Honeywell International Inc. (NASDAQ:HON) announced its third-quarter earnings on October 26, 2024, with CEO Vimal Kapur and CFO Greg Lewis at the helm. The company exceeded its adjusted earnings per share (EPS) targets, posting a figure of $2.58—an 8% increase year-over-year—despite sales falling short of expectations. Organic growth stood at 3%. Honeywell's aerospace segment continued its strong performance with a 10% organic sales increase, marking the ninth consecutive quarter of double-digit growth.
However, challenges such as project delays, supply chain disruptions, and a flat performance in Industrial Automation impacted overall sales. Looking forward, Honeywell remains optimistic about future growth, underpinned by strong order trends and a record backlog of $34 billion.
Key Takeaways
- CFO Greg Lewis will transition to Senior Vice President of Honeywell Accelerator, with Mike Stepniak taking over as CFO in February 2025.
- Honeywell's adjusted EPS rose to $2.58, up 8% year-over-year, with segment margin guidance exceeded.
- Sales were below expectations due to project delays, supply chain issues, and flat Industrial Automation performance.
- Aerospace segment sustained growth with a 10% increase in organic sales.
- Honeywell completed four acquisitions in 2024, totaling over $9 billion, and plans to spin off its advanced materials division.
- The company anticipates deploying $14 billion in capital by year-end across various initiatives.
- Honeywell revised its full-year 2023 sales guidance to $38.6-$38.8 billion and expects fourth-quarter sales of $10.2-$10.4 billion.
Company Outlook
- Honeywell forecasts low-double-digit growth in Aerospace Technologies and low-single-digit growth in Building Automation for 2024.
- Expectations for Industrial Automation have been lowered to a high-single-digit decline.
- The company remains confident in its ability to drive improved organic growth in the future.
Bearish Highlights
- Sales impacted by project delays and supply chain disruptions.
- Industrial Automation saw a 5% organic sales decline.
- Full-year 2023 sales guidance decreased from the previous 5%-6% growth expectation to 3%-4% organic growth.
Bullish Highlights
- Aerospace segment continues strong performance with nine consecutive quarters of double-digit growth.
- Building Automation sales rose 14% year-over-year, with strong performance in fire solutions.
- The company has a record backlog and is making progress on acquisitions.
Misses
- Sales fell below expectations due to operational challenges.
- The company adjusted its repositioning guidance for the year, reflecting a lower Q3 performance.
Q&A Highlights
- No expected revenue impact from the Boeing (NYSE:BA) strike on Q4.
- Commercial aftermarket performance showed strong international market growth.
- Plans to monetize investment in Quantinium contingent on technical milestones and customer acquisition.
- Optimism for future growth across all business segments in 2025, driven by a robust backlog and strategic portfolio optimization.
In summary, Honeywell's third-quarter results highlighted the company's resilience amid challenges and its strategic focus on future growth. The aerospace segment remains a strong performer, and despite the headwinds faced in other areas, Honeywell's leadership is optimistic about the company's trajectory, supported by a robust backlog and a focus on high-return capital expenditures. The company is also actively managing its portfolio, with divestitures and acquisitions shaping its path forward. Honeywell's full-year outlook reflects cautious optimism, with a keen eye on macroeconomic conditions and strategic initiatives to drive growth.
InvestingPro Insights
Honeywell International Inc.'s (HON) recent earnings report can be further contextualized with key financial metrics and insights from InvestingPro. The company's market capitalization stands at a robust $143.15 billion, underscoring its position as a prominent player in the Industrial Conglomerates industry, as noted by InvestingPro Tips.
Despite the challenges mentioned in the earnings report, Honeywell maintains a strong financial position. The company's P/E ratio of 23.71 suggests that investors are willing to pay a premium for its shares, which aligns with the InvestingPro Tip indicating that HON is trading at a high P/E ratio relative to near-term earnings growth. This valuation could be justified by the company's consistent performance and future growth prospects, particularly in its aerospace segment.
Honeywell's commitment to shareholder returns is evident in its dividend history. An InvestingPro Tip highlights that the company has raised its dividend for 14 consecutive years and has maintained dividend payments for 40 consecutive years. This track record of dividend growth, coupled with a current dividend yield of 2.16%, may be particularly appealing to income-focused investors in the current economic climate.
The company's financial health is further reinforced by InvestingPro Data showing a revenue of $37.85 billion over the last twelve months, with a revenue growth of 3.96%. This aligns with the company's reported organic growth of 3% in the recent earnings call. Additionally, Honeywell's gross profit margin of 37.6% and operating income margin of 21.0% demonstrate its ability to maintain profitability even in challenging conditions.
It's worth noting that while Honeywell faces some headwinds, as mentioned in the earnings report, the company's stock has shown resilience with a 17.81% total return over the past year. This performance, combined with the InvestingPro Tip that the stock generally trades with low price volatility, may be attractive to investors seeking stability in their portfolios.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 12 more InvestingPro Tips available for Honeywell, providing a deeper understanding of the company's financial position and market performance.
Full transcript - Honeywell International (HON) Q3 2024:
Operator: Thank you for standing by, and welcome to the Honeywell Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's call is being recorded. I would now like to hand the call over to Sean Meakim, Vice President of Investor Relations. Please go ahead.
Sean Meakim: Thank you. Good morning, and welcome to Honeywell's third quarter 2024 earnings conference call. On the call with me today are Chairman and Chief Executive Officer, Vimal Kapur; Senior Vice President and Chief Financial Officer, Greg Lewis; and Vice President of Corporate Finance, Mike Stepniak. This webcast and the presentation materials, including non-GAAP reconciliations are available on our Investor Relations website. From time-to-time, we post new information that may be of interest or material to our investors on this website. Our discussion today includes forward-looking statements that are based on our best view of the world and of our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. This morning, we will review our financial results for the third quarter, share our guidance for the fourth quarter and provide an update on full-year 2024. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO, Vimal Kapur.
