Honeywell International Inc at Citi Global Industrial Tech and Mobility Conference Summary

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

Question: Andrew Kaplowitz - Citi - Analyst : So Vimal, you've obviously been busy. So can you talk about -- so you've done all of these things, right? Like, where do you think you've made the most impact, so far? Is it with the announced split into three companies? It could be, but maybe it isn't. And where have you faced the biggest unexpected challenge?

Question: Andrew Kaplowitz - Citi - Analyst : And also, you suggested like -- I just want to get the Q1 conversation out of the way a little bit. You suggested you were taking a prudent view on '25, especially, I think, in Q1 sales growth because of the cross currents out there. Despite -- I think you guys have talked about green shoots. You did have a better growth quarter in Q4 in your automation businesses, slightly improved growth in Q4. So have you seen continued positive momentum in those short-cycle businesses so far in Q1? Or have they pulled back at all from that slightly improved Q4 growth?

Question: Andrew Kaplowitz - Citi - Analyst : And then, you already answered part of my next question. So you aren't forecasting a material short-cycle recovery in second half of '25, correct? You're not. But you did during the earnings call mentioned the word prudent three times. So as Mike is taking over, I know Honeywell wants to underpromise and overdeliver. Did you at all change the way you guide this year versus last year?

Question: Andrew Kaplowitz - Citi - Analyst : Well, it's easy to go back and look. So maybe just to go into Aerospace a little bit more, you mentioned acquisitions. You did CAES, which is going to be good, and Bombardier is a big transaction for you guys. But -- the business has had ongoing headwinds over time, as you know. And it's difficult to tell whether it's company specific or it's just supply chain or maybe a combination of both. So like I kind of want to go under the hood in the sense that you guys did mention the biggest unlock for free cash is in Aero with inventory management. You also -- it seems like past due backlog has stayed up. So maybe your -- you could opine on how do you mitigate these issues with the understanding that the separation could bring more focus.

Question: Andrew Kaplowitz - Citi - Analyst : Vimal, to your point, it's hard to complain, right, because you've had high 20s margins now for the last three years. Like but how much do you get involved to try to push, like whether it's hiring or whether it's supply chain resiliency, getting more partners that way? Like -- 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 18, 2025 / 1:00PM, HON.OQ - Honeywell International Inc at Citi Global Industrial Tech and Mobility Conference

Question: Andrew Kaplowitz - Citi - Analyst : Helpful, Vimal. So we talked about Aerospace. But maybe update us on your progress in transforming the automation business. So I think one of your main goals has been to create installed base and then sort of mine that installed base with software and service and to take best practices from business to business. So maybe update us on your progress there. Because I would have thought that increased focus would have driven better growth or better margin or both, but it's difficult to see because there's a lot going on.

Question: Andrew Kaplowitz - Citi - Analyst : Helpful. So I think on the call, you mentioned 2% price this year, but you do have incremental tariffs baked into your assumptions. But local-for-local strategy is the essence of Honeywell, I think protecting regions, such as China. Could you remind us again, though, your raw material exposure is still in aluminum and stepping back, you sounded like you could be more flexible really around price this year. So maybe what does that mean? And you talked through that a bit more whether you can maintain price cost in the green even if inflation does pick up?

Question: Andrew Kaplowitz - Citi - Analyst : Helpful. I want to ask you one question about the separation. I'll open it up to the audience, see if they have any questions in a second. So we're going to separation. I don't think we're overly surprised in the $1.5 billion to $2 billion in onetime costs, the timing of the separation second half of '26. 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 18, 2025 / 1:00PM, HON.OQ - Honeywell International Inc at Citi Global Industrial Tech and Mobility Conference But we're still under the impression that Aero and really, the supply chain between Aero and automation were separate. So maybe you can get it done a little faster for a little less cost. We understand it's complicated. But can you plan a potential to get it done faster or for lower cost?

