Q4 2023 Honeywell International Inc Earnings Call

Thank you for standing by and welcome to the Honeywell fourth 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 Meakin, Vice President of Investor Relations. Please go ahead.

Sean Meakin: Thank you Daniela good morning, and welcome to Honeywell's fourth quarter 2023 earnings in 2024 outlook Conference call.

Sean Meakin: On the call with me today are Chief Executive Officer, and senior Vice President and Chief Financial Officer, Greg Lewis.

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

Sean Meakin: 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 our businesses as we see them today and are subject to risks and uncertainties, including the one described in our SEC filings.

Sean Meakin: This morning, we will review our financial results for the fourth quarter and full year 'twenty, three and discuss our outlook for the year and share our guidance for the first quarter and full year 2024.

Sean Meakin: As always we'll leave time for your questions at the end with that I'll turn the call over to CEO I'm looking for.

Thank you, Sean and good morning, everyone.

CEO: To start I would like to acknowledge some important leadership changes announced this morning.

CEO: Both Honeywell's Board of director has elected me to take on additional role of chairman when our current executive Chairman Darius a damn Jack retired from the board in June. Additionally, Bill Air has been elected to succeed Scott Davis as independent lead director of the board effective this mi.

CEO: First I want to thank Gary for his innumerable contribution to Honeywell as well as his mentorship over the past two years in particular.

CEO: Also like to thank Scott for his insights over the past four years as an independent director and leadership throughout the CEO succession process.

CEO: Congratulations to bill for his appointment as a newly director I look forward to partnering with him in a TV Honeywell sort of the growth initiatives Lastly, I would like to thank period and the board for their support and naming me chairman.

CEO: I'm proud and honored to lead this great company and wake up every day energized to take onwards toughest challenges along with our 100000 future shippers.

CEO: Now, let's turn to the main topic of today in discussion on slide three.

CEO: We had a solid finish to another challenging year delivering on our 2023 commitments Honeywell's word class exited the operating system and differentiated portfolio of technology enabled us to achieve our initial full year guidance for organic growth adjusted earnings per share and free cash flow and surpassed.

CEO: High end of our original guidance for segment margin expansion.

CEO: Full year organic growth of 4% year on year with a strong demonstration of the resiliency.

CEO: Long cycle aerospace and energy oriented businesses, while we await acceleration in some of our short cycle businesses as markets continue to normalize.

CEO: Before we get into a more detailed discussion on 2023 results.

CEO: And 2024 outlook expectations, let me take a minute to revisit my priorities for Honeywell.

CEO: First our aim is to deliver the upper end of our long term organic sales growth target range of 4% to 7% in order to achieve that we had on hand, enhancing our innovation playbook accelerating our offering and sustainability and software monetizing our installed base and leveraging our leadership position in high.

Growth regions second over the last six years the effort of the grid integration have transformed Honeywell into an integrated operating company that deploys world class capability at scale and multiple growth enablers that benefit the entire enterprise.

CEO: We are evolving Honeywell accelerator version three point all of our operating system to drive further value through standardization by business model built on a contemporary digital backbone.

CEO: In addition to making this organization simpler and more efficient to operate accelerator is a powerful source of profitable growth all of our businesses and potential addition to our portfolio.

Operator: Thank you for standing by, and welcome to the Honeywell fourth quarter 2020. At this time, all participants are in a listening mode. To the speakers, please advise that today's call is being, I would now like. Let's go ahead.

CEO: Third we continue to evaluate and undertake actions to optimize our portfolio will do so by executing on strategic bolt on acquisitions, while divesting non core lines of business to consistently upgrade the quality of the portfolio and accelerate value creation.

CEO: This is a powerful combination, which delivered profitable growth and strong cash generation, creating a compelling long term value proposition for our shareowners.

Sean Meakim: Thank you, Jamila. Good morning, and welcome to Honeywell's fourth quarter 2023 earnings and 2024 Outlook conference call. On the call with me today are Chief Executive Officer Vimal Kapur and Senior Vice President and Chief Financial Officer Greg Lewis. This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website.

CEO: Now, let's turn to slide four to discuss our progress on portfolio shaping goals.

CEO: In the fourth quarter, we announced the acquisition of carriers global access solution business for nearly $5 billion, enabling Honeywell to become a leader in security solution for the digital age this transaction, which is clearly in line with our strategic bolt on M&A framework further enhances our equipment agnostic hi, Mark.

Sean Meakim: 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 our businesses as we see them today and are subject to risks and uncertainties, including those described in our SEC filings. This morning, we will review our financial results for the fourth quarter and full year 23, discuss our outlook for the year, and share our guidance for the first quarter and full year 2024. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to CEO Vimal Kapur. Thank you, Sean. And good morning, everyone.

CEO: <unk> product business mix within building automation Honeywell's overall security portfolio will be more than $1 billion in sales when the deal closes this year growing at accretive rate to sport Honeywell long term growth framework.

CEO: In addition earlier in January continuum announced its first equity raises the margin of Honeywell quantum solution and Cambridge quantum computing in late 2021, securing $300 million at a pre money valuation of $5 billion, demonstrating continued leading position on fault tolerant quantum computing.

Vimal M. Kapur: To start, I would like to acknowledge some important leadership changes announced this morning. First, Honeywell's Board of Directors has elected me to take on the additional role of Chairman when our current Executive Chairman, Darius Adamczyk, retires from the Board in June. Additionally, Bill Ayer has been elected to succeed Scott Davis as Independent Lead Director of the Board, effective this May.

CEO: The downward anchored by continued strategic partner JP Morgan Chase with additional participation from Mitsui <unk> company Amgen and Honeywell.

CEO: This investment brings the total capital raised by continuum since inception to approximately $625 million quantum computing the key enabler for AI to reach a scale potential and continue with our pioneering key breakthrough and expanding use cases across a number of industries.

Vimal M. Kapur: First, I want to thank Darius for his innumerable contribution to Honeywell, as well as his mentorship over the past two years in particular. I would also like to thank Scott for his insights over the past four years as an independent director and leadership throughout the CEO succession process. Congratulations to Bill for his appointment as our new lead director. I look forward to partnering with him in achieving Honeywell's strategic growth initiatives. Lastly, I would like to thank Darius and the board for their support in naming me chairman.

CEO: <unk> remains a majority owner with over 50% equity ownership and we are committed to demonstrating a path to monetization of Australia within the next 18 months.

CEO: With our recent portfolio announcements, we are attract to accelerate capital deployment and exceed our commitment to deploy at least $25 billion of capital in 2023 through 2025 with a bias towards high value accretive M&A, our balance sheet continues to give us meaningful capacity for both.

Vimal M. Kapur: I'm humbled and honored to lead this great company and wake up every day energized to take on the world's toughest challenges along with our 100,000 future shapers. Now let's turn to the main topic of today and discussion on slide three. We had a solid finish to another challenging year, delivering on our 2023 commitments. Honeywell's world-class accelerator operating system and differentiated portfolio of technology enabled us to achieve our initial full-year guidance for organic growth, adjusted earnings per share, and free cash flow and surpass the high end of our original guidance for segment margin expansion. Foulier's organic growth of 4% year-on-year was a strong demonstration of resiliency by our long-cycle aerospace and energy-oriented businesses, while we expect acceleration in some of our short-cycle businesses as markets continue to normalize.

CEO: Opportunistic share repurchases and M&A and the ongoing activity ongoing relatively favorable demand environment in 2024 will support the execution of our M&A strategy on a consistent basis.

Speaker Change: Before I hand off to Greg, Let me turn to slide five to review some of our recent exciting wins.

Greg Lewis: Let me briefly highlight some of our recent commercial proof points. These wins demonstrate innovation across our portfolio and support Honeywell's recently announced plan to align our portfolio to three compelling mega trend automation future of aviation and energy transition all underpinned by robust digitalization capability and solution.

Greg Lewis: In Aero, we secured over $1 billion in new avionics and mechanical wins directly with airlines carriers in 2023, representing over 2500 aircrafts.

Vimal M. Kapur: Before we get into a more detailed discussion on 2023 results and 2024 outlook expectations, let me take a minute to revisit my priorities for Honeywell. First, our aim is to deliver the upper end of our long-term organic sales growth target range of 4% to 7%. In order to achieve that, we are enhancing our innovation playbook, accelerating our offering in sustainability and software, monetizing our installed base, and leveraging our leadership position in high-growth regions. Second, over the last six years, the efforts of the great integration have transformed Honeywell into an integrated operating company that deploys world-class capability at scale and multiple growth enablers that benefit the entire enterprise. We are evolving Honeywell Accelerator version 3.0 of our operating system to drive further value through standardization by business model built on our contemporary digital backbone.

Greg Lewis: With our strong start to returning for United chose Honeywell to provide a wide range of advanced avionics, we're closer to 350 aircraft that will enter into service over the next decade. This win is another encouraging demand signal and demand stayed the strength of our offering in the marketplace.

Greg Lewis: In the energy space, our battery energy storage solution will be deployed to six solar parks in U S Virgin Islands.

Greg Lewis: When completed our automation solution will boost the islands, the carbonization effort by fulfilling 30% of the energy need through new knowable sources lowering both emission in consumer and energy cost. We remain excited about our sustainable solutions portfolio and honeywell's position at the forefront of words ongoing energy transition.

Greg Lewis: Finally, we'll be incorporating our hydrogen purification and carbon capture technologies into a multi billion dollar low carbon ammonia projects to this up to 97% of the plants carbon dioxide emission can be sequestered and the project will remove up to 7 million tons of Sidoti <unk> over per year.

Vimal M. Kapur: In addition to making this organization simple and more efficient to operate, Accelerator is a powerful source of profitable growth for all of our businesses and a potential addition to our portfolio. Third, we continue to evaluate and undertake actions to optimize our portfolio. We'll do so by executing on strategic bolt-on acquisitions while divesting non-core lines of business to consistently upgrade the quality of the portfolio and accelerate value creation. This is a powerful combination that delivers profitable growth and strong cash generation, creating a compelling long-term value proposition for our share owners. Now let's turn to slide four to discuss our progress on portfolio shaping goals. In the fourth quarter, we announced the acquisition of Carrier's Global Access Solutions business for nearly $5 billion, enabling Honeywell to become a leader in security solutions for the digital age.

Greg Lewis: This project is yet another example of honeywell's ability to help solve our customers' toughest challenges.

Greg Lewis: Sign of what's to come for our energy and sustainability solutions business now, let me turn it over to Greg on slide six to discuss our fourth quarter and full year 2023 results in more detail and also provide guidance for 2024.

Greg Lewis: Thank you <unk> and good morning, everyone.

Greg Lewis: Let me begin on slide six.

Greg Lewis: As a reminder, we are reporting fourth quarter and full year 2023 results under our legacy segment breakdown and providing our 2024 outlook using the new segment structure, which went into effect in January.

Vimal M. Kapur: This transaction, which is clearly in line with our strategic bolt-on M&A framework, further enhances our equipment-agnostic, high-margin product-business mix within building automation. Honeywell's overall security portfolio will be more than a billion dollars in sales once the deal closes this year, growing at a rapid rate to support Honeywell's long-term growth framework. In addition, earlier in January, Quantinium announced its first equity raise since the merger of Honeywell Quantum Solution and Cambridge Quantum Computing in late 2021, securing $300 million at a pre-money valuation of $5 billion, demonstrating Quantinium's leading position on fault-tolerant quantum computing. The round was anchored by Quantinium's strategic partner, JPMorgan Chase, with additional participation from Mitsui Amgen, and Honeywell. This investment brings the total capital raised by Continuum since inception to approximately $625 million. Quantum computing is a key enabler for AI to reach its full potential, and Continuum is a pioneering key breakthrough and expanding use cases across a number of industries.

Greg Lewis: With that let's turn to the results we had a strong finish to another challenging year delivering on our 2023 commitments. Despite a dynamic macro backdrop, Honeywell disciplined execution and differentiated solutions enabled us to deliver on our full year organic sales segment margin earnings and free cash flow commitments.

Greg Lewis: Full year organic sales were up 4% year over year, achieving the low end of our long term financial growth algorithm and beating the midpoint of our initial guidance. Despite a 5% drag from lower safety and productivity solutions sales.

Greg Lewis: Profit grew 8% year over year with segment margin expansion of 100 basis points to 22, 7% above our long term annual expansion target of 40 to 60 basis points and 10 basis points above the high end of our initial guidance.

Greg Lewis: Adjusted earnings per share grew 5% or 11% when excluding the impact of lower noncash pension income year over year.

Greg Lewis: We generated free cash flow of $4 $3 billion.

Greg Lewis: At the high end of our guidance range or $5 3 billion, excluding the after tax impact of onetime settlements.

