Honeywell Investor Day2026 New Long-Term Growth Algorithm Outlined Targeting 4-7% Organic Sales Rise

Good day everyone. I've been privileged to work at Honeywell over the last 35 plus years across different sectors of automation: buildings, process industry, industrial sector. Each one of them has been highly influenced by the customer voice who talk to us every day about making their business better and solving their complex problems. These customers are in refining, hospitals, data centers, hotels, semiconductor fabs, and the list goes on. So I thought what an exciting start to the investor day to hear voices of some of these customers which are shaping the future of Honeywell. So here we go.

Good afternoon everyone. A warm welcome to everybody joining us on our investor day. I thought it's important to start with our customers because if we have to commit to you growth, if you have to commit to our bright future, it's not without these people who shape our decisions every day. And I really take it very seriously, thinking about a customer-first mindset. So I'm going to walk through my story, and you will hear these messages. I thought we'll lay it out in the front: what are you going to hear from me in the next 35 to 40 minutes? The first is about our transformation to a pure-play automation company, something which you have been following. But more importantly, focusing automation on mission-critical segments. Automation is a very wide market. You can make a lot of choices. We are making a choice to operate in segments where mission criticality matters, where uptime matters. Customers want to use these systems 24/7. Making that choice is a critical decision we have been evolving over the last two years since we are reworking our portfolio. But also, point number three: we as a company are practicing a single business model, which is a bit novel because companies having a business model is not unique, but having businesses following a practice is very standard. We are going to follow at Honeywell level a single business model: we build an install base and we serve our install base through services and software at the scale of the entire company. Then moving along to AI, which is going to be a future opportunity for us. You will hear from me and subsequent speakers how our industry of automation will turn towards autonomy. It's real. Some of you had a chance to look at our demos. You can already see that we are pivoting toward our offering. But I believe that as a future optionality of revenue opportunities, it's going to create much bigger than what is in our numbers today. And then, of course, our operating system which gives us execution certainty and our team which knows how to deliver. So jumping onto it, I'm going to tell my story to you in three parts. I'll first walk you through our portfolio transformation, then I'll move towards what's going to drive growth in Honeywell, and finally how we're going to execute it. So three simple chapters. Working on the portfolio transformation, before that I thought let me go back to the last investor day of Honeywell, which was May 11, 2023, about three years and one month back. I was not CEO at that time. So my chart said 'Incoming CEO Priorities', and I thought I could go back and see what did I say and did I do what I said, or I just wandered around and chose to do different things. If you see the list of things I said: we will accelerate organic growth, improve our supply chain, execute on Honeywell transformation, accelerate our new product machinery, improve our operating system, pivot towards more corporate responsibility. Even so, priorities have changed here over the last three years, but we haven't lost course on that, and we deploy capital strategically. I won't say that we've done 100% precisely, but the direction of travel has been what I committed. There have been some tweaks. The point being that I stay on course, I don't change my mind. If we have what we're going to present you today, you can have a high amount of certainty that me and my team are going to deliver on these commitments in the times ahead. If you look at our portfolio, many of these actions are known, but I thought it's good to summarize on a page what we have been able to accomplish since the start of January 2024 till about two and a half years of journey: two spins successfully executed, the advanced materials spin last year, aerospace spin happening in about two weeks from now. We did seven acquisitions in the automation portfolio, two additional in aerospace, so I'm not counting those. We've done three divestitures: one completed, two under execution, should occur in Q3 of this year. We also did significant balance sheet simplification so that our business is easier to understand. And finally, we were able to accomplish the IPO of Continuum about a few days back. Now imagine, I started as a CEO in June of 2023, and I presented you this chart. I'm going to do this. You may think this is a crazy idea to do all this in such a short period of time, but we have been able to accomplish this because we are mission-centric. We really want to build an automation-centric portfolio. So when you work for a mission, you get the energy and execution speed on which we have delivered, and this has really created the new Honeywell. These are 2025 numbers, so they are backward-looking. Rough numbers: $17 billion is our revenue of Honeywell Technologies, divided into three segments: buildings, industrial, and process. But 25% of the portfolio is refreshed with all the changes we made of divestitures and acquisitions. A quarter of the revenue is going to come from new revenue streams, generally speaking from higher growth opportunities. Not only have we been able to create a pure-play diversified end markets portfolio, but also have positioned it well for growth. If you look at the distribution of the revenue, the center pie chart: if you pay attention to that, we really start focusing upon this whole notion of growing install base and mining install base. 60% of our revenue comes from solutions: 20% and 40% product. That's when we grow our install base. We do it every day. That's when we ship a product or we build a solution. So our install base keeps growing. But if our mindset is that we need to mine install base, that's 40% of our revenue: 30% comes from services, 10% comes from software. We like both. There's no question that we need more of services and more of software. We want both of them because both are equally profitable, and that mindset allows us to really think about our future business model. So one of the things we are planning as part of this layout is we want our services and software revenue to grow to 45%. Because it makes our business more predictable, less cyclical, but also more profitable because clearly that revenue stream has a higher margin compared to the solution and product stream. That's one of our strategic goals: we want to treat this business with this mindset of building and mining install base. If you look at our geographic distribution, as you would expect, the business is geographically very distributed: a little over 40% revenue from the US and 60% from the rest of the world. So we will benefit as global expansion occurs in different end markets. Now the question will obviously come: automation is a big market, where exactly do we play and why we made these choices? It's an important question because that's the heart and center of the discussion. So I put a very simple illustration of automation on the left-hand side. Some of you are familiar, it's called the Purdue model. So you start with sensing and measuring something, then you define a control measure on what you want to do, and finally you can optimize it using software. This is how the industry has evolved since the mid-70s when this industry got created. As I mentioned, we play in three end markets: building, process, and discrete. We have made a choice to play in the mission-critical part of these markets. Also, you don't see some other parts of automation we have not represented because we believe it doesn't fit into either mission criticality or our business model of building and mining install base doesn't really fit in well. If that's our core principle, we need to be staying true to our principle. So if you walk the stack here, in buildings we play through sensors, controls, and software. In buildings, the sensors are smoke detectors, cameras, field devices. Then we have a significant position in the control domain and a significant position in the software domain. When you come to process, we have a significant position in the solution side, both in control and software. And on industrial automation, we have a sensing and measurement play. At this point, we want to build a strong sensing and measurement business in industrial automation. This is a space we believe in because the thesis is very simple: if the world is going to invest much more in AI, AI is built upon data, and in the physical world, data comes from sensors. You can't estimate the temperature of a room or a condition in a building or any such asset based on estimate; it's not going to work. So physical sensing is the heart of it. It's a very fragmented industry. We have already built a strong product-based business in buildings, and we want to replicate that reputation in industrial automation, discrete automation. On the control side, we don't represent today, and the question will be why we don't participate in this market. It's a very attractive market with US onshoring occurring; there should be growth here. At this point, we don't have participation in that because that's how our portfolio has evolved over the many years. It doesn't mean we won't participate in the future. We understand these domains quite well. But today, our position is open at this point. So we're keeping our optionality open, and near term we'll continue to focus on strengthening our sensing and measurement space. But moving forward, we'll keep ourselves room to grow into discrete automation on the control side. So a very wide portfolio which jumps nicely to the next chart. Why do we like all this? Why do you like this combination? First and foremost, we play in a market which is a little over $200 billion between building, industrial, and process, and the market grows somewhere around 3.5% in a given period. So 3% growth in industry and process, and 4% growth in building. Now we want to grow 4 to 6%. So why would we grow higher than market? If market grows about 3.5%, what's our entitlement to grow higher than market? There are two fundamental reasons for that. Before I get to those reasons, automation by itself is a secular growth market for several decades to come. In the critical segment we operate, thinking about critical segments like hospitals, data centers, pharmaceutical facilities, refineries, semiconductor facilities, utilities, automation is like oxygen for these facilities. You cannot run these complex facilities without automation. So we are not in any fundamental shift which is likely to occur for decades to come. It is five decades of proven history. So secular growth here is highly probable in the times to come. So that's a table stake, but the fundamentals of macros are strong: whether infrastructure build-out, energy security which has become a major challenge due to two wars, labor scarcity, and AI issues which are interrelated. I'll talk to it. I think these are the foundational growth vectors which are occurring in automation which support us and support the entire peer group with whom we compete every day. So the question comes: why would we grow higher than the market? The thesis is built upon two fundamentals. The first is within these