Q1 Honeywell International Earnings Call
Speaker 1: You.
Speaker 2: All.
Speaker 3: Thank you for standing by, and welcome to the Honeywell First Quarter 2023 Earnings Conference, Paul.
Speaker 3: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker 3: Please be advised that today's call is being recorded.
Speaker 3: I would now like to hand the call over to Sean Mecham, Vice President of Investor Relations. Please go ahead. Sean Mecham, Vice President of Investor Relations.
Speaker 4: Thank you, Liz. Good morning and welcome to Honeywell's first quarter 2023 Ernie's conference call.
Speaker 4: On the call with me today are Chairman and CEO Darius Adamczyk, Senior Vice President and Chief Financial Officer Greg Lewis, President and Chief Operating Officer Vimal Kapoor, Senior Vice President and General Counsel Ann Madden.
Speaker 4: This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website.
Speaker 4: From time to time, we post new information that may be of interest or material to our investors on this website.
Speaker 4: Our discussion today includes forward-looking statements that are based on our best view of the world and of the businesses as we see them today and are subject to risks and uncertainties including the ones described in our SEC filings.
Speaker 4: This morning we will review our financial results for the first quarter, share our guidance for the second quarter, and provide our update to our four-year 2023 outlook. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO , Darius Adomchuk.
Speaker 5: Thank you, Sean, and good morning, everyone. Let's begin on slide two. To open today's discussion, I'd like to take a moment to reflect on what our company has accomplished over the past seven years.
Speaker 5: We've consistently outperform against the market and our peers, doubling our share price over that timeframe. We undertook our radical transformation agenda dramatically simplifying and digitizing our operations and supply chain, resulting in much more contemporary company, which is a platform for growth. Our
Speaker 5: We launched a software business, Honeywell Connected Enterprise, that continues to generate not only value for customers, but accretive growth and profitability for Honeywell. We also reshaped the portfolio, spinning off three sizable businesses while selling to others and adding 16 successful acquisitions, reducing cyclicality and enhancing our margins.
Speaker 5: We reconfigured our strategic business groups to better align and market opportunities and customer needs. We built that culture of innovation that has led to significant new breakthrough technologies in an ultimately meaningfully stronger organic growth. Last and I'm not breaking in use here.
Speaker 5: This will be my last earnings call as the CEO of Honeywell. As Bimmel transitions into the CEO role in just over a month and I become executive chairman, it's a great example of the emphasis Honeywell places on leadership development and succession plan. With his decades of experience and success leading businesses.
Speaker 5: spending time of customers and strategic planning. Our future is bright. With that said, the present is pretty good too. Let's turn to slide three to discuss our first quarter performance.
Speaker 5: We delivered a very strong first quarter, exceeding the high end of our first quarter organic sales, segment margin, and adjusted earnings per share guides. Despite ongoing macroeconomic challenges, I'm pleased with our disciplined execution and differentiated technologies that enable us to overdeliver on our commitment to our
Speaker 5: billion dollars, up 6% year over year and 2% sequentially due to continued strength in aerospace and performance materials and technologies.
Speaker 5: Similar to last quarter, orders remain a very positive story in ARROW and PMT, up double digits organically in each, leading to 1% organic growth and 8% sequential growth overall in the first quarter, overcoming the difficult year-over-year constant HBT and SBS.
Speaker 5: We remain confident in our 2023 setup as we capitalize on the recovery and markets combined with solid operational execution.
Speaker 5: Our segment margin expanded 90 basis points year over year, led by robust expansion, safety and productivity solutions and annual building technologies. These are strategic pricing actions that enable us to remain ahead of the inflation curve and we benefit from our productivity actions.
Speaker 5: Excluding the net impact of the settlements as we discussed in our guide, pre-cash flow was 300 million in the first quarter in line with our expectations and operationally stronger than 2022.
