Honeywell International (HON) Q2 2022 Earnings Call Transcript

Honeywell International (HON 1.39%)
Q2 2022 Earnings Call
Jul 28, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by. And welcome to Honeywell's second quarter fiscal year 2022 earnings conference call. [Operator instructions] I would now like to hand the call over to, Sean Meakim. Please go ahead.

Sean Meakim -- Vice President of Investor Relations

Thank you, Latif. Good morning and welcome to Honeywell's second quarter 2022 earnings conference call. On the call with me today are chairman and CEO, Darius Adamczyk; and senior vice president and chief financial officer, Greg Lewis. Also joining us are senior vice president and general counsel, Anne Madden; and senior vice president and chief supply chain officer, Torsten Pilz.

This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com/investor. Honeywell also uses our website as a means of disclosing information, which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website in addition to following our press releases, SEC filings, public conference calls, webcasts and social media. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our businesses as we see them today.

Those elements can change based on many factors, including changing economic and business conditions. And we ask that you interpret them in that light. We identify the principal risks and uncertainties that may affect our performance in our annual report on Form 10-K and other SEC filings. This morning, we will review our financial results for the second quarter of 2022 and share our guidance for the third quarter and provide an update on our full year 2022 outlook.

As always, we will leave time for your questions at the end. With that, I'll turn the call over to our Chairman and CEO, Darius Adamczyk.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you, Sean, and good morning, everyone. Let's begin on Slide 2. The second quarter was another strong one for Honeywell. We over delivered on our commitments as our rigorous operating principles enable us to navigate a challenging backdrop and remain highly resilient, amid ongoing supply chain constraints, inflation headwinds, and geopolitical unrest.

We met or exceeded our second quarter guidance, despite these challenges with adjusted earnings per share of $2.10, up 4% year over year, and $0.02 above the high end of the guidance range. Organic sales grew 4% year over year led by strong double-digit growth in our commercial aviation, building products, productivity solutions and services, advanced sensing technologies, advanced materials, and recurring connected software businesses. This was partially offset by three percentage-point impact from a combination of the wind down of our Russian operations and lower COVID-related mask sales as we lapped the height of demand in 2021. We expanded segment margin by 50 basis points year over year to 20.9%, meeting the high end of the guidance range, as commercial excellence enable us to remain ahead of the inflation curve.

Excluding the impact of our investment in Quantinuum, the margin expansion was 80 basis points year over year. Orders and backlog strength continued in the second quarter, led by Aero, HBT, and PMT as our end markets continue to recover, giving us confidence our demand outlook for the back half of the year. Orders were up 12% year over year and closing backlog was $29.5 billion, also up 12% year over year. In terms of capital, we deployed $2.3 billion to share repurchases, dividends, and capital expenditures.

We leveraged the strength of our balance sheet to opportunistically purchase 7.5 million shares throughout the quarter, reducing our average share count to 685 million shares, and continue to execute on our commitment to buy back $4 billion in shares in 2022. As always, we continue to execute our rigorous and proven value-creation framework, which drives outstanding shareholder value. I am proud of Honeywell's ability rise to the challenge to deliver strong results, amid such a fluid operating environment. Now let's turn to Slide 3 to discuss recent senior leadership changes.

This morning, we announced that Vimal Kapur has been appointed role of president and chief operating officer, effective immediately. Vimal is currently the president and CEO of Honeywell performance materials and technologies, and will maintain his PMT role until his successor is named. Honeywell is fortunate to benefit from a very deep bench of experienced leaders like Vimal with 33 years across various Honeywell businesses, a COO who will work closely with me to drive the continued profitable growth of Honeywell's operating businesses. This includes creating new solutions to help our customers drive their sustainability transformations and accelerate their digital transformation journeys.

Vimal will also oversee the continued integration of Honeywell's operating system, which we call Honeywell Accelerator. Vimal is uniquely qualified for this role and has proven his operational capabilities across many different industries, business models, regions, and business cycles. This appointment provides me additional bandwidth to focus on strategy, business development, customer engagement, and people development. Now, many of you will recall that I served as COO once upon a time as well.

This announcement today is not a repeat of that playbook. While I won't be chairman and CEO indefinitely, I have no definitive plans to retire and will continue to lead Honeywell. Vimal's appointment is going to allow me additional flexibility to focus on our overarching objective. In addition, effective earlier this month, we expanded both Sheila Jordan's and Suresh Venkatarayalu's role and welcome them to executive leadership team as Honeywell officers reporting to me, to ensure we continue to advance our enterprise transformation.

Sheila expanded her role to include all digital transformation efforts, becoming senior vice president, chief digital technology officer. Sheila joined Honeywell in January 2020 and has proven significant value working to modernize our IT infrastructure, applications, digital capabilities, and talent. Suresh took an expanded role becoming senior vice president, chief technology and innovation officer. Suresh has been with Honeywell almost 30 years and has held a series of Engineering and IT leadership positions, including CTO of Honeywell, and SPS.

Suresh is responsible for new product development and introduction processes, including development for breakthrough technologies. I'd like to congratulate Vimal, Sheila, and Suresh on their new roles, and I look forward to working closely with them as they enter the next phase of Honeywell's transformation. Next let me turn to Slide 4 to discuss other exciting recent announcements. In the second quarter, we continued to build on a reputation as one of the premier providers of cutting edge technologies that can deliver more sustainable solutions.

We announced yesterday that Archer Aviation selected Honeywell to provide flight control actuation and thermal management technologies for the Urban Air Mobility aircraft. Archer's production aircraft will operate in dense urban environments, making critical precision from the aircraft's flight controls and actuators, a must for civilian safety. Honeywell's actuators can accept hundreds of micro adjustments and commands per second from fly by-wire computers, enabling precise navigation which will enhance safety and accommodate the unique elements of Archer's electric vertical takeoff, and landing aircraft. Honeywell has a wide variety of ready-now solutions that will create a more sustainable future for the aviation sector, is a great example of that.

