Q1 2025 Honeywell International Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Honeywell First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's call is being recorded.

Thank you for standing by and welcome to the Honeywell first quarter 2025 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. Please be advised that today's call is being recorded.

Sean Meakim: I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead. Thank you.

Sean: I would now like to hand, the call over to Sean make them.

Sean: President of Investor Relations. Please go ahead.

Speaker Change: Thank you.

Sean Meakim: Good morning and welcome to Honeywell's first quarter 2025 earnings conference.

Speaker Change: Good morning, and welcome to Honeywell's first quarter 2025 earnings conference call.

Sean Meakim: On the call with me today are Chairman and Chief Executive Officer Vimal Kapur and Senior Vice President and Chief Financial Officer Mike Stepniak. This webcast and the presentation materials, including non-CAP 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: On the call with me today are chairman and Chief Executive Officer, Venmo, Gabor, and senior Vice President and Chief Financial Officer, Mike step in Yack.

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

Speaker Change: At the time, we post new information that may be of interest or materials for our investors on this website.

Sean Meakim: Our discussion today includes forward-looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filing.

Speaker Change: Our discussion today includes forward looking statements that are based on our best view of the world and all of our businesses as we see them today and are subject to risks and uncertainties, including the one described in our SEC filings.

Sean Meakim: This morning, we will review our financial results for the first quarter, share our guidance for the second quarter, and provide an update on the full year of 2025. As always, we'll leave time for your questions at the end.

Speaker Change: This morning, we will review our financial results for the first quarter share our guidance for the second quarter and provide an update on full year of 2025 as always we'll leave time for your questions at the end with that I'll turn the call over to chairman and CEO I'm looking for thank you, Sean and good morning, everyone. Honeywell saw a strong finish to last year is getting into 'twenty.

Vimal Kapur: With that, I'll turn the call over to Chairman and CEO Vimal Kapur. Thank you, Sean, and good morning, everyone. Honeywell saw its strong finish to last year's getting into 2025 as we exceeded the high end of our guidance on all metrics in the first quarter, and this performance translated into substantial free cash flow growth as well. Overall, demand was strong with a book to build above one. Although our business has solid momentum heading into second quarter, the economic climate has become increasingly uncertain in recent weeks. Global trade patterns are shifting because of increasing tariff and duties, making customer planning more difficult.

Speaker Change: 25, as we exceeded the high end of our guidance on all metrics in the first quarter and this performance translated into substantial free cash flow growth as well.

Speaker Change: Overall demand was strong with a book to bill above one.

Speaker Change: Although our business has solid momentum heading into the second quarter economic climate has become increasingly uncertain in recent weeks.

Speaker Change: Global trade patterns are shifting because of increasing tariff and duty, making customer planning more difficult.

Vimal Kapur: Weaker sentiments combined with higher price expectation warrants incremental caution regarding end market demand in the coming quarters. Despite these headwinds, we remain on track to deliver on our 2025 outlook as we are maintaining our full year organic growth guidance and raising our adjusted EPS guidance. Our outlook now incorporates the impact of current tariffs and macroeconomic uncertainty, fully offset by our ongoing mitigation efforts, local for local strategy, accelerator operating system, and resilient market position. As you can see, we are taking decisive actions during this uncertain time to not only protect, but grow earnings, invest for future, and position Honeywell for long-term success, regardless of the operating environment we face.

Speaker Change: Of course in demand combined with higher price expectation baudrons incremental caution regarding end market demand in the coming quarters. Despite these headwinds we remain on track to deliver on our 2025 outlook.

Speaker Change: We are maintaining our full year organic growth guidance and raising our adjusted EPS guidance. Our outlook now incorporates the impact of current tariffs and micro economic uncertainty fully offset by our ongoing mitigation efforts local for local strategy accelerated operating system and the land market.

Speaker Change: <unk>.

Speaker Change: As you can see we are taking decisive actions during this uncertain time.

Speaker Change: Not only predict but grow earnings invest for future and position Honeywell for long term success, regardless of the operating environment, we face.

Vimal Kapur: Honeywell has a team across function and businesses meeting daily to review and respond to tariff announcements. This theme analyzes the number of livers to optimally respond to changing conditions. We're also closely monitoring bilateral negotiation and engaging with key stakeholders.

Speaker Change: Well have the theme across functions and businesses meeting daily to review and respond to that if announcements.

Speaker Change: This team analyzes a number of levers to optimally to respond to changing conditions.

Speaker Change: We're also closely monitoring bilateral negotiation and engaging with key stakeholders.

Vimal Kapur: From our perspective, there are three very important considerations for supporting American competitiveness and manufacturing. Maintain the principle of USMCA. strike the right kind of trade agreement with our major trading partners and continue the global framework that has made the U.S. the world leader in aerospace.

Speaker Change: From our perspective, there are three very important consideration for supporting American competitiveness and manufacturing maintain the principle of U S MCA strike.

Speaker Change: Strike the right kind of trade agreement with a major trading partners.

Speaker Change: And continue the global framework that has made the U S. A world leader in aerospace as external environment has become more unpredictable. We remain focused on what we can control and we have made significant progress in planning and executing our separation into three industry, leading public companies.

Vimal Kapur: As external environment has become more unpredictable, we remain focused on what we can control and we have made significant progress in planning and executing our separation into three industry-leading public companies. This preparation has included key leadership appointments to ensure that we have the right people in place to continue our portfolio transformation.

Speaker Change: This preparation has included key leadership appointments to ensure that we have the right people in place to continue our portfolio transformation.

Vimal Kapur: Let's turn to slide three to discuss a few important changes announced earlier this month.

Speaker Change: Let's turn to slide three to discuss a few important changes announced earlier this month.

Vimal Kapur: Sue Ping Liu will succeed Anne Madden as Senior Vice President and General Counsel while retaining her role as Corporate Secretary. Sue's more than 15 years of legal experience with Honeywell across many of our business lines and geographies will further strengthen our executive leadership team.

Speaker Change: So, hoping lube and succeed and Madden as senior Vice President and General counsel, while retaining her role as corporate Secretary Sue has more than 15 years of legal experience at Honeywell across many of our business lines and geographies will further strengthen our executive leadership team.

Vimal Kapur: Anne will transition into a new role as Senior Vice President of Portfolio Transformation and Senior Advisor where her experience leading over 100 acquisitions as Honeywell's Global Head of M&A will prove invaluable during our continued portfolio optimization.

Speaker Change: And we will transition into a new role as senior Vice president of portfolio transformation and senior adviser with her.

Speaker Change: Experience, leading over 100 acquisitions as Honeywell's global head of M&A will prove invaluable during our continued portfolio optimization also our board of directors are elected Stephen Williamson to join Us as an independent director.

Vimal Kapur: Also, our Board of Directors has elected Stephen Williamson to join us as an Independent Director and Audit Committee member. Stephen's decade as CFO of Thermo Fisher Scientific will broaden and deepen the expertise of both.

Speaker Change: And audit Committee member.

Speaker Change: Stevens decade, as CFO of Thermo Fisher scientific will broaden and deepen the expertise of our board.

Vimal Kapur: I want to personally congratulate these three individuals on their new roles, and I look forward to working closely with each one of them.

Speaker Change: I want to personally congratulate these three individuals on their new roles and I look forward to working closely with each one of them.

Vimal Kapur: Let's turn to slide four to discuss update on separation. We hold strong conviction that separating automation, aerospace, and advanced materials will unlock significant value for all Honeywell stakeholders by best positioning each standalone public company for long-term profitable growth. Following our announcement in February, Honeywell has taken many steps forward in preparation for these transactions.

Speaker Change: Let's turn to slide four to discuss the update on separation.

Speaker Change: We hold strong conviction that separating automation aerospace and advanced materials and unlock significant value for all Honeywell stakeholders by best positioning eats Standalone public company for long term profitable growth. Following our announcement in February Honeywell has taken many steps forward in preparation.

Speaker Change: <unk> for these transactions for us we determined a tax free spin of Honeywell aerospace will be most efficient way to separate our automation and aerospace businesses.

Vimal Kapur: First, we determined a tax-free spin of Honeywell Aerospace will be the most efficient way to separate our automation and aerospace business. Second, the board confirmed that I will lead the automation company going forward, and it's where I've spent bulk of my career and where I have a specific vision for the future.

Speaker Change: Second the board confirm that I will lead the automation company going forward.

Speaker Change: We had our spend bulk of my carrier and wherever the snake vision for the future.

Vimal Kapur: At the right time, the board will evaluate the future leadership of Honeywell Aerospace as well.

Speaker Change: At the right time board will evaluate the future leadership of Honeywell aerospace as well.

Vimal Kapur: Third, we established a dedicated separation management office run by experts in corporate transformation. These entities have empowerment to maintain the value of our businesses, minimize separation costs, and achieved our communicated timeline. Most importantly, they will ensure that our operation leaders are focused solely on serving our customers and achieving our financial targets.

Speaker Change: Third we established dedicated separation management office run by experts in corporate transformation.

Speaker Change: These entities have empowerment to maintain the value of our businesses minimize separation costs and achieved our communicated timelines.

Speaker Change: Most importantly, they will ensure that our operations leaders are focused solely on serving our customers and achieving our financial targets fourth we appointed an accomplished leadership team what will be called solstice advanced materials.

Vimal Kapur: Fourth, we appointed an accomplished leadership team, what will be called Solstice Advanced Materials. Collectively, they bring years of experience leading public companies, operating specialty chemical businesses, and utilizing Honeywell X-related operating systems. Solstice will be headquartered in New Jersey. We are the current leadership team for the business set. Fifth, we continue deploying capital as an active buyer of our own shares, which offer tremendous value at recent levels. We have repurchased about $3 billion of our shares already this year and will continue to repurchase our stock opportunistically.

Collectively they bring years of experience, leading public companies operating specialty chemical businesses and utilizing Honeywell accelerated operating system.

Speaker Change: So all this will be headquartered in New Jersey, where the current leadership team for the business sets fifth we continue deploying capital as an active buyer of our own shares which offer a tremendous value at recent levels, we have repurchased about $3 billion of our shares already this year and we'll continue.

Speaker Change: To repurchase our stock Opportunistically.

Vimal Kapur: And lastly, in March, we announced the acquisition of Sundyne as we continue to optimize our portfolio.

Speaker Change: And lastly in March we announced the acquisition of sundial as we continue to optimize our portfolio.

Vimal Kapur: If you turn to slide five, I'll discuss how this deed fits into with our portfolio transformation. As you can see, Sundime will be the fifth strategic bolt-on acquisition since I became Honeywell CEO, along with a couple of strategically important technology tuck-ins. Sundine meet each of the common sense criteria we have set in. It's the right size. It exceeds our financial return hurdles. It improves our business profile by boosting both organic growth and segment margins. And Honeywell is a natural owner of the business as Sundine addresses a closely adjacent market to our existing ESS offering, which will allow us to sell a more robust and complementary portfolio of solution to our customers, particularly in LNG.

Honeywell CEO: If you turn to slide five I'll discuss how this deal fits into with our portfolio transformation as you can see sometimes will be the fifth strategic bolt on acquisitions since I became Honeywell CEO, along with couple of strategically important technology tuck ins.

Honeywell CEO: So nine need each of the common sense criteria, we have set in its the right size it exceeds our financial return hurdles. It improves our business provided by boosting both organic growth and segment margins and Honeywell is a natural owner of the business is Sunday and addresses a close lead or just end market.

Honeywell CEO: Two our existing E S S offering, which will allow us to sell them more robust and complementary portfolio of solutions to our customers.

Honeywell CEO: Clearly in LNG.

Vimal Kapur: We have meticulously built a pipeline of acquisition targets with compelling financial characteristics over the past several years and will continue to pursue them if they become available to us.

Honeywell CEO: We have meticulously built a pipeline of acquisition targets that compelling financial characteristics over the past several years and will continue to pursue them if they become available to us.

Vimal Kapur: Given everything we have in flight, only the deeds that are time-sensitive will be pursued for now. Buying these differentiated businesses with strong aftermarket content and secular growth drivers at a reasonable price is a powerful use of capital. Our 2024 acquisitions are now increasingly incorporated into our operations and performing admirably well with the bulk of integration work behind us. Reinforcing that we have the right M&A process in place to create incremental value.

Speaker Change: Given everything we have in flight only the deals that are time sensitive will be pursued for now bye.

Speaker Change: Buying these differentiated businesses with strong aftermarket content and secular growth drivers at a reasonable price is a powerful use of capital or.

