HON - Earnings call transcript Q2 2024 | Honeywell International Inc.

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Operator

Thank you for standing by, and welcome to the Honeywell Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead, sir.

Sean Meakim

Thank you. to Quarter welcome Call. Earnings and morning, Honeywell's XXXX Second Conference Good

Chief Lewis. the are and Vimal and today with Senior Officer, and President On me Officer, Chairman call Chief Executive Vice Financial Greg Kapur;

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

an of in described the Our and on XXXX. our on our view discussion and our today our as businesses review full This that forward-looking the are share results the for provide risks second today ones guidance and based are third morning, update world we will the we includes quarter, statements year to SEC uncertainties, filings. them our including of for financial best and quarter see subject

As always, your the at we'll time leave questions end. for

turn CEO, over I'll to that, call and Chairman the With Kapur. Vimal

Vimal Kapur

and good Thank morning, you, Sean, everyone.

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

continues our positive aerospace in strategic Three participation portfolio. across groups to of from all saw rate seeing growth growth, quarter, lead our are While we contributed and the growth broader improvement for business we X our sequential X.

growth Order rates were back into acceleration organic of expectation Honeywell, half year. supporting further healthy across of the our

portfolio, already value technology alike. our We for shareholders to and which enable are customers us adding new attractive create our compelling will to further assets

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

X%. end accelerating growth remains of priority of to X% organic upper sales key long-term target our range our deliver to First,

regions. we leadership our and innovation, in enhancing high-growth accelerating to how new installed order this, achieve vast position offerings improving about think monetizing our our In we base, are product software

these quarter on services proof read in second As efforts, when favorable an our accretive double-digit excluding are and even aftermarket early demonstrating the actions points: growth in [indiscernible] growth aerospace.

highlight I'm second In further in to half. quarter, second expect Honeywell the pleased volume grew fact, in our acceleration that and the volume we total

contemporary transforming run off the Honeywell we Accelerator the digital version how system. foundation, we our of Honeywell latest are of strength operating through Second, our

to We are business value, standardizing capabilities. by incremental our model enhancing growth drive

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

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

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

proving as tool Accelerator across successfully addition be the important to recent our to profitable is integrate As our an a source anticipated, of growth businesses all powerful portfolio. to

and financial Third, our demonstrating order billion goals. accelerate optimization we acquisition to in bolt-on profile. $X $X excited are about quality the to We're portfolio of range our through the a our strategic inflow progress business to upgrade in the multiple billion on commitment

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

the platform industry-leading business our for are and Connected IoT one Honeywell, integrating ways digital we creation growth accelerate support our to as by next the transformation we XXXX, to taking into strategy Enterprise In our strategic at aim we formed of SCE the stage to simplify Last, groups. SCE for seamlessly customers. Honeywell to unified forge enable

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

deliver across maintaining are the centralized expertise growth commercial version outcomes sustained accretive capabilities portfolio. This robust the our within and X.X integrate software will drive our deeply our better segment-level development those teams. and at will center, software even more SCE to We customers

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

In the progress, X turn let's to recent our spirit Slide of acquisition to announcements. that discuss

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

[indiscernible] of X technological our add are alignment compelling We accretive our megatrends growth teams to long-term creating flywheel framework. and financial to enhance our that a strategically Honeywell capabilities, overall provide that

recent Let's this and in With liquefied to Earlier approximately gas month, technology discuss Honeywell customers Products' the to offer equipment billion natural will we be end-to-end Air solutions our processing business a for management transaction. that assets. detail. deals addition, more gas our natural $X.X able acquire optimize this bit of announced in intention all-cash

Honeywell related and and customers provides heat manufacturing Products' platforms. coil-wound Experion Air a Honeywell of design including solution Currently, serving business and under exchangers globally technology of equipment. consists unified pretreatment portfolio, comprehensive LNG and Forge in-house automation the LNG complementary

This economics Forge. acquisition acquisition this will within portfolio Honeywell has at fourth Energy is Notably, year this announced technology growth part deployment base, disciplined new an to Sustainability expand adding installed Solutions. business attractive our as a Honeywell opportunities through LNG with strategy, energy capital The in will our valuation. of and creating the compound accretive services aftermarket bolster our digitalization transition immediately and

significantly forecasted in years new which provide frequency signal to for DOD private enable space. to of acquisition radio from grow in-housing air announced us and This short or we management end-to-end and technology International come. existing rates billion land, to defense sea, June, defense solutions accretive across critical CAES for solution will platforms, the firm Advent equity $X.X for Systems U.S. Honeywell's at CAES business electromagnetic are In for emerging

second capabilities, our business are potential excited the advanced significant international aerospace-focused is for in adds commercial transaction year, The this the and have future announced that engineering We underscoring state-of-the-art to talent manufacturing we impressive defense. of opportunities aviation. this alignment

annual for Honeywell recurring Solutions with leading business, positions which of revenue business' the portfolio. innovation in age profile, Honeywell existing accelerating Global we and as margin with cloud-enabled fast-growing digital accretive excess for benefit a Carrier's our combined with security attractive from mix opportunities $X solution will growth sales Access when in forecasted of June, valuable of completed also of services. in billion Also security content the the and acquisition software provider