In addition, last month, we announced a partnership shift with EnLink Midstream to deliver a carbon capture solutions to industrial-scale CO2 emitters along the Louisiana Gulf Coast. Our carbon capture and hydrogen purification technologies combined with EnLink's planned CO2 pipeline transportation network provides a cost-efficient solution for customers looking to reduce the environmental impact of their operations. Lastly, we discussed in our Q2 leadership webcast on sustainable building technologies released a new carbon and energy management software focused on the energy optimization and carbon reduction of commercial buildings. Commercial buildings currently account for almost a third of global energy consumption and 37% of global energy-related CO2 emissions.

Building owners recognize that this issue needs to be addressed and thousands of companies have voluntarily pledged to meet sustainability targets. Honeywell's new software offering enables building owners track and optimize energy performance down to a device or asset level. Our carbon and energy management software leverages Honeywell Forge, artificial intelligence, and machine learning algorithms to autonomously identify and implement energy conservation measures. This makes it possible for building owners to reduce the environmental impact of their building, while at the same time improving the well-being of their occupants.

As you can see, we are leveraging our expertise and culture of innovation to enable a more sustainable future. Now let me turn it over to Greg on Slide 5, to discuss our second quarter results in more detail and to provide an update on our 2022 outlook.

Greg Lewis -- Senior Vice President and Chief Financial Officer

Thank you, Darius, and good morning, everyone. As Darius highlighted, we delivered second quarter results which met or exceeded the high end of our guidance while navigating persistent macroeconomic uncertainties. Second quarter sales grew by 4% organically or 7%, excluding the impact of lower COVID-related mask volumes and the wind down of our operations in Russia. While demand trends remain strong, supply chain constraints continue to weigh on volume growth, predominantly in Aero, HBT and SPS, causing our path to backlog to increase sequentially by more than $100 million in the quarter.

However, we once again demonstrated our operational agility by staying ahead of the inflation curve through strategic pricing actions, enabling us to expand margins and beat the high end of our adjusted EPS guidance. Aerospace sales for the second quarter were up 5% organically compared to the second quarter of '21 as we continue to face the challenged overall aerospace supply chain. The ongoing recovery in commercial flight hours led to approximately 20% year-over-year sales growth in both, air transport aftermarket and business and general aviation aftermarket sales. Business and general aviation original equipment returned to growth in the quarter, growing double digits, while air transport original equipment continue to strong 2022, growing over 25% year over year.

Growth from our commercial aerospace business was partially offset by defense and space sales, which were down 11% year over year, so up sequentially from Q1 in both U.S. and international markets. Aerospace segment margins expanded 80 basis points in the second quarter to 26.5%. In building technologies, sales were up 14% organically, led by commercial actions and strength in both, building products and building solutions.

Demand remains strong with orders up double-digits for the second consecutive quarter, led by building projects, building management systems, and our security products. Backlog grew double-digits year over year in the second quarter, giving us continued confidence in our 2022 outlets. Our healthy buildings portfolio remained robust, with over $100 million of orders in the quarter. Segment margins expanded 110 basis points to 23.5%.

In performance materials and technologies, sales grew 10% organically in the quarter despite an approximately 3% headwind from Russia. Advanced materials continues to stand out with 21% organic sales growth in the quarter as a result of commercial excellence and greater volumes in specialty additives and electronic materials. Process solutions grew 7% organically on increased demand for thermal solutions and lifecycle solutions and services. Sparta Systems grew over 40% and was earnings accretive for the second consecutive quarter.

Process solutions orders grew more than 15%, including double-digit growth in our projects business, showing continued momentum. UOP sales decreased 1% in the quarter, including a 7-point headwind to year-over-year growth from lost Russia sales. We continue to see strength in our higher margin catalyst business which grew more than 20% and helped to offset lower equipment volume due to timing of larger projects. PMT segment margin expanded 150 basis points to 22.3% in the quarter.

Safety and productivity solutions sales decreased 10% organically in the quarter, in line with our expectations as strength in advanced sensing technologies and productivity solutions and services was offset by lower personal protective equipment and warehouse automation volume. Elevated COVID-driven mask demand in the second quarter of '21 led to a 5% year-over-year headwind for SPS in the quarter. Advanced sensing technologies grew 25%. Productivity solutions and services grew 19% and gas detection also grew organically in the quarter, all demonstrating excellent execution in a difficult supply constrained environment.

We continue to be impressed by the performance of these businesses. This quarter marks six straight quarters of double-digit organic growth in productivity solutions and services, and three straight quarters for advanced sensing technologies. SPS also benefited from a licensing and settlement agreement to resolve patent-related litigation with a competitor, which we entered into in the second quarter. Under this agreement, each party agreed to provide a license to its existing patent portfolio for use by the other party's existing products.

And Honeywell is entitled to receive up to $360 million over two years. Honeywell received the first of these payments of $45 million in the second quarter and recognized the corresponding sales and profit in the SPS financial results. This incremental profit in the quarter was more than offset by legal costs associated with the agreement and a one-time write-down of excess COVID-related mask inventory, which should close the book on that mask story. Overall SPS segment margins contracted 140 basis points to 12.6%, primarily due to the lower volumes and the PPE write-down.

Growth across our portfolio continues to be supported by strong results in Honeywell Connected Enterprise. We had another quarter of double-digit revenue growth, including double-digit recurring and 40% SaaS business growth year over year. Sparta Systems, connected safety, and cyber all saw growth of greater than 25% year over year in the quarter. So, for overall Honeywell, we exceeded our sales outlook growing top-line 4% organically, and we executed operationally to expand second quarter segment margin by 50 basis points to 20.9%, meeting the high end of our margin guidance range with expansion in PMT, HBT, and aerospace.

This expansion is net of a 30 basis-point year-over-year headwind associated with our investment in Quantinuum. On EPS, we delivered second quarter GAAP earnings per share of $1.84 and adjusted earnings per share of $2.10, which was up $0.08 year over year despite a $0.04 headwind from foreign exchange. A bridge for adjusted earnings per share from 2Q '21 to 2Q '22 can be found in the appendix of this presentation. Segment profit was an $0.08 tailwind, driven by strong commercial execution.

