Honeywell International Inc. · NASDAQ:HON
Honeywell International — Q1 2024 Earnings Presentation
28 slides from Honeywell International's earnings presentation, Apr 25, 2024
Slide 1: First Quarter 2024 Earnings Release
FIRST QUARTER 2024 EARNINGS RELEASE APRIL 25, 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: 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 4: Portfolio Strategy Unfolding
PORTFOLIO STRATEGY UNFOLDING ACCELERATING BOLT-ON M&A TUCK-IN M&A CAPITAL DEPLOYMENT • Prioritize attractive bolt-on transactions • Smaller, strategic investments that tuck-into between $1B - $7B ongoing business offerings 2024 • Deals aligned to our three key megatrends • Technological adjacencies
Slide 5: Commercial Proof Points
COMMERCIAL PROOF POINTS ALIGNED TO THREE KEY MEGATRENDS RECENT NEWS ACROSS PORTFOLIO AUTOMATION Automation Solutions Win • Honeywell will provide automation, cybersecurity, and • Supply chain diversification, reshoring, and resiliency safety solutions to a new multibillion-dollar facility for a majo
Slide 6: 1Q 2024 Results
1Q 2024 RESULTS 1Q 2024 Actual 1Q 2024 Guidance 1Q 2024 HIGHLIGHTS ADJUSTED • Organic sales growth of 3% led by ongoing long-cycle strength EARNINGS $2.25 $2.12 - $2.22 • Segment margin expanded 20 bps achieving the high end of our PER SHARE guidance range, led by AT up 150 basis points ORGANIC • Se
Slide 7: 2Q and FY 2024 Outlook
2Q AND FY 2024 OUTLOOK 2Q GUIDANCE FY GUIDANCE SALES SEGMENT MARGIN SALES SEGMENT MARGIN $9.2B - $9.5B 22.0% - 22.4% $38.1B - $38.9B 23.0% - 23.3% Up 1% - 4% Organically Down 40 - Flat bps Up 4% - 6% Organically Up 30 - 60 bps NET BELOW THE ADJUSTED EPS ADJUSTED EPS FREE CASH FLOW LINE IMPACT $2.25
Slide 8: 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 4% - 6% 37.5%1 23.0% - 23.3% ~15% 7% - 10%2 2023 4% 37.3% 22.7% 14%3 11%4 Results ‘17 - ‘22 Average5 5% 36.4% 20.5% 15% 9%
Slide 9: Summary
SUMMARY • Adjusted EPS up 9%, met or exceeded high end of 1Q24 guidance metrics; reaffirming 2024 guidance • Record backlog and improving short-cycle fundamentals to deliver strong results in 2024 and beyond • Improving business mix, commercial excellence, and productivity actions provide confidence
Slide 10: Appendix
Appendix 1Q 2024 Earnings – April 25, 2024 9
Slide 11: 1Q 2024 Financial Summary
1Q 2024 FINANCIAL SUMMARY SALES SEGMENT MARGIN ADJUSTED EPS FREE CASH FLOW Up 3% Organic Up 20 bps Up 9% Up $0.2B ex. Settlements $2.25 $0.2B $9.1B 22.0% 22.2% ($1.0B) $8.9B $2.07 $1.36 Reported $1.74 1Q23 1Q24 1Q23 1Q24 1Q23 1Q24 1Q23 1Q24 + Double-digit organic growth in both + Margin expansion le
Slide 12: 1Q 2024 Segment Results
1Q 2024 SEGMENT RESULTS SEGMENT MARGIN SALES CHANGE (BPS) COMMENTARY ($M) • 12th consecutive quarter of double-digit growth in commercial aviation; original equipment up over 20% $3,669 28.1% • Robust 16% growth in defense and space as volumes unlock; book to bill of approximately 1.4x AT Up 18% Org
Slide 13: 1Q 2024 Sales Growth
1Q 2024 SALES GROWTH 1Q Reported 1Q Organic AEROSPACE TECHNOLOGIES 18% 18% Commercial Aviation Original Equipment 25% 24% Commercial Aviation Aftermarket 17% 17% Defense and Space 17% 16% INDUSTRIAL AUTOMATION (12%) (13%) Process Solutions 2% 0% Productivity Solutions and Services (11%) (11%) Sensin
Slide 14: 1Q 2024 Earnings Per Share Bridge
1Q 2024 EARNINGS PER SHARE BRIDGE $0.05 ($0.02) Up 9% YoY $0.04 $0.00 $2.25 $0.09 ± 21.0% vs. + 657M vs. $2.23 21.0% 673M + Lower $2.60 repositioning and other ‒ Higher net interest expense + Pricing $2.07 + Productivity ‒ Inflation 1Q23 Segment Below the Adjusted Effective Share 1Q24 Russia-Related
Slide 15: Additional 2024 Inputs
ADDITIONAL 2024 INPUTS 1Q24 2Q24E 2024E COMMENTARY Pension / $151M ~$145M ~$550M • Pension income roughly flat to prior year OPEB • Retaining capacity for high-return projects to support cost management Repositioning ($34M) ($25M - $75M) ($200M - $300M) and productivity initiatives Other Below the (