We to welcome to Access are business. Automation the happy Solutions team Honeywell's Building

combination long high-value, track record customers Together, build products, the our Automation will Building our of solutions services globally. critical to and delivering

deal business attention turn manifest operation bottom Accelerator into anticipated and a we from top a of operating and our our portfolio, system processes, As the seamless line that help tools our of [indiscernible] to multi-facet integration synergies utilize we'll perspective. to streamline the ensuring our compelling make

of of year acquisition $X represents growth own profile valuation bolt-on our below before deal the to portfolio Collectively, accretive these of represents synergies. factoring sales excess any profile Cumulatively, growth of algorithm expected with annualized at billion revenue the Honeywell's margin to current X%. X% in past an over of our incremental well

Before over review to to overall to our I on deployment hand it Greg, commitments. Slide progress I'll capital turn X

We least excited intention during commitment of the at XXXX made the through XXXX. to very our when on deploy Investor to significant progress demonstrate last $XX Day billion are re-upped capital I in May we to you

have billion over a we $XX billion and the this minimum to With share early. year, $X committed pledge buyback, activity year acquisitions to deal billion deployed our approximately already approximately accelerated M&A and exceeding $XX of

done. is not our However, work mean does this

to capital and balance accretive share opportunistic the Our high-return provide with sheet robust growth capacity allocate to M&A, flexibility us capital. purchases

proven us as the will M&A strategically favorable, our disciplined to opportunities remains approach the In we return Honeywell on well deployment. of high-value reshape maintain As by of to deal as already expect assets. to fashion, true environment select highest combination can pipeline continue generate building portfolio you capital strong noncore

X turn me views the as quarter more on we provide let quarter full XXXX Greg to second guidance. in detail on results Now over third and discuss to year Slide our

Gregory Lewis

Thank everyone. you, good morning, Vimal, and

Let X. on me Slide begin

measure performance performance how second profit investors per it the expense As and period, of more segment compare measure acquisition-related believe to this a from adjusted the provides assets costs, and evaluate our earnings we We change acquisition-related related began the easier share. excluding of to impact for tax reminder, peers. internally amortization to quarter, effects certain performance a aligns with period our we starting and the meaningful to intangible makes including in

second our of approximately impact the addition, Building Automation of that, X month acquisition With Solutions. quarter let's results results. Access In from incorporate our discuss

dynamic high share guidance. meeting high We environment, sales delivered the midpoint a in the our macro earnings and our of our exceeding adjusted organic quarter range, segment margin of strong per end of another end landing above guidance the

defense X% double-digit by building quarter another Second double-digit year-over-year, aerospace Technologies growth Aerospace quarter growth commercial addition solutions both organic our sales space driven business. in were up in in supported growth XX% organic of to in and by

past XX XX points the mix second grew And grew half. acceleration further X X% by offset X% the and volumes profit Energy in was businesses. for Solutions basis the XX% time in pressures expect in in margin second segment our Honeywell by we contracted and expansion by Sustainability as Segment quarters, other year-over-year. to volume

up $X.XX, XQ per bridge X% And adjusted share second per EPS XQ of can this A $X.XX, 'XX adjusted quarter the Earnings for 'XX up profit by to was primarily appendix X% found year-over-year. the for from driven share was earnings year-over-year segment be in growth. presentation.

growth and of growing year-over-year with with led BA, of both short-cycle level record products backlog supported X% a $XX IA, strength Orders including our and X% in grew pockets X year-over-year billion. and ESS Orders year-over-year to growth by a in increase materials quarter-over-quarter. of book-to-bill advanced building maintain

and cash levels versus of of inventory 'XX income taxes. net roughly billion, from cash was improved approximately offset as by quarter second $X.X higher capital the working Free timing the reduced flow higher were year-over-year flat

meaningful to coming a we buildup more unwind inventory. the as expect of capital multiyear working the continue in becoming We quarters tailwind

materials to Accelerator able gives planning in are curve. bend our and of capabilities, This we effectively utilizing businesses starting confidence we digitalization to each our month which all optimizing by the management, our quarter, reduce production that systematically days improving me were supply demand

progress including repurchases closing discussed on closing our LNG and Products' allocating Air this Vimal combined significant $X.X When we with billion record Solutions. we this later and capital share of are expenditures, on XXXX. of $X our $XX anticipated a dividends, track Access capital businesses the to M&A, year, CAES deploy As quarter, to billion made capital deployment billion earlier, strategy acquisition in of

were growth Aerospace growth the and Space growth Now increased quarter commercial up quarter let's second spend This consecutive quarter sales performance both of Technologies, XX% Aviation, In the with shipset minutes double-digit for second sustained and and organically in deliveries. flight marks Defense few in by Commercial global aerospace. double-digit by activity XXth a enabled the business. on in

the quarter, Space robust chain of supply Aerospace increased with improvements consecutive and we see improvements as growth output growth. second accelerated eighth global chain on volume Defense remain by continue the to supply demand as unlock. incremental coupled enabling XX% in in output quarter second quarter double-digit the an track

contracted net by driven in inflation. to basis margin mix year-over-year original our Aerospace commercial Segment XX pressure partially of Technologies equipment excellence, points within XX.X% offset by business, expected

in For solutions sales quarter of grew and Industrial another Process our due in X% fell warehouse volumes Solutions organically partially double-digit but X% business smart Automation, quarter solutions, growth in the aftermarket offset improved to overall the revenue sales X% workflow by was in headwinds and sequentially. thermal primarily quarter energy. services lower as in

and and first when Our of orders productivity and improved million forward. year-over-year the business year-over-year $XX the saw settlement payments both solutions sequential impact modestly the Safety excluding license ended a growth services, positive Sensing sales, indicator and Technologies but in going quarter. that quarterly in declined In sales

for digits And Orders and of IA high third led grew warehouse in book-to-bill orders by of double growth workflow X.X. XX% grew digits, consecutive driving overall in an over PSS the single overall quarter. solutions,

points leverage payments contracted of end margin and and agreement XX basis segment productivity license the Automation settlement under volume and to services. to in XX% lower Industrial solutions the due

