Honeywell Worldwide Inc. (NASDAQ:) reported a sturdy conclusion to the fiscal 12 months 2023, assembly its monetary commitments and outlining a strategic imaginative and prescient for development within the coming years. Vimal Kapur, who will take over as Chairman following the retirement of Darius Adamczyk in June, detailed the corporate’s achievements and forward-looking methods throughout the earnings name.

Honeywell noticed an 8% rise in adjusted earnings per share, a $2.6 billion free money stream, and a record-high backlog of $31.8 billion. The corporate additionally introduced the acquisition of Provider’s International Entry Answer enterprise and secured important new contracts in avionics and power storage.

Key Takeaways

• Honeywell met its 2023 monetary commitments, together with natural development and adjusted earnings per share.
• The corporate plans to ship the higher finish of its long-term natural gross sales development goal vary of 4% to 7%.
• Honeywell introduced strategic acquisitions, together with Provider’s International Entry Answer enterprise for practically $5 billion.
• The corporate’s backlog reached a file $31.8 billion, indicating robust future revenues.
• Steerage for 2024 contains natural gross sales development of 4% to six% and adjusted earnings per share development of seven% to 10%.

Firm Outlook

• Honeywell goals to deploy no less than $25 billion of capital from 2023 to 2025, specializing in high-value acquisitions.
• The corporate expects Aerospace to guide with low-double-digit natural development.
• Constructing Automation is projected to have low-single-digit development, with an emphasis on margin growth.
• Power and Sustainability Options section to have blended outcomes, with some headwinds anticipated.

Bearish Highlights

• Security and productiveness options gross sales noticed a 24% natural decline.
• Constructing expertise gross sales skilled a 1% natural lower.
• The corporate anticipates gross sales declines within the first quarter of 2024 as a consequence of difficult comparisons in warehouse automation demand.

Bullish Highlights

• Aerospace gross sales grew 15% organically, with business aviation up by 20%.
• Efficiency materials and expertise gross sales grew 4% organically.
• Notable wins over $1 billion in new avionics and mechanical contracts and power storage options deployment.

Misses

• Regardless of total development, particular segments like security and productiveness options and constructing expertise confronted declines.

Q&A Highlights

• Executives outlined a balanced method to capital deployment, with a mixture of M&A and share repurchases.
• The corporate is on monitor to exceed its $25 billion capital deployment steerage.
• Honeywell is assured in its development prospects throughout numerous segments, regardless of market challenges.

In a 12 months marked by management modifications and strategic acquisitions, Honeywell has positioned itself for continued development and shareholder worth creation. The corporate’s diversified portfolio and powerful monetary efficiency, coupled with its deal with innovation and market growth, sign a optimistic trajectory for the 12 months forward. With an emphasis on natural development and strategic capital deployment, Honeywell is about to navigate the complexities of the worldwide market whereas delivering on its long-term monetary targets.

InvestingPro Insights

As Honeywell Worldwide Inc. (HON) appears to be like to the long run with strategic acquisitions and a deal with natural development, current information from InvestingPro affords further context to the corporate’s monetary well being and market place. With a market capitalization of $133.34 billion and a P/E ratio of 24.17, Honeywell is buying and selling at a premium relative to near-term earnings development. Notably, the corporate’s P/E ratio has adjusted barely to 23.57 during the last twelve months as of This autumn 2023.

InvestingPro Suggestions spotlight that Honeywell has raised its dividend for 13 consecutive years and has maintained dividend funds for a formidable 39 consecutive years, showcasing the corporate’s dedication to returning worth to shareholders. That is significantly related as the corporate’s dividend yield stands at 2.19%, with a dividend development of 4.85% during the last twelve months as of This autumn 2023. These figures underscore Honeywell’s secure monetary returns amidst its strategic development initiatives.

Furthermore, Honeywell is acknowledged as a outstanding participant within the Industrial Conglomerates trade and operates with a reasonable degree of debt, which suggests a balanced method to leveraging and monetary administration. This aligns with the corporate’s capital deployment technique and its skill to safe new contracts in crucial sectors like avionics and power storage.

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Full transcript – Honeywell Intl (HON) This autumn 2023:

Operator: Thanks for standing-by and welcome to the Honeywell Fourth Quarter 2023 Earnings Convention Name. At the moment, all contributors are in a listen-only mode. After the speaker’s presentation there will likely be a question-and-answer session. Please be suggested that at present’s name is being recorded. I might now like at hand the decision over to Sean Meakim, Vice President of Investor Relations. Please go forward.

Sean Meakim: Thanks, Jamila. Good morning, and welcome to Honeywell’s Fourth Quarter 2023 Earnings and 2024 Outlook Convention Name. On the decision with me at present are Chief Government Officer, Vimal Kapur; and Senior Vice President and Chief Monetary Officer, Greg Lewis. This webcast and the presentation supplies, together with non-GAAP reconciliations can be found on our Investor Relations web site. From time-to-time we put up new data that could be of curiosity or materials to our buyers on this web site. Our dialogue at present contains forward-looking statements which might be based mostly on our greatest view of the world and of our companies as we see them at present and are topic to dangers and uncertainties, together with those described in our SEC filings. This morning, we’ll evaluation our monetary outcomes for the fourth quarter and full-year 2023, focus on our outlook for the 12 months and share our steerage for the first-quarter and full-year 2024. As all the time, we’ll go away time on your questions on the finish. With that, I will flip the decision over to CEO, Vimal Kapur.