Speaker Change: Our 2024 acquisitions are now increasingly incorporated into our operations and performing admirably well with the bulk of integration work behind us.

Speaker Change: Reinforcing that we have the right M&A process in place to create incremental value. While we continue to evaluate acquisition. We also look forward to opportunistically exit businesses, such as personal productive equipment that do not fit our business model our strategic priorities.

Vimal Kapur: While we continue to evaluate acquisition, we also look forward to opportunistically exit businesses such as personal protective equipment that do not fit into our business model or strategic priorities. The PPE sale will improve margins and organic growth.

Speaker Change: <unk> sale will improve margins and organic growth.

Vimal Kapur: I will now move to slide six to address how we view the present global uncertainty. As a company, we remain confident in our ability to navigate the current trade environment. For decades, we have positioned each of our business lines to serve their local markets. This local for local strategy reduces our overall exposure to international trade and geopolitical tension. Based on tariffs in place today Our approximate 2025 exposure is about $500 million before taking any mitigation measures. Our better tested accelerator operating system can quickly identify areas of concern and implement mitigation efforts. Then we pursue consistent and clear communication with our suppliers, customers and partners to maximize operational stability for all parties.

Speaker Change: I will now move to slide six to address how we view the present global uncertainty.

Speaker Change: As a company.

Speaker Change: We remain confident in our ability to navigate the current trade environment for decades, we have position each of our business lines to serve their local markets. This local for local strategy reduces our overall exposure to international trade and geopolitical tensions.

Speaker Change: Based on tariffs in place today.

Speaker Change: Our approximate 225 exposure is about $500 million before taking any mitigation measures.

Speaker Change: Our battle tested accelerated operating system can quickly identify areas of concern and implement mitigation efforts.

Speaker Change: And then we pursue consistent and clear communication with our suppliers customers and partners to maximize operational stability for all parties.

Vimal Kapur: Through this well-developed operational systems and our established local-for-local footprint, we are confident we can fully offset the impact of current tariffs and are well positioned to manage future trade uncertainty. This is evident in today's results and our confidence in maintaining and raising guidance in spite of these offsetting headwinds.

Speaker Change: Through this well developed operational systems and our established local for local footprint.

Speaker Change: We are confident we can fully offset the impact of current tariffs and are well positioned to manage future trade uncertainty.

Speaker Change: This is evident in today's results and our confidence in maintaining and raising guidance in spite of these offsetting headwinds.

Vimal Kapur: Most importantly, whenever elevated global tensions do subside, we remain in an excellent position to capitalize on a record backlog and continue our growth trajectory.

Speaker Change: Most importantly, whenever elevated global tensions do subside, we remain in excellent position to capitalize on our record backlog and continue our growth trajectory.

Mike Stepniak: Now let me turn over to Mike to discuss our excellent first quarter results. Thank you, Vimal, and good morning to everyone joining us. Let me begin on slide seven. We had a very strong start to the year in the first quarter, exceeding the high end of our organic sales segment margin and adjusted earnings per share guidance. Our results demonstrate tremendous effort from our commercial teams, successful productivity initiatives, and excellent supply chain coordination with our partners in a rapidly changing market. First quarter sales grew 4% organically, led by aerospace technologies, where both our commercial aftermarket and defense and space businesses experienced double digit growth.

Speaker Change: Now, let me turn over to Mike to discuss our excellent first quarter results.

Mike: Thank you Bruno and good morning to everyone joining us let me begin on slide seven.

Mike: We had a very strong start to the year in the first quarter exceeding the high end of our organic sales segment margin and adjusted earnings per share guidance. Our results demonstrated tremendous effort from our commercial teams successful productivity initiatives and excellent supply chain coordination with our partners in a rapidly changing marketplace first quarter sales grew.

Mike: 4% organically led by aerospace technologies, where both our commercial aftermarket and defense and space businesses experienced double digit growth.

Mike Stepniak: Building solution remains a significant contributor as well. Segment margin remained flat from the prior year at 23%, with improvement in building automation and energy and sustainability solutions offset by pressure in aerospace technologies and industrial. I would like to highlight that this margin performance includes an increase in our research and development span of 50 basis points from the previous year to 4.5% of sales. We continue to balance current period profitability with our organic growth initiative. Segment profit for the quarter grew 8% year over year, aided by the inclusion of our 2024 acquisitions, which are performing ahead of the initial expectations.

Mike: Building solutions remains a significant contributor as well.

Mike: Margin remained flat from the prior year at 23% with improvement in building automation and energy in a sustainable solutions offset by pressure in aerospace technologies and industrial automation.

Mike: I would like to highlight that this margin performance includes an increase in our research and development spend of 50 basis points from the previous year to four 5% of sales. We continue to balance current period profitability with our organic growth initiatives segment profit for the quarter grew 8% year over year aided by the inclusion of our <unk>.

Mike: 2024 acquisitions, which are performing ahead of the initial expectations earnings per share for the first quarter was $2 22 per share flat from our previous year, while adjusted earnings per share was $2 51 per share up 7% year over year drop.

Mike Stepniak: Earnings per share for the first quarter was $2.22 per share, flat from a previous year, while adjusted earnings per share was $2.51 per share, up 7% year over year. Profit segment profit more than offset headwinds from interest rate expense for an exchange in taxes. You'll find a bridge of adjusted EPS from 1Q24 to 1Q25 in the appendix of this presentation. orders were $10.6 billion in the quarter up 3% year over year excluding the effect of acquisition. both supported by organic backlog growth of 8% to a new record of $36.1 billion. For this growth was led by longer cycle building automation and aerospace.

Mike: Brokerage segment profit more than offset headwinds from interest rate expense foreign exchange and taxes, you will find a bridge of adjusted EPS from <unk> 24 to $1 25 in the appendix of this presentation.

Mike: Orders were $10 $6 billion in the quarter up 3% year over year, excluding the effect of acquisitions Bulks supported by organic backlog growth of 8% to a new record of $36 $1 billion.

Mike: Orders growth was led by longer cycle building automation aerospace businesses first.

Mike Stepniak: First quarter cash flow was more than $300 million, over $100 million above the prior year, driven primarily by better adjusted earnings. We're utilizing our cash flow and strong balance sheet to dynamically allocate capital, including returning capital to shareholders. In the first quarter, we repurchased nearly $2 billion of our own shares at prices we find highly compelling. And we bought back roughly another billion dollars during the month of April, representing about 2% of our shares outstanding in 2025. We also paid more than $700 million of dividends in the first quarter.

Mike: First quarter cash flow was more than $300 million over $100 million above the prior year, driven primarily by better adjusted earnings we are utilizing our cash flow and strong balance sheet to dynamically allocate capital, including returning capital to shareholders in the first quarter, we repurchased nearly $2 billion of our own shares at a price.

Mike: As we finding highly compelling and we bought back roughly another $1 billion. During the month of April representing about 2% of our shares outstanding in 2025, we also paid more than $700 million of dividends in the first quarter.

Mike Stepniak: We are investing in our business both organically and inorganically, as we allocated approximately $250 million of capital projects and announced the acquisition of Sundy.

Mike: We are investing in our business, both organically and Inorganically as we allocated approximately $250 million of capital projects and announced the acquisition of Sunday.

Mike Stepniak: Now let's spend some time discussing our first quarter performance by business. In aerospace technology, sales in the first quarters were up 9% organically year over year, exceeding our prior expectation. Better output as a result of supply chain improvements and robust demand from air transport customers to support increased flight activity drove 15% sales growth in the commercial aftermarket business. Defense and space, aided by increased output and elevated global defense spending in a world of ongoing geopolitical uncertainty, delivered a fifth consecutive quarter of double-digit growth despite challenging comms and expiring government programs a year ago. Aerospace industry demand continues to outpace supplies, supporting our orders growth of 9% and a book-to-bill of 1.1%.

Mike: Now, let's spend some time discussing our first quarter performance by business.

Mike: In aerospace technologies sales in the first quarters were up 9% organically year over year exceeding our prior expectations.

Mike: Better output as a result of supply chain improvements and robust demand from air transport customers to support increased flight activity drove 15% sales growth in the commercial aftermarket business defense and space aided by increased output and elevated global defense spending in a world of ongoing geopolitical uncertainty delivered.

Mike: <unk> consecutive quarter of double digit growth, despite challenging comps expiring government programs a year ago aerospace industry demand continues to outpace supplies supporting our orders growth of 9% on a book to Bill of one point, while first quarter segment margin contracted 190 basis points to 26, 3% a matched our expectations.

Mike Stepniak: First quarter segment margin contracted 190 basis points to 26.3%, but matched our expectations as mixed pressure and acquisition integration costs from CAES were partially offset by productivity outcomes.

Mike: As mixed suppression and acquisition integration costs from case were partially offset by productivity actions.

Mike Stepniak: Industrial automation sales declined 2% organically in the first quarter, led by lower demand in personal protective equipment, particularly in China and Europe. Warehouse and workflow solutions returned to growth in the quarter, up 5% as demand for warehouse automation continues to stabilize in prior year comparisons get easier. Our sensing business demonstrated recovery in a second consecutive quarter with double-digit growth in both healthcare and aerospace and defense and marketing.

Mike: Industrial automation sales declined 2% organically in the first quarter led by lower demand in personal protective equipment, particularly in China, and Europe warehouse and workflow solutions returned to growth in the quarter up 5% as demand for warehouse automation continues to stabilize and prior year comparisons get easier.

Mike: Our sensing business demonstrated recovering in the second consecutive quarter with double digit growth in both healthcare and aerospace and defense end markets.

Mike Stepniak: process solution cells were flat. as continued strength in lifecycle solutions and services and compressor controls was offset by modest declines in smart energy and thermal In productivity solutions and services, weakness in Europe led to self decline of 1% year over year when excluding the impact of the final year, license and settlement payments. Segment margin industrial automation contracted 130 basis points to 17.8%. Driven by receivables write downs and volume deleverage. All she offset by productivity. Building automation delivered another solid quarter outpaced our expectations up 8% organically, led by second conservative quarter of both double digit growth in building solutions and mid single digit growth in building product.

Mike: Process solutions sales were flat.

Mike: As continued strength in lifecycle solutions and services and compressor controls was offset by modest declines in smart energy and thermal solutions.

Mike: In productivity solutions and services weakness in euro blended sales decline of 1% year over year, when excluding the impact of the final year license and settlement payments segment margin industrial automation contracted 100 basis points to 17, 8% driven.

Mike: Driven by receivables write downs and volume deleverage, partially offset by productivity actions.

Mike: Building automation delivered another solid quarter outpaced our expectations up 8% organically led by second conservative quarter of both double digit growth in building solutions and mid single digit growth in building products.

Mike Stepniak: Solutions continue to benefit from its robust backlog, up 11% in the quarter led by over 30% growth in the Middle East and mid-teens growth in North America. Building products growth of 6% was driven by double-digit organic growth in fire and sustained strength in security. Overall, orders continue to be encouraging indicator for building automation, with the first quarter marking a fourth consecutive quarter of year-over-year growth. Building automation margins spend in 150 basis bonds, driven by volume leverage, productivity actions, and accretion from access.

Mike: Solutions continue to benefit from its robust backlog up 11% in the quarter led by over 30% growth in the middle East and mid teens growth in North America building products grow about 6% was driven by double digit organic growth in fire and sustained strength in security overall orders continue to be encouraging.

Mike: Indicator for building automation with the first quarter, marking our fourth consecutive quarter of year over year growth.

Mike: Building automation margin expanded 150 basis points, driven by volume leverage productivity actions and accretion from access solutions energy and sustainability solutions sales declined 2% organically in the first quarter.

Mike Stepniak: Energy and Sustainability Solution Sales declined 2% organically in the first quarter. Strong quarter in petrochemical and refining projects, as well as sustainability projects, helped EOP deliver 2% organic sales growth year over year. Advanced material sales declined 4% as challenging priority comps in fluorine products offset broad-based strength, and especially chemicals and materials, highlighted by over 20% growth in spectra. Orders were the bright spot for advanced materials, up 7% year over year, driven by double-digit growth in fluorine products. This quarter marked a second full quarter of ownership of the LNG business. acquired from Air Products, which continues to grow at accretive sales and margin rates.

Mike: Strong quarter in petrochemical and refining projects as well as sustainability projects helped GOP delivered 2% organic sales growth year over year advanced materials sales declined 4% as challenging prior year comps in flooring products offset broad based strength in specialty chemicals and materials highlighted by over 20% growth in spectrum.

