Q1 Honeywell International Earnings Call

April 27, 2023

Speaker 1: And for you, you.

Operator: Thank you for standing by, and welcome to the Honeywell first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead.

Speaker 2: Thank you for standing by and welcome to the Honeywell first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's call is being recorded.

Sean Meakim: Thank you, Liz. Good morning, and welcome to Honeywell's Q1 2023 earnings conference call. 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 Kapur, and Senior Vice President and General Counsel Ann Madden. This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website. From time to time, we post new information that may be of interest or material to our investors on this website. 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 2: I would now like to hand the call over to Sean Meekam, Vice President of Industrial Relations. Please go ahead.

Speaker 3: Thank you, Liz. Good morning and welcome to Honeywell's first quarter of 2023 Ernie's ?? Sugall homepage.

Speaker 3: On the call is lead today our chairman and CEO Darius Adamchik, senior vice president and chief financial officer Greg Lewis, president and chief operating officer Vimble Capore, and senior vice president and general counsel Ann Madd.

Speaker 3: This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website.

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. 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 full 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 Adamczyk.

Speaker 3: From time to time, we post new information that may be of interest or material to our investors on this website.

Sean Meakim: 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 full 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 Adamczyk.

Speaker 3: businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. 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 full year 2023 outlook. As always, we'll leave time for your questions at the end.

Darius Adamczyk: 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. We've consistently outperformed against the market and our peers, doubling our share price over that timeframe. We undertook a radical transformation agenda, dramatically simplifying and digitizing our operations and supply chain, resulting in a much more contemporary company, which is a platform for growth. We launched a software business, Honeywell Connected Enterprise, that continues to generate not only value for our customers, but creative 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. We reconfigured our strategic business groups to better align with end market opportunities and customer needs.

Speaker 3: With that, I'll turn the call over to Chairman and CEO , Darius Adomchuk.

Speaker 4: 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 4: We 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.

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. We reconfigured our strategic business groups to better align with end market opportunities and customer needs. We built a culture of innovation that has led to significant new breakthrough technologies and ultimately meaningfully stronger organic growth. Last, and I'm not breaking any news here, this will be my last earnings call as the CEO of Honeywell.

Speaker 4: We also reshape the portfolio, spinning off three sizable businesses while selling to others and adding 16 successful acquisitions, reducing sickle quality and enhancing our margins.

Darius Adamczyk: We built a culture of innovation that has led to significant new breakthrough technologies and ultimately meaningfully stronger organic growth. Last, and I'm not breaking any news here, this will be my last earnings call as the CEO of Honeywell. As Vimal 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 planning. With his decades of experience and success leading businesses across our portfolio, Vimal is absolutely the right person to take on the CEO mantle for Honeywell into the next phase of our transformation. I look forward to supporting him over the next year, providing him with additional bandwidth by helping with mergers and acquisitions activity, spending time with customers, and strategic planning. Our future is bright. With that said, the present is pretty good too.

Speaker 4: We reconfigured our strategic business groups to better align with end-market opportunities and customer needs. We built that culture of innovation that has led to significant new breakthrough technologies and ultimately meaningfully stronger organic growth. Last, and I'm not breaking any news here,

As Vimal 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 planning. With his decades of experience and success leading businesses across our portfolio, Vimal is absolutely the right person to take on the CEO mantle for Honeywell into the next phase of our transformation. I look forward to supporting him over the next year, providing him with additional bandwidth by helping with mergers and acquisitions activity, spending time with customers, and strategic planning. Our future is bright. With that said, the present is pretty good too.

Speaker 4: This will be my last earnings call as the CEO of Honeywell. As BIML 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.

Speaker 4: With his decades of experience in success leading businesses across our portfolio, VIMO is absolutely the right person to take on the CEO mantle for Honeywell into the next phase of our transformation.

Speaker 4: I look forward to supporting him over the next year, providing him with additional bandwidth by helping with mergers and acquisitions activity, spending time with 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. talking about ourselves as economists.

Darius Adamczyk: Let's turn to slide three to discuss our first quarter performance. We delivered a very strong first quarter, exceeding the high end of our first quarter organic sales, segment margin, and adjusted earnings per share guidance, despite ongoing macroeconomic challenges. I'm pleased with our disciplined execution and differentiated technologies that enable us to overdeliver on our commitments. First quarter organic sales were up 8% year over year, led by double-digit growth in our Aerospace and PMT businesses, underpinned by a rigorous operational execution. The first quarter backlog grew to a new record of $30.3 billion, up 6% year over year and 2% sequentially due to continued strength in Aerospace and Performance Materials and Technologies.

Let's turn to slide three to discuss our first quarter performance. We delivered a very strong first quarter, exceeding the high end of our first quarter organic sales, segment margin, and adjusted earnings per share guidance, despite ongoing macroeconomic challenges. I'm pleased with our disciplined execution and differentiated technologies that enable us to overdeliver on our commitments. First quarter organic sales were up 8% year over year, led by double-digit growth in our Aerospace and PMT businesses, underpinned by a rigorous operational execution. The first quarter backlog grew to a new record of $30.3 billion, up 6% year over year and 2% sequentially due to continued strength in Aerospace and Performance Materials and Technologies.

Speaker 4: We delivered a very strong first quarter, exceeding the high end of our first quarter organic sales, segment margin, and adjusted earnings per share guidance. Despite ongoing macroeconomic challenges, I'm pleased with our disciplined execution and differentiated technologies that enable us to over-deliver on our commitments.

Speaker 4: First quarter organic sales were up 8% year of year led by double-vigaged growth in our aerospace and PMP businesses.

Speaker 4: underpin by a rigorous operational execution. The first quarter backlog grew to a new record of $30.3 billion, up 6% year-over-year and 2% sequentially due to continued strength in aerospace and performance materials and technologies.

Darius Adamczyk: Similar to last quarter, orders remained a very positive story in Aero and PMT, up double digits organically in each, leading to 1% organic growth and 8% sequential growth overall in Q1, overcoming the difficult year-over-year comps in HBT and SPS. We remain confident in our 2023 setup as we capitalize on recovering end markets combined with solid operational execution. Our segment margin expanded 90 basis points year over year, led by robust expansion safety and productivity solutions and Honeywell Building Technologies, as our strategic pricing actions enable us to remain ahead of the inflation curve, and we benefit from our productivity actions. Excluding the net impact of the settlements, as we discussed in our guide, free cash flow was $300 million in Q1, in line with our expectations and operationally stronger than 2022.

Similar to last quarter, orders remained a very positive story in Aero and PMT, up double digits organically in each, leading to 1% organic growth and 8% sequential growth overall in Q1, overcoming the difficult year-over-year comps in HBT and SPS. We remain confident in our 2023 setup as we capitalize on recovering end markets combined with solid operational execution. Our segment margin expanded 90 basis points year over year, led by robust expansion safety and productivity solutions and Honeywell Building Technologies, as our strategic pricing actions enable us to remain ahead of the inflation curve, and we benefit from our productivity actions.

Speaker 4: Similar to last quarter, orders remain a very positive story in ARRAL and PMT of double digits organically in each, leading to 1% organic growth and 8% sequential growth overall in the first quarter. Overcome the difficult year over your constant HBT and SPS.

Speaker 4: Remain conference in our 2023 setup to recap lies on the recovery and markets combined of solid operational execution.

Speaker 4: 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.

Excluding the net impact of the settlements, as we discussed in our guide, free cash flow was $300 million in Q1, in line with our expectations and operationally stronger than 2022. We deployed $1.6 billion to dividends, growth CapEx, and share repurchases, including opportunistically repurchasing 3.5 million shares throughout the quarter, reducing our weighted average share count to 673 million. We also announced the acquisition of Compressor Controls Corporation this week, which Vimal will provide more detail on shortly. Looking forward, I'm encouraged by the strength we're seeing in many areas of our portfolio.

Speaker 4: Excluding the net impact of the settlements as we discussed in our guide, free cash flow was $300 million in the first quarter in line with our expectations and operationally stronger than 2022.

Darius Adamczyk: We deployed $1.6 billion to dividends, growth CapEx, and share repurchases, including opportunistically repurchasing 3.5 million shares throughout the quarter, reducing our weighted average share count to 673 million. We also announced the acquisition of Compressor Controls Corporation this week, which Vimal will provide more detail on shortly. Looking forward, I'm encouraged by the strength we're seeing in many areas of our portfolio. We continue to execute in our proven value creation framework, which is underpinned by our Accelerator operating system. I am proud of our ability to overdeliver another quarter amidst a challenging external environment. Next, let's turn to Vimal to discuss some exciting recent announcements.

Speaker 4: We deployed $1.6 billion to dividends, growth capex, and share repurchases, including opportunistically repurchasing 3.5 million shares throughout the quarter, reducing our weighted average share count to 673 million. We also announced the acquisition of Compressor Controls Corporation this week, which VIMO will provide more detail on shortly.

We continue to execute in our proven value creation framework, which is underpinned by our Accelerator operating system. I am proud of our ability to overdeliver another quarter amidst a challenging external environment. Next, let's turn to Vimal to discuss some exciting recent announcements.

Speaker 4: Looking forward, I am encouraged by the strength we are seeing in many areas of our portfolio. We continue to exit in our proven value creation framework, which is underpinned by our accelerator operating system.

Speaker 4: I am proud of our ability to over-deliver another quarter amidst a challenging external environment.