Share count reduction drove a $0.05 year-over-year tailwind to earnings per share. We saw a $0.04 headwind from below-the-line items, primarily due to the lower pension income. A higher effective tax rate, 23.4% this year versus 23% last year drove a $0.01 headwind. In response to winding down operations in Russia, we recorded an additional charge of $126 million or a $0.19 impact to GAAP EPS.

The Company also took a $50 million non-cash charge in 2Q related to the potential comprehensive resolution of ongoing UOP matters. More information on this can be found in our Form 10-Q. Moving to cash. We generated over $800 million of free cash flow in the quarter, down 43% year on year, which was closely aligned to our expectations.

We continued to invest in inventory to deliver for our customers, which is driving elevated working capital in recent quarters, including Q2. During the quarter, we also received the final payment to close out our agreement with Garrett, but still saw a year-over-year decline in Garrett payments due to an elevated $375 million payment in the second quarter last year. We remain on track to deliver our cash guidance range of $4.7 billion to $5.1 billion for the full year. Finally, as Darius mentioned earlier, we continue to leverage our strong balance sheet, deploying $2.3 billion in the quarter.

Notably, we repurchased 7.5 million shares for $1.4 billion in the second quarter, bringing our first half total to $2.4 billion as we execute on our updated commitment to buy back $4 billion in shares and '22. We also paid approximately $690 million in dividends and invested approximately $160 million in capex. So overall, another strong quarter in which we delivered results at or above our expectations, executed well through challenging economic conditions, and accelerated our capital deployment. Now, let's turn to Slide 6 to talk about our third quarter and full year guidance.

While the environment continues to be volatile, our demand profile remains resilient. Our 2Q orders and our closing backlog of $29.5 billion both grew 12% year-over-year positioning as well for the quarters to come. Supply chain constraints particularly related to semiconductors improved slightly in the second quarter, and we expect modest sequential benefits to continue throughout the back half of the year, enabling us to unlock greater volumes. The aerospace supply chain has continued to face difficulties, but we're confident in the eventual recovery as Tier 3 and Tier 4 suppliers work to combat labor shortages.

Once again this quarter and throughout the rest of the year, we are staying ahead of the inflation curve with our strategic pricing actions. As a result of rising interest rates and the strengthening of the U.S. dollar, we are experiencing higher foreign currency impacts than we had in our prior guidance, impacting sales and EPS, and we are overcoming that operationally. With that as a backdrop, we expect third quarter sales to be in the range of $8.9 billion to $9.2 billion, up 7% to 11% on an organic basis, or up 8% to 12% excluding the one-point impact of our lost Russian sales.

We now expect full year sales of $35.5 billion to $36.1 billion, which represents a decrease of $300 million on the high end from our prior guidance, incorporating higher foreign currency impact. However, we are raising the low end of our organic growth range now at 5% to 7%, increasing the midpoint versus our prior guidance, and narrowing the overall range. That represents organic growth of 7% to 9% excluding a one-point impact of lower COVID-related mask demand and a one-point impact of lost Russian sales. The difference between our reported and our organic sales growth guidance is two points driven entirely by foreign currency translation.

We expect our disciplined commercial actions will contribute approximately 8% to our sales growth in 2022, which is higher than we anticipated last quarter, as we remain vigilant in addressing price cost dynamics given elevated inflation. Now, let's take a moment to walk through the third quarter and full year expectations by segment. An update on our 2022 end market outlook can be found in the appendix of this presentation. In aerospace, we see ongoing flight hour improvement leading to another quarter of robust growth in our aftermarket business, led by air transport aftermarket.

In original equipment, build rates continue to ramp, driving growth in both, air transport, and business and general aviation. Defense and space grew sequentially in the second quarter, and we expect this trend to continue into the second half. We anticipate the business will return to year-over-year growth in the second half as comps ease, but it will be down slightly for the full year. As I mentioned earlier, the overall aerospace supply chain remains challenged and is partially offsetting strong end market demand.

While our supplier decommit rate improved sequentially in the second quarter, the pace of improvement is slower than the higher end of our expectation. As a result, we now expect aerospace sales for the year to be up mid-single digits compared to 2021, lower than our previous outlook of high single digits. Original equipment mix headwinds were well telegraphed but lower volume leverage will weigh on full year margins, which we now expect to be down modestly year over year. In building technologies, where supply chain constraints particularly around semiconductors, have improved slightly each quarter so far '22, we expect sequentially improved volumes and pricing actions will support continued growth into the second half of the year.

Energy efficiency and healthy building solutions remain a priority for our customers, enabling growth in our building solutions and healthy building businesses. We now expect full year organic growth in the double-digits, trending better than our outlook at the end of the first quarter of high-single-digits to double-digits. Our operational excellence and additional volume leverage should allow us to build upon our margin expansion from the first half and the third quarter and throughout the rest of '22. In performance materials and technologies, the favorable outlook in our end markets and two consecutive quarters of double-digit orders growth provide solid footing for the future.

In process solutions we expect sequential improvement in the third quarter, with continued strong demand for thermal solutions leading the year-over-year growth. We expect sequential growth in UOP throughout the remainder of the year, largely driven by increased refining catalyst shipments with a heavier margin benefit in the fourth quarter versus the third. As we discussed last quarter, Russia will be a headwind to year-over-year growth throughout '22, but we're optimistic about the potential capacity investments in the energy sector to offset Russian supply, especially in LNG, and these investments provide support for our long-term growth framework. We expect the typical seasonality in advanced materials as we exit the summer months, but pricing tailwinds and solid demand support continued year-over-year growth in the back half.

For overall PMT, we now expect sales to be up high single digits for the year and upgrade from our outlook last quarter of up mid to high-single-digits. And we expect segment margin expansion in the second half versus the first. Looking ahead for SPS, we expect continued growth in advanced sensing technologies and gas detection as demand indicators have remained strong, and these businesses are supported by a robust backlog. And we expect modest sequential improvements throughout the back half of the year.

As we enter into the second half, we expect our personal protective equipment sales run rate to be relatively stable in the third and the fourth quarter. In Intelligrated, we are encouraged by the improvements we're making in our operational efficiency and strategic customer wins, which will enable greater profitability over the project lifecycle. That said we're seeing capital spending plans of our warehouse automation customers pushed to the right, some of which has been broadly publicized. While we remain very confident in the medium-term growth rate, we expect 2022 SPS revenue to decline mid-single-digits versus 2021 as deliveries Slide to the right.

