Investor Conference – Honeywell International Inc.

Honeywell International Inc. · Mar 5, 2014 · 161 slides

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2014 INVESTOR CONFERENCE New York March 5, 2014
Agenda 10:00 Introduction Dave Cote High Growth Regions Shane Tedjarati, Norm Gilsdorf Honeywell User Experience Doug Beaudet, Bob Smith Q&A Session 11:20 Technology Demos 1 11:45 Automation and Control Solutions Roger Fradin, Alex…
Roger Fradin President & CEO Automation and Control Solutions Honeywell Investor Conference March 5, 2014 0
Key Messages Battle-Tested Leadership Team +9B Sales (8% CAGR), 1.6B Income Growth Since 2003 Track Record +310 bps Margin Since 2008 On Track To Deliver 2014 Margin Target Key Macros: Safety, Security, Productivity And Energy…
ACS Business Models ESS 50% HPS 20% BSD 30% Energy, Safety Honeywell Building Solutions & & Security Process Solutions Distribution Unique Multi-Brand / Multi- Technology And Advanced 1B ESS Product Pull Through Channel Product…
End Markets Improving Developed Markets High Growth Regions Urbanization: +60M People Added U.S. New Home Starts Over 1M; To Cities Each Year Increasing At Double Digit Rate Residential Increased Focus On Indoor Air Existing…
Great Positions In Good Industries Segment Position Competitors Home Comfort Controls 1 Emerson, Nest, Danfoss Building Controls 1 JCI, Siemens, Schneider Residential Combustion 1 Emerson, Johnson Controls Security 1 UTC, Tyco,…
2014 Outlook Vs. Targets Sales Segment Margin (B) At Low End Of Strong Performance Target Despite M&A NPI, Pricing NPI, Pricing 15.0 15.0 Slower Global - - Strong Productivity, 17.4 - Growth, Industrial 15.3% 16.0% OEF,…
2018 Targets Sales Segment Margin (B) Long Term Margin Target 20% +40-70 Bps Adding 3-5B Per Year Of Sales NPI, Pricing, HUE, Improved Macros / Software End Markets 16.7 Continue HON / ACS 20.0 - Continue HON / 18.2%…
Margin Expansion (Segment Margin) 50+ bps 75 bps 150 bps HOS New Products Material Productivity HGR Electronic COEs New Markets OEF 16.7-18.2% Pricing FT/ERP 14.7% 2013 Organic Operational Repositioning 2018T Growth…
Why ACS Will Outperform Improving Non-Res And Industrial Markets 70% Exposure (Primarily Retrofit) Global Energy Markets Growth Tailwinds Accelerating Connected Home Market Strong Solutions / Services Long Cycle Backlog 4B…
Strategic Acquisition Process Dedicated Resources To Idea Generation Strong Pipeline Of Potential Targets - M&A Leaders Across All LOBs For Idea - Bolt-On And Adjacencies Aligned To Multi- Generation And Oversight Brand/Channel -…
Growth 2 2013 2012 2011 2010 2009 2008 2002 2006 2007 2005 Opportunity Results Enhance Our Core 60+ Acquisitions In 10 Years New, Attractive Adjacencies Driven 5B In Revenue Expand Addressable Market Consistently…
Innovation Lifeblood Investment In People And Process Delivering Customer Value Resources Aligned For Growth Example: Safety Products - R&D Census Up 3x - HGR R&D Census 20+% CAGR - 50%+ Of Engineers Devoted To Software -…
Growing Software Capabilities Functionality: Leader In Highly Reliable Sensors And Controls Software Connectivity: Differentiated Wirelessly Connected Products Embedded In Insights: Massive Installed Base Enables Data Analytics /…
Honeywell User Experience Customer Loyalty Increased Sales Lower Costs Increased Loyalty Differentiated Products Fewer Service Calls Taking Share Value-Priced More Platforms Higher Retention Higher Win Rates Lowest Install…
