Honeywell International Inc. (HON) Q4 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to Honeywell's Third (sic) [Fourth] Quarter 2015 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. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mark Macaluso, Vice President of Investor Relations. Please go ahead.

Thank you, Kyle. Good morning, and welcome to Honeywell's fourth quarter 2015 earnings conference call. With me here today are Chairman and CEO, Dave Cote; and Senior Vice President and Chief Financial Officer, Tom Szlosek. This call and webcast, including any non-GAAP reconciliations, are available on our website, www.honeywell.com/investor. Note that elements of this presentation contains 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, and we ask that you interpret them in that light. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other SEC filings. This morning, we'll review our financial results for the fourth quarter and full year 2015 and share with you our guidance for the first quarter and full year of 2016. Finally, as always, we'll leave time for your questions at the end. So with that, I'll turn the call over to Chairman and CEO, Dave Cote. David M. Cote - Chairman & Chief Executive Officer: Good morning, everyone. As I'm sure you've seen by now, Honeywell delivered another excellent quarter, capping off a terrific year in a difficult environment. We delivered results at or above our guidance on segment margin earnings and cash flow. Earnings of $1.58 in the fourth quarter increased 10%, representing another quarter of double-digit earnings growth. We continue to drive margin expansion, up 140 basis points, excluding the impact of the fourth quarter 2014 Aerospace OEM incentives. And our free cash flow finished at $1.6 billion in the quarter, up 17% at a 127% conversion. For the full year, we increased sales 1% on a core organic basis while continuing our seed planting with investments in new products and technologies, high ROI CapEx and expansion of our global footprint. We're benefiting from our balanced global portfolio, diversity of opportunity and our ability to effectively manage what continues to be a slow-growth macro environment. We also proactively funded $160 million of new restructuring in 2015, and that includes $60 million in the fourth quarter, building on a healthy pipeline of new projects which will support strong margin expansion this year and beyond. Earnings for the full year of $6.10 increased 10%, representing the sixth consecutive year of double-digit growth. Our 15% dividend rate increase marked the 11th time in the last 10 years that we've increased our dividend. And we committed over $8 billion in capital during the year to M&A and share repurchases, which sets us up nicely to deliver for our shareowners in 2016 and beyond. We're reaffirming our 2016 earnings guidance of $6.45 to $6.70, up 6% to 10% year-over-year. We're facing challenging end markets, but we have a credible and attainable plan to achieve this guidance, and our planning framework has not changed. We'll support growth wherever we have it to drive outperformance. However, we'll also be cautious in our sales planning, and we'll continue to plan our costs and spending conservatively, ensuring we remain flexible as a company. We'll also maintain our seed planting investments for the future, supported by our robust pipeline of funded restructuring projects and continued investment in R&D. There continues to be a lot of exciting things happening across the portfolio driving our terrific results, and I can't help but highlight a few. At the 2016 International Consumer Electronics Show in Las Vegas, Honeywell's latest connected offerings were on display, including the second generation Lyric Round Wi-Fi Thermostat. The new Lyric Wi-Fi Water Leak and Freeze Detector was honored by USA Today with the CES 2016 Editors' Choice Award. This great new product provides users with early alerts of water leaks and frozen pipes to avoid costly repairs. The detector easily connects to your home Wi-Fi network and provides a simple do-it-yourself installation. In 2015, our connectable product portfolio sales grew nearly 30%, a good example of the benefits from our continued investment and development of new technologies to support growth. Our win rate in turbos on new platforms was once again over 40%. Honeywell turbochargers are the no-compromise solution for vehicle performance, better fuel economy and compliance with emission regulations. Sales for both diesel and gas turbos continued to grow in 2015, and we estimate that by 2020, roughly half of all cars on the road will have turbocharged engines, up from one-third of all passenger vehicles today. We expect to continue growing faster than the industry due to our differentiated technology, global footprint, and the benefits of the Honeywell operating system. In November, Honeywell was selected to supply its HTF series jet engines, auxiliary power unit, advanced cockpit technologies, environmental control system and cabin pressure control system to Cessna's new Citation Longitude business jet, further evidence that we continue to perform well in super mid-size cabin platforms. Including the Cessna, our HTF7000 engine is now on four of the five super mid-size platforms, the others being Gulfstream, the G280, the Embraer Legacy 450/500, and Bombardier Challenger 300/350. Our platform engine has surpassed 2.4 million flight hours to-date. On the M&A front, we're pleased to have closed the Elster acquisition at the end of December, and the integration is underway. Elster brings outstanding technologies, including software, strong well-recognized brands, energy efficiency know-how, and a global presence to Honeywell in ACS. We look forward to updating you on our integration progress at our Investor Day in March. Earlier this month, we acquired the remaining 30% stake in UOP Russell, a global leader in modular gas processing technology and equipment. One of our objectives when we acquired the first 70% was to leverage the Honeywell global footprint to take this principally domestic focused modular technology to markets outside the U.S. This premise is now materializing. As an example, in the fourth quarter, PV Gas, Vietnam's primary gas provider, selected UOP Russell's modular gas processing plant to separate liquefied petroleum gas, or LPG, from natural gas at its facility near the southern tip of Vietnam. In addition, HPS will serve as the integrated main automation contractor, or I-MAC, and supply the integrated controls and safety systems for the facility and terminal. And we repurchased close to $2 billion in Honeywell shares during the year at attractive prices, which is nearly double the rate at 2014. We have and will continue to be opportunistic when it comes to share repurchases, which allows us to preserve our balance sheet firepower for repurchases or M&A as opportunities present themselves. And you can expect another terrific year for capital deployment in 2016. You can expect to see lots of exciting innovations at our Investor Day on March 2 where each of the businesses will highlight a number of new products and roadmaps for future growth and margin expansion. We also plan to share how software is evolving throughout the organization, which we believe is a key differentiator, particularly across the industrial space. We held our annual senior leadership meeting earlier this month, and I can tell you that each of the businesses are hard at work identifying new and innovative breakthroughs to drive further growth. Our seed planting for the future, great positions in good industries, diversity of opportunity, and strength of execution will allow us to deliver on our long-term targets and continue to outperform over the long-term. Needless to say, as we continue to talk amongst ourselves, this is an exciting time to be at Honeywell. So with that, I'll turn it over to Tom. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Thanks, Dave, and good morning, everyone. Dave mentioned our deployment of $8 billion in shareowner capital for 2015. That actually excludes $2 billion in dividends; and just to remind you, we've raised our dividend rate in the fourth quarter by 15%. The biggest component of the $8 billion is M&A. Slide four summarizes each of the deals, all of which have closed with the exception of COM DEV, which is expected to close imminently. We've previously articulated the rationale for each deal, and we're pleased with the diversity of the investment. So three of the deals are for Aero, two for ACS, and three for PMT, spreading the wealth, so to speak. You'll also notice the technology focus. For example, the Elster metering and analytics, the COM DEV space communications technologies, and the Satcom1 aerospace connectivity software. We also view each of these acquisitions as a great opportunity to deploy HOS goal to drive new growth and greater profitability while building on our great positions in good industries across the portfolio. We expect the acquisitions will generate strong future returns for our shareowners, consistent with Honeywell's track record, and we're excited about the M&A momentum as we head into 2016, as Dave mentioned. Slide five shows the fourth quarter results. Overall, our results met or exceeded the guidance we provided in December. Sales of $10 billion were flat on a core organic basis, slightly better than what we estimated during outlook call, largely because of our conservative planning. So we had improvements in Commercial Aero OE, in both ATR and BGA, UOP catalyst shipments, Process Solution Services, and the America's Fire and Security Distribution drove the stronger finish. The growth in these areas helped to mitigate the challenges we have in the oil and gas related businesses. On a reported basis, the sales decline in the fourth quarter was driven by the stronger U.S. dollar and the lower pass-through pricing in Resins and Chemicals, offset by the absence of the aerospace OEM incentive in the fourth quarter of 2014, which, as you recall, impacted both sales and segment profit in the fourth quarter of 2014. Segment profit, up 15%, with segment margins expanding 290 basis points to 18.8%, or 140 basis points when you exclude those OEM incentives. We drove profit growth and margin expansion in each of our three SBGs, so again, a balanced contribution across the portfolio. I'll talk more about segment margin in a minute. Items below segment profit were as expected. We did see higher pension income as a result of our fourth quarter adoption of the spot rate approach to setting our discount rate. The impact, however, was more than offset by about $60 million of new restructuring projects, which position us well for continued margin expansion. Earnings per share, excluding pension mark-to-market adjustment, were $1.58 and increased 10% from 2014, again, in line with our guidance. The 2015 pension mark-to-market adjustment was approximately $67 million unfavorable at $0.05 a share, principally driven by our U.S. non-qualified plan versus $249 million, also unfavorable, in 2014, or $0.23 a share. So as a result, the fourth quarter reported earnings per share of $1.53 were up 28% from $1.20 last year. Free cash flow in the quarter, $1.6 billion, was up 17% versus 2014 with conversion at 127%. We had a bigger improvement in working capital and lower cash taxes than what we anticipated in our outlook call. So overall, another strong quarter of margin expansion, double-digit earnings growth, and strong cash flow. Let me move to slide six to provide more detail on segment margin expansion with a slide that you're familiar with. As we've spoken about throughout 2015, our operating initiatives continue to drive segment growth led by the continued deployment of HOS Gold. We generated 100 point basis operational improvement in the quarter, and that follows 140 basis points in the first quarter, 110 basis points in the second quarter and 140 basis points in the third quarter. We've got attractive products with differentiated technologies and a software focus. Our factories and supply chains are maturing, our back office continues to get more efficient, and we continue to manage our indirect spend stringently. Previously funded restructuring, as well as new restructuring actions, have also enabled us to continue improving our overall cost position, and yet we believe there is more room to improve. The remaining 190 basis points of improvement came from our foreign currency hedging approach, lower raw materials pass-through pricing in Resins and Chemicals, and the absence of the fourth quarter OEM incentives. In 2015, we outpaced our five-year plan targets of 45 basis points to 75 basis points of segment margin expansion and we expect that the permanent improvements to our supply chain, footprint and back office through the deployment of HOS Gold will continue to drive margin expansion in 2016, 2017 and beyond. Let's move to slide seven and discuss the Aerospace results. Sales for the quarter were up 2% on a core organic basis, in line with our expectations. Commercial OE sales increased by 9% on a core organic basis, driven by the third consecutive quarter of double-digit growth in business and general aviation engine shipments and higher shipments to large OEMs in air transport. As Dave mentioned earlier, we continue to win on super mid-size business jet platforms. We also experienced good growth on key air transport platforms, including the Boeing 737 and 787 and Airbus A320 and A350, as we had anticipated. On a reported basis, commercial OE sales increased 45%, again reflecting the absence of the OEM incentives that we recorded in the fourth quarter of 2014. Commercial aftermarket sales, up 3% on a core organic basis, driven by robust repair and overhaul activities. R&O sales were up high single-digit in the quarter and have improved sequentially throughout 2015. On the spare side, we saw an increase in airline spares growth for both mechanical and avionic products. BGA RMUs, or retrofit, modifications and upgrades, grew double-digit in the fourth quarter, as we expected. Spares were soft in other parts of BGA due to the timing of channel provisioning. Defense & Space sales declined 1% on a core organic basis, driven by a number of program completions and project timing in our U.S. businesses. We saw strong growth in our international business on a sequential basis, but year-over-year growth was only 1% due to a difficult prior-year comparison. Just to remind you, the international business grew 17% in the fourth quarter of 2014. Defense & Space finished 2015 approximately flat, and we expect growth across all Defense & Space segments in 2016. Finally, Transportation System sales increased 1% on a core organic basis due to new platform launches and continued volume growth in both diesel and gas light vehicle applications. Our light vehicle diesel business grew in both Europe and North America while we saw double-digit growth in light vehicle gas in Europe and China. This was partially offset by lower commercial vehicle volumes, reflecting the soft conditions faced by our on-highway and off-highway commercial vehicle global OEM customers. On a reported basis, TS sales declined 10%, reflecting the stronger U.S. dollar. Aerospace segment margin expanded 420 basis points, or 50 basis points if you again exclude the OEM incentives. This was driven by productivity net of inflation, commercial excellence and the favorable impact from our foreign currency hedges, partially offset by the margin impact of higher OE shipments and the continued investments for growth. Let's turn to the ACS results on slide eight. In ACS, Alex and his team continued to position the portfolio for better and more profitable growth. With the closing of Elster, the newly acquired thermal solutions, combustion and gas, electricity and water metering businesses will be integrated into our Environmental & Energy Solutions business unit, which includes the legacy ECC business. The broader scope of this new business unit will position us for accelerated growth in both existing markets and attractive new adjacencies. We've seen similar commercial benefits from a combination of our security and fire businesses into Honeywell Security and Fire. In the fourth quarter, ACS sales were flat on a core organic basis. Sales by energy, safety and security, so the products business has declined 1% on a core organic basis. We saw continued strength in Security and Fire globally, another quarter of double-digit growth in China. The investments we've made in China continue to drive results, and we expect similar growth in 2016. And as Dave mentioned, sales of our connected products grew nearly 30% in 2015, as the continued growth following the launch of our new Lyric product offering. These improvements were offset by lower volume in Sensing and Productivity Solutions as we lapped the benefits of the U.S. Postal Service win in our Mobility business as well as by declines in Industrial Safety due principally to oil and gas related discretionary spending cuts. Building Solutions and Distribution sales were up 3% on a core organic basis in the fourth quarter. We continued to see strength in the Americas distribution business where sales growth improved sequentially every quarter in 2015, exiting the year up double-digit in the fourth quarter. This growth was partially offset by a decline in Building Solutions where we continue to experience softness in the energy retrofit business and slower