Mark Macaluso – VP, IR David M. Cote – Chairman and CEO Tom Szlosek – SVP and CFO

Scott Davis - Barclays Jeff Sprague - Vertical Research Stephen Tusa - JPMorgan Steven Winoker - Bernstein Joe Ritchie - Goldman Sachs Nigel Coe - Morgan Stanley Howard Rubel - Jefferies Andrew Obin - Bank of America Merrill Lynch

Good day, ladies and gentlemen and welcome to Honeywell’s First Quarter 2015 Earnings Conference Call. At this time all participants have been placed on 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'd now like to introduce your host for today’s conference, Mark Macaluso, Vice President of Investor Relations.

Thank you, Michael. Good morning and welcome to Honeywell’s first quarter 2015 earnings conference call. With me here today are Chairman and CEO, Dave Cote, Senior Vice President and CFO, Tom Szlosek. 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 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 principle risks and uncertainties that affect our performance in our 10-K and other SEC filings. This morning we will review our financial results for the first quarter and share with you our guidance for the second quarter and full year of 2015. Finally as always we'll leave time for your questions at the end. With that, I’ll turn the call over to Chairman and CEO, Dave Cote. David M. Cote: Good morning, everyone. As I'm sure you've seen by now Honeywell delivered another quarter of double-digit earnings growth to kick off 2015 driven by our diverse portfolio and effective execution what continues to be a challenging macro environment. Our earnings per share of $1.41 increased 10% year-over-year coming in at the high end of our guidance range. The macro environment in the first quarter wasn't easy with headwinds from extreme weather, port shutdowns, decline in oil and gas investments and a strengthening US dollar. Sales in the quarter of $9.2 billion, while up to 2% on a core organic basis were down 5% reported. Our performance was driven by decent organic growth and strong sales conversion with segment margins expanding 220 basis points to 18.7%. And as you'll hear from Tom a bit later, a large portion of the margin expansion came from improving gross margins, something a bit different than the past. It results from our focus on HOS both direction and indirect material and new products. Our key process initiatives are driving meaningful results throughout the portfolio. 140 basis points of the segment margin rate improvement was driven by commercial excellence and productivity. The rest of the improvement comes from smart decisions we've made about the portfolio. An important enabler of the productivity continues to be the savings we're seeing from previously funded restructuring actions. We're being proactive about keeping that pipeline full which we think is critical to supporting our continued margin expansion in 2016 and beyond. However, while managing our costs is important, we're also focused on supporting sales growth by investing in capacity expansion, new products and technologies, and resources in high growth regions. As a result of that strong first quarter performance and our confidence in the remainder of the year, we are raising the low end of our full year guidance by a nickel to a new range of $6 to $6.15 or up 8% to 11% versus the prior year. As we've been saying since December, we want to ensure we're remaining balanced in our planning for 2015 while continuing our seed planting investments for the future. In the quarter we proactively funded about $40 million of restructuring, building on a healthy pipeline of new projects, and we've continued our transactional and translational hedging into 2016. The euro is our biggest exposure. In 2015 we've hedged approximately 85% of our euro P&L exposure in an average rate of about $1.24. For 2016 we have again hedged approximately 85% of our euro P&L exposure at a plan rate of $1.10. In the current environment we believe the certainty this provides is prudent and generates the time needed to offset the impact in future years. We also continue seed planting for exciting new HUE based products, technologies and process improvements that will help us continue to win in the marketplace. On HOS Gold we are continuing to invest across our gold enterprises to create units that grow faster and are more profitable than our competitors. We want to marry big company cost efficiency, which is real if it’s done correctly and technical and functional excellence with small company speed and customer responsiveness accomplishing two seemingly conflicting things at the same time. Each HOS gold unit is identifying breakthrough strategies and moves into smart new areas and adjacencies. In early May we'll be kicking off our 2015 technology symposium, a forum that brings together approximately 400 Honeywell technology, marketing and management representatives from all of the businesses. This annual event which started about 10 years ago provides opportunities for ongoing collaboration and idea generation, and is focused on driving breakthrough innovations supported by differentiated processes and technologies, all of which helps enhance our great positions in good industries. Process solutions open the Honeywell industrial cyber security lab in Duluth Georgia to advance development and testing of new technologies and software to defend industrial facilities and operations like refineries and manufacturing plants from cyber attacks. We also recently inaugurated three new research and development labs at the Honeywell center of excellence in Brno, Czech Republic and plan to open another five labs within a months as part of a $10 million investment in the region to support both aerospace and ACS. In March we closed the acquisition of Datamax-O’Neil, a global manufacturer of fixed and mobile printers. Datamax-O’Neil portfolio of solutions expand Honeywell's ability to deliver enhance work flow performance and the team is very excited about this acquisition which builds on existing printing capabilities acquired with Intermec. Scanning and mobility continues to execute very well, delivering another quarter of double-digit core organic sales growth in the first quarter driven primarily by volume from key wins, most recently the US Postal Service deal signed last year. We also continue to be excited about the flooring products portfolio where we saw particular strength, up double-digits on a core organic basis driven by the ramp up of our Solstice low global warming suite of products. We've seen increasing demand for these products, where we now have a lifetime value of signed agreements of about $2.6 billion and another $800 million under negotiation. As we look ahead, we're cautious overall on the macro environment like I've been for five years. While we continue to expect that the benefit of lower oil prices will eventually play through in the US and in oil importing nations, this is really yet to be seen. There was weakness in January across the portfolio that we weren't able to fully recover from, but we did see good signs of improvement as the quarter progressed. GDP growth rates globally are weaker than most had expected for the first quarter. Now, we think weather had some impact early in the quarter in the US, but the slowdown was not unique to the US. With all that said, the majority of our businesses exited the quarter with momentum following more robust core organic growth rates in both February and March. Nevertheless, we're going to continue to plan conservatively to navigate the current headwinds, including oil and gas and as always we're not counting on a pickup in the global economy. We are well positioned to continue performing in this environment. Our portfolio is aligned to favorable macro trends and provides significant runway to grow. We have great positions in good industries. We're investing to grow faster than the markets we serve, and we'll stay the course on seed planting and continuous improvement initiatives. We're going to stay flexible and follow the play book you've come to expect from us, so that we can deliver on this year, next year, and beyond. So with that, I'll turn it over to Tom.