Innovating With Voice Enabled Products VALUE USE CASE Hands Free Connected Control A System Home While Hands Are Stats, Security Products Occupied In Global Languages Eyes Free Buildings Control A System Install, While Looking…
Innovating With Voice Industrys First Wi-Fi If Only Siri Worked This Voice-Activated Thermostat Well At Arms Length Top Rated Total Connect App Might Have Some Companies Scrambling To Compete HUE / VPD In Action - Ideation To…
Alex Ismail President, Energy, Safety and Security Automation and Control Solutions Honeywell Investor Conference March 5, 2014 16
Energy Safety & Security (ESS) Financials Multi-Brand, Multi-Channel To Grow Organic (B) 9% CAGR Growth Leadership Position In Homes/Buildings 8.8 Drivers 8.0 8.1 Accelerating In High Growth Regions 19.8% 6.8 19.5% 18.6% NPI…
5 Lines Of Business Environmental Scanning & Sensing and Life Safety Security & Combustion Mobility Control (HLS) (HSG) Controls (ECC) (HSM) (S&C) Fire Controls, Gas Building Automation, Intrusion Detection, Scanning Engines,…
Multi Channel And Brand Strategy Multiple Channels To Market Multiple Brands To Differentiate Building Fire Gas Integrator / Manufacturer Distribution End User Controls Installer OEM Distributor System Industrial Integrator…
NPI With Great Honeywell User Experience In Home In Store Out of Box Install In Use Upgrade Five-Star Customer Experience At All Touch Points Automation and Control Solutions Honeywell Investor Conference March 5, 2014 20
Growing In The Connected Home Content HON Redacted Industry Leading Position In Fast Growing Space Automation and Control Solutions Honeywell Investor Conference March 5, 2014 21
Growing In Buildings Energy Management Life Safety Industry Position Room Building Demand Fire Wireless Smoke Gas Controls Controls Management Response Systems Detectors Detection 1 Building Management Systems Sales…
Growing In HGRs Becoming THE Chinese Competitor Results And Growth Opportunity Win In China To Win In Other HGRs Galaxy SoHo 20 Airports In China - Export From China To HGR - Increasing Partnering / Channel Presence - Expanding In…
Acquisition Process Delivering Results Identification Portable And Fixed Gas And Industry Leader In Voice, RFID, Building Management System For Radiation Detection And Mobile Printing Infrastructure / Tunnels Fit: Adding Scale…
Continued Margin Expansion From HOS Silver To Gold Leveraging ESS Scale Maturity Evolution 2013 2014 2014 2018 Deployed Bronze Silver Gold Building Electronics COE From 50% HOS Silver To Gold - Common Platforms And Rapid…
Darius Adamczyk President, Honeywell Process Solutions Automation and Control Solutions Honeywell Investor Conference March 5, 2014 26
Process Solutions (HPS) Financials Strong YoY Profitability Improvement (B) 3.1 3.1 3.0 - 2013 Margin Up 220 bps vs. 2010 Business - 2013 ROIC Up Over 500 bps vs. 2010 Transformation 14.7% 2.7 1 In Orders And Profit Growth…
5 Lines Of Business In Growing Spaces Projects & Lifecycle Engineered Advanced Field Automation Service Field Solutions Products Solutions Solutions Solutions Automation Maintenance Outcome Based Oil & Gas Measurement &…
Industry Orders And Margin Growth Orders Growth Segment Profit Growth % Change : 2013 vs. 2012 bps Change: 2013 vs. 2012 250 10% 192 200 150 5% 4.1% 100 3.4% 47 50 5 0% 0 -0.4% -50 -16 -1.0% -100 -5% -150 -8.0% -200…
