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Honeywell International, Inc. (NYSE:HON)

February 20, 2013 9:45 am ET

Executives

David James Anderson - Chief Financial Officer and Senior Vice President

Elena Doom

Analysts

Scott R. Davis - Barclays Capital, Research Division

Scott R. Davis - Barclays Capital, Research Division

Ready. Okay, great. Let's get started here. I know we're running a couple of minutes late. It's my fault. I had to get a smoothie, one of those lovely smoothies, you can get a nice straw or an umbrella in it if you really want to enjoy it. And I brought Dave some banana chips, but he informed me he doesn't like banana chips. Too sweet for him. So anyways, we're on to Honeywell. And I think we had a little bit of a dinner last night with these fine folks, Dave and Elena. Dave Anderson is the CFO, I think most of you know, and Elena Doom has been doing Investor Relations a long time. And just to kind of save the time in this meeting, I thought there were some takeaways that were really interesting that we can delve into a little bit. And in no particular order, one of the points that Dave made that I think resonated with me is just driving home the whole theme that the strategies in place are getting a lot of momentum. It's taken a number of years to get there. I think we all know, most of -- I'm sure all of you in the audience know how long it takes to turn around a company. Take whatever you think it's going to and add another 3 to 5 years, and that's probably kind of the right answer. So it takes a very long time to turn around a company. Honeywell obviously had a lot of challenges, call it 10 years ago, that have been addressed. And I think Dave, at least for the crew we had at dinner last night, really resonated on the momentum in those strategies.

Dave came back and talked about growth, and I think growth is going to be a theme in this conference in one way, shape or another, because if you take a look at this particular quarter as an example, and we've had this the last several quarters, the average company that we cover came in at 2% quarter growth. That's a median number. We had to exclude Fastenal and some of the kind of weirder ones, the distributors, but if you take a look at the core manufacturers, came in at 2% core growth. We were forecasting 3%, but the standard deviation around that 2% was extraordinarily tight. It was basically high of 4% growth if you sold into health care markets or had a pull forward like Danaher did, or a negative 2% growth if you had tough weather comps on construction like Hubble[ph] , for example, but -- and Honeywell is at around 1%, I think, or so, which was, in their subgroup of peers, was pretty much right in the sweet spot.

So Dave spoke a bit on growth and now -- how Honeywell is now positioned with the right portfolio and the right leaders and the right R&D Investment and the right amount of time behind these investments to make progress on a forward basis in driving those growth rates to an above peer level.

Given the focus on cost -- and I think one of the things I, if somebody asked me a question, kind of, "What do you think Dave Cote does a very good job of?" I always find it very interesting when he talks about keeping census headcount flat in upturns and really controlling that -- controlling those costs as things get better, and then, obviously, I think we've seen in the most recent downturn that Honeywell has done a pretty good job of getting its cost structure variable enough that muted some of that cyclical recovery.

And lastly, Dave talked about Honeywell having a deeper cultural culture now that is around continuous improvement and productivity. We have some companies that we cover, and I think Danaher was on just on stage that, that culture itself really feeds on itself, and I think we know that. And if it is, in fact, accurate that Honeywell is building a culture that drives continuous improvement and productivity, it will arguably drive to a higher growth rate, a higher margin rate, higher returns on capital and create value for shareholders.

So I think that, from my perspective, is the most important thing -- those are the most important things to focus on today. I personally don't think there's a lot of debates around the Honeywell story right now. I think most of the sell side is relatively favorable towards the story. We don't find a lot of pushback like we used to in the old days and I'd get laughed at when I'd walk into a meeting, and they'd say, "What's your topic?" And I'd say, "Honeywell," then they'd say, "Next, dopey analyst," and kick me out of the door. And now, if you walk in, they say: "Yes, that's interesting." You get much, much greater sense of receptivity.

So Dave wanted to give a quick state of the union, and then, of course, we want to get to our audience response questions and then some of those issues that I think we dove into last night are really work exploring further and trying to figure out what is that next stage for Honeywell and how you as shareholders or perspective shareholders can benefit from that. So with that, Dave, I want to pass it over to you.

David James Anderson

I can just sit here and kind of talk? That's good? Just build on some of the themes. Some of the themes are in the document that we handed out, just the discussion topics that was in the back, on the table. But number one, obviously, is we feel good about 2012 performance. We set high expectations, and we delivered.