Vimal Kapur: 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 at its integrated complex in Baytown, Texas. The plant is expected to be the largest low-carbon hydrogen project in the world at plant startup 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. In addition, Honeywell recently launched a European clean aviation project to develop a new generation of aerospace-qualified megawatt-class fuel cells powered by hydrogen. Green hydrogen is an extremely clean power source that can be used to propel future aircraft, which makes it particularly appealing to the aerospace sector as we work to reduce carbon emissions.

Speaker 4: Next, let's turn on VIMO to discuss some exciting recent announcements.

Speaker 5: Thank you, Daryak 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 and projected to produce around one billion cubic feet of low carbon hydrogen per year.

In addition, Honeywell recently launched a European clean aviation project to develop a new generation of aerospace-qualified megawatt-class fuel cells powered by hydrogen. Green hydrogen is an extremely clean power source that can be used to propel future aircraft, which makes it particularly appealing to the aerospace sector as we work to reduce carbon emissions. Work on this project will be performed at Honeywell Technology Solution Research and Development Center in Brno, Czech Republic, and at all other Honeywell and project partner sites across Europe.

Speaker 5: space-qualified megawatt-class fuel cells powered by hydrogen.

Speaker 5: Green hydrogen has an extremely clean power source that can be used to propel future aircraft, which makes it particularly appealing to the aerospace sector as we work to reduce carbon emissions. Work on this project will be performed at Honeywell Technology Solutions Research and Development Center in Bruno Check Republic.

Vimal Kapur: Work on this project will be performed at Honeywell Technology Solution Research and Development Center in Brno, Czech Republic, and at all other Honeywell and project partner sites across Europe. Finally, this week, we announced a $40 million-plus win in our connected enterprise business with Globalworth, a leading real estate investor in Central and Eastern Europe. Globalworth is using Honeywell's Forge for building technology to help monitor energy consumption down to a device or asset level across their commercial office buildings in Romania, and Poland, while maintaining occupant comfort and productivity. Our solution will help reduce operating costs and lower energy consumption, key outcome for Europe's overarching climate objectives. These existing technologies provide us with a new growth vector while reinforcing Honeywell's sustainability message, demonstrating how we are helping the world solve its toughest challenge across all our end markets.

Finally, this week, we announced a $40 million-plus win in our connected enterprise business with Globalworth, a leading real estate investor in Central and Eastern Europe. Globalworth is using Honeywell's Forge for building technology to help monitor energy consumption down to a device or asset level across their commercial office buildings in Romania, and Poland, while maintaining occupant comfort and productivity. Our solution will help reduce operating costs and lower energy consumption, key outcome for Europe's overarching climate objectives.

Speaker 5: and at all other Honeywell and project partner sites across Europe .

Speaker 5: Finally, this week we announced a $40 million plus win in our connected enterprise business with Globalworth, a leading real estate investor in Central and Eastern Europe . Globalworth is using Honeywell's force for building technology to help monitor energy consumption down to a device or asset level across their commercial office buildings in Romania and Poland. gun on falling

Speaker 5: while maintaining occupant comfort and productivity. Our solution will help reduce operating costs and lower energy consumption, key outcome for Europe's overreaching climate objectives.

These existing technologies provide us with a new growth vector while reinforcing Honeywell's sustainability message, demonstrating how we are helping the world solve its toughest challenge across all our end markets. Now, let's turn to slide five to discuss an exciting new acquisition we just announced this week. On Wednesday, we announced an agreement to acquire Compressor Controls Corporation, in short, CCC, a leading provider of turbomachinery control and optimization solutions, including control hardware, software, and services for $670 million in all cash transactions.

Speaker 5: These existing technologies provide us with new growth factors while reinforcing Honeywell's sustainability message, demonstrating how we are helping the world solve its toughest challenge across all our end markets. Now let's turn to slide 5 to discuss an exciting new acquisition we just announced this week.

Vimal Kapur: Now, let's turn to slide five to discuss an exciting new acquisition we just announced this week. On Wednesday, we announced an agreement to acquire Compressor Controls Corporation, in short, CCC, a leading provider of turbomachinery control and optimization solutions, including control hardware, software, and services for $670 million in all cash transactions. CCC technologies primarily serve the LNG, gas processing, refining, and petrochemical segment and will bolster Honeywell's high-growth sustainability portfolio with new carbon capture control solutions where the same turbomachinery is used to achieve effective removal of CO2 from the process plant emissions. This acquisition will be integrated into Honeywell's process solution business and strengthen Honeywell's leadership in industrial control, automation, and process solutions, enabling customers to accelerate their energy transition.

Speaker 5: On Wednesday, we announced an agreement to acquire Compressor Control Corporation, in short CCC, a leading provider of turbo machinery control and optimization solutions, including control hardware, software, and services for $670 billion in all cash transactions.

CCC technologies primarily serve the LNG, gas processing, refining, and petrochemical segment and will bolster Honeywell's high-growth sustainability portfolio with new carbon capture control solutions where the same turbomachinery is used to achieve effective removal of CO2 from the process plant emissions. This acquisition will be integrated into Honeywell's process solution business and strengthen Honeywell's leadership in industrial control, automation, and process solutions, enabling customers to accelerate their energy transition.

Speaker 5: CCC technology primarily serves the LNG, gas processing, refining and petrochemical segment and will bolster Honeywell's high-growth sustainability portfolio with new carbon capture control solutions where the same turbo machinery is used to achieve effective removal of CO2 from the process plant emission.

Speaker 5: This acquisition will be integrated into Honeywell's process solution business and strengthen Honeywell's leadership in industrial control, automation, and process solutions, enabling customers to accelerate their energy transition.

Vimal Kapur: CCC's EBITDA margins are accretive to Honeywell, and we expect to achieve a cash-basis return on investment of more than 15% by fifth year that CCC is part of Honeywell. The transaction represents 15x 2023 expected EBITDA on a tax-adjusted basis and 13x EBITDA, assuming 8 million of annualized cost synergies. I'm excited about the new technologies and adjustments we have unlocked through this latest transaction. We said before that we have an active M&A pipeline, and this is further evidence that we are continuously enhancing our automation portfolio by investing in new opportunities. Now, let's turn to slide six to discuss the Q1 results in more detail. As Darius mentioned, we delivered a strong Q1 result despite a dynamic economic backdrop. Our operational agility enabled us to exceed our financial commitments.

CCC's EBITDA margins are accretive to Honeywell, and we expect to achieve a cash-basis return on investment of more than 15% by fifth year that CCC is part of Honeywell. The transaction represents 15x 2023 expected EBITDA on a tax-adjusted basis and 13x EBITDA, assuming 8 million of annualized cost synergies. I'm excited about the new technologies and adjustments we have unlocked through this latest transaction. We said before that we have an active M&A pipeline, and this is further evidence that we are continuously enhancing our automation portfolio by investing in new opportunities. Now, let's turn to slide six to discuss the Q1 results in more detail. As Darius mentioned, we delivered a strong Q1 result despite a dynamic economic backdrop.

Speaker 5: CCC's beta margins are accretive to Honeywell and we expect to achieve a cash basis return on investment of more than 15% by fifth year that CCC is part of Honeywell. The transaction represents 15 times 2023 expected beta on a tax adjusted basis and 13 times beta.

Speaker 5: you by investing in new opportunities.

Speaker 5: Now let's turn to slide this to discuss the first quarter results in more details.

Our operational agility enabled us to exceed our financial commitments. First quarter sales grew 8% organically with double-digit growth in PMT and aero, where we generated continued volume improvement on a strong demand and an improving supply chain. In fact, volume grew 2% for overall Honeywell in the first quarter, despite an impact of traffic activity levels in our long-cycle warehouse automation business. Excluding SPS, volumes were up 7% for first quarter. Our backlog grew 6% year over year and 2% sequentially, and our orders grew 1% organically and 8% sequentially, driven by long-cycle strength in aero and PMT.

Speaker 5: As Darius mentioned, we delivered a strong first quarter result despite a dynamic economic backdrop. Our operational agility enabled us to exceed our financial commitments. First quarter sales grew 8% organically with double digit growth in PMT and Aero, where we generated continued volume improvement on a strong demand and an improving supply chain.

Vimal Kapur: First quarter sales grew 8% organically with double-digit growth in PMT and aero, where we generated continued volume improvement on a strong demand and an improving supply chain. In fact, volume grew 2% for overall Honeywell in the first quarter, despite an impact of traffic activity levels in our long-cycle warehouse automation business. Excluding SPS, volumes were up 7% for first quarter. Our backlog grew 6% year over year and 2% sequentially, and our orders grew 1% organically and 8% sequentially, driven by long-cycle strength in aero and PMT. Supply chain remains a constraint on our overall growth. However, aero saw further output improvement, and we saw positive backlog reduction across all our short-cycle businesses. In addition to strong organic growth, we expanded segment margins by 90 basis points year over year to 22%.

Speaker 5: In fact, volume grew 2% overall Honeywell in the first quarter, despite an impact of trafing activity levels in our long cycle warehouse automation business. Excluding SPS, volumes were up to 7% for first quarter.

Supply chain remains a constraint on our overall growth. However, aero saw further output improvement, and we saw positive backlog reduction across all our short-cycle businesses. In addition to strong organic growth, we expanded segment margins by 90 basis points year over year to 22%. We continue to reap benefits from our investment in Honeywell's digital that have enabled us to stay ahead of the inflation curve through the strategic pricing action. Despite the top-line headwinds, SPS led the other SPGs with the largest segment margin expansion as a benefit from the right-sized cost base.

