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. [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.

Thank you, Christina and good morning and welcome to Honeywell's third quarter 2017 earnings conference call. With me here today are President and CEO, Darius Adamczyk, and Senior Vice President and Chief Financial Officer, Tom Szlosek. This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com/investor. Note that elements in 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 and we ask that you interpret them in that light. We identify the principle risks and uncertainties that affect our performance and our Annual Report on Form 10-K and other SEC filings. This morning we will review our financial results for the third quarter, share our guidance for the fourth quarter, and full year 2017 and as always we will leave ample time at the end for your questions. So, with that, I'll turn the call over to President and CEO, Darius Adamczyk.

Thank you Mark and good morning everyone. As we previewed last week Honeywell delivered another terrific quarter with strong organic sales growth and margin expansion leading to high quality earnings. Sales were up 5% exceeding the high end of the guidance we provided in July. Our aerospace aftermarket business grew more than 7%, our Intelligrated business which developed solutions for the warehouse automation market continued to grow at double-digit pace and every business and performance materials and technologies grew considerably led by 25% organic sales growth in UOP. In addition we saw a continued strength in high growth regions. Organic sales growth in both China and India was up more than 30% year-over-year driven by strong catalyst demand in UOP and continued growth from our differentiated offering within the home and building technologies and safety and productivity solutions. We expanded segment margins by a 120 basis points this quarter driven by strong operational performance in all businesses leading to earnings per share that came in at the high end of our guidance range of $1.75 up 16% on a basis consistent for our guidance. During the quarter we also funded about 120 million of restructuring and other projects. We remain on track to achieving our full year free cash flow guidance. Free cash flow for the quarter was 1.2 billion representing about 90% conversion. I am encouraged by the progress we made with regard to working capital but there is much more we can do and all of our businesses are focused on driving improvements to our cash cycle. Overall I am pleased with our organic sales growth momentum and the operational improvement each of our businesses continue to achieve. As a result of our continued outperformance last week we raised our full year earnings per share guidance to $7.05…

Thanks Darius, good morning, I'm on slide 4. As Darius mentioned we achieved 5% organic sales growth in the third quarter which exceeded our guidance of 2% to 4% growth. We've met or exceeded the high end of our sales guidance in every quarter of 2017 and each of our businesses is contributing to the momentum. Segment profit was 1.9 billion up 13% excluding the impact from our 2016 divestitures and segment margin expanded 120 basis points from 2016 driven by our continued focus on effective selling and operational execution. We also had some favorability from lower OEM incentives in aerospace which was contemplated in our guidance. Earnings per share was $1.75 in line with our preview on October 10th. Our third quarter tax rate came in at 23.4% lower than originally anticipated which enabled additional restructuring projects beyond what we had planned. These projects will improve our cost structure, drive further productivity starting in the fourth quarter, and begin to address the residual costs we expect as a result of the announcements. Excluding 60 million of this additional restructuring and earnings from our 2016 divestitures and normalized for tax at 26% in both periods, earnings per share was up 16% year-over-year. A number of people have asked about the impact from the extreme weather throughout the third quarter. The impact from all of the weather issues was approximately $0.02 of earnings which we were able to overcome with advanced planning and other mitigation actions. Each of our businesses was impacted in some way. We had to temporarily close six aerospace sites in the Gulf Coast and Puerto Rico, several ADI branches were closed leading to loss revenues for Home and Building Technologies. In Process Solutions several customers pushed third quarter projects into the fourth quarter and SPS experienced lower…

Thanks Tom. Darius and Tom are now available to answer your questions. So Christina if you could please open the lines for Q&A.

[Operator Instructions]. Our first question coming from Deane Dray with RBC Capital Markets.

Thank you, good morning everyone, and I'm sorry I signed on late so you may have covered some of this before. One of the follow-up points I had on the spin announcements, divestiture announcements earlier was the potential for and the use of the Honeywell brand for the divested businesses just it's kind of a clean-up question on that announcement, I will start there please?

