Q2 2024 Honeywell International Inc Earnings Call

Thank you for standing by, and welcome to the Honeywell Second Quarter 2024 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.

Operator: Earnings Conference call. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead, sir.

Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead, sir.

Sean Christopher Meakim: Thank you. Good morning, and welcome to Honeywell's second quarter 2024 earnings conference call. On the call with me today are Chairman and 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. From time to time, we post new information that may be of interest or material to our investors on this website.

Speaker Change: Thank you. Good morning and welcome to Honeywell's second quarter 2024 earnings conference call. On the call with me today are Chairman and Chief Executive Officer Vimal Kapur and Senior Vice President and Chief Financial Officer Greg Lewis.

Speaker Change: This webcast and the presentation materials, including non-GAAP reconciliations, are available on our Investor Relations website. From time to time, we post new information that may be of interest or material to our investors on this website.

Speaker Change: Our discussion today includes four 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 ones described in our SEC filings.

Speaker Change: This morning, we will review our financial results for the second quarter, share our guidance for the third quarter, and provide an update on full year 2024. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO Vimal Kapur. Thank you, Sean, and good morning, everyone.

Sean Christopher Meakim: Our discussion today includes four 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 filing. This morning, we will review our financial results for the second quarter, share our guidance for the third quarter, and provide an update on full year 2024. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO Vimal Kapur. Thank you, Sean, and good morning, everyone.

Vimal M. Kapur: The second quarter was another strong one for Honeywell. We exceeded the high end of our adjusted earnings per share guidance and achieved the high end of our organic sales guidance ranges. While aerospace continues to lead our growth, we are seeing broader participation across our portfolio. Three of our four strategic business groups contributed positive growth for the quarter, and we saw sequential improvement in growth rates from all four. Order rates were healthy across Honeywell, supporting our expectation of further organic growth acceleration into the second half of the year.

Vimal M. Kapur: Second quarter was another strong one for Honeywell. We exceeded the high end of our adjusted earnings per share guidance and achieved the high end of our organic sales guidance ranges.

Speaker Change: While aerospace continues to lead our growth, we are seeing broader participation across our portfolio.

Speaker Change: Three of our four strategic business groups contributed positive growth for the quarter, and we saw sequential improvement in growth rate from all four.

Speaker Change: Order rates were healthy across Honeywell, supporting our expectation of further organic growth acceleration into back-off of the year. We are adding attractive new assets to our already compelling technology portfolio, which will enable us to create further value for our customers and shareholders alike.

Vimal M. Kapur: We're adding attractive new assets to our already compelling technology portfolio, which will enable us to create further value for our customers and shareholders alike. Let me take a few minutes to restate my priority as chairman and CEO of Honeywell before we get into more detailed discussion on the second quarter 2024 results and an update on our full 2024 year expectations.

Speaker Change: Let me take a few minutes to restate my priority as Chairman and CEO of Honeywell before we get into more detailed discussion on the second quarter 2024 results and update on our full 2024 year expectations.

Vimal M. Kapur: First, our key priority remains accelerating organic sales growth to deliver the upper end of our long-term target range of 4% to 7%. In order to achieve this, we are enhancing how we think about our new product innovation, monetizing our vast installed base, accelerating software offerings, and improving our leadership position in high-growth regions. As an early read on these efforts, our self-help actions in aftermarket services are demonstrating favorable proof points, double-digit growth in the second quarter, and double-digit growth even when excluding aerospace.

Speaker Change: First, our key priority remains accelerating organic sales growth to deliver the upper end of our long-term target range of 4-7%. In order to achieve this, we are enhancing how we think about our new product innovation.

Speaker Change: monetizing our vast install base, accelerating software offerings, and improving our leadership position in high-growth regions.

Speaker Change: As an early read on these efforts, our self-help actions in aftermarket services are demonstrating favorable proof points.

Speaker Change: Double-digit growth in the second quarter and accretive growth even when excluding aerospace. In fact, I'm pleased to highlight that our total Honeywell grew volume in the second quarter, and we expect further volume acceleration in the second half.

Vimal M. Kapur: In fact, I'm pleased to highlight that our total Honeywell volume grew volume in the second quarter, and we expect further volume acceleration in the second half. Second, on the strength of our contemporary digital foundation, we are transforming how we run Honeywell with the latest version of our Honeywell Accelerator operating system.

Speaker Change: Second, off the strength of our contemporary digital foundation, we are transforming how we run Honeywell to the latest version of our Honeywell accelerator operating system. We are standardizing by business model to drive incremental value, enhancing our growth capabilities.

Vimal M. Kapur: We are standardizing our business model to drive incremental value, enhancing our growth capability. Our integrated operating system principles enable us to deploy world-class digital supply chain and technology development capabilities at scale, along with multiple growth drivers that benefit the entire enterprise. For example, we are leveraging our digital capabilities in demand planning to more closely match production and material management, enabling us to capture incremental inventory improvement and reduce working capital intensity. We are also leveraging generative AI to maximize the potential benefit of our operating system, both for our customers and ourselves.

Speaker Change: Our integrated operating system principles enable us to deploy world-class digital supply chain and technology development capabilities at scale, along with multiple growth drivers that benefit the entire enterprise.

Speaker Change: For example, we are leveraging our digital capabilities and demand planning to more closely match production and material management, enabling us to capture incremental inventory improvement and reduce working capital intensity.

Speaker Change: We are also leveraging generative AI to maximize the potential benefit of our operating system, both for our customers and ourselves.

Vimal M. Kapur: As anticipated, Accelerator is proving to be a powerful source of profitable growth across all our businesses, as well as an important tool to successfully integrate the recent addition to our portfolio. Third, we are excited about our progress on our portfolio optimization goals. We are demonstrating a commitment to accelerate deal flow through multiple strategic ports on acquisition in the $1 billion to $7 billion range in order to upgrade the quality of our business and financial profile.

Speaker Change: As anticipated, Accelerator is proving to be a powerful source of profitable growth across all our businesses, as well as an important tool to successfully integrate the recent addition to our portfolio. Third, we are excited about our progress on our portfolio optimization goals.

Speaker Change: We are demonstrating a commitment to accelerate deal flow through multiple strategic port on acquisition in the $1 billion to $7 billion range in order to upgrade the quality of our business and financial profile.

Vimal M. Kapur: These acquisitions are aligned to three compelling megatrends around which we are focusing Honeywell: automation, the future of aviation, and energy transition. The additions, combined with a modest subtraction of non-core lines of business that are not aligned to these trends, will enable us to accelerate value creation for our shareholders. Last, as we aim for ways to simplify and accelerate growth at Honeywell, we are taking our Honeywell Connector enterprise strategy to the next stage by seamlessly integrating SC into our strategic business groups. In 2018, we formed HCE to enable the creation of one unified industry-leading IoT force platform to support the digital transformation for our customers.

Vimal Kapur: These acquisitions are aligned to three compelling mega trends around which we are focusing: Honeywell, automation, the future of aviation, and energy transition. The additions combined with a modest subtraction of non-core lines of business that are not aligned to these trends will enable us to accelerate value creation for our shareholders.

Speaker Change: These acquisitions are aligned to three compelling mega-trends around which we are focusing Honeywell – automation, the future of aviation, and energy transition.

Speaker Change: The additions, combined with a modest subtraction of non-core lines of business that are not aligned to these trends, will enable us to accelerate value creation for our shareholders.

Vimal Kapur: Last, as the aim for ways to simplify and accelerate growth at Honeywell, we are taking our Honeywell connector enterprise strategy to the next stage, but seamlessly integrating at the into our strategic business groups. In 2018, we formed CE to enable the creation of one unified industry-dearing IoT Force platform to support the digital transformation for our customers. Over the last few years, we have been increasingly focused on scaling our commercial offering to deliver outcome-based solutions in performance, sustainability, and security. We are maintaining our over software development expertise at the center, NFC version 3.0 will more deeply integrate those centralized capabilities within our segment-level commercial teams. This will deliver even better outcomes to our customers and drive sustain a creative software growth across the portfolio.

Speaker Change: Last, as we aim for ways to simplify and accelerate growth at Honeywell, we are taking our Honeywell Connector enterprise strategy to the next stage by seamlessly integrating Etsy into our strategic business groups.

Speaker Change: In 2018, we formed HCE to enable the creation of one unified, industry-leading IoT-forged platform to support the digital transformation for our customers.

Vimal M. Kapur: Over the last few years, we have been increasingly focused on scaling our commercial offering to deliver outcome-based solutions in performance, sustainability, and security. We are maintaining our robust software development expertise at the center, and FCE v3.0 will more deeply integrate those centralized capabilities within our segment-level commercial teams. This will deliver even better outcomes for our customers and drive sustained accretive software growth across the portfolio. As we demonstrate further progress against these priorities, we expect to deliver on our long-term financial strategy and generate superior value for our shareholders. In the spirit of that progress, let's turn to slide three to discuss our recent acquisition announcement. Our top M&A priority remains targeting bolt-on acquisitions, as evidenced by our recent announcement.

Speaker Change: Over the last few years, we have been increasingly focused on scaling our commercial offering to deliver outcome-based solutions in performance, sustainability, and security.

Speaker Change: We are maintaining our robust software development expertise at the center.

Speaker Change: NFC version 3.0 will more deeply integrate those centralized capabilities within our segment-level commercial teams. This will deliver even better outcomes to our customers and drive sustained, creative software growth across the portfolio.

Vimal Kapur: As we demonstrate further progress against these priorities, we expect to deliver on our long-term financial algorithm and generate superior value for our shareholders.

Speaker Change: As we demonstrate further progress against these priorities, we expect to deliver on our long-term financial algorithm and generate superior value for our shareholders. In the spirit of that progress, let's turn to slide 3 to discuss our recent acquisition announcements.

Vimal Kapur: In the spirit of that progress, let's start the slide 3 to discuss our recent acquisition announcements. Our top-eminent priority remains targeting important acquisition, as evidenced by our recent announcement. We are creating a flywheel of teams that strategically add to our technological capabilities. In hazard alignment to our three compelling mega-trends and provide a creative growth that supports Honeywell overall long-term financial framework.

Speaker Change: Our top M&A priority remains targeting bolt-on acquisition, as evidenced by our recent announcement.

Vimal M. Kapur: We are creating a flywheel of deals that strategically add to our technological capabilities, enhance our alignment to our three compelling megatrends, and provide creative growth that supports Honeywell's overall long-term financial framework. Let's discuss our recent deals in a bit more detail. Earlier this month, we announced our intention to acquire Air Products' liquefied natural gas processing technology and equipment business for approximately $1.8 billion in all cash transactions. With this addition, Honeywell will be able to offer customers end-to-end solutions that optimize the management of natural gas assets. Currently, Honeywell provides a pre-treatment solution serving LNG customers globally and automation technologies unified under the Honeywell Forge and Experian platform.

Speaker Change: We are creating a flywheel of deals that strategically add to our technological capabilities, enhance our alignment to our three compelling megatrends, and provide a creative growth that supports Honeywell's overall long-term financial framework.

Vimal Kapur: Let's discuss our recent these in a bit more detail. Earlier this month, we announced our intention to acquire Air Products, liquified natural gas processing technology and equipment business for approximately $1.8 billion in all cash transactions. With this addition, Honeywell will be able to offer customers and to an solution that optimize the management of natural gas assets. Currently, Honeywell provides a pre-treatment solution serving LNG customers globally, and automation technology is unified under the Honeywell Ford and Experience platforms. Air Products' complementary LNG business consists of a comprehensive portfolio, including in-house design and manufacturing of coil bound heat exchangers and related equipment.

Speaker Change: Let's discuss our recent deals in a bit more detail.

Vimal M. Kapur: Air Products' complementary LNG business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-bound heat exchangers and related equipment. This acquisition will foster our energy transition portfolio within energy and sustainability solutions. The LNG technology will immediately expand our install base, creating new opportunities to compound growth in aftermarket services and digitalization through Honeywell Ford. Additionally, this is the fourth acquisition Honeywell has announced this year as part of our Disciplined Capital Deployment Strategy, adding a business with creative economics at an attractive valuation. In June, we announced the acquisition of CAES Systems, or CAES for short, from private equity firm Advent International for $1.9 billion, enhancing Honeywell's defense technology solutions across land, sea, air, and space.

Speaker Change: Earlier this month, we announced our intention to acquire Air Products' liquefied natural gas processing technology and equipment business

Speaker Change: for approximately $1.8 billion in all cash transactions. With this addition, Honeywell will be able to offer customers end-to-end solutions that optimize the management of natural gas assets.

Speaker Change: Currently, Honeywell provides a pre-treatment solution serving LNG customers globally and automation technologies unified under the Honeywell Forge and Experian platforms.

Speaker Change: Air Products' complementary LNG business consists of a comprehensive portfolio, including in-house design and manufacturing of coil-bound heat exchangers and related equipment.

Vimal Kapur: This acquisition will foster our energy transition portfolio within energy and sustainability solutions. The LNG technology will immediately expand our install base, creating new opportunities to compound growth in aftermarket services and digitalization through Honeywell Ford. Notably, this is a fourth acquisition Honeywell has announced this year as part of our disciplined capital deployment strategy, adding a business with creative economics at an attractive valuation. In June, we announced the acquisition of CAES Systems arcades for short from private equity firm Advented and National for $1.9 billion in housing, Honeywell's defense technology solution across land, sea, air and space. This business will enable us to provide new electro-magnetic defense solutions for end-to-end radio-frequency signal management for critical existing and emerging U.S.

Speaker Change: This acquisition will bolster our energy transition portfolio within energy and sustainability solutions. The LNG technology will immediately expand our install base, creating new opportunities to compound growth in aftermarket services and digitalization through Honeywell Forge.

Speaker Change: Notably, this is the fourth acquisition Honeywell has announced this year as part of our Disciplined Capital Deployment Strategy, adding a business with a creative economics at an attractive valuation.

Speaker Change: In June , we announced the acquisition of CAES systems, or CAES for short, from private equity firm Advent International for $1.9 billion, enhancing Honeywell's defense technology solution across land, sea, air, and space.

Vimal M. Kapur: This business will enable us to provide new electromagnetic defense solutions for end-to-end radio frequency signal management for critical existing and emerging U.S. DoD platforms, which are forecasted to grow significantly at accretive rates in years to come. We are excited that this is the second aerospace-focused transaction we have announced this year, underscoring our alignment to the future of aviation. The Business Ads state-of-the-art advanced manufacturing capabilities, impressive engineering talent, and potential for significant commercial opportunities in international defense.

Speaker Change: This business will enable us to provide new electromagnetic defense solutions for end-to-end radio frequency signal management for critical existing and emerging U.S. DoD platforms, which are forecasted to grow significantly at accretive rates in years to come.

Vimal Kapur: D.O.D. platforms, which have forecasted the growth significantly at a creative rate in years to come. We are excited that this is the second aerospace focus transaction we have announced this year, underscoring our alignment to the future of aviation. The business adds state-of-the-art advance manufacturing capabilities, impressive engineering talent, and potential for significant commercial opportunities in international defense. Also, in June, we completed the acquisition of carriers' global access solutions business, which positions Honeywell as a leading provider of security solutions for the digital age, which opportunities for accelerating innovation and fast-growing cloud enable services. Honeywell also benefits from businesses' attractive growth and margin profile, valuables software content, and a creative mix of raccoon revenue with forecasted and will say the success of one billion dollars when combined with our existing security portfolio.

Speaker Change: We are excited that this is the second aerospace-focused transaction we have announced this year, underscoring our alignment to the future of aviation. The business adds state-of-the-art advanced manufacturing capabilities.

Speaker Change: Impressive engineering talent and potential for significant commercial opportunities in international defense.

Vimal M. Kapur: Also in June, we completed the acquisition of Carrier's Global Access Solutions business, which positions Honeywell as a leading provider of security solutions for the digital age, with opportunities for accelerating innovation and fast-growing cloud-enabled services. Honeywell will also benefit from the business's attractive growth and margin profile, valuable software content, and a creative mix of recurring revenue with forecasted annual sales in excess of $1 billion when combined with our existing security portfolio. We are happy to welcome the Access Solutions team to Honeywell's Building Automation business.

Speaker Change: Also in June , we completed acquisition of Carrier's Global Access Solutions business, which positions the Honeywell as a leading provider of security solutions for the digital age, with opportunities for accelerating innovation and fast-growing cloud-enabled services.

Speaker Change: Honeywell will also benefit from businesses' attractive growth and margin profile, valuable software content, and a creative mix of recurring revenue with forecasted annual sales in excess of $1 billion when combined with our existing security portfolio.

Vimal Kapur: We are happy to welcome the Excess Solutions team to Honeywell's Building Automation business. Together, the combination will build our long track record of delivering high-value, critical building automation products, solutions, and services to our customers globally. As we turn on attention to ensuring a seamless integration of the business into our portfolio, we'll utilize our multi-phase tools of our accelerated operating system to streamline processes, ritualized operation, and many-phase anticipated synergies that help make the deal compelling from a top and bottom-line perspective. Cumulatively, the Bolton acquisition of the past year represents over two billion dollars of incremental annualized revenue, with growth profiles well in excess of Honeywell's growth algorithm of 4% to 7%.

Speaker Change: We are happy to welcome the Access Solutions team to Honeywell's building automation business. Together, the combination will build our long track record of delivering high value, critical building automation products, solutions, and services to our customers globally.

Vimal M. Kapur: Together, the combination will build our long-term track record of delivering high-value, critical building automation products, solutions, and services to our customers globally. As we turn our attention to ensuring a seamless integration of the business into our portfolio, we'll utilize our multi-faceted tools of our accelerated operating system to streamline processes, digitalize operations, and manifest the anticipated synergies that help make the deal compelling from a top and bottom line perspective. Cumulatively, the bolt-on acquisitions of the past year represent over $2 billion of incremental annualized revenue, with growth profiles well in excess of Honeywell's growth algorithm of 4-7%.

Speaker Change: As we turn our attention to ensuring a seamless integration of the business into our portfolio, we'll utilize our multi-faceted tools of our Accelerated Operating System to streamline processes.

