Honeywell International Inc.

Thank you for standing by and welcome to the Honeywell First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Mecham, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Honeywell's first quarter 2024 earnings conference call. On the call with me today are Chief Executive Officer Vimal Kapoor and Senior Vice President and Chief Financial Officer Greg Lewis. This webcast and the presentation materials, including non-cap reconciliations, are available on our investor relations website. From time to time, we post new information that may be of interest or material to our investors on this website. Our discussion today includes forward-looking statements that are based on our best view of the world AND OF OUR BUSINESS AS WE SEE THEM TODAY, AND ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THE ONES DESCRIBED IN OUR SEC FINAL LINKS. THIS MORNING, WE WILL REVIEW OUR FINANCIAL RESULTS FOR THE FIRST QUARTER, SHARE OUR GUIDANCE FOR THE SECOND QUARTER, AND PROVIDE AN UPDATE ON FOUR-YEAR 2024. AS ALWAYS, WE'LL LEAVE TIME FOR YOUR QUESTIONS AT THE END. WITH THAT, I'LL TURN THE CALL OVER TO CEO, VIMAL KAPOOR.

THANK YOU, SEAN, AND GOOD MORNING, EVERYONE. WE DELIVERED A VERY STRONG FIRST QUARTER, EXCEEDING THE HIGH END OF OUR FIRST QUARTER ADJUSTED EARNING FOR SHARE GUIDANCE and meeting the high end of our organic sales and segment margin guidance ranges. The disciplined execution of our world-class accelerator operating system and differentiated portfolio of technologies enabled this strong performance amidst a dynamic microeconomic backdrop. As expected, our long-cycle aerospace and energy-oriented businesses led the way with healthy organic volume growth. We are starting to see recovery in some areas of our short cycle portfolio, including consecutive quarters of orders growth in productivity solutions and services, while the other short cycle businesses continue to normalize as the effects of these stockings fade, consistent with our second half acceleration framework. Before we get into a more detailed discussion on the first quarter 2024 results and updates to our full year 2024 expectation, let me take a minute to revisit my priorities for Honeywell. First, we are keenly focused on accelerating organic sales growth towards the upper end of our long-term target range of 4% to 7%. We are doing this by enhancing our innovation playbook, accelerating sustainability and software offering, increasing penetration of our install base, and leveraging our leadership position in high-growth regions. Second, we are evolving Honeywell Accelerator to drive incremental value through deploying global design model across the portfolio to enhance our growth capabilities. Following the great integration inside of Honeywell over the past several years, we are now an integrated operating company that deploys world-class digital supply chain and technology development capabilities at scale, along with multiple growth drivers that benefit the entire enterprise. This includes leveraging generative AI to maximize the potential benefit of our operating system, both for our customers and internally. Of the strong, digitally enabled foundation, Accelerator is providing to be a powerful source of profitable growth across all of our businesses and potential addition to our portfolio. Third, we are executing on our portfolio optimizing goals, upgrading the quality of our business and financial profile by executing on strategic port on acquisition while divesting non-core lines of business to accelerate value creation. We expect to deliver profitable growth and strong cash generation as we demonstrate progress against these priorities creating a compelling long-term value proposition for our shareholders. In the spirit of that progress, let's turn to slide three to discuss the latest action in our portfolio shaping goals. Our M&A playbook is yielding positive results. Over the last few years, we have accumulated several quality bolt-ons and tuck-in assets that strategically add to our technological capabilities, enhancing our alignment to compelling megatrends, and provide a creative growth that supports Honeywell's overall long-term financial framework. We remain focused on creating a flywheel of bolt-on M&A transactions, roughly in the $1 to $7 billion purchase price range. We have successfully executed on meaningful deals that add technological adjacencies to our portfolio and are accretive to our growth and margin rate profile with attractive business-make characteristics. The most recent example of this came in the fourth quarter when we announced our intention to acquire Carrier's global access solution business for nearly $5 billion, enabling Honeywell to become a leader in security solution for the digital age. The transaction further enhances our equipment agnostic, high margin product business mixed with within building automation. Last year's acquisition of Compressor Control Corporation, or CCC, a leading provider of turbo machinery control and optimization solution, that will play a critical role in energy transition aligns with this playbook as well. CCC technologies, including control hardware, software, and services, bolster Honeywell's high-growth sustainability and digitalization portfolio with new carbon capture control solutions. CCC has seamlessly integrated into our process solution business, and we are already seeing meaningful revenue synergies benefit with Honeywell Forge. Check-in acquisitions are also an important growth lever for us as we continuously evaluate a build, buy, or partner approach to add strategically important offering that solves our customers' toughest challenges. Last month, Honeywell announced our intention to acquire Civi-Tanavi system for approximately 200 million euros. Civi-Tanavi technology will reinforce our leading navigation solutions across aerospace, defense, and industrial platforms. This acquisition, which is direct concert with Honeywell's alignment to the megatrend of automation and future of aviation, furthers our ability to create value for our customer from nose to tail, whether they are traditional operators seeking to increase the autonomous capability of their existing fleets or new entrants in the advanced air mobility space. Last year, we acquired SkedaFence, a business that delivers Internet of Things and operational technology cybersecurity solution for monitoring large-scale networks. SkedaFence brought proven technologies in asset recovery, threat detection, and security governance into our SC portfolio, all key components for critical infrastructure and industrial cybersecurity. The acquisition has bolstered our strategic foundation in an attractive market for us to continue to build on both organically and inorganically. With a recent portfolio announcement including Carrier's Global Access Solution business, And Civi Tanavi, we are on track to accelerate capital deployment in 2024 and exceed our commitment to deploy at least $25 billion of capital in 2023 through 2025. Our robust balance sheet capacity enable us to allocate capital to opportunity security purchases. High return growth CapEx and a creative M&A. As the deal environment remains relatively favorable in 2024, we will build on our ready strong pipeline of high value M&A opportunities, supporting the execution of our portfolio shaping strategy. Before I hand it off to Greg, let's turn to slide four to review some of our exciting recent wins. Let me take this opportunity to highlight our recent commercial wins and strategic actions we are taking that demonstrate innovation across our portfolio and support alignment to three compelling megatrends, automation, future of aviation, and energy transition, all underpinned by robust digitalization capability and solution. In the automation space, Honeywell was chosen to provide automation, cybersecurity, and safety solution to a multi-billion dollar plant expansion project for a major energy company in the Middle East. We will deploy our flagship distributed control system and safety manager technologies amongst other solutions. We remain excited about the various automation opportunities across our portfolio. In aerospace, we will invest more than $80 million to expand our Olathe plant in Kansas. This project will enable the production of next-generation avionics technology and directly create hundreds of jobs at site and in the local economy. This facility upgrade is another example of the resources we are committing to unlock the supply chain and our ongoing investment in the aerospace technology business to drive growth. Finally, Honeywell will be incorporating our hydrocracking technology in the new DG Fuel SAF refinery to convert hydrocarbon liquids into SAF. This technology is a low-capital solution which facilitates 90% reduction in CO2 intensity versus traditional fossil fuel-based jet fuels by using biomass as a feedstock. When completed, the refinery is expected to produce 600,000 tons of SAF every year. As demonstrated here, Honeywell remains committed to actively solving Both are customers' and board's toughest challenges. Now let me turn it over to Greg on slide five to discuss our first quarter results in more detail, as well as provide us our views on second quarter and full year 2024 guidance.