Vimal Kapur: Thanks, Sean, and good morning, everybody. To start out, I wish to acknowledge some essential management modifications introduced this morning. First, Honeywell’s Board of Director has elected me to tackle further position of Chairman when our present Government Chairman, Darius Adamczyk retires from the Board in June. Moreover, Invoice Ayer has been elected to succeed Scott Davis as Impartial Lead Director of the Board efficient this Could. First, I wish to thank Darius for his innumerable contributions to Honeywell, in addition to his mentorship over the previous two years particularly. I might additionally wish to thank Scott for his insights over the previous 4 years at Impartial Director and management all through the CEO succession course of. Congratulations to Invoice for his appointment as our new Lead Director, I look ahead to partnering with him in reaching Honeywell’s strategic development initiatives. Lastly, I wish to thank Darius and the Board for his or her help in naming me Chairman. I’m humbled and honored to guide this nice firm and wake-up on a regular basis energized to tackle world’s hardest challenges together with our 100,000 future shapers. Now let’s flip to the primary matter of at present and dialogue on Slide 3. We had a strong end to a different difficult 12 months, delivering on our 2023 commitments. Honeywell’s world-class Accelerator working system and differentiated portfolio of expertise, enabled us to realize our preliminary full-year steerage for natural development, adjusted earnings per share and free-cash stream and surpass the high-end of our authentic steerage for section margin growth. Full-year’s natural development of 4% year-on-year was a robust demonstration of resiliency by our long-cycle Aerospace and Power oriented companies, whereas we await acceleration in a few of our short-cycle companies, as markets proceed to normalize. Earlier than we get right into a extra detailed dialogue on 2023 outcomes and 2024 outlook, expectations, let me take a minute to revisit my priorities for Honeywell. First, our goal is to ship the upper-end of our long-term natural gross sales development goal vary of 4% to 7%. With a view to obtain that, we’re enhancing our improvements playbook, accelerating our providing in sustainability and software program, monetizing our installed-base and leveraging our management place in high-growth areas. Second, during the last six years, the trouble of the nice integration have remodeled Honeywell into an built-in working firm that deploys world-class functionality at-scale and a number of development enablers that profit your complete enterprise. We’re evolving Honeywell Speed up Model 3.0 of our working system to drive additional worth via standardization by enterprise mannequin constructed on our modern digital spine. Along with making this group less complicated and extra environment friendly to function, Accelerator is a robust supply of worthwhile development. All of our companies and potential addition to our portfolio. Third, we proceed to judge and undertake actions to optimize our portfolio. We’ll accomplish that by executing on strategic bolt-on acquisitions, whereas divesting non-core traces of enterprise to persistently improve the standard of the portfolio and speed up worth creation. This can be a highly effective mixture, which delivers worthwhile development and powerful money era, making a compelling long-term worth proposition for our shareowners. Now let’s flip to slip 4 to debate our progress on portfolio shaping targets. Within the fourth quarter, we introduced the acquisition of Provider’s International Entry Answer enterprise for practically $5 billion, enabling Honeywell to grow to be a pacesetter in safety answer for the digital age. This transaction, which is clearly in step with our strategic bolt-on M&A framework additional enhances our gear agnostic, high-margin product enterprise combine inside constructing automation Honeywell’s total safety portfolio will likely be greater than $1 billion in gross sales. When the deal closes this 12 months rising at accretive fee to help Honeywell long-term development framework. As well as, earlier in January Quantinuum introduced its first fairness increase for the reason that merger of Honeywell Quantum (NASDAQ:) Options and Cambridge Quantum Computing in late 2021, securing $300 million at a pre-money valuation of $5 billion, demonstrating Quantinuum’s main place on [fault-tolerant] (ph) quantum computing. The spherical was anchored by Quantinuum’s strategic associate JP Morgan Chase (NYSE:) with further participation from Mitsui & Firm, Amgen (NASDAQ:) and Honeywell. This funding brings the entire capital raised by Quantinuum since inception to roughly $625 million. Quantum computing is the important thing enabler for AI to achieve scale potential and Quantinuum is a pioneering key breakthrough and increasing use circumstances throughout quite a few industries. Honeywell stays a majority proprietor with over 50% fairness possession and we’re dedicated to demonstrating a path to monetization of our [stake] (ph) inside the subsequent 18 months. With the current portfolio announcement we’re on a monitor to speed up capital deployment and exceed our dedication to deploy no less than $25 billion of capital in 2023 via 2025 with a bias in the direction of excessive worth accretive M&A. Our steadiness sheet then continues to offer us significant capability for each opportunistic share repurchases and M&A and the continued comparatively favorable [demand] (ph) surroundings in 2024 will help the execution of our M&A method on a constant foundation. Earlier than I hand over to Greg, let me flip to Slide 5 to evaluation a few of our current thrilling wins. Let me briefly spotlight a few of our current business proof factors. These wins display innovation throughout our portfolio and help Honeywell’s just lately introduced plan to align its portfolio to a few compelling megatrends: automation, way forward for aviation, and power transition, all underpinned by sturdy digitalization functionality and answer. In aero, we secured over $1 billion in new avionics and mechanical wins instantly with airways carriers in 2023, representing over 2,500 aircrafts. With a robust begin to 2024, United selected Honeywell to offer a variety of superior avionics for near 350 plane that may enter into service over the subsequent decade. This win is one other encouraging demand sign and demonstrates the power of our providing within the market. In power area, our battery power storage answer will likely be deployed to 6 photo voltaic parks in US, Virgin Islands. When accomplished, our automation answer will increase the island’s decarbonization effort by fulfilling 30% of the power want via renewable sources, reducing each emission and shopper power prices. We stay enthusiastic about our sustainable options portfolio and Honeywell’s place on the forefront of world’s ongoing power transition. Lastly we’ll be incorporating our hydrogen purification and carbon seize applied sciences right into a multi-billion greenback low carbon ammonia tasks. By way of this, as much as 97% of the plant’s carbon dioxide emission will be sequestered and the challenge may take away as much as 7 million tons of CO2 air pollution over per 12 months. This challenge creates yet one more instance of Honeywell’s skill to assist remedy our buyer’s harder challenges and an indication of what is to come back for our power and sustainability options enterprise. Now let me flip over to Greg on Slide 6 to debate our fourth quarter and full 12 months 2023 leads to extra element and in addition present steerage for 2024.

