Vimal Kapur: Yes. So for IA and ESS, I would say, IA broadly, as we said, will be flatish on a year-on-year basis. The strength we see there is in Process Solutions, in particular, that — it had a strong 2023, we expect another strong 2024 from Process Solutions. Rest of IA is a short-cycle recovery. We saw pockets of that happening in Q4 in our scanning and mobility business. Now other portions have to also recover during course of the year. I talked about our warehouse automation business and how we expect that to perform during course of the year, specifically on the margin side. So that’s definitely is part of our forecast. On ESS, we briefly talked an earlier question. UOP is carrying a pretty strong booking and backlog.
So we expect a good year from UOP in 2024. And then I talked about advanced materials a bit earlier there. On orders rate, the Q4 orders were up 1%, which helped us to further bolster our backlog now to record high level. Specifically on orders, there were highlights on short cycles, early green shoots in building products, in scanning and mobility business, in parts of chemicals business, which is a good sign, because if couple have shown, I remain confident this will grow more broadly across our portfolio. Long cycle strong bookings in commercial aerospace, in UOP, in process solutions. There were some lumpy lessened orders in warehouse automation and defense and space, which I talked earlier. So net-net, our long cycle orders performed extremely well on an annualized basis in 2023.
And short cycle is showing early cycle of recovery, which gives me confidence for 2024.
Greg Lewis: Yes, maybe just in the last point on pricing, we talked about 4% for 2023. That’s exactly where it came in. And the more balanced view of price versus volume in our model for 2024 is really 3% pricing. And that’s going to be, to Vimal’s point, I think price cost neutral to maybe slightly positive for the year. So we feel very good about our ability to deliver on that. We’ve talked about that at length in the past. I think our capabilities in that area have been very strong and we continue to be confident going into next year.
Nigel Coe: Okay, that’s helpful, Greg. And quick follow up on the cash flow. Nice to see the pick-up year-to-year. I’m guessing the tax benefits, potential tax benefits from R&D kind of rollback. I’m assuming that’s not in your guide, but just curious, if that does pass the Senate, what kind of benefit you might see for 2024 for cash flow?
Greg Lewis: Yes. Well, first of all, it’s not nearly home, as I’m sure you can appreciate. So we’re not sitting here counting any chickens. To be honest, Nigel, I think we need to wait and see exactly how all the rules, first whether it happens and how they set the rules. As you can appreciate, all the specifics matter a lot in this area. So no, we’re not guiding anything special about that. We’ll wait and see exactly what happens and then interpret that and integrate it into our view when it becomes a real thing.
Nigel Coe: Okay. That’s great, thanks.
Operator: Thank you. Our next question comes from the line of Sheila Kahyaoglu with Jefferies. Your line is now open.
Sheila Kahyaoglu: Good morning, guys, and thank you.
Vimal Kapur: Hey, Sheila.
Sheila Kahyaoglu: Maybe I’ll start off with aerospace, if that’s okay. You talked about it growing low double digits. How do we think about the OE growth there? What build rates are you embedding into that on the commercial aerospace side and any color you could give on aftermarket and defense growth?
Vimal Kapur: Yes. So Sheila, we expect the overall low double-digit guide includes the continued high growth rate of OE, as we saw in 2023. That will repeat itself in 2024. Also expect double-digit growth in aftermarket. Defense, we perform at low single to mid-single digit in 2023, the supply chain constraint remains the biggest handle there. And as we make progress, we expect it to perform in that range in 2024 also. But the biggest unlock for us is supply chain. We have demonstrated a strong performance in 2023. We expect a good start of the year and we’ll unpack the year as the things progress.
Greg Lewis: Yes, so to be clear, I mean, no new signals from the OEs. They’re continuing to place the same level of demand on us that they have been. And so, that’s what we’re committed to try to deliver.
Sheila Kahyaoglu: Okay, great. And then if I could ask 1 more. You’ve been asked every angle in terms of revenue growth acceleration. Outside of [indiscernible], what do you need to see in the other three segments to hit the high end of guidance? Is it just all based on short cycle recovery and the timing of that, or is it some additional price capture? If you could maybe talk about that.
Vimal Kapur: Yes. The biggest variable is the short cycle recovery and the pace of it, which remains variable. I mean, you look at 2024 setup for Honeywell in three buckets. Our backlog is up 8% and we convert backlog at a pretty predictable rate. So that’s something which is highly deterministic. Number two, the self-help actions we are driving to drive growth. The self-help action includes price, that includes new products. I talked about high-growth regions, aftermarket services. All that is going to help us to drive growth regardless of the market. And then the third variable is short cycle. If it returns quicker, we’ll have an upper end of the growth or we can beat it if it surprises everybody and vice versa. If they doesn’t perform well during the course of the year, then we are at the lower end of the guide.
Sheila Kahyaoglu: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Andy Kaplowitz with Citi. Your line is now open.
Andy Kaplowitz: Good morning, everyone.
Vimal Kapur: Good morning, Andy.
Andy Kaplowitz: Vilma, I just wanted to follow up on a commentary that you’re on track to exceed the $25 billion of capital deployment guidance from 2023-2025. Obviously, you announced the Carrier deal, but does that commentary suggest continued more aggressive capital deployment? Does your M&A pipeline support that? And then could you update us on the progress in divesting the 10% of the sales you talked about previously?
Vimal Kapur: Yep. So I would say that our capital deployment strategy would be balanced, which maximizes shareholder return. That’s what we’re really targeting for. It will be the balance, as Greg mentioned earlier, we expect both M&A and share repurchases to be part of that element for 2024 and years to come. The pipeline is adequate at this point of time and activity remains strong. So we are constantly looking at the deals which work in our algorithm. It has to be bolt-on. It has to help to drive our overall organic growth and generally meet our financial algorithm which we have earlier talked about. On the part of the portfolio, which doesn’t fit in well, we are going to drive action starting 2024. Of course, we are not going to rush through that, because we need to capture shareholder value, but you can anticipate some initial actions on that during 2024.