Vimal Kapur: We continue to reap benefits from our investment in Honeywell's digital that have enabled us to stay ahead of the inflation curve through the strategic pricing action. Despite the top-line headwinds, SPS led the other SPGs with the largest segment margin expansion as a benefit from the right-sized cost base. Now, let's spend a few minutes on the first quarter performance by business. Aerospace sales for the first quarter were up 14% organically, led by 20% growth in commercial aviation, the fifth straight quarter of at least 20% organic growth, and the eighth straight quarter of double-digit growth. Sales growth was strongest in commercial aviation aftermarket, where continued flight hour recovery resulted in increased spare shipments and repair and overhaul sales, particularly in air transport. Commercial Original Equipment sales were also increased double-digit, driven by higher business and general aviation sales.

Now, let's spend a few minutes on the first quarter performance by business. Aerospace sales for the first quarter were up 14% organically, led by 20% growth in commercial aviation, the fifth straight quarter of at least 20% organic growth, and the eighth straight quarter of double-digit growth. Sales growth was strongest in commercial aviation aftermarket, where continued flight hour recovery resulted in increased spare shipments and repair and overhaul sales, particularly in air transport. Commercial Original Equipment sales were also increased double-digit, driven by higher business and general aviation sales.

Vimal Kapur: Defense and Space returned to growth in Q1 as we were able to convert our strong 2022 orders book increase sales volume. Book-to-bill in Defense and Space remained greater than one in the quarter. As expected, the Aero supply chain continued to make modest progress sequentially. Improvements in material availability from the lower supplier decommitment rates enabled us to increase our original equipment and spare shipment by 20% year over year in Q1. Our positive backlog remains a historically high level, as expected, with plenty of volume yet to be unlocked. Segment margin in Aerospace contracted 80 basis points year over year to 26.6%, driven by higher sales of lower margin original equipment products, partially offset by our commercial excellence effort and volume leverage. Performance Materials and Technologies orders grew organically across all three businesses ahead of our expectations, led by over 20% growth in UOP.

Defense and Space returned to growth in Q1 as we were able to convert our strong 2022 orders book increase sales volume. Book-to-bill in Defense and Space remained greater than one in the quarter. As expected, the Aero supply chain continued to make modest progress sequentially. Improvements in material availability from the lower supplier decommitment rates enabled us to increase our original equipment and spare shipment by 20% year over year in Q1. Our positive backlog remains a historically high level, as expected, with plenty of volume yet to be unlocked.

Segment margin in Aerospace contracted 80 basis points year over year to 26.6%, driven by higher sales of lower margin original equipment products, partially offset by our commercial excellence effort and volume leverage. Performance Materials and Technologies orders grew organically across all three businesses ahead of our expectations, led by over 20% growth in UOP. We remain particularly excited about traction in our Sustainable Technology Solutions business, where orders doubled year over year. For sales, PMT grew 15% organically in the quarter, with double-digit growth in all three segments of the PMT portfolio.

Vimal Kapur: We remain particularly excited about traction in our Sustainable Technology Solutions business, where orders doubled year over year. For sales, PMT grew 15% organically in the quarter, with double-digit growth in all three segments of the PMT portfolio. This was the fourth consecutive quarter of double-digit organic growth in PMT. UOP grew 19% organically in the quarter, led by refining catalyst shipment and gas processing, partially offset by lower refining and PET chem equipment volumes. Process Solutions grew 16% organically, driven by strength in projects and smart energy. In Advanced Materials, sales grew 12% in the quarter, as we saw another quarter of robust demand in Fluorine products that more than offset some softness in our electronic materials business.

This was the fourth consecutive quarter of double-digit organic growth in PMT. UOP grew 19% organically in the quarter, led by refining catalyst shipment and gas processing, partially offset by lower refining and PET chem equipment volumes. Process Solutions grew 16% organically, driven by strength in projects and smart energy. In Advanced Materials, sales grew 12% in the quarter, as we saw another quarter of robust demand in Fluorine products that more than offset some softness in our electronic materials business.

Vimal Kapur: Segment margin contracted 20 basis points year over year to 20.6% as a result of cost inflation, higher sales of lower margin products, and a previously communicated disruption in one of our PMT plants that caused some unplanned downtime, partially offset by commercial excellence and volume leverage. Safety and productivity solution sales decreased 11% organically in the quarter. Sales decline was led by warehouse and workflow solutions, and productivity solutions and services. The aftermarket services portion of our integrated business continues to perform well as expected, with sales growing greater than 20% in the quarter at accretive margins. The sensing portion of our sensing and safety technologies business remains a bright spot in the portfolio.

Segment margin contracted 20 basis points year over year to 20.6% as a result of cost inflation, higher sales of lower margin products, and a previously communicated disruption in one of our PMT plants that caused some unplanned downtime, partially offset by commercial excellence and volume leverage. Safety and productivity solution sales decreased 11% organically in the quarter. Sales decline was led by warehouse and workflow solutions, and productivity solutions and services. The aftermarket services portion of our integrated business continues to perform well as expected, with sales growing greater than 20% in the quarter at accretive margins.

The sensing portion of our sensing and safety technologies business remains a bright spot in the portfolio. Continuing on the trend from last year, segment margin for SPS was once again a standout in the quarter, expanding 270 basis points to 17.2% as a result of productivity actions and commercial excellence, partially offset by lower volume leverage, and inflation. In building technologies, sales increased 9% organically in the quarter, with growth in both building products, and building solutions.

Vimal Kapur: Continuing on the trend from last year, segment margin for SPS was once again a standout in the quarter, expanding 270 basis points to 17.2% as a result of productivity actions and commercial excellence, partially offset by lower volume leverage, and inflation. In building technologies, sales increased 9% organically in the quarter, with growth in both building products, and building solutions. Project sales were up double digits for the fourth consecutive quarter as we continue to convert our strong backlog. Services volumes also increased in the quarter, resulting in 13% organic sales growth in building solutions. Turning to our product portfolio, the supply chain is improving as expected. Building products grew 7% organically year over year to continue to strengthen our world-class fire franchise.

Project sales were up double digits for the fourth consecutive quarter as we continue to convert our strong backlog. Services volumes also increased in the quarter, resulting in 13% organic sales growth in building solutions. Turning to our product portfolio, the supply chain is improving as expected. Building products grew 7% organically year over year to continue to strengthen our world-class fire franchise. HBT orders were stronger than expected in Q1, although down mid-single-digit year over year organically as we lap outsized 2022 comps from the height of supply chain challenges.

Vimal Kapur: HBT orders were stronger than expected in Q1, although down mid-single-digit year over year organically as we lap outsized 2022 comps from the height of supply chain challenges. While inflation remains elevated and our strong building solution sales presented with mixed headwinds, our commercial excellence and productivity effort allow us to mitigate these challenges and expand HBT segment margins by 170 basis points to 25.2%. Growth across our portfolio continues to be supported by accretive results in Honeywell Connected Enterprise, an ongoing indicator of the power of strong software franchise. Robust overall growth was driven by double-digit growth in cyber, industrial, aerospace, and connected building. The future outlook is also strong due to double-digit growth in orders. Overall, this was a great result for Honeywell.

While inflation remains elevated and our strong building solution sales presented with mixed headwinds, our commercial excellence and productivity effort allow us to mitigate these challenges and expand HBT segment margins by 170 basis points to 25.2%. Growth across our portfolio continues to be supported by accretive results in Honeywell Connected Enterprise, an ongoing indicator of the power of strong software franchise. Robust overall growth was driven by double-digit growth in cyber, industrial, aerospace, and connected building. The future outlook is also strong due to double-digit growth in orders. Overall, this was a great result for Honeywell.

Vimal Kapur: Adjusted earnings per share in the fourth quarter grew 8% to $2.07, $0.11 above the high end of our first quarter guidance and up 16%, excluding pension headwinds. Segment profits drove $0.21 of year-over-year improvement in earnings per share, the main driver of our EPS growth. Excluding the pension headwinds, below the line and other added $0.03 year-over-year. A lower adjusted effective tax rate contributed $0.02 of improvement and reduced share count added an additional $0.05 for total EPS, excluding the pension impact of $2.22. This was offset by $0.15 headwind from a lower pension income. A bridge from adjusted EPS from Q1 2022 to Q1 2023 can be found in the appendix of this presentation. We made good progress on cash for Q1.

Adjusted earnings per share in the fourth quarter grew 8% to $2.07, $0.11 above the high end of our first quarter guidance and up 16%, excluding pension headwinds. Segment profits drove $0.21 of year-over-year improvement in earnings per share, the main driver of our EPS growth. Excluding the pension headwinds, below the line and other added $0.03 year-over-year. A lower adjusted effective tax rate contributed $0.02 of improvement and reduced share count added an additional $0.05 for total EPS, excluding the pension impact of $2.22. This was offset by $0.15 headwind from a lower pension income.

A bridge from adjusted EPS from Q1 2022 to Q1 2023 can be found in the appendix of this presentation. We made good progress on cash for Q1. Reported cash flow for the quarter was negative $1 billion due to payment of settlements signed in fourth quarter of 2022, which we signaled in our guidance call. Excluding the net impact of these settlements, we generated $300 million of free cash flow up from $50 million in the first quarter of last year. This increase was driven by improved working capital, including more favorable payables and inventory balances. As we discussed, our inventory planning focus will be a major contributor to our cash performance in 2023, and we are off to a promising start.

Vimal Kapur: Reported cash flow for the quarter was negative $1 billion due to payment of settlements signed in fourth quarter of 2022, which we signaled in our guidance call. Excluding the net impact of these settlements, we generated $300 million of free cash flow up from $50 million in the first quarter of last year. This increase was driven by improved working capital, including more favorable payables and inventory balances. As we discussed, our inventory planning focus will be a major contributor to our cash performance in 2023, and we are off to a promising start. So overall, Honeywell operating playbook continues to deliver strong results, and that combined with our differentiated portfolio of solutions will enable us to drive compelling growth in earnings and cash for the quarters to come.

