Honeywell International 10-Q 2022-03-31

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission file number 1-8974

Honeywell International Inc.

(Exact name of registrant as specified in its charter)

Delaware									22-2640650
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
855 South Mint Street									28202
Charlotte,			NC
(Address of principal executive offices)									(Zip Code)

			(704)			627-6200
			(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, par value $1 per share*						HON						The NASDAQ Stock Market LLC
1.300% Senior Notes due 2023						HON 23A						The NASDAQ Stock Market LLC
0.000% Senior Notes due 2024						HON 24A						The NASDAQ Stock Market LLC
2.250% Senior Notes due 2028						HON 28A						The NASDAQ Stock Market LLC
0.750% Senior Notes due 2032						HON 32						The NASDAQ Stock Market LLC

• The common stock is also listed on the London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer			x			Accelerated filer			☐
Non-Accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

There were 680,732,930 shares of Common Stock outstanding at March 31, 2022.

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PART I						Financial Information
ITEM 1						Financial Statements and Supplementary Data (unaudited):			1
						Consolidated Statement of Operations (unaudited) – Three Months Ended March 31, 2022 and 2021			1
						Consolidated Statement of Comprehensive Income (unaudited) – Three Months Ended March 31, 2022 and 2021			2
						Consolidated Balance Sheet (unaudited) – March 31, 2022 and December 31, 2021			3
						Consolidated Statement of Cash Flows (unaudited) – Three Months Ended March 31, 2022 and 2021			4
						Consolidated Statement of Shareowners' Equity (unaudited) – Three Months Ended March 31, 2022 and 2021			5
						Note 1 – Basis of Presentation			6
						Note 2 – Summary of Significant Accounting Policies			6
						Note 3 – Acquisitions and Divestitures			7
						Note 4 – Revenue Recognition and Contracts with Customers			7
						Note 5 – Repositioning and Other Charges			10
						Note 6 – Income Taxes			12

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(Dollars in tables and graphs in millions)

The following Management Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries (Honeywell or the Company) for the three months ended March 31, 2022. The financial information as of March 31, 2022, should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2021, contained in our 2021 Annual Report on Form 10-K. See Note 3 Acquisitions and Divestitures of Notes to Consolidated Financial Statements for a discussion of acquisition and divestiture activity during the three months ended March 31, 2022.

BUSINESS UPDATE

We continue to monitor several macroeconomic and geopolitical trends, that have impacted our business, including changing conditions from the COVID-19 pandemic, the on-going Russia-Ukraine conflict, inflationary cost pressures, supply chain disruptions, and labor shortages.

COVID-19 UPDATE

The COVID-19 pandemic continues to impact our business operations, and our customers' and suppliers' ability to operate at normal levels. Disruptions in normal operating levels continue to create supply chain disruptions and inflationary cost pressures within our end-markets. We anticipate supply chain constraints, and the inflationary environment will continue during 2022. As such, we implemented short-term and long-term strategies to reduce the impact of current and future effects.

During the first quarter of 2022, governments around the world removed many restrictions on businesses and the general public. We continue to operate our manufacturing sites at normal production levels. As of March 31, 2022, we have returned over 90% of our non-manufacturing employees to the workplace. For our remaining non-manufacturing employees, we continue to utilize our procedures for a phased return of our employees to the workplace.

We continue to actively monitor regional COVID-19 outbreaks, and the related government restrictions and lockdown activities in the areas we operate. To date, the impacts of these actions have not been material.

See the section titled Review of Business Segments for additional information on the impacts of COVID-19, inflationary cost pressures, supply chain disruptions, and labor shortages, to our businesses.

RUSSIA-UKRAINE CONFLICT

In response to the Russian invasion of Ukraine, on March 9, 2022, we suspended substantially all of our sales, distribution, and service activities in Russia and Belarus (the Suspension), any future actions are unknown as we continue to evaluate the situation. During March 2022, we created a Ukraine Relief Fund, allowing employees to make donations to support organizations that are providing direct assistance to Ukrainians and those that are assisting them in the midst of this humanitarian crisis. Through March 31, 2022, employee contributions to this fund, along with the Company match, exceeded $1 million. To further support employees in the impacted region, we accelerated payroll payments to those affected by the conflict and the Suspension of our operations.