Speaker Change: Rittledise operation and manifest the anticipated synergies that help make the deal compelling from a top and bottom line perspective.

Speaker Change: Cumulatively, the bolt-on acquisition of the past year represents over $2 billion of incremental annualized revenue, with growth profiles well in excess of Honeywell's growth algorithm of 4-7%.

Vimal M. Kapur: Collectively, these deals represent an accretive margin profile to our current portfolio at a valuation below our own before factoring any expected sales synergies. Before I hand it off to Greg, I'll turn to slide 4 to review our progress on our overall capital deployment commitment. We are very excited to demonstrate significant progress on the commitment I made to you during the last Made Investor Day, when we reaffirmed our intention to deploy at least $25 billion of capital in 2023 through 2025.

Vimal Kapur: Collectively, these deals represent a creative margin profile to occur in portfolio at valuation below our own, before factoring any expected sales synergies.

Speaker Change: Collectively, these deals represent an accretive margin profile to our current portfolio at valuation below of our own, before factoring any expected sales synergies. Before I hand it off to Greg, I'll turn to slide 4 to review our progress on overall capital deployment commitments.

Vimal Kapur: Before I hand it off to Greg, I'll turn the flight forward to review our progress on overall capital deployment commitments. We are very excited to demonstrate significant progress on the commitment I made to you during the last mid-investor day, when we re-off our attention to deploy at least $25 billion of capital in 2023 through 2025. With the accelerated amount of activity this year, we have already deployed and committed approximately $10 billion dollars acquisition, and approximately $5 billion to share buy-back, exceeding our minimum pledge of $13 billion over a year already. However, this does not mean our work is done.

Vimal M. Kapur: With accelerated M&A deal activity this year, we have already deployed and committed approximately $10 billion to acquisitions and approximately $5 billion to share buyback, exceeding our minimum pledge of $13 billion over a year early. However, this does not mean our work is done.

Speaker Change: We are very excited to demonstrate significant progress on the commitment I made to you during the last May Investor Day, when we re-upped our intention to deploy at least $25 billion of capital in 2023 through 2025. With accelerated M&A deal activity this year, we have already deployed and committed approximately $10 billion to acquisitions and approximately $5 billion to shared buyback.

Speaker Change: exceeding our minimum pledge of $13 billion over a year early.

Gregory Peter Lewis: Our robust balance sheet capacity provides us with the flexibility to allocate capital to accretive M&A, opportunistic share purchases, and high-return growth capital. As the deal environment remains favorable, we will continue to reshape the portfolio by building on our already strong pipeline of high-value M&A opportunities, as well as strategically prune select non-core assets. In true Honeywell fashion, you can expect us to maintain a disciplined approach to generate the highest return combination of capital deployment.

Vimal Kapur: Our robust balance sheet capacity provide us with the flexibility to allocate capital to a creative amount of opportunities to share for businesses and high-return growth capital. As a deal environment remains favorable, we will continue to appreciate the portfolio by building on our already strong pipeline of high-value M&A opportunities, as well as to radically prune select non-code assets. In true Honeywell fashion, you can expect us to maintain discipline and approach to generate higher-sistered combination of capital deployment.

Speaker Change: However, this does not mean our work is done.

Speaker Change: Our robust balance sheet capacity provides us with the flexibility to allocate capital to accretive M&A, opportunistic share purchases,

Speaker Change: and high return growth capital. As the deal environment remains favorable, we will continue to reshape the portfolio by building on our already strong pipeline of high value M&A opportunities, as well as strategically prune select non-core assets.

Speaker Change: In true Honeywell fashion, you can expect us to maintain disciplined approach to generate highest return combination of capital deployment. Now let me turn over to Greg on slide 5 to discuss the second quarter results in more detail as we provide our views on third quarter and full year 2024 guidance.

Vimal Kapur: Now let me turn over to Greg on slide 5 to discuss the second quarter results in more detail, as we provide our views on third quarter and fully year 2024 guidance.

Gregory Peter Lewis: Now, let me turn over to Greg on slide 5 to discuss the second quarter results in more detail as we provide our views on third quarter and full year 2024 guidance. Thank you, Vimal, and good morning, everyone.

Gregory Lewis: Williams. Thank you, Vimal, and good morning, everyone.

Gregory Peter Lewis: Let me begin on slide five. As a reminder, starting in the second quarter, we began excluding the impact of amortization expense for acquisition-related intangible assets and certain acquisition-related costs, including the related tax, from Segment Profit and Adjusted Earnings Per Share. We believe this change provides investors with a more meaningful measure of our performance period-to-period, aligns the measure to how we evaluate performance internally, and makes it easier to compare our performance to peers.

Gregory Lewis: Let me begin on slide five. As a reminder, starting in the second quarter, we began excluding the impact of amortization expense for acquisition-related and handleable assets and certain acquisition-related costs, including the related tax effects from segment profit and adjusted earnings per share. We believe this change provides investors with a more meaningful measure of our performance period to period. Align the measure to how we evaluate performance internally and makes it easier to compare our performance to peers. In addition, our second quarter building automation results incorporate approximately one month of impact from the acquisition of Access Solution.

Greg: Thank you, Vimal, and good morning, everyone. Let me begin on slide five.

Greg: As a reminder, starting in the second quarter, we began excluding the impact of amortization expense for acquisition-related intangible assets and certain acquisition-related costs, including the related tax effects, from segment profit and adjusted earnings per share.

Greg: We believe this change provides investors with a more meaningful measure of our performance period-to-period, aligns the measure to how we evaluate performance internally, and makes it easier to compare our performance to peers.

Gregory Peter Lewis: In addition, our second quarter building automation results incorporate approximately one month of impact from the acquisition of access solutions. With that, let's discuss our results. We delivered another strong quarter in a dynamic macro environment, meeting the high end of our organic sales range, landing above the midpoint of our segment margin guidance, and exceeding the high end of our adjusted earnings per share guidance. Second quarter organic sales were up 4% year-over-year, supported by 16% organic growth in aerospace technologies, driven by another quarter of double-digit growth in both commercial aerospace and defense in space, in addition to double-digit growth in our building solutions business. Honeywell grew volumes by 1% for the second time in the past 10 quarters, and we expect further volume acceleration in the second half.

Greg: In addition, our second quarter building automation results incorporate approximately one month of impact from the acquisition of Access Solutions.

Gregory Lewis: With that, let's discuss our results. We delivered another strong quarter and a dynamic macro environment, meeting the high end of our organic sales range, landing above the midpoint of our segment margin guidance, and exceeding the high end of our adjusted earnings per share guidance. Second quarter organic sales were up 4% year over year, supported by 16% organic growth in aerospace technologies, driven by another quarter of double-digit growth in both commercial aerospace and defense and space, in addition to double-digit growth in our building solutions business. Honeywell grew volumes by 1% for the second time in the past 10 quarters, and we expect further volume acceleration in the second half.

Gregory Peter Lewis: Segment profit grew 4% year-over-year and segment margin contracted by 10 basis points to 23.3%, as expansion in energy and sustainability solutions was offset by mixed pressures in our other three businesses. Earnings per share for the second quarter was $2.36, up 6% year-over-year, and adjusted earnings per share was $2.49, up 8% year-over-year, driven primarily by segment profit growth.

Speaker Change: With that, let's discuss our results. We delivered another strong quarter in a dynamic macro environment, meeting the high end of our organic sales range, landing above the midpoint of our segment margin guidance, and exceeding the high end of our adjusted earnings per share guidance.

Speaker Change: Second quarter organic sales were up 4% year-over-year, supported by 16% organic growth in aerospace technologies, driven by another quarter of double-digit growth in both commercial aerospace and defense in space, in addition to double-digit growth in our building solutions business.

Speaker Change: Honeywell grew volumes by 1% for the second time in the past 10 quarters, and we expect further volume acceleration in the second half.

Gregory Lewis: Segment profit grew 4% year over year, and segment margin contracted by 10 basis points to 23% as expansion and energy and sustainability solutions was offset by mixed pressures in our other three businesses. Earnings per share for the second quarter was $2.36, up 6% year over year, and adjusted earnings per share was $2.49, up 8% year over year, driven primarily by segment profit growth. A bridge for adjusted EPS from 2K23 to 2K24 can be found in the appendix of this presentation. Orders grew 4% year over year, with a book to bill of 1, led by growth in BA, ESS, and IA, including pockets of short cycle strength, with advanced materials and building products growing both year over year and quarter over quarter.

Speaker Change: Segment profit grew 4% year-over-year and segment margin contracted by 10 basis points to 23% as expansion in energy and sustainability solutions was offset by mixed pressures in our other three businesses.

Speaker Change: Earnings per share for the second quarter was $2.36, up 6% year-over-year, and adjusted earnings per share was $2.49, up 8% year-over-year, driven primarily by segment profit growth.

Speaker Change: A bridge for adjusted EPS from 2Q23 to 2Q24 can be found in the appendix of this presentation.

Gregory Peter Lewis: A bridge for adjusted EPS from 2Q23 to 2Q24 can be found in the appendix of this presentation. Orders grew 4% year-over-year with a book-to-bill of one, led by growth in BA, ESS, and IA, including pockets of short-cycle strength with advanced materials and building products growing both year-over-year and quarter-over-quarter. Order growth supported a 5% year-over-year increase in backlog to maintain our record level of $32 billion. Free cash flow is approximately $1.1 billion, roughly flat year-over-year versus the second quarter of 2020. Higher net income and improved working capital from reduced inventory levels were offset by the timing of higher cash tax.

Speaker Change: Borders grew 4% year-over-year with a book-to-bill of 1, led by growth in BA, ESS, and IA, including pockets of short-cycle strength, with advanced materials and building products growing both year-over-year and quarter-over-quarter.

Gregory Lewis: Orders grow supported a 5% year-over-year increase in backlog to maintain our record level of $32 billion. Free cash flow is approximately $1.1 billion, roughly flat year over year versus the second quarter of 23, as higher net income and improved working capital from reduced inventory levels were offset by the timing of higher cash taxes. We continue to expect working capital becoming a more meaningful tailwind in the coming quarters as we unwind the multi-year buildup of inventory. This quarter we were able to effectively reduce our days of supply each month in all our businesses by utilizing our accelerator digitalization capabilities, improving demand planning and optimizing production materials management, which gives me confidence that we are starting to systematically bend the curve.

Speaker Change: Orders grow supported a five percent year-over-year increase in backlog to maintain our record level of 32 billion dollars.

Speaker Change: Free cash flow is approximately $1.1 billion, roughly flat year over year versus the second quarter of 23, as higher net income and improved working capital from reduced inventory levels were offset by the timing of higher cash taxes.

Gregory Peter Lewis: We continue to expect working capital to become a more meaningful tailwind in the coming quarters as we unwind the multi-year buildup of inventory. This quarter, we were able to effectively reduce our days of supply each month in all our businesses by utilizing our accelerator digitalization capabilities, improving demand planning, and optimizing production materials management, which gives me confidence that we are starting to systematically bend the curve. As Vimal discussed earlier, we made significant progress on our capital deployment strategy this quarter, allocating $6.4 billion to M&A, dividends, share repurchases, and capital expenditures, including closing our $5 billion acquisition of Access Solutions.

Speaker Change: We continue to expect working capital becoming a more meaningful tailwind in the coming quarters as we unwind the multi-year buildup of inventory.

Speaker Change: This quarter, we were able to effectively reduce our days of supply each month in all our businesses.

Speaker Change: By utilizing our accelerator digitalization capabilities, improving demand planning, and optimizing production materials management, which gives me confidence that we are starting to systematically bend the curve.

Gregory Lewis: As we will discuss earlier, we made significant progress in our capital deployment strategy this quarter, allocating $6.4 billion to M&A, dividend, share purchases, and capital expenditures, including closing our $5 billion acquisition of access solution. Williams. When combined with the anticipated closing of case and Air Products, LNG businesses later this year, we are in track to deploy a record $14 billion of capital in 2024. Double digit growth in commercial aviation, enabled by sustained growth in global flight activity and increased ships at the liveries. Defense of space growth accelerated in the second quarter. As we continue to see robust global demand coupled with supply chain improvements, enabling an incremental volume unlock.

Speaker Change: As Vimal discussed earlier, we made significant progress on our capital deployment strategy this quarter, allocating $6.4 billion to M&A, dividends, share repurchases, and capital expenditures, including closing our $5 billion acquisition of Access Solutions.

Speaker Change: When combined with the anticipated closing of Case and Air Products LNG businesses later this year, we are on track to deploy a record $14 billion of capital in 2024.

Gregory Peter Lewis: When combined with the anticipated closing of Case and Air Products' LNG businesses later this year, we are on track to deploy a record $14 billion of capital in 2024. Now, let's spend a few minutes on the second quarter performance by business. Aerospace Technologies sales for the second quarter were up 16% organically, with double-digit growth in both defense and space and commercial aerospace. This marks the 13th consecutive quarter of double-digit growth in commercial aviation, enabled by sustained growth in global flight activity and increased ship set delivery.

Speaker Change: Now let's spend a few minutes on the second quarter performance by business.

Speaker Change: In aerospace technology, sales for the second quarter were up 16% organically, with double-digit growth in both defense and space, and commercial aerospace.

Speaker Change: This marks the 13th consecutive quarter of double-digit growth in commercial aviation, enabled by sustained growth in global flight activity and increased ship-set deliveries.

Gregory Peter Lewis: Defense's space growth accelerated in the second quarter as we continue to see robust global demand, coupled with supply chain improvements, enabling an incremental volume unlock. Aerospace supply chain improvements remain on track as output increased by 14% in the second quarter, the eighth consecutive quarter of double-digit output. Segment margin and aerospace technologies contracted 60 basis points year over year to 27.2%, driven by expected mixed pressure within our original equipment business, partially upset by commercial excellence net of inflation. For industrial automation, sales fell 8% organically in the quarter, primarily due to lower volumes and warehouse and workflow solutions.

Speaker Change: Defense's space growth accelerated in the second quarter as we continue to see robust global demand, coupled with supply chain improvements, enabling an incremental volume unlock.

Gregory Lewis: Aerospace supply chain improvements remain on track as output increased by 14% in the second quarter, the eighth consecutive quarter of double-digit output growth. Segment margin aerospace technologies contracted 60 basis points year over year to 27.2%, driven by expected mixed pressure within our original equipment business, partially upset by commercial excellence and administration. For industrial automation, sales fell 8% organically in the quarter, primarily due to lower volumes and warehouse and workflow solutions, but overall sales improved 1% sequentially. Process solutions revenue grew 1% in the quarter as another quarter of double-digit growth in our aftermarket services business was partially upset by headwinds in thermal solutions and smart energy.

Speaker Change: Aerospace supply chain improvements remain on track as output increased by 14% in the second quarter, the eighth consecutive quarter of double-digit output growth.

Speaker Change: Segment margin in aerospace technology has contracted 60 basis points year over year to 27.2 percent, driven by expected mixed pressure within our original equipment business, partially upset by commercial excellence net of inflation.

Speaker Change: For industrial automation, sales fell 8% organically in the quarter, primarily due to lower volumes in warehouse and workflow solutions, but overall sales improved 1% sequentially.

Gregory Peter Lewis: But overall sales improved 1% sequentially. Process Solutions revenue grew 1% in the quarter, as another quarter of double-digit growth in our aftermarket services business was partially upset by headwinds in thermal solutions and smart energy. Our Sensing and Safety Technologies business declined modestly year over year but saw sequential growth in both orders and sales, a positive indicator going forward. And Productivity Solutions and Services, sales improved year over year when excluding the impact of the $45 million quarterly license and settlement payments that ended in the first quarter.

Speaker Change: Process Solutions revenue grew 1% in the quarter as another quarter of double-digit growth in our aftermarket services business was partially upset by headwinds in thermal solutions and smart energy.

Gregory Lewis: Our sensing and safety technology business declined modestly year over year, but soft sequential growth in both orders and sales is a positive indicator going forward. In productivity solutions and services, sales improved year over year when excluding the impact of the $45 million quarterly license and settlement payments that ended in the first quarter. Orders and PSS grew double digits for the third consecutive quarter, and overall IA orders grew high single digits, led by growth of over 20% in warehouse and workflow solution, driving an overall book to bill of 1.1. Industrial automation segment margin contracted 90 basis points to 19% due to lower volume leverage and the end of payments under the license and settlement agreement in productivity solutions and services.

Speaker Change: Our Sensing and Safety Technologies business declined modestly year over year.

Speaker Change: but saw sequential growth in both orders and sales, a positive indicator going forward.

Speaker Change: In productivity solutions and services, sales improved year over year when excluding the impact of the $45 million quarterly license and settlement payments that ended in the first quarter.

Gregory Peter Lewis: Orders in PSS grew double digits for the third consecutive quarter, and overall IA orders grew high single digits led by growth of over 20% in warehouse and workflow solutions, driving an overall book-to-bill of 1.1. However, industrial automation segment margin contracted 90 basis points to 19% due to lower volume leverage and the end of payments under the License and Settlement Agreement in Productivity Solutions and Services.

Speaker Change: Orders in PSS grew double digits for the third consecutive quarter and overall IA orders grew high single digits led by growth of over 20% in warehouse and workflow solutions driving an overall book-to-bill of 1.1.

Speaker Change: Industrial automation segment margin contracted 90 basis points to 19%.

Speaker Change: Due to lower volume leverage and the end of payments under the License and Settlement Agreement in Productivity Solutions and Services.

Gregory Lewis: Excluding the impact of that agreement, margin expanded in the second quarter. Moving to building automation, sales were up 1% organically as another quarter of excellent performance and our long cycle building solutions business led the way while we continue to work through lower volumes and our building products portfolio. Solutions grew 14% of the quarter, with 20% growth in projects as a result of strength in data centers, healthcare, and energy. Sales grew double digits sequentially, including 1 month of benefits from the acquisition of our access solutions business highlighted by strong execution and solutions and further progress in fire and building management systems within building products.

