Investor Relations Insights

Hello,

I hope you are enjoying the start of summer. We have had an exceptionally busy second quarter at Honeywell with extensive investor engagement, including hosting an investor reception ahead of the 2025 Paris Air Show. In this note, we provide a recap of our time on the road as well as major commercial and corporate announcements. Last, we answer some Honeywell Aerospace-focused Frequently Asked Investor Questions (FAIQ) following our time in Paris last week. As always, thank you for your interest in Honeywell. We welcome your questions and feedback.

All the best,
Sean

Sean C. Meakim, CFA
Vice President, Investor Relations and Strategic Finance
Honeywell International

Recent Investor Engagement

We kicked off our second quarter activity by attending the Bank of America Industrials, Transportation, and Airlines Key Leaders Conference (webcast replay) in New York City in May. CFO Mike Stepniak highlighted Honeywell’s beat-and-raise to start the year after announcing 1Q25 results that exceeded guidance across all metrics and increased our 2025 outlookdespite heightened demand uncertainty. Mike emphasized the company’s strong focus on day-to-day operations while separately managing the upcoming spin-offs of Solstice Advanced Materials and Honeywell Aerospace, which are proceeding well. He also had the opportunity to dive into his key priorities as CFO. These include formulating guidance in which we have a high degree of confidence, developing strong, cross-functional teams that are driving further achievement ofNPI milestones, and promoting commercial intensityin high-growth verticals. 

The next week, we returned to New York with Building Automation President and CEO Billal Hammoud, who presented at the Wolfe Global Transportation and Industrials Conference (webcast replay). Billal highlighted the ongoing momentum in BA, demonstrated by back-to-back quarters of strong organic sales growth, and discussed our pragmatic outlook for the remainder of 2025 given the second half demand uncertainty for short-cycle products against the current geopolitical backdrop. He presented to the Street the ways in which BA’s robust R&D investments are improving NPI cadenceand strengthening customer relationships, and he answered questions on a myriad of BA key topics, including our Honeywell Forge platform and related software strategy, margin expansion playbook, and commercial progress in security following the Access Solutions acquisition.

 Later in the month, Advanced Air Mobility leader David Shilliday presented virtually at the 3^rd annual Jefferies eVTOL / AAM Summit (webcast replay). David discussed Honeywell Aerospace’s compelling technologies in the Advanced Air Mobility (AAM) market and how our role as a partner of choice for the first wave of AAM manufacturers will help drive the future of aviation across all aircraft end markets. David also highlighted how co-innovation with AAM customers has unlocked improvements to our cloud-native Anthem integrated cockpit system, which was a part of our landmark deal with Bombardier.

On June 15^th, Honeywell Chairman and CEO Vimal Kapur and Aerospace Technologies President and CEO Jim Currier presented at our 2025 Paris Air Show Investor Reception (webcast replay), diving into Honeywell Aerospace’s industry-leading position as a mission-critical systems supplier with an unmatched breadth of solutions across aerospace verticals and platforms. Jim had the opportunity to discuss with investors the business’s strong growth profile supported by a broad aerospace and defense upcycle supplemented with decoupled sales initiatives, ongoing supply chain transformation efforts that have driven consistent output increases, and substantial R&D investments over time that have led to winning positions on new platforms. Finally, he previewed Honeywell Aerospace’s attractive investment attributes as a future standalone public company beginning in the second half of 2026.

Recent Honeywell News

On May 22, we announced the acquisition of the Catalyst Technologies (CT) business from Johnson Matthey for $2.4 billion in an all-cash transaction. This transaction enhances the existing UOP portfolio and expands its installed base across petrochemical, refining, and renewable fuels, unlocking comprehensive, innovative solutions to support customers’ energy transition needs. As the next step in the evolution of the ESS portfolio, following the October 2024 announcement of the spin of Advanced Materials and the April 2025 announcement of the acquisition of Sundyne, this transaction bolsters our strategy of delivering process technologies and process automation as a compelling commercial value proposition to customers. We expect the CT acquisition to be accretive to Honeywell’s adjusted EPS in the first full year of ownership and anticipate the transaction to close in the first half of 2026.

Also on May 22, we announced the completion of the sale of our Personal Protective Equipment business for $1.3 billion, an important milestone in our portfolio optimization journey. The divestiture increases alignment across our company with the business model of developing a robust installed base and then monetizing it with aftermarket software and services, which we believe will create compelling long-term value for shareowners. The divestiture is also accretive to organic growth and margins in our IA segment.

Continuing on the portfolio front, on June 9, we announcedthe closure of the previously announced Sundyne acquisition for $2.2 billion. Sundyne is expected to be immediately accretive to sales growth, segment margins, and adjusted EPS in our first full year of ownership, and further cements ESS’s leading end-to-end LNG solution.

