Good day ladies and gentlemen and welcome to Honeywell’s third quarter earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star, one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star, two. Lastly, if you should require Operator assistance, please press star, zero. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mark Bendza, Vice President of Investor Relations. Please go ahead, sir.

Thank you Steven. Good morning and welcome to Honeywell’s third quarter 2020 earnings conference call. On the call with me today are Chairman and CEO, Darius Adamcyk, and Senior Vice President and Chief Financial Officer, Greg Lewis. This call and webcast, including any non-GAAP reconciliations are available on our website at www.honeywell.com/investor. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our businesses as we see them today. Those elements can change based on many factors, including changing economic and business conditions, and we ask that you interpret them in that light. Unless otherwise noted, the cost action plans described herein are not final and may be modified or even abandoned at any time. No final decision will be taken with respect to such plans without prior satisfaction of any applicable requirements with respect to informing, consulting or negotiating with employees or their representatives. We identify the principal risks and uncertainties that may affect our performance in our annual report on Form 10-K and other SEC filings. This morning, we will review our financial results for the third quarter of 2020, share our guidance for the fourth quarter and full year 2020, and share some preliminary thoughts on 2021 dynamics. As always, there will be time for your questions at the end. With that, I’ll turn the call over to Chairman and CEO, Darius Adamcyk.

Thank you Mark and good morning everyone. Let’s begin on Slide 2. In the past few months, we’ve celebrated two significant milestones. First, we celebrated Honeywell’s 100th year anniversary as a publicly traded company. We are proud of our longevity and long legacy of innovation. Since 1920, we have navigated the Great Depression, World War II, numerous political changes, the Great Recession, and the emergence of disruptive technologies in every market we serve. The reason that Honeywell continues to thrive in all these years, plain and simple, has been our ability to adapt to an ever-changing role and to innovate. The long list of inventions from the last 100 years and our legacy innovation endures today. For example, we are transforming the way our customers do business through Honeywell Forge, our cloud-based operating model, and are helping the world cope and recover from the effects of the COVID-19 pandemic with a new portfolio of healthy solutions. In addition, we recently announced a breakthrough in the early era of quantum computing, the introduction of the system model H1, our next generation quantum computer which offers a proven quantum value of 128, the highest measured in the industry. We also announced new users, including DHL and Merck, which demonstrates the wide range of quantum computing use cases. The second milestone we celebrated was our return to the Dow Jones Industrial Average. The S&P Dow Jones indices announced in August, Honeywell was previously a Dow component from 1925 to 2008. Our return to the Dow 12 years later reflects years of consistent performance and our ongoing transformation to the world’s premier software industrial company. We are proud and honored to re-join the group of companies that comprise the Dow. Both of these milestones serve as timely reminders of our long legacy of innovation…

Thank you Darius, and good morning everyone. As Darius highlighted, we’re very pleased with the third quarter. Our operational execution drove significant sequential improvements from Q2 and an improvement versus our expectations in July, particularly in revenue. While third quarter sales declined by 14% organically due to the effects of the pandemic, this was a four point improvement from the 18% organic sales decline in Q2 with sequential growth in all four segments. Importantly, we delivered strong double digit organic sales growth in our defense and space, warehouse automation, and PPE businesses, as well as in recurring software sales in HCE. Lower sales volumes and mix in aerospace and PMT drove 130 basis points of year-over-year segment margin contraction, but we once again expanded margins in HBT and SPS to drive 140 basis points of sequential margin expansion from second quarter. Our cost actions delivered approximately $450 million of year-on-year benefit in the quarter, which brought us to approximately $1.1 billion of savings year to date. We acted fast and early in the crisis and are now on track to deliver $1.5 billion to $1.6 billion of cost savings in 2020, up from our previous estimate of $1.4 billion to $1.6 billion. Adjusted earnings per share was $1.56, down 25% year over year but up 24% sequentially from adjusted EPS of $1.26 in the second quarter. We reported $124 million of repositioning in the quarter to fund cost savings initiatives for 2020 and into 2021. That repositioning funding was higher than the third quarter of last year, driving a $0.04 headwind below the line, and interest income was lower than third quarter of last year, driving a $0.05 headwind below the line. As expected, our higher adjusted effective tax rate resulted in a $0.05 EPS headwind partially offset by $0.04…

