Honeywell International Inc. · NASDAQ:HON
Honeywell International — Q1 2023 Earnings Presentation
24 slides from Honeywell International's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Earnings Release
FIRST QUARTER 2023 EARNINGS RELEASE APRIL 27, 2023
Slide 2: Forward Looking Statements; Non-GAAP Financial Measures
Forward Looking Statements We describe many of the trends and other factors that drive our business and future results in this presentation. Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Fo
Slide 3: Key Messages from Darius
KEY MESSAGES FROM DARIUS • Transformed the company via key ISC transformation and Honeywell Digital initiatives • Made 16 acquisitions and five spins and divestitures • Consistently outperformed market and peer group, growing share price by ~100% from 2016 to 2022 • Created Honeywell Connected Enter
Slide 4: 1Q 2023 Overview
1Q 2023 OVERVIEW 1Q 2023 1Q 2023 1Q 2023 Highlights Actual Guidance • Overdelivered on adjusted earnings per share, organic $2.07 growth, and segment margin expansion guidance Adjusted Earnings Per Share $2.22 Excluding $1.86 - $1.96 Pension Headwind • Organic sales growth of 8% driven by double-dig
Slide 5: Recent Announcements
RECENT ANNOUNCEMENTS Carbon Capture Win Next-Gen Hydrogen Fuel Cells Forge for Buildings Win • Announced that ExxonMobil will deploy • Launched a European Clean Aviation project • Won $40M+ order with Globalworth to provide Honeywell’s CO2 Fractionation and that will develop a new generation of Hone
Slide 6: Acquisition of Compressor Controls Corp
ACQUISITION OF COMPRESSOR CONTROLS CORP Business Overview Large Installed Base 1,100 14,000 3,400 • Offerings: leading provider of turbomachinery control and optimization solutions, including control hardware, software, and services; enhancing our digitalization portfolio Sites Critical Machines Pro
Slide 7: 1Q 2023 Financial Summary
1Q 2023 FINANCIAL SUMMARY Sales Segment Margin Adjusted EPS Free Cash Flow Up 8% Up 8% Up 90 Up 16% ex. $0.3B ex. Organic bps Pension Settlements Headwind $0.1B $8.9B 22.0% 21.1% $2.07 ($1.0B) $1.91 $8.4B $1.36 Reported $1.74 $1.2B 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 + Double-digit organic growt
Slide 8: 2Q and FY 2023 Outlook
2Q AND FY 2023 OUTLOOK 2Q Guidance FY Guidance Sales Segment Margin Sales Segment Margin $9.0B - $9.2B 21.8% - 22.2% $36.5B - $37.3B 22.3% - 22.6% Up 1% - 4% Organically Up 90 - 130 bps Up 3% - 6% Organically Up 60 - 90 bps Prior: $36.0B - $37.0B, Up 2% - 5% Prior: 22.2% - 22.6%, Up 50 - 90 bps Net
Slide 9: Summary
SUMMARY • Overdelivered on all guided metrics in the first quarter 2023 Investor Day New York, NY | May 11 • Raised full-year organic growth, segment margin, and adjusted EPS guidance Honeywell's Chairman and CEO Darius Adamczyk and incoming CEO Vimal Kapur, • Demand remains robust, backlog up 6% ye
Slide 10: Appendix
Appendix 1Q 2023 Earnings - April 27, 2023 9
Slide 11: 1Q 2023 Segment Results
1Q 2023 SEGMENT RESULTS Segment Margin ($M) Sales Change (bps) Commentary • Eighth consecutive quarter of double-digit organic sales growth in commercial aviation $3,111 26.6% Aero • Return to growth in defense and space; book-to-bill greater than one Up 14% Organic Down (80) bps • Margin contractio
Slide 12: 1Q 2023 Sales Growth
1Q 2023 SALES GROWTH 1Q Reported 1Q Organic Aerospace 13% 14% Commercial Aviation Original Equipment 13% 14% Commercial Aviation Aftermarket 22% 22% Defense and Space 4% 5% Honeywell Building Technologies 4% 9% Products 3% 7% Building Solutions 5% 13% Performance Materials And Technologies 12% 15% U
Slide 13: 1Q 2023 Earnings Per Share Bridge