Vimal Kapur: Thank you, Sean, and good morning, everyone. To start, I would like to highlight the significant leadership change announced earlier in the third quarter. After we report our 2024 financial results at the beginning of next year, Greg Lewis will step down as Chief Financial Officer of Honeywell, and Greg will enter a new role as Senior Vice President of Honeywell Accelerator and serve as a special advisor to me. I would like to express my sincere thanks to Greg for his partnership with me through my first year as CEO and his successful performance as CFO since 2018. He guided the company through multiple reorganizations and significant M&A activity and his leadership was critical to transforming Honeywell into the digital operator it is today. Mike Stepniak, former Vice President and Chief Financial Officer of Aerospace Technologies will succeed Greg in February. Mike will serve as Vice President of Corporate Finance and work closely with Greg and me during this transition. I would like to congratulate Mike and express my deeply rooted confidence in his readiness to lead Honeywell with me into our next stage of growth and innovation as we continue to deliver value for our shareholders. With that, let's turn to slide three. Honeywell demonstrated a commitment to operational excellence in the third quarter, exceeding the high-end of our adjusted earnings per share and segment margin guidance ranges despite sales coming in below our guided range. Near-term delays in couple of the project-led businesses, lack of short cycle improvement and some discrete supply chain disruption in September in aerospace have caused us to rebase our expectations for the year. Although the organic growth of 3% in the quarter was below our guidance, we continue to be encouraged by sustained strength in aerospace technologies output. Further sequential progress in-building automation and ongoing positive order trends. Before we dive down into more detailed discussion on the results and updated outlook for 2024, I would like to reiterate the strategic priorities that are cornerstone of my tenure as CEO and our latest progress against them. First priority is the acceleration of profitable organic growth towards the upper-end of our long-term target range of 4% to 7%. While our recent performance has been below this target, we are accelerating driving new product innovation and commercial excellence to support higher-growth rates in future and we are already seeing returns of this strategy. We booked a record $1 billion of orders in UOP, showing the strength of our technology and the promise of our sustainability offerings. This quarter, Electra selected Honeywell's flight control computers and electromechanical actuation system for its hybrid electric shot takeoff and landing aircraft. Earlier this week, we announced a new partnership with Google (NASDAQ:GOOGL) Cloud, leveraging Google's Vertex (NASDAQ:VRTX) AI and Honeywell Forge to accelerate our customer transition from automation to autonomous operations. By continuing to focus our effort on these key strategies, we are confident that we will be able to deliver organic growth at upper end of our long-range in the future. Second, we are making headway on the evolution of our accelerator operating system, transforming the way we run the company to extract incremental value from our operations and drive growth. Accelerator is unlocking new ways for us to leverage our well-established digital backbone to enhance topline growth and expand margins in addition to successfully integrating our recent portfolio additions. We are leveraging our digital domain through our Honeywell Forge IoT platform, creating recurring revenue streams that are delivering increased value for our customers and shareholders alike. And third, we are accelerating value-creation through the simplification of Honeywell and optimization of our portfolio, pursuing accretive, bolt-on and tuck-in acquisition, as well as targeted non-core divestitures that will lead to improved financial performance, strong cash generation, and an increasingly attractive outlook for investors. Before we discuss our results for the third quarter in more detail, let me take a moment to talk about in more depth about our progress on portfolio shaping on slide four. The end of the third quarter marks one full-year since we announced the reorganization of our businesses around the three powerful megatrends of automation; the future of aviation; and energy transition. I'm proud of the progress we have demonstrated on our portfolio strategy in 2024, particularly as our efforts have borne fruit over the past few months. We have remained disciplined in our commitment to executing strategic bolt-on M&A that aligns with our three key megatrends and are accretive to our financial profile. We have successfully closed four acquisitions this year, representing over $9 billion in deployed capital to M&A. All four deals fit seamlessly into our portfolio, bolstering our capability across automation, aerospace and energy transition and enhancing our growth trajectory. We are happy to welcome our new future shapers to Honeywell, and we are excited by the substantial possibilities in front of us as we work to ensure seamless integration across all three business segments. In addition, earlier this month, we took another important step in our simplification journey, announcing our plans to spin-off advanced materials into an independent, publicly-traded company. As a global leader in sustainability-focused specialty chemicals and materials, advanced materials will be positioned to benefit from financial flexibility to pursue the next generation of sustainable refrigerants and other valuable solution for customers in electronic materials that support the semiconductor industry, industrial grade fibers and highly engineered healthcare application. This quarter, we also made the decision to reclassify the personal protective equipment or PPE business as asset held for sale. This move will help us further strengthen our core business and will be creative to Honeywell's organic growth and margin rate. We will provide more details once a sale has been announced. The acquisitions we have made this year, along with the share buybacks, dividend and high-return CapEx will add up to a record $14 billion in capital deployed in 2024. We believe this demonstrates meaningful progress towards strengthening and simplifying our portfolio. However, our work is not yet done, and we'll continue to leverage portfolio optimization as a fundamental pillar of growth and margin enhancement into 2025 and beyond. With that, now let me turn it to Greg on slide five to discuss our third quarter results in more detail, as well as provide an update on the fourth quarter and full-year guidance.