Thank you Greg. Before we wrap up, I’d like to take a minute on Slide 9 to discuss an important topic: our commitment to a sustainable future, which is one of the key elements of our overall ESG story. At Honeywell, we believe our robust environmental, social, and governance in our ESG framework enables our long term success. Despite the unprecedented challenges we have faced this year, our commitment to our ESG principles has not wavered. To the contrary, I believe our perpetual drive to strengthen the sustainability of our business and uphold the highest ethical standards has only fortified our resilience. Our commitment to ESG is centered on the protection of our people and the environment, achieving sustainable growth and accelerated productivity and developing technologies to expand the sustainability capacity of our world. As evidence, we established robust 10/10/10 ESG goals to achieve by 2024 and we closely monitor progress against these goals. Additionally, starting this year as part of our continued focus on sustainability reporting, we’re reporting in alignment with the FASD and TCFD framework. As you can see on the slide, we have already worked extensively to reduce greenhouse gas emissions, increase energy efficiency, conserve water, and proactively restore former operations of predecessor company sites to produce community assets. Honeywell is uniquely positioned to shape a safer and more sustainable future. We continue to invent and develop technologies that provide our customers with adaptable and efficient solutions to their safety, energy, and environmental needs. In fact, we focus approximately 50% of our new product research and development on solutions that improve environmental and social outcomes for our customers. Some of the challenges our technologies address include sustainable refrigerants and aerosols, sustainable buildings and building safety, sustainable aviation and aviation safety, sustainable electric power, plant and personal safety,…

Thank you Darius. Darius and Greg are now available to answer your questions. Steven, please open the line for Q&A.

[Operator instructions] We will begin with our first question from Scott Davis with Melius Research. Please go ahead.

Good morning guys.

Morning Scott.

Good presentation, and obviously really good decrementals, but I just wanted to focus a little bit on the future. One of the real tools you have, I think, Darius and Greg, is your balance sheet. Perhaps just update us a little bit on M&A, and then what’s your appetite to getting more aggressive in purchases here, share purchases, just given a disconnect between your stock price and perhaps the upside reality?

Yes, I think in short, I think the story isn’t any different. We were very pleased that we were able to complete a couple of recent acquisitions. Although they’re not enormous, they are meaningful, and as you can see, the impact in the longer term for our business is actually quite significant - it’s a billion dollars-plus, and I think [indiscernible] to put these acquisition in place that although may initially appear small, they’re really building for the future, and these two are very much in that category. I would also tell you that our pipeline is very robust at the moment, probably in better shape than a long time. The M&A environment is getting better. There’s some real practical challenges to doing M&A, especially for international M&A. To conduct due diligence is quite a challenge with the quarantines in place and travel, and as you can imagine, much of the due diligence team comes from corporate so they’re not necessarily local, so that’s creating some challenges. But we’re working through that and we’re looking at some things that are domestic as well as international, so I think we’re going to continue to do that. As you’ve heard through our presentation today, we’re recommitting to a 1% share count reduction at least for the upcoming year, so it’s sort of--you know, we’re getting back to business, and the business is improving. We drove nice, I think, sequential progress from Q2, we’re going to drive again strong progress into Q4. Our decrementals are now going to get down into the low 20s - I think that that’s a fairly good performance, given the cards we’ve been dealt, and I think we’re going to do what we always do, which is deliver for today but also deliver for the future. I think those two acquisitions we made earlier this month are indicative of that.

Okay, that’s helpful. Then quantum is something that you guys have been talking about for the last year, and this stuff’s a little over my head, but how do you get paid for that? What do you envision the pricing model--you know, is there any way to identify a TAM around that or an opportunity that we can start to think about?

