD and increasing significantly to 467 million USD in 2024, indicating an accumulation of tax attributes in this category.

Tax Credit Carryforwards and Other Attributes

This category decreases between 2020 and 2022 from 219 million USD to 163 million USD, but sharply increases to 420 million USD in 2023 before declining to 269 million USD in 2024.

Gross Deferred Tax Assets

A consistent upward trend is observed, increasing from 2,078 million USD in 2020 to 3,526 million USD in 2024, reflecting growth in tax-advantaged temporary differences or carryforwards.

Valuation Allowance

Negative valuation allowances grow more pronounced from -766 million USD in 2020 to approximately -1,253 million USD in 2024, particularly expanding in 2023, which may indicate increased conservative provisions against deferred tax assets.

Deferred Tax Assets

Deferred tax assets show a steady increase from 1,312 million USD in 2020 to 2,273 million USD in 2024, consistent with increasing gross deferred tax assets net of valuation allowances.

Deferred Revenue

Reported only in 2024 as a negative 244 million USD, potentially indicating recognition or restatement of deferred revenue liabilities.

Pension

Pension liabilities have increased in absolute value from -548 million USD in 2020 to -1,485 million USD in 2024, suggesting growing pension obligations or funding deficits.

Property, Plant and Equipment

This asset category exhibits variability with no consistent trend, moving from -437 million USD in 2020 to -371 million USD in 2024, including a notable decrease in 2022 followed by a rebound.

Right-of-Use Asset

Right-of-use assets related to leasing rose from -184 million USD in 2020 to -242 million USD in 2024, reflecting increased recognition of leased assets.

Intangibles

Intangible assets show a decreasing trend over time, moving from -898 million USD in 2020 to -679 million USD in 2024, indicating amortization or impairments.

Unremitted Earnings of Foreign Subsidiaries

Liabilities related to unremitted foreign earnings deepen from -398 million USD in 2020 to -516 million USD in 2024, with a peak at -542 million in 2023.

Other Asset Basis Differences

There is an increase followed by a decrease, starting at -169 million USD in 2020, moving to -369 million USD in 2023, then improving to -285 million USD in 2024.

Other

This minor category fluctuates around zero with minimal absolute values through the years, indicating a relatively insignificant impact on the total.

Deferred Tax Liabilities

Deferred tax liabilities consistently increase, from -2,665 million USD in 2020 to -3,822 million USD in 2024, indicating growing taxable temporary differences.

Net Deferred Tax Asset (Liability)

The net deferred tax position remains negative throughout the period, ranging from -1,353 million USD in 2020 to -1,549 million USD in 2024, with fluctuations but no clear positive trend.

Deferred Tax Assets

There is a clear downward trend in deferred tax assets over the five-year period. Starting from 760 million USD in 2020, the value declines consistently each year, reaching 238 million USD by the end of 2024. This represents a significant reduction, indicating a decreasing recognition or realization potential of deferred tax assets over time.

Deferred Tax Liabilities

Deferred tax liabilities show some fluctuation, but generally a declining pattern over the observed period. After increasing from 2113 million USD in 2020 to a peak of 2364 million USD in 2021, the liabilities decrease gradually to 1787 million USD by the end of 2024. This suggests a reduction in the future tax obligations associated with temporary differences over these years.

Overall Insight

The contrasting trends in deferred tax assets and liabilities indicate a shifting tax position. Deferred tax assets are diminishing more sharply, while liabilities peaked early but then steadily decreased. This could reflect changes in tax planning strategies, effective tax rates, or evolving temporary differences. The net deferred tax position likely becomes less favorable as assets decrease significantly relative to liabilities.

The financial data exhibits a series of fluctuations across reported and adjusted values for total assets, liabilities, equity, and net income over the five-year period.

Total Assets

The reported total assets show a slight declining trend from 64,586 million USD in 2020 to 61,525 million USD in 2023, followed by a significant increase to 75,196 million USD in 2024. The adjusted total assets mirror this pattern closely, decreasing from 63,826 million USD in 2020 to 61,133 million USD in 2023, before rising sharply to 74,958 million USD in 2024. This suggests a substantial asset growth event or revaluation in 2024 after a period of relative stability and moderate decline.

Total Liabilities

Both reported and adjusted total liabilities describe a generally downward to steady trend from 2020 through 2023, with reported liabilities decreasing from 46,789 million USD to 45,084 million USD and adjusted liabilities from 44,676 million USD to 42,990 million USD. However, in 2024, liabilities increase noticeably to 56,035 million USD (reported) and 54,248 million USD (adjusted), consistent with the asset growth, indicating possible new borrowings or increased obligations accompanying the asset expansion.

