Good day, ladies and gentlemen, and welcome to Honeywell’s Fourth Quarter Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for 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 Bendza, Vice President of Investor Relations.

Thank you, Abby. Good morning and welcome to Honeywell’s fourth quarter 2019 earnings and 2020 outlook conference call. With me here today are Chairman and CEO, Darius Adamczyk; and Senior Vice President and Chief Financial Officer, Greg Lewis. This call and webcast, including any non-GAAP reconciliations, are available on our website at www.honeywell.com/investor. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our businesses as we see them today. Those elements can change, and we ask that you interpret them in that light. We identify the principal risks and uncertainties that may affect our performance in our annual report on Form 10-K and other SEC filings. For this call, references to adjusted earnings per share, adjusted free cash flow and free cash flow conversion and effective tax rate exclude the impacts from separation costs related to the two spin-offs of our Homes and Transportation Systems businesses in 2018 as well as pension mark-to-market adjustments and U.S. tax legislation, except where otherwise noted. Comparisons are to the prior year period, unless otherwise noted. This morning, we will review our financial results for the fourth quarter and full year 2019; discuss our full year outlook; and share our guidance for the first quarter of 2020. As always, we’ll leave time for your questions at the end. And with that, I’ll turn the call over to Chairman and CEO, Darius Adamczyk.

Thank you, Mark, and good morning everyone. Let’s begin on Slide 2. We are very pleased with our results in 2019. We’ve finished a great year of another strong quarter. In the fourth quarter, we delivered $2.06 adjusted earnings per share above the high end of the guidance range, 130 basis points of margin expansion and maybe most importantly $2.3 billion of adjusted free cash flow resulting in the fourth quarter conversion of 154%. With this conclusion to the year, we met or exceeded our financial commitments on all metrics in 2019, managing through a volatile environment and delivering adjusted earnings per share of $8.16, $0.06 above the high end of our initial 2019 guidance. Despite the challenging broad macro environment in 2019, we grew organic sales 5%, driven by strength across – on much of our portfolio throughout the year. Growth was driven by Commercial Aerospace, Defense, Process Solutions and Building Products. We also had strong orders for HPS mega projects, UOP equipment and Defense and overall a 100% in calibrator orders during the fourth quarter. These robust orders contribute to a 10% year-over-year increase in long cycle backlog. Additionally, in 2019, Honeywell Connected Enterprise drove double-digit software growth. We expanded segment margin 150 basis points or 70 basis points, excluding the impact of the 2018 spinoff, both 10 basis points above the high end of our 2019 guidance. Our growth combined with productivity rigor and commercial excellence, drove margin expansion in Aerospace, Building Technologies and Performance Materials and Technologies. We generated $6.3 billion of adjusted free cash flow for the year, exceeding the high end of our initial guidance by approximately $300 million and resulting in 105% free cash flow conversion or 114% free cash flow conversion, excluding pension income. We continue to make smart investments in our…

Thanks, Darius, and good morning everyone. For the fourth quarter, we grew organic sales by 2%, driven by 7% organic growth in Aerospace, as well as continued growth in our Process Automation, UOP and Building Management Products businesses. SPS contracted during the quarter, but the turnaround of productivity progress – product is progressing. Intelligrated sales improved sequentially, but they were down year-over-year as expected due to tough comps, compared to nearly 50% growth in the fourth quarter of 2018. Importantly, orders were up 100% as the major project orders we anticipated in Intelligrated materialized to set us up well for 2020. Our organic growth combined with commercial and operational excellence and the benefits from the portfolio enhancements that we made in 2018 drove segment margin expansion of 130 basis points, with segment margin again exceeding 21% this quarter. Excluding the favorable impact of the spinoffs, segment margins expanded by 90 basis points, which was 40 basis points above the high end of our guidance, driven by our strong commercial excellence and productivity programs. We delivered adjusted earnings per share of $2.6, up 11%, excluding the impact of the spinoff and above the high end of our guidance. In addition to strong segment profit performance, earnings per share benefited from lower share count due to our buyback program, and a lower adjusted effective tax rate, which more than offset our planned lower pension income. During the quarter, we generated $2.3 billion of adjusted free cash flow with conversion of 154% on the strength of improvements in working capital, primarily from cash collections and inventory reductions. As Darius highlighted, we’re beginning to see the effects of our supply chain transformation as demonstrated by inventory improvements in the fourth quarter. This resulted in full year adjusted free cash flow of $6.3 billion and…

thanks, Greg. Overall, we are pleased with strong operational performance from our portfolio in 2019. We continue to execute our core priorities and we again, delivered on our commitment. We remain cautious on the macroenvironment of many factors, still very fluid for 2020 and significant uncertainty around short cycle demand of a balanced portfolio poised for continued performance despite macro headwinds and we continue to make significant progress of our transformation initiatives including Honeywell Connected Enterprise, Honeywell Digital, and our Integrated Supply Chain. Additionally, we’re bringing innovative and connected offerings to market to fuel growth, which combined of our strong execution track record positions us well for 2020 and beyond. With that Mark, let’s move to Q&A.

