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EMR Emerson Electric

Participants
Tim Reeves Director of Investor Relations
David Farr Chairman & Chief Executive Officer
Frank Dellaquila Senior Executive Vice President & Chief Financial Officer
Bob Sharp Executive President, Commercial & Residential Solutions
Lal Karsanbhai Executive President, Automation Solutions
Joe Ritchie Goldman Sachs
Julian Mitchell Barclays
Steve Tusa JPMorgan
John Walsh Credit Suisse
Andrew Kaplowitz Citi
Nicole DeBlase Deutsche Bank
John Inch Gordon Haskett
Jeffrey Sprague Vertical Research Partners
Gautam Khanna Cowen & Co.
Deane Dray RBC Capital Markets
Robert McCarthy Stevens
Call transcript
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Operator

Good afternoon, and welcome to the Emerson Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. At this time, I would like to turn the conference over to Tim Reeves, Director of Investor Relations. sir. ahead, go Please

Tim Reeves

share East, most underlying were sales and were by Solutions remained residential a markets. decline HVAC three-month on Executive on and slide markets. distributor much, to and the sales our certain slower flat am in other along consumer growth was Sales Dellaquila, Chief X%, and as Please Middle the Residential conference Commercial Asia markets in in North President, American slide Bob Vice very and second broadly, inventory destocking Residential presentation, with David X% Karsanbhai, the offset and Trailing underlying in and second quarter is Lal Senior today increased quarter Farr, orders March. the follow President impact Executive of of the & Sharp, and Officer; share X% strong up target. Financial Chairman Executive quarter summary billion Solutions. Chief to to the two I'll Commercial Denise. our you billion & joined Solutions; X% Welcome website. GAAP up I the Automation stable completed available in X. $X start months the XX% in and up Solutions XXXX billion of by moderated Executive repurchase trends with call. President, earnings we to first quarter which XX%. Emerson's $X.XX, returned $X.X range underlying healthy the was per In X%. half, $X.X at in first shareholders Thank Officer; Automation underlying earnings and Frank XXXX with

points in while growth margin sales basis margin and benefited X, we quarter gas both and up excluding Europe from automation second strong, Intelligent the demand approximately The & both flat the XX than the Southeast & quarter. expected down lower Residential Africa was and and Tax in Europe. Tools basis and and the items was quarter across growth steady GE line marked Asia, quarter discrete was Americas, of Slide the Platforms X points. growth XX Commercial Middle to was for in to and was East oil was quarter down Test but stable in result, rate underlying China, the at up favorable we moderating climate points Middle the Solutions East. market. which X: and X% business, was XX Asia the acquisitions. slowdown in discrete XX.X% lower points with and This upstream expectations & margin led X also QX was Residential with slower expected due Automation slide global Aventics, of growth platforms several Solutions was XXth Turning gross fourth in at Europe basis Solutions points EBIT approximately in Second to EBIT solid our Commercial by due platforms. than improved

and in CapEx U.S., is we XXXX. of control the in as spending analytical instrumentation and down XX half. leverage was upgrades these previously final technologies, spending investment and our Turning progress to points primarily This cost compared and below up Southeast measurement made expectations, the and actions margin was basis to expansions were are and first sales. basis we expenditures slower-than-expected Capital deliver structure our X. growth adjust to half to weighted XXXX on more segment recent expansions, down Total XXX excluding And was slide second in strong climate Asia. to in announced China taking points acquisitions. facility due Because on businesses

performance. basis points, unchanged year XX and payables working capital is expectation by improved at million. Our Trade CapEx $XXX receivables full driven

stable backlog X, slide March Solutions' were and growth wins. trailing was X% to remained three-month brownfield, underlying cycle up underlying spending, and our across growth business; three and by project X% an demand our across follows. trends orders steady sales Strong as Automation All up basis. and the sales kinds areas in of X% up continued broadly the continued Underlying world continued areas underlying greenfield on in quarter world positive driven quarter MRO projects. Turning remained stably. long

backlog. strong to healthy areas missed two key outlook, project funnel, our and and a We a America. in in see orders impacted primarily project expectations long that cycle our growing continue There conversion, steady growth North progress were

to full to was unfavorable as year light the customers in slower development somewhat weather. of plans investment and volatility First, Permian oil was due price last in assess Bakken upstream gas year delayed and region pause oil late

tariff these U.S. We global increases. second impact through expect was channel last and secondly, to the modestly impact recover half. year's inventory in some of in the price by slower. growth end markets manufacturing of discrete were and from regions exacerbated And rebalancing The this

slower lowering growth expected X% we half Automation America full which markets. sales For global North to are X% discrete underlying X% embed softer high year, in X% from to somewhat second the range of the Solutions end to and

was than was in of and revenue in America, expectation low and fourth GE to growth in of Platforms in due single-digit America. recover XX points the foreign cycle expect in timing long below expected exchange largely Intelligent shale year; which the half businesses. recognized regions decreased of growth software-related XX expect second we in growth growth to impact to Aventics margin acquisitions. losses the the quarter; excluding North expected This we slower QX result in the and mid-single-digit points quarter basis supported North improving down takeaway the our and basis by For and Segment capacity stronger

February accelerating our our investor at segment approximately some cost GE expected profit incremental deals. the plans Full year excluding action Aventics We and and are is conference. XX.X% XX% year range investment protect full of adjusting margin to our to spending the margin deliver margin and within discussed be

favorable. as three-month impact underlying underlying rebalancing trailing Turning positives residential flat and in the markets slower Commercial orders. to certain slide Residential quarter residential were American and inventory March pace were somewhat strong These North markets consumer global professional & commercial by air-conditioning of offset the were Solutions X, in distributor and were our market. tools sales and were

We in plan the line China with continue through our to see discussed quarter investor the improvement at we in February conference.

markets However, to than expected, plan. Southeast Middle recovery Asia months and putting were two East behind expected slower our Asia three

the and target half we continue to follow. of expect the expected half decreased approximately X% second sales lowering slower XXX our China points underlying to second leverage than with Compared favorably trends XXXX incremental our to helped excluding to in underlying first Given trended Asia we year, line Through which over of & Test to sequential on X% embed the the basis and X%. the Tools start business are rest XX% Margin the with markets to improve deliver expectations. across price/cost acquisition. sales quarter, growth the

expect conference. on half. tailwind investor February and the margin year the consistent is We expected year-over-year to price, plan segment XX%, our higher cost in approximately drive the be to sales out second laid leverage and strong at Full leverage sequential we with

Turning slide now X. to

Residential X.X% in Solutions growth underlying is underlying X.X%, and reflecting in underlying framework guidance QX to & Solutions By and sales growth Automation in quarter, X.X% of Asia Middle at growth for X% growth Commercial QX businesses to improvement Solutions America. in $X.XX XXXX for end long our the $X.XX lower North expectation reflect in range expect updated and approximately America Modest to approximately East. and and growth approximately to Our EPS guidance markets of fourth QX. $X.XX. reflects The with quarter $X.XX upstream the QX in North in high Automation acceleration decreased the cycle has $X.XX we

year expect QX, tax XXXX accounting somewhat strengthening charges taking of GAAP XXX(k) and tailwind, charges charge. to fourth the than the had more cost one-time and EPS and half. We spending. items bridges guidance. tariffs In in slide to contribution one-time be XXX of these including investment plans XXXX are to of volume actions and right is we by leverage, the a of Strong items half, second favorable by rate operational price, contribution toward the second other Together second supported which weighted $X.XX headwinds size offset lapping half $X.XX $X.XX our $X.XX turn tax to approximately discrete Please in full acquisition XX%. is XXXX impact we the expected quarter, net section in XX,

to million in structure across we full spend year XXXX. actions Additionally million third quarter. accelerate restructuring up heading $X into strong QX to increased approximately the approximately a increasing restructuring XXXX from $XX platforms has are cost and sets both into of our Total and million $XX

items together to price/cost the aforementioned discretionary In to and to from We a strong particularly accelerated benefit spend half. modest expect EPS. and benefits as $X.XX are operational the deliver $X.XX through leverage expected quarter tailwind year-over-year the the contribute fourth these operating quarter restructuring second the investment and reduced fourth build from with sequential of

shown cadence over spending. investment right Farr. expected excluding will and Please I hand to the our tailwinds price, we've QX, profit results, QX execution cost in Both turn reflecting XX call strong will recent David reduced businesses On operational deliver slide acquisitions. and and the by to sequential improving business Mr.