Thanks, Dave. And good morning. I'm now on slide 4 which shows the first quarter results, sales of $9.2 billion, were up 2% on a core organic basis, but decreased 5% on a reported basis. The absence of friction materials which you'll recall was still in the portfolio for the first half of 2014, further strengthening of the US dollar and raw materials pricing in resins and chemicals were headwinds driving the negative reported growth this quarter. However, considering the slow start that we got off to in January, we were actually 8% down in January versus 2014 on a core organic basis. So even given that slow start, we feel pretty good about the Q1 core organic growth. Shipment timing in aerospace, order delays and PMT and unplanned plant outages in resins and chemicals prevented us from fully meeting our sales expectations, but as you'll see later we expect the growth rate to improve as the year progresses. An important note, the 2% core organic sales growth excludes FX, M&A and now the raw material pricing impact in resins and chemicals. Selling prices in resins and chemicals include an element of raw material pass through, most notably benzene, which is highly correlated to the price of oil. While the pricing model protects profit dollars, sales can be volatile, so we've modified the definition here to provide further insight into the underlying volume growth of our businesses. Segment profit increased 8% with segment margin expanding 220 basis points. The most impressive part about the segment margin performance is that most of the improvement came through gross margin rates. HOS Gold is working across Honeywell, from our engineering labs to our factories and supply chains, to our selling and marketing organizations and even to our back office. Our deployment of Honeywell user experience in product development is yielding better products that our customers are willing to pay for. Our supply chains are becoming even more lean and there is a strong collaboration between our engineers, sourcing organization and supply chain to drive down our material costs. Our focus on commercial excellence is yielding more focused sales teams and smarter pricing decisions. Operating costs are in check with SG&A also contributing to the segment margin rate improvement. Meanwhile, we continue to devote significant resources to the development of new products and the enhancement of existing ones. As we said in March, HOS Gold is a game changer and will be a differentiator for us as it was in this first quarter. We'll provide some additional color on the Q1 margin expansion in a moment. The items below segment profit came in as we expected. We had an increased year-over-year and pension income which was completely offset by restructuring of approximately $40 million. Note, in the prior period operating margin included the restructuring and other charges from the BE Arrow [ph] gain deployment, but excluded the gain itself. So operating margins expanded 340 basis points in the first quarter of 2015 compared to the 220 basis points expansion in segment margin. Earnings per share was up – earnings per share was $1.41, up 10% year-over-year and at the high end of our guidance range. We once again achieved double-digits earnings growth driven largely by increases in segment profit. Year-over-year share count was flat, so a good start on the P&L despite the environment. Finally, free cash flow in the quarter of 256 million came in down $240 million from 2014, driven primarily by timing, including the payment of the fourth quarter 2014 OEM incentives, higher cash taxes, and higher working capital requirements, particularly in aerospace. The first quarter has historically proven to be our lowest from a cash perspective and we remain on track to our full year guidance of $4.2 billion to $4.3 billion of free cash flow. We ended the quarter at approximately $1.3 billion negative net cash position, and as we highlighted in March, we expect to be in a positive net cash position approximating $1 billion to $2 billion by year end assuming no significant M&A. Overall we generated strong results in a relatively slow growth environment. I'm now on slide 5. I talked previously about the nature of our 220 basis point segment margin improvement. This slide provides some additional color on the specific drivers of that improvement. The first category is the core organic or operational drivers which generate 140 of the 220 basis point improvement. We're often asked to quantify the impact of HOS Gold. This first category is highly correlated to it. We can't always commit to triple digit margin expansion from HOS Gold, but you can see that the components touch all critical facets of our businesses. We're benefiting from commercial excellence, most prominently in aerospace, as well as significant productivity improvement and volume leverage across the portfolio. New product introductions and further penetration in high growth regions, particularly at ACS, are also part of it. We're also seeing savings from previously funded restructuring actions. Additionally as we indicated, we are able to proactively fund another $40 million of restructuring in the first quarter, improve our overall cost position, and drive further margin expansion going forward. The remaining three categories on this slide individually look pedestrian, but collectively reflect the benefits that our shareholders are realizing from the strategic decisions we have made and executed on. First, you can see the favorable margin impact from the friction materials divestiture, which we closed in July of 2014. This is a permanent improvement in our margin rate from exiting a business that did not meet our portfolio standards. You can expect to see additional year-over-year favorability in the second quarter from this divestiture and we are always assessing our portfolio to ensure all of our businesses continue to constitute great positions in good industries. Second, our hedging approach for foreign currency provided a big benefit. As you know, we made a decision last summer to expand our hedging approach from protecting our hundreds of individual P&Ls from foreign currency exposure, that is transactional exposure to one now where we are protecting the consolidated Honeywell enterprise, so that's transactional, plus translational exposure. The hedge strategy is in place to protect our operating results, but not necessarily at top line, thus the margin lift. Additionally, our merging markets footprint in our engineering organization, supply chain and back office also protect us from the strengthening US dollar. These strategies will be worth $0.12 to $0.13 to our shareholders in 2015 and help drive the margin improvement you see here. Third, in resins and chemicals, we have developed the lowest cost operating position in the world. A competitive position which allows us to run our plants at full capacity. Material costs are passed through to customers, so when raw materials –when raw [ph] market conditions are volatile like we're experiencing today, margin rates can be impacted, in this case favorably. When the material pass through and therefore sales is reduced, but margin remains the same. Without that low cost position our ability to compete for profitable business would be impaired as would the margin rates. Moving to slide 6 and the aerospace results, you can see here on the comparative sales stack bars, that we were highlighting the impacts of inorganic drivers. Namely for aerospace, foreign exchange headwinds and M&A, that is the friction materials divesture. We filed a similar convention on the subsequent pages for both ACS and PMT. Sales for the first quarter were up 1% on an organic basis, but down 6% reported, driven by the friction materials divestiture and the unfavorable impact of foreign currency movement, mostly in turbo. Segment margin was up 250 basis points driven by productivity net of inflation, commercial excellence and the favorable impacts from the friction divesture and foreign exchange. So overall great work by the aerospace team to drive robust margin expansion. From a sales perspective, commercial OE was up 1% on an organic basis. In air transport and regional we saw a continued benefit from higher OE build rates at Boeing, airbus and Embraer, partially offset by intentionally slower shipments to certain emerging market customers in order to manage temporary funding delays. In business general and aviation, there were lower than expected deliveries on certain platforms that are in transition, engine demand is robust, so we expect to see a pickup in growth in BGA in the second quarter. Commercial aircraft sales were up 1% on a core organic basis driven by strong growth in repair and overhaul activities, but partially offset by lower spare sales, particularly in China and Russia. We believe that this year represents a normal run rate for spare sales in China after a significant restocking by our airlines customers in 2014. Also similar to the OE side, we intentionally slowed spare shipments to certain emerging market customers as a risk management matter. Overall we anticipate continued growth in R&O