Greg Lewis: Thank you, Vimal, and good morning, everyone. I'll begin on slide five. We navigated through a challenging operational environment in the third quarter, delivering segment margin and adjusted earnings per share above the high-end of our guidance range and 10% increased cash flow, despite coming in below our sales guidance. The main driver of the sales miss was performance below our prior expectations in Industrial Automation as our revenues were sequentially flat across the portfolio. We were also impacted by some discrete manufacturing disruptions in September, including Hurricane Helene, and a separate fire at one of our aerospace technology plants. All-in, this led to third quarter organic sales growth of 3% year-over-year with three segments remaining in positive territory and double-digit growth in defense and space and commercial aviation original equipment in aerospace. This was the first full quarter of impact from the acquisition of Access Solutions, and we're pleased with the performance of that business in the early days of integration. We also saw approximately one month of impact in aerospace from the CAES and Civitanavi acquisitions. On orders, we grew 2% organically year-over-year with a book-to-bill of 1.1, led by double-digit growth in Energy and Sustainability solutions and Building Automation. This order strength drove a 10% year-over-year improvement in backlog to a record $34 billion. Excluding the impact of M&A, backlog grew 6% year-over-year and 4% sequentially. Although sales came in below our expectations, profit remained resilient as we leveraged our Honeywell Accelerator operating system and cost management capabilities to protect our bottom line. Segment profit grew 6% year-over-year, led by double-digit growth in Aerospace. Segment margin remained flat at 23.6%, 30 basis points above the high-end of our guidance as expansion in Industrial Automation, Building Automation and Energy and Sustainability solutions was offset by higher corporate costs year-over-year, mainly due to our investment in our digital infrastructure. Earnings per share for the third quarter was $2.16, down 5% year-over-year, and adjusted earnings per share was $2.58, up 8% year-over-year, and above the high-end of our guidance range, driven primarily by segment profit growth and lower interest expense due to timing of M&A deal closures. We took a charge in the quarter as a result of our decision to exit the PPE business in Industrial Automation. A bridge for adjusted EPS from 3Q ‘23 to 3Q ‘24 can be found in the appendix of this presentation. Free cash flow in the quarter was $1.7 billion, up 10% year-over-year due to stronger operational income and higher collections. On capital deployment, we put $3.1 billion to work in the third quarter with $2.1 billion in M&A, $700 million in dividends and $300 million in high return capital expenditures. As Vimal highlighted, we made significant progress this quarter and are on track to deploy over $14 billion in capital this year, and our work is not yet done as we continue to leverage our balance sheet into 2025 reshaping the portfolio. Now, let's spend a few minutes on the third quarter performance by business. In Aerospace Technologies, sales were up 10% organically year-over-year, the ninth consecutive quarter of double-digit growth. Sales were led by double-digit growth in Defense & Space, where we continue to unlock volume from our robust backlog through sustained global demand. In Commercial Aviation, we saw another quarter of double-digit growth in original equipment sales as shipset deliveries increased with particular strength in business and general aviation. Commercial aftermarket saw continued growth as global flight activity continues to rise. Despite some discrete supply chain disruptions in September that impacted our Air Transport OE business, output improved 13% in the quarter, as we made sequential progress in supply chain, the ninth consecutive quarter of double-digit output growth. Segment margin remained flat year-over-year at 27.7% in the third quarter as commercial excellence and productivity actions were offset by cost inflation and mix pressure within original equipment. Industrial automation sales were flat sequentially, but decreased 5% organically in the quarter, primarily due to lower volumes in warehouse and workflow solutions and short cycle safety and sensing technologies. Process solutions sales grew 2% year-over-year and 1% sequentially in the quarter, driven by strength in our aftermarket services and compressor controls businesses, partially offset by demand softness in smart energy and thermal solutions, as well as some delays in our projects businesses. Sensing and Safety Technologies sales declined year-over-year and sequentially, but the Sensing business delivered modest sequential growth for the second consecutive quarter. In Productivity solutions and services, orders and organic sales grew double-digits year-over-year when excluding the impact of the Zebra license and settlement payments that ended in the first quarter of this year. Industrial Automation segment margin expanded 60 basis points to 20.3% due to productivity actions and commercial excellence, partially offset by cost inflation and volume leverage. In Building Automation, sales grew 14% year-over-year and a 11% sequentially, thanks to a full quarter of the Access Solutions acquisition and acceleration in the fire business. Organically, BA sales were up 3%, supported by another quarter of solid performance in Building Solutions. Solutions grew 8% in the quarter, driven by another double-digit growth performance in projects and sequential growth in services. Product sales declined slightly year-over-year, but saw sequential improvement organically for the second straight quarter, thanks to strength in fire. Building Automation orders continue to be a bright spot, led by 25% year-over-year growth in Building Solutions on continued strong demand in data centers, healthcare and energy. Segment margin expanded 30 basis points to 25.9%, due to the impact of a full-quarter from Access Solutions and commercial excellence, partially offset by cost inflation. Energy and Sustainability solutions sales grew 1% organically in the third quarter. Advanced Materials grew 3% year-on-year, due to further improvement in specialty chemicals and materials, particularly in Spectra and continued growth in flooring products. UOP sales declined 2% as growth in aftermarket services and catalyst was offset by softness due to project timing. Orders in UOP were up over 50% in the quarter to a record $1 billion with strength in core process technologies and a record of more than $200 million in sustainable technology solutions. This marks the third consecutive quarter with ESS book-to-bill at 1.2. Segment margin expanded 10 basis points to 24.5% due to commercial excellence net of inflation. Overall, our accelerated playbook continues to serve us well as we once again demonstrated our ability to protect margins even in a lower-growth environment. Healthy orders, record backlog, and accretive growth rates across the M&A deals we have closed this year give us confidence in our ability to drive improved organic growth in the future. With that, let's turn to slide six, and we can talk about our fourth quarter and updated full-year outlook. Due to the incrementally more challenging end market backdrop, we are revising our full-year sales guidance range, while increasing the midpoint of our segment margin guidance. We are narrowing our adjusted EPS guidance to the high-end of the prior range due to that margin outlook combined with favorable adjustment to our effective tax rate. While our pace of sales has not degraded, we have not seen the short-cycle acceleration, which we anticipated by this point in the year, and it's appropriate to reflect that, as well as the energy related and aero output pushouts in our outlook. Our demand profile remains healthy with book-to-bill of 1.1 and record backlog, and we're confident in our ability to accelerate growth within our long-term framework in the coming quarters. We now expect full-year sales to be in the range of $38.6 billion to $38.8 billion, representing organic growth of 3% to 4%, down from 5% to 6% previously. The lower guide reflects the lower third quarter results, a slower recovery in industrial automation and more tempered expectations in pockets of Aerospace and Energy markets in the fourth quarter. As a reminder, our guidance includes the impact of all four acquisitions: Access Solutions, Civitanavi, CAES, and LNG now all closed. Collectively, they will add approximately $800 million in sales in 2024, consistent with prior communications. For the fourth quarter, we anticipate sales in the range of $10.2 billion to $10.4 billion, up 2% to 4% organically. Sales should increase sequentially across the portfolio, led by Aerospace as we experienced additional supply chain unlock, as well as