David Farr

truly everybody you us Thank today. want for to Tim. joining appreciate thank I I much, very it.

strong still seen quarter want we seen we've go. feel We intact. in and the sure times everyone at to We I've going throughout second can I've really of cycle look As we're in to our and tapping about the a half, make the what's said we've second But is we meetings what as months what's several Clearly, happening happened as the feel on as truly is where going had it. understands of the very and February said the last brakes cycle. marketplaces. in investor couple I've many the of

However to with to that. we've deal adjust had

this very things through insights still half. they cycle we our the their their see about this how are about at the presentation, about cycle. in customers. from the have customers, they our standpoint year the set program place, I a some but and They spend these you still allocation second want still to capital good give their spending – look quarter the Both will reported thankfully capital what moving, feel We've in go this all and Bob As comment the I everyone's and we Lal on of with feel and but timing, also they as discussions intact. in strongly checking capital standpoint QX the been and it's for

-- actions the Tim the Clearly, I The And firmly after in some lot oil go Final and saw particularly of could already and a that a in several area forecast we the callouts, still talked, pretty quarter Lal's on specific flow. what Bob accelerated call Control. need do of Bob's – also on? around and both around times. on and in business. profitability and recognize, team is, pockets we we very In big mapping Lal to and adjusting say, this really early with Bob feel We're I spent business. talk aligned early call, Both I to we to level U. that. in decision the the -- have out. around fourth or talked quarter the Clearly, here. profitably. come issue the pricing their third America We does talk what work to deliver they February. It I gas sales, Bob's, from go that we also made of special not Lal's in going closely that. taken to around as still phone from for that weakness, we let distribution. quarter, deliver York that what give which we was from a I wasn't continue focus in outperform a particularly a quarter profitability the now sat down. look and we business What some continued that bit global February of not areas China do that's will insights, know? we and as sales the we we we're around gap I be but you through has And with addition, work has taken we margins? particular will hours what business, to as to the East quarter and of a and in early we we we abused Bob we've of I that I The still on expected clearly out in, second year. right short-term at second incrementally Before pockets S. that calendar he charges. We guys that an sat of he off. over that but at and around impact in happened. What's Lal actions, had we'll of the America the Final to more, unfold, for the a underestimated over was can see a of about going growth, I Asia we shaping, I'll time and and quarter the pipe have double-digit focused business OCE the really it's XX% the key and with both also there we further the ensure delivered our the and the us That's XX% feel Yes, Bob's acquisitions will brought need why areas see Control Lal around hard profit through make necessary we believe missed, margins dealt do good. very call now you And out. filled my than the other are years had shifting actions couple to inventory many, the believe, distribution gap. the Lal's going we In the the more their unfolded people that. in place, third Asia areas with that very Emerson delivered profitability, would Clearly, timing tariffs, unfold, that actions want half. do key faster the want important. shifting our in think going still that, increased Southeast we very quarters, – lot bookings, material plus integrate with the to incrementally. were and to XX% and talk that want guarantee off cash as be then a intact deliver worked how and How for being restructuring most late I in in price the we A team. has and business areas many in North we we've to people, as about through then would do They do? to big the put Latin growth They've We've voice both In We're and flow. of is this years. inflation. and we of Bob talk team, the for business. I for this mountains are more sales very across -- from the we couple overcome and and deliver Southeast down, I Lal's that through back demands, also slowdown clearly, XXXX do good as year of But about we two strong that’s I could there decided the dealt the areas and and we the quarter, when had recent What we spent from hard feel tapping about second these what well as give will and uncertainty to come Middle they case in thank And miss, in and Also I was delivering team the who we've -- to here But competitors. cash out in call and whole business very, highest teams New the and

miss, But range going strongly. to with aligned to I company. the But taking cost even whole to that He's and Lal's it's in whole this the make back structure these clearly, flow, I we growing, the Bob's year. for on guys particular, that half. grow, will X% our a got these coming and we in not business the the was as thought this of leave very in clear that's still the around the happen the have as take But quarter. going make X%, be the it actions business actions we are cost cash at sure you're things second we the when to X% year. focus As cost to with year sure we into in X%. look I right of first we that going move for these X%, From to undertaking, grow do long-term see we had half what want second international, and half we – what's guys And we applaud as good actions second right XXXX. still

I that, this think talked We're the balance a sheet. about with Board at sheet sheet, shape the in Frank balance Frank the agree good would with our and today. balance very

about in working it our a after feel first high, think got the capital, bit I good back line. line, but got I very the quarter, we And we in little it’s cash lose little bit for the from it's easier a the down standpoint, working obviously, flow capital the earnings slows for business of If we more, side us that. a year. but

right good approximately company look to the about very good now the billion. flow we about I think that year, of what's as free half total feel the at us look focused the is second capital at $X.X marketplace. But which as around in I important we allocation standpoint. we feel a cash going $X.X So haven't billion, from I

have in structure I think cost a place. we

than in June, we trends second had the to organization of we and very We're kicked the roll. March that's back order at in roll so a I order things we see leave we if watch chart, about April. pace in with April. couple perspective. unfolded X% Obviously, stronger clearly, the half. that's will as range back the want went back positive three-month range where that we I right on Bob's And you dipped there. a and the We key. business, a we look out as anyone that business three-month is look as little we April, X% quarter, thought. doing bit look comparisons, down we the we the a expected of fourth this be happened. that good He -- on on ourselves up. trend forecast, you standpoint charts. on But the communicate roll. These hard firmly organization for lot what good globally from the think at quarter It positioning three-month still a that's further. order different picking in a at reacted And quickly. very thank start of in this Lal's that delivering us And trend from standpoint, easier were to that And to you're obviously focused believe feel going as bit up business guys little We a was a what's the from but to

And we'll a the also out. want today Lal that. us we and and the that. to little Q&A. tighter want to about and commitment to and to to this, made bit. And think shareholders. hard put Bob look a to focused to I half I I are committing Lal have to again, in And his Bob and then then talk will a up I Board. I are referred happening. first, the very everyone right I know, forward horse turn Q&A second follow team doing to do over that reigns made to I and reacting commitments to I We've hands thank our But got are we what's joining everyone for reacting, below have the it my I'm we go going in thank laid to the little you for reigns now. As year

So, Bob, it's all yours.

Bob Sharp

Dave. Thanks, right. All

over the well. derby Dave the pulled but stayed reign, the the as saw the weekend, lane You in

mid-February As March you've as investor seen, which well conference, underlying in thought by now. the in moving we flat our the expectation, was around we'd underlying be up is as with

we Dave indicators expected. you with margins, we see in As kind some challenges China The and and in got Yes, chart. not that as year in customers on time we the really reacted of which of key Asia to a Two selling the which oriented. the the sales conditions. as the in you And rest did looking watch, key territory, the play Middle mentioned. cost had these especially USAC Middle East the of we it out of the very lot have quickly show mentioned, Dave we were, is that XX% then our for. are I'll a as Asia, to expected. as next pockets lot out. the of was rest recovery of to this weakness, playing stayed side now strong, were And it down East of

to as some kind addition as some general weather the well playing stuff, S. product dynamics thermal the both of clearly disc some impact. inventory out discrete U. disposers destocking of some saw In consumer-oriented of some backs, products,

of really the kind has ticked real in us. played positive. against out quickly March back mentioned, that's So, as again, what Dave to April,

expect look continue a but lighter, see the chain, between a support one Starting to strong cooling, top on and there quarter tools half that to and disposers China the we playing last well. coal continue XX, sales I amount about different time that big business a update because very again dynamics pro & out. and big Asia are heating a the not chain movement Ridge for you at talked products We can X% the in from in of verticals chart bottom, especially to upward see tools We solid Home of very XX% Tools us, showed specifically And there Products, you second X% own is as chain and cold volatility positive. way still quarters go staying but as in in it solidly more XX% little line first the the especially have here for trend was XX the on activity. we then which as a by We solutions we're to Asia, the in to down the improved for. the And China quarter good the driver big here. can and total plus a a in we second quarter. Cooling in to continue Heating first And looking is Cold do outlook and and mentioned quarter. percent is trend some in very

total So, the quarter, was by to XX%, this then comes activity China watching largely as so out in we'll QX, see QX with heating do going XX, the that out and driven was playing well. is out. be in to QX we down happens what be that and QX down this positive continuing play into in and

the If in confident chart if again, and about overall we're across look you you go half. to really XX, strength solid the the second some key verticals geographies,

again, good North of America, the sales high First dynamic single-digit all, in quarter.