Mike: Orders were the bright spot for advanced materials up 7% year over year, driven by double digit growth in foreign products. This quarter marked our second full quarter of ownership of the LNG business.

Mike: Acquired from Air products, which continues to grow at accretive sales and margin rates USS segment margin expanded 230 basis points in the quarter led by productivity actions and the year over year benefit from the LNG acquisition, partially offset by cost inflation taken altogether, we still see long cycle businesses outperforming shortly.

Mike Stepniak: ESS segment margin expanded 230 basis points in the quarter, led by productivity options and the year-over-year benefit from the LNG acquisition, partially offset by cost inflation.

Mike Stepniak: Taken all together, we still see long-cycle businesses outperforming short-cycle ones, while record backlog levels and best-in-class operating systems position us well for future I'll now move to slide 8 to talk about our second quarter for Although a strong first quarter like we delivered would typically indicate improved expectations for the remainder of the year, we cannot ignore changes in the geopolitical environment that Vimal mentioned in his earlier remarks and believe that continuing to take a pragmatic approach to our guidance is appropriate given the increasing global uncertainty. Rest assured, Honeywell is actively and successfully addressing both potential cost and demand challenges to mitigate their impact on our business.

Mike: <unk> y La <unk>.

Mike: Record backlog levels and best in class operating system position us well for future periods I'll now move to slide eight to talk about our second quarter and full year guidance.

Mike: Although our strong first quarter like we delivery would typically indicate improved expectations for the remainder of the year, we cannot ignore changes in the geopolitical environment that <unk> mentioned in his earlier remarks, and believe that continuing to take a pragmatic approach to our guidance is appropriate given the increasing global uncertainty rest assured honeywell he's actively.

Mike: And successfully addressing potential cost and demand challenges to mitigate their impact on our business. We have a playbook of rapid implementation of sourcing pricing and productivity changes as a reminder, our local for local approach to maintaining supply chain has been our strategy for more than two decades and is a very mature part of our operating system.

Mike Stepniak: We have a playbook of rapid implementation of sourcing, pricing and productivity changes. As a reminder, our local for local approach to maintaining supply chain has been our strategy for more than two decades, and is a very mature part of our operating system. This structure and our leading market positions will help mitigate much of our recent tariff changes across the portfolio, but we're not immune. We'll continue to balance protective margins and sustaining volume across our end markets.

Mike: This structure and our leading market positions will help mitigate much of our recent tariff changes across the portfolio. Although we're not immune we will continue to balance protecting margins and sustaining volume across our end markets now lets discuss what this means for 2025 guidance.

Mike Stepniak: Now let's discuss what this means for 2025 guidance. For clarity, our guidance now assumes the impact of announcement tariffs, net of mitigation actions, as well as additional contingency for potential and market demand weakness triggered by this uncertainty. We're maintaining our prior outlook calling for organic sales drop of 2% to 5% for the year, or 1% to 4% when excluding the prior year impact from the Bombardier agreement, with better one-year performance being offset by a prudent guidance posture, giving greater uncertainty for the rest of the year.

Mike: Clarity our guidance now assumes the impact of announcing tariffs net of mitigation options as well as additional contingency for potential end market demand weakness triggered by this uncertainty we are maintaining our prior outlook, calling for organic sales growth of 2% to 5% for the year, our 1% to 4% when.

Mike: Excluding the prior year impacts from the Bombardier agreement with better <unk> performance being offset by a prudent guidance posture, given greater uncertainty for the rest of the year.

Mike Stepniak: As we contemplate the potential influence of uncertainty on our customer's activity. We are assuming an impact to organic cells for the remainder of the year, approaching 1% to segment profit of about 2% and to EPS of about 18 cents, compared to the guidance we laid out in. Food year sales are now projected to be $39.6 to $40.5 billion as payable movements in foreign exchange rates since year-end are being offset by two fewer months of revenue from our PPE business, given an early May exit rather than end of June.

Mike: As we contemplate the potential influence of uncertainty on our customers' activity.

Mike: We are assuming an impact organic sales for the remainder of the year approaching 1% segment profit of about 2% and two EPS of about <unk> 18 <unk>.

Mike: Turning to the guidance, we laid out in February.

Mike: Yourself are now projected to be 39, 6% to $45 billion as favorable movements in foreign exchange rates since year end are being offset by two fewer months of revenue from our PPE business. Given in early May exit Robert didn't end of June our guidance does not incorporate the acquisition of <unk>, which is still expected.

Mike Stepniak: Our guidance does not incorporate the acquisition of SignDime, which is still expected to close in the second quarter. We anticipate year-over-year organic sales improvement to be relatively balanced across the next three quarters when excluding the impact of last year's Bombardier Agreement, which will only influence the fourth quarter comparison. Consequently, we also see second quarter sales growing 1% to 4% organically, which translates into sales of $9.8 to $10.1 billion with one more month of PPE operations included, or a $200 million impact compared to a full quarter. We now anticipate our overall segment margin basis points this year, or to be down 10 basis points to up 20 basis points, Ex Bombardier.

Mike: To close in the second quarter.

Mike: We anticipate year over year organic sales improvement will be relatively balanced across the next three quarters when excluding the impact of last year's Bombardier agreement, which will only influenced our fourth quarter comparison. Consequently, we also see second quarter sales growing 1% to 4% organically, which translates into sales of 982.

Mike: $10 1 billion with one more mindful PPE operations included or a $200 million impact compared to a full quarter. We now anticipate our overall segment margin.

Mike: Basis points. This year are to be down 10 basis points to up 20 basis points ex Bombardier change.

Mike Stepniak: Changes to our margin outlook from prior expectations are focused in IEA and ESS, given their relatively higher exposure to China. For the second quarter, segment margin is expected to be in the range of 22.8 to 23.2%, down 20 basis points to up 20 basis points from a prior year, as margin improvement in IA and BA is offset by contraction in ARO and EA. For the year, we now expect earnings per share of $10.20 to $10.50, up 3% to 6%, or down 1% to up 2%, excluding the prior year-over-year agreement impact. Earnings per share in the second quarter is anticipated to be in the range of $2.60 and $2.70, up 4% to up 8% year-over-year.

Mike: Changes to our margin outlook from prior expectations, our focus in IAA in USS given their relatively higher exposure to China trade.

Mike: For the second quarter segment margin is expected to be in the range of $22 eight to 23, 2% down 20 basis points to up 20 basis points from the prior year as margin improvement in IAA NBA is offset by contraction in Ireland. The USS for the year, we now expect earnings per share.

Mike: Of $10 20 to $10 50 up 3% to 6% or down 1% to up 2%, excluding the prior year, but might be a agreement impact.

Mike: Earnings per share in the second quarter is anticipated to be in the range of $2 60, and $2 70 up 4% to up 8% year over year I'll provide additional details for full year EPS in a few minutes free cash flow for the year is still expected to be five 4% to $5 8 billion down 2% to up.

Mike Stepniak: I will provide additional details for full-year EPS in a few minutes. Free cash flow for the years is still expected to be $5.4 to $5.8 billion, down 2% to up 5% ex-bombardier, and roughly in line with earnings growth.

Mike: 5% ex Bombardier and roughly in line with earnings growth.

Mike Stepniak: You can reference the 2025 free cash flow bridge in the pen. Beyond our CapEx and dividend commitments, we plan to continue to deploy capital diligently over the course of the year, funding both attractive time sensitive acquisitions such as Sundime, as well as be opportunistic on repurchase of our shares. Year to date, we have already bought back $3 billion worth of our stock, including $1 billion in April, putting us on the path to reduce our net share count for the year by 2% far exceeding our 1% annual In summary, we're taking a clear eyed look at the remainder of 2025 to set appropriate expectations for our business given all the information available to us.

Mike: You can reference the 2025 free cash flow bridge in the appendix beyond our Capex and dividend commitments, we plan to continue to deploy capital diligently over the course of the year funding bulb attractive time sensitive acquisitions, such as some time as.

Mike: As well as be opportunistic on the repurchase of our shares year to date, we have already bought back $3 billion worth of our stock, including $1 billion in April putting us on a path to reduce our net share count for the year by 2% far exceeding our 1% annual commitment in summary.

Mike: We're taking a clear I'd look at the remainder of 2025 to set appropriate expectations for our business given all the information available to us today.

Mike Stepniak: We are also not pausing the investment needed to fuel the future of innovation growth.

Mike: We are also not pausing the investment needed to fuel the future of innovation and growth.

Mike Stepniak: I'll now turn to slide nine to spend a few minutes on our output by business discussing high-level expectations by segment with additional details by SPU covered in the commentary portion of the slide. For aerospace technologies, we are holding our 2025 full year outlook for organic cells growth in the high single digit range or mid single digit to high single digit when excluding the impact of last year's Bombardier agreement. Aeros is expected to maintain his position as the growth leader for Honeywell, driven by ongoing ramp in flight activity and global defense. For the second quarter, organic sales are expected to be up in the mid single digit to high single digit range led by strengthening our commercial aftermarket business as supply chain outlook continues to support our Margins for the quarter and the year should be roughly 26% as case integration headwinds temporarily bring the segment below the run rate level.

Mike: I will now turn to slide nine to spend few minutes on our outlook by business discussing high low expectations by segment with additional details by SBU covered in the commentary portion of the slide.

Mike: But aerospace technologies, we are holding our 2025 full year outlook for organic sales growth in the high single digit range or mid single digit to high single digit when excluding the impact of last year on year agreement.

Mike: Aerospace is expected to maintain its position as the growth leader for Honeywell driven by ongoing ramp in flight activity and global defense spending.

Mike: For the second quarter organic sales are expected to be up in the mid single digit to high single digit range led by strength in our commercial aftermarket business our supply chain on LOE continues to support our.

Mike: Margins for the quarter and the year should be roughly 26% as case integration headwinds temporarily bring the segment below the run rate levels.

Mike Stepniak: We are lowering the 2025 sales outlook for industrial automation to down mid-single digits year over year as the trajectory of short cycle orders and customer capex decisions has become increasingly uncertain in the current environment. We expect IE margins to be up modestly versus the prior year as we work to mitigate a potentially weaker demand environment and incremental costs related to tariffs with additional commercial excellence and productivity actions. We also anticipate second quarter sales to be down mid-single digits year over year as strong end market talents in sensing and continuing growth in warehouse automation are offset by muted demand growth in productivity, solutions, services, and personal productive equipment.

Mike: Lowering the 2025 sales outlook for industrial automation to down mid single digits year over year.

Mike: As the trajectory of short cycle orders and customer Capex decisions has become increasingly uncertain in the current environment, we expect <unk> margins to be up modestly versus the prior year as we work to mitigate a potentially weaker demand environment and incremental costs related to tariffs with additional commercial excellence and productivity actions. We also.

Mike: Dissipate second quarter sales to be down mid single digits year over year as strong end market <unk> sensing and continuing growth in warehouse automation also by muted demand growth in productivity solutions services and personal protective equipment industrial automation margin is expected to expand as the PPV exit commercial excellence and.

Mike Stepniak: Industrial automation margin is expected to expand as the PPV exit, commercial excellence, and productivity more than offset volume, the leverage, and cost.

Mike: <unk> more than offset the volume deleverage and cost inflation.

Mike Stepniak: For Building Automation, we are raising our 2025 Sales Outlook to mid-single-digit growth, given standout performance in both long- and short-cycle businesses in the first quarter. Our Sales Outlook for the remainder of the year remains largely unchanged, as momentum from new product innovation and robust demand in high-growth regions is partially tempered by global uncertainty for our business segment with the most international exposure. In the second quarter, we expect sales to be up, low, mid, single digits with sequential and year over year growth in both solutions and products. Margins for the quarter and for the year should expand as volume leverage accretion from access solutions and productivity actions more than offset cost inflation.

Mike: While building automation, we are raising our 2025 sales outlook to mid single digit growth given standup performance in both long and short cycle businesses in the first quarter, our sales outlook for the remainder of the year remains largely unchanged as momentum from new product innovation and robust demand in high growth regions is partially tempered by global uncertainty for all.

Mike: Our business segment with the most international exposure.

Mike: In the second quarter, we expect sales to be up low mid single digits with sequential and year over year growth in bulk solutions and products margins for the quarter and for the year should expand as volume leverage accretion from access solutions and productivity actions more than offset cost inflation.