Growing Upstream Oil & Gas Capture Dynamic Growth In Upstream, Offshore, And Unconventional Oil & Gas Opportunity Why HPS Wins Validating Growth Grow Upstream Upstream Oil Sands Project Addressable Market - Leverage Strong…
Growing Field Products Leverage Strong Projects Business And Build Indirect Channels To Pull Through Field Product Sales Opportunity Why HPS Wins Validating Growth 1B+ Projects Business Large Mid-Asia Gas Pipeline Addressable…
Growing Software And Aftermarket Services Grow Software And Aftermarket Services Opportunity Why HPS Wins Validating Growth Leverage HPS Installed Base Middle East NOC Cyber Security Addressable Market - 60% Needs Migration To…
Continued Margin Improvement 2010 - 2013 2014 - 2018 Greater Mix Of High Margin Software Leverage Optimized Cost Structure By Growing And Aftermarket Services Value Pricing With New Product Introductions Pricing Discipline Manage…
NPI / HUE Addressing Critical Customer Needs Customer Need Game Changing Tech Tied To Growth Levers Collaboration Universal IO Easier And More Cost Station SCADA Grow Upstream, Effective To Install And Offshore And Maintain…
HON User Experience Embedded In NPI Honeywell Experion Orion Console Competitor 1 Intuitive, Easy To Use Mobile Station To Reduce Operator Fatigue Voice-Enabled Interactive Collaboration To Pull Competitor 2 Remote Experts…
Summary Portfolio Realigned; Business Is Transformed Track Record Of Expanding Backlog Of Profitable Project Orders Winning Top Industry Performance In 2013 Ready To Accelerate Growth Through Acquisitions Growth Potential In…
Roger Fradin President & CEO Automation and Control Solutions Honeywell Investor Conference March 5, 2014 37
ACS Positioned To Outperform Sales Growth Catalysts (B) Tailwinds - Improving Non-Res & Ind. Markets 70% Exposure (Primarily Retrofit) - Global Energy Markets Growth - Accelerating Connected Home Market 20.0 - Strong Solutions /…
TRANSPORTATION SYSTEMS Terrence Hahn President and CEO
Key Messages No Compromise Fuel Economy +20-30% MPG Growth Regulations Driving Turbo Pen. Up 7pts To 38% By 2018 Inflection Industry Wide Adoption 20B+ Industry At Maturity Global Business Wins 40% Win Rate Outpacing Innovation…
2014 Outlook Vs. Targets Sales Segment Margin (B) In Range Of Margin Near Revenue Targets Targets HOS Productivity Technology Developments 14.4 14.0 Volume Leverage 4.0 - - - Growth In China 14.7% 15.0% 3.8…
Friction Materials HON Announced Sale Of Friction Materials To Federal Mogul Sale Expected To Close In 2H 2014 Turbo Technologies Remains Core Part Of Honeywell Portfolio Managing Friction Materials Operating Performance Until…
2018 Targets Sales Segment Margin* (B) Revenue 1B+ Growth 270-370 bps Expansion 3.8 TS Growth Drivers Margin Drivers FM 16.0% Business Wins Global Capability - Turbo Penetration 17.0% HOS And VPDTM Honeywell User 13.3%…
Growth Inflection Turbo Penetration Global Trend To Regulate Fuel Economy EUROPE CHINA NORTH AMERICA JAPAN KOREA INDIA Fuel Economy MPG1 MPG1 MPG MPG MPG MPG Regulation By 2021 By 2020 By 2025 By 2020 By 2025 By 2020 40% 45%…
Growth Inflection No Compromise Solution Honeywell Turbocharged Vehicles EUROPE CHINA NORTH AMERICA JAPAN KOREA INDIA Flagship Launches Peugeot 208 Fiat GAC Viaggio Chevy Cruze Subaru Levorg Hyundai ix35 Honda City 1.6L…
Growth Inflection Industry Wide Adoption GlobalPenetration Turbo Turbo Penetration Outlook Turbo Penetration By OEM 100% Pioneers 2013: 66% 2018: 76% 80 Maturity 70% 60 Followers 2013: 30% 2018: 41% 40 38% 31% Next Wave 20…