As I mentioned earlier, segment margin in the second quarter was lowered by a one time inventory write-down. So we expect significant sequential margin improvement in the third quarter and continued expansion in the fourth quarter through a combination of higher volume leverage, some cost reductions, and positive mix shift. For overall Honeywell, we expect third quarter segment margins to be in the range of 20.9% to 21.2%, resulting in year-over-year margin contraction of 30 basis points to flat due to timing of high margin catalyst shipments in PMT and some mix headwinds in aerospace. Excluding the 40 basis-point headwinds from Quantinuum, we expect margins to expand 10 to 40 basis points.

From a sequential perspective, our third quarter margin expectations are flat to up 30 basis points. Turning to our other core guided metrics. Third quarter net below-the-line impact, which is the difference between segment profit and income before tax, is expected to be in the range of negative $20 million to positive $30 million, with a range of repositioning between $50 million and $90 million in the quarter as we continue to fund attractive restructuring projects. We expect the third quarter effective tax rate to be approximately 24% and the average share count to be approximately 679 million shares.

As a result, we expect adjusted third quarter EPS between $2.10 and $2.20, up 4% to 9% year over year. Turning to the full year, we expect organic sales growth of 5% to 7%, up from 4% to 7% last quarter. We are upgrading our segment margin expectations by 20 basis points to 30 to 70 basis points of year-over-year expansion, at a margin rate of 21.3% to 21.7%. This is supported by successful execution of our price cost strategies, as well as our continued rigor on fixed cost management.

Excluding the 30 basis-point headwind from Quantinuum, we expect margins to expand 60 to 100 basis points in the year. We expect full year net below-the-line impact to be in the range of negative $150 million to negative $50 million, including capacity for $350 million to $425 million of repositioning. We expect a full year effective tax rate of approximately 22%, and we expect a weighted-average share count to be in the range of 684 million to 687 million shares for the year, reflecting our commitment to repurchase $4 billion of Honeywell shares in '22. As a result of all these inputs, we have raised a low end of our full year adjusted earnings per share expectations to $8.55 to $8.80, up 6% to 9% year over year, reflecting confidence in our ability to more than offset a $0.05 foreign exchange headwind versus our initial guide from February as well as navigate evolving external risks.

We still expect to see free cash flow in a range of $4.7 billion to $5.1 billion in 2022 or $4.9 billion to $5.3 billion excluding the impact of Quantinuum. The cash impact and timing of our Russia exit does remain uncertain and we'll update you as that continues to develop as it is not contemplated in this guidance. So, in total, we executed a strong Q2, despite supply chain, foreign currency, Russia, and inflation headwinds, and are raising the midpoint of our organic sales growth, adjusted EPS growth, and segment margin ranges, while holding our cash range, demonstrating our strong operational capabilities. Before turning it back to Darius, let's turn to the next page to discuss our ability to deliver in all economic cycles.

During our Investor Day earlier this year, we talked about our track record of managing through the cycle. Our execution through multiple downturns highlights our ability to move quickly and decisively to protect margins, drive growth, ensure liquidity and position ourselves for recovery. As we continue to maneuver through changing economic conditions, our favorable end market exposures, robust orders, and backlog positions, and diligent cost management will enable us to deliver differentiated results for our shareholders, as we have proven in the past. We believe our end market exposures will help us to remain resilient, during times of short cycle demand softening.

In fact, 65% of our sales address the commercial aviation, defense, energy, and non-residential end markets, which are all set up favorably to weather a potential recession. In commercial aviation, pent-up demand for leisure and business travel will continue to drive aftermarket demand, particularly as international travel resumes. Defense will remain relatively stable as international budgets are poised to increase with restocking from NATO allies, adding upward momentum to this end market. The energy markets are also gaining traction with higher relatively stable oil prices supporting an expected wave of capital reinvestment and LNG capacity additions, which are required to replace Russian gas supply and power the energy transition.

Infrastructure builds, both domestic and abroad, provide tailwinds for the nonresidential sector as does increased customer focus on sustainability and healthy buildings. As I mentioned earlier, although we are seeing some near-term softness in e-commerce, we still believe the medium-term growth is robust. As Darius mentioned earlier, we ended 2Q with a record high backlog of $29.5 billion, up 12% year on year. Approximately 60% of this backlog is long cycle, which grew 12% year over year, led by growth in commercial aviation, building projects and services, and process solutions projects.

This gives us ample runway to support growth for quarters to come. Finally, our long track record of segment margin expansion through multiple downturns and recessionary periods indicates our superior ability to streamline our fixed cost base, simplify and automate operations with our integrated supply chain transformation efforts and create efficiencies using Honeywell's digital capabilities to standardize business models and use data analytics to optimize productivity and growth. In fact, Honeywell Digital has proven very valuable over the last year. The tools we have built are helping us methodically and strategically implement pricing, enabling us to stay ahead of the inflation curve.

This, coupled with our rigorous and proven Honeywell value creation framework should provide investors with comfort that we will remain highly resilient, perform in all economic cycles and consistently deliver superior shareholder returns. Now, let me turn it back to Darius to talk about how we are leveraging our resources and expertise to positively impact our communities.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you, Greg. Let's turn to Slide 8 and talk of the more aspirational approach we are taking toward ESG commitments. At Honeywell, our commitment to improving the world beyond our product portfolio begins with our four pillars of corporate social responsibility: inclusion and diversity; employees in action; STEM education; and sustainability. We're embedding inclusion and diversity into all our systems and processes at Honeywell from our enterprisewide hiring protocols to our supplier diversity program.

Our 9,000 employees belong to one of the eight diverse employee networks and the number is growing every day, allowing us to provide opportunities for the education and allyship to all employees. We believe this approach is not only the right thing to do, but also a fundamental enabler of improved business results. Honeywell has set the guide rails for our culture of inclusion and diversity and our employees consistently go beyond what is expected and improve that culture. When Honeywell set up the Ukraine Relief Fund to provide underground aid and employee support, the generosity of our employees helped us raise over $1 million.

