Honeywell International 10-Q 2024-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

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)

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

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.

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 provided 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 649,671,200 shares of Common Stock outstanding at June 30, 2024.

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The following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries (Honeywell, we, us, our, or the Company) for the three and six months ended June 30, 2024. The financial information as of June 30, 2024, should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2023, contained in our 2023 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 six months ended June 30, 2024. Certain prior year amounts are reclassified to conform to the current year presentation.

BUSINESS UPDATE

MACROECONOMIC CONDITIONS

We continue to monitor the impacts of ongoing macroeconomic conditions and geopolitical events. Global conflicts continue to create volatility in global financial and energy markets and contribute to supply chain shortages adding to the inflationary pressures in the global economy. We continue to actively collaborate with our suppliers to minimize impacts of supply shortages on our manufacturing capabilities.

In the second quarter of 2024, market concerns over supply constraints due to sanctions and tariffs, along with previously low commodity prices, led to a temporary surge in the price of metals. This bullish trend on commodity pricing is easing, but we anticipate a general inflationary trend for commodities above the levels seen in the first quarter of 2024 for the foreseeable future. Slowing global growth relieved pressure on logistics freight and service capacity.

Our mitigation strategies include pricing actions and hedging strategies, longer term planning for constrained materials, new supplier development, material supply tracking tools, and direct engagement with key suppliers to meet customer demand. Our relationships with primary and secondary suppliers allow us to reliably source key components and raw materials, which include considering altering existing products, developing new products, and committing our own resources to assist certain suppliers. We believe these mitigation strategies enable us to reduce supply risk, accelerate new product innovation, and expand our penetration in the markets we serve. Additionally, due to the strenuous quality controls and product qualification we perform on a new or altered product, we do not expect these mitigation strategies to impact product quality or reliability.

To date, our strategies have successfully mitigated our exposure to these conditions. However, if we are not successful in sustaining or executing these strategies, these macroeconomic conditions could have a material adverse effect on our consolidated results of operations or operating cash flows.

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RESULTS OF OPERATIONS

Consolidated Financial Results

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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:

A discussion of Net sales by reportable business segment can be found in the Review of Business Segments section of this Management's Discussion and Analysis.

Q2 2024 compared with Q2 2023

Net sales increased due to the following:

• Higher sales volumes,

• Increased pricing and price adjustments to offset inflation, and

• Incremental sales from recent acquisitions.

YTD 2024 compared with YTD 2023

Net sales increased due to the following:

• Increased pricing and price adjustments to offset inflation, and

• Incremental sales from recent acquisitions.

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Cost of Products and Services Sold

Q2 2024 compared with Q2 2023

Cost of products and services sold increased due to higher direct and indirect material costs and higher labor costs.

YTD 2024 compared with YTD 2023

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

• Higher direct and indirect material costs and higher labor costs of approximately $0.3 billion or 3%,

• Partially offset by higher productivity of approximately $0.1 billion or 1%.

Gross Margin

Q2 2024 compared with Q2 2023

Gross margin increased by approximately $0.2 billion and gross margin percentage increased 40 basis points to 38.9% compared to 38.5% for the same period of 2023.

YTD 2024 compared with YTD 2023

Gross margin increased by approximately $0.4 billion and gross margin percentage increased 60 basis points to 38.8% compared to 38.2% for the same period of 2023.

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Research and Development Expenses

Q2 2024 compared with Q2 2023

Research and development expenses were largely unchanged.

YTD 2024 compared with YTD 2023

Research and development expenses were largely unchanged.

Selling, General and Administrative Expenses

Q2 2024 compared with Q2 2023

Selling, general and administrative expenses increased due to higher labor costs.

YTD 2024 compared to YTD 2023

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

• Higher labor costs of approximately $0.2 billion or 8%,

• Partially offset by higher productivity of approximately $0.1 billion or 4%.

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Other (Income) Expense

Q2 2024 compared with Q2 2023

Other income increased due primarily to higher interest income.

YTD 2024 compared to YTD 2023

Other income increased due primarily to higher interest income.

Tax Expense

Q2 2024 compared with Q2 2023

The effective tax rate decreased 20 basis-points primarily driven by increased benefits from taxes on non-U.S. earnings.