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

excellent long-cycle Building were way continue lower our in up organically solutions the led building to of our X% another to business Moving quarter volumes through work Sales while building as products we Automation. and performance portfolio.

management including X in business, in in from health Sales and as data building grew Solutions and result digits of products. Solutions projects grew highlighted within strength in month systems a Access solutions by centers, our of the care quarter benefit execution growth fire in XX% acquisition progress building of further sequentially, the double with strong and XX% energy.

XX.X% growing inflation, in solutions orders cost basis an and book-to-bill a overall Double-digit sequentially mix products, was margin headwinds partially to commercial in quarter, due and Automation X.X. for Segment contracted growth of offset the ratio in year-over-year Building productivity both to resulting XX points and actions by highlight excellence. both and

products. year-over-year in second In Energy difficult sales projects in in increased aftermarket and refining catalysts more organically UOP previously and Advanced continued noted offset year-over-year X% than flooring processing X% equipment strength materials Solutions, solid gas in growth declined services. comps sales Sustainability due as grew the to quarter. X%

a above third X.X driven expanded than basis were was actions. primarily growth on of in growth the highlight quarter book-to-bill X.X a technology points XX% quarter, XX.X% productivity as Orders consecutive sustainable margins and primarily greater materials the in in advanced in to ESS second basis XX% on more XXX a book-to-bill year-over-year solutions. Segment than by

to our proven and our the current confidence ability backlog, execute creation underpinned environment. value system. from ongoing our our Accelerator the continue This, cycle end on combined benefits in of strength to framework by us give long with We navigate our markets operating

year Slide to Now and let's about quarter full third outlook. talk turn X and our

with commitments certain technologies. in our and discipline and continued advanced materials, us operational enabled products modest particularly and businesses, our strength sensing within growth and building long-cycle commercial to Our short-cycle deliver safety growth of on sequential organic have

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

recent these are dynamics increasing and acquisition Given we our line announcements, top XXXX expectations. our

in be CAES Air of guidance. from third we from includes growth includes $XX.X to in previously, increasing range $XX.X businesses, sales to X% X% organic prior to LNG billion sales and for the midpoint billion, the quarter. of the sales the up X% also The of forecast Products' which to year, overall to forecast the close acquisition which expect our X% We

on UOP the to Honeywell to will other $XXX add exposures. modest quarters market and sales continued million by of will in fourth Collectively, end which progress aerospace XXXX. uplift in growth chain, supply long-cycle Sequential to approximately from most third and depending expected businesses be in short-cycle the improvement, the portfolio are in driven vary across areas addition acquisitions seasonal the of

$XXX of the revenue. For the acquisition-related billion of in the range billion, third $XX million quarter, with up benefit $X.X we to roughly organically anticipate X% sales to X% in

to segment margin. Moving

range, As growth long-cycle businesses raise in supporting less mix to outpaces expect see term. within our the of our to we the line some SBGs top in short short-cycle the recovery, a bit favorable our

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

productivity year-over-year. our margin dollars be in focus flat overall as recently still to and material in of acquisitions, XX XXXX grow of will price we XX.X% points significantly When X% raw between discipline range on incorporating Overall by supported down the X% now announced margins impact XX.X%, including anticipate our to segment will be and to segment the reducing cost profit to actions, costs. basis continue

result Automation modest Sustainability perspective, as lead Industrial segment will in Automation the group as contraction for Energy a expansion, and From and acquisition. Solutions followed by margin the as CAES Building well a aerospace of

points with year year-over-year the first Solutions. we segment basis to aero XX close quarters down XX.X%, this the CAES to anticipate normal the Sustainability in of Energy XX.X% in due quarter, variability seasonality within and and and of quarterly in anticipated mix, the X third For overall to range XX of margin line

a Now business. minutes few let's on outlook our spend by

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

air low our year challenges point and chain growth in build sequential strength we see volume the original quarters, and to the We rate through for as related as supply year-over-year fourth commercial drives of equipment, the quarter transport growth third be anticipate strong second In the progression. particularly abate.

