Honeywell International : 2024 Annual Report

Published: 2025-04-09 07:56:10 ET HON

2024 ANNUAL REPORT

A Letter From Our

Chairman & CEO

Dear Fellow Shareowner:

Over the past century, a spirit of transformation has driven Honeywell's ability to deliver for customers and produce value for all stakeholders. Looking ahead, this gives me great confidence in our plans for separating into three industry- leading, publicly traded companies with a sharp focus and strong potential for sustained value creation. I am incredibly excited to continue leading us forward to write the next chapter in Honeywell's storied history.

As I look back on my formative years in India, the need for adaptability and flexibility was constant. I grew up in a small town, where my family did not have a climate-controlled house, a car or a refrigerator - many of the basic amenities that people now consider essential. As I grew up and

experienced a better and safer life, I learned that driving dramatic improvements often requires embracing change. Everything my upbringing instilled in me about the value of transformation was ultimately put into practice when I joined Honeywell, at the young age of 24 years, as part of a joint venture in India that had to find its future in a highly competitive environment requiring growth, innovation and results. All of these experiences informed the four beliefs, which I practice in every business I have run: simplify, innovate to grow, transform continuously and have an operating system.

In my first major role as President of Honeywell's Process Solutions business in 2014, everything came full circle, and I made a focus on transformation a key operating principle. Our results in the subsequent years were impressive. When I was then tasked with leading Honeywell's Building Automation business in 2018, I instilled a similar set of principles that once again generated strong performance. As Chairman and CEO, I have come to believe that our ability to transform as an organization -- beyond what we ever could have imagined even a decade ago

TRANSFORMING HONEYWELL'S PORTFOLIO

Since aligning Honeywell to the three compelling megatrends of automation, the future of aviation and energy transition last January, we have been moving swiftly and decisively to optimize and simplify our portfolio to deliver superior growth and drive incremental shareowner value. As part of our disciplined capital deployment strategy, we completed nearly $9 billion of accretive acquisitions to accelerate growth and support our pivot to higher-growth verticals.

These included the acquisitions of Carrier Access Solutions, Civitanavi, CAES and Air Products' liquified natural gas business. In tandem, we announced several portfolio

optimization efforts, including the sale of our personal protective equipment business and the critical decision to spin off our Advanced Materials business into Solstice Advanced Materials.

Building on this, in February 2025, our Board completed a comprehensive, year- long business portfolio evaluation, and we announcedourintenttopursueafullseparation of Automation and Aerospace Technologies. The planned separation, coupled with the spin of our Advanced Materials business into Solstice Advanced Materials will enable the creation of three independent, industry- leading companies, each of which will have a clear path to accelerate growth and deliver enhanced customer and shareowner value while offering a bright future for our employees.

THREE INDUSTRY-LEADING

PUBLIC COMPANIES

STRATEGY ADVANTAGES

GROWTH DRIVERS

HONEYWELL

Global scale, with

Build on vast installed base and deepen presence in high- growth verticals

Positioned to address the future of automation, energy and digitalization

HONEYWELL

AEROSPACE

Large installed base, recurring aftermarket sales and best-in-class margins with leading R&D investment

Multi-year commercial original equipment and defense investment upcycle

Address the future of aviation through electrification and autonomy of flight

SOLSTICE

ADVANCED

MATERIALS

Unique financial profile

with market-leading

brands across specialty chemicals and materials

Enhanced financial flexibility to pursue innovation and develop new solutions with next-gen chemistry

IP-protected portfolio serving growing regulatory-drivenmarkets

Pure play

Premier technology

Sustainability-focused

specialty chemicals and

automation leader

and systems provider

materials pure play

A FOCUS ON ORGANIC GROWTH

Throughout 2024, we took intentional actions to make growth a top priority in all aspects of our business, increasing full-year adjusted earnings per share1 by 4%, to $9.89, and growing full-year sales by 5%, and 3% organically,1 while segment profit1 grew 1%. Beyond the changes executed across our portfolio, we upgraded talent, incorporated process improvements in our execution and deployed new high-impact innovations for our customers.