backlog conversion. ACS margins expanded 70 basis points to 16.6% in the quarter, capping off another terrific year. The business continues to benefit from significant productivity improvements, net of inflation, as well as from execution of restructuring actions. At the same time, we've maintained our investments for growth. We've added resources in sales, marketing and engineering locally to drive further acceleration in our high growth regions as well as in our connected product offerings. I'm now on slide nine to discuss PMT results. PMT sales declined 4% on a core organic basis while segment margin expansion was again robust. And orders growth for the quarter was positive, led by very strong orders in UOP. Let's take it business by business, starting with UOP. Sales were down 10% on a core organic basis, driven by lower gas processing equipment and licensing sales, partially offset by strong catalyst demand. Catalyst shipments were up significantly in the fourth quarter, driven by new petrochemical units and refining reloads. Furthermore, we recorded nearly $1 billion in orders in the fourth quarter with growth across the entire UOP portfolio, including another international gas processing win. This brings UOP's book-to-bill ratio for the year to approximately 0.95, not bad in this environment, and we expect a portion of the UOP orders to convert in 2016, which would partially mitigate the market softness. In Process Solutions, core organic sales were flat. We finished the December better than anticipated driven by growth in services and projects due to an uptick in customer spend at year-end, offset by high single-digit declines in the field instrumentation sales. The HPS projects and services backlogs remained solid and we continue to see increased demand for our Assurance 360 service partnership offering, which is a multi-year agreement to maintain, support and optimize the performance of Honeywell control systems. So while our short cycle field instrumentation business basically continued headwinds of the industry, we are seeing improvements in our higher margin software and service businesses. Advanced Materials sales, down 3% on a core organic basis due to volume declines in resins and chemicals and specialty products, partially offset by flooring product sales, which, again, increased due to continued demand for Solstice low global warming refrigerant and insulation products. Volumes in Resins and Chemicals in particular were adversely impacted by unplanned and planned outages in the quarter. On a reported basis, Advanced Materials sales declined 15%, primarily due to the impact of the lower pass-through pricing in Resins and Chemicals as we've highlighted previously. PMT segment margins, up 380 basis points to 20.3%, driven by significant productivity actions net of inflation, commercial excellence, the favorable impact of raw materials pass-through pricing in Resins and Chemicals, and a heavier weighting of UOP catalyst sales. PMT continues to aggressively pursue further cost reduction opportunities, which help support further margin expansion in this slow-growth environment. I'm now on slide 10 to recap the full year 2015 results. Sales increased 1% on a core organic basis with good growth in our short cycle ESS and Transportation Systems businesses, strong engine shipments in BGA OE and continued growth from the ramp-up of our Solstice offering in flooring products. The reported sales decline reflects the unfavorable impact of foreign currency, the Friction Materials divestiture and lower pass-through pricing in Resins and Chemicals, offset by the favorable year-over-year impact of the OEM incentives, which did not repeat in 2015. Segment profits increased 8% with margins expanding 220 basis points. 110 basis points of the expansion was driven by the operational improvements in each of the businesses, as we've discussed throughout 2015. All of this resulted in earnings of $6.10, up 10%, clearly in the top quartile of our industrial peer group. And as Dave mentioned, this represents our sixth consecutive year of double-digit earnings growth. Reported EPS for the year increased 13%, reflecting the decline in the unfavorable pension mark-to-market adjustment that I mentioned earlier. Finally, free cash flow of $4.4 billion increased 11%, exceeding the high end of our guidance range, largely driven by improved working capital performance. Our 91% free cash flow conversion was dilutive by our investment of over $1 billion attractive high ROI CapEx in 2015 to support future growth. Adjusting to our long-term reinvestment ratio of one times depreciation would yield approximately 100% free cash flow conversion, which we expect to reach on a run rate basis by the end of 2017. Slide 11 provides a recap for the full year by business. The results are very consistent with our guidance. Each of our three segments generated triple-digit margin expansion in a challenging market environment. At the same time, we've maintained our investments in new products, high-growth regions and restructuring across the portfolio to ensure growth and productivity. With 2015 behind us, let's take a quick look at our end markets as we head into 2016. On page 12, there's no change in our assessment of the conditions in the end markets we serve and no change to our 2016 guidance that we provided in December. We continue to expect the slower global growth environment to persist in 2016. However, our portfolio, with its mix of short and long cycle businesses, balanced participation in numerous global markets and diversified offerings for consumers, commercial buildings, industrial complexes and governments will help us to grow even in slower environments. Our end markets in total are generally stable. We continue to actively monitor the dynamics in our oil and gas businesses, particularly on the exploration and production side. The challenging conditions we see associated with lower oil and gas prices was contemplated in our 2016 outlook. For Honeywell, this is somewhat tempered by the healthy demand for the output for refining and petrochemical plant operators, which bodes well in the long term for the mid- and downstream offerings of HPS and UOP, and that includes catalysts, advanced solutions, and other aftermarket offerings. In the event conditions do continue to deteriorate, we have the flexibility to further adjust operating costs fairly quickly, as well as other contingencies to help us mitigate market headwinds. As we look across the other end markets, which make up over 85% of our total portfolio, we expect the demand environment to remain stable. In non-resi construction, we expect a similar environment as 2015. The commercial aftermarket industry will continue to grow, albeit at a slightly slower pace, as flight hours remain positive overall, but increased airline efficiency and the retirement of older aircraft will tamper aftermarket demand. International defense spending and increasing U.S. DoD budgets will make the Defense & Space environment attractive. On autos, we have attractive and competitive turbocharger offerings, which continue to manifest themselves in our strong win rates. As Dave noted, TS won over 40% of all new launches in 2015, grew the business in both gas and diesel, and continues to differentiate through breakthrough innovation and technologies. Further, turbo penetration continues to improve and we're growing faster than the market. Our planning approach for 2016 remains intact. We'll support growth where we see opportunities to outperform, emphasizing those areas where a clear path to growth exists, like high-growth regions, UOP catalysts and flooring products. We'll be cautious in our sales planning in the end markets where we see uncertainty in 2016, and we'll make shorter-term adjustments to cost levels should softer end markets dictate. We also continue to plan our costs and spending conservatively, with a strong emphasis to drive productivity in all of our cost categories while remaining flexible as a company. Of course, we will continue our seed planting investments to create mid- to longer-term opportunities. This includes R&D and marketing investments, but also further deployment of shareowner capital opportunistically. Let's move to slide 13 to more specifically discuss each of our businesses for 2016. The green and red abbreviations on this page represent our full year 2016 core organic sales growth expectations for each business. Let me start with Commercial OE. Excluding the OEM incentives, the business is expected to grow low single-digit in 2016. The demand in ATR and BGA continues to be strong, and we'll see the new wins we've communicated drive volume growth, particularly in the second half of the year. However, as previously communicated, the