Due to the Suspension, sanctions, and deteriorating trade relations, during March 2022, we recorded $183 million of reserves against outstanding accounts receivable, contract assets, and impairments of other assets. The respective impacts to revenues, net income, net assets, cash flow from operations, or our global workforce are not material. For the year ended December 31, 2021, revenues from sales in Russia represented approximately 1% of our global revenues, while assets in Russia represented less than 1% of our total assets. Based on available information to date, the Company’s estimate of potential future impairments on our businesses in Russia would not be material with respect to the Company's consolidated financial position. As the conflict continues to evolve, existing conditions may worsen, or other impacts that are unknown at this time, may arise that could have a material adverse effect on our consolidated financial position.

The Russia-Ukraine conflict caused certain commodity prices to spike, adding to the inflationary pressures in the global economy. We considered the impacts of the conflict on oil and gas prices in our short-term and long-term strategies discussed in the above.

See Item 1A. Risk Factors for additional information on potential risks to our business.

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RESULTS OF OPERATIONS

Consolidated Financial Results

Net Sales by Segment

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Segment Profit by Segment

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CONSOLIDATED OPERATING RESULTS

Net Sales

The change in net sales was attributable to the following:

			Q1 2022 Versus Q1 2021
Volume						(6)		%
Price						7		%
Foreign Currency Translation						(2)		%
						(1)		%

Q1 2022 compared with Q1 2021

Net sales decreased due to the following:

• Lower sales volumes in our Safety and Productivity Solutions segment, and

• The unfavorable impact of foreign currency translation, driven by the strengthening of the U.S. Dollar against the currencies of the majority of our international markets, primarily the Euro, Turkish Lira, Australian Dollar, and British Pound,

• Partially offset by favorable pricing to offset higher direct and indirect material costs and higher labor costs.

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Cost of Products and Services Sold

Q1 2022 compared with Q1 2021

Cost of products and services sold decreased due to the following:

• Lower sales volumes in our Safety and Productivity Solutions business which resulted in lower direct and indirect material costs, and lower labor costs,

• Partially offset by higher direct and indirect material costs and higher labor costs in our other businesses, and higher repositioning and other charges.

Gross Margin

Q1 2022 compared with Q1 2021

Gross margin as a percentage of net sales decreased due to the following:

• Higher repositioning and other charges,

• Partially offset by favorable pricing.

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Selling, General and Administrative Expenses

Q1 2022 compared with Q1 2021

Selling, general and administrative expenses increased due to the following:

• Accrual of reserves against outstanding accounts receivable, contract assets, and impairments of other assets due to the suspension of substantially all of our sales, distribution, and service activities in Russia and Belarus.

Other (Income) Expense

									Three Months Ended March 31,
												2022						2021
Other (Income) Expense																					$	(319)					$	(442)

Q1 2022 compared with Q1 2021

Other income decreased due to the following:

• Prior year gain on sale of the retail footwear business, and

• Lower pension income.

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Tax Expense

Q1 2022 compared with Q1 2021

The effective tax rate increased, and was higher than the U.S. federal statutory rate of 21%, due to the following:

• Accrual of reserves against outstanding accounts receivable, contract assets, and impairments of other assets due to the suspension of substantially all of our sales, distribution, and service activities in Russia and Belarus with no corresponding tax benefit,

• Lower tax benefits for employee share-based compensation, and

• Incremental tax reserves and state taxes,

• Partially offset by the favorable resolution of certain foreign tax matters.

For further discussion of changes in the effective tax rate, see Note 6 Income Taxes of Notes to Consolidated Financial Statements.

Net Income Attributable to Honeywell

Q1 2022 compared to Q1 2021

Earnings per share of common stock–assuming dilution decreased, driven by the following:

• Higher repositioning and other charges, including the accrual of reserves against outstanding accounts receivable, contract assets, and impairments of other assets due to the suspension of substantially all of our sales, distribution, and service activities in Russia and Belarus, and

• Prior year gain on sale of the retail footwear business,

• Partially offset by lower income taxes.

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REVIEW OF BUSINESS SEGMENTS

We globally manage our business operations through four segments: Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.