While increasing our research and development expenditures by 5% in 2024, we were able to launch several new groundbreaking products this year, which range from an artificial intelligence (AI) -powered Connected Buildings solution and an environmental cooling system for aircraft to a new portfolio of technologies that produce Sustainable Aviation Fuels (SAF) and diesel from a variety of pathways. Together, this progress helped invigorate organic growth with a 1% year-over-year increase in NPI vitality (the overall percentage of sales from new products) to 34% and with revenue contributions from new products totaling $13.1 billion in 2024.

Growth in full-year sales from 2023 to 2024

Increase in R&D expenditures in 2024

$13.1 billion

Total revenue contributions from new products in 2024

1See Non-GAAP Financial Measures section for additional information regarding non-GAAP measures.

INCREASING COLLABORATION

Over the past year, we placed an increased emphasis on customer and partner collaboration, particularly as we embraced a technology trifecta of AI, Cloud and 5G to bring certainty and speed to new products that drive the path to autonomy. As we continue to support our customers in bridging the physical and digital worlds to expand autonomous operations, I am optimistic that 2025 will be the year the sector accelerates its move to industrial autonomy at scale.

With long-time customer Bombardier, we signed a landmark agreement to co-innovate and advance next-generation aviation technology. Over the life of the agreement, we anticipate that aftermarket offerings and new technologies from this collaboration will provide up to $17 billion of revenue potential to Honeywell. We also established and expanded partnerships with Google Cloud, NXP Semiconductors and Qualcomm that are core to bringing innovative new products, solutions and services to our customers. These partnerships enabled us to further capitalize on the massive data set on Honeywell Forge, our leading Internet of Things platform for industrials.

As we continue to support our customers in bridging the physical and digital worlds to expand autonomous operations, I am optimistic that 2025 will be the year the sector accelerates its move to industrial autonomy at scale."

CONTINUED OPERATIONAL EXCELLENCE

Operational excellence will always be core to Honeywell, and the Six Sigma methodology has long been part of how we run the company. I started my own Six Sigma journey in my earliest years at Honeywell and have found it to be an extremely impactful problem-solving tool. We are now ensuring that our Futureshapers have the opportunity to engage with Lean Six Sigma mentors and training opportunities within our Accelerator operating system. This focus aligns perfectly with our commitments to continuous improvement, streamlined processes and effective problem solving.

Embraced a Technology Trifecta

of AI, Cloud and 5G

To bring certainty and speed to new products that drive the path to autonomy

Signed Landmark Agreement

with Bombardier, a Long-Time Customer

To co-innovate and advance next-generation aviation technology

Established and Expanded Partnerships

with Google Cloud, NXP Semiconductors and Qualcomm

To bring innovative new products, solutions and services to our customers

Our Accelerator system, which is fully integrated throughout our organization and aligned across our four main business models (products, aftermarket services, projects and software), has revitalized the way we manage and govern our business. We are now enhancing the system's capabilities to help us operate smarter and faster and to strengthen the integration of AI and other capabilities that comprise Honeywell's digital backbone, which is centered around the belief that every employee should have access to state- of-the-art technology that empowers them to drive innovation, creativity and growth.

Building on the strength of our data strategy and digital foundation, we are also deploying AI across various functions in Honeywell to further drive our growth and innovation. Our dedicated program office is facilitating the deployment of AI in areas such as product development, customer services, sales, legal and HR. We strongly believe in adoption of new technologies to empower our employees to be more productive.

HONEYWELL'S IMPACT

significant grants to employees who were impacted by the storms.

Additionally, last year our Honeywell Hometown Solutions India Foundation, a not-for-profit entity in India focused on making education more accessible and deploying sustainability solutions to communities across the country, expanded to reach 21 states, hundreds of villages and thousands of students with its STEM education programs. This builds on Honeywell's global STEM education programming that has reached more than 325,000 students this past year.