OEM incentives will dilute these ongoing growth rates in our ATR business. As a reminder, we expense these incentives as incurred, unlike many of our competitors who capitalize and amortize them over the life of the program. On the commercial aftermarket side, we expect the strong R&O momentum to continue. Additionally, while it's been up against a difficult year on RMU sales comparisons for most of 2015 and BGA, we're expecting the business to return to growth in 2016 as it did in the fourth quarter. All the businesses in Defense & Space, so the U.S. DoD, the services in the U.S., and international, are expected to grow in 2016 as the market demand dynamics improve. In TS, the growth will also continue, supported by a strong backlog of new wins. And while the commercial vehicles market for our technologies have been slow, particularly in China, we anticipate a moderation in the declines for 2016. We expect low single digit growth in ACS across both the products and the BSD portfolio, driven by continued momentum in security and fire products and distribution, and above-market growth in China, offset by declines related to the completion of large projects in S&PS. In PMT, our previously communicated growth expectations remain. As we've highlighted on numerous occasions, UOP short cycle catalyst business tends to be very lumpy quarter-to-quarter, and its growth in the fourth quarter of 2015 was massive, capping off a double-digit growth year for that business. This sets up a challenging first quarter and full-year 2016, which, along with the tough year-over-year comparisons in gas processing, drive our expectation that UOP will be down mid-single digit in 2016. So on balance, no change to our end market outlook, but we continue to monitor the landscape as we move into the first quarter. And speaking of the first quarter, I'm on slide 14 with a preview. Relative to foreign exchange, our Q1 sales estimates contemplates our full year planning exchanges; so, for example, $1 per euro. However, for operating profit, as we've communicated, we are hedged. So for the euro, as an example, our estimates reflect our $1.10 per euro hedge rate. For total Honeywell, we're expecting first quarter sales of $9.2 billion to $9.4 billion, so that's flat to up 2% reported or down 2% to flat on a core organic basis. Segment margins are expected to be up 70 basis points to 90 basis points, excluding M&A, or down 20 basis points to 40 basis points reported. EPS is expected to be $1.48 to $1.53, and that's up 5% to 9% versus 2015 with a tax rate at 26.5%. So starting with Aerospace, sales are expected to be up 1% to 2% on a core organic basis. In commercial OE, we're expecting sales to be down mid-single digit driven by the impact of the OEM incentives, which we previewed in our December outlook call. Excluding the incentives, commercial OE is expected to be up low single digit with a ramp up on key platforms in air transport, partially offset by regional declines and slowing growth in BGA following a terrific 2015. Commercial aftermarket sales are expected to grow low single-digit with higher volume in airline repair and overhaul activity, and improvement in BGA RMU sales. Defense & Space sales are expected to be up low single-digit with higher sales for the U.S. government partially offset by tough prior year comparisons in the international business as larger projects roll-off. In Transportation Systems, sales are expected to be up mid-single digit with strong growth across both diesel and gas light vehicle applications. Commercial vehicles, which represent roughly 15% of the TS portfolio, continue to face headwinds from a down-market, but we expect the declines to moderate in the second half of 2015. As for Aerospace margins, we expect an increase of 100 basis points to 120 basis points excluding M&A. ACS sales are expected to be up 2% to 3% on a core organic basis, or up 11% to 12% reported, driven by the addition of Elster. Both ESS and BSD are expected to grow low single-digit on a core organic basis. We expect the momentum in our security and fire businesses, and in our high-growth regions, to continue heading into 2016. S&PS growth will be slower with the completion of the U.S. Postal Service deployment and we expect continued oil and gas related headwinds in Industrial Safety. In BSD, we're expecting similar trends to what we've seen in recent quarters with strength in America's distribution offset by weakness in the U.S. energy retrofit business within Building Solutions. As I mentioned back in October, we've been selected on a number of competitive RFPs, but the pace of conversion from wins into orders, and then eventually into revenue, is slow. Excluding M&A, margins are expected to improve 130 basis points to 160 basis points in ACS, driven by continued productivity and commercial excellence. Due to acquisition dilution, the ACS margin rate in the first quarter is expected to be down 50 basis points to 80 basis points. In PMT, sales are expected to be down 11% to 13% on both reported and core organic basis. We contemplated this slow first quarter in the guidance we provided during our December outlook call. UOP is expected to be down significantly, driven primarily by continued declines in gas processing and lower catalyst sales, as I mentioned. Sales in our catalyst business were very strong in 2015, but it's not unusual to see variations, as we've experienced in prior years. We'll see these trends again in the first quarter, in particular, but expect that for the full year 2016, the catalyst demand will again be strong. HPS sales are expected to be down slightly. In 2014 and 2015, we won a number of significant global mega projects where we serve as the main contractor providing control and safety solutions for large installations. These will begin to convert in 2016, but the resulting sales growth will be more than offset by continued declines in sales of field instrumentation products. Advanced Materials sales are expected to be up high single-digit, driven by flooring products Solstice sales as well as higher production volumes in Resins and Chemicals. PMT segment margins are expected to be down 90 basis points to 110 basis points, or down 40 basis points to 60 basis points excluding M&A, with the dilution coming from sales declines in our petrochemicals catalyst business. Let me move to slide 15 for the 2016 financial guidance for the full year. So consistent with our December call, we expect total Honeywell sales in the range of $39.9 billion to $40.9 billion, up 1% to 2% on a core organic basis, modestly better than our Q1 expectations, which as you've seen, are weighed down by the normal ongoing lumpiness in UOP. Reported sales growth will be higher, in the range of 3% to 6%, primarily due to the favorable impact of M&A, most notably Elster. Segment margin expansion is expected to be 10 basis points to 50 basis points, or 80 basis points to 110 basis points excluding M&A. We're confident in our earnings range of $6.45 to $6.70, representing 6% to 10% growth versus 2015. The full year growth linearity remains in line with prior years and is based on an expected full year tax rate of 26.5% with share count held flat to the 2015 full year weighted average. Of course, we'll continue to be opportunistic about share repurchase opportunities, particularly in these volatile markets. Free cash flow is expected to be up in a range of $4.6 billion to $4.8 billion. That's a 5% to 10% increase from 2015, with CapEx investments roughly flat at approximately $1.1 billion. This will drive free cash flow conversion of approximately 90%. Let me move to slide 16 for a quick summary before turning it back to Mark for Q&A. In 2015, we again demonstrated that Honeywell can deliver on its commitments even in its slow-growth environment. We met or exceeded our margin expansion, earnings growth and free cash flow targets while investing for future growth through enhanced research and development, continued investment in CapEx and funding of business restructuring, and we put to work some sizable amounts of shareowner capital, which will pave the way for future earnings and cash growth. As we turn our attention to 2016, we're planning for more of the same: modest top line growth with strong margin expansion and earnings and cash growth. We have a credible and attainable 2016 plan based on the tenets that Dave mentioned of supporting growth, being cautious on sales, planning costs and spending conservatively, and continued seed planning. In summary, we're excited and prepared for 2016. Our management team is focused on execution as we head into year three of our five-year plan, and we look forward to sharing more at our March 2 investor conference. With that, Mark, let's move to Q&A.

