Honeywell International Inc.

Thank you for standing by, and welcome to Honeywell's second quarter fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the call over to Sean Mecham. Please, go ahead.

Thank you, Lateef. Good morning and welcome to Honeywell's second quarter 2022 earnings conference call. On the call with me today are Chairman and CEO Dariusz Adamczyk and Senior Vice President and Chief Financial Officer Greg Willis. Also joining us are Senior Vice President and General Counsel Ann Madden and Senior Vice President and Chief Supply Chain Officer Torsten Pils. This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com forward slash investor. Honeywell also uses our website as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Note that elements of this presentation contain forward-looking statements which 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 SEC filings. This morning, we will review our financial results for the second quarter of 2022 and share our guidance for the third quarter and provide an update to our full-year 2022 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, Gary Podomchik.

Thank you, Sean, and good morning, everyone. Let's begin on slide two. The second quarter is another strong one for Honeywell. We over-delivered on our commitments as our rigorous operating principles enable us to navigate a challenging backdrop and remain highly resilient amid ongoing supply chain constraints, inflation headwinds, and geopolitical unrest. We met or exceeded our second quarter guidance despite these challenges of adjusted earnings per share of $2.10, up 4% year-over-year, and 2 cents above the high end of the guidance range. Organic sales grew 4% year-over-year, led by strong double-digit growth in our commercial aviation, building products, productivity solutions and services, advanced sensing technologies, advanced materials, and recurring connected software businesses. This was partially offset by three percentage points impact from a combination of the wind down of our Russian operations and lower COVID-related mass sales as we lapped the height of demand in 2021. We expanded segment margin by 50 basis points year-over-year to 20.9%, meaning the high end of the guidance range as commercial excellence enabled us to remain ahead of the inflation curve, excluding the impact of our investment continuum The margin expansion was 80 basis points year over year. Orders and backlog strength continued in the second quarter, led by Arrow, HBT, and PMT as our end markets continue to recover, giving us confidence or demand outlook for the back half year. Orders were up 12% year over year, and closing backlog was $29.5 billion, also up 12% year over year. In terms of capital, We deployed $2.3 billion to share repurchases, dividends, and capital expenditures. We leveraged the strength of our balance sheet to opportunistically purchase 7.5 million shares throughout the quarter, reducing our average share count to 685 million shares and continue to execute on our commitment to buy back $4 billion in shares in 2022. As always, we continue to execute our rigorous and proven value creation framework which drives outstanding shareholder value. I am proud of Honeywell's ability to rise to the challenge to deliver strong results amid such a fluid operating environment. Now let's turn to slide three to discuss recent senior leadership changes. This morning, we announced that Vimal Kapoor has been appointed to the role of President and Chief Operating Officer, effective immediately. Vimal is currently the President and CEO of Honeywell Performance Materials and Technologies, and will maintain his PMT role until his successor's name. Honeywell is fortunate to benefit from a very deep bench of experienced leaders like Vimal with 33 years across various Honeywell businesses. As COO, you will work closely with me to drive the continued profitable growth of Honeywell's operating businesses. This includes creating new solutions to help our customers drive their sustainability transformations and accelerate their digital transformation journeys. Vimal will also oversee the continued integration of Honeywell's operating system, which we call Honeywell Accelerator. Vimal is uniquely qualified for this role, having proven his operational capabilities across many different industries, business models, regions, and business cycles. This appointment provides me additional bandwidth to focus on strategy, business development, customer engagement, and people development. Now, many of you will recall that I served as COO once upon a time as well. This announcement today is not a repeat of that playbook. While I won't be chairman and CEO indefinitely, I have no definitive plans to retire and will continue to lead Honeywell. Vimal's appointment is going to allow me additional flexibility to focus on our overarching objectives. In addition, effective earlier this month, we expanded both Sheila Jordan's and Suresh Ventricle's role and welcomed them to the executive leadership team as Honeywell officers reporting to me to ensure we continue to advance our enterprise transformation. Sheila expanded her role to include all digital transformation efforts, becoming Senior Vice President, Chief Digital Technology Officer. Sheila joined Honeywell in January 2020, and has proven significant value working to modernize our IT infrastructure, applications, digital capabilities, and talent. Suresh took an expanded role becoming Senior Vice President, Chief Technology and Innovation Officer. Suresh has been with Honeywell almost 30 years and has held a series of engineering and IT leadership positions, including CTO of Honeywell and SPS. Suresh is responsible for new product development and introduction processes, including development for breakthrough technologies. I'd like to congratulate Vimal, Sheila, and Suresh on their new roles, and I look forward to working closely with them as they enter the next phase of Honeywell's transformation. Next, let me turn the slide forward to discuss other exciting recent announcements. In the second quarter, we continued to build on our reputation as one of the premier providers of cutting-edge technologies that can deliver more sustainable solutions. We announced yesterday that Archer Aviation selected Honeywell to provide flight control actuation and thermal management technologies for the urban air mobility aircraft. Archer's production aircraft will operate dense urban environments, making critical precision from the aircraft's flight controls and actuators a must for civilian safety. Honeywell's actuators can accept hundreds of micro adjustments and commands per second from fly by wire computers, enabling precise navigation, which will enhance safety and accommodate the unique elements of Archer's electric vertical takeoff and landing aircraft. Honeywell has a wide variety of ready now solutions that will create a more sustainable future for the aviation sector. It's a great example of that. In addition, Last month we announced a partnership with Enlink Midstream to deliver carbon capture solutions to industrial scale CO2 emitters along the Louisiana Gulf Coast. Our carbon capture and hydrogen purification technologies combined with Enlink's planned CO2 pipeline transportation network provides a cost efficient solution for customers looking to reduce the environmental impact of their operations. Lastly, We discussed in our Q2 leadership webcast on sustainable building technologies, we released a new carbon and energy management software focused on the energy optimization and carbon reduction of commercial buildings. Commercial buildings currently account for almost a third of global energy consumption and 37% of global energy-related CO2 emissions. Building owners recognize that this issue needs to be addressed. and thousands of companies have voluntarily pledged to meet sustainability targets. Honeywell's new software offering enables building owners to track and optimize energy performance down to a device or asset level. Our carbon and energy management software leverages Honeywell's forged artificial intelligence and machine learning algorithms to autonomously identify and implement energy conservation measures. This makes it possible for building owners to reduce the environmental impact of their building while at the same time improving the well-being of their occupants. As you can see, we are leveraging our expertise and culture of innovation to enable a more sustainable future. Now let me turn it over to Greg on slide five to discuss our second quarter results in more detail and to provide an update on our 2022 outlook.