and improvement in spares in the second quarter and into the second half. Defense and space sales were down 1% on a core organic basis. We had lower deliveries in the US due to timing, but still expect the core organic sales will be up for defense and space on balance for the rest of the year. Defense and space backlog increased high single digit year-over-year. We anticipate some ongoing softness in the US, but we're very encouraged by the continued double-digit growth of our international defense business, which continues to be a tailwind in defense and space. Finally, transportation system sales increased 5% on a core organic basis due to strong volume growth in light vehicle gas applications where we continue to see increased global penetration. The success we have seen in TS continued in this quarter, and we expect similar growth throughout 2015. On a reported basis, TS sales declined 23%, reflecting both the friction materials divestiture and foreign currency headwinds. So let's turn to ACS results on slide 7. ACS sales were up 3% on a core organic basis in the first quarter, excluding an approximate 6% headwind from foreign exchange. Across the ACS portfolio we saw weakness in January, as we mentioned at our Investor Day in March, followed by steady core organic growth in February and March. All of the ACS businesses are exiting the quarter with good momentum giving us confidence going into the second quarter. ESS sales were up 3% on a core organic basis in the first quarter driven by continued strength in our scanning and mobility, fire safety, and security businesses. Scanning and mobility delivered another quarter of double-digit core organic sales growth following the double-digit increase for the fourth quarter and full year of 2014. The business continues to perform well driven by volume from recent program wins such as the US Postal Service program that Dave mentioned. In addition, we continue to realize integration benefits from Intermec in the combination of the two businesses. As for the rest of ESS, growth continues to be driven by new product introductions and further penetration in high growth regions. In particular, China and India each were up close to 15% in the first quarter with strength across most of the ESS portfolio, and we expect this to continue into the second quarter. Building solutions and distribution sales were up 3% on a core organic basis in the first quarter with continued strength in America's fire and security distribution businesses and growth in building solutions. Within building solutions, we continue to see good growth in our higher margin service business and as was the case with ESS, sales in BSD improved in February, March following a slow start in January. ACS margins expanded 180 basis points in the quarter to 15.8%. The business continues to benefit from good conversion on higher volumes and significant productivity improvements net of inflation. While the business has been able to control costs and optimize internal processes, our investments for growth, particularly in new product development and in high growth regions continue as we have highlighted previously. In addition, we continue to realize incremental synergy benefits from the combination of Intermec with scanning mobility. We expect the margin expansion to continue, particularly as the team builds on a connected ACS initiative, which Alex talked about at our Investor Day in March. I'm now on slide 8, and before I review the PMT results, I'd like to provide an update on our oil and gas related businesses similar to what we shared in January. Our upstream portfolio which resides entirely in our process solutions business comprises controls, solutions and remote operations for deepwater offshore facilities. As we've said, this upstream exploration and production part of the value chain is a small portion of PMT and roughly 1% of Honeywell's sales. And here, despite a significant scale back in future capital spending plans by international oil companies and national oil companies, which have caused a good deal of volatility in our market, our backlogs have held up, and there have been no cancellations to date. In fact, we saw a double-digit increase in volume of large order project wins in our projects and automation solutions business in process solutions in the first quarter, with approximately one third of that increase residing in our upstream segment. But discretionary spend both CapEx and OpEx is being cut across the board in this segment, and we felt the impact of these actions at HPS in particular. We are seeing softness in our short cycle field instrumentation business tied to both project delay, as well as reductions to maintenance, repairs and operations budgets. Our orders in the second quarter will be challenged as a result, but we'll continue to leverage our strong cost productivity actions to offset any downturn in 2015. It’s also worth mentioning that 45% of HPS is not tied to oil and gas, which further highlights our relatively low exposure to the volatility upstream. Moving to midstream, roughly a third of the UOP business, so the gas processing piece and about a quarter of the HPS business, which comprises gas metering and transfer, safety and security and terminals, is considered midstream. So think of oil and gas recovery, upgrading, treating pipelines and storage. We saw tremendous growth in our gas processing sales in the first quarter, particularly in UOP Russell, which was up double-digits on a core organic basis. Our midstream business overall has been impacted by the steep reduction in the US gas and oil rig count, and we did see one cancellation of approximately $35 million in our gas processing business in the US in this quarter. Orders are expected to continue to be challenged across our midstream business, including in HPS where customers are delaying spending decisions and cutting discretionary spend and also delaying conversion of orders and backlog. However, we also anticipate that international gas processing projects for modular equipment and additional service sales to US customers will help to mitigate the softness in the US in 2015 and 2016. Finally, our downstream segment primarily includes petrochemical and refining, which comprises about two thirds of UOP, and that's mostly process technologies, equipment and catalysts and approximately 20% of HPS, which is process controls, field instruments, services and optimization. Here we're experiencing delays and reductions in countries that are net oil producers, like Russia, as refining and petrochemical project decisions are deferred. A notable exception is the Middle East where we – we've seen new wins and an active pipeline of new bids, particularly in the UAE and Saudi Arabia and we're encouraged by the expected growth in HPS and UOP in the region. Also two thirds of the aforementioned double-digit increase in orders growth in the projects and automations solutions business and HPS is in this down stream refining sector. As the infrastructure investments continue to ramp in the Middle East, we anticipate continued positive growth in 2015 and in 2016. In the oil importing countries, mainly China and India, the benefit of the lower cost oil imports is mostly being absorbed by the national government, and is not currently being invested in energy projects. However, we do see continued momentum in the catalyst first load and reload activity for methanol to olefin and Oleflex licenses in China and a similar positive level of activity in India, particularly in our short cycle businesses in HPS. We're continuing to see existing projects progress and none have been abandoned. However, the initiation of new projects has been extremely slow. Overall, however, we continue to believe that in the mid to long-term, the impact further downstream will be neutral to in some cases positive despite the delays we have seen thus far. Sales and parts of our resins and chemicals business continue to be negatively impacted by the market based pricing, whereby selling prices are closely tied to the market price of raw materials, most notably benzene which is highly correlated to the price of oil, as we've discussed since December, while lower raw material cost continue to be a headwind to the top line, the pricing model protects profit dollars even on those lower sales. We now expect this will approximate a $400 million headwind to our reported sales in 2015. In ACS, a small portion of our industrial safety businesses, the portable gas detection and safety products businesses participate in oil and gas related end markets. We have seen minor impacts due to the recent work force reductions, mainly in the upstream segment. While demand for our gas detection and safety products has slowed, we continue to expect lower oil prices to eventually create demand side favorability across the remainder of the ACS portfolio. In terms of operating expenses, we are seeing favorable cost trends across the portfolio, including in our freight, utilities and other supply chain costs, as well as in our other indirect spend. We expect this will continue to be a nice tailwind for us throughout 