Mike Stepniak: In energy and sustainability solutions, we expect 2025 organic sales growth to remain in our previously guided low single digit range year over year, led by strength in EOP and ongoing momentum in S&P. We continue to build on our robust pipeline from sustained global demand in projects despite ongoing macroeconomic uncertainty. We anticipate ESS margin to remain flat as cost inflation is offset by productivity actions and the full-year benefit from the LNG acquisition. For the second quarter, organic sales should be up sequentially with plots to up year over year growth as backlog conversion is partially offset by the final quarter of difficult foreign comps for the year.

Mike: In energy and sustainability solutions, we expect 2025 organic sales growth to remain in our previously guided low single digit range year over year led by strength in ERP and ongoing momentum in SBS.

Mike: We continued to build on our robust pipeline from sustained global demand in projects. Despite ongoing macroeconomic uncertainty, we anticipate USS margins to remain flat as cost inflation is offset by productivity actions and a full year benefit from the LNG acquisition for the second quarter organic sales should be up sequentially.

Mike: With lots to up year over year growth as backlog conversion is partially offset by the final quarter of difficult foreign comps for the year.

Mike Stepniak: margin is expected to contract from the prior year as a result of timing impacts but remain in line with the first quarter.

Mike: Margin is expected to contract from the prior year as a result of timing impacts but remained in line with the first quarter.

Mike Stepniak: Now let's turn to slide 10 to go over our 2025 EPS. Walking from 2024 Adjusted EPS Ex-Bombardier to the midpoint of our 2025 EPS Guidance Range involves a few moving pieces. We see organic semiprofit growth adding 13 cents per share to 2025 earnings down from our prior guide. The first quarter surpassed our outlook.

Mike: Now, let's turn to slide 10 to go over our 2025 EPS bridge.

Walking from 2024, adjusted EPS ex Bombardier to the midpoint of our 2025 bps guidance Rage involves a few moving pieces, we see organic segment profit growth, adding <unk> <unk> per share to 2025 earnings down from our prior guidance the first quarter surpassed our outlook.

Mike Stepniak: But that will be more than offset by our more prudent posture towards guidance for the remainder of the year, driven by geopolitical changes seen over the past few weeks and their possible impact on customer demand, particularly in the back half of the year. Contributions from our 2024 acquisitions are still expected to add approximately 33 cents per share to 2025. Notably, expectations for these businesses have shown stability at levels ahead of our initial plans at the time of purchase.

Mike: That will be more than offset by our more prudent posture towards guidance for the remainder of the year driven by geopolitical changes seen over the past few weeks and their possible impact on customer demand, particularly in the back half of the year contributions from our 2024 acquisitions are still expected to add approximately <unk> 33 per share too.

Mike: 125, EPS, notably expectations for these businesses have shown stability at levels ahead of our initial plans at the time of purchase again I'll remind everyone that the Sunday acquisitions is not included in guidance for the year.

Mike Stepniak: Again, I remind everyone that the Sunday acquisition is not yet included in guidance for the year. The sale of our PPE business, for which we now model an early May close, will drag down earnings by seven cents for the year. So it will prove beneficial to segment margin organic sales. Foreign exchange movements since February have modestly reduced the expected currency headwind earnings for the year to $0.05 per share.

Mike: All of our PPE business for which we now model in early May close will drag down earnings by <unk> <unk> for the year. So it will prove beneficial to segment margin and organic sales growth.

Mike: Foreign exchange movements since February have modestly reduced the expected currency headwind to earnings for the year to <unk> <unk> per share. Please see the appendix of this presentation for a bridge with the sales impact over.

Mike Stepniak: Please see the appendix of this presentation for a bridge with the sales impact. Below the line items, the difference between segment profit and income before tax remains the largest headwind to year-over-year earnings growth at $0.52 per share. Pension income for the year is still expected to be $550 million, $50 million less than 2024 because of one-time item in Europe. The related transaction ended up closing early in the second quarter rather than the first quarter as anticipated previously, which shifted the negative income effect. Repositioning expenses are now expected to be $125 million to $225 million as roughly half of the lower first quarter spending assumed to occur later in the year.

Mike: Below the line items the difference between segment profit and income before tax remains the largest headwind to year over year earnings growth at 52 per share pension income for the year is still expected to be $550 million $50 million less in 2024, because of one time item in Europe the related transaction ended up.

Mike: Closing early in the second quarter.

Mike: In the first quarter as anticipated previously which shifted the negative income effect.

Mike: Brand positioning expenses are now expected to be 125 million to $225 million is roughly half of the lower first quarter spending assumed to occur later in the year.

Mike Stepniak: Lastly, average below the line expenses anticipate to be modestly higher at $1.35 billion to $1.4 billion, increasing from 2024 on account of higher interest expense from last year's acquisitions and the first quarter's accelerating share repurchase. Four-year tax rate expectations have not changed, though we anticipate a lower rate in the second quarter offset by higher third quarter rate.

Mike: <unk> <unk>.

Mike: Below the line expenses anticipated to be modestly higher at 135 billion to $1 4 billion, increasing from 2024 on account of higher interest expense from last year's acquisitions in the first quarters accelerating share repurchase full year tax rate expectations have not changed though we anticipate a lower rate in the <unk>.

Mike: Second quarter offset by higher FERC quarter rate.

Mike Stepniak: Finally, our full-year average share count expectation has been reduced by 12 million shares, increasing the tailwind to EPS to $0.19.

Mike: Finally, our full year average share count expectation has been reduced by 12 million shares increasing the tailwind to EPS to 19th now I will turn the call back over to Vivek.

Vimal Kapur: Now I'll turn the call back over to Vivian. Thanks, Mike. In closing, our performance in the first quarter exceeded all our communicated targets on the strength of our business model, and the dedication of our more than 100,000 future shapers around the globe. Our Watson stall base continues to provide stable demand for our solutions in this time of uncertainty. Simultaneously, we are investing substantial resources to expand further into high growth verticals, to develop innovative new products and services, and to grow our supply capabilities to fulfill our record backlog, even as we maintain promised level of profitability.

Vivek: Thanks, Mike in closing our performance in the first quarter exceeded all our communicated targets on the strength of our business model and the dedication of our more than 100000 future shippers around the globe are.

Vivek: <unk> installed base continues to provide stable demand for our solutions in this time of uncertainty.

Vivek: Simultaneously, we are investing substantial resources to expand further into high growth verticals to develop innovative new products and services and to grow our supply capabilities to fulfill our record backlog, even as we maintain promise level of profitability and updating our 2025 outlook we saw two.

Vimal Kapur: In updating our 2025 outlook, we sought to prudently balance the strength of our first quarter results with the unfolding economic uncertainty in the global economy. Taking both into account, we are raising the midpoint of our 2025 EPS guidance.

Vivek: Prudently balance the strength of our first quarter results with the unfolding economic uncertainty in the global economy.

Vivek: Both into account, we are raising the midpoint of our 2025 EPS guidance the work to separate Honeywell into three Standalone public companies has begun in earnest and the value creation opportunity from greater strategic focus financial flexibility and tailored capital priorities for each of the business are becoming clearer each day.

Vimal Kapur: The work to separate Honeywell into three standalone public companies has begun in earnest, and the value creation opportunity from greater strategic focus, financial flexibility, and tailored capital priorities for each of the businesses are becoming clearer each day. Our separation teams kicked off the process with a preparatory spin to lay out clearly the road ahead and the obstacles to overcome. Such planning will allow us to move both quickly and effectively in the months ahead, while ensuring our businesses do not miss a beat. In this way, we'll be certain to deliver our commitment to our shareholders, customers, and our employees.

Vivek: Our separation themes kicked off the process of the preparatory space to lay out clearly the road ahead and the large obstacles to overcome such planning will allow us to move both quickly and effectively in the months ahead, while ensuring our businesses do not Miss a beat.

Vivek: In this way, we'll be certain to deliver on our commitment to our shareholders customers and our employees.

Vimal Kapur: One way in which we can further maximize our value as we work through our spin-off transaction is to continue to selectively utilize our strong balance sheet and cash flow generation for a creative bolt-on acquisition. In view of the availability of such deals, we believe our shares offer tremendous value at recent levels.

Vivek: One way in which began further maximize our value as we work through our spinoff transaction is to continue to selectively utilize our strong balance sheet and cash flow generation, but accretive bolt on acquisition.

Vivek: <unk> of the availability of such deals will believe our shares offer tremendous value at recent levels.

Sean Meakim: With that, Sean, let's take a Thank you, Vimal. Vimal and Mike 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.

Vivek: That Sean let's take questions.

Vivek: Your demo.

Vivek: And then more micro 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.

Operator: 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. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

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

Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is another question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Keith.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2.

Nigel Coe: Our first question comes from the line of Nigel Coe with Wolf Research. Please proceed with your question. Thanks. Good morning, everyone. Thanks for the question.

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

Nigel Coe: Oh, Thanks, good morning, everyone. Thanks for the question.

Sean Meakim: Maybe just a bit more details on the tariff impact, the way that flows through. Obviously, $500 million. I just want to confirm, I'm assuming that's the second half, so the analyzed would be closer to $1 billion. But maybe just talk about kind of the offset strategies there, any pricing versus supply chain measures, anything that would be helpful.

Speaker Change: Maybe just a bit more details on the on the on the tariff.

Speaker Change: In fact, the way that flows through.

Nigel Coe: Obviously, if I remain.

Speaker Change: Just want to confirm that's the.

Nigel Coe: Im assuming that the second half.

Nigel Coe: So the annualized would be closer to $2 billion, but maybe just talk about kind of the offset strategies there.

Nigel Coe: Any pricing versus supply chain measures anything that would be helpful.

Sean Meakim: Hey, Nigel. So first of all, I would say if you see the chart in our deck, you know, our local for local strategy is a foundation for, you know, counting the impact of the tariffs. We are largely localized in each region in the United States and Europe and so on. So our impact that way is, you know, informed by that local footprint. Now, to your question, the countermeasures are going to be some pricing. We are going to do pricing where we have the opportunity. At the same time, we have substantial direct material productivity options available this year.

Nigel Coe: Hey, Nigel.

Nigel Coe: First of all I would say if youll see the chart in our deck.

Nigel Coe: Our local for local strategy the foundation for <unk>.

Counting them backed up with data largely localized in each regions in the United States and Europe and so on.

Nigel Coe: So our impact that is.

Nigel Coe: Informed by that local footprint.

Nigel Coe: A question.

Nigel Coe: The countermeasures that are going to be.

Nigel Coe: Summarizing we are going to do pricing and we have the opportunity at the same time, we have substantial direct material productivity option available this year and with the combination of the two we are going to offset the impact of this $500 million of that if I do believe that.

Sean Meakim: And with a combination of the two, we are going to offset the impact of this $500 million of tariff. I do believe that, you know, if we look at our business mix, it's largely, you know, a large part of it is aftermarket, which give us resilience to allow pricing, you know, execution there. At the same time, we operate in very rational markets. You know, most of our competition are public companies, which are, you know, projecting very similar strategies. So confidence to execute, you know, mitigating this $500 million tariff is very high. And I agree with Sean, just a clarifying point on that the billion dollar estimate as you as you put, keep in mind tariffs in the first half are not zero.

Nigel Coe: If we look at our business mix, it's largely in a large part of it is after market space give us that.

Nigel Coe: Zillions to allow pricing.

Nigel Coe: Execution there at the same time, we operate in a very rational market.

Nigel Coe: Most of our competition are public companies.

Nigel Coe: <unk> very similar strategies, so confidence to execute mid.

Nigel Coe: Mitigating this $500 million tariff is very hot.

Nigel Coe: And I think it's Sean.

Nigel Coe: Just a clarifying point on that the $1 billion estimate as you, but keep in mind tariffs in the first half are not zero. So I think as you annualize our footprint that could be something a bit lower than what you suggested but not too far off.

Sean Meakim: So I think as you annualize a full year impact to be something a bit lower than what you suggested, but not too far off.

Mike Stepniak: Okay, thanks Sean, that's helpful. And then Mike, you mentioned contingency in the guide, Luke's macros. I'm curious, you know, is that more of a top-down, you know, reading all the stuff in the press that we were reading? Is that more of a top-down contingency or are you starting to see unusual behavior or anything to kind of inform a weaker second half? That's correct. That's more a top-down view. If we look at our first quarter orders, very strong. April strengthening orders also continued, so we'll feel good about that. That said, just looking at our end markets, especially in industrial automation, our exposure to China there, we took a little bit of more, I would say, prudent view in terms of what contingency we want to have just to make sure we protect our total year.

Mike: Okay. Thanks, that's helpful and then Mike.

Nigel Coe: You mentioned contingency in the guide looks macros.

