Honeywell International Inc. · NASDAQ:HON
Honeywell International — Q3 2024 Earnings Presentation
31 slides from Honeywell International's earnings presentation, Oct 24, 2024
Slide 1: Third Quarter 2024 Earnings Release
THIRD QUARTER 2024 EARNINGS RELEASE OCTOBER 24, 2024
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: Honeywell CFO Transition Announcement
HONEYWELL CFO TRANSITION ANNOUNCEMENT EFFECTIVE FEBRUARY 2025 GREG LEWIS MIKE STEPNIAK BROUGHT HONEYWELL INTO DIGITAL AGE RIGHT PERSON TO ACCELERATE GROWTH • Named Senior Vice President of • Named Next Senior Vice President and Honeywell Accelerator; will serve as a Chief Financial Officer of Honeyw
Slide 4: Strategic Priorities
STRATEGIC PRIORITIES 1 2 3 ACCELERATE EVOLVE ACCELERATOR OPTIMIZE ORGANIC GROWTH OPERATING SYSTEM PORTFOLIO • Innovation playbook • Integrated operating company • Bolt-on acquisitions • High growth regions • Enhancing growth, margins, • Divest non-core / simplify • Monetize installed base and and ca
Slide 5: Portfolio Strategy Unfolding
PORTFOLIO STRATEGY UNFOLDING PORTFOLIO SIMPLIFICATION ACCELERATING FOUR ACQUISITIONS UNDERWAY CAPITAL DEPLOYMENT • Access Solutions: Bolstering Building • Demonstrated clear commitment to portfolio Automation’s equipment-agnostic products simplification with sharper focus on our three 2024 ~$14B bus
Slide 6: 3Q 2024 Results
3Q 2024 RESULTS 3Q 2024 Actual 3Q 2024 Guidance 3Q 2024 HIGHLIGHTS ADJUSTED • Organic sales growth of 3%, led by double-digit growth in defense EARNINGS $2.58 $2.45 - $2.55 and space and commercial original equipment PER SHARE • Segment margin flat, as we leveraged our Accelerator Operating System t
Slide 7: 4Q and FY 2024 Outlook
4Q AND FY 2024 OUTLOOK 4Q GUIDANCE FY GUIDANCE SALES SEGMENT MARGIN SALES SEGMENT MARGIN $10.2B - $10.4B 23.8% - 24.2% $38.6B - $38.8B 23.4% - 23.5% Up 2% - 4% Organically Down (60) - (20) bps Up 3% - 4% Organically Down (10) - Flat bps NET BELOW THE ADJUSTED EPS ADJUSTED EPS FREE CASH FLOW LINE IMP
Slide 8: Summary
SUMMARY • Exceeded segment margin and adjusted earnings per share guidance in the third quarter; volume headwinds, particularly in IA, weighed on organic sales • Lowered full-year sales and cash flow guidance, narrowed segment margin and adjusted EPS guidance • Significant steps taken to simplify an
Slide 9: Appendix
Appendix 3Q 2024 Earnings – October 24, 2024 8
Slide 10: 3Q 2024 Financial Summary
3Q 2024 FINANCIAL SUMMARY SALES SEGMENT MARGIN ADJUSTED EPS FREE CASH FLOW Up 3% Organic Flat bps Up 8% Up 10% 23.6% 23.6% $9.7B $2.58 $1.7B $2.38 $9.2B $1.6B $1.36 Reported $1.74 3Q23 3Q24 3Q23 3Q24 3Q23 3Q24 3Q23 3Q24 + Double-digit growth in defense and + Margin expansion in Industrial + Segment
Slide 11: 3Q 2024 Segment Results
3Q 2024 SEGMENT RESULTS SEGMENT MARGIN SALES CHANGE (BPS) COMMENTARY ($M) • Double-digit growth in business and general aviation original equipment; continued strength in commercial aftermarket; some transitory supply chain disruptions in the quarter $3,912 27.7% AT • 14% organic sales growth in def
Slide 12: 3Q 2024 Sales Growth
3Q 2024 SALES GROWTH 3Q Reported 3Q Organic AEROSPACE TECHNOLOGIES 12% 10% Commercial Aviation Original Equipment 10% 10% Commercial Aviation Aftermarket 8% 8% Defense and Space 18% 14% INDUSTRIAL AUTOMATION (5%) (5%) Process Solutions 2% 2% Productivity Solutions and Services (5%) (4%) Sensing and
Slide 13: 3Q 2024 Earnings Per Share Bridge