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

Thank you. [Operator Instructions] Thank you. And our first question is coming from Steve Tusa with JPMorgan.

Hi, guys. Good morning.

Good morning, Steve.

Good morning.

Just on the free cash, you mentioned a few items obviously, stronger in 2019, you mentioned a few items influencing 2020, kind of disagree with using an adjusted conversion metric, ultimately, cash per share is what matters. But what is the – is there anything kind of flip in 2021, so is 2020 to be viewed as kind of the base for growth or is there anything, timing-wise, that was pulled into 2019 that influence 2020, and then 2021 is kind of a more normal base to grow off of?

Yes. So, we’ve always talked about our free cash flow conversion adjusted and we guided it last year, even in that, we have 95% to 100% adjusted. We highlighted the – both in our press release materials, both the way we had done previously adjusted and then we also adjusted for pension income, just to be transparent about both of those metrics, particularly with the increase in pension income going into 2020. So that’s really the – that’s what you’re seeing there in terms of – and both of those numbers are strongly above 100%. So, in terms of the 2019 into 2020 differences, what I tried to highlight in the – in the opening, Steve is really a couple of things. And first, we are going to spend a bit more CapEx as we go into 2020 and that’s in support of our transformation initiatives in the supply chain, some additional capacity for some new products. We also have just from a calendar perspective; we’re going to have an extra payroll cycle in 2020. So that’s just math and for us that’s, call it, between $100 million and $200 million of headwind that will come and go in 2020. And then in terms of our environmental and other liabilities, those numbers will move a little bit and so there’s probably a $100-ish million, maybe $200 million of flex that we have in there for 2020 also. So, those are really the major items that you’ll see, but our cash flow performance and the overachievement that we had in the fourth quarter relative to our own expectations were heavily anchored around our working capital improvements. We did a tremendous job with our commercial and collections teams on the receivable side; we’ve been doing a lot on transforming how we do credit to collections. And then we talked about inventory being our bugaboo for some time now and if you look at the free cash flow statement, you’ll see for the first time in a while, we actually were able to get cash from inventory as we’re specifically starting to tune some of those dials in a more disciplined way, with again, some of the things that Torsten and the team are driving from a transformation perspective. So Darius, I don’t know if you want to add.

Yes. just to add a couple of things, Steve. And maybe, just to add a couple of things on a year-over-year basis and these are not dramatic impacts. but overall, our cash outlays are going to be slightly higher in 2020 versus 2019 due to restructuring. So that’s probably another factor. I wouldn’t get too focused about a baseline of 2020. obviously we have some CapEx to spend, which is the driver in our payment cycle, that’s an extra one. So that’s just a math worked outside. It doesn’t necessarily mean that 2020 announced the baseline. But I do want to highlight something and I think it’s a point that’s been missed completely, which is if you look at the cash flow generation of this company versus what it was three years ago, we’re about $2 billion higher on 15% to 20% in the last sales growth. I think that point has been just missed completely and I’m extraordinarily proud of the team in terms of what they’ve been able to accomplish in terms of cash generation. After all, that gives us more firepower to extra reinvest in the business or pass back to our shareowners or likely both. And I think that’s the thing that really matters.

Okay. So just – that makes sense. So basically, a few hundred million dollars that is kind of timing related in 2020. Is that – is that kind of how we should think about at a high level?

Yes, I’m sorry.

Okay. And then one last quick one, just on HBT, what’s going on there with – I mean, you guys had a pretty positive Investor Day and now kind of framing a year with a little bit of a decline at the low end, what kind of popped up, is that kind of performance contracting out of JCI talked about that as being weak as well. What’s kind of the drag there?

