Industrial goods manufacturer, Honeywell International Inc.HON secured the largest energy savings performance contract (ESPC) in the history of the U.S. Air Force. The company was awarded a $243 million facility modernization project at Tinker Air Force Base in Oklahoma City. The project will be jointly undertaken by Tinker, Honeywell, the Defense Logistics Agency Energy, Headquarters Air Force Materiel Command and the Air Force Civil Engineer Center.
The modernization endeavor is likely to reduce energy consumption by 23% and save $20.5 million in energy and operational costs each year. The project, funded through a 21-year ESPC awarded by the Defense Logistics Agency Energy, will result in $626 million in energy and operational cost savings on completion. On its part, the Air Force will not need any upfront capital investments for the project and will fund the requisite upgrades through annual energy and operational savings.
The contract primarily focuses on upgrading infrastructure and industrial processes across the Tinker Air Force Base to make it more energy efficient and productive. This will, in turn, make it more competitive in the private sector for aircraft maintenance work. Honeywell will also integrate new buildings within the facility to its Enterprise Buildings Integrator (EBI) management system that manages and controls heating, cooling and metering equipment. Subsequently, the company will offer continued maintenance services to the facility.
With such prime contracts, Honeywell aims to gain a competitive edge over its rivals and augment its revenues. Based in Morris Township, NJ, Honeywell manufactures a wide range of aerospace products and services, including control, sensing and security technologies for buildings, homes and industry. It also produces turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy efficient products and solutions for homes and business.
The company outperformed the Diversified Operations industry in the last three months with an average return of 7.4% compared with just 0.7% gain for the latter. We remain impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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