Question: Andrew Kaplowitz - Citi - Analyst : Any questions from the audience? Anyone want to ask question? I will continue. So I know you asked -- you were asking the call about regional sales trends. But at what point, if any, do you begin -- so again, this is a question I'm kind of asking all companies, right? It's like China has been very big for you. Europe is pretty big for you, but that's kind of now where the growth is right now. It's US, Middle East, India. So stepping back, if you're a US company focused on automation and aerospace is doing its own thing. Do you see a bigger move towards deglobalization helping you? Or how do you -- what's the future look like in terms of where you focus?

Question: Andrew Kaplowitz - Citi - Analyst : So Vimal, I want to dig into the segments a little bit more. So just back to Aerospace for a second, right? You talked about it kind of normalizing a little bit, but it also has this huge backlog, as you talked about, even ex Bombardier, right? So I think your guidance this year ex Bombardier is mid- to high single-digit growth, been growing high single digits to mid-double digits over last few years. So why would it slowdown that much if you've got this huge backlog on the OE side? And then I do get a lot of DOGE questions as I'm sure you're getting a couple. So like anything that you're seeing on the defense side or anything that you can talk about there?

Question: Andrew Kaplowitz - Citi - Analyst : It's interesting, Vimal. So let me ask you about Industrial Automation. I already asked you, we talked a little bit about potential green shoots. You are guiding to low single-digit down in '25, but maybe just walk me through the businesses a little bit more. 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 18, 2025 / 1:00PM, HON.OQ - Honeywell International Inc at Citi Global Industrial Tech and Mobility Conference I think you've talked about a product refresh helping you in PSS and you got the PPE exit should help you in the second half. If you look at Intelligrated, it's down significantly last year, but orders are better. So maybe with the understanding you want to be conservative, what's holding you back from the talking about some improvement in IA?

Question: Andrew Kaplowitz - Citi - Analyst : Got it. And then you alluded to Building Automation a bit, but you did grow 8%, which was quite a good result in Q4, low to mid-single-digit growth guide for '25. We talked about it. It had some European, China exposure. So you want to be careful. But it seemed to consistently outperform really over the last, I don't know, it feels like a few years here. You did mention expectations for building products growth turning positive. So first, what do you think this segment arguably does better maybe than other segments? And why can't the growth momentum last in BA, especially easy comparisons in --

Question: Andrew Kaplowitz - Citi - Analyst : I want to follow up on one thing you said because most platforms are kind of small at Honeywell, like in solutions business like data center stuff, are we talking about a couple of hundred million dollars nowadays like that --

Question: Andrew Kaplowitz - Citi - Analyst : Very interesting. And then moving to ESS. We know you've highlighted energy transition, megatrend support, but you also bought an LNG business. So I think you've got a pretty good balance in that business. So maybe just talk to us about the future of that business. And then I always hear like UOP orders are really strong, but then it doesn't seem to convert. So like maybe talk about that too and how that's going to manifest in '25?

Question: Andrew Kaplowitz - Citi - Analyst : Are you changing anything in the strategy given the new US administration or kind of -- 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 18, 2025 / 1:00PM, HON.OQ - Honeywell International Inc at Citi Global Industrial Tech and Mobility Conference

Question: Andrew Kaplowitz - Citi - Analyst : So then quickly on Quantinuum, you highlighted progressing toward continuums technical milestones for an eventual IPO. Maybe just lay out for us what internal milestones you're tracking and what you'd like to see from the business in order to sit in an IPO. I think you announced a partnership with SoftBank recently, so that's encouraging. But as you know, some of the tech community think quantum computing is still many years away from being useful. So maybe you could comment on that.

Question: Andrew Kaplowitz - Citi - Analyst : So before I run out of time, Vimal, I want to ask you a question I'm asking all companies, I've asked you last year. Just -- so what are the top two or three innovations and structural changes affecting your company over the next five years? Are there any emerging industry trends that are perhaps being overlooked in the current discourse?

Question: Andrew Kaplowitz - Citi - Analyst : Great. So I got 15 seconds, so I probably should not ask another question. We very much appreciate the time, Vimal.

Question: Andrew Kaplowitz - Citi - Analyst : Thank you.