Gregory Peter Lewis: Excluding the impact of that agreement, margins expanded in the second quarter. Moving to building automation, sales were up 1% organically as another quarter of excellent performance, and our long-cycle building solutions business led the way, while we continue to work through lower volumes in our building products portfolio. Solutions grew 14% in a quarter, with 20% growth in projects as a result of strength in data centers, health care, and energy. Sales grew double digits sequentially, including one month of benefits from the acquisition of our Access Solutions business, highlighted by strong execution and solutions and further progress in fire and building management systems within building products.

Speaker Change: Excluding the impact of that agreement, margins expanded in the second quarter.

Speaker Change: Moving to building automation, sales were up 1% organically as another quarter of excellent performance and our long-cycle building solutions business led the way, while we continue to work through lower volumes in our building products portfolio.

Speaker Change: Solutions grew 14% in the quarter with 20% growth in projects as a result of strength in data centers, health care, and energy.

Speaker Change: Sales grew double digits sequentially, including one month of benefit from the acquisition of our Access Solutions business, highlighted by strong execution in solutions and further progress in fire and building management systems within building products.

Gregory Lewis: Double digit orders growth was a highlight for building automation in the quarter, growing both sequentially and year over year in both solutions and products, resulting in an overall book to bill ratio of 1.1. One, Simon Margin contracted 60 basis points to 25.3% due to mixed headwinds and cost inflation, partially offset by productivity actions and commercial excellence. In energy and sustainability solutions, sales grew 3% organically in the second quarter. Advanced materials increased 8% year-over-year due to continued strength in flooring products. UAP sales declined 4%. As previously noted, difficult year-over-year comps and gas processing equipment projects more than offset solid growth in refining catalysts and aftermarket services.

Gregory Peter Lewis: Double-digit order growth was a highlight for building automation in the quarter, growing both sequentially and year over year in both solutions and products, resulting in an overall book-to-bill ratio of 1.1%. However, segment margin contracted 60 basis points to 25.3% due to mixed headwinds and cost inflation partially offset by productivity actions and commercial. In energy and sustainability solutions, sales grew 3% organically in the second quarter. Advanced materials sales increased 8% year-over-year due to continued strength in fluorine products. UOP sales declined 4% as previously noted difficult year-over-year comps and gas processing equipment projects more than offset solid growth in refining catalysts and aftermarket.

Speaker Change: Double-digit orders growth was a highlight for building automation in the quarter, growing both sequentially and year-over-year in both solutions and products, resulting in an overall book-to-bill ratio of 1.1.

Speaker Change: Segment margin contracted 60 basis points to 25.3% due to mixed headwinds and cost inflation partially offset by productivity actions and commercial excellence.

Speaker Change: In energy and sustainability solutions, sales grew 3% organically in the second quarter. Advanced materials increased 8% year-over-year due to continued strength in fluorine products.

Speaker Change: UOP sales declined 4% as previously noted difficult year-over-year comps and gas processing equipment projects more than offset solid growth in refining catalysts and aftermarket services.

Gregory Peter Lewis: Orders were a highlight in ESS as book-to-bill was 1.2 in the second quarter, the third consecutive quarter of a book-to-bill above 1.0, primarily due to greater than 20% growth in advanced materials and more than 60% growth in sustainable technology solutions. Segment margins expanded 200 basis points on a year-over-year basis to 25.2%, primarily driven by productivity. We continue to execute on our proven value creation framework, underpinned by our accelerator operating system. This, combined with ongoing benefits from our long-cycle end markets and the strength of our backlog, gives us confidence in our ability to navigate the current environment. Now let's turn to slide six and talk about our third quarter and full year outlook. Our commercial and operational discipline have enabled us to deliver on our organic growth commitment.

Gregory Lewis: Orders were a highlight in ESS as Booktable was 1.2 in the second quarter, the third consecutive quarter of a Booktable above 1.0, primarily on greater than 20% growth in advanced materials and more than 60% growth in sustainable technology solutions. Segment margins expanded 200 basis points on a year-over-year basis to 25.2%, primarily driven by productivity actions. We continue to execute on our proven value creation framework underpinned by our accelerator operating system.

Speaker Change: Orders were a highlight in ESS as book-to-bill was 1.2 in the second quarter, the third consecutive quarter of a book-to-bill above 1.0, primarily on greater than 20% growth in advanced materials and more than 60% growth in sustainable technology solutions.

Speaker Change: Segment margins expanded 200 basis points on a year-over-year basis to 25.2% primarily driven by productivity actions.

Speaker Change: We continue to execute on our proven value creation framework underpinned by our accelerator operating system.

Gregory Lewis: This combined with ongoing benefits from our long cycle end markets and the strength of our backlog give us confidence in our ability to navigate the current environment.

Speaker Change: This, combined with ongoing benefits from our long cycle end markets and the strength of our backlog, give us confidence in our ability to navigate the current environment.

Gregory Lewis: Now let's turn to slide 6 and talk about our third quarter and full-year outlook. Our commercial and operational discipline have enabled us to deliver on our organic growth commitments. We've continued long cycle strength and modest sequential growth within certain of our short cycle businesses, particularly in advanced materials, building products, and sensing and safety technologies. What we are encouraged by our performance year-to-date and our robust backlog, the back half will remain influenced by the dynamic macroeconomic backdrop and varying levels of channel improvement across our portfolio. Given these dynamics in our recent acquisition announcements, we are increasing our 2024 top-line expectations.

Speaker Change: Now let's turn to slide six and talk about our third quarter and full year outlook.

Speaker Change: Our commercial and operational discipline have enabled us to deliver on our organic road commitments.

Gregory Peter Lewis: With continued long-cycle strength and modest sequential growth within certain of our short-cycle businesses, particularly in advanced materials, building products, and sensing and safety technology. While we are encouraged by our performance year to date and our robust backlog, the back half will remain influenced by the dynamic macroeconomic backdrop and varying levels of channel improvement across our portfolio. Given these dynamics and our recent acquisition announcements, we are increasing our 2024 top line expectations.

Speaker Change: With continued long cycle strength and modest sequential growth within certain of our short cycle businesses, particularly in advanced materials, building products, and sensing and safety technologies.

Speaker Change: While we are encouraged by our performance year-to-date and our robust backlog, the back half will remain influenced by the dynamic macroeconomic backdrop and varying levels of channel improvement across our portfolio.

Speaker Change: Given these dynamics and our recent acquisition announcements, we are increasing our 2024 top-line expectations.

Gregory Lewis: We forecast sales to be in the range of $39.1 to $39.7 billion, which includes overall organic sales growth of 5% to 6% for the year, up from 4% to 6% previously, increasing the midpoint from our prior guidance. The sales forecast also includes the acquisition of case and air products LNG businesses, which we expect to close in the third quarter. Collectively, acquisitions are expected to add approximately $800 million to Honeywell sales in 2024. Sequential growth in the third and fourth quarters across most of the portfolio will be driven by continued progress in the aerospace supply chain, seasonal uplift from ULP, in addition to other long cycle businesses and areas of modest short cycle improvement, which will vary depending on the end market exposures.

Gregory Peter Lewis: We forecast sales to be in the range of $39.1 to $39.7 billion, which includes overall organic sales growth of 5% to 6% for the year, up from 4% to 6% a year ago, increasing the midpoint from our prior guide. The sales forecast also includes the acquisition of Case and Air Products L&G businesses, which we expect to close in the third quarter. Collectively, acquisitions are expected to add approximately $800 million to Honeywell's sales in 2024.

Speaker Change: We forecast sales to be in the range of $39.1 to $39.7 billion, which includes overall organic sales growth of 5% to 6% for the year, up from 4% to 6% previously.

Speaker Change: increasing the midpoint from our prior guidance.

Speaker Change: The sales forecast also includes the acquisition of Case and Air Products L&G businesses, which we expect to close in the third quarter.

Speaker Change: Collectively, acquisitions are expected to add approximately $800 million to Honeywell's sales in 2024.

Speaker Change: Sequential growth in the third and fourth quarters across most of the portfolio.

Speaker Change: will be driven by continued progress in the aerospace supply chain, seasonal uplift from UOP in addition to other long cycle businesses, and areas of modest short cycle improvement, which will vary depending on the end market exposures.

Gregory Lewis: For the third quarter, we anticipate sales in the range of $9.8 to $10 billion, up 4% to 6% organically, with the benefit of roughly $300 million in acquisition-related revenue. Moving to segment margin, as growth in our long cycle businesses outpaces the short cycle recovery, supporting the raise to our top-line range, we expect to see a bit less favorable mix within some of our SPGs in the short-line.

Gregory Peter Lewis: Sequential growth in the third and fourth quarters across most of the portfolio will be driven by continued progress in the aerospace supply chain, seasonal uplift from UOP in addition to other long cycle businesses, and areas of modest short cycle improvement, which will vary depending on the end market exposure. For the third quarter, we anticipate sales in the range of $9.8 to $10 billion, up 4 to 6% organically, with the benefit of roughly $300 million in acquisition-related revenue.

Speaker Change: For the third quarter, we anticipate sales in the range of $9.8 to $10 billion, up 4-6% organically, with the benefit of roughly $300 million in acquisition-related revenue.

Gregory Peter Lewis: Moving to segment margin as growth and our long-cycle businesses outpace the short-cycle recovery, supporting the raise to our top line range, we expect to see a bit less favorable mix within some of our SPGs in the short term. However, from a long-term perspective, executing on robust demand for projects and original equipment sets our businesses up for a long tail of high-margin aftermarket revenue streams by expanding our vast install base. When incorporating the impact of recently announced acquisitions, we now anticipate our overall segment margin to be in the range of 23.3 percent to 23.5 percent, flat to down 20 basis points year over year.

Speaker Change: Moving to segment margin as growth and our long cycle businesses outpaces the short cycle recovery, supporting the raise to our top line range, we expect to see a bit less favorable mix within some of our SPGs in the short term.

Gregory Lewis: Chairman. However, from a long-term perspective, executing on robust demand for projects and original equipment sets our businesses up for a long tail of high margin, aftermarket revenue streams by expanding our vast installed base. When incorporating the impact of recently announced acquisitions, we now anticipate our overall segment margin to be in the range of 23.3% to 23.5%, flat to down 20 basis points year over year. Overall, segment profit dollars will still grow significantly in 2024 between 6 and 9% as margins will continue to be supported by price-cost discipline and productivity actions, including our focus on reducing raw material costs.

Speaker Change: However, from a long-term perspective, executing on robust demand for projects and original equipment sets our businesses up for a long tail of high-margin, aftermarket revenue streams by expanding our vast installed base.

Speaker Change: When incorporating the impact of recently announced acquisitions, we now anticipate our overall segment margin to be in the range of 23.3% to 23.5%, flat to down 20 basis points year over year.

Gregory Peter Lewis: Overall segment profit dollars will still grow significantly in 2024, between six and nine percent, as margins will continue to be supported by price-cost discipline and productivity actions, including our focus on reducing raw material costs. From a segment perspective, energy and sustainability solutions and building automation will lead the group in margin expansion, followed by modest contraction for industrial automation, as well as aerospace, as a result of the CASE Act. For the third quarter, we anticipate overall segment margin in the range of 23.0% to 23.3%, down 30 to 60 basis points year over year and in line with the first two quarters of this year, due to quarterly variability and arrow mix, the anticipated close of the case, and normal seasonality within energy and sustainability services.

Speaker Change: Overall segment profit dollars will still grow significantly in 2024, between 6 and 9 percent, as margins will continue to be supported by price-cost discipline and productivity actions, including our focus on reducing raw material costs.

Gregory Lewis: From a segment perspective, energy and sustainability solutions and building automation will lead the group in margin expansion, followed by modest contraction for industrial automation as well as aerospace as a result of the case acquisition. For the third quarter, we anticipate overall segment margin in the range of 23.0 to 23.3%, down 30 to 60 basis points year over year and in line with the first two quarters of this year due to quarterly variability and arrow mix, the anticipated close of case, and normal seasonality within energy and sustainability solutions.

Speaker Change: From a segment perspective, energy and sustainability solutions and building automation will lead the group in margin expansion, followed by modest contraction for industrial automation as well as aerospace as a result of the case acquisition.

Speaker Change: For the third quarter, we anticipate overall segment margin in the range of 23.0% to 23.3%.

Speaker Change: Down 30 to 60 basis points year-over-year and in line with the first two quarters of this year due to quarterly variability and arrow mix the anticipated close of case and normal seasonality within energy and sustainability solutions

Gregory Lewis: Now let's spend a few minutes on our outlook by business. Looking ahead for aerospace technologies, we expect momentum from the first half to carry over into the second half as robust orders and increases in factory output will support growth. In commercial original equipment, we anticipate the second quarter to be our low point of the year for growth as some related supply chain challenges abate. We see strong sequential and year-over-year growth through the third and fourth quarters, particularly in air transport, as build rate strength drives volume progression. In commercial aftermarket, we anticipate continued sales momentum, though growth rates will come down slightly in the back half as comps get more difficult.

Gregory Peter Lewis: Now we'll spend a few minutes on our Outlook by business. Looking ahead for aerospace technologies, we expect momentum from the first half to carry over into the second half as robust orders and increases in factory output will support growth. For commercial original equipment, we anticipate the second quarter to be our lowest point of the year for growth as some related supply chain challenges abate.

Speaker Change: Now let's spend a few minutes on our Outlook by Business.

Speaker Change: Looking ahead for aerospace technologies, we expect momentum from the first half to carry over into the second half as robust orders and increases in factory output will support growth.

Speaker Change: In Commercial Original Equipment, we anticipate the second quarter to be our low point of the year for growth as some related supply chain challenges abate.

Gregory Peter Lewis: We see strong sequential and year-over-year growth through the third and fourth quarters, particularly in air transport, as build rate strength drives volume progression. In the commercial aftermarket, we anticipate continued sales momentum, though growth rates will come down slightly in the back half as comps get more difficult. For Defense in Space, the global geopolitical backdrop, coupled with our robust order book and increased investments in our supply chain, will provide support for sequential growth in the third and fourth quarters.

Speaker Change: We see strong sequential and year-over-year growth through the third and fourth quarters, particularly in air transport, as build rate strength drives volume progression.

Speaker Change: In commercial aftermarket, we anticipate continued sales momentum, though growth rates will come down slightly in the back half as comps get more difficult.

Gregory Lewis: For defense and space, the global geopolitical backdrop coupled with our robust order book and increased investments in our supply chain will provide support for sequential growth in the third and fourth quarters. As a result of these dynamics in a strong first half, we now forecast defense and space growth to be double digits for the year. We still expect aerospace to lead Honeywell in 2024 with organic sales growth in the low double-digit range. For segment margin, the dynamics remain comparable to 2022 and 2023, as higher sales from lower margin products are partially upset by volume leverage.

Speaker Change: For Defense in Space, the global geopolitical backdrop, coupled with our robust order book and increased investments in our supply chain, will provide support for sequential growth in the third and fourth quarters.

Gregory Peter Lewis: As a result of these dynamics and a strong first half, we now forecast defense and space growth to be double digits for the year. We still expect aerospace to lead Honeywell in 2024 with organic sales growth in the low double digit range. At segment margin, the dynamics remain comparable to 2022 and 2023, as higher sales from lower margin products are partially upset by volume levels. However, we now expect 2024 aero margins to decline modestly year over year due to the impact of the case acquisition.

Speaker Change: As a result of these dynamics and a strong first half, we now forecast defense and space growth to be double digits for the year.

Speaker Change: We still expect Aerospace to lead Honeywell in 2024 with organic sales growth in the low double-digit range.

Speaker Change: For segment margin, the dynamics remain comparable to 2022 and 2023, as higher sales from lower margin products are partially upset by volume leverage.

Gregory Lewis: However, we now expect 2024, arrow margin to decline modestly year over year due to the impact of the case acquisition. We anticipate the third quarter will be the low point in the year, reflecting the closing of case and less favorable quarterly mix. In industrial automation, we're benefiting from solid orders momentum in most of our one-cycle businesses, while our short-cycle businesses are showing varying signs of sequential progress. In the third quarter, we expect modest sequential improvement in IA and a return to year-over-year growth in the back half. Second half sales growth will be led by process solutions, which will see further strength in our aftermarket services businesses and improvement in the smart energy and thermal solution businesses that weighed on first half results.

Speaker Change: However, we now expect 2024 aero margins to decline modestly year over year due to the impact of the case acquisition.

Gregory Peter Lewis: We anticipate the third quarter will be the low point of the year, reflecting the closing of the case and a less favorable quarterly. In industrial automation, we're benefiting from solid orders momentum in most of our long cycle businesses, while our short cycle businesses are showing varying signs of sequential progress. In the third quarter, we expect modest sequential improvement in IA and a return to year-over-year growth in the back half. Second half sales growth will be led by process solutions, which will see further strength in our aftermarket services businesses and improvement in the smart energy and thermal solution businesses that weighed on first half results. Productivity Solutions and Services, and sales will grow sequentially from here.

Speaker Change: We anticipate the third quarter will be the low point of the year, reflecting the closing of case and less favorable quarterly mix.

Speaker Change: In industrial automation, we're benefiting from solid orders momentum in most of our long cycle businesses, while our short cycle businesses are showing varying signs of sequential progress.

Speaker Change: In the third quarter, we expect modest sequential improvement in IA, and a return to year-over-year growth in the back half.

Speaker Change: Second half sales growth will be led by process solutions, which will see further strength in our aftermarket services businesses and improvement in the smart energy and thermal solution businesses that weighed on first half results.

Gregory Lewis: and Productivity Solutions and Services. Sales will grow sequentially from here. Orders have grown double digits for three-stake quarters in PSS, giving us confidence in our outlook for the second half and into 2025. Sensing and staging technologies will improve sequentially as we benefit from the fading effects of distributor destocking. Warehouse and workflow solutions will grow sequentially as we move through the trough, and warehouse automation spending should end the year around $1 billion in sales. As a result of these dynamics, we expect flatish organic sales growth in 2024. Margins will expand in the second half as we implement productivity actions and benefit from volume leverage through long cycle seasonality and further short cycle progress.

Speaker Change: and Productivity Solutions and Services, sales will grow sequentially from here.

