Welcome to Honeywell's 2023 Investor Day. Please welcome Vice President of Investor Relations, Sean Meakim. All right. Good afternoon, everyone. Welcome to Honeywell's 2023 Investor Day, which we're very excited to host here at the Nasdaq Market Site in New York City. It's great to see so many familiar faces. I don't think we've seen all of you in one room in a number of years, really great to see. Honeywell first listed our shares on the Nasdaq in 2021. This morning, Darius and Vimal had the opportunity to ring the opening bell, along with their leadership team and a group of 30, 40 employees of Honeywell. It's been a great partnership with Nasdaq. I want to thank Nasdaq for their great partnership with us so far. We have a lot of great content to share. First, if you all just take a moment, just check your phones, make sure you silence them for us, please. For those listening on the webcast, you'll be able to follow along with the presentation as the slides are presented. Now with the required statement, today's webcast and presentation materials, including non-GAAP reconciliations, will be available on our investor relations website at the conclusion of today's session or about 3:30 P.M. Eastern Time. From time to time, we post new information that may be of interest or material to our investors on this website. Our discussion today will include forward-looking statements that are based on our best view of the world and our businesses as we see them today and are subject to risks and uncertainties, including the ones described in our SEC filings. Okay. With the formalities out of the way, let's turn to the agenda. We have a combination of presentations and thematic panels, lined up for you today. Given the condensed format, we don't have any official breaks, so if you need to get water, use the restroom, feel free to do that as you need to. I'll be the moderator of the panels for the discussions today. We have a wide range of leaders across the businesses. We'll leave time for some of your questions at the end of those panels. Following today's presentation, you'll have the opportunity to spend time with some of our leaders from Honeywell Connected Enterprise. We have several demonstration booths that'll be available during the cocktail reception. Each station is equipped with a subject matter expert, someone running the business, as well as one of our executives. You're gonna see a customer video as well. Honeywell's executive team will also be available for continuing the discussion beyond the presentation. Looking ahead at the lineup today, you'll hear presentations from four of our key leaders, and the governance room is pretty familiar with Darius, Vimal, Greg, and Anne. During the panels, you'll get a chance to see more of the breadth and depth of our bench as you see a number of our leaders across our different businesses and among the leadership team. With that, let's get the day started. To kick things off, I'll bring up Chairman and CEO, Darius Adamczyk. Please welcome Chairman and Chief Executive Officer, Darius Adamczyk. Well, good afternoon. Welcome, everyone. You know, just a moment of levity. Any Succession fans in here? Ever see how they did their investor day? I did not get inspired by that. I didn't think that would be a good idea. It was interesting to say the least. Nevertheless, maybe a couple of things before we get on with the real content, and maybe this is a good thing, but, you know, we made two announcements this week, and I don't know if any of you noticed, but both of them really have the potential to impact the world for the long term. The first one being progress in terms of our quantum computing technology. You know, this is the first time that anyone has been able to create natively fault-tolerant qubits, and that is a breakthrough that no one has ever been able to do. We think about the future of quantum computing, NLP, natural language processing, and AI, that's really what's gonna enable it. You know, maybe all of us sort of who are not technology acute may not understand, but I can assure you, if you talk to anybody that's fully aware of quantum technology, they're gonna tell you that's a real breakthrough. The other breakthrough that we announced this week, when you think about green fuels and particularly SAF, one of the core key limitations is feedstock, which is used to be greases, oils, and fats. The real issue with green fuels is how are you going to get feedstock? Where's it going to come from? We now came up with a new process, eFining, which basically uses green hydrogen and CO2 to create SAF, to create green gasoline, green diesel. That changes the game completely because you're not now limited by feedstock. Just to give you a statistic, Vimal and I talked about it this morning. In the last 12 to 14 months, we've won 36 green fuels projects, and we anticipate 50 before the end of the year. That's the kind of position, that's the kind of technology that we have in terms of positioning. Just kind of a little... I didn't want that to sort of slip by because they were two pretty important announcements. I'm gonna spend a little bit of time talking about the period that I was CEO, and then Vimal will talk about the future and some of the great things that he's going to do. I think it's safe to say that during my period, we focused a lot on self-help and transformation of Honeywell internally because, frankly, Dave did a great job bringing the company from what I call a break-fix state to being a respectable company. I wouldn't say it was a streamlined, contemporary, digitized, well-organized company. He did an incredible job in terms of the accomplishments that he did. To position it to the next stage of growth and innovation, it needed to change, whether it's through our ISC transformation, whether it's through our Honeywell Digital, the creation of the Honeywell Connected Enterprise, which is our software business that Kevin leads. These things have successfully transformed Honeywell. Our connected enterprise business has grown 15% since 2019. Maybe we don't talk about it often enough, maybe we should, but it's actually been a really big success, and that kind of growth rate is accretive, and it's margin accretive to what we do. We actually did 16 acquisitions, five divestitures or spins. We consistently beat our peers from a TSR perspective. We beat the XLI five out of the last six years. I wish it was six for six, but reality is it's five out of six. What I'm gonna do next is I'm gonna be executive chairman, which I'm actually very excited. I am gonna add value to Honeywell. It's not, it's not a Queen of England position. I am particularly gonna be contributing and helping Vimal with a lot of the BD work, a lot of work on strategy, customer outreach, and so on. He's clearly gonna be running the business, but I'm there to kind of take a little bit of the workload off and help him with some of the things and really assist him in any way I can. Lastly, but maybe most importantly, hopefully all of you get a chance to meet Vimal. He's a tremendous leader. He's got a great track record at Honeywell, 34 years at Honeywell, and I personally have known him for more than a decade and have a great working relationship. All of you have seen this value creation framework, seven layers. I'm not gonna read this to you should kinda take away two things from this framework. The first one is Honeywell is always going to be about health, self-help, and transformation. Simple reason. The reason is the investment returns on investing in yourself when you know what you're doing is superior to anything else you can do. You compare that versus, let's say, M&A, the returns on that are substantially greater. They're not even in the same quantum. The second, which is Accelerator, is the how. The seven things are the what. We're always going to enhance Accelerator and make it better and more compelling and change it to keep the company a contemporary. It started out under Dave. We called it HOS or HOS Gold, which was primarily focused on integrated supply chain, transformed into a lot of other elements I'll talk about in a minute. Vimal is gonna take it yet to new heights. How did we do? What was our performance? If you take a look at our performance, you know, we kind of talk about the three eras. The break-fix era was sort of a low single-digit growth rate, good level of margin expansion. What we've done is we've really changed that. If you allow me to exclude 2020, which I think should be allowed to do, we've grown mid-single digit every single year, and then we've expanded margins on a continuous basis. What Vimal is gonna do is he's gonna take that out growth algorithm up from here, and he's gonna explain exactly how. This is a fundamentally different company today than it was in 2016. It is significantly a much better position for the future. Let's talk about portfolio evolution. You know, probably the obvious things, Aero is a smaller part of our portfolio than it was back then. Performance materials and Aero are about the same now, and obviously SPS and HBT are the other segments. The other key thing here is that in some of our bigger acquisitions have actually done incredibly well, whether it be Intelligrated or Sparta. You see that 15% compound annual growth rate for Intelligrated. Just last year, we grew just about 50% in Sparta. They've been really great investments, and we've integrated them well. Maybe proactively, I wanna address the elephant in the room because some of you probably ask. I'll save you time on a Q&A, which is why didn't you do more acquisitions? There's three reasons why. Let me go through them all. The first one is, if we take a look at the multiples that were paid in the last five to six years, you can see that there's a significant difference in the multiples paid versus the past, the prior five or 10 years. What you have to do is you have to then work that math backwards to say, "What would you have to do to actually generate that kind of a return?" Well, even when some of our competitors buy a company, we actually do that math. Sometimes it really leaves us scratching our heads is: Are you really gonna generate compelling returns for your shareholders? I know it gets a lot of headlines, but there's gonna be a time to pay back on that money, and you're not gonna know it for two to three years, but it is gonna show up. The second reason, we love our portfolio. We have a lot of confidence in the current portfolio. We just committed to you we're gonna do 4% to 7% organic growth rate, and we're not in niche-y markets. We're in big markets, and that's a function of the fact that we've transformed the company. We're focused on innovation. We have utmost confidence in what we're gonna do in terms of both productivity and top-line growth. When you're gonna grow a company of our size at 4%-7% that's in core markets, we don't feel like we have to do acquisitions. The last, and maybe as important reason as any, we're really focused on getting ourselves ready to do acquisitions because you have to be well streamlined, organized. You have to have a digital footprint, a manufacturing footprint that makes sense. You know, we had to do a lot of work to transform the company to get it ready. The probability of having a successful post-merger integration once you do that kind of work is dramatically higher. When you integrate something into a mess, it's not gonna create great returns. What did we do? Some of the transformation initiatives. These are the maybe the three of the biggest ones we've done. These aren't the only three because we did a lot of work on breakthrough initiatives, innovation, commercial excellence, and so on. These three, I think, really stand out. Supply chain, just to give you some statistics. We shut down about 38% of the sites in which we operate, and we improved our profitability per square foot by over 20%. The ISC transformation is not just about footprint. We also digitized everything we did. We have a common platform. Everything is done through the use of analytics, KPIs. Torsten today can tell you exactly what's going on in any one of our facilities. We're doing our supply chain planning, our matching my supply of our demand, our SIOP planning. The level of sophistication that's in our supply chain is exponentially different than it was seven years ago. Honeywell Digital, probably our most ambitious initiative. When you can go from 2,800 applications, 1,700 websites, 160 ERPs, no data strategy, no data cleanup, no common processes. Every SBG, which is our business units, had their own IT strategy and IT platforms that they use. Now when you can do that and actually transform it, and everybody across the whole corporation uses the same thing, and you go from 160 ERPs down to 10 or 12, wherever it is, that's a fundamental change. Oh, by the way, all the data that we now use comes from one place or our enterprise data warehouse. I mean, I remember anecdotal when I first started, and I, you know, well, it wasn't even Greg then, but his predecessor, I'd say, "Hey, run me some analytics for to some business issue." Would literally require seven financial people, it would require eight sources of data, they would pull together 10 spreadsheets to give me an answer. You know what happens now? We go to one source, it's automatic, we can pull information data in a matter of seconds. Things that would take days to do. That is fundamentally a different business. Connected Enterprise continues to add value through innovation, through our installed bases that we have of our customers. The results speak for themselves. The business has grown 15% compound annual growth rate and at a margin that's net accretive to overall Honeywell. Vimal will tell you what he's expecting from HCE in the future, I think you're gonna find it impressive. We didn't just focus on the P&L statement, we also focused on the balance sheet. If we de-risk the pension plan, we're now funded at 125%. We match the liabilities with a fixed income stream. The probability of us ever needing to fund our pension are very low and probably near zero. We probably have as strong a pension plan funding as any company in our space. The second part, we've also matched some of our liabilities with some of the spins, they carry some of the responsibility for some of these liability agreements, we're able to match the cash inflows, the cash outflows. Lastly, but really importantly, we completely removed one of our liabilities from the balance sheet at the end of last year, that being NARCO, which removed a bit more than a third of our overall asbestos liabilities. For those of you that follow other companies, and I won't name them, whenever you can remove a liability from your balance sheet, you should do that yesterday because you never know when it will actually implode and actually completely change the basics of the company. I'm not gonna name them, but I know all of you can name them. Here's a snapshot. Here's what we look like today versus 2017. In fairness, we actually didn't look so great versus our peers from an organic growth perspective last year. We hit our... If you take a look at every metric, gross margin, segment margin, free cash flow, ROIC, we're better than we were, in most cases widened the gap between ourselves and our peers. That didn't happen by chance. That happened because we spent a lot of time, effort to transform the company, something that we worked on literally daily, weekly, and it's something that I was personally involved along with all my business leaders, functional leaders, so we did it together. It may not be the most interesting thing to write about, but it does make a financial difference, and it's probably the best return you can get on that time and investment. You know, in every one of these presentations, there are charts that I'm gonna ask you to remember. This is one of those charts. If you take a look at our top line growth rate, just, actually, our peers are growing a little bit faster than ours. That's the bad news. The good news is if you take a look at our segment profit growth, it's 2x our sales. If you compare that versus our peers, we are significantly ahead of them. This is how you create value. You create value by growing your segment profits. You don't create value by growing your top line. We could actually grow a lot faster than this. Because of our technology and because we're very selective in what we do and what we don't do, and frankly, we don't take low margin jobs about an aftermarket component. We take things that either create a strong aftermarket or are profitable, and we can charge a premium because of our technology differentiation. I think that is one of the key punch lines in terms of what Honeywell is and why, hopefully, you're invested in Honeywell today. A little bit of a review. You know, we created about $56 billion of market cap since 2016, which I think is pretty good. Of course, I wish it would be more, but it's not a bad outcome because actually if you take a look at the $56 billion created, if you look at the same number from 2002 to 2016, it's not much lower. What we created was nearly the same thing in seven years versus what we did in 14 or 15. If you take a look at our TSR versus the XLI, which is probably the best thing that you can compare it to, as I mentioned, we beat that index five of the last six years, and we have every intent to beat it again this year. We changed our financial algorithm last year at Investor Day. We didn't do it because it would just appease to investors. We did it because we have the utmost confidence in what we're doing and the transformation that the company has gone through and over the course of the last seven years. That's why we did it, both on the back end and the front end of the business, both on an innovation growth side as well as productivity, digitization and so on. We went from 3%-5% top-line growth and 30%-50% margin expansion. By the way, our say matched our do. We exceeded that. We're at the top end of that. From a margin perspective, we substantially exceeded that. We increased that last year to 4%-7% and then 40%-60%. We achieved that last year. We're very much on track to do it this year and looking forward to next year, it's looking like it's going to be another way where we're going to kick that field goal right in the middle of that range. We've got a great company. Now as we deploy capital more aggressively, we've got a great foundation to build on. Finally, just to kind of wrap up, a couple of words about Vimal. I've known him a long time. We worked together a long time. He has a great track record. He's run some of the most complex businesses within Honeywell. He's improved them under his tenure. He's certainly ready. He's a great leader who can take this company to its next stage and continue to create value and accelerate it. Great. On that note, say thank you and, Vimal. Please welcome President and Chief Operating Officer, Vimal Kapur. All right. Good afternoon. I think I'm in a very tough spot when every eye is on me on what he's going to say. His holy spot. On a serious note, I know there is a, you know, expectation to what's in his mind, and I'm sure at the end of 30 minutes, you will get to know a lot more about it. Before I jump into that, just wanted to start with the point which Darius made, that I really feel I'm leading Honeywell at a time when our portfolio is in extremely strong position. I really feel excited about it because look at the macros where we play. Be it air travel, be it energy transition, automation, digital transformation or digitalization. This is where we play at the center of Honeywell portfolio. Each one of them have a long growth momentum, 15 years, 20 years, or even longer. Having ability to lead a company at its time is a great opportunity. The platform we have created, gives us a strong runway. I just want to start with that point that I really feel excited about this fact that how well we are positioned here. The question is now: where do we go from here? I really look at it from two side of the equation. The first is what are you not going to change, and second is what are you going to do differently, right? There obviously going to be two side of the house. First, let's deal with the left-hand side. The first three things which I believe should not change, which Darius talked about. The first is our financial commitment. There's obviously, you know, there could be fear that the new guy come on the block and he's gonna say all the numbers were wrong. That's not true. I absolutely commit to the financial algorithm we committed last year in the Investor Day. Darius reiterated that. 4%-7% organic growth, 40-60 basis point of margin expansion and mid-teens of cash generation. Absolutely. We're going to do that. That's not changing. If that question was in your mind, please erase that question because we're going to deliver on that commitment. How we do it, that mechanism will change because we need to get better, but what is not gonna change. That's the first thing. The second is, how do we preserve the Honeywell's mindset on execution, commitment to outperforming all cycle, say, do, and our execution mindset that we deliver on our commitment on what we say, and absolutely want to preserve that. I feel really proud to be part of the company. We performed well during the COVID year, where our decremental margins were way better than our peers, even though we got hit by very bad downcycle in Aero and oil and gas. We dealt with the inflation with pretty good outcomes in terms of how we dealt with our pricing. That execution mindset to deal with very diverse problems, be it supply chain issue, inflation issue, the downturn cycle, that's the DNA of the company, and we need to preserve that. We cannot just let it go because there is a leadership change and certainly want to drive that. Third is our commitment to ESG. We as a company has a strong commitment to ESG, both internally on what we have committed, but also our portfolio that how aligned it is to the ESG trend. Those three things are working