Vimal M. Kapur: Honeywell remains the majority owner with over 50% equity ownership, and we are committed to demonstrating a path to monetization of our assets within the next 18 months. With the recent portfolio announcement, we are on a track to accelerate capital deployment and exceed our commitment to deploy at least $25 billion of capital in 2023 through 2025 with a bias towards high-value accretive M&A. Our balance sheet trend continues to give us meaningful capacity for both opportunistic share repurchases and M&A, and the ongoing relatively favorable deep environment in 2024 will support the execution of our M&A strategy on Before I hand over to Greg, let me turn to slide five to review some of our recent exciting wins.

Greg Lewis: We deployed $8 3 billion of capital, including $3 7 billion to share repurchases 1 billion, the capex $700 million of M&A and $2 9 billion to dividend payouts, which we increased for the 14th time in the past 13 years.

Greg Lewis: Fourth quarter organic sales were up 2% led by the 11th consecutive quarter of double digit growth in our commercial aerospace business.

Greg Lewis: Segment margin expanded by 60 basis points to 23, 5% driven by expansion in performance materials and technologies and aerospace.

Greg Lewis: Earnings per share for the fourth quarter was $1 91.

Greg Lewis: Up 26% year over year.

Greg Lewis: And adjusted earnings per share was $2 60.

Vimal M. Kapur: Let me briefly highlight some of our recent commercial proof points. These wins demonstrate innovation across our portfolio and support Honeywell's recently announced plans to align its portfolio to three compelling megatrends, automation, the future of aviation, and energy transition, all underpinned by robust digitalization capability and solutions. In the aerospace industry, we secured over $1 billion in new avionics and mechanical wins directly with airline carriers in 2023, representing over 2,500 aircraft. With a strong start to 2024, United chose Honeywell to provide a wide range of advanced avionics for close to 350 aircraft that will enter into service over the next decade. This win is another encouraging demand signal and demonstrates the strength of our offering in the marketplace. In the energy space, our battery energy solar solution will be deployed to six solar parks in the U.S. Virgin Islands.

Greg Lewis: Up 3% year over year.

Greg Lewis: And adjustment to our estimated future Bendix liability at the end of the year and our annual pension Mark to market adjustment drove the difference between earnings per share and adjusted earnings per share.

Greg Lewis: Excluding a 13 noncash pension income headwind adjusted earnings per share was up 8%.

Greg Lewis: Bridges for adjusted EPS from both <unk> 22 to <unk> 23 in FY 'twenty two to FY2023 can be found in the appendix of this presentation.

Greg Lewis: Free cash flow was $2 6 billion.

Greg Lewis: With free cash flow margin of 27, 4% versus 23, 1% and <unk> as working capital was a greater source of cash compared to the prior year.

Greg Lewis: We deployed $2 $6 billion of cash flow to share repurchases dividend high return Capex and M&A.

Greg Lewis: The fourth quarter was another strongly for our backlog, which grew to a new record of $31 $8 billion up 8% year over year, and 1% sequentially due to strength in Aero PMT and HPT.

Vimal M. Kapur: When completed, our automation solution will boost the island's decarbonization effort by fulfilling 30% of the energy need through renewable sources, lowering both emission and consumer energy costs. We remain excited about our sustainable solutions portfolio and Honeywell's position at the forefront of the world's ongoing energy transition. Finally, we'll be incorporating our hydrogen purification and carbon capture technologies into a multi-billion dollar low carbon ammonia project. Through this, up to 97% of the plant's carbon dioxide emissions can be sequestered, and the project could remove up to 7 million tons of CO2 pollution per year.

Greg Lewis: Orders were up 1% in the quarter led by growth in commercial Aero PMT in HPT, including orders growth in building products. This setup gives us confidence in our 2024 outlook, which I will discuss in a few minutes.

Greg Lewis: As always we continue to execute on our proven value creation framework, which is underpinned by our accelerator operating system.

Greg Lewis: I'm confident in the strength of our backlog the tailwind we're seeing across our long cycle end markets and our ability to navigate a dynamic operating environment, which we have demonstrated year after year.

Greg Lewis: This project is yet another example of Honeywell's ability to help solve our customer stuffer challenges and a sign of what's to come for our energy and sustainability solutions business. Now, let me turn it over to Greg on slide six to discuss our fourth quarter and full year 2023 results in more detail and also provide guidance for 2024. Thank you, Vimal, and good morning, everyone.

Greg Lewis: Now, let's spend a few minutes on the fourth quarter performance by business.

Greg Lewis: Aerospace for the fourth quarter was up 15% organically year over year with 20% growth in commercial aviation.

Greg Lewis: Our commercial original equipment business grew over 20% on increased deliveries to both air transport and business in general aviation customers.

Greg Lewis: Let me begin on slide six. As a reminder, we're reporting fourth quarter and full year 2023 results under our legacy segment breakdown and providing our 2024 outlook using the new segment structure which went into effect in January. With that, let's turn to the results. We had a strong finish to another challenging year delivering on our 2023 commitment. Despite a dynamic macro backdrop, Honeywell's disciplined execution and differentiated solutions enabled us to deliver on our full-year organic sales, segment margin, earnings, and free cash flow commitments. Full-year organic sales were up 4% year over year, achieving the low end of our long-term financial growth algorithm and beating the midpoint of our initial guidance. Despite a 5% drag from lower safety and productivity solution sales, segment profit grew 8% Adjusted earnings per share grew 5%, or 11% when excluding the impact of lower non-cash pension income year over year.

Greg Lewis: Commercial aftermarket had another double digit growth quarter led by the strength in air transport market as increased flight hours continue to drive demand.

Greg Lewis: Defense and space sales grew again in the fourth quarter as the ongoing global focus on National Security continues to drive robust demand, while we continue to work through supply chain challenges, which govern that growth.

Greg Lewis: Aerospace book to Bill of around one in the fourth quarter is more evidence that demand continues to outpace supply.

Greg Lewis: An encouraging sign that as the supply chain unlocks, we're well situated to capitalize on our advantageous position in the market.

Greg Lewis: Segment margin expanded 20 basis points to 28% as a result of commercial excellence and volume leverage which were partially offset by cost inflation and mix pressure in our original equipment business.

Greg Lewis: Performance materials technologies sales grew 4% organically in the fourth quarter.

Greg Lewis: Advanced materials was up 6%.

Greg Lewis: Returning to growth in the quarter, driven primarily by a double digit increase in flooring products and.

Greg Lewis: <unk> sales were up 4% organically as we saw continued strength and lifecycle solutions and services and smart energy.

Greg Lewis: <unk> sales grew 1% organically as a result of robust seasonal demand and petrochemical catalyst shipments, partially offset by lower volumes in gas processing.

Greg Lewis: We generated free cash flow of $4.3 billion at the high end of our guidance range, or $5.3 billion excluding the after-tax impact of one-time settlement. We deployed $8.3 billion of capital, including $3.7 billion to share repurchases, and $1 billion to CapEx. $700 million to M&A and $2.9 billion to dividend payouts, which we increased for the 14th time in the past 13 years. Fourth quarter organic sales were up 2%, led by the 11th consecutive quarter of double-digit growth in our commercial aerospace business. Segment margin expanded by 60 basis points to 23.5%, driven by expansion in performance materials and technologies and aerospace. Earnings per share for the fourth quarter were $1.91, up 26% year over year.

Greg Lewis: Our sustainable technology solutions business finished the year with over 30% sales and orders growth in the fourth quarter.

Greg Lewis: Orders for PMT grew across all three businesses.

Greg Lewis: Segment margin expanded 200 basis points to 24% as a result of productivity actions favorable business mix and commercial excellence net of inflation.

Greg Lewis: Safety and productivity solutions sales decreased 24% organically in the quarter, primarily as a result of lower volumes and warehouse and workflow solutions and productivity solutions and services.

Greg Lewis: The project portion of our integrated business remains around trough levels as investments in warehouse automation continued to be subdued.

Greg Lewis: However, our pipeline of new projects is robust and we are committed to delivering innovative solutions to a widening array of customers in this market positioning Honeywell to wind in an eventual recovery.

Greg Lewis: And adjusted earnings per share was $2.60, up 3% year-to-date. An adjustment to our estimated future Bendex liability at the end of the year and our annual pension mark-to-market adjustment drove the difference between earnings per share and adjusted earnings per share. Excluding a $0.13 non-cash pension income headwind, adjusted earnings per share was up 8%.

Greg Lewis: And our productivity solutions and service business, we continue to work through the effects of the distributor destocking, but over 30% orders growth in the quarter and provide some confidence that we are near the end of that cycle.

Greg Lewis: Sensing and safety solutions remains relatively resilient despite short cycle challenges in a few end markets.

Greg Lewis: Bridges for adjusted EPFs from both 4Q22 to 4Q23 and FY22 to FY23 can be found in the appendix of this presentation. Free cash flow was $2.6 billion, with a free cash flow margin of 27.4% versus 23.1% in 4Q, as working capital was a greater source of cash compared to the prior year. We deployed $2.6 billion of cash flow to share repurchases, dividends, high-return CapEx, and M&A. The fourth quarter was another strong one for our backlog, which grew to a new record of $31.8 billion, up 8% year-over-year and 1% sequentially due to strength in Aero, PMT, and HPT. Orders were up 1% in the quarter, led by growth in Commercial Aero, PMT, and HPT, including orders growth in building products. This setup gives us confidence in our 2024 outlook, which I will discuss in a few minutes.

Greg Lewis: Segment margin in Sps contracted 290 basis points to 17, 3% driven by lower volume leverage and cost inflation, partially offset by productivity actions and commercial excellence.

Greg Lewis: Building technologies sales were down 1% organically as growth in our long cycle building solutions business was offset by modest declines in short cycle building products.

Greg Lewis: Solutions grew 6% in the quarter led by high single digit growth in building services, driven by strong execution and past due backlog burn down.

Greg Lewis: Orders were strong across the board in the fourth quarter as every business grew year over year.

Greg Lewis: Segment margin contracted 90 basis points year over year to 23, 9% due to cost inflation and mix headwinds, partially offset by productivity actions and commercial excellence.

Greg Lewis: Growth across our portfolio was supported by another quarter of double digit sales growth in Honeywell connected enterprise, which remains accretive to overall honeywell or.

Greg Lewis: Our offerings in connected industrial cyber connected buildings life Sciences and connected aircraft all grew by more than 20% year over year in the quarter.

Greg Lewis: As always, we continue to execute on our proven value creation framework, which is underpinned by our Accelerator Operating Model. I'm confident in the strength of our backlog, the tailwinds we're seeing across our long cycle end markets, and our ability to navigate a dynamic operating environment, which we have demonstrated year after year. Now, let's spend a few minutes on the fourth quarter performance by business. Aerospace for the fourth quarter was up 15% organically year over year, with 20% growth in commercial aviation.

Greg Lewis: For the full year HCV sales and profit both grew by double digits, which is an indicator of the power of our strong software franchise.

With 2023 now in the rearview, we're excited about honeywell's favorable setup to accelerate growth in 2024.

Greg Lewis: Let's turn to slide seven to talk about our outlook for the year.

Greg Lewis: Yes.

Greg Lewis: We expect the environment to remain dynamic, but the power of our accelerator operating system enabled us to move quickly and decisively to drive growth protect margins and share liquidity and position ourselves well to deliver on our commitments and I'm confident we'll do that again in 2024.

Greg Lewis: Our commercial original equipment business grew over 20% on increased deliveries to both air transport and business and general aviation customers. Commercial aftermarket had another double-digit growth quarter, led by the strength of the air transport market, as increased flight hours continued to drive demand. Defense and space sales grew again in the fourth quarter, as the ongoing global focus on national security continues to drive robust demand while we continue to work through supply chain challenges which govern that growth. Aerospace booked a bill of around $ 1 billion in the fourth quarter, more evidence that demand continues to outpace supply, an encouraging sign that as the supply chain unlocks, we're well situated to capitalize on our advantageous position in the market. Segment margin expanded 20 basis points to 28% as a result of commercial excellence and volume leverage, which were partially offset by cost inflation and mixed pressure in our original equipment business. Performance, material, and technology sales grew 4% organically in the fourth quarter.

Greg Lewis: Our end market exposures across aerospace automation and energy remained favorable with continued commercial aviation fleet growth.

Greg Lewis: Defense investment.

Greg Lewis: <unk> focus on automation due to labor scarcity, intensifying energy demands and decarbonization goals and increased infrastructure spending.

Greg Lewis: These compelling vertical tailwind are underpinned by the ongoing demand for digitalization and our record level backlog, which will support robust organic growth for the business.

Greg Lewis: This outlook is somewhat tempered by the uncertain timing of an eventual recovery in the short cycle as markets return to normalcy, which we see as the swing factor to our sales outcome for the year.

Greg Lewis: But we're excited by the prospects of this reacceleration in the coming quarters.

Overall, we have a strong setup that will drive growth within our long term financial framework for sales margin earnings and cash in 2024.

Greg Lewis: Our robust balance sheet and strong cash generation will support accretive capital deployment and while we're happy with our recently announced transaction. We will continue to build on our accretive M&A pipeline as we optimize the portfolio.