Sure, I think as it relates to the Honeywell brand some of those decisions have not been made in terms of how we're going to -- what we're going to do with the brand for either the Homes or the Transportation Systems business. So I think that we will provide more clarity on that as we move forward but there are a lot of different options that we have and it's going to be part of our work product and we will be communicating that as it becomes clearer in Q1 and Q2 of next year.

And how about just a broader question on a progress report and goals for the transformation of Honeywell to the software industrial Darius that you envision, just in terms of portfolio shaping the way you're looking at M&A emphasizing perhaps some software as a service opportunities within the portfolio?

You're right overall I'm very pleased in terms of how our Connected Enterprises is progressing this year. It is up double-digit which is very much in line of expectations. Margins are up even higher than that. In terms of acquisitions and landscape we continue to look at all segments of the business including our software plays. We've made one acquisition actually in the software area in Q3 which is pretty exciting cyber technology that although the business itself is relatively small we have very, very big growth opportunities for it and it's actually exceeding our expectations. So the software acquisitions in general will be more of the bolt on variety, those are the kind that we're looking at but overall we continue to make progress both on the P&L on Connected Enterprise continues to make progress on the build out of our Sentience platform and signing up more partners as we go. So we continue to be very excited about what we're doing. And the most important part of that it’s generating the right kind of results.

Got it and just last question, I know we're going to hear more of this in your outlook call but broad strokes, the outlook on 2018 in terms of the macro environment where do you think you're particularly well positioned both U.S., outside the U.S.?

Yes, Deane this is Tom. We are in the throes of our planning right now. We'll go through the details as we get into November-December. We're looking at trends continuing in most of our businesses. I mean you see the strength in aerospace, a lot of good flight hour activity, the defense is looking up. And you know with any luck at some point at the tail end of 2018 we will get some help from the Business Jet side. Although Business Jet usage remains strong, so we expect those trends to continue. PMT we really are encouraged not only by their performance but by the strength of the orders and backlog and it's been in all lines of business. I mean not to denigrate last year but we had great orders last year than they were in the aftermarket side. We're seeing a lot of front-end orders type business in PMT particularly in UOP and HPS which bodes well for building installed base and building our service business. So really strong trends there. In SPS Intelligrated continues to perform very well. We expect that backlog which is well over 20% to fuel excellent growth and we expect the trends in that vertical to continue with the e-commerce. And the safety business continues to do well. We've got the Android products on productivity and the software businesses and SPS so, good trends. You saw our fourth quarter expected growth and I think we'll see that continue into next year. So overall I see some trends, some growth trends continuing. Deane as you saw every quarter of this year the organic growth rate has improved and if our guidance holds up into the fourth quarter that should at least be equal to the third quarter and hopefully that continues into next year. So overall pretty strong conditions ahead we are encouraged.

Thank you.

We'll take our next question from Steven Winoker with UBS.

Thanks and good morning all.

Good morning.

Darius could you maybe expand a little bit on your thoughts around PMT and UOP in terms of that refining cycle, given you a lot of -- I mean overall the tailwinds top line, I know you got equipment challenges but the cyclical versus structural side of this, now what are you kind of expecting given Tom's comment for the length of tailwinds in that -- one of that very important segment?

Well Steve as Tom pointed out one of the most important things for that business we always watch is the bookings. It is very much a long cycle bookings our you know backlog’s up -- it's going to -- we know for a fact that is going to be up probably double-digit by the end of this year versus the end of last year. We continue to be bullish, we are winning a lot of work. We are particularly winning a lot of work in our high growth regions which I find to be really important because as you think about where PMT needs to be strong and has to be strong is in the development and progress of a lot of the developing regions and it's exactly where it is winning. So it's win rate in China, India markets such as this give me a great deal of comfort is that it's going to continue to perform. Our backlog position is strong and we expect another strong quarters of booking in Q4 and go into 2018 with a strong position. And the good news is we're kind of seeing it across all the segment whether it's our gas processing business, whether it is the catalyst business all of those have been particularly strong which by the way enjoyed the biggest order ever in Q3 in terms of our catalyst orders. So overall things are very much moving in the right direction for all of PMT but especially UOP.