Gregory Peter Lewis: Orders have grown double digits for three straight quarters in PSS, giving us confidence in our outlook for the second half and into 2025. Sensing and safety technologies will improve sequentially as we benefit from the fading effects of distributor destocking.

Speaker Change: Orders have grown double digits for three straight quarters in PSS, giving us confidence in our outlook for the second half and into 2025.

Speaker Change: Sensing and safety technologies will improve sequentially as we benefit from the fading effects of distributor destocking.

Gregory Peter Lewis: Warehouse and workflow solutions will grow sequentially as we move through the trough in warehouse automation spending and should end the year around $1 billion. As a result of these dynamics, we expect flattish organic sales growth in 2024. Margins will expand in the second half as we implement productivity actions and benefit from volume leverage through long cycle seasonality and further short cycle progress. Moving on to building automation. In the third quarter, we expect building solutions to outpace building product sales, and for products, we anticipate sales to improve modestly, sequentially, in the third and fourth quarters, supported by 2Q's Favorable Order. However, the magnitude remains dependent on the ongoing normalization of channel limits.

Speaker Change: Warehouse and workflow solutions will grow sequentially as we move through the trough in warehouse automation spending and should end the year around 1 billion dollars in sales.

Speaker Change: As a result of these dynamics, we expect flattish organic sales growth in 2024.

Speaker Change: Margins will expand in the second half as we implement productivity actions and benefit from volume leverage through long cycle seasonality and further short cycle progress.

Gregory Lewis: Moving on to building automation in the third quarter, we expect building solutions to outpace building product sales. In products, we anticipate sales to improve modestly, sequentially, in the third and the fourth quarters, supported by two key favorable order trends. However, the magnitude remains dependent on the ongoing normalization of channel limitaries. In solutions, both projects and services orders grew over 20 percent in the second quarter, providing support for additional revenue growth in the back half and into 2025. Projects have been a standout, and we forecast double digit growth for the year. As a reminder, the access solutions acquisition has now been incorporated into our guidance within Building Products.

Speaker Change: Moving on to building automation, in the third quarter we expect building solutions to outpace building product sales.

Speaker Change: In products, we anticipate sales to improve modestly sequentially in the 3rd and 4th quarters, supported by 2Q's favorable order trends.

Speaker Change: However, the magnitude remains dependent on the ongoing normalization of channel inventories.

Gregory Peter Lewis: In solutions, both projects and services orders grew over 20% in the second quarter, providing support for additional revenue growth in the back half and into 2020. Projects have been a standout, and we forecast double-digit growth for the year. As a reminder, the Access Solutions Acquisition has now been incorporated into our guidance within Building Products.

Speaker Change: In solutions, both projects and services orders grew over 20% in the second quarter, providing support for additional revenue growth in the back half and into 2025.

Speaker Change: Projects has been a standout and we forecast double-digit growth for the year. As a reminder, the Access Solutions acquisition has now been incorporated into our guidance within Building Products.

Gregory Lewis: For the year, we continue to expect organic sales growth of low single digits. For segment margin, while we still anticipate expansion year over year, incremental shift and mix toward higher sales in our building solutions business will slow the pace of that expansion near term.

Gregory Peter Lewis: For the year, we continue to expect organic sales growth of low single digits. For segment margin, while we still anticipate expansion year over year, an incremental shift and mix toward higher sales in our building solutions business will slow the pace of that expansion in the near term. Finally, in energy and sustainability solutions, encouraging fundamentals in our end markets will drive a favorable growth outlook for the third quarter and the full year. In the third quarter, we expect sales to be roughly flat year over year and down slightly sequentially with typical seasonality and fluorine products as we exit the summer months, offsetting improvement in electronic materials and UOP.

Speaker Change: For the year, we continue to expect organic sales growth of low single digits.

Speaker Change: For segment margin, while we still anticipate expansion year over year, incremental shift and mix toward higher sales in our building solutions business will slow the pace of that expansion near term.

Gregory Lewis: Finally, in energy and sustainability solutions, encouraging fundamentals in our end markets will drive a favorable growth outlook in the third quarter and in the full year. In the third quarter, we expect sales to be roughly flat year over year and down slightly sequentially, with typical seasonality and flooring products as we exit the summer months, offsetting improvement in electronic materials and UOP. Notably, the second quarter marked the last of significant year-over-year, unfavorable comps from large gas processing equipment projects in UOP. For the full year, sustained strength and catalysts in conjunction with an incremental back half recovery and electronic materials will support growth for ESS.

Speaker Change: Finally, in energy and sustainability solutions, encouraging fundamentals in our end markets will drive a favorable growth outlook in the third quarter and the full year.

Speaker Change: In the third quarter, we expect sales to be roughly flat year over year and down slightly sequentially with typical seasonality in fluorine products as we exit the summer months, offsetting improvement in electronic materials and UOP.

Gregory Peter Lewis: Notably, the second quarter marks the last of significant year-over-year unfavorable comps from large gas processing equipment projects in UOP. For the full year, sustained strength and catalysts, in conjunction with an incremental back half recovery and electronic materials, will support growth for ESM. Our confidence in our sustainable technology solutions business remains unchanged as a strong demand profile will drive robust growth for the year.

Speaker Change: Notably, the second quarter marks the last of significant year-over-year unfavorable comps from large gas processing equipment projects in UOP.

Speaker Change: For the full year, sustained strength and catalysts in conjunction with an incremental back half recovery and electronic materials will support growth for ESS.

Gregory Lewis: Our confidence in our sustainable technology solutions business remains unchanged, as a strong demand profile will drive robust growth for the year. Additionally, we expect the closing of our acquisition of Air Products LNG business to take place in the third quarter and have included this impact in our guidance. For the year, our organic growth outlook for ESS is low single-digit. Margin should improve half over half, particularly in the fourth quarter, as a result of typical catalysts, reload seasonality, leading to full year margin expansion for ESS. Moving on to other key guidance metrics, pension income will remain roughly flat to 2023 and approximately $550 million.

Speaker Change: Our confidence in our sustainable technology solutions business remains unchanged as a strong demand profile will drive robust growth for the year.

Gregory Peter Lewis: Additionally, we expect the closing of our acquisition of Air Products L&G Business to take place in the third quarter and have included this impact in our guidance. For the year, our Organic Growth Outlook for ESF is low single-digit. Margins should improve half over half, particularly in the fourth quarter, as a result of typical catalyst reload seasonality, leading to full-year margin expansion for ESG. Moving on to other key guidance metrics. Pension income will remain roughly flat to 2023 at approximately $550 million.

Speaker Change: Additionally, we expect the closing of our acquisition of Air Products L&G Business to take place in the third quarter and have included this impact in our guidance.

Speaker Change: For the year, our Organic Growth Outlook for ESS is low single digits.

Speaker Change: Margins should improve half over half, particularly in the fourth quarter, as a result of typical catalyst reload seasonality, leading to full-year margin expansion for ESS.

Speaker Change: Moving on to other key guidance metrics. Pension income will remain roughly flat to 2023 at approximately 550 million dollars.

Gregory Lewis: As a result of the acquisitions and corresponding increased interest expense, we now anticipate net below-the-line impact to be between negative 700 million and negative 800 million dollars for the full year and between negative 185 million and negative 235 million dollars in the third quarter. Disguidance includes repositioning spend between $150 and $225 million for the full year and between $30 and $70 million in the third quarter as we invest further in high return projects to support future growth and productivity. Adjusted effective tax rate will be around 21% for both the full year and the third quarter.

Gregory Peter Lewis: As a result of the acquisitions and corresponding increase in interest expense, we now anticipate net below the line impact to be between negative $700 million and negative $800 million for the full year and between negative $185 million and negative $235 million in the third quarter. This guidance includes repositioning spend between $150 and $225 million for the full year and between $30 and $70 million in the third quarter as we invest further in high-return projects to support future growth and productivity. The adjusted effective tax rate will be around 21% for both the full year and the third quarter.

Speaker Change: As a result of the acquisitions and corresponding increase in interest expense, we now anticipate net below-the-line impact to be between negative $700 million and negative $800 million for the full year, and between negative $185 million and negative $235 million in the third quarter.

Speaker Change: This guidance includes repositioning spend between $150 and $225 million for the full year and between $30 and $70 million in the third quarter as we invest further in high return projects to support future growth and productivity.

Speaker Change: Adjusted effective tax rate will be around 21% for both the full year and the third quarter.

Gregory Lewis: We anticipate average share count to be approximately 655 million shares for both the full year and the third quarter, as we have already achieved more than 1% share count reduction for the year, but we maintain balance sheet flexibility to deploy additional capital to achieve the highest shareholder returns. As a result of these inputs, we now anticipate full year adjusted earnings per share to be between $10.5 and $10.25, up 6 to 8% year over year. We expect third quarter earnings per share between $2.45 and $2.55, up 3 to 7% year over year. We expect free cash flow to benefit from progress on the multi-year unwind of working capital as we continue to extract more value from our digitization efforts through Accelerator.

Gregory Peter Lewis: We anticipate the average share count to be approximately 655 million shares for both the full year and the third quarter as we have already achieved more than 1% share count reduction for the year, but we maintain balance sheet flexibility to deploy additional capital to achieve the highest shareholder return. As a result of these inputs, we now anticipate full-year adjusted earnings per share to be between $10.05 and $10.25, up 6-8% year-over-year. We expect third-quarter earnings per share between $2.45 and $2.55, up three to seven percent year-over-year.

Speaker Change: We anticipate average share count...

Speaker Change: to be approximately 655 million shares for both the full year and the third quarter, as we have already achieved more than 1% share count reduction for the year. But we maintain balance sheet flexibility to deploy additional capital to achieve the highest shareholder returns.

Speaker Change: As a result of these inputs, we now anticipate full-year adjusted earnings per share to be between $10.05 and $10.25, up 6-8% year-over-year.

Speaker Change: We expect third quarter earnings per share between $2.45 and $2.55, up 3-7% year-over-year.

Gregory Peter Lewis: We expect free cash flow to benefit from progress on the multi-year unwind of working capital as we continue to extract more value from our digitization efforts through Accelerator. In addition, we'll continue to fund high CAPEX projects, high return CAPEX projects, focused on creating uniquely innovative, differentiated technology. As a result, our free cash flow expectations are now in the $5.5-$5.9 billion range, up 4-11%, excluding the impact of prior year settlements, and commensurate with the revision to net income growth.

Speaker Change: We expect free cash flow to benefit from progress on the multi-year unwind of working capital as we continue to extract more value from our digitization efforts through Accelerator.

Gregory Lewis: In addition, we'll continue to fund high CAPEX projects, high return CAPEX projects focused on creating uniquely innovative differentiated technologies. As a result, our free cash flow expectations are now in the $5.5 to $5.9 billion range, up 4 to 11%, excluding the impact of prior year settlements and commensurate with the revision to net income growth.

Speaker Change: In addition, we'll continue to fund high CAPEX projects, high return CAPEX projects focused on creating uniquely innovative, differentiated technologies.

Speaker Change: As a result, our free cash flow expectations are now in the $5.5 to $5.9 billion range, up 4% to 11%.

Speaker Change: excluding the impact of prior year settlements and commensurate with the revision to net income growth. So, in summary, we delivered a strong first half to the year and anticipate continued top-line acceleration in the second half as we benefit from strength in our long-cycle businesses.

Gregory Peter Lewis: So, in summary, we delivered a strong first half of the year and anticipate continued top-line acceleration in the second half, as we benefit from strength in our long-cycle businesses. Our rigorous operating principles will enable us to execute through short-term mixed pressure, and we remain confident in our long-term algorithm with a strong second half 2024 exit rate on revenue intact, giving us nice momentum into 2025. So with that, let me turn it back to Vimal on the slide.

Gregory Lewis: So, in summary, we delivered a strong first half to the year and anticipate continued top line acceleration in the second half as we benefit from strength in our long cycle businesses. Our rigorous operating principles will enable us to execute through short-term mixed pressure, and we remain confident in our long-term algorithm with a strong second half 2024 exit rate on revenue intact, giving us nice momentum into 2025.

Speaker Change: Our rigorous operating principles will enable us to execute through short-term mixed pressure and we remain confident in our long-term algorithm with a strong second half 2024 exit rate on revenue intact, giving us nice momentum into 2025.

Vimal Kapur: So, with that, let me turn it back to Vimal on slide seven.

Vimal Kapur: Thank you, Greg. Before we end the call, let's take a moment to focus on the progress Uneven has demonstrated on our long-term growth algorithm. While we significantly transform the company over the past 10 years, we are not close to finish. We remain committed to delivering long-term organic growth in 4 to 7% range, coupled with a gross margin above 40%, second margin profit above 25%, free cash flow margins in mid-teens plus, and adjusted EPS growth of 8% to 12%. MNADs like the three we highlighted today also play a key factor enabling us to achieve one to two percent EPS aggression, a key factor that will allow us to generate double-digit adjusted EPS growth on a through-cycle basis.

Vimal M. Kapur: Thank you, Greg. Before we end the call, let's take a moment to focus on the progress Honeywell has demonstrated with its long-term growth algorithm. While we have significantly transformed the company over the past 10 years, we are not close to finishing. We remain committed to delivering long-term organic growth in the 4% to 7% range, coupled with a gross margin above 40%, segment margin profit above 25%, free cash flow margins in the mid-teens plus, and adjusted EPS growth of 8% to 12%.

Speaker Change: So with that, let me turn it back to Vimal on slide 7.

Vimal M. Kapur: Thank you, Greg. Before we end the call, let's take a moment to focus on the progress Honeywell has demonstrated on a long-term growth algorithm.

Speaker Change: While we significantly transformed the company over the past 10 years, we are not close to finish.

Vimal M. Kapur: M&ADs like the three we highlighted today also play a key factor enabling us to achieve 1% to 2% EPS accretion, a key factor that will allow us to generate double-digit adjusted EPS growth on a through-cycle basis. I remain excited about the opportunity to lead Honeywell to the next phase of our transformation, executing on my key priorities of accelerating organic growth, optimizing our portfolio, and evolving our accelerator operating system. I will continue to update you as these efforts drive improvement in our financial performance. And now, let's turn to slide eight for the closing thought before we move into Q&A.

Speaker Change: We remain committed to delivering long-term organic growth in 4-7% range.

Speaker Change: coupled with a gross margin above 40%.

Speaker Change: Segment Margin Profit Above 25%

Speaker Change: Free cash flow margins in mid-teens plus and adjusted EPS growth of 8% to 12%.

Speaker Change: MNADs, like the three we highlighted today, also play a key factor enabling us to achieve 1-2% EPS accretion, a key factor that will allow us to generate double-digit adjusted EPS growth on a through-cycle basis.

Vimal Kapur: I remain excited about the opportunity to lead Honeywell to the next phase of our transformation, executing on my key priorities of accelerating organic growth, optimizing our portfolio, and evolving our accelerator operating system. We continue to update you as these efforts to drive improvement in our financial firm.

Speaker Change: I remain excited about the opportunity to lead Honeywell to the next phase of our transformation, executing on my key priorities of accelerating organic growth, optimizing our portfolio, and evolving our accelerator operating system.

Speaker Change: We'll continue to update you as these efforts to drive improvement in our financial performance. And now let's turn to slide eight for the closing thought before we move into Q&A.

Vimal Kapur: And now let's turn to the slide for the closing part before we move into Q&A. In the first of the year, we made material progress towards the capital deployment goals, clothing access, solution deeds, and announcing three additional deeds: Sivitha Navi, Kays, and Air Products LNG business. This brings us to 10 billion in M&A since the beginning of the last year as you work towards achieving my key priorities of optimizing the portfolio. We will continue to effectively manage through the dynamic economic and geopolitical backdrop while delivering on our long-term financial framework. We executed well in the second quarter, meeting or exceeding all guidance metrics, and our portfolio is set up for top line growth acceleration in the second half as we benefit from easy-come strong orders growth in the second quarter and strengthen in our long cycle businesses.

Vimal M. Kapur: In the first half of the year, we made material progress towards our capital deployment goals, closing the excess solution deeds and announcing three additional deeds, Civita Navi, CASE, and Air Products LNG business. This brings us to $10 billion in M&A since the beginning of the last year as we work towards achieving my key priorities of optimizing the portfolio. We will continue to effectively manage through the dynamic economic and geopolitical backdrop while delivering on our long-term financial framework.

Speaker Change: In the first half of the year, we made material progress towards our capital deployment goals, closing the excess solution deeds and announcing three additional deeds, Civita Navi, CASE, and Air Products LNG business.

Speaker Change: This brings us to $10 billion in M&A since the beginning of the last year, as we work towards achieving my key priorities of optimizing the portfolio. We will continue to effectively manage through the dynamic economic and geopolitical backdrop while delivering on our long-term financial framework.

Vimal M. Kapur: We executed well in the second quarter, meeting or exceeding all guidance metrics, and our portfolio is set up for top-line growth acceleration in the second half as we benefit from easy comp, strong order growth in the second quarter, and strength in our long-cycle businesses. We are confident in our ability to weather near-term challenges and meet our financial targets. With that, Sean, let's take questions. Thank you, Vimal. Vimal and Greg are now available to answer your questions.

Speaker Change: We executed well in the second quarter, meeting or exceeding all guidance metrics, and our portfolio is set up for top-line growth acceleration in the second half, as we benefit from easy comp, strong orders growth in the second quarter, and strength in our long-cycle businesses.

Vimal Kapur: We are confident in our ability to weather near-term challenges and meet our financial targets.

Speaker Change: We are confident in our ability to weather near-term challenges and meet our financial targets. With that, Sean, let's take questions.

Sean Meakim: With that, Sean, let's take questions.

Sean Meakim: Thank you, Vimel. Vimel and Greg are now available to answer your questions.

Sean Meakim: We ask you, please be mindful of others in the queue by only asking one question and one related follow-up.

Sean Christopher Meakim: Thank you, Vimal. Vimal and Greg are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up.

Sean Christopher Meakim: We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Operator, please open the line for Q&A. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad to join the queue.

Sean Meakim: Operator, please open the line for Q&A.

Sean Meakim: Thank you.

Speaker Change: Operator, please open the line for Q&A.