continued growth in flight hours and shipset deliveries. Turning to segment margins, our strong result in the third quarter and our commercial excellence and productivity playbook are supporting our bottom-line. As a result, we're narrowing our overall segment margin guidance towards the high-end, now expecting to end the year between 23.4% and 23.5%, flat to 10 basis points from 2023. That said, the dynamics we highlighted last quarter still hold. Delays in short cycle improvement are leading our long cycle project and original equipment businesses to a larger percentage of our mix, driving margin headwinds. In the long-term, this provides us an expanded installed base to leverage for high margin aftermarket projects. We now expect overall segment profit dollars to grow between 5% and 6% for the year. At a segment level, Building Automation and Energy and Sustainability Solutions will lead the group in margin expansion. For the fourth quarter, we anticipate overall segment margin in the range of 23.8% to 24.2%, up sequentially, but down 20 basis points to 60 basis points year-over-year as a result of mix within original equipment in aerospace and volume de-leverage in industrial automation. Now let's spend a moment on our outlook by business. Looking ahead for Aerospace Technologies, we still expect low-double-digit growth in 2024 organic sales with double-digit growth in both commercial aviation and defense and space. In the fourth quarter, we expect sales growth of mid to high-single-digits, with particular strength in commercial aftermarket. As previously noted, segment margin in the third quarter outperformed our expectations on better-than-anticipated mix, but we still see modest year-over-year segment margin contraction as discrete supply chain disruptions from the third quarter are resolved and we see a corresponding recovery and commercial original equipment volumes. Moving to Industrial Automation, we're lowering our 2024 outlook for year-over-year organic sales to a decline in the high-single-digit range, as slower-than-expected short-cycle demand recovery alongside project pushouts and process solutions dampen our outlook for full-year organic growth. For the fourth quarter, we expect sales down low-single-digits with modest growth in projects and aftermarket services offset primarily by softness and sensing and safety technologies and smart energy. Margins will be down overall this year for industrial automation, but up when excluding the impact of the license and settlement payments that ended in the first quarter. In Building Automation, we still expect full-year organic growth in the low-single-digit range, led by continued strength in Building Solutions and high growth regions, particularly in India and Saudi Arabia. Fourth quarter sales will be up year-over-year and flat to up sequentially as we see volume improvement led by fire products. Margins should hit their high point for the year in the fourth quarter as improvement in fire and the impact of access solutions support positive mix. For energy and sustainability solutions, the organic growth outlook for the year is still low-single-digits with typical strong sequential improvement in the fourth quarter, driven by catalyst shipment seasonality. We're still expecting full-year margin expansion with the fourth quarter at the highest margin rate due to favorable business mix associated with catalyst reloads. We will also see a lift from the first quarter of sales and our newly acquired LNG business. Moving to other key guided metrics, net below the line is now expected to be between negative $650 million and negative $700 million for the full-year. For the fourth quarter, net below the line is expected to be between negative $250 million and negative $300 million. We now expect pension income to be approximately $600 million for 2024, up $50 million from our prior guide due to a one-time item that was pushed out from the fourth quarter into 2025. This guidance includes repositioning spend between $150 million and $190 million for the year and between $60 million and $100 million for the fourth quarter as we invest in high return projects to support future growth and productivity. We expect the adjusted effective tax rate to be around 20% for the full-year and 17% for the fourth quarter. The reduction in expected tax rate is a result of favorable adjustments to income tax contingencies and taxable income mix. We anticipate average share count to be around 655 million shares for the full-year and around 653 million shares for the fourth quarter. And we maintain balance sheet capacity to deploy additional capital to achieve the highest shareholder returns. We now expect that the year-over-year impact to 2024 adjusted EPS from the four acquisitions closed this year will be approximately neutral. A bit better than we communicated last quarter. Slight delays to the closing of the case in LNG deals, reduced some of the interest expense, and planned integration costs in 2024. And as we get our arms around the business, we're refining our near-term expectations. We continue to expect 1% to 2% EPS accretion in 2025 from these deals. A summary of the 2024 M&A impact on our financials is included in the appendix of this presentation. As a result of all these inputs, we expect full-year adjusted earnings per share to be in the upper half of our prior range, now between $10.15 to $10.25, up 7% to 8% year-on-year. We expect fourth quarter adjusted earnings per share between $2.73 and $2.83 up 1% to 5% year-on-year. On cash, we're reducing our guidance and now expect free cash flow in the range of $5.1 billion to $5.4 billion, down 4% to up 2%, excluding the impact of prior year settlements. Lower progress in inventory, mainly in aerospace, and slowing payment cycles in certain high-growth regions has impacted our performance and our expectations. We continue to work on the multi-year unwind of working capital, and we will fund high-return CapEx projects focused on creating uniquely innovative technologies for the company. Overall, while we remain cautious on the macroeconomic environment in the short-term, our acquisitions are progressing in line with our expectations, our backlog remains at record highs, and we are driving expansion of our installed base. Our rigorous operating principles give us confidence in our ability to execute on our long-term growth algorithm. Now let me turn it back to Vimal on slide seven for some closing thoughts.
Vimal Kapur: Thank you, Greg. While we experienced some headwinds in the quarter, we are confident in our ability to weather that macroeconomic backdrop with the operational rigor you expect from Honeywell. We deliver segment margins and adjusted earnings per share above our guidance range in 3Q. We have adjusted our outlook to reflect the realities as we now see them in this macro. We continue to make steady progress towards our portfolio optimization as we close out the year. As we look ahead towards 2025, our robust backlog further benefit from accretive growth rates to come from our acquisition and our leading position and attractive end market provide us with a constructive outlook, despite the ongoing economic and geopolitical uncertainty. While we think volume growth could remain subdued by muted short-cycle growth early in the year, we expect to see organic growth across all four businesses next year. We plan to return to margin expansion again in 2025 as a combination of volume leverage and productivity actions across the portfolio should offset modest mixed headwind in aerospace from OEM activity and integration of case. We look forward to providing more detailed guidance of 2025 during next quarter's earning call as the backdrop becomes clearer and our portfolio shaping impacts solidify. I remain excited about the future of Honeywell and believe our portfolio shaping efforts are enabling us to drive innovation and solve some of the world's most challenging problems. With that, Sean, let's open up for questions.
Sean Meakim: Thank you, Vimal. Vimal and Greg are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question and one related follow-up. Operator, please open the line for Q&A.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.
Julian Mitchell: Hi, good morning. Maybe I just wanted to start off with a sense, maybe flesh out a little bit more any thoughts around sort of next year. I realize we'll get more color in Q4 results, but in the past, you've often given sort of more detailed preliminary thoughts for the out year in October. So just wondered, for example, on the cost side of things, the topline is running light of expectations, but you took down your repositioning expectations for the year? I wondered if there might be a case given the macro backdrop to sort of accelerate things like cost-cutting measures, maybe do more repositioning to make sure you can get margins up in 2025. So, maybe flesh out some thoughts around the margin expansion from here.