Thanks, that's helpful. On SPS I think you had about a month of Intelligrated in that 3% organic, let me know if that's about right. So ex-Intelligrated which you say was up more than 20 so the rest of that business must have been down I don’t know, low to mid single-digits or something. Can you give a little color on that and maybe it is on the mobility productivity side but just a better understanding of the organic performance ex-Intelligrated there?

Yes, it's actually good and you see there's growth in every business. The only business where we didn't see growth was productivity products and the depth due to some of the challenges we previously communicated around the mobility platform because if we look at the scanning side of the business was actually up close to 20%. So we have one small area which is challenged and the productivity product business is challenged but as we just announced we have had exciting new product launch this week. We have more coming in the middle of November and another set of new product launches in the mobility segment coming in the middle of February. So we're not where we want to be on mobility and productivity products but I'm very confident that business as we have in the 2018 in Q1 and Q2 it is going to start turn their performance around as it launches these new offerings. But overall a very strong performance across the board by SPS other than the one issue you about and we aren’t particularly surprised about the outcome.

Yeah, not to mention overcoming the storms and hurricanes in the safety business in particular. I mean as you know the oil and gas vertical is a big sector and there was a lot of push outs of projects and activity that that affected the -- particularly the gas monitoring business and safety. But overall the trends there are really strong as Darius said.

Just numbers are -- it's up 1% though right, ex-Intelligrated Tom, so it was positive still?

Absolutely, yes.

Yes, okay.

No, no Steve I'm not saying that the numbers ex-Intelligrated were up 1%. I mean as Darius said, every one of the business wasn’t just Intelligrated that was contributing more than 2% or 3%.

Alright, great, thank you.

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

Hey guys, thanks for having me on the call this morning. It's nice to be able to get on calls and ask questions. Just first question, you guys you recently raised your dividend by how much?

12% Steve.

And the commitment has continued to do that and drive that faster than earnings going forward for the next few years?

Go ahead Tom.

Yeah, the commitment that we've made, that Darius talked about at the Investor Day -- at our Investor Day was continuing for the five year plan with the idea of raising the dividend faster than the earnings growth. And we're coming up to the end of that. As we look forward we'll watch that but what the minimum we're committing to keep the dividend growth in line with earnings growth and it will track earnings per share.

Yeah, and Steve -- so as we said, as they've committed for the five year period which ends in 2018 we're going to grow dividends at a pace that is faster than earnings. We're committed to that, it is consistent with what we set five years ago. The period after that what I would say is going to be equal to or greater than earnings. We are going to provide greater clarity on that in our February Investor Day. But I'd expect to be equal to or greater than that.

Right and you guys have free cash flow so we can talk about that, at the -- have you seasonally kind of suggested that your cash should be kind of towards the higher end of the range, well just remind us what the target is 100%, is that for 2018 or 2019?

Yeah, Steve the way I talked about that at the Investor Day and largely sticking to it is that by -- at run rate 2018 but really in 2019 we expect to be at 100%.

Okay and then just one last question, you know math is clearly not a strong suit, there are prerequisites for being on the sell side. But the math around safety and productivity solutions I was getting something a little different like maybe 1% or 1.5% growth in the core business and with your new Android products that is coming in would you expect that kind of core growth, I mean not that it really matters because Intelligrated is an organic grower that has tremendous orders, so I'm not sure why we are picking that apart in the first place. But would you expect that to get better next year with some of these new products coming into fray and changing productivity?

Yeah, absolutely. I mean we expect much improved growth rate in productivity products next year as these new product launch and gain traction. I probably expect it to accelerate a bit through the quarters because the bulk of our launches are coming in Q4 and Q1 so obviously it takes time to generate the orders but the short answer is yes. And that's -- I think we have continued to talk about productivity products, it is one segment of one business where we had a little bit of a struggle but across all the other businesses it has been a really nice story of both top line growth and margin expansion.