AEROSPACE

Net Sales

						Three Months Ended March 31,
												2022						2021						% Change
Net sales																								$	2,749					$	2,632					4		%
Cost of products and services sold																								1,759						1,656
Selling, general and administrative and other expenses																								237						214
Segment profit																								$	753					$	762					(1)		%

															2022 vs. 2021
						Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change									Net Sales						Segment Profit
Organic(1)																		5		%				(1)		%
Foreign currency translation																		(1)		%				—		%
Acquisitions, divestitures and other, net																		—		%				—		%
Total % Change																		4		%				(1)		%

(1) Organic sales % change, presented for all of our reportable business segments, is defined as the change in net sales, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this non-GAAP measure is useful to investors and management in understanding the ongoing operations and analysis of ongoing operating trends.

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Q1 2022 compared to Q1 2021

Sales increased primarily due to favorable pricing and higher demand from our aftermarket products and services, as flight hours increase from pandemic lows, and commercial OEMs, partially offset by supply chain constraints.

• Commercial Aviation Original Equipment sales increased 11% (increased 11% organic) due to higher demand from air transport, partially offset by lower sales volumes in regional and business aviation.

• Commercial Aviation Aftermarket sales increased 28% (increased 28% organic) due to favorable pricing and higher demand in air transport and regional and business aviation.

• Defense and Space sales decreased 15% (decreased 14% organic) due to lower sales volumes in domestic and international defense.

Cost of products and services sold increased due to higher sales volumes of lower margin products, and higher direct and indirect material costs and higher labor costs.

Segment profit decreased due to higher sales volumes of lower margin products, partially offset by favorable pricing.

HONEYWELL BUILDING TECHNOLOGIES

Net Sales

						Three Months Ended March 31,
												2022						2021						% Change
Net sales																								$	1,429					$	1,358					5		%
Cost of products and services sold																								839						789
Selling, general and administrative and other expenses																								254						264
Segment profit																								$	336					$	305					10		%

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															2022 vs. 2021
						Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change									Net Sales						Segment Profit
Organic																		8		%				14		%
Foreign currency translation																		(3)		%				(4)		%
Acquisitions, divestitures and other, net																		—		%				—		%
Total % Change																		5		%				10		%

Q1 2022 compared to Q1 2021

Sales increased due to favorable pricing, partially offset by the unfavorable impact of foreign currency translation.

• Sales in Products increased 12% (increased 14% organic) due to favorable pricing and higher demand for certain product offerings, partially offset by the unfavorable impact of foreign currency translation.

• Sales in Building Solutions decreased 4% (decreased 1% organic) due to lower sales volumes and the unfavorable impact of foreign currency translation, partially offset by favorable pricing.

Cost of products and services sold increased primarily due to higher direct and indirect material costs and higher labor costs, and lower productivity, partially offset by the favorable impact of foreign currency translation and higher volumes of higher margin products.

Segment profit increased due to favorable pricing and higher demand for certain product offerings, partially offset by higher direct and indirect material costs and higher labor costs, and the unfavorable impact of foreign currency translation.

PERFORMANCE MATERIALS AND TECHNOLOGIES

Net Sales

						Three Months Ended March 31,
												2022						2021						% Change
Net sales																								$	2,453					$	2,346					5		%
Cost of products and services sold																								1,601						1,591
Selling, general and administrative and other expenses																								342						321
Segment profit																								$	510					$	434					18		%

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															2022 vs. 2021
						Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change									Net Sales						Segment Profit
Organic																		6		%				19		%
Foreign currency translation																		(2)		%				(1)		%
Acquisitions, divestitures and other, net																		1		%				—		%
Total % Change																		5		%				18		%

Q1 2022 compared to Q1 2021

Sales increased due to favorable pricing and the acquisition of Sparta Systems, partially offset by lower sales volumes and the unfavorable impact of foreign currency translation.

• UOP sales decreased 9% (decreased 9% organic) due to lower demand for new oil and gas projects.

• Process Solutions sales increased 5% (increased 7% organic) due to favorable pricing, higher demand for certain products and services, and the acquisition of Sparta Systems, partially offset by the unfavorable impact of foreign currency translation and the impact of the Russia-Ukraine conflict.

• Advanced Materials sales increased 14% (increased 16% organic) due to favorable pricing, partially offset by lower demand for fluorine products and the unfavorable impact of foreign currency translation.

Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs, partially offset by lower sales volumes and the favorable impact of foreign currency translation.

Segment profit increased due to favorable pricing and higher sales of higher margin products, partially offset by higher direct and indirect material costs and higher labor costs.

