HON - Earnings call transcript Q3 2017 | Honeywell International Inc.

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Operator

Good day ladies and gentlemen and welcome to Honeywell's Third Quarter Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mark Macaluso, Vice President of Investor Relations.

Mark Macaluso

good conference welcome call. and quarter Honeywell's Christina earnings XXXX you, morning to and third Thank Financial With CEO, Senior Chief Darius here Adamczyk, Tom me today and Vice are President President and Officer, Szlosek. and website including webcast, reconciliations, on and call at any This www.honeywell.com/investor. are non-GAAP available our our our Note on businesses see today. this as are in the of elements contain forward-looking we view that that world statements presentation based best and of them change and that we ask interpret you in can that light. them elements Those and uncertainties Annual risks affect our XX-K We other our principle identify that performance and Report and the Form on SEC filings. we our and end questions. quarter, will and This ample always for morning fourth our for your XXXX year leave review the as the share third at quarter, full the we results for guidance will financial time

to I'll CEO, that, turn and over call the President with Adamczyk. Darius So,

Darius Adamczyk

you and good Thank morning everyone. Mark

delivered the week to expansion quarter previewed July. exceeding X% earnings. Honeywell strong we quality guidance the margin high another As and sales leading provided we organic high of terrific in end up growth were last with Sales

aerospace performance considerably organic than growth pace Intelligrated every solutions in and which developed at technologies and automation X%, the XX% to and business more warehouse Our business for double-digit market business our led continued grew by grew materials aftermarket grow UOP. sales

consistent strong of the points our came operational guidance. per we and and UOP basis high offering technologies and up a than leading in share building at XX% more basis from of saw high growth by by both was range that for on $X.XX expanded India performance catalyst the driven regions. our end to growth solutions. strength demand within addition a segment businesses In in and our in We year-over-year XX% a continued and Organic productivity by quarter safety sales earnings home XXX China up margins growth continued in in strong differentiated driven guidance all this

to of flow Free restructuring conversion. representing remain progress and achieving about was year guidance. billion XXX quarter track I quarter the to full regard the improvements can and more also we million Overall of our our encouraged operational cash our I on We for made cash each other businesses do XX% am we flow on of by the the all is During continue funded there focused we but much about are X.X projects. cash free improvement working growth to our sales with achieve. to am with and momentum capital driving our businesses cycle. organic pleased

to year last a per week As share earnings outperformance full guidance XX%. our we to X% of our to result raised continued $X.XX $X.XX up

shortly walk will As to a raised minutes. we our you you top guidance reflect will sales stronger full updates line hear the few through year also performance. those this morning in Tom

and week recall Systems. announced of last you As spins of may most Transportation Homes the

independent focused, expect Homes to a us strategic, the looking come and and Transportation with quarter's As and putting am this a better in a results Honeywell to position that will to these continue results more tailored, make companies us. finish from same company better decisions deliver synergistic actions value to you've XXXX. be long-term Systems capital strong I to and pleased forward creation. will time growth make positioned the At oriented, to enable

excited operations. announced increasing will Honeywell produces operations uptime. films. use Advisor failures aerial Platforming enhance which while continuously Connected Honeywell improve employees. combines the customers monitors and hazards become efficiency aerospace plastic help for Materials UAV before aromatics The will called Honeywell safety The detection the turn structure proven gas of Advisor monitoring and InView and for Technologies Falcon new issues inspections event Process made safety in will Optimization software eliminating Honeywell Honeywell Airport, data in which about X+ CCR to performance Technology Let's also to Paraxylene International big system. Performance ongoing performance upgrade on prevent hubs extensive Both repair, Solutions to and of services location light early optimize and one and plan critical a will with to performance cost experience Plant service Asia's its use or of oil outages analyze, enhanced energy, infrastructure, effective complex its Home of software combination precursor to provide to utility, Honeywell Intel's to and costly. will third Connected and failures. major selected data. unmanned and learning aviation business Reliability progress cutting the process monitoring mitigation machine slide Lumpur that response and data industries system a unique Plants will to control system aeronautics driven the Building applies plant vehicle accommodating will use has information The operation. data and and use help we X varied launched and customers this Kuala Technologies most Company Honeywell airfield and eventually service Building our at inspection In company UOP analytics fibers they ground log, Kuwait while some lighting We're services In Production improve of discuss commercial of predict across Honeywell's mode Process improved improve aircraft and whose KPPC time real quarter. and determine models streaming edge and traffic. verticals InView. the promoting structural

to deploy that we to manage customers Mobility continued for Edge more industrial operating and area. system handheld efforts any beginning will the easily to is which than in making develop it competitive recall future for refreshes earlier for to allows device mobile the computing the upgrade I'm you quickly our and Android for devices. our I'm announce Safety Edge Google's standard android pleased becoming results and customers Mobility quickly Solutions the Platform. Productivity offerings to users launched this week market traction offerings our deliver with In We offerings easier to Connected through Plant in this versions apps. pleased

our of the to that Mobility The solving conversations. and class call our With makes development up conducted research have across -- easy our and that of best as deployments of there platform we We Tom turn to happening the come I'd during points over approach platform to scalable the this Clearly to portfolio customers. voice comprehensive quick pain the XXXX. customer result our like things for a are results head lot in prior Edge into to discuss customer results. exciting rethought in the that

