Barclays Capital
Industrial Select Conference

         Dave Anderson
     Senior Vice President and CFO



           Feb...
Forward Looking Statements
    This report contains “forward-looking statements” within the meaning of Section
    21E of ...
Honeywell Overview
                         Segments                                             Geographic Mix
          ...
2008 Highlights
                                    • $40B+ Aerospace Programs
                                    • $0.4B...
Fourth Quarter 2008 Results

                                                                4Q07                  4Q08
  ...
Full Year 2008 Results

                                                                FY07                  FY08
     (M...
2009 Planning
                            • US GDP (3)% to (2)%
        Developed Markets   • EU GDP (2)% to (1)%
        ...
Key Market Assumptions
                                                     HON          2009                        2009
...
2009 Financial Guidance Update
                                    Consolidated                          2009             ...
Restructuring Benefits
        $M              Restructuring Charges (’06-’08)

      $600              Projected Benefits...
2009 Productivity Actions
                          Functional Transformation
        ~$0.8B Savings
                     ...
1Q09 Preview
                        Sales       Comments
     ($B)

                                    • Acq. / Div. -4%...
Honeywell Playbook - Sales

      • Delivery & Quality             HOS Toolkit


      • Pricing                        Ad...
Honeywell Playbook – Segment Profit

      • FT / ERP                           Project Execution


      • HOS Deployment...
Summary


      • Strong 2008 Finish in Tough Environment


      • Anticipating Challenging 1H 2009


      • Comparisons...
Appendix
     Reconciliation of non-GAAP Measures
              to GAAP Measures




                                   Ba...
Reconciliation of Segment Profit to Operating Income and
     Calculation of Segment Profit and Operating Income Margin

 ...
Reconciliation of Free Cash Flow to Cash Provided by Operating
     Activities and Calculation of Cash Flow Conversion

  ...
Reconciliation of Segment Profit to Operating Income and
     Calculation of Segment Profit and Operating Income Margin

 ...
Reconciliation of Segment Profit to Operating Income and
     Calculation of Segment Profit and Operating Income Margin

 ...
Reconciliation of Free Cash Flow to Cash Provided by Operating
     Activities and Calculation of Cash Flow Conversion

  ...
Barclays Capital Industrial Select Conference
22
                                  February 9, 2009
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Honeywell Barclays Capital Industrial Select Conference Presentation

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Honeywell Barclays Capital Industrial Select Conference Presentation

