Honeywell International (HON) 19th Annual Global Transportation & Industrials Conference summary

Strategic updates and separation progress

• Separation is set for June 29th, with all operational preparations on track and minimal remaining hurdles.

• Analyst Days are scheduled for June 3rd (Aero) and June 11th (RemainCo), with further details to be shared.

• Stranded costs from the separation are expected to be under $300 million on day one, reducing to about $100 million by year-end.

• Pension assets will be split proportionally between Aerospace and RemainCo, with ongoing board discussions on optimal treatment.

• Corporate expenses are expected to decrease post-separation, aided by the deconsolidation of Quantinuum and Aero royalty income.

Segment performance and outlook

• Building Automation continues to outperform, driven by strategic shifts, increased R&D, and focus on high-growth verticals.

• Industrial Automation is showing improvement, with a focus on margin expansion and potential for bolt-on M&A.

• Process Automation & Technology faces tough comps in Q2 but has a record backlog and expects a strong inflection in the second half.

• Aerospace supply chain issues persist, mainly in mechanical components, but Q2 is expected to improve over Q1.

• LNG business is sold out for 3.5 years, and ESG-related projects are gaining traction, especially outside the U.S.

Technology, innovation, and capital allocation

• AI is being deployed internally for productivity and in Forge for domain-specific applications, with no major workforce displacement.

• NPI and Forge are both key growth drivers, with Forge enabling autonomous operations and remote facility management.

• Incentive structures are being retooled to focus on customer-centric KPIs and NPI, expanding performance-based compensation.

• Capital allocation remains prudent, prioritizing growth CapEx, maintaining dividends, and focusing on debt repayment and bolt-on M&A.

• The pending Catalyst acquisition is expected to close in Q3, with a renegotiated price reflecting current market conditions.