nVent Electric (NVT) 31 Jul 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the nVent Q2 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions] I would now like to hand today's conference over to J.C. Investor of President Vice Relations. Weigelt, is Sir, the floor yours.

about are to you, our you Commission. quarter business Weigelt, Company's update XXXX begin, that in quarter future to Before about Sara and Zawoyski, such any outlined the Company's Vice Officer; as statements Financial performance Chief everyone the and remind will Carmen, Exchange welcome, the press nVent's the uncertainties, provide as call the are on as earnings made COVID-XX made also nVent's a forward-looking Today, of results our let Relations; statements well risks second Wozniak, and second we financial Investor filings release our Executive Thank and today's President and Beth risks Officer. call. me with we Chief I'm subject J.C. and anticipated on details statements Securities

today, in to appendix time or statements Company found made will Today's are the the in non-GAAP reconciled financials undertakes We'll the the call over And the by References turn of our and Investors are webcast website. be statements nVent's have results prepared is Actual circumstances. reflect obligation no after from for to to which differ accompanied I could questions as anticipated presentation. remarks. Forward-looking of section now, Beth. to can presentation, materially results. such publicly subsequent of a update events

thank morning J.C. you, joining and Good for Thank us. you

our have and thank adapting you a we of continue extend special want through all new I around are are of the to We you safe and you that navigate who nVent healthy been as to working. hope to those who and a way resilient employees, to pandemic.

by truly and stronger. to first focus nVent. times priority Our employees go these collaboration a any comment on employees and beyond the dedication. will our to color in stands their tremendous our want grateful and also remains with we has of customer running. society. stand have value first and injustice keep against living want feel nVent in commitment our We our effort, are putting I I to at racism form. with others marginalized. am inspired and injustice challenging and of any people been who our racism, all and that our been business in black kind. in The safety not inequality to of acknowledge inequality well-being never tolerate I and community above make And and

racism. engage as part employees We have in our launched to a effort of dialog circles across nVent an listening on

We have made the talk and we will act.

like quarter Now, Executive safety near-term priorities, I Slide our and of on to focused titled Summary. which focusing second to remain presentation, on X on would our We turn well-being of employees. first, the the three our are results

customers serve our Second, stronger continued a to critical support nVent of and during make take proud infrastructure. exit our to Company, positioned crisis. business I'm And to the quarter. third, operations the execution actions well

if investors, asked time. ago, you executed that perform downturn? will see review a would nVent a years spent Just think have second challenging two in and you been I during by we performance, unique our quarter always well how we

adjusted decrementals keep We supply plan free disruptions. teams to generation Our and conversion, chain operations conversion. with XXX% our with flow on running executed managed cash minimal strong

digital our These were out cost including launched last we actions to were addition, second performing acquisitions. new initial we well. a which point we acquisitions. excluded the impact We XX approximately track from executed laid evidence that. expectations just actions on In made impact were the do of and are XX%, on invest integration negative to the X than better of continued the to results, We In quarter from transformation highlighted stronger and as taking our view our emerge path a products, we on progress we and April and are acquisitions these XX% quarter we for growth. on decrementals decrementals that

each We performance down versus negatively Second in improved demand impacted XX%, cash quarter ago EPS by flow at COVID-XX. free segment's as our a adjusted was and $X.XX. sales were came year

Our and during acquisitions Eldon recent well quarter. WBT two performed the

We continue the XX% sales to a to XX% mild of target moderate for to down scenario year.

countries beginning additional More or open We view our back seeing to broadly, in up. trends verticals. actions states cost recovery given certain are improving we prolonged are of are a taking where