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

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

Honeywell aerospace these the of we half, to double dynamics still for Defense As organic Space We the strong to a a and in expect growth low now range. year. lead first with sales result double-digit be growth in XXXX digits in forecast

by For lower-margin leverage. comparable remain partially from to as volume offset products and segment XXXX sales are margin, dynamics XXXX the higher

expect point decline year, anticipate year-over-year in will favorable closing the reflecting and margins CAES now aero be the third the quarter We quarterly the less CAES the we of XXXX due acquisition. low impact of to to However, modestly mix. the

in businesses, return benefiting Automation, long-cycle IA showing Industrial improvement the growth our sequential in to a we're solid while progress. In modest from year-over-year expect of short-cycle orders most sequential businesses we In third in are back momentum the of half. signs our varying quarter, and

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

productivity outlook grown us for double sequentially will from our solutions digits straight confidence grow X second quarters and into In in half here. services, the giving for and sales Orders PSS, in have XXXX.

technologies will improve the trough distributor and automation will in solutions end warehouse Warehouse the from through spending we grow the benefit workflow year fading Sensing in and and billion sequentially move safety effects sequentially as destocking. $X we of as sales. around should

result through flattish dynamics, organic productivity half and benefit a as volume seasonality we in these the from actions second growth long-cycle expect and expand XXXX. sales Margins we progress. of short-cycle further in As leverage will implement

products, fourth the third building the Moving we trends. sales quarter, In expect favorable improve we Building anticipate XQ's product outpace to third by supported sequentially building solutions and modestly Automation. sales. quarters, to on to the In in order

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

for growth support in XXXX. back forecast additional been in orders into projects a has both the providing we year. standout, services XX% revenue and growth and the the double-digit grew Projects and over In half solutions, second for quarter,

our products. Solutions acquisition been reminder, now As incorporated guidance the building into has a within Access

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

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

drive materials our slightly growth Finally, and improvement months, in sequentially outlook expect Sustainability we the year-over-year in year. the with roughly seasonality as summer down fundamentals to exit flat be third the third In UOP. and offsetting end will in full electronic favorable products we and in Energy the quarter, in sales markets a Solutions, encouraging quarter and typical flooring

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

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

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

Additionally, LNG our Products' guidance. of in we expect have and the included of Air closing place third acquisition the to business take in this impact quarter our

low typical For is Margins seasonality, our catalyst half-over-half, ESS. to of the organic growth margin leading expansion year for fourth improve for should a in as the full ESS result single year, outlook digit. quarter, particularly reload

to on to income guidance will other XXXX Moving at million. approximately key roughly metrics. remain $XXX flat Pension

the and growth $XXX full guidance of expense, invest between This million result and the acquisitions a repositioning net between year we increase $XXX quarter. negative in corresponding million in $XXX impact to third be to includes $XXX future below-the-line we and negative and negative million in year As $XXX the and the and between million as spend interest and now $XXX quarter projects million negative for high-return $XX million productivity. for further support third and the full $XX between million in anticipate million

balance already flexibility we the to as approximately sheet the and highest quarter be XX% effective full achieved million capital reduction the additional count Adjusted share year to have third we average share for XXX and count than around deploy more X% to for the maintain both both year, for shares the returns. be but achieve will We third shareholder quarter. rate year anticipate full the tax

we of anticipate result between inputs, X% adjusted and year-over-year. per share these be $XX.XX to earnings year a full $XX.XX, to X% up As now

$X.XX We up between expect X% X% third quarter earnings and to per share $X.XX, year-over-year.

from We our extract efforts as multiyear expect more to unwind from to through Accelerator. of progress continue digitization working free benefit value the flow we cash capital on

projects high-return projects CapEx In innovative, uniquely on addition, continue to we'll -- technologies. fund differentiated high-CapEx focused creating

XX%, $X.X prior to year a are expectations range, growth. excluding now cash with billion As of net the to $X.X the income result, billion commensurate the up impact settlements free in X% our revision to flow and

So anticipate strong of half in our businesses. year line summary, from the we top long-cycle and in in we continued first acceleration benefit second as the strength half delivered a

enable a we confident Our remain rigorous revenue to rate second in on algorithm into us principles intact, mix execute half with And our giving us nice XXXX operating will short-term long-term strong momentum through exit pressure. XXXX.

turn me Slide on So to with let it Vimal that, back X.

Vimal Kapur

Greg. you, Thank

the on call, to a Honeywell on growth long-term we demonstrated focus has take our Before the end let's algorithm. moment progress

in the long-term with gross XX%, the over remain past transformed significantly mid-teens growth company X% margin above not adjusted and coupled organic EPS to committed margins to in margin profit are XX XX%, free of delivering we to range, years, While X% close finish. growth to cash above X% flow we plus We segment XX%. a

we X play also a accretion, allow the on key like highlighted a deals adjusted to a factor achieve today growth double-digit to EPS basis. M&A key EPS X% us generate to through-cycle us X% enabling that factor, will

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

now Air last brings the the business. LNG priorities we of first thought year, $XX the In our into before we material turn to the goals, move And Access the beginning and towards year Solutions let's of progress portfolio. Products' Slide Q&A. optimizing deals M&A CAES since the closing made work Civitanavi, deployment deals: as we and capital for towards my additional X billion closing half to key announcing X the us in achieving This of

from line long-cycle [indiscernible] effectively quarter delivering in exceeding second is growth portfolio metrics, top will comp, our businesses. backdrop as framework. while in in on geopolitical and or and dynamic the meeting for well we in our second guidance quarter, long-term financial strong growth through set all the continue economic and up our the executed We manage strength to We acceleration benefit the second orders half

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

questions. With that, let's Sean, take

Sean Meakim

Greg you, to open Instructions] available Operator, Thank Vimal are Q&A. please questions. now Vimal. line [Operator the for and answer your