Speaker 5: We deployed $1.6 billion to dividends, growth cap acts, and share repurchases, including opportunistically repurchasing, $3.5 million shares throughout the quarter, reducing our weighted average share count to $6.73 million. We also announced the acquisition of Compressor Control Corporation this week, which BIMO will provide more detail on shortly.
Speaker 5: Looking forward, I am encouraged by the strength we are seeing in many areas of our portfolio. We continue to execute our proven value creation framework, which is underpinned by our accelerator operating system. I am proud of our ability to over-deliver another quarter amidst a challenging external environment.
Speaker 5: Next, let's turn to Vimal to discuss some exciting recent announcements.
Speaker 6: Thank you, Darius, and good morning, everyone. Let's turn to slide four. In February , we announced that ExxonMobil will deploy Honeywell's carbon capture technology as its integrated complex in Baytown, Texas. The plant is expected to be the largest low-carbon hydrogen project in the world at land startup.
Speaker 6: and projected to produce around 1 billion cubic feet of low carbon hydrogen per day. Honeywell technology will enable the facility to capture more than 98% of the associated CO2 emission, which will be sequestered and permanently stored by ExxonMobil.
And <unk> our growth outlook is supported by robust demand for gas processing equipment, and we see increasing global demand for our sustainable technology solutions as legislation has improved project economics.
For the full year, another quarter of strong orders and backlog growth gives us confidence in our sales expectations, although more challenging comps moving forward I mean that the first quarter will likely be the largest in terms of organic growth.
We still expect sales for overall PMT to be up mid single digits for the year.
Segment margin and PMT should expand sequentially in the second quarter and throughout the second half leading to modest expansion for the year.
Looking ahead for Sps, we're expecting low double digit year over year declines in the second quarter as we see continued impact from the decline in investment for new warehouse capacity and short cycle demand softness in our products businesses.
However, we expect sales to grow sequentially from the first quarter led by strength in sensing and safety technologies the.
The aftermarket services portion of our <unk> business continues to grow at strong double digit rates and we anticipate this trend continuing throughout the year.
In our short cycle businesses, the demand outlook for 'twenty three is a bit more challenged than we initially anticipated and as a result, we now expect Sps to be down high single digits lower than our initial guidance last quarter of down mid single digits to high single digits.
However from a margin standpoint, we still anticipate another solid year for Sps as we see the results of our operational improvements in our sales mix continues to improve as evidenced in our first quarter results.
And building technologies, we are encouraged by our strong start to the year and the overall execution of the business for the second quarter sales should improve sequentially and lead to modest year over year growth as the supply chain environment continues to slowly improve allowing us to further work down the past due backlog, we built last year and are building.
Products business.
We expect we expect this robust backlog along with stimulus led.
Institutional demand in vertical such as airports healthcare and education to remain resilient throughout the year.
On the building solutions side, we are encouraged by the strong demand for our building services and we see our long cycle building solutions sales likely outpacing product sales in 2023.
For overall HPT, while we delivered high single digit growth for the first quarter comps get harder as we progress throughout the year given that the impacts from our supply constraints, where most acute in the first half of 'twenty, two and we maintain our full year sales outlook of low single digit organic growth. Although as we've said previously we will continue to monitor.
Our orders for Q2 and May have an upgrade opportunity after we complete the second quarter.
HPT remains well aligned to emerging secular themes of sustainability and energy efficiency and we see runway for growth acceleration as we exit 'twenty three.
For HPT segment margins, we still expect year over year expansion in 'twenty three as we maintain our momentum for the first quarter.
Turning to our other core guided metrics net below the line impact which is the difference between segment profit and income before tax is expected to be in the range of negative $130 million to negative $185 million in the second quarter and negative 500 million to negative $625 million for the full year.
This guidance includes a range of repositioning between 50 and $100 million for <unk> and $225 million to $325 million for the year as we continue to fund attractive restructuring projects and properly position Honeywell for the future.
We expect our adjusted effective tax rate to be roughly 21% in the second quarter and for the year and the average share count to be around 671 million shares in <unk> and approximately 670 million shares for the full year.