markets, there are verticals which are growing at a much higher rate, way greater than 3.5%, like data centers, semiconductor fabs, and many others like LNG. If we are able to participate in those markets and grow at a higher rate, we are able to change the rate of acceleration of our growth. So part A is how do we make those choices because we can't be everywhere. How do we carefully make the choices and grow those markets at a higher rate while we maintain our share in the core? That's the first change we want to make. And second, our install base built over the last 50 to 75 years in some businesses is significant. You're talking here tens of thousands of plants, millions of buildings and assets which we own. How do we execute our aftermarket services strategy in this mission-critical segment where service is very important, uptime is very important? Customers care about these assets to work all the time. So if we are able to execute our strategy on services and software flawlessly, that gives us an incremental growth opportunity. So it's fundamentally grow with the market with these two optionalities of growing higher on the high-growth markets and mining install base better makes a case for us not to grow three to four but to grow from four to 6%. In addition to that, the market characteristics of fragmentation in buildings and industrial market in particular is very attractive for us for future growth and optionality to further do acquisitions because fragmentation allows us to make choices. The markets are big, as you can see, $200 billion, and we are shy of $20 billion. So we have a lot of runway organically but equally importantly inorganically. And we believe that there's an aggregation opportunity selectively where necessary, possible in addition to that. So there's a lot to like in these markets for us to feel bullish about how we can deliver in the years ahead. All that really comes together in the form of where our position is as a pure-play automation leader: number one player in building automation and number one player in process technology. Now if I was standing here in 2019 and saying we are going to be number one player in building automation, most people would not believe that statement because the segment itself did not exist. We have created a segment called building automation from scratch after spinning off our residential business in late 2018, and from scratch we built a business which was $5.3 billion with sub-20% margins to a business which is trending towards $8 billion and high-20s margins. We know how to create pure plays, and we're going to repeat that formula in industrial and process automation. We believe in honest admission: we are top three, but our ambition is to also become number one. It's going to take a while. I'm not saying it's happening next quarter, but that's part of our strategy: how we continue to execute and improve our position. Our foundational strengths are our install base, our global scale, and our operating system. But our differentiation comes from three points. The first is domain experience. Domain experience matters in mission-critical segments, and our participation in these industries gives us a deep understanding of how these sectors work. More importantly, if we have to mine our install base, we have to understand the customer needs much more deeply than only at a product level. As an example, take the process industry, which is about 40% of our business. The domain experience there comes from understanding the conversion of molecules. These domains really drive converting a molecule from position A to position B. Not easy to understand domain. It is possessed by very few people who provide technology to asset builders to do that. We own that business. We are the number one provider of process technology in the whole world, which makes us uniquely positioned to have deep domain knowledge to play in that segment. And by the way, the same argument applies in industrial and buildings too. That gives us a unique advantage as we are turning our focus more from automation to autonomy. Domain experience is going to be paramount to do that. Number two, Honeywell Forge: something we have been investing in since 2019, seven years of journey. Now this is the foundation of our business model. If we have to mine our install base, we want to do it through the Honeywell Forge platform, which is an AI platform that mines our install base better and creates higher value for our customers and figures the path to autonomy. I will ask you to consider checking how many industrial companies announced a cloud strategy in 2019 and how many companies still have the cloud strategy in 2026. We are one of the few companies who stayed on course because we believed in it, and therefore it has become a competitive differentiator for us after seven or eight years. And then finally, our decision to play in innovation across critical control points. The mission criticality is a choice we have made. The whole company runs with the mindset of serving customers which are mission critical, which positions us differently from others which want to serve all segments. So that's where we believe our starting point is. Now before I go away from my portfolio section, I want to spend a minute on our commitment on ESG. We have stayed on course on that, specifically after the separation of aerospace and our specialty chemicals business. We don't have any exposure to nuclear weapons. Some of the shareholders have that as a criteria. That obviously was an obstacle in our previous portfolio. Not anymore. But more importantly for me, 75% of our offerings are sustainability oriented. That number will only go up in terms of how we think about this business. And finally, our own emissions have been reducing. We haven't changed our course just because it became less visible to the outside world. We have been executing on it. We will be carbon neutral by 2035. We'll be half of our emissions since we started measuring it by 2030. We do it every day, every week. So we are going to stay on course on that. So that was the first part of the story. We have transformed our portfolio. We believe in every part of our portfolio, and we're in a good position. The question is now: what do you do with that portfolio? It's just a good starting point. You need to execute and deliver growth based upon that. So before I jump into our growth strategy, I just want to go back to this interesting chart for you. If you see the left-hand side, I started my first year was 2024. So I thought it's good to start from year one of me being the CEO. We had, I would say at best, an okay year or not so great year, whichever word you want to choose. Our industrial automation business shrank about 4%. Process and building both grew around 2%. So not good performance out of the gate, but that's where we started laying out the strategy which I'm going to share with you: how we are going to grow as a company from mid to high single digits. There has to be a consistent way to do it, and that way is consistent across all three segments. You've seen how the building automation performance has changed from low single to consistent high single-digit growth delivered over the last six quarters, and I believe that we are well positioned to do that for the rest of the year. The question is: is that strategy replicable in industrial automation and process automation? The answer is yes, because we have a consistent and the same strategy. We don't have different ways to think about it. We are in a different stage of journey in terms of maturity of our strategy execution in our portfolio, and we have very high confidence that what we are committing to you in terms of our growth of mid-single-digit growth in industrial automation and process automation technology, and buildings from mid to high single-digit growth, is absolutely going to happen because of the consistency of the strategy. So what's our growth strategy? It's built on this whole circle of shared value creation. We start with growing install base, which is 60% of our revenue. We need to make careful choices on where we go, and I'll talk to that in a minute. And then we really start with a circle of monetizing install base. Now if you go back 10 years back, monetizing install base was all about getting some parts business, some break-fix services, some service contracts. That changed over the last few years since we started instrumenting our business with the cloud. Now we think about every asset: it needs to get connected, harness the power of the Honeywell Forge platform, which creates optimized outcomes for the customer. Then as the customer asset gets older, 5 years, 10 years, we refresh it with our migration software offerings, and the cycle starts all over again. That's a fundamental principle. If we think about it across all our businesses, it changes the mindset on what business you're in because you think your growth strategy around that. So with that in mind, this is how we think about our growth strategy. It's a simple triangle. We grow our install base by selling products and projects. That's 60% of our business. And then we mine that install base using our Honeywell Forge platform through services and software. And to do one and two, I need new products. If I need to participate in high-growth verticals, I need something to sell to them which is differentiated. If I have to mine my install base, I need to give them an offering by which customers are willing to pay. All that converts into three. And if I do a good job on new products, that ensures my growth. So a simple way to think about Honeywell Technologies is: in a typical year, how much growth came from new products, how much growth came from price. You add the two, subtract from them any market disruption or any churn which happens. That's going to be our growth vector. Growth numbers relatively simple to do, and why it relates this way because that's linked to our strategy. So we want to make ourselves so easy to understand that you don't have to do a lot of thinking on how to think about Honeywell in the future. Let me dig into each one of them: how we think about growing install base, monetizing install base, and introducing products. So let's talk about growing install base. On the left-hand side, you see our current construct of revenue. 