Honeywell International Inc.

Good day, everyone. Ladies and gentlemen, 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. If you would like to ask a question at that time, please press star 1 on your touchtone 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 Binza, Vice President of Investor Relations. Please go ahead.

Thank you, Ebony. Good morning, and welcome to Honeywell's third quarter 2019 earnings conference call. With me here today are Chairman and CEO Darius Adamczyk 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 risk 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 spin-offs of our homes and transportation systems businesses in 2018 as well as pension mark-to-market adjustments and U.S. tax legislation, except where otherwise noted. Comparisons are to the prior year period, unless otherwise noted. This morning, we will review our financial results for the third quarter of 2019, share our guidance for the fourth quarter, provide an update to our full year 2019 outlook, and share some preliminary thoughts on 2020 dynamics. As always, we'll leave time for your questions at the end. And with that, I'd like to turn the call over to Chairman and CEO, Dariusz Adamczyk.

Thank you, Mark, and good morning, everyone. Let's begin on slide two. This has been a very exciting quarter for Honeywell, capped off by another strong financial performance and several important recent leadership changes. I have asked Tim Mahoney, who has been the president and CEO of our aerospace segment for the past 10 years, to serve as our senior vice president of enterprise transformation. In that role, Tim will oversee Honeywell Digital, our global cross-functional digitization initiative that is driving improvements in customer service and efficiency. Tim's outstanding leadership has enabled aerospace to deliver exceptional results. Additionally, within Aero, Tim led the creation of Honeywell's best digital environment. I'm looking forward to leveraging that experience and having his expertise in this crucial role as we continue to evolve as a software industrial company. Taking over for Tim as the leader of aerospace is Mike Mattson, who previously led our aerospace integrated supply chain. Mike has also served as the president of our defense and space business, and has held leadership roles within our air transport and regional business. Mike began his career at Honeywell. This had three decades of leadership experience here. We are fortunate to have someone of Mike's extensive background at the helm of aerospace. These appointments are effective immediately, but Mike and Tim will, of course, work closely together throughout the fourth quarter to ensure a smooth transition. In addition, Jeff Kimball has been named Senior Vice President and Chief Commercial Officer, where he's overseeing our sales and marketing organizations to drive profitable organic growth. Jeff joins us from McKinsey, where he's a partner in the transformation practice. Last, Deborah Flint has joined our Board of Directors as an Independent Director. Deborah is the CEO of Los Angeles World Airports, where she's overseeing the complete modernization of LAX, including championing the use of IoT technologies. Her deep knowledge of and experience with critical infrastructure, connected buildings, and advanced security solutions will be invaluable to the board and our ongoing transformation. We have the right leadership team in place, a deep bench of up-and-coming leaders, an engaged and experienced board of directors that will help us continue to deliver the results you have come to expect from Honeywell. Turning to slide three, let's discuss a few of our recent highlights and wins. Through our Honeywell-connected enterprise, we launched Honeywell Forge Cybersecurity, aimed at helping customers identify and act on cyber-related incidents. We once again had double-digit growth in total connected software sales, as well as continued growth in connected orders during the quarter. We announced that Honeywell was appointed by Kuwait Integrated Petroleum Industries to provide technology and production systems to the El Zor Refinery, which will be the largest integrated refinery and petrochemical plant ever constructed in Kuwait. In addition, Honeywell was ranked 13th on Forbes 2019 World's Most Reputable Companies for Corporate Responsibility. Our position on this list is a testament to all we have done and continue to do to be strong advocates for the environment, our diverse employee base, and our communities. Now, on to slide four, in the third quarter. We continue to drive strong financial results, delivering adjusted earnings per share of $2.08, six cents above the high end of our guidance range. We grew organic sales by 3%, driven by the strength across aerospace, as well as in our process automation and building technologies businesses. Aerospace generated double-digit organic sales growth for the fifth straight quarter, driven by our strong positions on key platforms, robust defense portfolio, and ongoing demand for aftermarket services. Our long-cycle backlog was up approximately 8% year-over-year, driven by defense in space and UOP bookings, as well as the strong warehouse automation orders and HPS projects orders which each increased over 20% in the quarter, positioning us well for the remainder of the year and into 2020. Our organic growth, combined with the benefits of the portfolio enhancements we have made in 2018 and our operational excellence initiatives, drove segment margin expansion of 180 basis points, with segment margin again exceeding 21% this quarter. Excluding the favorable margin impact from the spinoffs, segment margin expanded 80 basis points, which was 40 points above the high end of our guidance. During the quarter, we generated $1.3 billion adjusted free cash flow. We remain focused on our working capital management at every level of the organization and expect to deliver on our cash flow commitment for the full year. As we've done throughout the year, we continue to execute our disciplined capital deployment strategies. During the quarter, we repurchased $1 billion of Honeywell shares, announced a 10% increase in our dividend, our 10th consecutive double-digit increase. We also closed three Honeywell venture investments and completed the acquisition of TrueTrack Flight Systems, a leader in autopilots for the experimental, light sport, and certified aircraft. In the first nine months of 2019, We have deployed $5.5 billion to share repurchases, dividends, and acquisitions. Additionally, during the quarter, we issued $2.7 billion of senior notes to refinance October debt maturities at attractive interest rates, further strengthening our balance sheet. I am very pleased with our performance this year. I'm confident the team will continue to execute and deliver our full-year plan. With that, I'll turn the call over to Greg. We'll discuss our third quarter results in more detail and provide our updated full-year 2019 guidance.