bought about speaking on Cargo now America strong and looks. and now, it's quite Global I customers activity when of here that. very are had very industrial going in numbers getting of weather-dependent, and very the continue course, It's AC home strong. start the continued some & overall of and certainly. to Cooper-Atkins around we stuff watch is chart, a season we little acquisition. again time we Last very -- in Home so continues North the into AC the very Chain -- this solid. the some the especially market right stuck and very and the quarter Cold X% heating they year in the how -- tools mixed solid Frankly, but China, products Tools they previous OEM good. see Products quarter turned. I again, products think as our you and our of got some up X% customers Chain, China acquisitions overall, underlying into activity because there the summertime, things are happened we'll and Europe solid from saw once when and with mentioned of the another labor activity hear construction the some -- uplift looking broad. You year the in Cold activity is expected was impacts And But again in -- it that that did, customers and U.S. good when It's for indicators sales. ProTools the positively always you reflected weather how destocking general some kind the rapid the and developing. when inventory started.

their more is they've higher about I'll the from now. now; it their So, clear going that. to customers they're right they're being release their say activity that shy substantially not just quotation until for signal right customers. It's got anything

develop looking for. So, this as of relates capability also not did financing to their right Outside now. Asia, half again, first we're

half. to the did double-digit in get to have new to of continued continues always be some for challenges and team. some the the playing quarter. on certainly a elsewhere out a us for probably relatively say solutions if Canada continues spaces. quarter. and was in the We'd give our partly of at dynamics. even looking America out growth us. because a territory activity shout are steady are They Middle second dynamics, competitive dynamics has like of double-digit good because But give in East that the this Rafael people otherwise programs It market them a some the story We that. they what in of low with to also Europe did is out shout improving Latin a We Europe looking And particular in trends. and I'll the for again we'll growth challenges,

Middle little orders. a closely, and So out again in we of activity. of this some say rest in our or above April line expectations inventory I'd very But East even are has turned especially Asia and watching

going how the February about we confident around We on. play to going would. said We quick this was out. and late saw we second March we're mentioned Profit very in when half Dave So is what got as developed second it as second in over for saw I'll to Solutions. that the cost, tailwind a half now to rather us And we which it again the sequential margin. Lal see turn healthy have in on some Automation confidence. going has price, the We're half. gives

Lal Karsanbhai

Bob. Thanks, Good afternoon.

slide turn to Let's XX.

very changed earlier, Automation the has opportunities is thesis our The Solutions to continue David greenfield robust. long-term investment business in of As intact. KOBX the cycle said front be not and in

We next the markets in that our on a experienced chart. however, business in couple will short a have, slowdown I cycle of discuss

to an we greenfield KOBX So on XX, $X.X February. met project has additional actually in billion, the $XXX remained chart funnel strong. million increased It since

So very robust.

We $XXX $XXX timing. an for booked in relatively company related to have minor announcements. have The in international $XXX intact quarter's movements major are with their earnings Emerson. remains affirmation evidenced million additional February this few plans of booked as total projects holding The bulk of the million since an million additional funnel oil and committed to capital very of

market oil that and Let's turn to from upstream and global business. what two industrial markets, changes fundamental in slide market. North There gas discrete discussed XX. both are cycle short that The the we impacting distribution February America

related and Let's about gas to and oil upstream it's first talk in three America really areas. North

in which basin, drilling First we see well good, the activity. Permian continue is to

and capacity. lack capped There The two, this One our and sub XX%. pipeline there being pause $XX are of reasons current lower takeaway three wells in to a a capacity equipment process of north that utilized. completion given of It is in December; this. running utilization is is instrumentation prices, not the was oil However, completed. are for

less and down of an our crude cost of more investment They companies players. key consolidation in by QX; been this integrated we'll thirdly, capital management to and expansion significant are pipelines, of and Although the oil better the has Sunrise have capacity two and of take independents the utilization that and area EPI XX% construction controls.

predominantly today, infrastructure to the hesitation area being North place. there's and oil need Bakken activity in on Coast there. exiting. such it Midwest new The heavy which a is thirdly, second the Keystone Northern has The is There took refineries gas little pipeline upstream on takeaway capacity both suffered suffered oil the rail but And are Gulf very as and XL. the multinationals gas which field And in the get from for Canada, have which Canadian from investment Western needs difficult U.S. used. a oil, and political winter around in little very Dakota,

However, any these. none of seem – on to doesn't a be movement of lot there's whole

the to will more regions, that takeaway be half two majors solved. positive believe positive, of in these I as continue and three out So very investment issues are second capacity support

world a the which have calendar quarter first resulted was in and increases restocking quarter and The the normal in And in slower-than-expected The distribution channel predominantly sectors. the the we -- driven call, slowed from slowdown channels. channel concerns stabilize. activity we expect half. – manufacturing channels end global second over stabilizing stable distribution distribution that the aggressive by areas. process comment and I in strong, to as We and other activity, extended have this in perspective on with the industrial January. and This quarter. recover more has discrete A rate X. is expect the price Automation above through relatively the the tariffs automation and of Europe believe remained the semiconductor Industrial KOB started margin impacted second above burn in the an in took negatively what the current discrete Europe go actions to automotive impact And is markets inventory quick the levels went as

key earlier, is pipeline terminal then, David Bob investment fields. America by projects Latin have driven we won. some to on customers and pushed Mexico, shale concern that the orders we back including to and very Asia Argentina be very continues sales India. strong, and conversion a deliveries and Africa The gas have around in as and Middle do And are have strong, strong, as East China although alluded

slide turn Let's to XX.

underlying growth half in band. growth than the -- first the year, The X%, X% the and year lower the into X% X% to are for we X was X% was to planned assume coming we which which points in is looking X to

February. for guidance EBIT EBIT as XX.X%. half year City our the XX% do band maintain full discussed the XX% in in to margins York New first The in were We

XXXX. The our backlog activity continue by our half. cycle of XX%, $XXX greenfield factors. the have businesses The Asia will benefit million by modular to One, longer will million. team since run world continues OCC and business to the August leverage, and be the improvement of by by volume and businesses, the an grew orders modernizations by -- second conversion continues win, has since XX% bookings with $XXX grew rate control the represent driven modernization over Final run product $XXX year-to-date business PK by supported also launch. half in and in increased in our systems families, and driven The half, is million volume Control and three led East, Control around Nyquist to and systems. outperform. A Final the his have and longer controller number cycle to orders upgrades KOBX driven these by benefit of and that first in The positives first Krishnan orders in above Ram from from first projects Middle booked large And systems continued half annualized Jim backlog

North invest in The is regionalization competition, in mentioned. key infrastructure. capacity business Asia We global to outpacing David America continue and center service as and

half points than goal largest competitor. first Our greater North X was America our

and the world price/cost priorities half we Well at as originally a modest in see P&L complexes. we in in higher recovering second North management the are -- second teams around have for response business, rightsizing completions in incremental improvement here a issues orders the refineries And came pulling was modest expect we positive are standpoint, as April quickly cost the level the in reset and the XXXX. will managing more businesses, favorable and year. opportunities, the to and believe quickly responded in to of actions well to we're and we more to recent set band from perspective note, year Thank integrating us half. million investments we for XX% acquisitions and the with approximately the EBIT keeping growth From we thirdly, remaining and America XX% turnaround the a in Cost-containment happy geared set two of weather an short restructuring takeaway $X the you. pace our structure the tailwind upstream. in cycle actions: well of Spending the and our deliver solved petrochemical strong of Secondly, Bakken. On cost structure how be up for a specific America XXXX. across improved conditions Three North a have growth season say

David Farr

to for Thank some floor participant questions the take you I'd Lal. from like With there. the Q&A very that, much, and open

Operator

question be today Goldman Sachs. of Joe ahead. will from first Your Instructions] [Operator for Ritchie go Please

Joe Ritchie

afternoon, Good Thanks. everybody.

David Farr

Good hear afternoon, to from Joe. Good you.