Our employees are active outside work in their local community as well, volunteering over 4,000 hours in 2021. Honeywell is also committed to improving our local communities through STEM education to shape the great minds of tomorrow. We're focusing on providing unserved students access to education that'll provide -- that will drive innovation. Some of our initiatives include education and skill development programs in high-growth regions, college scholarships for students and STEM pathways, and refurbished laptop distribution programs.

Another way Honeywell improves local communities is through sustainability organizations that protect our environment and create a greener world through our partnership with the Swades Foundation and America Cares Americares India Foundation that have helped provide over 10,000 Indian homes with access to drinking water and solar electricity. These pillars allow Honeywell to use its resources to create a long-lasting positive impact in the lives of our employees and the communities they live in around the world. Now let's turn to Slide 9 for some closing thoughts before we move into Q&A. We continue to execute on our value creation framework, effectively managing through ongoing external difficulties and over delivering on our financial commitments.

We remain optimistic about our future, including our ability to deliver differentiated results through the cycle. We raised the midpoint of our full year organic sales and adjusted earnings per share guidance as well as increased our segment margin rate, fully absorbing higher than previously anticipated foreign exchange impact. I'm proud of everyone at Honeywell is working hard to adapt and deliver in this challenging environment. While there is a heightened level of macro uncertainty at present, we continue to be confident in our ability to execute on the factors within our control.

With that, Sean, let's move to Q&A.

Sean Meakim -- Vice President of Investor Relations

Thank you, Darius. Darius, Greg, and Torsten are now available to answer your questions. [Operator instructions] Latif, please open the line for Q&A.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Steve Tusa of J.P. Morgan. Steve Tusa, your line is open.

Steve Tusa -- J.P. Morgan -- Analyst

Hey, guys. Good morning.

Darius Adamczyk -- Chairman and Chief Executive Officer

Morning.

Steve Tusa -- J.P. Morgan -- Analyst

Just on the Defense business. What are you hearing there? And what are you expecting for the second half and into next year?

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. Well, yes, as you saw, the business was still down in Q2. But if you look at -- if you combine the long cycle and the long-cycle bookings for the first half, it's actually been up year over year, so things are looking better. Obviously, as we look at the Ukraine situation and the focus of a lot of our NATO allies, we do anticipate some positive tailwinds in the next six to 12 months.

So similar to what some of the other peer companies, particularly in the defense reported, we do expect that to be a tailwind as we head into 2023 and beyond. Well, obviously, it's been a headwind so far for us this year.

Steve Tusa -- J.P. Morgan -- Analyst

And then what's -- just the follow-up, what's going on in UOP? I mean, I would have expected maybe a little bit more growth there.

Darius Adamczyk -- Chairman and Chief Executive Officer

Yes. Well, UOP was -- if you think about one business that got hit disproportionately hard by Russia, it was UOP. I mean it was a substantial headwind. I think it was six --

Greg Lewis -- Senior Vice President and Chief Financial Officer

We figured -- it's -- we were down one in UOP and it's -- seven points of that is Russia. So it's plus six --

Darius Adamczyk -- Chairman and Chief Executive Officer

Yes. So that's --that absorbed most of the Russia hit, and actually, we had some very robust bookings for Russia, which were canceled for UOP.

Steve Tusa -- J.P. Morgan -- Analyst

OK. All right. Thanks, guys. Appreciate it.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Julian Mitchell of Barclays. Julian Mitchell, your line is open.

Julian Mitchell -- Barclays -- Analyst

Hi. Good morning. Maybe just wanted to try and sort of understand the firmwide sort of sales and margin construct. So I think sort of sequentially in Q3, you're looking at flattish sales and flattish segment margins.

And then into Q4, you have EUR 300 million or EUR 400 million revenue uplift and a sort of 200-point segment margin uplift. So just trying to understand, is it really sort of SPS that has that very big margin hockey stick at the end of the year? And also within aerospace, you did allude to some margin pressures. And maybe help us sort of frame the scale of those and the factors behind them.

Greg Lewis -- Senior Vice President and Chief Financial Officer

Sure. Sure. So I think what you're going to see as we go through the remainder of the year is, as you mentioned, 3Q is going to look a lot like 2Q, broadly speaking. And as we get into Q4, we're going to get our normal sort of seasonal uplift in revenue, which brings along with that some nice fixed cost leverage.

On top of that, we're going to get some mix favorability. We expect UOP, in particular, to be very strong in Q4. You know that our PMT margins can be pretty lumpy with individual UOP catalyst shipments moving that needle, and we have a pretty strong Q4 plugged in there. And we are also taking some cost actions in SPS in particular, where we've talked to you about the relative challenges in top line.

So that's how I would think about the setup as we go into the back half.

Darius Adamczyk -- Chairman and Chief Executive Officer

Yes. So Julian, just kind of in summary, it's probably three primary things. Number one is PMT mix, particularly in UOP, which is favorable, and we know it pretty well because it's a long-cycle business. Number two is some leverage and some cost actions, particularly in SPS, which will provide us margin favorability and a bit more volume leverage also in Q4.

Because as you kind of look through the year, the equation will shift from more sort of price gains, the more volume leverages we get to Q4. So that's why Q4 looks a bit more -- a bit higher in terms of margin profile. It's -- this is very much in line with our original model. So there's nothing really dramatically different than what we expected.

Julian Mitchell -- Barclays -- Analyst

And just as the follow-up, sort of any color on the Aero margin pressure you mentioned?

Greg Lewis -- Senior Vice President and Chief Financial Officer

Yes. I would just say we printed something in the 26-ish range in Q2, and I would expect that to stay in that neighborhood through the remainder of the year kind of directionally. We'll probably get again a little bit of a lift in Q4 with some extra volume. But previously, we had thought that would be a little bit more robust with a higher revenue profile.

But as I discussed earlier, that's where we're probably on the lower end of our range of expectations of supply chain healing and output. And so just a little bit of volume leverage loss relative to the high end of what we had hopefully.

Darius Adamczyk -- Chairman and Chief Executive Officer

And due to primarily very robust OE demand, which obviously is -- from a mix perspective, is negative. But really nothing there that's different than our expectations.