Yeah, I guess people just can't live without adjusting numbers everywhere so I can understand why we would do that for a first segment like that. Congrats on a top tier organic growth and keeping your eye on the ball.

Thanks Steve.

We will take our next question from Gautam Khanna with Cowen and company.

Yes, thank you guys. I was wondering if I could provide early perspective on any competitive implications of UTX Collins and have you given any more thought to the whole Boeing Avionics initiative and their stated goal of kind of moving into the aftermarket on the aerospace side, thank you?

Sure, yeah, so I mean I think starting with Collins and UTX obviously something that we have analyzed but the way we look at this is the capability that we currently have both on the mechanical systems as well as avionics are on par greater than anything that UTX or Collins would have in creating that merger. And I am particularly excited as it relates to our vision of connected aircraft because having both front-end and electronics as well as the mechanical systems really gives you strengthened capability to implement and deliver that vision of a connected aircraft. And it's not theoretical for us, it's something that we already have and are delivering and it's growing double-digit. And we're marching through the aircraft to get all of our systems connected. We already have APUs, launched wheels and brakes this quarter and we're going to be marching through so I'm not sure that that merger puts us in any kind of a disadvantage vis-à-vis UTX or Collins. And maybe most importantly I never viewed the aerospace segment as one where scale matters. What matters for our us is technology differentiation and that's going to be our basis for competition. In terms of the Boeing avionics and services announcement clearly we do respect what they're doing. There's not a lot of clarity yet and it was exactly what that means and what we are doing. Obviously Boeing is a highly valued and important customer for us which we're going to continue to work with and support. But we also have our own relationship with the end users, the airlines and we have a strong vision for growing our services and RMUs and connected aircraft as well. So, we are going to be as supportive as we can to Boeing and stay in sync with them and create a win-win for both companies.

Thanks Darius, maybe just a follow-up on M&A, when you look at the pipeline and some of the portfolio actually you've announced, are there any larger properties that are attractive to you or should we expect more in the kind of couple of billion or Elster sized bites going forward or are there somethings…?

Well, you know there is always things that are attractive but I would expect more of the bolt on variety that's really our sweet spot and that's where we are looking. And I would say our pipeline is built more bolt on variety type of acquisitions. But, you never know anything could happen but I would say I would be more expectant of bolt-on.

Thank a lot guys, good luck.

Yes, thank you.

We will take our next question from John Inch with Deutsche Bank.

Thank you, good morning everyone and I would also like to echo Steve Tusa's commentary, it is nice when companies allow question. So I want to start, was…

We aim to please John.

Yes, you roll with the punches I appreciate it. So, with the pricing is there any discernible trend on pricing, there's a little bit of still this debate around [indiscernible] various companies are calling out and just curious. I realize you guys have -- you're not a huge rise spreads company but there is a little bit of impact, are spreads improving or how should we think about that?

Yeah, no, I mean obviously we're in a bit of an inflationary environment for some of the commodities but one thing I'm very proud of all our teams and all our businesses, they have really stayed on their toes, made the adjustments, understand what the impacts are and really are capturing the value that our services and products provide from our customers. So, I think overall we've probably been more challenged on the cost side this year than we've seen in a while. But I also think we reacted quickly, made the right adjustments, we have a very active value engineering program as well that produces substantial productivity. And we also understand the value that we bring to our customers and make adjustments as required. So all in all done a nice job here. [Multiple Speakers]

Say that again John.

Yeah, I just said, sorry, with respect to drag in the quarter this year versus last year if there's a way to kind of capture that?

No, I think we are -- when you look at the actual pricing it's what we talked about last quarter. It is holding in there quite nicely. We have been able to -- 50 to 100 basis point depending upon the business and largely recovering the types of inflation Darius talked about. Like he said the businesses are laser focused on -- particularly on the material inflation side.

John, I would just point to the fact that every one of our businesses expanded margins in Q3, I mean every single one. So, and we're on that trend for the whole year as well.