Vimal Kapur: Thanks. Thanks, Julian. Let me start and then hand over to Greg there. Look, I know my predecessors provided guidance on 2025, but given the current uncertainty in the environment across what we experienced, the wars, the upcoming election in the U.S. and multiple factor, we only found thought prudent that we do it in January when more facts are known. But I think it's -- there are few comments I'll make. First, there are three important backdrops, which we all should consider for 2025. Number one, our backlog is up 6%, 10% with all the acquisitions. I do believe we have a better quality portfolio. And number three, our cost position is very robust. We have seen that in our margin expansion across all four segments, and that's driven by both productivity and our cost control actions. So those are carrying forward for 2025. What we're also executing is our -- what's in our control, which is driving growth actions through new products, but also continuing to drive productivity actions to maintain the higher quality P&L. Now, with that backdrop, what -- as we mentioned in our comments is, we do expect all four segments to have organic growth in 2025. Now the specific ranges, we'll share that in January when we have the earnings call, but at this point, we feel confident on that fact. We also feel that -- we also believe we will be back to margin expansion in 2025 based upon the actions we really have taken. So, I would say the setup is positive. There are uncertainty. On the cost position, you're absolutely right, we are very watchful on that, and we have demonstrated that in Q3. I'm going to pass on to Greg to explain some of the repositioning numbers, what we have reflected on and provide specific commentary on that.
Greg Lewis: Yes. Yes. So Julian, the takedown in the repo guidance is really just the Q3 number being lower on the low-end of the range. So, if you look at our guidance for the fourth quarter at $60 million to $100 million, that's roughly the same as what we had implied, and so the take down from $150 million to $225 million to now $150 million to $190 million is really just the third quarter being on the low-end. We have a very robust productivity and repositioning pipeline, that process, as you know, we've owned for years. And to Vimal's point, we're not sitting here in October thinking the world is coming crashing down in 2025. So, it's not like we need to ramp up dramatically a major reduction in census to address that in which case then maybe you would see a much bigger near-term repo change, but we're going to always be watchful. So that's really -- I wouldn't read too much into the repo guidance coming down other than just having been on the low end, we've given ourselves plenty of flexibility in the fourth quarter to take appropriate productivity actions and we'll do so.
Julian Mitchell: That's very helpful. Thank you. And then just a very quick follow-up around, as we're thinking about sort of portfolio movements and so forth, you announced Advanced Materials spin, you've got PPE and assets held for sale. Just wondered, sort of, to what extent Vimal, the changes in the sort of organic backdrop on topline and what's happening with margins, do they have an effect on increasing the urgency of portfolio measures or you think about them as sort of somewhat two independent tracks?
Vimal Kapur: I would say the portfolio actions are driven by two factors. First is, the fit in the Honeywell portfolio, building Honeywell into a three simplified megatrends, which I committed exactly a year back. So, see -- if you see our actions on both Advanced Materials and PPE, they reflect that -- that reflect that commitment. I would say the PPE business in particular is going to have Honeywell accelerate organic growth and more advanced margin expansion. Advanced Material business is more of a neutral on an fixed basis. Going ahead, the portfolio actions are never completed. I would say that we're going to constantly look at now, given we have completed this phase, what else we could add or subtract to improve the quality of portfolio of Honeywell. So, what I'm really proud of, Julian is, all the four acquisitions we have made, they are in the high growth end verticals, they are in defense, they are in LNG, they are in Access Solution, which are high demand markets. And that certainly is improving the growth profile of Honeywell apart from the fact the actions we are taking on the core portfolio.
Julian Mitchell: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your question.
Steve Tusa: Hello? Can you hear me?
Vimal Kapur: Good morning, Steve.
Greg Lewis: Hey, Steve.
Steve Tusa: Yes. So sorry, just missed the first part of the call. Can you just talk about any kind of trajectory on into kind of '25 and some of the puts and takes? I know you guys had talked to being within the range on organic a few weeks ago, but also just whether the margins can be a kind of a trend-line year, any updated thoughts on kind of the '25 outlook?
Greg Lewis: Sure, Steve. Maybe I'll start. You know, as we talked about even when we saw each other in Europe, we still expect all four businesses are going to grow next year, and we're going to be coming out of the year with while a lower exit-rate than we had planned, it's still going to be a positive exit rate. And so, when we think about the setup for next year, again, way too early for guidance, we'll do that in January. We do expect all four businesses to grow and we expect margin expansion broadly across the portfolio with Aero probably being the one that's going to remain, I would say, you know, around its current levels organically with -- that's the one area where it will get headline pressure from the acquisitions, though all those acquisitions and particularly in the Aero, you know, and sensors are going to be very strong growth rates, so very healthy segment profit growth overall.
Steve Tusa: Okay, great. And then just on the free cash flow cut. What's the -- is that just an earnings cut or is there something else going on in working capital and like that?
Greg Lewis: Yes. The two big items there is, as you know, the biggest pile of inventory we have is in Aerospace, and that's been the hardest nut for us to crack so far and particularly given all the dynamics that you're seeing in the industry over even the last 90-days, we just don't see the ramp down that we had been trying to drive there specifically. We've made nice progress in both IA and BA on inventory reduction, but not in Aero. And then the other part of that, I would just say is in our high-growth regions, we're seeing payment cycles slow. And I think, again, that's a little bit of a reaction to oil prices and a little bit of the disruption happening around the Middle East. And so those really -- those two things are really what we're reflecting in the guide on cash. We do expect, again, as we go into next year, we're going to still work the acceleration on working capital reduction effort and hopefully the environment will participate in a way that's going to be more conducive to that. We're going to continue to do our work as we've done on the digitization of our working capital, particularly inventory and planning side to try to unlock that balance.
Steve Tusa: Great. Okay. Thanks a lot.
Vimal Kapur: Thanks, Steve.
Operator: Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.
Nigel Coe: Thanks. Good morning, and hope all is well. Just on…
Vimal Kapur: Hey, Nigel.
