Core Insights - Morgan Stanley's first quarter 13F filing shows a total market value of $1.37 trillion, up from $1.34 trillion in the previous quarter, indicating a growth of 6.05% in inflows [1][2] - The fund added 605 new stocks, increased holdings in 2,772 stocks, reduced holdings in 3,431 stocks, and completely sold out of 691 stocks, with the top ten holdings accounting for 22.67% of the total market value [1][2] Holdings Overview - The top five holdings include Microsoft (MSFT) with 142 million shares valued at approximately $53.31 billion, Nvidia (NVDA) with 421 million shares valued at about $45.64 billion, Apple (AAPL) with 199 million shares valued at around $44.15 billion, Amazon (AMZN) with 200 million shares valued at approximately $38.10 billion, and Meta (META) with 58 million shares valued at about $33.54 billion [3][4][5] - The top ten holdings also feature SPDR S&P 500 ETF (SPY), Mastercard (MA), Google (GOOG), Broadcom (AVGO), and Vanguard S&P 500 ETF (VOO) [4][5] Trading Activity - The top five purchases by percentage change in the portfolio include Visa (V), Walmart (WMT), Johnson & Johnson (JNJ), Philip Morris (PM), and Meta [6][7] - The top five sales by largest value include Tesla put options, SPDR S&P 500 ETF put options, Taiwan Semiconductor (TSM), SPDR Gold Shares ETF put options, and Honeywell (HON) [6][7]

Honeywell International Inc. (NASDAQ:HON) Bank of America 2025 Industrials, Transportation, and Airlines Key Leaders Conference May 13, 2025 8:00 AM ET Company Participants Mike Stepniak - SVP and CFO Sean Meakim - VP, IR Conference Call Participants Andrew Obin - Bank of America Andrew Obin With that, we're going to kick off right on time. We have Honeywell. We upgraded Honeywell last week. The stock is neglected, for a lack of a better term. And we think there's a lot of good news happening below the surf ...

Summary of Honeywell (HON) 2025 Conference Call Company Overview - **Company**: Honeywell (HON) - **Date**: May 13, 2025 - **Speaker**: Mike Stepnik, Senior Vice President and CFO Key Industry Insights - **Industrials Sector Performance**: The industrials sector is the best performing sector year-to-date, with the U.S. being the leading market for industrials, currently experiencing the largest capital expenditure (CapEx) cycle in two decades [3][4] - **Resilience in Earnings**: Companies in the industrials sector have shown surprising resilience during the earnings season, indicating strong underlying fundamentals despite market noise [4] - **Pricing Power**: Companies have improved their pricing strategies post-COVID, which has contributed to their resilience [5] - **Supply Chain Dynamics**: There has been a notable shift in supply chains moving out of China, with a focus on resilience and reshoring, particularly in sectors like semiconductors and LNG [5][7] Honeywell's Business Performance - **First Quarter Results**: Honeywell reported strong orders in the first quarter, with continued strength observed in April and May [13][14] - **China Exposure**: There is cautious optimism regarding demand in the second half of the year, particularly in segments exposed to China, with tariffs impacting gross margins by approximately $500 million [14][15] - **Segment Performance**: - **Building Automation**: Strong performance noted, particularly in fire products and short-cycle demand in Europe [16] - **Aerospace**: Organic growth of 9% driven by aftermarket demand, despite a 7% decline in Commercial OE [24] - **Defense and Space**: Strong international demand, particularly in Europe, with no significant impact from the defense budget [28][29] - **Building Products**: Growth driven by infrastructure projects and services, with a focus on creating an install base for value-added services [35] Strategic Initiatives - **Spin-Off Strategy**: Honeywell is separating into three distinct segments to allow for more focused capital allocation and management of growth CapEx [22][23] - **Acquisitions**: Recent acquisitions, such as Sundyne, are aimed at enhancing Honeywell's technology portfolio and stabilizing revenue streams [66] - **Advanced Materials**: The business is expected to grow, with a focus on refrigerants and HVAC, and is set to be spun out as Solstice Advanced Materials [68] Market Dynamics and Competition - **Chinese Competition**: Rising competition from Chinese companies is anticipated, particularly in lower-end markets, while Honeywell focuses on high-end technology [10][50][55] - **Energy Demand**: The demand for energy is expected to continue increasing, with Honeywell positioned across various energy sectors [51] Financial Strategies - **Pricing Strategy**: Honeywell is managing pricing carefully to avoid destroying demand while recovering costs through surcharges related to tariffs [76][77] - **Stock Buybacks**: The company has been active in stock buybacks, viewing its stock as attractively priced [81][82] Conclusion Honeywell is navigating a complex market landscape with a focus on strategic growth, resilience in its core segments, and proactive management of its supply chain and pricing strategies. The company is well-positioned to capitalize on emerging opportunities while addressing competitive pressures, particularly from China.