Earnings at the high end of our range, really driven by, again, record segment margin growth. Margin rates expanded 90 basis points in 2012 from 2011, and by the way, expanded 90 basis points from 2010 to 2011, so 180 basis points over that 24-month period, which we think is very impressive and, actually, best in class. There's a lot more to do on that front. 2013, our guidance -- midpoint of our guidance is about 50 basis points of margin expansion, so we're targeting continued growth in that very important metric in a continued what we would say is challenging environment. Scott will get into this more as we get into the dialogue in the Q&A. But, I guess the theme is really mixed order rates and a continued challenging macro environment. It's a theme, obviously, you're hearing from others in this conference and you know very well. But we are -- I'd say the keyword, and we talked about this last night, again, not surprising, one we use a lot, is remaining very, very flexible. There is still a degree of uncertainty, we think, in the macro environment that just requires us to be absolutely on our toes on census, all elements of variable cost, all elements of our cost structure.

We're absolutely committed, I'd say, the third point, Scott, just quickly before turning it over to you, is we're absolutely committed and on track to achieving our 2014 targets. You'll recall, back in February of 2010, just coming out of the recession of '08, '09, we set revenue targets and operating income, margin targets for 2014. We said we wanted to was that we want to $41 billion and $44 billion of sales. At that time, we were at about $33 billion of sales. And we said that we want to be at 15% to 16% -- 16% to 18% in terms of our operating margin. At that time, we were about 13.3%.

So fairly aggressive targets, I think at that time, people really questioned our sanity. But the fact is, we're doing it. It's a more challenged top line environment. GDP assumptions that we used at that time, the reality is that GDP growth has been -- global growth has been much slower. Foreign currency has been a net headwind relative to the assumption that we used there, particularly for the euro-dollar relationship. So a number of factors that you would say would comprise headwinds, but the tailwinds are really what we have delivered internally. It's really the strategies that Scott talked about, the strength of those, the consistency of those, and we think the consistency of the execution. So we're excited about that. We're going to be together in New York. Hopefully, a number of you can make it on March 6 for our annual Investor Day. Each of our business presidents is going to be speaking. Key for this year is going to be around growth, core growth. The strategies for that, demonstrations of that in terms of the technologies and the processes for driving that across the company, what we anticipate out to 2014 in terms of attainment of those targets, and really setting the stage, then, for March of 2014, where we'll be issuing new targets and really talking about '14 through '18 period. And you're going to hear that, hear about that from Dave Cote, you're going to hear about that from the business presidents in terms of their thinking about that and the preparation for that. So this is more to come, more, if you will, we think, sustaining value creation as a result of what we're doing, both the strategies and the execution of those strategies.

Scott R. Davis - Barclays Capital, Research Division

Good. Let's start with the ARS system, please, and go to the first question. Get the first couple of these out of the way. Do you currently own this stock? Yes: "overweight," "equal weight" or "underweight" are the first 3. And "no" is number 4. And please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

Okay. We can see there's still a fairly broad group of people that -- I've always actually been amazed at, when I look at your shareholder base, how many people don't own your stock. I find that interesting.

David James Anderson

It is interesting, yes.

Scott R. Davis - Barclays Capital, Research Division

There are huge shops that literally don't own a share other than maybe some index.

David James Anderson

Yes.

Scott R. Davis - Barclays Capital, Research Division

Okay. Let's go to the next question, please. What is your general bias towards the stock right now? Positive, negative or neutral? Please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

Okay, we're still overwhelmingly positive. I'm trying to think where you were last year. Do you remember, Elena?

Elena Doom

Seems a little higher.

Scott R. Davis - Barclays Capital, Research Division

Higher? Okay. And then, let's go to number 3, while we're here and we're talking about growth, and then we can go into some of these questions. In your opinion, through the cycle, EPS growth, this is EPS growth for Honeywell, will be: above peers, in line with peers, below peers. 1, 2, or 3. Please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

Okay, that's actually not bad. Think about it. I'm guessing a couple of years ago, there'd be a much bigger response of below peers, I suppose, right?

David James Anderson

In terms of the multi-industry peers, I mean, the data that we track, large cap, multi-industry peers, certainly for the '10, '11, '12 period, it's been above peers.

Scott R. Davis - Barclays Capital, Research Division

Yes.

David James Anderson

And I think that's reflected in the share price performance and the total TSR of the company.

Scott R. Davis - Barclays Capital, Research Division

Yes, it has been above peers. In fact, I think, this quarter was the only one really that you came in kind of in the middle of the pack.