That’s exactly it, Steve. We basically are energy contracts or performance contracts primarily driven by the government sector, we’ve seen a substantial drop-off in that segment of the business in orders that has not been sort of the focus of the government sector lately and that’s been a problem. That’s been a significant business for us in the past and that’s dropped off. Yes, the orders there have dropped off double-digit. So that’s probably the one problem area that we’ve seen in terms of orders, but that – we’re always going to have an issue somewhere, but if we look at our long cycle orders for the quarter across Honeywell, 15% growth, I don’t want to sort of bypass that back in a book-to-bill ratio of 1.7. So, I think it was an incredibly successful quarter from a long-cycle orders perspective. And just to maybe, quote you another fact. In a place like China, orders up north of 20% and backlog up nearly 50%. So, I viewed this quarter as just an outstanding from Honeywell winning in the marketplace.

Okay. One quick one, what’s your year-end share count? And then I’ll leave it there, just a year-end ending share count. I’ll leave it there. Thanks a lot.

I think we’ve talked about 718.

Yes.

We will take our next question from Scott Davis with Melius Research.

Hi, good morning, guys.

Good morning.

A lot of – a lot of information here and super helpful, I think this is the first quarter, where we’ve, at least for the 2020 guide, where supply chain seems to be a – starting to become a tailwind and I guess my question really is, Darius – has this become a linear tailwind, meaning you get some benefit in 2020, some in 2021, 2022 or is there some sort of a step-up that occurs over time as you kind of post these investment cycles?

Yes. I think it’s a gradual improvement. I think I was extraordinarily pleased with what we saw in terms of our inventory management. Inventory has been a bit of a bugaboo for Honeywell for a long time and we actually made some really nice progress in the second half of the year. I don’t think there are any miracles for us out there, but I expect that progress to continue and it was reflected in our cash flow for Q4. And also, we’re focused on our delivery, our quality and so on, and Torsten and his team are doing a really nice job driving those improvements and I expect a gradual improvement year-over-year and then transformation. I mean we dropped our fixed cost footprint in 2019. We have an even more aggressive plan for 2020 and 2021. So, you’re going to kind of continue to see that progress on fixed cost reduction, which obviously, makes us a much more variable cost company, which is something that I very much desire.

Yes. Super helpful and I don’t think you mentioned the word M&A or deals of any course in the prepared remarks and was that – I may have missed it, of course, but was that purposeful in the context, there’s just not a lot relatively expensive market out there or is it just not part of the planning right now, or deals are going to get announced when they get announced?

Yes. I mean, we did do Rebellion in December, which is a big acquisition, but really an interesting one, which is basically, the use of imaging for advanced gas detection. So, it’s very much a technology-oriented company in the industrial segment, which fits really, really well with industrial safety, but also, fits well with Productivity Solutions and our HPS business. So, we’re very thrilled to get that one. In terms of M&A, we continue to be very active, I can tell you and the environment we’re seeing is, yes, the prices are elevated, but what I can also tell you is that kind of, because there is so much cash awash and so much capital to deploy, we’re seeing very aggressive sort of due diligence in the kind of terms that others are willing to accept. So, I think we’re assessing that because we’re going to continue to be a very cautious company and really study the market, but we also have to kind of look within ourselves in terms of, you know what’s risk that’s reasonable, what isn’t. So it’s – it’s a very robust M&A marketplace and we expect to do deals in 2020, certainly.

Helpful. Best of luck guys. Thank you.

Thank you, Scott.

Thank you.

We will take our next question from Julian Mitchell with Barclays.

Hi, good morning. Maybe...

Good morning.

Maybe just a first question around the CapEx hike that you mentioned. It sounded pretty substantial, so maybe give us some idea of how long capital spending stays elevated and also in terms of the split of the CapEx increase maybe between growth focused on new product initiatives versus some of those supply chain internal self-help measures?

Sure. So, we’ve been around $800 million, as you know, for the last couple of years and it goes, like in the $820 million or $830 million or so. And so, when I say elevated, this is not massive increases, we’re talking about $100 million, $100 million-ish type of increases year-on-year, and I would say it’s probably 50-50 split between increases relative to the transformation and increases relative to some new capacity for some of our new product launches that we’re doing. So, I wouldn’t – this is not like we’re making one massive block investment and something huge here. But as we go through this transformation, in the supply chain, it’s going to require – it’s going to require capital. So 50-50, I would say and think about it in sort of like a $100 million, $150 million type of potential increase year-on-year.

And by the way, just to add to that, the IRR in total on these investments, substantially north of 30%. So, I mean if you think about that kind of a return versus M&A, whenever we’re going to see those kinds of returns, I’m more than happy to deploy more capital because it’s going to make us a better company in the long-term. So, I think that this increase in capital, I think, should be viewed as a positive, not a negative.

