Honeywell International Inc. · NASDAQ:HON
Honeywell International — Q4 2024 Earnings Presentation
42 slides from Honeywell International's earnings presentation, Feb 6, 2025
Slide 1: Fourth Quarter 2024 Earnings and 2025 Outlook
FOURTH QUARTER 2024 EARNINGS AND 2025 OUTLOOK FEBRUARY 6, 2025
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
KEY MESSAGES • Positive fourth quarter finish on sales, EPS, and cash; orders growth in all four segments • 2025 guidance reflects current view of external operating environment • Portfolio evaluation concluded - clear direction for next phase of Honeywell’s transformation Continuing to Drive Transf
Slide 4: Portfolio Evaluation Update
PORTFOLIO EVALUATION UPDATE Following the completion of a one-year internal portfolio review, the Honeywell Board has concluded the separation of Automation and Aerospace is in best interest of HON shareholders • Next logical step in Honeywell’s portfolio transformation to unlock significant value f
Slide 5: The Time Is Right
THE TIME IS RIGHT Operational transformations: Best-in-class operating playbook: Streamlined, digitalized backbone Mature Accelerator operating system and integrated supply chains fostering a culture of execution and rigor Portfolio optimization progress: Divergence of business strategies: Business
Slide 6: Rationale for Separation
RATIONALE FOR SEPARATION • Singular focus providing clear alignment in company purpose and incentives STRATEGIC • Greater end market intimacy and faster reaction time to changing market dynamics • Enhanced organizational agility, greater accountability, and simplified decision-making OPERATIONAL • D
Slide 7: Three Industry-Leading Public Companies
THREE INDUSTRY-LEADING PUBLIC COMPANIES HONEYWELL AUTOMATION HONEYWELL AEROSPACE ADVANCED MATERIALS Global scale, with a Unique financial profile with Large installed base, recurring comprehensive portfolio of market-leading brands across Advantages AM sales, best-in-class margins technologies, solu
Slide 8: Honeywell Automation
HONEYWELL AUTOMATION INVESTMENT HIGHLIGHTS BUSINESS OVERVIEW1 • Delivering the buildings and industrial infrastructure Financial Overview Operational Highlights of the future, leveraging process technology, software, and AI-enabled, autonomous solutions $18B >10M ~17K • Large installed base across d
Slide 9: Honeywell Aerospace
HONEYWELL AEROSPACE INVESTMENT HIGHLIGHTS BUSINESS OVERVIEW1 • Global scale in the highest-value and most critical areas Financial Overview Operational Highlights across aerospace and defense value chains • Compelling organic growth driven by robust end $15B 26% ~90% 100K+ markets and differentiated
Slide 10: Advanced Materials
ADVANCED MATERIALS INVESTMENT HIGHLIGHTS BUSINESS OVERVIEW1 • Leading positions across variety of end markets, supported Financial Overview Operational Highlights by a compelling IP portfolio • Innovative solutions enjoying global IP protection $4B >5K 400+ Sales Active patents and Technologists and
Slide 11: Portfolio Transformation Update
PORTFOLIO TRANSFORMATION UPDATE 2023 2024 2025 - 2026+ • Strategic alignment around three • Initiation of comprehensive • Continued strategy execution and megatrends internal business and portfolio preparation to create three Strategy and • Business re-segmentation review including transformational
