Honeywell International Inc.

Good day, ladies and gentlemen, and welcome to Honeywell's second quarter 2019 earnings release conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Lastly, if you should require operator assistance, please press star 0. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mark Micheluso, Vice President of Investor Relations.

Thanks, April. Good morning, and welcome to Honeywell's second quarter 2019 earnings conference call. With me here today are Chairman and CEO Darius Domchik and Senior Vice President and Chief Financial Officer Greg Lewis. This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com forward slash investor. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our businesses as we see them today. Those elements can change, and we ask that you interpret them in that light. We identify the principal risks and uncertainties that may affect our performance in our annual report on Form 10-K and other SEC filings. For this call, references to adjusted earnings per share, adjusted free cash flow, and free cash flow conversion and effective tax rate exclude the impacts from separation costs related to the two spinoffs of our homes and transportation systems businesses in 2018, as well as 2018 pension mark-to-market adjustment and U.S. tax legislation, except where otherwise noted. References to 2019 adjusted free cash flow guidance and associated conversion exclude impacts from separation costs related to the 2018 spinoffs. This morning, we will review our financial results for the second quarter of 2019, share our guidance for the third quarter, and provide an update to our full-year 2019 outlook And of course, we'll leave time for your questions at the end. With that, I'd like to turn the call over to Chairman and CEO, Darius Sadopnik.

Thank you, Mark, and good morning, everyone. We're excited to be hosting our call this morning from Charlotte, North Carolina, which will officially become our corporate headquarters on August 1st. It is an exciting time to be part of the Honeywell team as we continue to transform our business into a premier technology company with Charlotte as our home base. Let's begin this morning on slide two. It was another very strong quarter for Honeywell. We again delivered on our commitments, generating earnings per share of $2.10 at the high end of our second quarter guidance, up 9%, excluding the impact of spinoffs in 2018. The strong earnings result was driven by organic sales growth of 5% and 170 basis points of segment margin expansion. Notably, our segment profit excluding the spins on a comparable basis to 2018, was up 9 percent this quarter and was the largest contributor of EPS growth. For the first half of 2019, organic sales growth reached 7 percent, which is a proof point to the investments we've made in our business. In our sales force and new technologies that are winning in the marketplace, we continue to see the benefits from our strong positions on key platforms in our long cycle business aviation and defense portfolios in aerospace, In our warehouse automation business, which is up over 20% organically year-to-date, it now generates approximately $2 billion in annual sales. In our building technologies business, which had another great quarter, our process solutions and UOP businesses, which principally serve the oil and gas industry, also both grew 5% organically this quarter. As we continue to be encouraged by the progress we are making in the Honeywell Connected enterprise, which drove double-digit organic sales growth of our software in the quarter. In fact, this quarter we signed a framework agreement to deliver Honeywell Forge asset performance management and improve the reliability and performance of over 1,000 industrial assets for a large Middle Eastern refinery. Segment margin exceeded 21% in the second quarter, up 170 basis points, driven by smart portfolio enhancements we made in 2018, our investments in the commercial organization, and the benefits of previously funded restructuring to improve our operations. Excluding the favorable margin impact from the spinoffs, segment margins expanded 80 basis points, which was 30 basis points above the high end of our guidance. Building on the progress we have seen for several quarters, we delivered 100% free cash flow conversion and we remain on path to approximately 100% for the second year in a row. I am encouraged by our progress in this area and remain focused on continuing to drive improvements in working capital. We also continue to extend our capital deployment strategy. We're purchasing $1.9 billion shares and closing four new Honeywell Ventures investments in the quarter, bringing our total to 12 new investments in the first two years of the fund. As a result of our first half performance, we are raising the low end of our full-year organic sales guys by one point to a new range of 4% to 6%. and raising the low end of our full year earnings per share guidance to a new range of $7.95 to $8.15. We expect to generate approximately $6 billion in free cash flow for the year, and we have narrowed our free cash flow guidance to reflect this. While we are encouraged by our performance this quarter, we're continuing to plan cautiously for the second half of the year, given the uncertain macro environment in which we operate. We've seen some slowing in certain short cycle businesses, that has been overcome by the strong performance in the rest of the portfolio. We think it is prudent to plan conservatively in the event of a broader slowdown, given that nearly 60% of our business is short cycle in nature. I'm very pleased with our performance in the first half. We still have substantial work to do to achieve our plan, but I'm confident that the team will continue to execute. I'll stop there and turn the call over to Greg, who will discuss our second quarter results and updated 2019 guidance in more detail.