Thomas Szlosek

on I'm morning, X. good Darius, Thanks slide

third to of X% growth. organic our met guidance every X% achieved we contributing end mentioned in of from quarter our XXX the margin or on billion Darius of selling exceeded As XXXX was our sales X% sales the which by basis the XXXX to our high X.X businesses effective XXXX each XX% We've momentum. in profit operational exceeded driven quarter excluding and guidance expanded the growth up impact points from Segment continued is and segment divestitures and our focus execution. of

line had guidance. some favorability from preview lower incentives Earnings in XXth. also on in was October was We OEM $X.XX our share which our in per with aerospace contemplated

costs projects restructuring at the Our a enabled and originally cost tax projects announcements. fourth quarter, These structure, will lower which further expect XX.X% the had improve result in third we planned. starting begin rate than to beyond residual our in of drive additional address productivity as quarter what we came the anticipated

quarter. have of our and refinery impact to proud into quarter several A in how issues was employees about the earnings employees delivered and ongoing $X.XX experienced for through XXXX assessing was had the The safety weather additional business. year-to-date cash impacted third are and the all XXX despite these our demand more fourth push about responded challenges Solutions Excluding asked Each gas pleased cash number impact mitigation quarter to year-to-date. XX% in and leading made due our XX% share overcome We're the third of Home from payments to and loss it safely. people the XX Building that maintenance event this earnings businesses million close normalized several continues Coast pushed customers any tax of of branches process closed and ADI to this We're Puerto all divestitures Technologies. were equipment In aerospace million approximately periods, and million about flow in lower earnings able of tax planning our restructuring of for other quarter the year-over-year. of despite products and the per our team Process SPS management some growing related Free way. to and we and with XX% from in sensing outs. from at which timing extreme temporarily of six more projects of up especially XXX weather impact for actions. to strong revenues Gulf the both was sites were advanced We throughout Rico, be

As conversion performance flow strong Overall as Darius our results businesses. XX% expect to in third improving focus Darius and we into beginning cash to high delivered is mentioned, we the working by was deliver Free this our results and quarter capital in XXXX about driven operational beyond. on quality continue mentioned.

aviation year-over-year general also regional in X in with of quarter high by aftermarket lower timing transport by sales up market two of was this continued slide points X%. as quarter Overall the primarily aerospace, the for of Strength the for was demand up percentage after business the our Starting to OE and aftermarket The upgrades. our expected. commercial and spares turn modifications, air grew sales the XX% customer for driven retrofits, incentives driven results. growth guidance. sales impact segment customer Let's demand. were and above end continued with strong

XXX, to air platforms AXXX, platform transport timing shipments general avionic as new certain better were well. including and and accelerated the business in the demand of higher with strong engines than the anticipated key demand. primarily side Sales and growth saw AXXX, we due aviation OEM's on regional and On

the of year-over-year impact of the driven X% including in favorable commercial BGA, Europe, the the and driven weight products. XXX quarter commercial segment impact distribution points with again by and and more customer of Honeywell U.S. defense helicopter are in with over particularly early side services offset up of energy by sales excellence new the gas impacts, by was by space launches for increases vehicles sales quarter the anticipated grew the on smart encouraged sales incentives our XX% market up as ADI strong a was business. in in Aerospace and within for Growth XXXX we Transportation quarter supply turbos or region in Systems and continued organic is double-digit benefit primarily in The the U.S., Defense the were continued our space the year the every China. business. Home XXXX. execution, in basis and productivity expansion in was force, government was of turbos related on-highway fully line saw Technologies next increased regulations divestiture the sales of vehicle and not business continued recover X% by in in strong. year-over-year. down than and storm While in to the the late business expected strength reporting vehicle growth margin the of from Backlog weakness light Solutions vehicle until business the we ongoing every up In investments initiatives, strong core signaled, in based enforcement commercial in we lower China Building the Building driven distribution X% business markets.

X%. coming were with both up demand of voice unable at Vocollect and significant in a between sales continued booked rollout growth of and another European were strength products up with cycle points mobility and and significant short chemical thermal Materials by points had of Productivity the meter and for demand processing XX% our sales in Productivity well There Darius sales as backlog to Asia-Pac, demand from and well year. We the for high PMT and materials key exceptional with had existing water guidance control software Android we're from our And demand HPT services Within by from quarter China. gas software Segment partially Workflow expansion growth growth global well double-digit saw commercial were our up came as achieving demand roll China, saw business range margin large former the the Safety Intelligrated up benefits regions within of and entire Android to growth, sales in the in for across Performance based -- solutions address licensing, increases strong business had unfavorable the growth margin quarter good HPS of India for catalyst, of in single-digits continue new portfolio. UOP ongoing from business. strong demand robust unit by strong as reload up sensor as line. product was printers. and the impact offset expanded PMT driven regions Margin as record continued by XX% in strong and Solstice, mentioned quarter strong growth clean our last that and mega-projects like the PMT's is products excellence productivity quarter new quarter customers. Sensing businesses. X% customer the mix with In Technology low Advanced smart catalysts sensing East. Orders in efforts, commercial as within across high-end Products several controls equipment, particularly double-digit in There sales program organic and driven and products and with our Solutions, execute leverage volume as high In In of project In in orders double-digit volumes every and see resins large continued third another strong Middle were large expansion. divestiture products. line distribution. growth including working year-over-year scanning of a growth has products our excellence business businesses growth Movilizer our another basis and China. warming of the organic recorded solutions. amount sales IoT volumes. businesses in customers this businesses air year. XXX XX driven solutions results we next driven broad remained the and outs in in gaps within anticipate our basis the we growth initiatives XX% and from PMT with our new outstanding all we'll for launches for by in product the