Julian Mitchell -- Barclays -- Analyst

Great. Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Scott Davis of Melius Research.

Scott Davis -- Melius Research -- Analyst

Good morning, guys.

Darius Adamczyk -- Chairman and Chief Executive Officer

Good morning, Scott.

Scott Davis -- Melius Research -- Analyst

You're one of the few companies, I think, we're going to see this quarter with gross margins up. In fact, they're up 60 bps. Is that -- would you characterize that because of -- you're ahead of the curve on price cost? Or is it some mix help and benefit? I know that you keep fixed costs down, and that's helpful, certainly when you have unit volumes. But I would imagine net of price or unit volume this quarter weren't very positive.

So can you help kind of --

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. Sure. Absolutely. Let me help unpack that.

Certainly, we're trying to stay ahead of inflation. That's been a playbook. We're trying to get price where we can. And we have pretty good metrics and visibility in exactly where inflation is, how it's broken down by business unit, how we're seeing it.

And now we've embedded that into our operating system that -- such that we can identify it, act. And we do that in multiple ways. I mean, obviously, price is one lever, managing the mix to things that we can sell that are higher margin profile. We've done some redesigns which are also net helpful also generate some cost benefit.

The thing I'm particularly pleased about is I can tell you, well, full transparency, nine months ago, that was not part of our playbook. I think we stumbled a little bit nine months ago, and I'm really thrilled because now it's part of our operating system. We know what to do. It's underpinned by the fact we have great data visibility, great analytics, one source of truth, which really enables us to take much more precise management actions to manage the headwinds we see in inflation.

Scott Davis -- Melius Research -- Analyst

Then I will pass it on and stick to my one question. Thank you and good luck. Thanks.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thanks, Scott.

Operator

Thank you. Our next question comes from the line of Sheila Kahyaoglu of Jefferies. Sheila Kahyaoglu, your line is open

Sheila Kahyaoglu -- Jefferies -- Analyst

Hey, guys. Good morning, Darius and Greg. Thank you. Maybe on -- the guys stole my aerospace question.

So maybe on intelligrated and warehouse, that was down sharply in the quarter as you expected, but you called out greater profitability over this cycle. Can you talk about some of the puts and takes on how you're envisioning that business improve?

Darius Adamczyk -- Chairman and Chief Executive Officer

Yes. I mean, I think some of the warehouse kind of overcapacity in the market has been pretty well publicized, so I'm not going to dwell on that. I mean, obviously, we're seeing that too. And frankly, we forget that the PET business grew at 50% in 2021 and at a similar rate in 2020.

So I think that, frankly, what it needs to happen is that some of this capacity needs to be absorbed. We're very, very excited about the future of warehouse automation. So this is a bit of a blip for the next few quarters. And midterm, we think that this is going to be still a very good business.

And you're right, from a mix perspective, although there is obviously -- to the top line, there is an impact; from a mix -- margin mix perspective, this would be net helpful because our LSS business is growing. Some of our projects that we are securing are at higher margin rates. So net-net, this is not something we're particularly that worried about. I mean, we wish the business was there from a top-line perspective.

But overall, I think this is a storm that we're definitely going to weather, and we still love the segment that we're in, in warehouse automation.

Sheila Kahyaoglu -- Jefferies -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Andrew Obin of Bank of America. Andrew?

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Good morning.

Darius Adamczyk -- Chairman and Chief Executive Officer

Hey. Good morning.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Hey. How are you? Just a question on the new COO role. And could you just give us more of your thought process there? And specifically, historically, we've been getting questions on Honeywell and M&A. Does that mean that Darius, you're just going to spend more time on strategic alternatives? And does the world look any different to you now post the market corrections and what's been happening there? Thanks.

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. Well, I mean, I think let me just kind of talk a little bit about the COO role and Vimal, specifically. I mean as you can imagine, we do -- a lot of the operational outputs that we get don't happen by accident. It takes a lot of hard work and attention to detail and pursuing data and so on.

And I kind of found myself maybe more in the middle of that than maybe I wanted to be. Maybe that's good and bad. And frankly, some of these other aspects and M&A and BD is certainly one of those is an area that I probably should be spending a little bit more time in. But I would add to that, customer outreach and people development strategy and some of the other brand building, things that, frankly, I should be doing.

And I -- to be very transparent, I've talked about that openly to my own staff multiple times. And I think that the best way to kind of solve that is to really partner with Vimal to be the COO. I mean, he's got a great track record at Honeywell. He's been extraordinarily successful in running HBT.

He's run HPS. He's run PMT. It's got 33 years worth of experience. There aren't too many mysteries to Vimal that he doesn't know at Honeywell with that kind of multi-business experience and multicontinent experience, because he's lived in Asia, Europe, and North America.

So he's going to be a great partner for us to do things. And I think this is going to be a net positive for Honeywell because it will allow me to do some other things that are going to be very beneficial. And yes, BD and M&A is going to be one of those things.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

I got you. And then just a follow-up question on strength in Advanced Materials came in a little bit stronger than I would have thought. Can you just comment what's specifically going on there and how sustainable it is?

Darius Adamczyk -- Chairman and Chief Executive Officer

Yes. No, we love our Advanced Materials business. I mean, you're seeing a lot of things. You've seen the strength of our Solstice business really picking up.

We kind of forget that we have an electronic materials business, probably the only electronic materials and chemicals business based in the U.S. So you can imagine what kind of future that has. And the business is very robust. We've invested in capacity expansion.

Those capacity expansions are not even yet shown in our results and will really come to fruition in 2023. So not only are we excited about how the business is performing in '22. Things could get even better for '23. So we're very thrilled with the performance of Advanced Materials.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Great to hear on congrats to Vimal. Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Nigel Coe of Wolfe Research.

Nigel Coe -- Wolfe Research -- Analyst

Congratulations to Vimal. Actually, I was going to ask about the COO role, but that's been asked already. But just maybe just clarify, Darius, is Vimal going to continue to be the leader of PMT? Or is that going to transition over time? But my real question is around the consumer. And obviously, Resideo and Garrett took a lot of the consumer -- direct consumer exposure away from Honeywell.