well. There is no need for me to change it or poke it. If any, just make it better and, you know, keep it running. What I'm gonna do different. I think there are three opportunities I believe I can do differently. First is how we make the organic growth Algorithm up from where we are. 4%-7% growth for a business like us is pretty attractive. How we deliver on the upper end of the equation and not on the lower end of the equation, something has to be done to enable that. It's not going to happen because I want it. We need to do something about it. I'll talk about that first theme, how do we accelerate organic growth and more innovation? That's my first focus area. You can also imagine that's a little natural given my huge background in the company. I will offer a lot of point of view on where we should go, where we should not go, and that's kind of a natural bias I'll have. The second is Honeywell operating system, which we call Honeywell Accelerator. I believe it has more runway to add value to Honeywell. It's not that we are done. It's always. You can be a bit speculative that all large companies will talk about operating system, but we believe in it. We practice it. We're gonna make it better, and it's gonna become another source of profitable growth of Honeywell. That's the second theme. I'll talk about it. Third is the portfolio that the transformed Honeywell, which is more nimble, which is more digitized, how do we really leverage that and further improve our portfolio? We make our portfolio more contemporary, and we deploy our capital in a smart way. I'll talk about those three themes, and hopefully, you'll get more ideas about my thought. Let's move to the first theme. How do we grow better? What can we do differently? I think there are 4 things we can drive, different to drive better organic growth, but it starts with a strong foundation. I cannot forget the foundation we have in automation and control, digitization, and sustainability. We got a great start, so we need to build upon that without distracting it. The 4 things is, first is, really driving our innovation playbook. I believe you can smartly invest R&D capital, and I'll talk about that in my chart, that if you spend R&D money differently, you can grow better. That's idea one. Idea two and three is really overdrive our focus on sustainability and software, something we do well, but this is a mega trend on which we want to ride building upon our strength. Finally, we maintain our strong position in High Growth regions. When these four things come together, they allow us to perform at upper end of the algorithm of 4%-7%, which we have really committed. Let's talk the first one. What does the innovation playbook means? What I'm trying to do differently here? If I look at this chart, the x-axis is offerings, the y-axis is markets or customer. The bottom left-hand side corner, where you're serving your current offerings to current customers, you have to invest R&D dollars there because that's your businesses today. You can't say it's a bad idea to invest R&D dollars and keep your new products vitality, NPI vitality. That's what we always have done well. That's how we keep our share. Another evidence of that is that's how we got our pricing because of we do perform better than our competition in our core products. Something we do well. What we're gonna do differently is really invest on two opposite end of the quadrant of this chart. Building offerings for our existing customers, we're building new offerings. What are the examples of that? What are we gonna do new for our existing customers? Selling more software. Our whole HCE strategy is primarily building new offerings for our existing customer. That's the very foundation of our software business, or growing our sustainability offerings for our existing customer is the very foundation of it. That's an example of doing new offering for existing customer. On the y-axis, you sell your current offering to new customers. What are the examples of that? What are you gonna sell? What do you have today to a new set of people? Sensors for the EV cars, new markets, but we have sensors today. Solstice for heat pumps. Heat pump is a new category, but we have Solstice molecule. We can create application for that. As defense and space business is expanding outside U.S., it's a good news for us. We can sell our products to them. There's some work required there. The fundamental strategy here is very simple. Invest more money in those quadrant and increase your served available market in a very conscious manner. It means you really drive that spend tops down and make sure that you are having the constant impact of that year after year. The way it works is, I've seen in my earlier life, is the compounding effect really plays. If you start with a new segment, you may start with $50 million, it grows to $100 million, it grows to, you know, $200 million. The compounding effect really makes it very attractive in year three, four, and five. Really spending your money differently. One point I wanna highlight here is we will maintain our% of R&D spend, as we grow, hopefully, we have more money to spend automatically. It's not that we're gonna raise our R&D spend, percentage remains more or less flattish, we spend it more smartly. Before I walk off from this chart, the breakthrough initiatives remain important. This is where we are investing R&D dollars, new customers, new markets, new offerings. It's important. This is creating higher enterprise value. These play out in five, seven years' time from now. Quantinuum is gonna play. Urban air mobility is gonna play. Green hydrogen. We are investing in that because eventually those trends are gonna occur. It's important to invest because Honeywell has to be good today, good in two years from now, and good in five years from now, we need to just play all those cards all the time. That's point one, how we invest smartly in our R&D. The point two is how we improve our position in sustainability. Now, we already have a strong position in sustainability in our portfolio today. The way to look at this chart is start at nine o'clock position in measurement and reporting. Every customer needs to have real-time measurement of emissions because of reasons of more reporting is gonna come into in vogue very soon. It's almost evident that you need to pay more attention to your true baseline. In emerging opportunity, some market which we are building and growing, we really believe in that. Followed by energy efficiency. Once you measure it, you want to reduce its consumption. You know, there's a lot of discussion on energy transition, but I always remind people it's better to first reduce what you consume before you transition it. We are really good in energy efficiency. Honeywell has been leader in energy efficiency in plants, in planes, in buildings for years. It means that segment is naturally gonna grow. I call between, you know, measurement and energy efficiency more of energy management business. This is not energy transition business. Energy transition business really starts in the red box here, which is really two components of it, electrification and net zero solution. When you think of electrification, the immediate point comes is Honeywell is not an electrification business. We are not in solar. We are not in wind. We are not in grid. What's Honeywell gonna do in electrification? We do use cases of electrification. As electrification happens, there are new stuff which is coming, and we can play in that. EV cars, for example, as I mentioned earlier, build more sensors in that. That's an outcome of electrification. Energy, as more energy is putting into renewables, you have to store it. Energy storage requires controls. That's an outcome of electrification. We are consciously improving our content, our focus on utilization of electrification. It's a smart place for us to be. Where we're really excited, and you see us talking a lot more about is net zero solution. We have pretty strong conviction on how the world will need renewable energy, renewable fuels, I'm sorry, carbon capture, hydrogen. That's something which is increasingly becoming an important for our customers, and we are gonna improve our play in each one of them. Darius shared some stats with you on renewable fuels. Carbon capture, we have made big successes. It's allowing us to take ourselves to the new segments. We talked about Sustainable Technology Solutions segment in PMT revenue in last Investor Day. We talked about $700 million revenue from that segment in 2024. You see a new number here. It's $1 billion in 2026. We really feel convicted about it. This is really working well. There's more and more spend in these areas, and we think we are on the right trajectory here. My goal is to creating more and more seeds of these sustainability-driven businesses in Honeywell, be it in buildings, be it in Aerospace, be it in SPS. Every part of Honeywell is impacted by sustainability. Really keeping our focus on the segment is gonna give us higher growth rate because we are consciously investing where the growth is. That's the second place to go. The third place is software. We started our effort on software in late 2018. We have stayed on it. You know, this has been something which has been stopped by many companies, but we have stayed on it. The Forge is, put very simply, which is our IoT platform, is operational system of record, and it really solves customer problems. It's not we wanna be in software business because it's fashionable to do that. We do it because our customers have problems. We supply them a lot of products. That's the reason we are in the software business. Those problems are on asset utilization, they are on cybersecurity, they are on sustainability, they are on worker productivity, and those are the solutions which we bring through our software business. It's really in taking our know-how and building an industrial software business. We talked about building a greater than $2 billion software business. We are on a path to that. We will absolutely deliver on that. You can question why $2 billion matter for Honeywell. You're a $35 billion-plus company. Why are you so? I think there are a couple of reasons. I'll give you three reasons. The first is, the growth rate for our software business is likely in the zip code of three times of our base growth, it's gonna grow three times. Which is, which gives momentum to our growth. The margin rates are almost 1,000, you know 10% higher, 1,000 basis points higher from our current base. When we do that, there are not many industrial software company of $2 billion size. We are not competing with Microsoft or Salesforce or SAP. We are competing with different peers and building a different segment for ourselves. I think all coming together really gives us strong conviction. This is going to enable $750 million of growth over the next three years. That's the kind of goal and target I want to set for myself, and we want to deliver on that, and it's gonna come all from new products. This is all from new products. We are not an acquisition mindset here. We're gonna go and acquire it. If there's a tuck-in, we'll obviously do it, but it's very organic growth-driven model. The part of our excitement here is that's the reason you will have demos here right after 4:00 P.M. Please have some sneak peek of some of our new stuff which is out there. The last and not the least is Honeywell focus on High Growth Regions. We always have done well in High Growth Regions. It's $8 billion of Honeywell revenue last year. We will maintain our double-digit growth in High Growth Regions. The construct here is also very wide. We have a portfolio in which we have a pretty balanced revenue across multiple regions, Middle East, India, ASEAN, you can see the list here. We are not really dependent on one geography. There is a concern that as China saturates and geopolitical dynamics will do what? It will do what it wants to do. We will focus on growing our overall portfolio in emerging region from our well-tested strategy. Local products, invest more in local products, invest more in local leadership, more localization. That really has been name of the game. All those really come together and really give us confidence on this 4%-7% algorithm. It's smarter investment in new products, continue on the path of sustainability, software, and High Growth regions. Another lens I look at the business, how we should spend money is, this is another lens for you, is all businesses are not created equal. There are segments in Honeywell which are growing or will grow double-digit or double-digit plus. They are gonna be in our software business, they are gonna be in our sustainability business. Obviously we should invest more there. That's a natural bias anybody will have. There are businesses which are growing GDP plus. They should get the full care and attention, and finally, the rest of the portfolio. This is another lens when we look at the growth model I presented with a careful selection of what you do, you really end up having a strong conviction on that 4%-7% organic growth, and hopefully we deliver on the upper end of the equation in every year. That's the first part of the story, that how we drive and focus on growth better. Let's move to the second theme now on Honeywell Operating System. What I'm planning to do differently here. The Honeywell Operating System is not new. Dave started it in 2005, heavily focused on supply chain. He did a great job to make our supply chain look consistent. Our plants were using Kaizen, Lean Six Sigma, all those tools, so that we are more productive. It was shown up in the productivity in Honeywell P&L. That was a 10+ year of great run. Darius added the scope of it. We added commercial excellence processes, customer experience to it. We heavily invested in digital in that time because writing process is step A. When you digitize this, the repeatability improves dramatically because you have less point of people not using it. Where we wanna go really is the step three is end-to-end business model standardization. We see there's a more value to capture there. Now that sounds a mouthful. Looks like I presented a new thesis, but that's more than thesis. I think it's a reality. We look at Honeywell in four business models. $6 billion of Honeywell is projects businesses spread over multiple segments. They are in Aerospace, they are in PMT, they are in HBT, they are in SPS. $7 billion of Honeywell revenue, and these are rough numbers, but pretty accurate, close to accurate. $7 billion of Honeywell is services, about $21 billion of Honeywell is shipping products, and about $2 billion is software. If you are able to run this business consistently with the best practices, having a consistent global design model, you create incremental value, and that incremental value shows up into two places. It shows up in terms of a very foundation for profitable growth, but also lifting the margin of underperforming businesses. It's basically, it's a two-way game that you are able to run everybody at the same momentum, but lift the people who are, moving at a lower speed. GDM means what? Let's drill into it. What is this global design model? Things like a lot of process work, Six Sigma type of work. It's much bigger than that. Of course, it's a process work. You need to write the process map, you also wanna go way beyond that. You wanna see how you want to measure the success of that type of business model. What does it mean to run a good project business? Means what? What should you measure? What good looks like? What it is to have a good services business? Defining those KPIs, clearly writing roles and responsibility of the people, that's where the heavy lifting happens. You step from jump one, from one to two, which is digitization. You digitize that with a software platform. Many times we are not buying the platform which is available. We are really going to the platform what we want and encouraging the software providers to change the platform to our GDM. We are providing them voice of customer, and they need to push their platform towards that, and we do that quite frequently. Of course, we deploy it and then sustain it on a long-term basis. This is how the cycle really goes. If you see the bottom example, this is a real example, the bottom right-hand side. We have deployed this in one of our four business models. The left-hand side where you see that red dot and black dot are different businesses' performance at the start. The black line is the average margins of those businesses. As we have deployed our Honeywell Accelerator, we're able to move up the black line to the reds because everybody performance starts moving up. That gives us margin expansion opportunity across the portfolio. This is not a hypothesis. This is motion item in practice, and we're gonna do this across Honeywell by end of the year, really making it a next way, you know, move of our margin expansion. You always thought of Honeywell have two tricks for margin expansion, productivity and price. Think about we have three tricks now. We have productivity, we have price, and we have Honeywell operating system. I don't wanna leave impression that Honeywell operating system is only for margin expansion. It also enables growth, but margin expansion is the easiest place to pick up because it's unquestionable in that case. I also wanna point your attention to the last piece of M&A integration. We believe that Honeywell operating system will become the basis on how we look at acquisitions. We have a standard against which we will look at an acquisition. How far they are from our standard. The more far they are, actually, it's a good news because you can add lot more value. It's very clear we can lift them a lot more up by our own model. If they are very close, we should not go too aggressive in our valuation because we are probably being, you know, overcommitting ourselves. This is how we will add value in our M&A, so it's a structured model rather than coming with our own conclusion on different deal valuations. I'm really excited. I think this is gonna add lot more value from a margin standpoint. Last is now the third theme is how I think about the portfolio and what I intend to do there. Before we jump into specifics, I, you know, having grown in the company got me a benefit of looking at a portfolio with a different lens. I look at each business or segment of business with certain parameters. I talked about NPI vitality. I believe a good measure of a business is its vitality has to be high, and it's different in each segment. If it's in Aerospace, the cycles are low, but vitality still has a relevance. If you're on a tech business like PSS, the vitality has to be high because you're always competing with the next handheld communicator all the time. But vitality matters. Software orientation matters. You know, Honeywell has HCE as a software business, but we have a large amount of our business which is software-enabled, so that matters. High growth region sales matter because it shows your diversification. You're not really tied to one geography. You have roles to play. If things go wrong in one place, you have more tasks to play. High Growth Region diversification matters. The gross margin is something which also is important for me. We are sitting at 37% gross margin in Honeywell right now. I wanna put action in place, both organically and inorganically, to move it greater than 40%. I think there's a clear opportunity for us to do that. Recurring sales is important. It, by default, makes your business less cyclical. 