MORGAN STANLEY LAGUNA CONFERENCE
VIMAL KAPUR
Chief Executive Officer
SEPTEMBER 12, 2023
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). Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes or anticipates will or may occur in the future. They are based on management's assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties that can affect our performance in both the near- and long-term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this presentation can or will be achieved. These forward-looking statements should be considered in light of the information included in this presentation, our Form 10-K and other filings with
the Securities and Exchange Commission. Any forward-looking plans described herein are not final and may be modified or abandoned at any time.
NON-GAAP FINANCIAL MEASURES
This presentation contains financial measures presented on a non-GAAP basis. Honeywell's non-GAAP financial measures used in this presentation are as follows: Segment profit, on an
overall Honeywell basis; Segment profit margin, on an overall Honeywell basis; Organic sales percentage; Free cash flow; Free cash flow excluding impact of settlements; Free cash flow margin; Adjusted earnings per share; and Adjusted earnings per share excluding pension headwind, if and as noted in the presentation.
Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain measures presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Refer to the Appendix attached to this presentation for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.
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KEY MESSAGES
1 | 2 | 3 | 4 | |||||
SIMPLIFY | GROW | MANAGE PORTFOLIO | ACCELERATOR | |||||
• Align with three megatrends | • New products as engine of | • | Enhance M&A capability | • Version 3.0 of Honeywell operating | ||||
• | Aviation | organic growth; new innovation | • Bolt-on deals to align to three | system | ||||
• | Automation | playbook | megatrends | • Foundation for profitable growth for | ||||
• | Energy Transition | • Commercial excellence focus | • | Stay disciplined | existing business / M&A | |||
COMPELLING LONG-TERM FINANCIAL FRAMEWORK
4% - 7% | 40 - 60 bps | Mid-Teens+ | $25B+ |
Organic Sales Growth | Segment Margin Expansion | Free Cash Flow Margin | 2023 - 2025 Capital Deployment |
A Strong Foundation in Place, Poised for Accelerated Growth
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FOCUS ON ORGANIC GROWTH ACCELERATION
Strengths Aligned to Megatrends | Innovation Playbook | |
ENERGY
TRANSITION
AUTOMATION
AVIATION
DIGITALIZATION
MARKET GROWTH
DD
MSD
HSD / DD
DD
LEADING
HONEYWELL POSITION
- Sustainable Technology Solutions
- Sustainable Building Technologies
- Advanced Materials
- Manufacturing / Supply Chain / Building
- Sensing Technologies
- Diversified Aero portfolio
- Leader in AAM solutions
- Honeywell Connected Enterprise
What is the same
- Continued R&D investments (4% - 5% of sales)
-
Driving average 200 bps NPI Vitality increase each year
What is different - Greater capital allocation toward new product categories
- Compounding benefits over time
New
SAM EXPANSION | BREAKTHROUGH | ||
Increase | INITIATIVES | ||
Examples: Sensors for EVs, | |||
Spend | Examples: Quantinuum, | ||
Markets | D&S Global Expansion, | ||
Green Hydrogen, AAM | |||
Solstice for Heat Pumps | |||
NPI VITALITY TO | SAM EXPANSION | |
KEEP SHARE | ||
NPI vitality has increased | Examples: HCE, | Increase |
Spend | ||
>1,000 bps in the last five | Sustainability Solutions, | |
years | Aero Electrification | |
Existing | Offerings | New |
AAM: Advanced Aerial Mobility. EV: Electric Vehicles.
End Market Setup, Innovation Playbook Driving Increased Organic Growth
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PORTFOLIO SHAPING
1 SIMPLIFICATION AND
ALIGNMENT WITH MEGATRENDS
Current Indicative Sales
Digitalization | Software and |
Related | |
Energy | |
Transition |
Automation
Aerospace
2 TARGETED PORTFOLIO
OUTCOMES
2022 TARGET
Recurring 32% 35%+ Revenue
Gross 37% 40%+
Margin
Segment 22% 25%+ Margin
2023+ Priorities
3 CAPITAL DEPLOYMENT
FOCUS
$36B - $39B
Total Capital Deployment Capacity
Additional | $11B - $14B | |
Potential | Available Cash | |
Deployment | and Debt Capacity | |
$13B+ | ||
$25B+ | Share Repurchases | |
and M&A | ||
Re-upped | ~$3B | |
commitment for | ||
Capex | ||
2023 - 2025 | ||
~$9B | ||
Dividends | ||
• Prioritize bolt-on M&A | • Reshape portfolio through strategic pruning | • Fund Honeywell innovation engine |
Data represents 2022 sales. Honeywell gross margin excludes customer-funded R&D, in line with the reporting change made in 1Q23. Note: Prior 2022 - 2024 of $25B+ commitment made in March 2022 Investor Day.
High-Grading Portfolio
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Honeywell International Inc. published this content on 12 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 September 2023 12:51:08 UTC.