80% of our revenue comes from what we call mature verticals where the growth happens at GDP rate, around 3% growth in a typical year. So that's our businesses in end markets like commercial real estate, education, airport, refining, chemicals. Absolutely important business for us. We want to keep our share in these markets and gain some where we have an opportunity through our innovation. That's part of our strategy. But equally important for us is that it's an 'and' strategy: while we do that, we also make a choice of high-growth verticals, which is 20% of our revenue, and grow them at a higher rate, at a double-digit growth rate. And if we do that well consistently, that 20% becomes 25%. The question will be: how do you choose where you want to grow? If you randomly pick up what's occurring at this point, or you want to be thoughtful on that. We're really putting bets on four things on a next 5 or 10 year horizon. The four things should not surprise you. The first is we believe AI is here to stay for a long time. That's why the two end markets of data center and semiconductor are important for us. Number two, if AI is here to stay, you need more energy. Therefore, LNG and grid infrastructure are important. And those are two end markets we really want to focus upon. Number three, aging population is here to stay for a long time, which means the world needs more life sciences, more drugs, and also likely needs more hospitals. So we're putting bets on those two. And then finally, hospitality. As the world becomes richer, consumption increases. People want to spend money on leisure, and therefore the hospitality industry grows. So we are not putting random bets on what's in fashion. We are thoughtful on four big vectors: AI, energy, aging, and consumption. If those are true, which we believe they are based upon our analysis, that gives us a structured way to keep thinking about where to focus on high-growth verticals. And we have proven it already. We have grown nicely in LNG. Through our inorganic acquisition, we have built a good position in data center from nowhere over the last three to four years. We built a good position in hospital hospitality with a combination of our actions of organic and inorganic. We're going to continue this journey. Some places we have a lot more runway, some places we have less runway. So that's part of our strategy: growing our install base in a very thoughtful manner through our solution and our product. Then once we have built our install base, then we want to mine our install base, which is the upper end of this bar. So 40% was at the top, 60% was at the bottom. Now we need to mine it. Now we are not selling, as I said, break-fix services. We are selling outcomes. That's a direction we are pivoting towards: selling skilled labor efficiency, selling asset uptime or operational efficiency, the offerings which customers care about consistently across all the segments we operate. That's where the mission criticality matters. If you operate in mission-critical segments, customers care about uptime, they care about operational efficiency, they care about skilled labor, and therefore our offerings remain highly repeatable because we can work on them across many sectors. And if you see the middle chart of our install base penetration, we have wired our entire install base, which is a relatively unique feature. If you have time to walk through one of our demos in the room here, we have visibility to our entire install base of all of Honeywell. Why it matters? Because if my business model is to mine install base, the obvious first question is: do you even know where it is? It looks like a very pedestrian question, but it's hard for an industrial company which has grown over multiple years through multiple acquisitions to instrument that. Now we have that data. We know which customer is under contract. We know the life of the asset, which parts are obsolete, which are not obsolete, which needs renewal. And that gives us the penetration option. And you see some businesses are in mid-single digits like process technology at 3%. I see that as an opportunity of runway. We can grow from 3 to 10 and 20s. But every business has a runway to grow. From a theoretical option, if we have to get all the service business in the planet from an install base, the model or empirical model is roughly $20 billion, and our service business is just $7 billion. So that to me is an opportunity set how we should think about it. How to get from 7 to 7.5 to 8, which gives me confidence that we will get to 45% revenue mix of services and software because our entitlement is very large, and mission criticality drives us towards that. Which nicely puts us to the whole story of Honeywell Forge, which is the center of our strategy to monetize our install base. Forge, as I said, we invested over a billion dollars since 2019 to really build this hardware-agnostic AI platform which allows us to build our offerings to mine our install base through services and software. Sur will walk you through in a section how the journey has evolved over the last few years, but really started with connected services: connect our install base and offer our customer a service contract through the Forge platform. Why it matters? Because customers are able to get better uptime, they have better visibility of the assets. We're able to get better price as a company and also have lower cost to serve. So that's how we started in 2019. Then we pivoted towards new software applications. The applications which were created with the power of data. You can create new software applications to configure our products. You can create applications to inspect our products for a license fee. And they became a new revenue stream for us. So revenue streams are growing to a point that today approximately $1 billion of revenue is annual recurring revenue for us only for software. Companies like us used to have big software numbers. We have learned our lesson to keep it simple. Just report ARR, which is what we invoice, and this should grow about 15% we believe if we execute the strategy well. And that becomes a growth engine for monetizing our install base. Of course, as I said, our total services and software business is $7 billion. A billion of that is from software recording ARR. So obviously we will work towards growing that in the future. Now the last box here of autonomous operation is equally important. As the world is growing, as we get more and more data, we clearly see the automation industry moving towards autonomy. Now what does it mean? If you go back to the automation industry when it was created in the mid-70s, the whole model was built upon the concept of a rule-based system where human is in the loop. So you take an asset, take a hospital, take a semiconductor fab, take a refinery, you instrument it, you put control measures. There are exceptions which happen. Exceptions are managed by humans. Humans will come in and take a control measure to deal with the exception. Now in hindsight, after 50 years, you say, wow, there's a problem in that model. The problem in that model is that the human who was running that asset for 10 years, 20 years, acquired a lot of knowledge about why this system fails, why it doesn't operate the way it operates. So when that human leaves, the knowledge leaves with the human, and that has become a problem over the last 10 years as fewer and fewer skilled people are available. Knowledge is becoming an issue. AI solves that problem. So we are in a world today of agentic systems where agents are helping humans to augment the knowledge they are missing. So our customers are asking for more and more agents to run their facilities, run their buildings, run their plants, run their process facilities, and eventually we will find a pathway towards autonomy. But augmentation itself has a huge opportunity of transforming our industry from automation to working towards autonomy. And if you look at how we are enabling it, look at some stats on the right-hand side of the chart. We have more than 300,000 customers connected. I would argue that's some scale. 5 million assets which are connected, and every day we collect more than a trillion terabytes of data. That's the basis for us to build our autonomy. It's not going to happen just because I want it. It needs a foundational system, and we have created a foundation on which we're going to build an autonomous system in the future. It's a future optionality. Only a billion dollars of ARR revenue is in our revenue stream today, but I'll argue that there's a lot more runway to come. Now all for us to do: moving into verticals and serving our install base requires new products. One of the decisions I made as incoming CEO was to raise our R&D spend in 2025. If you observed, our R&D spend went up by about 200 basis points. I think it was necessary because if our thesis is all about growth through new products, we need to spend at median or above median of the market. But we need to spend it smartly. So we have done that. I don't see a necessity for us to make any more correction. We are at the point we like it to be. Now we need to grow our revenue every year and earn that incremental revenue through our growth while keeping the percentages same. But what has that done? Our vitality has been progressively growing to mid-40s. The typical industrial average of vitality is about 20s. Vitality is defined as products you created over the last 3 years. So you can see the health of the business. You're not selling old stuff. You're selling new stuff. So you're less disruptive to yourself. And all that is leading to our organic growth. What you can see on the right, we are slowly progressing from not growing based upon new products to more growing. And we do expect this number to keep going up as we make progress on this. But it's less about spending more money. I wish that you could grow by just spending more R&D dollars. It's not that straightforward. We've also invested heavily in refreshing our offering managers. We have 600 of them. Looking at their talent, making sure that we have the right people in the right jobs. That's an important part of our execution. But also looking at underlying systems: do we have the right systems on how we look at our new product performance? How do we know which is working, what's not working, what's the basis of that, what's the definition of that? And then our launch processes, because we launch hundreds of products in a year. That's a big opportunity. So all that really is a basis for us to think about high confidence in this. I spend a lot of my personal time on this process. The question is why? Because all our growth is linked to new products. And if me and my colleagues, the SBG CEOs, are not passionate about it, we will not be able to execute the growth we're really talking about. All that really comes back to the story I started about this whole cycle of shared value creation. It is in motion. This is not something we are thinking about or a strategy we're going to do in the future. 5.2 million assets connected. It'll be 9 million conservatively by 2028, almost double. Which gives us high confidence that using Forge, we'll continue to propel our services and software revenue from 40s to 45%. Because we create outcomes for our customers, and then we keep refreshing our install base and go back to the whole cycle. So the cycle of value creation is the whole heart of our growth strategy which we want to get across. So before we wrap up this section, I thought I'd also spend a minute on our M&A. Our growth is heavily dependent on organic growth. I want to make it very clear that's the majority of our growth. We did six acquisitions, and acquisitions were done more around some known growth vectors. We strongly believe in markets we believe are high growth. So we made three acquisitions in the LNG space: Air Products LNG business, Sundyne business, and CCC business. But we also made two acquisitions in the space of security. We believe the world is going to invest more in security, be it physical or cyber. So we are acquiring in spaces we know extremely well. So there's lower risk and higher probability of execution, and Mike will share with you the numbers of all these acquisitions. We want to be absolutely transparent on how we are doing against them. The good news here is we are beating our internal model across all of them, and they are based upon some cup numbers we committed to ourselves, and we're going to stay on the same strategy. We're going to stay on the bolt-on strategy in the optimal deal size of $2 to $4 billion, with a clear path on commercial synergies, continue to operate in mission-critical segments. We're not going to change our rubric that has been successful for us. We'll be very selective, very thoughtful, because we are very focused at least in 2027 to wind down our debt and continue to make our commitments on that front. I thought it important to spend a minute also on Continuum, a good success story of completing the IPO a few days back. Continuum now becomes an optionality for us in the future. We own 47% of the company. So how do we monetize?