Thanks, Tom. Operator, please open the line for questions.

Thank you. The floor is now open for questions. And we will take our first question from Scott Davis from Barclays.

Hey. Good morning, guys. David M. Cote - Chairman & Chief Executive Officer: Hey, Scott. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Good morning, Scott.

Dave, you're not a bad CEO. We'll give you a nod. David M. Cote - Chairman & Chief Executive Officer: That's appreciated. It only took me 14 years to get it.

Well, I don't know if you're worth $25 million, but if you can throw a pitch 100 miles per hour, maybe. David M. Cote - Chairman & Chief Executive Officer: More. I'm worth more.

All right. Good. Well, can I answer your phones for you? Maybe I'd get a cut of that. But anyways, not much really to pick on, on the quarter. My biggest question really, the Elster deal looks – I mean, I think it was a really interesting transaction and the markets have gone maybe the direction that you probably wanted them to go the last couple of years. You've had dry powder, but things have been a little pricey. I mean, is there – are there other Elster-ish type deals out there that you are starting to see? I mean, where – you've always had some confidence in M&A, but a lot of the deals have been smaller. Are there bigger deals out there that are interesting, you feel like you're getting down into the right price? David M. Cote - Chairman & Chief Executive Officer: Well, there's always, it's going to sound like a repeat of an answer, but it is true. We always have a pretty full pipeline that we're working, and there's some bigger stuff, some smaller stuff and you just never know when they're going to hit. You just don't, and you've heard me say this before, but it's like working in a retail store. You open up at 10 O'clock and nobody shows up till 2:30, and then five people come in the door at the same time. It just works that way. For last year, a lot of that came together in a very good way, and we're hopeful that it can continue again this year, but it's not one of those things you can guarantee, because we are going to stay very disciplined. It's the same rigor that we've used in the past, we stick with and I think my old team would tell you that I paid personal attention to every single one of these things on a nonbinding basis, a binding basis, the integration reviews with as much vigor as I did 13 years ago.

Yeah. Makes sense. Moving more specifically, I think the one area that I've always struggled to model with you guys is PMT, and help us get a little bit more comfortable around UOP. I mean, if your core was down 10 and catalysts were strong, that implies the basic, what I'll call the consulting business and licensing business must've been down a lot. What's your confidence that that stuff comes back and catalysts don't normalize? Particularly, you've seen the GDP numbers out of the U.S. today. I mean, it's – you may have another tough year in front of us. I can't imagine catalyst growth can stay incredibly strong forever, so help us get a little bit more confidence around that because I think it's just impossible for us to know. David M. Cote - Chairman & Chief Executive Officer: Yeah. We'll talk more about this at Investor Day, but you can expect that the catalysts are going to continue to do well, and Tom provided you some of the data and can provide more color, but catalysts will continue to do well because there's still usage out there and there's still demand for refined product. That's not going away. And that's really where demand comes from for us on the catalyst side. You're also going to hear more about the Parex cycle and how that changes. It tends to go through cycles, and we'll be coming up on a new cycle for Parex as we get towards the end of this year and into next year. When it comes to new projects, yeah, you're right, there wasn't as much, as many new projects put on the board as they were in prior years, but we actually took a lot of those hits last year. So as we start looking at kind of the comparables, as you go from one year to another, we should start seeing that coming out I'd say again towards the end of this year and more into next year. So while it's been a difficult transition, it helps for us that this diversity of opportunity you hear me talk about where oil and gas is only about 13% in total, so it's been manageable, not easy, but manageable, and I think you're going see UOP getting onto a growth path again as we get into next year. So, Tom, I don't know if there's anything you want to add. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah. Just to put a little more color on what Dave said, I think the orders and backlog are holding up okay in what is a rough environment. As I mentioned, UOP orders were up over 50% in the fourth quarter, and that was across all their business lines so equipment, licensing, gas, and catalysts. So it's – and the backlog itself is held up pretty well. I mentioned 0.95 book-to-bill ratio. I mean the backlog is down mid-single digits is the way I would characterize it. When you talk to Rajiv (41:51) and the team, they are very excited about what's going on in chemicals and petrochemical catalysts in particular. We are the clear leader in that space, so when you think about aromatics and olefins and other things where we have a significant amount of presence, it's a big opportunity for us. So overall, I think it's – while we'll be continuing to be lumpy, the prospects are good.

Okay. That's helpful. Thank you, guys. Good luck. David M. Cote - Chairman & Chief Executive Officer: Thanks Scott. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Thanks.

And we'll take our next question from John Inch with Deutsche Bank.

Thank you. Good morning, everyone. David M. Cote - Chairman & Chief Executive Officer: Hey, John.

David, it's nice to see a company report a quarter that isn't padded by 5% tax rates and below the line parlor tricks. David M. Cote - Chairman & Chief Executive Officer: Well, thank you. As you know, I've been advocating for a long time that doing well in operations should make a difference. Operating earnings matter.

Yeah. Tom, what was commercial vehicle on the light side if you exclude, I'm sorry, what was Turbo on the light side if you exclude commercial vehicle? What was the growth rate there? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: It was roughly mid-single digit growth.