So let's talk about this growth. I mean, let's talk about the few different levers you have. I mean, you have some businesses that are still -- I think you mentioned last night you still have 40% of your business is still relatively depressed. Maybe you can talk about when you would expect recovery and the tailwinds that would come and just talk about these 40% of businesses that might be able to be that next driver of growth.

David James Anderson

Sure. Well, Elena made the point last night at dinner. We were talking a little bit about the -- sort of the state of the portfolio and cycle. And, Elena made the point that, just analytically, if you look at our revenues relative to prior peak, that for something like 40% of the company, and I think it's commercial, Aero, OE, as well as turbo and defense, those are below -- today, revenues, absolute revenues, are below prior peak, '07, '08 time period.

So it really does speak to some of the headwinds that we've had, economic headwinds. And we talked about that a little bit last night, Scott. And it's been mixed, obviously. I mean, we've seen tremendous strength on the aftermarket, on the aerospace aftermarket. We've seen selective strength with some of the ACS businesses. Obviously, UOP has been on a tear. But it speaks to this point about the, call it, the residual or pent-up potential that's still there on the top line. And if you look at the fourth quarter, the numbers you mentioned, that 1% was with a 5% EMS decline. So a $5 billion out of a, call it $37 billion company, revenues are going down in this environment. Now we're managing that, we think, very effectively, and we had the strength, obviously, on the commercial, which helped offset -- commercial Aero, which helped offset that. But it speaks to some of what we're we managing still in terms of the overall macro set of conditions, macro challenges.

Scott R. Davis - Barclays Capital, Research Division

You guys, Dave -- I hate to skip around, but I want to talk about cash deployment, because I think that's another issue that gets raised fairly often, not just for Honeywell, but really for every company that we cover, is you're generating so much cash that you're delevering so quickly in any given year, and yet, finding deals at the appropriate multiple and appropriate size is something that becomes more and more difficult as you get further along in the cycle. I'll ask you the same question, really, I asked Dan. I mean, how do you approach an environment now where you know that you're no longer really looking at trough EBITDA numbers, and you're certainly not going to get any bargains on the EBITDA multiple? You have done some very interesting acquisitions, but arguably, a company like yours needs to do a couple more than maybe what you did. So how do you think about both the size and the scope, and then this challenge that we have that not only are public market values going up, but inevitably, private market values will probably follow?

David James Anderson

Right. Well first of all -- and again, a theme that we've talked about is that, for us, M&A is a complement to the focus on our core growth. Our real focus is on organically building our businesses with M&A as a complement to that. And it's been a very important complement. We've done, in my tenure as CFO, as you guys know, we've done about 75 transactions, some of those very notable, very visible. You mentioned Novar as one. UOP, I think, has been a tremendous transaction for us. EMS is a recent one that we did with sort of a little bit below the radar screen. Huge upside in the satellite telecommunications technology space of the Aerospace group. So lots of examples, both small and much bigger, in terms of what we've been able to successfully do in M&A. And for us, M&A remains, I would say, a constancy in terms of the valuation of opportunities. Each of our business leaders -- other than transportation systems, each of our business leaders is really charged with ensuring a rich pipeline of ideas and opportunities that we review monthly with Dave Cote. And it's a command performance. I mean, it may be just be 30 minutes for each business, but there's a level of detail and level of scrutiny in dialogue in those sessions that is consistent because it's something that we see as incredibly important to us, is continuing to generate opportunities, ideas and opportunities, and build relationships in terms of acquisition potentials, acquisition opportunities. That being said, we're highly disciplined. I mean, we're very, very selective. We're absolutely paranoid about the potential for mistakes in the M&A arena. As a result, that governs us, in terms of what we look at in terms of both potential size and fit, with a real sweet spot for us being transactions that represent tuck-in adjacencies that can be -- can achieve strong cost synergies, where we can execute strong cost synergies, and deliver 5x, 6x, 7x, after realized synergies, EBITDA multiples, and that's what we do. That's the kind of the track record that we have. And we think that's where the real benefit of M&A derives, as well as a being a fuel additive, in terms of organic growth and market position, channel strength, et cetera. All that has to be there in addition to the financials. So as a result of that, it's hard for us to forecast. It's hard for us to say, well, it's going to be $1 billion this year. Well it's likely to be $1 billion this year just because of the size of completing the Intermec acquisition, which we think is on track for a second quarter close, still subject, obviously, to regulatory approval. But it's something that's difficult for us to say, "Scott, well, we're going to take it up $2 billion," or, "We're going to take it up to $3 billion," or, "We should do larger deals." We certainly look at larger transactions. We conduct a lot of reviews. There's a lots of idea flow that takes place in the company, and we view it as a top priority. But it's not something that we typically set as a target or predetermine in terms of what -- how much capital we're going to commit to it.

