$4.95 Billion Acquisition Bolsters Honeywell's Strategic Alignment to the Automation Megatrend, Underpinned by Digitalization Positions Honeywell as a Leading Provider of Security Solutions in a Digital Age Enhances Honeywell's Building Automation Segment, Adding an Accretive Growth and Margin Business CHARLOTTE, N.C., June 3, 2024 /PRNewswire/ -- Honeywell (NASDAQ:HON) today announced the completion of its acquisition of Carrier Global Corporation's (NYSE:CARR) Global Access Solutions business for $4.95 billion. The deal positions Honeywell as a leading provider of security solutions for the digital age with opportunities for accelerated innovation in the fast-growing, cloud-based services and solutions space. This transaction also strengthens Honeywell's alignment of its portfolio around three compelling megatrends, including automation, and complements Honeywell's Building Automation segment. The acquisition brings differentiated software capabilities through the addition of three respected brands to Honeywell's portfolio: LenelS2, a leader in commercial and enterprise access solutions; Onity, which offers electronic locks, specifically hospitality access and mobile credentials; and Supra, which specializes in cloud-based electronic lockboxes and scheduling software. Global Access Solutions' approximately 1,200 employees are now part of Honeywell. The transaction is expected to be adjusted earnings per share1 accretive in the first full year of ownership. Global Access Solutions enhances Honeywell's Building Automation business model of leading with high-value products that are critical for buildings. Honeywell will also benefit from the business's attractive growth and margin profile, valuable software content, and accretive mix of recurring revenue, with forecasted annual sales in excess of $1 billion when combined with Honeywell's existing security portfolio. "As the world's security needs evolve from a focus on protecting people to protecting both people and critical assets, we see strong growth prospects for our Access Solutions acquisition," said Vimal Kapur, Chief Executive Officer of Honeywell. "By building on our strong track record of delivering high-value building automation products, solutions, and services globally, this acquisition creates an exciting opportunity for us to achieve faster growth and further margin expansion, while generating better outcomes for our Building Automation customers." Company Updates 2024 Outlook, Changes Non-GAAP Reporting MetricsBeginning in the second quarter, Honeywell will exclude the impact of amortization expense for acquisition-related intangible assets and other acquisition-related costs4, including the related tax effects, from segment profit1 and adjusted earnings per share1. The company believes this change provides investors with a more meaningful measure of its performance period to period, aligns the measure to how management will evaluate performance internally, and makes it easier for investors to compare our performance to peers. Honeywell plans to provide historical non-GAAP financials under this new basis to facilitate comparability when the company reports its second quarter results in July 2024. As a result of the acquisition closing, Honeywell has updated its full-year sales, segment margin2, and adjusted earnings per share2,3 guidance (under the amended calculation). Full-year sales are now expected to be $38.5 billion to $39.3 billion, including organic1 sales growth of 4% to 6%. Segment margin2 is expected to be in the range of 23.8% to 24.1%, with segment margin expansion2 of 30 to 60 basis points. Adjusted earnings per share2,3 is expected to be in the range of $10.15 to $10.45. Operating cash flow is expected to be in the range of $6.7 billion to $7.1 billion, with free cash flow1 of $5.6 billion to $6.0 billion. A summary of the changes to the company's full-year guidance can be found in Table 1. Honeywell also updated its second-quarter sales, segment margin2, and adjusted earnings per share2,3 guidance. Second-quarter sales are expected to be $9.3 billion to $9.6 billion, with organic1 sales growth of 1% to 4%. Segment margin2 is expected to be 22.7% to 23.1%, down 40 basis points to flat compared to the prior year period. Adjusted earnings per share2,3 is expected to be in the range of $2.35 to $2.45, up 2% to 7% compared to the prior year. TABLE 1: FULL-YEAR 2024 GUIDANCE Previous Guidance Impact of Acquisition Guidance After the Acquisition Impact of Non-GAAP Reporting Change Updated Guidance Sales $38.1B - $38.9B ~$0.4B $38.5B - $39.3B — $38.5B - $39.3B Organic1 Growth 4% - 6% — 4% - 6% — 4% - 6% Segment Margin2 23.0% - 23.3% (0.2) % 22.8% - 23.1% 1.0 % 23.8% - 24.1% Expansion2 Up 30 - 60 bps (20 bps) Up 10 - 40 bps 20 bps Up 30 - 60 bps Adjusted Earnings Per Share2,3 $9.80 - $10.10 ($0.15) $9.65 - $9.95 $0.50 $10.15 - $10.45 Adjusted Earnings Growth2,3 7% - 10% (1 %) 6% - 9% 1 % 7% - 10% Operating Cash Flow $6.7B - $7.1B — $6.7B - $7.1B — $6.7B - $7.1B Free Cash Flow1 $5.6B - $6.0B — $5.6B - $6.0B — $5.6B - $6.0B 1 See additional information at the end of this release regarding non-GAAP financial measures. 2 Segment margin and adjusted EPS are non-GAAP financial measures. Management cannot reliably predict or estimate, without unreasonable effort, the impact and timing on future operating results arising from certain items excluded from segment margin or adjusted EPS. We therefore, do not present a guidance range, or a reconciliation to, the nearest GAAP financial measures of operating margin or EPS. 3 Adjusted EPS and adjusted EPS V% guidance excludes items identified in the non-GAAP reconciliation of adjusted EPS at the end of this release, including the impact of amortization expense for acquisition-related intangible assets and other acquisition-related costs, and any potential future items that we cannot reliably predict or estimate such as pension mark-to-market. 4 Acquisition-related costs are principally comprised of third-party transaction and integration costs and acquisition-related fair value adjustments to inventory.   Honeywell is an integrated operating company serving a broad range of industries and geographies around the world. Our business is aligned with three powerful megatrends - automation, the future of aviation, and energy transition - underpinned by our Honeywell Accelerator operating system and Honeywell Connected Enterprise integrated software platform. As a trusted partner, we help organizations solve the world's toughest, most complex challenges, providing actionable solutions and innovations that help make the world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom. Honeywell uses our Investor Relations website, www.honeywell.com/investor, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. We describe certain trends and other factors that drive our business and future results in this release. Such discussions contain forward-looking ...