partially A from the X Slide offset in unanticipated per all as XXX and SPS performance organic Darius overcoming driven by Again X% commercial risk weather share the while from excluding excellence. great impacted recovery by the impacts productivity the our personal for across quarter investments impacts mentioned disruptions. lines the related driven points dilutive walks third quarter. third earnings our consistent gas in quarter Finally on share M&A framework. equipment the basis guidance the the XXXX to Safety hurricanes quarter from in in expect Safety grew first per in continued were of XXXX were an our demand and third benefits, fourth divestitures the XXXX. we mostly fully offerings. XXXX. our Earnings sensing safety modestly general with the a primarily from protective exclude quarter in baseline high $X.XX amounts year the approximately those by segment third expanded of volumes, in and from margins basis We higher and quarter businesses restructuring by

we purposes impact the was have XXXX comparison quarter also share. the rate For to in $X.XX for guidance, XX% our assumed quarter effective which the normalized third tax third tax per rate of the we of

at in our items of due this all and quarter restructuring In restructuring growth funded approximately sale were earnings XXX XX%. is executed coming by our majority line of to from flat Below deployment lower commercial in projects. from by quarter the tax million partially roughly third services quarter XXXX savings profit items tax $X.XX top rate gain absence line Gold As year-over-year. government the well offset we business Other our the efforts you interest, than segments was head the business were aerospace improvement the reflects from the led the nearly at which win a as primarily the restructuring of share strong count, enabled to expense non-controlling HOS the slightly third planned quarter as excellence previously aerospace. the of partially see growth former four overwhelming including and This impacts segment in the lower can with contributing year-over-year. by from

margins and our offset X% quarter. turn by sales the for on aftermarket to on up sales aerospace In in and timing the in growth a We expect X increased by expand driven to of transport transport to basis by to expect mid air In partially single-digit systems. spares weakness. and business deliveries inflation. drive shipments by X%. are U.S. slide air BizJet fourth strong flat X%. HPT the customer organic net offset in driven commercial expectations commercial have OE. timing slight for by organic excellence, Let's flat driven repair of transport partially be Europe points legacy platforms growth low of anticipate declines the the aviation expect we of in overhaul after should defense OE strength growth gas total demand in leverage, In expected declining modest space is spares XX to to In roughly quarter to activities air growth and the demand. market offset on backlog restructuring X% benefits, of in we turbos transportation by we for healthy be roughly impact to Demand Aerospace and ongoing expected sales core XX this volume defense continued by anticipate productivity

move third slower businesses as meter executed products and Within will in we rollout we the the smart growth albeit a at pace large continue the second quarters. in smart past energy

HPT in quarter introductions to and XX In backlog each by building expect business prior improved earlier result excellence XXXX points of was contract head ongoing mentioned I excellence. commercial actions Security and fire. and distribution combined security will product strong continued to partially fourth the commercial as driven margins the a global restructuring with expected solutions within the single-digit initiatives. and low drive basis mix the in product distribution productivity strength continued from growth to in segment continue quarter. by XX and some saving improvement offset anticipate are that new also we wins We

Energy results a results and PMT's in was HPT to the from reminder and earnings. Performance Smart quarter their As Technologies moved will included be fourth with Materials beginning recently

file to driven of to Smart movement this Form sales expected outlook basis UOP continued as SEC business. deliver another XXXX by and loads the by segment on to natural to Before quarterly XX% Russia growth In Technologies organic in expected we and and the backlog. initial are strong the Russell is to quarter of North Middle our as expect X-K the strong America well sales recovery reflect Performance our of results strong projects the business with XXXX conversion to up XX% December Energy to restate be Materials an in UOP driven in East. gas catalyst

XXX XXX XX% demand to so margin of the basis Safety the safety catalyst fueled PMT products. unfavorable an solutions PMT growth of following double-digit range We mobile our air of basis points significant an had safety HPS Productivity margins Advanced Solstice in conditioning. be contract In mix by of our hurricane instruments. we will expected which by catalyst the organic an expect for we of expansion, business of mid single-digit expect on outstanding we field demand refrigerants for UOP as are expected of versus In resumes Solutions up basis generate truly and fueled primarily the fourth growth maintenance basis. sales thermal are year expect refinery in quarter growth to robust our will driven year. Materials full still year-over-year. for the with third for In PMT XXX points Even to which segment entire growth quarter and in to than expansion points more XXX drive X% X% sales impacts related In equipment margin. XXXX expect

expect to We be and Intelligrated margins that driven the strategy the and new and the the will elevated Controls XXX our business including normal we'll productivity products strong and seasonal at strong see Growth XXXX throughout well higher as business driven by volumes quarter expect execute the are on ongoing this and as repositioning continued growth expand by direct will return demand. growth and by quarter business points backlog primarily to that building in from we robust for retail and another selling Vocollect SPS Movilizer. demand and Sensing Workflow expected productivity effort. XXX results Solutions as to orders basis

For basis organic earnings and expect total quarter in margin growth per expansion of to leading we to $X.XX points to of sales XX another Honeywell XX $X.XX. of strong share

and projects will by year we two fourth our quarter be organic quarter to sales and impacts difference a as to quarters well full have XX%. stronger with Intelligrated the between fourth rate. two the of tax M&A business effective service as that projections the have we the about additional rate the We effective and you enabled resins see expect low On on divestitures, expected acquisition. to XX% We dollar. lapped this intend page this impact tax the closer as business undertake government U.S. aerospace the of past chemicals big restructuring the The is primarily due our

our businesses costs week. and as work for progress. not the to We're to full spins Our we year Systems provide contemplate define Homes prepare does significant cost those more Transportation and working quarter announced details streams and last and fourth will guidance we

and outlooks XXXX stronger performance EPS to materials charges, XXXX of year excludes X% return to Let's to $X.XX sales move guidance impact do X% of full asset a X% year in divestitures, $X.XX up and per billion to and reported. technologies. raising XX%. debt as XX.X range mark-to-mark by of the be X% to the slide share to Based our to adjustment fourth X, on of new we expect refinancing quarter low-end billion and aerospace pension discount XXth and We're range current the we reflects full $X.XX sales organic up last performance new assumptions not up guidance significant. mark-to-mark X% pension growth raised the adjustment. rates to week XXXX XX.X September and This to our This

on change year You have our our flow year-to-date the remain businesses segment to full is narrowed XX% to working free guidance. can flow estimate up focused revised side of guidance the We has The remain right the our execution. within and the initial guidance margin which the about of basis and sales page. for XX see to free no on There's capital cash our cash been performance continues good year-over-year. points improving each