Slide 12: Path Forward
PATH FORWARD • Spin of Advanced Materials anticipated in late 2025 or early 2026 TIMING • Separation of Aerospace and Automation expected in 2H 2026 • Filing and effectiveness of applicable filings with SEC (including Form 10) CLOSING • Customary confirmation that separations are expected to be tax-
Slide 13: 2024 Results
2024 RESULTS FY 2024 4Q 2024 4Q 2024 2024 HIGHLIGHTS ACTUAL ACTUAL GUIDANCE ADJUSTED • Exceeded upper end of fourth quarter sales and EPS guidance EARNINGS $9.89 $2.47 $2.26 - $2.36 • Organic sales growth of 3%, or 4% excluding the impact of the BBD $10.34 ex. BBD1 $2.93 ex. BBD1 $2.73 - $2.83 ex. B
Slide 14: 2025 Outlook
2025 OUTLOOK END MARKETS ORGANIC GROWTH OPERATING LEVERAGE AND CASH Fleet growth and • Challenging macroeconomic environment and • Benefits from Accelerator operating system replenishment, defense offsetting margin pressure from less favorable investment cycle heightened geopolitical tension temperi
Slide 15: 1Q and FY 2025 Outlook
1Q AND FY 2025 OUTLOOK 1Q GUIDANCE FY GUIDANCE SALES SEGMENT MARGIN* SALES SEGMENT MARGIN* $9.5B - $9.7B 22.5% - 22.9% $39.6B - $40.6B 23.2% - 23.6% Up 2% - 5% Organically* Up 60 - 100 bps Flat - Up 2% Organically* Down (50) - (10) bps Up 1% - 4% ex. BBD1 Down (10) - Up 30 bps ex. BBD1 NET BELOW THE
Slide 16: FY 2025 Segment Guidance
FY 2025 SEGMENT GUIDANCE ORGANIC GROWTH RESULTS ORGANIC GROWTH GUIDANCE 2025 COMMENTARY ($M) 4Q 2024 FY 2024 1Q 2025 FY 2025 • Growth strongest in commercial OE driven by shipset output ramp 1% 11% MSD HSD • Sustained momentum in commercial aftermarket, defense and space AT 11% ex. BBD1 14% ex. BBD1
Slide 17: 2025 Earnings Per Share Bridge
2025 EARNINGS PER SHARE BRIDGE Guidance Ranges: $0.08 - $0.36 $0.32 - $0.34 ($0.57) - ($0.47) ~$0.33 Midpoint ~($0.05) ~($0.12) ~($0.52) ~$0.22 Midpoint Midpoint $0.45 ~$0.10 Up 2% - 6% Adjusted + Higher ~$0.00 Down (2%) - volumes Up 2% $10.34 + Productivity, - Increased interest ± ~20% vs. 20.0% +
Slide 18: Summary
SUMMARY • Resilient performance in 2024 despite challenging macro backdrop • 2025 outlook reflects current state of demand while navigating economic uncertainty; impact of accretive M&A • After extensive internal portfolio review, Honeywell Board has concluded an Automation and Aerospace separation
Slide 19: Appendix
Appendix 4Q 2024 Earnings – February 6, 2025 18
Slide 20: Business and Industry Characteristics
BUSINESS AND INDUSTRY CHARACTERISTICS HONEYWELL HONEYWELL ADVANCED AUTOMATION AEROSPACE MATERIALS Cycle Dynamics Mix of Long and Short Long Short Capital Intensity Low Medium High Aftermarket Medium High Low Presence Primary Go-to-Market Direct and Channel Partners Direct Direct Approach Customer Co
Slide 21: Honeywell Accelerator
HONEYWELL ACCELERATOR WHAT IS ACCELERATOR? BUSINESS MODEL STANDARDIZATION Maximizing value creation for the current business and the future Accelerator contains all the best practices, Pivot from functional process excellence to business model value creation tools, and digital platforms to deliver b
Slide 22: Landmark Agreement with Bombardier
LANDMARK AGREEMENT WITH BOMBARDIER Differentiated Technologies 2024 Financial Impact Satellite communications Next-generation Latest evolution of our providing enhanced safety Sales ($372M) Anthem avionics suite HTF7K engine series services capabilities Commercial Proof Points and Key Details Segmen
