Good morning, welcome to Honeywell's Third Quarter 2021 Earnings Conference Call. On the call with me today are Chairman and CEO Darius Adamczyk, and Senior Vice President and Chief Financial Officer Greg Lewis. Also joining us are Senior Vice President and General Counsel Anne Madden, and Senior Vice President and Chief Supply Chain Officer Torsten Pilz. This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com/investor. Honeywell also uses our website as a means of disclosing information which may be of interest or material to our investors 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. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our businesses as we see them today. Those elements can change based on many factors, including changing economic and business conditions, and we ask that you interpret them in that light. We identify the principal risks and uncertainties that may affect our performance in our annual report on Form 10-Q and other SEC filings. This morning, we will review our financial results for the third quarter of 2021, share our guidance for the fourth quarter and full year 2021, and share some preliminary thoughts on 2022 planning. As always, we'll leave time for your questions at the end. With that, I'll turn the call over to Chairman and CEO, Darius Adamczyk. Thank you, Reena Vaidya, and good morning, everyone. Let's begin on slide 2. Our outstanding discipline and execution enable us to deliver third quarter results that met or exceeded our financial guidance in an increasingly challenging environment. We achieved the high end of our third quarter adjusted earnings per share guidance range and exceeded the high end of our segment margin guidance by 60 basis points, despite significant headwinds from inflation and supply chain constraints which hampered down our top-line growth potential. Despite that, organic sales were up 8% year-over-year, driven by double-digit organic growth and Safety and Productivity Solutions, the commercial aerospace aftermarket, and advanced materials, and UOP. Segment margin expanded 130 basis points to 21.2%, driven by strong actions that we took across the portfolio to address the headwinds we face from inflationary pressures and supply chain disruptions. Specifically, we've continued to operate our strong productivity playbook. We took swift pricing action that allowed us to stay ahead of the inflation curve. We drove a 4% increase year-over-year on the top line and yielded approximately 40 basis points of margin expansion net of inflation. Adjusted earnings per share was $2.02, up 29% year-over-year, achieving the high end of our guidance range. We delivered a strong third quarter despite a volatile backdrop that included a hurricane at our PMT factory corridor, power blackouts in China, and the persistent and ongoing impacts on the supply chain more broadly. I am pleased for our disciplined execution, which enable us to navigate the challenges in the macroeconomic environment and capitalize on the ongoing recovery in our end markets. I continue to be encouraged by the strength we are seeing in many areas of our portfolio. Orders across Honeywell are up high single digits year-over-year organic. Excluding the impact of COVID-related mask business, which has seen significant demand decline since the pandemic has been subsiding. Orders across Honeywell were up double digits year-over-year. Backlog was up 7% to $27.5 billion, and up 9% excluding the impact of COVID mask orders, driven by strength in many of our segments and positioning us to deliver next phase of the recovery as we head into 2022. As always, we continue to execute on our rigorous and proven value creation framework that drives outstanding shareholder value. Let's turn to slide 3 to discuss some of our exciting recent announcements. Last month, United Airlines and Honeywell announced a joint multimillion-dollar investment in Alder Fuels, powering the biggest sustainable fuel agreement in aviation history. Alder Fuels is a cleantech company that is pioneering first-of-its-kind technologies for producing sustainable aviation fuel, or SAF, at scale. When used together across the fuel life cycle, the Alder technologies, coupled with Honeywell's Ecofining process, have the ability to produce a carbon-negative alternative to today's jet fuels. As part of the agreement, United is committing to purchase 1.5 billion gallons of SAF when produced to United's requirements, which is one and a half times the size of the known purchase commitments of all global airlines combined, making this easily the largest publicly announced SAF agreement in aviation history and demonstrating the power of Honeywell technologies continue to bring to the oncoming global energy transition. We also recently announced the acquisition of Performix, a provider of manufacturing execution system, or MES, software for the pharmaceutical manufacturing and biotech industries. This acquisition builds on our strategy to create the world's leading integrated software platform for customers within the life sciences industry, who are striving to achieve faster compliance, improved reliability, and better production throughput at the highest levels of quality. The Performix MES software joins Honeywell's large and growing portfolio of automation solutions for the life sciences industry, including Sparta Systems' quality management software and Honeywell's Experion Process Knowledge System. The combined offerings will address life sciences customer needs across the product life cycles, from automation project execution to optimal production to sustainable quality. Lastly, we unveiled an all-new aircraft cockpit system earlier this month called Honeywell Anthem, the first in the industry built with an always-on, cloud-connected experience that improves flight efficiency, operation, safety, and comfort. Honeywell Anthem offers unprecedented levels of connectivity, an exciting and intuitive interface modeled after everyday smart devices, and a highly scalable and customizable design. This next-generation flight deck is powered by a flexible software platform that can be customized for virtually every type of aircraft and flying vehicle, including large passenger and cargo planes, business jets, helicopters, general aviation aircraft, and the rapidly emerging class of advanced air mobility vehicles. In fact, Honeywell Anthem has already been selected by Vertical Aerospace and Lilium for their vertical takeoff and landing all-electric aircraft. As these announcements highlight, we're continuously innovating and enhancing our portfolio of exciting new technologies aligned to our long-term strategic objectives. Now, let me turn it over to Greg on slide 4 to discuss our third quarter results in more detail. Thank you, and good morning, everyone. As Darius highlighted, we executed with the typical level of rigor that you have come to expect from Honeywell and delivered on our commitments despite a challenging backdrop. Our third quarter was strong, with sales up 8% organically