Honeywell International Inc at Morgan Stanley Laguna Conference Transcript

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

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : So you've been in the CEO role now for a bit over a year. So I guess, where do you think Honeywell stands today? And looking back over the last year, what have been the biggest challenges for you in the role? And what do you think have been the biggest successes for Honeywell over the last year plus?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yeah, no, appreciate that. And as you try to return Honeywell or make it a more growth-oriented company, you've listed delivering organic growth on the upper end of 4% to 7% as your number one priority. Certainly, end markets getting better help that. But when you think about what the company can do, whether it's the active management of the portfolio, whether it's maybe more investment into the business lines, how would you think about that active piece versus the more organic investments to get growth going?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yeah, no, appreciate that. And when I look at growth versus the peer group over the last three or four years, the growth has been a bit softer, but margin expansion has been kind of the other side of that and you've -- earnings and operating profit has stayed good on the margin side. I guess, how do you balance the two? Because it feels like on some level, driving growth could be -- have negative implications for margins or a bit of a headwind if it requires investment.

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : I appreciate that. And Q2 was maybe a little bit opposite of what we saw in the prior quarters. The growth picked up, but then the margins kind of stagnated a bit. And when I look at the guide for the back half of the year, it's calling for growth to continue to increase, and margins kind of more in the sideways range. Is that what investors should expect as you kind of try to turn back on the growth?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yeah, no. Maybe moving over to the portfolio. The company has a lot of dry powder. $25 billion plus was highlighted in 2023. You guys have done maybe $10 billion of deals, but a lot is left. You guys have been pretty clear that the focus is bolt-ons, $1 billion or $7 billion, big deals for most companies, but bolt-ons for Honeywell. I guess my question is, why do you guys believe that smaller bolt-ons are better than maybe something bigger and more transformational?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yes. So maybe following up on that and flipping to the other side of active management, you mentioned earlier that, I think, you'd be disappointed if there's not material divestitures in '24. I know you can't tell us what you guys are thinking, but you also mentioned that you want businesses where you can monetize an installed base, and I see that. So is it fair, when we look at the portfolio and we think, hey, what doesn't fit here? Is that the main criteria?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Appreciate that. And maybe before I ask about the market and some of the segments, does anyone in the audience have any questions? All right. Hopping back into it. You mentioned earlier that the business is set up for good growth in 2025. Aero should decelerate [in lisvega], maybe decelerates a little bit as the comps are large numbers. I guess what businesses do you have the most confidence that are going to be better in '25, maybe than they are in '24? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:35PM, HON.OQ - Honeywell International Inc at Morgan Stanley Laguna Conference

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yeah. You talked earlier about the margin headwinds really just being a function of long cycle doing better than short cycle. Q2, we started to see some signs of short cycle getting better. When you look at the short-cycle businesses, do you see end market demand improving? Or is it okay, we're just done lapping the destock, comps are getting easier and --

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Appreciate that. Maybe some questions on the segments individually. Aero tech, biggest segment, best growth, obviously. How do you see the aero supply chain today? And when you look -- I mean, I know aftermarket is a lot bigger than you guys in OE, but is there any concern on the OE side that there's a lot of work in process inventory and ultimately, it could be the only end market that hasn't destocked yet? And could that be coming?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Appreciate that. Maybe going over to industrial automation and process solutions specifically, you guys are calling for a growth pickup here into the back half of the year. How are customer conversations going in the process market and around projects over the next 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 2:35PM, HON.OQ - Honeywell International Inc at Morgan Stanley Laguna Conference

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Appreciate that. Maybe going over to advanced materials. I think at the conference, we're going to hear a lot this week about the refrigerant changeover that's coming on the HVAC side. What does that mean for advanced materials and I guess, Solstice specifically?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Appreciate that. Only a minute left here, maybe going -- staying in ESS and going to UOP. Can you maybe talk about the strategic nature of UOP, how it gets you close to the customer? And ultimately, what drives growth in that business above just refining flows?

Question: Christopher Snyder - Morgan Stanley Co. LLC - Analyst : Yeah, no, definitely feels underappreciated, but we're up on the half hour. So thank you so much, Vimal. Very much enjoyed the conversation.