Slide 23: 4Q 2024 Financial Summary
4Q 2024 FINANCIAL SUMMARY SALES SEGMENT MARGIN* ADJUSTED EPS* FREE CASH FLOW* Up 2% Organic* Down (350) bps Down (8%) Down (27%) Up 6% ex. BBD1 Down (70) bps ex. BBD1 Up 9% ex. BBD1 Down (7%) ex. BBD1 $10.5B 23.7% 24.4% $2.93 $10.1B $2.4B $9.4B $2.6B $2.69 20.9% $2.47 $1.9B 4Q23 4Q24 4Q23 4Q24 4Q23
Slide 24: FY 2024 Financial Summary
FY 2024 FINANCIAL SUMMARY SALES SEGMENT MARGIN* ADJUSTED EPS* FREE CASH FLOW* Up 3% Organic* Down (90) bps Up 4% Up 15% Up 4% ex. BBD1 Down (20) bps ex. BBD1 Up 9% ex. BBD1 Up 3% ex. BBD1 and settlements2 $38.9B $10.34 $5.5B 23.3% $5.3B2 $38.5B 23.5% $9.89 $4.9B $9.52 22.6% $4.3B $36.7B FY23 FY24 FY
Slide 25: 4Q 2024 Segment Results
4Q 2024 SEGMENT RESULTS SEGMENT MARGIN SALES CHANGE (BPS) COMMENTARY ($M) $3,986 20.3% • Double-digit organic sales growth in commercial aftermarket with over 20% growth in air transport; fourth consecutive quarter of double-digit sales growth in defense and space on robust global demand Up 1% Organ
Slide 26: 4Q and FY 2024 Sales Growth
4Q AND FY 2024 SALES GROWTH 4Q Reported 4Q Organic FY Reported FY Organic AEROSPACE TECHNOLOGIES 9% 1% 13% 11% AEROSPACE TECHNOLOGIES (EX. BBD1) 19% 11% 16% 14% Commercial Aviation Original Equipment (62%) (61%) (7%) (7%) Commercial Aviation Original Equipment (ex. BBD1) (7%) (7%) 8% 8% Commercial A
Slide 27: 4Q 2024 Earnings Per Share Bridge
4Q 2024 EARNINGS PER SHARE BRIDGE $0.18 ($0.07) $0.05 $0.03 ($0.45) Up 9% + 655M vs. YoY $0.05 + Lower repo ± 17.3%1 vs. 661M and other 18.6% + Pricing ‒ Higher net $2.93 interest + Productivity expense ($0.16) $2.69 ‒ Inflation and foreign Down exchange (8%) YoY ($0.06) ($0.15) $2.47 ($0.14) $1.96
Slide 28: FY 2024 Earnings Per Share Bridge
FY 2024 EARNINGS PER SHARE BRIDGE $0.19 ($0.45) $0.12 Up 9% $0.32 ($0.05) YoY + 655M vs. 668M ($0.49) $0.24 − Higher net + 20.0%1 vs. interest 20.9% $10.34 Up 4% YoY expense + Lower repo ($0.13) + Higher spend ($0.03) ($0.39) volumes + Improved $9.89 $9.52 + Pricing and pension productivity income (
Slide 29: FY 2024 Free Cash Flow Bridge
FY 2024 FREE CASH FLOW BRIDGE $0.4B ($0.1B) ($0.1B) ($0.5B) Up 3% YoY Down (7%) $5.3B $5.5B YoY $4.9B FY23 Excluding Net Income Working Capital Capital FY24 Ex. BBD 1 BBD Agreement FY24 Settlements Growth / Other Spending 1. 4Q24 financial results include impact of the Bombardier Agreement announced
Slide 30: FY 2024 Segment Results
FY 2024 SEGMENT RESULTS SEGMENT MARGIN SALES CHANGE (BPS) COMMENTARY ($M) $15,458 25.8% • Organic growth of 15% in commercial aftermarket driven by strong demand in air transport Up 11% Organic Down (180) bps AT • Robust double-digit growth in defense and space from continued global demand and suppl
Slide 31: 2025 Sales Bridge
2025 SALES BRIDGE Organic Growth: 2% - 5% 1% - 4% ex. BBD1 ~$1.1B ~($0.5B) Up 2% - 5% ~$1B ~($0.4B) Organic Up 1% - 4% ex. BBD ~$0.4B $39.6B - $38.5B $38.9B $40.6B FY24 Exclusion of FY24 Sales Organic Foreign Acquisitions PPE Mid-Year FY25 Sales BBD Agreement Ex. BBD 1 Growth Exchange Sale Guidance
Slide 32: 2025 Free Cash Flow Bridge
