Summary of Honeywell (HON) FY Conference Call - May 20, 2025 Company Overview - **Company**: Honeywell (HON) - **Event**: FY Conference Call - **Date**: May 20, 2025 Key Points Business Performance - Honeywell has experienced strong business momentum with back-to-back quarters of **8% growth** [3][6] - The growth is attributed to strong customer relationships, R&D investments, and new product offerings [3][4] - The business model consists of **15% projects, 25% services, and 60% products** [4] R&D Investments - R&D investments increased by **50 basis points** as a percentage of sales in Q1 [7][19] - Focus on connected and software offerings is expected to enhance margin expansion [4][20] - Productivity of software engineers has increased by **double digits** due to AI tools implemented for coding [20] Solutions and Products - Solutions business has shown **double-digit growth** for two to three quarters, while products have improved from flat to mid-single digits [9] - The Solutions segment comprises **40%** of the business, with **25% from services** and **15% from projects** [10] - The company is able to scale globally, anticipating growth in various verticals and regions [12] Growth Verticals - Key growth verticals identified include **data centers, hospitality, and healthcare** [14][15] - Data center business is growing at **double-digit rates**, with a focus on advanced fire detection and control systems [16] Market Dynamics - The company is navigating uncertainties related to tariffs and macroeconomic conditions, which may impact growth [27][28] - There is a pragmatic approach to managing growth expectations, with guidance for mid-single digits in the second quarter [27] Access Solutions Acquisition - The Access Solutions business has transitioned to being part of Honeywell, with a focus on globalizing the business and enhancing R&D investments [32][34] - Revenue synergies are ahead of expectations, with a significant shift in investment towards cloud-native solutions [34] Margin Expansion - Current margins are around **26.2% to 26.5%**, with long-term targets of **29%** [46] - Margin expansion strategies include a focus on execution and increasing the mix of higher-margin solutions [47] Software and IoT - Honeywell's software platform, Forge, is positioned for growth, with a **$2 billion** Connected Enterprise business [57] - The company emphasizes the importance of making software solutions easier to implement and transact for customers [54] Competitive Landscape - Honeywell maintains a competitive edge in the fire and security business, with a focus on cloud-native solutions and integrated offerings [62] - The company differentiates itself through its controls domain expertise, evolving towards analytics and AI [64] Conclusion - Honeywell is well-positioned for continued growth through strategic investments in R&D, a focus on high-growth verticals, and leveraging software solutions to enhance customer value and operational efficiency [3][4][14][62]