96 annotations
Page 4 of 5
Finally, we maintained our dividend growth policy, paying out $2.7 billion and raising our dividend for the 13th time in 12 years.
divi up again
Transcript
2022 Q4
6 Feb 23
backlog, which grew to a new record of $29.6 billion, up 7% year-over-year and 2% sequentially due to strength in Aerospace and Performance Materials and Technologies. Orders were also a positive story in Aero and PMT, leading to a 2% organic orders growth and 6% sequential growth in the fourth quarter.
backlog up 7% (aero+pmt), orders only 2% organic
Transcript
2022 Q4
6 Feb 23
Orders in our Sustainable Technology Solutions business have accelerated dramatically over the past two years, and we're expecting more of the same in 2023 as we continue towards our $700 million sales target by the end of 2024. In total, we expect PMT sales to be up mid-single digits for 2023. PMT margins should expand modestly as a result of improved volume leverage and continued pricing and productivity actions.
Sustainable tech solutions and PMT outlook
Transcript
2022 Q4
6 Feb 23
However, we remain very confident in our long-term framework for Building Technologies as much of our portfolio is aligned with secular trends of sustainability and energy efficiency.
LT HBT outrlook positive
Transcript
2022 Q4
6 Feb 23
As expected, we are seeing some signs of demand weakness in pockets of our shorter-cycle businesses in SPS and HBT, but demand across our long-cycle portfolio remains robust with the exception of warehouse automation as evidenced by 2% organic growth in orders and 7% growth in backlog.
short cycke weakness , long cycle robust
Transcript
2022 Q4
6 Feb 23
Yes. As Darius highlighted, I think the most difficult spot for us has been in Aerospace for sure. And we actually -- we've done better than you probably would expect in the long-cycle businesses going and repricing the backlog because we have seen inflation there.
So we have had some good success in our projects businesses going back and getting price. The products businesses are definitely the bigger driver of all of that, as you would imagine.
And so that's, I would say, PMT, HBT, SPS are all having very strong pricing power in the products businesses in particular.
Darius Adamczyk
And I would just add, the algorithm going forward is probably going to be a bit different. I mean, as we look into '23, we're probably not going to enjoy this much of a change from price and we'll probably get Q3. Q4 still we expect to be relatively strong. But the algorithm kind of changes in '23. I mean, Q4 will probably gain some very, very modest volume leverage, that's what we're coming on and much more volume leverage next year, probably a little bit less from price.
So kind of how we make the year and how we grow margin expansion for '23 is going to be different. That's -- the supply chain has been frustrating, but it is slowly improving. I mean, we dropped our pass-through backlog in HBT, SPS, PMT, granted in aero a bit of a tougher problem. But even if you look at aero and if you look at our outlook in Q3, it was actually up slightly versus Q2. And normally, I'm kind of -- if you take a look at the averages over the last 5 years, Q3 output is about 4% to 5% lower in Q2.
pricing pwer discussion
Transcript
2022 Q3
31 Oct 22
that actually may be not helpful
"NET helpful"
Transcript
2022 Q3
31 Oct 22
Yes. I mean you're right. I mean there was a tiny tick downwards in our path to backlog. It went down in PMT, HBT and SPS but went up, it was offset in aero. And we are seeing some improvement in the supply chain in those three segments. But unfortunately, we -- when you combine robust order rates in aero, there's some substantial issues in aero supply chain. Aero went up and went up substantially.
backlog discussion
Transcript
2022 Q3
31 Oct 22
We are much more linked to downstream segment in PMT.
So the volatility in oil price does determine customer decision on how they want to spend capital based on the returns they will get. What we have seen there is that investments are slowly getting better. We clearly see investments getting better in the sustainability side of the portfolio.
oil/pmt etc
Transcript
2022 Q3
31 Oct 22
Yes. I think you see it in our outlook for next year.
We expect to grow free cash flow next year, roughly -- sort of roughly in line with EPS, excluding the impact of pension, which is going to be a major headwind.
fcf will grow in lone with eps next year
Transcript
2022 Q3
31 Oct 22
Yes, I would just say that probably the sweet spot for us continues to be sort of in that $1 billion to $5 billion purchase price. We're not wedded to it. I mean, one of the things that -- and I mentioned this on the prior earnings call is that I probably would stay away from sort of the tiny deals unless something is very, very, very strategic because it takes up a lot of energy, and I'm not sure it moves the needle.
So I think we're going to be probably inching up in terms of the size of the deal. I never say that mega deals are impossible, but they're probably not likely.
deal -- 1-5bn range.
Transcript
2022 Q3
31 Oct 22
And then secondly, you did talk about Quantinuum as a potential like strategy to offload that piece of your business sometime over an 18-month period. I'm just curious whether the environment has kind of changed things at all just given the volatility that we've seen with stock action?
quantinuum spin off?
Transcript
2022 Q3
31 Oct 22
ou called out Project Solutions is a bit weaker into fourth quarter. How do we think about weak warehouse, probably weak spending environment in '23 versus supply chain sort of pent-up demand as we go into '23 for the PS portion of the portfolio?
Vimal Kapur
sps in a recession?
Transcript
2022 Q3
31 Oct 22
es, because we have such a broad scenario. And I think if you look at programs like hypersonics, T55, those are some of the helicopter engine programs. Those are obviously all good for us.
You've got to remember, there's -- this obviously wasn't our best quarter in terms of defense and space. But we do think this is the bottom.
Our backlog went up and it went up substantially.
defense & space weak but this is "bottom"
Transcript
2022 Q3
31 Oct 22
think all I can tell you is we're going to expand margins. That, you can count on. How much? Unfortunately, you're probably going to have to wait until the end of January or early February, whenever we issue our Q4 results and guidance for '23. On your former question, I just would like to point out a couple of things.
mgn expabsion in 2023 -- wait fpor guidance
Transcript
2022 Q3
31 Oct 22
So the OE growth is not obviously a favorable mix scenario.
Now to offset that, the miles travel in the aftermarket business, we don't expect as robust air miles next year as we do this year.
However, it's offset by the fact that we do expect more wide-body miles next year. And as you know, the aftermarket opportunity of wide-bodies to narrowbodies are roughly 3:1.
widebody recovery will be good for aftermarket
Transcript
2022 Q3
31 Oct 22
Safety and Productivity Solutions, decreased investment in new warehouse capacity and potential recession impacts in our short-cycle businesses will provide headwinds in 2023.
However, we have a strong portfolio with differentiated solutions that will allow us to compete regardless of the macro environment. Operational improvement actions that we've already begun implementing and shifting business mix will allow us to expand margins in '23, even if revenues decline year-over-year
sps -- watehopuse will be weak
Transcript
2022 Q3
31 Oct 22
P&C, we expect to continue to capitalize on the growth we have seen in 2022. Backlog built this year will drive growth in Process Solutions, LNG capacity expansion and improved comps as Russia headwinds fall off will support growth in UOP and improvement in semiconductor supply among customers and continued demand for Solstice products will enable advanced materials to have another strong year. Sustainable Technology Solutions should also provide growth as the inflation Reduction Act supports new SaaS and carbon capture opportunities.
pmt outlook 2023
Transcript
2022 Q3
31 Oct 22
HBT, stimulus fueled investment in institutional markets as well as elevated backlog levels from this year's supply constraints should provide resiliency into 2023
hbt good backlog will flow into 2023
Transcript
2022 Q3
31 Oct 22
While we remain confident in the medium-term growth rate in SPS, short-term headwinds persist, and we still expect SPS sales to decline mid-single digits in 2022.
sps guidance
Transcript
2022 Q3
31 Oct 22