3Q 2024 EARNINGS PER SHARE BRIDGE $0.05 ($0.14) $0.15 ($0.06) $0.06 Up 8% YoY + 654M vs. ($0.03) 667M $2.58 ($0.25) + Lower + 21.0% vs. repositioning 23.0% + Pricing and other + Productivity ‒ Higher net $2.38 ‒ Inflation interest expense $2.16 3Q23 Segment Below the Adjusted Effective Share 3Q24 Am
Slide 14: What's Changed Since 2Q
WHAT’S CHANGED SINCE 2Q SALES SEGMENT MARGIN ADJUSTED EPS 3Q24 3Q24 3Q24 - Unexpected delays in Process Solutions + Supply chain disruptions in commercial + Reduced integration costs and interest / UOP and modestly softer short cycle original equipment drove favorable mix expense for CAES and LNG du
Slide 15: M&A Impact
M&A IMPACT 3Q24 ACTUALS 4Q24 OUTLOOK FY24 OUTLOOK CORE ACQUISITIONS TOTAL HON CORE ACQUISITIONS TOTAL HON CORE ACQUISITIONS TOTAL HON Sales $9.5B ~$200M $9.7B $9.7B - $9.9B ~$500M $10.2B - $10.4B $37.8B - $38.0B ~$800M $38.6B - $38.8B Segment 23.4% ~20 bps 23.6% 23.9% - 24.3% ~(10) bps 23.8% - 24.2%
Slide 16: Additional 2024 Inputs
ADDITIONAL 2024 INPUTS 3Q24 4Q24E 2024E COMMENTARY Pension / $148M ~$160M ~$600M • 4Q pension income higher due to timing of a discrete event moving into 2025 OPEB • Retaining capacity for high-return projects to support cost management Repositioning ($28M) ($60M - $100M) ($150M - $190M) and product
Slide 17: Long-Term Financial Progression
LONG-TERM FINANCIAL PROGRESSION ORGANIC GROWTH GROSS MARGIN SEGMENT MARGIN ADJ. FCF MARGIN ADJ. EPS GROWTH Long- Term Mid- 4% - 7% 40%+ 25%+ 8% - 12% Target Teens+ 2024 Guidance 3% - 4% 37.6%1 23.4% - 23.5% 13% - 14% 7% - 8%2 2023 4% 37.3% 23.5% 14%3 10%4 Results ‘17 - ‘22 Average5 5% 36.4% 21.5% 15
Slide 18: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in this presentation to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with
Slide 19: Reconciliation of Operating Income to Segment Profit
RECONCILIATION OF OPERATING INCOME TO SEGMENT PROFIT AND CALCULATION OF OPERATING INCOME AND SEGMENT PROFIT MARGINS ($M) 3Q23 4Q23 3Q24 2023 Operating income $ 1,926 $ 1,583 $ 1,858 $ 7,084 Stock compensation expense1 39 54 45 202 Repositioning, Other2,3 100 569 69 952 Pension and other postretireme
Slide 20: Reconciliation of Operating Income to Segment Profit (Historical)
RECONCILIATION OF OPERATING INCOME TO SEGMENT PROFIT AND CALCULATION OF OPERATING INCOME AND SEGMENT PROFIT MARGINS ($M) 2014 2015 2016 2017 2018 2019 2021 2022 2023 Operating income $ 5,622 $ 6,238 $ 6,051 $ 6,303 $ 6,705 $ 6,851 $ 6,200 $ 6,427 $ 7,084 Stock compensation expense1 187 175 184 176 1
Slide 21: Reconciliation of Organic Sales Percent Change
RECONCILIATION OF ORGANIC SALES PERCENT CHANGE 3Q24 Honeywell Reported sales percent change 6% Less: Foreign currency translation —% Less: Acquisitions, divestitures and other, net 3% Organic sales percent change 3% Aerospace Technologies Reported sales percent change 12% Less: Foreign currency tran
Slide 22: Reconciliation of Organic Sales Percent Change (Historical)
RECONCILIATION OF ORGANIC SALES PERCENT CHANGE 2014 2015 2016 2017 2018 2019 2021 2022 2023 Honeywell Reported sales percent change 3% (4)% 2% 3% 3% (12)% 5% 3% 3% Less: Foreign currency translation —% (4)% (1)% —% 1% (1)% 1% (3)% (1)% Less: Acquisitions, divestitures and other, net —% —% 4% (1)% (4
Slide 23: Reconciliation of EPS to Adjusted EPS
RECONCILIATION OF EPS TO ADJUSTED EPS 3Q23 4Q23 3Q24 FY2023 4Q24E 2024E Earnings per share of common stock - diluted1 $ 2.27 $ 1.91 $ 2.16 $ 8.47 $2.50 - $2.60 $9.23 - $9.33 Pension mark-to-market expense2 — 0.19 — 0.19 No Forecast No Forecast Amortization of acquisition-related intangibles3 0.10 0.