Group 1: Honeywell International - Honeywell has been added to UBS analyst Amit Mehrotra's list of "top picks" alongside Johnson Controls and 3M, indicating strong potential for outperformance [1] - The company raised the midpoint of its full-year guidance following excellent first-quarter results, with an organic sales growth outlook of 2% to 5% [2][4] - Honeywell's aerospace business is benefiting from increased aircraft production and growth in flight departures, with notable double-digit growth in Building Solutions [3] - Long-term potential exists from the planned breakup into three divisions, allowing for a more focused investment proposition and capital raising opportunities [6][7] Group 2: Johnson Controls - Johnson Controls reported a 7% organic sales growth in its fiscal second-quarter 2025, raising its full-year earnings guidance to $3.60 [9] - The company achieved a 5% order growth, increasing its backlog to $14 billion, driven by digital technology deployment [10] - Long-term growth catalysts include the adoption of the OpenBlue suite, which optimizes building efficiency and supports net-zero emissions goals [12] - The company's HVAC systems present growth opportunities in data centers, aligning with the AI/data center spending boom [13] Group 3: 3M - 3M's new CEO, Bill Brown, is implementing improvements after a period of underperformance, particularly in addressing legal issues and restructuring [14][15] - The company is tracking toward the low end of its guidance for full-year organic sales growth of 2% to 3%, but operational improvements have increased its operating margin to 23.5% [16] - If the tariff environment improves, 3M could benefit from enhanced earnings due to improved end markets and reduced cost headwinds [17]

Core Viewpoint - 3M Company and Honeywell International Inc. are competing in the diversified operations industry, with both companies investing heavily in R&D to drive growth and innovation [1][2] Group 1: 3M Company (MMM) - The strongest driver of 3M's business is the Safety and Industrial segment, with organic sales improving by 2.5% year over year in Q1 2025, supported by demand from data centers and renewable energy projects [3] - The Transportation and Electronics segment is benefiting from growth in the transportation and aerospace markets, with adjusted organic revenues growing 1.1% in Q1 2025 [4] - 3M rewarded shareholders with $396 million in dividends and $1.3 billion in buybacks in Q1 2025, with a total of $2 billion in dividends and $1.8 billion in buybacks in 2024 [5] - The Consumer segment faced a decline of 1.4% in Q1 2025 due to decreased consumer discretionary spending [6] - 3M's long-term debt was $12.3 billion, a 10.8% increase sequentially, with a long-term debt-to-capital ratio of 73.1%, significantly higher than the industry average of 55.2% [7] - Ongoing litigations, including a $6 billion settlement related to earplug lawsuits, pose additional financial concerns [8] Group 2: Honeywell International Inc. (HON) - Honeywell's commercial aviation aftermarket sales increased by 14% year over year in Q1 2025, driven by growth in air transport flight hours and supply-chain improvements [9] - The defense and space business saw a 23% year-over-year sales surge in Q1 2025, benefiting from stable defense spending [9] - The Building Automation segment is expected to benefit from increasing building projects, with an overall backlog growing 8% year over year to $36.1 billion [10] - Honeywell paid out $732 million in dividends and repurchased shares worth $1.9 billion in Q1 2025, with a total of $2.9 billion in dividends and $1.66 billion in buybacks in 2024 [11] - The Industrial Automation segment has faced weakness, particularly in smart energy and thermal solutions [12] - Honeywell's long-term debt was $25.7 billion, with a long-term debt-to-capital ratio of 58.8%, higher than the industry average [13] Group 3: Financial Estimates and Performance - The Zacks Consensus Estimate for 3M's 2025 sales implies a year-over-year decline of 9.8%, while EPS estimates indicate growth of 4.9 [14] - Honeywell's 2025 sales and EPS estimates imply year-over-year growth of 4.4% and 4.5%, respectively [14] - In the past three months, 3M shares have lost 7.4%, while Honeywell stock has gained 2.9% [18] - 3M is trading at a forward P/E ratio of 17.62X, above its three-year median of 12.03X, while Honeywell's forward earnings multiple is at 20.15X, close to its median of 20.05X [19] Group 4: Investment Considerations - 3M's strength in safety and industrial markets is offset by weakness in consumer retail and ongoing legal challenges, leading to cautious sentiment [23] - Honeywell's diversified portfolio and strong market position provide a competitive advantage, making it a more favorable investment despite higher valuation [24]