So I guess my question is if you think of Turbo, right, and the penetration you guys just articulated getting to the 50%, you would think this business should be pretty well-positioned to start to put up I think once you get over the commercial vehicle headwinds and double-digit top line, if you look back over time, you've always had this very favorable penetration, right, on gasoline side. You haven't really ever realized that. I think you maybe did it a bit in 2013. But just could you talk to your confidence level or how we should be thinking about the run rate for Turbo kind of post commercial vehicle? Like, why can't this be a really high growth segment and driver of profit for Honeywell? David M. Cote - Chairman & Chief Executive Officer: Yeah. That's the whole point. You hit it exactly right. Go ahead, Tom, sorry. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Hey, John. You did say double-digit top line growth. I wouldn't – while I appreciate that sentiment, I wouldn't go quite that far. But it is a very strong, they do have very strong prospects. The position is very good, and our global presence, I mean, where we are versus where our customers are positions us very nicely and the business has – it's probably the best run supply chain that we have. So as long as the car market remains intact and there's orders, we're going to be on those platforms and no matter who the OEM is with our technology and with our ability to deliver. David M. Cote - Chairman & Chief Executive Officer: It's going to be very good growth. I can understand Tom's reticence of the double-digit, but I would say at the end of the day there are several phenomenon. One, the commercial market – both the commercial market decline and currency are masking the growth that we're getting in, say, PV side, both gas and diesel. That's going to continue, and when commercial goes the other way and you don't have an offset impact to currency, I think you're going to say it looks pretty darn good.

Yeah. I was literally taking your 40% win rate times the global auto sales times 50% delta, right, and then just sort of assuming currency and the commercial vehicle didn't factor in it. Let's put it this way. It's a pretty high growth number if you sort of point that out. Just as a follow-up, this merger between Johnson Controls and Tyco, JCI bought York, and you guys at the time pretty much downplayed the significance of why you would not follow in those footsteps. Does this merger, David, do you think give you an opportunity to take some market share here? David M. Cote - Chairman & Chief Executive Officer: I don't know about taking market share so much because we really don't compete with them all that much. There's maybe a couple of places that we do, but there's not – the biggest overlap is really just kind of the service side of this, the Honeywell Building Solutions.

Yeah. David M. Cote - Chairman & Chief Executive Officer: So because there's not a big overlap between us, I wouldn't say there's a big share opportunity there for us.

Okay. But what about then doing a bigger deal? Does that, I mean, are you still sort of wed to this notion that you've got to really have it – be able to be ring fenced and bolted on? Even though Elster I realize is bigger, but you know, I mean, a bigger deal so comparables, I guess, to the significance of JCI and Tyco? David M. Cote - Chairman & Chief Executive Officer: You mean, do I think I need to do something that's foreign?

I think the angle is in a – yeah, I think the angle is in a very slow growth world, which you've articulated many times. Those two companies have decided that it makes sense to get together to try and drive some cost synergy or whatever, right? So I'm wondering about your own thinking towards possibly or the prospects of maybe doing a bigger deal perhaps because of the macro and what you're seeing with respect to other industrial companies. That was the question. David M. Cote - Chairman & Chief Executive Officer: No. I don't feel compelled to do it because somebody else is. And I feel like we're big enough and we're going to perform very well on our own. That being said, as you know, many times I've said I'll never say never to doing something large even though it hasn't happened in 14 years, because you never know when that opportunity presents itself but, so I'm still open to it, I guess, but it's got to be a smart deal for own share owners, otherwise, we're going to do very well on our own. I don't feel like we need a lot of big help anywhere.

Got it. Thanks much.

We will take our next question from Joseph Ritchie from Goldman Sachs. Joseph Alfred Ritchie - Goldman Sachs & Co.: Thanks. Good morning, guys. David M. Cote - Chairman & Chief Executive Officer: Hey, Joe. Joseph Alfred Ritchie - Goldman Sachs & Co.: So, Dave, nice quarter. It's got to make you feel a little bit better about the Pats' loss last week. David M. Cote - Chairman & Chief Executive Officer: Oh, geez. Why'd you have to put it that way? Joseph Alfred Ritchie - Goldman Sachs & Co.: Sorry. I had to dig a little bit. Let me start on that – let me kind of start on a near-term question. Last year, I recall January getting off to a really slow start. It surprised you. It surprised us. I think it was down 8%. Maybe talk a little bit about just your quoting activity on the short cycle businesses over December/January, and how that's trending versus your expectations. David M. Cote - Chairman & Chief Executive Officer: Right now, I'd have to say it feels just fine. I know last year we got surprised the other way. This year we're not getting surprised. But it's three weeks, so who can tell how the whole thing's going to go? But it's – I would say we're not having to deal with the same kind of negative surprise we had last year. Joseph Alfred Ritchie - Goldman Sachs & Co.: Okay. All right. No, that's helpful. I guess maybe one of the things that we've been talking to investors a lot about recently with the Boeing results earlier this week was just the potentially weakening longer-term production schedule at Boeing. I'm just curious, does that change your long-term outlook at all on Commercial OE? Or how are you guys thinking about that today? David M. Cote - Chairman & Chief Executive Officer: No, it doesn't really have any effect on us. And you've probably heard me say in the past, this diversity of opportunity that we talk about for the company in total applies to our Aerospace business, also. We're tied to basically everybody. And if you take a look at what's happening in the aerospace industry, the biggest thing for us is that flight hours increase. And flight hours last year were up 4% or 5%. They're likely to be up 4% to 6% again this year. And the big thing is that planes fly, and as long as they fly, and as long as there's a need for the kind of upgrades that we keep talking about, and as long as the technology keeps progressing towards this kind of connectivity and the need for airlines and passengers to just be connected better than they have in the past, those are all good phenomena for us. So no, it doesn't really have an effect on us. The big thing is flight hours continuing to grow and the technology, especially on the software and connectivity side, continuing to develop. Joseph Alfred Ritchie - Goldman Sachs & Co.: Okay. That's helpful. Maybe one last question for Tom, just going back to PMT for a second, it seems like you're starting off the year pretty slow with organic growth expected to be down 11% to 13%. The guide for the year, I think, is down 1% to plus 1%. So I fully recognize the comps are tough in the first quarter, but maybe talk a little bit more about the confidence and the implied ramp for the rest of the year, especially given the catalyst shipments, the fact that backlog was up in Process. Just curious to hear some thoughts there. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: It's a good question. I mean, as we – and we gave you our guidance for the full year on both UOP, HPS, and the like. And given the backlog dynamics that we talked about as well as the visibility that we have into the service bank and HPS, in particular, we're still confident in the full year outlook. The first quarter is really a factor of this timing, and particularly in UOP catalysts. I mean, we were – we had a strong first quarter in 2015, and we had a huge fourth quarter in 2015. So both of those kind of play on the impact for – on the overall PMT. So minus 11% to minus 13% for the first quarter, yeah, but still confident in the overall outlook as roughly flat.

Yeah, Tom, if I could add, the other thing to point out, Joe, is that our gas processing business in 1Q of last year had just a fantastic quarter; so we also have a little bit of a comp issue just in 1Q, and that'll ease through the rest of the year. Joseph Alfred Ritchie - Goldman Sachs & Co.: Cool. Thanks, guys. Great quarter. David M. Cote - Chairman & Chief Executive Officer: Thanks.