Nigel Coe: Is that more of a top down.

Mike: All the stuff in the press that we were reading is.

Mike: Is that more of a top down and contingency or are you starting to see unusual behavior or anything.

Mike: It's kind of in full a weaker second half.

Mike: That's correct that's more of a top down view, if we look at our first quarter orders very strong April.

Mike: April.

Mike: Strength in orders also continued so we'll feel good about that.

Mike: That said, though just looking at our our end markets, especially in industrial automation, our exposure to China there.

Mike: We took a took a little bit of more I would say.

Mike: Prudent view in terms of what contingency we want to have just to make sure. We protect our total year. So yes. This is demand contingency for the second half I don't have any data that would suggest that demand is falling falling out but we.

Mike Stepniak: So yes, this is demand contingency for the second half. I don't have any data that would suggest that demand is falling out, but we'll continue to take a prudent stance on our guide. I want to make sure that the guide I give you, I have a high level of confidence the team can deliver on it.

Mike: We will continue to take a prudent stance on our guide I want to make sure that the guide I gave you I have a high level of confidence that team can deliver on it.

Mike Stepniak: Okay, thank you.

Mike: Okay. Thank you.

Operator: Thank you.

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

Steve Tusa: Our next question comes from the line of Steve Tusa with J.P. Morgan. Hi, good morning. Morning.

Steve Tusa: Hi, good morning.

Speaker Change: Good morning.

Mike Stepniak: Can you guys just parse out what your volume assumption is? I think coming into this year, you've talked about like three points of price. Maybe what's the volume assumption just in the context of this contingency, just trying to kind of gauge what's kind of in the base case and what's just a hedge on that front?

Steve Tusa: Can you guys just parse out what your volume assumption is I think.

Steve Tusa: Coming into this year, you've talked about like three points of price maybe what's the what's the volume assumption just in the context of this this contingency just trying to kind of gauge what.

Steve Tusa: What's kind of in the base case, and what's just a hedge on that front.

Mike Stepniak: Sure, so just to clarify one more time, our total year framework is unchanged, everything holds. If you look at now price volume, going to the year, we're assuming about, I think, 2% price, that's what we communicated. Excluding Bombardier. Excluding Bombardier, and the volume was minus 1% to 2% up. In this current guide, I'm assuming about 3% of price, and I'm assuming about minus 2% of volume to 1% of volume. So that's the conservatism is there. So whether you include Bombardier or not, either way, one more point of price, one less of volume would align to the same guide.

Steve Tusa: Sure. So just to clarify one more time, our total year framework is unchanged and everything holds if you look at now price volume going through the year, we're assuming about 2% price thats, what we communicated.

Steve Tusa: Including Bombardier, excluding Bombardier and then and the volume was minus 1% to 2% up.

Speaker Change: In this current guide I'm, assuming about 3% of price.

Speaker Change: And I'm, assuming about minus 2% of volume to 1% of volume So thats.

Speaker Change: Is that conservatism is there so whether you include on BARDA or not either way one more point on price one lesser volume.

Speaker Change: Lines and the same guy.

Mike Stepniak: Yep, that makes a ton of sense.

Speaker Change: Yes that makes a ton of sense and then just related to the tariffs.

Sean Meakim: And then just related to the tariffs, can you maybe talk about how much is roughly coming from China? And I know this may be kind of old news at this stage, but any other, other than Mexico, any other kind of hotspots that we should be watching when it comes to other regions? Or is this mostly like a China thing, the 500 million? So, Steve, you know, if you peel out our tariffs, I would say that going into China, exports from U.S. into China is a big part of impact. As we've always shared, we are net exported to China for many years.

Speaker Change: Can you maybe talk about how much is roughly coming from China and.

Speaker Change: I know this may be kind of old news at this stage, but any other other than Mexico any other kind of hotspots that we should be watching when it comes to other regions or is this mostly like the China thing the $500 million.

Steve Tusa: So Steve.

Steve Tusa: If you Peel out our data has I would say that.

Steve Tusa: Going into China exports from U S into China.

Steve Tusa: Big part of impact.

Steve Tusa: As we've always shared we are net exporter to China for many years aerospace and <unk> business, you'll be ship it from U S. So clearly a part of our tariff impact as John elevated status on incoming site into U S.

Sean Meakim: Aerospace and ESS business, UOP, we ship it from U.S. So, clearly, a part of our tariff impact is China-related tariffs. On incoming site into U.S., the impact is not big because you're largely localized, but at the same time, there's impact of some products coming from impacted by reciprocal tariffs because we do impact parts from all over the world. And then there is a tail-off impact from China, both in, you know, specifically in the industrial automation business. So that's the construct of it. And as we said before, we have factored all known tariff rates which are known today, both coming into US and coming into China.

Steve Tusa: The impact is not big.

Steve Tusa: Because youre largely localized but at the same time does the impact of some products coming from impacted by the ZIP brokerage status because were doing back bars from all over the world and then there is the.

Steve Tusa: The tail off impact from China, both in.

Steve Tusa: Specifically in the industrial automation business so.

Steve Tusa: That's the construct of it and as we said before we have factored all known data if rates, which are known today, both coming into U S and coming into China.

Sean Meakim: And Steve, I would just add, so for China, it's about 60% to 70% of our overall tariff exposure. Rest of it is reciprocal. Mexico is 100% offset. Yeah. A hundred percent what, sorry? Mexico? Yeah, Mexico, it's not material to us. Oh, it's immaterial. Yep, got it. Yeah, 100% covered. Okay, got it. Great. Thanks a lot. Thank you.

Speaker Change: Steve I would just add so for China is about 60% to 70% of our overall power of exposure right. Some of it is reciprocal Mexico is 100% offset.

Steve Tusa: 100% of what sorry.

Steve Tusa: Okay.

Steve Tusa: Mexico is not material to us.

Steve Tusa: Yes got it yes, 100% covered okay got it great. Thanks a lot.

Steve Tusa: Thank you.

Julian Mitchell: Our next question comes from the line of Julian Mitchell with Barclays. Hi, good morning. Maybe just wanted to start with the industrial automation segment. So maybe help us understand, you know, you have that big drop off in the PSS top line in the first quarter. Kind of how are you thinking about that playing out for the balance of the year? Anything odd going on sort of share wise? And on the margin front, I suppose those margins were down in the first quarter. I think they're guided to be up slightly for the year. So maybe any help around the sort of cadence of that margin swinging from down to up as we go through the quarter?

Speaker Change: Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Julian Mitchell: Hi, good morning.

Julian Mitchell: Maybe just wanted to start with the industrial automation segment.

Julian Mitchell: So maybe help us understand.

Julian Mitchell: You have that big drop off in the PSS top line in the first quarter kind of how you're thinking about that playing out for the balance of the year.

Julian Mitchell: Anything odd going on sort of share wise.

Julian Mitchell: And on the margin front I suppose those IAA margins were down in the first quarter.

Julian Mitchell: <unk> guided to be up slightly for the year.

Julian Mitchell: So maybe any help around the sort of cadence of that knowledge and swinging from down to up.

Julian Mitchell: Through the year.

Mike Stepniak: Yeah, so Julian, the PSS quarter one was, you know, roughly flattish. If you take out the royalty we get from Zebra, that was the last quarter we had the comps. So it was a flattish revenue. We did extremely well in North America, Europe, there was some pressure. I think it's too early for us to see any comps related to competition. So I think as our competition will declare results, we'll observe if there are any specific puts and takes to share. I would say in our guide, when we talked about contingency, there are two drivers of that contingency from the future demand, if I can use the word unknown.

Julian Mitchell: Yeah, So julien.

Julian Mitchell: The PSS quarter one was.

Julian Mitchell: Flattish if you take out the.

Julian Mitchell: The royalty we get from Zebra that was the last quarter, we had the comps. So it is a flattish revenue we did extremely well in North America Europe, there was some pressure.

Julian Mitchell: It's too early for us to see any comps related to competition. So I think as our competition will declare that adults will observe.

Julian Mitchell: If any any specific puts and takes to share I would say in our guide when we talked about contingency. There are two drivers of that contingency from the future demand. If I can use the word unknown. One is definitely China, Mike talked about uncertainty, we see their VOI business exposure and then second.

Mike Stepniak: One is definitely China, Mike talked about uncertainty, we see there we have a business exposure. And then second part is the uncertainty around our businesses, which touches the retail markets. So PSS being one of them. I cannot tell you an absolute number because we are not trying to drill down a business by business, we have taken an overall, you know, broader view. So we do expect some pressure to a certain degree on on on PSS business in our assumption for for the rest of the year. On the margins in first quarter, the large part of the margin contraction in IA was receivables write off.

Julian Mitchell: What is the uncertainty around our businesses such as the retail markets. So PSS being one of them I cannot tell you an absolute number because we're not trying to drill down a number of business by business. We have taken the overall broader view. So we do expect some pressure to a certain degree on on PSS business in our assumption for.

Julian Mitchell: The rest of the year.

Speaker Change: On the margins.

Speaker Change: First quarter, the large part of the margin contraction in IAA was receivables write off.

Mike Stepniak: We had some past receivable write off and based upon the progress of that, we wrote them off. You know, the year as we progress, we don't have the similar event for us of the year. Also, as the PP business retires from our portfolio that gives us a favorable tailwinds. So fundamentally, I think all those factors play out help help us margin expansion for the rest of the year. I would add PPE is obviously a creative to our segment margin and a creative to our organic growth.

Speaker Change: You had some bus receivable write off and based upon the progress of that we wrote them off.

Speaker Change: The year as we progress we don't have the similar event for us of the year also had the PB business retires from our portfolio that gives us a favorable tailwind. So fundamentally I think all of those factors play out help us margin expansion for the rest of the year.

Speaker Change: I would add PPE is obviously accretive to all of our segment margin and accretive to our organic <unk> growth.

Speaker Change: Sure.

Mike Stepniak: That's helpful, thank you.

Speaker Change: That's helpful. Thank you and then just my follow up on the capital deployment.

Julian Mitchell: And then just my follow-up on the capital deployments. Last year, you know, you had under $2 billion of buyback and close to $9 billion committed to M&A. This year, year to date, you know, you're running at sort of $3 billion buyback and a couple of billion of M&A.

Speaker Change: Last year, you had on the $2 billion of buyback and close to 9 billion committed to M&A.

Speaker Change: This year year to date.

Speaker Change: We're running at sort of 3 billion buyback in a couple of billion dollars of M&A.

Mike Stepniak: Any way you could frame for us sort of the buyback scope for the year? And I understand it depends on share price action and other uses of cash potentially. But, you know, just trying to gauge sort of how aggressive or large could that buyback be, assuming the share price stays around current level. Julian, I would just say at this stage that we will continue to be opportunistic. We obviously view our share price as very attractive as a stage for buybacks. But at the same time, we want to balance our capital deployment with M&A. And we obviously, M&A machine has been now in play for us for a couple of years.

Speaker Change: Any way you could frame for us sort of the buyback scope for the year and I understand it depends on share price action and other uses of cash potentially but.

Speaker Change: Just trying to gauge sort of how aggressive or large could that buyback be assuming the share price stays around current levels.

Speaker Change: So Julien I would just say at this stage that we will continue to be opportunistic. We have received view our share price is very attractive at this stage for buybacks, but at the same time, we we want to.

Speaker Change: Balance our capital deployment with M&A and.

Speaker Change: We obviously M&A machine has been now.

Speaker Change: In play for Us for a couple of years. So if deals there specific deals that we've been working for a while and then attractive to us we will not will not pass them on.

Mike Stepniak: So if there are specific deals that we've been working for a while and then attractive to us, we'll not pass them on. Yeah, so it'll be a balanced approach. Again, I mean, we do expect opportunistic approach on share buyback to continue. But at the same time, if there's a time bound M&A deal, we have been working for a couple of years. We also don't want to miss the window, you know, at this point of time, so it'll be a balanced approach.

Speaker Change: Yes, so it will be a balanced approach.

Speaker Change: We do expect opportunistic approach on share buyback to continue but at the same time, if there's a time bound M&A deals we have been working for a couple of years. We also don't want to Miss the window.

Speaker Change: At this point of time, so it'll be a balanced approach.

Mike Stepniak: Perfect, thank you. Thank you.

Speaker Change: Perfect. Thank you.

Speaker Change: Thank you. Thank you.

Scott Davis: Our next question comes from the line of Scott Davis with Melius Research.