Let me turn beating quick help up, robust each to performance third that commitments. Honeywell, strong continued for our a meeting growth. across sales We will slide growth XX and the the backlog performance outstanding of fuel businesses for segments another their wrap and marked orders quarter or had

We finish between with the share of $X.XX and year expect sales X% X% organic earnings to and quarter to $X.XX. growth strong fourth per

per For share. range sales share per the new XX.X to week, guidance guidance earnings raised billion last $X.XX we provided new $X.XX reaffirm our year to and we range XX.X a the to billion of

move results on on and announced that cash Mark of With year. share owner Q&A. quarter every outstanding make drive to a result optimizing future to Honeywell we're that we We Systems the investments growth, to let's Homes the to costs be eliminate also delivering Transportation announced as of week well expect remaining our as driving we continue profitable last that means businesses. as spins of productivity, residual focused means a At value, to and to flow committed begin portfolio the growth but every as

Mark Macaluso

and Tom. are now to your Tom Darius available questions. answer Thanks

could the for you please if Christina lines So Q&A. open

Operator

Instructions]. [Operator

Deane Our from first question with coming RBC Capital Markets. Dray

Deane Dray

have this everyone, Thank I and on of sorry some I'm you, late good you morning covered signed before. may so

was the use the businesses of clean-up kind I divested the will announcements the for earlier points just for I Honeywell and question potential there on announcements, had of announcement, that on the brand of please? start follow-up spin One divestiture the a it's

Darius Adamczyk

think the brand decisions of not as -- with or for I to to how either Honeywell the we're Systems to business. of terms do we're Transportation going what those have Homes it Sure, relates been the in made going the some brand

forward think clearer part that QX as more we be I different have and clarity we a that we of to it's of communicating but and in work So as move it are on our will provide of QX lot there will that be that becomes options going next product year. and we

Deane Dray

goals just just portfolio how software way question you're about envision, progress perhaps the the opportunities a M&A a in on as service Darius at of the and that some to broader looking the terms you of industrial shaping transformation software for portfolio? a And report Honeywell emphasizing within

Darius Adamczyk

overall is is up I'm progressing much that. pleased line is how It our double-digit year. Connected You're right terms Enterprises in this of even than expectations. very which up very in higher are of Margins

which although our of business exciting actually very, big is terms look itself plays. for small acquisitions of In including cyber relatively business the in have software technology and all one and opportunities we expectations. in to pretty We've continue it's segments QX landscape we is growth that at the our made acquisition actually very it exceeding the area software

on continues out build at make we make variety, progress be and of continue in the we're looking on on more that So P&L will go. kind general overall to the those to on Enterprise Connected bolt the more are acquisitions partners the software our we as but of both Sentience platform progress signing the up

of So of very we're what continue important part it’s And results. that doing. the generating excited be right the to most about we kind

Deane Dray

terms the question, the macro the environment just think in hear in your outlook XXXX strokes, U.S., broad this you're last where of but know we're particularly of on it Got going outside outlook call you more well and do U.S.? to I positioned both

Thomas Szlosek

Tom. is this Deane Yes,

trends know November-December. good in will of throes our any you hour we Business a get at the as defense into go in Jet XXXX see with luck now. of We the point tail right flight And help I planning the looking end we of up. our the businesses. are the at aerospace, some lot side. activity, mean of some details in is get from strength We'll continuing looking the most you through We're at

trends we business and but the year and not those business. been continue. Business our usage lot the denigrate installed had to building orders and We're of Although it's only last the all are Jet for orders not mean year building of business. base by so expect last and encouraged front-end were really great I by in but to performance HPS which bodes in backlog strength particularly a well we we UOP lines of orders aftermarket remains than strong, side. seeing they their PMT service type in PMT in

well. So perform really strong trends there. In SPS very continues Intelligrated to

over is expect XX% the businesses safety got SPS that which We've expect the well continue so, to the productivity that to growth And to and with and products e-commerce. good and software business continues trends. fuel the backlog we We well. in Android vertical do the trends excellent on

You growth see fourth expected into quarter continue that next I and year. think we'll saw our

growth quarter some our the of to at if every quarter into equal saw So trends, see overall and least and I fourth should be some next this organic year third hopefully you continuing. continues year. guidance has improved trends the that up that quarter growth Deane rate as the into holds

overall conditions ahead strong pretty So we encouraged. are

Deane Dray

you. Thank

Operator

Winoker question next with Steven our take We'll from UBS.