1/3 of Honeywell sales is recurring today. I obviously wanna work to make it higher, that number. Then ESG orientation is important. No one business will have all these characteristics, I need to have a guidepost what to look for, and if you are generally holding true to these, it gives me a higher confidence this is a business in which we can do better, we should invest more and things of that nature. That's always my starting point, and this is gonna be like, I would say, the broad rule set on which you look at current business, future business. That's the first way to think about it. The second way to think about the way I think about Honeywell portfolio is rather than wearing the lens of SBGs, Aerospace, SPS, buildings, PMT, I wear the lens of macros we serve, Honeywell serves four macros. It serves the macro of air travel in Aerospace business. Large part of Honeywell is automation. Energy transition is a significant part of Honeywell, and Honeywell is increasingly becoming relevant in digitization. How do we really build Honeywell around these four macros is another way I look at the portfolio. What it means is that we may have to do some pruning, which is not a lot, but whatever it is, whatever little it is, it helps me to get faster to that team is something I like to do, and then do bolt-on acquisition to get faster towards that path. Combine the two, that, the metric I looked at the previous page, and these mega trends or these macros drives the whole mindset on how we should, look at, you know, the M&A framework. I talked about some of the targeted portfolio outcomes. I want to really look at it, higher recurring revenue, higher gross margins and operating income target of greater than 25%. Really wanna push the margins to that rate. Now, when you wanna do that, the obvious question is M&As will be required. Answer is yes, to a certain degree, M&As will be required. We want to stay in the zone of bolt-ons. Anywhere in the enterprise that's like indicative from $1 billion-$7 billion, anywhere in between probably is a likely scenario. Now, when we look at acquisition, we look at industry characteristics, which are high growth, large TAM opportunity, and then the target companies which are within that segment showing the characteristic of above industry growth rate, higher gross margin, less cyclicality and technology differentiation. This is not something we created this chart for the sake of this Investor Day. This is what we have been practicing for the last two years. Look at our three acquisitions we made over the last two years. Sparta in our software business, a US Digital Designs, Inc in building technology, which was a property acquired in our fire business, and now Compressor Control. What is common in all three of them? It's the middle black box. They are above industry growth rate. They're all high gross margin, higher than Honeywell's gross margin. They are all less cyclical, and they're all technologically differentiated. They're not large, but they are very thoughtful. That's what you can expect the trend line. It's gonna be thoughtful. It's gonna make our portfolio better. That's the path we are gonna really, you know, keep going forward. I can commit to you that I would not do any acquisition for sake of doing it. There's no such plan that I have a target, we are going to transform Honeywell and we're going to do. I'm not really married to some big idea, what I'm married to is making our portfolio better and making our businesses more profitable. From a capital spend standpoint, we are re-upping our commitment of capital to $25 billion. Last year, we mentioned $25 billion spend over a three-year period. We are reiterating that now from 2023-2025. You can see the split of that between dividend, capital spend and share repurchases and M&A. $13 billion obviously is flex. Again, we don't have any target that within 13 we should spend X in share repurchases or Y in M&A. I think you've seen the thesis on M&A, and we'll appropriately adjust based upon opportunity. Our limit is we can spend more if necessary. We have enough position in our balance sheet to go and get more cash, depending upon the opportunity here. That's another focus area we certainly want to pay attention to. That's kind of how I will summarize my those three priorities, really looking at organic growth, looking at Honeywell Operating System and constant look at our portfolio. Really, I want to leave this last chart with you, again, stating the obvious that the long-term targets remain intact. We really are in a space which is, our macros are pretty strong. I really feel confident on delivering 4%-7% growth, 40-660 basis point of margin expansion, and mid-teens of free cash flow. Of course, deploy $25 billion of capital in a threessssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss-year window. Look at our results in 2022 and 2023. We have recently given guidance, and guidance of 2023 is, this is kind of a summary of that, how we will perform. We are performing in that algorithm. My job is to stay consistent or make it better. Look, I mean, I've been here for a long time, many of you have seen, and I'm passionate performer. That's how I always. If history is an indication what's gonna happen, I can commit to you that I'm gonna work very hard and continue to deliver results for Honeywell. I truly believe in Honeywell's story. Not that I didn't get opportunities to work at different places, I did, but I always said no to my phones because I really believe in this portfolio and will absolutely work hard to deliver very good results for our shareholders. Thanks again for listening and look forward to connect with you guys after 4:00. Thank you very much. Please welcome Senior Vice President and General Counsel, Anne Madden. Hello, everybody. Welcome. So happy to have you here. I thought what I would do, thank you, Vimal, for the great M&A tee up. Appreciate it. We've had some recent investor interest in what our M&A process looks like. I thought I'd spend a little bit of time with you today making that more transparent to you so that you can understand what it is that we do. What I've set out on the right-hand side of this slide is what we look for, both in terms of industry characteristics and target company characteristics, but also the process that we use to generate high quality acquisition pipeline. Vimal mentioned many of these characteristics just a few moments ago. I'll go into some examples in a bit, but in a nutshell, we're looking for above industry, above average industry growth, high gross margins, low cyclicality, attractive cost and/or revenue synergy opportunities, reasonable valuations, and the ability to leverage our Honeywell Accelerator operating system. We are looking for a lot. A lot has to come together for us to say, "Good go." But as we curate our M&A pipeline, we focus first on our deep domain knowledge in our core businesses and in our close adjacent markets. All of that informs our strategic plans. We then focus on taking that strategic framework and translating it into M&A targets. Our M&A targets, in other words, are always aligned to our strategic plans. The strategy has to come first. There's no such thing as free range, ad hoc pipeline creation. We don't allow it. If it doesn't already comport with our business growth strategies, it doesn't go on the pipeline. Let's turn to what we actually do. Our M&A approach from an organizational perspective is what I like to call a hybrid approach. We have dedicated strategy and business development resources within our strategic business groups, our SBGs, and they're focused on M&A. We also have dedicated transaction execution expertise at the corporate center focused on M&A. Together, these teams work together in a one Honeywell way to approach our M&A aspirations. On the business side, within the SBGs, they're very much focused on the front end of the M&A process. Think about people working on the market back approach to identifying the most attractive spaces to grow, whether that be organic growth or inorganic growth. That body of work informs all growth, inorganic and organic. They study the markets, they study the technologies, they study the profit pools, and then they gauge strategic fit. This front end work is what forms the translation into a broad screen of potential targets that we then formally evaluate and curate into a broad and deep M&A pipeline, always tied to our growth strategies. This then includes biweekly reviews with our corporate deal review board. This is a formal body that Greg Lewis and I chair, and monthly pipeline reviews with our CEO. This feedback loop for M&A enables us to prioritize very, very carefully how we spend our time and our resources and make sure that we're focusing on what we deem most important. Formal pursuit of a specific target company flows out of this senior team review and approval process. We leverage our M&A execution expertise at the center to drive best practices. Think best in class due diligence, valuation analysis, scenario analysis, integration planning, and deal negotiations. Post-closing, we deploy our integration playbook, leveraging our Accelerator Operating System. We appoint a full-time integration leader and dedicated business and functional expertise to the integration plan. We're super excited. I mean, Vimal said it so well. Accelerator is a fundamental backbone for us to be able to do this better. Let me walk you through some data around what I've just described. You'll notice the funnel. We always start, as I said, with spaces and targets that align to our growth strategies. That's an inviolable principle. In 2022 and year-to-date, through year-to-date 2023, through today, we've screened over 200 public companies, about 6,600 private equity-owned assets, and over 100 other privately owned companies. From that very broad funnel, we've evaluated some 500 potential targets. From that group of 500, we further prioritize down to about 90 targets that we put through our defined acquisition criteria. We utilize a scoring framework to measure each target based on strategic fit, on its growth and operating margin characteristics, its potential valuation, and importantly, its actionability. Not everything is actionable when you want it to be. We rank the pipeline opportunities by SBG based on the scoring outputs of this defined framework. Once we've distilled the ranking down to the top 10 by SBG, we then put those through our formal review process with our corporate development review board and ultimately with our CEO. As we prosecute the chasing of specific targets and we learn more, we either gain conviction that we wanna proceed, and then we deploy resources there, or we cull the target from our pipeline. We don't want deadwood. We don't want that hanging out as if it's something that we would pursue. We place the target on what we call our milk run list, and this is something that we'll pursue purposefully, but over a longer period of time. The goal for us is to be very comprehensive and broadly situationally aware of all the moving pieces in our competitive landscape and in our target company universe, so that we can always be cognizant of what's happening in our spaces and things that relate to our strategic growth aspirations because we wanna be aware and agile, but we also wanna be super prioritized and super focused. If we aren't focused, then we're not deploying our resources to what's really gonna matter, what's really gonna be the best opportunities near term, and most needle-moving for our shareholders. We wash, rinse, and repeat this process and do the next top 10 and the next top 10 and so on. The reality is there's a lot of rejection and a lot of failure in the world of M&A. You can't be sensitive if you work in M&A. We reject a lot ourselves and we tell our businesses, "Thank you for trying, but we don't like that one." We get rejected a lot ourselves. We try to pursue target companies that we think meet our criteria, and we often get rejected. We can't transact with them if they don't wanna transact with us. Or we lose on price to a competitor because they were more risk-loving than we were on the valuation measure. You need a tough skin, but importantly, you need a big pipeline of ideas. If you only have a pipeline of 10 ideas and those all blow up, you have nothing left to do, right? It's important to start really broad and have a well-informed current view of the targets in your M&A pipeline so that you can be super choosy in what we pursue and what we spend our time on, and have enough there that we can withstand the internal rejection, the external rejection that is just inherent in M&A. I like to say you gotta kiss a lot of frogs. We also spend a lot of time cultivating potential targets, oftentimes over many, many years. These are our milk run targets, and we want to get to know them. We want to allow them to get to know us and the value that we can bring to them, bring to their technologies, channel to market, opportunities for their employees. Then we'll work really hard to transact unilaterally with them before they're tempted to launch a competitive auction process. That's nirvana when we get that to happen. Those opportunities are hard to get to, and far and few between, when we do that makes us very happy. In terms of the types of deals we look at, we tend to focus on three primary deal types. One is strategic bolt-ons to our core assets, strong core assets. Second is close complementary adjacencies, and these are adjacencies that are identified in that market back work that we do to support our strategic planning process. Preferably in those complementary adjacencies, you know, we've landed upon an opportunity where there's some fragmentation that allows us to do follow-on acquisitions. Lastly, what we call growth plays, and those enable us to tap into a new capability or perhaps fill a gap in our technology roadmaps that allow us to serve our customers better. These are the opportunities that enable us to best deploy our Accelerator playbook to create value. You can see on the right-hand side of this chart some illustrative examples of deal models where Honeywell can add a lot of value when we onboard an acquisition. Let me step you through two recent M&A transactions. Vimal mentioned them, Sparta Systems and Compressor Controls Corporation. One is an example of what we call a growth play, and one is a classic strategic bolt-on, but both serve to strengthen our automation portfolio. In 2021, we bought Sparta Systems, a leader in quality management system software which serves the life sciences industry. We deployed $1.3 billion of capital there. We were attracted to Sparta based on the nature of the space that it plays in. We tend to really like regulated and compliance-oriented spaces for our software applications. We liked Sparta's growth characteristics, especially its SaaS growth, and our ability to help Sparta. What we brought to Sparta was an ability to help it grow through our Connected Enterprise and our ability to help it grow via geographical expansion. Sparta has been a great example of our strategic acquisition thesis and our integration execution, driving sustainable outsized growth for Honeywell. It's really been a home run, so we couldn't be happier with how that's going. As Vimal mentioned, just a couple of weeks ago, we announced the agreement to acquire Compressor Controls Corporation, which is the leading provider of LNG and carbon capture controls for critical equipment. The purchase price there, $670 million. This is a space we know very well. We have deep process control domain knowledge in Honeywell Process Solutions, this one was really hand in glove for us. We are super highly confident that we can drive profitable growth for CCC in services and through leveraging Honeywell Forge. We also have the opportunity there to add new verticals and to drive geographic expansion. We have compelling cost synergies with CCC, which will buy down the EBITDA multiple we paid by two turns, but we also have attractive opportunities to drive revenue synergies there as well, which will further buy down that EBITDA multiple, and makes the all-in price that we're paying extremely attractive. We love CCC. It has attractive gross margins, attractive operating margins, and will be immediately accretive to Honeywell. We expect to close that deal by year-end. Right down the middle of the fairway, and like Sparta, we're highly confident we'll generate attractive returns for our shareholders. Let me wrap up the M&A discussion with a couple of observations. I think it's well understood for those of you who traffic in owning corporations, I think it's well understood that many companies do not do M&A well. The rate of failure for acquirers in general is pretty humbling, and it's something that we at Honeywell never wanna lose sight of. We always wanna stay careful, we wanna be vigilant, and we wanna be highly selective about the deals we choose to do. I have long said there's no such thing for Honeywell as a must-have deal, and Vimal just said it too. We really believe it. Our organic opportunities are immense, we don't ever have to do M&A. Maintaining our deal discipline is super critical. We only wanna do deals if we can do them well, and we can create value for our shareowners. We do them when we achieve a high level, high degree of confidence in our ability to deliver against our commitments and our ability to de-risk and defend against a poor outcome. We're never gonna do M&A just for the sake of it. Having said that, we do like the current M&A environment. The interest rates, the increased financing costs, the tighter lending conditions all mean Honeywell, with our fortress balance sheet, has a competitive advantage. Driving rich pipeline allows us to prosecute the very best deals for Honeywell, and we intend to do that. We've earned our right to add attractive bolt-ons to our portfolio that'll enable us to supplement our strong organic growth with inorganic growth and drive that algorithm higher. Our track record, I think speaks for itself. We know how to execute an M&A program. We've done it. We've demonstrated we can do it. Over the last 20 years, we've done over 110 acquisitions, deploying about over $24 billion in capital to M&A, and we hold ourselves accountable. Our say/do is high. We deliver against our commitments. We execute against our M&A process playbook. Accelerator is going to help us take that to the next level. This approach has earned us a best-in-class track record of acquisition performance with the vast majority of those deals over this period meeting or exceeding our goals. We've also been proactive portfolio pruners. That's important too. We'll continue to take an unemotional, critical, clinical approach to what comes out of our portfolio. This is something that we review very proactively every year. We review it with our board of directors in July. As you can see, we've divested over $18 billion in non-core revenues over the last two decades, including our spin transactions. This clearing out of what's no longer core has enabled us to really reposition the portfolio for better growth and better performance, and we're gonna continue to do that. Over the last few years, the work we've done to transform and streamline our company, including, importantly, our Accelerator operating system, will enable us to achieve even better results as we acquire and integrate new assets seamlessly into our portfolio. We're super excited about the prospect of doing M&A in this environment, but it's gonna be smart, and it's gonna have rigorous execution associated with it. If we can do that, it's an important tool for us to be able to create outsized shareholder value. Let me now turn to the topic of sustainability, if I can. Sorry. Okay. Our progress as a leader in sustainability is not only a key tenet of our strategy as a company, it's long been a part of our DNA as a technology company and as an innovator. We've made sequentially aggressive commitments, but our say-do remains pristine. I am super excited to reveal that our greenhouse gas emissions reduction targets, which include our Scope 3 greenhouse gas emissions, have now been officially validated by SBTi, the Science Based Targets initiative. We're excited about that. You can see it today. It was published for the first time on the SBTi website, so that is cool news. For each of our commitments, we have execution plans with milestones, ownership, accountability. There is rigor and detail behind all of our execution plans to meet our targets. We've never missed a target since 2004, when we first formally stood up our program. We've always met or exceeded our goals. We have a high degree of confidence that we will meet or overdrive our more recent ambitious sustainability commitments. As we innovate and learn and deploy our own technologies to support the achievement of our sustainability objectives, we're able to support our customers by providing solutions that they can use right now to achieve their own sustainability goals. That is super exciting. That brings us smiles to our faces every day. We are really proud of our program overall, not just on the E portion of things, but also on the S and the G portions. I can say unequivocally, Honeywell truly is a sustainability leader. We wanted to show you some evidence of our high say-do in terms of accomplishing our commitments. You can see on the left-hand side of the chart that we've achieved on time or exceeded the timeframe to achieve our public commitments. We're in great shape on our 10-10-10 goals, which we committed to achieve by 2024. The first two of them have already been achieved, and the third one is in great shape and on track to be completed this year. Next up, we have the commitment we've made to the Department of Energy Better Climate Challenge, and that requires by 2030 that we'll further reduce our U.S. domestic greenhouse gas emissions by another 50%. These are our Scope 1 and 2 emissions, we have a detailed plan to execute against that commitment. Then I just mentioned the SBTi for-formal validation of our GHG emission reduction targets. That now includes our Scope 1, our Scope 2, and our Scope 3 or value chain or indirect emissions. Those targets are now in place to be delivered by 2037. Great news there. You know, I just would wanna point out for those who don't traffic in Scope 3 emissions, you know, when we make a big commitment to reduce our Scope 3 emissions, that means, by definition, it's an innovation unlock. We must innovate more to be able to put in the hands of our customers better tools for them to reduce their own emissions. It means innovation unlock and further collaboration with our customers and co-innovation oftentimes with our customers. It's a very virtuous thing. Our track record of meeting or exceeding our targets gives us really tremendous confidence that we're gonna be instrumented the way we need to be, fully operationalized that we need to be in terms of our achieving our goals. We've completed over 6,300 projects since 2010. We've beaten every single one of our public targets. Once again, we're pleased to highlight that over 60% of our 2022 sales were comprised of ESG-oriented revenues, and about 60% of our R&D spend were also ESG oriented. We're driving innovation for ourselves. We're driving it for our customers. We're using our own technologies today to support the achievement of our goals, and so are our customers. As I said, it's very virtuous. This chart maps our targets against what we've achieved, and where we're tracking against our global U.S. domestic GHG emissions. Our execution plan includes the use of our own technologies. When I think of, you know, the buckets of where we need to further focus, we have electricity, we have combustion emissions, we have process emissions. Those are really the big three. We use our own technologies to achieve and ideally overdrive our goals. A great example of the use of our own innovation is the carbon capture technology and the emissions monitoring and detection technology that we have installed in our Geismar, Louisiana site. That's absolutely exciting for us. I can never really resist showing the Green Wheel. I showed this last year. I lovingly refer to it as the Green Wheel. We keep adding to the green wheel in terms of ESG-oriented innovation, and you're gonna be hearing more about these innovations in the upcoming panel on sustainability solutions. I just wanna say, so that you don't forget it, our solutions today are helping to solve the world's most complex sustainability problems. We