HONEYWELL INTERNATIONAL INC Q1 FY2025 earnings call

• First Quarter Performance: Exceeded high end of guidance on organic sales, segment margin, and adjusted EPS. Organic sales grew 4%. Segment margin flat at 23%. - Separation Update: Preparation for separating automation, aerospace, and advanced materials; tax-free spin of Honeywell Aerospace, leadership appointments, board changes. - Tariff Mitigation: Team analyzing levers to offset tariff impact, local-for-local strategy, accelerated operating system. - Acquisitions and Divestitures: Acquired Sundyne, plan to exit personal protective equipment business.

Aerospace Technologies: First-quarter sales grew 9% organically. Commercial aftermarket up 15% due to supply chain improvements and air transport demand; Defense and Space had double-digit growth for the fifth consecutive quarter. Segment margin contracted 190 basis points to 26.3%. Industrial Automation: Sales declined 2% organically, led by personal protective equipment decline; warehouse and workflow solutions up 5%, sensing business had double-digit growth. Segment margin contracted 130 basis points to 17.8%. Building Automation: Up 8% organically, led by building solutions and products; solutions backlog up 11%, products up 6%; margin spending 150 basis points. Energy and Sustainability Solutions: Sales declined 2% organically, but EOP and sustainability projects helped 2% growth. Advanced Materials: Sales declined 4%, but orders up 7% driven by foreign products; LNG business acquired from Air Products continues to grow.

• Full-Year 2025: Maintaining organic growth guidance (2%-5% organic sales growth). Raising adjusted EPS guidance to $10.20-$10.50. Second-quarter organic sales growth 1%-4%, EPS $2.60-$2.70. Free cash flow $5.4B-$5.8B. - Segment Guidance: Aerospace Technologies organic sales growth in high single digits. Industrial Automation sales down mid-single digits. Building Automation sales mid-single-digit growth. Energy and Sustainability Solutions low single-digit growth.

• Geopolitical Uncertainty: Tariffs, trade patterns, end-market demand uncertainty. - Supply Chain Disruptions: Impact on industrial automation and aerospace. - Demand Destruction: Potential from tariff-related price increases and geopolitical tensions.

Q: Details on tariff impact and offset strategies?

A: Vimal Kapur and Mike Stepniak discussed tariff impact and mitigation through pricing, productivity, and local-for-local strategy.

Q: Contingency in guidance due to macro?

A: Mike Stepniak explained top-down view and prudent stance.

Q: Tariff impact by segment?

A: Industrial Automation and Aerospace have largest exposure.

Q: Cadence of tariff mitigation?

A: Mike Stepniak stated mitigation efforts will be sooner than year-end, with confidence in offsetting impacts by fourth quarter.

Q: Industrial Automation portfolio and M&A?

A: Vimal Kapur discussed focus on high-growth end markets and M&A opportunism.

Q: Aerospace aftermarket and OE?

A: Mike Stepniak and Vimal Kapur talked about aftermarket growth, price alignment, and OE normalization in second half.

Q: Separation timing and costs?

A: Vimal Kapur provided updates on separation timing and cost expectations, including regulatory approvals and stranded cost mitigation.

Q: Q2 margins and guidance?

A: Mike Stepniak and Vimal Kapur addressed Q2 margin expectations, mix considerations, and continued confidence in guidance.