Yeah so, that kind of almost leads to the question of cash and given all the investments you guys have been putting in, the new products and so forth and the growth that you anticipate it's clearly what is picking up in PMT and aerospace. I forget Darius you had mentioned this in kind of the portfolio review call but what's your sort of line of sight to Honeywell getting to 100% free cash conversion if not higher than that and where does that kind of rank in your strategic priority list of things you're trying to accomplish?

Yeah, it's important and we're -- that's exactly what we're aiming is 100%, it is consistent with the message we have been giving. You know we're marching towards that goal where we did roughly 90% this year, we expect to see improvement next year, and then further improvement 2019. And it's a very conscious call and I can tell you that we've never had more focus on working capital than we do today. We are seeing some progress being made there and there's more to go but it's a very important goal, the goal that both Tom and myself and the rest of the business leaders take very seriously and we are committed to it.

You know just lastly on the question to capital allocation, I mean you just basically said look, let's think about near-term, we will think about our foreseeable future bolt ons, while the stuff out there is pretty pricey given what's happened in public markets plus Darius I think a lot of the things that you want to aspire towards improving or realizing in your mix, software, industrial, etc I mean that stuff has got to be pretty pricey too. Is the playbook kind of in the intermediate term just we're not going to do a lot of M&A, I mean what's the -- kind of how do you judge that balance or gauge that balance, because you don’t want to overpay but you don't want to sit and sort of do nothing if the prices are the prices, right?

Yeah, I think that's fair and we've been very cautious. We've been very active by the way in the M&A area but we're going to -- the one thing we're known for we're known for doing days there and that is going to be the same there. And we are going to stay disciplined in terms of M&A. But if you're selective and you're active which we're going to be both of these things sometimes you can find the gems at the right price. So we're going to continue to try and going to have -- we have a robust pipeline and we're not marching off the field because things look expensive, they do but we believe that there are opportunities out there where we can participate in appealing valuation. Now having said that if there's nothing that happens we're obviously we're going to also be looking at buybacks as another way to distribute cash back to our shareholders. So there's always a balance, we'd like to have some ability to stay balanced. Our preference is for bolt on M&A but it's got to be smart and we got to pay the right price. And if we can't get that done then we are obviously going to be a little bit heavier on buybacks.

Thank you and by the way you guys better hold on the Mark, good investor relations are hard to find.

I think the checks in the mail John.

Any check would be welcome, trust me.

Thank you, it just feels like there's a lot of passive aggressiveness on the call today.

Can't imagine why. Operator And we will take our next question from Nigel Coe with Morgan Stanley.

Okay, I will keep this one simple I think. Good morning guys. So SPS, so no passive aggressiveness, maybe some aggression but nothing passive. So, -- SPS organic growth obviously in 4Q we've kind of being shadowboxing around this as well, so math is not my strong point but Intelligrated would be about 2 to 2.5 points tailwinds to that number, so we're looking at maybe a core of 4% to 5% ex-Intelligrated?

I think, I will have to do the math, but each of the business is at least low to mid single-digit that you put in productivity product side. So for example the safety business Nigel, I mean where it was you know low single-digits in the third quarter that's going to be good mid single-digits in the fourth. And industrial safety will be well into the mid to higher single-digits, you know high risk businesses is doing well. We also will have really strong results expected on the retail business. As you know we've changed the business model, that's going to be well into the double-digits. Productivity even with the productivity products overall will be high single-digit in productivity. As Darius said, the scanning business is doing fantastic, work flow is going to be north of 20%, our software and sensing business will be mid to high single-digit. And Intelligrated will be up like we said it would be but it's everywhere and globally as well. I mean it's in the U.S., it's Europe, China, so it's not just a poll from Intelligrated that's doing this nor is it the productivity product pulling us down. These are all really good growers given an organic growth range we have talked about.

It sounds pretty broad. One of your competitors dramatic drop to surprise warning in that warehouse business, I think it was yesterday or day before, seems to imply that leaves us some share, I mean maybe you could just touch on how you're seeing the maybe the front-end and the warehouse business as you go into 2018?

