LEADERSHIP WEBCAST SERIES
NOVEMBER 23, 2021
DARIUS ADAMCZYK
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GREG LEWIS
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ANNE MADDEN
SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT AND GENERAL COUNSEL
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Forward Looking Statements
This presentation contains certain statements that may be deemed "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934.
All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this presentation are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, technological, and COVID-19 public health factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, and other developments, including the potential impact of the COVID-19
pandemic, and business decisions may differ from those envisaged by such forward-looking statements. Any forward-looking plans described herein are not final and may be
modified or abandoned at any time. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the Securities and Exchange Commission.
Non-GAAP Financial Measures
This release contains financial measures presented on a non-GAAP basis. Honeywell's non-GAAP financial measures used in this release are as follows: segment profit, on an overall Honeywell basis, a measure by which we assess operating performance, which we define as operating income adjusted for certain items as presented in the Appendix; segment margin, on an overall Honeywell basis, which we define as segment profit divided by sales; organic sales growth, which we define as sales growth less the impacts from foreign currency translation and acquisitions and divestitures for the first 12 months following the transaction date; free cash flow, which we define as cash flow from operations less capital expenditures plus cash receipts from Garrett, if and as noted in the release; adjusted free cash flow, which we define as free cash flow adjusted to
exclude the impact of separation costs related to the spin-offs of reside and Garrett, if and as noted in the release; adjusted free cash flow margin, which we define as
adjusted free cash flow divided by net sales; and adjusted earnings per share, which we adjust to exclude pension mark-to-market, changes in fair value for Garrett equity securities, an expense related to UOP matters, gain on the sale of the retail footwear business, the non-cash charges associated with the reduction in value of reimbursement receivables due from Garrett, net of proceeds from settlement of related hedging transactions, the favorable resolution of a foreign tax matter related to the spin-off transactions, and a non-cash charge associated with a further reduction in value of reimbursement receivables following Garrett's emergence from bankruptcy on April 30, 2021, if and as noted in the release. 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 metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain metrics 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 release for reconciliations of non-GAAP financial measures to the most directly
comparable GAAP measures.
4Q21 Leadership Webcast - November 23, 2021 | Honeywell Confidential - ©2021 by Honeywell International Inc. All rights reserved. | 1 |
KEY MESSAGES
Active Capital Deployment | Innovation Enabling | |
to Shape Honeywell | Continued Growth | |
• Continual commitment to | • Demonstrated MSD growth | |
refreshing the portfolio on an | combined with 70 bps of margin | |
ongoing basis and aligning to | expansion (2017 - 2021 | |
growth / ESG market segments | average, excluding 2020) | |
• Annual capital deployment | • Growth in core and via | |
consistently beyond FCF | breakthrough initiatives enable | |
generation | acceleration | |
• Attractive markets underpin | ||
growth potential |
ESG Focus
- Focusing ~50% of our new product R&D activity towards solutions that improve environmental and social outcomes
- Accelerated growth in ESG focused businesses
- A leader in all three elements of E, S, and G
Honeywell Uniquely Positioned to Differentiate in Ongoing Recovery
4Q21 Leadership Webcast - November 23, 2021 | Honeywell Confidential - ©2021 by Honeywell International Inc. All rights reserved. | 2 |
TRACK RECORD OF OUTPERFORMANCE
2017 - 2021E Average Financial Performance1
Highlights
Organic Sales Growth
5% 5% | 5% | |||||
4% 4% | 4% | |||||
3% | ||||||
Peer | Peer | HON | Peer | Peer | Peer | Peer |
1 | 2 | 3 | 4 | 5 | 6 |
Margin Expansion
(bps, rounded)
70 | 70 | |||||
0 | ||||||
HON | Peer | Peer | Peer | Peer | Peer | Peer |
Spin | 4 | 2 | 1 | 3 | 6 | 5 |
Adjusted | ||||||
(50) (50) (60) | ||||||
(80) |
- Delivered 5% annual organic sales growth on average over the last 5 years1, outperforming our peer average
- Expanded margin annually by 70 basis points on average over the same period1, outperforming our peers
- Methodically repositioned portfolio to optimize for high growth and high margin businesses
- Consistently invested in differentiated technologies while maintaining industry leading margin expansion
Peer group consists of EMR, FTV, GE, ITW, MMM, and ROK
1Excludes 2020 financials. Uses midpoint of 2021 organic sales guidance and CapitalIQ consensus margin expansion for all companies except EMR and ROK, which are fiscal year 2021 actuals.
Portfolio Transformation Driving Outperformance vs. Peers
4Q21 Leadership Webcast - November 23, 2021 | Honeywell Confidential - ©2021 by Honeywell International Inc. All rights reserved. | 3 |
HONEYWELL VALUE CREATION FRAMEWORK
1. Deep Experts | 2. Innovators of | 3. Leaders in High | 4. Rigorous | ||||||||||
Scalable | |||||||||||||
of Our Domains | Growth Regions | Operators | |||||||||||
Technologies | |||||||||||||
Expansive installed base and | Leveraging installed base; | Continuous improvement in | |||||||||||
scale drive connected | building high-margin, | Long-term track record of | |||||||||||
operating efficiency; decisive | |||||||||||||
software, recurring, and | innovative, and scalable | growth; local-for-local presence | |||||||||||
action in all environments | |||||||||||||
services revenue streams | businesses | ||||||||||||
5. Disciplined | 6. Effective | 7. Responsible | |||||||||||
Financial | Corporate | ||||||||||||
Capital Managers | |||||||||||||
Stewards | Citizens | ||||||||||||
Consistent performance on | Disciplined capital deployment; | Committed to upholding our | |||||||||||
organic growth, margin | environmental, social, and | ||||||||||||
active portfolio management | |||||||||||||
expansion, cash generation | governance principles | ||||||||||||
Underpinned by Our Operating System - Honeywell Accelerator
Today's Focus on Innovation, Portfolio, and Sustainability
4Q21 Leadership Webcast - November 23, 2021 | Honeywell Confidential - ©2021 by Honeywell International Inc. All rights reserved. | 4 |
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Honeywell International Inc. published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 14:29:03 UTC.