are not just helping you with your behaviors and your procedures. We are doing the hardest possible problem-solving. Honeywell's technologies address well over 50% of the global greenhouse gas emissions today. Whether it be carbon capture or Ethanol to Jet or low global warming refrigerants, we are contributing to the reduction of millions of metric tons of CO2 emissions. Honeywell really is on the cutting edge of innovation, not only for our environment, but also for safety and our security. What we like to say, if you were outside and saw the big marquee for Nasdaq earlier today, we're making sustainable attainable right now. I also wanted to spend a little bit of time on corporate governance. Corporate governance, we take very seriously from the board all the way on down, and transparent disclosure to our shareholders is very important to us. We devote significant time and effort to delivering transparent disclosures to all of our stakeholders across all of the elements of the E, the S, and the G. Our emissions data is third-party verified. We have had it third-party verified since 2011, so you really don't have to take our word for it. It's been attested to. Our disclosures comport with TCFD, SASB, CDP, and so much more, and we hold ourselves accountable to an extremely high standard. We're not just disclosure-focused. We are substance-focused first and foremost, and what we actually do in the practice is of the highest quality. I mentioned our greenhouse gas numbers have been third-party verified. They're also audited. They're measured, they're tracked, and they're reviewed at the senior-most levels of our company, indeed with our board of directors. I really encourage you to take a look at our ESG report, where our 2022 ESG report is out there on our website. We're about to, you know, go into the throes of our 2023 report. I think if you take a look at it, you'll be really amazed by some of the problems that we're solving and amazed by what we're doing to contribute to a better world. We also launched a few quarters ago, our environmental sustainability index, this surveys and takes the temperature of about 700 sustainability professionals to understand what the key indicators are of sentiment. It goes to their progress and their own sustainability initiatives, their strategies, their budget deployments. This is a really interesting and I think insightful way to help our customers benefit as they get to tap into this huge swath of sustainability professionals, seeing what the opportunities are, the challenges, and their successes. The data that we saw in our most recent quarter points to the need for much more advanced technology to support achievement of more ambitious sustainability goals. The low-hanging fruit has been behaviors and process changes, procedural changes, but it's really not enough. Our customers are now turning to innovation on green hydrogen and carbon capture and storage and improved renewables infrastructure, battery energy storage, et cetera. These are the problems that Honeywell can help them solve, and they cannot meet their goals without these higher order advanced technologies. Let me touch for a minute on the S and the G. We're super excited about the progress that we've made in inclusion and diversity. In the last three years, we have made substantial progress. I'm really excited to say that our IND data, which we publicly disclose, puts us at the top of our multi-industrial peer group in terms of women and those who are racially or ethnically diverse. We also stood up recently nine employee resource networks that have almost 12,000 of our employees belonging. These networks are focused on driving employee belonging and inclusion, also work to support attraction and retention of our diverse talent. A few years ago, we stood up what we call our Diversity of Slate initiative, which requires that our slate of job candidates for bands three and above roles include diverse candidates, unless an exception is approved by a senior HR leader. I'm thrilled to say that we've also now deployed that same strategy and that same concept to our succession planning process for that same population. We're not just focused on bringing diverse talent in the door. We're also focused on making sure that our people leaders are proactively identifying and developing diverse talent so that they're ready now when there are opportunities to advance. On governance, let me just quickly point out, world-class diverse board of directors. Four of 11 of our directors are women. Five of 11 are ethnically and racially diverse. This diversity of thought and diversity of opinion in the board intercourse really, really drives better decision-making. It's super important for us to have active engagement with our shareowners so that we can hear our shareowners' feedback directly. We're in the throes now of the proxy season engagement. We invite our top 100 shareholders to have a conversation with us so that we can hear directly from them. We often have one or two of our directors, including our independent lead director, on the phone, leading those calls with our shareholders, and that feedback is brought back to our board of directors and fed into their decision-making process. Let me leave it there. Thank you for your attention. For the shareowners in the room, thank you for owning Honeywell. I am Datuk Bacho Pilong. I am Senior Vice President of Project Delivery and Technology Division in PETRONAS. We produce and deliver energy and solution that powers societies progress in a responsible and a sustainable manner. Back in quarter four 2020, PETRONAS made a bold declaration of our net zero carbon emission by 2050 aspiration. In fact, we are the very first oil and gas energy company in South Asia making such a bold statement. Honeywell has been a long-standing partner for us for many years in variety of discipline. One is the emissions management, where the ability to track emission for GHG and methane in real-time and drive insights and reduction strategy. Second, measure emissions, specifically methane in real-time using gas cloud imaging cameras and compact carbon capture technology development, which includes pretreatment facilities. By joining forces, we unlock synergies and opportunities. PETRONAS will continue to foster technology development as we see it as our role to act as a catalyst to speed up the transition to net zero. Please welcome our sustainability panel, Senior Vice President and Chief Technology and Innovation Officer, Suresh Venkatarayalu. Aerospace President and Chief Executive Officer, Mike Madsen. PMT President and Chief Executive Officer, Lucian Boldea. HBT President and Chief Executive Officer, Billal Hammoud. SPS President and Chief Executive Officer, George Koutsaftes. Moderator, Vice President of Investor Relations, Sean Meakim. Thank you for that wild applause. It's much appreciated. We're really excited to kick off these panels that are focused on some of the key key themes when you, when you invest in Honeywell. We're starting with sustainability, and let's start with Suresh. Suresh, you're our Chief Technology and Innovation Officer, so you oversee a lot of what we're gonna talk about today. In Vimal's prepared comments, he talked about doubling down on innovation, particularly in the area of sustainability. You know, you're at the center of these efforts. We often like to say that we're trying to solve the world's most complex problems, particularly as it relates to sustainability. Can you maybe just provide some context for us of what that means, and then critically, you know, lay out the roadmap for how that's going to drive acceleration, innovation will drive an acceleration in our top line. Sure. Vimal shared the innovation playbook, which I think extremely clear, crisp about how we think about the portfolio. If you really look at our long-range technology plan, that's what I pretty much own for the company to really fuel the innovation playbook. Falls into 3 broad themes: sustainability, which is the topic that we have right now. Second, autonomy and controls. Third one is software and digitization. Approximately 60% of our R&D spend is focused around sustainability. Really look at sustainability. If you really double-click and zoom in, where do we invest altogether? It falls into the 4 or 5 broad themes. It falls under the energy transition, primarily in our PMT Business Solutions business. We invest around emissions. We invest around energy management, energy storage. For Mike's business, it's all about sustainable aviation, electrification. In our sensor business, we are gonna be hearing a little bit more from George. It's all about electrification, sensors, emission management. Then in Bill al's business, it's all about sustainable building portfolio. It's a wide variety. What we are pretty excited about is these are net new. You may fall under net new products or net new breakthroughs. You will see some of them later today as part of the discussion. What are we doing little differently this time around? We knew that these things require co-innovation with our customers. I think that's something that we are primarily focused right from a day one. Second, we are deploying them in our sites, plant, buildings. What we are pretty committed is it fits into a sustainability and ESG report that Anne talked about. What's also very, very important is it also fits extremely well into our growth metric that Vimal talked about. In a way, our roadmap for the company, 60% of it falls into the sustainability for the future. That's where I'm excited about driving innovation, co-invention, co-partnering with external world. Oh, thank you for that. Now, Lucian, you're relatively new to Honeywell. It's about eight months. Given your background in material sciences, you know, great to have someone come in and take a fresh look at the portfolio. Maybe just tell us what you've learned so far. You know, what's your size of the portfolio look like, what does that mean in terms of the long-term potential for PMT? Sure. Thank you, Sean. If I look at the PMT portfolio, certainly an extremely exciting portfolio, and I'll tell you why I'm so excited about it and why I think it's so unique. If you think of the intersection of material science, which is what we have in our advanced materials business, process technology, engineering, and the ability to scale up, which is what we have in Honeywell UOP, and then digital capability that we have in our HPS businesses, that intersection of those three capabilities really doesn't exist in another company. You know, having three things that nobody else has is not inherently valuable. What is valuable is that you can bring these three things together to solve some of the world's most challenging problems. When we talk about what the world is trying to solve today around energy transition, around sustainability, these three tools are really invaluable to really drive that growth. Couple that with many decades of experience and credibility around each one of these three, and it really gives us a unique seat. Before I get into medium term and long term, can just give you a few proof points from just the last few months. For example, not too long ago, we announced the largest carbon capture project ever done. It was done with one of our very valued customers, Exxon, in Baytown. We're capturing seven million metric tons of CO2 in that. That's the equivalent of taking 1.5 million cars off the road. You can imagine a very serious societal impact in a single project, making 1 billion cubic feet of hydrogen every day out of that project. This is the largest scale so far of blue hydrogen that's available, will be online 2027-2028, and it's really a proof point, and I think an early adopter, frankly, in that technology with many more of those to come. If I shift the lens over to advanced materials, in advanced materials, we have a long history of investing in refrigerant. We've invested almost $1 billion between capital and R&D in the last 10 years on inventing, really reinventing this category and looking at refrigerant from a low greenhouse warming potential impact. We have the best portfolio of essentially zero GWP products in here, our Solstice line. We didn't stop at refrigerants. We looked at what other applications are possible with these. In working with AstraZeneca, we looked at meter dose inhalers, for example. Those use a propellant today that does have GWP impact. When compared to the legacy material that's used as a propellant, we can reduce the impact by 99.9% and still have a non-flammable alternative. We really, as Honeywell, are the only ones who offer a non-flammable zero GWP impact propellant for an MDI. That is another example of an innovation. If we go on to our HPS businesses, we've worked with KORE Power. There's another example. They're a leading producer of lithium battery, both for mobility and also for energy storage. We've delivered our manufacturing excellence platform that really creates the first digital end-to-end solution to battery technology. You might ask, was that just developed for that? Technology is adapted to that, technology is proven technology. This is something that we've used in life sciences and in sheet manufacturing. We've brought that together and really delivered the solution. These are just some recent proof points, I think what has me most excited is if you look at these three businesses and we start looking at the convergence of the activities, now I'll give you a medium-term example around battery and energy storage. We have electrolytes that we're working on that are based on our chemistry that we practice in advanced materials. We have membranes for batteries that we're developing for long duration energy storage in UOP, we have the control systems that I talked about for KORE Power and also modular battery energy storage solutions that we offer in HPS. You can see how even on energy storage from end to end, we're starting to really fill in a very nice solution on something that will be very useful as the world transitions to new way of consuming energy, new ways of storing energy. Definitely very excited about the portfolio, definitely very excited about the capability. Again, I'm even more excited by marrying that up with all the credibility and all the investment that's already been done and bringing it forward to today's challenging problems that customers truly care about. That's great. No doubt. There's a tremendous amount of opportunity for PMT, and that's why we just take an opportunity to think about a way in which kind of cross SBGs, these often come together. Mike, thinking about your Aerospace customers, you know, sustainable aviation fuel is a big focus for them, trying to figure this out. How does it play in their business? How does it help them achieve their goals? Can you maybe talk about how that's unfolding from your customer's perspective, and then how having PMT as a partner has been helping enable you to drive deeper relationships with your customers? Certainly. First of all, why sustainable aviation fuel? You know, from our perspective, it's kind of the no regrets solution for carbon neutrality in terms of jet fuel replacement. Fits right in in terms of the combustibility of it, can tailor it, the properties you need to have, presents really no logistics solutions. It's here now. What's really incredible for us is sustainable aviation fuel reflects the power of Honeywell. When you think about end-to-end, Lucian's business in mind, and we work, by the way, very closely on this, the ability to produce sustainable aviation fuel using our Ethanol to Jet infrastructure that's already in place. We already use ethanol to produce gasoline. We can produce jet fuel from ethanol as well. The eFining technology that Darius and Vimal talked about, the ability to convert carbon dioxide to jet fuel using green and blue hydrogen, there really is not a challenge, even in terms of feedstock availability. You combine those technologies with fast oils and greases, waste biomass, there's not really a challenge there. From a technology perspective, using it as a fuel is simple. We view that as kind of a no regrets decision, and our devices will all be SAF compatible, 100% SAF compatible within the next couple of years. Then let's think about the future of air travel. You know, we have our Advanced Air Mobility Business, you know, $7 billion of orders. Of course, that matters quite a bit. Let's talk about not just our position in helping to you know, to create this burgeoning industry, but also some of the learnings that have come out of that process that'll help feed back into the core business as we think about the electrification of air travel in the decades to come. Yeah, certainly. Just to close out on the prior topic, hydrogen, we like hydrogen. I think as a fuel cell driver for fuel cells, think hundreds of watts to tens of kilowatts, it's a great replacement for a battery. The energy density is much better than a battery. We sort of see this bifurcated as hydrogen and fuel cells for smaller aircraft and SAF for larger. Back to your question around advanced air mobility. Yeah, we're really proud of the fact that in the last two years we've won $7 billion of real business in that space. The other thing that's really exciting, and one of the reasons why I love this business, is every one of those technologies, whether it's electromechanical actuation, fly-by-wire flight controls, power generation and distribution, think e-motors and generators, every one of them has applicability in regular way aviation. We have won applications for every one of those products in other types of aircraft. We're helping bring this new way of flying to the market, and at the same time, we're developing products that are making their way into regular way existing aircraft. Again, it's a great way for us to reduce the risk of that investment and to leverage it. That's great. Turning to SPS, George, the SPS portfolio is levered to the industrial IoT. One of the verticals that gets a lot of investor attention is e-commerce automation, we do spend a lot of time talking about that. You also have a $2 billion sensing portfolio that doesn't get as much airtime with the investors. Maybe can you talk about that portfolio, why sensor technology is core to a controls and automation company, and ultimately, why we have a path to win in the long term in that business? Yeah, sure. Thanks, Sean. First of all, the world of digitization and growth of it is ubiquitous. We all know that. What we always need to know and understand is that sensors play a central role in making all that happen. Why is that? Because sensors are a cost-effective way to measure various parameters simultaneously to help keep people and assets safe and to make industrial environments more productive. We're proud to have a very broad portfolio of capability that's able to do that, and we've been doing this for decades, helping to make the process automation, industrial manufacturing, and healthcare industries be safe and productive. We do this because we have the capability to measure various parameters, whether it's temperature, humidity, flow, pressure, as well as being able to detect toxic and flammable gases. What really excites us, though, is that this technology is now evolving even further, Honeywell is at the forefront of that. We're making sensors smaller, we're making sensors that consume less power, and we're making sensors that can even detect even more parameters. What that's doing for us, for you as investors, it's expanding our addressable markets. You heard Vimal talk about one important aspect of innovation is driving addressable market expansion. We have over $2 billion of more addressable markets we are addressing today because of our sensor innovation. Couple examples are in healthcare. We're already in 70% of the world's medical device companies and critical applications, but the drive and growth towards at home and in-physician office, safe and effective and cheap medical diagnostic and diagnostic applications is critical, and it's a high growing opportunity. On this topic of sustainability, we're really excited about the world of electrification. Electrification and the demand for energy through via electricity is gonna double over the next two decades. We need sensors to make that happen both safely and effectively. One example of that is electric vehicles. Lithium-ion batteries are inherently unsafe. We know this. They actually have thermal runaway. Today, there's a 5-minute early warning signal for drivers in a car that their battery is unsafe before they can get out. The auto industry does not want that. They want an earlier warning detection capability. In collaboration with Lucian's team on chemistry with electrolyte detection and gas detection, we're developing sensors today in collaboration with automotive OEMs and battery OEMs to give them better early warning detection for thermal runaway. The second thing that excites us is around thermal and gas detection. We know that the semiconductor industry is growing immensely their investments to diversify and make their supply chain more resilient. They need toxic gas detection to be more, more finite, more discreet at smaller micron levels. We're using light-based technology to enable our ability through technology through our Aerospace business to actually do detection of micron-level particle detection. When you think about the world of semiconductors, they're growing their manufacturing capacity on smaller node technologies. That demands micron-level detection, gas detection, and we're able to do that. This is, as I said earlier, over $2 billion of addressable markets we're growing. The EV sector alone is over $1 billion, and we're also working on detection methods for hydrogen technology, and also in partnership with both Bilal and Lucian on battery energy storage. They need switches. They need current sensing. They need battery flammability detection capability. We're partnering with a prototype solution we're working on for them as well. It's a real exciting