2015 and continue to look for ways to drive further productivity and cost savings across the portfolio. In terms of the second derivative impacts, we highlighted in December that we anticipate that the emerging airline profitability from lower oil prices could drive further activity with that customer segment. In addition, the lower prices at the pump, improvements in employment and overall positive consumer sentiment have driven greater demand for autos where we are benefiting from increased demand for turbocharger technologies. The impact to our short cycle business on the whole thus far has been neutral, but we expect an increase in demand across the portfolio as lower oil prices persist. On balance, the headwinds we are seeing in our oil and gas business will continue to present challenge in the near to mid term and we continue to plan conservatively to mitigate the impacts in this area. We do expect to eventually see some positive impacts from lower oil prices, which will benefit our short cycle businesses, particularly in ACS as the benefit makes its way further downstream to consumers. We are also encouraged by the benefit to our own cost structure which will continue to provide a nice tailwind in 2015 and 2016. I am moving to slide 9 for PMT first quarter results. PMT sales in the quarter of $2.3 billion were up 3% on a core organic basis and down 5% on a reported basis. The reported decline was driven by foreign exchange headwinds and the impact of lower oil prices on resins and chemicals, as we have spoken about before. Starting with the UOP, sales were up 9% on a core organic basis driven primarily by higher gas processing sales, particularly at UOP Russell. As a reminder, UOP grew 9% on a core organic basis in the first quarter of 2014 as well. So exceptional growth even against a difficult year-over-year comp. Orders were roughly flat in the quarter with strong growth in the product technologies and equipment business, offsetting declines in gas processing which are mostly timing related. As you know, we are in the midst of adding UOP capacity, particularly on the catalyst side which will help the business better service its backlog, which continues to hold firm. In process solutions, sales were below our expectations. Core organic sales down 3% and reported sales down 11%. Obviously foreign exchange headwinds impacted our reported sales. Orders overall were slightly down in the quarter as we experienced some order delays, particularly in March as we approach the quarter end. While we're not seeing order cancellations in HPS, some customers are delaying project startups, and in some cases future capital spending decisions. Still on balance, our projects business had a strong orders quarter, up strong double-digits, primarily driven by the Middle East where we see infrastructure investments continuing. Discretionary spend is under pressure, which primarily impacted our orders and sales growth in our field products business. Our service backlog is holding up well with low single digit sales growth, a reflection of our comprehensive offerings to our strong install base. Process solutions backlog increased high single digit year-over-year, which gives us confidence that the sales growth rates will eventually improve. Advanced material sales were up 2% on a core organic basis and decreased 12% reported, again primarily driven by foreign exchange headwinds and the impact of lower oil prices on resin and chemicals. In addition, we had unplanned outages in our resins and chemicals plants that had a negative impact on production volumes, and segment margin in the quarter. The rest of the advanced material saw positive core organic growth in the quarter, particularly in flooring products, which again grew double-digit as demand continues for Solstice products continues to grow. PMT margins were up 230 basis points to 21.5%, which exceeded our guidance, driven by commercial excellence, significant productivity actions net of inflation and higher UOP and flooring products volumes as we've discussed. This was partially offset by the resins and chemicals unplanned plant outages we highlighted and continued investments for growth across PMT. So in summary, despite less sales growth than expected the business continues to deliver on results. Also PMT is aggressively pursuing cost reduction opportunities in anticipation of potential further top line pressure. I'm now on slide 10 with a preview of the second quarter. For total Honeywell we are expecting sales of $9.6 billion to $9.8 billion, up 2% to 3% on a core organic basis, but down 4% to 6% reported. We think we're being prudent in our planning approach given the slow start for the top line we saw in the first quarter. Segment margins are expected to be up approximately 130 to 150 basis points versus 2014. We expect our segment margin rate to again benefit from the factors that drove the significant first quarter margin expansion, especially operational excellence and execution. We do anticipate higher engineering sales and marketing investments in the second quarter, as well as a less favorable sales mix and lower margin rate benefit from the friction materials, foreign currency and resins and chemicals raw materials pricing drivers I explained earlier. Given these factors and our conservative planning, the segment margin expansion may not be as robust as Q1, but will still be well into the triple digit range. With that said, second quarter EPS is expected to be in the range of $1.46 to $1.51, up 7% to 10% versus 2014 on a basis normalized for tax at 26.5% in both years. Moving into businesses, aerospace sales are expected to be up 1% to 2% on a core organic basis or down 5% to 7% on a reported basis, reflecting the year-over-year absence of friction material sales, as well as anticipated foreign currency headwinds in the quarter. In commercial OE, we expect core organic sales will be up low single digit, driven primarily by continued healthy demand in mid to large cabin business aircraft where we have significant new content, partially offset by the timing of ATR OE build rates. In commercial after market we expect core organic sales to be up low to mid single digit, with continued repair and overhaul and ATR spares growth, partially offset by slower BGA spares growth. Defense and space sales are expected to be approximately flat on a core organic basis, driven by continued strengths in the international business, offset by a decline in the US as we've highlighted. In transportation systems, sales are expected to be up mid single digits on a core organic basis, but down significantly on a reported basis. Similar to the first quarter, the growth in TS on a core organic basis is primarily driven by new launches and strong light vehicle gas turbo volume globally. As for aerospace margins, we expect an increase of 140 to 160 basis points in the second quarter driven by commercial excellence, significant productivity improvements across the portfolio, and favorable impacts of the friction materials divestiture. ACS sales are expected to be up 4% to 5% on a core organic basis or down 1% to 3% on a recorded basis, with mid-single digit core organic growth in ESS and continued growth in BSD. The difference between the reported and organic core growth rates reflects the foreign currency headwinds in the quarter. The trends in the end markets where we primarily participate, residential, commercial and industrial, continue to be consistent with what we highlighted in December. We continue to benefit from new product introductions in high growth region penetration, as we saw in China and India in the first quarter. ACS margins are expected to be up 80 to 100 basis points driven by good conversion on higher volumes, commercial excellence, and continued productivity net of inflation, while maintaining the investments for growth I spoke about earlier. In PMT sales are expected to be down 1% to approximately flat on a core organic basis, and down approximately 7% to 9% recorded, driver by foreign currency headwinds and the continued impact of lower oil prices on resins and chemicals. We're expecting UOP to be down mid single digit on a core organic basis, primarily driven by difficult year-over-year comps in our catalyst business, partially offset by continued growth in gas processing. You'll remember we experienced double-digit sales growth in the catalyst business in the second quarter of 2014. In HPS we're expecting core organic sales to be approximately flat. We continue to see delays in the conversion of orders and backlog, particularly in the large projects business, offset by software and services growth in our large install base. On the advanced material side, we're expecting mid single digit growth on a core organic basis, principally driven by continued strength in flooring products. Overall PMT segment margins in the quarter are expected to be up 240 to 260 basis points versus 2014 driven by productivity net of inflation, commercial excellence and the favorable margin rate impact of the market based pricing model in resins and chemicals. The second quarter will be challenging for PMT however. The