Yes, I think the business model pricing value models are still evolving, as you can imagine. It can vary anything from do we cover some part of the value that you create by solving the problem, which frankly is the model we would prefer, although it’s a little more challenging to implement, but to leasing time and those kind of structures. You know, early on we’re going to experiment, we’re going to try. I think the thing that’s exciting about our quantum effort is the people. The first thing is, as you saw yesterday, we’re making very strong progress in terms of technology, and we believe we have the world’s most advanced quantum computer. The second part, and I think this is maybe even more important, we’re gaining more and more customers, because when people are willing to pay for these services, so you can sort of make all sorts of claims but if you can’t secure customers and revenue, which we’re now starting to do, I think that’s a pretty good testament of saying that we have something real and differentiated, and continue to be in momentum on the commercial side.

Okay, good luck guys. Thank you. I’ll pass it on.

Yes, thanks Scott.

We will take our next question from Steve Tusa with JP Morgan. Please go ahead.

Hey guys, good morning.

Good morning.

I think looking at the sub-segment data, that your aftermarket, aerospace commercial aftermarket was up 18%, something like that sequentially. Can you just maybe confirm that, and then also just talk about how you may be leveraged to flight hours? You seem to be kind of bouncing off the bottom sooner than some of these other guys, kind of leading off the bottom, if you will.

Well, I think Steve, we’re down in the ACR aftermarket by, again, mid 50s, 55% I think, which is similar to what I thought I heard from some of the peer groups earlier this week, and again consistent with Q2 where we were down 56%, so yes, nominally it’s up a little bit, as you mentioned, but kind of on a year-on-year basis it’s pretty consistent with what we saw in Q2. Obviously the upside, the BGA was nice because that went from down 50 to only down 28, so we saw some nice sequential improvement on the BGA space.

Yes, I mean, I think whether they’re coming from business jets or aircraft, I think revenues still matter, but it was up. Your total commercial aftermarket was up 18% or something like that, so [indiscernible].

Yes, that’s true. [Indiscernible].

Okay, when it comes to the commercial aftermarket, the large stuff, how tethered is that to flight hours versus perhaps stuff that’s a little more inventory and durable goods type of related stuff?

So far, we haven’t seen any divergence between our MSP growth, which is that’s the power by the hour, that’s directly tied, and more of our shop business, spares, etc. Those right now are moving in very similar trajectories as far as year-on-year growth, so they have not diverged in any meaningful way so far.

Got it, so you guys should kind of lead out of this if bus jets continue to trend, and you’re kind of tracking flight hours in your large commercial aftermarket stuff relative to peers?

Yes, and as we’ve talked about, really the growth in flight hours is obviously tied very closely to confidence, which waxes and wanes almost on a month by month basis, based on the circumstances on the ground, so--but yes, at this moment, we expect it to move pretty closely to the movement in flight hours, but that’s a little bit of [indiscernible] where it’s hard to really predict where that’s going to go at the moment.

Yes, and just to maybe add, Steve, we’re expecting very, very modest improvement in Q4 and then continued improvement on a sequential basis, but that does presume some medical solution starting to get rolled out early in 2021, which frankly I don’t think is completely unrealistic based on what I’ve been reading. I think it gives our aerospace business actually a really nice long runway for the next two to three years as things ramp up, so given the adjusted cost base, I think this is actually a pretty positive thing. I do want to note one thing about the costs, because we’ve been going through something called Honeywell digital automation and so on. This is not just a stupid rip out of cost just to reduce it. Much of what we’ve done is we just accelerated some of our initiatives that we were going to do anyway, so I think that some of this is sustained. Now granted, it’s going to be offset somewhat by investments, but I think it’s important to note that this is a bit of an acceleration of some of the initiatives that we were doing anyway.