to $8.5 billion. Segment margins expanding 130 basis points to 21.2%, resulting in 36% incremental margins and free cash flow of more than $900 million, up 20% year-on-year. Our third quarter performance demonstrates our ability to deliver for our shareholders in all environments. Now, let's take a minute to discuss how each of the segments contributed to that. Starting with Aerospace, third quarter sales were up 2% organically as the ongoing recovery in flight hours drove another quarter of strong double-digit commercial Aerospace aftermarket growth. As expected, air transport aftermarket sales continued to gain momentum, growing more than 10% sequentially from the second quarter and growing 40% year-over-year. Commercial original equipment returned to growth in the quarter, driven by strong demand for business jets. The growth in commercial aerospace was partially offset by defense and space, which was down 17% in the quarter, primarily due to supply chain constraints, which limited our deliveries. Excluding those impacts, defense and space would've been down mid-single digits in the quarter, an improvement versus the first half run rate. Aerospace segment margins expanded 390 basis points to 27.1%, driven by growth in our high-margin aftermarket business, strong productivity from our lower cost base, and pricing. Honeywell Building Technologies sales were up 3% organically, driven by broad-based demand across the building products portfolio as well as continued growth in building solution services. Orders were up double digits year-over-year for the fourth straight quarter, driven by demand for fire products, building management systems, and projects. Backlog for Building Solutions services was up over 35% year-over-year, positioning the business for growth into 2022. In addition, our healthy buildings portfolio maintained strong customer momentum with approximately $100 million of orders in the quarter, bringing year-to-date orders to $250 million. HBT segment margins expanded 190 basis points to 23.5%, driven by pricing and productivity, partially offset by inflation. In PMT, sales were up 9% organically, led by 29% growth in UOP and 14% growth in Advanced Materials. UOP's sales growth was driven by higher petrochemical catalyst shipments, and their backlog grew double digits year-over-year, which should drive growth well into 2022. Process Solutions sales were down 2% organically as the recovery in projects has lagged, partially offset by high single-digit growth in thermal solutions and life cycle solutions and services. HPS orders were up 20% year-over-year, driven by broad-based demand across the portfolio, providing confidence in the longer-term outlook for the business. PMT segment margins expanded 260 basis points to 22.2% in the quarter, driven by pricing, strong operating leverage, and a healthy mix of UOP. In Safety and Productivity Solutions, despite battling supply chain and inflation challenges, sales were up 21% organically, driven by another quarter of double-digit warehouse and workflow solutions growth, Productivity Solutions and Services growth, and gas analysis growth. Orders in these three businesses were also up double digits year-over-year, resulting in a robust SPS backlog of more than $4 billion. Personal protective equipment sales declined year-over-year as mask demand declined meaningfully. This was partially offset by growth in the hearing, gloves, and fall protection categories. SPS segment margins contracted 70 basis points to 13.2%. Driven by unfavorable business mix, which combined with targeted investments and supply chain challenges in Intelligrated, drove inefficiencies in manufacturing installation as the business has been scaling to outsize growth, which was 60% organically this quarter. Finally, growth across our portfolio was underpinned by continued progress in Honeywell Connected Enterprise. Our connected buildings and cyber solutions delivered another quarter of double-digit organic growth, and third quarter recurring revenue growth was once again up double digits year-over-year. Overall, we delivered strong organic sales growth, drove 130 basis points of improvement in segment margins, 60 basis points above the high end of our guidance, despite the challenging environment. For the quarter, we delivered GAAP earnings per share of $1.80, and adjusted earnings per share of $2.02, up 29% year-over-year, achieving the high end of our guidance. A bridge from 3Q20 adjusted EPS to 3Q21 adjusted EPS can be found in the appendix of this presentation, which includes reference to a $160 million non-cash charge related to ongoing UOP matters that are described in our Form 10-Q. The majority of our year-over-year adjusted earnings growth, $0.26, was driven by our strong segment profit improvement. Below-the-line items were a $0.13 tailwind, driven by lower repositioning and higher pension income. A lower effective tax rate of 22.9% and lower weighted average share count of 699 million shares drove a $0.04 and $0.03 benefit respectively. We generated $900 million of free cash flow in the quarter as increased earnings Excuse me. As increased earnings increase in working capital due to growth of the business and related supply chain challenges tamp that down a bit. We strategically deployed $1.5 billion primarily to share repurchases, dividends, and CapEx in the third quarter, which significantly exceeded operating cash flow. We paid $646 million in dividends, deployed $208 million to capital expenditures, and reduced $650 million of Honeywell shares, reducing our weighted average share count to 699 million. Total capital deployment was up 44% year-over-year. This was another strong quarter under difficult circumstances. We continue to manage through the multi-speed recovery across our portfolio, making disciplined investments for the future, and meeting or exceeding our commitments while proactively addressing macroeconomic challenges. Let's turn to slide 5 to discuss the impact of the supply chain constraints we're facing and how Honeywell is adapting to address those challenges. As we saw last quarter, the world continues to face persistent supply chain challenges as the sourcing environment for direct materials and electrical components continues to be tight. Logistics capacity remains strained, and labor availability becomes more challenging. All driving constraints in operating and inflationary pressures on our cost base. Semiconductors remain an acute problem due to a structural disconnect between supply and demand, driven by canceled industrial and automotive orders during COVID-19, as well as unplanned growth of 5G, personal computing, and consumer electronics. We've also started feeling pressure in aerospace as the supply chain broadly ramps up more slowly than needed, leading to parts challenges due to deteriorating supplier delivery. While we have been mitigating the overall risk by proactively partnering with distributors and alternative suppliers, the challenges accelerated in the last quarter, constraining