But in terms of your second half framework, just given the way that a lot of the consumer-facing stocks are just blowing up and we're starting to see -- June, July starting to see that impact. To what extent have you dialed in weaker trends within, I don't know, refrigerants, electronics, handhelds within SPS? Any kind of concerns you see in there? Thanks.

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. Yeah. So let me kind of unpack, because there's really two questions. Let me very quickly open the PMT question.

So no, we don't envision Vimal holding on to both roles. But what we wanted to do is to make sure that it became clear that the PMT role is open. Because as always, when we have big roles like that open, we want to consider internal and external candidates. And frankly, it's much tougher to recruit when a role isn't vacated, so he's going to serve in both roles.

As you can imagine, early on, and he's got to pay a lot of attention to PMT. But as we fill that role, he's going to take over more of the COO role. So that's the first part. Yes, we've seen some of the same outputs on the consumer.

And you're right, we don't have a lot of consumer exposure. I mean most of that consumer exposure went away with the two spins. So that's spot on as well. We see it a little bit indirectly.

I talked about it in the Intelligrated play, because sort of -- there was some level of assumption that sort of this consumer demand would keep on going. It's kind of slowed down and consumers have a little bit of a different behavior, so we see it there. But I would just say this. If you go back to 2020 right after the pandemic hit us, we probably had one of the most unfavorable pandemic portfolio you could have out there, right? I mean our two biggest businesses were aerospace and energy.

And frankly, other than maybe hospitality, those got hit about as hard as anything else. Well, I think we're kind of entering a little bit of a different cycle, and I actually think that no matter what you count in terms of the recession period, I don't see a substantial reduction in OE build rates for aerospace, air travel. There's a lot of pent-up demand, and you see it. You see it more on the consumer side.

And my bet is you're going to see it more and more on the business side. There's still a lot of pent-up demand to travel. And let's be honest, a widebody, at least in international travel, is nowhere near where it was in 2019. So I think we're entering a cycle here, which is actually going to have a very favorable market mix, market conditions.

Obviously, that's underpinned by the kind of backlog position we have. So we're cautiously optimistic that even in a recessionary environment, which may happen, I think we're still going to do quite well.

Nigel Coe -- Wolfe Research -- Analyst

That's great. Thanks, guys.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Joe Ritchie of Goldman Sachs. Joe Ritchie, your line is open.

Joe Ritchie -- Goldman Sachs -- Analyst

Thanks. Good morning, everyone, and congrats to everybody on the promotions. My question is really just around pricing. So I think last quarter, you guys talked about five points of price coming through for the year.

I'm curious, what's the expectation now? And then also, clearly, like you guys are building up a pretty good war chest here. It's backlogs almost $30 billion. I just want to understand how you guys are thinking about the pricing that's in that backlog. And with commodities deflating right now, could you see a nice little boost in 2023 as you start to deliver some of that backlog?

Greg Lewis -- Senior Vice President and Chief Financial Officer

Sure. So you're right, we talked about 5% for the year a quarter ago. We now see that as being more like an 8% number for 2022. So nice progress for the first two quarters, and that kind of carrying through.

Pricing our backlog has been something that's been very important to us. Obviously, that's got a lot more challenges to it than new orders coming in. But we have been successful in doing that in certain areas of the portfolio. So we expect to be able to retain a good bit of that pricing.

I think we found that our pricing has been very sticky over time.

Joe Ritchie -- Goldman Sachs -- Analyst

And maybe, Greg, just answering that question on like the -- on commodities deflating. Like, how does -- does that impact your business at all this year? Is that more of like a 2023 event? It's like if we continue to see base now prices stay at current levels, which has been on a downward trajectory for the last several weeks.

Greg Lewis -- Senior Vice President and Chief Financial Officer

Yes. I would say when we look at it, there are some commodities that are seeing some of that deflation. But overall, for our total portfolio of direct materials, that's sort of cherry picking. And overall, we still see a net increase.

Darius Adamczyk -- Chairman and Chief Executive Officer

Overall, I mean, your theory is right that as some of these commodities come down, we may have an opportunity as we get into '23 for some margin expansion. It obviously varies by commodity. Some of them are indexed, some of them are not. So -- but directionally, I think your assertion is correct.

Joe Ritchie -- Goldman Sachs -- Analyst

Great. Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Andy Kaplowitz of Citigroup. Andy Kaplowitz, your line is open.

Andy Kaplowitz -- Citi -- Analyst

So, Darius, you raised HBT expected growth from high single digits to double digits. Are the primary markets in HBT growing that fast? Or are these share gains that HBT continues to achieve? Maybe just a big uptick you're seeing in high-growth markets and how are you thinking about HBT's European exposure?

Darius Adamczyk -- Chairman and Chief Executive Officer

I think it's a little bit of both. I mean, certainly, the business is growing. I think -- what I'm particularly excited about is that HPT has the kind of solutions that our customers are seeking, both in terms of energy conservation, in terms of healthy buildings, healthy environments, clean air, visibility to their energy usage, visibility to their carbon emissions, all of these are -- these are solutions that we currently have in our portfolio, and there isn't a customer out there that's not interested. And that's reflected in their booking rates.

I mean their booking rates were pretty much double digits, almost across the board for every one of their businesses. So it's the right portfolio, right solutions and the business is doing very, very well.

Andy Kaplowitz -- Citi -- Analyst

And just there's HBT's European exposure in general European exposure. Are you seeing anything there?

Darius Adamczyk -- Chairman and Chief Executive Officer

No. Not yet. I mean, frankly, our business in Germany, which is obviously the biggest economy, was actually up significantly in Q2, so we're not kind of seeing any signs yet of any kind of a pickup. We're watching this as much as everybody else.

We are as concerned as everybody else around sort of the energy profile as Europe heads into the winter. But so far, so good in terms of what we saw here in Q2.

Andy Kaplowitz -- Citi -- Analyst

Appreciate it. Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Josh Pokrzywinski of Morgan Stanley. Josh Pokrzywinski, your line is open

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Good morning.