Earlier this week the board approved a $10 billion share repurchase authorization, providing us with continued flexibility on the best way to deploy our balance sheet.
As a result of these inputs are adjusted earnings per share guidance range is between $2 15.
And $2 25 for the second quarter up 2% to 7% year over year.
For full year EPS, we are upgrading the low end of our guidance range by <unk> 20.
And the high end of our guidance range by <unk>.
To a new range of $9 to $9 25 up 3% to 6%, reflecting our continued confidence that 2023 will be a strong growth year for Honeywell. Despite the year over year pension headwinds, excluding these headwinds EPS growth will be 9% to 12% up for the year.
We still expect to meet our original free cash flow guidance of $3 9 billion to $4 $3 billion in 2023 or five one to $5 5 billion, excluding the net impact of settlements.
So in total we executed a strong first quarter with outperformance across all guided metrics and are raising our full year 2023 organic sales growth segment margin and adjusted EPS guidance ranges.
Now, let's turn to slide eight and I'll hand, the call back to <unk> for some closing thoughts before we move to Q&A.
Thank you Greg in summary, we're off to a strong start to 2023 over delivering across the board versus our guidance, allowing us to meaningfully raise our full year guidance for organic growth segment margin and earnings per share are.
Our value creation framework is working.
The macro economy remains uncertain, but we continue to grow our record backlog and executing on it provides significant runway in the near term Honeywell.
Honeywell remains well positioned to outperform in any environment.
Thank you to all of our Honeywell colleagues, who continue to drive differentiated performance for our customers and shareholders with that Sean let's move to Q&A.
Thank you Darius.
<unk>, Greg them on and are now available to answer your questions. We ask that you. Please be mindful of others in the queue by only asking one question.
Liz Please open the line for Q&A.
Our first question comes from the line of Steve Tusa at J P. Morgan.
Good morning.
Good morning.
Congrats again demo.
On the change on your I guess your first call is going to be I guess, the second quarter, but on that front.
Give us some color on the sequential trends.
As far as earnings are concerned for.
The rest of the year of <unk> and <unk> just to kind of level set everybody. After this.
Pretty pretty strong first quarter.
Yes, so sequentially.
As Greg gave you the full year view, we do expect the growth momentum to continue even though at a slightly different rate part of it is we had a pretty.
Strong quarters in PMT and SPD prior year. So we are dealing with the tough comps.
So there is certainly going to be.
Sure.
Some revenue comparison issues there it will be very strong and SBS as we guided will be moderated performance over the rest of the year, so but overall.
We remain confident on our new guide of 3% to 6% organic growth rate.
And.
We'll work hard to perform on that Greg.
Greg if you want to add and I think you hit it I mean.
The second quarter.
It's going to be really nice results I think in and across the portfolio, albeit we're just coming off of four quarters of significantly strong double digit growth in PMT for four straight quarters HPT at high single digits for three years to four straight quarters.
So, but the underlying business performance going forward is going to be really healthy.
Sorry, so what's the what's the sequential performance for EPS should we think about that as kind of inline with normal seasonality or yes. When you look when you look at our quarter like how do we how do we think about where do you think of EPS for the rest of the year. When you look at EPS sales I mean, we're going to be roughly in line with.
Our normal kind of percentage of the year.
In those quarters, this year and last year, a little bit heavier in the back half.
This year, a little less so, but it's not going to look out of the norm.
What is the norm.
Just remind us because it's been a couple of years of what youre asking about any different so it depends on which one you're talking about yes.
EPS EPS, yes, we are.
Well I mean, when you look at it right now we're going to have a little bit of a heavier back.
Back ended the year fourth quarter will probably be bigger than second and third but the second and third will be within spitting distance of one another roundabout.
Okay, great. Thanks, a lot for the color.
Our next question comes from Julian Mitchell with Barclays.
Hi, good morning.
Maybe.