Core Viewpoint - Honeywell International has demonstrated resilience amid tariff-related uncertainties, raising its earnings guidance for 2025, which positions the stock as a good value for patient investors [1][4][14] Group 1: Honeywell's Guidance - Honeywell raised its 2025 earnings per share (EPS) guidance from a range of $10.10 to $10.50 to a new range of $10.20 to $10.50, reflecting management's estimate of current tariff impacts [4] - Despite the overall positive guidance, Honeywell lowered its full-year sales expectations in industrial automation to a mid-single-digit decline from a prior low-single-digit decline [5] - The company's first-quarter organic sales growth of 4% exceeded internal expectations, particularly in the commercial aerospace aftermarket, and management increased its sales guidance in building automation [6] Group 2: Tariff Management - Honeywell's guidance accounts for a $500 million impact from increased tariffs, but management is implementing pricing actions and seeking alternative sourcing to mitigate this impact [7] - More than 80% of Honeywell's sales in the U.S. and Europe are produced locally, which aids in managing tariff impacts [8] - As a net exporter to China, Honeywell's earnings could benefit from any easing of U.S./China trade tensions, given that the company has already incorporated existing tariffs into its guidance [9] Group 3: Future Growth Catalysts - Honeywell plans to spin off its advanced materials business as Solstice Advanced Materials in late 2025/early 2026, with expected growth improvements in the latter half of 2025 [10] - Honeywell Aerospace is experiencing high-single-digit growth due to ongoing demand in the commercial aftermarket and original equipment sales [11] - The separation into three standalone companies—Solstice Advanced Materials, Honeywell Aerospace, and Honeywell Automation—will likely enhance growth potential, particularly in aerospace and automation sectors [12] Group 4: Investment Appeal - Honeywell's stock is attractive for both near-term and long-term investors, with potential to exceed guidance in 2025 and operational improvements expected from the planned business breakups [14]

Core Insights - Honeywell Inc. experienced a significant stock price increase of 5% following the announcement of better-than-expected quarterly earnings [1] - The company's sales rose by 8% year-over-year, reaching $9.8 billion in the first quarter of 2025, with the Aerospace segment performing particularly well [1] Financial Performance - Honeywell's quarterly earnings exceeded market expectations, contributing to the stock price surge [1] - The Aerospace division was highlighted as a key driver of sales growth, indicating strong performance in this sector [1]