Future optionality for us. But what excites me about quantum is the quantum story and AI story goes hand in hand. As AI is scaling, the compute power is not able to keep up with that. The compute power is running in differential to the compute power which AI is demanding, and the best way to solve that is quantum. And the areas like drug design, optimization, new material discovery, cyber security is where quantum demand is imminent. And we believe that at the right time, when these start scaling up, it will be the right time for us to monetize our stake. But we are in a much better position now because the company being public, and we'll execute at the right point of time. So moving to the last part of the story now - spending my last five minutes on: okay, it's all great, how are you going to execute it? I mean, anybody can say, and it's good to tell the story, but do we have the muscle to execute all of that?

I'll first point out our Honeywell Accelerator, which is our operating system. This has grown over 20 years. I am proud to say that my two predecessors did an excellent job to lay down a strong foundation of this operating system since 2005, when Dave Cote started. We really focused on functional excellence and manufacturing operating system. Under leadership of various, we really moved into new products and pricing and to commercial excellence. And under my leadership, we focused on business models and customer obsession. So the point being that this is an ever-evolving operating system. This is how we make a choice to work by discipline, and it makes our businesses better. It also gives us an assurance that we can execute with certainty versus execute with high variability across businesses. And you will hear from different business leaders how they use the operating system not only for running their business, but also if we did an acquisition, how we integrate those acquisitions flawlessly as part of our business.

Which nicely flows into the next point: the Accelerator is a big part for us to also drive our margin expansion. Now, margin expansion tools are going to be typical - it's going to be pricing, it's going to be productivity for sure. But rather than pricing and productivity through a non-systemic manner, we use our tools we have created over 15 to 20 years to drive manufacturing excellence, to drive pricing execution, to drive commercial excellence to ensure that we can deliver on our margin expansion, but also use our tools to manage our fixed cost. Our fixed cost has come down by almost 600 basis points with all the work we have done. Now our job is to keep it at 31% - we have gone there - and if possible, make it even lower to further expand our margin. And our operating system really drives us to understand what are the optionality and options for our fixed cost management. And finally, as I mentioned before, our mix of revenue mix, as it changes, is certainly going to be margin-accretive. So all that gives me high assurance that our margin expansion rubric is very solid, because it's built on a backup operating system which we use every day.

Now to do all that, we have a very capable leadership team. You're going to hear from six of them later today - from Mike, Suresh, and four CEOs. I can tell you that this team is supercharged up and highly excited about the optionality it has in front of them. We have executed, as I mentioned to you, flawlessly over the last two years. We delivered to you, hopefully, in a surprising manner, executing our spins flawlessly, acquisition integration, but also continuing to deliver our financial commitments. And this team is very capable to deliver future commitments. We're really talking about what's ahead of us. It's also interesting that many of the team players rejoined Honeywell - I thought it's an important feature to point out: starting from Mark himself, who rejoined us, but also Anand who rejoined us from Microsoft, Bilal who rejoined us, and Pete who also rejoined us. The question is why people are excited - not because they are my great friends, but because they believe in the strategy. They believe that we are onto something which creates a new opportunity, and we collectively are excited about that.

So is also our board. I'm proud to have three of our board members in the room today: Mike Lamach, who hopefully needs no introduction - CEO and chair of Trane. Mike is going to be our lead director. We have Indra Nooyi, who was chair and CEO of PepsiCo, and Steven Williamson, who was CFO of the Fisher. They represent our board here today, and I'm very proud to have a board which is not only driving governance, but driving us with insight, helping us execute the strategy. And like any other purpose-built company, you also get to build a purposeful board so that it's aligned to execution of your strategy. So a great team with the right board gives me high confidence that we're going to execute on it in a flawless manner.

This chart is an interesting data point. If you see on the right-hand side, this is an attrition trend of Honeywell since 2019. And if you see the numbers, when the big resignation happened, our numbers went up like everybody else. And if you see the chart on the extreme right, at the end of 2025, our attrition is the lowest in our history from the data we can ever find in the last 15 years. That sounds very counterintuitive - that a company which is going through such a big transformation, spinning stuff, selling companies - why people are not leaving? Because they believe in the future. We are creating a true growth culture. Look at some of the stats on the left-hand side: our Voice of Employee score is 74, above industry median; our Glassdoor score is way higher than our peers, because we are investing in people, in their training, in customer co-creation. They can see the strategy. So I think if no other stat gives you confidence, I think this stat - it's all facts - gives you confidence that we're on the right trajectory, because our employees believe in it. They are insiders; they can see and feel it every day on how we're executing that.