  1. 1. Barclays Capital Industrial Select Conference Dave Anderson Senior Vice President and CFO February 9, 2009
  2. 2. Forward Looking Statements This report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the Securities and Exchange Commission. Barclays Capital Industrial Select Conference 2 February 9, 2009
  3. 3. Honeywell Overview Segments Geographic Mix Specialty ROW 14% Aerospace 22% 35% Transportation US 13% 48% Europe 30% ACS 38% Financials Key Initiatives Sales ($B) Segment Profit ($B) FCF Conversion % 129% • Velocity Product Development™ 119% 110% • Honeywell Operating System • Functional Transformation $36.6 $34.6 $31.4 $4.8 $4.7 • Acquisition and Divestiture Process $4.1 2006 2007 2008 The New Honeywell Barclays Capital Industrial Select Conference 3 February 9, 2009
  4. 4. 2008 Highlights • $40B+ Aerospace Programs • $0.4B+ Building Efficiency Projects Multi-Year Contract Wins • $4B+ Turbo Platforms • HTF 7500 Engine Attractive New Products • Wireless Sensing Technology • UOP Heavy Oil Hydrocracking • Norcross, Metrologic Acquisitions Portfolio Management • Consumable Solutions Divestiture • $1.2B Acquisitions / Divestitures, Net • $1.4B Share Repurchases Effective Capital Deployment • $0.8B Dividends • $0.4B Actions ($0.7B ‘06-’08) Proactive Repositioning • Funded Through Operations / Gains • 70% Sites HOS Initiated Key Initiative Execution • ERP Progress / FT Savings • VPDTM Contributions Increasing Building Long-Term Value Barclays Capital Industrial Select Conference 4 February 9, 2009
  5. 5. Fourth Quarter 2008 Results 4Q07 4Q08 (M) • 6% Decline Sales $9,275 $8,712 (4)% Organic 2% Acq. / Div. (4)% F/X Segment Profit $1,274 $1,160 • 9% Decline ACS + 110 bps Margin % 13.7% 13.3% TS (1030) bps Net Income $689 $707 • 3% Growth Repo. Offsets Taxes EPS $0.91 $0.97 • 7% Growth Lower Sharecount Free Cash Flow* $1,130 $1,093 • 155% Conversion Good Performance In Tough Environment *Excluding cash taxes relating to the sale of the Consumable Solutions business Barclays Capital Industrial Select Conference 5 February 9, 2009
  6. 6. Full Year 2008 Results FY07 FY08 (M) • 6% Growth Sales $34,589 $36,556 2% Organic 3% Acq. / Div. 1% F/X Segment Profit $4,654 $4,845 • 4% Growth Margin Expansion Margin % 13.5% 13.3% 3 of 4 Segments Net Income $2,444 $2,792 • 14% Growth Including $424M Repo. EPS $3.16 $3.76 • 19% Growth Lower Sharecount Free Cash Flow* $3,144 $3,073 • 110% Conversion Another Great Year *Excluding cash taxes relating to the sale of the Consumable Solutions business Barclays Capital Industrial Select Conference 6 February 9, 2009
  7. 7. 2009 Planning • US GDP (3)% to (2)% Developed Markets • EU GDP (2)% to (1)% Global GDP (1)% to 0% • China GDP 5 to 6% Emerging Markets • India GDP 4 to 5% • EURO / USD $1.25 Foreign Exchange • GBP / USD $1.45 • Nickel Down 80%+ From Peak Commodities • Natural Gas Down 55%+ From Peak • + : Net Productivity, Repo Benefits • - : Volume, FX Segment Margin • 1H Comps Challenging • 100%+ Conversion Free Cash Flow • Working Capital Contribution • High Quality Earnings Stream Macro Assumptions Supporting Outlook Barclays Capital Industrial Select Conference 7 February 9, 2009
  8. 8. Key Market Assumptions HON 2009 2009 Business 4Q08 Drivers Planning AM: 0% Flight Hours (2)% AT&R OE: 13%* OE Deliveries 0% to 5% AM: 3% TFE Flight Hours (15)% B&GA OE: 16% OE Deliveries (5)% to 0% Defense 4% DOD Budget 3% US/EU Housing Sales No Recovery US/EU Non-Res Downturn ACS – Developed 2% Retrofit / Regulation Stable Industrial Cap/Op Ex Cautious ACS – Emerging 16% New Construction Moderating Europe Auto Production (20)% to (15)% Turbocharging (44)% Europe Diesel Penetration (1) pts Small Engine Shift (4) pts UOP $1.6B Backlog Refining / Gas / Petrochem Slowing Challenging Market Conditions Barclays Capital Industrial Select Conference 8 *Excluding CS Divestiture and Boeing Strike February 9, 2009