Shareowners’ Equity

Reported equity declines from 17,549 million USD in 2020 to 15,856 million USD in 2023, then rises again to 18,619 million USD in 2024. The adjusted equity shows a stronger upward bias, starting at 18,902 million USD in 2020, increasing to 20,443 million USD in 2021, followed by declines to 17,558 million USD in 2023, and rebounding to 20,168 million USD in 2024. This pattern aligns with the changes observed in assets and liabilities and may reflect equity adjustments related to deferred income tax considerations or other accounting treatments.

Net Income Attributable to Honeywell

Reported net income steadily grows from 4,779 million USD in 2020 to 5,658 million USD in 2023, with a modest increase to 5,705 million USD in 2024. The adjusted net income fluctuates more, peaking at 5,720 million USD in 2021, dropping to 4,786 million USD in 2022, rising again to 5,811 million USD in 2023, and then decreasing to 5,472 million USD in 2024. This variability in the adjusted net income suggests ongoing impacts from tax adjustments or accounting estimates that affect profitability metrics on an after-tax basis.

Overall, the data indicates a period of relative stability or slight decline across assets, equity, and liabilities until 2023, followed by a marked increase in these accounts in 2024. Concurrently, net income shows a generally positive trend with some volatility in adjusted figures. The divergence and convergence between reported and adjusted values highlight the significance of deferred tax and income tax adjustments in the company’s financial reporting over the analyzed timeline.

The data from the given periods reveals several noteworthy trends in the company's profitability, efficiency, leverage, and returns.

Net Profit Margin

The reported net profit margin shows an overall fluctuation, starting at 14.64% in 2020, increasing to a peak of 16.11% in 2021, then declining to 14% in 2022 before climbing again to 15.43% in 2023 and slightly decreasing to 14.82% in 2024. The adjusted net profit margin follows a similar pattern but generally maintains slightly lower values compared to the reported figures, with a peak of 16.63% in 2021 and reaching 14.21% in 2024. This indicates some variability in profitability with generally moderate margins over the years.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios exhibit an improvement from 0.51 in 2020 to a high of 0.60 in 2023, showing increased efficiency in utilizing assets to generate sales. However, there is a notable decline in 2024 back to 0.51, matching the initial level, suggesting a possible reduction in asset utilization efficiency in the latest period.

Financial Leverage

The reported financial leverage ratio declines from 3.68 in 2020 to 3.47 in 2021 but then rises steadily to 4.04 in 2024, indicating an increasing reliance on debt or other liabilities to finance assets in the latter years. The adjusted financial leverage mirrors this trend, beginning at 3.38 in 2020, dropping to 3.13 in 2021, then rising back to 3.72 by 2024. This upward trend in leverage could suggest a strategic decision to increase financial risk or opportunistic financing.

Return on Equity (ROE)

Reported ROE shows a general upward trend from 27.23% in 2020 to a peak of 35.68% in 2023 before declining to 30.64% in 2024. Adjusted ROE follows a similar pattern, rising from 24.36% in 2020 to 33.1% in 2023 and then decreasing to 27.13% in the latest year. The increase in ROE up to 2023, coupled with the rise in financial leverage, suggests improved profitability amplified by higher leverage, while the subsequent decline may reflect changing profitability or asset efficiency dynamics.

Return on Assets (ROA)

Reported ROA progresses from 7.4% in 2020 to 9.2% in 2023 before falling to 7.59% in 2024. Adjusted ROA similarly ascends from 7.21% to 9.51% in 2023 but also drops to 7.3% afterward. The ROA pattern reflects increased effectiveness in asset earnings generation until 2023 and a decrease in 2024, aligning with the observed decline in asset turnover for that year.

In summary, the data indicate that up to 2023, the company improved profitability and returns, driven partly by increasing leverage and better asset utilization. However, in 2024, a decline is evident across multiple metrics, including asset turnover, ROA, net profit margin, and ROE, suggesting potential challenges in maintaining the earlier performance gains. The increased financial leverage over the years highlights a rising financial risk profile which may impact future stability depending on market conditions and profitability recovery.

The financial data reveals several notable trends regarding the company's net income and profitability margins over the five-year period.

