Honeywell Settles Lawsuit With Bombardier, Signs Technology Agreement; Cuts Q4, FY24 Outlook

Honeywell

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(RTTNews) - Honeywell International Inc. (HON) and Bombardier Inc. (BBD_B.TO, BBD_A.TO) have reached an agreement to settle a lawsuit regarding the cost of the jet engines Honeywell produces for the Montreal-based plane maker. Additionally, Honeywell has signed an agreement with Bombardier to provide advanced technology for current and future Bombardier aircraft in avionics, propulsion, and satellite communications technologies. Honeywell has also cut its outlook for the fourth quarter and fiscal year 2024.

In a separate press release, Bombardier confirmed that it has reached an agreement to settle its lawsuit against Honeywell that it initially filed in 2016 before the Superior Court of Québec. The settlement resolves the lawsuit and the pending request for appeal before the Supreme Court of Canada. The terms of the settlement agreement are confidential to both parties.

In 2016, Bombardier filed a lawsuit against Honeywell, claiming that Honeywell breached a contractual obligation to lower engine costs and provide the best prices, which Honeywell disputed. About a year ago, a Quebec Superior Court judge reportedly ruled that Honeywell must negotiate in good faith with Bombardier to reduce engine prices. Honeywell responded by filing a motion to appeal the decision.

Meanwhile, Honeywell said Monday that it signed a strategic agreement with Bombardier to provide advanced technology for current and future Bombardier aircraft in avionics, propulsion and satellite communications technologies.

Honeywell noted that the collaboration will advance new technology to enable a host of high-value upgrades for the installed Bombardier operator base, as well as lay innovative foundations for future aircraft. Honeywell estimates the value of this partnership to the company at $17 billion over its life.

As part of the partnership, Bombardier and Honeywell will work together to certify and offer JetWave X for the Bombardier Global and Challenger families of aircraft for both new production and aftermarket installations. Bombardier will also have access to Honeywell's full suite of next generation L-Band satellite communications products and antennas that will provide future safety services capabilities, Honeywell said.

While the commercial agreement may impact its financials in the short term, the company is confident it will create long-term value for its shareholders, Honeywell said.

Honeywell cut its fourth-quarter adjusted earnings per share outlook to a range of $2.26 - $2.36, from the previous outlook of $2.73 - $2.83. It also lowered quarterly sales forecast to a range of $9.8 billion - $10.0 billion, from its prior estimation of $10.2 billion to $10.4 billion. Analysts polled by Thomson Reuters expected the company to report earnings of $2.78 per share and revenues of $10.24 billion for the fourth quarter. Analysts' estimates typically exclude special items.

For fiscal year 2024, the company now expects adjusted earnings per share to be between $9.68 and $9.78 and sales of $38.2 billion - $38.4 billion. Previously, it expected annual adjusted earnings per share to be in the range of $10.15 - $10.25 and sales of $38.6 billion - $38.8 billion. Wall Street currently is looking for fiscal year 2024 earnings of $10.17 per share on annual revenues of $38.65 billion.