Investor Relations Insights

Hello,

I recently joined Honeywell to lead our Investor Relations efforts and look forward to sharing the vision and value of Honeywell's transformation, strategy, and process with you in the coming quarters. With our new Investor Relations Insights, we endeavor to provide you with incremental updates on Honeywell topics across our portfolio of businesses that we think will be of interest to our shareholders.

In our inaugural edition, we spotlight a significant win for Honeywell's Aerospace segment, Lockheed Martin (LMT) Sikorsky-Boeing's selection last week of Honeywell's HTS7500 engine to power the DEFIANT X helicopter for the U.S. Army's Future Long-Range Assault Aircraft (FLRAA) program.

Below we've compiled answers to some Frequently Asked Investor Questions (FAIQ) on the award as well as Honeywell's leading Engines & Power Systems business within our Aerospace portfolio. Thank you for your interest in Honeywell. We welcome your questions and feedback!

Sean

Sean C. Meakim, CFA
Vice President, Investor Relations
Honeywell International

What does the LMT Sikorsky-Boeing’s selection of the HTS7500 engine mean for Honeywell?
The U.S. Army’s Future Long-Range Assault Aircraft (FLRAA) helicopter program is planned to supplant the long-running Black Hawk assault helicopter, with two competing designs, one from LMT Sikorsky-Boeing and the other from Bell (Textron). Last week, LMT Sikorsky-Boeing announced they selected Honeywell’s 7,500-shaft horsepower HTS7500 engine to power the DEFIANT X, their coaxial rigid-rotor compound helicopter design for the FLRAA program. The helicopter can fly two times faster and farther than the Black Hawk.

If the U.S. Army selects the DEFIANT X, “the program has a total potential lifetime revenue to Honeywell of over $25B, making it potentially one of our largest wins ever,” said Aerospace President Mike Madsen. “The FLRAA program would secure our position as a leading supplier of gas turbine engines for the next 25+ years.” Notably, the Army did not fund an engine development program for FLRAA. The HTS7500 engine has potential for other platforms beyond FLRAA as well.

What is FLRAA?
The Future Long-Range Assault Aircraft (FLRAA) was initiated by the U.S. Army in 2019 to develop a new utility helicopter that will replace the Sikorsky UH-60 Black Hawk starting in 2030. The Black Hawk was developed in the 1960s and 1970s and was selected by the U.S. Army in 1976. FLRAA will provide the next generation of capability for decades to come for the U.S. Army, and the HTS7500 has been built to provide world-class reliability and time on wing for this next generation of aircraft. The Army is expected to select the winning FLRAA design in mid-2022, with the first prototype to fly in 2025 and full delivery by 2030.

How material are engines to Honeywell’s Aerospace segment?
In 2021, our Engines business represented ~20% of our Aerospace segment, split fairly evenly across Commercial (Business & General Aviation) and Defense applications. The HTS7500 engine is the newest and most technologically advanced model in Honeywell’s family of military engines, building on a rich tradition going back several decades. Our engine fleet includes the iconic T55 engine, which has powered the Boeing CH-47 Chinook fleet for over 60 years. To date, Honeywell has delivered more than 80,000 turbine engines across commercial and military platforms.

How differentiated is the HTS7500 engine design?
Honeywell’s HTS7500 engine is based on the architecture of our proven T55 turboshaft (the CH-47 Chinook) “but you can consider this a new centerline engine for us,” says Dave Marinick, president of our engines and power systems business. The HTS7500 will provide 42% more power than the current T55-714A on the Chinook with 18% lower specific fuel consumption.

The HTS7500 engine architecture is intentionally designed to maximize DEFIANT-X performance. The HTS7500 meets all FLRAA requirements while simultaneously providing a streamlined and efficient design, robust construction and low part count, using proven, low-cost materials. The engine’s low turbine temperatures increase reliability and reduce cost, while its tolerance to sand minimizes cooling and “sand glassing” (at high temperatures sand can be turned to glass and create performance risks to helicopter engines). Critically, all field maintenance can be accomplished with only one maintainer and requiring only 19 of 104 tools from the Army power plant toolbox.

What are Honeywell’s expectations for the Aerospace segment in 2022?
In 2022, we expect Aerospace to benefit from the continued recovery in flight hours, leading to robust growth in commercial aftermarket revenue. Commercial build rates will also continue to improve, especially in air transport, providing growth in original equipment sales but also creating some mix headwind to margins. Defense and space sales are expected to experience progressively improved performance as supply chain challenges abate in the second half, returning the business to growth and ending the year roughly flat. We expect Aerospace revenue to be up high-single digits for 2022. Despite some mix pressure and the ramp up in R&D expenses for key long-term programs, margins should expand as the Honeywell Quantum Solutions business is now housed in Corporate and no longer accounted for in Aero.

What is the latest on Aerospace’s UAM/UAS development?
We believe we are helping our customers launch a revolution in aerial transportation and logistics through innovative technology that is “future-proofing” our aerospace business. Honeywell has established itself as a leader in the UAM (Urban Air Mobility) and UAS (Unmanned Aerial Systems) spaces with its fly-by-wire, avionics, and simplified vehicle operations technology. We are also developing aerospace-grade motors that can be built at automotive scale.

To date, we have secured over $3.5B in content wins across multiple customers and see a pipeline of ~$7B over the next five years. We expect more awards in 2022. Some of the customers with which we are working most closely are planning first flights in 2022, demonstrating the validity of the more advanced vehicles in development. Honeywell Aerospace is planning to unveil a new technology center for UAS/UAM in 2022; stay tuned for more on that. Meanwhile, Aerospace continues to make big strides in its technology development; click here for more on Honeywell’s smart drone radar technology, including an interesting demonstration video.

About Honeywell

Honeywell (www.honeywell.com) is a Fortune 100 technology company that delivers industry specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help everything from aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.

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