HONEYWELL AEROSPACE
DISCUSSION TOPICS
MAY 8, 2013
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.
1
Honeywell Aerospace - May 8th, 2013
Aerospace Overview
Financials
$12.0 - 12.2
$12.0
$11.5
$10.7
2012 Highlights
19.619.8%
18.9%
17.6%
• Large Air Transport Continued Growth
- Original Equipment (OE) Growth Strong - 11% Growth
- Flight Hour Growth Tempered Throughout 2012
• BGA Market Flat, HON Growing
17.2%
- Growth >20% Despite Flat OE Market
- Strong BGA Aftermarket Growth Vs. Low Utilization
• Defense Weathering Modest Declines
2010
2011
ATR Sales
2012
BGA Sales
2013E
D&S Sales
Segment Margin
- HON D&S Down (-3%)
- Partially Offset By International Growth
Business Split
D&S AM US
Geographic Mix
Other
ATR OE
15%
9%
Asia
13%
9%
D&S OE US
18%
D&S AM Int’l 5%
D&S OE Int’l 4%
25%
ATR AM
Europe
17%
65%
United
States
12% 8%
BGA AM
BGA OE
Strong 2012, Well Positioned For Future
2
Honeywell Aerospace - May 8th, 2013
Aerospace Macro Drivers
ATR Flight Hour Growth
Regional Share Of Flight Activity
100%
10%
Air Transport
Regional
Total ATR
Asia Pac
80%
5%
60%
EMEA
0%
40%
-5%
20%
-10%
1Q12
3Q12
1Q13
Americas
0%
3Q13E
2001
OE Deliveries
ATR
2006
2011
2016E
Parked Aircraft
BGA
2026
1572
678
1372
1948
16001700
649
1160
2011
2012
2013E
2011
2012
2013E
2002
2004
2006
2008
2010
2012
Planning For A Continued Challenging Macro Environment
3
Honeywell Aerospace - May 8th, 2013
Big Wins – Last 3 Years
ATR
BGA
COMAC C919
$16B
$4.0B
$2.8B
APU, Flight Controls, Wheels &
Brakes, Navigation, Components
Boeing 737MAX
EBAS and Controllers
Embraer G2
~$6B
$3.6B
$3.7B
Avionics
Unannounced
HTF 7000 Engine
Bombardier
TFE Engine
Gulfstream
Mechanical
Dassault
$2.7B Components Wins
$0.8B
$1.4B Airline Selectables
$0.8B
~$1B Unannounced Win
$3.6B Other AM And OE Programs
Integrated Cockpit
Cessna
Mechanical
D&S
$1.5B U.S. Army TIGER
U.S. Air DoD
$0.9B Logistics Services
Israeli Air Force
$0.7B M-346 Trainer
NASA Goddard Space
$0.5B Flight Center
Unannounced
$0.4B Helo Systems
Army
$0.2B U.S.
AGT1500 Abrams Engine
… And Many Others
… And Many Others
… And Many Others
$28B
$19B
$15B
2010-2012
2010-2012
2010-2012
Winning Big In All Segments
4
Honeywell Aerospace - May 8th, 2013
Expansive Product Breadth
Delivering New Innovations
• Enhanced Safety Products
• Air Traffic Modernization
• Innovative Mechanical and
Electronic Solutions
• Airborne Connectivity
Unmatched Breadth, Uniquely Innovative
5
Honeywell Aerospace - May 8th, 2013
Strong Pipeline Of New High Impact Aircraft
ECS/CP
Components
Other
APUs
Compo
nents
Engines
APUs
Engine
s
Avionics
ECS/C
P
|----D&S----|-----------BGA------------|------------------------ATR-----------------------------|
Aircraft
Avionic
s
HONEYWELL’S PLATFORM POSITION
Other
Honeywell Value
Competitor
Value
TBD
TBD
TBD
~$3B
<$1B
TBD
~$4B
$2B
(Displays)
Embraer 2nd Gen E-Jet
NA
Boeing 737 Max
NA
Airbus A350
NA
~$18B
$6-$9B
(Avionics and Components)
COMAC C919
NA
~$16B
<$16B
(Avionics, ECS and Other)
Gulfstream 650
NA
~$3B
----
~$24B
~$2B
(Avionics)
~1.5B
~$0.5B
~$22B
TBD
Embraer L500/450
Alenia Aermacchi M-346
10 Unannounced
NA
Broad, Unmatched Wins
6
Honeywell Aerospace - May 8th, 2013
Propulsion / APU Group
7
Honeywell Aerospace - May 8th, 2013
APUs: Large Installed Base & Poised For Growth
• Over 36,000 APUs In Service
36-150
Series
• Narrow Body Production Rates Strong
• New Product Introductions
- C919 , A350 And Other Unannounced
• Low Total Cost Of Ownership
RE100
~18,000
In Service
85 Series
ATR
131 Series & HGT750
~9,000
In Service
D&S
~9,000
In Service
RE220
G03-999-64
BGA
331 Series & HGT1700
Over 90,000 APUs Shipped, Over 36,000 In Service
8
Honeywell Aerospace - May 8th, 2013
Propulsion Systems Product Lines
TPE331-14
HTF7000
T55
731 Series
HTS900
TPE331-12
CFE738
AGT1500
LF507
TPE331-10/11
T53
ATF3
F124
CTS800
TPE331-5
F125
Turbofan Engines
3,000 to 10,000 lb Thrust for
Commercial and Military Aircraft
LTS101
Turboprop Engines