Outpacing Industry Global Business Wins Content Redacted 1B+ Revenue Growth 75% In Asia And Americas Transportation Systems Honeywell Investor Conference March 5, 2014 8
Outpacing Industry 2013 Performance Content Redacted Transportation Systems Honeywell Investor Conference March 5, 2014 9
Outpacing Industry Innovation Industry Breakthrough Benefit Vs. Key Honeywell Flagship Launch Segment Technology Prior Generation Capability Light Vehicle Maserati Ghibli 4th Generation VNTTM Turbine Aerodynamics Diesel 3L Diesel…
Outpacing Industry One HON Expertise Automation & Control Aerospace Transportation Systems Solutions Turbine Aerodynamics Engine Control Software Gas Nozzle Design System Engineering High-Temperature Materials High-Precision…
Outpacing Industry Motorsports Innovation Content Redacted Transportation Systems Honeywell Investor Conference March 5, 2014 12
Honeywell User Experience Pre-Sale Bid Launch Supply Post-Sale Commercial Cycle Turbo Launch Portal Turbo Noise Avoidance Turbo Sell Through Aftermarket Customer Connect Product Development Tracking Solution Eliminate Key…
Honeywell Advantage HGR Capability High Growth Regions Growth* HON Strategy (B) HON 20% Turbo CAGR Industry 11% CAGR 2.9 Marketing BECOME ISC 1.9 THE CHINESE 1.7 COMPETITOR 2013 2014 2018 *China, India,…
Honeywell Advantage HOS Gold Honeywell Operating Velocity Product System Development HOS Gold Business-Driven Operational Excellence NPI Value And Speed Operating System Cost Leadership Flawless Launches Global Reach -75%…
Summary No Compromise Fuel Economy +20-30% MPG Growth Regulations Driving Turbo Pen. Up 7pts To 38% By 2018 Inflection Industry Wide Adoption 20B+ Industry At Maturity Global Business Wins 40% Win Rate Outpacing Innovation In…
PERFORMANCE MATERIALS & TECHNOLOGIES Andreas Kramvis President & CEO
Key Messages Successful Track Record Across Multiple Growth Initiatives Strong Foundation High Growth Region Focus, Now 40% Of Total Sales Expanding Capacity To Meet Orders In Hand IP Leadership Reinforces Great Positions In Good…
PMT Overview Business Portfolio Technologies For Oil & Gas Production (% Sales 13) Refining & Petrochemicals Processes UOP Gas Recovery And Treatment FP FP Molecule Scale-Up Technology 14% 14% Equipment And Engineering Services…
2014 Outlook Vs. Targets Sales Segment Margin (B) Exceeded Revenue Beat Margin Targets Targets 18.8 - 7.0 Developed A 19.1% 16.0 Rigorous Operating - Lasting Strategy - Mechanism 7.1 5.6 18.0% - Broadened Optimized Plant…
Execution Focus Yields Results New Markets Globalization Backlog* Addressable Demand (B) HGR Sales (B) (B) (Over Next 5 Yrs) 75 7.5 2.7 59 UOP 1.6 4.1 Over 15B UOP Broader Markets To Address From 37% To 40% AM Sales…
2018 Targets Sales Segment Margin (B) Long-Term Margin Target 25% 2B+ Revenue Growth 220-370 bps Expansion Growth Drivers Margin Drivers 21.0 New Process Honeywell Operating - 8.5 Technologies 22.5% System - 7.0 9.1…
New Markets: Example 1 Oleflex Technology For On-Purpose Production Of Propylene Converting Propane From Shale Gas To In-Demand Plastic Building Blocks Licensing & Design Construction Commissioning Ongoing (Year 1-2) (Year 2-4)…
New Markets: Example 2 Methanol-To-Olefins (MTO) Converts Coal To High-Value Plastics First Major Startup Q3 2013 Licensing & Design Construction Commissioning Ongoing (Year 1-2) (Year 2-4) (Year 3-5) (Year 4-35) Content…