Got it, and then just one last quick one on HBT. Watching a bit of those tech forum presentations over the last couple weeks, it seems like there’s a lot of activity that building managers are trying to figure out how to approach ESG, and obviously IAQ for COVID. You guys seem to be kind of at the center of that. Obviously some of the HVAC guys are making a bigger deal out of it, and it wouldn’t necessarily translate today into revenues. How big is the--you know, is the quotation activity there, can you quantify in a way what maybe the front log of discussions are around customers coming to you? Are the phones lighting up as people are asking you about how to manage all this? I’m just curious as to if activity has picked up there at all.

Yes, think about an open pipeline in the half a billion dollar range in terms of some of our healthy building offerings. Bookings in the double digit million range, mid double digit with potential to approach triple - you know, $100 million plus hopefully by the end of the year. It’s accelerating. It’s something that everybody needs. Most, at least in the U.S. and some other parts of the world, people are not back working in their workplace yet, but when they do come back, they do want to come back to a healthier environment. I think we’re kind of hitting the spot there and the time to implement those solutions is now, not after people come back. So we’re seeing good activity, and we’re very encouraged by the order progress.

About $500 million, did you say?

Pipeline - pipeline, Steve.

Wow, okay. Great, thanks. Appreciate it.

We will take our next question from Nicole DeBlase with Deutsche Bank. Please go ahead.

Yes, thanks. Good morning guys. I just wanted to focus first a little bit on free cash. Totally understand that you guys have made the commentary about 2Q being the high point of the year, but I guess I was surprised that inventory was actually up a little bit year-on-year, so is there opportunity to improve inventory as you move into 4Q and into 2021?

Yes, that’s exactly the way it plays out and what we discussed, as we mentioned in July. We knew that we were going to get pressure from the [indiscernible] costs associated with all the repo that we’re doing - you saw that, it was almost $200 million year-over-year increase, and we talked about the capital, which again even in this environment, we continue to invest in capex particularly in PPE and Intelligrated. Then yes, we talked about inventory as really the thing we’ve got to make some moves on. We’ve got a long cycle business in aerospace which has a pretty sizeable tranche of inventory there. We’re working through that now and we expect the fourth quarter to start seeing that come down, so that is exactly the playbook that we’re running. As I mentioned in my comments, we do expect cash flow to get better sequentially from the third to the fourth quarter, but we also again will continue--we talked about it even in the very beginning of the year, we’re going to have an extra payroll cycle in December with the length of the year, which is, call it $150 million round about pressure, so yes, those are the dynamics. Then as we get into next year, we continue to--you know, working capital and cash is always a big focus for the company and we continue to make improvements in those areas, and Honeywell digital also is one of the aspects that will help us in that.

Yes, and Nicole, just to add a couple things, number one, Q3 was at or slightly even above where we expected, so there’s no surprise here given the cash hit on the restructuring and the incremental investment in growth capital, so that’s a key point. The second point is as we get into Q4, although we have some headwinds from this extra pay cycle, we do expect our conversion to be over 100%, kind of get that back on track, so--and we indicated that Q3 could be challenged because we knew we were facing these extra headwinds in terms of cash, for I think good reasons. I mean, one is investment in making the business more efficient, and the second investment is in growth capital, so really not a surprise at all to us where we ended up, cash, probably a little bit even up where we expected. Last comment on inventory is, as you can imagine, for a long cycle business like aerospace, as we kind of started tuning down our outlooks early in Q2, that takes a little bit of time to kind of get through the system, and we expect to see more benefits in terms of inventory reductions as we had into Q4 and beyond.

Got it, thanks Greg and Darius. That’s really helpful color. Then for my second question, I just wanted to ask one more on M&A - clearly a very hot topic for you guys. As we‘ve moved through this pandemic and you’ve seen some changes in what’s going on by end markets and the outlook, have your M&A priorities changed at all with respect to the areas of the portfolio where you’d be interested in making deals? I guess maybe why I’m a little focused is does aerospace become a more attractive opportunity set, given what’s going on in that end market?