Steven Winoker

good and all. Thanks morning

Darius Adamczyk

morning. Good

Steven Winoker

cycle, the that given in but tailwinds around important the refining of a for of of challenges equipment a bit one now very overall expand side are expecting what versus know UOP -- structural line, mean segment? of this, you maybe comment -- got terms in little lot could on of given that top kind you Tom's that length the cyclical Darius your you PMT you I thoughts and I tailwinds of

Darius Adamczyk

to It watch Well one for very long Steve pointed important is a bookings. is most the know Tom our bookings we as -- is year this things going we much end -- by cycle you know probably the up that of year. versus that to for of double-digit always business out the it's be last end fact of up going the a backlog’s

We continue bullish, lot to of winning are work. a be we

it's you of needs We which as is it in has high about be important exactly development lot are strong PMT where and a winning in really to developing and particularly to I find think growth to be be winning. work progress regions the is our of a because the lot and of where regions strong

markets to So a it's is perform. this me win that give rate comfort in it's great of deal to such China, continue as going India

it's and quarters it is the we're into gas those biggest whether in with a of business, our business good of of processing way orders. And backlog been the strong across our in go catalyst and the strong another strong is have order is segment all enjoyed the it whether kind particularly position strong all by the booking Our we seeing in XXXX terms which QX expect news catalyst QX position. of ever

moving in much all PMT overall are right direction So the especially UOP. of very for but things

Steven Winoker

had Thanks, that's you On know SPS helpful. me about that's month if in about a I X% think of right. that let organic, Intelligrated

of there? up you a I say the better been side low know, down is which give that was single-digits must but the understanding Can than organic don’t so of productivity more XX to ex-Intelligrated have color on mid it business maybe ex-Intelligrated performance the just something. So you rest mobility that and a or on little

Darius Adamczyk

and actually see growth see communicated if mobility it's the we due up XX%. scanning the previously every good products didn't depth of business of side platform we around there's look to Yes, you because only at The the actually business. we was in the was some productivity growth close the where challenges to business and

is have we we as but launch productivity we and challenged had product have challenged business one product the So just this week. new small is exciting area announced which

the coming segment of mobility in the in middle the November in of and launches new set We have more coming of February. another middle product

these I'm where we the have to So as SPS going as about new launches performance to XXXX start want their strong the be But very offerings. than on very productivity around we're particularly a but and turn that is one issue across by board business about in the QX overall not in aren’t QX and confident other it it products surprised we and performance the we mobility outcome. you

Thomas Szlosek

activity as particularly overall gas business are really the that -- strong know mention safety projects of the the gas and Yeah, and that I sector as outs vertical you and storms the Darius business safety. trends was and overcoming of in lot is there not to in said. a the oil hurricanes big push and monitoring a mean affected the there particular. But

Steven Winoker

positive it's are -- still? numbers it Tom, so Just though right, X% was up ex-Intelligrated

Thomas Szlosek

yes. Absolutely,

Steven Winoker

okay. Yes,

Thomas Szlosek

one as Steve ex-Intelligrated no business the the X% not Darius wasn’t numbers every I'm that or just No, more than X%. of I said, saying that were up X%. was Intelligrated mean contributing

Steven Winoker

thank you. great, Alright,

Operator

from with next our Tusa take will Steve question We JPMorgan.

Stephen Tusa

Hey guys, thanks this It's on for call able having me calls ask questions. morning. get on the nice to to and be

question, how guys you you first Just much? by your raised dividend recently

Thomas Szlosek

Steve. XX%

Stephen Tusa

that faster the And few years? that continued and do earnings forward commitment to than for has drive next going the

Darius Adamczyk

Go Tom. ahead

Thomas Szlosek

that of end And continuing that Day the commitment our idea Darius made, year Day the faster to growth. than with at plan about that. -- up was coming we're five we've Investor of the the Investor the talked for the earnings dividend the at Yeah, raising

As will but share. with the we're the we track watch minimum growth what earnings we'll dividend per earnings and committing in forward it to look keep line that growth

Darius Adamczyk

to is that, five we to said, for period period to Yeah, so that We're as year would or they've we're The going which I than a pace with five XXXX ago. than is consistent after the committed -- it what what be grow and earnings. that to ends we set committed Steve earnings. going in equal as faster is dividends say greater at years

greater to than greater provide February that We are going or expect clarity on Investor But equal Day. in be our that. to I'd to

Stephen Tusa

remind of should just your that, flow have Right target higher towards for XXXX or cash what free kind and XXX%, range, that so kind of the of -- have you seasonally XXXX? guys the can that us suggested the talk end at is cash the we you about be well is

Thomas Szlosek

to XXXX that to rate is about Day -- in really at talked largely I expect XXX%. the but at run and be we sticking way at that the it Steve XXXX Investor Yeah, by

Stephen Tusa

then last that a suit, with a you in business and sell in X.X% X% your and the different is clearly and the core was know there I for not strong little is on or the around math solutions productivity getting math one maybe coming being Okay just growth prerequisites something like safety side. But question, would products are new Android kind has not first with that get really why products But place. growth, because that an I'm in Intelligrated the sure would new expect coming changing productivity? I so fray orders, of and to tremendous core that these apart mean picking matters it we are year of grower organic you is into some better not that expect next you that

Darius Adamczyk

improved talk of it in Yeah, because through the accelerate so takes QX next the launches a the new gain expect these generate orders mean rate I product but it obviously we traction. bit quarters had top one has absolutely. we I really I the little that's other both short continued margin a products, we all business segment have expansion. the answer is and to a about coming and in productivity much probably are growth bit as to across it been growth is of struggle our to but bulk one year think launch a products yes. businesses and productivity And story line expect -- QX of time of nice it where

Stephen Tusa

a why I your segment do live for ball. would that understand top eye Congrats organic like we people tier the and numbers everywhere first on adjusting can't just without guess keeping a can Yeah, I so growth that. on

Darius Adamczyk

Steve. Thanks

Operator

question next Gautam Cowen our and company. from Khanna take with will We

Gautam Khanna

competitive wondering side, of and was whole to Collins perspective aftermarket I UTX into have thank guys. their and you goal could stated Boeing if on you I the any the thought provide early any thank moving on initiative Avionics the aerospace of more implications Yes, you? given kind of