Yes. And again, we talked about our free cash conversion, just to get back to that for a minute. We’ve said many times, we are not like pinpointed on a $100 million, if we’ve got good investments, and we’re going to make them. So…

That’s helpful. Thank you. And then my second question just around Safety and Productivity Solutions, not so much on the Productivity Solutions piece because I think that’s well understood. But maybe on Safety, that did rollover in the fourth quarter. Just maybe give us some understanding of – was that a surprise to you and what do you think this year will look like in terms of Safety sales?

Yes, I mean there it’s the markets. The industrial markets overall have been relatively soft. We don’t think that there is anything sort of unusual going on in that business, it’s a reflection of that. I mean it’s not – obviously it’s a market that’s flattish to down, some of the segments that we play in, we saw that. So this is probably one why we have some uncertainty about the short cycle, that’s one of the tougher businesses to call for us. We are concerned about what’s happening in China around coronavirus and so on and not just the impact in China, but really the impact on the global industrial production, because your global supply chain. So, I think you have to look beyond just China. But we’re optimistic that the markets are going to improve, but there isn’t inherently something unusual going on in those – in that business.

Great, thanks.

Thank you.

Thanks.

We will take our next question from Andy Kaplowitz with Citi.

Good morning, guys.

Good morning, Andy.

Good morning, Andy.

Darius or Greg, just focusing on your guidance for 2020. To the extent you can, could you elaborate on the headwinds you could incur from the MAX, either growth or margin and obviously it’s too early to tell the coronavirus impact on commercial aftermarket. But there are lot of moving parts in that business, whether it’s a brief decline in flight hours, or the ADS-B mandate, you’ve had strong RMUs, connected initiatives are doing well. So, how do you think about the resiliency of commercial Aero aftermarket in 2020?

So, obviously the – what Boeing is doing with the MAX return to service has and will have an impact on the aftermarket performance and I think we were all – we’re all aware, they fly the older planes longer, and so therefore, has increased demand in that sense. When you think about our guide for what’s happening with the math, you should think about – we’re going to have probably a low-to-mid single-digit headwind to the Aerospace growth because of the production schedule changes. And so we talked last year about it being rather minimal because the numbers were smaller. But now with Boeing announcing the stoppage of production and their mid-year return to service and their ramp up, their re-ramp, we are going to be taking down our deliveries to them much more significantly than we did in the back half of 2019. So, as we talked about, we will try to utilize some of our other existing backlog. And hopefully the supply base can provide us some additional material inputs, so that we can defer labor and try to serve some of our other customers in a way to offset some of that, but it’s hard to say how that’s going to work out. That’s – that’s why we’re – we are being a bit cautious, because that’s all very fresh news, as you know, within weeks and so the impacts to even our supply chain is unknown. So...

Yes, the revenue impact is meaningful. I mean it’s – think about kind of a mid triple-digit impact for millions of dollars that obviously we can – we think we can offset some of that, both through RMUs and backlog reduction, but it’s from a revenue perspective, it’s not an insignificant – and by the way, we’re just – we’re completely aligned to Boeing’s perspective. So it’s – that’s what’s reflected in our current outlook.

Thanks for that guys. And, Darius you already mentioned China in Q4 was pretty strong in terms of orders, but maybe you can walk us around the world, which you did in Q4 and what your expectations are for 2020. We are understanding that there’s uncertainty out there. I think in Q3, China and U.S. year grew strong, you’re expecting India to come back. So, what happened to these regions in Q4?

Yes. Yes, interesting Q4, I mean, obviously, China was a highlight, both kind of on the orders growth rate. And by the way, China is accelerating for us. So, you have seen a higher rate of growth in Q2, Q3, Q4. Q4 is even higher. So we’re encouraged by what we’re seeing there, the orders give us. So actually, China is one of the really nice storage for us. The other place to highlight, and I think, I’ve talked about this before, which is Latin America. I mean, Latin America was also up high-single digits and obviously we have to be taking a lot of share there given the fact that a lot of those economies aren’t exactly robust and they’re struggling. So, I’m very, very pleased with what’s happened there. Middle East continues to be a region of strength for us. We had some tougher comps, but think low-to-mid single-digit kind of growth rate. Probably that the low light for us was Western Europe. That’s been kind of soft in Q4. I think a couple of the countries that I’d look to get that were particularly soft would be Italy and the Netherlands, which were weak overall. India was okay in Q4. Frankly, it was a little bit lower than we had hoped, the low-to-mid single-digit kind of growth numbers. There is some – we have – that’s a country of strength for us, but slightly below our expectations. And Russia actually did quite well for us as well in the segments that we play in. So sort of a mixed story but the highlight certainly being China both on the actual performance and the bookings growth.