So overall, Honeywell operating playbook continues to deliver strong results, and that combined with our differentiated portfolio of solutions will enable us to drive compelling growth in earnings and cash for the quarters to come. Now, let me turn it over to Greg as we move to slide seven to discuss our second quarter and full-year guidance.

Vimal Kapur: Now, let me turn it over to Greg as we move to slide seven to discuss our second quarter and full-year guidance. Thanks, Vimal, and good morning, everyone. As we look to the rest of 2023, our original guidance framework continues to be solid. We delivered above our Q1 guide as we navigated known risks and have raised the year to reflect that. Our demand profile remains robust with record backlog and favorable order trends in aerospace and PMT. We continue to monitor the macroeconomic backdrop and its impact on our shorter-cycle businesses, and our rigorous operating principles enable us to stay agile to outperform through another challenging year. For our Q2 sales guidance, we expect to be in the range of $9.0 to 9.2 billion, up 1% to 4% on an organic basis.

Greg Lewis: Thanks, Vimal, and good morning, everyone. As we look to the rest of 2023, our original guidance framework continues to be solid. We delivered above our Q1 guide as we navigated known risks and have raised the year to reflect that. Our demand profile remains robust with record backlog and favorable order trends in aerospace and PMT. We continue to monitor the macroeconomic backdrop and its impact on our shorter-cycle businesses, and our rigorous operating principles enable us to stay agile to outperform through another challenging year. For our Q2 sales guidance, we expect to be in the range of $9.0 to 9.2 billion, up 1% to 4% on an organic basis.

Vimal Kapur: We now expect full-year sales of $36.5 to 37.3 billion, which represents an increase of $500 million in the low end and $300 million in the high end from our prior guidance, incorporating our strong first quarter results. We're raising our organic growth range now at 3% to 6%, and we continue to expect a greater balance of price and volume versus last year and have upgraded our full-year expectations in Aero while softening our outlook for SPS to reflect the demand we're seeing. Moving to our segment margin guidance, we expect the second quarter to be in the range of 21.8% to 22.2%, resulting in year-over-year margin expansion of 90 to 130 basis points due to continued benefits from our improving cost position and business mix in SPS and commercial excellence in PMT.

We now expect full-year sales of $36.5 to 37.3 billion, which represents an increase of $500 million in the low end and $300 million in the high end from our prior guidance, incorporating our strong first quarter results. We're raising our organic growth range now at 3% to 6%, and we continue to expect a greater balance of price and volume versus last year and have upgraded our full-year expectations in Aero while softening our outlook for SPS to reflect the demand we're seeing.

Moving to our segment margin guidance, we expect the second quarter to be in the range of 21.8% to 22.2%, resulting in year-over-year margin expansion of 90 to 130 basis points due to continued benefits from our improving cost position and business mix in SPS and commercial excellence in PMT. For full-year 2023, we're upgrading our segment margin expectations by 10 basis points in the low end to a new range of 22.3% to 22.6%, or 60 to 90 basis points of year-over-year expansion. Our rigorous fixed cost management and favorable price-cost strategies remain key elements of our operating playbook, helping us to drive margin expansion.

Vimal Kapur: For full-year 2023, we're upgrading our segment margin expectations by 10 basis points in the low end to a new range of 22.3% to 22.6%, or 60 to 90 basis points of year-over-year expansion. Our rigorous fixed cost management and favorable price-cost strategies remain key elements of our operating playbook, helping us to drive margin expansion. Now, let's take a moment to walk through the second quarter and full-year expectations by segment. Looking ahead for Aerospace, demand across our end markets remains very encouraging. We expect modest sequential sales growth in the second quarter as flight hours continue to improve, with particular strength in commercial aftermarket. This flight hour growth, enhanced by further recovery in wide-body aircraft as international travel recovers, will lead commercial aftermarket to be our strongest end market for sales in 2023.

Now, let's take a moment to walk through the second quarter and full-year expectations by segment. Looking ahead for Aerospace, demand across our end markets remains very encouraging. We expect modest sequential sales growth in the second quarter as flight hours continue to improve, with particular strength in commercial aftermarket. This flight hour growth, enhanced by further recovery in wide-body aircraft as international travel recovers, will lead commercial aftermarket to be our strongest end market for sales in 2023.

Vimal Kapur: On the commercial OE side, we also expect strong volume growth as build rates, particularly for business and general aviation OEs, continue to trend upwards. In defense and space, we passed the growth inflection point in Q1, and we expect similar organic growth rates throughout the year as we convert our strong defense order book into sales. While the demand environment supports rapid top-line acceleration, the pace of sales growth throughout 2023 will ultimately be determined by the rate of recovery in the aero supply chain. Our expectation for the supply chain remains unchanged: modest, steady improvement each quarter. Reduced decommits from suppliers should allow for sequential improvements in factory output.

On the commercial OE side, we also expect strong volume growth as build rates, particularly for business and general aviation OEs, continue to trend upwards. In defense and space, we passed the growth inflection point in Q1, and we expect similar organic growth rates throughout the year as we convert our strong defense order book into sales. While the demand environment supports rapid top-line acceleration, the pace of sales growth throughout 2023 will ultimately be determined by the rate of recovery in the aero supply chain. Our expectation for the supply chain remains unchanged: modest, steady improvement each quarter.

In defence and space, we passed the growth inflection point in <unk>, and we expect similar organic growth rates throughout the year as we convert our strong defense order book into sales.

While the demand environment supports rapid topline acceleration the pace of sales growth throughout 'twenty three will ultimately be determined by the rate of recovery in the aerospace lie chain, our expectation for the supply chain remains unchanged modest steady improvement each quarter.

Reduced decommits from suppliers should allow for sequential improvements in factory output. Given the positive signs from the supply chain and continued strength in our order book, we now expect Aero organic sales growth in the low double-digit range and upgrade from our outlook last quarter of high single digits to low double-digit growth. However, we anticipate most of the incremental sales strength to come from our OE business, resulting in modest mix pressure on margins. We now expect Aero segment margins to be flattish for the full year.

We do see commits from suppliers should allow for sequential improvements in factory output.

Vimal Kapur: Given the positive signs from the supply chain and continued strength in our order book, we now expect Aero organic sales growth in the low double-digit range and upgrade from our outlook last quarter of high single digits to low double-digit growth. However, we anticipate most of the incremental sales strength to come from our OE business, resulting in modest mix pressure on margins. We now expect Aero segment margins to be flattish for the full year. In Performance Materials and Technologies, the constructive outlook across our end markets will continue to drive favorable growth. For Q2, we expect sales to increase sequentially and year over year, led by continued strength in our projects and Smart Energy businesses within Process Solutions, as well as Lifecycle Solutions and Services. This strength will likely continue throughout the year, supporting strong growth for Process Solutions overall.

Given the positive signs from the supply chain and continued strength in our order book, we now expect Aero organic sales growth in the low double digit range and upgrade from our outlook last quarter of high single digits to low double digit growth.

However, we anticipate most of the incremental sales strength to come from our OE business, resulting in modest mixed pressure on margins. We now expect Aero segment margins to be flattish for the full year.

In Performance Materials and Technologies, the constructive outlook across our end markets will continue to drive favorable growth. For Q2, we expect sales to increase sequentially and year over year, led by continued strength in our projects and Smart Energy businesses within Process Solutions, as well as Lifecycle Solutions and Services. This strength will likely continue throughout the year, supporting strong growth for Process Solutions overall. In advanced materials, continued demand for fluorine products will enable us to capitalize on our capacity expansion investments we made in 2022, though we still expect to see some softness in electronic materials until the second half of the year.

In performance materials and technologies, the constructive outlook across our end markets will continue to drive favorable growth.

For the second quarter, we expect sales to increase sequentially and year over year led by continued strength in our projects and smart energy businesses within process solutions as well as lifecycle solutions and services.

This strength will likely continue throughout the year supporting a strong growth.

For our process solutions overall and advanced materials continued demand for flooring products will enable us to capitalize on our capacity expansion investments we made in 'twenty, two but we still expect to see some softness in electronic materials until the second half of the year.

Vimal Kapur: In advanced materials, continued demand for fluorine products will enable us to capitalize on our capacity expansion investments we made in 2022, though we still expect to see some softness in electronic materials until the second half of the year. In UOP, 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 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.

In UOP, 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 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.

<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.

<unk> EBIT margin and PMT should expand sequentially in the second quarter and throughout the second half leading to modest expansion for the year.

Vimal Kapur: Looking ahead for SPS, we are 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 aftermarket services portion of our Intelligrated 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 2023 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.

Looking ahead for SPS, we are 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 aftermarket services portion of our Intelligrated business continues to grow at strong double-digit rates, and we anticipate this trend continuing throughout 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 technology.

The aftermarket services portion of our intelligence 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 2023 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 and as sales mix continues to improve, as evidenced in our first quarter results. In building technologies, we are encouraged by our strong start to the year and the overall execution in the business.

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.

Vimal Kapur: However, from a margin standpoint, we still anticipate another solid year for SPS as we see the results of our operational improvements and as sales mix continues to improve, as evidenced in our first quarter results. In building technologies, we are encouraged by our strong start to the year and the overall execution in 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 in our building products business. We expect this robust backlog, along with stimulus-led institutional demand in verticals such as airports, healthcare, and education, to remain resilient throughout the year.

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.

In 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 <unk>.