Joe Ritchie

Yes, thanks for on. getting me

up side Chain, I we're the I about Maybe upstream you're on what on quarter where guess, to what channel more a inventories first bit the provide through bit around you we heard two? think gives confidence that and that little bit in Dave. well. a the the my you automation. get to more going as on color Cold seeing built just stand wanted So, get specifically or next I'm assuming channel. question, color in We in a little discrete being that

David Farr

Yes.

late not for the channel not -- business when standpoint, to my to say business some slowed From base happened which Bob's Lal's had we certain down up instrumentation relative year, small term, has go as discrete it last channel. of or customer a the that a and yet. via short-term -- For built relative -- they through our short rate, did are perspective, most think the automation -- as in market the burn the products the I

which at be looks our, our quarter. say look this a second and will channel, would will I of be done the time to we it because we this model rate the burn the by calendar lot end the channel now As like spent talking me talking to to what of third quarter,

relative of us do the inventories. in and -- in quarter, fourth I going the out and the to a looks done the we business that, the the pace based that's standpoint built Clearly, this to look quarter. What from like there lot at as we mean and projection. channel you to what the lot more out. distribution the So to the in be or of it like of and order out see how our but or channel tools Lal's here. quarter gone our sure we've help checking will environment, assumptions we and it's It side there me we fourth calendar that's looks businesses, third make more demand on a quarter standpoint consumer the both understand

it call, by make to you. I we Joe. So out that's now, a to want see how way, right And the

Your on report HVAC, good. very report the was

take to We'll I little nice good you It talk do to that understand a I did if bit, to team a did that to think a I you take Joe. a job there. going had your job market. very a been I call. you have would and understand shot. good market do on. We're But I there. you. you talk to come a would to just give had us. shot,

Joe Ritchie

for just on. KOBX about some sounds positive talk what’s Hey, a you're Look, I side? the remains coming to mix a maybe maybe thinking also, awards, of like It could to you're been about the then this good. bit year, If little through I the just lower into feedback, and like should follow-on And as on look, Dave. be winning little guess ANS the awards. in margin year expect funnel of pricing I question just one next we us the mix it kind side? project the still follow-on bit appreciate a rest of on project sounds project like

David Farr

right and big issue are. that's let where we I'll answer I'll because first, now It's Lal. a

the or it or is standpoint. Rockwell, project. building price the a Yokogawa, standpoint ABB. on It what been The is it of an project Honeywell, the hasn't it it is on competition a of the really depends decrease been is going increase the changed project has from hasn't or after, backlog Our

really coming start now not say will quarter. the guys from or the in month of this that early these what hasn't to And start shift I backlog, perspective, are through I changed. around projects, that going starting right -- year, a relative would seeing projects awarding, initial execution that year, it The two but So, and seeing buildup of to with won phases last projects. what late the we're we're say, fourth some would

So, got the He's initial also he's coming hurt sees his the he's in project Because But fourth as the he in in quarter, KOB cover why wasn't to some growth margins. actions. some of accelerated of the coming that's short mix on at Lal work the will his back. looks some here. cost there cycle stuff phase banking X his that that

So, get the cost right. structure now he's got to

shape. dynamic in we we we're move we that, you the this me do let have now, to -- side, add? want you play I but think let out have ignoring anything as Lal, forward. right how good moving I'll on So, distribution that's Lal comment

Lal Karsanbhai

David. Yes, thanks

of as jobs -- really the expectations nothing on to The changed beginning project X capacity. at see structure. pricing. I of dilutive point, in the you call the it pricing way, fundamentally way, the available functionality are that that at think around X puts the say is EPC less the and expectation projects is KOB midway I cost through in aligned pricing increase, and beginning that on we've around February. with the emphasis clearly, market we on tension this and the total, we had the a And margin But driving margins pricing what Clearly, at see we'll planned. and and of from the discussed adjusting number of but the

David Farr

quarters, to think at as Yes, And they've it it six a next key Baker they've his balanced. CFO, out Joe, now is have lay things pretty got want that well the -- think call sales I out and two done next -- Lal I I trying to that got of of great and one change? the or think I I right think a does unfold, look the Lal team how mix job I Dave

cost you out We from. came that's costs Now, assumption. they and out. the can a something the actions where obviously, coverage to we change little need it and need all said the here laid get But

things In get come out in don't more distribution extra in bit than channel. little a fact to case you a need

this this how Emerson, really I do. that's for quick -- that's we a what but that's on give A work us, is special and because So, callout. change midstream we a

Lal Karsanbhai

share jobs. point. our Joe, at with and look David, additional opportunities. jobs. our be all decision And at on technology one factor go then our best customers gain three where we success our and these will can each place into competitiveness We intimacy probability, All rate if these the look I may those We of

David Farr

much Joe. Thank Take care. to Look you. you good. talking very forward Yes,

Joe Ritchie

Make sense. Thanks guys.

Operator

The Julian go Please next question will be from of ahead. Mitchell Barclays.

Julian Mitchell

Hi, good afternoon.

David Farr

Julian. afternoon Good

Julian Mitchell

in flat first around guidance. just the XXXX Margins businesses been include four a both question now if three Maybe have margins. for years or we

were out just make margins the restructuring think when up of more I to But perhaps the wondered more $X to was goals perhaps million year. if dusting a year. at move for up you a restructuring noticed can wondered million in or restructuring had looking there need off for you're aggressive those around $X lot gone So XXXX for you sure up urgency extra the next term. those the if push I current thought margins medium kind I

David Farr

point believe in can this top firmly time, Julian back get you to arrange. we we're XX% -- At that not still

-- get and in can over that year out and if mix time, point and in the we're full we have to standpoint couple again or need about the that years with about if of But clearly I'm will we we company But talk next pretty we assuming see go total time, restructuring of we -- at we both to a progressing that both actions Board we think for at to over kind we have. looking key. going into At to that. the we're through June things Automation good to strategy XX% here. businesses still this a point do it. be we'll range. have push the XXXX to us not for what feel But to can XX% see very -- you in getting a I business the margin restructure from back Solutions That's after. this go there standpoint, going have

the more we’ll spending. We'll So think this to see and don't do year fundamental the we right a change and of ahead got mix of just change. bit little because slowdown growth I now

different. so knew coming. are acquisitions And We acquisitions no are

I right that change think now we so might about. And that feel again. four months, good or three But course we

Julian Mitchell

following up. Understood. And maybe just

you've positions but that of Test several just integration there Bob's. in update. prepared particularly an in also & perhaps accelerated Maybe the mentioned You remarks the give business, mentioned ones Tools and times Lal's in

pace how growth GE Aventics, in that now Tools Platforms, Intelligent of are across businesses the those acquisition you look you If and organic integration? with Test, happy right &

David Farr

that? Bob do want you on comment to

Bob Sharp

Yeah.

me start Tools & Test. Let with

the We playing out. things are are very happy with way

organization together We North have plumbing. electrical the sales and between America

From frankly another talked which of now out were didn't business for working in playing California, we there business Tools be on European, is the time and even some very obviously business Test come the together, lot China that's from money. at now are -- getting with noncore standpoint, the business that And communications some the group group was right by basically piece soon. there's big a away time cost hand of in & a losing a of now also we will a that playing piece We the out. lot about out done. as had was bringing that stuff close the that us tools of We cost, a stuff

say would opportunities. there's identify I everything we So

right now. are of that We running ahead

in underlying this was I X% think growth quarter. I mentioned ProTools around

is improvement happy a is combination good sales profitability. Tools sides. it's on lot of & and Ridge of which healthy side, with And we're growth playing side A activity way the out. So on with cost the the strengthened Ridge Test the both really

David Farr

Mike, Julian, in I in the ahead the now, We don't also had see within But term and unique feel I them at – plan. don’t business anything this they’re acquisitions as at opportunities we were with look of near I like highly team very focused I are – as good out there right he's see that think his organization session progress in any growth outlook. side. about I time. point looking, I his got business. Bob's

Bob Sharp

– by effort leads took net unit clearly Julian. actually. A us Machine over us. second, as touched lot with around personally gone a And work our with the And with our deals as business But very that the fluid there. a very space. that that lot us. global Automation Solutions. that discrete the of world the last there. team I've We've engaged and entire important the been come for XX channel we've channel are I to can to days multiple our waves around And around the offering. where exploring twice. the up see with to Charlottesville what we world, we team. engage in slowed And Yeah. I'll Bhandari business and value PLC that comment integration now little the synergies fundamental the the that in David in of business Aventics, on integration to harder. add in, and X KOB drive distribution that impacted happy for reports three bit good chart work comments by earlier channel forced I part -- believe I Significant Manish some on that Aventics, made of for XX, a power