growth in some of our businesses. The most affected businesses in our portfolio are SPS, aerospace, and HBT. We provide guidance ranges for our quarterly and annual outlook in order to incorporate an adequate level of risk for things just such as this, as we see these dynamics in the last few quarters. We are managing this situation aggressively on a daily basis and have deployed the full strength of our re-engineering efforts to qualify alternative parts, which has mitigated some risk on our Productivity Solutions and Services, Advanced Sensing, and fire businesses. We created tiger teams using advanced digital tools to track shortages and deploy a number of actions to liberate supply in the market. We also continue to mitigate inflation in materials, freight, and labor in our operations through targeted regular pricing actions. For the longer term, we're developing dual-sourced platforming strategies and executing long-term supply agreements with some of our key suppliers. This, coupled with strengthening direct engagement with the semiconductor OEMs and foundries, will improve our ability to secure increased volumes in the future. We do expect this environment to persist into the fourth quarter and the first half of 2022. We'll continue to adapt as we manage through this period. With that, let's turn to slide 6 to talk about our expectations for the fourth quarter. As we enter the fourth quarter, and given the ongoing challenges I mentioned, we expect sales to be in the range of $8.5 billion-$8.9 billion, down 4% to flat on an organic basis, which includes the impact of the COVID-19-driven mask sales decline. Excluding this impact, organic sales would be down 2% to up to organically. We would also normally see a seasonal step-up from the third to the fourth quarter, which this year will be somewhat dampened by the unique calendar impact of having more days in the third quarter than we do in 4Q. In aerospace, we expect our commercial business to continue to improve as business aviation and air transport flight hours continue to accelerate, driving continued sequential and year-over-year growth in the commercial aftermarket sales. The pace of the air transport acceleration will continue to vary regionally, with domestic travel recovering faster than international. Commercial original equipment build rates will also continue to progress gradually. Defense and space sales will be down due to lower demand from U.S. DoD programs driven by moderating U.S. Defense spend and soft international defense volumes. We will continue to manage through the constraints as the Aerospace supply base ramps up, but we are expecting to miss out on potentially hundreds of millions of dollars worth of shipments due to these continued challenges in Q4. We now expect organic sales growth to be down mid-single digits for the year in Aerospace. In Building Technologies, we expect continued strong demand across the portfolio as the world continues to reopen and sustainability solutions take hold, driving sales and orders growth in the fourth quarter. We will face ongoing pressures from the supply chain constraints but continue to work our mitigation actions as we anticipate mid-single-digit sales growth for the year. In PMT, we see continued strength in the short cycle HPS businesses, though this will be tempered by the slower recovery in projects. Our strong orders growth in the third quarter will support a growth acceleration into 2022. For UOP, we're pleased with our robust 3Q performance and expect continued growth into the fourth quarter and into 2022, supported by the strong backlog, which is up double digits year-over-year. Last, we expect continued healthy demand for products across the advanced materials portfolio. We expect PMT organic sales to be up low single digits for the year. In Safety and Productivity Solutions, we expect another quarter of robust growth in our warehouse and workflow solutions and Productivity Solutions and Services businesses. In our Productivity Solutions and Services business, which is having an outstanding year, backlog remains up triple digits year-over-year, which, combined with our Intelligrated backlog that is over $2.4 billion, gives us confidence in these businesses for the remainder of 2021 and into 2022. Mask demand has accelerated as expected as the world recovers from the pandemic, though we will partially offset this softness with strengths in other areas of the PPE portfolio. Finally, we expect to see strength in our short cycle gas analysis and advanced sensing businesses, driven by double-digit orders growth in the third quarter. We'll continue to manage through this challenging supply environment, which will impact our growth potential but will record strong double-digit growth for the year. Let me turn to our expectation for our other core guided metrics. For our fourth quarter segment margins, we expect to be in the range of 21.2%-21.7%, up 10 to 60 basis points year-over-year. We expect margins to continue to benefit from pricing actions ahead of inflation, volume leverage, and ongoing productivity from our streamlined cost base, despite the headwinds from unfavorable business mix in Honeywell Intelligrated and efficiency challenges due to the supply chain environment. Fourth quarter net below-the-line impact, which is the difference between segment profit and income before tax, is expected to be in the range of - $10 million to - $95 million, with a range of repositioning between approximately $140 million and $215 million as we continue to fund ongoing restructuring projects. We expect the effective tax rate to be approximately 20% and average share count to be approximately 698 million shares. As a result, we expect fourth quarter adjusted earnings per share between $2.03 and $2.13, down 2% to up 3% year-over-year. Given these fourth quarter expectations, full-year organic sales growth will be in the range of 4%-5%, narrowing the range we provided last quarter to $34.2 billion-$34.6 billion. We are once again raising the low end of our segment margin guidance by 10 basis points for the year to the new range of 20.9%-21.1%, representing expansion of 50-70 basis points for the year. We expect margin expansion in Aero, HBT, and PMT as we carefully invest back into the business while managing the multi-speed recovery across the portfolio. Our fixed cost management remains a focus. We are tracking favorably to the permanent reduction of $1 billion of fixed costs from our 2020 cost actions. We expect our net below-the-line impact to be in the range of $40 million-$125 million, including capacity for $400 million-$475 million of repositioning. Our full-year effective tax rate will be approximately 22%, and weighted average share count will be approximately 701 million for the year, over-delivering on our minimum 1% reduction in shares. This will take adjusted earnings per share to a range of $8-$8.10, up 13%-14% year-over-year. This maintains the high end of our previous guidance and raises the low end by $0.05. Despite