time. For us investors, you saw in Vimal's investment framework, he wants businesses that have 40% plus gross margins. We're well above that already. We're one of the crown jewels of profitability in the portfolio. A $2 billion business that's highly profitable and will grow double-digit because of these investment initiatives. We're really proud about that opportunity while making the world safer, more sustainable, and more productive. That's great, George. Thank you for that. Let's turn our attention to Building Technologies. Bilal, you're relatively new to the role leading HBT, but you're not new to Honeywell. You know, long-time Honeywell leader. HBT is somewhat unique in the portfolio. You've got the highest mix of HGRs, highest software uptake with HCE, and sustainability is pretty much embedded throughout the portfolio. Mm-hmm. Maybe you could just talk about your assessment of the business thus far, where you see the most opportunities, and thinking about that inherent overlapping and somewhat conflicting two goals that your customers have, which is trying to enhance occupant experience while also reducing energy costs in a rising energy price world. Very good. Thanks, John. First I'll start by saying how excited I am to be leading Honeywell Building Technologies. It is a strong business. It has a truly global, best-in-class global footprint, and yet there's so much room to grow organically, when you think about all the new growth opportunities to create value for customers. Indeed, sustainability is one of those key growth vectors. When you think about sustainability, it provides a new opportunity for us to help customers solve for complex goals. The complexity doesn't just come from having to meet opposing goals, occupant experience, and energy efficiency, but it also comes from the infrastructure that the customer has to deliver these goals in. If you think about an institutional investor like a school district, for example, you have multiple buildings. Those buildings are used for different purposes, different work schedules, and most importantly, that infrastructure isn't necessarily all the same age, and not necessarily the same capability. Enter Honeywell Forge Sustainability+ solution, a ready-now, all-encompassing solution that is able to continuously and autonomously monitor what's happening in these buildings in order to optimize occupant experience and energy efficiency. What we can do there in that specific example for the school customer, we can do across multiple other verticals, whether it's critical infrastructure, whether it's high asset commercial buildings, et cetera. Now what you have in Honeywell Building Technologies, with the strong global presence, with the new exciting offerings such as the Forge solutions, we are actually able to follow the money. Whether following the money means that there's geographic growth that we can go after with our strong and scalable global footprint. We're able to follow the money if there's a growing vertical, or if we have somebody looking for improved energy efficiency or following the money where the government incentives are. This will help us accelerate our top-line growth with additional focus, and it gives us confidence in delivering on our mid-to-high single-digit growth commitments. Very helpful. Let's come back to energy transition. Lucian, maybe you could talk a little about some of the technologies that we have embedded, particularly in UOP across our Sustainable Technology Solutions business. I think investors maybe don't fully appreciate at times how much our core portfolio is gonna be able to not only sustain energy production today, but a lot of those core technologies map quite nicely to the new emerging energy verticals like carbon capture, hydrogen, a lot of the ones that you spoke to earlier. Let's talk about maybe how that portfolio will help us bridge from today to where the world's trying to go. Absolutely. When you think about energy transition, it's the mega-trend that's here in front of us, and that really is extremely well suited for us to address in PMT. If you look just at the world of emission, we are able to address with our technologies today, not tomorrow, today, we're able to address two-thirds of the emissions out there. That is something that no other company really can state very easily. It's really a unique position that we have. What's even more important is, I mentioned earlier, the portfolio and the decades of experience and the credibility. Energy transition, it's the word transition. It's going to happen over time. It's going to happen at some pace. Yes, IRA and other regulations are going to accelerate it, but we will live in the world of and for some time. What that means is we need to do a few things. One is, first and foremost, we need to improve what we've got and really improve that efficiency, improve that carbon footprint, and then ultimately transition towards some kind of transition state that has a lot of ands in it and maybe some transition fuel, and eventually transition to our ultimate destination. If you look at our portfolio today, we're positioned across the board. If we start with the most boring things, that's energy efficiency. How do you capture that value? That's the digital solutions, all the process control, all the automation, all our legacy has been around industrial automation and efficiency. We're adapting a lot of that technology towards energy efficiency. Emissions management, you start with the lowest hanging fruit possible, which is fugitive emissions. That's a pretty significant portion of emissions that are the valve left open, the leaky flange, those kind of things. Today's technology involves satellites, virtual reality. You get a point in time view of that. What we have and what you'll see in the demos next door is real time. We have the Signal Scout sensors. We have the Rebellion cameras that can quantify, can pinpoint your emissions real time, and you can reduce. These are no regrets kind of investments that are here, they're now. They can improve what we're doing today. You transition from there to more sophisticated solutions. For example, our municipal boilers today that use gas or other fuels can transition that to heat pumps. We offer these most virtually zero greenhouse warming potential impact refrigerants that can be used. REPowerEU is big on adopting heat pumps, you go there. We've covered a lot of the other more sophisticated technologies, whether you're talking about carbon capture and blue hydrogen, whether we're talking about green hydrogen, whether we go to even more sophisticated like eFuels or or biofuels. We have a number of those technologies that really complete that portfolio and give really a full offering where we can offer somebody an improvement on what they do today, a transition. We have a lot of activity going on LNG as well. We talked about battery storage and then going all the way to new fuels, next generation fuels like SAF, for example. I'm really excited about that complete offering that we're bringing to the table and about the front row seat that we'll be able to play as a leader as the world transitions. No, it's great. Now we'll have time for a couple questions, but just in kind of summing it all up, Suresh, maybe talk a little bit about our breakthrough initiative pipeline. I think a lot of the big headline names people are pretty familiar with, STS, HCE, Quantinuum, AAM. What else is kind of peeling back what's behind the curtain, what's still being incubated? Let's talk about what that pipeline looks like and why that maybe gets you excited about the growth in the longer term. If you're really in Vimal's innovation playbook grid, breakthrough is our standing up a new business entity, new to market, disruptive technology. That's pretty much where our fundamental focus is. Yes, you have heard about five, six businesses that we have stood up in the last many years right now. What is exciting is what I see is how the pipeline is built internally. That's my job, and John Waldron as the Chief Commercial Officer's job is curating and building this pipeline. We have defined them into two bucket. One is breakthrough execution, which we have almost closer to our higher teams right now, which we are continuing to curate, have an independent team working with customers, which we should be starting to see some good results. Almost 3x of that is what we call a BTI pipeline or incubation, which is where we're taking some long-term bets at this juncture. There are a few things today we did not really talk to you. In George business, we are completely spending all our efforts around robotics and storage and within the warehouse industry, how would that be the next big potential for their businesses? The same way in Lucian business, we did not talk about the smart meters in a grid utility environment with digitization and quantum keys, how it could completely turn things around. There are a number of things that are coming up. One of the things that we are doing, apart from structuring the process and really fine-tuning our hit rates to improve, we also are focusing on our ventures arm to say, can we take some long-term bets? Can we actually co-create in some of them? Can it improve the hit rate? That's the portfolio at this juncture. What I can say and summarize, Sean, is a pipeline that we have and how we are curating, we should be starting to see a lot more coming up in the coming years. Awesome. Now we have a few minutes left, and time for some questions from the audience. Thank you. It's Deane Dray from RBC. I was really interested when Vimal highlighted a couple areas of new focus, and the first two interesting emissions monitoring and sensors. Now we have George highlighting those that looks like you're already in those businesses. Just kinda share with us a bit. I mean, those landed on top of the new areas of focus. This is an area that Honeywell's already considered an expert in, but just time to market for new products. Will this all be organic growth? Do you have to add any new technologies? Just, you know, expectations in terms of where this fits in the portfolio. Well, where it fits in the portfolio is exactly where it is. That's an easy answer. A couple things, time to market. We're already in the market today with current sensors that are actually providing a safety profile for EVs already. We've had wins with auto OEMs, but on the back end of that or the tail from the win, the tailwind behind that, we're working with the auto OEMs and developing the next generation sensors, as I mentioned earlier in my talk. That stuff should come to market in the next couple of years, and we expect meaningful growth coming from that in our portfolio over the long range plan that Vimal presented. In terms of M&A, we're always scouting around for new capabilities to complement the portfolio of sensors. I mentioned that we have a wide range of parameter detection capabilities already, but there's things we don't have and things we're constantly scouting on. Areas we'll be looking at are particle detection outside the light emitting technology I mentioned earlier, but outside of that, there's other technology we think we could acquire maybe. That's one area. The second area is other sensor capabilities around pressure and flow that help advance our medical device application development that also are interesting for us. You guys have talked a lot about the vitality index and how that's increasing. The growth hasn't been that spectacular in the last couple of years. What's like the decline curve on the, or the decay curve on the stuff that, you know, isn't an NPI? What's the drag from that kind of on an annual basis? Just it doesn't, all these technologies don't really seem to be dropping to the bottom line. Is this just, it's going to take a couple of years and we'll see it a couple of years out? One of the things that what we have done well in the last five years is we started measuring the vitality. We have a NPI vitality as a measure that we have probably doubled up in the last four or five years once we started measuring. Now we are realizing you have to start slicing the vitality, quality of the vitality. One of the things that as Vimal showed the overall four-quadrant grid, core business, we wanna ensure that the measure of vitality, you don't really erode that business because you basically refresh your product portfolio. You have to keep up with the GDP growth rate. When you get to NPI new, which is new to market or new technology, we wanna actually track that as an organic growth. A BTI should be a topic altogether. One of the things that you will actually starting to see as we are rewiring the innovation playbook, we are gonna be slicing that into NPI vitality and NPI new vitality, NPI new vitality that we wanna start measuring against the organic growth rate formally. NPI vitality, the way we started measuring it, we want to ensure that there's no erosion. That's pretty much we are gonna be redefining as we move forward at this juncture. Time for one more. I think this is for Lucian. Like, historically, PMT has been maybe a little bit more cyclical in parts, but, you know, now you're talking about sustainability. How does it balance out the cyclicality of that business? I think the growth rate, you know, long term, mid to high single digits, does it help? You know, you talked about the new target, the $2 billion, does it help you get closer to the high end if you do this well going forward? You know, I think in the past, part of the answer even to the previous question, you know, we've communicated externally, we had a lot of exposure to Russia. A lot of that was in PMT, we had that hit. That was also a one-time source of erosion that is not there. Vimal also talked about our High Growth Regions, how looking forward we're going to diversify. You mentioned China, what will happen, what happened. We're trying to be more balanced and more diversified to where you can absorb a shock like this. In the end, what it's all about is innovation. The answer, the short answer to your question is yes, I think it's going to balance. First of all, what you try to do, and the magic of all this is going to be a one PMT end-to-end solution, ultimately a 1 Honeywell. You've heard a lot of that today about how we bring together solutions across SBGs and take them to the market. I think the all these sustainability trends are the great unifier that it gives you a common problem to address that's going to allow us to bring the different elements of PMT. I think to go to your specific question, you know, UOP, at least oil and gas, you've had some decrease in investment. We're certainly seeing that rebound in a very good way. I think the industry has learned a very valuable lesson that if you don't invest across the cycle, there's gonna be things you're short on that you didn't plan on, like welders. You know, most boring thing that you didn't think would bite you, this is what bites you. At this point, the industry, I think, is more committed to investing. You don't see in the petrochemical sector the slowdown that maybe you would have seen historically when there's a little bit of slowdown in demand. We see a more steady demand. The backlog is very, very strong. The order books are strong. We feel very good about what we have in front of us, but we're truly excited about the innovation portfolio. I think the macro trend that's in front of us, the tools that we have, we really don't have a good excuse not to lead this. It's on us right now to bring the capability forward and lead in the segment as we move forward. That's a great way to end it. Thank you all very much. Building owners are facing a dilemma. How to make a building more sustainable while providing a people-centric environment in a cost-effective way. The enabler for all those key pillars is Forge. My name is Valentin Neagu, and I'm the Head of Property and Facility Management at Globalworth Romania. Globalworth is a preeminent real estate investor in Central Eastern Europe. We're the biggest landlord in Romania and Poland. A focal point for a partnership such as the one that we have with Honeywell is the trust, the trust in the product and the trust in the teams that are part of this amazing project. We have incorporated Forge and other software, enrolled them into our entire portfolio in Romania and Poland. It's software that helps us being the most sustainable landlord in CEE. By leveraging sensors and infinity data, you are able to segment the consumption and then energy emissions and then to take the appropriate measures. All our efforts are guided to provide the best experience possible and to follow all the regulations in terms of ESG and sustainability. The building of the future needs to be the place where people choose to go and work. It's these experiences that we want to perpetuate in our buildings and make sure they meet the highest standards for people to want to come back to the office. Please welcome our Digitalization and Transformation panel, Senior Vice President and Chief Financial Officer, Greg Lewis. Senior Vice President and Chief Supply Chain Officer, Torsten Pilz. Senior Vice President and Chief Digital Technology Officer, Sheila Jordan. HCE President and Chief Executive Officer, Kevin Dehoff. Senior Vice President and Chief Commercial Officer, John Waldron. Moderator, Vice President of Investor Relations, Sean Meakim. All right, we're off to a good start. The last panel got wild applause. You all came with the silence. All right. All right, we'll pick it up from here, though. Right. Okay. The challenge. That's right. Greg, we'll start with you. A year ago at Investor Day, you spent a lot of time talking about the great integration of Honeywell the last five or six years. Darius referred to earlier as stage two of Honeywell, we're gonna move on to stage three. You know, stage two is about simplifying and digitizing the company. Maybe just help us understand what's been accomplished to date, and more critically, what does that mean in terms of financial performance over the next five to 10 years? Sure, yeah. Again, simplified, Darius spoke about earlier this morning, supply chain footprint, simplifying the portfolio with the spins, simplifying the IT architecture that we had. Again, 150 ERPs, thousands of applications, you know, 1,500 websites. You can imagine the ability to actually monitor your portfolio and KPIs across the company. It was completely manual and frankly, to do it in a way that was closed loop, almost impossible. Not to mention, you know, the interface with the customers needing to be, you know, much more seamless. You know, as we described, I mean, we spent over $1 billion. By the way, we did that while creating productivity to fund it. It wasn't like it was a knock on our, on our margin expense. We spent over $1 billion in creating, you know, this infrastructure that was discussed. I mean, you know, roughly 10 ERPs, about three of them have more than 90% of the business on it, which gives you an opportunity now to build something around it. Right now you can build a logical ecosystem around it, and, you know, Sheila will talk about it, but 19 platforms. Think about things like supply planning, a unified customer experience. You know, think about what the guys were just talking about here in terms of NPI, you know, having a NPI operational platform to manage from. All of these things are now possible. Mm-hmm ... you know, because of what was done. You know, that's delivered, not just data to make decisions, but actually, more importantly, the ability to make those good decisions and then ensure that what you think you said you were gonna go do actually happens. Like the closed loop aspect of it, that's actually where the value comes from. You can do all the analytics in the world, have great hypotheses, but frankly, we can actually plan, do, and check and make sure that the things that we said we were gonna do, are actually happening. Again, you saw that in terms of where does it come through from a financial perspective. You know, last year we highlighted it in this, you know, year of dramatic inflation. You know, price cost was a strength for us and was a huge driver, you know, to our to our margin expansion, and we did that with speed. You know, the ability to do that across such a large enterprise and with speed is really a differentiator. These are the kinds of things that we've been able to create value from across the enterprise. We're just getting started. You know, we've moved from operational financial reporting, and now we're getting into this value capture from this, you know, data thread that we've been able to build. Sheila, naturally to turn to you next. You're our Chief Digital Technology Officer, so a lot of the work that Greg's talking about falls in your lap, right? Can you help us understand what it means when Greg talks about moving towards digitizing in a closed loop, end-to-end process, and ultimately, how that translates into tangible value for Honeywell? Thank you. First, I'll say that we have been very busy in the last few years. What Greg explained is it's so exciting because it really is the layers of IT and the layers of architecture. The first is we resolved and fixed and right-sized the applications and infrastructure across the organization, so global networking and all the applications. The second is we've introduced this notion of 19 strategic platforms, so long gone are the day of these fragmented, you know, bolt-on applications. The third is the enterprise data warehouse, which both, you know, Darius and Vimal and Greg have spoken about. We've unleashed the opportunity and the transparency across the organization to really manage the business, you know, near real time. Every day, transactional information is available, and it's the transactional systems come together, so you get to see those insights. This helped us drive, which we spoke about last year, this notion of inflation-adjusted pricing. It really has unleashed the opportunity for us to really run the business fully transparency, near