second quarter will be challenging for PMT. However, the conservative cost actions we've taken give us confidence in our ability to deliver our forecast. Let me move to slide 11 for an update on our full year guidance. You can see revised sales and margin targets for 2015. The reported sales growth is expected to be lower than the core organic growth, principally due to foreign currency headwinds. The impact of the friction materials divestiture and raw materials pricing in resins and chemicals. Our end markets are generally holding up with commercial and industrial momentum, largely offsetting the headwind in oil and gas, and I'll get into more detail on this in a moment. Our new sales guidance reflects the further strengthening of the US dollar since we provided our initial outlook back in December. For example, we're now playing for a euro exchange rate for approximately $1.10 for the remainder of the year and have similar revisions for other currencies and now expect an approximate $1.7 billion headwind for the top line from foreign currency for the full year. To remind you, our operating profits are protected from further US dollars strengthening by our hedging approach, even though the top line is adversely impacted. For example with the euro, our operating profits are protected at a rate of about $1.24. And as Dave indicated for 2016 we're taking a similar approach. We put hedges in place to cover approximately 85% of our 2016 euro P&L exposure at the planning rate of approximately $1.10. On a core organic basis, our sales growth for 2015 is now approximately 3%. This reflects the slow start we had in the first quarter and the risks associated with order delays, we've been able – we've seen to date, primarily in aerospace and PMT. In ACS there is some minor puts and takes among the businesses, but overall the outlook for the rest of the year remains intact and we continue to expect good core organic growth, particularly in our short cycle businesses. We're raising our segment margin targets in all businesses due to favorable drivers previously discussed, including commercial excellence, HOS, restructuring, and a continued focus on managing our costs, as well as the impact to the foreign currency hedges and the market based pricing model in resins and chemicals. In addition as Dave mentioned, we're raising the low end of our EPS guidance extension [ph] mark-to-market by $0.05 to $6.15 per share, representing 8% to 11% growth versus 2014, and providing the framework for another year of strong earnings growth in what continues to be a challenging global economy. This range continues to be based on a full year income tax rate assumption of 26.5% and share count held roughly flat to 2014 levels. We continue to expect free cash flow in the range of $4.2 billion to $4.3 billion, up 8% to 10% from 2014 with CapEx investments peaking this year at roughly two times depreciation. At a more normalized rate of CapEx investment approximately 1.25 times depreciation, we would expect free cash flow conversion to be approximately 100%, and we expect to be at those levels again by 2017. So overall, still a very balanced outlook for the year. Let me move on to slide 12. With the first quarter in the books, we thought it'd be helpful to provide an update on how we see things in our key end markets and how they are impacting our planning for the remainder of 2015. Starting with aerospace, the outlook on the commercial side is largely the same as we outlined in March. As OE build rates and flight hours remain strong. On the commercial OE side, we still expect a benefit from build rate schedules and a ramp up in new platforms, including Airbus A350 and ATR and the Bombardier Challenger 350 and Embraer Legacy 500 and BGA. Flight hours for ATR are expected to grow approximately 4% in 2015, similar to 2014. And on the business jet side, we expect the flight hours for large cabin aircraft will continue to grow in 2015, up mid single digit reflecting the continued healthy demand in the cabin sized sector we are more represented. In defense and space, we're seeing strong international demand as defense budgets continue to grow. This is supported by the 20% plus core organic growth we saw in our international business in the first quarter and a very strong backlog. We expect the US portion of the business to stabilize consistent with the US DoD budgets despite the timing delays we encountered in the first quarter. In the automotive market, we're seeing the market improving as turbo adoption continues in the life vehicle gas segment globally and as light vehicle production picks up. This should bode well for us going forward as we expect to outpace the industry in gasoline turbo wins. Moving to ACS, residential markets continue to grow at a steady pace as urbanization in high growth regions progresses. We continue to accelerate our investments in the connected home space where we have a strong install base and market channel and where we expect to benefit from new product introductions in both ECC and security. On the non-res side, we continue to expect acceleration in commercial construction spending and our positive outlook for the full year remains intact despite a slower than anticipated start. As I mentioned earlier, we saw a strong growth in our short cycle businesses in fire and security and expect that positive end market trends will continue to drive growth in these businesses. As for building solutions, the strong backlog from our projects business and service bank continue to support an improvement for the remainder of 2015. On the industrial side, we continue to benefit from increasing safety standards across the globe, as activity picks up in both the US and in our high growth regions. So overall, very similar to where we were in March, and good momentum as we head into the second quarter. We've touched a lot on PMT already, but to summarize the impacts from oil and gas are becoming clearer and more pronounced than we initially anticipated. However, we continue to proactively address PMTs cost position and are confident in power managing our exposure to the sector. In advanced materials, we continue to see robust demand for our low global warming Solstice products, supporting the significant investments we've made in this business heading into 2015 and 2016. We once again saw double-digit core organic growth in flooring products in the quarter. Let's now move to our updated full year segment guidance on page 13. Let me explain the setup here, the left-hand side of the slide represents the guidance as of our December outlook, and an estimate of the core organic sales growth under those assumptions. The 5% growth we show here on a core organic basis is on the same basis as the 4% organic growth we previously articulated. We simply restated the 5% to reflect the adjustment for the resins and chemicals price impact. The right half reflects our current guidance, including the first quarter results and latest outlook by business on a core organic bass. We won't get in all of details again, but just want to highlight that our core organic growth expectations in aero and ACS are down slightly given the slow start and PMT has been adversely impacted as previously explained. However, we continue to expect good margin improvement across the businesses for the reasons I discussed earlier. We continue to take a conservative approach to the rest of the year. We're committed to our EPS outlook raising the low end, while continuing to invest for the future in seed planting and additional restructuring. This confidence is derived from the good visibility we have on new products and technologies, our penetration of high growth regions, our conservative cross planning and the deployment of our key process initiative is part of HOS goal. Let's turn to slide 14 for a brief wrap up before I move on to Q&A. This was another quarter where the Honeywell business model and HOS enabled us to set and exceed challenging performance expectations. The quarter started slow and not all the markets we participate in were giving us help, but we picked up momentum and exited on a strong note with significant outperformance in both segment margin and EPS. Our shareholders are benefit from a diverse portfolio with great technologies and long and short cycle exposure, one that continues to derive significant benefits from comprehensive globalization, and one that will further benefit from the significant fire power [ph] that we have on our balance sheet. With a little more help from the economy, we are well positioned to continue outperformance throughout 2015, all the while seeding and feeding our growth initiatives. Like all of you, we're also thinking about what's beyond 2015. Each of our HOS Gold enterprises are hard at work on their five year strategic plans, which Dave and his staff will dive into before our next earnings call. And if you've already heard, some of our early actions we've taken for 2016, including additional restructuring and hedging of our foreign currency exposures. We look forward to sharing more over the course of 2015. With that, let's move on to the Q&A segment.