Greg Lewis: Thanks, Vimal. And good morning, everybody. Let me start on Slide 6. As a reminder, we’re reporting fourth quarter and full 12 months 2023 outcomes underneath our legacy section breakdown and offering our 2024 outlook utilizing the brand new section construction which went into impact in January. With that, let’s flip to the outcomes. We had a robust end to a different difficult 12 months delivering on our 2023 commitments. Regardless of a dynamic macro backdrop, Honeywell’s disciplined execution and differentiated options enabled us to ship on our full 12 months natural gross sales, section margin, earnings and free money stream commitments. Full 12 months natural gross sales had been up 4% year-over-year, reaching the low finish of our long-term monetary development algorithm and beating the midpoint of our preliminary steerage, regardless of a 5% drag from decrease security and productiveness options gross sales. Phase revenue grew 8% year-over-year with section margin growth of 100 foundation factors to 22.7% above our long-term annual growth goal of 40 foundation factors to 60 foundation factors and 10 foundation factors above the excessive finish of our preliminary steerage. Adjusted earnings per share grew 5% or 11% when excluding the affect of decrease non-cash pension revenue year-over-year. We generated free money stream of $4.3 billion on the excessive finish of our steerage vary, or $5.3 billion excluding the after-tax affect of one-time settlements. We deployed $8.3 billion of capital, together with $3.7 billion to share repurchases, $1 billion to CapEx, $700 million to M&A, and $2.9 billion to dividend payouts, which we elevated for the 14th time prior to now 13 years. Fourth quarter natural gross sales had been up 2%, led by the eleventh consecutive quarter of double digit development in our business aerospace enterprise. Phase margin expanded by 60 foundation factors to 23.5%, pushed by growth in efficiency supplies and applied sciences and aerospace. Earnings per share for the fourth quarter was $1.91, up 26% year-over-year, and adjusted earnings per share was $2.60, up 3% year-over-year. An adjustment to our estimated future Bendix legal responsibility on the finish of the 12 months and our annual pension mark to market adjustment drove the distinction between earnings per share and adjusted earnings per share. Excluding a $0.13 non-cash pension revenue headwind, adjusted earnings per share was up 8%. Bridges for adjusted EPS from each 4Q 2022 to 4Q 2023 and FY 2022 to FY 2023 will be discovered within the appendix of this presentation. Free money stream was $2.6 billion with free money stream margin of 27.4% versus 23.1% in 4Q, as working capital was a larger supply of money in comparison with the prior 12 months. We deployed $2.6 billion of money stream to share repurchases, dividends, high-return CapEx and M&A. The fourth quarter was one other robust one for our backlog, which grew to a brand new file of $31.8 billion, up 8% year-over-year and 1% sequentially, as a consequence of power in Aero, PMT, and HBT. Orders had been up 1% within the quarter led by development in business Aero, PMT, and HPT, together with orders development in constructing merchandise. This setup offers us confidence in our 2024 outlook which I’ll focus on in a couple of minutes. As all the time we proceed to execute on our confirmed worth creation framework which is underpinned by our Accelerator working system. I am assured within the power of our backlog, the tailwinds we’re seeing throughout our lengthy cycle finish markets, and our skill to navigate a dynamic working surroundings, which we’ve demonstrated 12 months after 12 months. Now, let’s spend a couple of minutes on the fourth quarter efficiency by enterprise. Aerospace for the fourth quarter was up 15% organically year-over-year, with 20% development in business aviation. Our business authentic gear enterprise grew over 20% on elevated deliveries to each air transport and enterprise and common aviation clients. Business aftermarket had one other double-digit development quarter led by the power in air transport market as elevated flight hours continued to drive demand. Protection and area gross sales grew once more within the fourth quarter as the continued international deal with nationwide safety continues to drive sturdy demand, whereas we proceed to work via provide chain challenges which govern that development. Aerospace book-to-bill of round 1 within the fourth quarter is extra proof that demand continues to outpace provide, an encouraging signal that as the availability chain unlocks we’re nicely located to capitalize on our advantageous place out there. Phase margin expanded 20 foundation factors to twenty-eight% on account of business excellence and quantity leverage, which had been partially offset by value inflation and blended stress in our authentic gear enterprise. Efficiency materials and expertise gross sales grew 4% organically within the fourth quarter, superior materials was up 6%, returning to development within the quarter, pushed primarily by a double digit improve in fluorine merchandise. In HPS, gross sales had been up 4% organically as we noticed continued power in life cycle options and providers and sensible power. UOP gross sales grew 1% organically on account of sturdy seasonal demand in petrochemical catalyst shipments, partially offset by decrease volumes in gasoline processing. Our sustainable expertise options enterprise completed the 12 months with over 30% gross sales and orders development within the fourth quarter. Orders for PMT grew throughout all three companies. Phase margin expanded 200 foundation factors to 24% on account of productiveness actions, favorable enterprise combine, and business excellence internet of inflation. Security and productiveness options gross sales decreased 24% organically within the quarter, primarily on account of decrease volumes and warehouse and workflow options and productiveness options and providers. The tasks portion of our Intelligrated enterprise stays round trough ranges as investments in warehouse automation proceed to be subdued. Nevertheless, our pipeline of latest tasks is powerful and we’re dedicated to delivering modern options to a widening array of shoppers on this market, positioning Honeywell to win in an eventual restoration. In our productiveness options and repair enterprise, we proceed to work via the consequences of distributor de-stocking, however over 30% orders development within the quarter supplies some confidence that we’re close to the top of that cycle. Sensing and Security Options stays comparatively resilient regardless of brief cycle challenges in a number of finish markets. Phase margin in SPS contracted 290 foundation factors to 17.3%, pushed by decrease quantity leverage and price inflation, partially offset by productiveness actions and business excellence. Constructing expertise gross sales had been down 1% organically as development in our long-cycle constructing options enterprise was offset by modest declines in short-cycle constructing merchandise. Options grew 6% within the quarter, led by excessive single-digit development in constructing providers, pushed by robust execution and overdue backlog burndowns. Orders had been robust throughout the board within the fourth quarter, as each enterprise grew year-over-year. Phase margin contracted 90 foundation factors year-over-year to 23.9% as a consequence of value inflation and blended headwinds, partially offset by productiveness actions and business excellence. Progress throughout our portfolio was supported by one other quarter of double-digit gross sales development in Honeywell Related Enterprise, which stays accretive to total Honeywell. Our choices in linked industrial, cyber, linked buildings, life sciences and linked plane, all grew by greater than 20% year-over-year within the quarter. For the full-year, HCE gross sales and revenue [fall] (ph) via by double-digits, which is an indicator of the facility of our robust software program franchise. With 2023 now within the rear-view, we’re enthusiastic about Honeywell’s favorable setup to speed up development in 2024. Let’s flip to Slide 7 to speak about our outlook for the 12 months. We count on the surroundings to stay dynamic, however the energy of our Accelerator working system permits us to maneuver shortly and decisively to drive development, shield margins, guarantee liquidity and place ourselves nicely to ship on our commitments and I am assured we’ll do this once more in 2024. Our end-market exposures throughout aerospace, automation and power stay favorable with continued business aviation fleet development, increased protection funding, heightened deal with automation, as a consequence of labor shortage, intensifying power demand and decarbonization targets and elevated infrastructure spending. These compelling vertical tailwinds are underpinned by the continued demand for digitalization and our file degree backlogs, which can help sturdy natural development for the enterprise. This outlook is considerably tempered by the unsure timing of an eventual restoration within the short-cycle as markets return to normalcy, which we see because the swing issue to our gross sales end result for the 12 months. However we’re excited by the prospects of this re-acceleration within the coming quarters. General, we’ve a robust setup that may drive development inside our long-term monetary framework for gross sales, margin, earnings and money in 2024. Our sturdy steadiness sheet and powerful money era will help accretive capital deployment. And whereas we’re proud of our recently-announced transaction, we’ll proceed to build-on our accretive M&A pipeline as we optimize the portfolio. Now let’s flip to Slide 8 to debate how these dynamics come collectively for our 2024 steerage. Given the backdrop, in complete for 2024, we count on gross sales of $38.1 billion to $38.9 billion, which represents an total natural gross sales development vary of 4% to six% for the 12 months with a larger steadiness between quantity and worth. Our information anticipates some short-cycle restoration to start within the second-half of the 12 months, albeit doubtless at totally different charges for our numerous end-markets, making a considerably back-half weighted outlook. Moreover, we stay keenly targeted on new product innovation, sustaining our management place in high-growth areas, monetizing our huge installed-base and strengthening our software program franchise, which we count on to offer resiliency via the 12 months. We additionally count on the Aero supply-chain to proceed to enhance step by step sequentially all year long because it did in 2023. For the first-quarter, we anticipate gross sales within the vary of $8.9 billion to $9.2 billion, flat-to-up 3% organically. We count on our total section margin to develop 30 foundation factors to 60 foundation factors subsequent 12 months, supported by enhancing enterprise combine, continued price-cost self-discipline and productiveness actions, together with our precision deal with lowering raw-material prices. Just like final 12 months, we count on constructing automation margins to develop essentially the most as we profit from productiveness actions and build-on continued business excellence, adopted by industrial automation and power and sustainability options. For aerospace, quantity leverage will cowl continued funding in our innovation platforms and within the supply-chain to unlock quantity. Conserving our margin fee inside a decent band of our current ranges, whereas enabling us to ship sturdy year-over-year revenue development. For the first-quarter, we count on total section margin within the vary of 21.9% to 22.2%, down 10 foundation factors to up 20 foundation factors year-over-year. Importantly, our steerage for each the primary quarter and the full-year for 2024 doesn’t take into account the deliberate acquisition of Provider’s International Entry Options enterprise. We anticipate the closing of the deal by the end-of-the third quarter, and we’ll replace our steerage accordingly at the moment. Now let’s spend a couple of minutes on our outlook by enterprise. In Aerospace Applied sciences, we count on that sturdy demand will stay all through 2024 as our file degree backlog supplies a catalyst for development. In business authentic gear construct charges proceed to development upwards, driving improve in chipset deliveries, primarily in air transport. On the business aftermarket facet, we count on to see quantity power as flight hours proceed to enhance, significantly in wide-body as worldwide journey normalizes additional. In protection and area, provides — supply-chain constraints not demand would be the limiting issue on quantity development. Nevertheless, our output development of 18% in 2023 throughout Aero offers us confidence in our skill to execute and we anticipate modest sequential enchancment all year long. For total Aerospace, we count on natural development within the low-double-digit vary in 2024. Whereas we once more count on Aero to be our quickest top-line grower, margins will doubtless stay at comparable ranges to 2022 and 2023, as increased gross sales of lower-margin merchandise are principally offset by elevated quantity leverage. Within the first quarter, we count on to see low-teens natural development year-over-year because the progress we have made on supply-chain all through 2023, coupled with our file backlog will drive continued significant year-over-year output development. For Industrial Automation, the timing of short-cycle restoration will play a key consider 2024 outcomes and are — and can doubtless result in a back-half weighted 12 months. In Course of Options, we count on to additional construct on the success we skilled in 2003 with one other robust 12 months of development, significantly in our tasks and aftermarket providers enterprise. Our sensing and security applied sciences and Productiveness Options and Service companies will profit as the consequences of distributor destocking fade all year long. In warehouse and workflow options, we count on to maneuver via the trough of the warehouse automation spending cycle, capitalizing on our sturdy pipeline and simpler year-over-year comps because the 12 months goes on. On account of these dynamics, we count on IA gross sales to be flattish in 2024. Phase margins ought to develop, significantly within the second-half as short-cycle restoration results in quantity leverage advantages. Within the first quarter IA will stays sequentially secure, whereas difficult comparisons in warehouse automation demand that’s nonetheless close to trough ranges will weigh on year-over-year development, resulting in excessive single-digit to low-double-digit gross sales declines year-over-year. Turning to Constructing Automation, we see a — we count on to see our long-cycle companies once more outpace our short-cycle portfolio, significantly early in 2024. General, the timing of the short-cycle restoration will likely be one of many key drivers of efficiency within the 12 months and sure result in stronger leads to the second-half. Each tasks and providers will develop on the power of current backlog and tailwinds from aftermarket providers. We’re seeing encouraging indicators in our core verticals, each within the US and internationally as institutional funding in growing areas will likely be an engine for development in BA. We anticipate our short-cycle merchandise companies will profit as stock ranges normalize. For Constructing Automation, we forecast full-year gross sales development to be low-single digit year-on 12 months. Regardless of this, we anticipate BA would be the section with the biggest margin growth, primarily pushed by productiveness actions and business excellence internet of inflation. Within the first-quarter we count on gross sales development to be just like the fourth quarter as destocking reaches its late levels. In Power and Sustainability Options, the macro-environment will present places and takes in 2024. UOP development will likely be led by power in our Catalysts and Companies companies, whereas our Course of Applied sciences enterprise, modular gear development will doubtless be offset by quantity headwinds from difficult comps in LNG gear. In Sustainable Know-how Options sturdy demand will result in one other file 12 months of development. In Superior Supplies, power within the broader fluorine merchandise enterprise, significantly in our [indiscernible] portfolio will likely be offset by anticipated quantity decline in our legacy stationery merchandise, as a consequence of well-telegraphed quota reductions from the US. Inside the remainder of Superior Supplies, enhancing short-cycle demand over the course of 2024, significantly from semiconductor fabs will help the top-line. General, we count on [VSS] (ph) gross sales to be flat-to-up low-single digits for the 12 months in comparison with 2023. Margin ought to enhance in 2024, although not as a lot as in our different segments, due to each business excellence and productiveness actions. Within the first-quarter, we count on gross sales to be down mid to-high single-digits year-over-year as we work-through difficult comps, significantly in our gasoline processing enterprise and put together for increased exercise ranges because the 12 months progresses. Transferring on to different key steerage metrics. Pension revenue will likely be roughly flat to 2023 at roughly $550 million, which is modestly extra optimistic than in comparison with our outlook feedback from the third quarter earnings name, because the interest-rate surroundings turned barely extra favorable in the direction of the 12 months finish. As a reminder, pension revenue is a non-cash merchandise, given our overfunded pension standing will guarantee no incremental contributions are wanted. This can be a nice place to be in for our workers, each former and present and our shareholders. We anticipate internet below-the-line affect to be between unfavorable $550 million and unfavorable $700 million for the full-year and between unfavorable $140 million and unfavorable $190 million within the first-quarter. This steerage features a slight enchancment in year-over-year repositioning spend, which will likely be between $200 million and $300 million for the full-year and between $60 million and $100 million within the first-quarter, as we proceed to put money into high-return tasks to help our future development and productiveness. We count on the adjusted efficient tax-rate to be round 21% for the full-year and round 22% for the first-quarter as a consequence of timing of discrete funds. We anticipate common share depend to be round 656 million shares for the full-year as we execute on our dedication to scale back share depend by no less than 1% per 12 months via opportunistic buybacks. On account of these inputs, we anticipate full-year adjusted earnings per share to be between $9.80 and $10.10, up 7% to 10% year-on 12 months. We count on first-quarter earnings per share to be between $2.12 and $2.22, up 2% to 7% year-over-year. Included within the appendix is a bridge that walks the weather of 2024 adjusted earnings per share from 2023. You may see the first year-over-year drivers are increased volumes and elevated productiveness, with decrease share depend offsetting below-the-line modifications, that are primarily from increased internet curiosity expense. On free-cash stream, we count on to develop in-line with earnings, excluding the after tax affect of final 12 months’s one-time settlement from derisking our steadiness sheet. We are going to start the multi-year unwind of working capital, the place our digitalization capabilities via Accelerator are enhancing demand planning and optimizing manufacturing and supplies administration. As well as, we see a number of compelling growth-oriented capital funding alternatives and develop — count on to fund high-return tasks targeted on creating uniquely modern, differentiated applied sciences. Consequently, we count on free-cash stream to be within the $5.6 billion to $6 billion vary, up 6% to 13% excluding the affect of prior 12 months settlements. Our 2024 free-cash stream bridge is within the appendix and summarizes the drivers of year-over-year development with internet revenue development being the biggest issue, adopted by working capital enhancements, partially offset by modestly higher-growth CapEx spend. Concerning capital deployment, whereas we’re targeted on executing our sturdy M&A pipeline, opportunistic share repurchase at highly-attractive valuations, which you noticed within the second-half of 2003 as we accelerated our buyback in 3Q and once more in 4Q stays an essential a part of our framework, a vote of confidence in Honeywell’s efficiency and that may proceed to be true in 2024. So in abstract, whereas we’re cautious on the macroeconomic backdrop, our leverage to the important thing macro traits of Aerospace, automation and the power transition, underpinned by digitalization, which will likely be complemented by our file backlog and accelerated working system, give us confidence in delivering one other robust 12 months in 2024. So with that, let me flip it again to Vimal on Slide 9.