New Markets: Example 3 Uniflex Technology For Bottom-Of-The- Barrel Upgrading Extracting More High-Value Transportation Fuels From Heaviest Crudes First Project Sold Q1 2012 Licensing & Design Construction Commissioning Ongoing…
New Markets: Example 4 Cryogenic Processing Packaged Plant Separate Gas & Liquid (NGL) Streams First Non-U.S. Win Q4 2013 Equipment Site Prep & Materials Ongoing Fabrication Installation (Year 5) ( Year 5) (Months 4-12) (Months…
Honeywell Modular Vs. Stick-Built Approach Project Phase Stick-Built HON Modular Customer Benefits Approach Design Unique Specs Standard Design Lower Risk Package Higher IRR% Project On-Site Customer Turnkey Engineering Customer…
Modular Growth Platform Content Redacted Performance Materials and Technologies Honeywell Investor Conference March 5, 2014 11
Core UOP Markets Refining Demand Paraxylene Demand For Fibers / PET Refining Demand Oil Demand 15 Additional pX Plants By 2018; Tighter Fuel Specifications 20M MT Capacity Add 4-5% Growth Changing K MTA 40000 Regional…
UOP Roadmap For Growth Sales (B) 4.4 New Modular And Gas Modular International NGL And LNG Equipment & Turnkey Engineering Services New Gas Expanded Modular Portfolio Offerings 3.1 New Process Technologies New Process…
Fluorine Products Solstice Commercialization New Platform Driving Application Highlights GWP Growth And Income Meets CAFE Standards In U.S. And MAC Directive In EU Vehicle Adoption In 2 Million Cars By Mobile A/C Year-End…
Specialty Products Fast-Cycle Application Areas Aclar Titan Asphalt High Purity Spectra X Moisture Barrier Additives Metal Targets For Next-Gen Fiber For Drug For New Road Semiconductors For Helmet Armor Packaging Surfaces…
Resins And Chemicals Global Caprolactam Supply / Cost Landscape 3,000 Global Demand Overcapacity Lowest Cost Supplier 2,000 Cost 1,000 Increasingly Competitive Increased Risk Of Rationalization 0 71 642 1212 1783 Honeywell…
Advanced Materials Roadmap For Growth Sales (B) 4.7 Unique Patented Position 4.0 Unique Differentiated Technologies Patented New Patented Molecules Position Performance Enablers Winning On Applications 2.6 Winning Global…
High ROI Capex Capital & Incremental Sales Timeline For New Capacity Online Capex Growth Reliability & Cost Base Key Growth Projects 2014 2015 2016 Gas-To-Chemicals Catalysts Refining Adsorbents UOP 2013 2014 2015 2016 2017…
World-Class Facilities Solstice LGWP Liquid Blowing Agent Joint Venture 245fa Foam Blowing Agent Baton Rouge, LA Q2 2014 Taicang, China Q3 2014 New Multi User Site For Catalysts & Adsorbents Hydroprocessing Refining Catalysts…
Honeywell Initiatives Deliver Results 90% Of Conversion Cost Now Either Bronze Or Silver HOS Drive To HOS Gold; Enterprise-Wide Benefits To Capture Supply Chain Driving Productivity Stage Gate Rigor Reducing Risks And Speeding…
Honeywell User Experience Perfect Delivery: Refinery Design: Hydrofluoric Acid Catalyst Changeouts Maintain 26% Market Price 100M Opportunity Over Next Premium Through Enhanced 5 Yrs; Better Design Saves End User Experience Use…
Innovation Pipeline IP Leadership Advanced Research Product Vitality Census % R&D Spend Sales From New Products Launched In Last 5 Years 2,800 Horizon 1 2.7B Incremental 3 226 Ranking For U.S. 27% Active NPI Companies In…