2025 FREE CASH FLOW BRIDGE ~$0.3B ~($0.1B) Up 10% - 18% $0.5B ~($0.1B) ($0.2B) - Flat range Down (2%) - Up 5% ($0.2B) - Flat range $0.2B - $0.4B range ex. BBD1 $5.5B $5.4B - $4.9B $5.8B FY24 Exclusion of FY24 Ex. BBD 1 Net Income Working Capital Capital 2025 Guidance BBD Agreement Growth / Other Spe
Slide 33: Additional 2025 Inputs
ADDITIONAL 2025 INPUTS 2024 2025E 1Q25E COMMENTARY Pension / $603M ~$550M ~$90M • Year over year headwind from one-time item in 1Q25 OPEB Repositioning ($115M) ($150M - $250M) ($30M - $70M) Other Below the ($1,045M) ($1,325M - $1,375M) ($350M - $360M) • Increased year over year headwind from interes
Slide 34: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in this presentation to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with
Slide 35: Reconciliation of Operating Income to Segment Profit
RECONCILIATION OF OPERATING INCOME TO SEGMENT PROFIT AND CALCULATION OF OPERATING INCOME AND SEGMENT PROFIT MARGINS ($M) 4Q23 4Q24 1Q24 2023 2024 Operating income $ 1,583 $ 1,745 $ 1,860 $ 7,084 $ 7,441 Stock compensation expense1 54 41 53 202 194 Repositioning, Other2,3 569 73 92 952 292 Pension an
Slide 36: Reconciliation of Organic Sales Percent Change
RECONCILIATION OF ORGANIC SALES PERCENT CHANGE 4Q24 2024 Honeywell Reported sales percent change 7% 5% Less: Foreign currency translation —% —% Less: Acquisitions, divestitures and other, net 5% 2% Organic sales percent change 2% 3% Aerospace Technologies Reported sales percent change 9% 13% Less: F
Slide 37: Reconciliation of EPS to Adjusted EPS
RECONCILIATION OF EPS TO ADJUSTED EPS 4Q23 4Q24 1Q24 2023 2024 1Q25E 2025E Earnings per share of common stock - diluted1 $ 1.91 $ 1.96 $ 2.23 $ 8.47 $ 8.71 $1.98 - $2.08 $9.39 - $9.79 Pension mark-to-market expense2 0.19 0.15 — 0.19 0.14 No Forecast No Forecast Amortization of acquisition-related in
Slide 38: Reconciliation of EPS to Adjusted EPS (footnotes)
RECONCILIATION OF EPS TO ADJUSTED EPS 1 For the three months ended December 31, 2024, and 2023, adjusted earnings per share utilizes weighted average shares of approximately 654.8 million and 660.9 million, respectively. For the three months ended March 31, 2024, adjusted earnings per share utilizes
Slide 39: Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate
RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE ($M) 4Q23 4Q24 2023 2024 Income before taxes $ 1,506 $ 1,544 $ 7,159 $ 7,213 Pension mark-to-market expense 153 126 153 126 Amortization of acquisition-related intangibles 76 140 292 415 Acquisition-related costs 2 16 9 75 Divestitu
Slide 40: 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 IMPACT OF SETTLEMENTS ($M) 4Q23 4Q24 2023 2024 Cash provided by operating activities $ 2,955 $ 2,281 $ 5,340 $ 6,097 Capital expenditures (364) (393) (1,039) (1,164) Free cash flow $ 2,591 $ 1,888
Slide 41: Reconciliation of Expected Operating Cash Flow to Expected Free Cash Flow
RECONCILIATION OF EXPECTED CASH PROVIDED BY OPERATING ACTIVITIES TO EXPECTED FREE CASH FLOW 2025E($B) Cash provided by operating activities ~$6.7 - $7.1 Capital expenditures ~(1.3) Free cash flow ~$5.4 - $5.8 We define free cash flow as cash provided by operating activities less cash for capital exp
Slide 42: 4Q 2024 Earnings – February 6, 2025
4Q 2024 Earnings – February 6, 2025 41
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