David Farr

I It’s that, business would coming good.. really profitability. say that growing, is better

Bob Sharp

it around And good again, Ram the just, earlier, done add very and looks well but phenomenal early. is VMV&C to outperform. and ahead just have and last, I'll Krishnan it mentioned our It work then that team the plan the of I continues

David Farr

this looking morning. The – now business are software. around It's very took Lal's acquisitions the at right one much to Board we we're in

software And We've already acquisition. year. done couple so, a another this

well But these the of far, starting the the off for our and OCC PKS are the So has so which board. is again, utilize doing taken coming them nothing But PLC, actually with us. the GE some we're to and adding and opportunities of integration especially and business big. own really across the in timing

in us. back. their for So Julian, Clearly, right work pleased great automotive for so -- do step back get bounce very will out a and was cut The now. But guys and I'm business, also a of them. discrete things the downturn and chance faster, they we timing to Europe got distribution not the

And perspective. so about good now them feel from that right I

Julian Mitchell

for the like thanks And extra in slides chart the Thank XX. color you.

David Farr

you you understand sure understand that Emerson. guys we try to make to guys out, you just it sure clearly want help just I so... Well, make to that it. I understand

Julian Mitchell

All right.

David Farr

Next.

Operator

The from next Tusa question ahead. will go Steve Please of be JPMorgan.

Steve Tusa

Hey, guys. afternoon. Good

David Farr

different today, are afternoon. time you’re Steve. here, Good And getting zone because double you in time

Steve Tusa

sleeps, Good to morning Money Money never never Dave. you. sleeps.

David Farr

Money day. quote of Well, sleeps. the that’s be got to never

Okay. ahead. Go

Sorry.

Steve Tusa

where $XXX activity kind kind final this And of gets the but put on silly delve you as at not into back, in all there. orders. mean of guys that were Is did Or like to she that number steady quotation to booked one, and in going relevant? how it But number year? of goes? kind committed I compare million that pretty is you last

David Farr

relevant. It's was – wasn’t XXX? that February XXX, in It's relevant. Last XXX? number

Frank Dellaquila

$XXX million, December about pretty that basically stable, million about should, in stay higher. XX XXX

David Farr

quarter. and maturing because It's for bookings and or us, bookings steady that's versus year stay next because But growing is those that sign number will at and good that coming we funnel the up number us last key that's means are for know it, the either happening. happen as us for know this look those If we sure. quarter at keeps a

our and half So in the it you. and the XXXX the in you that the it reason for That's us we a importantly first tells track that's of and and give opportunity for and number us second half with relative more the sales. that in confidence, is to year track we why of growth it relevant to share bookings

Frank Dellaquila

ahead. the And go Steve, sorry, KOB.

David Farr

ahead, Go Steve.

Steve Tusa

in a second migrate hurdle this Can out the those any the over know, of kind range, high or bookings of double-digit lull? that, point, is towards of course half too coming ANS at the you of

Bob Sharp

we X. say Right. perspective, to band stay I'd From X within my the that of

David Farr

definitely is going there move it's being can you it's right roll, up month a come. of going we big projects worked to They mean three at back a out I with big t are look couple on And to X% Yes. possible. that some three so and There the in bookings possible It are how definitely now. range. X%, have months month towards the are roll

is right what I So, booking pace, we like yes, our mean now. it

the think I So opportunities are there. still

Bob Sharp

committed We few up trigger in bucket, pull double-digit. they do us other got if Steve, a that into will the

Steve Tusa

for one last one then Dave. And you, Okay.

trajectory do you or maybe Does that’s think like at something that. was like kind that knock an in I off this or XXXX, lull to is your flattening this of of kind guess And this a that, it trajectory think long-term, like off still in the outlook, least the your – you or here? is years. XXX enough – I achievable is out So target

David Farr

about Because capital good debate and still still is I -- Frank both different might feel and allocation very because to starting I we're But differently. this. is it less business it, feel There there come be I It talked the going now, so about There Bob's Right that. still for it. might back. haven't might acquisitions. about be on cycle for business Steve. to come good Lal's

that of at about talk three because includes, all. Board next got that off which about front ready point this I'm that in time. and I So next still years, we've point, debating to month to XXXX. at in feel are good the not this at the and come And Frank I obviously,

good I it. feel about So still

Steve Tusa

Thanks appreciate Okay. a I guys. lot, it.

David Farr

calling in luck China. nice him. thanks with Steve, Jamie Good be for to tomorrow, from okay,

Steve Tusa

said, Thanks. I’ll hi. him, tell you

David Farr

it. Thanks. appreciate Okay,

Operator

next ahead. go from Please question of John will Walsh The be Suisse. Credit

John Walsh

afternoon. Hi. Good

David Farr

Good John. afternoon,

John Walsh

the Wanted us to conversation already you kind the discussed obviously, of lower kind range. of Automation around and the underlying of at for to little high have a range X put Solutions, have what then, the X here growth could end of end that

David Farr

take will I shot. a

range would cause one the off of work us couple see fiscal that it say distribution would of key a the would and year, the That's that I inventory now, area the at on channel. could put they way the the think of lower that a not is right clearly. issue end one If come building channel pushed to of that lower end the back takes right the lot have the we I that the be of get now. won range all that it does we some pressure also months. on booked out projects we're and

stay things, but work of now. We out world done this sure about we’ve right push and a that feel it Lal, I two push anything lot range. we're shove within going we that in would the and are back those – but the make So us see it, to want? good around you

Lal Karsanbhai

I agree, David.

North confidence I the into and stabilization half think in I more market the in to upstream the range. the miss We We're in first watching second half. call, slides the the America it versus that lower cycle slip based the carefully. have businesses We half. improvement turnaround that well could discrete backlog I impact the I have second have us on in us season strong however, will our end as to That see today. moves – the longer we as puts in shippable the confidence, what that channels. upper

David Farr

Okay. John?

John Walsh

a April of talked you kind for just In commentary. And automation Obviously, upstream about broke gas. December, markets thinking then you've about your out of bunch orders oil business. different and Yes. the

are accelerating? discrete. talked the deceleration? you refinery season to we of about plays Is out? is turnaround those about some talked there that for I those maybe kind just general on color and kind how But of think there those parts mean midstream were us. You've if about other of LNG submarkets think the you buckets accelerating? Or is

David Farr

guys been that break out launch I to can. if back we look point that it’s it of being best tell I the lot way. and -- they expansion see some are this the companies. us from did first We up. XXXX. just power better projects had We're the the in pace the in their at The looking strong and big which than -- more a have upgrades bookings and hit our see initial down it, same work you, the a We coming initially, and general try But sales will their there. refining, LNG investments very a not we’ll brownfield second seeing The better worked products do the picking back half. We time. business we at so in see lull petrochemical have area. stages of definitely in therefore, early we're power XXXX at of now spending Yes,

point the in So, But time. have of around only pace at the color little world. spending we upgrading a bit just that's the in we about feel we're seeing business and this better

Tim Reeves

Dave, that over in but an we're are midstream is around moving built there the The pipelines and I'll that now built, the capacity very echo Dave's we in have right being uplift working that. North instruments into the equipment But less seen there's I at the than strength, we have that see pipe the Obviously, being on LNG particularly, add confidence activity strong. projects versus wellhead, are reach aggressively. see as of markets comments. FID across the and quarter seen the America. We is one, our midstream wellhead. activity takeaway Clearly, we

David Farr

Johnny. you, Thank

John Walsh

Thank the color. for you

Operator

go be will of question ahead. Andrew next Your Kaplowitz Please from Citi.

David Farr

Andrew. Hello

Andrew Kaplowitz

afternoon How Good you doing guys. are Dave?

David Farr

Not too bad.