Darius Adamczyk -- Chairman and Chief Executive Officer

Morning.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Just want to follow up on PMT. I guess a couple unique drivers of this cycle may be versus what we've seen in the past. I guess, on one hand, you've had refining margins blow out the upsides here pretty quickly and maybe some snap responses by those customers to drive spending this year, but it's still kind of a long-cycle business, hard to get too much going inside of a six- or 12-month period. But as much as it's good this year, are you guys pulling things forward potentially from '23? Is it still building momentum here? Like, how do you see kind of the unique aspects of this environment kind of driving momentum or duration versus other cycles in that business?

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. So we are certainly not pulling anything from '23. So let's just be very clear about that. There is no pull-ins.

We don't need to do pull-ins because the business is robust. What we're excited about is the LNG cycle. I mean, you see that investment taking place. You see it in the Middle East.

You see it in the U.S. We are participating in it. UOP is participating. We had some very robust bookings that you saw in Q2 here.

We actually expect more robust bookings in the second half of the year, and we're very much part of that LNG cycle. Another really important data point, which is -- I don't know if this is well publicized, but we are also the leading player in renewable fuels or green fuels. And the solutions there just this year, our expectation is that the bookings in that segment would be up three times versus what they were in 2021. So we are very excited.

It's -- we're kind of playing on the both ends of the barbell when it comes to the energy infrastructure. And I think this is exactly where you want to be. The world needs energy right now, and it's most likely going to come from natural gas, and there's got to be a build-out. There's going to be infrastructure build-out.

There's going to be E&P that takes place to supply the world with natural gas. You see that particularly pronounced in Europe. We're playing in that. We're also playing on sustainability and renewables and renewable fuels.

And I just gave you the very specific data point on green, sustainable fuels, where we're really a leader in that space. We're having more and more wins in plastics recycling. We have a pilot going on in battery storage. So just about every relevant, I talked a little bit earlier in the earnings call about the partnership in carbon capture.

So just about anything you want to do in sustainability and renewable economy of the future, we also do. So we're going to benefit from both sides of this energy transition, and you see it in the bookings right this quarter.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Great color. Thanks, guys.

Sean Meakim -- Vice President of Investor Relations

Latif, we have time for one more, please.

Operator

Yes, sir. And our final question comes from the line of Deane Dray of RBC Capital Markets. Deane Dray, your line is open.

Deane Dray -- RBC Capital Markets -- Analyst

Thank you. Good morning, everyone.

Darius Adamczyk -- Chairman and Chief Executive Officer

Morning.

Deane Dray -- RBC Capital Markets -- Analyst

Just a couple of cleanup questions for Darius. Good to hear that the semiconductor situation seems to be bottoming. Just some color on de-commits and your expectations for the second half. Is it going to be a linear improvement? Do you expect it to be choppy? And then for Greg, anything on Russia in terms of other write-downs that -- I know they're excluded, but just the wind down of Russia, is that complete yet? Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

Yeah. So maybe let me take the first one Yes, I mean I think in terms of recovery on our supply chain broadly, it's going to be very, very gradual. There is no sort of a magic unlock that's going to happen in one quarter and all of a sudden, everything will now sort of get flushed through our backlogs and so on. I think it's been very gradual.

Sort of the de-commits you're probably referring to, because I gave some specific numbers on that in last quarter around aerospace. And just to give you a little bit of an update on that. Q1 was at 22.5%, 23% in that range. Q2 was better, but it wasn't as good as we had hoped.

It came in at just a shade over 21% on the de-commits, so better than Q1, but we were kind of hoping something around the 19% to 20% range. But we saw improvement. We expect that improvement to continue gradually. We also saw about a 3% improvement in output Q-over-Q.

So overall, some level of progress, but it's going to be gradual. And that's kind of what we're penciling in for the next few quarters, which is gradual level of improvement, both in the semi space as well as some of the aerospace supply chain. That's kind of what our standard case is. We hope for the better.

We've deployed a small army into the supply chain, particularly in the aerospace segment to help our suppliers get up to rate. But it's challenging because it's not sort of just the suppliers that are kind of, let's call them, Tier 3 suppliers that really feed us to the Tier 4 and even Tier 5 suppliers that are struggling. And this problem will be solved. I have no doubt it will solved, but there is no instant gratification.

Greg Lewis -- Senior Vice President and Chief Financial Officer

Yes. And then on the Russia side, Deane, I mean, I'd say we have taken the bulk of the write-downs associated with our balance sheet as it relates to Russia in the first quarter. That was really around our unbilled receivables in the second quarter. We took down essentially all of our PP&E and any other related assets down to essentially zero at this point.

What we're really working through now is just the cash implications of all of that, and it's going to be a legal matter that will probably take quarters and -- well into 2023 as all of the aspects of sanctions on export control compliance comes into play. So it's just not going to be a simple wind down. But from a write-down perspective, I would say the bulk of it has happened at this point.

Deane Dray -- RBC Capital Markets -- Analyst

Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

And, Deane, as you know, we've absorbed sort of the FX impact as well into our guidance range, which was nickel on the EPS range, and on a year-over-year basis, actually a $0.14 headwind, so.

Deane Dray -- RBC Capital Markets -- Analyst

That's helpful. Thank you.

Darius Adamczyk -- Chairman and Chief Executive Officer

OK. I just want to thank all of our shareholders for your ongoing support. We delivered strong second quarter results in typical Honeywell fashion. We have and we will continue to overcome the numerous external factors we face with operational rigor and agility in order to drive superior shareholder returns.

Thank you all for listening, and please stay safe and healthy.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Sean Meakim -- Vice President of Investor Relations

Darius Adamczyk -- Chairman and Chief Executive Officer

Greg Lewis -- Senior Vice President and Chief Financial Officer

Steve Tusa -- J.P. Morgan -- Analyst

Julian Mitchell -- Barclays -- Analyst

Scott Davis -- Melius Research -- Analyst

Sheila Kahyaoglu -- Jefferies -- Analyst

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Nigel Coe -- Wolfe Research -- Analyst

Joe Ritchie -- Goldman Sachs -- Analyst

Andy Kaplowitz -- Citi -- Analyst

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Deane Dray -- RBC Capital Markets -- Analyst

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