Honeywell's Cote Discusses Strategy, U.S Budget on Bloomberg's Street Smart
April 28, 2014
Honeywell Chairman and CEO Dave Cote appeared on Bloomberg’s Street Smart following distribution of the company’s first quarter earnings for 2014. Among other topics, Cote focused on the company’s five-year plan and the President’s budget during his interview with host Trish Regan.
When asked about Honeywell’s newly released five-year plan:
“The first priority is to have high-quality earnings,” Cote explained. “Our free cash flow conversion is about 125% in this decade. So it is a big number. That means over the next five years, we have $30 billion to $35 billion to find something to do with other than just let it build on the balance sheet. We talked about a 50/50 split at this point. 50% would go to increasing dividends… the other 50% is investment in the businesses, including M&A. We have developed a really good reputation to be good at acquisition.”
Cote also commented on the President’s budget.
“It still doesn't address the fundamental issue that we have. Over the next 20 years -- they always want to look at a 10-year basis. This is a 20 to 30-your problem -- The baby boomers are retiring. We will drive Medicaid and Medicare spending through the roof. No matter how much we control inflation, it's going to happen. That is the thing that needs to be discussed and that this demographic freight train has been known about for decades. It is not a new development. And nobody is talking about -- that needs to get sorted out.”