Operator

Instructions] question with from line Our Stephen [Operator JPMorgan. the of first comes Tusa

C. Stephen Tusa

the Quantinuum And you costs I just but the higher. I out raised including Can and cutting moving us obviously, below-the-line from here? are parse then you are costs guys parts core higher, you're think, organic, interest. help the on revenue acquisitions you're, mean profit. also

core So to to any? if the just segment us want really reduction the segment of profit down the profit get size the what influencing with acquisitions is, much like And they're then just help how numbers. and

Gregory Lewis

Steve. Sure. Sure. Thanks,

think the full there. first the right the I months. think always So year was relates opened to us X year, we all, of about Essentially, it, got quite are you've going particularly we we it lot to said half thematics the a now how short coming, cycle. through And when tell you about as when was first here

still is cycle the And the sorry, range towards is and totality quite or its growth guidance heavily bottom. -- long it's our up why which of But actually in seeing towards more short cycle took organic is what in well, we short. we're than doing the

there's we projects are others cycles accelerating. business So some building and accelerating things short news there, PaaS much hoped. our had of in is HPS are as solutions, and like as But the not good which

changing just IA margin really that's So and mix, BA. particularly in the

our in about X/X say the rightly I And X/X, coming by of about the probably And organic X/X, like about in the we've $X.XX. think X/X think guidance probably the I midpoint, next because you at it's down noted, added of core if you as acquisitions set acquisitions. the we're versus business would terms --

going year. of to half round in we're back But cost billion $X along about that, X% us with spend out. that's of And course, the the going to

that's So overall. we're making here thematic really changes that the

thing half encouraging rate the very But strong. is exit the still back is

basis in about So this year, again, we really of compelling next revenue into exit half about on point, the going revenue. it's and acquired rate to really at good points feel layering we're and billion be a of XXX $X its totality -- back

much So trying I kind from of think where point. very this us and on strategy to at take Vimal's

C. Stephen Tusa

contribution these Sorry, relative that is from Quantinuum dollar-wise? guys segment June? profit you what's are thought had cut And profit what in core the what numbers to early now the the ex to the in acquisitions

Gregory Lewis

is it's core $X.XX to our the X/X about business, net and it's reduction about X/X. of relative The Steve, about midpoint M&A, at to X/X X/X, the relative interest.

Operator

the of line Julian comes question next Barclays. Mitchell with from Our

Julian Mitchell

Maybe on couple of follow a to up just points wanted there.

profit segment down, I come to $XXX think, the guide So has about dollar million. million $XXX

wanted you're just is year check, a to So full saying that's what think. Greg, I number,

that. of You're X/X is then saying of from Those in acquisitions that negative X/X wanted if versus like. mix long of I the is we're core just dilution check at... EBITA, short And cycle are more just sort cycle. around it just then newer that And closing to when QX. you looking

Gregory Lewis

is and reduction is which M&A, the making What acquisitions. of is And about due midpoint. actually I'm the to saying, business, core Julian, about of X/X that interest of at $X.XX those is that the a of cost that for at the about EPS line, the inclusive it's X/X

Vimal Kapur

changes, in have to the the of will businesses, OE mix I continue add in margin shift is -- this point gone market aftermarket the mix. It's within causing changes. case we Like something margin Julian, not the there has businesses. the is which versus aerospace, that

In of Automation. case Automation, Building more of Industrial products, less similar in case solution, dynamics

to I businesses underlying it strong. remain clear So make that want

expansion. seeing We are margin

We productivity. are seeing

attractive. remains cost very Our fixed

mixed it's within the businesses. So

also which getting We more are way solidifies longer-term outlook. in a half second long-cycle our businesses,

We significant are short cycle. factoring the in uptake not a

we have to We which are but some, visibility. factoring

catalyst is in quarter-on-quarter businesses, backlog year, long-cycle second UOP built our growth of the majority continued of strong businesses, in ramp-up for half other outlook aerospace, sequentially of in solution upon But the specifically half businesses. second

have margin the comes just makes it to. guided what then So together, that all mix to we

Julian Mitchell

of of sort like I dollar just see. the lot it margin Yes, the just guide lower, of is question not absolute I sort the think But... segment profit mix. because a looks

Vimal Kapur

margin dynamics cycle, this up not off of That's issue. that the Because roll if should That's to growing business than But it an XXXX, margin it shorter businesses factor of unfavorable. the is you greater highlighting. is underlying way I'm point longer-cycle play right. because the -- mix

not gone fact, and are cost not businesses. are We're, that true. issue, getting productivity somewhere, that has we productivity, the cost we It's expansion. is excellent margins of in our having price we're getting None fixed margin dropping mix by up. driven purely in It's

Julian Mitchell

That's helpful.

Gregory Lewis

in mind, them than margins, Just points as keep project think about XX most -- long-cycle our -- cases, solution-oriented short higher short-cycle most our being margin. in

what in roughly rate really carrying but you're totality lower organically its with margin the So that's seeing. same along a Revenue it.