  9. 9. 2009 Financial Guidance Update Consolidated 2009 Growth Financial Outlook 2009E vs. 2008E ($B) Sales $ 33.6 - 35.3 (8)% - (4)% (4)% - Organic (LCE) 1% Segment Profit 4.4 - 4.8 (8)% - 0% Segment Margin 13.2% - 13.7% (10) bps - 40 bps Net Income 2.4 - 2.7 (14)% - (4)% EPS $3.20 - 3.55 (15)% - (6)% Free Cash Flow >100% Conversion Status Since December 15 Guidance – Pension Discount Rate 6.95% vs. 7.5% + Pension Plan Returns -29% vs. -33% – China and India Slow-Down + Euro ~$1.30 Spot vs. $1.25 Plan – Commercial Aerospace Weakness + ACS Performance – Electronic Materials Demand + Commodity Costs – Earnings and Cash Non-Linearity + Productivity Savings Fluid Economic Environment Barclays Capital Industrial Select Conference 9 Excludes impact of acquisition related costs (FAS 141(R)) February 9, 2009
  10. 10. Restructuring Benefits $M Restructuring Charges (’06-’08) $600 Projected Benefits Reported EPS Growth $300 31% 25% 19% $- $(300) $(600) 2006 2007 2008 2009 Funded Through Operations / Gains Barclays Capital Industrial Select Conference 10 February 9, 2009
  11. 11. 2009 Productivity Actions Functional Transformation ~$0.8B Savings • Targeting Functional Cost at 5.3% of Sales – 60% Total Sales on SAP AERO – 40% Reduction in Supplier Base – Consolidating 75 Rooftops Honeywell Operating System • 80% Manufacturing Cost Base Initiated (~160 Sites) – 40 Sites Attain Bronze Certification ACS >95% Delivery to Customer Request >15% Improvement in Inventory >25% Reduction in Defects Improved Safety Maturity TS Repositioning Savings • Benefits from $0.7B Proactive Actions ’06-’08 SM – $0.5B+ Savings in 2009 – Fixed Costs Aligned With Slow Growth Environment Projects Identified And Actionable Barclays Capital Industrial Select Conference 11 February 9, 2009
  12. 12. 1Q09 Preview Sales Comments ($B) • Acq. / Div. -4% Estimated Impact • OE Deliveries Decline Aerospace ~2.6 – 2.8 • ATR Flight Hours -4%, TFE Hours -25% • FX -12%, Acq. +8% Estimated Impact • Contribution from Acquisitions ACS ~3.0 – 3.2 • Conversion of Solutions Backlog • FX -8% Estimated Impact Transportation ~0.7 – 0.8 • Continued Automotive Weakness • FX -2% Estimated Impact Specialty ~0.9 – 1.0 • UOP Catalysts Decline, Negative Mix • Continued R&C, EM Weakness 1Q09 Sales ~$7.4B - $8.0B EPS $0.50 – $0.60 Barclays Capital Industrial Select Conference 12 February 9, 2009
  13. 13. Honeywell Playbook - Sales • Delivery & Quality HOS Toolkit • Pricing Advanced Analytics • New Products VPD™ Leverage • Emerging Market Growth Design / Source Locally • Acquisition Leverage Synergy Benefits Grow Faster Than Served Markets Barclays Capital Industrial Select Conference 13 February 9, 2009
  14. 14. Honeywell Playbook – Segment Profit • FT / ERP Project Execution • HOS Deployment Deliver Benefits • Cost Management Specific Accountability • Direct Materials Strategic Sourcing • Census / Restructuring Deliver Savings Protect Bottom Line Barclays Capital Industrial Select Conference 14 February 9, 2009
  15. 15. Summary • Strong 2008 Finish in Tough Environment • Anticipating Challenging 1H 2009 • Comparisons More Favorable in 2H 2009 • Reaffirming 2009 EPS Guidance Investor Meeting February 23rd Barclays Capital Industrial Select Conference 15 February 9, 2009
  16. 16. Appendix Reconciliation of non-GAAP Measures to GAAP Measures Barclays Capital Industrial Select Conference 16 February 9, 2009
  17. 17. Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin 4Q07 4Q08 ($M ) Sales $9,275 $8,712 Cost of Products and Services Sold (7,013) (6,523) Selling, General and Administrative Expenses (1,205) (1,179) Operating Income $1,057 $1,010 Stock Based Compensation (1) 11 21 Repositioning and Other (1, 2) 135 105 (1) Pension and OPEB Expense 71 24 Segment Profit $1,274 $1,160 Operating Income $1,057 $1,010 ÷ Sales $9,275 $8,712 Operating Income Margin % 11.4% 11.6% Segment Profit $1,274 $1,160 ÷ Sales $9,275 $8,712 Segment Profit Margin % 13.7% 13.3% (1 Included in co st o f pro ducts and services so ld and selling, general and administrative expenses ) (2) Includes repo sitio ning, asbesto s, enviro nmental expenses and equity inco me (beginning 1 /2008) /1 Barclays Capital Industrial Select Conference 17 February 9, 2009