Slide 24: Reconciliation of EPS to Adjusted EPS (Footnotes)
RECONCILIATION OF EPS TO ADJUSTED EPS 1 For the three months ended September 30, 2024, and 2023, adjusted earnings per share utilizes weighted average shares of approximately 654.1 million and 667.0 million, respectively. For the three months ended December 31, 2023, adjusted earnings per share util
Slide 25: Reconciliation of EPS to Adjusted EPS (Historical)
RECONCILIATION OF EPS TO ADJUSTED EPS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Earnings per share of common stock - diluted1 $ 4.92 $ 5.33 $ 6.04 $ 6.21 $ 2.00 $ 8.98 $ 8.41 $ 6.72 $ 7.91 $ 7.27 $ 8.47 Pension mark-to-market expense2 0.05 0.23 0.06 0.28 0.09 0.04 0.13 0.04 0.05 0.64 0.
Slide 26: Reconciliation of EPS to Adjusted EPS (Historical Footnotes)
RECONCILIATION OF EPS TO ADJUSTED EPS 1 Adjusted earnings per share utilizes weighted average shares of 668.2 million, 683.1 million, 700.4 million, 711.2 million, 730.3 million, 753.0 million, 772.1 million, 775.3 million, 789.3 million, 795.2 million, and 797.3 million for the years ended December
Slide 27: Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE ($M) 3Q23 3Q24 Income before taxes $ 1,967 $ 1,824 Amortization of acquisition-related intangibles 87 120 Acquisition-related costs 6 25 Indefinite-lived intangible asset impairment — 48 Impairment of assets held for sale — 125 Adju
Slide 28: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND FREE CASH FLOW EXCLUDING THE IMPACT OF SETTLEMENTS ($M) 3Q23 3Q24 2023 Cash provided by operating activities $ 1,809 $ 1,997 $ 5,340 Capital expenditures (249) (279) (1,039) Free cash flow 1,560 1,718 4,301 Impact of settl
Slide 29: Reconciliation to Adjusted Free Cash Flow and Margin
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW AND FREE CASH FLOW EXCLUDING IMPACT OF SETTLEMENTS AND CALCULATION OF ADJUSTED FREE CASH FLOW MARGIN AND FREE CASH FLOW MARGIN EXCLUDING IMPACT OF SETTLEMENTS ($M) 2014 2015 2016 2017 2018 2019 2021 2022 2023 Cash pro
Slide 30: Reconciliation of Expected Operating Cash Flow to Free Cash Flow
RECONCILIATION OF EXPECTED CASH PROVIDED BY OPERATING ACTIVITIES TO EXPECTED FREE CASH FLOW 2024E($B) Cash provided by operating activities ~$6.2 - $6.5 Capital expenditures ~(1.1) Free cash flow ~$5.1 - $5.4 We define free cash flow as cash provided by operating activities less cash for capital exp
Slide 31: 3Q 2024 Earnings – October 24, 2024
3Q 2024 Earnings – October 24, 2024 30
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