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

Mike Stepniak: Hey, good morning, Vimal, Mike, and Sean. Hey, I hate to beat the dead horse, but still on tariffs. I just wanted to clarify kind of the cadence of, you know, you've got the cost side of tariffs and you have price, I imagine they don't match up kind of perfectly, unless you're doing surcharges, I suppose. But is the intent to match up price and mitigation efforts with tariffs by, say, the end of the year and have it be neutral by then? Or do you think you can do it sooner than Well, I would I would say it will be much sooner sooner than that.

Speaker Change: Hey, good morning demo, Mike and challenge.

Speaker Change: Mark.

Speaker Change: Hey to beat the dead horse, but still on tariffs.

Speaker Change: Just wanted to clarify kind of the cadence of you've got the cost side of tariffs and yet price imagine they don't match up perfectly unless youre doing surcharges I suppose but is the intent to match up price and mitigation efforts with tariffs by say the end of the year and have it be neutral by then or do you think you can do it sooner than that.

Speaker Change: Well I would I would say it will be much sooner than that.

Sean Meakim: I mean, we have a we stood up a large team of people that can understand terrorists by by HTS code and know it essentially to a dollar. And the teams have been quite active in terms of understanding what how to offset it and what are the mitigation actions. I would say it's not 100% price. I mean, like Vimal said earlier, we we have other options and our direct material productivity has been really good. So we're trying to manage, I would say, demand with with cost and demand destruction vis-a-vis price. So so we feel very confident and by the in the second half.

Speaker Change: We stood up a large team of people that can understand tara's bye bye HTS code and Noah essentially to one dollar.

Speaker Change: The teams have been quite octopus in terms of understanding what how to offset it and what are the mitigation options I would say, it's not 100% price I mean like <unk> said earlier, we have other options in our direct material productivity has been really good. So we're trying to manage I would say demand with.

Speaker Change: Wood costs.

Speaker Change: Demand destruction reasonably priced so so we feel very confident then baidu in the second half.

Sean Meakim: will be, I would say, on par and definitely by fourth quarter will be in a stable operating mode, assuming things don't change materially for us here.

Speaker Change: We'll be I would say on par and definitely by fourth quarter will be in a stable operate operating mode, assuming things don't change materially for us here.

Sean Meakim: Yeah, that's good color. Hey, and I'm not asking for specific numbers, but let's just say that it's 800 million ballpark of total tariff impacts. If there was a way to kind of rank it by segment or give us a little color by segment of where the bigger impacts are, just be helpful. If you want to give numbers, that would be great, but I don't expect it. Yeah, so Vimal mentioned earlier, but our largest exposure on tariffs is in industrial automation, just because of the supply chain there and also in aerospace, which is exported to China.

Speaker Change: That's good color.

Speaker Change: Hey.

Speaker Change: I'm not asking for specific numbers, but let's just say that it's $800 million ballpark of total tariff impacts.

Speaker Change: If there was a way to kind of ranking by segment or give us a little color.

Speaker Change: By segment of where where the bigger impacts are just just be helpful. If you want to give numbers that would be that would be great but.

Speaker Change: I don't expect it so.

Speaker Change: So bill mentioned earlier, but our largest exposure in tires is in industrial automation.

Speaker Change: Because of the supply chain, there and also in an aerospace, which arrow is exported to China. So those are our two largest segments. They have exposure building automation is largely protected.

Sean Meakim: So those are two largest segments that have exposure. Building automation is largely protected. They're almost 100% local for local in their geographies. And then ESS, we don't see a lot of tariff exposure, maybe a little bit of a demand risk in China, given they sell to China as well. But that's something that I think is, all of it is contained in our guide. And I feel at this stage is de-risked, assuming things stay the way they are.

Speaker Change: There are almost 100% local for local in their enduring geographies and then yes as we.

Speaker Change: We don't see a lot of tariff exposure, maybe maybe a little bit of a demand risk in China, given given they sell to China as well, but thats something that I think is all of it is contained in our guide and I feel at this stages derisked, assuming things stay the way they are.

Sean Meakim: Good color. I appreciate it. Thank you guys.

Speaker Change: Okay. Good color I appreciate it. Thank you guys I'll pass it on.

Operator: I'll pass it on. Thank you.

Scott Davis: Thank you Scott.

Speaker Change: Yes.

Andrew Obin: Our next question comes from the line of Andrew Obin with Bank of America. I guess good morning. Good morning, Andrew. Good morning. So looking at aerospace, I think on Aero OE, you know, I think we were sort of indicating that Aero OE was going to be better than I think what happened, and then on the aftermarket, I think it came in quite a bit stronger.

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

Andrew Open: Good morning.

Speaker Change: Good morning, Andrew Good morning.

Andrew Open: So.

Andrew Open: Looking at aerospace.

Andrew Open: I think on Arrow O E.

Andrew Open: I think we were sort of indicating.

Andrew Open: That <unk>.

Andrew Open: We're going to be better than I think what happened and then on the aftermarket I think it came in quite a bit stronger.

Vimal Kapur: And I appreciate that your numbers seem to be in line with what other folks are reporting in the aerospace, but can you give us more color as to what's happening on the OE, what's happening on the aftermarket, is there a de-stock going on, would be greatly appreciated. Thank you. Okay, so Andrew, as the first to the outset, I would say, you know, the, the aero volume, manufacturing volumes are growing. Why you don't see that showing up in the OE revenue is there are two drivers for that. The first is the mix of our products. We have, you know, when we ship specifically mechanical products, we have cost over sell.

Speaker Change: And I appreciate that your numbers seem to be in line with what other folks are reporting in the aerospace, but can you give us more color as to what's happening on the R E.

Speaker Change: What's happening on the aftermarket is there a destocking going on would be greatly appreciated. Thank you.

Speaker Change: Okay. So Andrew at the outset I would say.

Speaker Change: The the ore volume manufacturing volumes are growing.

Speaker Change: Why you don't see that showing up in the OLED revenue as there are two drivers.

Speaker Change: The first is.

Speaker Change: The mix of our products.

Speaker Change: We have.

Speaker Change: When we ship specifically mechanical products, we have cost of ourselves.

Vimal Kapur: So, even though we are shipping more volume due to cost over sell, our revenue growth actually goes towards opposite direction, goes negative due to that. So, when you have a higher mix of cost over sell products in a given quarter, that has its impact. And the second driver is the timing when we recognize, we ship the revenue and customer recognizes the revenue that does also have a driver on our, you know, overall revenue recognition process. So, the combination of the two really drives the OE growth numbers, what you see. As the year progresses, we do expect these numbers to improve.

Speaker Change: So even though we're shipping more volume due to cost or sell our revenue growth actually goes towards the opposite direction goes negative.

Speaker Change: Due to that so when you have a higher mix of Costa will sell products in a given quarter that has its impact and the second driver is.

Speaker Change: The timing when we recognize we shipped our revenue and customer recognizes revenue that does also have a driver on our.

Speaker Change: Overall revenue recognition process. So the combination of the two really drives the OE growth numbers, what you see as the year progresses, we do expect these numbers to improve.

Vimal Kapur: And overall, as we reconfirm the aerospace guidance for the year, we continue to remain very bullish. I think these are the puts and takes in the business with more than 2 billion of backlog and we remain very confident on delivering for aerospace.

Speaker Change: And overall as we reconfirm the aerospace guidance for the year. We continue to remain very bullish I think these are the puts and takes in the business with more than $2 billion of backlog.

Speaker Change: And we remain very confident on delivering.

Speaker Change: Aerospace.

Andrew Obin: Excellent. And just to follow up, I mean, I guess there are a lot of headlines out there about, you know, all this traffic, all this shipping traffic out of China, collapsing over the next four to six weeks. How should we think about it? You know, I would imagine is that, you know, in parts of IA, the supply chain is exposed to China. Just can you just tell us, because you're diversified, you've been in China for a long, long time. Like, how is that going to play out? Because there's this doom and gloom scenario, how everything is going to come to a grinding halt in about four to six weeks.

Speaker Change: Thanks, Tom.

Speaker Change: A follow up.

Speaker Change: I mean, I guess, there are a lot of headlines out there about.

Speaker Change: All of this traffic all the shipping traffic out of China collapsing over the next four to six weeks.

Speaker Change: How should we think about it.

Speaker Change: I would imagine as that.

Speaker Change: In parts of IAA the supply chain is exposed to China. Just can you just tell us because you were so diversified we have been in China for a long long time like how is that going to play out because there's this doom and gloom scenario, how everything is going to come to a grinding halt in about four to six weeks doesn't seem.

Vimal Kapur: It doesn't seem we see that in your guidance, appreciate a different manufacturing footprint, longer cycle exposure. But as I said, I would greatly appreciate any color you can give us how you guys are going to deal with sort of, you know, effectively trade embargo between US and China. Thank you. So, so I would say the products coming into from China into US, the biggest impact that of is in industrial automation business. So to that degree, there will be a tariff pressure, which is already into our guide. It's already factored in. And on the opposite side, when we ship products from US into China, that's primarily a driver in aerospace and in ESS business.

Speaker Change: We see that in your guidance appreciate.

Speaker Change: Different manufacturing footprint longer cycle exposure, but as I said I would greatly appreciate any color you can give us how are you guys going to deal.

Speaker Change: We're sort of.

Speaker Change: Effectively trade embargo between U S and China. Thank you.

Speaker Change: So so I would say.

Speaker Change: The products coming into from China in the U S. The biggest impact that up is in industrial automation business.

Speaker Change: <unk>.

Speaker Change: So to that degree.

Speaker Change: There will be a tariff pressure, which is already into our guide it's already factored in.

Speaker Change: And on the opposite side, when we ship products from U S into China, that's primarily a driver in aerospace and in FFS business. So again the impact of those data of start again factored into our guide.

Vimal Kapur: So again, the impact of those tariffs are again factored into our guide. And then overall, we also have factored the demand destruction on either side of the fence due to the known facts, what we know today. And that's how we have guided at this point of time. Any view for us, I would say we are really looking at potential reduction in volume in our short cycle, in our automation business, or reduction of demand of catalyst for UOP. Those are the kind of assumptions we have made, but it should be seen if they really play out depending on how economic situation plays out.

Speaker Change: And and then overall, we also have factor the demand destruction on either side of the fence due to the known facts, what we know today and Thats all we have.

Speaker Change: Guided at this point of time.

Speaker Change: Any view for US I would say we are really looking at potential reduction in volume in our short cycle in our automation business our reduction of the amount of catalyst for you will be those are the kind of assumptions. We have made but it has to be seen if they really play out depending on how economic situation plays out.

Vimal Kapur: But it's actually it's demand destruction. It's not ability to access the actual components and parts, right? Because I think the headlines indicate like this massive shortage of parts, but it seems for you, it's under control. Yes, I don't see we don't foresee any shortage of parts. I think it's just the tariffs coming in and business demand destruction. Yeah, I haven't seen or heard any lack of product availability for Honeywell so far.

Speaker Change: But its actually its demand destruction, it's not ability to access the actual components and parts right because I think the headlines indicate like this massive shortage of parts, but it seems for you it's under control.

Speaker Change: Yes, I don't see we don't foresee any shortage of box I think it just that data is coming in and business demand destruction.

Speaker Change: I haven't seen a vote any lack of product availability for Honeywell so far.

Andrew Obin: Really appreciate it. Thanks so much.

Speaker Change: Really appreciate it thanks so much.

Sheila Kahyaoglu: Thank you. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question. Good morning, guys, and thank you. Maybe two more on aerospace. First, if I could, just following up on Andrew's comments on aftermarket, 15% commercial aftermarket growth versus the guidance of mid to high single digits. How is price a contributor? And how do you think about overall price in aero versus the 3% for the total company and any color regionally you could provide on aftermarket behavior?

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

Sheila: Good morning, guys and thank you.

Speaker Change: Maybe two more on Eric Paul.

Speaker Change: First if I can just following up on Andrew's comments after market at 10% commercial aftermarket growth.

Speaker Change: First is the guidance of mid to high single digits pellet price a contributor and how do you think that overall pace of aerospace 3% for the total company and any color regionally you could provide on aftermarket.

Vimal Kapur: Sheila, I would say on the aftermarket, as Vimal mentioned, we still have over two billion dollars of positive backlog. So whenever I would say our shops have capacity, we ship to whoever we can to satisfy that demand. So our, I would say, results for the next couple quarters will still be, I would say, lumpy in terms of OE, aftermarket mix. Generally, our price is in line with what we guided at the beginning of the year, so there's no change there for aftermarket. And I know what the hours, I would say, flight hours moderated a little bit here going to the second year, but we still see good hours, four plus percent hours.