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 in our building products business. We expect this robust backlog, along with stimulus-led institutional demand in verticals such as airports, healthcare, and education, to remain resilient throughout the year. On the building solution side, we are encouraged by the strong demand for our building services, and we see our long-cycle building solution sales likely outpacing product sales in 2023.

Alex 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.

Vimal Kapur: On the building solution side, we are encouraged by the strong demand for our building services, and we see our long-cycle building solution sales likely outpacing product sales in 2023. For overall HBT, 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 were most acute in the first half of 2022, and we maintain our full-year sales outlook of low single-digit organic growth, although, as we've said previously, we'll continue to monitor orders for Q2 and may have an upgrade opportunity after we complete the second quarter. HBT remains well aligned to emerging secular themes of sustainability and energy efficiency, and we see runway for growth acceleration as we exit 2023. For HBT's segment margins, we still expect year-over-year expansion in 2023 as we maintain our momentum for the first quarter.

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 HBT, 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 were most acute in the first half of 2022, and we maintain our full-year sales outlook of low single-digit organic growth, although, as we've said previously, we'll continue to monitor orders for Q2 and may have an upgrade opportunity after we complete the second quarter. HBT remains well aligned to emerging secular themes of sustainability and energy efficiency, and we see runway for growth acceleration as we exit 2023. For HBT's segment margins, we still expect year-over-year expansion in 2023 as we maintain our momentum for the first quarter.

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.

Their orders for Q2, it may have an upgrade opportunity after we complete the second quarter.

<unk> 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.

For HPT segment margin, we still expect year over year expansion in 'twenty three as we maintained our momentum for the first quarter.

Vimal Kapur: 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 Q2 and $225 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 Q2 and approximately 670 million shares for the full year.

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 Q2 and $225 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 Q2 and approximately 670 million shares for the full year.

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 positioned 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.

Vimal Kapur: 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, our 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 $0.20 and the high end of our guidance range by $0.05 to a new range of $9.00 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.

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, our 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 $0.20 and the high end of our guidance range by $0.05 to a new range of $9.00 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.

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 20.

And the high end of our guidance range by <unk> <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 nine to 12.

<unk> percent up for the year.

Vimal Kapur: We still expect to meet our original free cash flow guidance of $3.9 billion to $4.3 billion in 2023, or $5.1 billion 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 Darius 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. Our value creation framework is working.

We still expect to meet our original free cash flow guidance of $3.9 billion to $4.3 billion in 2023, or $5.1 billion 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 Darius for some closing thoughts before we move to Q&A.

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.

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.

Darius Adamczyk: 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. Our value creation framework is working. The macroeconomy remains uncertain, but we continue to grow our record backlog, and executing on it provides significant runway in the near term. 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 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.

Our value creation framework is working the.

Vimal Kapur: The macroeconomy remains uncertain, but we continue to grow our record backlog, and executing on it provides significant runway in the near term. 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. Darius, Greg, Vimal, and Ann 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 a line of Steve Toussaint at JPMorgan. Hi. Good morning. Good morning. Good morning. Congrats again, Vimal, on the change. Thanks. I guess your first call is going to be, I guess, the Q2.

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.

Q2, 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.

Sean Meakim: Thank you, Darius. Darius, Greg, Vimal, and Ann 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.

Thank you Darius.

Yes, 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.

Operator: Our first question comes from a line of Steve Toussaint at JPMorgan.

Our first question comes from the line of Steve Tusa at J P. Morgan.

Steve Toussaint: Hi. Good morning.

Vimal Kapur: Good morning.

Good morning.

Darius Adamczyk: Good morning.

Good morning.

Steve Toussaint: Congrats again, Vimal, on the change.

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.

Vimal Kapur: Thanks.

Steve Toussaint: I guess your first call is going to be, I guess, the Q2. But on that front, maybe give us some color on the sequential trends as far as earnings are concerned for the rest of the year: Q2, Q3, and Q4, just to kind of level set everybody after this pretty strong first quarter.

Vimal Kapur: But on that front, maybe give us some color on the sequential trends as far as earnings are concerned for the rest of the year: Q2, Q3, and Q4, just to kind of level set everybody after this pretty strong first quarter. Yeah. 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 quarter in PMT and HBT prior year, so we are dealing with the tough comps. So there is certainly going to be some revenue comparison issues there. Aero will be very strong, and SPS, as we guided, will be moderated performance over the rest of the year. 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.

Give us some color on the sequential trends.

As far as earnings are concerned for.

The rest of the year of <unk>, <unk> and <unk> just to kind of level set everybody. After this.

Vimal Kapur: Yeah. 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 quarter in PMT and HBT prior year, so we are dealing with the tough comps. So there is certainly going to be some revenue comparison issues there. Aero will be very strong, and SPS, as we guided, will be moderated performance over the rest of the year. 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, if you want to add anything?

Pretty pretty strong first quarter.

Yes sequentially.

As Greg gave you the full year view, we do expect the growth momentum.

Can you, 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 Sps 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.

Vimal Kapur: Greg, if you want to add anything? Yeah. No, I think you hit it. I mean, the second quarter, we're going to be really nice results, I think, 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 to four straight quarters. But the underlying business performance going forward is going to be really healthy. Sorry. So what's the sequential performance for EPS? Should we think about that as kind of in line with normal seasonality or seasonality across the quarter? Yeah. When you look at our- Yeah. When you look at our- How do we think about the phasing of EPS for the rest of the year? Yeah.

Greg Lewis: Yeah. No, I think you hit it. I mean, the second quarter, we're going to be really nice results, I think, 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 to four straight quarters. But the underlying business performance going forward is going to be really healthy.

Greg if you want to add.

No I think you hit it I mean the the.

Second quarter.

We're 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.

Steve Toussaint: Sorry. So what's the sequential performance for EPS? Should we think about that as kind of in line with normal seasonality or seasonality across the quarter? Yeah. When you look at our- Yeah. When you look at our- How do we think about the phasing of EPS for the rest of the year? Yeah.

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.

Yes, when you look when you look at our quarter like how do we how do we think about what 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.

Vimal Kapur: 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 can you just remind us? Because it's been a couple of years of. Well, you're asking about many different metrics, so it depends on which one you're talking about. EPS. EPS. EPS. EPS. Yeah. I mean, when you look at it right now, we're going to have a little bit of a heavier back end of 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.

Greg Lewis: 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.

Kind of percentage of the year in.

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.

Steve Toussaint: What is the norm? Just can you just remind us? Because it's been a couple of years of.

What is the norm can you 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, yes, EPS EPS, yes, we are.

Greg Lewis: Well, you're asking about many different metrics, so it depends on which one you're talking about.

Steve Toussaint: EPS. EPS. EPS. EPS.

Greg Lewis: Yeah. I mean, when you look at it right now, we're going to have a little bit of a heavier back end of 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.

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.

Steve Toussaint: Okay. Great. Thanks a lot for the color.

Vimal Kapur: Thanks a lot for the color. You're good. Our next question comes from Julian Mitchell with Barclays. Hi. Good morning. Maybe. Good morning. 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 doesn't sound like that's anything sort of macro or demand-related. It's maybe more on supply, so any extra color on that. And also, it looks like you're guiding for sort of sales to be up sequentially in Q2 firm-wide somewhat, but flat margins. So is that just something around maybe Aero OE mix? Just any thoughts on that, please. Yeah. 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.

Okay, great. Thanks, a lot for the color.

Operator: You're good. Our next question comes from Julian Mitchell with Barclays.

Yes.

Our next question comes from Julian Mitchell with Barclays.

Julian Mitchell: Hi. Good morning. Maybe.

Hi, good morning.

Greg Lewis: Good morning.

Julian Mitchell: 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 doesn't sound like that's anything sort of macro or demand-related. It's maybe more on supply, so any extra color on that. And also, it looks like you're guiding for sort of sales to be up sequentially in Q2 firm-wide somewhat, but flat margins. So is that just something around maybe Aero OE mix? Just any thoughts on that, please.

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 arrow.

OE mix.

Darius Adamczyk: Yeah. 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. Now, last year was a bit of an anomaly given that it was more heavily impacted by some of our supply chain challenges. But if you look at 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.

Any thoughts on that please.

Yes, Julian if you actually look at the historical revenue sort of step from Q1 to Q2 is very much in line. 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.

Vimal Kapur: Now, last year was a bit of an anomaly given that it was more heavily impacted by some of our supply chain challenges. But if you look at 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. Yeah. No, I mean, we've grown anywhere from 4% to 7%, quarter to quarter sequentially. This guide has us right in like a 3% to 4% range. Last year, we had a really big step up in PMT. It's a little bit less in Q2 this year, but again, very much within historical parameters. And from a margin perspective, again, last year we went down in margin rate from Q1 to Q2. So our guide is solidly within our Q1 performance. I think at the top end, we're up 20 basis points.

Store called graduation from Q1 to Q2, it is 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 us rising like a 3% to 4% range last year, we had a really big step up in PMT, it's a little bit less.

Greg Lewis: Yeah. No, I mean, we've grown anywhere from 4% to 7%, quarter to quarter sequentially. This guide has us right in like a 3% to 4% range. Last year, we had a really big step up in PMT. It's a little bit less in Q2 this year, but again, very much within historical parameters. And from a margin perspective, again, last year we went down in margin rate from Q1 to Q2. So our guide is solidly within our Q1 performance. I think at the top end, we're up 20 basis points. At the bottom end, we're down 20. So it's frankly right in the norm. So I wouldn't read too much into it.

And in Q2, this year, but again very much within historical parameters and.