Vimal Kapur: Thanks, Greg. Let’s take a minute to zoom out from the near-term dynamics and discuss how our monetary algorithm interprets into worth via EPS development. Final Could, we unveiled our up to date long-term monetary development algorithm. One of many strengths of that framework is that we’ve demonstrated that we are able to steadiness between the levers we’ve to ship what issues, constant, compelling EPS development. Let me unpack this for a second. Our annual 4% to 7% natural gross sales development and 40 foundation level to 60 foundation level of margin growth alone will ship 6% to 10% of natural EPS development. Some years, one or different of those parts transfer. However as you’ve gotten seen, 6% to 10% supply has been constant hallmark of Honeywell. When coupled with 1% to 2% of EPS accretion from each share buyback and constant M&A execution, we’re assured we’ll ship double-digit adjusted EPS development on the midpoint on a [true] (ph) cycle foundation. The power of our dividend at the moment yielding about 2% additionally provides additional worth to our shareholder returns. Though there was some noise within the outcomes, principally associated to under the road, we’ve delivered 8% section revenue development and a pair of% adjusted EPS accretion from the share repurchases on a median throughout the previous few years, in step with the long-term monetary framework. Now, we’re ramping our M&A lever, which ought to drive incremental advantages. With that, let’s go to the subsequent web page to debate our current progress on this long-term development algorithm. As you may see on Slide 10, our 2023 outcomes symbolize one other 12 months of robust monetary efficiency according to our framework, following significant progress since 2016, inorganic development, gross margin, section margin growth, and free money stream reacceleration. Equally, our 2024 expectation for natural development, gross margin, section margin, and free money stream margins are solidly in step with our long-term dedication as we proceed to make regular, constant enchancment in high quality of Honeywell’s monetary profile. We’re reorienting the group to prioritize natural development, deploying the operational energy of Accelerator 3.0, and executing on a sturdy portfolio optimization technique, which can allow us to realize our long-term targets. I look ahead to the subsequent section of transformation and stay optimistic in regards to the super alternatives we’re uncovering to seize worth, drive incremental gross sales development, develop margins, and generate extra cash. We’ll proceed to trace our development intently and replace you as these efforts more and more switch into our enhanced monetary efficiency. Now, let’s flip to Slide 11 for closing ideas earlier than we transfer to Q&A session. We delivered on all of our 2023 commitments. We’re assured in our skill to climate the dynamic macroeconomic and geopolitical backdrop with working rigor you’ve gotten come to count on of Honeywell. Current file backlog ranges, ongoing power in our largest finish markets, aerospace and power, in addition to impending restoration in our short-cycle enterprise will help robust outcome as we progress via 2024. I stay optimistic about the way forward for Honeywell and imagine the corporate is well-positioned to drive the innovation wanted to unravel a few of the world’s most difficult issues. The long run is basically what we make it. With that, Sean, let’s transfer to Q&A.