Scott R. Davis - Barclays Capital, Research Division

So let's take the other side of, it and then I want to open it up to the audience. This theme that I think -- that we've been writing about it, and I think our competitors are picking up on it, too, of simplicity and messaging that comes from companies on what they're going to look like in the future. And we saw, obviously, GE made a big sale with NBC and is moving down that path of becoming easier to understand, and you see what a premium the pure plays in this group generally trade on the others. I'm not advocating that, really, for the most part, companies in this space break up. We've seen that forced in with companies like Tyco IT where you really don't have an operating system that's working in any capacity, and so you have to kind of go with Plan B, but how can you address the simplicity issue and the interest level of investors for really understanding what they own and not having to think about, "well, I just don't know where I can get hurt in the stocks, so I'm just go -- if I want aerospace exposure, I'm going to go buy Rockwell Collins. Or if I want turbo exposure, I'm going to go buy BorgWarner. And if I want chemical exposure, I'll go buy a chemical company." And so how do you kind address that issue while still helping investors understand that there is a Honeywell Operating System the creates value and there are some synergies to what you're all trying to do?

David James Anderson

We're absolutely committed, wedded to the multi-industry model. And we think that you can consistently drive shareholder value with that model. And just as evidence of that, as you know, if you look at our 10-year total shareholder return relative to the S&P, or 5-year, or 3-year, or 2-year or 1-year. We've blown by the S&P, and we compare ourselves to a group of industrials across the set of industries that we participate in, 15 companies that we regularly track and compare ourselves against, and we performed between the 68th and 100th percentile on that -- against that group of companies over that same time period. So absolutely wedded to the model and believe it absolutely is a vehicle to operate globally. And the strength of that comes from, as Dave would say, the diversity of opportunities that it presents. And a good example of that is just the growth that the company is going to experience on the COMAC success, the C919 success. And a lot of investment that's taking place, R&D investment, lots of capital investments taking place. But over the 2018, 2025, 2030 timeframe, the company and our shareholders are going to benefit as a result of that diversity of opportunity, both in terms of industry participation and geographic participation. So we look at the world in that context. You make a very good point, which is the overlay is a set of disciplines. There's a set of disciplines in terms of operating disciplines that we talk about, which extend to our leadership and management processes. We employ something we call the MRR process across the company, the Management Resource Review process, which is absolutely key in terms of surfacing and identifying talent through the organization and really building and nurturing and growing that talent for key leadership roles, general management positions, ISC, integrated supply chain lead positions, finance positions, et cetera. A very, very big succession planning build-from-within process that characterizes the company, in addition to the operating disciplines. Increasingly, Scott, in some of the more exciting stuff that we'll be viewing with the group in March and in subsequent meetings, is going to be the stuff in technology development, technology enhancement, product development and in more, if you will, visual as well as performance evidence of the richness of our R&D investment, which is absolutely key for us, absolutely critical. And we're not backing off; indeed, have not backed off through this cycle at all. In fact, I would say, if anything, we've just continued to emphasize and to funnel and fund key strategic growth investments in each of our businesses. So there's a number of elements that characterize Honeywell that we think derive from the strength of the diversity of the businesses and geographies of markets that we participate in with the overlay of a management system and set of processes that we think are actually best practice. Our M&A practice. While M&A is just a complement our core organic growth, we think our M&A practices are -- have become best-in-class. So we think, for all of those reasons, we're positioned well. Now what can we do better? There's a number of things we can do better. We can provide enhanced visibility and clarity in terms of the makeup of our businesses. We took a step forward with that with ACS by breaking out ESS, the Energy, Safety and Security business, HPS and the Building Systems and Distributions business -- the Building Solutions and Distributions business. We can do more with that, and we can do more in terms of providing insights in terms of the performance, both revenue performance, margin, ROIC performance of those businesses, giving you more understanding of the targets that we've set for those, and I think by doing that -- for example, in ESS, just as a reminder, I mean, this is a world leader in terms of -- this a high-teens, low-20s operating margin business with tremendous franchise, brand, channel trade and sales strength on a global basis, and it's just getting better. We can provide more clarity and understanding of the technologies and the growth platforms that exist within PMT. There's a pretty good understanding of UOP, but we need to provide even greater clarity on the advanced materials side so you have an understanding of that. Andreas will be speaking about that at the upcoming Investor Day. So there are ways, I think, in which we can, call it, demystify some element of the portfolio and also provide more evidence of how the Honeywell processes, the One Honeywell, if you will, approach, cascades through and possibly influences the performance of these businesses and the leadership. I think Elena has done a terrific job with her Investor Days in the visits to the various locations, showcasing our products, our facilities, our people, the Honeywell Operating System, et cetera. We want to continue to do that and be responsive to that. So I think those are the kinds of things, Scott. The final thing I'll mention to you is, I think, over time, some of this also sort of heals itself. And the reason is, is because you're going to see our very strongest, highest growth businesses continue to get bigger, and we'll add to those inorganically through M&A. And what you'll see is that, over time, those will become even stronger recognized, I think, pillars within the company, and the others will either participate or they won't participate in that. So I think some of that, Scott, will be just sort of a natural sort of evolution that will occur within the portfolio over time. So I think all of those -- for all those reasons, we're confident. We understand the issue. It's real and we want to just make sure that we're being positive and proactive in terms of how we approach it without changing our stripes.