And we'll take our next question from Howard Rubel with Jefferies.

Thank you very much. I want to also stay with Aerospace. I mean, the deliveries at Boeing are really more due to timing because they're building new planes for R&D. It has no demand impact. But you have a lot of STC opportunities and GX, which you've talked about, Dave, a little bit, and some international. Could you talk for a moment a little bit about some of these, where you are in terms of getting the customers to sign up for these processes, because it really is game-changing? David M. Cote - Chairman & Chief Executive Officer: Are you talking about on the connectivity GX side, that kind of thing?

Absolutely. And then, also, what you're doing still with COM DEV, and – if you can. I know it hasn't closed, but to the degree that that's possible, please. David M. Cote - Chairman & Chief Executive Officer: Yeah, I can't put any numbers on it at this point, but so far – and I think you'll get some of this at Investor Day – Tim's pretty excited about what he's seeing, the sign up rate and the speed with which they're able to acquire new customers here, because the value that Tim's able to add through is connectivity and the services, and now we're going to be able to expand that with Satcom1, Aviaso and COM DEV, along with the technologies we acquired with EMS. He's pretty pumped up about where he's going. So, so far, yeah, quite good.

And then, just a follow-up a little bit with the portfolio. I mean, international had a great year last year with some of the expansion. You've got sort of a lot of nice mid-engine – midsize capability engines, and we've seen what you've done in bizjets. Where else can you do some things in the international market? David M. Cote - Chairman & Chief Executive Officer: Well, a lot of places. And that's been one of, I guess, Tim's – one of Tim's big insights, as simple as it sounds, is 90% of life is showing up; and just Tim showing up in a lot of these places that we didn't in the past is making a hell of a difference. So that's going to continue around the world.

And then finally, Tom, you have these significant incentives. Are they pretty evenly spread throughout the year this year? Or is there one quarter we should be aware of as being a little bit lumpy? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah. No. They're pretty much throughout the year.

Thank you, gentleman. David M. Cote - Chairman & Chief Executive Officer: Thank you, Howard.

We'll take our next question from Jeffrey Sprague with Vertical Research Partners.

Thank you. Good morning, gentleman. David M. Cote - Chairman & Chief Executive Officer: Hey, Jeff.

How's it going? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Quite well, actually. David M. Cote - Chairman & Chief Executive Officer: Pretty well, so far, it seems.

Yeah. It looks pretty good. David M. Cote - Chairman & Chief Executive Officer: Jeff, I'm a little – while you got to like the market reaction, I got to admit, I'm still a little surprised that, after 14 years, people are surprised by us doing what we say.

Yeah, I don't know why that is, Dave. You only have to hit me over the head once or twice and I get it. 14 times, I don't need. So, hey, the margin execution, as always, is stellar. What really surprised me a little bit were the ACS margins were better than I thought, again, maybe just my modeling error, but was there no kind of Elster purchase accounting noise or something that pressured the Q4 numbers? I thought with the late close maybe you'd have some inventory step-ups, something like that, in the quarter. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: No. I mean, we closed on December 27, and virtually very little commercial activity. So we did do whatever pro rata portion of the purchase accounting that was required, but it was de minimis.

Okay. Could you speak to how Elster actually performed in Q4, what the organic pro forma growth rate looked like and how you see it growing in 2016? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah. I mean, I can't speak to the details of Q4, but as we look forward in 2016, Jeff, it's at or better than what we've modeled in our TVA. I mean, the prospects on the metering side in particular as the rollouts continue to occur in outside of the U.S., across all three of the metering platforms are very exciting for us. So you can think about mid-single-digit growth there for us. And also, the gas combustion that's going into ECC is also holding up in terms of what our expectations were for 2016. So, so far so good. I mean, we're early days in the integration, so a lot more work to do, but it's consistent with what we had expected.

Well, it sounds like there could be a little bit more upside in that accretion plan for 2016 would be a fair assumption? David M. Cote - Chairman & Chief Executive Officer: I could tell you we're pushing all the acquisitions to do even better in 2016.

Right, as we'd expect. Thanks a lot. David M. Cote - Chairman & Chief Executive Officer: Thanks, Jeff.

We will take our next question from Steve Tusa with JPMorgan.

Hey, guys. Good morning. David M. Cote - Chairman & Chief Executive Officer: Hey, Steve. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Hey, Steve.

Listening to Danny Boy on the music pre-conference call, and hopefully that's not a commentary on your tenure there in the near-term. Hopefully you're going to be around for a little bit longer. These are decent results. David M. Cote - Chairman & Chief Executive Officer: (57:35) you didn't have to listen to Tom singing it.

There's been a lot of big numbers floating around out there on the capacity to do deals. I know you guys have said in your formal commentary from your Investor Day, it's, I don't know, something like $10 billion. I think you made a comment on Bloomberg that it was like $20 billion or something like that, $15 billion to $20 billion. Can you just clear the air on if something big came up, kind of how far, what do you think your capacity is from a ratings agency perspective? How far would you be willing to go as far as capital deployment, call it, over the next couple of years? What is that number? David M. Cote - Chairman & Chief Executive Officer: Well, as we tried to show in the Investor Day a couple of years ago, I used the $10 billion as just an example because I felt like in our previous five-year plan, we got no credit for what we could do there, even though I tried to talk about how much cash capability we had ahead of us. And if you recall, I said at the time in there that we had something like $20 billion to $30 billion in capacity over the next five years when you looked at cash generation and debt capacity as EBITDAR grew. I'd say that's still the case. We've only deployed about $6 billion, $8 billion out of the $30 billion or so we're going to generate and the capacity that we'll generate over that five-year period. But we still have a lot of room to grow. In terms of how big we'd be willing to go, I guess it would depend on how good the opportunity would be. If we have something that could generate great returns, and we think there's forgiveness in the numbers and the ability to execute, then yeah, I'd be willing to go larger. But by the same token, it's got to make sense, consistent with how we've talked about deals in the past.

Right. And it's good to see that Elster EBIT has held up and hasn't collapsed on you like some other deals. Just a comment or a question on UOP. These international wins that you guys are booking, I know you had talked about a pipeline of 12 or so at some stage of the game. What is kind of the number of opportunities out there? Because there's a view that everything in energy is basically going down a lot, but this seems like actually an area where a little pocket that actually is growing and has some opportunity. How many of these are out there to offset what's going on in clearly a more challenging domestic environment and gas processing? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah, we had a nice fourth quarter in orders on gas processing, Steve. There was a – one or two of mega projects that really contributed to the gas processing orders growth. There's a handful of things that we're pursuing internationally now. We don't really comment on the individual prospects, but I would say it's enough to keep the team busy. And we'd like it to be bigger, though. We'd like the pipeline to be bigger.