Reported net income attributable to Honeywell

The reported net income shows a generally positive trajectory with some fluctuations. It increased from 4,779 million USD in 2020 to 5,542 million USD in 2021, indicating strong growth. However, there was a decline to 4,966 million USD in 2022, followed by a recovery in 2023 reaching 5,658 million USD, and a slight increase to 5,705 million USD in 2024. Overall, the trend suggests resilience despite a dip in 2022.

Adjusted net income attributable to Honeywell

Adjusted net income exhibited a somewhat volatile pattern. It rose from 4,604 million USD in 2020 to a peak of 5,720 million USD in 2021, then dropped significantly to 4,786 million USD in 2022. Afterward, it bounced back to 5,811 million USD in 2023 but slightly decreased to 5,472 million USD in 2024. This fluctuation indicates sensitivity to factors addressed in the adjustment process, with a notable dip in 2022.

Reported net profit margin

The reported net profit margin showed variability within a moderate range. It increased from 14.64% in 2020 to a high of 16.11% in 2021, then declined to 14.00% in 2022. There was a recovery to 15.43% in 2023, followed by a decrease to 14.82% in 2024. This pattern reflects changes in profitability relative to revenue, with a pronounced peak in 2021.

Adjusted net profit margin

The adjusted net profit margin mirrored the reported margin's trend but with slightly different levels. It rose from 14.11% in 2020 to 16.63% in 2021, decreased to 13.49% in 2022, increased again to 15.85% in 2023, and then dropped to 14.21% in 2024. The adjusted margin shows a similar volatility and suggests that adjustments had a measurable impact on profitability metrics.

In summary, the company's net income and profit margins experienced a peak around 2021, followed by a decline in 2022, and a partial recovery thereafter. Both reported and adjusted figures demonstrate this cyclical behavior, highlighting 2022 as a challenging year. The margins’ fluctuations indicate variability in operational efficiency or cost management during this period, with adjusted figures reflecting underlying business performance after tax-related adjustments.

Total Assets

The reported total assets remained relatively stable from 2020 to 2023, declining slightly from 64,586 million USD at the end of 2020 to 61,525 million USD at the end of 2023. However, there was a significant increase in 2024, with reported total assets rising sharply to 75,196 million USD. The adjusted total assets followed a similar pattern, showing stability and slight decline between 2020 and 2023, followed by a notable increase to 74,958 million USD in 2024. This indicates a sudden expansion in asset base in the most recent year.

Total Asset Turnover

The reported total asset turnover ratio demonstrated an improving trend from 0.51 in 2020 to a peak of 0.60 in 2023, suggesting increased efficiency in using assets to generate revenue during this period. However, in 2024, the ratio decreased back to 0.51, indicating a reduction in asset utilization efficiency despite the significant asset base increase. The adjusted total asset turnover ratio mirrored this trend precisely, confirming consistency in the adjustment methodology and underlying operational performance.

Overall Insights

The data reflects a period of stable asset levels and improving turnover efficiency from 2020 through 2023, suggesting gradual operational improvements. The sharp increase in total assets in 2024, accompanied by a drop in turnover ratio to the 2020 level, suggests that the recent asset growth has not yet translated into proportional revenue generation efficiency. This may point to recent investments or acquisitions that have expanded the asset base but require time to contribute to revenue effectively.

The financial data reveals notable trends across reported and adjusted figures for total assets, shareowners’ equity, and financial leverage over the five-year period from 2020 to 2024.

Total Assets

Reported total assets display a gradual decline from 64,586 million US dollars in 2020 to 61,525 million in 2023, followed by a sharp increase to 75,196 million in 2024. Adjusted total assets follow a similar pattern, decreasing from 63,826 million in 2020 to 61,133 million in 2023, then sharply rising to 74,958 million in 2024. This suggests a significant expansion or acquisition event in 2024 that positively impacted asset levels.

Shareowners’ Equity

Reported total Honeywell shareowners’ equity increased from 17,549 million in 2020 to a peak of 18,569 million in 2021, then consistently declined to 15,856 million by 2023 before recovering to 18,619 million in 2024. Adjusted equity follows a comparable trend, with values rising from 18,902 million in 2020 to 20,443 million in 2021, subsequently decreasing to 17,558 million in 2023 and rebounding to 20,168 million in 2024. This indicates an erosion of equity during 2022 and 2023, potentially due to operational or market challenges, with a restoration in equity strength in 2024.