Specifically with networking be management, In cable detection, other trend. proposition in weak. also rail trends. and across management. is outside CADDY continues seeing commercial, are the of the trends long-term performing verticals growth, we to power enclosure Utilities, integrated with prefab and liquid to centers and the tied within improved orders and a We're solutions relative value a well, cooling to are And have our solutions backlog double-digit networking nVent and solutions, data business infrastructure leak improved reopening economies and seeing verticals. data strong centers our seeing globe, inside

such there an food handling continue recovery. some Although uneven areas Overall, more and material remain beverage. that we as are resilient and expect to

manage levels spend. companies trends and As manage gas inventory and Similar remain weak. their oil quarter, partners to channel last

balance please turn some results year. call quarter to actions detail we the emerge our our our orders three although on the ahead. Although on Sara, to Sara, In COVID-XX, of the to quarter. Thermal stronger. cost double-digits second experienced backlog decrementals out actions summary, strong our We're the some and over related share I grew go and managed and update will I'll project priorities, point on business confident on our for in and generated executed pressure cash. are near-term we Management taking thoughts this

Beth. you, Thank

Slide results. and turn to growth. Sales The about relative on acquisitions declined to XX% of and to was XX% second XXXX last basis added X Eldon quarter million down reported a review were $XXX six Let's WBT year to organically. points

declined in consistent fairly the month, labs sales sales improvement Looking were at and XX%. quarter, with at down orders the during by year-over-year marginal monthly trends organic Notably overall organic daily June.

decrementals quarter XX% in X acquisitions. point all negative including from a impact were Second

both So, growth. in to better we well to X strong and while year versus than and approximately outlook. a the turn Free organically. plans cost quarter for discussion improve quarter scenario Starting prior conversion Slide sales our continued future structural including $XXX million temporary We our flow actions a XX% second of cash had in XX% please our and initial of Enclosures, executed investing on Now, at XXX% performance. with segment declined

competitive verticals, impacted pockets we as relative COVID-XX demand business. negatively in negative across grew rail. was some and While quarter Price we did of we in strength low the double-digits see most new won

basis expanded on basis our on on points forma integration pro XXX basis sales declined declined, segment half in The to and of volume, sale to and year. are we the points. margin inefficiencies declined margins. Enclosures costs impact a XX% Eldon lower the related well improve return increased efforts. over COVID-XX back negatively of XXX income are and expected Decrementals impacted While track with

$XX organically. Moving million Management; XX% declined to Thermal of sales

As declines expected, delayed of or due continued in saw MRO to parts closures site the deferred steepest the industrial spend. world and

our business to was execute on backlog. down Our single-digits we as continue project

faring part energy revenue the of in backlog bookings. we exposure Recall, In sequentially project be significant better Commercial we continue quarter. declines our vast this seems major win to grew of majority is the as environment. the to downstream first experienced which year-over-year and addition, in

our presence was and continue our Segment offering. XX% reduce saw XXX fixed a a our component. we However, make channel structure to basis progress We commercial in on recovery to and a higher have good June with modest are and significant out. and lower commercial as which tend in sales mix improvement down margin points MRO in realign industrial actions QX due business, decrementals saw read to our return from the to declined sequential expanding income volume cost

Now An declined XX% commercial million XX% EFS; vertical, sales. vertical by at from a XXX quarter to COVID-XX. points, sales on EFS contribution which area of was had in the point was and was down sales XX%. remained site strength the helped mainly to Segment digits EFS on for almost inefficiencies return impact of accounts and productivity income price particular gains, strong organically. operational of from XX% and strong of in which over shutdown. grew The offset XX% utilities COVID-XX declined realized basis due but nearly mid-single and negatively $XXX

cost focus on continue on to lag continues $XX X. the digital we Reviewing took structural strategy, we in Turning product are we $XX of additional and well a discussed transformation. team actions our Slide inorganic The growth savings development earnings more we to million temporary implemented the cost second aggregate, cost of original well uncertainty we April include first the extension executed the as changes. allocation temporary through will an a combination as actions remains, of on the to with measures growth and The versus invest restructuring now approximately actions. quarter capital million In call. our actions. targeting near-term new These and

dividend component returning a Our shareholders. remains cash key to of

M&A, share building on funnel, based and and in be the market buyback opportunities. improve. are conditions of lifting as that We stock focused so program, ready are we'll are a position -- continue actively we back to our stock to buyback on we buying suspension assess conditions M&A relationships our market On in

and we each allocation to As leverage. highest return, will goal for with returns to continue the generate always, liquidity evaluate managing decision the the capital while