Yes, obviously on your last one, obviously some of the aerospace assets are probably at different value points than they have been in a while, so from that perspective it is appealing. Have our priorities dramatically changed? I would say it’s probably too early to tell because I’m not really ready to declare as to what the post-COVID world will look like, and I think we need to see a little bit of what that will look like. But in terms of our levels of interest, they really vary across all our businesses, including HCE, and we envision a scenario where we’re going to augment and do bolt-ons for all five of our businesses. I wouldn’t say it’s changed dramatically, but obviously the aerospace segment is a bit more approachable from a valuation perspective.

Thanks, I’ll pass it on.

We will take our next question from Andy Kaplowitz with Citigroup. Please go ahead.

Hey, good morning guys. Darius or Greg, achieving a 22% to 23% decremental margin in Q4 would be another significant improvement from Q3’s decrementals, so could you talk about where you expect to see the most improvement? It seems like it may be in aero given the improvement in Q3, and then for all of Honeywell, what does it tell you about the carryover of permanent cost reduction that you’ve talked about before, that 60% to 70% of the $1.55 billion into ’21, and does it give you confidence in terms of recording incrementals that could be above the decrementals you reported at the bottom of the cycle?

Yes, in terms of decrementals, I think we’re expecting those across the business because, as you can imagine, a lot of our cost actions occurred Q2 and during Q3, so you didn’t see the full benefit of those actions until the quarter ended, and that obviously rolls through into quarter four. We have a lot of confidence in those decrementals dropping into the low 20s from that 29 that you saw this year. I think we added quickly and decisively and made those adjustments on the cost base, which I think is really going to pay off, not just in 2020 but 2021 and 2022 as we really position the company well for the future, while still investing for the future, which I think is important because we’re going to need to do that in ’21. So I think that the story is that we’re very confident. Maybe one other thing that I’ll add before I turn it over to Greg here is we’re building up a lot of capacity in our SPS business. We brought on a lot of capacity in Q3, we’re bringing more on in Q4. Both expansion of capacity as well as really maximizing efficiency of that capacity, because as you can imagine when you first bring capacity on board, it is not an ideal efficiency the first or second month - that takes a little bit of time. But the good news here is that as we get into 2021, not only will we get substantial expansion in SPS capacity, we’re also going to be much more efficient in the processing backlog that we have, and we’re already starting to see that even in this month, but we’re still in the capacity expansion. I’ll turn it over to Greg for some more color.

Yes, so Andy, the simple way--because I agree with Darius, I think we’re going to get that improvement across the board, but the simplest way to think about it is we’re going to get leverage in Q4 We’re keeping our fixed cost base fairly close to flat sequentially from the third to the fourth quarter. We will start to see some costs increase as travel returns to some degree and so on, but with a sequential improvement of revenue that we will see from the third to the fourth quarter, you’re going to see, I think, leverage across the portfolio. Then as it relates to your question on 2021, I think our position is still the same - that 1.5 to 1.6 cost reduction that we are delivering on, we think 60% to 70% of that persists into 2021, which means we’re going to see something in the neighborhood of, call it, half a billion of dollars of the headwind year-on-year into ’21 due to the temporary nature of some of those costs, so very much consistent with what we had laid out in the last two calls and we’re very confident in our execution around those plans and actions.

Very helpful. Then Darius, obviously it seems like you continue to face some pressure in PMT and specifically in UOP. I think you said in UOP, [indiscernible] year-over-year decline in Q3. Are you seeing any signs of improvement yet within UOP and HPS, and you did have good backlog at HPS coming into the downturn, I think you mentioned flattish backlog for this quarter. Are you seeing any signs of projects moving forward again within HPS, and what are customers telling you about the prospects for recovery in 2021?