From a margin perspective again last year, we went down in margin rate from Q1 and 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>.

Vimal Kapur: At the bottom end, we're down 20. So it's frankly right in the norm. So 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 PSS portion, kind of how are you looking at that in the second half on revenue versus warehouse, and if there's been any change in your warehouse growth or sales assumptions for the year. Thank you. Yeah. So I mean, let's kind of take this piece by piece. I mean, in terms of PSS, I mean, we've kind of actually seen 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 that's very much consistent with our assumptions and very much in line with our expectations.

It's frankly right in the right in the norm so.

Julian Mitchell: 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 PSS portion, kind of how are you looking at that in the second half on revenue versus warehouse, and if there's been any change in your warehouse growth or sales assumptions for the year. Thank you.

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 and if theres been any change in your warehouse.

Both our sales assumptions for the year. Thank you.

Darius Adamczyk: Yeah. So I mean, let's kind of take this piece by piece. I mean, in terms of PSS, I mean, we've kind of actually seen 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 that's very much consistent with our assumptions and very much in line with our expectations. When it comes to IGS, that market continues to be relatively soft. But having said that, our core activity and our opportunity activity is significantly increasing for Q2, Q3, and Q4 because as we look forward in the pipeline, that continues to get better and better. So we're cautiously optimistic that we're going to see much better order trends as we head into the last three quarters of the year.

Yes, so let's kind of take this piece by piece I mean 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 very much in line with our expectations when it comes to Ics.

Vimal Kapur: When it comes to IGS, that market continues to be relatively soft. But having said that, our core activity and our opportunity activity is significantly increasing for Q2, Q3, and Q4 because as we look forward in the pipeline, that continues to get better and better. So we're cautiously optimistic that we're going to see much better order trends as we head into the last three quarters of the year. Yep. No, I think Darius put it quite well. Look, this is IGS revenue for this year is kind of already locked given the long nature of the business here. We're really working hard to secure a good base of orders for 2023 so that we can print a good year for 2024 ahead. And one thing I can assure, we're not going to lose share. So it's more on the market.

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.

Vimal Kapur: Yep. No, I think Darius put it quite well. Look, this is IGS revenue for this year is kind of already locked given the long nature of the business here. We're really working hard to secure a good base of orders for 2023 so that we can print a good year for 2024 ahead. And one thing I can assure, we're not going to lose share. So it's more on the market. As the market recovers, we will get our fair share of demand.

Yes.

I think <unk> put it quite well.

The idea of the revenue for this year is kind of already locked given the law.

Long nominated up their business here really working hard to secure a good base of orders for 2023, so that we can bring a good year for 2024.

One thing I can assure you, we're not going to lose share to talk more on the market and as market recovers.

Vimal Kapur: As the 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. Good morning. Hey. Good morning, I guess. Maybe just be a little clearer on kind of what surprised to the upside. And it sounds like it's partly supply chain, but it also sounds like it's partly demand. So maybe just talk about that. And we saw a pretty significant uptick in accounts receivable on the balance sheet, which might indicate the March was perhaps particularly 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.

Operator: Our next question comes from Nigel Coe with Wolfe Research.

We will get our fair share of demand.

Our next question comes from Nigel Coe with Wolfe Research.

Nigel Coe: Oh, thanks. Good morning. Thanks for the question.

Oh, Thanks, good morning, Thanks for the questions.

Darius Adamczyk: Good morning.

Nigel Coe: Hey. Good morning, I guess. Maybe just be a little clearer on kind of what surprised to the upside. And it sounds like it's partly supply chain, but it also sounds like it's partly demand. So maybe just talk about that. And we saw a pretty significant uptick in accounts receivable on the balance sheet, which might indicate the March was perhaps particularly strong. So maybe just talk about that as well.

So.

Hey, guys.

Maybe just be clear on kind of what surprised to the upside and it sounds like it.

Partly supply chain, but it also sounds like a tiny demand. So maybe just talk about that.

Pretty significant uptick in accounts receivable on the balance sheet, which might indicate that March was perhaps to be strong. So maybe just talk about that as well.

Greg Lewis: 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 Chinese New Year and concerns about whether everyone was going to go home and then come back and wind up 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 were we going to get a substantial sequential improvement in output? And we did.

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.

Vimal Kapur: One was China with Chinese New Year and concerns about whether everyone was going to go home and then come back and wind up 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 were 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 and was quite strong. And then the third one was PMT. And we talked about the fact that in December, we had some challenges with a freeze in the Louisiana area with some of our factories there, and we had an outage early January, which we needed to shut down a plant and bring it back up again.

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.

We were up 20% in our output in aerospace year over year, which was above the high end of our guidance and was quite strong. And then the third one was PMT. And we talked about the fact that in December, we had some challenges with a freeze in the Louisiana area with some of our factories there, and we had an outage early January, which we needed to shut down a plant and bring it back up again. It came up quite well. In fact, on time, and after the plant was restored, it was operating at levels that were greater than before the outage even occurred. That's why what you're seeing is essentially PMT and Aerospace in particular drove probably over $100 million each on the top end of our own guide in terms of the revenue outlook.

Which was above the high end of our guidance and 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.

Vimal Kapur: It came up quite well. In fact, on time, and after the plant was restored, it was operating at levels that were greater than before the outage even occurred. That's why what you're seeing is essentially PMT and Aerospace in particular drove probably over $100 million each on the top end of our own guide in terms of the revenue outlook. Those are things that we were conscious of and were watching and managing where we could, and things turned out quite well. That was really good. Then again, as you mentioned, accounts receivable goes up. As you recall, 50% of our revenues in any quarter, or in the last month of the quarter, we had a really strong revenue performance.

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 were watching and managing where we could, and things turned out quite well. That was really good. Then again, as you mentioned, accounts receivable goes up. As you recall, 50% of our revenues in any quarter, or in the last month of the quarter, we had a really strong revenue performance. AR goes up, and we've got a lot of receivables here to collect in April, and I'm sure that will bode well for strong cash here in Q2.

Those are things that we were conscious of where were and were 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.

Vimal Kapur: AR goes up, and we've got a lot of receivables here to collect in April, and I'm sure that will bode well for strong cash here in Q2. Great. Thanks, Greg. I'll leave it there. One question. Yep. Our next question comes from Scott Davis with Melius Research. Hey. Good morning, guys. Good morning. Good morning, Vimal. And welcome, Vimal. Guys, the announced buyback is pretty darn large, $10 billion's a big number. And we're hearing chatter from kind of 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, and PE is less competitive, of course.

Ah goes up and we've got a lot of receivables here to collect in April .

Im sure that will bode well for <unk>.

Nigel Coe: Great. Thanks, Greg. I'll leave it there. One question. Yep.

Strong cash here in Q2.

Great. Thanks, Greg I'll leave it there one question yes.

Operator: Our next question comes from Scott Davis with Melius Research.

Our next question comes from Scott Davis with Melius research.

Darius Adamczyk: Hey. Good morning, guys.

Greg Lewis: Good morning. Good morning, Vimal.

Hey, good morning, guys.

Good morning, good morning, Bonnie.

Scott Davis: And welcome, Vimal.

And welcome available.

Scott Davis: Guys, the announced buyback is pretty darn large, $10 billion's a big number. And we're hearing chatter from kind of 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, and PE is less competitive, of course. How do you guys think about your pipeline of deals that's out there and the optionality versus kind of the guide, I think, of share countdown, kind of 1% ballpark means you may not be going in and hitting the bid 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 big question there is, what's your backlog and pipeline look like? And I'll stop there. Thanks.

Got it you announced this buyback is pretty darn large 10 billion is a big number.

And.

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 <unk>.

It's less competitive of course.

Vimal Kapur: How do you guys think about your pipeline of deals that's out there and the optionality versus kind of the guide, I think, of share countdown, kind of 1% ballpark means you may not be going in and hitting the bid 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 big question there is, what's your backlog and pipeline look like? And I'll stop there. Thanks. Hey, Scott, real quick, just what you saw with the $10 billion authorization, that is 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 it to $8 or 10 billion.

Yes.

What how do you guys think about your your pipeline of deals that's out there and the Optionality 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 the 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 to the big question. There is what's your backlog and pipeline look like.

Greg Lewis: Hey, Scott, real quick, just what you saw with the $10 billion authorization, that is 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 it to $8 or 10 billion. And so you should view that as us just doing our normal restacking 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 I'm sure Darius will talk about the capital allocation aspect.

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.

Vimal Kapur: And so you should view that as us just doing our normal restacking 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 I'm sure Darius will talk about the capital allocation aspect. Yeah, I mean, in terms of our framework, you've got to remember, we are holding to the framework of 1% min buyback per year on average. And we've done that. We've stuck to that. And I think that's very, that $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. It's just supportive of that. And we're going to continue to buy back shares as we see the priced aggressively, and we'll do at least 1%.

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 I am sure Darius will talk about the capital allocation.

Darius Adamczyk: Yeah, I mean, in terms of our framework, you've got to remember, we are holding to the framework of 1% min buyback per year on average. And we've done that. We've stuck to that. And I think that's very, that $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. It's just supportive of that. And we're going to continue to buy back shares as we see the priced aggressively, and we'll do at least 1%. On the M&A, which I think is the more important question, I think I've always said there's time to be a buyer and there's a time to be a seller.

In terms of our framework you've got to remember we are we are holding to the framework the 1% buyback per year on average and we've done that we stuck to that and I think that thats varied 10 billion authorization continues to underpin that that kind of an algorithm. So I think I wouldn't look too much or too little into it it just supportive mcfadden.

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 I think <unk> always said there is time to be a buyer and there is a time to be a seller.