So with that, in wrap-up, I will say that we as a company feel - Mike will talk more about our financial rubric - but I, as a leader of the business, feel highly confident on delivering what we are committing to you today: 4 to 6% organic growth. We do have a contingency built into that - we are absolutely transparent about it. I do believe in today's uncertain time, one needs some contingency to deliver the commitment. So we can't build a plan and come back to you with excuses to say 'here's the reason we can't deliver that.' I feel highly, highly confident about our margin expansion and delivering 10% plus adjusted income growth. So that I'm going to wrap up here, my section. I hope the story of building a pure-play automation leader is convincing. The story of durable growth margin with our mission-criticality focus and business model is convincing. And optionality of future - going from automation to autonomy - is real, and the operating system is going to be the backbone, and our team is going to be the backbone which is going to execute it. So I look forward to more conversation. I'm going to invite my friend Bilal on the stage to talk about his successful story of building automation. Bilal, over to you.

Clear path to expanding margins through better pricing, productivity, and stranded cost reduction through all the portfolio moves that we've done in IIA. But we'll apply a milestone funding approach to this. We'll responsibly invest, but we'll do it in concert with growth. The productivity that's in these fertile grounds will allow us to not just expand margins but also simultaneously invest heavily in the growth of this business. And when we start growing, look out. The thing that I'm most excited about in this business is the leverage that exists in it. Look, these are extremely high variable contribution margin businesses. So as the revenue starts to turn, the operating leverage that exists in these businesses is incredible. So the refocused IIA as a sensing and measurement business is primed to reach its full potential. And to my 20,000-ish IIA colleagues around the world that are sitting in watch parties right now in Shanghai, in Pune, in Dubai, in mines, Raleigh, Charlotte, Munich, Houston, in Richardson, Texas. I can't wait to create value with you guys. So, thanks so much for your time and I'm going to hand it over to my dear friends Jim and Ken to talk about PAT. Please welcome President and CEO of Process Automation, Jim Masso, and President and CEO of Process Technology, Ken West.

Yeah, thanks Mark. I mean it's no secret a couple years ago building automation was not performing like this and it's really about the transformation last couple of years around customer centricity, speed and effectiveness of innovation and then having the absolute best talent empowered to do what they do best to get it done and that has really allowed us to do this and we've committed this business to continue to do that for the years to come.

I mentioned a little bit about this. In fact, a couple years ago we walked into the factories and everybody was talking about oh we need to knock this wall down and expand if you're really going to be driving the growth and so on. So we challenged our team and said just think about how we rethink about that, how we reuse the space. And in fact, a couple weeks ago was visiting one of those factories and it's helping us. This is one of the factories that's driving the highest growth right now, close to double digits. And when you walk into that factory, you think that business is slow because they have taped off all these empty areas. And they said, you challenged us to through lean and continuous improvement and kaizen projects to reduce. We've done it. Tell us what else is going to come. Keep going this business. That's just one example. And then obviously in the rest of the business and R&D and in demand generation capabilities, we've made all those investments. We are where we need to be to deliver our commitments for the next three years. So when the volume comes in, it's going to have a really great leverage for us along with the acceleration of our post-connected offerings and the margin capability that those would bring.

It's about how you show up and you have to have end-to-end teams focused on it that understand that space and then you have to make sure that you position your offering in a good way. If I think about data centers, we have the number one solution for advanced fire detection in data center and we added Ion Tamer for lithium ion battery fire detection to that. In building management systems, we're leveraging Niagara to help our customers drive through the integration within the building domain control. And then on the access control side, we have some of the most complex global networks of access control that our OnGuard platform does. So showing up understanding what it takes for your customer to succeed and then making sure that we position our offerings to help them deliver what they need to deliver to their customers.

Well everything is a building and factories are buildings. So in the case of Ken's business and process technologies, what we do in some cases is very hard for other people to do. So we leverage that high differentiation to bring in building automation along with process technologies and data centers as an example. Liquid cooling requires a lot of new sensing capabilities that did not exist and Pete and his team are developing some really compelling solutions there. We're able to bring those and then in Jim's business we're able to bring that high level control system of systems and bring that approach along with PLC controls into the data center space.

I can start. Price is ultimately about the value that you deliver and the ease with which you're able to do pricing as to how much value you're delivering. Value delivery, new products is a big part of it but how you do your job every single day when your customer asks you a question, when you deliver something to your customer, the speed of innovation, all of those come into the value creation that you do for customers. Specifically in building automation that's true. For some of the other businesses, what we sell into our channel is less than 20% of the cost of our channel to go do something. To the extent that we are that 80% is sitting in the labor and design and engineering, to the extent that we are able to go and tap into that 80% and help them make that 80% lower, that gives us a lot of opportunity to create value.

I just wanted to draw to your point on how much of commonalities in industrial automation businesses and what processes made common. I want to draw a parallel to building automation business. While Bilal's business serves same end market, our channels in fire, security and BMS are unique. We don't share any channel partner. So, Bilal has unique offerings for each one and each channel, but back end is common factory pricing process. We are replicating the same model. It's exactly copying the same model where it appears everything is same. But in reality, it is not. In fact, we do not share channel partners for the reasons we'll appreciate and the scale is highly replicable in industrial automation. So I want to clarify that this is not a new invention. We're basically copying what we've always been very successful.

Why don't we start with Paul?

Decisions and be nimble with that spending, and we've seen that, and that's reviewed even on a monthly basis at every level of our organization.

Yeah, it's important to mention that a lot of businesses are being disrupted by many of the new software capabilities that are coming out, AI, right? So, if you think about where we're unlocking this massive value, there's domain depth across all of these businesses, and you very uniquely in our cognition demo over there — if you haven't seen it, come see me after — we're putting that domain depth directly into our control systems, directly into our automation, whether it be a building, process, facilities, doesn't matter. The impact we're able to have on our customers' operations, depending on the industry, it's a wide range, but we're often talking tens of millions of dollars of immediate incremental difference for some of our automation solutions that are augmented by this domain depth. And again, because of that position, a lot of these new compute capabilities are really augmenting our capability and allowing us to get into markets in a way that no one else can. It's kind of interesting, this cycle of disruption. And I knew this coming into Honeywell, but it's been pretty incredible to see it play out over the last 11 months. It's driving a lot of value direct to our customers, which is where we're focused. Okay, maybe two quick ones. Go to Nicole and then end with Cap.

I think I speak to Ken more than anybody in my family. My wife's probably watching and thinking yeah, it's constant. It is absolutely constant. And I think Ken can talk a little bit more about how quickly we've been driving these solutions across the business.

And on that, is it fair to say that the time spent together and the pipeline, but the real benefit is still to come because you guys are working really well together right now, but the benefit is...

Yeah, I'll start on the operating expansion. It's all within our control, and this is why I feel so highly confident about it. I think we get there with low single digits to almost no growth just on the self-help stuff. And then growth will obviously supersize that or be a part of it, or we would take some of that and reinvest it as we're growing. But I feel in control on the margin expansion and feel like we could do that at low single digit growth.

Yeah, on the regions, the good news is with the new organization we have and regional focus, all of our regions are growing. China and Europe have long been slow, but for us they're growing quite nicely. In fact, Europe is showing up in the mid single digits and we expect that to continue. Your question about how things change: the fact that we have capable teams empowered to make their own choices and innovations will help us to do that. Take the example of our Middle East and Africa region. A couple of years ago when we talked about growth in that region, it was all about the investments happening in Egypt. Well, last week it was all about Saudi Arabia and Northwest Africa. Our teams anticipate the growth, and they have the capability and the empowerment to make sure they are ready for it when it happens. We see that dynamism in how our team approaches it across all of our visions, and the customer centricity helps them continue to deliver on that.