Charles Tusa: If you'd like to ask a question, please press star one on your telephone keypad to join the queue. Our first question comes from the line of Stephen Tusa with JPMorgan. Please proceed with your question.

Speaker Change: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad to join the queue.

Operator: Our first question comes from the line of Stephen Tusa with J.P. Morgan. Please proceed with your question. Hi, good morning.

Speaker Change: Our first question comes from the line of Stephen Tusa with J.P. Morgan. Please proceed with your question.

Gregory Lewis: Hey Steve, good morning. Can you guys just help us parse out the moving parts here? I mean, the below-the-line costs are higher. Obviously, on interest, the costs are higher, and you raised organic, but you're also including the revenue from acquisitions, and then I'm, I think, cutting core profit. Just really want to get down to what the size of the segment core profit reduction is, if any, and then just help us with the acquisitions and how much, you know, they're influencing the segment profit numbers.

Charles Stephen Tusa: Can you guys just help us parse out the moving parts here? I mean, you know, the below-the-line costs are higher, obviously, on interest. Quantinium costs are higher.

Charles Stephen Tusa: Hi, good morning.

Charles Stephen Tusa: Thank you. Good morning.

Charles Stephen Tusa: Can you guys just help us parse out the moving parts here? I mean, you know, the below-the-line costs are higher.

Speaker Change: obviously on interest.

Charles Stephen Tusa: And you raised organically, but you're also including revenue from acquisitions. And then you're, I think, cutting core profits. So I just really want to get down to, like, what the size of the segment core profit reduction is, if any, and then just help us with the acquisitions and how much, you know, they're influencing the segment profit numbers. Sure, sure. Thanks, Steve. So, I think you've got the thematics, you know, quite right there.

Speaker Change: Quantinium costs are higher, and you raised organic, but you're also including the revenue from acquisitions.

Speaker Change: and then you're I think cutting core profit so just really want to get down to like

Speaker Change: What the size of the segment core profit reduction is, if any, and then just help us with the acquisitions and how much, you know, they're influencing the segment profit numbers.

Gregory Lewis: Sure. Thanks, Steve. So I think you've got the thematics, you know, quite right there. You know, essentially, when you think about it, you know, first of all, when we open the year, we always said the first half was going to tell us a lot about, you know, how the full year was coming, particularly as it relates to short cycle. And now, here we are through six months. And what we're seeing is the organic growth in its totality is still in the range of our guidance and actually, you know, doing quite well, which is why we took up the bottom.

Speaker Change: Sure, sure. Thanks, Pete. So I think you've got the thematics, you know, quite right there.

Gregory Peter Lewis: You know, essentially, when you think about it, first of all, when we opened the year, we always said the first half was going to tell us a lot about how the full year was coming, particularly as it relates to the short cycle. And now we are through six months, and what we're seeing is that organic growth in its totality is still in the range of our guidance and actually, you know, doing quite well, which is why we took up the bottom, but it's more heavily towards the short cycle, or sorry, towards the long cycle than short.

Speaker Change: Essentially, when you think about it, first of all, when we opened the year, we always said the first half was going to tell us a lot about...

Speaker Change: How the full year was coming, particularly as it relates to short cycle. And now here we are through six months and what we're seeing is the organic growth in its totality is still in the range of our guidance and actually doing quite well, which is why we took up the pandemic.

Gregory Lewis: But it's more heavily towards short cycle, or, sorry, towards long cycle than short. So there's good news in there, which is things like building solutions, you know, our paths, projects, business, and HPS, and others are accelerating. But some of the short cycles are not accelerating as much as we had hoped. So that's really just changing the margin mix, particularly in IAMBA. And I would say it's probably like two thirds, one third, in terms of the, if you think about our guidance at the midpoint, I think we're coming down by about 15 cents. And probably about two thirds, one third, the organic core business versus the acquisitions because, as you rightly noted, you know, we've added in the next set of acquisition.

Gregory Peter Lewis: So, there's good news there, which is things like building solutions, you know; our paths, projects, business, HPS, and others are accelerating, but some of the short cycles are not accelerating as much as we had hoped. So that's really just changing the margin mix, particularly in IA and BA. And I would say it's probably like two-thirds, one-third in terms of the, if you think about our guidance at the midpoint, I think we're coming down by about 15 cents and probably about two-thirds, one-third, the organic core business versus the acquisitions, because as you rightly noted, you know, we've added in the next set of acquisitions, but along with that, you know, we' And of course, that's going to cost us about 5%, you know, round about.

Speaker Change: [inaudible]

Speaker Change: HPS, and others are accelerating, but some of the short cycles are not accelerating as much as we had hoped. So that's really just changing the margin mix, particularly in IA and BA.

Speaker Change: And I would say it's probably like two-thirds, one-third in terms of the, if you think about our guidance at the midpoint.

Speaker Change: I think we're coming down by about 15 cents, probably about two-thirds, one-third.

Speaker Change: the organic core business.

Speaker Change: We've added in the next set of acquisitions, but along with that, we're going to spend $4 billion in the back half of the year. And of course, that's going to cost us about 5% roundabout.

Gregory Lewis: But along with that, you know, we're going to spend $4 billion in the back half of the year. And of course, that's going to cost us about 5 percent, you know, around about. So that's really the thematic changes that we're making here overall. But, you know, the encouraging thing is the back half exit rate is still very strong. So, you know, where we feel really good about the back half in its totality at this point. And it's going to be a really compelling exit rate. And again, layering on $2 billion of acquired revenue into next year, you know, about 500 basic points of revenue.

Speaker Change: So that's really the thematic.

Gregory Peter Lewis: So, that's really the thematic change that we're making here overall. But, you know, the encouraging thing is that the back half exit rate is still very strong. So, you know, we feel really good about the back half in its entirety at this point, and it's going to be a really compelling exit rate. And again, layering on $2 billion of acquired revenue into next year, you know, about 500 basis points of revenue. So, I think, you know, very much on strategy and from, you know, kind of where Biml is trying to take us at this point.

Gregory Lewis: So I think, you know, very much on strategy, and from, you know, kind of weird dimmels trying to take us at this point. So sorry, what is the profit, you know, contribution from these acquisitions that are now in the numbers relative to what you guys had thought in early June? And what is the cut to the core segment profit ex Quantumium? You know, I want to see the it's about two thirds, one thirds. You know, the 15 cent reduction at the midpoint is about two thirds relative to the core business. And it's about one third relative to our M&A netizens.

Gregory Peter Lewis: So, sorry, what's the profit, you know, contribution from these acquisitions that are now in the numbers relative to what you guys had thought in early June? And what is the cut to the core segment profit ex quantinium, dollar wise? I want to see that.

Gregory Peter Lewis: It's about two-thirds, one-third, you know, the 15 cent reduction at the midpoint is about two-thirds relative to the core business, and it's about one-third relative to our M&A net of interest. Okay. Okay. Got it. Got it.

Christopher Glynn: Christopher. Okay, got it, got it. Okay, thank you.

Gregory Lewis: Thank you, Steve.

Charles Stephen Tusa: Okay. Thank you. Thank you, Steve.

Gregory Lewis: Thank you.

Operator: Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question. Hi, good morning.

Julian Mitchell: Our next question comes in line of Julie Mitchell with Barclays. Please proceed with your question.

Julian C.H. Mitchell: Maybe I just wanted to follow up on a couple of points there. So, the segment profit dollar guide has come down, I think, about $100 to $150 million. So, just wanted to check, Greg, what you're saying, and that's a full year number, I think. You're saying that around two-thirds of that is core dilution, just from more long cycle mix versus short cycle, and then a third of it is just the newer acquisitions closing in Q3.

Gregory Lewis: Maybe just wanted to follow up on a couple of points there. So the segment profit dollar guide has come down, I think, about 100 to 150 million. So just wanted to check, Greg, what you're saying is, and that's a full year number, I think. You're saying that around two thirds of that is poor dilution, just from more long cycle mix versus short cycle. And then the third of it is just the newer acquisitions closing in Q3; those are sort of negative EBIT A if you like. I just wanted to check that. And then when we're looking at what I'm saying, Julian, is that at the EPS line, it's about a 15 cent reduction is the midpoint.

Speaker Change: Just saying that around two thirds of that is core dilution.

Speaker Change: Just some more long cycle mix versus short cycle, and then a third of it is just the new acquisitions closing in Q3, those are sort of negative EBIT. A if you like I just wanted to check that and then when we're looking at yes.

Julian C.H. Mitchell: Those are sort of negative EBIT A, if you like. I just wanted to check that, and then when we're looking at... Yeah, what I'm saying, Julian, is that on the EPS line, it's about a 15-cent reduction at the midpoint.

Speaker Change: What I am saying Julien is that at the EPS line, it's about a 15% reduction at the midpoint at.

Gregory Lewis: And about two thirds of that is from the core business. And about one third of that is due to the MNA, which is inclusive of the interest cost of actually making those acquisitions. Julie, the point I will add there is the margin changes, not that there's something has gone, you know, shift in the businesses. It's the mix within the businesses, which is causing this margin changes. Like in case of aerospace, you continue to have OE versus aftermarket market mix in case of bending automation. More solution, less products; similar dynamics in case of industrial automation. So I want to make it clear that underlying businesses remain strong.

Gregory Peter Lewis: And about two-thirds of that is from the core business, and about one-third of that is due to M&A, which is inclusive of the interest cost of actually making those acquisitions. Julian, the point I will add there is the margin changes, not that something has gone, you know, shifting businesses. It's the mix within the businesses which is causing these margin changes. Like in the case of aerospace, we continue to have an OE versus aftermarket mix. In the case of building automation, more solutions, less products; similar dynamics in the case of industrial automation.

Speaker Change: And about two thirds of that is for the core business and about one third of that is due to the.

Julian: M&A, which is inclusive of the interest cost of actually making those acquisitions Julian the point I'll add there is.

Speaker Change: The margin change is not that does something has gone shifting the businesses. It's the mix within the businesses, which is causing this margin changes.

Speaker Change: I can give some aerospace we continue to have OE versus aftermarket market mix and kids up building automation more solution based products similar dynamics in group of industrial automation, So I want to make it clear that underlying businesses remain strong. We are seeing margin expansion you are seeing productivity on fixed cost remains very attractive.

Vimal M. Kapur: So I want to make it clear that underlying businesses remain strong. We are seeing margin expansion. We are seeing productivity. And our fixed cost remains very attractive.

Gregory Lewis: We are seeing margin expansion. We are seeing productivity are fixed, can't remain ready attractive. So it's mixed within the businesses. We are getting more longer term long cycle businesses, which in any way also solidifies our second half outlook. We are not factoring a significant uptake in the short cycle. We are factoring some to which we have visibility, but the majority of our outlook for the second half is bent upon long cycle businesses, continued growth in aerospace, sequentially quarter and quarter, ramp up of European, the second of the year, specifically catalyst businesses, strong backlog and other solution businesses.

Vimal M. Kapur: So it's mixed within the businesses. We are getting more longer-term, long-cycle businesses, which in a way also solidifies our second-half outlook. We are not factoring in a significant uptake in the short cycle. We are factoring in some, but only to which we have visibility. But the majority of our outlook for the second half is built upon long-cycle businesses, continued growth in aerospace, sequentially quarter-on-quarter, ramp-up of UOP in the second half of the year, specifically catalyst businesses, and strong backlog in other solution businesses. So then all that comes together.

Julian: It is mix within the businesses.

Julian: We are getting more longer term long cycle businesses within EMEA also solidifies our second half outlook, we are not factoring a significant uptake in the short cycle. We are factoring some of which we have visibility, but majority of our outlook for second half is built upon long cycle business.

Julian: This is continued growth in aerospace sequentially quarter on quarter ramp up youll be in the second half of the year, specifically countless businesses strong backyard in backlog and the other solution businesses. So then all that comes together it just made.

Gregory Lewis: So then all that comes together, it just, you know, makes the margin mix to what we have guided it to. I see. Yeah, I think a lot of the question is because it looks like the absolute sort of segment profit dollar guide is lower, not just sort of the margin mix. That's right. Because of the dynamics of longer cycle businesses growing way greater than short cycle, the margin mix is unfavorable. But if you roll it up to 2025, that factor should play out because this is not an underlying business margin issue. That's the point of highlighting.

Vimal M. Kapur: It just, you know, makes a margin mix similar to what we have guided it to. I see. Yeah, I think a lot of the question is just because it looks like the absolute sort of segment profit dollar guide is lower, not just sort of the margin mix. That's right.

Julian: Make some margin mix.

Julian: What we have guided to.

Speaker Change: I see yes, I think it's a little bit the question just because it looks like the absolute sort of segment profit dollar guide is is.

Speaker Change: Lower not just sort of the margin mix that's right that's right.

Julian C.H. Mitchell: Because of the dynamics of longer cycle businesses growing way greater than shorter cycle businesses, the margin mix is unfavorable. But if you roll it up to 2025, that factor should play off because this is not an underlying business margin issue. That's the point I'm highlighting. It's not that we are dropping margins somewhere, we are having a price cost issue, we are not getting productivity, and our fixed cost has gone up. None of that is true.

Speaker Change: But I think that that's the right because of the dynamics of longer cycle businesses growing really greater than shorter cycle at the margin mix is unfavorable but if you roll it up to 2025.

Speaker Change: That factors should play off because this is not a underlying business margin issue thats. Upon are highlighting its not that we are dropping margin somewhere I think price cost issue you are not getting productivity. Our fixed costs has gone up none of that is true we are in fact getting exelon.

Gregory Lewis: It's not that we're dropping margin somewhere. We're having price cost issue. We are not getting productivity, or fixed costs has gone up. None of that is true. We're in fact getting excellent productivity and margin expansion. It's purely driven by mixes in the business. That's helpful. And you just keep in mind, you know, short most in most cases are short cycle margins. You know, think about them as being 30 points higher than our long cycle project, you know, solution-oriented margin. So that's really what you're saying. Revenue in the totality organically roughly the same, but carrying a lower margin rate along with it.

Vimal M. Kapur: We're in fact getting excellent productivity and margin expansion. It's purely driven by mix within the business. That's helpful.

Speaker Change: Excellent productivity and margin expansion, it's purely driven by mix within the businesses.

Gregory Peter Lewis: And you just keep in mind, you know, in most cases, our short cycle margins, you know, think about them as being 30 points higher than our long cycle project, you know, solution-oriented margin. So that's really what you're seeing revenue in its totality organically, roughly the same, but carrying a lower margin rate along with it. That's very helpful.

Speaker Change: That's helpful and can you just keep just keep in mind short most in most cases, our short cycle margins.

Speaker Change: Think about them as being 30 points higher than our long cycle project.

Speaker Change: Solution oriented margins. So that's really what you're seeing revenue in its totality organically roughly the same.

Speaker Change: But carrying a lower margin rate along with it.

Gregory Lewis: That's very helpful. And on your point on the M&A, the fourth quarter, I think you're assuming. Sequentially, revenues are up, maybe 9%. That's a lot more than normal, but you've got the deals coming in Q3. So it's just wondered sort of how much of those new deals add to that fourth quarter revenue, if you had that to hand. Yeah, I mean, you should think that we're expecting closure of those deals in the third quarter, but likely to be, you know, mid to late part of the third quarter. So there's some level of that step up.

Julian C.H. Mitchell: And on your point about the M&A, the fourth quarter, I think you're assuming sequentially revenues are up maybe 9%. That's a lot more than normal, but you've got the deals coming in Q3. So just wondered sort of how much those new deals add to that fourth quarter revenue if that were to happen? Yeah, I mean, you should think that we're expecting closure of those deals in the third quarter, but likely to be, you know, the mid to late part of the third quarter. So there's some level of that step up.

Speaker Change: That's very helpful and then on your point on the M&A.

Speaker Change: The fourth quarter I think you were assuming sequentially revenues are up maybe 9%.

Speaker Change: That's a lot more than normal, but you've got the deals coming in Q3, So just wondered sort of how much of those new deals add to that fourth quarter revenue. If you have that to hand.

Gregory Peter Lewis: Remember, we always have a big step up in ERO and Q4. And we expect that to also be true. We also have a lot of visibility into the ESFs and REV streams in Q4, as well. So catalyst reloads, and so forth.

Speaker Change: Yes, I mean, you should think that we're expecting closure of those deals in the third quarter, but likely to be mid to late part of the third quarter. So there is some level of that step up.

Gregory Lewis: Remember, we always have a big step up in Arrow and Q4, and we expect that to also be true. We also have a lot of visibility into the ESF red streams and Q4 as well. So catalyst reloads and so forth. So it's, you know, it is. So it is on the higher side of the revenue step up for sure, but we feel good. We've interrogated that quite deeply, and we feel good about, you know, the credibility around that outlook. Now, the other thing I would just mention is keep in mind if you just take a step back for a minute on the M&A side, you know, in the early days of these acquisitions, there's going to be some, you know, meaningful integration costs on the front end.

Speaker Change: Remember, we always have a big step up in Aero and Q4, and we expect that to also be true. We also have a lot of visibility into the DSS.

Speaker Change: Red streams in Q4.

Speaker Change: As well, so catalyst reloads and so forth so.

Speaker Change: It is it is on the higher side of the revenue step up for sure.

Sean Christopher Meakim: So it's, you know, it is, it is on the higher side of the revenue step up, for sure. But we feel good. We've interrogated that quite deeply, and we feel good about, you know, the credibility around that outlook. Now, the other thing I would just mention is, keep in mind, if you just take a step back for a minute on the M&A side, you know, in the early days of these acquisitions, there's going to be some, you know, meaningful integration costs on the front end.

Speaker Change: But we feel good we've interrogated that quite deeply and we feel good about.

Speaker Change: The the credibility around that.

Speaker Change: That outlook. So the other thing I would just mentioned that keep in mind is if you just take a step back for a minute on the M&A side.

Speaker Change: In the early days of these acquisitions that theres going to be some meaningful integration cost on the front end.

Gregory Lewis: But again, beyond 2024, you know, these deals are nicely accretive as we get through that integration costs, you know, period. So again, good. I think this is a very nice. It's a very nice adder to the portfolio. And if you think about the work that we're trying to do on improving the quality of the portfolio, this is all good news for 25 and beyond.