Greg Lewis: Now, let's turn to slide eight to discuss how these dynamics come together for our 2020 for guidance.

Greg Lewis: Advanced Materials was up 6%, returning to growth in the quarter driven primarily by a double-digit increase in fluorine products. In HPF, sales were up 4% organically as we saw continued strength in lifecycle solutions and services and smart energy. UOP sales grew 1% organically as a result of robust seasonal demand for petrochemical cattle shipments, partially offset by lower volumes in gas processing.

Greg Lewis: Given the backdrop in total for 2024, we expect sales of 38, 1% to $38 9 billion.

Greg Lewis: Which represents an overall organic sales growth range of 4% to 6% for the year with a greater balance between volume and price.

Greg Lewis: Our guide anticipate some short cycle recovery to begin in the second half of the year, albeit likely at different rates for our various end markets, creating a somewhat back half weighted outlook.

Greg Lewis: Additionally, we remain keenly focused on new product innovation and maintaining our leadership position in high growth regions monetizing our vast installed base and strengthening our software franchise, which we expect to provide resiliency through the year.

Greg Lewis: Our sustainable technology solutions business finished the year with over 30% sales and orders growth in the fourth quarter. Orders for P&T grew across all three business units, and segment margin expanded 200 basis points to 24% as a result of productivity actions, favorable business mix, and commercial excellence net of inflation. Safety and Productivity Solutions sales decreased 24% organically in the quarter, primarily as a result of lower volumes in Warehouse and Workflow Solutions and Productivity Solutions and Services.

Greg Lewis: We also expect the Aero supply chain to continue to improve gradually sequentially throughout the year as it did in 2023.

Greg Lewis: For the first quarter, we anticipate sales in the range of $8 nine to $9 2 billion flat to up 3% organically.

Greg Lewis: We expect our overall segment margin to expand 30 to 60 basis points next year supported by improving business mix continued price cost discipline and productivity actions, including our precision focus on reducing raw material costs.

Greg Lewis: The projects portion of our intelligrated business remains around trough levels as investments and warehouse automation continue to be subdued. However, our pipeline of new projects is robust, and we are committed to delivering innovative solutions to a widening array of customers in this market, positioning Honeywell to win in an eventual recovery. In our Productivity Solutions and Service business, we continue to work through the effects of distributor destocking, but over 30% of orders growth in the quarter provides some confidence that we are near the end of that cycle. Sensing and Safety Solutions remains relatively resilient despite short-cycle challenges in a few end markets. Segment margin and SPS declined by 290 basis points to 17.3%, driven by lower volume leverage and cost inflation, partially offset by productivity actions and commercial efforts. Building technology sales were down 1% organically as growth in our long-cycle building solutions business was offset by modest declines in short-cycle building products.

Greg Lewis: Similar to last year, we expect building automation margins to expand the most as we benefit from productivity actions and build on continued commercial excellence.

Greg Lewis: Followed by industrial automation and energy and sustainability solutions.

Greg Lewis: For aerospace volume leverage will cover continued investment in our innovation platform and in the supply chain to one lock volume.

Greg Lewis: Keeping our margin rate within a tight band of our recent levels, while enabling us to deliver robust year over year profit growth.

Greg Lewis: For the first quarter, we expect overall segment margin in the range of $21 nine to 22, 2% downturn to up 20 basis points year over year.

Greg Lewis: Importantly, our guidance for both the first quarter and the full year for 2024. It does not consider the planned acquisition of carriers Global access solutions business. We anticipate the closing of the deal by the end of the third quarter and we will update our guidance accordingly at that time.

Greg Lewis: Solutions grew 6% in the quarter, led by high single-digit growth in building services driven by strong execution and past-due backlog burndowns. Orders were strong across the board in the fourth quarter as every business grew year over year. Segment margin contracted 90 basis points year over year to 23.9% due to cost inflation and mixed headwinds, partially offset by productivity actions and commercial equity.

Greg Lewis: Now, let's spend a few minutes on our outlook by business.

Greg Lewis: And aerospace technologies, we expect that robust demand will remain throughout 2024 as a record level backlog provides a catalyst for growth.

Greg Lewis: And commercial original equipment build rates continue to trend upwards driving increase in chipset deliveries primarily in air transport.

Greg Lewis: On the commercial aftermarket side, we expect to see volume strained as flight hours continue to improve particularly in wide body as international travel normalizes further.

Greg Lewis: In defence and space.

Greg Lewis: <unk> supply chain constraints, not demand will be the limiting factor on volume growth.

Greg Lewis: Growth across our portfolio was supported by another quarter of double-digit sales growth in Honeywell Connected Enterprise, which remains accretive to overall Honeywell. Our offerings in Connected Industrial, Cyber, Connected Buildings, Life Sciences, and Connected Aircraft all grew by more than 20% year-over-year in the quarter. For the full year, HCE sales and profit both grew by double digits, which is an indicator of the power of our strong software franchise.

Greg Lewis: However, our output growth of 18% in 2023 across Arrow gives us confidence in our ability to execute and we anticipate modest sequential improvement throughout the year.

Greg Lewis: For overall aerospace, we expect organic growth in the low double digit range of 2024.

Greg Lewis: While we again expect aero to be our fastest topline grower margins will likely remain at comparable levels to 2022, and 2023 as higher sales of lower margin products are mostly offset by increased volume leverage in the first quarter, we expect to see low teens organic growth year over year as the progress we made a supply chain throughout <unk>.

Greg Lewis: With 2023 now in the rear view, we're excited about Honeywell's favorable setup to accelerate growth in 2024. Now, let's turn to slide seven to talk about our Outlook for the Year. We expect the environment to remain dynamic, but the power of our accelerator operating system enables us to move quickly and decisively to drive growth, protect margins, ensure liquidity, and position ourselves well to deliver on our commitments. And I'm confident we'll do that again in 2024.

Greg Lewis: <unk> thousand 23, coupled with a record backlog will drive continued meaningful year over year output growth.

Greg Lewis: For industrial automation, the timing of short cycle recovery will play a key factor in 2024 results and our and will likely lead to a back half weighted year.

Greg Lewis: In process solutions, we expect to further build on the success, we experienced in 'twenty three with another strong year of growth, particularly in our projects and aftermarket services business.

Greg Lewis: Our sensing and safety technologies, and productivity solutions and service businesses will benefit as the effects of distributor destocking phase throughout the year.

Greg Lewis: Our end market exposures across aerospace, automation, and energy remain favorable with continued commercial aviation fleet growth, higher defense investment, heightened focus on automation due to labor scarcity, intensifying energy demands, and decarbonization goals, and increased infrastructure spending. These compelling vertical tailwinds are underpinned by the ongoing demand for digitalization and our record-level backlogs, which will support robust organic growth for the business. This outlook is somewhat tempered by the uncertain timing of an eventual recovery in the short cycle as markets return to normalcy, which we see as the swing factor for our sales outcome for the year.

Greg Lewis: And warehouse and workflow solutions, we expect to move through the trough of the warehouse automation spending cycle capitalizing on a robust pipeline and easier year over year year over year comps as the year goes on.

Greg Lewis: As a result of these dynamics, we expect sales to be flattish in 2024.

Greg Lewis: Segment margin should expand particularly in the second half as short cycle recovery leads to volume leverage benefits.

Greg Lewis: In the first quarter IAA will remain sequentially stable, while challenging comparisons in warehouse automation demand that is steel near trough levels will weigh on year over year growth, leading to high single digit to low double digit sales declines year over year.

Greg Lewis: Turning to building automation, we see we expect to see our long cycle businesses again outpaced our short cycle portfolio, particularly early in 'twenty four.

Greg Lewis: But we're excited by the prospects of this reacceleration in the coming quarters. Overall, we have a strong setup that will drive growth within our long-term financial framework for sales, margin, earnings, and cash in 2024. Our robust balance sheet and strong cash generation will support accretive capital deployment. And while we're happy with our recently announced transaction, we will continue to build on our accretive M&A pipeline as we optimize the portfolio. Now, let's turn to slide 8 to discuss how these dynamics come together for our 2024 guidelines.

Greg Lewis: Overall, the timing of the short cycle recovery will be one of the key drivers of performance in the year and likely lead to stronger results in the second half.

Greg Lewis: Both projects and services will grow on the strength of existing backlog and tailwind from aftermarket services.

Greg Lewis: We are seeing encouraging signs in our core verticals both in the U S and internationally as institutional investment in developing region will be an engine for growth in da.

Greg Lewis: We anticipate our short cycle products businesses will benefit as inventory levels normalize.

Greg Lewis: For building automation, we forecast full year sales growth to be low single digit year on year.

Greg Lewis: Despite this we anticipate <unk> will be the segment with the largest margin expansion, primarily driven by productivity actions and commercial excellence net of inflation.

Greg Lewis: In the first quarter, we expect sales growth to be similar to the fourth quarter as destocking reaches its late stages.

Greg Lewis: In energy and sustainability solutions, the macro environment will provide both puts and takes in 2024.

Greg Lewis: Given this backdrop, in total, for 2024, we expect sales of $38.1 to $38.9 billion, which represents an overall organic sales growth range of 4 to 6% for the year, with a greater balance between volume and price. Our guide anticipates some short-cycle recovery to begin in the second half of the year, albeit likely at different rates for our various end markets, creating a somewhat back-half-weighted outlook. Additionally, we remain keenly focused on new product innovation, maintaining our leadership position in high-growth regions, monetizing our vast installed base, and strengthening our software franchise, which we expect to provide resiliency throughout the year. We also expect the aero supply chain to continue to improve gradually, sequentially throughout the year, as it did in 2023. For the first quarter, we anticipate sales in the range of $8.9 to $9.2 billion, flat to up 3% organically.

Greg Lewis: <unk> growth will be led by strength in our catalyst and services businesses, while our process technologies business modular equipment growth will likely be offset by volume headwinds from challenging comps and LNG equipment.

Greg Lewis: In sustainable technology solutions robust demand will lead to another record year of growth.

Greg Lewis: In advanced materials strength in the broader flooring products business, particularly in our solstice portfolio will be offset by expected volume declines in our legacy stationary products due to well telegraphed quota reductions in the U S.

Greg Lewis: Within the rest of advanced materials, improving short cycle demand over the course of 2024, particularly from semiconductor fab will support the top line.

Greg Lewis: Overall, we expect DSS sales to be flat to up low single digits for the year compared to 2023.

Greg Lewis: Margins should improve in 2024, though not as much as in our other segments. Thanks to both commercial excellence and productivity actions.

Greg Lewis: In the first quarter, we expect sales to be down mid to high single digits year over year as we worked through challenging comps, particularly in our gas processing business and prepare for higher activity levels as the year progresses.

Greg Lewis: Moving on to other key guidance metrics pension income will be roughly flat to 2023 at approximately $550 million, which is modestly more positive than compared to our outlook comments for the third quarter earnings call as the interest rate environment became slightly more favorable towards the year end.

Greg Lewis: We expect our overall segment margin to expand 30 to 60 basis points next year, supported by Improving Business Mix and continued price-cost discipline and productivity actions, including our precision focus on reducing raw material costs. Similar to last year, we expect building automation margins to expand the most as we benefit from productivity action and build on continued commercial success, followed by Industrial Automation and Energy and Sustainability Solutions. For Aerospace, Volume Leverage will cover continued investment in our innovation platforms and in the supply chain to unlock volume. Keeping our margin rate within a tight band of our recent levels while enabling us to deliver robust year-over-year profit growth. For the first quarter, we expect overall segment margin in the range of 21.9% to 22.2%, down 10% to up 20 basis points year over year. Importantly, our guidance for both the first quarter and the full year of 2024 does not consider the planned acquisition of Carrier's Global Access Solutions business.

Greg Lewis: As a reminder, pension income as a noncash item given our overfunded pension status will ensure no incremental contributions are needed and this is a great position to be in for our employees, both former and current and our shareholders.

Greg Lewis: We anticipate net below the line impact to be between negative $550 million and negative $700 million for the full year and between negative $140 million and negative $190 million in the first quarter.

Greg Lewis: This guidance includes a slight improvement in year over year, repositioning spend which will be between $200 million and $300 million for the full year and between 60 and $100 million in the first quarter as we continued to invest in high return projects to support our future growth and productivity.

Greg Lewis: We expect the adjusted effective tax rate to be around 21% for the full year and around 22% for the first quarter due to timing of discrete payments.

We anticipate average share count to be around 656 million shares for the full year as we execute on our commitment to reduce share count by at least 1% per year through opportunistic buybacks.

Greg Lewis: As a result of these inputs, we anticipate full year adjusted earnings per share to be between $9 80.