Michael, please open the line for Q&A.

Certainly. [Operator Instructions] We will go first to Scott Davis with Barclays.

Hi. Good morning, guys. David M. Cote: Hey, Scott.

Guys, what happened in January, I'm – is there any kind of general theme to why January started so weak for you? David M. Cote: You know, I wish there was. Interestingly, at least from the talking I did around the horn [ph] we weren't alone. I mean, this was kind of a phenomenon that some even saw in the banking community. There was just something about January that caused everything to be a slowdown, and I'd have to say I was a little nervous as we were in January, and then things turned in February and turned bigger in March. So I can't explain it. It just happened.

And it was pervasive Scott across the, you know, almost every one of our business units… David M. Cote: Around the world.

Everywhere.

Yes, that's amazing. Okay. Good. And then, I struggle sometimes, I mean your margins are exceptional and continue to be on the right path. But what does HOS really mean to margins? Can you quantify it at all? I remember when you went from nothing to bronze, it was a pretty meaningful step up. Is gold as meaning to step up when you come up from silver? David M. Cote: Yes. Well, it is pretty meaningful I'd say being able to get there. We don't have that many units that are actually there at gold yet. That's one of the things that – that's why we think there's a lot more improvement left in the company. It's tough to quantify exactly what the dollar amount is that – or the rate amount that comes from HOS, but it's going to continue to grow. Because as we've tried to show in the past it doesn't just kind of raise your overall level, but it raises your improvement rate per year also So think of it is, it's not just a first derivative improvement. It's a second derivative improvement also. So I'm actually quite encouraged about what this is going to continue to be able to do for us.

Yes. And I would add that the way we're defining HOS Gold, as we talked about at the Investor Day cuts across the entire business and enterprise, whereas once it was focused on factories and the supply chain, it now extends to engineering and product development, commercial excellence, dealing with our customers and the like. So all of those things were contributors as I tried to articulate when I explained that 140 basis point expansion in the first quarter.

And last just quickly, on M&A is it – are the gating factors really price or is it availability of assets or both? David M. Cote: I'd say its more price now than anything else. Prices are just high. This is – we're going to continue to be disciplined and be smart about this. But prices are high right now, and you haven't heard me say that much in the past, but this time they are.

Yes. Well, we hear that from everyone. So great, thanks guys. I'll pass it on. David M. Cote: All right. See you, Scott.

We will go next to Jeff Sprague with Vertical Research.

Thank you. Good morning, everyone. David M. Cote: Hey, Jeff.

Hey. Can we just get a little more color on UOP? I may have missed it, Tom, when you went through all that detail. But what were UOP orders actually like in the quarter and, you know, if we think about the capacity that you have coming on, is it still, you know, fully sold and, you know, and how firm is the backlog in that business?

Yes. Well, the orders were roughly flat in the quarter for UOP, but it was – it was kind of a tale of two cities. The gas businesses are being impacted by delays. We think there was a significant amount of orders that were pushed out into the second quarter and third quarter on the international side. So we're expecting those to come back in. But on the other hand the technologies and equipment business, performance technologies and equipment had an outstanding orders growth, strong, strong double-digit growth. Catalysts were essentially flat to the year. So overall those were the contributors to UOP. Good activity and the backlog as well. You know, down a little bit, but overall in pretty good shape.

And on the expansion?

And to answer the question on expansion that demand is still there. I was actually at the Jon Hegan [ph] factory in the first quarter, and it will be – it is starting to run at full capacity. So really excited about those investments that we're making. And the capital spending plans are all on schedule and we're going to hit the targets and get the market benefit. David M. Cote: On the expansions, Jeff, I'm more worried about making sure we hit the startup date than anything else because the demand for the product's there.

Okay. Great. And just on the hedging, is the hedge only on the euro or you're hedging other currencies where you can, at that rate, at that kind of 85% coverage?

Yes, it's not just the euro, Scott – Jeff. It's all the currencies where we have exposure. We take a comprehensive look at our long – the currencies where we're long and the currencies where we're short. The currencies where we manufacture versus the currencies where we only sell. It's a comprehensive model, but in the end we end up doing comprehensive hedging in a number of different currencies, euro, GBP, Australian dollar, others. And we get some natural benefit from currencies that we are currently locking in. So unbalanced it's not just the euro.

And then given kind of the peculiarity of January, I know it's early, but, you know, any thoughts on how April is starting? I mean, there's just so many cross currents out there. Does this pick up in February and March that you saw? Is it continuing into the early part of the second quarter here?

Well, it's a little tough to tell at this point, but we think it's going to be – I don't know that it's going to be as strong as it was in February and March, but it's certainly going to be a lot better than January.

Okay. Thanks a lot.

You're welcome.

And we'll go next to Steve Tusa with JPMorgan.

Hey, good morning. David M. Cote: Hey, Steve.

On the aerospace side you mentioned some funding issues I guess from some customers. I know the GE talked about some supply chain dynamics going on out there, I guess PCP, there have been some issues around I guess seeding with the 787. What is, you know, maybe the flavor of what's going on in the commercial aerospace side? If you could put a little more – some more details around that?

Happy to clarify that comment, Steve. It was more to deal with the commercial side and customers, you know, emerging market regions, particularly in Russia with the, you know, the impact that the global economy has had and the sanctions it had. Our customers, some of our customers are experiencing some funding delays. And so we've held up a shipment until we can get those clarified. We're 100% confident it's going to resolve itself and it already is resolving itself in the second quarter. So it's more a matter of risk management than any kind of demand issue.

Does that, I mean I guess Dave at a higher level, is that a comment on what's going on out there financially in emerging markets or is that an aerospace specific type of thing? David M. Cote: I would say this is more aero specific in certain emerging market countries.

Okay. So not something we should kind of, you know, from a – just a liquidity perspective out there globally, there's a lot going on with currencies and the central banks, you know, shooting money all the over the place. So I guess that we shouldn't be kind of concerned about this more globally for the economy? David M. Cote: No, absolutely not.

Okay.

It is definitely concentrated in Russia, Steve, and…

Okay.

You know the size of Russia for us.

Okay. Got it. And then just on UOP, what is the – what's kind of the size of the international opportunity at Thomas Russell again? I know you guys have talked about, I don't know, something like bidding on 10 projects and you guys have given some revenue numbers. I am just – that business is clearly going to have a little bit of a rough patch here. It's only $500 million in revenues. But what is kind of the size of international and how – can you put that in a context as far as what the opportunity there is to kind of fill the hole in 2016?