Good morning, just wanted to try and understand dialing in on the second quarter for a second so you've got a smaller than maybe normal sequential sales increase it.
It doesn't sound like that's anything sort of macro demand related it's maybe more on supply so any extra color on that.
And also it looks like Youre guiding for sort of sales to be up sequentially in Q2 firm wide somewhat flat margins. So is that just something around maybe aero OE mix.
Any thoughts on that please.
Yes, Julian if you actually look at the historical revenue sort of step from Q1 to Q2, it's very much in line with what we've done historically last year was a bit of anomaly given that it was more heavily impacted by some of our supply chain challenges, but if you look at this the historical graduation from Q1 to Q2.
It's very much consistent and in line with that if you look at the prior year averages, yes, no I mean, we've grown anywhere from 4% to 7% quarter to quarter sequentially. This guide has is rising like a 3% to 4% range.
Last year, we had a really big step up in PMT, it's a little bit less.
And in Q2, this year, but again very much within historical parameters.
And from a margin perspective again last year, we went down marginally from Q1 to Q2. So our guide is solidly within our Q1 performance I think I think at the top end were up 20 basis points at the bottom and we're down <unk>.
It's frankly right in the right in the norm So I.
I wouldn't read too much into it.
Thanks, very much and then just my follow up would be around the Sps piece.
Sort of updated thoughts on that second half outlook, particularly the the PSS portion kind of how are you looking at that in the second half on revenue versus warehouse.
Any change in your warehouse.
Both our sales assumptions for the year. Thank you.
Yes, so I mean, it's going to take this piece by piece in terms of PSS I mean, we've kind of actually seeing sequential improvement off of Q4. So we think that that business is back on the rise and we saw that sequentially. So I think that thats very much consistent with our assumptions and.
And it very much in line of our expectations when it comes to <unk>.
That there was still bad markets continues to be relatively soft, but having said that.
Our quote activity and our opportunity activity significantly increasing for Q2, Q3 and Q4, because as we look at forward air.
In the pipeline that continues to get better and better so.
We are cautiously optimistic that we're going to see much better order trends as we head into the last three quarters of the year.
Yes.
I think <unk> put it quite well.
The idea is the revenue for this year is kind of already locked given the law.
Lung nodule nature of the business here really working hard to secure a good base of orders for 2023, so that we can bring to a good year for 2024.
We remain.
One thing I can assure you, we're not going to lose share so.
More on the market.
And as market recovers.
We will get our fair share of demand.
Our next question comes from Nigel Coe with Wolfe Research.
Oh, Thanks, good morning, Thanks for the question.
So.
Hey, guys.
Maybe just to be clear on kind of what surprised to the upside and it sounds like it.
Partly supply chain, but it also sounds like there's probably demand. So maybe just talk about that.
Pretty significant uptick in accounts receivable on the balance sheet, which might indicate the March was perhaps with a strong. So maybe just talk about that as well.
Sure let me take that so if you think about our guidance 90 days ago, we talked about really three specific risks that we were watching.
One was China with with Chinese new year and concerns about whether everyone was going to go home and then come back in.
Windup with Lockdowns in China, It didn't happen.
Things turned out quite well there was really no disruption in China at all second one was really again aerospace and where are we going to get a substantial sequential improvement in output and we did we were up 20% in our output in aerospace year over year.
Which was above the high end of our guidance.
He was quite strong and then the third one as PMT.
And we talked about the fact that in December we had some challenges with a freeze.
And in the Louisiana area with some of our factories. There we had an outage early January which we needed to shut down a plant and bring it back up again and it came up quite well and in fact on time and after the plant was restored it was operating at levels that were greater than before the outage even occurred and so thats why what you saw.
Seeing as essentially PMT in aerospace in particular.
Drove probably over $100 million each on the top end of our own guide in terms of in terms of the revenue outlook. So.
Those are things that we were conscious of and where we're and we're watching and managing.
Where we could and things turned out quite well so that that was.
That was really good and then again as you mentioned accounts receivable goes up.