Darius Adamczyk

to launched starting way mean the Sure, this obviously greater on the connected for that having our we're already through to we we vision competition. well in a systems and have as wheels relates or APUs, and brakes sure that look connected is analyzed And so and most not are that the something have aerospace us segment of where aircraft. get puts for or I I all as electronics delivering matters. and am it's particularly scale And aircraft UTX UTX one going our anything have yeah, double-digit. for the avionics strengthened the it's through we're so basis kind deliver because that that as systems Collins. we of the something that be it's disadvantage is marching mechanical marching in currently Collins Collins than technology but implement We mechanical would are maybe our I think aircraft quarter a have we and front-end I'm viewed gives as matters already this be to And capability and theoretical both never par vision at importantly not have on vis-à-vis merger merger. that's any differentiation to both creating us that you excited well our really growing capability with going as of as and and connected. us, UTX I And of systems What that to it

was what and In what are important terms going have our and for doing. lot aircraft relationship as continue what well. end the own and services also clearly Boeing and and our a we to of avionics we're work with customer highly for which growing airlines connected the a us the RMUs means do we respect is to doing. and Obviously services strong support. valued that we of vision it they're have with and announcement clarity a Boeing we exactly yet There's not But users, and

with going So, as can to win-win we be create we as Boeing and are both supportive stay companies. a and them sync to for in

Gautam Khanna

Thanks there Elster portfolio of the you Darius, expect at you of larger kind bites maybe some when couple M&A, sized billion going the or announced, should we more that or somethings…? pipeline on just a follow-up are any of properties in or look and are you've forward are attractive there actually the to

Darius Adamczyk

would that anything our on but know things is sweet bolt know that's there on looking. pipeline variety would more where bolt are would spot more always happen attractive you are type say I you of is bolt-on. acquisitions. variety I expectant And But, never our say and could more but expect of really be we the built would Well, that's I of I

Gautam Khanna

guys, a lot Thank good luck.

Darius Adamczyk

thank Yes, you.

Operator

We will take Inch Deutsche John question next our from Bank. with

John Inch

to good when you, commentary, and everyone morning Thank it companies allow Tusa's question. would echo I is Steve like nice also

to want was… I start, So

Darius Adamczyk

John. please to aim We

John Inch

punches the I it. with roll you appreciate Yes,

So, calling company spreads or on we a debate you're a discernible little little are I with improving not spreads various curious. there you but is still is that? impact, there's guys and pricing realize have out are any just pricing, should [indiscernible] of around how huge the about of trend there think bit rise this bit a -- companies

Darius Adamczyk

toes, from Yeah, and services no, and teams an of a our capturing really our the value very businesses, I'm of provide we're adjustments, for made and the thing stayed the all they products all one our mean have on our are customers. really bit that the what their obviously but in of are some I proud commodities inflationary environment impacts understand

and think I we I that seen cost more engineering on in probably than been required. the think make adjustments active productivity. side substantial program And made this overall produces the well also we we a a as bring have year right the adjustments, that customers value very we've reacted challenged we've we So, our But also to value while. quickly, understand as

Speakers] [Multiple here. job nice a done all in all So

Darius Adamczyk

Say that again John.

John Inch

drag respect the there's kind Yeah, sorry, capture I with last said, this quarter of just if year to that? in to a way versus year

Thomas Szlosek

it's quarter. is we pricing It about last there quite nicely. -- when at talked are we the you what think look in I holding No, actual

he have able about. side. said the on to Like XX the laser to on -- focused and inflation basis businesses upon been depending -- are of point material business XXX talked the largely We particularly recovering types the inflation Darius

Darius Adamczyk

I the in fact that of our single businesses to margins point one expanded John, QX, every just every would mean I one.

on the So, year trend that for we're as whole and well.

John Inch

free been in kind your aerospace. kind almost and that conversion higher and sort things to picking clearly products if and forth cash than accomplish? not this given Honeywell what's mentioned your you review of the you have what that up but XXX% in portfolio the PMT call of I priority so, you're where that the sight and question of of to getting the putting line of investments in strategic trying kind to so Yeah of growth Darius it's that you rank had and does in, list of to is anticipate guys new cash the forget leads all

Darius Adamczyk

what we consistent -- with that's we're Yeah, message is and giving. it exactly it's we're have been important aiming the is XXX%,

XX% we tell next year, see more marching we've we working improvement And that did we never You call it's had do focus a on you and then that know to where today. very I can roughly capital conscious we're towards goal expect further than XXXX. year, and this improvement

seriously very We the seeing made and progress of it's business important rest go are but there the we myself some both and leaders goal very that a it. goal, take being there's the to are and more and committed Tom to

John Inch

basically public I to your bolt is think You pretty in just there mean plus realizing out etc industrial, will towards Darius software, improving said pricey that you markets given what's I foreseeable capital question our future think aspire in while or to ons, just think of happened you the allocation, know want about about things stuff I look, mean got mix, don't in Is lastly let's playbook are to kind on a lot near-term, the to the the sort and how to do lot the nothing kind do term too. be mean -- M&A, prices what's pricey the want prices, of that of want pretty do not just because we're you but sit that that gauge of overpay the intermediate a or you of you if don’t going judge balance, balance stuff has the I to right? we

Darius Adamczyk

we disciplined which in going But to the terms can active and these things you're the sometimes the you both And to M&A. at if of price. we're you're that cautious. We've to for and we're and we've area way fair been is thing doing there in we're one that's we're the M&A the very going think the known going find be gems stay selective same right I days active for there. -- by Yeah, are but been be of to very known going

out that and but expensive, So we're to believe opportunities we have the field not try there -- things going there a can in do valuation. they to pipeline we and have appealing off participate because look we where robust going are marching continue we're to

cash going also looking be as that there's Now another to our nothing happens that back said if having buybacks we're distribute shareholders. at obviously way to we're to

to ability some always stay balance, there's we'd like So balanced. to a have

Our got pay are right be to M&A that done be we and a preference the going it's get on we little bit is to got bolt smart but if on to can't obviously then for And heavier buybacks. we price.