A couple points. First one is I think there’s a part of PMT that’s particularly challenged - our gas processing business because as you know, the number of rigs and so on, that that’s way down year over year, and gas processing is down year over year. The other thing to keep in mind I that as a lot of our customers, who are much of the oil and gas customers, as they announce their capex and opex cuts for the year, they’re not likely to reverse those in 2020, so we really don’t expect to see an uptick this year. We expect an uptick next year as some of those budgets get normalized and, as you know, you can’t not invest in your infrastructure for too long or you’re actually going to have a crisis the other way, where your demand is going to dramatically [indiscernible] supply, so we envision an incremental improvement and obviously there is an alignment to overall economic conditions here, so as the world returns back to a little bit more of the normal, we would also see that pick-up in PMT. The thing that I am very encouraged by is that we have not seen project cancellations. We’ve seen slide-outs and push-outs, but we have not seen cancellations. Frankly when I was running the PMT business in ’15 and ’16, we saw probably more cancellations back then than we are now, so I think that that’s very encouraging and I’m bullish on PMT for 2021 and beyond.

Appreciate it, guys.

Thank you.

We will take our next question from Jeff Sprague with Vertical Research. Please go ahead.

Thank you, good morning everyone. Just two from me. First, I guess for Greg, just to clarify the comment about the headwind next year on return of costs, and I understand that’s consistent with what you said, but I think today for the first time, we are getting the comment, quote-unquote, strong incremental margins for 2021. I just want to clarify, those are strong incremental margins net of that headwind - is that the message?

The message is that we’re going to return to margin expansion, and I would say that is including that incremental headwind. I think the way we’ve positioned ourselves from a fixed cost standpoint, Jeff, is we’re setting ourselves up for the ability to grow margins and invest back in the business next year, and I think that’s--you know, Darius highlighted earlier, we’re not going to try to have a blow-out ’21 and leave it all on the table. We’ve got some very important transformation initiatives that we want to make sure we’re continuing to invest in, and we’ve got some important investments to make in our breakthrough initiatives in quantum and HCE, etc., so we do expect to return to our margin expansion framework, even net of that, call it half a billion headwind.

Yes, just to add to that, Jeff, and I’d just echo what Greg said, I think it’s exactly right, we will drive margin expansion next year. There’s no question about that. How much is still a little bit of a TBD, and that includes, by the way, the impact of those headwinds, so we have accounted for that. But we also have to invest in our future, and I think particularly some areas, R&D specifically, aero, HCE, Honeywell Digital, those are areas where we definitely want to invest in. [Indiscernible] planning cycle but what we’re going to try to do is offer a very compelling return for our investors while investing for the future - that’s always the balance we’re going to have, and we’re going to do both and we’re pretty confident it’s going to be a very compelling year for our investors, but also we’re going to invest for the future.

That makes sense. Maybe somewhat related, Darius, you mentioned, and I think Greg, obviously going through this difficult environment was a window to accelerate restructuring and some other things that maybe were on the shelf, that you would have done later. Given that, should we expect a more normal restructuring year, from a historical brute force type of restructuring relative to what we saw in 2020 here?

Can you repeat that, because I didn’t quite get it. What kind of restructuring, Jeff?

The question is really just on restructuring and the cost base itself, kind of the normal flow of restructuring--

Oh yes, I get it. Yes, I think we’re going to return to more normalized levels. Obviously we’ve pulled some things in that we were probably going to do later. We rationalized our cost structure because frankly we had to - I mean, that’s what we were facing early in Q2, and we did do that, so I think as we look in 2021 and 2022, we’re going to return to a little bit more of a normalized level. But Jeff, as you know, this never fully exits our playbook. In good times and bad, we always look for opportunity to be much more efficient, so yes, it’s not going to be at the same level as this year, but we still are executing our ISC transformation, we’re still executing on Honeywell Digital, that’s going to--

[Indiscernible].

--yes, so it’s all going to continue pay off in terms of productivity and efficiency, so hopefully that helps.

It does, thank you.

We will take our next question from John Walsh with Credit Suisse. Please go ahead.

Hi, good morning everyone. I guess just wanted to follow back to the margin question here in Q4 and just make sure I understood the underlying comments. If we look at where you’ve spent most of the restructuring dollars this year, it’s been in aerospace and PMT, and if we look at Q3, that’s where you had the largest deltas from a pick-up. Is that still where you would think to see a lot of the improvement in Q4, particularly in those two segments year on year?