As you recall, 50% of our revenues in any quarter in the last month of the quarter, we had a really strong revenue performance.
Ah goes up and we've got a lot of receivables here to collect in April .
I am sure that will bode well for strong cash here in Q2.
Yes.
Great. Thanks, Greg I'll leave it at one question yes.
Our next question comes from Scott Davis with Melius research.
Hey, good morning, guys.
Good morning, Bonnie.
And welcome Venerable.
Got it she announced this buyback is pretty darn large 10 billion is a big number.
And we're hearing chatter from other companies here and there that M&A is just starting to get into a little bit of a sweet spot where valuations are starting to make a little bit more sense in and pay us less competitive of course.
What how do you guys think about your your pipeline of deals that's out there and the Optionality and.
And versus kind of the.
The guide I think of share count down kind of 1% ballpark means you may not be going in and hitting hitting a bit on that $10 billion right away, but.
How do you think about the ebb and flow of the buyback versus that M&A and perhaps the the big question. There is what's your backlog and pipeline look like.
I'll stop there thanks.
Hey, Scott real quick just.
What you saw with the 10 billion authorization that is like what we always do we work our authorization down to about a $2 billion range and then we frankly almost as a matter of course re up into eight or $10 billion and so you should view that as us just doing our normal re staffing of our.
Buyback authorization to give us the flexibility that we always have so there was nothing abnormal in that at all in terms of the cycle of the way we operate but im sure Darius will talk about the capital allocation.
I mean in terms of our framework you've got to remember we are we are holding to the framework of 1% buyback per year on average and we've done that we've stuck to that and I think that thats varied 10 billion authorization continues to underpin that.
Kind of an algorithm. So I think I wouldn't look too much or too little into it just supportive of that.
We're going to continue to buy back shares as we see the.
Priced aggressively and we will do at least 1% on the.
M&A, which I think is the more important question is.
<unk> always said there is time to be a buyer and there is a time to be a seller.
I have not seen a better time at least as I've been CEO to be a buyer.
One deal we did this past week.
I think that it's an opportunity for us to be much more active the pipeline is probably better than it's ever been.
And I think we've got some interesting bolt ons that we're looking at that hopefully we're going to be able to close here in the next few months.
Dairy is just natural follow up.
That's quite a statement never seen a better time to be a buyer.
I don't think I've ever heard you say anything in that context that bullish in your tenure and then would you consider going up in size, you just said bolt ons, but.
Perhaps something a little bit more.
Larger in the pipe.
Well I mean, I think we.
We set the bolt on for US is to up to $5 $6 $7 billion range. So I would say that that's decent in size. The reason I'm more bullish is look the cost of money has gone up significant.
The interest rates and frankly.
Competition is different in competition for assets now is primarily strategics.
A lot of the activity is not I wouldn't say nonexistent, but it's not nearly as strong as it used to be and.
I think it's smart to be a buyer or seller in various <unk>.
Michael is of economic conditions and interest rates and I think right now I think it's smart to be a little bit more aggressive on being a buyer.
Very encouraging thank you I'll pass it on guys. Good luck.
Thank you.
Our next question comes from Sheila <unk> with Jefferies.
Thank you and good morning, everyone.
Maybe bigger picture as Bob can you talk about what you guys are seeing Gary asked the class that pricing portfolio I think Greg you mentioned pricing contributed six points organic growth, including Sps.
How does pricing balance out in volume throughout the remainder of the year and how do you see across the segments.
Yes, I mean I think.
You saw kind of a six to mix.
As we move forward I think frankly, we're still projecting to be about a 4% price impact for the year. So obviously pricing is going to become a bit tougher in the second half of the year as we kind of lap some of those comps.
But overall pricing is going to continue to be a significant value driver for our results given the differentiation and the technologies that we have and are moving our portfolio.
So thats kind of how we see the setup, obviously coming off of 6% and projected for the year, we expect something a bit lower in the second half, but that's all very much who wins the algorithm that we expected for the year.