these challenges, we are maintaining the same cash flow outlook for the year in the range of $5.3 billion-$5.6 billion. Let's turn to page 7 and review our guidance progression throughout the year. Since we provided our initial 2021 guidance in January, we have navigated through several uncertainties: the ongoing global pandemic, supply chain challenges, unprecedented raw material inflation, and labor market challenges. At each turn, our rigorous operating principles have enabled us to continue to demonstrate our resiliency. At our latest update, we have adjusted our sales outlook purely due to the constraints we are battling in the supply chain, which dampened 3Q and our fourth quarter sales potential. We continue to have a robust backlog of demand. Despite these changes to top-line expectations, we have not only maintained the high end of our segment margin and adjusted EPS guidance, but we have further increased the low end of both ranges and maintained our previous free cash flow guidance. These are excellent proof points of our ability to execute in all economic cycles. In total, I'm encouraged by the strength we are seeing in key areas of the portfolio as we head into 2022, particularly driven by strong orders growth and backlog position. Aggressive supply chain tactics that are mitigating risks, enabling us to deliver on our long-term commitments. Let's move to slide 8, where we can talk about some of the preliminary thoughts we have on 2022. With the commercial aerospace recovery in view, upcoming capital reinvestment in the energy sector, non-residential construction spending returning to 2019 levels, and the exponential growth we continue to see in e-commerce, we have a strong setup for 2022. We expect organic growth in all four segments driven by strong portfolio-wide demand and backlog, underpinned by year-to-date orders growth of 17% in HBT, 14% in aero, 10% in PMT, and 6% in SPS, or 8% in SPS if we exclude the COVID mask business. This, coupled with the strategies we have in place that are focused on driving uniquely innovative and differentiated technologies to address the world's increasing demand for digital transformation, process technology, and sustainable solutions, gives me confidence in our future. However, we do expect growth in the first half of 2022 to be constrained due to continued challenges from labor force uncertainty, supply availability, and logistics challenges. Inflation will continue to be a factor under these circumstances, though our pricing rigor as reflected in our margin rates will help us. We do expect changes to corporate tax legislation, though the exact impact of that is as of yet unknown. With these dynamics in mind, let's look at our key markets. In aerospace, we expect strong growth in our commercial aerospace business. Ongoing improvement in global flight hours will drive growth in our commercial aerospace aftermarket. We also expect original equipment build rates, which have lagged the flight hour recovery, to ramp up in 2022. In defense and space, we expect flat to low single-digit growth year-over-year as U.S. and international defense budget spending stabilizes and our supply challenges abate. In HBT, we expect non-residential construction growth and an ongoing return to public spaces to drive demand for building products, services, and projects. We also expect continued demand for our portfolio of healthy building solutions, as well as tailwinds from U.S. infrastructure plans. We expect a large backlog to draw from as well as we end in 2021. In PMT, we're assuming improved macroeconomic conditions and higher stable oil prices will improve growth in UOP and also help recover automation projects in HPS. We expect continued strength in advanced materials driven by demand in the auto, construction, and healthcare sectors. For Safety and Productivity Solutions, we expect strong demand in our Productivity Solutions and Services, gas analysis, and Advanced Sensing businesses. We also execute on our robust backlog of major projects in our warehouse and workflow solutions businesses. However, we will face constraints to growth as supply chain challenges continue in the first half of 2022. Mask demand will remain at our lower second half exit rates as the world recovers from the pandemic. For overall Honeywell, we expect margin expansion to be driven by aftermarket recovery in aerospace, accelerating catalyst shipments in UOP, and improving mix in SPS. Our strong productivity and pricing actions, which should carry through to next year and provide potential upside, will enable key investments to support medium-term top-line growth, including a step-up in R&D and our digital initiatives. We look forward to completing the combination of Honeywell Quantum Solutions with Cambridge Quantum Computing, which is a very big strategic step forward for us, but will be a minor drag on our margins. We have significant balance sheet capacity for M&A and share repurchases, and we expect to reduce our share count by a minimum of 1% again in 2022. Overall, we have some insight into our end markets and a lot of confidence in our continued operational execution, which will give us the ability to deliver another strong financial performance and continue to execute our strategy to be the premier software industrial. We'll provide more specific inputs once we close out the year. With that, I'd like to turn the call back over to Darius. Thank you, Greg. Before we wrap up, I'd like to take a minute on slide 9 to discuss an important topic: Honeywell's culture of inclusion and diversity. Our commitment to inclusion and diversity enables better decision-making, helps build competitive advantages, and further long-term success. Inclusion and diversity is one of our foundational principles. Honeywell expects all employees to exemplify these principles. We continue to build out our initiatives to promote racial equality and inclusion and diversity, including employing mandatory unconscious bias training to our global workforce, establishing a global I&D steering committee co-sponsored by me, and fortifying Honeywell's I&D governance structure by embedding I&D councils into each business group. We also established 2021 goals for each of my direct reports that include an annual objective of driving diversity with his or her organization. These initiatives have yielded results. Women and people of color represent a higher percentage of the workforce at Honeywell compared to our peers. In addition, representation of women and people of color at Honeywell has increased each year since 2018, which is a testament to our ongoing commitment to hiring, developing, and retaining diverse talent. Now let's wrap up on slide 10. We delivered on our third quarter commitments despite a challenging backdrop. As always, we remained laser-focused on executing our strategic objectives and investing in growth opportunities that position our business well for the next phase of recovery. We're executing on our proven value creation framework with the rigor you