Position. Moving to Slide X, Liquidity titled Healthy

is slightly revolver. end of was an on above quarter quarter $XXX first ended quarter. the available Our million which net the leverage additional the the in ratio $XXX times, second with X.X at cash and million We our

this remain well liquidity We and maturities activities have until as generation limited position, confident our year. XXXX as cash our in

team progress. capital, good our to Specifically working on continued make

from Flow. back and and grading to cash how uptick in to Our a working given steep is but is year. Sheet focus intend see periods. working target the to stronger X the quarter the improvements inventory did benefit progress another Slide in of On half example on taking early to improve in capital an We driven titled future made of the decline continue opportunities, this in capital this generation our demand task we pandemic. Cash in Balance approach data force emerge structural expect This to

$XX mentioned have CapEx. approximately quarter, sheet and as I $X seeing the also million and second healthy dividends, we to deploying we improved on earlier, are generation. to million We cash In a preservation, liquidity year-over-year while focused balance

our at first business continue and scenario manage Moving we to levels through plans Slide presented organization. actions April, we all of Consistent to the X. in what with

quarter us couple organic believe sales pace remains believe unclear. until we conditions us, the guidance continuing worst stabilize. the recovery to While we data improved. be down points the full from improvement reasons financial can XX% our to of XX% quarter. gives an the near-term, sales are is suspension second we shape do the behind in the More so expect and to third range, A the that Accordingly, of market

declined quarter sales second orders than less in down First, the XX%. and

both trough. and orders mid-teens June improvement down July the from showing were Additionally, May

We quarter also saw an second improvement trends. in versus sales July

in quarter We to in the XX% be acquisition. expect before decrementals XX% third and further of to range the improve to

As efficiencies cost to actions and out. improved read continue

For the to year the we scenarios. mild and moderate continue full sales XXXX, down see between

we we at year, improvement segments, execute. progress the in we expect albeit ensure and down ready and of the modeled year-over-year. rest plants, have place the to are enterprise, each Again, that our our we are have of plans sequential we still segment As each scenarios of help through in at at these

and in scenarios points close expect $XXX range. interest will not year, to range few year the in these be shares, any We to we from be this other guideposts buyback our acquisitions. now a share $XX did rate for to exclude XXXX. a XX% approximately diluted more if On reminder, count XX% A the million. million the As full tax impact as

decrementals, challenging to and emerge. this cash managing back that fast. am recovering and pleased second This on comments deliver my appropriate over the concludes environment. Our to actively create quarter now are focus the a quarter our nVent and results turn with I second driving will execution, is And as call I confident Beth. amidst we actions I stronger and the am on taking we

and the developed well on Thank forward, our our have I'm you, to executed our priorities Slide during goals. checklist start emerge customers Across quarter. stronger. environment, on business to actions detailed work these we the keeping employees, going Breeding of near-term safety executing a safe to XX, on COVID-XX a Sara. and ensure suppliers. our We moving facilities.

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and programs focused our look report my commitment forward updating progress foundation a diverted employees, nVent to summarize our we're foundational in issues grant a supporting confident meaningful With we to XX% am stronger call proud Q&A. I'm are accomplished on is environment. waste emerge of I To the a this operator landfills. quarter. actions well I pandemic that to of the the education nVent awarded turn nVent. Our STEM on shareholders. today, We in youth executing from from second to and and the in now what our to start our world as comments to around you This in challenging over important customers progress. taking the we will team, driving step

question. Capital Thank you. questioner with Hammond go the [Operator your KeyBanc line ahead Instructions] Markets. will with Your first Jeff come of from Please

Hi, good morning.