Julian Mitchell

fourth That's are on maybe point in X%. helpful. QX. the the than a quarter, on got M&A, up you've the very sequentially, your coming think deals but lot revenues normal, assuming And That's more I you're

those sort of wondered hand? if how to have that add just quarter revenue that you to So new fourth deals of much

Gregory Lewis

that deals Yes. I the to closure mean of those late mid- the we're you third quarter, should quarter. be third think part but in to of likely expecting

of there level that step-up. So is some

we QX, in Remember, aero expect that true. in always and a have big to step we also up be

visibility We QX the reloads so ESS also lot so as of forth. and have red into catalyst a streams in well,

the outlook. and of we revenue interrogated we've for around good we feel that step-up about deeply, credibility So it But on sure. good the is feel that higher side quite the

going end. the back we through there's keep front on is -- deals integration XXXX, meaningful nicely are that's early that again, the in cost mind, costs take acquisitions, a these these some the Now days for get accretive integration just as the in to be period. mention minute M&A beyond on I But if step side, thing other just of you would a

news do 'XX portfolio. very -- nice this and if was a of it's is the that a very the quality -- nice think portfolio, the you good is all adder So I about the on work think beyond. to for improving to this trying And again, good

Sean Meakim

And then, it's Sean. Julian,

Just June X, to one revenue the a in incremental button question announced put on business. closing Access the on of 'XX, around Solutions -- your we the

We also increased million our guidance by the for year. $XXX

this new M&A in related revenue Now $XXX reflects million 'XX. guidance another of

second you 'XX, of the through which walk had That month June of So $XXX quarterly give of full about the of the year through Access Solutions, quarter. a enough the to of year. month we in balance the million, will kind

accretive 'XX. And as the as Honeywell billion of he's deals be $X close Greg well rates of in And then collectively a are going into these said, coming overall. at run respective as to talked we rate businesses -- growth to to to each going about

Operator

question Nigel next line comes of Our Wolfe with Research. the Coe from

Nigel Coe

come hate My the guidance want I but math. was acquisition margin I accretive, to understanding to bore, think was back maybe a this that actually revision do LNG be to but I [indiscernible].

on So you've M&A of here. got like it $XXX $XXX incremental over segment income through that million million of coming feels revenue,

that feels within getting And cut the margin? that how clarify $XXX it guide And is maybe that. that? think so. Is want core IA million BA about the all segments? and Just So it correct? by we is do solely like Is to or

Gregory Lewis

Sure.

incremental the So yes, getting long-cycle these sure. most we're And in where segment changes is mix IA sure. is for of is That the short-cycle, and pronounced cut BA acquisitions. on profit most for new

don't know, we I about, talk of bear, some early interest net there's in to As going with associated to the mentioned, that. guide then where the to be And costs roughly on. I that degradation $X.XX that's going EPS integration of them $X.XX on costs we're

Nigel Coe

coming about repo the million. costs Greg, $XX But down, are by

above integration help how that and about over costs can -- mean out talking you you are I much... repo? just and are So us

Gregory Lewis

repositioning into we're of SBG. that there's acquiring segment ongoing incurred of a that project go business costs costs associated, Integration into there profit the unless segment integration get the are but inside profit that

Nigel Coe

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

Gregory Lewis

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

So I'm precise number. like point not and a going to give you

Operator

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

Scott Davis

pretty on to historically, Some the does at bank, they've been don't get think something of indicate helpful. in about relatively of kind half? encouraging. wanted Are the Slide history that they that I be book-to-bill, guys they stick but with pretty I color this you you we lot have just on a -- XX. look don't book-to-bills to kind acceleration view would if talking we we looking sharp will, volatile. can your these a back there I'm of

Vimal Kapur

orders Scott, second actually, quarter. earnings story of is one our for performance the Yes, highlights this in

Building double grew single in Energy Solutions. double-digit in orders high digit Industrial Sustainability in Our and Automation, and Automation

we for the really we of flowing in into orders our is for second which did second backlog X%. By that's what have the forecast billion, is second the So book-to-bill, a our up put strong. now the $XX strong now with also that quarter. And has revenue half half very way, to

of cycle because the have pivoted businesses it we strength more essentially, this book-to-bill, So us very toward guide long on the point towards is forecast we visibility. at gives on are our this which of and feel the the we that's nearly more time. backlog getting And and long-cycle called is assurance we a standing strong that out X. And footing why on

Scott Davis

you have meaningful key could seen regions, Vimal, a world bit mean I around the us? China? little notably changes of for in And the some Okay. walk you any

Vimal Kapur

X to will I the China We high thanks biggest last would and aero and China say for call continues out Middle businesses I do have us, would regions in East. single year. energy here. to No, we scored -- I Honeywell say well,

read. Short-cycle like similar We businesses China rates this as we economic are are cycle all year. the towards too, trending challenged of there,

for Middle East remains is a counterpoint It strongly. growing very us.