SAFETY AND PRODUCTIVITY SOLUTIONS

Net Sales

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						Three Months Ended March 31,
												2022						2021						% Change
Net sales																								$	1,744					$	2,118					(18)		%
Cost of products and services sold																								1,218						1,550
Selling, general and administrative and other expenses																								273						265
Segment profit																								$	253					$	303					(17)		%

															2022 vs. 2021
						Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change									Net Sales						Segment Profit
Organic																		(15)		%				(14)		%
Foreign currency translation																		(1)		%				(1)		%
Acquisitions, divestitures and other, net																		(2)		%				(2)		%
Total % Change																		(18)		%				(17)		%

Q1 2022 compared to Q1 2021

Sales decreased due to lower sales volumes, the sale of the retail footwear business, and the unfavorable impact of foreign currency translation, partially offset by favorable pricing.

• Sales in Safety and Retail decreased 31% (decreased 26% organic) due to lower demand of personal protective equipment and the sale of the retail footwear business, partially offset by favorable pricing.

• Sales in Productivity Solutions and Services increased 13% (increased 16% organic) due to favorable pricing and higher demand, partially offset by the unfavorable impact of foreign currency translation.

• Sales in Warehouse and Workflow Solutions decreased 28% (decreased 28% organic) due to lower sales volumes as a result of supply chain constraints and timing of projects.

• Sales in Advanced Sensing Technologies increased 23% (increased 24% organic) due to higher demand and favorable pricing, partially offset by the unfavorable impact of foreign currency translation.

Cost of products and services sold decreased due to lower sales volumes, the divestiture of the retail footwear business, and the favorable impact of foreign currency translation, partially offset by higher direct and indirect material costs and higher labor costs, and lower productivity.

Segment profit decreased primarily due to lower productivity and lower sales volume, partially offset by favorable pricing.

CORPORATE AND ALL OTHER

Corporate and All Other primarily includes unallocated corporate costs, interest expense on holding-company debt, and the controlling majority-owned interest in Quantinuum. Corporate and All Other is not considered a separate reportable business segment as segment reporting criteria is not met for the activities reported with Corporate and All Other. The Company continues to monitor the activities in Corporate and All Other to determine the need for further reportable business segment disaggregation.

REPOSITIONING CHARGES

See Note 5 Repositioning and Other Charges of Notes to Consolidated Financial Statements for a discussion of our repositioning actions and related charges incurred in the three months ended March 31, 2022 and 2021. Cash spending related to our repositioning actions was $69 million in the three months ended March 31, 2022, and was funded through operating cash flows.

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LIQUIDITY AND CAPITAL RESOURCES

(Dollars in tables in millions)

We continue to manage our businesses to maximize operating cash flows as the primary source of liquidity. Each of our businesses is focused on increasing operating cash flows through revenue growth, margin expansion, and improved working capital turnover. Additional sources of liquidity include committed credit lines, short-term debt from the commercial paper market, long-term borrowings, access to the public debt and equity markets, U.S. cash balances, and the ability to access non-U.S. cash balances.

CASH

We monitor the third-party depository institutions that hold our cash and cash equivalents on a daily basis. Our emphasis is primarily safety of principal and secondarily maximizing yield of those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities. As of March 31, 2022, and December 31, 2021, we held $9.8 billion and $11.5 billion, respectively, of cash and cash equivalents, including our short-term investments.

BORROWINGS

Consolidated total borrowings were $19.4 billion and $19.6 billion as of March 31, 2022, and December 31, 2021.

			March 31, 2022						December 31, 2021
Commercial paper and other short-term borrowings						$	3,526					$	3,542
Variable rate notes						622						622
Fixed rate notes						15,231						15,314
Other						197						332
Debt issuance costs						(207)						(211)
Total borrowings						$	19,369					$	19,599

A source of liquidity is our ability to access the commercial paper market. Commercial paper notes are sold at a discount or premium and have a maturity of not more than 365 days from date of issuance. Borrowings under the commercial paper program are available for general corporate purposes as well as for financing acquisitions.

We also have the following revolving credit agreements:

• A $1.5 billion 364-Day Credit Agreement (the 364-Day Credit Agreement) with a syndicate of banks, dated March 24, 2022. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 23, 2023, unless (i) we elect to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on March 23, 2024, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 364-Day Credit Agreement replaced the previously reported $1.5 billion 364-day credit agreement dated as of March 31, 2021, which was terminated in accordance with its terms effective March 24, 2022. As of March 31, 2022, there were no outstanding borrowings under our 364-Day Credit Agreement.