Yes, I'd say it's a little tougher to say how big it could be because we're not quite sure ourselves. It's a lot bigger even than we anticipated when we first did the acquisition, and we continue to be pretty encouraged by the stuff we're finding. So what we're seeing is a much greater strength on the international side and of course less on the US side. So we expect that the international piece of this is going to be a really good positive for that business.

Can it be…

I can't put a number on it right now.

Right. But I guess can it be somewhat material to that $500 million business in 2016?

Oh, yes. Yes, definitely.

Okay. Okay. So you can see some of that comes through to offset whatever we may see in Russell for 2016. And then one last question, you said $0.10 of exposure to this kind of euro hedging dynamic in 2016, I guess at the Investor Day. I'm just doing the rough math on what you said, I guess is it – is it now about $0.15 or is it still around, you know, what's the actual year-over-year headwind number for 2016 as we stand today?

Yes, Steve I would compare the $1.24 that I mentioned that were hedged after the euro to next year's rate which will be $1.10. And…

Okay.

You can kind of apply that to our business. I think the range we gave still is intact.

Okay. So it's around $0.10 still, no real change there?

Yes. It's reasonable to think about it as, like a penny for a penny. So it's reasonable to think about it that way, and I think it's important to think about it in the context of 6 bucks.

Absolutely. Absolutely. Okay, thanks.

Thanks, Steve.

We will go next to Steven Winoker with Bernstein.

Thanks. And good morning, guys. David M. Cote: Hey, Steve.

Hey, Dave you mentioned before in answering the earlier question that prices were high and M&A and the current environment is a gating factor right now. I know you're a patient guy sometimes, but how long and – well, not that many topics right, but how long and how – what happens on your capital deployment strategy? Do you start to consider other means of returning capital, or do you just say look, you know, over a long enough cycle it still makes sense to wait. What are you thinking? David M. Cote: I would say first of all, you characterized me correctly. I'm generally more impatient about things except when it comes to spending money, in which case I want to make sure that we're smart. The New Hampshire chief in me still would bug me to overpay with something.

I have to agree with both of those. David M. Cote: The – at the end of the day, though, we're still pretty much going to stick with what we talked about in that $1 billion to $2 billion net cash position at which point we'll start doing more on the repurchase side. And I think that's still a reasonable and a smart place to be overall. So it preserves fire power for those times when we can be opportunistic, but also says we're not going to let this get excessive.

Okay. All right. And then the acceleration that this has baked in sequentially for ACS organically, you know, market dynamics that you're seeing in non-res specifically, could you maybe just also give a little more color, are you still seeing that strengthening, are you seeing kind of oil and gas regional slow down impacting any of those projects, the construction ones, not the oil and gas side of it, what are you seeing in that market? David M. Cote: The way I'd describe it is that it's stronger than our overall organic growth rate, not as strong as we thought it would be, But it looks like a lot of that was, I think a lot of that might have been weather impacted and we're anticipating that it continues to strengthen during the course of the year, Tom anything you want to…

Yes. If you look at the products that serve that or the businesses that serve that sector, the non-res sector Steve, they were between 3% and 4% organic growth for the quarter. So, I think it's very much in line with what we think the markets are doing.

Okay. All right. I'm sure you have a lot of people waiting, so I'll pass it on. Thanks. David M. Cote: All right. Thanks, Steve.

We will go next to Joe Ritchie of Goldman Sachs.

Thank you. Good morning, everyone. David M. Cote: Hey, Joe.

So interesting on the organic growth, you're one of the few companies we've heard of so far where trends actually got better as the quarter progressed. I mean, you actually had some companies talk about March not happening. And so I'm curious Dave from your perspective what kind of impact do you think that oil and gas and the currency moved through here in the US are having on just industrial CapEx spend broadly and how that impacts your business? David M. Cote: I would say on the CapEx side, I mean the only real effect that we're seeing is on the oil and gas piece of this. I'd be hard pressed to point to something elsewhere I would – where I could say that currency was having an impact on those decisions. I don't know, Tom, if anything comes to your mind or anything else.

No. David M. Cote: So, those – that's the only one that I could see, that's more oil price impacted than it is currency.

It seems like there's more of a direct impact to your business, but nothing indirect that you guys are hearing from your customers today? David M. Cote: Yes, I would say in general when it comes to FX, the only effect we're really seeing is on the translation side, and as you know we hedged the income number there and so it shows up on the sales side. But preserves the income side, which is one of the reasons our margins look good, and jeez, I think we should be getting kudos for being smart on how we hedged this year and next.

I'll give you kudos, it's by far the number one question I got from investors heading into the quarter. So I think taking – tabling some of that risk was definitely a smart and prudent move on your part. Maybe one other question because you did mention the margins. I mean, in your core operations, the margin expansion this quarter really good despite slower organic growth than expected. You've got this like five year target at the high end of 75 basis points, and you know, assuming organic growth continues to improve with the capacity investments that you've made, it would seem to me that that 75 basis points should be a lot steeper. So maybe some comments around the conservatism around the high end of that guidance range over your five year planning period. David M. Cote: Well, I would love to see that myself, and as you know, margin rates are a combination of a lot of things, so we're going to continue to drive it. I'm very committed to that five year plan and understand what I promised I'd deliver there. So there's a whole combination of thing that go into it, and yes, I'd love to see that margin rate improvement continue and I don't see any reason why we don't continue with a triple digit increase this year.

All right, helpful, guys. Thank you. David M. Cote: See you, Joe.

We will go next to Nigel Coe of Morgan Stanley.

Yes, thanks. Good morning, guys. David M. Cote: Hey, Nigel.

Yes, so I just wanted – just come back to this January issue again. And if I just do the rough math and maybe someone can help me out here. It looks like February, March trended up 5%, and I'm sure that benefited a little bit of snap back from January, first of all is that correct. And secondly, given all the macro volatility, do you think we're in a – sort of a more volatile month-by-month pattern from here on Dave? David M. Cote: I don't know that it's going to be more volatile month-by-month. I would say, though, I really do believe that lower oil prices are going to play through bigger in the macro economy than what we've seen so far, especially in the US. And this is the – kind of the longest the consumer is gone historically with not spending kind of newfound riches, whether it's through oil price or tax refunds. So I think we're going to start to see the benefit of that sooner rather than later. I don't think it waits until next year. That being said, I don't want to count on it either because if I'm wrong, that's not a – not a good place to be. So I don't think that kind of what we saw January, February, and March continues, and then we'll see something that's a little more stable going forward.