Andrew Kaplowitz

for a just you because a do year? in is the oil end prices Excellent, East What probably think I for down going last mentioned Middle the only period think question Bob. of at brief you looked market dynamics. the competitive on

months. on come and think can next commentary If Asia give more with back market could along can you elaborate you you few some the why there us Southeast over the

Bob Sharp

Okay.

see space think crunch, normal of of market pretty get other the right East some Saudi. then the in by to our in. if places releasing lot China Chinese where big is and find some and companies spending They're the of a The kind normal or they're you technologies frankly products aggressive business will. been customers of the for government activity And into Middle we in with would a thing other And government also the that's projects. East, there's things. disrupting kind little now. c I say, looking kind there aught going difficult. if of rotary And The some and stuff the, heavily the they're very I we a out to the and of for paying especially Middle bit and is tightened in up driven

in really other everything just and start and of So, again, those it and were have it it felt It started was I two. like up. stabilized Asia in the for East. business Southeast, OEMs up. there quite frankly, January moving were lot a shipping back We the to Middle the it's Southeast hasn't than we of In combination looking we mean moving is a

second the awhile. major upturn connected. half. are been -- calling for stability. I'd really in its we're quite it's And And a It's two for any So, closely say really not just the down

So more the comps just start than getting anything. easier in the second half

David Farr

money getting in bookings And lot we're we Lal of as Middle now East. the up the they is see And a but start question it. said, to starting spending the will free

that seems And positive we initial Andrew. feel reasonable a think little a than half, to right second money and now freeing bit why that being that's about better up I more our first the so be feel it half

Andrew Kaplowitz

businesses? the wanted then And X said obviously, think you about, terms What ask do here. means you very slowdown to the Dave. a down cycle KOB you the in closely Thanks of watched of you past, both in for for slow itself that a I worry a bit can than larger the that bit? margin you you as you the move projects mix do KOB project lower mix a for right your and Obviously, KOBX slowing down that do margin impact? offset actually to X. And is start that little KOBX see How

David Farr

again first good. answer month. solid It’s I'll had still good We a very I'll from perspective, very let X our very and we've work. this had clearly, a month, Bob. Yeah. KOB The

-- okay, be KOB not weaker strong as fourth profitability key the issue cost taken have particular areas standpoint. why are in X us clearly break in U.S. spending has from the Lal on right in and that's will they the the quarter. I is as may That's the think assume in tap in the for now, third actions teams We his certain and taking guys, unique us to hurt a Therefore, quarter. a Canada.

year. We of relative, think is actions and strategy therefore, changing. going we in is year we're out, take back the change as asked us, taking that our do we're then if we additional laid if into now. profitability what KOB profitably why because we it story second actually to above cost first going in that still half and about we have fact does we The the still that able laid quarter been believe what me tapping that out don't business to business right a the that two So I'm next that means North mix does a in then first I'm XX%, to the to grow why he's our if Control still at how watch Final third that him you coming our are little watching come business has But the to That's watching going the very feel Lal’s America, that's in Control any of this gaining have and quarter way quarter of a Final doesn't fourth it and got good now. tells that. could or it. quarter, quarters Julian the next I improve want. I changing. that level And back question not that's the move fundamentals to unfolds competitors come we mean cost protect And, half X actions our we're back bit it because lot closely pressures right does we're how

do Lal to? So want

Lal Karsanbhai

accretive also relatively to for programs they're a margin X models. modernization, KOB the well. we structured aggressively; as forward. equally is The around service and But the a XX% around are it we quickly, very and business, number also business as that modernization very, watch those service that business No, as world, see in software programs MRO, important. just work KOBX service I continue mentioned -- moving with And a as – very Yeah. very organization

David Farr

to asked, the to asked. think going this back to then back also back pushout, Andrew project I Steve going you question going and what

X% of our -- of end you therefore, seeing X. a that you which that don't we movement we're towards that's time-to-time, a X% tells again, if of percent to going us to for put when see concern a out up that for higher be the And, KOB us. from If orders we do Lal,

around what if tell our orders watching That's unfolding we're or watching unfolding. it’s you So be communication and to the will now. that going not

watch timing KOB We'll going it and pretty important. to think X now real set. KOBX hard. of we be well that's I the have

Andrew Kaplowitz

guys. it Appreciate

David Farr

you. you. safe. best Be Thank the care. to Take All

Operator

The next question Deutsche will be go Please from Nicole DeBlase ahead. Bank. of

Nicole DeBlase

Yeah, afternoon. Good thanks.

David Farr

Nicole. morning, Good

Nicole DeBlase

little talk you're cut Is out with And respect should investment? are be a you investments. how that growth could a push XXXX? investments guys it of about growth paring about we actions cost to that doing out me into taking. maybe costs than the possible to that versus this So investments would what parse probably we bit rather think seems It to a

David Farr

X% much standpoint have we've XXXX. here. are them to I don't want say, I our important your timing that we pace And to ahead a to will is, were that but and two back be we'll these in out get -- from underlying try more bit of X% the clearly too they'll push that we curve think X% -- yes. away, we push it's competitive to order -- clearly a more range. quarters to not the go Priorities From perspective, a, at investments a programs, out be and last into running them it But little had say, the break standpoint. information would therefore back growth not in dial Yeah. from -- X% to our X% I

you bring line. them therefore, goes. this it's more them, of the back We're kill investments look of the that not into but know to timing we And of to done. going a teams are at Lal's how tracking As just acceleration

how that's restructuring goes do doing restructuring. this we the and $XX we why team business and business. to it you've it, slowing pulled that's But cost feel that slowing back our to are, to line down your we now get Lal's that's XXXX. were We like that's in needs million, We're so we it think in growth. of break We -- both actual And our that's with we need different. a with the investments side, done you're little talking out. need I just to what Bob's about ahead want it, bit about okay, this We're we get On just in pushing right do And don't reading it growth know structure, is Nicole. now. I That what right. I we to, be think and

Lal Karsanbhai

and aligning David. point at investment less, back we top how we look spots, business, us required pull in is in year think will look we to And see few how February, than line be at develops. timing. did the a today around the know, pacing right, the a it you the some we run We'll this, this as as That's of back

David Farr

Yeah.

Lal Karsanbhai

around the going cost side. the acquisitions restructuring around obviously, forward structure -- getting then, and the right for have we do the on And opportunities

David Farr

If of you given size imagine, pretty it's the numbers, significant business. can this

Nicole DeBlase

allocation. the the Thank color. was helpful That on Yeah. actually. really one I capital for second And you guess just

to with we're finished for guys You mean is billion scope that increase repurchases XXXX? Does done? billion that the target for the Or that there you $X $X expected full year.

David Farr

At in at billion. this set time we are point $X

with back Committee our are at topic situation full that happened. billion met again, right early set did night, rose the we strategy the say, will the be Finance billion this we point But $X I time. in. As going not a or allocation at Board it something $X to in it's whole discuss review it, would But had last we that unless to now do we're capital June. now, in and right up go review if of move we'd But set arise to and major

Nicole DeBlase

Dave. Thanks, Okay.

David Farr

care. Take Okay.

Operator

Haskett. The go next Inch Gordon Please question from will be of John ahead.

John Inch

you Dave. much. everybody. Thank very Hi, Hi,

David Farr

afternoon, Good John.

John Inch

Afternoon.

think in you if get guess, on form, the a depending to I get specifically orders wanted deal, a Emerson? to we what I for this deal corollary, we trade leads So ask you, think more the China do Emerson? for trade with if the you do implication don't is,

David Farr

us. a cost more we it's a think any more to would change for relative It investment – now, perspective, issue from growth opportunity. I see right of our don't be

would, But would cost clearly, an see pricing any advantage. don't too. We that change. a our impact then, But I get have we fundamental and reductions time over obviously,

it the that because say, side. his hear serves much we would confidence that, I business solidify will markets in Bob in better, get so on not as of think would Lal's some China, I

Lal Karsanbhai

No.

from or the confidence, it’s on now viewed autos but what the cautious would trade are China, definitely it's in, that people trade with form positively and you're notable or what from in help. deal, homes I think more investing right I consumer deal think, in, side, China think a in it’s consumer shape a on other you – definitely And I if things. depending

John Inch

agnostic pretty in get way Is as you're you're business, we a Lal, I terms that…. of suppose. whether don't then the or to planning for deal we the

Lal Karsanbhai

don't Absolutely. an from cost we hurt order John, get a will stated, yes. done. perspective, David a perspective, if From as it deal us

