Honeywell 4Q16 Earnings Call Notes

Honeywell International’s (HON) CEO Dave Cote on Q4 2016 Results

Net exporter

We’re a net exporter, so on balance it would benefit us from a tax standpoint. When it comes to repatriation, it depends on what the final deal is. If there is really high tax that’s put on in, well, that makes it a lot less interesting. So, we’ll have to judge it when we see it.

Animal spirits

“I would say, it’s changed become more positive. I’ve really been impress to see that improvement in animal spirits, small company CEOs, big company CEOs, a small banks that I’ve talked to, really quite surprising, so the animal spirits are real, there is no doubt about it. And hopefully if we can just get a few specs here with some actual actions that could be enough to really start turn the herd. I don’t think it takes us to crazy levels, the GDP growth and if it did that would be a problem. But I think we are going to see an improvement here, not ready to bid on it, we’re going to continue to plan for a slow growth global economy, but it still feels more positive than it has in a while coming off of worst recession since the great depression.”

A trade war is bad economically

” you have to be worried about a trade war. If it gets to that point, it’s not going to be bad just for trade, but it’s going to be bad economically, it’s kind of tough to be in economic island now especially if you are the number economy in the world. So it depends on how all that gets handled. And yes, of course it’s a concern for us.”

Better than it’s been in a long time

“Well, I do think and I’ve said this for several years that I don’t economist also really understand what happens after a severe financial recession, it was true that 30s and it was true of this one, and hit overall confidence was just really, really strong, really hard, and when you have the whole herds thinking about slow global growth and that’s just the way it is and that’s just the way it’s going to work, well, it becomes self-reinforcing because we all act that way. If you take the look at the conditions for recovery, it actually pretty good for while, they were been talking for number of years about how good consumer balance sheets were in the U.S. You look at capacity utilization, it’s in good shape, unemployment down 4.5 or so percent, you can argue under employment, but still employment in good shape, our bank balance sheet in the best condition, they’ve ever been, most companies balance sheets really good shape, and I really think it just need to spark. And the election assuming that we – the right things gets follow through and we don’t end up with some unintended consequences provide that sparks and I’m really encourage by what I’m seeing. Now it’s got to turn into something, but right now the feelings are better than I’ve seen them in long time and that could be enough to get the herd moving in the direction of saying, I’d better not miss this moment as oppose to just hunker down and keep waiting it out.”

Cote leaving

“Thanks. After 15 years at the helm, this is my last earnings call as some of you pointed out. It’s been an honor to lead the Honeywell team for this many years. And all of us are proud of what we’ve accomplished. I’ll have to say we are even more excited about what’s coming. Our outperformance will continue because we’ve invested heavily in people, process and portfolio to do the seed planting that we’ve always done.”