Greg Lewis: We anticipate the closing of the deal by the end of the third quarter, and we'll update our guidance accordingly at that time. Now, let's spend a few minutes on our Outlook by Business. In aerospace technologies, we expect that robust demand will remain throughout 2024 as our record-level backlog provides a catalyst for growth. In commercial original equipment, build rates continue to trend upwards, driving an increase in ship set deliveries, primarily in air transport. On the commercial aftermarket side, we expect to see volume strength as flight hours continue to improve, particularly in widebody, as international travel normalizes further. In defense and space, supply chain constraints, not demand, will be the limiting factor on volume.

Greg Lewis: And $10 10.

Greg Lewis: Up 7% to 10% year on year.

Greg Lewis: We expect first quarter earnings per share to be between $2 12.

Greg Lewis: And $2 22.

Greg Lewis: 2% to 7% year over year.

Greg Lewis: Included in the Appendix is a bridge that walks the elements of 2024 adjusted earnings per share from 2023.

Greg Lewis: Youll see the primary year over year drivers are higher volume and increased productivity with lower share count offsetting below the line changes, which are primarily from higher net is net interest expense.

Greg Lewis: On free cash flow, we expect to grow in line with earnings excluding the after tax impact of last year's onetime settlement from Derisking our balance sheet.

Greg Lewis: We will begin the multi year unwind of working capital, where our digitalization capabilities through accelerator or improving demand planning and optimizing production and materials management.

Greg Lewis: However, our output growth of 18% in 2023 across Aero gives us confidence in our ability to execute, and we anticipate modest sequential improvement throughout the year. For overall aerospace, we expect organic growth in the low double-digit range in 2024. While we again expect Arrow to be our fastest top-line grower, margins will likely remain at comparable levels to 2022 and 2023, as higher sales of lower margin products are mostly offset by increased volume leverage. In the first quarter, we expect to see low teens organic growth year over year as the progress we made in supply chain throughout 2023, combined with our record backlog, will drive continued meaningful year-over-year output growth. For industrial automation, the timing of short cycle recovery will play a key factor in 2024 results and will likely lead to a back half-weighted year.

Greg Lewis: In addition, we see several compelling growth oriented capital investment opportunities and expand expect to fund high return projects focused on creating uniquely.

Greg Lewis: <unk> differentiated technologies.

Greg Lewis: As a result, we expect free cash flow to be in the five $6 billion to $6 billion range up 6% to 13% excluding the impact of prior year settlements.

A 2020 for free cash flow bridge is in the appendix and summarizes the drivers of year over year growth with net income growth being the largest factor.

Greg Lewis: By working capital improvements, partially offset by modestly higher growth Capex spend.

Greg Lewis: Regarding capital deployment, while we're focused on executing our robust M&A pipeline opportunistic share repurchase.

Greg Lewis: Kylie attractive valuations, which you saw in the second half of 'twenty three as we accelerated our buyback in <unk> and again in <unk>.

Greg Lewis: Remains an important part of our framework.

Greg Lewis: <unk> confidence in Honeywell performance and that will continue to be true in 2024.

Greg Lewis: So in summary, while we are cautious on the macroeconomic backdrop are leveraged to the key macro trends of aerospace automation and the energy transition underpinned by digitalization.

Greg Lewis: In Process Solutions, we expect to further build on the success we experienced in 2023 with another strong year of growth, particularly in our projects and aftermarket services business. Our sensing and safety technologies and productivity solutions and service businesses will benefit as the effects of distributor de-stocking fade throughout the year. In Warehouse and Workflow Solutions, we expect to move through the trough of the warehouse automation spending cycle, capitalizing on a robust pipeline and easier year-over-year comps as the year goes on. As a result of these dynamics, we expect IA sales to be flat in 2024.

Greg Lewis: Which will be complemented by our record backlog and accelerated operating system.

Greg Lewis: Give us confidence in delivering another strong year in 2024.

Speaker Change: So with that let me turn it back to <unk> on slide nine.

Speaker Change: Greg, let's take a minute to zoom out from the near term dynamics and talk about how our financial algorithm translates into value through EPS growth.

Greg Lewis: Last may we unveiled our updated long term financial growth algorithm one of the strengths of that framework is that we have demonstrated that we can balance between the levers we have to deliver what matters consistent compelling EPS growth, let me unpack this for a moment.

Greg Lewis: Segment margins should expand, particularly in the second half, as the short-cycle recovery leads to volume-leveraged benefits. In the first quarter, IA will remain sequentially stable, while challenging comparisons and warehouse automation demand that is still near drop levels will weigh on year-over-year growth, leading to high single-digit to low double-digit sales declines year-over-year. Turning to building automation, we expect to see our long-cycle businesses again outpace our short-cycle portfolio, particularly early in 2024. Overall, the timing of the short-cycle recovery will be one of the key drivers of performance this year and likely lead to stronger results in the second half. Both projects and services will grow on the strength of existing backlogs and tailwinds from aftermarket services. We are seeing encouraging signs in our core verticals both in the U.S. and internationally as institutional investment in developing regions will be an engine for growth in Value Added Services. We anticipate our short cycle products businesses will benefit as inventory levels normalize. For Building Automation, we forecast full-year sales growth to be single-digit year-on-year.

Greg Lewis: Our annual 4% to 7% organic sales growth and 40 to 60 basis point of margin expansion alone will deliver 6% to 10% of organic EPS growth. Some years, one or other of these elements move, but as you've seen 6% to 10% delivery has been consistent hallmark of Honeywell.

Greg Lewis: When coupled with 1% to 2% of EPS accretion from both share buyback and because as did M&A execution.

We are confident will deliver double digit adjusted EPS growth at the midpoint on on a through cycle basis.

Greg Lewis: The strength of our dividend currently yielding about 2% also add further value to our shareholder returns.

Greg Lewis: Although there has been some noise in our results mostly related to below the line. We have delivered 8% segment profit growth and 2% and adjusted EPS accretion from the share repurchases on an average during the past three years in line with the long term financial framework Navin ramping up M&A lever, which should drive incremental benefits with that.

Greg Lewis: Let's go to the next page to discuss our recent progress on this long term growth algorithm.

Greg Lewis: As you can see on slide 10, our 2023 of the zones represent another year of strong financial performance consistent with our framework following meaningful progress since 2016 in organic growth gross margin segment margin expansion and free cash flow re exploration.

Greg Lewis: Despite this, we anticipate BA will be the segment with the largest margin expansion, primarily driven by productivity actions and commercial excellence net of inflation. In the first quarter, we expect sales growth to be similar to the fourth quarter as destocking reaches its late stage. In energy and sustainability solutions, the macro environment will provide both puts and takes in 2024.

Greg Lewis: Similarly, our 2020 for expectation for organic growth gross margin segment margin and free cash flow margins are solidly in line with our long term commitment as we continue to make steady consistent improvement in quality of Honeywell's financial profile we.

Greg Lewis: UOP growth will be led by strength in our catalyst and services business, while our process technology business, and modular equipment growth will likely be offset by volume headwinds from challenging comps in LNG equipment. In sustainable technology solutions, robust demand will lead to another record year of growth, and advanced materials strength in the broader fluorine products business, particularly in our solstice portfolio, will be offset by expected volume declines in our legacy stationary products due to well-telegraphed quota reductions in the U.S. Within the rest of advanced materials, improving short cycle demand over the course of 2024, particularly from semiconductor fabs, will support the top Overall, we expect ESF sales to be flat to up low single digits for the year compared to 2023.

Greg Lewis: Reorienting the organization to prioritize organic organic growth deploying the operational power of accelerated <unk> and executing on a robust portfolio optimization optimization strategy, which will enable us to achieve our long term targets.

Greg Lewis: I look forward to the next phase of transformation and remain optimistic about the tremendous opportunities. We are uncovering to capture value drive incremental sales growth expand margins and generate more cash we'll continue to track our progression closely and update you.

Greg Lewis: As these efforts increasingly translate into our enhanced financial performance.

Greg Lewis: Now, let's turn to slide 11 for closing thoughts before we move to Q&A session.

Greg Lewis: We delivered on all of our 2023 commitments.

Greg Lewis: We are confident in our ability to better the dynamic macroeconomic and geopolitical backdrop with the operating rigor you've come to expect of Honeywell <unk>.

Greg Lewis: <unk> record backlog backlog levels.

Greg Lewis: Ongoing strength in our biggest end markets aerospace and energy as well as impeding recovery in our short cycle business will support strong reserves as we progress through 2024.

Greg Lewis: Margins should improve in 2024, though not as much as in our other segments, thanks to both commercial excellence and productivity action. In the first quarter, we expect sales to be down mid to high single digits year over year as we work through challenging comps, particularly in our gas processing business, and prepare for higher activity levels as the year progresses. Moving on to other key guidance, pension income will be roughly flat to 2023 at approximately $550 million, which is modestly more positive than our outlook comments from the third quarter earnings call as the interest rate environment became slightly more favorable towards the year-end. As a reminder, pension income is a non-cash item, and given our overfunded pension status will ensure that no incremental contributions are needed.

Greg Lewis: I remain optimistic about the future of Honeywell and believe the company is well positioned to drive the innovation needed to solve some of the world's most challenging problems. The fujairah is really what we make it with that Sean let's move to Q&A.

Speaker Change: Thank you minimal minimal and Greg are now available to answer your questions. We ask that you. Please be mindful of others in the queue I only ask one question and one related follow up Camillo. Please open the line for Q&A.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: <unk> will indicate that your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keith.

Speaker Change: Once again in the interest of time, we ask that you limit to one question and to one follow up.

Greg Lewis: This is a great position to be in for our employees, both former and current, and our shareholders. We anticipate net below-the-line impact to be between negative $550 million and negative $700 million for the full year and between negative $140 million and negative $190 million in the first quarter. This guidance includes a slight improvement in year-over-year repositioning spend, which will be between $200 million and $300 million for the full year and between $60 and $100 million in the first quarter, as we continue to invest in high-return projects to support our future growth and productivity. We expect the adjusted effective tax rate to be around 21% for the full year and around 22% for the first quarter due to the timing of discrete payments.

Speaker Change: Our first question comes from the line of Steve Tusa with Jpmorgan. Please proceed with your question.

Steve Tusa: Hi, good morning.

Steve Tusa: Hey, Steve Good morning, Steve.

Steve Tusa: Can you just talk about the.

Steve Tusa: Sequential progression in EPS as we move through the year off of the first quarter base here.

Steve Tusa: Yes.

Steve Tusa: You're just talking about for the for the full year, yes, yes.

Steve Tusa: The first quarter is a little bit light as a percentage of the year. So just trying to understand how.

Steve Tusa: Things built.

Steve Tusa: Sure.

Steve Tusa: For the next three quarters to get to the midpoint of guidance.

Speaker Change: Sure sure I mean, if you if you look at the guide we're giving for Q1, it's actually not that different from 2023. So.

Speaker Change: As we progress through the year, we're going to expect to see the short cycle revenue inflection more likely between two and three Q then one in <unk> and.

Greg Lewis: We anticipate average share count to be around 656 million shares for the full year as we execute on our commitment to reduce the share count by at least 1% per year through opportunistic buyback. As a result of these inputs, we anticipate full-year adjusted earnings per share to be between $9.80 and $10.10, up 7% to 10% year-on-year. We expect first quarter earnings per share to be between $2.12 and $2.22, up 2-7% year-round. Also included in the appendix is a bridge that walks the elements of 2024 Adjusted Earnings Per Share from 2023. You'll see the primary year-over-year drivers are higher volumes and increased productivity with lower share count, offsetting below-the-line changes, which are primarily from higher net interest expenses. On free cash flow, we expect to grow in line with earnings, excluding the after-tax impact of last year's one-time settlement from de-risking our balance sheet.

Speaker Change: In terms of.

Speaker Change: The level of.

Speaker Change: That that acceleration.

Speaker Change: So I think the EPS will follow along with that the last two years, our EPS has been more backend weighted in third and fourth quarter than our prior history. I think it is going to look fairly similar this year.

Okay, and then just one on on on the buildings business.

Speaker Change: What are you guys seeing there and what are you assuming for the products business.

Speaker Change: And the next few quarters is obviously a lot of noise in the channel there and also just from an end market demand perspective, maybe touch on regionally as well.

Speaker Change: The buildings business.

Speaker Change: Yes, the steep so we <unk>.

Speaker Change: Had the quarter port finish enrich our buildings orders grew up across all segment, both in building products and in building solutions. So that puts us in a good setup for 2024 DSP.

Speaker Change: To your specific question.

Speaker Change: The the the <unk>.

Speaker Change: Set up we have it allows us to.

Speaker Change: Steve sequential progress in the short cycle as the year progresses, and the front end of the year, we'll see more strength in our solution side of the business.