  18. 18. Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion 4Q07 4Q08 ($M ) Cash Provided by Operating Activities $1,440 $1,259 Expenditures for Property, Plant and Equipment (310) (332) Free Cash Flow 1,130 927 Cash taxes relating to the sale of the Consumable Solutions business - 166 Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business 1,130 1,093 Cash Provided by Operating Activities $1,440 $1,259 ÷ Net Income 689 707 Operating Cash Flow Conversion % 209% 178% Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business $1,130 $1,093 ÷ Net Income 689 707 Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business Conversion % 164% 155% Barclays Capital Industrial Select Conference 18 February 9, 2009
  19. 19. Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin 2006 2007 2008 ($B) Sales $31.4 $34.6 $36.6 Cost of Products and Services Sold (24.1) (26.3) (28.0) Selling, General and Administrative Expenses (4.2) (4.6) (5.0) Operating Income $3.1 $3.7 $3.6 Stock Based Compensation (1) 0.1 0.1 0.1 Repositioning and Other (1, 2) 0.5 0.6 1.0 Pension and OPEB Expense (1) 0.4 0.3 0.1 Segment Profit $4.1 $4.7 $4.8 Operating Income $3.1 $3.7 $3.6 ÷ Sales $31.4 $34.6 $36.6 Operating Income Margin % 9.9% 10.7% 9.8% Segment Profit $4.1 $4.7 $4.8 ÷ Sales $31.4 $34.6 $36.6 Segment Profit Margin % 13.0% 13.5% 13.3% (1 Included in co st o f pro ducts and services so ld and selling, general and administrative expenses ) (2) Includes repo sitio ning, asbesto s, enviro nmental expenses and equity inco me (beginning 1 /2008) /1 Barclays Capital Industrial Select Conference 19 February 9, 2009
  20. 20. Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin 2008 2009E ($B) Sales $36.6 $33.6 - $35.3 Cost of Products and Services Sold (28.0) (25.2) - (26.5) Selling, General and Administrative Expenses (5.0) (4.6) - (4.8) Operating Income $3.6 $3.8 - $4.0 Stock Based Compensation (1) 0.1 ~0.1 Repositioning and Other (1, 2) 1.0 0.3 - 0.4 Pension and OPEB Expense (1) 0.1 0.2 - 0.3 Segment Profit $4.8 $4.4 - 4.8 Operating Income $3.6 $3.8 - $4.0 ÷ Sales $36.6 $33.6 - $35.3 Operating Income Margin % 9.8% ~11.3% Segment Profit $4.8 $4.4 - 4.8 ÷ Sales $36.6 $33.6 - $35.3 Segment Profit Margin % 13.3% 13.2 - 13.7% (1 Included in co st o f pro ducts and services so ld and selling, general and administrative expenses ) (2) Includes repo sitio ning, asbesto s, enviro nmental expenses and equity inco me (beginning 1 /2008) /1 Barclays Capital Industrial Select Conference 20 February 9, 2009
  21. 21. Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion 2006 2007 2008 ($B) Cash Provided by Operating Activities $3.2 $3.9 $3.8 Expenditures for Property, Plant and Equipment (0.7) (0.8) (0.9) Free Cash Flow 2.5 3.1 2.9 Cash taxes relating to the sale of the Consumables Solution business - - 0.2 Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business $2.5 $3.1 $3.1 Cash Provided by Operating Activities $3.2 $3.9 $3.8 ÷ Net Income $2.4 $2.4 2.8 Operating Cash Flow Conversion % 154% 160% 136% Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business $2.5 $3.1 $3.1 ÷ Net Income $2.1 $2.4 $2.8 Free Cash Flow excluding cash taxes relating to the sale of the Consumables Solution business Conversion % 119% 129% 110% Barclays Capital Industrial Select Conference 21 February 9, 2009
  22. 22. Barclays Capital Industrial Select Conference 22 February 9, 2009

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