Honeywell International Inc at Barclays Industrial Select Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Julian Mitchell - Barclays - Analyst : Great. Thanks, Vimal. Maybe switching back to the short term a little bit. I think it's been a very sort of dynamic environment month to month for industrial companies. Your own business, for example, you had strong orders second half of 2024. You're not necessarily guiding for that to feed into stronger revenue this year. So maybe help us understand, is that natural conservatism, something in the types of orders that you've been looking? Any thoughts around that, please?

Question: Julian Mitchell - Barclays - Analyst : Perfect. And when you think about the more short-cycle businesses, particularly parts of industrial automation or some of the products within Building Automation, you had a pretty good fourth quarter in both categories actually. You haven't guided for that to persist this year or get better in the second half. Why is that? And what are you seeing in those shorter-cycle product businesses?

Question: Julian Mitchell - Barclays - Analyst : Great. And I think to your point on guidance just now, there was a difficult time with some of the guides second half of last year. I think investors are trying to figure out what was the framework or the sort of impulse behind the guidance setting for this year in that context? Is it conservative? Is it prudent? Is it something else? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 12:30PM, HON.OQ - Honeywell International Inc at Barclays Industrial Select Conference

Question: Julian Mitchell - Barclays - Analyst : Great. And I suppose away from the short term on the top line, I think on the splits, I suppose people would wonder the motive around it. How much of it was sort of some of the parts valuation maths? How much was it weighted to, no, we're going to improve the operating performance of each of the three pieces in the long term?

Question: Julian Mitchell - Barclays - Analyst : And when you talk about the accelerated growth for the pieces, are there maybe some examples that you might use where this business should have done X or Y? If it was standalone, maybe it would have done -- any thoughts around that?

Question: Julian Mitchell - Barclays - Analyst : Great. And if we look at Aerospace, for example, there's always a debate in that industry around, is Honeywell's growth, what it should have been on the top line, has it undergrown peers, whichever the peer set happens to be that people look at? Is there a need for sort of stepped up reinvestment in the business once it becomes standalone to get the growth moving faster? Any thoughts around that?

Question: Julian Mitchell - Barclays - Analyst : Got it. And I think for this year, Aerospace has guided for sort of high single-digit-or-so organic sales growth. The commercial Aero cycles sort of maturing after a very strong three-year recovery. Defense and space may be improving, though. So how do you see the growth rate medium term for the overall Aero business?

Question: Julian Mitchell - Barclays - Analyst : And then maybe switching to the automation RemainCo or as you said, the sort of leadership will be stable. On that piece, kind of what are the most exciting sort of growth opportunities there? Which are the biggest brands or businesses that you think will see the highest growth the next three or four years?

Question: Julian Mitchell - Barclays - Analyst : And on the process side of things, I know that's something that you, yourself, have been very close to for a lot of your time at Honeywell. How is the growth outlook there? And maybe sort of remind us the way you talk about Process Solutions. How does it differ from some of your peers?

Question: Julian Mitchell - Barclays - Analyst : Got it. And as you said, automation has a number of different parts inside it. Investors often ask kind of, where will Honeywell prioritize within that? Could we see some asset exits announced or enacted before the full split takes place next year? What's your perspective on that sort of portfolio management element of the RemainCo?

Question: Julian Mitchell - Barclays - Analyst : Maybe away from the portfolio a second and just think about -- Honeywell has always had a very strong operating culture, pushing up margins. Maybe talk about the confidence in the margin expansion between now and the spin. And I know in Aerospace, there's some mix issues. And then any sort of further clarity on how to think about stranded or stand-up costs?

Question: Julian Mitchell - Barclays - Analyst : In terms of kind of reducing distraction risk for the businesses in all this, kind of how you're approaching setting up offices to run this program versus having the base businesses involved with this?

Question: Julian Mitchell - Barclays - Analyst : Great. And then when we look at free cash flow, I think people often try and think about, okay, with the three pieces, how does the free cash look across each of them? What does that mean in turn for the capital deployment outlook? How would you characterize kind of the free cash flow conversion, I suppose, at the three pieces versus say Honeywell? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 12:30PM, HON.OQ - Honeywell International Inc at Barclays Industrial Select Conference

Question: Julian Mitchell - Barclays - Analyst : Great. And I think last question, before we go to the sort of audience response survey questions, I think would be around the uses of cash between now and the spin. And then I realize they have their own Investor Days. But for, let's say, dividend or income-focused shareholders, sort of how should they think about the dividend policy of Automation and Aero down the line?

Question: Julian Mitchell - Barclays - Analyst : Got it. And between now and the spin, there's the big buyback, and probably M&A takes a bit of a backseat.