Sean Christopher Meakim: But again, beyond 2024, you know, these deals are nicely accretive as we get through that integration cost period. So, again, good. I think this is a very nice, it's a very nice adder to the portfolio. And if you think about the work FIML's trying to do on improving the quality of the portfolio, this is all good news for 2025 and beyond.

Speaker Change: Again beyond.

Speaker Change: 2020 for these deals are nicely accretive.

Speaker Change: As we get through that integration costs.

Speaker Change: Period, so again good.

Speaker Change: I think this is a very nice.

Speaker Change: It's a very nice adder to the portfolio and if you think about.

Speaker Change: The work almost trying to do on improving the quality of the portfolio.

Speaker Change: This is all good news for 25 and beyond.

Gregory Lewis: And then join the show and just want to put a button in your question around the incremental revenue in 24 on June 3rd. We announced the closing of the Access Solutions business. We also increased our guidance by 400 million for the year. Now this new guidance reflects another 400 million of related M&A revenue in 24. So full year 24, about 800 million of which we had a month of access solutions, the month of June in a second quarter. Such a give you enough to kind of walk through the quarterlies through the balance of the year.

Julian C.H. Mitchell: Just wanted to put a button on your question around the incremental revenue in 24. On June 3rd, we announced the closing of the Access Solutions business. We also increased our guidance by $400 million for the year. Now, this new guidance reflects another $400 million of related M&A revenue in 24. So full year 24, about $800 million, of which we had a month of Access Solutions in the month of June in the second quarter. That should give you enough to kind of walk through the quarterly results through the balance of the year.

Sean Christopher Meakim: And then Julian this is Sean I, just want to put a button and your question around the incremental revenue and 24 on June <unk>, we announced the closing of the access solutions business.

Speaker Change: Also increased our guidance by $400 million for the year now this new guidance reflects another $400 million of related M&A revenue in 'twenty four so full year 'twenty four.

Speaker Change: $800 million of which we had a month of access solutions. During the month of June in the second quarter, essentially give you enough to kind of walk through the quarter lease through the balance of the year and then we talked about a run rate of close to $2 billion collectively going into 'twenty five and as Greg said, he is going to be an <unk>.

Sean Christopher Meakim: And then we talked about a run rate of close to $2 billion collectively going into 2025. As Greg said, he's going to be, each of these deals are coming in at accretive growth rates to the respective businesses as well as to Honeywell overall. Very helpful. Thank you.

Gregory Lewis: And then we talked about a run rate of close to $2 billion collectively going into 25. And as Greg said, he's going to be, you know, each of these deals are coming in at accretive growth rates to the respective businesses, as well as on lower raw. Very helpful. Thank you.

Greg: Deals are coming in at accretive growth rates to the respective businesses as well as the Honeywell overall.

Speaker Change: Very helpful. Thank you.

Dan: Thank you Dan.

Speaker Change: Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.

Julian C.H. Mitchell: Thank you. Our next question comes from the line of Nigel Coe with Wolf Research. Please proceed with your question. Good morning.

Nigel Coe: Our next question comes from the line of Nigel Coe with Wolf Research. Please proceed with your question.

Nigel Edward Coe: I hate to be a bore, but I do want to come back to this guidance revision map. My understanding was that the LNG acquisition was actually margin-accretive, I think, you know, maybe 30%, 40%. So on that $400 million of incremental M&A revenue, it feels like you've got over $100 million of segment income coming through here, so it feels like the core guide is getting cut by maybe $200 million or so. Is that correct?

Speaker Change: Good morning.

Gregory Lewis: I hate to be a ball, but I do want to come back to this guidance vision map. My understanding was that the LNG acquisition was actually margin of credit, but I think, you know, maybe 34%. So on that 400 million dollars of incremental M&A revenue, it feels like you've got over 100 million dollars of segment income coming through here. So it feels like the cool guide is getting cut by maybe 200 million dollars or so. Is that correct? And, you know, how do we think about that? Is that solely within the IA and BA segments?

Nigel Edward Coe: I hate to be a pool, but.

Nigel Edward Coe: I do want to come back to this guidance revision math.

Speaker Change: I think most of the LNG acquisition was actually margin accretive, but I think you know maybe 30 or 40%.

Speaker Change: So in that $40 million of incremental M&A revenue.

Speaker Change: It feels like you've got over $1 billion of segment income coming through here. So it feels like the cool Guy does it get cut by maybe 200 Mendoza is that correct.

Nigel Edward Coe: And, you know, how do we think about that? Is that solely within the IA and BA segments, and is it all margin? Just want to clarify that. Sure. So most of the cut is in IA and BA for sure. That is where the short cycle, long cycle mix changes are most pronounced, for sure.

Speaker Change: How do we think about that is that solely within the.

Speaker Change: The I, a and b segments or margins, just just wanted to clarify that.

Gregory Lewis: And is it all margin? Just just want to clarify that. Sure. So most of the cut is an INBA for sure. That is where the short cycle, long cycle mix changes is most, you know, pronounced for sure. And yes, we're getting, we're getting incremental segment profit, you know, on these new acquisitions. As I mentioned, there's going to be some integration costs, you know, on them early on and then net of the interest costs that we're going to bear. That's where we talk about, you know, about, you know, I don't know, four to five cents roughly degradation in the EPS guy associated with that.

Speaker Change: Sure. So so most of the most of the cut as an anda for sure.

Speaker Change: That is that is where the the short cycle long cycle mix changes.

Gregory Peter Lewis: And yes, we're getting incremental segment profit on these new acquisitions. As I mentioned, there's going to be some integration costs on them early on, and then net of the interest costs that we're going to bear, that's where we talk about, you know, about, I don't know, 4 to 5 cents roughly of degradation in the EPS guide associated with that. But the repo costs are coming down, Greg, by about $50 million. So are you talking about integration costs that are over and above the repo cost? I mean, and can you just help us out? You know how much?

Speaker Change: Is most.

Speaker Change: Pronounced for sure and yes, we're getting we're getting incremental segment profit on these new acquisitions as I mentioned theres going to be some integration costs.

Speaker Change: Early on and then net of.

Speaker Change: The interest cost that we're going to we're going to bear that's where we talk about.

Speaker Change: I don't know four to five roughly.

Speaker Change: Degradation in the EPS guide associated with that.

Gregory Lewis: But the repo costs are coming down, Greg, by about $50 million. So are you talking about integration costs that are over and above repo? I mean, and can you just help us out? You know, how much? Yes, integration costs get incurred inside of segment profit, unless there's a repositioning project associated. But there are ongoing, there are ongoing integration costs that go into the segment profit of the business that we're acquiring into that SPG. Okay. My last question, Greg, is what the impact on segment income from the new acquisitions in the back half of the year?

Speaker Change: But the the repo costs coming down, Greg, but about $50 million. So.

Greg: Are you talking by integration costs over and above repo.

Greg: Can you just help us out how much.

Nigel Edward Coe: Yep, yep, yeah, integration costs get incurred inside of segment profit unless there's a repositioning project associated with them. But there are ongoing integration costs that go into the segment profit of the business that we're acquiring and into that S&P. Okay, my last question, Greg, is what is the impact on segment income from the new acquisitions in the back half of the year? I don't think we're giving you a precise answer on that. There's a range around it inside of what I was sharing. So, you know, I'm not going to give you like a pointed precise answer. Okay, we're perfect.

Speaker Change: Integration costs get incurred inside of segment profit unless there is a repositioning project associated but there are ongoing we think there are ongoing integration costs that go into the segment profit of the business that we're.

Speaker Change: We're acquiring into that STG.

Greg: My last question, Greg is what is the impact on segment income from the new acquisitions in the back half of the year.

Gregory Lewis: I don't think we're giving you a precise answer on that. There's a range around it inside of what I was sharing. So, you know, I'm not going to give you like a pointed precise number.

Greg: I don't think we're giving you a precise answer on that there's a range around inside of what I was sharing so.

Speaker Change: I'm not going to give you like a.

Speaker Change: Appointed precise number.

Gregory Lewis: Okay, we're both left.

Speaker Change: Okay.

Speaker Change: Excellent.

Scott Davis: Thank you. Our next question comes from the line of Scott Davis with Millie's Research.

Speaker Change: Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

Scott Reed Davis: Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your questions. Hey, good morning, Vimal, Greg, and Sean. I'm looking at these book-to-bills on slide 11. I don't think we don't have a lot of history with you guys talking about book-to-bill, but they look pretty encouraging. I just wanted to get kind of your view on this... Historically, they've been relatively volatile. Are they something that we can kind of take to the bank, if you will?

Scott Davis: Yeah.

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

Scott Davis: Good morning, Bill. Greg and Sean. Hey, I'm looking at these book to bills on slide 11. I don't think we don't have a lot of history with you guys talking about book to build. If they look pretty encouraging, I just wanted to get kind of your view on historically, they've been relatively volatile. Well, are there something that we can kind of take to the bank, if you will, that, you know, this doesn't indicate a pretty sharp acceleration in the back half. Yeah.

Speaker Change: Okay.

Scott Reed Davis: I'm looking at these book to bills on Slide 11, and I don't think we don't have a lot of history with you guys talking about book to Bill, but they look.

Speaker Change: They look pretty encouraging I just wanted to get kind of your view on historically, they've been relatively volatile or there is something that we can kind of take to the bank. If you will that.

Speaker Change: That.

Speaker Change: This does indicate a pretty sharp acceleration in the back half.

Gregory Lewis: Yes, Scott. Actually, one of the highlights for the turning story is our artist performance in taking quarter. Our artist grew double digit in building automation, high single in that said automation, and double digit in energy and sustainability solution. So that has put our backlog now to $32 billion of 5%, and that's really what is now flowing into our revenue of second half with the strong book to bill, which we did in taking quarter. By the way, the forecast we have for the orders of the second half is also very strong. So essentially, we have pivoted towards our guide toward long cycle on the strength of the backlog and the forecast we are getting on the long cycle businesses because it gives us more assurance and more visibility.

Speaker Change: Okay.

Vimal M. Kapur: That, you know, this does indicate a pretty sharp acceleration in the back half. Yeah. Yeah, Scott, actually, one of the highlights for this earnings story is our orders performance in the second quarter. Our orders grew double digits in building automation, high single digits in industrial automation, and double digits in energy and sustainability solutions. So that has put our backlog now to $32 billion, up 5%. And that's really what is now flowing into our revenue for the second half with a strong book to bill, which we did in the second quarter.

Scott: Yes, Scott.

Speaker Change: Actually one of the highlight for this earnings story is our artist performance in second quarter.

Speaker Change: Our artist grew double digit in building automation high single in that said automation and double digit in energy and sustainability solution. So that has put our backlog now to $32 billion up 5%.

Scott: And that's really what it is.

Scott: Now flowing into our revenue up second half with a strong book to Bill, which we did in.

Scott: Second quarter by the way the forecast we have for the orders. So the second half is also very strong so.

Vimal M. Kapur: By the way, the forecast we have for the order book for the second half is also very strong. So essentially, we have pivoted toward our guide toward long cycle on the strength of the backlog and the forecast we are getting on the long cycle businesses because it gives us more assurance and more visibility. And that's why we called out book to bill, which is nearly one.

Scott: You see.

Scott: We have pivoted towards our guide toward long cycle on the strength of the backlog and the forecast we are getting on the long cycle businesses, because it gives us more assurance and more visibility and Thats why we called out book to Bill which is nearly one.

Gregory Lewis: And that's why we called our book to bill, which is nearly one, and we feel that this is standing on a very strong footing at this point of time.

Vimal M. Kapur: And we feel that this is standing on a very strong footing at this point in time. Okay. And Vimal, could you walk around the world a little bit for us?

Scott: And we feel that this is standing on a very strong footing at this point of time.

Scott: Okay.

Gregory Lewis: And then, could you walk around the world a little bit for us? I mean, have you seen any meaningful changes in on the key regions and notably China. Yeah, I would say I will call out the two biggest regions for us: China and Middle East. I would say China; Honeywell continues to do well. Thanks to Aero and Energy businesses we have here. We scored high single in last year. We are trending towards similar rates this year. Short cycle businesses are challenged there too, like the economic cycle of China, as we all read. Middle East remains a counter point for us.

Speaker Change: Then what could you walk around the world a little bit for us.

Speaker Change: <unk> seen any meaningful changes in from.

Scott Reed Davis: I mean, have you seen any meaningful changes in... Key Regions, and notably China. Yeah, no, I would say I will call out the two biggest regions for us, China and the Middle East. I would say China, Honeywell continues to do well thanks to the aero and energy businesses we have here. We scored a high single in last year.

Speaker Change: From the key regions and notably China.

Speaker Change: Oh, yes, no I would say.

Speaker Change: I will call out the two biggest region for us China and Middle East I would say, China Honeywell continues to do well, thanks to Aero and energy businesses. We have here, we scored high single in last year, we are trending towards similar rates this year.

Vimal M. Kapur: We are trending towards similar rates this year. Short cycle businesses are challenged there, too, like the economic cycle of China, as we all read. The Middle East remains a counterpoint for us.

Speaker Change: Short cycle businesses are challenged there too.

Speaker Change: Like the economic cycle of China, as we all read Middle East remains a counterpoint for us it is growing very strongly.

Vimal M. Kapur: It is growing very strongly. Specifically, Saudi Arabia, and also the UAE, we see strong momentum. And in a way, we are counting on that reversion in the times ahead to, you know, slow down on China progressively every passing year. In Europe, we are actually seeing recovery.

Gregory Lewis: It is growing very strongly, specifically Saudi Arabia also UAE. We see a strong momentum. And in a way we are counting on that reversion in the times ahead to, you know, the slow down on China progressively every passing year. Europe, actually we are seeing recovery. We have seen good revenue progression for Honeywell in the first half of the year. So probably bottom is behind us and that's how we are looking at times ahead for Europe for us. So that's kind of some high level comments on geography. Okay, very helpful. Thank you.

Speaker Change: Specifically, Saudi Arabia also UAE, we see a strong momentum and we are counting on that promotion in the times ahead too.

Speaker Change: The slowdown in China progressively.

Speaker Change: Parts of the year.

Speaker Change: Actually we are seeing recovery.

Speaker Change: We have seen good revenue progression for Honeywell in first half of the year, So probably bottom is behind us and Thats, how we are looking at.

Scott Reed Davis: We have seen good revenue progression for Honeywell in the first half of the year, so probably the bottom is behind us, and that's how we are looking at times ahead for Europe for us. So that's kind of some high-level comments on Joker.

Speaker Change: I'm the head for Europe.

Speaker Change: For us so thats gone so.

Speaker Change: Some high level comments on geography.

Speaker Change: Okay very helpful. Thank you good.

Scott Reed Davis: Okay, very helpful. Thank you. Good luck. Thank you. Thank you.

Scott Davis: Good luck.

Speaker Change: Good luck. Thank you.

Speaker Change: Thank you thanks.

Operator: Thank you. Our next question comes from the line of Andrew Obin with Bank of America. Please proceed with your question. Uh, yes, uh, good morning. Hey Andrew.

Speaker Change: Thank you. Our next question comes from the line of Andrew <unk> with Bank of America. Please proceed with your question.

Andrew Obin: Our next question comes from the line of Andrew Oben with Bank of America.

Andrew Obin: Yes, good morning. Hey, just a question on aerospace and, you know, and as I said, maybe it's a too long term, but just sort of thinking about the mix for Aero into the second half, which I believe you've sort of highlighted as a drag. Vimo, are you guys changing your approach to monetizing programs in Aero that are sunsetting because my understanding is that they have been sort of a steady source of upside over the past couple of years? Are you, you know, as you sort of become the chairman, are you changing approach to how to think about your portfolio there?

Andrew Alec Kaplowitz: Yes, good morning.

Andrew Burris Obin: Hey, just a question on aerospace and, you know, and as I said, maybe it's too long term, but just sort of thinking about the mix for Aero into the second half, which I believe you've sort of highlighted as a drag. Vimal, are you guys changing your approach to monetizing programs in Aero that are sunsetting? Because it is my understanding that they have been sort of a steady source of upside over the past couple of years.

Andrew: Hey, Andrew.

Andrew: Hey, just a question on aerospace and you know and as I said.

Speaker Change: Maybe it's too long term, but.

Speaker Change: Just sort of thinking about the mix for Aero until the second half, which I believe you've sort of highlighted as a drag.

Speaker Change: Are you guys changing your approach to monetizing programs and Arrow there are sunsetting, because my understanding that there have been sort of a steady source of upside over the past couple of years.

Speaker Change: As you sort of become the chairman are you changing approach to how to think about your portfolio there.

Vimal M. Kapur: You know, as you sort of become the chairman, are you changing your approach to how to think about your portfolio there? I mean, I would say we absolutely are looking to make Aero more of a longer cycle growth vector for Honeywell. You know, Aero has always faced its cycle, up cycle, down cycle, and we are really positioning it to grow high single-digit for the next five to seven years. And there's organic growth work which is happening around it through new products.

Vimal Kapur: I mean, I would say we absolutely are looking to make Aero more of a longer cycle growth vector for Honeywell. You know, Aero has always faced cycle up, cycle down, cycle, and we are really positioning it to grow high single for the next five to seven years. And there's the organic growth work, which is happening around it through new products, but equally importantly, the acquisitions which we made of Sivitnavi and Kate both are targeted to defense segment and defense segment. We are bullish on the growth occurring in defense; our backlogs are growing very nicely there.

Speaker Change: I mean, I would say, we absolutely are looking to make <unk> more of a longer cycle.

Speaker Change: Growth vector for Honeywell.

Speaker Change: <unk> has always spaces cycle up cycle down cycle, and we are really positioning it to grow high single for the.

Speaker Change: The next five to seven years.

Speaker Change: And there is the organic growth work, which is happening around it through new products, but equally importantly, the acquisitions, which we made of <unk> and Avi and case, both are targeted to defense segment.

Vimal M. Kapur: But equally importantly, the acquisitions which we made of Civita Navi and Cades, both are targeted to the defense segment. And in the defense segment, we are bullish on the growth occurring in defense. Our backlogs are growing very nicely there.

