Comfortable as a Conglomerate, Honeywell Buys More Companies

Honeywell's 1Q16: Why Investors May Stick with the Company

(Continued from Prior Part)

Honeywell buys three companies in 1Q16

Honeywell (HON) maintained its acquisition momentum from last year in the first quarter of 2016. The company has a strong ability to make acquisitions, with liquid cash reserves of ~$4.4 billion, or around 8.9% of its total assets. The company’s cash holdings were a massive $7.0 billion. or 15.3% of total assets. at the close of fiscal 2014. In fiscal 2015, the company made $5.5 billion worth of acquisitions, financed primarily through debt and partially through cash, which brought down its cash holdings to $5.4 billion, or 11% of its total assets. The company’s cash position fell further due to the acquisitions, in which ~$1 billion in capital was deployed.

Xtralis

Honeywell completed the acquisition of Xtralis, a Dublin-based smoke-detection and video security company, on April 1, 2016. Xtralis is a pioneer in providing smoke detection technologies to customers with requirements to protect high-value assets, such as museums and historical buildings. The company’s aspirating smoke detection solutions also protect several Fortune 500 companies by providing early warnings to minimize facility damages and potential injuries. The integration of Xtralis in the Honeywell’s security and fire business is a strategic fit for Honeywell, with the video analytics business expected to complement software capabilities within the unit. Honeywell acquired Xtralis for $480 million from the target’s private equity majority shareholders, Pacific Equity Partners and Blum Capital Partners.

RSI Video Technologies

Honeywell acquired privately held intrusion detection provider RSI Technologies on March 1, 2016, for $123 million. RSI’s battery-powered motion detectors have built-in cameras that transmit high-quality videos over the cloud to central monitoring stations. These systems are chiefly used in commercial and residential security applications. RSI will also be integrated into the security and fire business within the Automation and Control Solutions unit.

Movilizer

Honeywell acquired a German company named Movilizer for an undisclosed sum on March 1, 2016. Movilizer’s cloud-based platforms are used by remote workers performing out-of-office service, maintenance, sales, and distribution. Movilizer has more than 200 multinational customers in over 30 countries. It was named a 2015 “Cool vendor in Mobile App Development” by Gartner, a leading information technology advisory company.

Investors interested in trading in the industrials sector could look into the Industrial Select Sector SPDR ETF (XLI) and the iShares US Industrials ETF (IYJ). Major holdings in IYJ include Honeywell (HON) at 3.3%, 3M (MMM) at 3.9%, and General Electric (GE) at 11.5%.

Browse this series on Market Realist:

• Part 1 - Earnings: How Does Honeywell Compare with Aerospace Competitors?

• Part 2 - Honeywell’s Earnings: Defy Estimates despite Lower Margins

• Part 3 - Honeywell’s Aerospace Segment: Did It Meet Expectations?