can expect from Honeywell, which will continue to consistently drive shareholder value. With that, Reena, let's move to Q&A. Thank you, Darius. Darius, Greg, Anne, and Torsten are now available to answer your questions. We ask that you please be mindful of others in the queue by only asking one question. Ari, please open the line for Q&A. Thank you, Reena. The floor is now open for questions. If you have a question, please click on the Raise Hand icon at the bottom of your Zoom screen. Once you're called to ask your question, please make sure you unmute your microphone. We'll now take our first question from Steve Tusa from JP Morgan. Steve, over to you. Hey, good morning. Can you hear me okay? Yes. Great. Just on the organic growth guidance for next year, would you expect the first half to actually grow, or are you looking at it being more like the fourth quarter? You talked about all 4 segments growing, I guess. Does that mean will you decelerate from this year because of the first half? Maybe just give us a bit of guideposts on what the messaging is on the first half versus all of next year on this front. Yeah. The short answer to your question, Steve, is that, yeah, we do expect the first half to grow. I think how much is going to be a little bit dependent upon some of the supply chain challenges that we pointed out that we're seeing in Q4. Frankly, we see it this way, which is on semiconductors, we actually see some positive tailwinds as we head into the first half next year. That's good. I don't think that they're going to be completely alleviated, but it's going to get better. When it comes to some of the other components, particularly for aerospace and some of the tier 2, tier 3 suppliers, particularly castings, forgings, things of that nature. We're not sure where we are in that improvement cycle because it really just kind of popped up in Q3 at a more acute phase. We're a little more cautious there. The short answer is, we do expect growth in the first half of 2022. What I will say is that we'll have some headwinds in SPS due to sort of what I call COVID-related masks. I think those are going to be particularly acute in Q1 of next year. They're evident here in Q4 of 2021, and to a lesser extent, Q2 of 2022. Then we're going to get back to that normal run rate. As you can see, the year 2022 is setting up terrific. We're up double-digit orders growth in each of our SBGs. One exception, SPS is sort of call it mid-single digit. If you exclude the impact of the COVID masks, we would be up double digit as well. The only constraint that we see is, to some extent, the supply chain. At least in semiconductors, we think that Q4 is the peak of those challenges. That's the way we see it today. I will say this lastly, which is, it's a dynamic environment. There were some puts and takes here in Q3 that were probably more takes than positives. We're going to monitor this as closely as Q4 evolves. That's even why we have such a wide guidance range for the fourth quarter. $400 million of revenue range is wider than we're typically doing, and it's exactly for those reasons. Does terrific mean acceleration from 2021? That's just my follow-up. Thanks. Well, all I can say is we expect growth in the first half, and when we get together with you in January, February to give you our outlook, we'll have a better view. We certainly expect growth. The backlog supports that. Our story hasn't changed from really the end of Q2 earnings report. I think the setup for Honeywell for 2022, 2023 is terrific. There's nothing here that makes me want to change my mind. Yes, we're going to have to deal with some of the supply chain challenges. They're here. They're real. They're probably understated in the market. I think that frankly, it's only recently that it's been realized how severe they are. We've incorporated that in our guide for Q4, and I think we're working diligently to try to resolve them. We've been at this for 12 weeks now, and it's not just one way. It's not just pushing suppliers harder. It's also doing redesigns, alternative products, finding different ways to generate revenue. I think we've got a pretty good playbook. I won't understate this, the challenges are real and fairly substantial. Our next question comes from Julian Mitchell from Barclays. Julian, over to you. Thanks very much. Yes, good morning. Maybe my question would focus on the revenue outlook in aerospace. Because I think the guidance for this year has come down three quarters in a row now in that division. I just wanted to try and understand your level of confidence in when the defense and space piece will return to growth again. Is it sort of early next year or towards the end of the year? Also any updated thoughts on commercial aero aftermarket and how you think your own revenues will lag or move in line with the recovery in traffic because of spare parts and so forth. Okay. Julian, a couple of points. On defense and space, as you saw, we kind of had Frankly, a bit of a disappointing double-digit negative for Q3. Remember that had we not had some of these supply chain challenges, which really became very evident in Q3, because think about these as Q3, Q4 suppliers, which are smaller, which reduced capacity during the pandemic, and now we're getting a lot of demand, not just from us, but probably some of the other aerospace players. It's going to take some time to work through that. We would've been down mid-single digits in Q3 had that not happened. We have, unfortunately, more past due than we want, defense and space. That's went up substantially in Q3, and we've got to work our way through that. What I will tell you about defense and space is if you look at our book keeps, or where we are at this cycle, early Q4 versus where we were at the same period of last year, that gives us quite a bit of confidence that we're looking at flat to low single digits. That could get even better. I don't know that it's going to get a lot worse. What we're seeing here is, if you recall, if you go back to 2020, we had very strong orders and revenue in 2020 in defense and space. You see the effect of some level of usage and de-stocking by some of those defense and space customers and distributors. We're optimistic about normalization in that in 2022. Based on what we see today, and this is important to state today, and this could change, we see flattish to low single-digit growth. Let's now switch gears and talk about commercial aftermarket. We see that continuing to improve it. You saw that strong growth in Q3. We think it's going to continue to get better. We're still nowhere near the 2019 levels, but it continues to get better. As you know, November 8th, we're going to open up the borders and more international traffic is going to step up. As more international comes back, as COVID abates, which we think we're going to happen here in Q4 and Q1 next year, we see continued growth in our aftermarket, coupled with stronger growth in OE, both in air transport as well as BGA. The setup for aerospace, we think for 