Sheila: Sheila I would.

Speaker Change: Say on the on the after market.

Sheila: Ben will mentioned, we still have over $2 billion up.

Speaker Change: A positive backlog.

Speaker Change: Whenever our I would say our shops have.

Speaker Change: Capacity was shipped to whoever we can to satisfy that demand. So our I would say results for the next couple of quarters will still be I would say lumpy in terms of OE aftermarket mix generally.

Speaker Change: Our prices in line with what we guided to at the beginning of the year. So there's no change there for for aftermarket and I know what the.

Speaker Change: The hours.

Speaker Change: I would say flight hours moderated a little bit here going to the second year, but we still see good hours four plus percent hours and we as you know we have exposure to two ATR in business aviation and those business aviation hours are more stable and in defense also has our after market in there and defenses.

Vimal Kapur: And we, as you know, we have exposure to ATR and business aviation, and those business aviation hours are more stable. And Defense also has an aftermarket in there, and Defense is growing extremely strong, especially in the aftermarket. So I would say overall, I know it's a little bit lumpy, but I would say our construct for the year is not changing vis-a-vis what's happening in commercial aviation.

Speaker Change: Growing extremely strong, especially in the after market. So I would say overall I know, it's a little bit lumpy, but OSA say our construct for the for the year is not changing BW, what's happening in <unk>.

Speaker Change: In our commercial aviation.

Vimal Kapur: Okay, and maybe if commercial OE is still set to outperform aftermarket for the year and any color on commercial OE production rates you could provide. So, commercially, we're normalized in the second half. Right now, what I see is we have a little bit of mix within a mix issue. If you, it's not even an issue, just a reality of how our OEMs take product between mechanical and electronics. That said, like Vimal said, our supply chain output, our factory output for the quarter, again, was double digit, double digit. So, we're really, really confident that this OE demand is continuing to stay with us for the remainder of the year, going to next year.

Speaker Change: Okay.

Speaker Change: Commercial OE still set to outperform after market for the year and any color on commercial OE production rates you can provide.

Speaker Change: So commercial we will.

Speaker Change: We're normalized in the second half right now what I see is we have a little bit of mix within the mix issue, if you're always going to be an issue just does.

Speaker Change: Reality of how our OEM stake big product between.

Speaker Change: Mechanical and electronics that said ill like Venmo said, our supply chain output our factory output for the quarter again was double digit double digit. So so we're really really confident that this OE demand has continued to stay with us for for the remainder of the year going.

Speaker Change: Next year in and within that $2 billion, we OE is about.

Vimal Kapur: And within that $2 billion, we OE is about $1 billion of positive backlog, if not more. Okay, thank you. Thank you.

Speaker Change: About $1 billion of Opus.

The backlog if not more.

Okay. Thank you.

Speaker Change: Thank you.

Amit Mehrotra: Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question. Okay, thanks.

Speaker Change: Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.

Vimal Kapur: Congrats on the quarter. Just maybe a couple quick ones. One, can you just update us on the timing of the spin if you think it could happen sooner than what you noted earlier? And then if aerospace margins, I get the case, and there's some mixed dilution, but is there an opportunity to kind of build on the 1Q margin as we progress through just given the higher revenue? Or do we think first quarter is kind of the right runway for the rest of the year? So timing of the spin, Amit, as we've indicated. For advanced materials, it's Q4 this year slash Q1 of next year.

Amit Mehrotra: Okay. Thanks, congrats on the quarter.

Amit Mehrotra: Maybe a couple of quick ones. One can you just update.

Amit Mehrotra: Also on the timing of the spin if you think it could happen sooner than what you noted earlier and then if aerospace margins I get the case and there is some mixed solution.

Amit Mehrotra: But is there an opportunity to kind of build on the <unk> margin as we progress through just given the higher revenue or do we think first quarter is kind of the right run rate for the rest of the year.

Amit Mehrotra: So timing of the spin on it.

Amit Mehrotra: As we've indicated.

Amit Mehrotra: For advanced materials. It's Q4 this year Slash Q1 of next year I think we are far along the way and as we'll come to the Q2 earnings call, we'll be able to provide you a specific date I think we have some external elements, which are not entirely out of control.

Vimal Kapur: I think we are far along the way. And as we'll come to the Q2 earnings call, we'll be able to provide you a specific date. I think we have some external elements which are not entirely our control. So because that's the only variable. If you ask me, our own execution, that is progressing extremely well. You know, we are on schedule to execute all the tasks, but I cannot control anything which are not in Honeywell control, specifically regulatory agency approvals. We cannot control the timing of that.

Amit Mehrotra: So because that's the only variable if you asked me our own execution that is progressing extremely well we are arent should you execute all the doors, but I cannot control any anything which I've not in Honeywell controllers, specifically regulatory agency approvals, we cannot control the timing of that and aerospace spend data.

Vimal Kapur: And aerospace spin dates, I think it's early days. We started work just about two months back, but we are working to, you know, make it on schedule. And as the schedule progresses, we'll provide you more specific color. What will be the specific date? Because right now, I fully appreciate the date is a bit wide, H2. And our goal is to refine the date and provide more specific outcome on that.

Amit Mehrotra: That's early days these targeted work just about two months back.

Amit Mehrotra: But we are working to make it on <unk> and as they should do with progresses. We'll provide you more specific color what would be the specific date because right now I fully appreciate the data has been white X to and our goal is to define the data and provide more specific.

Vimal Kapur: On aerospace margins, as we had provided the guide during start of the year. I think there are two specific drivers for the ARO margins for 2025. One is the mix of, you know, mix or mix within the mix of the products we are shipping. And the second is the case acquisition integration is going to be part of the P&L, there's integration related costs, the business also gets onboarded with a lower margin, which on a longer term is a good news because we can expand those margins. But the combination of those two contracts the ARO margin.

Amit Mehrotra: Come on that on.

Amit Mehrotra: On aerospace margins as we have provided the guide during sort of the year.

Amit Mehrotra: I think there are two specific drivers for the Aero margins for 2025, one is the mix of.

Amit Mehrotra: Mix our mix within the mix of the products, we are shipping and the second is the case.

Amit Mehrotra: Acquisition integration is going to be part of the P&L. The integration related cost. The business also gets on boarded with lower margin, which on a longer term is a good news because we can expand those margins, but the combination of those two contracts. The aero margin I would say that the aero margins will remain on a similar pace.

Vimal Kapur: I would say that the ARO margins will remain on a similar pace as you've seen in Q1. We don't expect any substantial shift. But on an overall year basis, I think the guidance what we provided at the start of the year, that will still hold.

Amit Mehrotra: As you've seen in Q1, we don't expect any substantial shift.

Amit Mehrotra: Overall year basis, I think the guidance what we provided I started the year that will still holds good.

Vimal Kapur: Okay, that's helpful.

Speaker Change: Okay. That's helpful and just as a follow up.

Amit Mehrotra: And just as a follow-up, you know, building automation, we've now had two straight quarters of high single-digit growth. I know last quarter, you didn't necessarily want to extrapolate the goodness into this year, but now we've had another quarter of high single-digit growth.

Speaker Change: The building automation, we've now had two straight quarters of high single digit growth I know last quarter, you didn't necessarily want to extrapolate the goodness into into this year, but now we've had another quarter of high single digit growth as we think about the guidance.

Vimal Kapur: As we think about the guidance over, I mean, comps get a little bit difficult, so maybe that explains it, but is the guidance still reflective of kind of not extrapolating what we've been seeing over the last couple quarters, or do you think now it's kind of more realistic-based? So, as you saw in our guide, we raised the building automation guidance from low single digits to mid single digits to mid single digits. And then part of our demand contingency if you think in the second half is related to us just taking a prudent stance on potential demand destruction in the second half.

Speaker Change: I mean comps get a little bit more difficult so maybe that explains it but.

Speaker Change: Is the guidance still reflective of kind of not extrapolating, what we've been seeing over the last couple of quarters or do you think that was kind of more realistic based on the trend.

Speaker Change: So as you saw in our guide we raised the one building automation guidance from low single digits to mid single digits to mid single digits.

Speaker Change: And then part of our demand contingency being in the second half is related to US just just taking a prudent stance on.

Speaker Change: On the potential demand destruction in the second half.

Vimal Kapur: Building automation projects, I would say, are continuing to be strong. We're just watching our short cycle demand, product demand.

Speaker Change: Billing automation projects I would say are continued to be strong.

Speaker Change: Just watching our short cycle short cycle demand product demand.

Vimal Kapur: And if building automation continues on this space, I think they have a chance to be dead, but we're just being prudent as far as second quarter, the rest of the second quarter and the third quarter, given everything going on in the market. I think the overall strategy in building automation is really playing out. We focused on pivoting our business to higher growth verticals like data center, like hospitality. And those segments are growing regardless of the current conditions. So certainly that's helping. But also at the same time, the business has the largest global footprint exposure. This business is like literally one third in US, one third in Europe, one third in Asia.

Speaker Change: If.

Speaker Change: Building automation continues on this space I think they have a chance to beat that but we're just being prudent as far as <unk>.

Speaker Change: Second quarter, the rest of the second quarter in the third quarter, given everything going on in the market I think the overall started in building automation is really playing out.

Speaker Change: We are focused on pivoting our business to higher growth verticals.

Speaker Change: Like.

Speaker Change: Data center like.

Speaker Change: Hospitality and those segments are growing regardless of.

Speaker Change: The current conditions. So certainly that is helping but also at the same time the business has the largest global footprint exposure. This businesses like literally one third in the U S. One third in Europe, one third in Asia. So.

Vimal Kapur: So given the uncertainty in the global trade environment, we are therefore being conscious of the fact that it can hit on the headwinds on the economic side, economic uncertainty. So we have factored that. But if you ask me on the strategy side, the business is executing extremely well.

Speaker Change: Given the uncertainty in the global trade environment, we are therefore being conscious of the fact that it can hit on the headwinds on the economic side.

Speaker Change: Economic uncertainty.

Speaker Change: In fact that that but if you asked me on the strategy side. The business is executing extremely well and if things don't change.

Vimal Kapur: And if things don't change, the business will continue to deliver the numbers you've seen over the last few quarters.

Speaker Change: The business will continue to deliver the numbers you've seen over the last few quarters.

Vimal Kapur: Wonderful. Okay, thank you very much. Thank you.

Speaker Change: Wonderful okay. Thank you very much.

Speaker Change: Thank you. Thank you.

Joe Ritchie: Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question. Hey, good morning, guys. Maybe just following up on that on that on that last point and just relating it to the demand contingency that you've baked into the guide.

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

Joe Ritchie: Hey, good morning, guys.

Joe Ritchie: Hey, good morning.

Speaker Change: On that on that last point and just relating it to the demand contingency that you baked into the guide. So is it fair to say then <unk> got some good visibility on your long cycle businesses, but it's really just on the short cycle side, maybe in IAA, maybe in VA that you're most concerned and you're building in.

Mike Stepniak: So is it fair to say then you've got some good visibility on your long cycle businesses, but it's really just on the short cycle side, maybe in IA, maybe in BA that you're most concerned and you're building in as contingency, just any any color that you can kind of parse out for what's baked into that demand contingency? Sure, sure, so I would say we have very good line of sight to the long cycle for the year. With respect to short cycle, if we look at industrial automation, that's the business that's the most exposure to China.

Speaker Change: And as contingency just any color that you can kind of parse out.

Speaker Change: What's baked into that demand contingency number.

Speaker Change: Sure sure. So I would say we have very good line of sight to the long cycle for the year with respect to short cycle.

Speaker Change: Look at industrial automation Thats the business has the most exposure exposure to China, we're watching that especially especially the products part of the business and then building automation I mean business operation has been doing extremely well for the last three quarters and continues we have really no reason to worry at this stage, but like I said.

Mike Stepniak: We're watching that, especially the products part of the business. And then building automation, I mean, building automation has been doing extremely well for the last three quarters and continues. We have really no reason to worry at this stage, but like I said, we're just taking a prudent approach to the second half.

Speaker Change: We're just taking a prudent approach to the second half.

Mike Stepniak: So I'm feeling confident about the second half, but like I said at the beginning, we want to continue to make sure that we give a guide that we have high level of confidence we can deliver. That's helpful.

Speaker Change: So I'm feeling confident about the second half, but if I can.

Speaker Change: I said at the beginning we want to continue to make sure that we give a guide that we are have high level of confidence we can deliver.

Speaker Change: Got it that's helpful. And then just my quick follow up.