John Inch

way hard Thank relations you the guys the investor and hold better on to by you Mark, good find. are

Darius Adamczyk

think mail the the John. I checks in

John Inch

would Any trust welcome, check be me.

Darius Adamczyk

the there's aggressiveness on a lot call just you, like passive today. feels Thank it of

John Inch

why. we will with from Can't imagine And Coe question Stanley. take Nigel next Morgan Operator our

Nigel Coe

keep this will one simple think. I I Good morning Okay, guys.

passive. passive no aggressiveness, maybe SPS, aggression but some So so nothing

being about so not So, this looking of well, point so XQ to a to tailwinds Intelligrated -- we're we've X X% maybe growth ex-Intelligrated? core shadowboxing obviously organic number, around as math would but in X% of strong SPS be kind at to that my points X.X is

Darius Adamczyk

low the I least to but side. single-digit will of do at have productivity math, think, I the to each in business that is mid product you put

will business So Nigel, risk be going for in low single-digits industrial where the single-digits, to I to know that's example in the you third good single-digits is be into was the businesses you mid well higher And know high mean well. safety mid the doing it safety quarter fourth.

retail We expected also on strong business. the really results will have

the be in know will you going model, productivity single-digit even high As Productivity be with well products changed into we've business the that's to double-digits. overall the productivity.

it's software about. to will in going single-digit. it's sensing that's poll are scanning range would like is mean we And north business Intelligrated growth talked and from said, be the be as the pulling high all have everywhere flow will it's Europe, it's productivity U.S., an just mid Intelligrated be given us and up we really down. the is nor work business a said Darius it well. XX%, fantastic, not globally doing These to growers be As our but I organic it is so product this of good China, doing

Nigel Coe

pretty broad. sounds It

the could I maybe the it mean front-end you're warehouse to seeing competitors drop share, into was warehouse to that One before, touch think the of just us and business, I on XXXX? how day as seems surprise that yesterday dramatic your leaves warning go in business you some maybe you or imply

Darius Adamczyk

seeing said, and think be is growing e-commerce, on the spot field we strong of to quarter exactly our orders. that as imagine bullish warehouse bullish and we're orders value of are really we automation are are well And playing we Yeah, can and very the sweet the pausing, on fastest really had in as for we QX and business I growing continue another distribution. this customers expansion that QX XXXX. positioned and we quickly a type see high given in warehouses. don't very and throughput is you in is And very we generating because what's that anticipate bullish the QX, the it's a I And warehouse one the

Nigel Coe

one… Great, just quick then and a

Thomas Szlosek

that our said we quarter Backlog of just to take growth expect he going as and ahead, Go Darius we fantastic really double-digits is it was all strong good, quarter growth. the and talked our as note our, just I organic strong, to announcement to was backlog compared terms well competitor mean XX% is but mean continue. mean, did about I orders last say you said, Intelligrated. fourth and in of I -- over I third year growth.

very positioned well. So it's

Nigel Coe

stronger tells Tom so be revenues that my what but or XX about obviously quickly just that's I this margin [indiscernible] got place weaker year am then for dollar so expansion will XQ, me? EBIT, dilutive dynamics And hedge the impact on from FX wondering in to margin in no of is the the bips just given math we

Thomas Szlosek

QX? mean for You

Nigel Coe

yeah. QX, For

Thomas Szlosek

I Yeah, for flat. XQ. the big consider basically I be flat you I don't us mean movement in to for everything the overall FX translation and rates going the year-over-year. that's When and -- that will hedges, a impact be it's the mean about think

Nigel Coe

it. guys. Thanks lot got Okay, a

Operator

question from we take next with And will Sprague Jeff our Vertical Research.

Jeff Sprague

one you, a guys. Hey, morning Thank quick good from just me.

right certainly want welcome of is is big about just I'm year bridge are just get don't the if little in, puts be cash are what etc, next improve really Tom bit, in a XXX% Darius chime You wondering that on items just assuming expect a I'm CAPEX working big flow might you've looking for just year on growth a maybe items you XXXX? your this got further guys flow. cash to to when the what to working but are bit next think but know little of free doesn't, lot capital it that so kind perhaps question the you forward it, in the covered ground. with on you free mitigated maybe I against help down I we and absolute hone capital, churns pension path

Thomas Szlosek

Jeff as a CAPEX mean billion down mean that cash a There although I when I incremental for timing We about related. year million that in at least XXX XXXX. it's at big at XXXX little be to this will you and at X us. that come tax could of you look ratio looking a which CAPEX we're look is expect million heavy. driver reinvestment do less be have to mostly of spending XXX When

We're I repeat year tailwind. by probably most of year-over-year. should about means that not treading don't improving expect kind necessarily to have year million which operationally of driving our we're working drive going next give the forward. working staying going those that said end water looking XXX are churn would a the is capital. three so trends Darius year importantly XXX that is things year XXX the incremental he but to of talked our I adding working towards to out will million focused then to lot capital. us amounts huge that We're We next to on kind And big this some of business The capital that as of at. need XXX%. to is go million say flat kind of

Jeff Sprague

Great, guys. I there. leave it Thanks will

Operator

We'll from Bank take with question America. our Obin of next Andrew

Andrew Obin

Yes, good morning guys.