2022 is quite good. Greg, I don't know if you've been through that. No, I think you got it. Great. Thank you. Thank you. Our next question comes from Scott Davis from Melius Research. Scott, over to you. Good morning, guys, and Anne. Hopefully you can hear me okay. Darius, can you quantify what you think supply chain cost you in revenues in the quarter? Do you have a sense of that? Oh, yeah. If you have a sense of that, Darius, do you have a sense of, can you delineate between a lost sale and a delayed sale? How much of that is kind of gone forever versus just pushed into the future next quarter or whatever? No, I can. Think about the impact in Q3, about ±$300 million, and think about what's embedded in our Q4 outlook of an impact of $300 million-$500 million. In terms of lost forever versus pushed, it's not lost forever. As I talked about, unfortunately, some of our past due is going up, and that went up $200 million-$300 million just in Q3. It's not lost. We've got to be able to get our supply chain to function much more effectively and efficiently, and that's exactly what Torsten and his team are working on. We don't envision that as lost. Customers still need those products. Frankly, I think, when this earning cycle ends, I don't think we're going to be that unique in terms of some of the bottlenecks that we're seeing. Okay. Thank you. Good luck, guys. Yep. Thank you. Our next question comes from Nicole DeBlase from Deutsche Bank. Nicole, over to you. Guys, good morning. Morning, Nicole. Morning. Maybe you could talk a little bit about how you're thinking about driving 4Q margin expansion despite, at the midpoint, a revenue decline. The reason I ask is just how are you driving cost-cutting in an environment where I know things are tough, but you're also up against a very strong backlog with the potential for growth to really bounce back in 2022. How do you balance that against cutting costs for the short-term issues that you're facing? Well, first of all, Nicole, cost-cutting is not what we're doing. We're actually investing this year, particularly in businesses like Intelligrated, which are growing at clips that probably no other business has seen before. The biggest lever here, and I think one of the best operational stories for Honeywell that you see here in Q3, is our pricing discipline. We think we gain in terms of a price cost 40-50 basis points of margin expansion, and that's what you're seeing come through in our margins. I think that was a terrific commercial execution by the team, and they did a great job. This is not so much a function of cost-cutting. This is more of a function of commercial execution. Greg? Yeah, I would agree. If you think about it, Nicole, last year, obviously, we were in a substantial cost-cutting mode, and our repositioning pipeline and the projects around that reflected it. This year, we always say that we continue the productivity playbook, fixed cost power one, create operating leverage by growing sales and holding fixed costs flat as just a mantra of the way we work. To Darius's point, we're not doing massive cost-cutting. We are being smart about where we're putting it back, though, and we are using the things that we spoke about last year in terms of automation and our digital capabilities to help us deliver. I'll be honest, the supply chain work that we're doing, that Torsten and the team are doing, are very much enabled by our Honeywell Digital tools and capabilities, and some of the visibility that he's put into his own capabilities in the supply chain to manage. This isn't about cutting costs, it's about managing them properly, and we are investing back in the business, as Darius mentioned. We're going to be doing it diligently. I feel pretty good about the margin rate expansion. You would see the implied margin rate expansion is a little bit lower than what our guide was previously, simply because the sales numbers are down. We'll have a little bit less operating leverage from an opportunity standpoint, but still very healthy margin expansion in Q4. Just to add to that, Greg, this is an important point. Honeywell Digital kind of has two elements. Number one is it helps us to operate the business better, and Torsten and his team have done a great job instrumenting exactly how do we uncork some of these bottlenecks that we're seeing. It's not perfection. It's not that we're going to completely avoid them, but I think we're doing a nice job. Second of all, which is continue to drive productivity, as Greg pointed out, through automation. Automation is a big lever for us, and one that frankly we're using aggressively, both in our manufacturing facilities, but also in the office environment. It's been enabling us to drive productivity. Thanks for the clarification, guys. Super helpful. Yeah. Thank you. Our next question comes from Jeff Sprague from Vertical Research. Jeff, over to you. Thank you. Good morning, everyone. Hey, Jeff. Hey, good morning. Sort of a related question. Darius and Greg, one of the other themes out of earnings season so far is kind of the double-edged sword element of backlog. In other words, things not priced in the backlog for the current inflationary market. Given that you run with relatively large backlogs, I just wonder if you could address the profitability in your backlog. Do you have inflation protection? Any particular headwinds we should think about as that backlog converts? That's a very good question, Jeff. We've thought about that one. You're right. With aged backlog, you got to be very, very careful, because if you don't go back and revisit your backlog and reprice it, then you're going to have a problem. I can tell you that's a very active exercise we're doing because as you can imagine, just to quote some figures, steel is up 198% year-over-year. Nickel, 25%. Copper, 46%. Aluminum, 66%. These are fairly substantial increases. What we've been doing in, more or less, all of our businesses, and particularly long cycle ones, is trying to go back and reprice some of our backlog. You kind of almost have to do that because, not to even mention labor inflation, which we're also seeing. It's part of our playbook, part of our exercise, and exactly what we've been trying to do. Okay. Thank you very much. Our next question comes from Josh Pokrzywinski from Morgan Stanley. Josh, good morning, and over to you. Hey, good morning, everybody. I guess one question for Darius, and Torsten, since he's on the line as well. How's that $500 million of supply chain that you guys talked about at the 2019 Analyst Day looking? You're probably looking at the composition of that a little differently today, just given how much has changed. Then just a smaller follow-up, how do we think about the cadence of UOP catalyst shipments from here? Those look pretty solid in the quarter. Let me start with the UOP question, I'll turn it over to Torsten for the other. UOP's bookings remain very, very strong. You saw that both in revenue and booking rates here in Q3, we're optimistic. Keep in mind, which really