Honeywell International Inc.

Thank you for standing by, and welcome to the Honeywell first quarter 2025 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 2025 earnings conference call. On the call with me today are Chairman and Chief Executive Officer Vimal Kapoor and Senior Vice President and Chief Financial Officer Mike Stepniak. 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 businesses as we see them today, and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning, we will review our financial results for the first quarter, share our guidance for the second quarter, and provide an update on full year 2025. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO, Vimal Kapoor.

Thank you, Sean, and good morning, everyone. Honeywell saw its strong finish to last year's carry into 2025 as we expect. exceeded the high end of our guidance on all metrics in the first quarter, and this performance translated into substantial free cash flow growth as well. Overall, demand was strong with a book to build above one. Although our business has solid momentum heading into second quarter, the economic climate has become increasingly uncertain in recent weeks. Global trade patterns are shifting because of increasing tariff and duties, making customer planning more difficult. Weaker sentiments combined with higher price expectation warrants incremental caution regarding end market demand in the coming quarters. Despite these headwinds, we remain on track to deliver on our 2025 outlook as we are maintaining our full year organic growth guidance and raising our adjusted EPS guidance. Our outlook now incorporates the impact of current tariffs and microeconomic uncertainty fully offset by our ongoing mitigation efforts local for local strategy, accelerator operating system, and resilient market position. As you can see, we are taking decisive actions during this uncertain time to not only protect but grow earnings, invest for future, and position Honeywell for long-term success regardless of the operating environment we face. Honeywell has a team across function and businesses meeting daily to review and respond to tariff announcements. This team analyzes the number of livers to optimally respond to changing conditions. We're also closely monitoring bilateral negotiation and engaging with key stakeholders. From our perspective, there are three very important considerations for supporting American competitiveness and manufacturing. Maintain the principle of USMCA, strike the right kind of trade agreement with our major trading partners, and continue the global framework that has made the US the world leader in aerospace. As external environment has become more unpredictable, we remain focused on what we can control, and we have made significant progress in planning and executing our separation into three industry-leading public companies. This preparation has included key leadership appointments to ensure that we have the right people in place to continue our portfolio transformation. Let's turn to slide three to discuss a few important changes announced earlier this month. Su Ping Liu will succeed Anne Madden as Senior Vice President and General Counsel while retaining her role as Corporate Secretary. Su's more than 15 years of legal experience with Honeywell across many of our business lines and geographies will further strengthen our executive leadership team. Anne will transition into a new role as Senior Vice President of Portfolio Transformation and senior advisor, where her experience leading over 100 acquisitions as Honeywell's global head of M&A will prove invaluable during our continued portfolio optimization. Also, our board of directors has elected Stephen Williamson to join us as an independent director and audit committee member. Stephen's decade as CFO of Thermo Fisher Scientific will broaden and deepen the expertise of both I want to personally congratulate these three individuals on their new roles, and I look forward to working closely with each one of them. Let's turn to slide four to discuss update on separation. We hold strong conviction that separating automation, aerospace, and advanced materials will unlock significant value for all Honeywell stakeholders by best positioning each standalone public company for long-term profitable growth. Following our announcement in February, Honeywell has taken many steps forward in preparation for these transactions. First, we determined a tax-free spin of Honeywell Aerospace will be the most efficient way to separate our automation and aerospace businesses. Second, the board confirmed that I will lead the automation company going forward at its where I've spent bulk of my career and where I have a specific vision for the future. At the right time, board will evaluate the future leadership of Honeywell Aerospace as well. Third, we established dedicated separation management office run by experts in corporate transformation. These entities have empowerment to maintain the value of our businesses, minimize separation costs, and achieved our communicated timelines. Most importantly, they will ensure that our operation leaders are focused solely on serving our customers and achieving our financial targets. Fourth, we appointed an accomplished leadership team, what will be called Solstice Advanced Materials. Collectively, they bring years of experience leading public companies, operating specialty chemical businesses, and utilizing Honeywell X-related operating system. Solstice will be headquartered in New Jersey, where the current leadership team for the business sits. Fifth, We continue deploying capital as an active buyer of our own shares, which offer tremendous value at recent levels. We have repurchased about $3 billion of our shares already this year and will continue to repurchase our stock opportunistically. And lastly, in March, we announced the acquisition of Sundyne as we continue to optimize our portfolio. If you turn to slide five, I'll discuss how this deal fits into with our portfolio transformation. As you can see, Sundime will be the fifth strategic port on acquisition since I became Honeywell's CEO, along with a couple of strategically important technology tuck-ins. Sundime meet each of the common sense criteria we have set in. It's the right size. It exceeds our financial return hurdles. It improves our business profile by boosting both organic growth and segment margins, and Honeywell is a natural owner of the business as Sundyne addresses a closely adjusted market to our existing ESS offering, which will allow us to sell a more robust and complimentary portfolio of solution to our customers, particularly in LNG. We have meticulously built a pipeline of acquisition targets with compelling financial characteristics over the past several years and will continue to pursue them if they become available to us. Given everything we have in flight, only the deals that are time sensitive will be pursued for now. Buying these differentiated businesses with strong aftermarket content and secular growth drivers at a reasonable price is a powerful use of capital. Our 2024 acquisitions are now increasingly incorporated into our operations and performing admirably well with the bulk of integration work behind us, reinforcing that we have the right M&A process in place to create incremental value. While we continue to evaluate acquisition, we also look forward to opportunistically exit businesses such as personal protective equipment that do not fit into our business model or strategic priorities. The PPE sale will improve margins and organic growth. I will now move to slide six to address how we view the present global uncertainty. As a company, we remain confident in our ability to navigate the current trade environment. For decades, we have positioned each of our business lines to serve their local markets. This local-for-local strategy reduces our overall exposure to international trade and geopolitical tensions. Based on tariffs in place today, our approximate 2025 exposure is about $500 million before taking any mitigation measures. Our better-tested accelerated operating system can quickly identify areas of concern and implement mitigation efforts. Then we pursue consistent and clear communication with our suppliers, customers, and partners to maximize operational stability for all parties. Through this well-developed operational systems and our established local for local footprint, we are confident we can fully offset the impact of current tariffs and are well positioned to manage future trade uncertainty. This is evident in today's results. and our confidence in maintaining and raising guidance in spite of these offsetting headwinds. Most importantly, whenever elevated global tensions do subside, we remain in an excellent position to capitalize on the record backlog and continue our growth trajectory. Now let me turn over to Mike to discuss our excellent first quarter results.