• A $4.0 billion Five Year Credit Agreement (the 5-Year Credit Agreement) with a syndicate of banks, dated March 24, 2022. Commitments under the 5-Year Credit Agreement can be increased pursuant to the terms of the 5-Year Credit Agreement to an aggregate amount not to exceed $4.5 billion. The 5-Year Credit Agreement amended and restated the previously reported $4.0 billion amended and restated five year credit agreement dated as of March 31, 2021. As of March 31, 2022, there were no outstanding borrowings under our 5-Year Credit Agreement.

We also have a current shelf registration statement filed with the SEC under which we may issue additional debt securities, common stock, and preferred stock that may be offered in one or more offerings on terms to be determined at the time of the offering. We anticipate that net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, share repurchases, capital expenditures and acquisitions.

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CREDIT RATINGS

Our ability to access the global debt capital markets and the related cost of these borrowings is affected by the strength of our credit rating and market conditions. Our credit ratings are periodically reviewed by the major independent debt-rating agencies. As of March 31, 2022, S&P Global Inc. (S&P), Fitch Ratings Inc. (Fitch), and Moody’s Investor Service (Moody's) have ratings on our debt set forth in the table below:

			S&P						Fitch						Moody's
Outlook			Stable						Stable						Stable
Short-term			A-1						F1						P1
Long-term			A						A						A2

CASH FLOW SUMMARY

Our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows, are summarized as follows:

			Three Months Ended March 31,
			2022						2021						Variance
Cash and cash equivalents at beginning of period						$	10,959					$	14,275					$	(3,316)
Operating activities
Net income attributable to Honeywell						1,134						1,427						(293)
Noncash adjustments						537						239						298
Changes in working capital						(815)						42						(857)
Other operating activities						(820)						(730)						(90)
Net cash provided by operating activities						36						978						(942)
Net cash provided by (used for) investing activities						(10)						(1,304)						1,294
Net cash used for financing activities						(1,719)						(2,217)						498
Effect of exchange rate changes on cash						15						(14)						29
Net increase (decrease) in cash and cash equivalents						(1,678)						(2,557)						879
Cash and cash equivalents at end of period						$	9,281					$	11,718					$	(2,437)

Cash provided by operating activities decreased due to an unfavorable impact to working capital and a decrease in net income, partially offset by an increase in noncash adjustments, primarily driven by an increase in repositioning and other charges.

Cash used for investing activities decreased by $1,294 million primarily due to a $1,127 million decrease in cash paid for acquisitions, $205 million net increase in investments, and $197 million cash receipts from Garrett Motion Inc. (Garrett), partially offset by $190 million in proceeds from the 2021 sale of the retail footwear business.

Cash used for financing activities decreased by $498 million primarily due to $777 million decrease of proceeds from the issuance of long-term debt, partially offset by $196 million increase in repurchases of common stock and $44 million decrease in proceeds from the issuance of common stock.

CASH REQUIREMENTS AND ASSESSMENT OF CURRENT LIQUIDITY

In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures, share repurchases, dividends, strategic acquisitions and debt repayments. On February 12, 2021, the Board of Directors authorized the repurchase of up to a total of $10 billion of Honeywell common stock, which included amounts remaining under, and replaced, the previously approved share repurchase program. During the three months ended March 31, 2022, the Company repurchased common stock of $1,018 million. Refer to the section titled Liquidity and Capital Resources of our 2021 Form 10-K for a discussion of our expected capital expenditures, share repurchases, and dividends for 2022.

We continue to identify opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers and sales of our trade receivables to unaffiliated financial institutions without recourse. The impact of these programs is not material to our overall liquidity.

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We continue to assess the relative strength of each business in our portfolio as to strategic fit, market position, profit, and cash flow contribution in order to identify target investment and acquisition opportunities in order to upgrade our combined portfolio. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also identify businesses that do not fit into our long-term strategic plan based on their market position, relative profitability, or growth potential. These businesses are considered for potential divestiture, restructuring, or other repositioning actions, subject to regulatory constraints.

Based on past performance and current expectations, we believe that our operating cash flows will be sufficient to meet our future operating cash needs. Our available cash, committed credit lines and access to the public debt and equity markets provide additional sources of short-term and long-term liquidity to fund current operations, debt maturities, and future investment opportunities.