Darius Adamczyk

morning. Good

Andrew Obin

on think programs do defense questions, we portfolio programs, we defense couple relative of aerospace, portfolio as think Just about budget, how to the should i.e. budgets your to about is improve a as there can a the I be different? that very big of there up budget, is something going programs you think terms your you in keep -- Honeywell is with mean of outline

Darius Adamczyk

we good going doing do aligned whole. are U.S. some the mean anticipate continue ending, higher of we some of we kind much that a programs, well. continuing an When think overall defense it budgets clarity it's comes the a I have think in greater I well and to and slightly is and be have up I obviously to different different talking lot density. where geopolitical more than Aero programs and that spending We to a international countries, segment we're we obviously really the a because growth aligned be a greater business by it's seeing will bit anticipate are or are as particularly seeing Yes, it little in that lot given NATO arena, of And to hazy it's what of growth. greater the we're but

in the And future some as recovery in the is you segment. which Eagle markets in [ph] know that

overall comes to So constructive defense.

Andrew Obin

is about Right, on on and should the you seeing everything tailwind And with emerging second, party talking China A) so what track? be going driven exposure portfolio this business should your guys you have we thank nice the of that a another to congress, China markets underlying Aero are aerospace how and ground just visibility. going China is you think question and your China now disconnect from the UOP, by about given that degree to really guys changes that a forward, forward sort do macro made you? the certain

Darius Adamczyk

behind and gets Comac have I imagine is way ahead as out every PMT segments not is we Aero still India actually Aero. to as going one and quarter for of revenue been potentially this you business our that not isolated China as mean That's us. us pointed or XX% of that up further No, and even can success

Buildings to a markets there this continuing year. both. are growth but successes win board in little we bit some tremendous of Secondly those approach India, do UOP, double-digit again and we across markets the differently the in than and HPS Home developed in China

of very, very early segment whether which to to we're but very are to urbanization business trends well a moving well. SPS, now is in. much going portfolio on So kind maturing automation oriented. both but China there forefront then segment the is their And very safety it's and aligned still days or going with finally in the regulatory participate another industrial more agenda when evolving it remaining the Warehouse buildings one and of safety early so that's much worker changing do of independent worker clearly and the on days the again Homes environment is India the

team, mean potential across markets, speak both QX tremendous. our India. excited portfolio So great we results we're and think have China those Both for perspective in have management local both a about great are the our of is in growth I XX% themselves. I and and

Thomas Szlosek

segments inference that of look I just upon if all third your Andrew, you think China. we're HPT And to to HPT our there, for mean add slowest that I was amongst was at quarter the but dependent in grower growth

really it -- [Multiple So Speaker]

Andrew Obin

lot a thanks Terrific, guys.

Operator

take will question we Citi. Kaplowitz our And from last Andrew with

Andrew Kaplowitz

Thanks guys, good you you million tailwind restructuring at enter greater benefits mean than that that? here stepped restructuring have the we look do last amount fair in you normal last I restructuring XXX talked about Tom, XXXX, how up seemed of restructuring you short-term. would quarter morning. and a and of know as of those about do from like talked benefits, million XXX we I but

Thomas Szlosek

mean I into what greater it's would I have this had going don't year. than necessarily Yeah, we think

us you was place. divided and took pretty as significant Andy delayering SPS, headed amount that good HPT restructuring of we up fact we gave when into In up some remember we tailwinds if the into a ACS that fair there did It XXXX.

of outlook So we into in say agree color momentum XXXX earnings I wouldn't put a a our the tailwind multiple XXXX. But And of had more give as clear and lot get we'll in that December. in coming. that coming I restructuring there capital on on you to we we've is work it's

Andrew Kaplowitz

the have last performance gotten just year biggest XXXX? events you of big year year surprise really that the of you in in That's the XXXX surprise And you here Darius, I were negative early confluence been what's do had positives, the and then think much tell helpful. here has kind been Aero that pretty been a on in so can versus How reorganization maybe the far. surprise whole has better

Darius Adamczyk

mean with mean it Well, I am how performing. pleased right. yeah, Andrew you're is very I I

to generating as I sales that always a it sales surprised very not every to The of get commercial with in productivities is detailed continues that well which invested last XXX I'm that business It's in the growth does of a in capturing every connected the pleased aircraft. grow as watched new what's RMUs, the about think level. year. drive the more and in business by aftermarket happened people lot terms the top what at I but that's we productive it excellence, very QX year business so I'm business, want line do

is the -- concessions a business, more was that also certainly making decision on headwinds yeah but now faster last as year, helped So, segregated faster. year the the moves tough is reorganization we

So continued its for outlook really how with I executing they're and am the pleased future.

Andrew Kaplowitz

Thanks Darius.

Darius Adamczyk

you. Thank

Operator

for And closing Darius that Mr. would question-and-answer concludes remarks. to I turn additional conference today's to Adamczyk this the like session. back time At

Darius Adamczyk

be sales year-over-year Thank the continued improvement would you. our pleased of cash sustained on come third quarter continued free remain more and am to our your spin in the improved our Thank results performance Honeywell conversion, I you will XXXX rest successes acceleration, distractions to no I months. Homes businesses. and coming have focused our sharing with organic plans we to There even Honeywell. our expect from Transportation look you. with and of financial forward Enjoy delivering you the the Systems over work especially fall. of profit We as the for flow.

Operator

does your today's have Please teleconference. disconnect day. wonderful time lines conclude at this a Thank you, and this

Honeywell International (HON) 20 Oct 172017 Q3 Earnings call transcript