We also concentrated on supporting our Futureshapers by growing the professional development, continuous learning and skills- building opportunities available at Honeywell, while expanding our foundational behaviors with an enhanced focus on workplace safety. To shape the next generation of leaders, we welcomed 1,200 interns into our Honeywell Futureshapers Academy and plan to grow that number to 1,700 in 2025.

Looking ahead, we are on track to achieve carbon neutrality in our operations and facilities by 2035, and we estimate that our technologies will have a cumulative impact of mitigating 2.0 billion metric tons of CO2e between 2023 and 2030.2

325,000 students

Reached through Honeywell's global STEM education programming in 2024

The belief that the future is what we make it guides Honeywell's momentum. Across the globe, our team of Futureshapers drives our success as a business and our ability to make a difference in our communities. Following the impact of Helene and other severe hurricanes in the U.S., Honeywell and our employees supported the multi-state effort to fund immediate humanitarian relief and support long-term recovery. The Honeywell Humanitarian Relief Foundation, an independent 501(c)(3) organization, has also distributed

1,200 interns

Participated in the Honeywell Futureshapers Academy in 2024

2bn metric tons of CO2e

Cumulative mitigation impact by Honeywell technologies between 2023 and 20302

2Methodology for estimating GHG mitigation impact is available at investor.honeywell.com (see "ESG/ESG Information/GHG Mitigation Impact of Honeywell Technologies")

OUR FUTURE

I am more confident than ever that our revitalized portfolio optimization strategy, established history of operational excellence and robust installed base will unlock further value creation as we continue to solve the world's most complex challenges and enhance the lives of people and communities across the globe. Our businesses are uniquely positioned to thrive during what stands to be an extended period of disruption throughout the global economy. Building on what we accomplished this past year, we will continue executing the separations while maintaining our suite of world-class offerings, expanding further into specialty vertical end markets and innovating in software and services to help drive the best outcome-based solutions for our customers.

In closing, I want to recognize Greg Lewis for his nearly two decades of service to Honeywell and his contributions as our CFO since 2018. With Greg's transition to his new role as Senior Vice President, Transformation and Senior Advisor, we are fortunate that Mike Stepniak, a tenured member of our finance team who previously served as Vice President and CFO for Honeywell Aerospace Technologies and as Vice President and CFO of Honeywell Building Technologies, has seamlessly stepped in as our new CFO, as announced in September.

I also want to thank the Honeywell Board of Directors, our customers, our partners and our approximately 100,000 Futureshapers across the globe for their tremendous contributions to our progress. I am confident that Honeywell is well-positioned for long-term growth in this ever- evolving landscape and look forward to what we will achieve together.

I appreciate your confidence and continued ownership of Honeywell.

Sincerely,

Vimal Kapur

Chairman and Chief Executive Officer

Building on what we accomplished this past year, we will continue executing the separations while maintaining our suite of world-class offerings, expanding further into specialty vertical end markets and innovating in software and services to help drive the best outcome-based solutions for our customers."

Forward Looking Statements

We describe many of the trends and other factors that drive our business and future results in this document. Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including statements related to the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, the proposed separation of Automation and Aerospace, the sale of the personal protective equipment business, and the acquisition of Sundyne. Forward-looking statements are those that address activities, events, or developments that we or our management intend, expect, project, believe, or anticipate will or may occur in the future. They are based on management's assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant factors, many of which are difficult to predict and outside of our control, including Honeywell's current expectations, estimates and projections regarding, among other things, the proposed spin-off of the Company's Advanced Materials business into Solstice Advanced Materials, a standalone, publicly traded company, the proposed separation of Automation and Aerospace, the sale of the personal protective equipment business, and the acquisition of Sundyne. They are not guarantees of future performance, and actual results, developments, and business decisions may differ significantly from those envisaged by our forward-looking statements, including the consummation of the spin-off of the Advanced Materials business into Solstice Advanced Materials, the proposed separation of Automation and Aerospace, the sale of our personal protective equipment business, and the acquisition of Sundyne, and the anticipated benefits of each. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties, including ongoing macroeconomic and geopolitical risks, such as lower GDP growth or recession, supply chain disruptions, capital markets volatility, inflation, and certain regional conflicts, which can affect our performance in both the near and long term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this release can or will be achieved. These forward-looking statements should be considered in light of the information included in this document, our Form 10-K, and our other filings with the Securities and Exchange Commission. Any forward-looking plans described herein are not final and may be modified or abandoned at any time.