See Note 8 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional discussion of items impacting our liquidity.

OTHER MATTERS

LITIGATION

We are subject to a number of lawsuits, investigations, and claims (some of which involve substantial amounts) arising out of the conduct of our business. See Note 14 Commitments and Contingencies of Notes to Consolidated Financial Statements for further discussion of environmental, asbestos and other litigation matters.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to our Critical Accounting Estimates presented in our 2021 Annual Report on Form 10-K. For a discussion of the Company’s Critical Accounting Estimates, see the section titled Critical Accounting Estimates in our 2021 Annual Report on Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements.

For a discussion of the Company’s quantitative and qualitative disclosures about market risks, see the section titled Quantitative and Qualitative Disclosures About Market Risks in our 2021 Annual Report on Form 10-K. As of March 31, 2022, there has been no material change in this information.

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Honeywell management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure information required to be disclosed in the reports that Honeywell files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer, our Chief Financial Officer, and our Controller, as appropriate, to allow timely decisions regarding required disclosure. There were no changes that materially affected, or are reasonably likely to materially affect, Honeywell’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q.

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PART II. OTHER INFORMATION

We are subject to a number of lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. See Note 14 Commitments and Contingencies of Notes to Consolidated Financial Statements for a discussion of environmental, asbestos and other litigation matters.

There were no matters requiring disclosure pursuant to the requirement to disclose certain environmental matters involving potential monetary sanctions in excess of $300,000.

Other than as noted below, there have been no material changes to our Risk Factors presented in our 2021 Annual Report on Form 10-K under the section titled Risk Factors. For further discussion of our Risk Factors, refer to the section titled Risk Factors in our 2021 Annual Report on Form 10-K.

A significant percentage of our sales and operations is in non-U.S. jurisdictions and is subject to the economic, political, regulatory, foreign exchange, and other risks of international operations.

Our international operations, including U.S. exports, represent more than half of the Company’s sales. Risks related to international operations include exchange control regulations, wage and price controls, antitrust regulations, employment regulations, foreign investment laws, import, export and other trade restrictions (such as sanctions and embargoes), differing levels of protection of intellectual property, acts of industrial espionage, violations by our employees of anti-corruption laws (despite our efforts to mitigate such risk), changes in regulations regarding transactions with state-owned enterprises, nationalization of private enterprises, acts of terrorism, acts of war, civil strife, and our ability to hire and maintain qualified staff and maintain the safety of our employees in these regions. Instability and uncertainties arising from the global geopolitical environment and the evolving international and domestic political, regulatory, and economic landscape, including the potential for changes in global trade policies, including sanctions and trade barriers, and trends such as populism, economic nationalism and negative sentiment toward multinational companies, as well as the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying product, marketing, pricing or other strategies for growing our businesses, as well as our ability to improve productivity and maintain acceptable operating margins.

Existing free trade laws and regulations provide certain beneficial duties and tariffs for qualifying imports and exports. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products or from where we import products or raw materials, either directly or through our suppliers, could have an impact on our competitive position and financial results.

The U.S. continues to implement certain trade actions, including imposing tariffs on certain goods imported from China and other countries, which has resulted in retaliatory tariffs by China and other countries. Additional tariffs, export controls and sanctions laws imposed by the U.S. on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could increase the cost of our products.

In response to the conflict between Russia and Ukraine, the U.S. and other countries imposed actions including sanctions, export and import controls, and trade restrictions with respect to Russian and Belarusian governments, government-related entities, and other entities and individuals. Further, the Russian government implemented retaliatory actions against the U.S. and other nation members of the North Atlantic Treaty Organization (NATO). Based on available information to date, the Company's estimate of potential future impairments on our businesses in Russia would not be material with respect to the Company's consolidated financial position. As the conflict continues to evolve, existing conditions may worsen, or other impacts, including impacts that are unknown at this time, may arise that could have a material adverse effect on our consolidated financial position, including escalation of the conflict in other regions of Europe, where there is a material portion of our business, and increased tensions between Russia and the U.S. and other NATO members. These impacts may result in increased costs and additional suspensions or exit from certain operations and may adversely affect our ability to meet contractual and financial obligations, results of operations, and financial condition.