And on your first – your first question, Nigel, yes, you got it pretty much right in terms of the 7 March numbers.

Okay. And then just a follow up question on the aerospace. You call that tough China comps, you call out Russia, but outside of those regions would you say especially on the ATR side that, you know, airlines – airline behavior was consistent with plan and did provisioning have any impact on either the quarter or the year-over-year comp? David M. Cote: Provisioning didn't have that much impact on us that I'm aware of. And yes, airlines have been pretty consistent. And I actually think aerospace improves during the course of the year because of the timing on some of the shipments that didn't happen in the first quarter.

Yes, I think also the – when you look at it by region, it's quite interesting Nigel, and we had mid-single digit growth in spares, ATR spares in the US, but because of those China issues we were definitely weighed down.

Okay. And then just finally, you announced a big order in Egypt's – Egyptian refinery, $1.4 million, when does that start hitting the backlog? David M. Cote: I'm not sure. I don't know if that's in the backlog number yet.

Okay. Thanks, guys. David M. Cote: You're welcome.

We will go next to Howard Rubel of Jefferies.

Good morning, gentlemen. Thank you. David M. Cote: Hey, Howard.

Dave, thank you. Dave, there's been a lot of stimulus efforts in Europe to help the economy. We can see a little bit of it in air traffic. What about on the ground in some of the ACS businesses or elsewhere? David M. Cote: I'd say ACS we're starting to see some improvement. I don't think it hit as fast as what you'd see on the aerospace side. But, yes, we're expecting that that's going to play through especially as that economy gets closer to 2%.

Is there any market you can see better. I mean is it still just Germany or you see France improving or Spain or anything of that order? David M. Cote: I would just kind of – I'd say leave it as a general comment. The north is still stronger overall, and I think it's going to take a little bit of say a few more months before say some of the southern economies really start to feel it.

But it sounds to me, though, like you're being very conservative, and it's still a wait and see. You're not adding people or anything like that at the moment? David M. Cote: I could say I am definitely not adding people in Europe.

I get it.

Howard, just to put a little color on that. The – I mean, as we've continually said over the last two or three years, Europe and Africa for us have been relatively1%, 0, minus 1%, consistently quarter-over-quarter over quarter. This year was similar, to your point aero was stronger. We also saw good performance in the turbo business, good volume growth as that – the gas penetration continues to grow. So –but you know, it nets out to similar to the environments that we've seen in the past for Europe.

I appreciate that. I'm just, you don't want them to spend all that money and not get anything for it and you have a lot of early cycle businesses and that's why I asked. David M. Cote: I think it does – it will show up Howard. I don't think though this turns Europe around. I do believe that we'll see some short lived impact from all of this. But, at the end of the day they still need to address a lot of their social issues. And they are just – and my fear is that some of this is going to cause them to delay taking the actions they need to, to become more competitive as a region.

And then just as a follow up in a slightly different vein, you have talked a lot about new products. Could you elaborate a little bit on what we might see in a fashion later in the year in terms of – it sounds like a lot of things are going to happen in ACS either in connected home. Is there – you know, as you're sort of previewing ideas to the dealers or otherwise when might we expect some rollout and impact from this? David M. Cote: Yes, as is typical with us and I know you hear me talk about this diversity of opportunity a lot and that there's never – while there's never any one big thing that's going to hurt us, which I think is a good way to run the place. There's never any one big thing that's going to make all the difference for us, either, rather it's going to be a series of products in a number of areas that are going to make the difference here. And I'm actually pretty encouraged in some of the gross margin rate improvement you saw was attributable to just being able to introduce new products at better margin rates because it adds more value. And I think you're going to – I feel pretty confident you're going to continue to see more of that.

Thank you very much. David M. Cote: You're welcome, Howard.

And we will take our final question from Andrew Obin of Bank of America Merrill Lynch.

Thanks a lot for fitting me in guys. David M. Cote: Hey, Andy.

So my question is just a follow up on Joe Ritchie's question. Obviously the margins were fantastic in the quarter. But if I look at your core growth outlook, you know the 18 target is 4% to 6% top line and last year we were below this target and the idea was that we were going to accelerate into 2015. And as I look at your organic growth target for 2015 it seems we're actually decelerating versus 2014, 2 to 3 versus 3%. So does that mean the plan now is more about margins as opposed to organic growth? Has the balance shifted between the two given what we are seeing now for two years? David M. Cote: I would say 2018 is still three years away, and things have a way of changing, and of course we're trying to make sure that we end up in that range, that combination of sales growth and margin rate growth. And right now, last year and this year, organic sales were not as good as what we'd hoped for. Largely because global GDPs didn't even achieve the kind of conservative numbers that we thought we had in there. So I'd say, yes, we're going to make sure that we continue to work on both. If GDP growth isn't there to support that kind of organic sales growth then you'll probably see even more margin rate improvement and vice versa. If global GDP does start to take off and sales start to improve, well, you'll see more attributable to the sales side. So, we're still committed to those five year targets and we're going to continue to work both of those variables.

And if I could add…

That’s a great…

And if I could add the – as we talked about the Investor Day, we are experiencing really good win rates and we are expecting inflection points at aerospace and in PMT given the investments that we've made and the new platforms we're on. So, I think that's going to be a nice catalyst and we still obviously – you know, obviously have our eye on organic growth as a big part of it. David M. Cote: That's a good point, Tom, and we've talked about that on Investor Day with those inflection points. Those definitely happening.

And if I can just squeeze in one technical question, in terms of your change in your methodology for PMT for input costs, what kind of impact did it have in terms of your organic growth number. Did it have a negative impact for the annual guidance? I just didn't quite understand that? David M. Cote: It’s about half a point, I'd guess.

It’s about a half a point for the quarter, yes. David M. Cote: The reason that we excluded Andy is just that it has no impact on operating income, and you want to use that as a proxy for volume and what's occurring out there in your actual shipments. So the shipments are actually fine. Operating income is just fine, and in fact, it increases our margin rates because of it. So that's why we excluded it because it just didn't seem to make sense.

No, terrific. Really appreciate the comment. Thanks a lot. David M. Cote: All right. Andy, thanks.

And ladies and gentlemen, that does conclude today's question and answer session. I would now like to turn the conference back to Dave Cote for closing comments. David M. Cote: In a difficult first quarter macro environment, we were actually quite pleased with our operating performance, and I hope you were too. Our initiatives like HOS Gold, HUE and software are working, and our business model continues to deliver. Raising our guidance for the year is a nice display of our confidence in our ability to deliver this year, next year, and beyond. The diversity of opportunity resident in our portfolio really does make a difference in our ability to outperform. Our opportunities far outweigh any risks we deal with, and we're actually pretty excited about where we're going. So thanks for listening. Bye-bye.

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