Very interesting, thanks guys.

Thank you.

Thanks.

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

Hey, thank you. Good morning, everyone. Couple of quick ones from me. Just on the productivity products. Darius, a little surprised to hear you’re not expecting a return to growth to the back half – into the back half, the comps are very easy in the first half. Do you feel like you have the product to actually drive the business and kind of take a little bit better control of your destiny relative to kind of just what the noise is going on perhaps in the channel?

So, to be clear, I am expecting a return to growth in productivity products. So, I think we – I think we’ve got our signals across somewhere. And just to give you some very specific data points. The sales out in the channel for productivity products has grown every quarter last year. More or less normalized our channel position now by the end of 2019. We actually saw growth in the scanning portfolio in productivity products and we’ve been able to secure a couple of good wins. The toughest comp still for productivity products is Q1. We anticipated that. It’s not news. But as we get further and further out the year, I do expect growth in productivity products. So – and I have the data to – that gives me that confidence. So that’s not a wish and a hope. I have some data points that says that, that’s a reasonable outcome to expect, unless of course something goes wrong with the market. But actually, I’m very pleased with the kind of progress that’s been made, the team that we now have there in place and the products that we have to the marketplace.

All right. I was just going by Slide 7 there on the second half. Just thinking about the guide overall, when you read what you’ve put on Slide 6, it doesn’t sound like you’re being super conservative, but then when you talk and with the range, it does in a way feel conservative. Could you just address that? I mean zero at the low end feels pretty conservative, particularly if you pull out a zero in Q1, which is your toughest comparison, right? Then you probably are on a path for something better than that as the year unfolds.

Well, Jeff, I think we’ve been pretty consistent in our approach in terms of forecasting and outlooks, which is, we’re not – when I’m not sure of something, or myself and Greg are not sure of something, we’re going to give you a wider range. And we’re not going to promise things that we don’t either don’t have visibility or can’t do. I would also tell you a couple of other things. I mean, there are quite a few unknowns, I mean the coronavirus right now is an example, is something that’s very difficult for us to predict around the impact. I mean if things go back and our factories reopen Monday or a week from Monday, which is kind of the schedule, then maybe it’s conservative. What if they don’t? What if this continues to spread? What if it gets worse? That impact could be substantially worse than what we’re expecting. The short cycle is a little bit unpredictable. We talked about – there was a prior question industrial safety, it’s tough to call that right now. As I look at a lot of the reports from a lot of the shorter cycle-oriented peers, they exactly have not been stellar. I mean, so we’re trying to call it, I don’t know about conservatively. We don’t know and we don’t know that much about short cycle right now. We’re going to kind of err on certainly, a little bit wider range and we’ll see what happens, and obviously like we do every year, as the year progresses, we’ll update you and we’ll refresh our guidance. I’m very happy with our long cycle. I mean a 10% growth in the backlog is very good. So that gives me some confidence and we’ll see how the year progresses.

Yes. And on the long cycle, just one more if I could. Obviously projects are normally subject to delays and the like. But as it stands now, is most of that backlog deliverable in 2020? It’s tied to expected activity in 2020?

No, it’s – some of it is beyond 2020. I mean, we sort of expect the normal conversion cycle. I mean, it’s – for example, some of the Intelligrated backlog just goes all the way into 20.

15 months.

Yes, 15, 18 months, so it’s longer cycle. But nevertheless, I mean, the makeup of it isn’t dramatically different in terms of execution versus 20 – end of 2018. So it kind of looks the same. It’s always more than one year. So it’s not inconsistent, what we’ve seen in the past.

Great, thank you very much.

Hey, Abby, I think we can take two more questions.

Okay, thank you. We will take our next question from Nicole DeBlase with Deutsche Bank.

Yes, thanks for the question. Good morning, guys.

Good morning, Nicole.

Good morning. So my first question is just around, you guys talked about short cycle as obviously another item of uncertainty in 2020. Can you talk a little bit about what you saw from short-cycle trends in 4Q throughout the quarter? And was there maybe any signs of like weakening throughout December and into January that gives you concern into the first quarter or have you seen more like stabilization?