Yes, so John, absolutely. I think when you look at it, those are the ones where we spent the most repo. For obvious reasons, they’re the most challenged of the businesses in the portfolio, so yes, I would expect that that’s where you’re going to see some healthy improvements. But as I mentioned, we’re going to see it across the board.

Got you, and then maybe just a finer point on thinking about cash next year. You sized that payroll. I don’t know if you’ve spoken about capex plans yet into ’21, but should we think of next year as maybe those net and it’s just net income growth and working capital blocking and tackling, or are there any other things to be aware of in the headwinds and the tailwinds column for next year, particularly thinking about capex?

We’re still obviously in our planning stages for ’21. As you said, if you think about capex this year, we’re probably going to wind up spending round about what we thought we were going to in the early part of the year, before COVID even hit, because our reductions in some of the discretionary areas we backfilled with the growth capital that was important to us to go spend. As we head into next year, wouldn’t surprise if we spend capital at about the same rate, plus or minus a bit, but again that’s all subject to us completing our planning. But I wouldn’t expect us, as we sit here today, to see that as a materially different mover in the context of a $5 billion to $6 billion cash flow generator that we usually are. And as I mentioned, working capital, we’re always going to be driving our working capital progress and we would expect to continue to do that into ’21, so we’ll update you in90 days with more specifics around some of the finer points around it as we complete our planning and complete the year.

Great, thanks for the additional color.

Steve, let’s just take one last caller.

Absolutely, sir. We will take our final question from Deane Dray with RBC Capital Markets. Please go ahead.

Thank you, good morning everyone. I like that last slide on the sustainable focus and ESG. One of the points that occurred to me, the 50% of your new product introduction investments fit the ESG classification, and I was curious whether--is that 50% a target or is it an outcome, and what are the economics?

No, no, that’s not a target, that’s where we are today. That is not aspirational, that’s currently where we are. I want to point something that’s really, really important, which is we talked a little bit about on our script is the formation of a whole new business unit, the sustainability business unit within PMT which really is going to help a lot of our customers really make the transition to sort of the new energy future. I think nobody is going to transition this in a month or a year or two, but what we’ve done and what we’re doing is really creating a whole new sustainability infrastructure in PMT, and really all our business units to create a business structure which is going to be much more sustainable, aligning with the needs of the plan and society in general, and I think it might be even the most needed in PMT where a lot of our customers are really looking at what the future of energy looks like. We want to be part of the solution to create that bridge.

Great. Just last question, and to the extent that you can comment on it, was hoping you’d put this whole Garrett situation in context This is such a small piece of your cash flow, it’s a small piece of the capitalization, but it does get some headlines, and I was hoping you might comment.

Sure. I think your comment’s right - in terms of the overall value and so on in terms of Honeywell, it’s not that relevant. I think you probably saw some of it. Frankly, there is an offer out there which is on for Garrett. We have--we’re confident we’re going to secure a majority of that cash flow. There’s a superior offer on the table with a couple of the partners we have out there. We don’t believe there’s a lot of merit in the litigation that Garrett is trying to put forward, and we have a level of confidence of preserving those future cash flows and a lot of this will still kind of be in motion here for the next few months. But there’s a lot of confidence in what we’re doing there and we think we’re going to recover a majority of that receivable.

Appreciate that, thank you.

Thank you Deane. We’re pleased with the improvements we achieved in the third quarter compared to the challenging second quarter. We are growing in areas not as impacted by the current pandemic and we’re gaining momentum in the new growth opportunities by providing innovative solution for customer needs. We remain focused on continuing to perform for our share owners, our customers, and our employees in any environment. We are well positioned for the recovery with a balanced portfolio, track record of execution, and a strong balance sheet. Thank you for listening and please stay safe and healthy.

Thank you, this does conclude today’s teleconference. Please disconnect your line at this time and have a wonderful day.