Speaker Change: Defense segment, we are bullish on the growth occurring in defense.

Speaker Change: Backlog is not growing very nicely there.

Vimal Kapur: So we really pivoting towards higher growth segments within Aerospace to maintain our growth rates there in the times ahead. And I don't mean very both bullish and optimistic on how Aero business is going to perform in the next seven years ahead. And I guess I'm going to go back to the question that everybody else asked, you know, as we go through sort of the list of the performance of businesses this quarter, right? I mean, it was very few exceptions. It seems a short cycle businesses have actually done as well as you were expecting. So, in another way of asking the question, now that you're chairman, are you just taking a more conservative approach to sort of how to think about the framework going forward, given the level of macro uncertainty out there?

Vimal M. Kapur: So we're really pivoting towards higher growth segments within Aerospace to maintain our growth rates there in the times ahead. And I remain very both bullish and optimistic on how the Aero business is going to perform in the next several years. And I guess I'm going to go back to the question that everybody else asked. You know, as we go through sort of the list of the performance of businesses this quarter, right, I mean, there were very few exceptions.

Speaker Change: So we're really pivoting towards higher growth segments within aerospace to maintain our growth rates there.

Speaker Change: The times ahead item anybody both bullish and optimistic.

Speaker Change: The mistake on holiday business is going to perform in next several years ahead.

Speaker Change: And I guess I'm going to go back to the question that everybody else has to you know as we go through sort of the list of the performance of business as this quarter right. I mean, it was very few exceptions. It seems that short cycle businesses have actually done as well as you were expecting so another way of asking the question now that you have.

Andrew Burris Obin: It seems like short cycle businesses have actually done as well as you were expecting. So another way of asking the question, now that you're chairman, are you just taking a more conservative approach to sort of how to think about the framework going forward given the level of macro uncertainty out there? I mean, I think the macros are reality, Andrew, at the end of the day. That's something which I don't control.

Speaker Change: Chairman are you just taking a more conservative approach to sort of how to think about the framework going forward, giving given the level of macro uncertainty out there.

Vimal Kapur: I mean, I think the macro is a reality, and we are at the end of the day. That's something which I don't control. So long cycle businesses are performing well because the segments we serve are attractive: energy transition, aerospace, and that's certainly helping us. I think short cycle businesses are reverting back. I'm not suggesting that they are contracting, but the reversion is more at the lower end of our initial estimated start of the year versus at the mid or upper end of it. That's only such a difference. And the swing between the mix of short and long is the difference in the margin, because we are raising the low end of our guide of revenue, which shows our confidence in the overall business, the organic growth, because my comment right from the day I started is organic growth is my highest priority and we are delivering on that. Our guide is five to six.

Andrew: I mean, I think the macros on reality, Andrew at the end of the day.

Speaker Change: That's something which I don't control.

Vimal M. Kapur: So long cycle businesses are performing well because the segments we serve are attractive, energy transition, and aerospace, and that's certainly helping us. I think short cycle businesses are reverting back. I'm not suggesting that they are contracting. But the reversion is more at the lower end of our initial estimate at the start of the year versus at the mid or upper end of it. That's the only subtle difference.

Speaker Change: Long cycle businesses are performing well because of the segments. We serve are attractive energy transition.

Speaker Change: Aerospace.

Speaker Change: And that's certainly helping us I think short cycle businesses are reverting back im not sure.

Speaker Change: Suggesting that they arent they are contracting but reversion is more at the lower end of our initial estimate at start of the year versus at the mid or upper end of it that's the only subtle difference and that swing between the mix of short and long is the difference in the margin because we are raising the low end of our guide on revenue.

Vimal M. Kapur: And that swing between the mix of short and long is the difference in the margin because we are raising the low end of our revenue guide. This shows our confidence in the overall business, the organic growth, because my comment right from the day I started is that organic growth is my highest priority, and we are delivering on that. Our revenue guide is five to six.

Speaker Change: Our confidence in the overall business the organic growth because my comment right from the day I started is organic growth is my highest priority and we are delivering on back of our guide is five to six.

Vimal M. Kapur: My goal will be, of course, to deliver on the upper end of it. And I would argue that, in the very first year of my inception in the job, that's not a bad outcome. And we'll strive for that subsequently. I don't want to leave any impression that the short cycle is less important; the long cycle is more important. I think it's just a derivative of how the markets are performing and how we are performing in the markets at this point in time. Thanks so much.

Vimal Kapur: My goal will be, of course, to deliver on the upper end of it. And I would argue in the very first year of my, you know, inception and the job. That's not a bad outcome, and we'll strive for that, you know, subsequent year. I don't want to leave any impression that short cycle is less important; long cycle is more important. I think it just a derivative of how markets are performing and how we are performing in the markets at this point of time.

Speaker Change: My goal will be of course to deliver on the upper end of it.

Speaker Change: And I would I would argue in the very first year of my.

Speaker Change: Inception, and the job that is not a bad outcome and we will strive for that.

Speaker Change: Subsequent here I don't want to leave any impression that short cycle is less important long cycle is more important I think adjusted derivative of how markets are performing and how we're performing in the markets at this point of time.

Andrew Obin: Thanks so much.

Speaker Change: Thanks, so much.

Speaker Change #101: Thank you.

Andrew Burris Obin: Thank you. Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question. Thank you. Good morning, everyone. Hi Dean.

Speaker Change: Thank you. Our next question comes from the line of Deane Dray with RBC capital markets. Please proceed with your question.

Dean Dre: Our next question comes from a line of Dean Dre with RBC Capital Markets. Please proceed with your question.

Deane Michael Dray: Thank you good morning, everyone.

Dean Dre: Good morning, everyone. Hi, Dean. Good morning, Dean.

Deane Michael Dray: Good morning, Dean. I was hoping to get some commentary if you're seeing any of the election worries, delaying customer decisions, and it's not really related, but any impact from the CrowdStrike fiasco early in the week, any ripple through your businesses? I mean, there is nothing on CrowdStrike, no impact on Honeywell; we are not a user of that software. We obviously pay a lot of attention to our cybersecurity strategy and remain very vigilant on that. So I'm never going to claim victory on that front.

Deane Michael Dray: Hi, David mining.

Vimal Kapur: It was hoping to get some commentary if you're seeing any of the election worries delaying customer decisions, and it's not really related, but any impact from the CrowdStrike fiasco early in the week. Anything reppled through your businesses? I mean, I'll be nothing on the CrowdStrike knowing back on Honeywell, they're not a user of that software. We obviously pay a lot of attention to our cybersecurity strategy and remain very vigilant of that. So I'm never going to claim victory on that front. We need to stay vigilant.

Deane Michael Dray: Hey was hoping to get some commentary if you're seeing any of the election worries delaying customer decisions.

Deane Michael Dray: And it's not really related but any impact from the crowd strike fiasco early in the week anything ripple through your businesses.

Speaker Change: I mean being nothing on the cloud side, no impact on Honeywell, where not to use any of that software.

Speaker Change: As we build our attention to our cyber security strategy and remain very vigilant on that so I'm now going to claim victory on that front, we need to stay vigilant I think on the elections are coming.

Vimal Kapur: I think on elections are coming. We always will prepare for both the scenarios. That's not new for company like Honeywell, but this year elections are more than a US factor spinning around, you know, our rest of the world, and clearly that is certainly been a factor on how economies of economies are shaping up. That's my view. I think there was a lot of stories around half the word is going to elections, but that's not playing out because the results are out. And I think the biggest one in US, we are anxiously waiting on how the results would play out in a couple of months down the line.

Vimal M. Kapur: We need to stay vigilant. I think about elections, look, I mean, we always will prepare for both scenarios. That's not new for a company like Honeywell. But this year, elections are more than a U.S. factor. It's spinning around, you know, the rest of the world.

Deane Michael Dray: We always are prepared for both the scenario that's not new for company like Honeywell, but this year elections on more than a U S factor and spending it on.

Vimal M. Kapur: And clearly, that is certainly a factor in how economies are shaping up. That's my view. I think there were a lot of stories around how the world is going through elections, but that's not playing out because the results are out.

Deane Michael Dray: Our rest of the world and clearly that has certainly been a factor on how economic economies are shaping up that's my view.

Deane Michael Dray: I think there was there a lot of stories around half the world is going through elections, but thats not playing out because the results are out and I think the biggest one in the U S. We are anxiously waiting on how the drug should be out in a couple of months down the line, but we are prepared in either scenario.

Vimal M. Kapur: And I think the biggest one in the U.S. We are anxiously waiting on how the results will play out a couple of months down the line, but we are prepared in either scenario. This is something we do for a living, and we anticipate each outcome and how it will impact us. That's great to hear. And then just a second question.

Vimal Kapur: But we are prepared for either scenario. This is something we do for a living, and we anticipate each outcome and how it will impact us.

Speaker Change #109: This is something we do for living and we anticipate each.

Speaker Change: Come on how will it impact us.

Vimal Kapur: That's great to hear.

Speaker Change: That's great to hear and then just a second question I know, we're still early in the deal integration, but where would you highlight some of the revenue synergy opportunity is what would be the biggest and potential timing.

Deane Michael Dray: I know we're still early in the deal integration, but where would you highlight some of the revenue synergy opportunities? What would be the biggest and potential timing? Yooka!

Vimal Kapur: And then just a second question. I know we're still early in the deal integration. But where would you highlight some of the revenue synergy opportunities? What would be the biggest and potential timing? Look, I would like to highlight that all the days we have announced, none of our deal are always a base on say synergy. We don't count it. Having said that, each of the four days we have done. They are highly synergetic to Honeywell. And that's has been our theme. I'm equally I'm bullish on all the four deals, and synergies is bring Aero has substantial synergies on both case acquisition and in CB to Navi acquisition.

Speaker Change: Look.

Speaker Change #106: I would like to highlight that all the deals we have announced none of silver.

Vimal M. Kapur: I would like to highlight that all the deals we have announced, none of our deal ROIs are based on safe synergy. We don't count it. Having said that, each of the four deals we have done, they are highly synergetic to Honeywell, and that has been our theme. I'm equally bullish on all four deals and the synergies they bring. Aero has substantial synergies on both the case acquisition and the CBTNAVI acquisition. The same is true for both UOP and HPF and LNG because we were always present in the LNG segment.

Speaker Change #100: D. R. Horton Rois are based on data centers, if you don't count it having said that each of the.

Speaker Change #104: <unk>, we have done their highly synergetic to Honeywell and Thats been our team.

Speaker Change #104: I am equally I'm bullish on all of the <unk> deal and synergies that bring arrow has substantial synergies on both case acquisition and in <unk>.

Speaker Change #104: <unk> acquisition.

Vimal Kapur: Same is true for both UOP and HPS and LNG because we were always present in the LNG segment. This is not a new arrival for us. But with the deep technology expertise. The new air products business bring it just going to further enhance our LNG penetration and growth rate in that segment and carrier acquisition. We have talked in some of the earlier calls. It's all about taking that business truly global because the business is very concentrated in North America, and that's going to provide us a synergies. So, you know, there are two factors in these acquisitions are call out.

Speaker Change #111: Same is true for both for you will be in Sps and LNG, because we were always present in LNG segment. This is not a new arrival for us, but with a deep technology expertise.

Vimal M. Kapur: This was not a new arrival for us, but with the deep technology expertise this new air product business brings, it's just going to further enhance our LNG penetration and growth rate in that segment. And carrier acquisition, we talked about in some of the earlier calls. It's all about taking that business truly global because the business is very concentrated in North America, and that's going to provide us with safe synergies.

Speaker Change #104: This new air Products' business bring it does going to further enhance our LNG penetration in growth rate in that segment.

Speaker Change #107: And carrier acquisition, we have talked in some of the earlier calls it's all about taking that business truly global because our business is very concentrated in North America, and that's going to provide updated synergies. So.

Vimal M. Kapur: So, there are two factors in these acquisitions I'll call out. The first is that all the acquisitions we have made are accretive to the baseline growth rate of Honeywell, all of them. Second, the safe synergies are icing on the cake on top of that, and we will deliver on that as we integrate them in 2025 and beyond, and that's going to be a strong part of our earnings story in the time ahead. Thank you. Thank you. Thank you. Our next question comes from the line, Sheila Kahyaoglu with Jeffrey. Please proceed with your question. Good morning, Vimal, Greg, and Sean. Thank you. Good morning.

Speaker Change #105: There are two factors in the acquisition I'll call out. The first is all the acquisitions. We have made they are accretive to the baseline growth rate of Honeywell all of them second the phased synergies are icing on the cake on top of it and we will deliver on that as we integrate them in 2025 and more than that.

Vimal Kapur: The first is all the acquisition we have made. They are a creative to the baseline growth rate of Honeywell all of them. Second, the phase synergies are icing on the cake on top of it. And we will deliver on that as we integrate them in 2025 and more, and that's going to be a strong part of our earning story in the time ahead.

Speaker Change #105: It's going to be a strong part of our earnings story in the times ahead.

Vimal Kapur: Thank you.

Speaker Change #105: Thank you.

Speaker Change #100: Thank you.

Speaker Change #100: Yes.

Sheila Karin Kahyaoglu: Thank you. Our next question comes from the line of Sheila <unk> with Jefferies. Please proceed with your question.

Sheila Kahyaoglu: Our next question comes from the lines of Sheila Kahyaoglu with Jeffrey. Please pursue with your question.

Sheila Kahyaoglu: Good morning, Vimal, Greg, Sean.

Sheila Karin Kahyaoglu: Maybe just to start on the top line with aerospace. Can you talk about commercial OE? How you're thinking about where your max and 787 rates are today and how they will progress through the year? Is Boeing signaling any sort of change to your output as we think about the rest of the year and into 2025? So, Sheila, we are constantly calibrating our output with all the key OEMs on a 12-month rolling frequency.

Speaker Change #112: Good morning, and then we'll go to Sean Thank you.

Gregory Lewis: Thank you. Good morning. Maybe just to start on the top line with Iris Bayes.

Sean Christopher Meakim: Hey, good morning.

Sean Christopher Meakim: Good morning, maybe just to start on the top line with aerospace can you talk about commercial.

Gregory Lewis: Can you talk about commercial OEE, how you're thinking about where your max and 77 rates are today and how they progress through the year? Is Boeing signaling any sort of change to your output as we think about the rest of the year and into 25? So Sheila, we are constantly calibrating our output with all the KeoEMs on our 12 months rolling frequency. That has been a process for a while now. I would say that, based on the recent adjustment part, both Airbus and Boeing, we have calibrated our volumes aligned with them. It's not a major change, but there's some small change specifically on the electronic side, where we don't have much past use.

Sean Christopher Meakim: How youre thinking that way your Max and 77 rates are today and how they progressed through the year.

Speaker Change #103: Playing signaling any sort of change tear out, but as we think about the rest of the year to 25.

Sheila Karin Kahyaoglu: That has been a process for a while now. I would say that based on the recent adjustment path, both Airbus and Boeing, we have calibrated our volumes aligned with them. It's not a major change, but there are some small changes, specifically on the electronic side, where we don't have much past use, but the change is not material to Aerospace and not material to Honeywell.

Sheila: So Sheila we are constantly calibrating our output with all the key Oems on a 12 months rolling frequency that has been a process for a while now I would say that.

Sheila: Based on the recent adjustment bought both Airbus and Boeing we have calibrated our.

Sheila: Our volumes in line, but then it's not a major change, but there are some small change specifically on the electronic side, where we don't have much past dues.

Gregory Lewis: But the change is not material to aerospace and not material to Honeywell, but our guide does factor changes which have been signaled by both Airbus and Boeing recently.

Speaker Change #103: But the change is not material, the aerospace and not material to Honeywell, but our guide does factor changes, which have been signaled by both Airbus and Boeing recently.

Vimal M. Kapur: But our guide does factor in changes which have been signaled by both Airbus and Boeing recently. So how do we think about the OE growth? Is it up 20%, I think? Um, this year it's going to be up strong double digits, so you're in the right neighborhood. Yeah, she was.

Gregory Lewis: So how do we think about the OEE growth? Is it up 20%? I think? This year it's going to be up strong double data projects. So you're in the right neighborhood of this. Yes, you are.

Vimal M. Kapur: So how do we think about the OE growth has it up 20% I think.

Speaker Change #110: This year, it's going to be up strong double digits. So you're in the right neighborhood, yes, yes, yes exactly.

Gregory Lewis: Okay, and then expect it. We think about aerospace by and market would be something approaching 20% for OEE is reasonable, something like mid teams for aftermarket, and then double digits for defensive space.

Gregory Peter Lewis: The way to think about aerospace by end market would be something approaching 20% for OE is reasonable, something like mid-teens for aftermarket, and then double digits for Defense in Space. Okay, and then just on profitability, you know, you have about 100 bits of contraction in the second half, despite more typical selection credit dynamics. So, how do we think about profitability in the second half and how the problem acquisition changes that?

Speaker Change #110: When you think about aerospace by end market would be something approaching 20% for OE is reasonable something like mid teens for aftermarket and then double digits for defense and space.

Gregory Lewis: Okay, and then just on the profitability, you know, you have about 100 bits of contraction. I think in the second half, despite more typical selection credit dynamic. So how do we think about profitability in the second half and how the problem acquisition changes that? Yes, so as we talked about the mix inside of our deliveries, as you know, caused us quarter to quarter, you know, volatility, I'll call it, the lack of a better word. And the third quarter is likely going to be the lowest margin rate of the year for us. And we expect that'll then recover back and forth quarter.

Speaker Change #114: Okay, and then just on the profitability.

Speaker Change #115: About 100 of contraction I think in the second half despite more typical selection credit dynamics. So how do we think about profitability in the second half and how that pop on acquisition change of that.

Gregory Peter Lewis: Yeah, so as we talked about, the mix inside of our deliveries has caused us quarter to quarter, you know, volatility, I'll call it, for lack of a better word. And the third quarter is likely going to be the lowest margin rate of the year for us. And, you know, we expect that'll then recover in the fourth quarter. And that's based on, again, what we can see in terms of what's in the backlog, the margin on those products, etc.