Turboshaft Engines
575 to 1,600 SHP for
Commercial and Military Aircraft
500 to 5,000 SHP for Tanks,
Commercial and Military Rotorcraft
Over 70,000 Turbine Engines Delivered Since 1959
9
Honeywell Aerospace - May 8th, 2013
BGA Engine Hours And Fleet
Honeywell Turbofan Engine Growth
200%
HTF
TFE
TOTAL BA Fleet
180%
160%
140%
120%
100%
2011
2012
2013E
2013
Honeywell Turbofan (HTF): 7000 to 8000 lbs Thrust Class
2014E
2014
2015E
2015
Sources: FAA, Global Insight, Honeywell Internal Estimates
Turbofan Engine (TFE): 4000 to 5000 lbs Thrust Class
% Growth (2010 Base)
40%
Engine/Aircraft Utilization
TFE & HTF Growth
30%
TFE Base
US & EU Cycles
20%
10%
0%
2011
2012
2013
2013E
2014
2014E
2015
2015E
BGA Aftermarket Outpaces Flight Cycle Growth
10
Honeywell Aerospace - May 8th, 2013
Operational Excellence
11
Honeywell Aerospace - May 8th, 2013
Aerospace Structure
• 3 Customer Facing Organizations
AEROSPACE
- Single Point Of Contact For Customer
- Aligned With Market Verticals
AIR TRANSPORT &
REGIONAL
• Integrated Product Roadmaps Owned By M&PM
- 84 Product Lines, 10 Product Families
• Proactive Cost Management
BUSINESS &
GENERAL AVIATION
- Aggressive Indirect Cost Reduction Since 2010
• Shared Support Structure
-
DEFENSE &
SPACE
Engineering Resources Shared Across Projects, Businesses
Single Supply Chain Drives Sourcing And Mfg Efficiencies
Centralized Back-Office Functions (Finance, IT, HR)
MARKETING & PRODUCT
MANAGEMENT
Common Systems (SAP) Support Structure
Integrated Supply
Chain (ISC)
Mergers &
Acquisitions (M&A)
Engineering &
Technology
Human Resources &
Communications
Customer & Product
Support (C&PS)
Finance
Information
Technology (IT)
Law, Contracts
& Export
Regional Leadership
Matrix Organization Provides Flexibility
12
Honeywell Aerospace - May 8th, 2013
Key Metrics
Sales / Employee
Long Cycle Backlog
($K)
($B)
Short Cycle Sales
($B)
$311
~$9
$293
$283
$283
2009
2010
~$9
~$8
~$7
2011
2009
2012
Seg Profit / Employee
2010
$4.4
$4.0
2011
2012
$3.3
$3.4
2009
2010
2011
2012
ROI*
Segment Margin
($K)
31.4%
$59
18.9%
28.9%
$52
$50
26.2%
25.1%
17.6%
17.6%
$49
17.2%
2009
2010
2011
2012
2009
2010
2011
2012
Strong Value Creation
13
2009
2010
2011
2012
* Internal Measure
Honeywell Aerospace - May 8th, 2013
Aero Initiatives
• Improving New Product Introductions - Speed, Efficiency, Productivity
VPD™
• Over $300M In Productivity Through 2016
• Focusing On Core Product: 68% Reduction In New Part Introductions
Globalization
• International Defense Budgets Growing 3-4 %
- Growth In Middle East, Asia, And India
- Strong Service Opportunities In Middle East, Europe, Asia
• Growth In Commercial Helicopters
• Leveraging HON-Wide HOS Success To Accelerate Aero
% Aero Mfg Cost
Results
Silver
• Built In Flexibility For Uncertain Environments
HOS
Full
Scale
Dep.
6%
• Achieved 67% Of Manufacturing Costs Coverage At
33%
Silver/Bronze Maturity In 2012
• Silver/Bronze Sites Productivity > 50% vs. Early Maturity
61%
Sites
Bronze
• Time To Bronze Maturity Reduced By 50%
Year End 2012
Enablers Driving Margin Acceleration
14
Honeywell Aerospace - May 8th, 2013
HOS: 2012 Performance
Quality
(Defects, PPM)
Inventory
(Days Of Supply)
63% Improvement
Full Scale
Deployment
Bronze
28% Improvement
Silver
Delivery
Full Scale
Deployment
Bronze
Silver
Productivity
(OTTR)
(Net Productivity %)
+15 pt Improvement
Full Scale
Deployment
Bronze
+100 bps Improvement
Silver
Full Scale
Deployment
Bronze
Silver
HOS Delivering Results And Sustaining Our Future
15
Honeywell Aerospace - May 8th, 2013
Honeywell Operating System: 131 APU
Layout
Results
• 40% Lower Footprint
• 20% Lower Resource Requirements
• Increased Productivity By 25%
• >50% Reduction Of Work In Process
• 40% Reduction In Cycle Time
• Engines Culture Moving Away From
Batch Build To Continuous Flow Line
HOS Driving Increased Productivity, Throughput
16
Honeywell Aerospace - May 8th, 2013
17
Honeywell Aerospace - May 8th, 2013