Slide 16: Long-Term Financial Growth Algorithm
LONG-TERM FINANCIAL GROWTH ALGORITHM MEGATRENDS ORGANIC SEGMENT SHARE M&A ADJUSTED EPS SALES MARGIN REPURCHASES Accretive bolt-on GROWTH acquisitions Automation GROWTH EXPANSION Minimum 1% per year 4% - 7% 40 - 60 bps The Future of Aviation Adj. EPS Adj. EPS Segment Profit and Adj. EPS Growth Growth
Slide 17: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in this presentation to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with
Slide 18: Reconciliation of Operating Income to Segment Profit
RECONCILIATION OF OPERATING INCOME TO SEGMENT PROFIT AND CALCULATION OF OPERATING INCOME AND SEGMENT PROFIT MARGINS ($M) 1Q23 2Q23 1Q24 2023 Operating income $ 1,692 $ 1,883 $ 1,860 $ 7,084 Stock compensation expense1 59 50 53 202 Repositioning, Other2,3 180 103 92 952 Pension and other postretireme
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) 2014 2015 2016 2017 2018 2019 2021 2022 Operating income $ 5,622 $ 6,238 $ 6,051 $ 6,303 $ 6,705 $ 6,851 $ 6,200 $ 6,427 Stock compensation expense1 187 175 184 176 175 153 217 18
Slide 20: Reconciliation of Organic Sales Percent Change
RECONCILIATION OF ORGANIC SALES PERCENT CHANGE 1Q24 Honeywell Reported sales % change 3% Less: Foreign currency translation —% Less: Acquisitions, divestitures and other, net —% Organic sales % change 3% Aerospace Technologies Reported sales % change 18% Less: Foreign currency translation —% Less: A
Slide 21: Reconciliation of Organic Sales Percent Change
RECONCILIATION OF ORGANIC SALES PERCENT CHANGE 2014 2015 2016 2017 2018 2019 2021 2022 2023 Honeywell Reported sales % 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)% (16
Slide 22: Reconciliation of EPS to Adjusted EPS Excluding Pension Headwind
RECONCILIATION OF EPS TO ADJUSTED EPS AND ADJUSTED EPS EXCLUDING PENSION HEADWIND 1Q23 2Q23 1Q24 FY2023 2Q24E 2024E Earnings per share of common stock - diluted1 $ 2.07 $ 2.22 $ 2.23 $ 8.47 $2.53 - $2.63 $9.78 - $10.08 Pension mark-to-market expense2 — — — 0.19 No Forecast No Forecast Russian-relate
Slide 23: Reconciliation of EPS to Adjusted EPS
RECONCILIATION OF EPS TO ADJUSTED EPS 2013 2014 2015 2016 2017 2018 2019 2021 2022 Earnings per share of common stock - diluted1 $ 4.92 $ 5.33 $ 6.04 $ 6.21 $ 2.00 $ 8.98 $ 8.41 $ 7.91 $ 7.27 Pension mark-to-market expense2 0.05 0.23 0.06 0.28 0.09 0.04 0.13 0.05 0.64 Debt refinancing expense2 — — —
Slide 24: Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE ($M) 1Q23 1Q24 Income before taxes $ 1,782 $ 1,871 Russian-related charges (benefit) (2) 17 Adjusted income before taxes $ 1,780 $ 1,888 Income tax expense $ 374 $ 396 Adjusted income tax expense $ 374 $ 396 Income tax expense $ 374
Slide 25: 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 AND CALCULATION OF FREE CASH FLOW MARGIN EXCLUDING IMPACT OF SETTLEMENTS ($M) 1Q23 1Q24 2023 Cash provided by operating activities $ (784) $ 448 $ 5,340 Capital expenditur
Slide 26: Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW AND CALCULATION OF ADJUSTED FREE CASH FLOW MARGIN ($M) 2014 2015 2016 2017 2018 2019 2021 2022 Cash provided by operating activities $ 5,080 $ 5,519 $ 5,498 $ 5,966 $ 6,434 $ 6,897 $ 6,038 $ 5,274 Capital expenditures
Slide 27: Expected Operating Cash Flow to Expected Free Cash Flow
RECONCILIATION OF EXPECTED CASH PROVIDED BY OPERATING ACTIVITIES TO EXPECTED FREE CASH FLOW 2024E($B) Cash provided by operating activities ~$6.7 - $7.1 Capital expenditures ~(1.1) Free cash flow ~$5.6 - $6.0 We define free cash flow as cash provided by operating activities less cash for capital exp
Slide 28: 1Q 2024 Earnings – April 25, 2024
1Q 2024 Earnings – April 25, 2024 27
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