YTD 2024 compared with YTD 2023

The effective tax rate remained unchanged primarily driven by increased benefits from taxes on non-U.S. earnings, offset by incremental tax expense from tax reserve activity.

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Net Income Attributable to Honeywell

Q2 2024 compared to Q2 2023

Earnings per share of common stock–assuming dilution increased due to the following:

• Higher segment profit ($0.10 after tax),

• Lower repositioning and other charges ($0.07 after tax), and

• Lower share count ($0.06 after tax),

• Partially offset by higher interest expense (loss of $0.07 after tax).

YTD 2024 compared with YTD 2023

Earnings per share of common stock–assuming dilution increased due to the following:

• Higher segment profit ($0.19 after tax),

• Lower repositioning and other charges ($0.12 after tax), and

• Lower share count ($0.11 after tax),

• Partially offset by higher interest expense (loss of $0.13 after tax).

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REVIEW OF BUSINESS SEGMENTS

During the first quarter of 2024, the Company realigned certain of its business units as reflected in Note 18 Segment Financial Data, which impacts the composition of its reportable segments. The Company recast historical periods to reflect this change in segment presentation. See Note 18 Segment Financial Data to Notes to Consolidated Financial Statements for further discussion.

We globally manage our business operations through four reportable business segments: Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions.

AEROSPACE TECHNOLOGIES

Net Sales

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Q2 2024 compared to Q2 2023

Sales increased $550 million due to higher organic sales of $267 million in Commercial Aviation Aftermarket driven by higher sales volumes in air transport due to an increase in flight hours and higher organic sales of $225 million in Defense and Space driven by higher sales volumes due to increased shipments.

Segment profit increased $130 million and segment margin percentage decreased 60 basis points to 27.2% compared to 27.8% for the same period of 2023.

YTD 2024 compared to YTD 2023

Sales increased $1,108 million due to higher organic sales of $504 million in Commercial Aviation Aftermarket driven by higher sales volumes in air transport due to an increase in flight hours and higher organic sales of $412 million in Defense and Space driven by higher sales volumes due to increased shipments.

Segment profit increased $334 million and segment margin percentage increased 40 basis points to 27.7% compared to 27.3% for the same period of 2023.

INDUSTRIAL AUTOMATION

Net Sales

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Q2 2024 compared to Q2 2023

Sales decreased $221 million due to lower organic sales of $165 million in Warehouse and Workflow Solutions driven by lower demand for projects and lower organic sales of $49 million in Sensing and Safety Technologies driven by lower demand for personal protective equipment.

Segment profit decreased $67 million and segment margin percentage decreased 90 basis points to 19.0% compared to 19.9% for the same period in 2023.

YTD 2024 compared to YTD 2023

Sales decreased $546 million due to lower organic sales of $419 million in Warehouse and Workflow Solutions driven by lower demand for projects and lower organic sales of $89 million in Sensing and Safety Technologies driven by lower demand for sensing products.

Segment profit decreased $179 million and segment margin percentage decreased 130 basis points to 19.1% compared to 20.4% for the same period in 2023.

During the second quarter of 2022, our Productivity Solutions and Services business entered into a license and settlement agreement (the Agreement). Under the Agreement, we received $360 million, paid in equal quarterly installments over eight quarters, beginning with the second quarter of 2022 and ending with the first quarter of 2024. The Agreement provides each party a license to its existing patent portfolio for use by the other party’s existing products and resolved the patent-related litigation between the parties.

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BUILDING AUTOMATION

Net Sales

Q2 2024 compared to Q2 2023

Sales increased $61 million due to higher organic sales of $82 million in Building Solutions driven by higher demand for building projects and services, partially offset by lower organic sales of $63 million in Products driven by lower demand. Additionally, the acquisition of Access Solutions contributed $62 million to sales in the three months ended June 30, 2024.

Segment profit increased $6 million and segment margin percentage decreased 60 basis points to 25.3% compared to 25.9% for the same period of 2023.