We gain confidence in that algorithm given that given our.
Raised both the bottom and top end of our range is I don't know Greg John Yes, No I think I think you said that this is not really that different from what we talked about and we have positive price every quarter of this year. So no no concerns in that again, we've talked about it for the last six to nine months as inflation settles down a little bit there going to be pockets, where.
Won't be as necessary as it was a year ago.
And so thats, what youre seeing what youre seeing now.
Great. Thank you.
Our next question comes from Jeff Sprague with vertical research partners.
Thank you good morning, everyone.
Sure.
Hey, just two two parter on Aero OE I mean, it looks like Youre, making pretty good progress as you stated and you acknowledged some supply chain issues, but it was a little surprised one of your customers called you out by name yesterday.
Wondering if theres something Honeywell specific that's hung up from a delivery standpoint, or you would just kind of point your finger further down the line to your suppliers is just kind of part one if you could add any color there and then just also on.
OE kind of incentive payments and the like where do we stand for 2023 now is this still.
And a peak year for headwinds or does some of that maybe move into 2024, if deliveries aren't quite what you thought they might be.
Yes, So let me kind of start with the first part of your question I think as we look at our output.
It ranges depending upon whether it's.
Avionics or some of the mechanical things were up anywhere from 20% to 40%. So I think we're actually very pleased in terms of the output.
I can assure you that in terms of the bottlenecks, it's not Honeywell and it's not sort of throughput through our facilities. So we have a lot of issues with our supply base as well and frankly some of those being large public companies.
Not going to sit here and call them out.
On a call like this frankly, it's our responsibility and it's our job to deliver and I am not going to use somebody else's, an excuse for us not to look at.
Our job to manage and frankly.
Earnings call is not the right place to actually have those kinds of discussions so we're going to work at it we own it.
I know the supply chain in aerospace is not perfect. It is getting better and it's getting better relatively quickly probably even better than we anticipated, but there is work to do.
And there's four or five layers of the supply chain.
What we're seeing and feeling.
Close to harm to our suppliers, we're still getting some.
Very inconsistent supply base I mean, our decommit rate went from being 19%, 20% Q4 down to 15, but 15 still not good but improving and we're making those.
<unk> and we've launched hundreds literally.
Literally hundreds of people into our supply chain to assist our suppliers and frankly, probably put more time and effort.
To be responsive to the needs of our OE based.
On the incentive side, we're not making any adjustment to our expectations as far as.
As that is concerned it's still very early in the year.
As we know OE deliveries are still going to be roughly in the range of what we had anticipated as we opened the year and like you said, we expect this year is probably the peak.
And then it's going to flatten out or come down slightly next year, but still be relatively high should that shift left to right a little bit we will see but at this moment, we're keeping our expectations as they were I think one point I wanted to add was.
The diversity of our portfolio and <unk> is quite unique we supply.
<unk> avionics navigation equipment lighting breaks the list goes on.
Due to diversity, our volume is growing overall, but there could be some category what are the growth of slightly less versus others and I think that puts us in a unique position on how we get viewed by our customers because they obviously want growth to local consistently across all product lines. So I want to have that appreciation that our diversity is one of the unique factors.
Compared to our peer group there.
Great. Thanks for that color I appreciate it.
Yeah.
Our next question comes from Joe Ritchie with Goldman Sachs.
Thanks, Good morning, everybody.
Hey, gentlemen, so just wanted to stay on Aero.
For my one question I guess as you think about the margins for the year you guys talked about flat margins, but that started the year off.
Down.
Yes.
What's expected to improve as the year progresses.
Friction associated with the supply chain, that's impacting the margins today, because your aftermarket business is growing faster than OE. So just just any color on like the what gets better in aero from a margin standpoint as the year progresses.
Yes, sure I mean think about it this way.
First and most basic one is volume leverage right. We are very much in control of our fixed costs.
Revenue is going to go up each and every quarter sequentially.