Arabia, And we see the Saudi are strong way, passing ahead a in reversion to China UAE, also on every slowdown momentum. progressively year. in that a Specifically in the times counting we

are a recovery. actually, Europe, seeing we

progression revenue of in have We good for Honeywell the year. first half seen

that's ahead times So we is are at probably us. bottom and us, for Europe behind for how looking

some of kind that's So on high-level geography. comments

Operator

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

Andrew Obin

Yes.

of past of steady your to of in think my there? you you second monetizing become approach aero the drag. the are your that changing Vimal, it's said, sort I are been just a that a couple of the half, as about as to I aero -- approach sort upside programs mix highlighted they source too how years? changing And to portfolio term. question about guys is which on Chairman, sunsetting you maybe of you've thinking aerospace. believe sort understanding long because as you a sort for over Are Just But of into are have the

Vimal Kapur

products. for would longer-cycle faced looking happening there's growth always And cycle. positioning it I it an are growth we mean for vector work a X a grow which absolutely cycle, Honeywell. to around Aero organic say to next until I really we cycle, to through down make X single And are high new years. aero up has more is of

importantly, Civitanavi And occurring in CAES, defense. equally both to of defense the segment. which defense acquisitions segment, and But we we the are made targeted are on growth bullish

Our backlogs nicely are very growing there.

towards aero both I years on times bullish our is segments to and the So going the really in pivoting within aerospace to And in several there how remain growth we're ahead. perform business very ahead. optimistic higher-growth rates maintain next

Andrew Obin

I'm the that to And I question asked. guess else going to go everybody back

right, well actually like of the As as list we this go have short-cycle It was businesses through sort quarter, you very and seems few expecting. were exceptions. performance done of there the of as businesses

of So there? way the that the more just of Chairman, now you macro to conservative of the given level forward, taking a uncertainty asking about going framework another question, think approach how to you're are sort out

Vimal Kapur

I control. I day, are of don't that's At the I end mean macros think Andrew. which the the reality, something

serve well because that's businesses are transition, the attractive: aerospace. And segments certainly we performing are So long-cycle us. the helping energy

of is estimate of the mid That's lower the are reverting they but at reversion the the our the I difference. upper suggesting versus not a at that back. I'm such are start initial end of think end it. year short-cycle more at businesses only or contracting,

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

bad it. on Our in very deliver X the will the year to the guide of job, to And any more to I argue impression first not don't subsequent inception want goal of is is would strive cycle X. that for course, My important, that my important. in of and be, is upper outcome, year. short leave end less that's a we'll cycle I long

I performing we think are of how markets it's just of point in market performing at the this a time. are and derivative how

Operator

Markets. from the next Deane with Our of line comes Capital Dray question RBC

Deane Dray

customer the decisions. I hoping of commentary week, delaying fiasco it's businesses? some was anything any but the not Crowdstrike election worries in get your through from you're early really And to seeing the ripple related, if any impact

Vimal Kapur

I mean Crowdstrike, -- the no nothing Honeywell. being on impact on

on user lot to very We that. vigilant obviously are our not of of attention that cybersecurity pay a We strategy software. a remain and

I'm that going never to need claim We on So victory front. vigilant. stay to

U.S. world. a we mean, rest will prepare I year factor, look, both for scenario. That's are than company Honeywell. the for elections, the elections spinning new But around always like this a of on think more I not

that a clearly, view. on That's up. And my factor shaping how certainly has been economies are

out. was elections, not there world lot half a the through think around playing is I results out going stories but because that's of the are

will the in I is in couple and for living, in biggest we will the either it we how down scenario. are a one anticipate out And U.S., think something anxiously and outcome play each prepared how line. are the But waiting we do a impact we on This results of months us.

Deane Dray

you would in where we're biggest synergy and timing? That's opportunities? some But potential the great be revenue know And would integration. early I to a the question. hear. still second highlight just deal then What of the

Vimal Kapur

our highlight have theme. deals sales are have ROIs the of Look, we all on announced, synergetic it. done, has that, Honeywell, don't We Having deal I deals we highly been they and synergy. each would like count said to X none our that of are based to that the

a segment. deals was because bullish both I'm were Same Aero on acquisition Civitanavi and equally the bring. and we not X us. new This in both for acquisition. -- for LNG and I'm has it always substantial on true UOP in HPS and synergies all CAES present arrival LNG is synergies

it's new Carrier that acquisition, And bring, with deep growth going that earlier just taking expertise the very rate North in LNG in global But business that's in Air business us sales some Products going calls, truly concentrated to segment. synergies. the is business all about of enhance the have technology further this they're penetration and and provide to America, we talked our because

So X acquisitions I'll these in there are factors out. call

growth are Honeywell, all them. we of of The they have accretive first to is all the the rate acquisitions made, baseline

be top of ahead. And will earnings on strong them in a on cake integrate the on we and it. that times icing more. that's going our are synergies we And story XXXX deliver as the in of sales part the to Second,

Operator

with of question comes next Sheila Jefferies. Kahyaoglu Our the from line

Sheila Kahyaoglu

on 'XX? just through we with where about think aerospace. they of change the today to Can MAX start sort how XXX into your how year the to and top talk you're line feeling progress and thinking the Boeing output rates any as rest and about of commercial the your are about Maybe OE, Is year? you

Vimal Kapur

are XX Airbus calibrating say a them. that months calibrated a our been now. the we our Boeing, both process have with all while So Sheila, key I constantly would and on the based adjustment recent That for on rolling frequency. we has output aligned a with OEMs volumes

by material It's both where changes not electronic There's factor aerospace not don't a Honeywell. have change change, major change. been we does some the the Airbus [indiscernible]. which is material to to on side and and not Boeing But specifically much signaled recently. But our have small guide

Sheila Kahyaoglu

OE it the XX%, about think think? we I up do how Is So growth?