Mike Stepniak: And then just my quick follow up, helpful to get some color on the separations. I'm just wondering, has there been any update on either the one-time cost or the stranded cost that you can give us any more information on either of those? So, so I think they are the one time cost we had indicated between the band of 1.5 to 2 billion dollars. We are on plan to stay in the same range. Given the large part of that one time cost related to aerospace, and we are early innings of execution of that, it's therefore it's hard to refine that number at this point of time.

Speaker Change: Helpful to get some color on the on the on the separation I'm. Just wondering has there been any update on either the onetime cost or stranded costs that you can you can give us any more information on either of those two options.

Speaker Change: So I think.

Speaker Change: They are the.

Speaker Change: One time costs, we had indicated between the band of one $5 billion to $2 billion. We are on plan to stay in the same range.

Speaker Change: Given the large part of that bundle.

Speaker Change: Onetime costs linked to aerospace and we are early innings of execution of that and therefore, it's hard to find that number at this point of time.

Mike Stepniak: Standard cost, we already started doing the work to look at standard cost, starting with the advanced material spin happening at the end of the year. Our confidence that standard cost will be, you know, eliminated between 18 to 24 months time is very high, post spin. So working on that front and we will make sure that we execute on the same. Okay, thank you. Thank you.

Speaker Change: Stranded cost.

Speaker Change: <unk> already started doing the work to look at standard costs, starting with advanced materials, it's been happening into the year.

Speaker Change: Our confidence that stranded costs will be.

Speaker Change: <unk> eliminated between 18 to 24 months time is very high.

Speaker Change: Post spin so working on that front end.

Speaker Change: We will make sure that we execute on the same.

Speaker Change: Okay. Thank you.

Chris Snyder: Our next question comes in the line of Chris Snyder with Morgan Stanley. Please proceed with your question. Thank you. Maybe for my first one, just on Q2 margins, you know, guided flat quarter-on-quarter despite, you know, volumes going higher and the PPE divestiture, which should have some level of margin tailwinds. I guess, is this kind of saying that there's some margin pressure in Q2 on the tariffs and then as we go into the back half, we'll get neutral per some of the earlier comments? I don't see any, I would say, large impression right now incremental to everything that we saw in the first quarter.

Speaker Change: Thank you. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question.

Chris Snyder: Thank you maybe for my first one just on Q2 margins guided flat quarter on quarter, despite volumes going higher and the PPE divesture, which should have some level of margin tailwind I guess is this kind of thing that theres. Some margin pressure in Q2 on the tariffs and then as we go into.

Chris Snyder: The back half, we will get neutral per some of the earlier comments. Thank you.

Speaker Change: I don't see any I would say March.

Speaker Change: Margin pressure right now incremental due to everything that we saw in the in the first first quarter second quarter to me looks benign in terms of any new information it feels more like first quarter.

Mike Stepniak: Second quarter, to me, looks benign in terms of any new information. It feels more like first quarter. And that $260, $270 that we guided, we feel it's appropriate given everything that's going on and our mix holds, our price is holding. So, I don't see any structural issues.

Speaker Change: And.

Speaker Change: The $2 62 to 70, and then we guided we feel it's appropriate given given everything that's going on in our mix holds our price is holding so I don't see any any structural issues only item on the margin rate one item I'll add to Mike's point is I think quarter to quarter. If you really want to look at quarter to quarter differences Esf's margin.

Vimal Kapur: Only item I'll add to Mike's point is I think quarter to quarter, if you really want to look at quarter to quarter differences, ESS margins were substantially up in Q1. That won't be the case in Q2. It's just the mix of shipments of catalyst, catalyst shipment by product, by product. Some are high margins, some are moderate margins. So, depending on Q2 has a different shipment levels or shipment mix compared to Q1, but that doesn't concern us at all. I think it's just a very normal course of this event. And overall, the guidance, what we did for the ESS margin, that still holds very good.

Speaker Change: <unk>.

Speaker Change: Substantially up in Q1 that won't be the case in Q2. It just the mix of shipments of catalyst catalyst shipments by product by product. Some are high margin somewhat moderate margin. So depending on Q2 have the different shipment levels, our shipment mix compared to Q1, but that doesn't concern us at all I think I just have a normal course of <unk>.

Speaker Change: <unk>.

Speaker Change: And overall the guidance what we did for the Es margin that still holds very good.

Vimal Kapur: Thank you. I appreciate that.

Speaker Change: No yes. Thank you I appreciate that and then maybe venmo just maybe a bigger picture question on industrial automation portfolio. The business has leading positions in process building and warehouse theres not much of a discrete presence for sales into a factory you talked earlier about willingness to do M&A. So I guess my question. My question is do you think it is.

Chris Snyder: Then maybe Vimal, just maybe a bigger picture question on industrial automation portfolio. The business has leading positions in process, building, and warehouse. There's not much of a discrete presence for sales into a factory. You talked earlier about willingness to do M&A.

Vimal Kapur: So I guess my question is, do you think it's important for Honeywell automation standalone entity to have discrete exposure in the portfolio? Thank you. Chris, you know, as we're looking at the equity story of Honeywell Automation, the way we are looking at it is our exposure to the end markets. We want to build a portfolio which is exposed to high growth and verticals. So examples of that would be LNG, example of that will be data center, example of that will be semiconductor. So rather than looking at the business with a lens of process and hybrid and discrete, we are looking at the business with a lens of end markets and how much exposure you can have.

Speaker Change: Important for Honeywell automation standalone entity to have discrete exposure in the portfolio. Thank you.

Chris Snyder: Hey, Chris.

Chris Snyder: Looking at the equity story of Honeywell automation.

Chris Snyder: We are looking at it is our exposure to the end markets.

Chris Snyder: We want to build a portfolio, which is exposed to high growth end verticals.

Chris Snyder: So examples of that would be LNG example of that would be data Center example of that will be semiconductor so rather than looking at the business through the lens of.

Chris Snyder: Process and hybrid and discrete we're looking at the business through the lens of end markets and how much exposure you can have and we'll share more with you.

Vimal Kapur: And we'll share more with you when we are ready. We have nothing for or against discrete automation. It's not that we like or don't like it. I think it's a factor of our exposure in that segment is low. That's a fact. But if there's any attractive opportunity which is exposed to higher growth markets, as we have demonstrated in our acquisition profile, we'll absolutely execute that. We are looking for an acquisition which is accretive to our growth rates and if possible, also accretive to our margin rates. We don't want to build on board something which then we are being defensive on our growth profile.

Chris Snyder: When we are ready.

Chris Snyder: We have nothing Florida against discrete automation, it's not that we like or don't like it I think it's a factor of our exposure in that segment is that's a fact.

Chris Snyder: And the attractive opportunity, which is exposed to higher growth markets as we have.

Chris Snyder: Demonstrating our acquisition profile will absolutely execute that we are looking for in acquisitions, which are accretive to our growth rates and if possible also accretive to our margin rates, we don't want debated onboard something which than we are.

Chris Snyder: Being defensive on our growth profile, so more to come there.

Vimal Kapur: So more to come there. We remain active in our M&A portfolio and continue to outlook for good opportunities. Appreciate that. Thank you.

Chris Snyder: We remain active in our M&A portfolio and continue to outlook for good opportunities.

Chris Snyder: I appreciate that thank you.

Operator: Leslie, we'll take one more question. Thank you.

Chris Snyder: We'll take one more question.

Andy Kaplowitz: Our final question this morning will come from the line of Andy Kaplowitz with Citigroup. Good morning, everyone. Thanks for sending me in. You mentioned that HPS is expected to lead industrial automation's growth in 2025, I think, in the presentation, but it didn't lead growth in Q1, I think, where else automation did. So can you talk about the visibility you have in HPS going forward? And then while you're having conversations with your customers, are you seeing any hints of CapEx delays or project deferrals, and what end markets or regions are driving HPS? Yes, HPS, number Andy, if you see on a reported basis, as we've said in our prepared comments, the we saw strength in our aftermarket services, that certainly drove a lot.

Speaker Change: Thank you. Our final question. This morning will come from the line of Andy Kaplowitz with Citigroup. Please proceed with your question.

Chris Snyder: Hey, good morning, everyone. Thanks for fitting me in.

Chris Snyder: You mentioned that <unk> expect to lead industrial automation growth in 25, I think in the presentation, but it didn't lead growth in Q1, I think warehouse automation didn't say can you talk about the visibility you have in <unk> going forward and then why you.

Chris Snyder: Having conversations with your customers are you seeing any hints of Capex delays of project deferrals, and what end markets or regions are driving EPS growth.

Chris Snyder: Yes, Sps number Andy if youll see on a reported basis as we've said in our.

Chris Snyder: Our prepared comments.

Chris Snyder: We saw strength in our aftermarket services that certainly drove a lot.

Vimal Kapur: There are other businesses which are reported as part of HPS, thermal solutions and smart energy, they saw a minor, you know, pressure. So net net, the whole segment was reported as flat. But if you look at the projects and services in HPS, they are performing on expected lines. To your question, are we seeing any pressure on projects? I think with a combination of the lens we have both on UOP side of the projects and HPS side, I certainly see some push out on projects, which were sustainability related. I think customers willingness to spend money on sustainability related investment, energy companies are becoming more cautious.

Chris Snyder: There are other businesses, which are reported as part of Hbf thermal solutions and smart energy they saw a minor.

Chris Snyder: Pressure so net net the whole segment was reported as flat, but if you look at the.

Chris Snyder: Projects and services in Sps They are performing unexpected lines to your question are we seeing any pressure on projects I think that the combination of the lengths. We have both on the <unk> side of the projects in Sps site.

Chris Snyder: At least see some push out on projects, which have a sustainability related.

Chris Snyder: In customers' willingness to spend money on sustainability related investment energy companies are becoming more cautious.

Vimal Kapur: And certainly we expect that to that factor to persist. On other side, we see very strong trends on growth in gas processing and LNG. So kind of one offsets the other. And that's why we have a portfolio, which is very diversified. We cover all these end markets.

Chris Snyder: And certainly we expect that that factor to persist on other side, we see very strong.

Chris Snyder: Trends on growth in gas processing and LNG, so kind of one offsets the other and Thats why we have a portfolio, which is very diversified we cover all of these end markets. So net net.

Vimal Kapur: So net net, we do believe that, you know, we will have a normal year for HPS in 2025. helpful.

Chris Snyder: We do believe that.

Chris Snyder: We will have a normal year for Sps in Green quantified.

Vimal Kapur: And just back to Aero and defense in space, you have difficult comps essentially all year in defense, but you delivered double digit growth in Q1. Are you seeing more strength in international defense now? Or is it growth relatively balanced? And then it doesn't seem like you have or expect to see any impact from Doge, but maybe you can elaborate on that. Yeah, so I think first maybe just answer the DODGE question. We don't see an impact. Majority of our programs are funded or have been funded, and those are multi-year programs. So we don't see an issue there.

Speaker Change: Helpful and just back to Aaron to Central space, you have difficult comps essentially all year in defense, but you delivered double digit growth in Q1, I've seen more strength in international defense now or is it growth relatively bounce and then it doesn't seem like you have or expect to see any impact from village, but maybe you can elaborate on that.

Chris Snyder: Yes, So I think first maybe just answered <unk> question.

Chris Snyder: Don't see any impact majority of our programs are funded or have been funded and those are multi multi year programs. So we don't see an issue there and like I said earlier internationally defenses.

Vimal Kapur: And like I said earlier, international defense is continuing to show strength and a lot of demand and interest out there. So I don't think the team will have any issue in terms of managing the comms on the defense and space side this year. Thanks, guys. Thank you, Andy. Thank you.

Chris Snyder: <unk> is continuing to showing strength and low demand and interest out there. So I don't I don't think the team will have any issue in terms of managing the comps on the defence and space side. This year.

Chris Snyder: Thanks, guys.

Speaker Change: Thank you Andy.

Vimal Kapur: Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the phone back to Mr. Kapur for any final I want to express my sincere appreciation to our shareholders, our future shapers and our customers for the unwavering support during this transformational time for Honeywell. Our future is bright and we're excited to share more with you as we make progress in delivering with our commitments. Thank you very much for listening and please stay safe and healthy. Thank you.

Speaker Change: 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.

Kapoor: I want to express my sincere appreciation to our shareholders, our future shippers and our customers for the unwavering support during this transformational time for Honeywell, our future is bright and we're excited to share more with you as we make progress in delivering with our commitments. Thank you very much for listening and please stay safe and healthy.

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

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