gets us excited also, and I've talked about this before, HPS follows UOP by a 12 to 18-month cycle. UOP leads, HPS follows. That sort of gives you another good indicator that we should see a nice impact in HPS 12 to 18 months from now. We've done this analysis before, that's the typical lead lag cycle. Not only is this good news, let's face it, we all read the same articles. The world needs more energy. Some of it's going to come from renewables, frankly, some of it's going to have to come from hydrocarbons as well. We think that's, overall, the world right now is energy short and there's going to have to be a reinvestment cycle, both in renewables, and to some extent, hydrocarbons. I'll turn it over, Torsten. Yeah. The $500 million there, split primarily between our short cycle business, especially in SPS and PMT, and the long cycle business in aerospace. That's what we are seeing. First saw a dramatic impact on the short cycle business, now in Q3, really saw that supply shortages are kicking in also in the long cycle in the aerospace business. The majority sits primarily in the semiconductor-related short cycle business. Okay. Thanks a lot, guys. Yeah. Thank you. Thank you very much. Our next question comes from Deane Dray from RBC Capital Markets. Deane, good morning. Welcome back, Deane. Our next question comes from Andrew Obin from Bank of America. Andrew? Yes, can you hear me? Yes. Yes. Good morning, Andrew. Good morning. Just a follow-up question. On China, when are you guys s ee China re-accelerating? Another question is, if I look at HPS and UOP, China has been a huge market, huge source of growth, and what we've been reading is, because of these energy constraints in China is reassessing some sort of more commoditized energy-intensive industries like textiles, but more importantly, chemicals. We've read about some large chemical projects being canceled. What does it mean for sort of HPS and UOP in China going forward? Thank you. Well, first of all, we actually, just to give you a data point from Q3, our growth in China continues to be robust. We were up high single digits in Q3, and we actually don't see that abating. Our position in China continues to be very good. As you know, there's probably a focus in China right now to actually generate more energy, particularly to support the industry right now that's happening into Q4. We actually think that's going to create a very favorable investment environment and business opportunity for us. The other business opportunity for us, which we're very excited about, is a focus in China on sustainability. When we think about some of the UOP HPS solutions and our sustainability technology solutions business, that's going to create a giant opportunity for us in China, and frankly, one we're very excited about. We think that there's going to be kind of a twofold opportunity here. I think there's going to be a reinvestment cycle in what I call a little bit more of the traditional energy, but really an accelerated and more pronounced investment cycle in renewables. As you know, we have a very strong position in China, and we think we could be a major player in that sustainability play. Our next question comes from Andy Kaplowitz, from Citigroup. Andy? Good morning, guys. Morning. Morning. Darius, many of the multi-industry peers that you have have been relatively acquisitive over the last six months. We know Honeywell's been active also, but its level of activity has been maybe a little lower given the size of your company. Is this just a function still of valuations being pretty high? I know, Darius, you've spoken about this before. You've spoken last quarter, I think, just about being more aggressive with the balance sheet. What does that mean? Do you see a step up for Honeywell on M&A-related activity over the next year? I think M&A is sort of the still the desired way to deploy capital. We have done Sparta this year, although it didn't require cash. We think the CQC Honeywell Quantum Solutions is a very important and meaningful transaction. It's a merger, not a deployment of capital, but nevertheless, it is a transaction that's critical for us. We just did Performix. It's a smaller acquisition, but it's a critically important one. You see a little bit of a pattern, right? Sparta, life sciences, Performix, life sciences. We like that segment, and we're going to continue to look. With this kind of interest rate environment that we have today, the M&A market is overheated. It is what it is. I've said we're not going to stay on the sidelines forever. Versus any historical metric, the multiples are high. I don't love it, but the market is what the market is. It doesn't mean we're going to stay on the sidelines forever and wait for it to turn. It's been this way. If interest rates go up, I do think it'll probably cool off a little bit, which may allow us to be even more active. We are active. We're looking at numerous deals, and nothing is 100% in the world of M&As, but we're hopeful we're going to be able to get something done, and certainly want to deploy our capital in that way. It has to be the right business. It has to fit our technology orientation, has to be at the right value for it point, although nothing is cheap these days. We're thrilled with what we're doing with Sparta. I think that's been, looking back at this, it's been about six months plus since we've acquired that company. It's going to be a winner. I'm very confident with that. Appreciate it, Darius. Thank you. Our next question comes from Peter Arment from Baird. Peter? Yes, can you hear me? Yes. Yes. Good morning, Peter. Hey, good morning, Darius. Greg. Darius, maybe you could just talk a little bit about how you're viewing SPS kind of margins, the outlook going there. You talked a little bit about kind of improved mix and execution, but obviously you're up against some headwinds there in that business. You talked a little bit about supply chain and also just the PPE business declining. How should we think about just kind of the outlook improving margins in SPS? Yeah. Well, as you know, the fastest growing business in SPS is Intelligrated. It is margin dilutive. We've been talking about that. Look, that business grew 60% this quarter. Any business growing at that kind of pace is going to have some challenges. You coupled that kind of level of growth, which pulls on things like electronics, steel, metal, with the supply chain challenges we have, it's going to have some efficiency challenges, particularly since there's a strong correlation between third party buy, our own manufacturing, and installation. When those things don't work together well, there's some challenges. I can tell you we're investing heavily in that business to really prepare it to be a $4 billion or $5 billion, $6 billion business, which is the path that it's on. There's an investment play, there's an efficiency play and so on. Having said that, a lot of our other businesses, such as AST, such as PSS had an absolutely terrific quarter. PSS has been a great success