Honeywell International Inc.

Good day, and welcome to the Honeywell's first quarter earnings release. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mark Bensa, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Jake. Good morning, and welcome to Honeywell's first quarter 2021 earnings conference call. On the call with me 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 based on many factors, including changing economic and business conditions, 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 STC filings. This morning, we will review our financial results for the first quarter of 2021, share our guidance for the second quarter, and provide an update to our full-year 2021 outlook. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO, Dariusz Adamczyk.

Thank you, Mark, and good morning, everyone. Let's begin on slide two. We delivered a very strong start to 2021, exceeding the high end of our first quarter organic sales growth, segment margin, and adjusted earnings per share guidance range. In the first quarter, we delivered adjusted earnings per share of $1.92. down 13% year-over-year and 9 cents above the high end of our guidance range. Organic sales were down 2% year-over-year, a 5 percentage point sequential improvement from the 7% organic sales decline in the fourth quarter of 2020. We drove year-over-year organic sales growth in two out of our four segments, HVT and SPS, despite facing difficult comps since the first quarter of 2020. wasn't fully impacted by the pandemic. Honeywell Building Technologies' return to growth and safety and productivity solutions achieved an outstanding 47% organic growth in the quarter. We also drove double-digit year-over-year organic growth in connected software sales driven by strong demand for connected buildings and cyber solutions. We delivered a segment margin of 21% 10 basis points above our guidance, with margin expansion in aerospace, HVT, and SPS. We generated $757 million of free cash flow in the quarter, a strong performance despite increased investments in high-return capital expenditures, which were up approximately $80 million year-over-year as we positioned ourselves for the recovery. Adjusted free cash flow conversion was 56%, up 500 basis point year-over-year on the strength of working capital improvements. In terms of capital, we deployed $3 billion to dividends, growth capex, share repurchases, and M&A during the quarter. We opportunistically repurchased 4 million shares throughout the quarter, reducing our share count to 705 million. We're off to a strong start in 2021. and I'm very confident that continued improvement in markets coupled with accelerated innovation and strong execution will provide a long runway for continued business improvement and top-tier value creation for our shareholders. Next, let's turn to slide three to discuss a few of our recent business highlights. I'm excited to share a few recent recognitions and partnerships that highlight our commitment to upholding the highest ethical standards and our focus on creating breakthrough innovations. First, Honeywell is one of only eight companies in the industrial manufacturing category to be named one of the world's most ethical companies by Ethisphere. Ethisphere is an organization that evaluates and honors businesses around the globe and across industries for their strong cultural, environmental, social, governance, and diversity practices. We are proud to have earned this prestigious ranking. Second, Honeywell is named to Fast Company's annual list of the world's most innovative companies for 21. In addition to being recognized for a 100-year heritage of creating groundbreaking technologies like quantum computing that transformed the way the world works, Honeywell is also recognized for mobilizing quickly to help people and businesses cope with the pandemic, including our launch of new N95 mask manufacturing and our introduction of a UV treatment systems for airplanes, healthy building solutions, and innovative AcclarEdge bottles and vials. We also recently announced our partnership with musician and entrepreneur Will.i.am to launch the Super Mask, a one-of-a-kind innovative smart face mask for the mid- and post-pandemic world. The Super Mask is easily adjustable to fit a variety of face shapes and is enhanced with multiple functions for the modern lifestyle, including dual three-speed fans and HEPA filters for enhanced breathability, active noise-canceling audio and microphone capabilities, and Bluetooth connectivity. Finally, we're continuously evaluating our portfolio for M&A opportunities that can enhance our existing offerings. During the first quarter, we signed an agreement to acquire a majority stake in Phyplex Communications, a company that develops in-building communication systems, including bidirectional amplifiers that provide continuous and critical in-building radio coverage in challenging environments to improve the safety of first responders and building occupants. The addition of FiFlex products and software will enhance our offering in the fast-growing in-building communication market and complement our innovative, industry-leading portfolio, enabling us towards creating the next generation of fire and life safety solutions. Let me turn it over to Greg on slide four to discuss our first quarter results in more detail and to provide an update on our 2021 outlook.