real time, you know, 24/7. Even though that's all fantastic, I'm super excited about the next phase of this because it's a natural evolution where we bring these end-to-end processes together. We talked about the Honeywell Accelerator before, but really the notion is that you've got your four business models, products, projects, software, and services, and we've identified seven end-to-end processes that we're going to standardize and simplify for the organization. Let's take three, for example. The first one is around e-commerce or our customer experience. Think about us doing, which we have today, about $5 billion comes through the e-commerce channel today, which we hope to more than double over the next three years. Think about that, e-commerce against products, e-commerce against software, and e-commerce against services. We still have to determine what projects means, but each of these seven end-to-end processes will be addressed, simplified, and standardized against each of the business models. Another example is what we talked about, Suresh talked about, is the innovation life cycle. Think about NPI and how we're gonna model base engineering and using digital tools to do engineering, but so much so that we're bringing in the supply chain at the beginning of that, so the supply chain can weigh in on the design of products. That's all vis-à-vis the technology and the tools that we've talked about. Finally, which really has significant opportunities, is really quote to cash. You think about the opportunity of quote to order to invoice to cash. Again, each one of those will have an implication against the four business models. If we do this right, we'll have less turns on the quoting process, we'll know our customers better, we won't do as many quotes, and of course, we'll improve our cash position. Again, we're determining that and simplifying those processes against those four business models. It is super exciting as we enter into this next evolution. That's super interesting. I don't think investors get a lot of visibility into how companies are digitalizing, right, on the inside. From your seat, as you look across comparable companies of our scale, how unique is this model that we're driving? I get, I have the fortune to really speak to a lot of CIOs across all different industries, I can honestly tell you that I don't know of any other company that's doing all of this at the same time. They might be picking the technology. They might be thinking about the enterprise data warehouse. The uniqueness is what we've been able to do over the last three years, is really simplify the foundation and kind of clean the garage. We've done that work, and now we can really take advantage of it and really try these simplified end-to-end processes that I think is gonna unleash the next area of value for the organization. Now let's turn to the other part of transformation, which is supply chain. Towards then a year ago at this event, we were kind of the apex of supply chain pain throughout a number of industries. We made a lot of progress. You've been able to unlock a lot of the challenges that we've had. I'm sure this audience would like to hear just a, an update on where we are on the path to normalization. Thinking about the more strategic areas, we're towards the later stages of footprint simplification, and so the natural question at Honeywell is what's next? Yeah. We made tremendous progress in terms of like access to material. It's not only on the semiconductor side. Semiconductor was probably one of our biggest problems, and I do think we are at the back end of that semiconductor problem, but it's not only this area, also casting special components. We buy hundreds and hundreds of thousands of different components, so it's for us, it's a very complex challenge. We would not have been able to do this without cleaning house or cleaning the garage and having visibility in all the technology. It's was very important. We also changed a little bit how we go to our suppliers. We used to buy a lot through distribution. We changed this. We created really strategic supply base, real good connections at very high levels with a lot of strategic suppliers. We shifted from a very transactional management of supply chain to more strategic supply chain. To your question on footprint, yes, we are at the back end of it. Over the last three to four years, I think we took out about 100 facilities, 100 sites out of our network. We have probably another 10-15 to go, but I think by the end of next year, we are almost done, and then we're gonna shift into more maintenance mode. At the same time, we also have been very busy on the digital side because I'm lucky because I run an operation that has now a very well-established digital backbone, and that is a connection of everything that we've developed in-house, products that Kevin has, that we sell for others. That enabled us to really drive a lot of simplification value, and we measure this, for instance, in productivity. This enables us this year, for instance, to offset inflation completely with productivity. So somebody asked me what about inflation this year? What kind of inflation? We offset it with productivity. So that's a, that's something where we can act really, really fast and really, really quickly. That's, that's really thanks to the, to everything we've done in the past. When it comes what's the next step? Where are we going with this? I think the next step is twofold. One is, the way we operate the company now enables us to relatively seamlessly integrate our operational sites, machines, processes, equipment with the digital backbone that we've created in the company. That's very, very powerful because we have real-time visibility, can make very well, very good decisions, and can establish this plan, do, check, act cycle that Greg was referring to, not only from a financial perspective, but also in the operation. That's super powerful. The next step really is to drive towards more automated decision-making in our operation. I think that's the next frontier. Similar to what Sheila was mentioning, I also have the pleasure to talk to a lot of my colleagues in other companies, and I'm very, very convinced that none of them is at the level at that we have established right now. Most of them are thinking about this, but the good news is we're actually doing it right now. You mentioned Kevin. Kevin leads our Honeywell Connected Enterprise, our standalone software business. You know, that business was originally a BTI, started up in 2018. It was one of the early BTIs under Darius' tenure. The last six to 12 months have been about moving off the foundation and towards really driving commercialization. It's been a big part of what Kevin has been leading. Maybe you could just give us an update on what that looks like. A lot of new products introduced. We're gonna see some of them following the presentation and the reception. Maybe just some customer proof points beyond the 1, the video that we saw just a few minutes ago. Look, as you said, I'm very excited about the acceleration of innovation that we have in Connected Enterprise. Over this past year, we've introduced at least 12 new products and many more to come here throughout 2023. I'm also very confident that we've got the right products at the right time. The reason I'm confident is because when we speak with our customers, there's at least 3 things that every one of them wants to speak about, and that is digitalization, particularly in operations, sustainability and cybersecurity. That's exactly what Forge is positioned to deliver. Forge is the software that we use to enable, to deliver, business outcomes in those three areas, and those business outcomes have very clear economic value to our customers in the form of higher asset utilization, increased labor productivity, less energy consumption, that equates to a smaller carbon footprint, and ultimately the assurance of security at the operational, asset level. When you hear our customers talk about things like, you know, Forge enabling a 2%-3% improvement in throughput or, 5% reduction in energy or, 10% in increase in labor productivity, these types of outcomes have tens, if not hundreds of millions of dollars of impact directly on the customer's P&L. The Globalworth video that played just before we came on stage, we recently announced a $40 million software deal with Globalworth. The reason they invested $40 million is because there's an overwhelming return on that investment in the form of what our software is enabling them to save in energy, in lower asset life cycle costs, improved predictive maintenance, increased operational efficiency in their buildings. It's a multiple return on that investment. As we break here a little bit later, and you go over to the demo room, you'll hear six other customer experiences that will illustrate the kind of impact that we're having with the software. Thanks, Kevin. Let's maybe widen the lens a little bit and bring John into the discussion. John's our Chief Commercial Officer. John, as we think about companies moving along, customers moving on in their digitalization path, and how both our internal efforts as well as the offerings we have externally, both kind of can deliver value for those customers. Sure. First, I wanna maybe answer a question that was asked a little earlier on, what is the timing of these products and offers, and when are they gonna be available? The answer is now. Everything Kevin just said is generally available, publicly available. We'll take purchase orders later today. These products are in use. We're using them, our customers are using them. They're delivering real value today. You know, our customers, most of them are going through many of the same transformational issues we are, right? They're going from analog to digital and distributed to central and really trying to wrestle with all of the related challenges. Most are still focused on IT transformation, centralizing their data, getting visibility, building fancy dashboards so they understand what people are doing. You know, they're now starting to grapple with the operational technology side, all the things that Torsten described in terms of what are my assets really doing in those plants? How are those processes performing? What are the safety issues I'm dealing with? What are the cybersecurity realities that are on the edge of my network in those particular domains? Now, as we engage these customers, they all have different challenges to solve because they all have different mixtures of those assets, those processes, and the networks that they're a part of. We come from a, a position of having done this for ourselves with a very large, complex network that is now very centrally accessible. We are able to do remote management. You know, we're doing autonomous operations in some cases. you know, we're really able to come at this from a very consultative perspective, then help customers plot their own journey through their own IT to OT, you know, to optimize performance. That's great. Let's bring it back to Kevin one more time. You know, earlier today, Vimal talked about the pathway to adding $750 million of incremental revenue. We put that burden on you today, the next three years. Can you just help us illuminate that path? Just talk about the key markers that you have in your mind's eye as you think about going towards that size of an industrial software business. Well, look, it's really exciting and a privilege to lead Connected Enterprise at this point because as you've been hearing throughout the day, it's an increasingly important part of Honeywell's portfolio. I think it was Darius mentioned that since its inception, Connected Enterprise has grown double digits with accretive margins on a normalized basis. It's a high-performing business in and of itself. It's also a growth engine for Honeywell and, you know, we're gonna increase the top line of Connected Enterprise by 50% over the next three years. As Sean just alluded, that plan requires us finding $750 million of incremental growth by 2025. Two-thirds of that growth is gonna come from our investments in new products and new technology. We're aggressively investing across the software portfolio along 3 different time horizons. We have a legacy portfolio of edge applications that are high-value franchises that are creating significant value for our customers in our install base, and we'll continue to add functionality, add enhancements to those products. The real growth engine is the investments that we're making in Forge applications. These are our cloud-based Forge applications that are focused on the kinds of things that I talked about, and they will that will in fact be driving a significant amount of that of that growth. The final horizon is the all new that Suresh talked about. We have some exciting investments, and you'll see a couple of them in the demonstrations later this afternoon. All new growth platforms around emissions monitoring and management around OT cyber security and around enabling and equipping the digital worker for higher levels of productivity. These are all new platforms that we're investing in that will also contribute to the growth. You know, you mentioned what indicators. Well, you know, ultimately it's my job to continue that sustained double-digit growth and have it be accretive to Honeywell. You know, things that I'm looking at are we're continuing to build that foundation of recurring revenue in HCE, and, you know, that becomes the flywheel, right? I mean, that as we build that and it's an increasing part of the overall HCE revenue, the big contributor to that recurring revenue is our SaaS growth. You know, we're looking at these new Forge products driving the revenue and, you know, we have high aspirations for the amount of growth that that's gonna drive. Finally is, as we talked about with Suresh, is the vitality, that we're committed to a high vitality portfolio, and we've publicly committed to two new product introduction events each year. One of them is coming up here in two weeks. It's called Honeywell Connect. It's a virtual event. We'll be introducing about a half dozen additional new products and enhancements. Our flagship event is in the fall in October, where again, we'll be, you know, on a routine basis introducing these new products. Pretty exciting pipeline, innovation driven and will be the key to delivering the growth that we're committed to. Thanks, Kevin. We're gonna open up to questions, but before we do, Greg, maybe just help stitch all this together for us as we think about, you know, from the CFO's position, ultimately, how is all this going to impact, whether it's revenue- Yeah. Margin expansion, cash generation, the things that the folks in the audience really care about. Yeah. I mean, I guess first I would just start by saying, you know, these initiatives that we laid out in 2017 and actually, you know, publicly went into depth around our Investor Day in 2019, they're working. You know, we've delivered over $2 billion of benefits in working capital revenue margin. You heard each of the teams talk about, you know, the various places that's coming from, whether it's, you know, Kevin's growth in HCE or the, you know, price cost management we've gotten, or you know, what Torsten's been able to achieve in the supply chain, and again, the productivity that Sheila's unlocked to be able to even afford making these investments without becoming a burden to the company. Those things are underpinning our ability to execute, right? That's the... You know, Darius mentioned it earlier, I've said it often, I mean, the, the sustainable performance we've had does not happen by accident. These are some of the reasons why we're able to do this, you know, through and through, you know, the cycle. I guess I would just say, I'll just tag it back to Vimal's comments around, you know, Accelerator and the business models. Each one of them, you saw that bubble chart, each one of them is gonna have a little bit of a different priority as to what we'll get from where. You know, in the services business, we're gonna go attack install base and drive added capture because we're gonna instrument the muscles that go about doing that on purpose, and that's gonna drive growth. You know, we talked about, you know, what we've been doing in the projects business. We're gonna digitize and instrument contract management. That's gonna lower risk, it's gonna increase margin, it's going to accelerate, you know, cash generation. Each of these things are gonna have, you know, a little bit of a different focus area in each one of the business models, but they're all the things that are enabling us to do what we're doing today, which is reconfirming and in many cases upgrading our long-term financial outlook. It's really powerful. Let's take a couple questions here. Yeah. Thank you. I think it was very clear from Vimal's presentation that accelerated growth is a big focus. As we sort of look at the digitalization, what are the levers that are available to you to pull to accelerate the growth versus what we've seen over the past three to five years? I mean, it's really hard, I appreciate, to sort of develop organically a digital growth platform, but is it technology? Is it change in how we hire people? Is it the fact that we've been incubating a lot of stuff over the past couple of years? What drives acceleration within digitalization? Thank you. Sure. I mean, I'll start and maybe John, you can, Kevin, you guys can kind of take it from there. I think it's a little bit of all of those things. I mean, the technologies that we have been developing are, you know, coming to market now, those are going to be accelerators. Again, if I speak about the Honeywell Accelerator operating system, each one of those things, we're driving our organization to be better at the things that they're going to go do in terms of not only knowing what's out there in the market in terms of demand and what offerings we're gonna go develop to satisfy those offerings, then executing around those. It's a little bit of technology. It's absolutely execution orientation around the things that we wanna go do. Again, feeding right into the, you know, the overall macro trends. I don't know, John. Yeah. Kevin I would also add that, you know, what we've been doing is essentially laying digital threads through the organization. When you think about the connectivity between the products you decide you need to go invent, how you need to construct them or deploy them, and then the people that take them to market through your channels or to your customers, you know, historically, that's been a lot of human-denominated handoffs, a lot of tribal knowledge. We've been investing for years in these digital threads through these processes in our company, and we're continuing on that trend. That's gonna allow us to more repeatably execute from the idea to scaled commercial capture in the market, whether that's in our existing markets or in some of these, you know, extended markets for new SAM growth or even in our breakthroughs. That's really what Honeywell Accelerator is about. It's about laying the digital thread so that when people join the organization, they're much more quickly coming up to speed on how we innovate, how we engineer, and how we then commercially scale an idea into the marketplace. It's a little bit of everything you said, but the how we do it is kind of what Vimal's described in this Honeywell Accelerator framework that's underpinned by this entire digital infrastructure that we've been investing in. I would ask Torsten maybe to make a couple comments, because again, without delivery, right? Yeah. It's not only inventing and selling, it's also making. Yeah. It actually- That is important. It actually connects everything together. But it, it requires a little bit different breed of people. I mean, you're really pivoted towards a more technology-based leadership also among us, but also who we hire and who's in there. In particular in our end, we have. The beauty of it is that we can combine the technology knowledge with the domain knowledge of in which we are. Most tech companies out there, they have great technology, but they lack use cases. They lack examples how to do this. We can do this all together. That's the, that's the real powerful thing. That's the differentiator. We have time for maybe one more. Thanks a lot. Maybe one for Kevin, just, you know, on HCE specifically. Just wondered if you could give us some more kind of KPIs around the makeup of the business, you know, recurring versus reoccurring sales mix, license versus subscription. Also, I guess when we think about that $2 billion of revenue, is the R&D to drive it drawn kind of from the four segments, or does it have its own, like, standalone vertical P&L with SG&A, R&D of its own? Greg, do you want to do the reporting and then I'll. Let's, you know, you could mention a few things around the rough sizes of some of the recurring and so forth for your business, but maybe let me just start with Kevin's got his own P&L. I mean, it happens to be embedded inside of each of the four segments, but he has an AOP, he has a strategic plan, he has, you know, an investment portfolio to be accountable for. You know, make no mistake about it, there is, you know, Kevin's got a high degree of accountability from the, you know, the front end of investment through the sales channels to deliver. You can make a couple comments about the, you know, the rough size, a couple of those things that you were asked about. Yeah. As I said, we're driving that growth through new products, Forge software. Just to kind of put a little bit of a frame around it, we're already well over 50% recurring revenue in HCE, and we'll probably be approaching two-thirds recurring revenue quite shortly. That, that truly is a flywheel, right? Establishing that foundation and we're going to continue to do that. As I talked about that second bucket of Forge software, right? That's all cloud-based, that's SaaS. Over the last two years and through the next three