YTD 2024 compared to YTD 2023

Sales were flat due to higher organic sales of $120 million in Building Solutions driven by higher demand for building projects and services, partially offset by lower organic sales of $152 million in Products driven by lower demand. Additionally, the acquisition of Access Solutions contributed $62 million to sales in the six months ended June 30, 2024.

Segment profit decreased $25 million and segment margin percentage decreased 90 basis points to 24.9% compared to 25.8% for the same period of 2023.

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ENERGY AND SUSTAINABILITY SOLUTIONS

Net Sales

Q2 2024 compared to Q2 2023

Sales increased $37 million due to higher organic sales of $72 million in Advanced Materials driven by higher demand for fluorine products, partially offset by lower organic sales of $22 million in UOP driven by lower gas processing project demand and by the unfavorable impact of foreign currency translation of $13 million.

Segment profit increased $42 million and segment margin percentage increased 200 basis points to 25.2% compared to 23.2% for the same period of 2023.

YTD 2024 compared to YTD 2023

Sales increased $101 million due to higher organic sales of $127 million in Advanced Materials driven by higher demand for fluorine products, partially offset by the unfavorable impact of foreign currency translation of $18 million.

Segment profit increased $43 million and segment margin percentage increased 60 basis points to 22.6% compared to 22.0% for the same period of 2023.

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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 a separate reportable business segment as segment reporting criteria is not met. 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 six months ended June 30, 2024, and 2023. Cash spending related to our repositioning actions was $109 million in the six months ended June 30, 2024, and was funded through operating cash flows.

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LIQUIDITY AND CAPITAL RESOURCES

(Dollars in tables in millions)

We 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 U.S. cash balances, and the ability to access non-U.S. cash balances, short-term debt from the commercial paper market, long-term borrowings, committed credit lines, and access to the public debt and equity markets.

CASH

As of June 30, 2024, and December 31, 2023, we held $9.8 billion and $8.1 billion, respectively, of cash and cash equivalents, including our short-term investments. 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 counterparty.

As of June 30, 2024, $6.1 billion of the Company’s cash, cash equivalents, and short-term investments were held by non-U.S. subsidiaries. We do not have material amounts related to any jurisdiction subject to currency control restrictions that impact our ability to access and repatriate such amounts. Under current laws, we do not expect taxes on repatriation or restrictions on amounts held outside of the U.S. to have a material effect on our overall liquidity.

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:

Six months ended June 30, 2024

Net cash provided by operating activities was $1,819 million, driven by $3,007 million of Net income attributable to Honeywell, adjusted for $600 million of depreciation and amortization, partially offset by $583 million of other operating activities, driven by higher tax payments, $471 million decrease in Accrued liabilities, driven by a decrease in accrued employee compensation and benefits costs, $423 million decrease in Accounts payable, due to increased disbursements, and $295 million of pension and other postretirement income.

Net cash used for investing activities was $5,405 million, driven by $4,913 million of cash paid for acquisitions and $492 million of capital expenditures.

Net cash provided by financing activities was $5,298 million, driven by $5,710 million of proceeds from issuance of long-term debt primarily to fund the Access Solutions acquisition and $2,504 million of net proceeds from issuance of commercial paper, partially offset by $1,446 million of cash dividends paid and $1,200 million of repurchases of common stock.

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Six months ended June 30, 2024 compared with six months ended June 30, 2023

Net cash provided by operating activities increased by $1,243 million due to the $1,325 million payment made by the Company pursuant to the NARCO Amended Buyout Agreement in 2023, partially offset by $328 million decrease of noncash adjustments, driven by $232 million decline in deferred income taxes and $106 million decline in repositioning and other charges.

Net cash used for investing activities increased by $4,696 million due to a $4,252 million increase in cash paid for acquisitions and $479 million net increase in investments.

Net cash provided by financing activities increased by $6,161 million due to a $2,744 million increase in proceeds from issuance of long-term debt, $2,434 million increase in net proceeds of commercial paper, and $779 million decrease in payments of long-term debt.

