Honeywell International Inc Q3 2024 Earnings Call Summary

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

Question: Julian Mitchell - Barclays - Analyst : Hi, good morning. Maybe I just wanted to start off with a sense maybe -- flesh out a little bit more -- any thoughts around sort of next year. I realize we'll get more color in Q4 results. But in the past, you've often given sort of more detailed preliminary thoughts for the outyear in October. So just wondered, for example, on the cost side of things, the top line is running light of expectations, but you took down your repositioning expectations for the year. I wondered if there might be a case given the macro backdrop to sort of accelerate things like cost-cutting measures, maybe do more repositioning to make sure you can get margins up in 2025. So maybe flesh out some thoughts around the margin expansion from here.

Question: Julian Mitchell - Barclays - Analyst : That's very helpful. Thank you. And then just a very quick follow-up around -- as we're thinking about sort of portfolio movements and so forth, you announced advanced materials spin. You've got PPE and assets held for sale. Just wondered sort of to what extent, Vimal, the changes in the sort of organic backdrop on top line and what's happening with margins, do they have an effect on increasing the urgency of portfolio measures or you think about them as sort of somewhat two independent tracks?

Question: Julian Mitchell - Barclays - Analyst : Great, thank you.

Question: Stephen Tusa - JPMorgan - Analyst : Hello, can you hear me? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, HON.OQ - Q3 2024 Honeywell International Inc Earnings Call

Question: Stephen Tusa - JPMorgan - Analyst : Yeah. So sorry, I just missed the first part of the call. Can you just talk about any kind of trajectory on -- in the kind of '25 and some of the puts and takes? I know you guys had talked to being within the range on organic a few weeks ago, but also just whether the margins can be a kind of a trend line year. Any updated thoughts on kind of the '25 look?

Question: Stephen Tusa - JPMorgan - Analyst : Okay. Great. And then just on the cash flow cut, what's that? Is that just an earnings cut, or is there something else going on in working capital like that?

Question: Stephen Tusa - JPMorgan - Analyst : Great. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, HON.OQ - Q3 2024 Honeywell International Inc Earnings Call

Question: Nigel Coe - Wolfe Research, LLC - Analyst : Thanks. Good morning. Hope all's well. Just on the aero performance, maybe just touch on the Boeing strike and how you dial that into your sort of 4Q outlook. And then within the performance in commercial aftermarket, the plus 8%, can you dissect that between ATR and BizJet? I'm assuming BizJet's going to be a bit more challenged there. Just any help there would be helpful.

Question: Nigel Coe - Wolfe Research, LLC - Analyst : Great, thanks. That's helpful. And just a quick one on the portfolio. The PPE, no surprise there. But maybe size the revs and margin for PV this year. And then, I guess, the only other thing on the agenda right now is Quantinium. Are we still hoping to monetize that next year?

Question: Nigel Coe - Wolfe Research, LLC - Analyst : Great, thank you.

Question: Scott Davis - Melius Research - Analyst : Hey, good morning, guys. (inaudible) to the call. Hey, guys, you made this announcement with Forge and Gemini AI. I mean, what's the deliverable here? I can conceptually see what you're doing. But what do you kind of envision as the out the other side, the real kind of killer app for customers?

Question: Scott Davis - Melius Research - Analyst : That makes sense. And just -- Intelligrated, obviously, has been the kind of the gift that keeps on giving. It was great for a while, and then it's been not so great here for a few years. But how do you fix that business? It doesn't seem to be as much value at the customer level, perhaps, as we all once thought? And is it a product innovation issue (inaudible)? Is it just that the market itself is just too cyclical or, perhaps, too concentrated with a couple of big customers, and maybe they have too much power in the channel? But how do you fix this thing? I'll just leave it at that. Thank you.

Question: Scott Davis - Melius Research - Analyst : Thank you. Thanks a lot, guys.

Question: Chris Snyder - Morgan Stanley - Analyst : Thank you. I wanted to ask on the aero organic growth into Q4, slowing to mid- to high singles. And I think you said earlier that there's no impact from the Boeing strike in that. So I guess, is there any spillover impact from the fire at the facility you saw in Q3? Or does this kind of where you see aero market growing here in Q4?