Greg Lewis: We will begin the multi-year unwind of working capital, where our digitalization capabilities through Accelerator are improving demand planning and optimizing production materials management. In addition, we see several compelling growth-oriented capital investment opportunities and expect to fund high-return projects focused on creating uniquely innovative, differentiated technologies. As a result, we expect free cash flow to be in the $5.6 to $6 billion range, up 6 to 13%, excluding the impact of prior settlement. A 2024 free cash flow bridge is in the appendix and summarizes the drivers of year-over-year growth with net income growth being the largest factor, followed by working capital improvements, partially offset by modestly higher growth cap expense. Regarding capital deployment, while we're focused on executing our robust M&A pipeline, opportunistic share repurchase at highly attractive valuations, which you saw in the second half of 23 as we accelerated our So in summary, while we're cautious on the macroeconomic backdrop, our leverage on the key macro trends of aerospace, automation, and the energy transition, underpinned by digitalization, which will be complemented by a record backlog and accelerated operating, gives us confidence in delivering another strong year in 2020. So with that, let me turn it back to Vimal on slide nine.

Speaker Change: Europe remains challenge as as it was over the last several quarters.

Speaker Change: And in the U S. We are in the late innings of Destocking of the distributor.

Speaker Change: Inventories so that's somewhat offsetting the what excites me about the businesses. The book, we have done on new products, that's going to position us well our strength in high growth regions, which is performing exceedingly well so net net.

Speaker Change: Remain pretty confident on growth in building solutions building automation business in 2024, specifically margin expansion and.

Speaker Change: Continental of delivering strong results there.

Speaker Change: Thanks.

Speaker Change: Thanks, Steve.

Speaker Change: Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Your line is now open.

Julian Mitchell: Hi, good morning.

Julian Mitchell: Maybe just wanted to try and think about the progress through the year from a segment margin standpoint, I guess <unk> had seven quarters in a row was good year on year expansion Q1 is sort of flat.

Julian Mitchell: And then the year is up close to that sort of 50 bps smog.

Julian Mitchell: Exiting the year in Q4 made with margins up.

Julian Mitchell: 100 bps plus.

Julian Mitchell: So just trying to understand starting Q1 zero Q4 up 100.

Julian Mitchell: It is kind of the sharpest improvement come on a segment basis as you go through the year and do we think about that margin year on year improvement. Some why does just being pretty steady.

Vimal M. Kapur: Thank you, Greg. Let's take a minute to zoom out from the near-term dynamics and talk about how our financial algorithm translates into value through EPS growth. Last May, we unveiled our updated long-term financial growth algorithm. One of the strengths of that framework is that we have demonstrated that we can balance the levers we have to deliver what matters. Consistent, compelling EPS growth. Let me unpack this for a moment.

Julian Mitchell: It goes through 2024.

Speaker Change: Okay. Thanks, Julian again, I would tell you the.

Speaker Change: A lot of the guidance fundamentals.

Speaker Change: We're pretty are tied pretty closely to the short cycle recovery and what I mean by that is we don't expect a big inflection in the first half and so therefore, our segment profit improvement in the first half versus the second half is going to be a bit lower and as those short cycle businesses recover remember those are some of the highest margin.

Speaker Change: <unk>.

Speaker Change: Businesses in the portfolio, so that volume leverage is going to be pretty powerful as we go through the year.

Vimal M. Kapur: Our annual 4% to 7% organic sales growth and 40% to 60% basis point of margin expansion alone will deliver 6% to 10% of organic EPS growth. Some years, one or other of these elements may move, but as you've seen, 6% to 10% delivery has been a consistent hallmark of Honeywell. When coupled with one to two percent of EPS accretion from both share buyback and consistent M&A execution, we are confident we'll deliver double-digit adjusted EPS growth at the midpoint on a two-cycle basis. The strength of our dividend, currently yielding about 2%, also adds further value to our shareholder returns. Although there has been some noise in the results, mostly related to below the line, we have delivered 8% segment profit growth and 2% adjusted EPS accretion from share repurchases on an average during the past three years, in line with the long-term financial framework.

Speaker Change: And that will be true in each of those in each of those non aero related businesses.

Speaker Change: Ill add Julian is if I look at the full year picture for the margin expansion, but we have committed 30% to 60 basis point there are three broad drivers.

Speaker Change: The pricing will remain of the order of 3% our price cost will not be a headwind.

Speaker Change: We remain very confident on our pricing execution.

Speaker Change: We will see good productivity in 2020 for material productivity remained strong in Q4, and we expect that to roll up on a full year basis. In 2024. We also have made good progress in executing AI in our operation and that will be also a source of productivity in 2024, and finally, the sharp sharp cycle recovery volume.

Speaker Change: Greg made as that Unpacks itself the margin accretion we have on that is pretty substantial so when you put it altogether, we remain extremely confident on our margin expansion.

Speaker Change: That's helpful. Thank you and just.

Vimal M. Kapur: Now we are ramping up the M&A lever, which should drive incremental benefits. With that, let's go to the next page to discuss our recent progress on this long-term growth algorithm. As you can see on slide 10, our 2023 results represent another year of strong financial performance consistent with our framework following meaningful progress since 2016 in organic growth, gross margin, segment margin expansion, and free cash flow re-acceleration. Similarly, our 2024 expectations for organic growth, gross margin, segment margin, and free cash flow margins are solidly in line with our long-term commitment as we continue to make steady, consistent improvement in the quality of Honeywell's We are reorienting the organization to prioritize organic growth, deploying the operational power of Accelerator 3.0, and executing on a robust portfolio optimization strategy that will enable us to achieve our long-term targets.

Speaker Change: My quick follow up if we look at say slide 15.

Speaker Change: Trying to understand sort of the shape of that.

Speaker Change: Sales recovery.

Speaker Change: There's two units at the bottom productivity solutions and service and warehouse and workflow if you're thinking about those two businesses.

Speaker Change: One exited the year just finished down 25 and the other exits are down 50.

Speaker Change: What's the exit rate from 24 for those two that's embedded in the sales guide please.

Speaker Change: Yes.

Speaker Change: We don't guide that specifically, but you should expect that this exit rate diminishes as the year progresses, and as we get into the back half of the year that turns to be something that is likely.

Speaker Change: Likely positive on productivity.

Speaker Change: Solutions and services and will be <unk>.

Speaker Change: Flattish.

On warehouse and workflow solutions, and perhaps up we'll see how the year progresses on the project side, an important thing to keep in mind is inside of.

Speaker Change: The warehouse business in particular.

Vimal M. Kapur: I look forward to the next phase of transformation and remain optimistic about the tremendous opportunities we are uncovering to capture value, drive incremental sales growth, expand margins, and generate more cash. We'll continue to track our progression closely and update you as these efforts increasingly translate into our enhanced financial performance. Now, let's turn to slide 11 for closing thoughts before we move to the Q&A session.

We've got actually a very rich mix now on.

Speaker Change: The aftermarket services business, so while the projects orders will really be the thing that will govern the topline our progression overall, we see double digit growth continuing in the aftermarket which of course is where.

Speaker Change: We capture the value from the installed base. So we feel very good about the progression of that as we go through the year, maybe to add to Greg's point on warehouse solutions business.

Vimal M. Kapur: We are confident in our ability to weather the dynamic macroeconomic and geopolitical backdrop with the operating rigor you have come to expect of Honeywell. Recent record backlog levels, ongoing strength in our biggest end markets, aerospace and energy, as well as an impending recovery in our short cycle business, will support strong results as we progress through 2024. I remain optimistic about the future of Honeywell and believe the company is well positioned to drive the innovation needed to solve some of the world's most challenging problems. The future is really what we make it. With that, Sean, let's move to Q&A. Thank you, Vimal. Vimal and Greg are now available to answer your questions.

Speaker Change: The topline has been challenging.

Speaker Change: But I see that.

As not a headwind for EPS in 2024, we have taken actions that Greg spoke about after market. The auto market continues to be strong and will be a factor of growth in 2024, we have taken meaningful action in our cost base, particularly on supply chain and when we put those actions together, which is in our control VC margin.

Speaker Change: The expansion in this business.

Speaker Change: In spite of topline pressure it will not be a source of <unk>.

Speaker Change: <unk> solution it will be a source of EPS accretion.

Julien if I could add just one full quarter.

Operator: We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Camilla, please open the line for Q&A. We will now be conducting a Star 1 on your telephone.

Julien: From a modeling perspective keep in mind, it's not just a dynamic embedded in our model for 'twenty for second half likely stronger than the first half. It's also that second half 'twenty three was weaker than first half 'twenty. Three so both of those are influenced the year over year growth rate as you were talking about exiting 'twenty three versus exiting 'twenty four.

Operator: Confirmation time will indicate that your line is in the question, and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Speaker Change: That's great. Thank you.

Operator: Once again, in the interest of time, we ask that you limit yourself to one question and to one follow-up. Our first question comes from the line of Steve Tusev with J.P. Morgan. Please proceed with your question. Hi, good morning. Hey, Steve.

Speaker Change: Thank you our.

Speaker Change: Our next question comes from the line of Scott Davis with Melius Research. Your line is now open.

Scott Reed Davis: Hey, good morning, BMO on Greg and Sean.

Scott Reed Davis: Good morning, guys.

Steve Tusev: Good morning, Steve. Can you just talk about the, you know, sequential progression in EPS as we move through the year off of the, you know, first quarter base here? You're talking about for the full year. Yeah. Yeah. I mean, the first quarter is a little bit light.

Scott Reed Davis: We.

Scott Reed Davis: Can we take an opportunity to take a step backwards at least in and just walk around the world a little bit on what Youre, assuming I assume.

Scott Reed Davis: Yes, you probably have pretty good read on what's going on in China. That's been a tough region for a lot of a lot of your peers, but.

Greg Lewis: It's a percentage of the year. So just trying to understand how things build for the next three quarters to get to the midpoint of guidance. Sure, sure. I mean, if you look at the guide we're giving for Q1, it's actually not that different from 2023. So, you know, as we progress through the year, we're going to expect to see the short-cycle revenue inflection, more likely between 2 and 3Q than between 1 and 2Q, in terms of the level of that acceleration. And so I think the EPS will follow along, you know, with that. I mean, the last two years, our EPS has been more back-end weighted in the 3rd and 4th quarter than our prior history. I think it's going to look fairly similar this year.

Scott Reed Davis: No need to really focus on aerospace because it's a different dynamic but for the other businesses, perhaps just a little bit of color on what you are expecting any differences in 'twenty four geographically versus 23 that'd be helpful. Thanks.

Speaker Change: Thanks Scott.

Speaker Change: So this week talking about that.

Speaker Change: Let me start with China, we grew about 7% in 2023.

Speaker Change: B I don't expect a material shift between 24 to 23, we have weathered a tough year in 2003, China economic cycle.

Speaker Change: And I expect 24 to be a shade better, but it's no more going to be a source of high growth what it used to be five years seven years back speaking more broadly of high growth regions, which represents almost 25% of the Honeywell revenue now.

Greg Lewis: Okay, and then just one on the buildings business. What are you guys seeing there? And what are you assuming for the products business? In the next few quarters, there's obviously a lot of noise in the channel there and also just from an end market demand perspective, maybe touch on regionally as well, and the building business. Steve, so we had a quarter four finish in which our building orders grew across all segments, both in building products and in building solutions. So that puts us in a good setup for 2024. To your specific question, you know, the setup we have allows us to see sequential progress in the short cycle as the year progresses, and the front end of the year will see more strength in our solution side of the business. Europe remains challenged as it was over the last several quarters, and in the U.S., we are in the late innings of de-stocking distributor inventories. So that's the overall setting.

Speaker Change: We had very good performance in Middle East and India in particular, and we expect those trends to continue in 2020 for India grew for us high double digits.

Speaker Change: 2023.

Speaker Change: Very meaningful revenue there.

Speaker Change: Similar good performance in Middle East. So we expect those regions to performed well all in all I expect high growth regions to grow double digit.

Speaker Change: Which would be a source of organic growth about 1% and overall Honeywell algorithm of organic growth.

Speaker Change: Europe remains challenging.

Speaker Change: And then we have seen.

Speaker Change: Headwinds in some portions of our businesses and daily in terms of the other portion so net net it's.

Vimal M. Kapur: What excites me about the business is the work we have done on new products. That's going to position us as well as our strength in high-growth regions, which are performing exceedingly well. So, net net, we remain pretty confident about growth in the building solutions and building automation business in 2024, specifically margin expansion, and a continent of delivering strong results there. Thanks.

Speaker Change: More neutral to negative and U S of course, we are like everybody else waiting for interest rate environment that settled and that will determine the performance of our business specifically on the short cycle. So thats kind of a broad overview of how we see different geographies.

Speaker Change: Okay. That's helpful and then a little bit of a nuance here would you classify the carrier deal as a bolt on.

Vimal M. Kapur: Our next question comes from the line of Julian Mitchell with Barclays. Your line is now open. Hi, good morning.

Speaker Change: Look a little larger than a bolt on my definition, but kind of curious how you think about it because clearly in your slides you mentioned bolt on deals being the focus.