John Inch

part sense is Emerson, of anything understand going Got you quasi- dealing government my it. you are in what's are Dave, all any just firms a you're on then, is, the against question of the US see bias company. wondering a that? an a the And of as China, maybe over trying can Do get but customers or you here. just given kind still you there. growing that, on a like or of to this, government follow-up pioneer how American of with there I'm context and just

David Farr

in to at we Well, new I grand on two years person our report, that's as customers. couple our center. tech of I Beijing a opening, there a meeting We're this innovation the the an American our was and perspective, came government just XXth there. of a Mascom, page year From company. long, celebrating with she front And have number we've had long was certain relationship. officials

seen checks seen had not we government any. and our a perspective. like and have maybe anything not by We reviews that, officials Does it things mean more few yes. have I But from

localized, China. about very, in China very are we we know, we you sell design what we and manufacture As XX% of in China, in

it's eyes So open. we're and make perspective, ears just they that we treat, treated have something want but differently, And our sure. from to

as feel what's U.S. sure I now. I do, right I'm get is about again, to government. Chinese all good something trade perspective. the it do to right deal perspective, our So we a But done and out want But including There applaud the from their I as deal. with Chinese the constituents country. we the for same are talk and us China with appropriate I with him well working and an thing think best of wish for we'll And officials. come

John Inch

it. Perfect. Thanks, Appreciate Good to hear. Dave.

David Farr

All the care, best. Take John.

Operator

Sprague will be Research ahead. Vertical Partners. Please from go next of The question Jeffrey

David Farr

Hey, Jeff, how are you doing?

Jeffrey Sprague

you Dave. doing? Good How afternoon, Good are everyone.

David Farr

in? you in What zone bad. time are What you right now? too Not zone time

Jeffrey Sprague

In Munich.

David Farr

that’s good oh, place. Munich,

Jeffrey Sprague

a are so if power they that, interested. Yes, business, you thing is got

David Farr

I know sell to power can’t you’re business. You me believe Siemens trying

Jeffrey Sprague

[indiscernible]

David Farr

BS. the get Okay, questions, not the

Jeffrey Sprague

looking are you for Dave, quarter, last Well, players. baseball

need right, You hockey a this player, with QX?

David Farr

got some the a now. sport, right José. I some probing I rally now, bats It's right say. some we contact bats need I'm got as bit monkey more out. I need I out. bats. everybody more little

Jeffrey Sprague

little those and the what's in results? feel specifically tariffs that you us going though, in a quarter fourth the to help price/cost Can bit, you you're the with Yes. on kind for of expecting tailwinds there in

David Farr

as It's both helped you business to in us. now Bob's -- negative. the we second obviously, Frank look Lal's of half, positive And half business was us. first year, going be I'll and the let for have --

so us helps first quarter, second and in flipping have the third a fourth the in we the we're a quarter. bit really And quarter. lot little significantly the in In the fourth over -- but help

Frank Dellaquila

we expect Yes, would ...

Jeffrey Sprague

that it price/cost, QX? $X.XX mostly buckets, in $X.XX those that Is is evenly or spread delta three between

David Farr

on an the had $X.XX We bridge.

Frank Dellaquila

I Frank. quarter a price/cost. that Yes, in the this a we of both accelerates good mean out Jeff, is heavily to get do get price/cost it's expect tailwind the in Yes. the – hi expect third pretty to pretty into fourth businesses. We

David Farr

all covered. -- bit Lal's Bob to additional there's have pretty but close we more. much And If not it. little business, tariff everything a has pretty

if there, we that still all trying are that to through it puts work some so don't have have covered. and additional We President all. the that covered don’t tariff have all we in of think you I it

Bob Sharp

well, total got more for the positive Yes, neutral half first was Residential, pretty total for and in Yes. -- than & in the cost, but second price in covered, half. Commercial it's we've significantly it

David Farr

chunk bit a set. $X.XX starting the big in quarter that's second little it's of margin there we're to that inventory the the get from or particular. this second the a I in mean so, hurt out work here obviously But comes and profit us first two now quarters -- the Yes, half. in

Bob Sharp

second price/cost nearly perspective is from perspective half our first impact from to the our -- Yes, Xx half.

Jeffrey Sprague

X And you Okay, efforts out like Is you things PK -- a great. kind this your a KOB of factor? Do that's is that? And can you times. KOBX and wave spending hit the squeezed of by X mean offset internal Dave do think KOB couple other that being I preemptively coming?

David Farr

see down. give I We perspective. it need to of the go or little you quarter from me $XXX organization, it first down a a CEO and got top The and first think Word spending.” is from going let you you’re you out out brakes say, a place slow let’s tap billion about comes need global to happens. to -- say a of way what the we you budget got to So, on and slow take the bit budget the “Guys,

reductions you first you all The you thing all if United cost go look place at actions. It's the is in States. United because same can the control States cost

because The the we first the place have you the in go United in States flexibility organization.

talked is concerned about So, the is down I that little in what tap a this. word the came little out, slow months as they things in markets. a bit we they U.S. in they where tapped. February And tapped bit about was and saw I let’s last three The

at of other So, where KOB we look Arabia, distribution. if and biggest in top on pullback saw than in the United X was Saudi you States the the

strong and U.S. strong from X Asia. Latin in how belief the fundamental we’ll that. We're back KOB We're and my X KOB communication in held that unfolds. the capital seeing the build time if benefit fall where it seeing saw So, Europe. in allocation seeing to that’s in typically strong period in late in summer KOB in quarter that We're KOB we will up is, early it the X X back-off hold America the the continues

in because the X in it this, KOB If customer that's control U.S. you ever my volatile watch of we're how CEO’s base. more the for

Bob Sharp

going to isn't to be be X, anyway. paying this going KOB year It's X Right. because

David Farr

Yes.

exactly So right.

Bob Sharp

this money save year. doesn't It

David Farr

Yes. see That's how Jeff. it I

Jeffrey Sprague

Thanks.

David Farr

that, Be want buy they to business. Jeff, systems, if safe. take not you I'll care. And do I'll to want that's -- gladly their take I do Siemens Power buy controls but

Operator

Cowen Co. Khanna of be go ahead. will question next Please from Gautam The &

Gautam Khanna

afternoon good thanks Yes, guys.

David Farr

how friend? you doing afternoon are Gautam, Good my

Gautam Khanna

I answered. make wanted asked A am I and doing sure understood. questions to well. of I lot just

it Solutions opportunity net integration you, going still move given on in comfortable Project incrementals the to parts. moving have XXXX-XXXX what plus as Do recent acquisitions, confidence incrementals move through? you do we the with in all XX% putting you side, altogether we XX% plus KOB we're Just through have the timing that to of Automation feel still as kind X

Lal Karsanbhai

recovery as Yeah. Lal, This right going businesses markets about is that end and days, those next the four, very the within the bit policy are that around important in as the we're programs during in that rationale executing restructuring execute second and insurance EBIT in we around we we containment the leverage. Part the been we the on Gautam. what's talking little band incremental put cost half. of on Yes. of that second And we've the half in XX% get the in place do five a --

David Farr

us We issue to for the goes question. back

Gautam. I earlier, think asked Julian

out margin KOB plan got to If for if to And going half also we don't the have to a to the business to fluidity plan business. action. see core and of business, the understand X in there margin profitability. around going take understand laid and structure. you get because Lal that then We get We’ve have figure Lal -- are second X the come out we plan. can't that. and working They for a the acquisition. adjust they X year, we back we're but And how cost got knows with team a to to to the we're his the the have

here I us we this thing here and all our Lal’s flow. in and together got one about. Frank. and sits floor good the right as with We're That's HR Head with same CFO of his team understand does here Bob here jobs. And now. same are So the pretty fluid think we're

So this about his talk if But now with on. focus can right openly we'll team. we guys a to I we what's have Lal adjust going there. feel have And and can't get

Lal Karsanbhai

And a as second as the pressured in has year and we the felt on, the said pressures year us, little an short quarter on changed as we’re bit year. has having earlier We're a good the of good shape margins. a It's cycle, having you the organization David business.

David Farr

Correct.