Nigel Coe: Hi, guys. Just on the Aero performance, maybe just touch on the Boeing strike and how you dial that into your sort of 4Q outlook? And then, within the performance in commercial aftermarket, the plus 8%, can you dissect that between ATR and Bizjet? I'm assuming Bizjets is going to be a bit more challenged there. Just any help there would be helpful.
Vimal Kapur: Yes. Let me start here and I'll pass on to Greg. I would say the Boeing circumstances are obviously very challenging. We all saw the results of the strike vote yesterday night, which is unfortunate. I would say from a Honeywell perspective, we have been working very closely with Boeing to make sure that we have a coordinated way of dealing with our shipments with the Boeing. The net punchline of that is, thankfully, there is no impact of that into our revenue in Q4. We are adjusting some shipments into aftermarket of Boeing's customers and so on. And we really have to already start thinking about 2025 based upon how things are shaping up. But for Q4, there's no specific impact into our numbers. Maybe, Greg, do you want to answer the second part?
Greg Lewis: Yes. So on the commercial aftermarket side, as you saw us report high-single-digit growth overall. And as your spidey senses are telling you, it's double-digits in APR and it's single-digits in BGA. And again, I don't think that should be a surprise to anyone as the international market continues to expand on flight hours as it has throughout the course of the year. We're still outgrowing in DGA, the flight hours growth given all of the nice work the team has done on their RMU portfolio. So that continues to be a positive for us in terms of trying to do the decoupled growth approach that we've been so successful at over the years.
Nigel Coe: Great. That's helpful. And just a quick one on the portfolio. the PPE, no surprise there, but mixed size -- the revs and margin for PV this year. And then I guess the only other thing on the agenda right now is Quantinium. Are we still hoping to monetize that next year?
Greg Lewis: Yes. So the PPE revs are about $1.1 billion. We're not going to get into the margin profile, you can probably get close with some of the information you learned over time. And then on Quantinium...
Vimal Kapur: Yes. Nigel, as we have said, we absolutely want to monetize Honeywell investment at the right time. The key focus area for us is continue to make progress on the technical milestone, because that will feed into a commercial customer acquisition, which will feed into IPO in that order. And we are making nice progress on the technical front. We -- earlier in the year, we worked with Microsoft (NASDAQ:MSFT) to prove the added rates in quantum computing, which is a big milestone, and we did prove one of the highest fidelity computing platform. They also made some announcement on the capability relative to logical qubits in Q3. So we are making progress on expected lines on the technical front, which is very, very positive factor to know. That will now feed into the next step to acquire customers. The strategy of monetizing Quantinium hasn't changed. The timing will be dependent upon as we make progress in the actions we have highlighted earlier.
Nigel Coe: Great. Thanks, Vimal.
Vimal Kapur: Thank you.
Operator: Thank you. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.
Scott Davis: Hey, good morning, guys. [Multiple Speakers] to the call. Guys, you made this announcement with Forge and Gemini AI. I mean what's the deliverable here? I can kind of see the -- conceptually see what you're doing, but what do you kind of envision as the out the other side, the real kind of killer app for customers?
Vimal Kapur: Yes. I can give you two minutes version, while I also have a two-hour version of this. The short answer is that as we are connecting more and more of our customer assets into our Forge platform for the last, I would say, about two to three years. The obvious next question for us is what are we going to do with that data as we keep expanding our customer base through connectivity. So we're looking ahead and looking to look at the AI model, the Vertex AI capability, which Google has provide us some unique capabilities, which will create a new applications on top of that data. So it's a -- it's consistent with the strategy Scott I have always highlighted, monetized installed base. So monetize installed base by connecting the installed base and then having more capability through partnerships like this. At the same time, we do expect some of our edge devices our products, which connected with the building or the process unit or with the warehouse, things like scanner, think of gas detection devices, embed AI at the chip level and have the Google Nano AI program embedded into that. It makes those products more capable. We expect to launch first-half one of them in early 2025. So this is not a long-term dream. This is imminently happening shortly. So all in all, this is continue to build upon our commitment of organic growth focus through new innovation, and we are partnering with companies like Google to expand our horizons here. And I'm very excited about it. I do expect this is going to help us support our organic growth profile in the years ahead.
Scott Davis: That makes sense. And just Intelligrated, obviously, has been the kind of the gift that keeps on giving. It was great for a while, and then it's been not so great here for a few years. But how do you fix that business? It doesn't seem to be as much value at the customer level, perhaps as we all once thought? And is it a product innovation issue them? Is it just that the market itself is just too cyclical or perhaps too concentrated with a couple of big customers and maybe they have too much power in the channel. But how do you fix this thing I'll just leave it at that and thank you.
Vimal Kapur: Yes, I understand the frustration around Intelligrated, and so are we given the performance. Look, the good news is we saw slight sequential growth in that business in Q3, and we expect that trend to continue in Q4. Speaking differently, the business is definitely at its spot on with a slight turnaround. As I look ahead, I do see business are becoming very concentrated actually on aftermarket. 2025, our aftermarket, maybe actually 60% of the revenue. It used to be 30% when we acquired it, so it's almost become double. We have re-baseline our cost base, Scott, to nearly $1 billion run rate revenue, which we have today. I think the real constraint here is customer adoption rates. We have talked before, the value proposition is extremely compelling. However, the capital investment required for fixed sortation system is high. And making that commitment on a long-term basis, you can't decide to automate one warehouse. You have to basically commit to all of them. And that commitment, therefore, tends to be several hundred million or sometimes even in $1 billion. And that really have observed in my two-year watch of this business as a constraint. So I would say we are -- we'll continue to run this business as efficiently as we can. The 2025, the business has baseline to a point. It won't be a drag to the Honeywell's numbers anymore. And we will continue to put our actions in place to make it a better business in the years ahead.
Scott Davis: Thank you. Best of luck guys.
Vimal Kapur: Thank you.
Operator: Thank you. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question.
Chris Snyder: Thank you. I wanted to ask on the ARO organic growth into Q4, slowing to mid to high-singles. And I think you said earlier that there's no impact from the Boeing strike in that. So I guess, is there any spillover impact from the fire at the facility you saw in Q3? Or does this kind of where you see aero market growing here in Q4.