Good morning.

talking a just the on decrementals So nice the in margins, performance quarter.

I the Sara, decrementals. going the is in you what about to else the simply, bad Can internal just improvement the said XX% the informing sale less quarter, you Is in what's think restructuring the -- and third sales talk XX% on better there? or it

Jeff. Yes, I say would that,

So a there. of couple things

to hold would EFS expect and cost see in Enclosures take factories. in and COVID as to of to the would we really business we mid that costs continue then continue to that to we of marginally worked expect but improve some in low having range. actions. kind a some one, largest secondarily, get to largest -- price decrementals QX, of So to improve really improvement hold operational some perspective, through From that 'XXs to we Thermal, well. some on continue a would And our productivity with improvement in the expect expect from to related better disruptions expect leverage the of expect those

where you that we've you million our million is $X of productivity, includes productivity. QX That at a there look just think of $XX net got that, I walk, if see example good profit right. overall

roughly see and where productivity acts $X by million little bit million you've three you And of so almost easing a $XX QX offset that QX. inflation inflation productivity from got of that's

us ramp expect decrementals. to better to continue giving better, here QX, we'll in that So

the think out from thing, thing I to to Jeff. other It's standpoint. acquisition just other one the point

September, going acquisitions Just overall that QX. impact lapping to from to because be ease do we're Eldon acquisition in expect bit in the we a

And you then talk mentioned June just about you segment, called EFS excellent. you by I that and think getting order trends, Can Okay, the particularly? better. July with out

Yes.

I about order we EFS thermal roughly So range. mirrored the in perspective, cadence of kind that more what The say so I XX% a side. the down and the a of sales talked range down mid-teen would quarter. QX at that -- lot in high Enclosures being teen, XX% one on or say was was orders so of down saw we would on side from

that April that EFS more to So better that the was more Enclosures in trough course May of a the got trough that bit And timeframe. And timeframe. continually in was it thermal at If sales bit we July better project extending about looked that. given talked mean, even I with than performance more, July. the that we into a just of dynamic specifically, quarter.

for saw So those that what mid-teen range, as well to July overall. rates were we QX revenue for as overall was than better order June similar and that in

If perspective, we better here didn't QX the But expect job the and thermal was a I point because be nVent. it's QX. you that that we than for perspective. do ago, backlog look we'll large orders at front up to being with helpful a overall year-over-year Thermal sales line talked was we as said, very to that order And really Arctic well. of about the do LNG was fronts, year even orders from in EFS Jeff, on expect a perspective. on that from QX in be with be revenue lapping right in that to as a out, from negative both enclosures a both segment in and bit worse think

lot. color. helpful a very Okay, Thanks

Joe Your Go with Sachs. of next ahead. Ritchie line question Goldman is from the

Maybe business end kind the everyone. a out, just flash just for for this rest be helpful starting get expectation mix of can about you really thermal just growth to little were around talk forward Thanks, of by to market -- good what quarter. kind the out It'd And of parse that the you is going what can we, bit commercial did. morning some year? color kind your the MRO of

third remember, third MRO. project, to thermal a is and third, that roughly if you business of a perspective from commercial, Yes, more a

about we so only And down a business talked that actually in being single-digit. project

XX% if On overall QX, due saw and will. site you mainly of the some side, greater we down headwinds MRO probably commercial some in economic closures hardest the than in did we range. And commercial to see here then of hit, these

digits out the Look of kind And it well as we that so build I we an back year. as, as sequentially. say to backlog perspective, as year-over-year project that's would the at orders how saw on the again actually side segment of from double strength continue half well overall. up

given relatively do resilient, business continue going backlog We that's expect albeit delays expect at be pressure just execute to spend slower deferrals as we think continue to to improve, and to MRO, to well. some against under be that to well rate. and commercial a more as continue overall projects our as we we the

super helpful. that's it, Got

forward. So negative, sounds probably comparable it a why be mix like, will pretty fair to was already negative it continue think decrementals it. going sounds to will and that quarter the which way about this be Is like is