I would tell you that as we – as we exited the year, it was relatively stable. But I would tell you that also January with the China situation is going to be one we’re going to have to read into pretty closely. So, no, I wouldn’t highlight a huge problem to solve at this point just yet, but certainly there have been some weakening trends as we exited December and into January in a few places. Again, China, on the short cycle is one we’re going to watch very closely. Darius mentioned a couple of areas in Europe in particular as well.

Okay, got it. Thanks, Greg. And then secondly just around Process, if you guys could talk a little bit more about what you’re seeing from a backlog perspective and areas of strength. One of your big competitors talked about some big LNG projects coming through recently, so it would be great to hear where the strength is coming from for you guys?

Yes. Well, I think for us it’s probably three main components of strengths. By the way, HPS had a terrific quarter, double-digit orders growth, the business is doing incredibly well. We’re thrilled with their performance. But specifically LNGs coming through some of the mega refining petrochemical complexes is another place of growth and we’re starting to give you a bit more in the renewable segment. That’s actually one of the focus areas for PMT in general. And we’re seeing some improved activity for – in renewables. So I would highlight those three as areas where we’re seeing growth with a terrific bookings and orders outlook in Q4.

Thanks, Darius. I’ll pass it on.

Thank you.

And our next question is from Nigel Coe with Wolfe Research.

Thanks guys. Thanks for letting me in. I appreciate it.

Good morning, Nigel.

So, yes, we’ve obviously covered a lot of ground and I appreciate all the detail by the way. I just want to clarify on the payroll cycle. Greg, you called out $100 million, $200 million, is that just a cash impact or does that also impact –

That’s right. Payroll.

Yes, it’s payroll, that’s our payroll.

Right. So was that just cash or was that earnings?

No, no that’s cash. That’s just –

Business cash, okay.

Generally, at the end of the year, we carry an accrual. The way the calendar falls that are repaid every two weeks on a Friday, happens all the time, the exact same way. It happens next year, the Friday is going to be ready for the year-end.

Understood. Thank you very much. And then my main question is on the 20 to 50 bps of segment margin expansion, how does that look by segments? And the spirit of my question is, should we expect SPS to be sort of a heavy contributor to that, maybe Aerospace is a little bit less, so any color on that. And then kind of the subtext here is, you’re obviously doing a lot of restructuring this year, up to $0.5 billion in your plan. Is that all cash? And what kind of paybacks are you getting on that spend?

Yes, so let me unpack that. First of all, we’re not giving segment margin expansion guidance individually. We should expect, of course that SPS will improve, given the degradation we saw in 2019. They’ve obviously got a lot more room to run given that depression we had this year. The other three businesses, I think all have, I’ll call it, equal opportunity on margin improvement overall. So that’s the way I would think about – think about that from a segment perspective. As it relates to the restructuring, a high percentage of the restructuring that we have on the balance sheet is cash-oriented, and we do expect that is going to essentially get carried out over 2.5 to 3 years time. As Darius mentioned, a heavy amount of that would be in 2020 and then in 2021 and a little bit of a tail off into 2022. But as it relates to the projects, you can think about them really in sort of two categories, those that are really tied to, call it, site consolidations. Those are above the cost of capital, clearly the high-single digit, low-double digit type returns, those that are more associated with, call it, back office productivity and organizational redevelopment and so on. Those are carrying far higher returns to them. So that’s kind of what we are looking at.

Great, thank you. And one quick clarification on the share count reduction question. It doesn’t feel like you’ve got a whole lot dialed in for 2020, about $1.5 billion by my calculations. Is that the right zone?

Yes, that’s in the ballpark. Again, we are at a minimum going to buyback 1% of our shares for sure. And then as we discuss this, if the year progresses, and we’re not seeing a lot of M&A activity and it looks like an attractive opportunity as we did here in 2019, we won’t be afraid to go back into the market and scoop up some of our own shares.

Great, thanks, guys.

That concludes today’s question-and-answer session. At this time, I would like to turn the conference back to Mr. Darius Adamczyk for any additional or closing remarks.

I want to thank our shareholders for continued support of Honeywell. We remain focused on continuing to outperform for our shareowners, our customers and our employees. We have delivered on our commitments, strong results each quarter and continue to make great progress on our growth and transformation initiatives. We have a great portfolio and we continue to execute well. I’m excited for 2020 and we expect another high-performance year for Honeywell. Thank you all for listening and have a great weekend.

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