Vimal Kapur: Look, Chris, Aero has been -- it's nine quarters, we have been growing double digits. So it just -- one is the elevated level of comps that certainly makes it challenging. But two important facts here to share. In Q3, we had two discrete events, which are transitional in nature. We unfortunately had a fire in one of our plants. The plant is back up and running, so we lost that revenue. And we also saw last week impact of a Helene, because we do have large aero facility in Florida, and we could not ship for last couple of days of the quarter. Moving ahead in Q4, our acceleration is good. I mean, if you see in Q3, our volume growth is 13%. Now it used to be in high-teens, it has come to the low-teens. And that's where the volume extension through supply base with elevated levels is really the problem we are revolving for. By no dimension, our outlook has changed. Our outlook for Aero for the year is still low-double-digit, what it was earlier, too, so it's not really changed. We have possibly missed an upside opportunity there. That's how we'll put it. There was a case here, we would have beaten that low-double-digit to a better number, but some of the supply chain pushouts have really made it more of a not 2025 event. Our backlog -- our past dues are now continues to be greater than $2 billion. They have grown further, not a good news from a customer perspective. But at the same time, we're carrying forward that backlog next year, which will help us to have very similar profile of growth in 2025 as we are experiencing in Q4 this year. So remain very positive and optimistic. I'm also very excited about the case acquisition, which is going to further expand the profile. It's a meaningful business size, $750 million we do expect a high growth rate in defense segment, which is also going to help and shape 2025 number for ARO on the top line growth.
Chris Snyder: I appreciate that. And then maybe kind of turning over to Industrial Automation. It's been a couple of years now of pretty steady, meaningful declines. And I understand that a lot of these end markets are challenged, whether it's warehouse or scanners or even safety and sensing. But when you look at your -- the Honeywell's performance in industrial automation compared to the end markets you serve, do you feel like the company is holding share? Or do you think that the company might be losing share or even maybe even gaining share across these end markets? Thank you.
Vimal Kapur: Yes, Chris, we serve multiple end markets there. So I can't give you a very brief and short answer on that. I would say, on the whole, the market drivers are the contributing factors on the performance of the Industrial Automation business. I mean there'll be always exceptions there, but that really drives it. Also bear in mind that this business is extremely global. And we look at the end market or the lens of U.S., which we offset here and that's what we observe. But this business has a strong presence in Germany. This business has a strong presence in China. And we cannot ignore some of the economic dynamics going in those parts of the world. And when you have material revenue there, it's certainly having its own impact. So I would say that the one liner for that is we are just shaping up with the market. Looking ahead, I would say, 2025, there are two headwinds we have or ‘24 are behind us, which makes me believe very, very strongly that Industrial Automation will grow in 2025. The first headwind will be gone is the rebase signing of Intelligrated volumes, business volume -- it's -- we had mentioned in one of the earlier calls, it will be around $1 billion. That's where it is shaping up. So we don't have that headwind. We do believe we can sustain that volume looking ahead in 2025. And we had three quarters of the royalty from Zebra in our numbers in 2024, which won't appear in 2025. So from a comp perspective, it let me correct that. We have only one quarter of this year. So from a comp perspective, it's a small number. So in 2025, we don't have to deal with that too. So those going away and markets normalizing to a certain degree, even they remain constant, we are still going to grow at a very normalized market today, we do expect a positive performance in that business in 2025.
Chris Snyder: Thank you.
Operator: Thank you. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Please proceed with your question.
Sheila Kahyaoglu: Thank you so much, guys, and good morning. Going back to Aerospace and Greg, if we -- or if we could talk about -- can you tell us what the rate was in Q3? How you think about it in Q4 and deceleration Q3 to Q4? Is that -- that's not a change in the MAX? Is it just the supplier that just popped up?
Sean Meakim: Sorry, Sheila. I think you broke up for a second. Would you mind restating the question?
Sheila Kahyaoglu: Sorry about that. So just on the MAX, can you give us an idea where you are on MAX in Q3 versus Q4? And if it is unchanged, what results in the Q3 to Q4 margin deceleration of about 250 bps going to around 25%.
Vimal Kapur: Yes. So on the -- I will answer the second portion. The margins, Q3 to Q4 is just the drivers of the OE shipments. So some of the discrete manufacturing disruption in what we had in Q3 ended up having directly lower OE volume, which helped us in terms of the mix and that drove the margin in Q3. So as those supply chain disruptions are getting released in Q4, those shipments are going to occur, which again pushes the margins to a different trajectory. So I think that's a fundamental shift there.
Greg Lewis: I think our comments on the Boeing situation is just that their demand on us has not gone down demonstrably from what it had been previously. There doesn't mean there's not some disruption in our ability to ship in Q3 versus Q4. We definitely had that challenge, but the demand on us has not changed meaningfully from Boeing.
Sean Meakim: The last point I would add is just to say that 3Q is better than we would have thought on the margin given that mix -- and then there's some reversion in fourth quarter. So overall, the full year is really unchanged when we communicated previously. It's just what goes in which quarter.
Sheila Kahyaoglu: Got it. And then hopefully, you could hear me on the commercial aftermarket in Q3, it was -- it lagged at 8%. Maybe we just modeled it wrong. But it seems like it was mostly BGA. So when you think about aftermarket being the growth leader in Q4, is that in double digit in ATR, any color there? Or is it BGI picking up again?
Greg Lewis: In aftermarket. Yes. The aftermarket will be stronger in ATR than BGA. That's just -- that's going to continue to be that way for some period of time.
Sheila Kahyaoglu: Got it. Thank you.
Vimal Kapur: Thanks, Sheila.
Operator: Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.
Deane Dray: Thank you. Good morning, everyone.
Greg Lewis: Hey, Dean.
Deane Dray: Hey, I think it was just about a year ago that you did the re-segmentation. And one of the outcomes was you identified that there was roughly 10% of revenues that would be divested, maybe half of them chunky, others kind of very small below the radar screen. So does PPE -- would that be part of it? And I would trust Advanced Materials is not part of that 10%. So just what's that pipeline look like?