Vimal Kapur: On the M&A, which I think is the more important question, I think I've always said there's time to be a buyer and there's a time to be a seller. I have not seen a better time, at least since I've been CEO, to be a buyer. You saw 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. 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. Darius, just natural follow-up. It'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 or that bullish in your tenure. Would you consider going up in size?

I have not seen a better time, at least since I've been CEO, to be a buyer. You saw 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. 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.

I have not seen a better time at least since I've been CEO to be a buyer I know you're still one deals 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.

Scott Davis: Darius, just natural follow-up. It'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 or that bullish in your tenure. Would you consider going up in size? You just said bolt-ons, but perhaps something a little bit more larger in the pipe?

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.

Vimal Kapur: You just said bolt-ons, but perhaps something a little bit more larger in the pipe? Well, I mean, I think we said the bolt-on for us is up to a $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 significantly. I mean, you see the interest rates, and frankly, the competition is different. The competition for assets now is primarily strategics. A lot of the PE activity is not, I wouldn't say it's nonexistent, but it's not nearly as strong as it used to be. And I think it's smart to be a buyer or a seller in various cycles 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.

Perhaps something a little bit more.

Darius Adamczyk: Well, I mean, I think we said the bolt-on for us is up to a $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 significantly. I mean, you see the interest rates, and frankly, the competition is different. The competition for assets now is primarily strategics. A lot of the PE activity is not, I wouldn't say it's nonexistent, but it's not nearly as strong as it used to be. And I think it's smart to be a buyer or a seller in various cycles 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.

Larger in the pipe.

Well I mean, I think we said the bolt on for US is to up to $5 $67 billion range. So I would say that that's decent in size. The reason I'm more bullish views look.

Cost of money has gone up significant I mean, you see 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 theory.

Cycles 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.

Scott Davis: Very encouraging. Thank you. I'll pass it on, guys. Good luck.

Vimal Kapur: I'll pass it on, guys. Good luck. Thank you. Our next question comes from Sheila Kahyaoglu with Jefferies. Thank you. And good morning, everyone. Maybe bigger picture as well. Can you talk about what you guys are seeing, Darius, across the pricing portfolio? I think, Greg, you mentioned pricing contributed 6 points to organic growth of 8, including SPS. How does pricing balance out in volume throughout the remainder of the year, and how do you see it playing across the segments? Yeah. I mean, I think you saw kind of a 6, 2 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.

Very encouraging thank you I'll pass it on guys. Good luck.

Darius Adamczyk: Thank you.

Thank you.

Operator: Our next question comes from Sheila Kahyaoglu with Jefferies.

Our next question comes from Sheila <unk> with Jefferies.

Sheila Kahyaoglu: Thank you. And good morning, everyone. Maybe bigger picture as well. Can you talk about what you guys are seeing, Darius, across the pricing portfolio? I think, Greg, you mentioned pricing contributed 6 points to organic growth of 8, including SPS. How does pricing balance out in volume throughout the remainder of the year, and how do you see it playing across the segments?

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 organic growth, including Fps.

How does pricing balance out in volume throughout the remainder of the year and how do you see across the segments.

Darius Adamczyk: Yeah. I mean, I think you saw kind of a 6, 2 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 within our portfolio.

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.

Vimal Kapur: 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 within our portfolio. So that's kind of how we see the setup. Obviously, coming off a 6% and projecting forward for the year, we expect something a bit lower in the second half. But that's all very much within the algorithm that we expected for the year. And I actually gained confidence in that algorithm given our raise both in the bottom, and top end of our ranges. I don't know, Greg, if you want to. Yeah. No, I think you said it. This is not really that different from what we talked about, and we have positive price every quarter of this year. So no concerns in that. Again, we've talked about it for the last six, nine months.

So that's kind of how we see the setup. Obviously, coming off a 6% and projecting forward for the year, we expect something a bit lower in the second half. But that's all very much within the algorithm that we expected for the year. And I actually gained confidence in that algorithm given our raise both in the bottom, and top end of our ranges. I don't know, Greg, if you want to.

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 actually gained confidence in that algorithm given the 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.

Greg Lewis: Yeah. No, I think you said it. This is not really that different from what we talked about, and we have positive price every quarter of this year. So no concerns in that. Again, we've talked about it for the last six, nine months. As inflation settles down a little bit, there are going to be pockets where it won't be as necessary as it was a year ago. And so that's what you're seeing. That's what you're seeing now.

Vimal Kapur: As inflation settles down a little bit, there are going to be pockets where it won't be as necessary as it was a year ago. And so that's what you're seeing. That's what you're seeing now. Great. Thank you. Our next question comes from Jeff Sprague with Vertical Research Partners. Thank you. Good morning, everyone. Good morning too. Hey. Good morning. Hey, just a two-parter on kind of Aero OE. I mean, it looks like you're making pretty good progress, as you stated, and you acknowledged some supply chain issues. But I was a little surprised when your customers called you out by name yesterday. I'm just wondering if there's 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. That's just kind of part one, if you could add any color there.

Won't be as necessary as it was a year ago.

And so thats, what youre seeing.

Sheila Kahyaoglu: Great. Thank you.

What youre seeing now.

Great. Thank you.

Operator: Our next question comes from Jeff Sprague with Vertical Research Partners.

Our next question comes from Jeff Sprague with vertical research partners.

Jeffrey Sprague: Thank you. Good morning, everyone.

Sean Meakim: Good morning too.

Thank you good morning, everyone.

Darius Adamczyk: Hey. Good morning.

Jeffrey Sprague: Hey, just a two-parter on kind of Aero OE. I mean, it looks like you're making pretty good progress, as you stated, and you acknowledged some supply chain issues. But I was a little surprised when your customers called you out by name yesterday. I'm just wondering if there's 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. That's 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 kind of peak year for headwinds, or does some of that maybe move into 2024 if deliveries aren't quite what you thought they might be?

Hey, Good morning, Hey, just two two parter on kind of Aero OE.

It looks like Youre, making pretty good progress as you stated and you acknowledged.

Some supply chain issues, but it was a little surprised when your customers call. It by name yesterday.

I'm just 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.

Vimal Kapur: And then just also on OE kind of incentive payments and the like, where do we stand for 2023 now? Is this still kind of peak year for headwinds, or does some of that maybe move into 2024 if deliveries aren't quite what you thought they might be? Yeah. So let me kind of start with the first part of your question. I think as we look at our output, it's ranges depending upon whether it's avionics or some of the mechanical things. We're up anywhere from 20% to 40-plus%. 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. It's not sort of throughput to our facility. So we have a lot of issues with our supply base as well, and frankly, some of those being large public companies.

OE kind of incentive payments and the like where do we stand for 2023 now is this still kind of peak year for headwinds or does some of that maybe move into 2024 deliveries aren't quite what you thought they might be.

Darius Adamczyk: Yeah. So let me kind of start with the first part of your question. I think as we look at our output, it's ranges depending upon whether it's avionics or some of the mechanical things. We're up anywhere from 20% to 40-plus%. 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. It's not sort of throughput to our facility. So we have a lot of issues with our supply base as well, and frankly, some of those being large public companies. I'm 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.

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 mechanical things were up anywhere from 20% to 40 plus percent. 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 I'm not going to sit here and call them out.

Vimal Kapur: I'm 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. I'm not going to use somebody else as an excuse for us not delivering. That's our job to manage. 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's getting better, and it's getting better relatively quickly, probably even better than we anticipated. But there's work to do. There's four or five layers of the supply chain, and what we're seeing and feeling flows down 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%.

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 deliberate.

I'm not going to use somebody else as an excuse for us not delivering. That's our job to manage. 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's getting better, and it's getting better relatively quickly, probably even better than we anticipated. But there's work to do. There's four or five layers of the supply chain, and what we're seeing and feeling flows down 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%.

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's work to do.

And there's four or five layers of the supply chain.

We're seeing and feeling.

Flows down to our suppliers, we're still getting some.

Very inconsistent supply base I mean, our day rate went from being 19%, 20% in Q4 down to 15, but 15 still not good but improving and we're making those improvements and we've launched hundreds literally.

Vimal Kapur: But 15 is still not good, but improving, and we're making those improvements. We've launched hundreds and, I mean, 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 base. And I don't know, Greg. Yeah. On the incentive side, we're not making any adjustment to our expectations as far as that is concerned. It's still very early in the year. As far 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'll see.

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.

Greg Lewis: Yeah. On the incentive side, we're not making any adjustment to our expectations as far as that is concerned. It's still very early in the year. As far 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'll see. But at this moment, we're keeping our expectations as they were.

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 ship 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.

Vimal Kapur: But at this moment, we're keeping our expectations as they were. I think one point I wanted to add was that the diversity of our portfolio in Aero is quite unique. We supply engines, avionics, navigation equipment, lighting, brakes. The list goes on. So due to diversity, our volume is growing overall, but there could be some category where the growth is 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 occur 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 here. Great. Thanks for that color. Appreciate it. Our next question comes from Joe Ritchie with Goldman Sachs. Thanks. Good morning, everybody. Hey, Jeff. Good morning.

Vimal Kapur: I think one point I wanted to add was that the diversity of our portfolio in Aero is quite unique. We supply engines, avionics, navigation equipment, lighting, brakes. The list goes on. So due to diversity, our volume is growing overall, but there could be some category where the growth is 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 occur 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 here.

The diversity of our portfolio and <unk> is quite unique we supply.

<unk> avionics navigation equipment lighting breaks the list goes on so 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 occur consistently across all <unk>.