1Q 2023 EARNINGS PER SHARE BRIDGE $0.05 ($0.15) Up 16% $0.02 YoY $0.03 $0.21 + 673M vs. 691M + 21.0% vs. 22.0% + Lower $2.22 Up 8% repositioning charges YoY ‒ Higher net interest expense $2.07 + Pricing + Volume $1.91 ‒ Inflation 1Q22 Adjusted Segment Profit Below the Line Adjusted Effective Share C
Slide 14: 2023 Segment Outlook
2023 SEGMENT OUTLOOK Primary HON Organic Segment Commentary End Market Growth Rate • Volume growth enabled by progressive recovery in the aerospace supply chain Commercial Aerospace Aero LDD • Continued commercial aviation strength on increased build rates and flight hours, particularly widebody Def
Slide 15: Additional 2023 Inputs
ADDITIONAL 2023 INPUTS 1Q23 2Q23E FY23E Commentary Pension / • Significant increase in interest rates resulting in lower $136M ~$140M ~$550M pension income year over year OPEB • Retaining capacity for high-return projects to support cost Repositioning ($100M) ($50M - $100M) ($225M - $325M) managemen
Slide 16: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in this presentation to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with
Slide 17: Reconciliation of Operating Income to Segment Profit
RECONCILIATION OF OPERATING INCOME TO SEGMENT PROFIT AND CALCULATION OF OPERATING INCOME AND SEGMENT PROFIT MARGINS ($M) 1Q22 2Q22 1Q23 2022 Operating income $ 1,271 $ 1,601 $ 1,692 $ 6,427 Stock compensation expense (1) 60 53 59 188 Repositioning, Other (2,3) 401 180 180 942 Pension and other postr
Slide 18: Reconciliation of Organic Sales % Change
RECONCILIATION OF ORGANIC SALES % CHANGE 1Q23 Honeywell Reported sales % change 6% Less: Foreign currency translation (2)% Less: Acquisitions, divestitures and other, net —% Organic sales % change 8% Aerospace Reported sales % change 13% Less: Foreign currency translation (1)% Less: Acquisitions, di
Slide 19: Reconciliation of EPS to Adjusted EPS
RECONCILIATION OF EPS TO ADJUSTED EPS AND ADJUSTED EPS EXCLUDING PENSION HEADWIND 1Q22 2Q22 1Q23 FY2022 2Q23E 2023E Earnings per share of common stock - diluted (1) $ 1.64 $ 1.84 $ 2.07 $ 7.27 $2.15 - $2.25 $9.00 - $9.25 Pension mark-to-market expense (2) — — — 0.64 No Forecast No Forecast Expense r
Slide 20: Reconciliation of Effective Tax Rate to Adjusted Rate
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE ($M) 1Q22 1Q23 Income before taxes $ 1,505 $ 1,782 Russian-related charges (benefit) 183 (2) Adjusted income before taxes $ 1,688 $ 1,780 Income tax expense $ 371 $ 374 Adjusted income tax expense $ 371 $ 374 Income tax expense $ 37
Slide 21: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW ($M) 1Q22 1Q23 Cash provided by operating activities $ 36 $ (784) Expenditures for property, plant and equipment (183) (193) Garrett cash receipts 197 — Free cash flow $ 50 $ (977) We define free cash flow as cash provided by
Slide 22: Reconciliation of Free Cash Flow Excluding Impact of Settlements
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND FREE CASH FLOW EXCLUDING IMPACT OF SETTLEMENTS ($M) 1Q23 Cash provided by operating activities $ (784) Expenditures for property, plant and equipment (193) Garrett cash receipts — Free cash flow $ (977) Impact of settlemen
Slide 23: Reconciliation of Expected Free Cash Flow
RECONCILIATION OF EXPECTED CASH PROVIDED BY OPERATING ACTIVITIES TO EXPECTED FREE CASH FLOW AND EXPECTED FREE CASH FLOW EXCLUDING IMPACT OF SETTLEMENTS 2023E($B) Cash provided by operating activities ~$4.9 - $5.3 Expenditures for property, plant and equipment ~(1.0) Garrett cash receipts — Free cash
Slide 24: 1Q 2023 Earnings - April 27, 2023
1Q 2023 Earnings - April 27, 2023 23
Honeywell International — Q1 2023 Earnings Presentation on 6ix