Sean Meakim: Thanks, Vimal. Vimal and Greg at the moment are out there to reply your questions. We ask you please be aware of others within the queue by solely asking one query and one associated follow-up. Camilla, please open the road for Q&A.

Operator: Thanks. We are going to now be conducting a question-and-answer session. [Operator Instructions] Our first query comes from the road of Steve Tusa with JP Morgan. Please proceed along with your query.

Steve Tusa: Hello, good morning.

Vimal Kapur: Hey, Steve.

Greg Lewis: Good morning Steve.

Steve Tusa: Are you able to simply discuss in regards to the sequential development in EPS as we transfer via the 12 months off of the primary quarter base right here?

Greg Lewis: You are speaking about for the complete 12 months?

Steve Tusa: Sure. I imply the primary quarter is just a little bit gentle as a share of the 12 months, so simply attempting to grasp how issues construct for the subsequent three quarters to get to the midpoint of information?

Greg Lewis: Positive. I imply, if you happen to take a look at the information we’re giving for Q1, it is truly not that totally different from 2023. So, as we progress via the 12 months, we will count on to see the brief cycle income inflection extra doubtless between 2Q and 3Q than 1Q and 2Q when it comes to the extent of — that acceleration. And so, I believe the EPS will comply with together with that. I imply, the final two years, our EPS has been extra back-end weighted in third and fourth quarter than our prior historical past. I believe it will look pretty comparable this 12 months.

Steve Tusa: Okay, after which only one on the constructing’s enterprise. What are you guys seeing there, and what are you assuming for the merchandise enterprise within the subsequent few quarters? There’s clearly plenty of noise within the channel there, and in addition simply from an finish market demand perspective, possibly contact on regionally as nicely within the constructing enterprise?

Vimal Kapur: Sure, Steve. So we had 1 / 4 4 end by which our buildings orders had been grew throughout all segments, each in constructing merchandise and in constructing options. In order that places us in a superb setup for 2024. To your particular query, the setup we’ve permits us to see sequential progress within the brief cycle because the 12 months progresses, and the entrance finish of the 12 months will see extra power in our answer facet of the enterprise. Europe stays challenged, because it was, during the last a number of quarters. And in US, we’re within the late innings of destocking of the distributor inventories. In order that’s the general setting. What excites me in regards to the enterprise is the work we’ve completed on new merchandise, that is going to place us nicely, our power in excessive development areas, which is performing exceedingly nicely. So net-net, we stay fairly assured on development in constructing options, constructing automation enterprise in 2024, particularly margin growth and are assured of delivering robust outcomes there.

Operator: Thanks. Our subsequent query comes from the road of Julian Mitchell with Barclays. Your line is now open.

Julian Mitchell: Hello, good morning. Possibly simply needed to attempt to take into consideration the progress via the 12 months from a section margin standpoint. I suppose you’ve got had seven quarters in a row of excellent year-on-year growth. Q1 is form of flat after which the 12 months is up near that form of 50-bips mark. So that you’re exiting the 12 months in This autumn possibly with margins up 100-bips plus. So simply attempting to grasp beginning Q1 at zero, This autumn up 100, the place does type of the sharpest enchancment come on a section foundation as you undergo the 12 months? And will we take into consideration that margin year-on-year enchancment agency broad as simply being fairly regular as we undergo 2024?

Greg Lewis: Thanks, Julian. Once more, I might inform you plenty of the steerage fundamentals are tied fairly intently to the brief cycle restoration. And what I imply by that’s, we do not count on an enormous inflection within the first half, and so subsequently our section revenue enchancment within the first half versus the second half goes to be a bit decrease. And as these brief cycle companies get better, bear in mind, these are a few of the highest margin companies within the portfolio. In order that quantity leverage goes to be fairly highly effective as we undergo the 12 months. And that’ll be true in every of these non-Aero associated companies.

Vimal Kapur: What I will add, Julian is, if I take a look at the complete 12 months image for the margin growth, what we’ve dedicated 30 foundation factors to 60 foundation factors, there are three broad drivers. The pricing will stay of the order of three%. Our worth value won’t be a headwind. We stay very assured on our pricing execution. Second, we’ll see good productiveness in 2024. Materials productiveness stays robust in This autumn and we count on that to roll up on a full 12 months foundation in 2024. We even have made good progress in executing AI in our operation, and that will likely be additionally a supply of productiveness in 2024. And eventually, the brief cycle restoration level, which Greg made, as that unpacks itself, the margin accretion we’ve on that’s fairly substantial. So whenever you put all of it collectively, we stay extraordinarily assured on our margin growth algorithm.