Services. Today our shared services penetration is about 40%. Over the next two years will be over 70, and that's where you get really payback on the productivity on your AI investment. So we feel really good about this margin expansion while we're also taking out stranded cost and we get a lot of question on stranded cost. What is it? How much is it? When you going to take it out? etc. So I'm pleased to say today our stranded cost is only $290 million. Just think about it. It's $290 million on over $20 billion of revenue. More importantly, we'll be taking this cost out, remaining cost out in the next 12 months. We already action about $200 million of that through repositioning other actions. It just needs to show up in our run rate. And then we have about $85 million of cost left that we'll take out next year by simplifying our structure and getting better penetration in short insured services. So our fixed cost is going down by about 500 to 600 bips from 25 to 27 while we reinvested and stepped up our investment in R&D. So I think really good story on cost. So with that, let's talk about EPS. And look, to me, the $6 EPS in 2029 of 10% drop, this is table stakes. I really have two questions to myself. It's not whether we can hit it, but by how much can we beat it? And this EPS growth is coming in early years, meaning it's frontloaded. So I'll be super disappointed in next year if we don't grow EPS by 12% plus. And to that point, the $4.05 for this year, there's still a lot of opportunity to beat that as well. So the teams are working really hard to deliver that and I could assure you that the growth is coming sooner versus later. You don't have to wait three years to see it and it's operational. This is all through above the line items: volume, price, mix, productivity, everything we talked about today. So with that let's talk about a few minutes about cash and capital allocation because obviously those are extremely important to our future. So cash we will be 80% free cash converter this year. We will be 95% plus converter in the second half of the year. There just a lot of things went on in the first half of the year that we had to manage. You think about it, we're raising $16 billion of debt, we're in the process of retiring $21 billion of debt, we're separating $140 company and creating two companies over hundred billion market cap over the next few years. Just a lot of complexity that we had to deal with: transitory interest costs, taxes, and also the conflict in the Middle East. We had some pass bills in the first quarter. Now I am convinced we are 95% free cash flow converter going forward based on all the structural things we've done. We're paying out our debt focusing on that's going to help our cash interest. Our tax rate going forward is about 19%. It used to be 22%. That's significant source of cash as well. And we have higher quality portfolio that is going to deliver better cash flow. And finally, look, our folks are coming off the separation work, including myself, we're getting more focused on cash. So I'll be focusing a lot on cash over the next 18 months. I can promise you that. So, what are we going to do with all this cash? First, we're going to pay down debt. We're managing our debt and that leverage ratio to below three hopefully by year end. In the midterm, we'll continue to invest in capex. Our capex should be about 3% of sales. It's lighter than used to be, more like 3.5 to 4. And then medium-term, we also obviously will focus on returning excess capital to shareholders. Our dividend payout ratio should be about 35%, which is on par with our peer set, and we'll focus on about 1% share count reduction. And then we'll continue to do bolt-on M&A. Ticket size will be for us bolt-on about 2 to 4 billion of the purchase price, but it will be thoughtful and it will be patient. There is no urgency, but we'll continue to add assets strategically just like we did with access solutions, just like we did with LG. So with that, in closing, I just want to say we have created a very unique pure-play automation company, and from my vantage point, this company has a very, very good financial profile and financial framework for the next three years. And I'm confident that with the team you saw today, we're not only going to deliver this financial framework, we will beat this. So with that, I would like to invite Viml, Suresh, and Mark back on the stage for the final Q&A. Thank you.

I would say the two biggest priorities: one is we need to strengthen our IA portfolio, but it has to be done thoughtfully. We've built this portfolio with a lot of effort in sensing and measurement, so we're not going to excursion here and there and create an unrelated portfolio. But we will absolutely pay more attention to that. If I move beyond that, the two things I focus on are vertical-based offering M&A. What we've learned in hardware is that it takes just one or two offerings to give you tremendous opportunity in a vertical. Look at the LG business acquisition which changed the whole profile of our business, and we added Sundyne subsequent to that. If you look at our hospitality segment, we have a big play in hotels. We always did the thermostat and the hotel room business for 10 or 15 years, but when we acquired the access solution business, we got electronic locks which have digital identity linked to those locks. So all of a sudden we became so critical for the hotel. The point is one acquisition can change your whole profile. And those eight verticals we have identified, which I talked about – semiconductor, data center, LNG, hospitality, and so on – that's where I want to focus on how we bring more strength so that our story goes hand in hand. We want to grow in those verticals. Can we find more space inorganically to grow in that? And last but not least, I am a big believer in frontier technology. Frontier technologies have an important role to play in our businesses. Think about we have made two acquisitions in cybersecurity in a very thoughtful manner. OT cybersecurity is still a nan business, but if we continue to invest in frontier technology, we will be the leader in that space. We made two acquisitions in that. We made an acquisition in fire detection. We were the first company in 2017 to make a fire detection for data centers – a fact which is not well known under AM's leadership. Now of course it is benefiting us today because nobody would have put a bet on early detection of fire in data center in 2017, but we did, and we made detection of the lithium battery off-gases 3 years back. That's frontier technology. We need to know about it because they are disruptive. You need to stay ahead of the game, which means we need a deeper understanding of our segment. So I think that's our fundamentally our playbook: strengthen our IA business, continue to have our vertical story building together, keep an eye on frontier technology, and as we generate more cash, we will responsibly spend it and do it in a thoughtful manner.

Yeah, a lot of questions. I would say the reason I feel so comfortable about the margin expansion is that in many ways, our margin expansion is not dependent on strong topline growth. With whatever we are guiding at 4% topline growth, we still can get the majority of this margin expansion. This is because of us taking out the stranded cost but also going beyond that. It's really about our structural simplification across the company, and with now having a cleaner, more focused portfolio, we can drive a lot of that. Second, pricing discipline at Honeywell has gotten much better over the last two years. We learned a lot about pricing – how to be more attuned to the markets, how to price regionally versus globally with one cookie approach. We're closer to our customers, and our offering is better, which allows us more pricing. So I think the margin expansion is largely derisks. It's really about can we get how far beyond 24% we can get. As far as the incrementals on software, they are going to be really high. We invested a billion dollars in Forge. We're not investing as much anymore, and that's why those incrementals on software revenue are higher than our product incrementals. So we see a lot of opportunity there. In terms of growth, all three businesses have momentum, and it's really strong. IIA is different because it's all about self-help, so Peter is going to grow for a while at this mid-single-digit rate without even considering too much of the market itself. Process automation technology cycles are multi-year cycles, and they're on the cusp of it. And Bilal is taking share across the world; he regionalized first in Honeywell and has been on this journey for three years. His growth is driven by offering. The PNT segment, we have assumed that Johnson Met the acquisition pulls our margins down but the rate of change opportunity provided is very large. So it's a little bit of short-term math works against us, but then the rate of change opportunity – that's why we acquired it. So 25 is a little bit if we take it out, the numbers look different. It's more of a math.