And it will have a crescendo and probably the highest quarter in Q4. So just by that alone we're going to get some volume leverage so theres not like any.
Big changes from one quarter to the next.
That I would call out from a mixed perspective, now again that can always.
Fluctuate.
As time goes by but the single biggest thing.
That you should expect is really around volume leverage is fairly simple.
Okay, great good enough. Thanks.
Our next question comes from Deane Dray with RBC capital markets.
Thank you good morning, everyone.
Good morning.
Hey, Darius since this is your last call just wanted to say congratulations on your run as CEO and look all CLS monarch go out on a strong note, leaving the company had good hands and I think this quarter speaks to that so congrats.
Thank you.
Hey.
For my one question on Intel granted after market.
There was always this high growth in installations, and we are waiting to get that critical mass in the installed base to start to get to the aftermarket have you reached that point and whats that mix going forward between OE and aftermarket.
Yeah. So overall our performance on after market has been double digits for last couple of years, including this year and in fact, we are performing extremely well I would say in high teens.
So we are at a point to your question on the mix now.
Two thirds one third so I think we are going towards that mix now, which is which is a thought I mean this business is seven to eight years or so if you roll. The dice 15 years from now the mix will be probably more in favor of after market. As we are experienced in other parts of Honeywell, but its trending very frankly better than our thesis.
Consistently north of 15% and we are pretty pleased with that and margins are pretty attractive.
Great. Thank you.
Our next question comes from Gautam Khanna with Cowen.
Gautam Your line is now open.
Okay.
Our next question will come from Chris Snyder with UBS.
Thank you so the guidance at least at the midpoint it seems to suggest slightly better organic growth in the back half relative to Q2.
And it comes despite tough comps and maybe some macro concerns out there. So could you just maybe provide some more color on the sub segments or business lines, where you think you could see better organic growth in Q2 relative to Q2 and also does this dynamic maybe reflect some Q2 conservatism the prior.
Prior commentary kind of said that Q2 seasonality is coming in below normalized levels. Thank you.
Sure.
Again, what I would tell you is aerospace we expect now to have some really nice sequential organic growth as the year progresses, which is going to be a big level of support for us overall.
Back to <unk>.
It's very much in line with.
Kind of our historical.
Trends and so we feel good about the guided range that we're at in.
In terms of the back ended the year as far as.
PMT is concerned I think we will have a really strong back half there as well.
Sps will get actually sequentially, a little bit easier as the year goes by so we'll probably hit the heights of our declines here in the first half in the second half, we'll get a little bit easier and that will take a little bit of pressure off the overall portfolio. So I think we're going to see really nice growth throughout the portfolio.
Three out of the four businesses and the easing of the Sps comps will help yes, and the other factor is that we're gaining more and more confidence in the output out of aerospace I mean, we're continued to grow its.
The work that we've done in terms of amending the supply chain is producing results I quoted from the year over year numbers earlier and.
We expect that progress to continue and even accelerate particularly as we get into the back half of the year. So we're very confident in our outlook for for the growth that we have been looking forward for signs, especially order rates for HPT to see what that looks like.
Obviously, our Q1 results there were also better than expectations. Both in terms of revenue as well as orders. So we'll see how Q2 goes in that May offer some further upside.
Thank you I appreciate that.
Thank you I would now like to turn the call back over to Darius Adam Jack for closing remarks.
Once more I want to thank our shareholders for ongoing support I valued our dialogue over the past seven years gross we want to thank the entire Honeywell family, including our colleagues present and past we've built a tremendous company over the past two decades and thanks to all of your hard work and perseverance.
It has been an honor to be able to lead. This company. We delivered outstanding first quarter results more importantly, the utmost confidence that we'll continue to do so in the future under <unk> leadership.
Typical level of operational rigor, we've come to expect from Honeywell.
This company's best days remain ahead of us and we look forward to discussing this further at our upcoming Investor Day next month. Thank you all for listening please stay safe and healthy.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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