Julian Mitchell: Maybe I just wanted to try and think about the progress through the year from a segment margin standpoint. I guess you've had seven quarters in a row of good year-on-year expansion. Q1 is sort of flat, and then the year is up close to that sort of 50 bps mark. So you're, you know, exiting the year in Q4 maybe with margins up, you know, 100 bps plus. So just trying to understand, you know, starting Q1 at 0, Q4 up 100, where does the kind of sharpest improvement come on a segment basis as you go through the year? And do we think about that margin year-on-year improvement firm-wide as just being pretty steady as we go through 2024? Thanks, Julian.

Speaker Change: If we are to expect other timeline billion ish.

Speaker Change: I would call it.

Speaker Change: Because.

Speaker Change: My argument is that bolt on to me is which is adding to our core portfolio and propels the growth of organic growth of the business itself. So that's what those businesses. If you see our building products business.

Speaker Change: Our strategy is to have products, which are specified which are critical for the building.

Speaker Change: We had a moderate position in security with the addition of this portfolio makes us a meaningful player.

Speaker Change: And therefore I call it a bolt on because it's a continuum of our strategy. We are not finding a new adjacency, we're not exploring some new idea is something we understand extremely well and therefore, our confidence to add shareholder value here is extremely strong.

Greg Lewis: Again, I would tell you that a lot of the guidance fundamentals are tied pretty closely to the short cycle recovery. And what I mean by that is, we don't expect a big inflection in the first half. And so, therefore, our segment profit improvement in the first half versus the second half is going to be a bit lower. And as those short cycle businesses recover, remember, those are some of the highest margin businesses in the portfolio. So that volume leverage is going to be pretty powerful as we go through the year. And, and, you know, that'll be true. And in each of those, and each of those non-arrow related businesses. What I'll add, Julian, is if I look at the full year picture, for the margin expansion, which we have committed to 30 to 60 basis points, there are three broad drivers. The pricing will remain of the order of 3%. Our price cost will not be a headwind. We remain very confident in our pricing execution.

Speaker Change: And keep in mind, it's at $5 billion, it's something like 4% of our market cap. So.

Speaker Change: Reasonably.

Speaker Change: It's not it's not a huge bet as it relates to that as well, obviously very different world than when our market cap was half that 10 years ago.

Speaker Change: Sure understood. Thank you guys I'll pass it on good luck this year.

Speaker Change: Thank you Sir.

Speaker Change: Thank you. Our next question comes from the line of Andrew <unk> with Bank of America. Your line is now open.

Andrew: Yes, good morning.

Andrew: On Azure.

Andrew: Hey, just looking at <unk>.

Andrew: A little bit surprised by the growth in the quarter I would have thought with STS being strong and I know you sort of gave US I think it was a gas product, but can you just tell us what kind of visibility do you have on this business accelerating.

Vimal M. Kapur: Second, we will see good productivity in 2024. Material productivity remains strong in Q4, and we expect that to roll off on a full year basis in 2024. We also have made good progress in implementing AI in our operation, and that will also be a source of productivity in 2024. And finally, the short cycle recovery point which Greg made, as that unpacks itself, the margin accretion we have on that is pretty substantial. So when you put it all together, we remain extremely confident in our margin expansion algorithm. That's helpful.

Andrew: 24, because it is sort of I guess, that's what you're guiding to but just a little bit more granularity there. Thank you.

Speaker Change: Sure Andrew.

Speaker Change: So 'twenty three revenue.

Speaker Change: Is 1% growth is primarily driven by equipment revenue we had in the prior year, we had large equipment base.

Speaker Change: Projects in our volume LNG projects, so on a year on year comp basis, <unk> repeat itself, but if youll see the core <unk> business on catalyst remains pretty strong do you have a specific question on sustainable technologies as we mentioned.

Speaker Change: Our earnings earlier.

Greg Lewis: Thank you. Now, my quick follow-up, if we look at, say, slide 15, trying to understand sort of the shape of that sales recovery, you've got those two units at the bottom, productivity solutions and service, and warehouse and workflow. If we're thinking about those two businesses, you know, one exited the year, just finished down 25, and the other exited down 50, what's the exit rate from 24 for those two that's embedded in the sales guy?

Speaker Change: We're very confident on its performance.

Speaker Change: The benchmark of 50 licenses of sustainable aviation fuel just few weeks back.

Speaker Change: And obviously activity in carbon capture projects.

Speaker Change: Early innings on hydrogen.

Speaker Change: <unk> so our plans to have sustainable technology business of $1 billion. In next few years haven't changed and my confidence of that absolutely has only grown higher.

Speaker Change: The last few months and I would also just zoom out I mean, we talk about.

Greg Lewis: Yeah, again, we don't guide that specifically, but you should expect that, you know, this exit rate diminishes as the year progresses. And as we get into the back half of the year, that turns out to be something that is likely positive on productivity solutions and services and will be, you know, flattish on warehouse and workflow solutions. And perhaps we'll see how the year progresses on the project side. You know, an important thing to keep in mind is inside of the warehouse business, in particular, we've got a very rich mix now in the aftermarket services business.

Speaker Change: Some of the variability in this business and PMT has always got.

Speaker Change: Some of the highest variability.

Speaker Change: With <unk> being a big part of that keep in mind, we grew sales in <unk> and <unk> for the year something like 8%.

Speaker Change: We are very very healthy and we have also grown orders somewhere in that same neighborhood.

Speaker Change: I think I think 2% for the year, but with 13% and in the catalyst business. So we've got we've come off some big comps with the large LNG projects. Overall this is a very healthy business with a very healthy backlog.

Greg Lewis: So while the project's orders will really be the thing that will govern the top line progression overall, you know, we see double-digit growth continuing in the aftermarket, which of course is where we capture the value from the installed base. So we feel very good about the progression of that as we go through the year. Maybe to add to Greg's point on the warehouse solutions business, the top line has been challenging, but I see that this is not a headwind for EPS in 2024. We have taken action that Greg spoke about aftermarket.

Speaker Change: And as you said the STS business provides a really nice catalysts on that new aspects of it.

Speaker Change: But we feel very good about where your peers are at.

Speaker Change: At this stage.

Speaker Change: Excellent and just to follow up on advanced materials.

Speaker Change: I guess same question. The business has returned to growth just what are you seeing maybe a little bit more detail driving positive outlook for 'twenty four I think <unk>.

Vimal M. Kapur: The aftermarket continues to be strong and will be a factor of growth in 2024. We have taken meaningful action on our cost base, specifically on the supply chain. And when we put those actions together, which is in our control, we see margin expansion in this business. And in spite of top line pressure, it will not be a source of EPS growth. It will be a source of EPS accretion. Hi Julian, this is Sean. If I could add just one more thing there, from a modeling perspective, keep in mind that it's not just a dynamic embedded in our model for 24, second half likely stronger than first half. It's also that second half 23 was weaker than first half 23.

Speaker Change: As constructive.

Speaker Change: Are there as well and maybe you can throw in a lot of questions on <unk>.

Speaker Change: Yes, that's part of it as well just if you expand on that thank you.

Speaker Change: Yes, Thanks, Andrew Yeah, we do see a recovery in semis.

Speaker Change: <unk> increasing.

Andrew: A month is becoming modestly better.

Andrew: That's part of our forecast for.

Andrew: 2024, we also saw in Q4 recovery in some segments of chemicals and short cycle and we expect that to rollover in 2024, so the short cycle recovery on a broader Honeywell portfolio is not a one event. So it's going to happen in different portions so chemicals happen.

Andrew: Late Q4, and we expect that to continue as the audit all advanced materials should have a better year in 2024 compared to what we had in 2023.

Sean Meakim: So both those will influence the year-over-year growth rate as you're talking about exiting 23 versus exiting 24. That's great, thank you. Thank you. Our next question comes from the line of Scott Davis with Melius Research. Your line is now open.

Speaker Change: Thanks, so much.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Nigel Coe with Wolfe Research. Your line is now open.

Nigel Edward Coe: Thanks, Good morning, Thanks for the question.

Scott Reed Davis: Hey, good morning, Bill Mullen, Greg. Good morning, guys. We...take an opportunity to take a step back. Just walk around the world a little bit on what you're assuming, probably have a pretty good idea of what's going on in China, a lot of your peers. You don't need to really focus on arrows.

Nigel Edward Coe: And congrats on the on the chairman role.

Nigel Edward Coe: So look at modern question, so here's a few more.

Nigel Edward Coe: A couple more.

Pricing I'm not sure if you've called out price, but maybe if you just talk about what you've been bit of a price in your revenue build but it.

Vimal M. Kapur: For the other businesses, perhaps just a little bit of color on what you're expecting, any differences in 24 geographies. Yeah. Thanks, Scott. So, let me start with China.

Nigel Edward Coe: It seems that we're entering the year with two the segments down pretty pretty heavily.

Maybe just talk about how you see that break back to growth.

Nigel Edward Coe: And <unk> is that in the second quarter is that more second half loaded and perhaps maybe you can talk about what you've seen in the order rates to maybe support the view that we are at the bottom and some of these markets.

Vimal M. Kapur: We grew about 7% in 2023. I don't expect a material shift between 2024 and 2023. We have weathered a tough year in 2023, China's economic cycle, and I expect 2024 to be a shade better, but it's no more going to be a source of high growth like it used to be five or seven years ago. Speaking more broadly of high growth regions, which represent almost 25% of Honeywell revenue now, we had very good performance in the Middle East and India, in particular, and we expect those trends to continue in 2024 India grew for us at high double digits in 2023. We have very meaningful revenue there, and similar good performance in the Middle East, so we expect those regions to perform well. All in all, I expect high growth regions to grow double digits, which will be a source of organic growth, about a percent in the overall Honeywell algorithm of organic growth. However, Europe remains challenging.

Speaker Change: Yes, so for Aida and DSS.

Speaker Change: I would say.

Speaker Change: We're broadly as we said will be flattish.

Speaker Change: On a year on year basis.

Speaker Change: The strength, we see that is in process solutions.

Speaker Change: In particular.

Speaker Change: It had a strong 23, we expect another strong 2024 from Brazos solution rest of Aida is a sharp cycle recovery we saw.

Speaker Change: Saw buckets of that happening in Q4 in our scanning and mobility business.

Speaker Change: Now other portions have to also recover during the course of the year I talked about our warehouse automation business.

Speaker Change: And how we expect that to perform during the course of the year, specifically on the margin side.

Speaker Change: So that's definitely.

Speaker Change: As part of our forecast on assets.

Speaker Change: Briefly talk to an earlier question <unk>, it's getting pretty strong booking and backlog. So we expect a good year from youll be in 2024, and then I talked about advanced materials, a bit but earlier on orders right.

Vimal M. Kapur: We have seen headwinds in some portions of our businesses and tailwinds in some other portions. So net-net, it's more neutral to negative. And in the US, we are, like everybody else, waiting for the interest rate environment to settle. And that will determine the performance of our business, specifically in the short cycle. So that's kind of my broad overview of how we see different geography.

Speaker Change: The Q4 orders were up 1%, which helped us to further bolster our backlog now to regard the record high level.

Speaker Change: Specifically on orders there were highlights on short cycle early green shoots in building products and scanning and mobility business in parts of our chemicals business, which is a good sign because if couple of have shown item and confident it will grow more broadly across our portfolio long cycle strong <unk>.

Greg Lewis: Okay, that's helpful. And then a little bit of a nuance here, would you classify the carrier deal as a bolt-on? Thank you. In your slides, you mentioned Baltimore. I will...... expect other kinds of like billionaires.

<unk> in commercial aerospace in you will be in process solutions. There was some lumpiness in the orders in.

Vimal M. Kapur: I would call it bolt-on because, you know, my argument is that bolt-on, to me, is something that is adding to our core portfolio and propels the growth of organic growth of the business itself. So that's what this business is. If you see our buildings products business, our strategy is to have products that are specified, which are critical for the building. We had a moderate position in security, but the addition of this portfolio makes us a meaningful player. And therefore, I call it a bolt-on because it's a continuum of our strategy. We are not finding a new adjacency.

Speaker Change: Warehouse automation and defense and space, which I talked earlier, so net net our long cycle artist performed extremely well on an annualized basis in 2023 and short cycle is showing early cycle of recovery.

Which gives me confidence for 2024, and then maybe just take the last point on pricing, we talked about 4% for 2023, that's exactly where it came in and the more balanced view of price versus volume in our model for 'twenty four is really 3% pricing so.

Speaker Change: And that's going to be the most points I think price cost neutral to maybe slightly positive for the year. So we feel we feel very good about our ability to deliver on that we've talked about that at length in the past I think our capabilities in that area have been very strong and we continue to be confident in going into next year.

Greg Lewis: We're not exploring some new idea. It's something we understand extremely well. And therefore, our confidence to add shareholder value here is extremely strong. And keep in mind, at five billion, it's something like 4% of our market cap. So, reasonably, you know, it's not a huge bet as it relates to that as well.