Gregory Lewis

it's be year, double going This to up strong digits.

neighborhood. So you're right in the

Sean Meakim

like Yes. for mid-teens double space. and and The would be is aftermarket then XX% by defense for something end approaching for digits OE I way reasonable, about aerospace market something think

Sheila Kahyaoglu

And I typical just about bps have profitability, selection in XXX then despite on the think, contraction, you the dynamics. second of half Okay. more credit

in profitability [indiscernible] think the that? second changes and we do the about acquisition half how how So

Gregory Lewis

Yes.

mix will of caused word. I'll in fourth quarter the inside is be expect our rate better recover So margin the it, the to as lowest for quarter-to-quarter volatility, quarter. going for call that us, And lack of talked third we us year we the has a and about likely back then deliveries of the

year. And aero in was again, on, that on et margin based fact those we roughly the products, see can be margins that's cetera. basis talked going backlog, in on the of And this flat what's an terms about we organic the what in to

will up and on layering that the have there. that negative impact a CAES bring back then acquisition And on it from then we'll baseline,

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

Operator

Andy from Our Citigroup. Kaplowitz of question comes line from the next

Andrew Kaplowitz

then double-clicking lower And Vimal weaker-than-expected been than improving assuming the in maybe you these for issues? orders building you are that now? saw they the What organic margin you one improving. on June? second the just businesses or maybe products Is are that expected of thought in solutions Greg, you and Are businesses in have the half, same short-cycle said resulting think terms slower of or on the I question rate productivity more sensing. recovery of just

Gregory Lewis

Yes. Thanks, Andy.

So a couple in of things to keep mind.

quarter. Just of to given month before happen third remind, third on when remember, the we obviously of any our of quarter. the in results it's guidance half our And X, month the June gave

that speaks moment see So like versus just today. can to what time we that we able to in at see were what

short your short-cycle of But businesses than that There is certain products had exactly of are parts are inside the inside supposition we cycle building of IA right. hoped. and slower

mentioned, as offset, sales, And sales, project the really getting that's that's improving we et the building but driving sequentially. solutions what's by the HPS margin so mix cetera, they're still

So as improving that's that sequentially robustly They're also not we but is as still not -- true. like. would

Andrew Kaplowitz

recent that you talked Do M&A that line in rate algorithm? ramping your Can -- to And terms of considerably. stepped obviously, in market you've dilution Helpful, or Vimal, activity you to up conducive grow Greg. And up. then, longer-term with then divestitures you XX% M&A M&A see still from that of that? the Is continuing? the divestitures might you offset eventually about get

Vimal Kapur

not hear And play if on work divestiture, actions, on That we its you us progress. it, our you if on expect we as And only I out. progress XXXX. show I on would -- I disappointed have mean would things say that's but as can year play I earnings update guide, can will, do are progresses. the and out, during more to from be those cost Andy, in working we taken indication any, we'll any

active. available obviously lightly. we're out have we don't We're On from we walking doesn't our sourcing is M&A mean fact them. deals, to X actually still take that integrate the But of market, have it away what's that to there. done the We and pipeline are want front, conscious we

Operator

of Sachs. Our comes the Joe question next Ritchie with from Goldman line

Joseph Ritchie

just segments those margins So particular just expected and focused there. on and expectations just those year has are maybe changed BA for IA the second the a that for How year? for the for

Gregory Lewis

ought of mainly in progress expect half a anticipated. not performance in the They're little we down robust back coming see as BA be make the will had on year. still bit because had to basis, that We we as in of again, versus particular. an margin thought just the improvement. And we overall But Yes. expectations. what of we beginning going to It's

So think basis about that XXX points opposed in to as of basis tens points.

expect make XXX on year to the basis points And the for tens of in the the year. IA overall points to of to opposed some similarly, type side, we progress full probably in it's range. basis But as going be

quarter going IA, So -- the it nice mind, and very experience this of us, and a of to we're payments PSS but X progress were -- year. to now the that relative quarters we in license and loss inside next of are accretive business lift X keep that for year overcoming

Joseph Ritchie

Yes.

Okay.

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

Vimal Kapur

in is pricing, The Joe, signaled. trending the we have direction

a X%, strong, half just about productivity a the is margin is is at giving across which and about second be are little rate stronger. our to slightly cost very of neutral, us businesses. We is expect our we The punchline our price expansion and

as But explained -- businesses at rates level, we is of era margin X% over. EPS itself. this it's pricing -- expect before before, remains the just price spoken And mixed the what level. the right I've at do I And within X that the

and we that, than in XXXX. that demonstrating greater something expect should always are we So

Gregory Lewis

side, something that again, There's along. And the big on comes no always Yes. changes. inflation

Vimal Kapur

Labor where and in us. That's say, see would labor. and for continue highly Electronics, pricing, are a say remains hot. but level I we will elevated elevated remain -- to inflation category of others would is I

Operator

time turn that Mr. I'll comments. allowed concludes Kapur to the gentlemen, questions. and Ladies final any our floor for for back

Vimal Kapur

express to your for our want I my who and Honeywell again future-shapers, for driving appreciation are differentiated our to shareholders performance support customers. ongoing our to

progress we to Our continue Thank forward future and healthy. executing bright, for sharing please stay our with our look you is as we safe listening, and you commitment. and on

Operator

conference today's call. Thank you. This concludes

disconnect your lines time. may participation. Thank You your for this you at

Honeywell International (HON) 25 Jul 242024 Q2 Earnings call transcript