Yes, exactly.

the then, And if bleeds I is, Okay, actions last then this into quarter. provide is the that half any year. in for if thinking that be And too. a cost guess my about portion the into expectation around is actions great. cost then, helpful maybe And came additional of XXXX what second I'd be there the additional actually is question of the color how could through cost out. much if you just the there curious -- second one would

Okay.

of break that down. Let kind me

tech our way -- actions actions just structural bold. temporary. we we're structural it saw these year. of some look QX into coming million overall of extend well that and full temporary as for in we the QX We as million $XX some of the at over targeting and So by play out as the $XX If of

structural. is million million, So on that side $XX million $XX is the $XX temporary roughly and

and half to have $XX incremental $XX that it did the roughly $XX we structural. temporary taking was that, here, from So

that that talked was million this about next piece roughly this that So million we of carry of what $XX million and we would $XX if include did structural structural just $XX more year is last you simply from year. million April, million year. and into to $XX last over at of $XX carryover cost looked

that's coming the temporary key cost part So, to fold into reductions XXXX. offset we going back think in of these helping a be of us some

Yes, a sense. that very makes lot of much. you Thank

one at And as say temporary actions, we more these point, likely there back, would doesn't look a there I some come it right. of is, is that cost portion

So travel think about we're it as traveling we where to levels probably we're all working virtually the was. and less, back get digitally, doesn't

as marketing, shows we're Even about we it trade doing think digitally. just and and more all

I think P&L back find cost we're going to into come we forward. some temporary our as look that doesn't

but that, evaluating still that to have. we're that's think we're another going lever So I

next RBC Deane will with your Please question. Capital of with come Your go Dray the question line from Markets. ahead

Thank through Could get how on of the morning, also they color you. Good quarter? everyone. the we progress then the geographies. context And within

Sara. is this Deane,

for I up a part side, And that most about overall most cadence, a ended organic that perspective. the from in roughly the we down orders sales perspective, saw cadence if of basis. perspective I and North earlier in on reflects that on you your say an an and down overall APAC the XX% the relative from flat. EMEA improvement. And would will, geographical We a bit sales America that talked from the So improvement

Europe? about How

of performed down and what than heaviest, better EMEA So, EMEA was North in with a America. terms bit a right, XX%. was America -- EMEA North APAC a less overall bit that bit flat. down so was

to to planning. decrementals then go on And give you slide, the it. the Got and scenario your back where

we point quarter. up the quarter I this September, know not Just in you shape be I anniversaries impact would of emphasized third the decrementals. terms the guidance before of but does what today? you does Eldon X How that was acquisitions, know include this understand impacted for and M&A that in said

Yes.

that Yes, the about acquisition on that just decrementals be the in to in X expect given we So Eldon QX. impact lapping September. of points

one. real just And That's helpful. last

brand Eldon goes I be thought talk mean approach, would Just, the away. what's and value about there the forward. Eldon we I going brand but

the does and that? So thinking what's altogether it disappear just behind

it as to does go one we including around customers part have overtime, brand did market that the thoughtful support And a world. we is very have of we Deane, of Eldon the that the some team. to assessments Yes, one and disappear is remember, opportunities global forward, OEM with

And our customers that is a with from so offering But website that will and brand. there we that Eldon transitionary lot to needed to allowing references do cross everything material and Hoffman. to you understand between unify of is that see those

it nomenclature to put very a and global we have So strategy that and place, OEM world. in thoughtful of products one but branding a approach ultimately the to set enables support around

That's really you. helpful. Thank

Your next question your Mitchell comes Julian from the Barclays. with ahead go with Please line of question.

