Deane Dray (RBC) asked about Middle East collection/force-majeure risk and, as a follow-up, the implications of the renegotiated (lower) Johnson Matthey price and integration plans.
Vimal Kapur said Middle East collection issues are modest and not material (concentrated in March-April, now normalizing), with revenue guided up high single digits; on JM, he framed the renegotiation as normal course, closing at ~13x EBITDA on cost synergies alone, with commercial/sales synergies to build over time, and Mike Stepniak added they acquired the business near a cyclical bottom.
Nigel Coe (Wolfe Research) asked what increased confidence since June and to unpack the ~2 points of segment-margin expansion from Q3 to Q4.
Stepniak cited across-the-board double-digit short-cycle orders and broad-based IA strength (China, Europe, recovering U.S. on onshoring), seeing room to beat even the raised guide; Mark Macaluso said the Q3-to-Q4 margin step-up is broad-based across BA, IA (the largest sequential increase), and PA&T as growth and catalyst mix improve, with about half of expansion operational and half structural.
Scott Davis (Melius) asked about the M&A pipeline split across segments and the scope of the data-center opportunity.
Kapur described three M&A buckets, priority one being IA sensing/measurement, then high-growth-vertical additions, then smaller tech tuck-ins (fire detection, cybersecurity); on data centers he cited global build-out, on-site power generation (a new Process Automation entry not yet in orders), and liquid-cooling sensing as three expanding legs.
Andrew Obin (Bank of America) sought clarification on the 40% figure and asked about Middle East order diversification and IA execution KPIs.
Kapur clarified catalyst is up 25%-30% second-half-vs-first-half while total orders were up 16% and PA&T orders up 24%; he confirmed investment is diversifying beyond the Middle East (a large Africa project, Asian downstream refining/petrochemicals) and said IA delivery performance is climbing from the mid-40s toward high-80s with new products fueling 10% order growth.
Nicole DeBlase (Deutsche Bank) asked whether Building Automation's high-single-digit growth is sustainable into 2027 and for an update on stranded-cost progress.
Kapur said the evidence (seven straight quarters of high-single-digit growth, data center/hospitality/healthcare tailwinds, new products) supports it, with prudence built into the new-company guide; Stepniak said stranded-cost removal is ~$20M better than the Investor Day plan, entering 2027 with ~$60-$65M left to eliminate.
Jeff Sprague (Vertical Research) asked whether Johnson Matthey's sales are synchronous with UOP and how quickly revenue synergies could be captured.
Kapur said JM's licensing technologies (hydrogen, methanol, ammonia) differ from UOP's refining/petrochemical focus so are not one-to-one, while catalyst trends are convergent; he expects '1+1=4' from combined offerings that improve win rates, plus services/software on JM's install base, and is confident of printing a better-than-13x outcome once synergies are realized.
Joe Ritchie (Goldman Sachs) asked whether Middle East disruption is helping orders and about aftermarket impact, plus how much of the 4%-6% 2H outlook reflects longer-cycle strength supporting 2027.
Kapur said activity has settled after early revenue loss, with a big Middle East LNG process-technology deal and customers investing in resiliency and logistics; Stepniak said both short- and long-cycle strength make 2027 look incrementally stronger than at the Investor Day.
Andrew Kaplowitz (Citi) asked about price/cost dynamics into the second half and the shift toward products leading IA growth.
Stepniak said price was ~3.5%-3.7% in Q2 and will be ~4% in 2H to cover stubborn inflation (electronics, memory, copper, labor), but most margin expansion comes from productivity and stranded-cost takeout rather than price/cost; Kapur and Macaluso noted solutions strength (partly Intelligrated, pre-divestiture) with core IA growing low single digits post-divestiture.
Alexander Virgo (Evercore ISI) asked what is driving 15% software ARR growth, the higher repositioning costs, and the catalyst-volume margin impact.
Kapur attributed ~15% Forge ARR growth to deeper penetration plus new offerings; Stepniak said the Q2 repositioning spike (~$100-$110M for the year) came from consolidating the process footprint with a quick payback; Kapur explained catalyst margins swing quarter-to-quarter on the mix of market-priced versus unique-IP catalyst but are predictable annually.
Chris Snyder (Morgan Stanley) asked why Honeywell's Middle East outlook is more constructive than peers and about balance-sheet/bandwidth capacity for material M&A.
Kapur credited a portfolio matched to the region's energy and infrastructure build-out and a heavily localized model (no personnel evacuated during the conflict); on M&A, 2026 is focused on debt retirement, with material deals ($1-$5B EV) more of a 2027-onward story, aided by potential Quantinuum monetization.
Andrew Buscaglia (BNP Paribas) asked about LNG project conversion timelines and whether physical AI is driving incremental hardware demand.
Kapur said LNG proprietary-equipment (heat exchanger) delivery runs two to three years on a percentage-of-completion basis, and Honeywell is sold out of LNG for the next three years; on AI, he pointed to Forge's AI-based software (ARR toward over $1B) as the direct measure, with AI integral to the automation-to-autonomy strategy that also pulls product demand.