Alongside the start of the Paris Air Show on June 16, we announced that Southwest Airlines is in the process of activating its entire Boeing 737 aircraft fleet with Honeywell SmartRunway and SmartLanding software designed to increase runway safety. Our SmartRunway and SmartLanding technologies proactively notify pilots when they are moving too fast, flying too high, or are directed toward the wrong runway, decreasing the likelihood of runway accidents. This implementation is a prime example of how Honeywell Aerospace is leveraging retrofits, modifications, and upgrades (RMU) of the existing aircraft fleet to profitably accelerate our growth in ways that are decoupled from flight hours.

Also on June 16, we announced that Bell Textron has selected our 36-150 auxiliary power unit (APU) and Honeywell Attune™ thermal management system for the U.S. Army’s Future Long-Range Assault Aircraft (FLRAA). The 36-150 APU enhances mission readiness and flexibility of aircraft operations by providing both a secondary source of electrical and hydraulic power, while Attune provides our latest innovation of energy-efficient high-density cooling technologies. This partnership with Bell Textron is just one illustration of how Honeywell Aerospace is partnering with customers to shape the future of aviation.

On the following day, Honeywell Aerospace announced, in partnership with Near Earth Autonomy, the successful completion of the first autonomous test flight of a Leonardo AW139 helicopter, demonstrating our leadership position in driving the future of aviation on the path toward autonomy. The test flight on Honeywell's AW139 took place in Phoenix, Arizona in May and marks a critical step in efforts to deliver scalable, autonomous logistics support to the United States Marine Corps (USMC).

Earlier this quarter, Quantinuum announced a strategic agreement with Invest Qatar, the Investment Promotion Agency of Qatar, aimed to strengthen Qatar’s quantum computing ecosystem. Invest Qatar will provide tailored support services to Quantinuum, which recently announced expansion into the quickly growing region, highlighted by President Donald Trump during his historic state visit to Qatar. “As part of the deepening strategic ties between the U.S. and Qatar, we are enabling direct access to our world-leading quantum hardware and software, creating value for academia and industry in Qatar while training the next generation of quantum developers and researchers to strengthen the region’s position as a global hub for advanced technologies”, commented Dr. Rajeeb Hazra, President and CEO, Quantinuum.

Frequently Asked Investor Questions (FAIQ) | 2025 Paris Air Show

After three challenging years, are the aerospace industry’s supply chain constraints easing? How does Honeywell Aerospace plan to evolve its supply chain to support over $70 billion in customer wins in the past three years?

The need to transform Honeywell Aerospace’s supply chain over the coming years to support its robust growth was a primary rationale for spinning off the business into a standalone public company.

Since 2021, we have invested more than $1 billion into supply chain efforts that include upgrading internal talent through both new additions and enhanced skill development programs, insourcing high value components that are critical to manufacturing innovative systems, and utilizing strategic investments and partnerships to optimize multi-sourced models. As a result, we have increased our output at a double-digit rate for eleven consecutive quarters and vastly improved our sourcing resiliency.

Going forward, as we look to get beyond the necessary healing from pandemic era supply chain disruptions, we anticipate incremental opportunities to leverage AI software to improve purchasing and planning, transform the procurement-through-fulfillment process with digital tools, and scale the next generation of smart factories. These new initiatives will expand our capabilities and capacity to double our current sales in the 2030s.

“Decoupled” growth was emphasized as a point of differentiation for HON at the Paris Air Show. Do you expect RMUs (retrofits, modifications, and upgrades) to continue to drive “decoupled” sales growth at double-digit rates? Which RMU focus areas are growing fastest? How do margins compare to overall Aerospace margins?

RMU growth should continue to deliver double-digit growth to Honeywell Aerospace. RMU sales are accretive to overall Aerospace margins and aftermarket margins as many are software-enabled solutions. They offer high ROIs to our customers with average payback periods under 24 months. These programs are tied to operational enhancements and aligned to increased customer demand for greater autonomy, electrification, and safety. Dedicated R&D funding for these programs and special incentives for our sales force enable continued strong growth momentum.

Our current RMU sales pipeline is robust with more than 50 in production at any given time. We expect additional penetration of existing products, some of which have been mandated by regulatory bodies. We also anticipate an expansion of certifications of existing technologies to additional aircraft platforms. Increased national security needs are accelerating defense deliveries as well. Newer RMU focus areas include thermal management, non-GPS navigation, enhanced legacy military aircraft capabilities, additional aircraft connectivity, and cockpit upgrades.

With global conflicts escalating and countries looking to become more self-reliant in their national defense, how is Honeywell Aerospace positioned to capture increased international defense spending?

International defense budgets are expected to increase at elevated rates over the next five years in countries in which we have a significant presence such as Germany, Japan, and India, among others. We believe we are particularly well-positioned to capture this growth. Our commercially developed technologies have direct applicability for the most in-demand defense applications, such as missiles, fighter jets and unmanned aircraft, which we can sell on a direct commercial basis to international customers.