suppose level guess something macro in the the that uncertainties there's would scenario on the Friday. the down, sales you organic that's consistent I put with or realize balance a for the uncertainty. specific the Thank first mid-teens see scenario I timing out you. moderate something QX. to Is guidance energy out you're that as environment, backlog with Maybe reflecting in broadly. call fourth coming And there is I imply, And of question year. it, this half mid-teens lot and of of how the thermal Happy implying We're at of the more playing just Financial sales and around But year perhaps sales. or a in mild the on just fully that it's you quarter it the scenario, formal not first the

specifically what sales should be second the expect and understand on to wanted energy, then in half? yes, done to we Just that

Yes.

your to think, question, uncertainty, I I mean, the some just this is of right.

recover just pandemic down the spreads which to some to spending. steps and and up create to caution as in open then take economies some some seen we've So -- areas things close

said, think So we've it on some say and gas that those just going markets, going forward. would oil that though weaker. is I uncertainty be is of we as that to about as expect end we

while Now, that CapEx business be we're is have there right. be MRO project likely going to to just relative to weaker, we weaker. strength, spend expect

have as we what our that's in outlook. we've factored So about thought

suppose I -- the capital around secondly, then And you. Thank deployment.

acquisition balance the Your very a few anniversarying Eldon is not weeks. the levered, sheet in

got do macro sort the just said environment the capital you've deployment. bandwidth But the on of to uncertain. you is more understand So as

of us So the what on to How to scope expect acquisitions maybe to XX be months you understand investors or is excess months? sort buybacks over could cash the from here? aggressive of help next spend six

Well, what's prioritize first and that best capital. and our cash, always on you answer growth. want always is, for, to I And know, we're right think of looking use on we the the focus

very a is it challenging that, said having Now environment.

and front, there funnel -- so working And and to I just uncertainty our think are right. the is on as relationships what feasibility, M&A

As you think an about to acquisition. ability do the

that. And work to some going there challenges is think so to be to timing that. continue But going I we're to

just evaluate that we're buybacks, comes share et going then of at the markets the when So, cetera. to it to look certainty and

we the we're like that and some we what we that cash opportunity got to going is believe the nice we've best use just we on to whatever put sure what as market. our So optionality or make assess is

Great, thank you.

line your go ahead Graham Rosenblatt is question question. with Please from next Securities. the of Scott Your with

Hey, Well good done. all. morning

Good morning, Scott.

look but the Sara, wanted to was did Beth. Sara, happy fine. why back It like maybe that? are then question go like into I the of it, with and more something raise motivated sounds and ask cost-outs. toe It with a strategic you you decrementals what off

Yes.

some particularly So as side. gas in Scott, in well space additional areas some industrial talked about we oil in specific the a targeted need and in take in on as to structural the April actions, the

our incremental our So well us that framework. that -- fast believe to within as really enabling decrementals actions position manage well. recover us to these But also we

well seeing, more help select actions and may would that of inefficiencies as What be as addressing offset some really I recovery, as sort the these to allow we're and of in maybe some COVID-XX say an So, cost and verticals. that thermal example. we incremental these think of us costs prolonged of Enclosures

from, Got you. a quarter the to some enclosures particular of last about Beth, businesses inertia know, to strategic. thing. move rising, know the on two end and catch you of during couple healthcare, just markets that We was you quarter. sort buildings Company's how you on where where talked are buildings better type of to more better in serve corporate, and how transition be I strategy that we you this hospital, fee there

Yes.

doing -- well. points around to CADDY think to as EFS we right. is, our there in we we're we then say, this environment, and about would a a As think one I easier business COVID what about, strength And proof think do trend, more particularly I environment around growing guess and we we've the prefab. contactless pre-fabrication is what continued with we're that of what install,

other verticals. for would to for areas. just that say So their application or for beyond we another office into put data networking business. other CADDY, at of in we And at CADDY we buildings to from in that continue are, look I these expanding effort how and that as also us, space, just looking some scale particular data portfolio

in how we terms So and about think a terms those propositions that of market And out offering lot that have. of in product then we there. we the just value get

to portfolio how markets. on that we broader reach a work So our we're positioned continuing to vertical

process or you? bit education that Your obviously sell is end markets, direct to a your easier the do little for those to would which already distributors user data