Julian Mitchell: That is useful. Thanks. And simply my fast comply with up, if we take a look at, say, Slide 15, attempting to grasp form of the form of that gross sales restoration, you’ve got bought these two items on the backside, productiveness options and repair and warehouse and workflow. If we take into consideration these two companies, one exited the 12 months simply completed down 25 and the opposite exited down 50, what is the exit fee for 2024 for these two that is embedded within the gross sales information, please.

Greg Lewis: Yeah, nicely, once more, we do not information that particularly, however it is best to count on that this exit fee diminishes because the 12 months progresses, and as we get into the again half of the 12 months, that turns to be one thing that’s doubtless optimistic on productiveness options and providers and will likely be flattish on warehouse and workflow options. And maybe up, we’ll see how the 12 months progresses on the challenge facet. An essential factor to bear in mind is inside the warehouse enterprise, particularly, we have got truly a really wealthy combine now on the aftermarket providers enterprise. So whereas the tasks orders will actually be the factor that may govern the highest line development total, we see double digit development persevering with within the aftermarket bit, which in fact is the place we seize the worth from the set up base. So we really feel superb in regards to the development of that as we undergo the 12 months.

Vimal Kapur: Possibly so as to add to Greg’s level on warehouse options enterprise, the highest line has been difficult, however I see that this as not a headwind for EPS in 2024. We now have taken motion that Greg spoke about aftermarket. The aftermarket continues to be robust and will likely be an element of development in 2024. We now have taken significant motion on our value base, particularly on provide chain. And once we put these actions collectively, which is in our management, we see margin growth on this enterprise. And despite high line stress, it won’t be a supply of EPS answer. Will probably be a supply of EPS accretion.

Greg Lewis: And Julian, if I may add only one last item there. From a modeling perspective, take note it is not only a dynamic embedded in our mannequin for 2024, second half doubtless stronger than the primary half. It is also that second half 2023 was weaker than first half 2023. So each of these will affect the year-over-year development fee as you are speaking about exiting 2023 versus exiting 2024.

Julian Mitchell: That is nice. Thanks.

Operator: Thanks. Our subsequent query comes from the road of Scott Davis with Melius Analysis. Your line is now open.

Scott Davis: Hey, good morning, Vimal and Greg and Sean.

Vimal Kapur: Good morning.

Greg Lewis: Good morning.

Scott Davis: Good morning. Guys, can we take a step backwards no less than and simply stroll around the globe just a little bit on what you are assuming? I assume, Vimal, you in all probability have fairly good learn on what is going on on in China. It has been a troublesome area for lots of your friends, however you needn’t actually deal with Aerospace as a result of it is a totally different dynamic. However for the opposite companies, maybe just a bit little bit of colour on what you are anticipating, any variations in 2024 geographically versus 2023. That’d be useful. Thanks.

Vimal Kapur: Sure, thanks, Scott. So, particularly speaking about — let me begin with China. We grew about 7% in 2023. I do not count on a fabric shift between 2024 to 2023. We now have weathered a troublesome 12 months in 2023, China’s financial cycle. And I count on 2024 to be a shade higher, however it’s no extra going to be a supply of excessive development, what it was once 5 or seven years again. Talking extra broadly of excessive development areas, which represents virtually 25% of the Honeywell income now. We had superb efficiency in Center East and India particularly, and we count on these traits to proceed in 2024. India grew for us excessive double digits. In 2023, we had very significant income there, comparable good efficiency within the Center East, so we count on these areas to carry out nicely. All in all, I count on high-growth areas to develop double-digit, which will likely be a supply of natural development, a couple of p.c, and total Honeywell algorithm of natural development. Europe stays difficult. We now have seen headwinds in some parts of our companies and tailwinds in another parts. So net-net, it is extra impartial to unfavorable. And US, in fact, we’re like all people else, ready for rate of interest surroundings to settle. And that may decide the efficiency of our enterprise, particularly on the brief cycle. In order that’s type of my broad overview of how we see totally different geographies.

Scott Davis: Okay, that is useful. After which just a little little bit of a nuance right here. Would you classify the Provider deal as a bolt-on? It looks as if just a little bigger than a bolt-on by my definition, however type of curious how you consider it, as a result of clearly in your slides you talked about bolt-on offers being the main target and if we had been to count on different type of like billionish…

Vimal Kapur: I might name it bolt-on, as a result of my argument is that, bolt-on to me is which is including to our core portfolio and propels the expansion of natural development of the enterprise itself. So that is what this enterprise is. Should you see our Buildings Merchandise enterprise, our technique is to have merchandise that are specified, that are crucial for the constructing. We had a reasonable place in safety with the addition of this portfolio makes us a significant participant. And subsequently I name it a bolt-on, as a result of it is a continuum of our technique. We’re not discovering a brand new adjacency. We’re not exploring some new concept. It is one thing we perceive extraordinarily nicely. And subsequently, our confidence so as to add shareholder worth right here is extraordinarily robust.

Greg Lewis: And take note, at $5 billion, it is one thing like 4% of our market cap. So moderately, it is not an enormous guess because it pertains to that as nicely. Clearly, very totally different world than when our market cap was half that 10 years in the past.

Scott Davis: Positive. Understood. Thanks, guys. I will go it on. Good luck this 12 months.

Greg Lewis: Thanks.

Operator: Thanks. Our subsequent query comes from the road of Andrew Obin with Financial institution of America. Your line is now open.

Andrew Obin: Sure, good morning.

Greg Lewis: Good morning, Andrew.

Andrew Obin: Hey, simply taking a look at UOP, I used to be just a little bit shocked by the expansion within the quarter. I might have thought with STS being robust, and I do know you form of gave us, I believe it was a gasoline product, however are you able to simply inform us what sort of visibility do you’ve gotten on this enterprise accelerating into 2024? As a result of it’s form of, I suppose, that is what you are guiding to, however just a bit bit extra granularity there. Thanks. Positive.

Vimal Kapur: Positive, Andrew. So 2023 income is 1% development. It is primarily pushed by gear income we had within the prior 12 months. We had massive equipment-based tasks in our quantity, LNG tasks. So on a year-on-year comp foundation, do not repeat itself. However if you happen to see the core UOP enterprise on catalysts, it stays fairly robust. Your particular query on sustainability applied sciences, as we talked about throughout our earnings earlier, stay very assured on its efficiency. We crossed the benchmark of fifty licenses of sustainable aviation gas only a few weeks again. Now we’re seeing exercise in carbon seize tasks, early innings on hydrogen tasks. So our plans to have sustainable expertise enterprise of $1 billion in subsequent few years have not modified. And my confidence of that completely has solely grown increased over the previous couple of months.