story for us. It's winning in the marketplace. We think that this sort of margin challenge is going to abate over time, particularly as we made some of the process improvements and investments. Yeah, I would just echo that. We've always talked about this as creating an end market for ourselves to follow later with service and software. That's still our expectation. As Darius mentioned, when the material availability doesn't match up with the installation labor, it becomes challenging, and that's really what we're facing right now. We'll get through it. It's this availability of material throughout the supply chain creates some big challenges when you're seeing this type of growth. Appreciate the color. Thanks. All right, our next question comes from Deane Dray from RBC Capital Markets. Deane, are you there? Yes, thank you. Good morning, everyone. Hey, Deane. Hey. Hey, Deane. Hey, sorry, I was juggling multiple calls this morning, so thanks for letting me get back in. I want to circle back on a topic that Josh raised, and just the idea of UOP leading HPS, and it just begs the question about the oil and gas industry CapEx cycle. It's really been slow to recover here, but now with that spike in oil prices, what's your expectation on release of new projects? Even as simple as MRO has still been lagging as well. What's your outlook there, please. Yeah. I think this is becoming fairly obvious, and we all read the same articles and see what's going on, which is there's going to have to be a reinvestment cycle. As much as we all want sustainable and renewable technologies to take over the energy needs of tomorrow, it's probably going to be a little bit of a longer journey. It's very clear to me that there's going to be a reinvestment cycle. We're seeing a good reinvestment cycle on, I call it, some of the shorter projects, refurbishment-focused at the installed base, but we're strong believers there's going to be a fairly strong reinvestment cycle in 2022 and 2023 here. I think that's necessary. We're bullish on that segment. Certainly, the price of oil, price of gas support that kind of investment. If you look at gas and oil, they're very attractive levels. What we need now is some level of stability. That's good. Let me give you a couple of other specific data points, Dean. Our renewable fuel orders this past quarter were up 86%. I think we forget sometimes that we just characterize UOP as oil and gas. It is not just oil and gas. It has an incredibly strong green fuels portfolio, which is winning in the marketplace, and it's seen 86% growth. Also, some of our energy storage controls orders were up 64% this past quarter in our HPS business. Those are just a couple of data points for you that we are very excited about the energy future. We have a portfolio that's going to play in it. Having said that, there's going to have to be a reinvestment cycle in what I call the old energy infrastructure. That's real helpful. Thank you. Thank you. All right, our next question comes from Joe Ritchie from Goldman Sachs. Joe? Thanks. Good morning, everyone. Morning, Joe. Guys, when I take a look at your performance just from a growth standpoint and what we're seeing from a backlog orders perspective, HBT is probably the one where we're seeing the biggest disconnect. I'm curious if you can maybe just provide a little bit more color on whether it's specific components, labor, what specific regions you're really seeing some of these supply chain strain issues, and when we would expect some of that to alleviate for the growth to really pick up. This is one of the places where the electronics shortages are very acute. The fire business in particular uses some very specific semiconductors, which have been extremely short. I think Doug Wright and the supply chain team have done a very good job of trying to free up capacity from other distribution points. We talked a little bit about the re-engineering work. They've done a lot of re-engineering to try to include different chipsets into some of their platforms. This one is really pretty acutely tied to the whole capacity expansion that's going on in the fab industry. I think we're going to feel this, we talked about the fourth quarter and into the first half of the year, this is one of the businesses I think we're going to feel that probably more than others. It will come to an end. I think it's not 1,000 parts, it's measured in tens of parts here. Okay. Thank you. Our last question comes from Sheila Kahyaoglu from Jefferies. Sheila, over to you. Good morning, Darius and Greg, and thanks for fitting me in. Morning, Sheila. Greg. Good morning, guys. You guys noted it to an earlier question too, defense was down mid-single digits ex the supply chain issues. Yeah. Maybe could you parse a little bit about how much of that mid-single-digit decline came from U.S. DOD O&M budgets declining versus international programs? Somewhat related to that, margins are still growing pretty nicely despite the supply chain issues and the OE growth in the quarter in Aero. Was defense materially lower, or was there better price in the segment? Maybe I'll take the last one first. Think about the operating leverage that we're getting across the portfolio, pretty heavy in aerospace in particular. We talked about our cost reduction programs last year. Aero was at the top of that list, PMT second in terms of the level of fixed cost takeout. Part of what you're seeing from aerospace in terms of almost 400 basis point improvement is a big operating leverage that they're getting even though it's on only 2% revenue growth. In terms of the split between U.S. DOD and international, I think what we're seeing is similar to what we spoke about before. The U.S. DOD and international are both down from a demand perspective as we're going through that recalibration, if you will, on some of the pre-buying that had been done last year. We do see the supply chain issues that we're having are really in a lot of the mechanical spaces. I expect that we'll start seeing that improve as the aerospace supply chain complex ramps up into the fourth quarter, into the early part of next year. I don't know if Torsten would want to make a few comments on that. Yeah. We've seen this in 2018, 2019, and we were eventually able to grow this by 18%, 19%, 20% year-over-year, and this will kick in the next couple of quarters. Great. Thanks so much. Thank you. That concludes today's question-and-answer session. At this time, I would like to turn the conference back to Darius Adamczyk for any additional processes. Darius, over to you. I want to thank our shareholders for your ongoing support. We delivered strong third quarter results and continued to navigate effectively through uncertainty while gaining traction in key strategic growth vectors and positioning ourselves to capitalize on improving key end markets. Thank you all for listening, and please stay safe and healthy. Thank you. Thank you. This does conclude today's conference call. You may disconnect at this time. Have a wonderful day.