Right. But a couple of those are multiples of what the domestic stuff is, so it seems like that's a pretty good backfill for an energy environment where there's not much backfill elsewhere. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah. Very sizable opportunities.

Okay. Great. Thanks a lot, guys.

We will take our next question from Nigel Coe with Morgan Stanley. Nigel Coe - Morgan Stanley & Co. LLC: Thanks. Good morning. So I think what we're seeing here is HOS Gold really does feel like it's accelerating the productivity, but I know you're going to talk about that in March, so I'll leave that there. I just wanted to come back to the M&A pipeline and the $20 billion, $30 billion ambition to deploy capital. And I'm just wondering, with this environment, arguably more willing (01:01:22) sellers, PE is constrained by the high yield market. Do you think, or maybe are you more optimistic that you can do another Elster or maybe something larger over the next 12 months, given the backdrop what we're seeing right now? David M. Cote - Chairman & Chief Executive Officer: Well, let me just – since you brought up HOS Gold, I should add it's a lot more than just a productivity story. I would agree that HOS was that way because that was really focused on our factories and we brought that into the functions with functional transformation, but HOS Gold is much about the breakthrough goals and what that does to excite growth as it is a basic cost productivity. And I think you'll be quite encouraged with some of the stuff the guys are going to share, along the lines of something like three-quarters of our breakthrough goals involve software, the progress that we've made in breakthrough goals and how that's shown up. But HOS Gold is as much about growth as it is about productivity. In fact, I'd say probably even more so. When it comes to the acquisition side, I'll let Tom handle that one. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah, I think the – I mean, it's a good question, Nigel. I think the expectations from a seller perspective, I don't think we've seen them moderate to any significant degree. I think you're referring to a private equity and your ability to get financing, maybe that's capping what we're seeing. I think you still see robust expectations from sellers. But with that said, I'd repeat what Dave said earlier into the question, which was our cadence around M&A is the same as it's always been. We take a look at opportunities every month in every business. There's plenty to talk about in each of those businesses. The sizes of the opportunities vary. And some of them could be sizable, like Dave said, but there's an equal amount or more that are of the size that we've historically done. So really nothing's changed. I can't say that anything is imminent except for the closure of COM DEV knock-on wood. So that's the environment, and we're overall encouraged that we can hopefully do something similar to what we did in 2015. Nigel Coe - Morgan Stanley & Co. LLC: Okay. Okay, thanks. That's great. And just a quick one. I know we're running a little bit late here. I'm seeing that the bulk of the minority line in 2015 was UOP Russell. So I'm wondering now you've bought in the minority of the minority interest, what happens to that line going forward? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: That line will go down. To your point, Nigel, it's a subtraction from our earnings, represented the 30% minority interest in UOP Russell. We purchased the remaining 30% near the end of the year, and what that does is eliminates that deduct. We always had the full 100% of UOP Russell in our segment margin. So this will be an improvement to EPS but not necessarily to sales or segment margins. Nigel Coe - Morgan Stanley & Co. LLC: Right. But it's accretive to earnings? Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Correct, an improvement to EPS. Nigel Coe - Morgan Stanley & Co. LLC: Great. Thanks, guys.

We will take our final question from Steven Winoker with Bernstein. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Thanks for fitting me in. And Dave, before you just hand Scott that job answering phones, make sure you conduct in-person interviews for all of us, okay? I think that can make a difference. David M. Cote - Chairman & Chief Executive Officer: All right, Steve. Appreciate it. I feel there's demand. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Listen. Cash flow, pretty darn impressive, 127% conversion. You guys talking about normalization on CapEx going forward, but this is a change from an external viewpoint of Honeywell in terms of the numbers we're seeing. So maybe give us a little more thought around not just the CapEx side but the rest of free cash flow and what's going on internally such that we should, over a longer period of time, be thinking closer to 100% free cash flow conversion as just part of the business model? David M. Cote - Chairman & Chief Executive Officer: Well, actually I don't think it's a change to the story we've been telling. It may be how it's been perceived. But as you know, before we embarked on this CapEx expansion, we were generally over 100%. We said we had the opportunity to invest about $1 billion here at 30% and 40% IRRs that, yeah, they don't show up right away, given the magnitude of the projects. But it does show up, and when it does, it's quite good. And we've always thought that made sense. And the focus on free cash flow conversion, I found a little interesting, because I felt like a number of investors thought that I should pass up 30% and 40% projects so that I had good conversion that I could then invest in acquisitions at 15% IRR, which doesn't make a lot of sense. And that's why we said we're going to run this for the long-term. So we always planned on getting back to 100% as soon as we were done with the CapEx expansions. And Tom saying it was, we feel a message that we've been saying all along. But if it resonates better because we said it again, then great because that's been the message all along as far as I'm concerned. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: And you don't see – you continue to see a tale down in those projects, right, there's not new ones coming up? David M. Cote - Chairman & Chief Executive Officer: Well, here's the part that is probably going to be frustrating for you, because while the answer is right now, no, I hope they do. Because if we have $1 million projects for 30% and 40% IRRs, I think you should want me doing that. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Yeah. No, absolutely. All right. On just non-resi, can you give a little more detail about what you guys are seeing? Are you seeing any deceleration and sort of residual impact of energy in certain parts of the country? David M. Cote - Chairman & Chief Executive Officer: No, I think it's still pretty much the same. We've said before, it's better than the slow growth we see everywhere else. But that being said, it's still slow overall. Thomas A. Szlosek - Chief Financial Officer & Senior Vice President: Yeah, I would add, Steve, to that, that, I mean, our businesses that participate, and they are, as you know, mostly ACS, Fire and Security had outstanding years, outgrew the market. So if you consider, I don't know whose number you want to believe, but the ones that I hear, say, non-resi grew somewhere between 4% or 5% in the year. We're certainly above that in some of our products businesses. As we talked about in HBS, we had constraints from the declines in the energy retrofit business. I think that's more of a timing issue than anything else. So, overall, a very strong 2015, and the prospects continue to look pretty good for the period we have visibility for the next few quarters. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay, great. Nice quarter, gents. Thanks. David M. Cote - Chairman & Chief Executive Officer: Thanks.

I would now like to turn the conference back over to Dave Cote for any additional or closing remarks. David M. Cote - Chairman & Chief Executive Officer: Well, there's no doubt, it's a slow growth environment. That being said, whether it's slow growth or high growth, we believe your best bet is Honeywell because we do what we say. Our strong diverse portfolio and our ability to execute really does make a difference. Thanks, guys.

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