Summary Proven Track Record, Primed For More Growth Strong Foundation Adding Capacity For High-Margin Products, Orders In Hand Game-Changing Processes And Molecules Ongoing Innovation Pipeline Differentiated Technology And…
AEROSPACE Tim Mahoney President & CEO Aerospace Honeywell Investor Conference March 5, 2014 0
Key Messages Beating The Market In All Business Segments Large Unmatched 90B + New Wins Program Wins Installed Base Rapidly Expanding Strong HGR Penetration Commercial And Defense More Dramatic Replacement Cycle, Continued…
Aerospace Overview Financials 2013 Summary (B) 12.0 12.0 12.2 12.0 - 12.2 Large Program Wins 11.5 High Product Renewal Cycle 20.2 - 19.8% 20.5% 18.9% Commercial Growth Offset By Defense Decline 17.6% High Growth Region…
Winning Across The Portfolio Aerospace Honeywell Investor Conference March 5, 2014 3
Differentiated Portfolio Product Groups Product Group Opportunity New Launches Mechanical Systems 5 Year Market CAGR Propulsion Engines (Served Sectors) Gulfstream 280 Over 70K Turbine Engines Delivered 6% Bombardier CL300/350…
Honeywells Platform Position Winning On The Right Aircraft With The Right Products Mechanical Avionics Software & Services Aircraft In Development/ Honeywell Value Competitor Value Entry Into Service Airbus A350 18B 6-9B…
Pipeline Of Wins Fueling Growth Bombardier Embraer Embraer E2 Lear 70/75 450/500 24B 3B COMAC 4B C919 16B Airbus Aermacchi A350 Unannounced M-346 18B 10B 1.5B Boeing 737 MAX 8B Bombardier G650 CL350 3B 6B 2014 2015…
The Five Year Plan Aerospace Honeywell Investor Conference March 5, 2014 7
2014 Outlook Vs. Targets Sales Segment Margin (B) Unexpected Sales Headwind From Slower Headwinds Growth And New Wins Strong Execution: Strong Execution: EMS Acquisition 20.2% 21.0% Technology Differentiation Strong Upgrades…
2018 Targets Sales Segment Margin (B) Long Term Margin Target 25% 90B Of Wins +40-60 bps Fuel Growth Per Year Large Program Wins Technology Premium 22.0% In All Businesses - Volume Leverage 13.5 23.0% - New Products And…
Business Unit Growth Aerospace Honeywell Investor Conference March 5, 2014 10
Air Transport & Regional ATR OE Outlook Key Fleet Growth - Airbus, Boeing, Embraer Well HON ATR OE Sales (B) Positioned A350 EIS 2014 ATR OE Deliveries On Growing APU Active Fleet Growing At 600+/Yr To Over Fleets 20K By 2018 -…
Business & General Aviation High HON Content On High Growth Platforms BGA OE Outlook G650, G280, CL350, F2000 Well Positioned G280 Ramp Up, Legacy 450/500 EIS 2014 HON BGA OE Sales (B) On Growing BGA OE Deliveries Engine…
Defense Returning To Growth 6.0 5.0 HON Outlook International Sales (B) 4.0 3.0 DoD 2.0 1.0 0.0 2013 2014E 2018T Industry Trend Honeywell Position Strong Positions On Priority Platforms (F-35, THAAD) DoD…
Potential International D&S Growth Regions CEE/CIS: 26B (5%) Asia: 155B (3%) Def Budget India: 5 yr CAGR% 47B (7%) (Nominal) 5+% ME & Africa: 2-5% 138B (6%) Region: 0-2% 2013 Def. Spend (13-18…
High Growth Regions HGR Sales Key Growth Drivers (B) Becoming THE Chinese Competitor - Building On C919 And Other Wins Global 3 OEM - Local Sourcing, Engr. And Market Access Wins Russian Platform Wins: MS-21, Helos Brazilian…
EMS Acquisition Update Leading Provider Of Connectivity Identification Solutions For Satellite Communications And Mobile Networking / Computers 2.8B Fit: Powerful Synergies Across HON Inmarsat Sales Synergies Businesses…
Technology Leadership Driving Growth Aerospace Honeywell Investor Conference March 5, 2014 17