Scott R. Davis - Barclays Capital, Research Division

I think that's a fair answer. Let's open up the Q&A now to the audience. Up front, there's one up here. And you can press the -- it's not the green button. I was wrong, it's a speaker button, microphone button.

Question-and-Answer Session

Unknown Analyst

Two questions. One is, as we went through the fiscal cliff discussions last year, did you see any impact on customer orders in any of the segments? If so, which ones? And then, are you seeing that interchange more positively in the early part of the new year? And then just second, could you talk about what the impact the sequester might have on your businesses, should it go into effect?

David James Anderson

Sure. I think, relative to the fiscal cliff, part one of the first question that you had, in terms of any specific evidence, I would say, no, both on the negative and on the positive. However, I would say that there is an overlay to the general economy that is still very much present. There's still a degree of uncertainty, I think, that exists in the overall economy. The U.S. economy has been surprisingly, I think, resilient, despite the lack of political leadership and policy. But it's something that we just feel like we have to live with and manage through. Really, to the second point -- and by the way, just as a reminder, as I said on the very front end, it's a continued mix in terms of orders growth and orders patterns. It's a continued challenging environment. And in part, attributable to that void in terms of political leadership. Regarding sequestration, it really is predominantly focused on our Defense and Space business, which 2011 was about a $5 billion business, last year about $4.9 billion. We've got it coming down a little bit further this year in terms of our guidance for 2013. We've assumed 80% impact of sequestration, of full sequestration in our planning numbers. So you got a 3% decline for 2013, top line for the D&S business compared to 2012 results. Now full sequestration would be worse. In fact, I'd say the reality is, right now, you'd expect, as of March 1, we're probably into sequestration. And for what period of time that's going to be until we get a new authorization bill, I'd say that's, really, Elena, it's a TBD.

Elena Doom

Absolutely.

David James Anderson

Anything that you would add to that?

Elena Doom

No. I think just building on the point, our business has done some scenario planning around a more full sequestration scenario and living under the continuing resolution assumptions for the remainder of the year, and they've attempted to sort of bridge that -- the gap, and depending upon the timing, I think it really falls into whether it's a 2013 or 2014 effect. So we could see a 2% to 5% incremental sales degradation as a result of full sequestration...

David James Anderson

In the Defense business.

Elena Doom

In the defense business, right, as a result of fuller sequestration numbers and the lack of an appropriations bill being passed anytime in the near future.

Scott R. Davis - Barclays Capital, Research Division

Let's take the next ARS question, and we'll queue up another audience question. But the next -- in your opinion, what should Honeywell do with excess cash? Bolt-on M&A, larger M&A, share buybacks, dividends, debt paydown, internal investment? Please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

Wow. Pretty split up. I think that's one of the challenges when you're trying to serve different types of shareholders, right? People want you to do different things.

David James Anderson

Right.

Scott R. Davis - Barclays Capital, Research Division

So let's go to the next question and try to get some clarity on this. What multiple, and this is P/E multiple on 2013 earnings, should Honeywell trade? And you can see the numbers here. So please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

13 to 15. So not quite Danaher quality yet.

David James Anderson

Right.