Other clients. So I want to have that appreciation that our diversity is one of the unique factors compared to our peer group there.

Jeffrey Sprague: Great. Thanks for that color. Appreciate it.

Great. Thanks for that color I appreciate it.

Operator: Our next question comes from Joe Ritchie with Goldman Sachs.

Our.

Question comes from Joe Ritchie with Goldman Sachs.

Joe Ritchie: Thanks. Good morning, everybody.

Joe Ritchie: Hey, Jeff. Good morning.

Thanks, Good morning, everybody.

Vimal Kapur: 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. And what's expected to improve as the year progresses? Is there friction associated with the supply chain that's impacting the margins today? Because your aftermarket business is growing faster than OE. So just any color on what gets better in Aero from a margin standpoint as the year progresses. Yeah. Sure. I mean, think about it this way. The first and most basic one is volume leverage, right? We are very much in control of our fixed cost, and revenue is going to go up each and every quarter sequentially, and it will have a crescendo in probably the highest quarter in Q4. So just by that alone, we're going to get some volume leverage.

Joe Ritchie: 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. And what's expected to improve as the year progresses? Is there friction associated with the supply chain that's impacting the margins today? Because your aftermarket business is growing faster than OE. So just any color on what gets better in Aero from a margin standpoint as the year progresses.

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 and whats expected to improve as the year progresses as their friction associated with the supply chain, that's impacting the margin today, because youre aftermarket businesses 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.

Greg Lewis: Yeah. Sure. I mean, think about it this way. The first and most basic one is volume leverage, right? We are very much in control of our fixed cost, and revenue is going to go up each and every quarter sequentially, and it will have a crescendo in probably the highest quarter in Q4. So just by that alone, we're going to get some volume leverage. So there's not 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. It's fairly simple.

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.

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 there is not like any.

Vimal Kapur: So there's not 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. It's fairly simple. Okay. Great. Good enough. Thanks. Our next question comes from Deane Dray with RBC Capital Markets. Thank you. Good morning, everyone. Good evening. Hey, Darius. Since this is your last call, I just want to say congratulations on your run as CEO. And look, all CEOs want to go out on a strong note and leaving the company in good hands. And I think this quarter speaks to that. So congrats. Thank you. Appreciate that.

Big changes from one quarter to the next.

That I would call out from a mixed perspective now getting 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.

Joe Ritchie: Okay. Great. Good enough. Thanks.

Hey, great good enough. Thanks.

Operator: Our next question comes from Deane Dray with RBC Capital Markets.

Our next question comes from Deane Dray with RBC capital markets.

Deane Dray: Thank you. Good morning, everyone.

Darius Adamczyk: Good evening.

Thank you good morning, everyone.

Deane Dray: Hey, Darius. Since this is your last call, I just want to say congratulations on your run as CEO. And look, all CEOs want to go out on a strong note and leaving the company in good hands. And I think this quarter speaks to that. So congrats.

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.

Darius Adamczyk: Thank you. Appreciate that.

Thank you.

Vimal Kapur: Hey, for my one question on integrated aftermarket, there was always this high growth in installations, and we were waiting to get that critical mass in the installed base to start to get to the aftermarket. Have you reached that point? And what's that mix going forward between OE and aftermarket? Thanks. Yep. So overall, our performance on aftermarket has been double digits for the last couple of years, including this year. 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, 2/3, 1/3. I think we are going towards that mix now, which is a start. I mean, this business is seven, eight years old. So if you roll the dice 15 years from now, the mix will be probably more in favor of aftermarket as we are experiencing other parts of Honeywell.

Deane Dray: Hey, for my one question on integrated aftermarket, there was always this high growth in installations, and we were waiting to get that critical mass in the installed base to start to get to the aftermarket. Have you reached that point? And what's that mix going forward between OE and aftermarket? Thanks.

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.

Vimal Kapur: Yep. So overall, our performance on aftermarket has been double digits for the last couple of years, including this year. 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, 2/3, 1/3. I think we are going towards that mix now, which is a start. I mean, this business is seven, eight years old. So if you roll the dice 15 years from now, the mix will be probably more in favor of aftermarket as we are experiencing other parts of Honeywell. But it's trending, very frankly, better than our thesis, consistently north of 15%. And we are pretty pleased with that, and margins are pretty attractive.

Yeah. So overall outperformance 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 aftermarket SCR experienced in other parts of Honeywell, but its trending very frankly better than our thesis.

Vimal Kapur: But it's 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. Our next question will come from Chris Snyder with UBS. Thank you. So the guidance, at least at the midpoint, seems to suggest slightly better organic growth in the back half relative to Q2 and comes despite tough comps and maybe some macro concerns out there. So could you just maybe provide some more color on the subsegments or business lines where you think you could see better organic growth relative to Q2? And also, does this dynamic maybe reflect some Q2 conservatism? The prior commentary kind of said that Q2 seasonality is coming in below normalized levels. Thank you. Sure.

Consistently north of 15% and we're pretty pleased with that and margins are pretty attractive.

Deane Dray: Great. Thank you.

Great. Thank you.

Operator: Our next question comes from Gautam Khanna with Cowen. Gautam, your line is now open. Our next question will come from Chris Snyder with UBS.

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.

Chris Snyder: Thank you. So the guidance, at least at the midpoint, seems to suggest slightly better organic growth in the back half relative to Q2 and comes despite tough comps and maybe some macro concerns out there. So could you just maybe provide some more color on the subsegments or business lines where you think you could see better organic growth relative to Q2? And also, does this dynamic maybe reflect some Q2 conservatism? The prior commentary kind of said that Q2 seasonality is coming in below normalized levels. Thank you.

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 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 two relative to Q2 and also does this dynamic maybe reflect on Q2 conservatism.

Prior commentary kind of said that Q2 seasonality is coming in below normalized levels. Thank you.

Greg Lewis: 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 Q2, 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 terms of the back end of the year, as far as PMT is concerned, I think we'll 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. And the second half will get a little bit easier, and that'll take a little bit of pressure off the overall portfolio. So I think we're going to see really nice growth throughout the portfolio in three out of the four businesses, and the easing of the SPS comps will help.

Vimal Kapur: 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 Q2, 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 terms of the back end of the year, as far as PMT is concerned, I think we'll 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. And the second half will get a little bit easier, and that'll take a little bit of pressure off the overall portfolio.

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.

Back that <unk> of.

It is very much in line with kind.

Kind of our historical.

Trends and so we feel good about the guided range that we're at.

In terms of the back end of 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.

Vimal Kapur: So I think we're going to see really nice growth throughout the portfolio in three out of the four businesses, and the easing of the SPS comps will help. Yeah. And the other factor is that we're gaining more and more confidence in output out of aerospace. I mean, we're continuing to grow. The work that we've done in terms of mending the supply chain is producing results. I quoted some of 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 the growth that we have and looking forward for signs, especially order rates for HPC, to see what that looks like because obviously, our Q1 results there were also better than expectations, both in terms of revenue as well as orders.

And three out of the four businesses and the easing of the Sps comps.

Darius Adamczyk: Yeah. And the other factor is that we're gaining more and more confidence in output out of aerospace. I mean, we're continuing to grow. The work that we've done in terms of mending the supply chain is producing results. I quoted some of 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 the growth that we have and looking forward for signs, especially order rates for HPC, to see what that looks like because 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, and that may offer some further upside.

Yes, and the other factor is that we're gaining more and more confidence in the output auto aerospace I mean, we're continuing to grow.

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 the growth that we have in <unk>.

Looking forward for signs, especially the order rates for HPT to Sue holds with what that looks like.

Obviously, our Q1 results there were also better than expectations. Both in terms of revenue as well as order. So we'll see how Q2 goes in that May offer some further upside.

Vimal Kapur: So we'll see how Q2 goes, and that may offer some further upside. Thank you. Appreciate that. Thank you. I would now like to turn the call back over to Darius Adamczyk for closing remarks. Once more, I want to thank our shareholders for ongoing support. I valued our dialogue over the past seven years. I also want to thank the entire Honeywell family, including our colleagues, both present and past. We've built a tremendous company over the past two decades, and it's thanks to all 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, I have the utmost confidence that we'll continue to do so in the future under Vimal's leadership with the typical level of operational rigor we've come to expect from Honeywell.

Chris Snyder: Thank you. Appreciate that.

Operator: Thank you. I would now like to turn the call back over to Darius Adamczyk for closing remarks.

Thank you I appreciate that.

Thank you I would now like to turn the call back over to Darius Adam Jack for closing remarks.

Darius Adamczyk: Once more, I want to thank our shareholders for ongoing support. I valued our dialogue over the past seven years. I also want to thank the entire Honeywell family, including our colleagues, both present and past. We've built a tremendous company over the past two decades, and it's thanks to all your hard work and perseverance. It has been an honor to be able to lead this company. We delivered outstanding first-quarter results.

Once more I want to thank our shareholders for ongoing support our valued our dialogue over the past seven years gross we want to thank the entire Honeywell family, including our colleagues both present and past we've built a tremendous company over the past two decades and thanks to all your hard work and perseverance.

It has been an honor to be able to lead this company delivered outstanding first quarter results more importantly, the utmost confidence that we'll continue to do so in the future under <unk> leadership with a typical level of operational rigor, we have come to expect from Honeywell.

More importantly, I have the utmost confidence that we'll continue to do so in the future under Vimal's leadership with the 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, and please stay safe and healthy. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Vimal Kapur: 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, and please stay safe and healthy. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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.

Thank you for participating you may now disconnect.

Q1 Honeywell International Earnings Call

Request a DemoDemo

HON

Honeywell International

Earnings