Yeah, we continue to be very bullish and we had a very strong orders quarter in Q3, we anticipate another one for Q4 and as I said, I think this is really well positioned because what's really growing the fastest is the e-commerce, high throughput type of warehouses. And that is exactly the sweet spot of that business and customers are seeing the value and we're generating the orders. And as you can imagine it's a very quickly growing playing field in warehouse automation given the expansion in warehouse and distribution. And we don't see that pausing, we are bullish on our Q4 and we are bullish on 2018.

Great, and then just a quick one…

Go ahead, I was just going to say we did take note of the competitor announcement you talked about but our, as Darius said, our fourth quarter -- our third quarter was just fantastic in terms of orders growth and Intelligrated. I mean, strong, strong double-digits and as he said we expect that to continue. Backlog is really good, I mean compared to last year and it is all organic growth. I mean well over 50% backlog growth. So it's positioned very well.

And then just quickly Tom on the [indiscernible] margin expansion in 4Q, obviously the FX hedge we got in place for this year is margin dilutive given the dynamics of stronger revenues from weaker dollar but no impact to EBIT, so I am just wondering will that be about 20 bips or so that's what my math tells me?

You mean for Q4?

For Q4, yeah.

Yeah, I mean the translation and -- that will be about flat for us I mean year-over-year. I don't think that's going to be a big impact overall FX for 4Q. When you consider the hedges, the movement in the rates and everything it's basically flat.

Okay, got it. Thanks a lot guys.

And we will take our next question from Jeff Sprague with Vertical Research.

Thank you, good morning guys. Hey, just a quick one from me. You guys covered a lot of ground. I just want to get to hone in a little bit further on this free cash flow question looking forward and I'm just wondering perhaps it is for Tom but Darius you are certainly welcome to chime in, just what is the big bridge items next year when we think about free cash flow. I'm assuming CAPEX might be down a little bit, I don't know if you expect help on working capital, you've got growth that are mitigated against it, right so maybe your churns improve but maybe absolute working capital doesn't, pension etc, just what are the really the big items next year that kind of puts you on the path with 100% in 2019?

I mean when you look at 2017 Jeff I mean we're looking at about 1 billion of CAPEX although that could be a little heavy. When you look at that as a reinvestment ratio expect that to come down in 2020. There will be at least 150 million to 200 million less of CAPEX which is a big driver for us. We do have incremental cash tax spending this year and it's mostly timing related. We will have probably by the end of the year incremental 500 million year-over-year. I don't expect that to repeat next year so that should give us some tailwind. And then most importantly operationally Darius talked about is working capital. We're kind of improving our trends which means kind of treading water this year not necessarily adding huge amounts to working capital. The churn is kind of staying flat but as he said a lot of business is focused on driving that going forward. We're going to need 200 million to 300 million out of our working capital next year to go to drive towards that 100%. I would say those are the big three things that we're looking at.

Great, I will leave it there. Thanks guys.

We'll take our next question from Andrew Obin with Bank of America.

Yes, good morning guys.

Good morning.

Just a couple questions, on aerospace, as we think about the defense portfolio of programs, as defense budgets improve how should we think about your portfolio of programs relative to budget, i.e. do you think you can keep up with the budget, I mean is there something -- is there a big outline in terms of your programs that Honeywell is going to be very different?

Yes, I think it's going to be aligned and I mean we're seeing really good growth particularly in the U.S. defense budgets where we I think we have obviously greater clarity and a much greater density. And that segment of the business is doing well. We anticipate to continue to do well and it will be aligned or higher than the growth. When it comes to international it's a little bit more hazy because obviously we are talking a lot of different countries, a lot of different programs, and we have some programs that are ending, some that are continuing but overall it's kind of an up Aero given what we're seeing in the geopolitical arena, anticipate slightly greater spending by NATO as a whole. And some recovery in the Eagle [ph] markets in the future which as you know is in that segment. So overall constructive comes to defense.