Speaker Change: Okay. That's helpful. Greg and then a quick follow up on the cash flow.

Speaker Change: Nice to see the pick up year over year I'm.

Greg Lewis: Obviously, a very different world than when our market cap was, you know, half that in 10 years. Thank you, guys. I'll pass it on.

I'm guessing the tax benefits potential tax benefits from R&D.

Speaker Change: Kind of a rollback im assuming thats not in your guide, but just curious if that does pass the Senate will kind of benefit you might see for 'twenty two 'twenty three for free cash flow, yes, well first of all there is not nearly home as I'm sure. You can appreciate so we're not sitting here counting any chickens.

Andrew Burris Obin: Good luck this year. Thank you. Thank you. Our next question comes from the line of Andrew Obin with Bank of America. Your line is now open. Good morning. On air, Andrew.

Andrew Burris Obin: Hey, just looking at UOP, I was a little bit surprised by the growth in the quarter. I would have thought with SDS being strong, and I know you sort of gave us, I think it was a gas product, but can you just tell us what kind of visibility do you have on this business accelerating into 24? Because it is sort of, I guess that's what you're guiding to, but just a little bit more granularity there. Thank you. Sure, Andrew.

Speaker Change: To be honest, Nigel I think we need to wait and see exactly how all the rules first whether it's whether it happens and how they set the rules as you can appreciate all of the specifics matter a lot in this area. So no we're not guiding anything special about that we'll wait and see exactly what happens and then.

Speaker Change: Interpret that and integrate it into our view when it becomes a real thing.

Nigel Edward Coe: Okay, that's great. Thanks.

Vimal M. Kapur: So, 23 revenue is 1% growth. It's primarily driven by equipment revenue we had in the prior year. We had large equipment-based projects in our volume, LNG projects. So, on a year-on-year comp basis, it doesn't repeat itself.

Speaker Change: Thank you. Our next question comes from the line of Sheila Hi.

Sheila Hi: Hi, Yao Lu with Jefferies. Your line is now open.

Sheila Hi: Good morning, guys and thank you.

Sheila Hi: Let me I'll start off.

Sheila Hi: I'll start off with aerosols, if that's okay.

You talked about it growing low double digits, how do we think about the growth there.

Vimal M. Kapur: But if you look at the core UOP business on Catalyst, it remains pretty strong. To your specific question on sustainable technologies, as we mentioned during our earnings earlier, we remain very confident in its performance. We crossed the benchmark of 50 licenses for sustainable aviation fuel just a few weeks ago.

Sheila Hi: Build rates are you embedding into that on the commercial aerospace side any color you could give on aftermarket and defense growth.

Yes.

Speaker Change: Yes, so Sheila we expect.

Speaker Change: The oral low double digit guide.

Speaker Change: <unk>.

Vimal M. Kapur: Now we are seeing activity in carbon capture projects, and early innings on hydrogen projects. So, our plans to have a sustainable technology business of a billion dollars in the next few years haven't changed. And my confidence in that absolutely has only grown higher over the last few months. Yeah, and I would also just zoom out.

Speaker Change: Continued high growth rate of Hawaii as we saw in 2023 that will repeat itself in 2024.

Speaker Change: Also expect.

Speaker Change: Double digit growth in aftermarket.

Speaker Change: Defense.

Speaker Change: We perform at.

Speaker Change: Low single to mid single digit in 2023, the supply chain constraint remains the biggest handle there and as we make progress we expect.

Greg Lewis: I mean, we talk about some of the variability in this business, and PMT has always got some of the highest variability, with UOP being a big part of that. Keep in mind, we grew sales in UOP for the year by something like 8%. Very, very healthy.

It to perform in that range in 2024 also.

Speaker Change: But the biggest unlock for us.

Speaker Change: Is supply chain.

Greg Lewis: And we've also grown orders somewhere in that same neighborhood, I think 2% for the year, but with 13% in the capital. So, we've come off some big comps with the large LNG projects. Overall, this is a very healthy business with a very healthy backlog. And, as you said, the STS business provides a really nice catalyst for that new aspect of it, but we feel very good about where UOP is at this stage. Excellent. And just to follow up on advanced materials, I guess, same question. The business has returned to growth. But just what are you seeing? Maybe in a little bit more detail, driving a positive outlook for 24. I think Kim Moore's is constructive there as well.

Speaker Change: <unk> demonstrated a strong performance in 2023.

Speaker Change: We expect a good good start of the year and we'll unpack the year as things progress, yes, so to be clear I mean, no new signals from the Oes.

Speaker Change: They are continuing to.

Place the same level of demand on us that they have been.

Speaker Change: And so that's what we're committed to try to deliver.

Speaker Change: Okay, Great and then if I could ask one more <unk> been asked every angle in terms of revenue growth acceleration.

Speaker Change: Outside of ore, what do you need to see in the other three segments to hit the high on the guidance is that just based on short cycle recovery and the timing of that or is it some additional price capture and if you could maybe.

Speaker Change: Sorry about that.

Yes, the biggest variable is the short cycle recovery in the piece of it which remains variable.

Andrew Burris Obin: And maybe you can throw in a lot of questions on semis. I guess that's part of it as well, just if you expand on that. Thank you. Yeah, thanks, Andrew.

Speaker Change: You look at 'twenty four set up our Honeywell in three buckets, our backlog is up 8% and we convert backlog at a pretty predictable rates. So that's something which is highly deterministic number two the self help actions we are driving to drive growth. The self help actions and huge surprise that includes new products I talked about high growth.

Vimal M. Kapur: Yeah, we do see recovery in semis modestly increasing, you know, every month is becoming modestly better. So that's part of our forecast for 2024. We also saw, in Q4, recovery in some segments of chemicals in the short cycle, and we expect that to roll over in 2024. So the short cycle recovery on a broader portfolio is not just one event.

Speaker Change: Regions after market services all of that is going to help us to drive growth regardless of the market and then the third variable is short cycle.

Speaker Change: If it returns quicker we will have a blend of the growth or we can beat it surprised everybody and device or our site for it doesn't perform well during the course of the year than we are at the lower end of the guide.

Vimal M. Kapur: So it's going to happen in different portions. So chemicals happen late in Q4, and we expect that to continue. So all in all, advanced materials should have a better year in 2024 compared to what we had in 2023. Thanks so much.

Speaker Change: Great. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from the line of Andy Kaplowitz with Citi. Your line is now open.

Sheila Kayalu: Thank you. Our next question comes from the line of Nigel Coe with Wolf Research. Your line is now open. Thanks. Good morning.

Andrew Alec Kaplowitz: Good morning, everyone.

Andrew Alec Kaplowitz: Good morning Ann.

Andrew Alec Kaplowitz: Just wanted to follow up on the commentary that Youre on track to exceed the 25 billion of capital deployment guidance from 'twenty to 'twenty, five obviously announced the carrier deal, but does that commentary suggests continued more aggressive capital deployment does your M&A pipeline support that and then could you update us on the progress in divesting the 10% of the sales you talked about.

Vimal M. Kapur: Thanks for the question. And a bit more congratulations on the chairman role. There are lots of modern questions, so here's a few more.

Vimal M. Kapur: Well, a couple more. Pricing, I'm not sure if you've called out price, but maybe if you just talked about where you've been better for price in your revenue bill. It seems that we're entering the year with two of the segments down pretty heavily. Maybe just talk about how you see that break back to growth for IA and ESS. Is that in the second quarter, or is it more second half loaded?

Andy Kaplowitz: Previously.

Speaker Change: Yeah, So I would say that our capital deployment strategy would be balanced, which maximizes shareholder returns. That's what we are really targeting for it will be the balance.

Speaker Change: Greg mentioned earlier, we expect both M&A and share repurchases to be part of that element for 2024 and <unk> com.

Nigel Edward Coe: And perhaps maybe talk about what you've seen in the order rate to maybe support the view that we are at the bottom in some of these markets. Yeah, so for IA and ESS, I would say IA broadly, as we said, will be flattish on a year-on-year basis. The strength we see there is in process solutions, in particular, that it had a strong 23, and we expect another strong 2024 from process solutions. The rest of IA is a short cycle recovery. We saw pockets of that happening in Q4 in our scanning and mobility business, and now other portions also have to recover during the course of the year.

Speaker Change: Tom.

Speaker Change: The pipeline is.

Speaker Change: As Eddie create at this point of time and activity remains strong. So we are constantly looking at.

Speaker Change: The deals which working on algorithms it has to be bolt on it has to help to drive our overall organic growth and generally meet our financial algorithm, which we have earlier talked about.

Speaker Change: On the.

Speaker Change: The part of the portfolio or it doesn't fit in well we are going to drive action starting 'twenty four.

Speaker Change: Of course, we are not going to rush through that.

Speaker Change: We need to capture shareholder value, but you can anticipate some initial actions on that during 2024, yes, I mean, maybe just to put numbers on it Andy.

As we showed in that slide I mean, we've been doing eight ish billion dollars per year. The simple math for 2024 says just with carrier that number's 10.

Vimal M. Kapur: I talked about our warehouse automation business and how we expect that to perform during the course of the year, specifically on the margin side. So that's definitely part of our forecast. On ESS, we briefly talked about an earlier question, UOP is carrying a pretty strong booking and backlog, so we expect a good year from UOP in 2024. And then I talked about advanced materials a bit earlier there.

Speaker Change: Going in with just enough share repurchase to buy back the creep so.

Speaker Change: We're going to be we're going to be sitting at 18 through two years towards the 25 plus number so the high confidence that.

Speaker Change: We're going to be above that above that level, just with the math.

Speaker Change: And then just a quick follow up you managed to grill Aero margin by 20 basis points in Q4, even with OE mix being against you and you talked about supply chain improving in 'twenty four I know you are saying.

Vimal M. Kapur: The Q4 orders were up 1%, which helped us to further bolster our backlog now at a record high level. Specifically on orders, there were highlights on short cycle, early green shoots in building products, in scanning and mobility business, and in parts of the chemicals business, which is a good sign because if the couple has shown, I remain confident this will grow more broadly across our portfolio. Long cycle, strong bookings in commercial aerospace, in UOP, in process solutions. There were some lumpy lesson orders in warehouse automation and defense in space, which I talked about earlier.

Speaker Change: Margin stay in a tight range, but.

Speaker Change: Lighting does continue to improve is there an opportunity there with all of your productivity projects in that segment.

Speaker Change: Look I mean, there are there is.

Speaker Change: Volume growth, there, which will continue in the volume leverage gets offset by the OE mix, which I talked earlier the OEM mix remains strong, but we are also Andy investing into aerospace the volume growth is not coming exit entity.

Greg Lewis: So net-net, our long cycle orders performed extremely well on an annualized basis in 2023, and the short cycle is showing early signs of recovery, which gives me confidence for 2024. Maybe just to hit the last point on pricing, we talked about 4% for 2023. That's exactly where it came in.

Speaker Change: Have invested into our supply chain operation supplier recovery, which is.

Speaker Change: The monster in the continuous volume growth occurred in 2324, so when you put those facts together that really drive the.

Speaker Change: The margin forecast 440 at this point.

Nigel Edward Coe: And the more balanced view of price versus volume in our model for 2024 is really 3% price. And that's going to be, to Vimal's point, price-cost neutral to maybe slightly positive for the year. So we feel very good about our ability to deliver on that. We've talked about that at length in the past. I think our capabilities in that area have been very strong, and we continue to be confident going into next year. That's helpful.

Speaker Change: Helpful guys.

Speaker Change: Thank you.

Speaker Change: Thank you and our next question will come from the line of Peter Arment with Baird.

Peter J. Arment: Your line is now open.

Yeah. Thanks, Good morning, Greg.

Peter J. Arment: Hey, Greg just a quick one you mentioned in just kind of the legacy segment Sps you were talking about warehouse.

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Peter J. Arment: The pipeline of kind of in the projects business.

Speaker Change: There was there were some signs that there was some at least some improvement there maybe if you could just give us a little color there just because it's obviously it's been a.

Greg Lewis: Greg, a quick follow-up on the cash flow. Nice to see the pickup year-to-year. I'm guessing the tax benefits, potential tax benefits from R&D kind of rollback, I'm assuming that's not in your guide, but just curious if that does pass the Senate, what kind of benefit you might see for 2024 in cash flow. Yeah, well, first of all, it's not nearly home, as I'm sure you can appreciate, so we're not sitting here counting any chickens. To be honest, Nigel, I think we need to wait and see exactly how all the rules are set first, whether that happens, and how they set the rules, as you can appreciate all the specifics matter a lot in this area.

Speaker Change: That particular asset.

Speaker Change: Got it.

Speaker Change: Big downturn here I can start there yes.

Yes, I can start there and Greg and John look the pipeline if I compare simple facts our pipeline in Jan of 24, compared with <unk> 23 for warehouse automation projects.

Speaker Change: Nearly 30%.