Question: Chris Snyder - Morgan Stanley - Analyst : Thank you. I appreciate that. And then maybe kind of turning over to industrial automation. It's been a couple of years now of pretty steady, meaningful declines. And I understand that a lot of these end markets are challenged, whether it's warehouse or scanners or even safety and sensing. But when you look Honeywell's performance in industrial automation compared to the end markets you serve, do you feel like the company is holding share? Or do you think that the company might be losing share or even maybe even gaining share across these end markets? Thank you.

Question: Chris Snyder - Morgan Stanley - Analyst : Thank you.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Thank you so much, guys, and good morning. Going back to your aerospace, and Greg, (inaudible) if you can talk about -- can you tell us what the rate was in Q3? How you think about it in Q4? And deceleration Q3 to Q4, is that -- that's not a change in the Max? Is it just the supplier that just popped up?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Sorry about that. So just on the Max, can you give us an idea where you are on Max in Q3 versus Q4? And if it is unchanged, what results in the Q3 to Q4 margin deceleration of about 250 bps going to around 25%? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, HON.OQ - Q3 2024 Honeywell International Inc Earnings Call

Question: Sheila Kahyaoglu - Jefferies - Analyst : Got it. And then, hopefully, you could hear me on the commercial aftermarket. In Q3, it lagged a bit, 8%. Maybe we just modeled it wrong. But it seems like it was mostly BGA. So when you think about aftermarket being the growth leader in Q4, is that in double digit in ATR? Any color there? Or is it BGA picking up again?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Got it. Thank you.

Question: Deane Dray - RBC Capital Markets - Analyst : Thank you. Good morning, everyone.

Question: Deane Dray - RBC Capital Markets - Analyst : I think it was just about a year ago that you did the resegmentation. And one of the outcomes was you identified that there was roughly 10% of revenues that would be divested, maybe half of them chunky, others kind of very small below the radar screen. So does PPE -- would that be part of it? And I would trust advanced materials is not part of that 10%. So just -- what's that pipeline look like?

Question: Deane Dray - RBC Capital Markets - Analyst : What would be the timeframe for other divestitures?

Question: Deane Dray - RBC Capital Markets - Analyst : Thank you.

Question: Joseph Ritchie - Goldman Sachs - Analyst : Hey, good morning, guys. I may have missed it, but can you please elaborate on the project delays that you're experiencing in both process solutions and (inaudible)? So what are the root causes, and then how do you see that rectifying going forward?

Question: Joseph Ritchie - Goldman Sachs - Analyst : Got it. That's helpful. So mostly, this is basically exogenous factors, not anything internal that's impacting. Okay. And then I guess maybe -- yeah. And then the second question is just, look, the defense business has been, I think, double digits now for four out of the last five quarters and recognize that you're benefiting from the fact that supply chain is normalizing. I guess, how do we think about that into 2025? Is this a business just based on the normalization of the supply chain, it should continue to see this level of growth, call it, high single digits to double-digit type growth into next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, HON.OQ - Q3 2024 Honeywell International Inc Earnings Call

Question: Joseph Ritchie - Goldman Sachs - Analyst : Hey, great. Thank you very much.

Question: Andy Kaplowitz - Citigroup - Analyst : Hey, good morning, everyone. Vim, I know you've talked about accelerating new products now and evolving the accelerated operating system. How much could that accelerating or maybe the focus on what good looks like across your portfolio help in '25 versus '24? Would you anticipate a material step-up in core growth from your initiatives, even if markets maybe stay a little muted -- more muted than expected outside of aero?

Question: Andy Kaplowitz - Citigroup - Analyst : Got it. And then maybe just a little more color on what you're seeing in terms of the landscape by geography. It's interesting to see that buildings products has started to improve. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, HON.OQ - Q3 2024 Honeywell International Inc Earnings Call Is that a function of European building products getting any better? And I know you mentioned some macro headwinds in China, obviously. So what are you seeing out there?

Question: Andy Kaplowitz - Citigroup - Analyst : Appreciate all the color.