Scott R. Davis - Barclays Capital, Research Division

That's telling. And then let's take the last question, then. What do you see is the most significant investment issue for Honeywell? So maybe this helps address what drives you to a higher multiple, right? So core growth, margins, capital deployment or execution of strategy? Please vote.

[Voting]

Scott R. Davis - Barclays Capital, Research Division

Core growth. Okay. Well, there it is. Drive that. And we got a similar answer at the last presentation, drive core growth and drive you a higher multiple, maybe, right? So I do want to take 1 or 2 more from the audience, if there's questions out there. If there's one, we'll take it right now. If not -- anybody? We've got a shy audience today. So I think a great -- I think, a question to ask in periods like these, where there's not a huge amount of debate, the sequestration is -- obviously influences lots of folks...

David James Anderson

Right..

Scott R. Davis - Barclays Capital, Research Division

There's not lot of debate. So what keeps you up at night? What are you worried about? What are the things that, you know that it's not going to be a perfect year, but what are the things we're going to wake up on May 1 and say, "Crap, I didn't think about that." I mean, what are the kinds of the...

David James Anderson

I'd say it's really back to the, if you will, the macro economy, Scott. It really has to do with the fact that you can become enthusiastic with a few data points. And you can begin to string that together and believe that there's actually a, call it, a predictable, forecastable path forward and -- Scott and I were talking a little bit before the session and talking about contingency, and I think we've got as much contingency this year as I can remember. And I think, frankly, it's well deserved. It's just that type of environment. And I wish it were better, I wish it were different. And I wish we could say there's this kind of upside or we're being too conservative or whatever. We're going to continue to be somewhat conservative in our approach to planning and to guidance. But the reality is I think it's very appropriate in this environment. So I would say that's what -- if there's something that keeps me awake at night, it's really that. And I think our internal execution, our effective control and management, putting the CFO hat on, the effective control and management of the disparate, diffuse set of businesses and operations around the world, our ability to forecast, plan internally, to do scenario planning, which is really the term of the day, is really what we do anymore, it's really scenario planning, set up ranges and set up outcomes and what ifs and possibilities. I would say our skill set is good there, and you see that in terms of our performance against our guidance and the transparency that we provide in terms of our results as well as our forward guidance. But it's really the -- it's really related to the macro environment in which we operate.

Scott R. Davis - Barclays Capital, Research Division

Question up front, please. And there's one on the side.

Unknown Analyst

When you said that you built in as much contingency as you can remember, does that comment exclude your defense business, where obviously there's a lot of uncertainty, or is that all across the board?

David James Anderson

Well, I'd just say generally, it's at the corporate level in terms of just making sure that we have some reserves, some contingency, again, a set of unknowns and factors and scenarios. Yes.

Scott R. Davis - Barclays Capital, Research Division

Question over here?

Unknown Analyst

Could you talk about your acquisition in the mobile computing space and your enthusiasm for potentially investing more in that area?

David James Anderson

Well, with the acquisition of Intermec, we'll basically doubling our size from $800 million to around $1.6 billion in that space. We've done very well, as you know, with the Hand Held and Metrologic acquisitions. Those have been effectively integrated and repositioned in terms of the Honeywell offering with new technologies. We've had notable wins, as you know, with both UPS as well as with Deutsche Post. So we gotten some terrific, visible commercial validation of our participation in that space. Intermec brings a tremendous set of technologies as well as channel strength. So it's going to broaden our product offering. They have a leadership technology in voice collection and systems interface, voice interface. And we've got, we think, another winner with both the strategic qualities, product portfolio qualities, channel strength, as well as the cost take out opportunities with that. There's really nothing that we see on the horizon that would be needed as a complement, as a supplement to that, to really give us either the scale or the positioning in terms of the product offerings, the technology offering, to be fully competitive against anybody in the marketplace. So it's really about integrating now, successfully building now this franchise to include Intermec. That's really the focus in terms of our management team. So we're very excited about that. Again, just to remind everybody, on a kind of reported level, it's a big headline price. When you adjust for what we'll net in terms of realizable synergies and saves over the first 12, 24 months of that acquisition, it really comes down into that range we talked about earlier of that 5x, 6x, 7x EBITDA of what we will realize ultimately in terms of run rate performance.

Scott R. Davis - Barclays Capital, Research Division

Okay. Let's wrap it up with that. Thank you, Dave and Elena. Thank you, everybody.

David James Anderson

Thanks, Scott.

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Source: Honeywell International Inc. Presents at Barclays Industrial Select Conference, Feb-20-2013 09:45 AM
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