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To the extent the current conflict between Russia and Ukraine escalates, it may also negatively impact other risks disclosed in our 2021 Form 10-K and further impact our financial results. Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and consumer spending; cybersecurity incidents and other disruptions to our information technology infrastructure or that of our customers and suppliers, including disruptions at our cloud computing, server, systems and other third party IT service providers; adverse changes in international trade policies and relations; our ability to implement and execute our business strategy, particularly in Eastern Europe and surrounding regions; disruptions in global supply chains; terrorist activities targeting U.S. government contractors and/or critical infrastructure; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets.

Operating outside of the U.S. also exposes us to foreign exchange risk, which we monitor and seek to reduce through hedging activities. However, foreign exchange hedging activities bear a financial cost and may not always be available to us or be successful in eliminating such volatility. Finally, we generate significant amounts of cash outside of the U.S. that is invested with financial and non-financial counterparties. While we employ comprehensive controls regarding global cash management to guard against cash or investment loss and to ensure our ability to fund our operations and commitments, a material disruption to the counterparties with whom we transact business could expose Honeywell to financial loss.

Operating outside the U.S. also exposes us to additional intellectual property risk. The laws and enforcement practices of certain jurisdictions in which we operate may not protect our intellectual property rights to the same extent as in the U.S. and may impose joint venture, technology transfer, local service or other foreign investment requirements, and restrictions that potentially compromise control over our technology and proprietary information. Failure of foreign jurisdictions to protect our intellectual property rights, an inability to effectively enforce such rights in foreign jurisdictions, or the imposition of foreign jurisdiction investment or sourcing restrictions or requirements could result in loss of valuable proprietary information and could impact our competitive position and financial results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 12, 2021, the Board of Directors authorized the repurchase of up to a total of $10 billion of Honeywell common stock, which included amounts remaining under, and replaced, the previously approved share repurchase program.

Repurchases may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, 10b5-1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. Honeywell presently expects to repurchase outstanding shares from time to time (i) to offset the dilutive impact of employee stock-based compensation plans, including option exercises, restricted unit vesting and matching contributions under our savings plans, and (ii) to reduce share count via share repurchases as and when attractive opportunities arise. The amount and timing of future repurchases may vary depending on market conditions and the level of operating, financing and other investing activities.

During the quarter ended March 31, 2022, Honeywell purchased 5,510,850 shares of its common stock, par value $1 per share. As of March 31, 2022, $6.1 billion remained available for additional share repurchases. The following table summarizes Honeywell’s purchase of its common stock for the quarter ended March 31, 2022:

Issuer Purchases of Equity Securities
Period			Total Number of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs (Dollars in millions)
January 1-31, 2022						—						$	—					—						$	7,106
February 1-28, 2022						600,000						$	182.29					600,000						$	6,996
March 1-31, 2022						4,910,850						$	185.06					4,910,850						$	6,087

ITEM 4. MINE SAFETY DISCLOSURES

One of our wholly-owned subsidiaries has a placer claim for and operates a chabazite ore surface mine in Arizona. Information concerning mine safety and other regulatory matters associated with this mine is required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K and is included in Exhibit 95 to this quarterly report.

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Exhibit No.						Description
10.1						364-Day Credit Agreement, dated as of March 24, 2022, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of America, N.A., as administrative agent, and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as syndication agent (incorporated by reference to Honeywell's Form 8-K filed March 28, 2022)
10.2						Amended and Restated Five-Year Credit Agreement, dated as of March 24, 2022, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of America, N.A., as administrative agent and as swing line agent and JPMorgan Chase Bank, N.A., and Wells Fargo Bank, National Association, as syndication agents (incorporated by reference to Honeywell's Form 8-K filed March 28, 2022).
10.3*						Amendment to the 2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Restricted Unit Agreement (filed herewith)
10.4*						Amendment to the 2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Restricted Unit Agreement, Form 2 (filed herewith)
10.5*						Amendment to the 2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Stock Option Award Agreement (filed herewith)
10.6*						Amendment to the 2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates–Form of Performance Plan Grant Agreement (filed herewith)
31.1						Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2						Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
95						Mine Safety Disclosures (filed herewith)
101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

The Exhibits identified with an asterisk (*) are management contracts or compensatory plans or arrangements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			HONEYWELL INTERNATIONAL INC.
Date: April 29, 2022			By:			/s/ Robert D. Mailloux
						Robert D. Mailloux Vice President and Controller (on behalf of the Registrant and as the Registrant’s Principal Accounting Officer)

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