Speaker Change: So what it tells us is that the basic value proposition and the long term trend of Iraq's warehouse automation are intact, but customers' willingness to invest in this very tight market are uncertain market is what is holding them back from making capital decisions. So we remain absolutely convicted on this business.

Speaker Change: This and the foundational actions we have taken on continue to grow our after market. They are really paying off I mean, not after market businesses across half a billion dollars Mark in 2023, we expect double digit growth in aftermarket in 2024, and you can expect the business almost capping a half projects and half after March.

Greg Lewis: So no, we're not guiding anything special about that. We'll wait and see exactly what happens and then interpret that and integrate it into our view when it becomes a real thing. Okay, that's great.

Joseph Alfred Ritchie: Thank you. Our next question comes from the line of Sheila Kayalu with Jeffreys. Your line is now open.

Greg Lewis: Good morning, guys. And thank you. Hey, I'll start off with aerospace, if that's okay. You talked about it growing in low double digits. How do we think about the OE growth there? What build rates are you embedding into that on the commercial aerospace side, and any color you could give on aftermarket and defense? Yes, so, Sheila, we expect the overall low-dip, double-digit guide to include the continued high growth rate of OE, as we saw in 2023. And that will repeat itself in 2024.

Speaker Change: In this year, so as the market confidence returns, we'll see that.

Speaker Change: We'll see the growth back and that's supported by the pipeline we have.

Speaker Change: And activity in the market.

Speaker Change: Very helpful color. Thanks, I'll leave it at one.

Speaker Change: Thank you.

Speaker Change: Thank you and our next question will come from the line of Joe Ritchie with Goldman Sachs. Your line is now open.

Joseph Alfred Ritchie: Thanks, Good morning, guys.

Joseph Alfred Ritchie: Good morning.

Joseph Alfred Ritchie: Maybe circling back to <unk> question on pricing of three points, that's embedded into your expectations does that disproportionately coming from Aero or how do I, just kind of think about pricing across the segment.

Vimal M. Kapur: Also expect double-digit growth in the aftermarket. For defense, we will perform at a low-single to mid-single-digit in 2023. The supply chain constraint remains the biggest handle there, and as we make progress, we expect it to perform in that range in 2024 also. So, the biggest unlock for us is the supply chain. We have demonstrated a strong performance in 2023. We expect a good start to the year, and we'll unpack the year as things progress. Yeah, so to be clear, I mean, no new signals from the OEs. They're continuing to place the same level of demand on us that they have been, and so that's what we're committed to trying to deliver. Okay, great. And then, if I could ask one more, you've been asked every angle in terms of revenue growth acceleration. Outside of AERO, what do you need to see in the other three segments to hit the high end of guidance? Is it just all based on short cycle recovery and the timing of that?

Speaker Change: Yes so.

Joseph Alfred Ritchie: Arrow is probably on the mid to lower end of that just given all the contract nature of their business and the other businesses. The other the other three segments are going to be a bit higher than that overall, so that's really without being too specific that's sort of directionally are notionally, how you should think about it.

Speaker Change: Okay, great. Thanks, Greg and then a quick follow up just circling.

Speaker Change: The square.

Greg Lewis: Commentary on HPT and the Destocking that you're seeing in the products business with with obviously, you're excited about the security acquisition and the growth profile of that business appears to be different I'm, just trying to square those comments and maybe maybe you can kind of help me with what youre seeing within your own security business today.

Greg Lewis: As I mentioned before.

Greg Lewis: The front end of the year growth to be more driven by solutions side of the business. We are guiding forward meaningful backlog, both in products and services and as the year progresses.

Joseph Alfred Ritchie: Or is it some additional price capture? If you could maybe talk about that. Yeah, yes, the biggest variable is the short cycle recovery and the pace of it, which remains variable. I mean, you look at 24 setup or Honeywell in three buckets, our backlog is up 8%, and we convert backlog at a pretty predictable rate. So that's something that is highly deterministic.

Greg Lewis: We expect short cycle recovery to be the key factor for growth in the.

Greg Lewis: Buses, along and net net we expect low single digit growth in building technologies, but strong margin expansion of our commercial excellence actions are in place.

Vimal M. Kapur: Number two, the self-help actions we are driving to drive growth. The self-help actions include price, and that includes new products. I talked about high-growth regions, aftermarket services, all that is going to help us to drive growth regardless of the market. And then the third variable is the short cycle.

Speaker Change: And we remain confident that youre going to have a meaningful progress in the year, both on growth and margin expansion, yes, I mean, I would just say Joe.

Speaker Change: Zoom out for a minute and we're coming towards the end of a three year period, where again Covid then followed by big supply chain constraints, followed by massive inflation and that's why you hear everyone talking about what's going on in inventory stocks all over.

Vimal M. Kapur: If it returns quicker, we'll have the higher end of the growth, or we can beat it if it surprises everybody, and vice versa. If it doesn't perform well during the course of the year, then we are at the lower end of the guide. Great, thank you. Thank you. Our next question comes from the line of Andy Kaplowitz with Citi. Your line is now open. Good morning, everyone.

Speaker Change: And yes as that as that thing normalizes, thats going to make things clear across many of our products businesses, including.

Speaker Change: But more broadly again zooming out we love the we love where this business is going.

Speaker Change: And also creating that sizable position in security with a very attractive asset that we're bringing on from carrier. Yes. We're very excited about that opportunity because we think that's going to be accretive growth across the portfolio for us. So it's just a matter of.

Andrew Alec Kaplowitz: Vimal, I just wanted to follow up on your commentary that you're on track to exceed the $25 billion of capital deployment guidance from 2023 to 2025. Obviously, you announced the carrier deal, but does that commentary suggest continued more aggressive capital deployment? Does your M&A pipeline support that? Could you update us on the progress in divesting the 10% of the sales you talked about previously? Yes.

Speaker Change: I'd say differentiating between the here and now and the medium to longer term.

Speaker Change: With those comments.

Speaker Change: Helpful. Thank you guys.

Speaker Change: Got it.

Speaker Change: Thank you I would now like to turn the call back over to CEO demo Kapoor for closing remarks.

Vimal M. Kapur: Thank you I want to thank all our shareholders for your ongoing support and our Honeywell colleagues, who continue to enable us to outperform in any environment. Our future is bright and we look forward to updating you on our progress as we execute on our commitments. Thank you very much for listening and please stay safe and healthy.

Vimal M. Kapur: So, I would say that our capital deployment strategy would be balanced, which maximizes shareholder return. That's what we are really targeting. It will be the balance, and as Greg mentioned earlier, we expect both M&A and share repurchases to be part of that element for 2024 and, you know, for years to come. The pipeline is adequate at this point of time, and activity remains strong. So, we are constantly looking at the deals which work in our algorithm. It has to be bolted on.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Yes.

Speaker Change: Hum.

Speaker Change: Hum.

Vimal M. Kapur: It has to help to drive our overall organic growth and generally meet our financial algorithm, which we have earlier talked about. On the part of the portfolio which doesn't fit in well, we are going to drive action starting in 2024. Of course, we are not going to rush through that, because we need to capture shareholder value, but you can anticipate some initial actions on that during 2024.

Speaker Change: Sure.

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Speaker Change: No.

Greg Lewis: Yeah, maybe just to put numbers on it, Andy, as we showed on that slide, I mean, we've been doing, you know, eight-ish billion dollars per year. The simple math for 2024 says, just with Carrier, that number is 10, going in with, you know, just enough share repurchase to buy back the creep. So, you know, we are going to be sitting at, you know, 18 through two years, you know, towards the 25-plus number.

Speaker Change: [music].

Speaker Change: Okay.

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Speaker Change: Hum.

Vimal M. Kapur: So, I have high confidence that we are going to be above that level just, you know, with the math. And then just a quick follow-up. You managed to grow Arrow Margin by 20 base points in Q4, even with OE mix being against you, and you talked about supply chain improving in 24. I know you're saying, you know, it'll margin will stay in a tight range, but, you know, if supply chain does continue to improve, is there an opportunity there with all of your productivity projects in that space? Look, I mean, there is volume growth there, which will continue, and the volume leverage gets offset by the OE mix, which I talked about earlier. The OE mix remains strong. But we are also investing in aerospace; the volume growth is not coming accidentally. We have invested in our supply chain operations and supplier recovery, which is demonstrating the continuous volume growth that occurred in 23 and 24. So when you put those facts together, that really drives the, you know, the margin forecast for aero at this point.

Speaker Change: Hmm.

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Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Uh huh.

Greg Lewis: Helpful guys. Thank you. Thank you. And our next question will come from the line of Peter Arment with Baird. Your line is now open.

Speaker Change: Hum.

Speaker Change: [music].

Peter J. Arment: Thanks. Good morning, Vimal, and Greg. Greg, just a quick one. You mentioned in just kind of the legacy segment, SPS, you were talking about warehouse, that, you know, the pipeline for kind of in the projects. But there were, you know, there were some signs there. Maybe you can just give us a little color there. All right, that particular big downturn here. Yeah, I can start there, and Greg can join me.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Hello.

Speaker Change: Oh.

Speaker Change: Okay.

Vimal M. Kapur: Look, the pipeline, if I compare the simple fact, pipeline in Jan of 24 compared to Jan of 23, for warehouse automation projects, it's up nearly 30%. So what this tells us is that the basic value proposition and the long-term trend of warehouse automation are intact, but customers' willingness to invest in this very tight market or uncertain market is what is holding them back from making capital decisions. So we remain absolutely committed to this business, and the foundational actions we have taken to continue to grow our aftermarket are really paying off. I mean, our aftermarket businesses crossed the half-billion dollar mark in 2023.

Speaker Change: [music].

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Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Vimal M. Kapur: We expect double-digit growth in aftermarket in 2024, and you can expect the business to almost cup half projects and half aftermarket this year. So as market confidence returns, we'll see growth back, and that's supported by the pipeline we have in activity in the market. Very helpful, Colin. Thanks. I'll leave it at that.

Greg Lewis: Thank you. Thank you. And our next question will come from the line of Joe Ritchie with Goldman Sachs. Your line is now open.

Joseph Alfred Ritchie: Thanks. Good morning, guys. Maybe circling back to Nigel's question on pricing, the three points that are embedded into your expectations, is that disproportionately coming from Aero, or how do I just kind of think about pricing across? Yeah, so, Aero is probably on the, you know, mid to lower end of that, just given all the contract nature of their business, and the other businesses, the other three segments are going to be a bit higher than that overall.

Greg Lewis: So that's really, you know, without being too specific, that's sort of directionally or notionally. I usually say, Okay, great. Thanks, Greg. And then the quick follow-up, just circling, I'm trying to square the commentary on HBT and the de-stocking that you're seeing in the products business with, you know, obviously, you're excited about the security acquisition and the growth profile, but that business appears to be different. I'm just trying to square those comments.

Joseph Alfred Ritchie: And maybe you can kind of help me with what you're seeing within your own security business today. As I mentioned before, we expect the front end of the year growth to be more driven by the solutions side of the business. We are carrying forward meaningful backlog, both in projects and services, and as the year progresses, we expect short cycle recovery to be the key factor for growth as the year passes. And net-net, we expect low single-digit growth in building technologies but strong margin expansion.

Vimal M. Kapur: Our commercial excellence actions are in place, and we remain confident that we're going to make meaningful progress this year, both on growth and margin expansion. Yeah, I mean, I would just say, Joe, zoom out for a minute. And we're coming towards the end of a three-year period where COVID is again, followed by big supply chain constraints, followed by massive inflation. And, you know, that's why you hear everyone talking about what's going on in, you know, inventory stocks all over.

Greg Lewis: And yeah, as that thing normalizes, that's going to make things clear across many of our products and businesses, including, you know, HPT. But more broadly, again, zooming out, we love where this business is going and also creating that, you know, sizable position in security with a very attractive asset that we're bringing on from Carrier. Yeah, we're very excited about that opportunity because we think that's going to be creative growth across the portfolio for us. So it's just a matter of, you know, I would say, differentiating between the here and now and the medium to longer term with those comments.

Joseph Alfred Ritchie: Helpful. Thank you guys. You got it. Thank you. I would now like to turn the call back over to CEO Vimal Kapur for closing remarks. Thank you. I want to thank all our shareholders for your ongoing support and our Honeywell colleagues who continue to enable us to outperform in any environment.

Vimal M. Kapur: Our future is bright, and we look forward to updating you on our progress as we execute on our commitments. Thank you very much for listening, and please stay safe and healthy. This concludes today's conference call. Thank you for participating. You may now disconnect, and Mark. Thank you. Thank you, and, J.M.C. I'm Quick on the Air.

Operator: Bye! Mark. Mark. Mark. Mark. Mark. Mark, and Ralph Golden, Seth Rogen, Sheldon Hopkins, Subs by www.zeoranger.co.uk, and John Holt.

Operator: Thank you. Thank you. Thank you. Thank you.