Yep. So Andrew, if you look at it, let me start with building automation then go to industrial automation. Building automation: 60% of our revenue comes through channels. Two years back we said we have no entitlement for any service there. We ship the product and they should serve it. That sounds logical. Then 40% install base we own because we sell projects, and we have a large service business on that. Our first inning of Forge was to connect our install base and make our service contract more digitized. Then we said, who stopped us from asking service business from our channel partners? Whose thesis was that? It turned out nobody's thesis; it was a self-imposed ban. Now our Forge is open to our channel partners. They can sell connected building to their install base. When they sell it, they have to pay me a license fee. We have opened an academy to train our channel partners on how to sell Forge. It's a big transformation for them. Our classical system integrator grew up to sell fire system, security system, HVAC. We are saying go and sell this IoT platform. They obviously said that's hard; we will train you for that. But every time you sell it, you have to pay me a license fee. Great example is the connected life safety solution business in fire, launched in 2019. It generates more than $100 million revenue from recurring revenue, but that's the engine which grows the product business because our channel partners are so dependent on our software to configure their product that it's unlikely they can move to anybody else. So the compounding effect of that is really high. Same is now moving towards industrial automation when we look at our install base of gas detection, which is very similar to fire detection – it's a hazard to humans. We are replicating that model, building the tools by which our customers can remotely inspect these gas detectors and configure them. It's early innings, and we will repeat the same process. It's learning from one and transferring to other. My confidence is that the ARR growth of 15% from a base of about a billion dollars will require us to constantly innovate and generate extra revenue.

That's right. I mean that is correct, and I think that's really where the opportunity is for us to overdrive. Yeah, that's why we show the hedge of 2%. I mean, look, inflation wants to go up. The thing we can't do is we don't want to forecast next four years of price. So we say our prices stay in the 3 to 4% range, but I and Mike know it's in that range for '26 and '27. It's in front of us. Can I say that? I don't know. Maybe inflation cools down and it becomes 2% or 1%, but we are then ready with higher NPI efficiency to still grow our revenue 4 to 6. So it's one variable we control in our growth – new products – and one variable we don't control – inflation which drives up pricing. We'll manage the two and deliver the 4 to 6. Do we have a hedge on it? Yes, we do. But if we plan a strategy in which we don't plan any hedge, I think we are not being responsible to making our commitments.

That's a journey we have learned through. So your question is absolutely right. When we started Honeywell Connected Enterprise in the first phase, we said we need a separate, very smart people who can sell software. Turns out that thesis was wrong because it creates an internal conflict in one organization. So we made a decision in early '25, late '24, operation '25. All those sales people have been moved to all four segment leaders. They are very smart people. They know how to sell. They need offering which this guy makes. Do we need to upgrade our sales force? Absolutely. That's our future. We want to sell services and software. So let's solve the real problem to upgrade our sales force progressively versus putting a band-aid to say I think you are not so smart, I'm going to hire some extra people. I don't think that really works. We acknowledge we took a detour here and come to this world, and this is really working for us. Our confidence factor is high. The limiting factor for growth of ARR is innovation. Salespeople are smart; they'll always sell what sells in the market. If the offering is creating value for customer, they want to sell it. So if we are innovating, if we have the right set of proposition, and have high confidence ability to think through innovation engine, we are on the right trajectory. It's hard, but we will do it. And I would just add to it: in our process business, that's where really owning the lifecycle product lifecycle relationship with the customer, we a lot of times design the chemical process and the IP on it for our customers. So before we even build anything, the customers will come in to us and ask us to essentially engineer the outcomes for them, chemical outcomes as far as their feed, etc. So the channel model there wouldn't work.

Yes, so look, I mean, we obviously we're working through it. It's really we're changing and thinking through how we're going to operate in countries. We operate materially in about 70 countries. We have countries where we have pretty legal entities. So we just have massive qualification of legal entities like Germany. We have 30 legal entities in Germany. I guarantee you we don't need 30 entities in Germany. So we have some of the frictional tax coming our way as far as trying to simplify it. But that's already calculated in the context of what we're trying to do. And as far as our simplification, the low-hanging fruit is pretty large. I mean if you look at it, one thing we did not pay attention to is Honeywell has made a lot of acquisitions over the last 15, 20 years. We did not pay attention to eliminating the legal entities, and what we are realizing is that you don't need those legal entities just for the basic transactions. That number is like a low-hanging fruit out of the 400 reduction is significant. And then comes the difficult portion of the tail where the fractional tax will come in, and their team has to be thoughtful on how to do that work. The motivating factor for us is very clear. The motivating factor was we created Solstice and Aerospace from scratch. Aerospace has got 100 legal entities and I can't stomach it. We need 300? There's no reason. When we create a new entity, they have such a pristine business, and the remaining co tends to carry the burden of history. I think we can do it. It's just going to be a lot of effort. But I think structurally we know how to execute that. And a lot of this is also simplification not necessarily externally but internally within Honeywell. We have a lot of intercompany transactions etc. That's really eliminating this noise, that's where the leverage comes in if you will, or the productivity.

We're working with our board here; that's going to be one of our key topics coming right off as we become a standalone public company? The answer is absolutely yes. I think we need to make our compensation align to the strategy which we are presenting to you. I haven't discussed with our board of directors. It's too premature for me what it'll look like, but directionally it'll look like the things we talked about. Our compensation should link to what we committed to you; it should be directly proportional to that. So there's an opportunity here, and I'm going to work with all our directors to make it happen.

So let's take the inward example of AI. I think Mike talked about it. You know, our company has been a productivity engine because we have an operating system for many years. Driving productivity 15, 20 years back was using six sigma and kaizen, and then it became robotic process automation and so on. What we realized is that for us to create opportunity of productivity at scale required us to build a centralized services model. And the realization came: we have centralized execution of R&D under leadership, a common R&D team of almost 7,000 people. They were the first one to use AI at scale to do software testing, and it gave us substantial productivity. That gave us a ring bell to say if you want to use AI, you have to centralize your function. It's as simple as that. There's no way you can have a desperate function like in case of Mike: he has finance team in the center, he has FP&A, then he has people in the businesses. There's no way you don't have any scale to do AI to make a meaningful P&L impact. That made us now pivot towards a shared services model. Corporate will be like we are a public company, of course we need a corporate function to behave like a public company, but everything else we do should be a shared service so that you can reimagine the service using AI. So there should be AI versions of that when we do procurement, when we do finance, when we do other functions, customer service. That's our journey. So I would say that how much that number should be? It probably is going to be greater than what we all expect, but it's hard for us to put a number on the table to say it's going to be 30 basis points or 10 or nothing. But it absolutely is greater than zero, and we are very bullish about that. On the external customer side, I think our innovation adoption has to match with the customer's ability to do change management because these offerings we are launching of agentic systems – building an agentic system for buildings, building an agentic system for process industry or plants. When a customer adopts it, they have to make an organizational structural change. They have to hire different types of people. So can they do it in 2 months? Unlikely. Can they do that in two years? Probably. So we are shifting our discussion not only limited to agentic system. When I talk to my peer group, they talk about it: how are you dealing with it? Are you making changes? And they are really dealing with that issue because agent systems mean the skills are getting automated at the bottom of the pyramid and the skills are moving in the middle of the pyramid. For example, he's going to eliminate all the nuisance alarms. So there are a lot of people who are doing this punching the key to deal with nuisance alarm and different kind of system. But given they're eliminated, somebody needs to do something about it. Those people are different. So who's going to make the organizational change to say all these people are less and we need something in the middle? So our scaling is more dependent upon customer adoption of their own change, and the more quickly they do it, I think the rate of change here could be quite different in any new technology. We have to be working with our customers on that.