Speaker Change #109: Yes, so as we talked about the mix inside of our deliveries has.

Speaker Change #108: Caused us quarter to quarter.

Speaker Change #116: Volatility I'll call it for lack of a better word.

Vimal M. Kapur: In the third quarter is likely going to be the lowest margin.

Speaker Change #108: Right.

Speaker Change #108: The year for Us and we expect that will then recover back in fourth quarter and that's based on again, what we can see in terms of what's in the backlog the the margin on those products et cetera.

Gregory Lewis: And that's based on, again, what we can see in terms of what's in the backlog, the margin on those products, etc. And we talked about the fact that, you know, arrow on an organic basis, but it was going to be roughly flat in margins this year. And then layering on, you know, the case acquisition that will have a negative impact on that baseline. And then we'll bring it back up from there. So as you, you know, start seeing the third and the fourth quarter prince, you know, that's what you should expect to see inside the arrow margin rate, but it's not, it's not a change in our overall outlook, definitely amplitude, you know, from quarter to quarter to quarter, as we've been discussing, given the mix of, you know, the products were delivering even inside the, oh, we itself.

Gregory Peter Lewis: And we talked about the fact that, you know, aero on an organic basis was going to be roughly flat in margins this year. And then layering on, you know, the case acquisition, that will have a negative impact on that baseline. And then we'll bring it back up from there.

Speaker Change #108: And we talked about the fact that arrow on an organic basis, we're going to be roughly flat and margins. This year and then layering on.

Gregory Peter Lewis: The case acquisition that will have.

Vimal M. Kapur: A negative impact on that baseline and then we'll bring it back up from there. So as you start seeing the third and the fourth quarter prints.

Sheila Karin Kahyaoglu: So as you, you know, start seeing the third and the fourth quarter prints, you know, that's what you should expect to see inside the aero margin rate. But it's not a change in our overall outlook, definitely amplitude, you know, from quarter to quarter to quarter, as we've been discussing, given the mix of, you know, the products we're delivering even inside the OE itself, but, you know, no real change in our outlook on how that is performing. Thank you. Thank you.

Sheila Karin Kahyaoglu: That's what you should expect.

Speaker Change #108: To see inside the Aero margin rate, but it's not it's not a change in our overall outlook definitely amplitude from quarter to quarter to quarter as we had been discussing given the mix of.

Speaker Change #108: The products, we're delivering even inside the <unk> itself.

Gregory Lewis: But, you know, no real change in our outlook on how that is going to work.

Speaker Change #108: But no no real change in our outlook on how that is performing.

Speaker Change #108: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Andy Kaplowitz with Citigroup. Please proceed with your question.

Operator: Our next question comes from the line of Andy Kaplowitz with Citigroup. Please proceed with your question. Good morning, everyone.

Andy Kaplowitz: Our next question comes in line of Andy Caplow. question.

Andrew Alec Kaplowitz: Good morning, everyone.

Andrew Alec Kaplowitz: Good morning, APN. Bill Moore and Greg, just maybe double-clicking on the short cycle businesses that are resulting in the lower expected organic margin in the second half. I think you said building products orders have been improving. Are they just improving more slowly than you thought and you saw a weaker than expected June? Is that one of the issues?

Andy Kaplowitz: Good morning. Thank you, Andy.

Andy: Good morning, Andy Andy.

Gregory Lewis: There are more great, just maybe double-clicking on the short-circle businesses that are resulting in the lower expected organic margin and second half. I think you said building products; orders have been improving. Are they just improving more slowly than you thought, and you saw weaker than expected June? Is that one of the issues in the needy-same question and productivity solutions are sensing? What are you assuming for these businesses in terms of weight of recovery now?

Andrew Alec Kaplowitz: Them or Greg just maybe double clicking on the short cycle businesses that are resulting in the lower expected organic margin in the second half I think you said building products orders have been improving but they just didn't clean more slowly than you thought and you saw weaker than expected June is that one of the issues and then maybe same question on productivity solutions are sensing.

Gregory Peter Lewis: And then maybe the same question: productivity solutions are sensitive. What are you assuming for these businesses in terms of rate of recovery? Yeah, thanks, Andy.

Speaker Change #118: What are you assuming for these businesses in terms of later recovery now.

Gregory Lewis: Yeah, thank you, Andy. So, a couple things to keep in mind, just to remind when we gave our guidance in June 3rd, you know, obviously before the third month of the quarter. And remember, half of our half of our results happen in the third month of any given quarter. So that just gives speaks to like what we were able to see at that moment in time versus what we can see today. But your, you know, your supposition is exactly right. There are certain parts of the short-cycle businesses inside of building products and inside of IAA short-cycle that are slower than we had hoped.

Andrew Alec Kaplowitz: So, so a couple things to keep in mind. You know, just just remind yourself that when we gave our guidance on June 3, it's obviously before the third month of the quarter. And remember, half of our half of our results happen in the third month of any given quarter. So that just speaks to what we were able to see at that moment in time versus what we can see today. But your, you know, your supposition is exactly right.

Speaker Change #120: Yeah. Thanks, Andy So so a couple of things to keep in mind.

Speaker Change #120: Just just remind when we gave our guidance in June 3rd.

Andy: Obviously before the third month of the quarter and remember half of our.

Vimal M. Kapur: Half of our results happened in the third month of any given quarter. So that just gives speaks to like what we were able to see at that moment in time versus what we can see today.

Andy: But your.

Speaker Change #119: Your supposition is exactly right there are certain parts of the short cycle businesses inside of building products and inside of IAA short cycle that are slower than we had hoped.

Gregory Peter Lewis: There are certain parts of the short cycle businesses inside of building products and inside of IA short cycle that are slower than we had hoped. And so that's really what's driving the margin mix. It's getting offset, as we mentioned, by, you know, the building solutions sales, the HPS project sales, etc. So for Gregory and Vimal, obviously, you've stepped up your M&A activity considerably. Do you see the recent rate of M&A continuing?

Speaker Change #119: And so that's really what's driving the margin mix, it's getting offset as we mentioned by the building solutions.

Gregory Lewis: And so that's really what's driving the margin mix that's getting offset, as we mentioned, by, you know, the building solutions, sales, the HPS, project sales, et cetera. But there's still improving sequentially, so that's not, and that is also still true. They're improving sequentially, but not as robustly as we would have liked.

Gregory Peter Lewis: Sales.

Speaker Change #119: HTS project sales et cetera.

Gregory Peter Lewis: But there is still improving sequentially. So that's not that is also still true they are improving sequentially, but not as robustly as we would have liked.

Speaker Change: It's helpful. Greg and then obviously you stepped up M&A activity considerably do you see the recent rate of M&A continuing is the M&A market conducive to that and then you've talked about divestitures.

Gregory Lewis: So for Greg, it's been more obviously stepped-up M&A activity considerably.

Gregory Lewis: Do you see the recent rate of M&A continuing? Is the M&A market conducive to that?

Gregory Peter Lewis: Is the M&A market conducive to that? And then you've talked about divestitures, you know, ramping that up. Can you offset the dilution that you might eventually get from divestitures to still grow, you know, that 10% in terms of line with your longer term strategy? That will play out.

Gregory Lewis: And then you've talked about disasters, you know, or ramping that up. Can you offset the solution that you might eventually get from the disasters to still grow? Yeah, that 10% in terms of anybody's longer-term algorithm. That will, that will only play out.

Gregory Peter Lewis: Ramping that up can you offset dilution that you might eventually get from divestitures to still grow that 10% in terms of in line with your longer term algorithm.

Andrew Alec Kaplowitz: I mean, only on divestiture, I would say we are working on it, and I would be disappointed if we do not show any progress during 2024. And as those things play out, we'll update you on its implications on earnings guys if we have to take any cost actions. But that's a work in progress. And you can expect to hear more from us as the year progresses. On the M&A front, our pipeline is still active. We are obviously conscious of the fact that we have done the four Ds; we have to integrate them.

Andy: Yes.

Speaker Change #109: That's Atlantic play out I mean, I can only go on divested over say, we are working on it and I would be disappointed if we do not show any progress or in 2024.

Gregory Lewis: I mean, I can only on-devester; I would say we are working on it. And I would be disappointed if we do not show any progress during 2024. And as those things play out, we'll update you on a simplification on our earnings skies. If anything, we have taken cost actions, but that's a work in progress. And you can expect to hear more from us as a year progresses.

And as those things play out we will update you on its implication on on earnings skies, if any we have taken cost actions.

Andrew Alec Kaplowitz: But that's work in progress and you can expect to hear more from us as the year progresses on M&A front, our pipeline is still active.

Gregory Lewis: On M&A front, our pipeline is still active. We are obviously conscious of the fact that we have done four days. We have integrated them. We don't want to take that lightly, but it doesn't mean that we are walking away from the market, and we actually so say what's available out there.

Andrew Alec Kaplowitz: We're obviously conscious of the fact, we have done four deals we have to integrate them.

Andrew Alec Kaplowitz: We don't want to take that lightly but it doesn't mean that we are walking away from the market and be actively sourcing what's available out there.

Vimal M. Kapur: We don't want to take that lightly. But it doesn't mean that we are walking away from the market and actively sourcing what's available out there. Be sure to subscribe to our YouTube channel for more videos like this!

Speaker Change: Appreciate it guys.

Gregory Lewis: Thank you.

Andrew Alec Kaplowitz: Thank you. Thank you. Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question. Hey, guys. Good morning. Hey, Joe.

Speaker Change: Thank you.

Andrew Alec Kaplowitz: Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.

Joe Richie: Our next question comes from the line of Joe Richie, with Goldman Sachs.

Joe Richie: Please proceed with your question. Hey, guys, good morning.

Joseph Alfred Ritchie: Hey, guys good morning.

Joseph Alfred Ritchie: And so, thanks for all the color. So, maybe just focus on BA and IA for a second and the margins that are expected for the year there. How have those expectations just changed for those two particular segments for the year? Yeah, they're, they're, coming down versus what we had anticipated. And again, mainly because of the back half, you know, margin performance expectations. But we still expect that, on an overall basis, we will make progress in VA, in particular. We ought to see a little bit of improvement; it's just not going to be as robust as we had thought at the beginning of the year. So think about that in terms of, you know, tens of basis points as opposed to 100 basis points.

Joe: Hey, Joe.

Gregory Lewis: Joe. And so, thanks for all the color. So, just maybe just focused on BA and I for a second in the margins that are expected for the year there. How is those expectations just changed for those two particular segments for the year? Yeah, they're coming down versus what we had anticipated. And, again, mainly because of the back half margin performance expectations. But we still expect that, on an overall basis, we will make progress in BA in particular. You know, we ought to see a little bit of improvement. It's just not going to be as robust as we had thought in the beginning of the year.

Joseph Alfred Ritchie: Thanks, Thanks for all the color.

Joseph Alfred Ritchie: Just maybe just focused on.

Joseph Alfred Ritchie: For a second and the margins that are expected for the year. There how is the expectations just change for those two particular segments for the year.

Joseph Alfred Ritchie: Here.

Speaker Change: Yes, they are there.

Joseph Alfred Ritchie: They are coming down versus what we had anticipated and again, mainly because of the.

Joseph Alfred Ritchie: The back half.

Joseph Alfred Ritchie: Performance expectations, but we still expect that on an overall basis, we will make progress.

Joseph Alfred Ritchie: In VA in particular.

Joseph Alfred Ritchie: We ought to see a little bit of improvement, it's just not going to be as robust as we had thought in the beginning of the year. So think about that in.

Gregory Lewis: So, think about that in, you know, tens of basis points as opposed to 100 basis points. And on the IA side, you know, similarly, we expect to make some progress in the year. But it's probably going to be in the tens of basis points over all for the full year, as opposed to, you know, 100 basis points type of range. but progress on what I keep in mind inside of inside of IA, you know, we're overcoming, you know, the very accretive license payments relative to the PSS business that, you know, we're, we're a nice lift for us and now we're, you know, we're going to experience three quarters of that loss this year and one quarter of this next year.

Gregory Peter Lewis: And on the IA side, you know, similarly, we expect to make some progress in the year, but it's probably going to be in the tens of basis points over all for the full year as opposed to, you know, the 100 basis points type of range. So, But progress on what? Keep in mind inside of inside of IA, you know, we're overcoming, you know, the very accretive license payments relative to the PSS business that, you know, we're, we're, we're a nice lift for us. And now we're, you know, we're going to experience three quarters of that loss this year and one quarter of it next. Yes, okay. Okay, great.

Joseph Alfred Ritchie: Tens of basis points as opposed to a 100 basis points.

Speaker Change: And on the on the <unk>.

Gregory Peter Lewis: Syed.

Speaker Change: <unk>, we expect to make some progress in the year.

Gregory Peter Lewis: But it's probably going to be in the tens of basis points over the over all for the full year as opposed to.

Gregory Peter Lewis: 100 basis points type of range. So.

Gregory Peter Lewis: But progress on what keep in mind inside of inside of IAA.

Gregory Peter Lewis: We're overcoming.

Gregory Peter Lewis: The very accretive.

Gregory Peter Lewis: License payments relative to the PSS business.

Gregory Peter Lewis: That.

Gregory Peter Lewis: We're a nice lift for us and now we're we're going to have experienced three quarters of that loss. This year in one quarter. The next year.

Gregory Lewis: Yes, okay, okay, great.

Joseph Alfred Ritchie: And then I guess just I know that a lot of the comments on the change in margins have been driven by the mix commentary, and we've highlighted that already. I'm just curious, has anything changed from a pricing standpoint or from a raw material inputs or inflation standpoint? Just any comments around that would be helpful.

Speaker Change: Yes, Okay. Okay, great and then I guess, just I know, there's a lot of a lot of the comments on the.

Gregory Lewis: And then I guess just, I know there's a lot of the, a lot of the comments on the change in margins has been driven by the mix commentary, and we've highlighted that already. I'm just curious, is anything changed from a pricing standpoint or like raw material inputs or inflation? Does any, any comments around that would be helpful. The pricing is trending in the direction we have signaled. We are on a rate of our 3%, and we expect second half to be, you know, a little, you know, slightly stronger. The punchline is our price cost is just about neutral, and our productivity is very strong, which is giving us the margin expansion across our businesses.

Joseph Alfred Ritchie: The change in margins has been driven by the mixed commentary and we've highlighted that already I'm. Just curious has anything changed from a pricing standpoint, or like raw material inputs or inflation, just any any comments around that would be helpful.

Vimal M. Kapur: The pricing, Joe, is trending in the direction we have signaled. We are at a rate of about 3%, and we expect the second half to be, you know, a little, you know, slightly stronger. The punchline is our price cost is just about neutral, and our productivity is very strong, which is giving us margin expansion across our businesses. And as I explained before, the margin rates at EPS level are just mixed within the businesses themselves.

Joseph Alfred Ritchie: The pricing Joe is trending in the direction, we have signaled.

Vimal M. Kapur: Sure.

Vimal M. Kapur: Right about 3% and we expect second half to be a little.

Vimal M. Kapur: Life slightly stronger the punch line is our price cost of just about new drill and our productivity is very strong which is giving us the margin expansion across our businesses.

Gregory Lewis: And what, as I explained before, the margin rates at EPS level, they just mix within the business itself, but the pricing remains at the right level, and we do expect this 3% I've been spoken before that the ERA 1% price is over. So we always should expect something greater than that, and we are demonstrating that in 2023. And again, on the inflation side, no big changes. There's, there's always something that comes along. Electronics, I would say, the remains hot. That's where we continue to say elevated level of pricing, but others are, I would say, end and labor.

Vimal M. Kapur: As explained before the margin rates at EPS level is just mix within the business itself, but brightening remains.

Vimal M. Kapur: But pricing remains at the right level, and we do expect this 3%. I've been spoken before that, you know, 1% price is too high. So, we always should expect something greater than that, and we are demonstrating that in 2023. Yeah, and again, on the inflation side, no big changes. There's always something that comes along.

Vimal M. Kapur: At the right level.

Vimal M. Kapur: And we do expect this 3% I've been spoken before that.

Vimal M. Kapur: One person prices over so we always should expect something greater than that and we are demonstrating that in 2023 and again on the inflation side no big changes. There is always something that comes along the electronics I would say remains hot and Thats, where we continue to stay elevated develop rising.

Joseph Alfred Ritchie: Electronics, I would say, remains hot. That's where we continue to stay at an elevated level of pricing. But others are, I would say, and then labor. Labor is and will remain a high elevated inflation category for us.

Joseph Alfred Ritchie: But others are and then labor labor is and will remain.

Gregory Lewis: Labor is and will remain a high elevated inflation category for us.

Joseph Alfred Ritchie: Weighted inflation category for us.

Gregory Lewis: Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you very much.

Joseph Alfred Ritchie: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Kapoor for any final comments.

Joseph Alfred Ritchie: Okay, thank you. Thank you very much. Thank you. Ladies and gentlemen, that concludes our time allotted for questions. I'll turn the floor back to Mr. Kapur for any final comments. I want to express my appreciation to our shareholders for your ongoing support and again to our Honeywell FutureShapers who are driving differentiated performance for our customers. Our future is bright, and we look forward to sharing our progress with you as we continue executing on our commitment. Thank you for listening, and please stay safe and healthy. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Sean Meakim: Ladies and gentlemen, that concludes our time. Allow for questions.

Vimal Kapur: I'll turn the floor back to Mr. Kapoor for any final comments.

Vimal Kapur: I want to express my appreciation to our shareholders for your ongoing support and again to our honeymoon future shapers who are driving differentiated performance for our customers. Our future is right, and we look forward to sharing our progress with you as we continue executing on our commitment.

Joseph Alfred Ritchie: I want to express my appreciation to our shareholders for your ongoing support and again through our Honeywell future shippers, who are driving differentiated performance for our customers. Our future is bright and we look forward to sharing our progress with you as we continue executing on our commitment. Thank you for listening and please stay safe and healthy.

Sean Meakim: Thank you for listening, and please stay safe and healthy. Thank you.

Joseph Alfred Ritchie: <unk>.

Joseph Alfred Ritchie: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Sean Meakim: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.