years, we'll grow that at about 50% compound annual growth in terms of the SaaS, the SaaS software. Those are just a few of the kind of the indicators, around, really kind of the software-led growth to give you a feel. That's a great way to end the conversation, but lots of interesting points made here. Thank you all very much. Please welcome Senior Vice President and Chief Financial Officer, Greg Lewis. Okay, we're coming down the home stretch, and with this last 100 charts, we'll get the whole story told. You know, 2022 was another strong year of outperformance. Again, this year, this past year in the face of hyperinflation and supply constraints. As Vimal and Darius both talked about, we got a tremendous setup for the next few years. Very visible tailwinds, advantages in our technologies to address some of the world's most challenging problems. Investors, all of you out there, you counted us for our execution and our financial balance and rigor, and we have and will deliver in both the short and the long term. Our Accelerator operating system that we've been talking about here today, is gonna add another lever for us to drive outperformance. Combine all that with what Anne shared, you know, the environment for M&A is as good as we've ever seen, and Honeywell is differentiated in our ability to succeed in M&A in this market, and you get a really compelling set of financial outcomes as we enter the next phase of growth for Honeywell. Let me make just a really quick stop on guidance. April, consistent with our expectations, as we are here today, we're on track relative to guidance range for both the second quarter and the full year. As we talked about in our earnings call a couple weeks back, you know, we're optimistic about the opportunity to build on what was a very strong start that we had in 1Q, and deliver another outstanding year here in 2023. We wanna talk about the long term. As we've discussed, our operating model is geared toward driving a balanced set of financial outcomes. We don't go hard to the hole on one thing and then ignore the balance in our financial delivery. You see that in our performance, in our organic growth, which accelerated to 6% in 2022 from 4% in 2017, in our margins, which we've grown 270 basis points in the last five years, to 21.7%. Again, we've done that while investing across the portfolio, including over $1.3 billion in our digital infrastructure, which has more than returned that investment in sales margin and working capital benefits of over $2 billion. All in, that performance delivers an ROIC that's 400 basis points above our peer median. A terrific outcome in that regard. The punchline is really the same as I talked about a year ago in this forum. You know, Honeywell consistently invest in our business, while growing margins, and it really isn't an either/or proposition when you think about Honeywell. We touched on this in the panels, but one of the things that I'm most proud about is Honeywell's ability to deliver in all environments. We demonstrate agility, speed, adapting to changing circumstances. You know, we're not gonna run away from a problem. We're the ones that generally run at it directly and address it as soon as it shows itself. We've shown the capability to tackle multiple priorities simultaneously. Over the last 6+ years, we've had numerous examples, on this chart are really three big ones. In 2018, we executed two major spins, delivering Resideo and Garrett to the market in about 12 months, removing 20% of our fixed costs in order not to degrade, you know, the margin. We delivered strong outcomes on the base business in that year, 6% growth, 60 basis points of margin, and 12% adjusted EPS growth. In 2020, feels like a long time ago now, you know, our portfolio was one of the most negatively impacted of anyone's in the COVID-driven, you know, market drop. We delivered better decremental margins than the peer median due to the fast nature of the actions that we took from a cost perspective. Wasn't fun. It was necessary in order that we resize our cost base to the new reality that we had at the moment, and we did that, removing about a billion and a half dollars of fixed costs from our portfolio. Most recently in 22, as I mentioned earlier, in the height of the major supply constraints and hyperinflation, we used the digital capabilities that we discussed, both from, you know, Torsten's angle and through John and the SBGs to make sure we can liberate supply and also get price costs, which really, you know, drove our margin and allowed us to grow margins by 70 basis points last year, again, 65 basis points above the peer median. These aren't stories. This is not like made up, you know, stories. This is what really happens. These are proof points. These are facts. Again, I think it really points to the power of Honeywell, our ability to act with speed and purpose, speaks both to the culture of execution that we have and now the platform we've created, from which we're gonna grow from here. Just wanna take a quick moment on expanding margins. Again, you know this story very well. Our gross margins, though, I think perhaps are underappreciated. We've increased those over 700 basis points in the last 10 years to 37%. It was 38% in the first quarter. That's been a huge contributor to the overall segment margin expansion, as well as one of the reasons why, you know, we're able to retain price. I know there was a lot of concern as we went into this year about as, you know, were we gonna have to give price back. You know, part of the reason that we are able to have the kind of pricing leverage that we do is because of the technology differentiation that we have, which I think is evidenced in our gross margin. I think that's something that may be underappreciated, that technology differentiation that's present in our portfolio of solutions and offerings. With our new commitment to take GM above 40% from here through both leveraging what we discussed on Accelerator and the operating system that we have, as well as shaping the portfolio that Vimal described, we now see 100-200 basis points of opportunity to our long-term margin target, giving us confidence to increase it to over 25%. We've made sizable progress, but we still have more room to run. Like, all these things we discussed with you today, I'm super excited about, you know, what's yet to come, and we plan to continue to advance our technologies to solve some of these big challenges across the world. You know, turning to cash, briefly, you know, we've made a lot of progress here as well. Over the last 10 years in our free cash flow generation, you know, we've moved our cash margins from an average of 10% in the 12-16 period to 15%-16%, since 2020. We've done that also again in challenging economic backdrops. You know, COVID drove a ton of supply chain challenges, you know, a substantial challenge in inventory in particular. R&D tax legislation changes, of course, that you guys know quite well, also created some cash tax headwinds, but we're still delivering a very nice free cash flow margin. You know, to combat that, we've driven superior terms. You know, that's all been aided by the efforts that we discussed in ISC and Digital. We've got more room to go here as well. We're not done. The operating model that we talked about, the end-to-end transformations, you know, Sheila discussed some of the things that we're gonna do from an end-to-end perspective and quote to cash. You know, we're gonna have ample opportunity to raise the GBEs, you know, as Vimal showed in his chart, you know, up to the best-in-class performance levels across the portfolio, and that's gonna give us a little bit more juice here as well. Now I just wanna touch on briefly something Anne mentioned, you know, during her session. You know, the world we're living in today, the capital markets have shifted. You all know this. You know, higher inflation for longer is certainly expected. Unprecedented, at least in the last 20 years of certainly our lives. The rate hike cycle, you know, moving apace for many months now increased the cost of capital for many and made it difficult to actually obtain for some. That to us is actually an opportunity, particularly in the M&A context. These are the times when it makes me really happy to know that we've, you know, protected our credit rating for so long, for 30 years, in fact, for times just such as these. We've also managed our debt capacity, you know, very intentionally. Darius talked about the de-risking of the balance sheet that we've done, particularly with our incredibly well-funded pension plan. All this serviced really well in the pandemic. You may remember we went out into the markets in the height of the pandemic and raised $6 billion at that time. Just shows you the ready access to low-cost capital that we have as Honeywell. We'll do that now, as and when we need it, in order to do the capital deployment that we talked about. This is truly a time in the market where we feel like it really is advantage Honeywell, and we expect to take advantage of that. In terms of capital deployment, you heard the message from Vimal. We're re-upping our three-year commitment to 25+ over the next three years. We deployed over $8 billion last year. You know, you've seen us do this capital deployment over the years. We've got ample capacity to do so. $36 billion-$39 billion at our disposal when you think through, you know, the cash that we have on the balance sheet, plus what we're gonna generate, and then layer on top of that the debt capacity that we have. You know, we're gonna do that with a combination of high return organic investments. You heard a lot today about how powerful the investments in R&D and growth CapEx that we think we have on the horizon are, and it really is exciting, all the opportunities that the teams talked about, particularly in sustainability and aviation and automation. We'll continue to pay a competitive dividend. You know our buyback, you know, algorithm, you know, minimum 1% per year. We're gonna complement that with smart M&A. As Anne described, it's, you know, you've got to get all the ducks in a row to make it happen. Hopefully you've learned a little bit more about the robustness of the process that we run, so that you'll have confidence that that is something that we take very seriously. We're not gonna just spend the money because, you know, somebody wants us to. We're only gonna do it when we're confident that we're gonna get the kinds of returns, you know, that we need. You know, the CCC deal, as Anne talked about, is just a great example of that. You know, just let's anchor this all around the long-term commitments. First in terms of the SBGs, you know, Vimal shared earlier his reconfirmation and refinement in the long-term targets that we have. You know, as we're here today, we have got a lot of confidence in our portfolio, and we've upgraded our view in three of our SBGs from the targets we shared just a year ago. In Aero, the demand environment continues to be really strong, and the progress that we're now seeing in improving our supply chain performance has given us the confidence to upgrade our view on growth to MSD to high single digits over the long term. In HPT, we're now in the precipice of delivering our previous long-term margin target of 25%. We hit that in Q1, in fact. Now we've got the confidence to raise that expectation to 27%. Similarly, in SPS, we're now operating right near the low end of our 18%-20% target. We're knocking the 18 off, and we're going for 20, and we think that we've got a nice runway to get there. All of this supports our outlook for the overall portfolio in which we're raising Honeywell segment margin target to above 25%, and our execution capability and our growth levers are really painting a bright picture for the future as we see it. Let me wrap up with just a few final quick thoughts. Our markets and technology offerings support a really robust outlook for the future of Honeywell. I hope you've, you know, much of that from all of the leaders here today. You know, what we do is crucial to solving some of the world's toughest problems. I think that's a fact in sustainability, digitization, automation, and we've got tremendous technologies to bring to bear. As I discussed earlier, I think our differentiation shows in the financial metrics and our performance. As we, as we look out now, we're, you know, adding a couple of new metrics to our, to our view on the world. 4%-7% organic growth is still very much in the cards. Now 35% recurring revenue. You know, a new outline that we're talking about greater than 40% gross margin. You may have noticed we've changed our external reporting to highlight that, you know, on par with our peers. 40-60 basis points of margin expansion over time. mid-teens+ in free cash flow margin. We do see some improvement there that we think we can upgrade that. As I mentioned, the $25 billion+ of capital deployment over the next 3 years. You know, hopefully what you take from today is that, once again, we've demonstrated you can count on Honeywell to deliver in all environments, which in an era of increasing volatility, I think is differentiated amongst our peers. Everyone can go up and down in given years. For us, you get that steady performance. As I've shared before, our operating system is not an either/or. We generate growth and productivity, and that provides space for us to invest in the short and long term. Many times people ask me, "Well, can you know, can you deliver results with higher incrementals?" Yeah, we can, but we're always gonna invest back in the business too. We're not here to win right here, just in this quarter alone. We're doing it for the long and the short term. Our transformation's been effective, and it continues. We're not done. Again, that's one of the beauties of our culture at Honeywell. We're never satisfied. We're our own worst critics. You can rest assured that, you know, that's the case. With the added lever of Accelerator, we'll continue to provide some fuel to optimize both earnings and cash for the future. You know, over the past seven years, we've created a very powerful platform to grow from, organically and inorganically, and we've got the firepower to leverage it. Our confidence and conviction in the future and our ability to accelerate our financial algorithm is as strong today as it's ever been. I really do believe the best is yet to come. Thank you very much. We'll move on. Please welcome Darius Adamczyk, Vimal Kapur, Greg Lewis, and Anne Madden. We come to our favorite part. Yeah. Now everybody's awake. That's right. Only can take two questions. [audio distortion] Yeah. My first question, Anne, really appreciated the rigor behind the funnel and how many targets you take a look at and then still basically distilling that down to 10. You know, you mentioned that like right now is a really good time for you guys. I'm curious, you know, what's in the pipeline right now? Do you have 10 that you're looking at today? Are they similar size to that $1 billion-$5 billion number that Darius has been talking about? Yeah. Thank you for the question. We've been feverishly working our pipeline. We have 10 by SBG, so it's not 10 for total company Honeywell. We really distill it down to 10 by SBG. Not all of those are created equal. I mean, we have an enormous amount of diversity and some incredibly attractive places to play. What we like to do is look at multiple things at a time across the program. Yes, we have deals that are squarely in that $1 billion-$7 billion range. We have deals that are lower than that. I think, you know, if we didn't say it before, I think Vimal might have alluded to it. When we think about pure play software deals, we actually think about a smaller category of bolt-on than that $1 billion-$7 billion. Hopefully that helps. Yeah, that's super helpful. It's a good segue actually to Vimal. Vimal, I know you didn't wanna talk about the opportunities, I guess, necessarily by SBG. Mm-hmm. When I think about M&A and maybe what was transpiring before, you know, before Darius took over as CEO, you're about to make potentially like a really large acquisition in Aerospace. Over the last seven years, I think that there's been less of a focus for at least from an M&A perspective on the Aerospace business. I know your background has been running PMT and HPT. How do you think about Aerospace as a potential area for capital going forward from an M&A perspective? Look, I think any capital investment depends upon return on investment. I don't think my background, you know, my background has such a checkered history. I can't be attached to anything. Software, I'm energy storage, I'm building technologies, I'm controls. I don't think that it has direct correlation to that. I think short answer is, as you said, I believe in four macros Honeywell belongs to. Air travel, energy transition, automation, digitization. If the deals make sense, we'll do the right thing. You have to remember that in Aerospace, we have a strong position in our content already, so we need to have a compelling case to do anything different. Just because of the deal there, you know, we make so much of content in a plane, so our urgency do anything there is less, but you never said no if there's an appropriate opportunity. Thanks. Thanks for the question. I'm not hearing anything about a big portfolio review like Darius did when he took over as CEO. Seems like you're pretty happy with the portfolio today. I did see a reference to non-core asset or potential non-core asset sales. Maybe just address that first and foremost. I did hear a focus, much more focus on gross margin. Mm-hmm. The integrated OE business, the install business clearly is well below that 40% gross margin bar. You've raised the SPS margins. You know, when that business recovers next year and beyond, have you found a way to grow that business more, more profitably going forward? Yeah. I think the same algorithm applies there. The way I think about integrated businesses in two ways. One is, as we make our choices to grow our install base, we have to again focus on higher gross margin there. Same algorithm applies. Very importantly, how we grow our aftermarket services business, it's gonna touch half a billion dollars. It's growing double-digit for many years. The driver to keep a double-digit growth can enhance the overall gross margin of the IGS business. It's a two lever really to think about how we become more sensitive in the front end, and in the back end, we keep growing our aftermarket. This business is six, seven years in Honeywell, back forward. I mean, somewhere close to 2016, so eight, seven years. I'm from Process Solutions, which is 40 years in Honeywell. Process Solutions, the services business is way bigger than projects business. Why? We're doing it for 40 years now. It takes time. It just and we are used to that cycle. We've done that in process. We have done that in buildings. We'll do that in warehouse. The margin question is fair, and that has to be challenged all the time. Yeah. If I could maybe just build on that, though, too, just to hit your Accelerator point. You talked about it in the presentation earlier, the GBEs, which was the first business model we really went out after this. Projects. It was projects, right? you know, we've talked about 19 strategic platforms. We now have a really strong platform that we're now running all of our projects businesses under, which we did not have a year ago, 18 months ago. all of these kinds of end-to-end processes we spoke about, making sure we do design reviews, understanding change order practices and so forth, all of those things are gonna cause us to run all of our projects businesses better tomorrow than we did yesterday. you know, Vimal's exactly right. I mean, the whole point of that was to create, you know, a stream of services and software business that outgrows the install base over time. Thank you. Good morning, guys. Good afternoon. Darius, I'm not on the Succession episode yet, but. It's a good one. How do you think about just re-energizing the portfolio to focus on growth? You know, how does management change from a focus on margin to going to growth? Just a quick follow-up on SPS. How do you reiterate that guide given the last 2 years of performance? It'll imply a big step-up in 2024. If you could comment on that. Yeah. I mean, first of all, you know, I think our growth algorithm, 4%-7% growth in core non-niche markets combined with 40%-60% margin, I think if you can find better growth opportunities through a cycle, I don't know where they would be. I think we've got that in itself is a commitment to the kind of growth that we're gonna have. Sure, there's gonna be a down market like we have in warehouse automation, which we telegraphed in the middle of last year, that it's gonna be, is a discontinuity, because what really happened is there was an accelerated investment in 2020 and 2021. The market's just got to absorb that, but you got to think about that through the cycle. You know, I think some people are going back to our warehouse automation business, which we told you was not going to grow because of absorption in the market. Everything else, if you look at HPT, you look at TMT, look at Aero, these businesses are growing extraordinarily well, and they're growing profitably, which is the chart that I showed in my section. I think we're very happy with the portfolio. You know, I think Suresh and the team talked a lot about the innovation that's going to be kicking in even more. There's no instant gratification, but we have a real comfort level at that kind of growth algorithm through a cycle. I think that's compelling, particularly when you also think about the teens plus cash margin that Greg showed in his charts. Yeah. In SPS, in particular, again, just because it's down now, I mean. It's a long-term view. That's a long-term target. It's a long-term target. We still think those macro trends are very strong. Yeah. All right. Good afternoon, guys. Vimal, I think there's been some assumptions on how you're gonna spend the first six