Greg Lewis: Sure, and I might additionally simply zoom out. I imply, we discuss a few of the variability on this enterprise, and PMT has all the time bought a few of the highest variability with UOP being an enormous a part of that. Consider, we grew gross sales in UOP for the 12 months, one thing like 8%. Very, very wholesome. And we have additionally grown orders someplace in that very same neighborhood, I believe 2% for the 12 months, however with 13% within the catalyst enterprise. So we have come off some massive comps with the big LNG tasks. General, it is a very wholesome enterprise with a really wholesome backlog. So — and as you stated, the STS enterprise supplies a very nice catalyst on that new facet of it, however we really feel superb about the place UOP is at this stage.

Andrew Obin: Wonderful, and simply to comply with up on superior supplies. I suppose identical query, the enterprise has returned to development, simply what are you seeing, possibly in just a little bit extra element, driving optimistic outlook for 2024. I believe [indiscernible] is constructive there as nicely. And possibly you may throw in plenty of questions on semis. I suppose that is a part of it as nicely, simply if you happen to develop on that. Thanks.

Vimal Kapur: Sure. Thanks, Andrew. Sure, we do see restoration in semis modestly growing. Each month is changing into modestly higher. In order that’s a part of our forecast for 2024. We additionally noticed in This autumn restoration in some segments of chemical compounds in brief cycle. And we count on that to roll over in 2024. So the brief cycle restoration on a broader Honeywell portfolio is just not a one occasion. So it will occur in several parts. So chemical compounds occurred late This autumn and we count on that to proceed. So all-in-all, superior materials ought to have a greater 12 months in 2024 in comparison with what we had in 2023.

Andrew Obin: Thanks a lot.

Vimal Kapur: Thanks.

Operator: Thanks. Our subsequent query comes from the road of Nigel Coe with Wolfe Analysis. Your line is now open.

Nigel Coe: Thanks. Good morning. Thanks for the query. And Vimal, congrats on the Chairman position. There’s a number of fashionable questions, so here is a number of extra. Nicely, a pair extra. Pricing, I am unsure if you happen to’ve caught up worth, however possibly if you happen to simply discuss what you’ve got [indiscernible] pricing in your income invoice. However it appears that evidently we’re getting into the 12 months with two of the segments down fairly closely. Possibly simply discuss the way you see that break again to development for IA and ESS. Is that within the second quarter, is it extra second half loaded? And maybe possibly discuss what you’ve got seeing within the order charges to possibly help the view that we’re on the backside in a few of these markets?

Vimal Kapur: Sure. So for IA and ESS, I might say, IA broadly, as we stated, will likely be flatish on a year-on-year foundation. The power we see there may be in Course of Options, particularly, that — it had a robust 2023, we count on one other robust 2024 from Course of Options. Remainder of IA is a short-cycle restoration. We noticed pockets of that taking place in This autumn in our scanning and mobility enterprise. Now different parts need to additionally get better throughout course of the 12 months. I talked about our warehouse automation enterprise and the way we count on that to carry out throughout course of the 12 months, particularly on the margin facet. In order that’s undoubtedly is a part of our forecast. On ESS, we briefly talked an earlier query. UOP is carrying a fairly robust reserving and backlog. So we count on a superb 12 months from UOP in 2024. After which I talked about superior supplies a bit earlier there. On orders fee, the This autumn orders had been up 1%, which helped us to additional bolster our backlog now to file excessive degree. Particularly on orders, there have been highlights on brief cycles, early inexperienced shoots in constructing merchandise, in scanning and mobility enterprise, in elements of chemical compounds enterprise, which is an effective signal, as a result of if couple have proven, I stay assured this may develop extra broadly throughout our portfolio. Lengthy cycle robust bookings in business aerospace, in UOP, in course of options. There have been some lumpy lessened orders in warehouse automation and protection and area, which I talked earlier. So net-net, our lengthy cycle orders carried out extraordinarily nicely on an annualized foundation in 2023. And brief cycle is displaying early cycle of restoration, which provides me confidence for 2024.

Greg Lewis: Sure, possibly simply within the final level on pricing, we talked about 4% for 2023. That is precisely the place it got here in. And the extra balanced view of worth versus quantity in our mannequin for 2024 is basically 3% pricing. And that is going to be, to Vimal’s level, I believe worth value impartial to possibly barely optimistic for the 12 months. So we really feel superb about our skill to ship on that. We have talked about that at size prior to now. I believe our capabilities in that space have been very robust and we proceed to be assured going into subsequent 12 months.

Nigel Coe: Okay, that is useful, Greg. And fast comply with up on the money stream. Good to see the pick-up year-to-year. I am guessing the tax advantages, potential tax advantages from R&D type of rollback. I am assuming that is not in your information, however simply curious, if that does go the Senate, what sort of profit you would possibly see for 2024 for money stream?

Greg Lewis: Sure. Nicely, initially, it is not practically dwelling, as I am positive you may recognize. So we’re not sitting right here counting any chickens. To be sincere, Nigel, I believe we have to wait and see precisely how all the foundations, first whether or not it occurs and the way they set the foundations. As you may recognize, all of the specifics matter loads on this space. So no, we’re not guiding something particular about that. We’ll wait and see precisely what occurs after which interpret that and combine it into our view when it turns into an actual factor.

Nigel Coe: Okay. That is nice, thanks.

Operator: Thanks. Our subsequent query comes from the road of Sheila Kahyaoglu with Jefferies. Your line is now open.

Sheila Kahyaoglu: Good morning, guys, and thanks.

Vimal Kapur: Hey, Sheila.

Sheila Kahyaoglu: Possibly I will begin off with aerospace, if that is okay. You talked about it rising low double digits. How will we take into consideration the OE development there? What construct charges are you embedding into that on the business aerospace facet and any colour you possibly can give on aftermarket and protection development?

Vimal Kapur: Sure. So Sheila, we count on the general low double-digit information contains the continued excessive development fee of OE, as we noticed in 2023. That can repeat itself in 2024. Additionally count on double-digit development in aftermarket. Protection, we carry out at low single to mid-single digit in 2023, the availability chain constraint stays the largest deal with there. And as we make progress, we count on it to carry out in that vary in 2024 additionally. However the largest unlock for us is provide chain. We now have demonstrated a robust efficiency in 2023. We count on a superb begin of the 12 months and we’ll unpack the 12 months because the issues progress.

Greg Lewis: Sure, so to be clear, I imply, no new indicators from the OEs. They’re persevering with to position the identical degree of demand on us that they’ve been. And so, that is what we’re dedicated to attempt to ship.

Sheila Kahyaoglu: Okay, nice. After which if I may ask 1 extra. You’ve got been requested each angle when it comes to income development acceleration. Exterior of [indiscernible], what do you should see within the different three segments to hit the excessive finish of steerage? Is it simply all based mostly on brief cycle restoration and the timing of that, or is it some further worth seize? Should you may possibly discuss that.

Vimal Kapur: Sure. The largest variable is the brief cycle restoration and the tempo of it, which stays variable. I imply, you take a look at 2024 setup for Honeywell in three buckets. Our backlog is up 8% and we convert backlog at a fairly predictable fee. In order that’s one thing which is extremely deterministic. Quantity two, the self-help actions we’re driving to drive development. The self-help motion contains worth, that features new merchandise. I talked about high-growth areas, aftermarket providers. All that’s going to assist us to drive development whatever the market. After which the third variable is brief cycle. If it returns faster, we’ll have an higher finish of the expansion or we are able to beat it if it surprises all people and vice versa. In the event that they would not carry out nicely throughout the course of the 12 months, then we’re on the decrease finish of the information.