Core Insights - The majority of U.S. energy executives believe AI has significant near-term potential to enhance energy security [2][4] - Global energy demand is projected to increase by 32% by 2050, with electricity demand alone expected to rise by 75% [3] - Energy leaders are increasingly adopting AI and digital technologies to optimize operations and meet growing energy demands [6] AI Adoption in the Energy Sector - Honeywell's survey found that 91% of respondents see AI's near-term potential for enhancing energy security, and 85% are currently using or piloting AI [4][5] - While only 12% currently consider AI critical to their operations, 81% anticipate it will become critical in the next five years [5] - 94% of respondents are engaged with or considering AI solutions providers, indicating strong momentum for AI adoption [5] Key Applications of AI - The most valuable applications of AI identified by energy decision-makers include: - Cybersecurity and threat detection (57%) - Predictive maintenance (52%) - Operational efficiency (44%) [6] - More than half of respondents (53%) are using AI to address labor shortages and enhance workplace safety [7] Survey Methodology - The survey was conducted by Hudson Pacific from March 24, 2025, to April 1, 2025, involving 300 U.S. decision-makers in various energy-related sectors [8]

Core Insights - Honeywell reported Q1 2025 sales of $9.8 billion, representing an 8% year-over-year increase [1] - Earnings per share (EPS) stood at $2.22, unchanged from the same period last year, while adjusted EPS was $2.51, reflecting a 7% increase [1] - Operating cash flow reached $600 million, and free cash flow was $300 million, marking a 61% year-over-year growth [1]

Financial Data and Key Metrics Changes - Honeywell exceeded the high end of its guidance on all metrics in the first quarter, with organic sales growth of 4% year over year [4][18] - Adjusted earnings per share (EPS) was $2.51, up 7% year over year, while earnings per share remained flat at $2.22 [20][21] - First quarter cash flow exceeded $300 million, over $100 million above the prior year, driven by better adjusted earnings [20] Business Line Data and Key Metrics Changes - Aerospace Technologies saw a 9% organic sales increase, with commercial aftermarket sales growing 15% due to robust demand [22] - Industrial Automation sales declined 2% organically, primarily due to lower demand in personal protective equipment [23] - Building Automation grew 8% organically, driven by strong demand in both Building Solutions and Building Products [25] - Energy and Sustainability Solutions sales declined 2% organically, while Advanced Materials sales decreased by 4% [26] Market Data and Key Metrics Changes - Orders for the first quarter were $10.6 billion, up 3% year over year, with a record organic backlog growth of 8% [20] - Aerospace industry demand continues to outpace supply, supporting orders growth of 9% and a book-to-bill ratio of 1.1 [22] Company Strategy and Development Direction - Honeywell is focused on separating into three standalone public companies to unlock significant value and position each for long-term growth [9][10] - The company is actively pursuing acquisitions, with the recent acquisition of Sundyne being part of its portfolio transformation strategy [12][14] - Honeywell's local for local strategy aims to mitigate the impact of tariffs and geopolitical tensions by serving local markets [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increasing economic uncertainty and shifting global trade patterns but remains confident in achieving its 2025 outlook [4][5] - The company is maintaining its full-year organic growth guidance while raising its adjusted EPS guidance [5][29] - Management emphasized the importance of ongoing mitigation efforts and a strong operational framework to navigate current challenges [16][28] Other Important Information - Honeywell has repurchased approximately $3 billion of its shares in 2025, with plans to continue opportunistic buybacks [11][33] - The company expects free cash flow for the year to be between $5.4 billion and $5.8 billion, down 2% to up 5% excluding the Bombardier impact [32] Q&A Session Summary Question: Details on tariffs and offset strategies - Management confirmed that the estimated tariff impact is approximately $500 million, with strategies including pricing adjustments and productivity measures to mitigate this impact [47][48] Question: Volume assumptions and contingency - Management indicated a conservative approach to guidance, assuming a volume decline of 1% to 2% and a price increase of about 3% [60] Question: Impact of tariffs by segment - The largest tariff exposure is in Industrial Automation and Aerospace, with Building Automation being largely protected due to its local strategy [87] Question: Aerospace aftermarket performance - The commercial aftermarket grew 15%, driven by strong demand and a positive backlog, with no significant changes in pricing expectations [108][109] Question: Supply chain exposure to China - Management noted that while there is tariff pressure, they do not foresee a shortage of parts, focusing instead on demand destruction due to tariffs [102][105]