Right, so that should be a nice tailwind to aerospace and another question just talking about China and emerging markets visibility. A) what are you guys seeing on the ground with this party congress, is everything on track? And the second, how should we think about your China exposure going forward given the portfolio changes that you guys have made now that your China business is really driven by Aero and UOP, do you sort of disconnect from the underlying China macro to a certain degree going forward, thank you?

No, I mean China and India as we pointed out this quarter have been up 30% and that success is not isolated to PMT or Aero. That's for every one of our business segments and as you can imagine as Comac gets going even further Aero actually that revenue potentially is still way ahead of us not behind us. Secondly UOP, HPS are continuing to win across the board in China and India, tremendous successes there this year. Buildings and Home we approach those markets a little bit differently than we do in some of the developed markets but again double-digit growth in both. So very well aligned with the urbanization trends so whether it is the independent Homes business or the remaining buildings portfolio are going to do very, very well. Warehouse automation now moving on to SPS, again early days but it's a maturing segment and one which we're going to participate in. And then finally industrial safety another segment that's evolving when still in kind of their early days but clearly worker safety is very much on the forefront of the agenda of both China and India and the regulatory environment there is changing much more worker oriented. So across our portfolio we're excited about our potential in both China and India. Both of those are great markets, we have great management team, and have both a local perspective and the results speak for themselves. I mean 30% growth in Q3 I think is tremendous.

And to add to that Andrew, just I think your inference was that we're dependent upon HPT for growth there, but if you look at third quarter I mean HPT was our slowest grower amongst all of the segments in China. So it really -- [Multiple Speaker]

Terrific, thanks a lot guys.

And we will take our last question from Andrew Kaplowitz with Citi.

Thanks guys, good morning. Tom, last quarter you stepped up restructuring and talked about 150 million of benefits, and those seemed like you would do a fair amount of restructuring here in the short-term. I know you talked about 150 million of benefits from that last restructuring but we have greater than normal restructuring tailwind as you enter 2018, I mean how do we look at that?

Yeah, I mean I don't think it's necessarily greater than what we would have had going into this year. In fact if you remember Andy that we did the significant restructuring when we divided up ACS up into HPT and SPS, there was a fair amount of delayering that took place. It gave us some pretty good tailwinds as we headed into 2017. So in 2018 I agree we've put a lot of capital to work on restructuring and there is clear momentum coming. But I wouldn't say it's a multiple of the tailwind that we had coming in 2017. And we'll give you more color on that as we get into our earnings outlook in December.

That's helpful. And then Darius, Aero has been on pretty big positives, surprise I can tell you really the whole year so far. How much do you think the surprise has been the early year reorganization versus just you had a confluence of events last year that were kind of negative that have gotten better here in 2017 and maybe what's been the biggest surprise in the performance here in 2017?

Well, yeah, I mean you're right. I mean Andrew I am very pleased with how it is performing. I think not that I'm surprised by it but I'm very pleased with what's happened in terms of commercial excellence, the business capturing the aftermarket business, the RMUs, the growth in connected aircraft. It's invested in that last year in Q4 about 200 sales people that's generating a lot of new sales and we watched that at a very detailed level. The business continues to drive productivities so it does what I always want every business to do which is grow the top line as well as get more productive every year. So, yeah that is certainly -- last year was a tough year, more headwinds on the concessions but the reorganization also helped as we segregated the decision making is now faster business, moves faster. So I am really pleased with how they're executing and its continued outlook for the future.

Thanks Darius.

Thank you.

And that concludes today's question-and-answer session. At this time I would like to turn the conference back to Mr. Darius Adamczyk for additional closing remarks.

Thank you. I am pleased with our continued performance in the third quarter especially of our continued organic sales acceleration, our improved profit conversion, and our year-over-year improvement of free cash flow. We remain focused on delivering the sustained financial results you would have come to expect from Honeywell. There will be no distractions even as we work to spin the Homes and Transportation Systems businesses. I look forward to sharing more Honeywell successes with you and our plans for 2018 over the coming months. Enjoy the rest of your fall. Thank you.

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