Sheila Kahyaoglu: Nice. Thanks.

Operator: Thanks. Our subsequent query comes from the road of Andy Kaplowitz with Citi. Your line is now open.

Andy Kaplowitz: Good morning, everybody.

Vimal Kapur: Good morning, Andy.

Andy Kaplowitz: Vilma, I simply needed to comply with up on a commentary that you simply’re on monitor to exceed the $25 billion of capital deployment steerage from 2023-2025. Clearly, you introduced the Provider deal, however does that commentary counsel continued extra aggressive capital deployment? Does your M&A pipeline help that? After which may you replace us on the progress in divesting the ten% of the gross sales you talked about beforehand?

Vimal Kapur: Yep. So I might say that our capital deployment technique can be balanced, which maximizes shareholder return. That is what we’re actually concentrating on for. Will probably be the steadiness, as Greg talked about earlier, we count on each M&A and share repurchases to be a part of that aspect for 2024 and years to come back. The pipeline is ample at this level of time and exercise stays robust. So we’re continually trying on the offers which work in our algorithm. It must be bolt-on. It has to assist to drive our total natural development and customarily meet our monetary algorithm which we’ve earlier talked about. On the a part of the portfolio, which does not slot in nicely, we’re going to drive motion beginning 2024. In fact, we’re not going to hurry via that, as a result of we have to seize shareholder worth, however you may anticipate some preliminary actions on that in 2024.

Greg Lewis: Sure, possibly simply to place numbers on Andy. As we confirmed in that slide, we have been doing $8-ish billion per 12 months. The straightforward math for 2024 says simply with Provider, that quantity is 10 entering into with simply sufficient share repurchase to purchase again the creep. So we will be sitting at 18 via two years in the direction of the 25 plus quantity. So the excessive confidence that we will be above that degree simply with the mathematics.

Andy Kaplowitz: After which only a fast comply with up. You managed to develop Aero margin by 20 base factors in This autumn, even with [OE mix] (ph) being in opposition to you. And also you talked about provide chain enhancing in 2024. I do know you are saying it will marginally keep in a decent vary, but when the availability chain does proceed to enhance, is there a chance there with all your productiveness tasks in that section?

Vimal Kapur: Look, I imply, there are — there’s a quantity development there, which can proceed and the amount leverage will get offset by the OE combine, which I talked earlier, the OE combine stays robust. However we’re additionally ending investing into aerospace. The amount development is just not coming by accident. We now have invested into our provide chain operations, provider restoration, which is demonstrating the continual quantity development occurred in 2023 and 2024. So whenever you put these information collectively, that basically drives the margin forecast for Aero at this level.

Andy Kaplowitz: Useful, guys.

Vimal Kapur: Thanks.

Operator: Thanks. And our subsequent query will come from the road of Peter Arment with Baird. Your line is now open.

Peter Arment: Thanks. Good morning, Vimal and Greg. Greg, only a fast one. You talked about in simply type of the legacy section SPS, you had been speaking about warehouse, the pipeline of type of within the tasks enterprise, that there was some indicators and there was some — no less than some enchancment there. Possibly if you happen to simply give us just a little colour there simply because it is — clearly it has been a — that that individual space has had an enormous downturn right here.

Vimal Kapur: Sure, I can begin there and Greg can be part of. Look the pipeline, if I examine easy information, our pipeline in Jan of 2024 in comparison with Jan of 2023 for warehouse automation tasks, it is up practically 30%. So what it tells us is that, the essential worth proposition and the long-term development of warehouse automation are intact. However clients willingness to speculate on this very tight market or unsure market is what’s holding them again for making capital selections. So we stay completely convicted on this enterprise and the foundational actions we’ve taken on proceed to develop our aftermarket, they’re actually paying off. I imply, our aftermarket companies crossed $0.5 billion mark in 2023. We count on double digit development in aftermarket in 2024. And you’ll count on the enterprise virtually cupping a half challenge and half aftermarket on this 12 months. In order the market confidence returns, we’ll see the expansion again, and that is supported by the pipeline we’ve and exercise out there.

Peter Arment: Very useful colour. Thanks. I will go away it at one.

Vimal Kapur: Thanks.

Operator: Thanks. And our subsequent query will come from the road of Joe Ritchie with Goldman Sachs. Your line is now open.

Joe Ritchie: Thanks. Good morning, guys.

Vimal Kapur: Good morning, Joe.

Joe Ritchie: Possibly circling again to Nigel’s query on pricing, the three factors that is embedded into your expectations, is that disproportionately coming from Aero? Or how do I simply type of take into consideration pricing throughout the segments?

Greg Lewis: Sure. So, Aero might be on the mid to decrease finish of that, simply given all of the contract nature of their enterprise and the opposite companies, the opposite three segments are going to be a bit increased than that total. In order that’s actually, with out being too particular, that is form of directionally or notionally, I simply give it some thought.

Joe Ritchie: Okay. Nice. Thanks, Greg. After which the short comply with as much as circling, I am attempting to sq. the commentary on HBT and the destocking that you simply’re seeing within the merchandise enterprise. With — clearly, you are excited in regards to the safety acquisition and the expansion profile of that enterprise seems to be totally different. I am simply attempting to sq. these feedback and possibly you may type of assist me with what you are seeing inside your personal safety enterprise at present.

Vimal Kapur: No, as I discussed earlier than, we count on the entrance finish of the 12 months development to be extra pushed by options facet of the enterprise. We’re carrying ahead significant backlog, each in tasks and providers. And because the 12 months progresses, we count on brief cycle restoration to be the important thing issue for development because the 12 months passes alongside. And net-net, we count on low single digit development in constructing applied sciences, however robust margin growth. Our business excellence actions are in place and we stay assured that we will have a significant progress within the 12 months, each on development and margin growth.

Greg Lewis: Sure. I imply, I might simply say, Joe, zoom out for a minute. And we’re coming in the direction of the top of a 3 12 months interval the place, once more, COVID, then adopted by massive provide chain constraints, adopted by large inflation. And that is why you hear everybody speaking about what is going on on in stock shares throughout. And sure, as that factor normalizes, that is going to make issues clear throughout a lot of our merchandise companies, together with HBT. However extra broadly, once more, zooming out, we love the — we love the place this enterprise goes, and in addition creating that sizable place in safety with a really enticing asset that we’re bringing on from Provider. Sure, we’re very enthusiastic about that chance as a result of we predict that is going to be accretive development throughout the portfolio for us. So it is only a matter of, I might say, differentiating between the right here and now and the medium to long term with these feedback.

Joe Ritchie: Useful. Thanks guys.

Operator: Thanks. I might now like to show the decision again over to CEO, Vimal Kapur, for closing remarks.

Vimal Kapur: Thanks. I wish to thank all our shareholders on your ongoing help and our Honeywell colleagues who proceed to allow us to outperform in any surroundings. Our future is vibrant and we look ahead to updating you on our progress as we execute on our commitments. Thanks very a lot for listening and please keep secure and wholesome.

Operator: This concludes at present’s convention name. Thanks for taking part. It’s possible you’ll now disconnect.

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