Financial Leverage

Reported financial leverage ratios reveal a fluctuating but generally increasing trend, moving from 3.68 in 2020 to 3.47 in 2021, increasing to 3.73 in 2022, and further rising to 4.04 in 2024. Adjusted financial leverage shows a similar pattern at lower absolute levels, declining from 3.38 in 2020 to 3.13 in 2021, then increasing to 3.72 in 2024. The rising leverage ratios, particularly approaching and exceeding 4.0 in the reported data, reflect an increasing reliance on debt relative to equity, highlighting a possible strategy of leveraging the balance sheet more aggressively in recent years, especially in 2024.

Overall, the data indicates a period of asset contraction and equity decline during 2022 and 2023, followed by significant recovery and growth in 2024. The increase in financial leverage corresponds with this recovery, suggesting that growth was partly supported through increased borrowing or liabilities. The adjusted figures consistently present a slightly more conservative view of leverage and equity levels compared to reported figures, implying adjustments that reduce equity or assets moderately. The substantial uptick in assets and equity in 2024 paired with higher leverage suggests strategic financial maneuvers aimed at scaling or restructuring the balance sheet.

The data reveals several notable trends in financial performance over the five-year period. Reported net income attributable to Honeywell increased steadily from 2020 to 2021, peaking in 2024 at 5,705 million US dollars after a dip in 2022. Adjusted net income follows a similar pattern but displays slightly higher volatility, with a notable peak in 2021 at 5,720 million and a subsequent decline in 2022, before rising again in 2023 and then tapering slightly in 2024.

Total shareowners’ equity, both reported and adjusted, shows a downward trend between 2021 and 2023 but rebounds significantly in 2024. Reported equity decreased from 18,569 million in 2021 to 15,856 million in 2023, then recovered to 18,619 million in 2024. Adjusted equity mirrors this pattern with values declining from 20,443 million in 2021 to 17,558 million in 2023, followed by an increase to 20,168 million in 2024.

Return on equity (ROE) metrics illustrate efficiency in generating profits from shareholders’ equity. Reported ROE increased consistently from 27.23% in 2020 to a peak of 35.68% in 2023, before declining to 30.64% in 2024. Adjusted ROE follows a similar trajectory but remains consistently lower than the reported ROE. The adjusted ROE rose from 24.36% in 2020 to 33.1% in 2023, then decreased to 27.13% in 2024.

Net Income Trends

Reported net income showed growth with a slight setback in 2022; adjusted net income exhibited more variability but generally aligned with reported figures.

Equity Levels

Both reported and adjusted total shareowners’ equity declined during the middle years before recovering close to or above previous highs in 2024.

Profitability (ROE)

ROE improved steadily until 2023, indicating increasing profitability relative to equity, followed by a decrease in 2024 for both reported and adjusted measures.

The financial data exhibits a variety of trends related to reported and adjusted figures over the five-year period.

Net Income Trends

The reported net income attributable to the company increased from 4,779 million US dollars in 2020 to 5,542 million in 2021, then decreased to 4,966 million in 2022. It subsequently rose again to 5,658 million in 2023, followed by a marginal increase to 5,705 million in 2024. Adjusted net income showed a similar but less volatile pattern: increasing substantially from 4,604 million in 2020 to 5,720 million in 2021, dropping to 4,786 million in 2022, rising to 5,811 million in 2023, and then declining to 5,472 million in 2024. Overall, both reported and adjusted net income demonstrate variability with generally higher outcomes in the later years, particularly around 2021 and 2023.

Total Assets

The reported total assets slightly decreased from 64,586 million US dollars in 2020 to 61,525 million in 2023 before sharply increasing to 75,196 million in 2024. The adjusted total assets followed a similar trajectory, declining from 63,826 million in 2020 to 61,133 million in 2023 and then increasing significantly to 74,958 million in 2024. This marked increase in total assets in the final year suggests a significant expansion or acquisition activity taking place.

Return on Assets (ROA)

Reported ROA rose from 7.4% in 2020 to a peak of 9.2% in 2023, before dropping to 7.59% in 2024. Adjusted ROA followed a comparable trend: starting at 7.21% in 2020, increasing to 9.51% in 2023, and then declining to 7.3% in 2024. The ROA figures indicate periods of improved profitability relative to assets, particularly in 2023, but a decrease in efficiency in the most recent year.

Comparisons Between Reported and Adjusted Figures

The adjusted figures for net income and ROA generally depict a smoother trend than the reported figures, with adjusted net income showing slightly higher peaks and somewhat less pronounced declines. Adjusted total assets are consistently lower than reported assets but follow very similar trends, including the sharp increase in 2024. The adjustments appear to moderate some fluctuations, likely due to the exclusion of certain items, but overall the patterns remain aligned between the reported and adjusted data sets.