I think the biggest unlock is for us the next innings for Honeywell Technologies is going to be building the vertical-oriented offerings. What industrial companies do well is to build businesses by product line: process automation, life safety, gas detection. So the people are trained to sell their product to a customer. But if you pivot the problem by end market to say we are serving life sciences, we are serving semiconductor, we are serving grid infrastructure – those are problems you have not solved a problem which will need to sell products from multiple businesses. That to me is the biggest unlock in today's revenue stream. All the numbers we presented to you, we don't have any meaningful number of process built in because we haven't proven anything. But if you ask me and all my SPG colleagues and Mike, that's what we are most excited about because this is a scenario. As we execute that, that to me is the biggest unlock because within the segments, I think each business leader is very capable to grow the strategy which they presented. My job and Mike's job is really to imagine now how do we solve this vertical orientation. But that's a relatively unique concept to build cross-sell by each end market. In process it's easy because both Jim and Ken sell to the same customer, there's a high amount of inter-relation. Now when you do it beyond it, it just makes it harder. That to me is the biggest unlock we have to solve. 200 basis points of growth in there is possible, absolutely. That's my incoming thesis. Have we delivered on that? The answer is no. But that's an upside which is not in our numbers right now.

Yes, I mean, if you look at how we executed this separation, it's a bit interesting to spend a minute on that. I think the separation team was done as a separate team under leadership, and we separated it, created a separate separation management office to really drive execution of Solstice and Aerospace separation. My time actually spent was not as significant as it appears from outside. I had to make a few difficult decisions on how to hire leadership team for Solstice and for Aerospace and create board of directors, of course. But the time required is less; the implication of decision is very big. So I did not really go away from the core of spending about one-third of my time externally. That has been my principle – spending time with your salespeople and with your customer because that really gives you the insight on how the businesses are moving. But to your question, it's going to be vertical thinking: the segments where we have a lesser penetration. I'm spending more time with life sciences customer, I'm spending more time with semiconductor customer, getting to know them, what are their pain points, and what offerings we can make. It's interesting that I met with one of the large life sciences customer earlier this year, the largest company, and his comment was, 'I'm surprised I'm meeting a Honeywell CEO for the first time. But you're the biggest automation company, and I don't know why we don't have a relationship with you.' My takeaway was our brand value is so high in his mind, and we have not done a good job to create value for them. Then we talk about our cross-sell solution; they really get excited about it because they said this is new, we haven't heard this before. So that's where the time will get spent more in terms of organic growth – creating more opportunities and of course building pipeline for M&A. I see my job continues to be more growth coming from organic and inorganic actions, and that's where I should spend a lot of my time. But just to the point of how focused we are, tomorrow morning we have all day of business reviews to focus on the first quarter two. We're serious. We need to deliver.

You want to answer? I can talk about the facility. Look, our strategy has worked really well for us as a bolt-on acquisition. So what works well, don't mess around with that. That's fundamentally we want to stay focused on that enterprise range. You never say no to everything. There's never say we won't do this and we won't do that. Things change, but principally speaking, we don't see any necessity to go away from our fundamental strategy of growing install base, minor install base. This strategy will work for us and do some meaningful addition in M&A where necessary, specifically on what I mentioned: verticals and frontier technologies. On your question on facilities, we are already 85% local for local, region for region. We're optimizing things especially in IIA. So you'll see more consolidation, but this is more just to drive scale in our facilities, and that won't require any incremental repositioning funds. I'm assuming about 70 to 80 million of repositioning for Hannover on go-forward basis. But largely we have a footprint that we want and we can grow on it. Actually, Scott here, our VP for IFC, has built a very keen strategy. We have about 80 factories, 80 facilities manufacturing in Honeywell Technologies. He wants to build 25 facilities that will produce 85 to 80% of our revenue – the 80-20 rule. We still need 80 because of some nuances of localization, some unique product lines. But if we turn our focus to 25, that's where you invest capital, that's where you build scale, that's where you build the Honeywell Operating System. I think his strategy is really smart to execute it that way, and that's going to give us leverage. We don't think Honeywell needs any new factory with one exception: LNG. If somebody has more LNG capacity, give me a phone call. We have so much business we can't serve it because it has unexpected business coming our way. But outside that, I think we have a good capacity to serve the entire company, and scaling a few factories is our strategy.

I think the three-year number is just to illustrate for everybody in this room to give something which is tangible. Our strategy is more long-term and more durable. We don't think we're going to come back to you in two or three years from time to say we're going to change our strategy. So the fundamental strategy of having mission-critical segments serving building, industrial, process, growing through new product – that's going to remain very robust. But as a public company, we need to give you some commitment you can hold ourselves accountable to. But as Mike said very well, we think every day how do we beat that $6 commitment we're making, because that's really what will excite you and what will excite us. We operate on three-year cycles in Honeywell. Somebody comes to me with a plan and has 10% CAGR like that and it's linear, it's not believable. So I always discount the last year but really focus on the first two years. Because if you can get that growth and the margin expansion in the first two years, you're pretty sure you get it on the back end. So it's really about the next 18 months. Once we instrument the next 18 months in six-month increments, we can then talk about rolling forward the forecast. But that's our general construct financially, and we're quite convicted on what we're going to deliver here in the early cycle of that.

Yeah, clearly, Julian, the actions we have taken on LNG was thoughtful to derisk our business which is concentrated in refining petrochemicals. So I think that certainly has helped, and the outside growth in that is certainly going to change. And we're equally focused to grow our business on the process side of the business in life sciences and in grid infrastructure. On the core, we believe the biggest opportunity is opex leverage. There may not be a lot of capacity coming for refining petrochemical, but nobody is shutting down any plant. So it means the money being spent on opex in terms of running these facilities better – that's why our mining install base strategy is very critical. So I think that's going to enable our growth. A case in point is Ken's business: he never had any services. They licensed the technology and then sold the catalyst. Now Ken believed he can create several hundred million dollars of services business from ground zero. He never had any. So now all that for us is incremental growth. We're displacing somebody else who was providing those services – maybe small system integrators, small EPCs, maybe customers' in-house team. So getting the maximum share of demand in our core, but pivoting towards some of these high-growth markets like LNG, grid infrastructure, and life sciences. That's why vertical strategy is important. We have called out life sciences and grid infrastructure as priority verticals. We'll do organic growth. Nothing stops us to look at inorganic opportunities there to continue to build our business, more diversity there. So more to come.

All right. So again, just wanted to thank everyone. I wanted to make sure that we start the day with a customer and end the day with a customer because I believe that customers drive our future. You heard from several segment CEOs and how they're partnering with us every day to drive and shape our future. I think this slide is a summary of where I started my day in the morning. You know, why own Honeywell Technologies? Everybody has a lot of choices. But we have built a portfolio which has transformed into a pure play global automation company. The portfolio mix and the business model really give us an optionality to have more than 10% earnings growth through cycle, and AI is an optionality. I truly believe that this industry is going to transform itself. The timing is near-term versus long-term, and we are going to be leading that whole move of automation to autonomy. And finally, execution is in our DNA, whether it's our operating system or it's in our team. So there's no... I've been in this automation segment for 40 years. I just realized yesterday that I started working on June 10, 1986. Today is June 11, so I completed 40 years only in one segment. And I've never been excited about the future of automation industry not because I'm CEO of the company, but the opportunities which are ahead of us. I'm really excited. I think this moment is a great moment for Honeywell Technologies, and I feel you all are excited in terms of the future which holds ahead for us. So thank you very much for being here. We have a great set of demos put together for you on the side. So do stop by for reception and have a good rest of your day. Thank you.