CASH REQUIREMENTS AND ASSESSMENT OF CURRENT LIQUIDITY

In addition to our normal operating cash requirements, we expect our principal future cash requirements will be to fund capital expenditures, share repurchases, dividends, strategic acquisitions, and debt repayments. On April 24, 2023, the Board of Directors authorized the repurchase of up to $10 billion of Honeywell common stock, including approximately $2.1 billion of remaining availability under the previously announced $10 billion share repurchase authorization. During the six months ended June 30, 2024, we repurchased common stock of $1.2 billion. Refer to the section titled Liquidity and Capital Resources of our 2023 Form 10-K for a discussion of our expected capital expenditures, share repurchases, mergers and acquisitions activity, and dividends for 2024.

We continually seek opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers and transfer of our trade receivables to unaffiliated financial institutions on a true sale basis. The impact of these programs is not material to our overall liquidity.

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. In the second quarter of 2024, we acquired Access Solutions for total consideration of $4.9 billion, net of cash acquired, as well as announced our intention to acquire CAES Systems Holdings LLC for approximately $1.9 billion and Air Products' liquefied natural gas process technology and equipment business for approximately $1.8 billion. 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. See Note 3 Acquisitions and Divestitures of Notes to Consolidated Financial Statements for additional discussion

In early 2023, we made payments of approximately $1.5 billion in connection with the NARCO Buyout and UOP Matters. Pursuant to the NARCO Amended Buyout Agreement, we received proceeds of $275 million from the HWI Sale during the year ended December 31, 2023. During the three and six months ended June 30, 2024, we received $3 million of proceeds from the HWI Sale and may receive additional consideration in future periods if certain conditions under the definitive sale agreement for the HWI Sale are met. These payments and receipts have not materially impacted our liquidity position. See Note 12 Fair Value Measurements of Notes to Consolidated Financial Statements for additional discussion related to the fair value of future proceeds from the HWI Sale.

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. During the first quarter of 2024, our net cash provided by financing activities included proceeds of $5.7 billion from the issuance of long-term debt primarily to fund the Access Solutions acquisition.

See Note 9 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional discussion of items impacting our liquidity.

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BORROWINGS

We leverage a variety of debt instruments to manage our overall borrowing costs. As of June 30, 2024, and December 31, 2023, our total borrowings were $27.9 billion and $20.4 billion, respectively.

A primary source of liquidity is our ability to access the corporate bond markets. Through these markets, we issue a variety of long-term fixed rate notes, in a variety of currencies, to manage our overall funding costs.

Another primary 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 365 days or less 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 as of March 18, 2024. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 17, 2025, 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 17, 2026, 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 20, 2023, which was terminated in accordance with its terms effective March 18, 2024. As of June 30, 2024, 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 as of March 18, 2024. 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 20, 2023. As of June 30, 2024, there were no outstanding borrowings under our 5-Year Credit Agreement.

• A $1.5 billion second 364-day credit agreement (the Second 364-Day Credit Agreement) with a syndicate of banks, dated as of July 2, 2024. Amounts borrowed under the Second 364-Day Credit Agreement are required to be repaid no later than July 1, 2025, unless (i) we elect to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on July 1, 2026, or (ii) the Second 364-Day Credit Agreement is terminated earlier pursuant to its terms. As of July 25, 2024, there were no outstanding borrowings under our Second 364-Day Credit Agreement.

See Note 9 Long-Term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional information regarding our debt instruments.

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.

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 June 30, 2024, 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:

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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 15 Commitments and Contingencies of Notes to Consolidated Financial Statements for further discussion of environmental, asbestos, and other litigation matters.

CRITICAL ACCOUNTING ESTIMATES

Other than as noted below, there have been no material changes to our Critical Accounting Estimates presented in our 2023 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 2023 Annual Report on Form 10-K.

Goodwill and Indefinite-Lived Intangible Assets Impairment Testing—The Company’s business combinations typically result in the recognition of goodwill and intangible assets. The Company generally engages an independent third-party valuation specialist for assistance in the allocation of the purchase price and determination of the fair value of goodwill and intangible assets, which involves the use of accounting estimates and assumptions based on information available at or near the acquisition date. The Company believes the accounting estimates and assumptions are reasonable based on information available at the date of acquisition through historical experience and information obtained from management of the acquired entity; however, there is inherent uncertainty in the accounting estimates as assumptions are forward looking and could be affected by future economic and market conditions.

Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual, or more frequent if necessary, impairment testing. In testing goodwill and indefinite-lived intangible assets, the fair value is estimated utilizing a discounted cash flow approach, including strategic and annual operating plans, adjusted for terminal value assumptions. These impairment tests involve the use of accounting estimates and assumptions, and changes to those assumptions could materially impact our financial condition or operating performance if actual results differ from such accounting estimates and assumptions. To address this uncertainty, we perform sensitivity analyses on key accounting estimates and assumptions. Once the fair value is determined, if the carrying amount exceeds the fair value, it is impaired. Any impairment is measured as the difference between the carrying amount and its fair value.

Definite-Lived Intangible Assets—The Company’s business combinations typically result in the recognition of customer relationships, patents, and trademarks, in addition to other definite-lived intangible assets. The determination of fair value for definite-lived intangible assets, useful lives (for depreciation / amortization purposes) and whether or not intangible assets are impaired involves the use of accounting estimates and assumptions. The assumptions used in developing the accounting estimates may include business growth rates, sales volume, selling prices and costs, cash flows, and the discount rate selected and changes to those assumptions could materially impact our financial condition or operating performance if actual results differ from such estimates and assumptions.

We evaluate the recoverability of the carrying amount of our definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset group may not be fully recoverable. The principal factors in considering when to perform an impairment review are as follows:

• Significant under-performance (i.e., declines in sales, earnings, or cash flows) of a business or product line in relation to expectations;

• Annual operating plans or strategic plan outlook that indicates an unfavorable trend in operating performance of a business or product line;

• Significant negative industry or economic trends; or

• Significant changes or planned changes in our use of the assets.

Once it is determined that an impairment review is necessary, recoverability of assets is measured by comparing the carrying amount of the asset grouping to the estimated future undiscounted cash flows. If the carrying amount exceeds the estimated future undiscounted cash flows, the asset grouping is considered to be impaired. The impairment is then measured as the difference between the carrying amount of the asset grouping and its fair value.

The fair value estimates are subject to changes in the economic environment, including market interest rates and expected volatility. Management believes the estimates of future cash flows and fair values are reasonable; however, changes in estimates due to variances from assumptions could materially affect the valuations.

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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 2023 Annual Report on Form 10-K. As of June 30, 2024, there has been no material change in this information.

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 SEC'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 a discussion of environmental, asbestos, and other litigation matters in Note 15 Commitments and Contingencies of Notes to Consolidated Financial Statements.

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

There have been no material changes to our Risk Factors presented in our 2023 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 2023 Annual Report on Form 10-K.

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

On April 24, 2023, the Board of Directors authorized the repurchase of up to $10 billion of Honeywell common stock, including approximately $2.1 billion of remaining availability under the previously announced $10 billion share repurchase authorization. The repurchase authorization does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

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 three months ended June 30, 2024, Honeywell purchased 2,707,020 shares of its common stock, par value $1 per share. As of June 30, 2024, $5.9 billion remained available for additional share repurchases. The following table summarizes our purchases of Honeywell's common stock for the three months ended June 30, 2024:

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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.

On April 14, 2024, the Company entered into an amendment (Original Amendment) to the indemnification and reimbursement agreement with Resideo, which is incorporated by reference in Exhibit 10.1. On June 14, 2024, the Company amended and restated the Original Amendment, which is filed herewith as Exhibit 10.2. The amendment provides that certain covenants set forth in Exhibit G of the indemnification and reimbursement agreement will be modified to substantially conform the covenants with those contained in Resideo's credit agreement (as and when such covenants in the credit agreement are amended in connection with the acquisition and financing transactions that Resideo announced on April 15, 2024).

EQUITY TRADING ARRANGEMENTS ELECTIONS

Certain executive officers and directors of the Company may execute purchases and sales of the Company's common stock through Rule 10b5-1 and non-Rule 10b5-1 equity trading arrangements.

During the three months ended June 30, 2024, none of our executive officers or directors adopted, terminated, or modified a "Rule 10b5-1 trading arrangement," or adopted, terminated, or modified any "non-Rule 10b5-1 trading arrangement" (each as defined in Item 408 of Regulation S-K).

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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.

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