months, but I don't think anybody's explicitly asked you that question. How will you spend the first six months? I'll run even longer. Will a portfolio review be part of that process? Yeah. I mean, the portfolio review is a standard Honeywell process, done every year with the board. I get to do that this year and with my lens versus the lens of Darius. I think that's clearly an opportunity. From a priority perspective, I think the -- I have a benefit of being part of Honeywell for a long time. My, my opportunity is really to sharpen what I'm already thinking versus evolving my thinking. Now there's a subtle difference. I believe what I'm gonna do, which I directionally shared. Probably I need to have 100% conviction this is it, or maybe there's a small tweak to it. I'm pretty convicted to what I shared is a path forward. Would I add to it? Sure. If there's something, we'll stay aligned and communicate. Vimal, do you feel empowered by the board to make whatever changes you wanna make, meaning senior leadership, portfolio, anything else, despite the strong personalities that you have on the stage with you? Absolutely. I mean, I think, I have a job to do, and I think I have empowerment to do that. You know, I, you know, fortunately worked with Darius for a long time. Yeah. We have agreed to disagree multiple times, so that's not a new equation. We worked successfully for 10+ years, and I feel pretty confident that I've courage to do things which I'll like to do, so. Not only that, I would expect him to. If he does all the same stuff that I did, then- Yeah we're on the wrong path, and I encourage him to do things differently. Just like when I took over from Cote, the first statement was, "Why don't you just keep doing everything that Cote did?" No. He should have the same mindset. Good afternoon. Hey, two from me. Just first on the deal stuff, Anne. I listened to your pitch, and I felt really sorry for your staff and the investment banking associates out there and everything. But seriously, the nature of my question is have you kind of gone back and looked at, you know, how tight that screen is? You know, you wanna yield the diamond at the end, right? But are you missing emeralds and rubies because it's just too tough? I guess it's a little bit hard to know if something traded away or it didn't trade, right, woulda, coulda, shoulda. But I just wonder if you've kind of had that introspection on the process. Then the second question is just around the breakthroughs generally and Quantinuum specifically. Mm-hmm. You do have those as kind of an add-on to the four to seven. Mm-hmm. Right? Yeah. Do we think about those as a hedge to the 4 to 7? You know, they are literal-literally upside to the four to seven. Does Quantinuum belong in the portfolio longer term, or it's best monetized somewhere down the road? Joe, we can have Anne go. You want to go first? Yeah. Yeah. On the, you know, are the screws dialed down too tight on the way we look at M&A, it's not the first time we've been asked that question, and we ask that question to ourselves internally all the time. You know, when I, when I look at the data in the marketplace, and I, you know, am very situationally aware of where deals trade to and why and for how much and what that's worth, there is very precious little, I'll be honest, that makes me wanna cry in my beer when I don't win a deal because I didn't push myself on price or, you know, there was that one that got away. That almost never happens at Honeywell. I think the reason that it doesn't is that our organic opportunities are so compelling that we don't feel that intense artificial pressure to go put up inorganic growth as a substitute. We love it all day long as an add-on, as a tool to add to that 4-7, but we don't need that to have Honeywell be a successful company, and that enables us to maintain our discipline around our metrics. The last few years have really been extraordinarily ugly in terms of market conditions, and there have been times when we have thought about should we just hold our nose and jump into the pool both feet in. We concluded the answer for us was that would be a bad idea. We've seen others do that and live to regret it. I think largely we're still in the camp of the way in which we deploy the rigor is smart. We look at deals every which way from Sunday on a GAAP basis, on a cash basis. You know, we model the hell out of it, we're very situationally aware of what it will do on impact to Honeywell. We're not at a stage at this point where we have to, you know, throw caution to the wind and, you know. We don't need to do that. I feel pretty good that we're in a good spot in terms of the discipline. On your question of four to seven, yeah, the BTIs are not included in the model. Explain you why. The way to think about BTI, these are long cycle bets. If I have to develop a flow battery or build my business in green hydrogen on urban air mobility, these are five, seven-year bets. They take higher cycle time. Quantinuum is in the same box. Therefore, they are not part of four to seven because they are more of a near-term results. We don't wanna confuse the two. When they execute, even if you're successful half the time, they add up to that model. They do add up to the model, but the cycle is longer. I really look at it more of creating long-term enterprise value. To your question on Quantinuum, we have been public and to say that we will monetize the value of our investment in that venture when the timing is right. One of the key milestone was the announcement made earlier this week of fault-tolerant technology. We have proven that, so that makes us one step closer. At the right time, we'll, you know, we'll execute on our commitment there. Thanks. Vimal, I just wanted to go back to what you put up on High Growth Regions and the focus there. I guess if you look across all the High Growth Regions, where are you most excited about incremental growth? I feel like High Growth Regions used to be like a euphemism for China. I'd love to hear, like, your view on- Yeah. How China fits into that in an increasingly, you know- Yeah. -an environment with geopolitical tension. Thank you. As mentioned, our revenue High Growth Region was $8 billion. This year will be somewhere between $8 billion and $9 billion, closer toward $9 billion category. China represents only about 25%, top of my mind. Our High Growth Region doesn't equal to China. That was the first message I was trying to communicate here. It's well spread out. We clearly see higher growth opportunity in next two to three years in Middle East and India. The reason for that is strong fit of our portfolio to what those regions want to do. They want to do three things. They all want to be big in air travel. Saudi wants to build a new airline. Air India has been privatized. They all want to be big in energy transition. They all want to build a lot of infrastructure. Well, that's what is Honeywell. Why we should not be and we have a very strong position in these countries. Our domestic presence is strong. Our brand is strong. Our manufacturing exists. Our government relations are strong. There's a reason behind it, and we're gonna be. It doesn't mean we are going to forget China. Having our position, we will put every effort to contain our share. That cannot be the only vector on which we are counting on it. Thanks. Wanted to ask on price cost and just the tools that you have with the operating system today, and then are you sort of moving toward an ability to drive each of these more independently? I'm sure at their core, they've gotta be linked, but when I think about the insights that you're gaining on the supply chain side of things. Mm-hmm. Are you able to do more independently if you talk about buckets of productivity opportunity? Is price sort of a more of a separate decision tool at this point in time, so we see less of that? I can start. Yeah. Go ahead, yeah. Y- The answer is yes. I mean, that's Torsten sort of alluded to that, right? We're going after price cost in the marketplace, but at the same time trying to drive, you know, productivity or deflation. Yes, that's the beauty of the whole digital evolution is our capabilities are getting better and better and better. You know, again, if I think about it from a pricing perspective, you know, now we're starting to try to get into elasticity to demand. Can we understand whether we de-destroy demand? It's not just go out in the marketplace and price and then, you know, hope. I think the answer can be yes, and our capabilities are gonna continue to evolve as we get more and more sophisticated, you know, with the level of insights that we're getting. Can you just clarify what you mean by long-term target? Are these like a roll-forward of last year, so it's more of kind of like a 2026 view? I would think about it even beyond 2026. Okay. For the... Is there any reason why that extra margin kind of wouldn't drop through into cash flow or, you know, I would think that with defense and- I, I would- SP&S coming through that that should be a little bit of a positive from the down payment dynamics there. Yeah. Should that drop through to cash flow? Yeah, I would expect the margin growth that we get. That's why we kind of plussed up both the free cash margin rate and the, and the segment margin rate. Yeah. Then just lastly, when we think about those long-term targets, should we think about those as somewhat linear? I mean, you're doing about that this year. Is there any reason why that should, you know, dip in 2024 before re-accelerating in 2025 on both the top line as well as the margin expansion? Like, will you guys come and guide in January and say, "Well, we outperformed last year, so we're below trend this year. In January you can ask us that, and we'll tell you. Well, is it linear? I mean, is there any reason to believe that there's something back end loaded in 2025 and 2026? Roughly. I mean, it's roughly linear, but again, that's, it's not gonna be exactly the same each and every year. I mean. The only way it'll. That's the point of talking about it in a longer term nature. Sure. you know that there's always gonna be some up and downs through a cycle. Yeah. I would just add that, look, I think based on everything we see today, you know, I think we expect that to fit that algorithm next year too, especially as you look at our backlog, which keeps growing. You know, we've got two of our big businesses which are insulating us from economic conditions. That's what it really is. That's right. It's also too early. I mean, we're sitting here in May, so I mean, it's based on everything we see today, it gives us a lot of confidence about the outlook for next year. It's also May. Yeah. Great. Thanks. Thank you. Just a question on buybacks. You know, when we talk to investors, one of the comments we get, it's sort of an easy one, not a big buyback, but sort of given the performance that you have delivered, given the returns on capital, just a very easy nearer-term, medium-term solution while we're waiting for larger deals. What's your response to that? What has the feedback been over the past, you know, couple of weeks since you sort of announced the management transition? Thank you. I mean, I don't think we are gonna fundamentally change our model of share buyback, what we did so far. I mean, you know, we have target of $25 billion spend in a three-year window, roughly $8 billion a year, and we know how much of flex we have between share buyback and M&A. We have to balance the two all the time because it's not A or B. We don't have, as I specifically said, that $13 billion, there's no target, okay, it's five and eight or eight and five. It depends on opportunities of M&A which are accretive to us, and then share buyback are opportunistic. Yeah. I mean, we can count on a minimum of one. Yeah. Minimum, yeah. That's, that's been our algorithm of a minimum 1, and then, you know, we'll see how it goes. I mean, last year we thought the stock was depressed and we bought $4 billion back, you know. That was. Yeah ... you know, kind of a opportunity decision at that time, and we'll continue to evaluate, as Vimal said, and make those as we go. By the way, you know, we did what we said we're gonna do. I mean, we said $25 billion. We did roughly a third of that last year. You know, this year we made 1 acquisition. We might make more. But if they don't come through, then we'll probably do a little bit more buyback. I mean, I think it's, I think it's just we're gonna toggle between those two, depending upon market conditions and what we see on the M&A front. I think bigger, I mean, I know the question is one on something, but just you've done a fantastic job in terms of delivering fundamentals. I appreciate that it doesn't create value long-term. It's not accretive. I appreciate all the arguments against buybacks. You know, sometimes it's sort of an easy thing to do, and they do create value. No, no. By the way, we agree. That's why, that's exactly why we had at least a minimum of 1% buyback per year. If you remember, that's part of the algorithm. You should assume it's gonna continue to be unless Vimal decides to change it. Yeah. I think we're in alignment there. Right here on the left. Hey, guys. You raised the growth in your largest business long term for A&E, right? You know, defense has been a little bit tough to turn, and it just turned. You know, how are you feeling about that, especially with, you know, the debate in Washington that's going on? Then you also, Vimal, you guys didn't really talk about AI at all, and I hear that, like, 12 times, you know, like, a day nowadays. Yeah. Like, maybe any sort of thoughts on how Honeywell approaches this age that we're in. Sure. I can do second question first there. I mean, to me, our fourth strategy is really a platform for AI eventually. We are ferociously working to connect all our customers to our IoT platform, be it in process, be it in buildings, be it in aerospace. As we fast-forward, that data collection will allow us opportunity to create new business model on data monetization. The reason you see me so convicted on software, because that's the basis on which AI will get monetized, but I don't have something to show you, so even I'm gonna brag here without a clear proposition. Internally, we are actively, you know, Sheila is taking lead to look at all possible use cases of AI for our own operation, be it in areas of proposal development, marketing, technical support. We are actively working with Microsoft to be one of the early adopter of that. On defense and space, we had a finally a good quarter one, 4% growth. We expect to maintain that rate. Our backlog is very strong, so it's still kind of constrained by supply chain to a broader degree. The good news there is, the international defense business, which I talked about in my model, is becoming a very attractive opportunity as many countries have increased their GDP, defense spend to their GDP. That's gonna be longer cycle because this is a long cycle business as we sell our equipment to them. It's gonna be more profitable because it's a commercial transaction. At the end of the day, we are not bound by any specific rules that we can do A or B. Overall, I think on a longer cycle, the defense business is gonna play an important role in the aero portfolio. Hey, thanks. Yeah, I just wanna come back to your software ambitions and curious how you're thinking about balancing organic versus inorganic growth and investment in that business. You know, secondarily, thinking about Sparta, you know, it sounds like you exceeded expectations, so I'm curious how that might inform the underwriting of the next deal. I mean, can you open your aperture, maybe pay up a little bit more because you have that, you know, ability to propagate the technology? The software business, the way I think about it is that fundamentally, we are solving our customers' problems, and that's the motivation for us to be in that business. Given these problems are not solved in scale by any company, the net opportunity to acquire somebody diminishes automatically because we are getting into cybersecurity, emission monitoring, asset performance. They're not large businesses which exist and do that today. If you want to stay convicted to my basis, I should not change my story to say, "Oh, by the way, we found this. We're gonna do something else." I think that's a very basis for it. Within those areas, if we find appropriate acquisition to progress our cybersecurity strategy, progress our asset performance strategy, for sure we'll do that, but it'll be more bolt on to our core versus being a absolutely fresh idea. You can, you know, bank on that. Sparta has been a great acquisition. Anything to build upon that platform is our priority. That's my priority, that's Kevin's priority, that's Anne's priority. We are looking at what could be additive to that model, which has worked pretty well for us, and progress that business to the next level. You're absolutely spot on. That's one of our priority areas to look at. We love to be able to do follow-on deals. When we do primary deals, we are always looking forward to the potential follow-on deals. Why? Because you can look at the synergy benefits more holistically. Thank you. For Vimal, I was a bit surprised to hear the emphasis on the new product vitality index. A number of companies have been moving away from this as a key metric, 'cause in some cases, the organization gets the wrong incentives... Right. -to kind of declare a product new. There could be some churn in the portfolio offerings that way. Just maybe you can address that. My second question is, the idea of optimizing and improving R&D, just, not by adding additional funding, but just through the growth of the company. Just strategies around and what does it mean to optimize? It's not- Yeah. patents, you know, per year or so forth, but, just, you know, the thinking around that. Thank you. Thanks for the question. Both are quite interrelated. What I mean by optimizing is typically the leadership engagement and how R&D money is spent is not very deep. The way the AOP cycle works is Honeywell has about 35 businesses. We build a plan for the year. There's an R&D dollar, let's say X business is $100 million. They spend $100 million to best of their ability and leadership engagement in that is not tactically deep enough. That's what I wanna change to say, take a case of Lucian's business. He spent $350 million. I wanna know how he plans to spend it. I just wanna know that, and I wanna get convinced it's working on that algorithm of protecting our base and expanding our SAM. It should be deep enough conversation by him and with his key business leaders. That shift creates an opportunity of incremental making bets tops down. I'm not gonna execute it. I'm not technologist that I can execute it. That's gonna be Suresh and his team. Changing that model on how you make decision on capital allocation at a program level is a shift we're really gonna make here. I'm not gonna opine on how others think about new product metric. Honeywell is a technology company. The day we will not care about new products, I think our very ability to deliver 4%-7% growth will get pretty much in significant risk. We will always remain focused on our product vitality, but we will do it in a manner that we keep our current categories and create new categories. It's which we are adding to our model, creating new categories like sensors or EV cars. We don't have a lot of business there. Can we do it? Sure, we can do that. It's not a heavy lift. Doing it in a very intentional manner to say, "We wanna create $400 million business," just picking a random number. It's a different model versus bottoms-up, somebody tells me it's gonna be $50 million. That's kind of a change in model in how we are thinking about that. Hi. Thanks. I just wanted to follow up on the price cost question. In a high inflation environment, it's easier to raise prices. Can you tell us how much was price cost in the last 1 year? How much of a benefit, and how much have you assumed going forward to get to that 25%? Yeah. I mean, price cost delivered, a large portion of our 2022 unit margins. I'm not gonna be super specific about it, 'cause we don't disclose it, but it was a pretty large contributor in 2022. You know, that's, you know, tamped down a little bit in 2023. We're gonna just continue to make sure that we're price cost positive. I mean, that's effectively what our objective is to ensure that we're not degrading margins. I just want to add one other thing, 'cause I think sometimes we get too narrowed with price cost. That's one lever. The other key lever is what Vimal talked about, which is NPI, new product introductions. We bring new products, which are generally almost always accretive to the products that they're displacing or new products that we're adding. That is part of the formula in terms of how we continue and have the confidence to continue to expand margins. As I talked about in my presentation, we don't necessarily want to be the fastest grower. That's not what we're after. We're after being the most profitable grower. There's a difference, and that's what creates shareholder value. It's not top line, it's profit. That's a really good place to end the conversation, I think. Before we turn it back to Vimal for closing remarks, and as we wrap up here, we're gonna open up these walls. There's gonna be a reception to your right. There's gonna be six technology demonstrations we talked about. Grab some food, grab a drink, grab an executive, and have a nice conversation. In the meantime, we turn back to Vimal for closing remarks. Yeah. Thanks again for being here, and thanks for listening our story. I wanna first starting with the big thanks to Darius for his outstanding work over the last 7 years as Honeywell CEO. As Darius laid out, we are looking for phase 3 of Honeywell, grow and innovate. You can count on me to deliver on that, and I hope to see you guys more often to tell my story. For now, we'll break now, and we'll look forward to the demo session. Thank you very much.