Lal Karsanbhai

we recovery in very, in we on based do on we some fully at half shareholders. that it careful. actions what And quarter. April second there. saw And second to month-by-month took The do but watching that's the have very understand be positive. least we have what as we we But what fluid as saw And we'll based situation, unfolds Gautam,

Gautam Khanna

No, I get it.

priority Just flexible that the that’s how to or set financial water? meeting? target? the something how it way is wondering think come Or I'm you might goal about backfill. I’m I'm in just up there, of Is – curious a you around. toggle you'll guys high in just it if Board just that the a philosophically, early terms a we Board the XXX-ish you something that consider could you as and Dave be target as little if out hell more you wanted bit June curious obviously, buyback

David Farr

many to If share the less. acquisitions and the do If don't From see going a underlying on -- then rate repurchase we're right still a obviously and to -- this in this the business say XXXX we to perspective said case. the But when definitely question underlying bit last a yes, is going what's Well, now differently the platform let's believe I, Frank we to being? on ways at a year acquisitions, it have margins. target based about share meeting I me For have get now realistic Acquisitions is unfold growth little June or the Board this And growth a repurchase, okay look that we better can year. in XXX we it's have they my and talk realistic this. is say, no adjust. there. or just the we rate to year was it's XXXX we leaders it. as with see I then

to relative valuation look it. important that we and as long-term seriously our that We that how see going take that it's something we're we'll we unfold. know XXX and So is unfold at to

we it up what build the will happens see days. we here next So XX as

Gautam Khanna

it. Thank Appreciate guys. you

David Farr

talking Good see Thank you again. you, and to you Gautam. to

Operator

be will question from next Capital go RBC Dray Markets. ahead. of The Deane Please

Deane Dray

Thank Good everyone. you. afternoon,

David Farr

friend? How my Good are doing afternoon, you Deane.

Deane Dray

Thanks. well. Very

territory a lot know covered Just of we I here.

Bob a follow-up. For had I

Just in aren't clarification. depends the government on facing fourth heat a on pump do program? quarter. But the out? And activity comp heating think a on you China. plays that When – Bob, whole A commented tough you lot you so, how

Bob Sharp

June was Well, really China. for heating collapsed, when the have don't for of May, tough fourth better last comp. word, quarter, It now. good we the I a timeframe spring, guess, kind a no, of lack But in it's market

quarter, And growth not it that. not not against So talking on difficult grew single-digit last a The the we're are we're heating in so came – AC XX% comparisons the and pretty or some time we again, of dramatic recovery. cycle, out that quickly. fourth

It's it's really emphasis normal So reliant I'm Sky This the something matter not on dramatic. -- not industrial more project, a more oriented. activity on There's happening. just of is the the initiative. high still Blue

releasing the it's So government while. a residential less like the about around for neighborhoods stuff was Beijing

funding having comes a a you're got And companies you boiler.” where they to some then stop really a “You in areas pump that, the change will say, nudging in cut It's the it and for pretty this cases they down heat. little and some to So government a they're if or know, heat dried. using where either to zone have told don't in

Deane Dray

Got it.

Bob Sharp

buy And or in compressor investment. heavy know funded. that so for project's like a are they right working quotations they're OEMs. a of the now customers the OEMs Again, problems. the there's They see asking are retrofitting that. a times those not our – companies are a power full sure implementation, the boiler until just going We to for from OEMs, lot Again, region the with doing who -- because a

Deane Dray

Yeah. it. Got

Dave, in Where hit clarify in the going to last tariffs the that Just, would the just take be on you turn stand does latest your interesting negotiations. million. I were update And $XXX today? trade hearing

David Farr

numbers, still Tariff good.

longer. well I've As little the always August take appropriate this already back, you July, if know, a you was said going was thing felt go to timeframe.

so, I've believe we'll deal guy done. the publically the said I call thing I and it still this said been as And said, on here. never a get May, this I in that

go meet to take give-and-take. think really and testing August ahead are more to will I the go But they be week. don’t to this parties happen -- period. And meet to boils this and is going and still both I -- think back a couple until I'm the we'll times. – forth each are believe anything the glad – issue And think leader I the on – hear I going time

I And get and done will so passed something it's breath. believe can't be cry my and manage. I I cost -- but we do with But hold got sit eventually. I through will here the that believe do and to deal it them. have that to

I need we’ll issue with addressing we're than a from – glad country, it the We on and on and so, a be I'm And think, this now waiting. to as company, standpoint of this with issue. get

Deane Dray

Got it. Thank you.

David Farr

Thank you, Deane.

Operator

final question Stevens. And McCarthy Please will of Robert the ahead. today from be go

Robert McCarthy

everyone. afternoon, Good

David Farr

afternoon, Good Rob.

Robert McCarthy

is got One two I and one form is questions. substance. of So a

about could the cash acquisitions walk historically to leaders is of the first, for business So ask of have particularly the And a I'll what businesses, EPS have conversion opportunities. conversion? the cash the around just maybe are way maybe superior through there one talk you long-term context in substance opportunity, your target been? for the you just above a And of

So high-quality short, that you strong, $X.XX a fall number. number to you really support a even cash very might have high-quality as $X.XX could

David Farr

to guys take You a want shot?

Bob Sharp

strong. & for mean the single Residential from I side standpoint, capital the The we very in working Well, digits. obviously margins are run Commercial

Robert McCarthy

work. place the be would acquisitions Your you

Bob Sharp

to from in a And working combination terms now. DSO we payable & change not Acquisitions, working capital line standpoint I change. right Emerson Test, Textron Tools more ahead are Inventory, will buyers significant dramatic is paying. with versus a a what capital point. this at of pays of with that's is what well say

you been to be say would So for say will it's and conversion, I would cash commercial/residential outstanding has outstanding. continue

David Farr

the you've is I acquisitions think your recent years work in in point. done bullet the

biggest I think Lal’s the got got that’s the opportunity. one

Bob Sharp

we No. present about do and to at continue doubt you will the no of The Rob, buttons. it, us we very high our that, of drive be pointed press to automation. run more across out cash I as But as a agree. conversion acquisition opportunities those levels

Frank Dellaquila

But run But Rob, mean we'll expect above get acquisitions. always of of for from XXX% and continue now efficiently we'll we opportunities take better. to ways We'll to to do flow, and do free well flow just right the we think cash run continue I pretty this conversion, the advantage we that. can is look we I improve cash We it. Frank. consistently that

Robert McCarthy

a thank Well, a the different that on for have though. on little call. this kind you form, and all you for I of Obviously, thank Dave, question this substance call. is

your put to business leaders the forefront. You

cost lot about takeout, You detail positioning put and for restructuring then a of growth. in

Given of its would here, are Thrones, Game a bake-off happening kind you... we seeing season of or how last of

David Farr

I no no No. no bake-off I going on? going bake-off. not am bull? anywhere. going kind anywhere, there bake-off. what There's Rob of ain’t there's No,

Robert McCarthy

I get was guess to on all raise and phone, or something the leaders to this prompted you seriousness, in environment felt your profile? is the you But the by just this aggregate needed

David Farr

this, communicate One, what importantly, the Bob same platform this. myself did unison what but think at today to microscope we're one we operating standpoint communicate sitting you the investors, need thing with Frank the it’s the I have a it's here I for and the we guys I and thing at don't we're to how both leaders, can well. from under to felt It's in of -- a it everyone I in These and they baked-off. investors for were side level know I also and me and here that and Board given to sell the important trying level. then businesses know I extremely we the for the this they're I February chance to can I perform. and that have very are that that through, sit They a plan. talking also engaged two deliver Emerson. the the thing talking for to leadership two the company be working very changed. they go reasons they shareholders. Bob’s engage plan’s did thought both the to consider deliver of here investors like we the also perform to very chance comfort It's corporation, and two important with important business, been give There's explain Lal, me experience -- felt whole laid for to board and this this, And the that sit was for No. investors there out and at them. have And and a and their at, know the at Lal interact

help by It's value, way, So trying decision the a about XXXX. still to information on all And XXXX it better to was Emerson. make capabilities not have of all you long-term to the José. yet, it's

Robert McCarthy

Understood.

David Farr

friend. want I on as my It to I and we Bob, joining I care want thank And Frank, and want Tim. to going look to very thanks I a approach and – just, strong was chance us. thank to chance everyone Lal, QX everyone and Take execute. a said I organization wanted earlier, what's thank just different for see to I to the give a forward a we have to as want

you thank everybody. very much So,

Operator

has you conference the gentlemen, attending today's and presentation. now ladies Thank concluded. And for

now disconnect. You may