Honeywell to use free cash flow and cash from spin-offs to repay debt

By Devika Patel

Knoxville, Tenn., Oct. 10 – Honeywell International Inc. will use excess cash from planned spin-offs of three businesses, along with its 2018 free cash flow, to pay down debt.

The company plans to spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into two stand-alone, publicly-traded companies.

The spin offs will result in dividends of about $17 billion.

“Free cash flow is expected to be up about 18% year to date,” president and chief executive officer Darius Adamczyk said on the company’s conference call announcing planned portfolio changes on Tuesday.

“We expect the spin-offs will result in an approximate $3 billion dividend, which we will largely apportion to deleveraging to maintain our Moody’s A2 credit rating, share repurchases and potentially M&A should the proper opportunities arise.

“[The $3 billion aggregate dividends from the spin-offs] when coupled with the 2018 free cash flow we are targeting, we’ll have about $7 billion of cash to deploy in the U.S. in 2018 and $17 billion globally.

“[The $17 billion] will be apportioned amongst dividends, M&A, share repurchases and debt repayment,” he said.

The spin-offs are expected to be completed by the end of 2018.

Honeywell is a Morris Plains, N.J.-based technology and manufacturing company.

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