Honeywell Aerospace has invested heavily into developing its presence in international markets, leading to international sales mix of more than 25% of our Defense & Space business, up from roughly 10% ten years ago. We have more than 1,000 engineers in the EU and recently expanded our manufacturing base in the area with the 2024 acquisition of Italy-based Civitinavi.

Over the last two years, we have purposefully increased our engagement with global Defense & Space customers to better understand and support their needs. This higher level of strategic engagement will enable us to continue the strong trajectory of the business, which has increased its sales at a CAGR in excess of 15% from 2019 to 2025. 

How much does Honeywell Aerospace spend on R&D? Can this spend be leveraged across its broad product portfolio?

As highlighted in our Paris Air Show presentation, Honeywell Aerospace spends roughly 4% of its sales on company-funded R&D and an additional 7% of its sales on customer-funded R&D.

We believe the breadth of our aerospace and defense offerings is unmatched in the industry with Honeywell systems found in the most critical sections of an aircraft and on more than 90% of the global fleet. We have content on over 500 current platforms with balanced exposures across commercial air transport, business jet, and defense & space verticals. No platform represents more than a mid-single-digit percentage of our sales.

We leverage our R&D spending by taking breakthrough innovations from one platform or vertical to the other areas of aerospace and defense in which we participate. We do not develop new products in silos. For example, our new Anthem integrated flight deck is designed to work on everything from an eVTOL to the most advanced fighter jet. Our Assure electromechanical actuation system, originally designed for the advanced aerial mobility market, has been selected on five different aircraft platforms across multiple end market segments. In this way, we maximize the ROI of our significant investments in new technologies.

Is Honeywell Aerospace still committed to reaching a 29% segment margin as an independent company? What is required to get there?

Honeywell Aerospace remains committed to achieving (and eventually surpassing) a 29% segment margin.

While continued strong top line growth will drive operating leverage, a few factors will limit margin expansion in the near term from recent levels around 26% to 27%. Commercial OE sales are likely to lead Aerospace growth as OE customer build rates ramp up and our supply chain heals further and the business works down past-due backlog. That dynamic will put mix pressure on margins, especially as much of the past due backlog consists of mechanical products that offer lower OE margins than electronic solutions. We also continue to invest significantly in our supply base to increase output and improve reliability. Finally, our acquisition of CAES Systems is a modest (~100 bps) headwind to Aero’s segment margin profile in 2025 while we integrate the business, though it will be accretive to sales and segment profit growth.

Longer term, OE sales growth mix will normalize, supply chains will stabilize, and CAES will deliver margins aligned to the rest of our Defense & Space business. Leveraging the power of our Accelerator operating system and unprecedented demand for our portfolio of technologies, Honeywell Aerospace will drive the consistent productivity benefits and margin expansion we have seen in the business historically, allowing for meaningful margin expansion beyond current levels.

What opportunities does Honeywell Aerospace have in Air Traffic Control Modernization?

Honeywell Aerospace has over 100 years of aviation, safety, and innovation expertise to support the efforts to modernize U.S. Air Traffic Control that have been championed by Transportation Secretary Sean Duffy. While much of the focus to date has been on updating groundside infrastructure, we believe strongly that upgrading aircraft systems can significantly reduce accidents and airport congestion.

Honeywell sells several airborne solutions that vastly improve flight safety.SURF-A, our new cockpit-alerting technology, sends automated, earlier warnings to pilots if there is a runway obstruction on approach to create greater situational awareness and prevent collisions. Automatic Dependent Surveillance - Broadcast (ADS-B) offers in-flight deck interval management, which maximizes airspace utilization. Lastly, Controller Pilot Data Link Communications allow text messaging between an aircraft and the air tower, which reduces miscommunication and strain on pilots and air traffic control personnel.

About Honeywell

Honeywell is an integrated operating company serving a broad range of industries and geographies around the world. Our

business is aligned with three powerful megatrends – automation, the future of aviation, and energy transition – underpinned by our Honeywell Accelerator operating system and Honeywell Forge IoT platform. As a trusted partner, we help organizations solve the world's toughest, most complex challenges, providing actionable solutions and innovations through our Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions business segments that help make the world smarter and safer, as well as more secure and sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.

Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media.

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), including statements related to the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, and the proposed separation of Automation and Aerospace Technologies. Forward-looking statements are those that address activities, events, or developments that we or our management intend, expect, project, believe, or anticipate 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, many of which are difficult to predict and outside of our control, including Honeywell's current expectations, estimates, and projections regarding, among other things, the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, and the proposed separation of Automation and Aerospace Technologies. 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, including the consummation of the spin-off of the Advanced Materials business into Solstice Advanced Materials and the proposed separation of Automation and Aerospace Technologies, and the anticipated benefits of each. 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, including ongoing macroeconomic and geopolitical risks, such as the impacts of tariffs and other trade barriers and restrictions, lower GDP growth or recession in the U.S. or globally, supply chain disruptions, capital markets volatility, inflation, and certain regional conflicts, which 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.