Non-GAAP Financial Measures

This publication contains financial measures presented on a non-GAAP basis. Honeywell's non-GAAP financial measures used in this release are as follows:

The following information provides definitions and reconciliations of certain non-GAAP financial measures presented in the Shareowners Letter to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP).

Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. Management believes the change to adjust for amortization of acquisition-related intangibles and certain acquisition- and divestiture-related costs provides investors with a more meaningful measure of its performance period to period, aligns the measure to how management will evaluate performance internally, and makes it easier for investors to compare our performance to peers. These measures should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Certain measures presented on a non-GAAP basis represent the impact of adjusting items net of tax. The tax-effect for adjusting items is determined individually and on a case-by-case basis. Other companies may calculate these non-GAAP measures differently, limiting the usefulness of these measures for comparative purposes.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitations of these non-GAAP financial measures are that they exclude significant expenses and income that are required by GAAP to be recognized in the consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Investors are urged to review the reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single financial measure to evaluate Honeywell's business.

Honeywell International Inc.

Reconciliation of Earnings per Share to Adjusted Earnings per Share

Twelve Months Ended

December 31,

2024

2023

Earnings per share of common stock - diluted1

8.71

8.47

Pension mark-to-market expense2

0.14

0.19

Amortization of acquisition-related intangibles3

0.49

0.35

Acquisition-related costs4

0.09

0.01

Divestiture-related costs5

0.04

Russian-related charges6

0.03

Net expense related to the NARCO Buyout and HWI Sale7

0.01

Adjustment to estimated future Bendix liability8

0.49

Indefinite-lived intangible asset impairment9

0.06

Impairment of assets held for sale10

0.33

Adjusted earnings per share of common stock - diluted

9.89

9.52

10 For the twelve months ended December 31, 2024, the impairment charge of assets held for sale was $219 million, with no tax benefit.

We define adjusted earnings per share as diluted earnings per share adjusted to exclude various charges as listed above. We believe adjusted earnings per share is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Acquisition amortization and acquisition- and divestiture-related costs are significantly impacted by the timing, size, and number of acquisitions or divestitures we complete and are not on a predictable cycle and we make no comment as to when or whether any future acquisitions or divestitures may occur. We believe excluding these costs provides investors with a more meaningful comparison of operating performance over time and with both acquisitive and other peer companies.

Honeywell International Inc.

Reconciliation of Organic Sales Percent Change

Twelve Months

Ended

December 31,

2024

Honeywell

Reported sales percent change

Less: Foreign currency translation

Less: Acquisitions, divestitures and other, net

Organic sales percent change

We define organic sales percentage as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Honeywell International Inc.

Reconciliation of Operating Income to Segment Profit

(Dollars in millions)

Twelve Months Ended

December 31,

2024

2023

Operating income

7,441

7,084

Stock compensation expense1

194

202

Repositioning, Other2,3

292

952

Pension and other postretirement service costs4

Amortization of acquisition-related intangibles5

415

292

Acquisition-related costs6

Indefinite-lived intangible asset impairment1

Impairment of assets held for sale

219

Segment profit

8,699

8,598

We define operating income as net sales less total cost of products and services sold, research and development expenses, impairment of assets held for sale, and selling, general and administrative expenses. We define segment profit, on an overall Honeywell basis, as operating income, excluding stock compensation expense, pension and other postretirement service costs, amortization of acquisition-related intangibles, certain acquisition- and divestiture-related costs and impairments, and repositioning and other charges. We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

Disclaimer

Honeywell International Incorporation published this content on April 08, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on April 09, 2025 at 11:55 UTC.