Vimal Kapur: Yes. So Dean -- when we -- when I announced it last year this time, it was an initial view of the portfolio, which had less fit relative to the three megatrends. They were portions of advanced materials, which were part of it. But when we did the work, the shareholder value much higher for the whole spin versus the smaller part, which make us this decision of announcing the spin a few weeks back. So that was definitely part of the parameter and a smaller scope but ended up being big. PPE was part of that scope. So I would say on a broader strategy basis, we are directionally done for the near-term, but portfolio work is never complete. There are -- we are constantly want to look at what else is a less fit in Honeywell now, even though everything fits into either future of aviation, energy transition or automation. Another question I'm asking is relative to the growth rates and margin expansion runway and vertical fit and things of that nature and will constantly make our portfolio active portfolio management as part of our operating system. We have a lot of balance sheet capacity. So we certainly want to use that and embrace that to the benefit of building a better business. So those are some of the comments I will offer you.
Deane Dray: What would be the time frame for other divestitures?
Vimal Kapur: I want -- I mean I wouldn't say I won't put a specific time line here. I would say that we want to be a prudent utilization of our balance sheet capability and the events will be more determined by the opportunity set. -- the opportunity set of acquisitions. And similarly, the fit is less. We need to get convicted. We have to do that work and then really start working on some of the possible portfolio actions there. So there's nothing new definitive which we are working on, but you'll never say never because this is a constant activity.
Deane Dray: Thank you.
Operator: Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.
Joe Ritchie: Hey, good morning, guys.
Vimal Kapur: Hi, Joe.
Joe Ritchie: So can you -- I may have missed it, but can you please elaborate on the project delays that you're experiencing in both Process Solutions and -- so what are the root causes? And then how do you see that rectifying going forward?
Vimal Kapur: So Joe, I would say the conversion rates typically we see we end up doing approximately 50% of our revenue in month three of every quarter. And we have a well-proven run rate of conversion of smaller projects, both in Process Solutions and smaller catalyst shipments. And that's what really didn't occur on the normal run rate in Q3. So that's what we observed for the first time that push outs are happening at this point of time. At the same time, I will also give you another data point, UOP had a historic high in its history order booking in the same quarter, $1 billion, which are large new projects, people are committed investments for new process technology on new equipment. So those are the dynamics going on. The long-cycle commitment continue to hold. The short cycle pushouts are also occurring at the same time, and we have factored that into our Q4 earnings forecast now that we expect that some of those project pushouts will continue to occur did we say stability? And probably the root cause of that would ascertain that to two factors. I would say there's a lot of uncertainty in Middle East due to war situation and oil price fluctuations. We all observe there and we all are equally awaiting on outcome of U.S. elections. So I think that uncertainty causes making any moderate investment also a bit of a consideration for our customers. And that's driving the push out. And we do expect as things settle, some of these should come back to the normal case ahead.
Joe Ritchie: Got it. That's helpful. So mostly, this is basically exogenous factors, not anything internal that's impacting. Okay, and then I guess maybe. Yes, and then the second question is just, look, the defense business has been I think double-digits now for four out of the last five quarters and recognize that you're benefiting from the fact that supply chain is normalizing. I guess, how do we think about that into 2025? Is this a business just based on the normalization of the supply chain, it should continue to see this level of growth, call it, high single digits to double-digit type growth into next year?
Vimal Kapur: I do believe that. I think our order books there are strong in defense, and in fact, demand remains very strong. We have demonstrated now for two quarters in a row, our ability to take supply chain actions, specifically to the defense supply chain and we do expect to maintain this momentum in 2025. It will remain the headline for aerospace growth, specifically not only the core business and even always own but with the acquisition of Kate, which is the entirely service Defense segment. Our near-term mix of defense is going to go up and growth rates are going to be at I would say, relatively elevated rate compared to the core aerospace business.
Joe Ritchie: Okay, great. Thank you very much.
Vimal Kapur: Thank you.
Operator: Thank you. Our final question this morning comes from the line of Andy Kaplowitz with Citigroup. Please proceed with your question.
Andy Kaplowitz: Good morning, everyone.
Vimal Kapur: Hey, Andy.
Greg Lewis: Hey, Andy.
Andy Kaplowitz: Vim, I know you've talked about accelerating new products now and evolving the accelerated operating system. How much could that accelerating or maybe the focus on what good looks like across your portfolio help in '25 versus '24? Would you anticipate a material step-up in core growth from your initiatives, even if markets maybe stay a little muted, more muted than expected outside of Aero?
Vimal Kapur: Yes. I think short answer is yes, Andy. We have done work, and we really track what I call new product category. So fundamentally, what we have bought our operating system is Think about the product as core products, which we always have and refreshing them because we have to keep share, you can't keep them stale and then adding new product categories, which we don't have today, those SKU numbers don't exist in our ERP system. And that -- those products which are being lodged in '24 or early '25 are going to be a larger number compared to what we had in '24 run rate. So that does give me a confidence that that's going to act as an enabler for us to deliver our growth in 2025. specifics will share when we do the earnings call. But fundamentals do look attractive on that space.
Andy Kaplowitz: Got it. And then maybe just a little more color on what you're seeing in terms of the landscape by geography. It's interesting to see that buildings products has started to improve. Is that a function of European building products getting any better? And I know you mentioned some macro headwinds in China, obviously. So what are you seeing out there?
Vimal Kapur: I would say in pockets, we -- I mean, if you call specifically on the Buildings business, we did observe a good recovery in Europe in our short cycle businesses in building automation. I would say we have crossed the trough in Europe, and we are on a moderate recovery there. We certainly see that. In China, I would say that's not true. Honeywell continues to be in mid- to high-single. We have said that before, we will perform well in China, thanks to our Aerospace and Energy segment. But our automation businesses are flat to slight contraction. We are not observing any change in trajectory which then get reflected on the performance there. So some pockets of recovery in Europe, not so much in China and headline of our growth, which we mentioned in our prepared remarks also, we do see strong growth in India and Saudi Arabia. Those two countries are become capless of our growth. We have a moderate number of -- amount of revenue there. So certainly double-digit revenue growth certainly helps on our top line.
Andy Kaplowitz: Appreciate all the color.
Vimal Kapur: Thank you.
Operator: Thank you. This concludes our question-and-answer session. Mr. Kapur, I'll turn the floor back to you for any final comments.
Vimal Kapur: I want to express my thanks to our shareholders for your support and to the Honeywell future shaper, who will help us to achieve our accelerated growth goals. I believe, our future is bright, and we look forward to updating you on the progress. Thank you for listening, and please stay safe and healthy.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
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