Yes.

to tend all markets. those distributors access Our

strong For very us two of things, EFS doing a have we're it's such that we particularly a program. loyalty portfolio because in contract matter or strong,

So sessions, hands. mentioned get get do these, to We their it into couple things. a ship we these products products. training of We I virtual actually

value applications the with proposition. these sessions can tactile very and it's So be it. they used. can virtual But else products do we where to talk What's also play about

the those all our in benefits direct to the the channel things, explaining products it's with and working end the So applications. them then the of of and and value user partners

tell that quarter. maybe Got within centers, strategies for specifically be are the of hyper they in But of the may you more you more how broadly, growth did question scales? data lever me. the data some your me Data you. behind center and better business like it the or from you market businesses guys, forms keep could to Last to to one

Yes.

and I had us, the more strength, down at got for So and in was would networking shutdown, right. relative solutions But job although quarter. look we say that sites data it

you getting during and when of contractors to for everyone's comfortable getting etcetera. is that office, if that return there some So shut installations. some of about I the got down all time mean, with think on-site to quarter do

racking liquid up trend our long-term have to But partners. integrated I be where tend think a know, channel arms the favorable. smaller the the and we not be would which that's more going we're focused. more to tend systems is for we channels, of to more in tend solution we still system right, can integrators So, We to do say all with here we tends And a have we have, hyperscale. more through sales very levels, really us, cooling. through do those dealing terms you of most We in with and but hyperscale, targeted distribution of simple from some to not --

Understood, thanks.

Thank you.

And line with King. question with from the Silver next of go your CL comes David your ahead Please question.

Yes, you. Good thank morning.

morning. Good

hi. Yes,

a what me looking to Slide slide. still for changed scenario and looks has you're your X, months three wondering, what outlook ago, kind just planning of three maybe at scenario pretty you, I'm internally. I'm it mild So in to perspective, do similar months I expecting And ago. the overall But from believe your to moderate

to. example, hoping too So the could I of security macro be months that could people It expecting a Three environment. the anymore from were channel some behavior, recovery. ago, the side, chain, be people don't were maybe for distributor V-shape management or internal. for hear -- supply talk much

scenarios, changed? created maybe has So compared your what externally ago, think internally when you you do three to either or months

right. ago Well, we difficult months quite sure weren't or QX I start was to with, going I would three challenging be, think how

but certainly. through think we of back things in that -- that during It that even normal, of in as the spoke and I our sales. were some we orders I as just progression we business saw not there we But shutdowns, And was reopened progress about terms and in segments eventually quarter so to saw think of now. terms

the quarter, the all expect So is that toughest as been Sara we said, will QX right. have

initial this just or say I and orders as our always home we at running. sure we we work we through, that reaction thing continue sure deemed to other as there like that is looked and have would places these The is were supply to companies ensuring up employees one, we weren't or stay had Mexico, chain, weren't at have essential things, two different

was it very disruptive. So

where the some how invest in inefficiencies in PPE think And right. about other new, better was managed costs, we've we about all so, important. a things more thinking and when now or had we situation to or or operational of all measures, talk COVID manage got very shifts I Those that to safety now our

So those our optimize to efficiencies. of ability things, some manage operational

have more about good forward. I think positive manage we we a feel going perspective how or that

this because consistent. with downturn, trend of and enter be things. just from We say particularly couple our can that history always particularly recovery, it would So back expectation you see distribution there that up a go do get Enclosures, in we when destocked lot and Enclosures through and particularly in Enclosures business, channels. our a will we yet, of when and not we come we're And we but I to those start was the are time, EFS know a that goes faster we expect faster.

faster that the seeing a pickup see. always add we drop But there not more And it color fast gradual over we're come but let I'm off so is improvement. know Sara We that. comp some indeed should did we that time, saying I'll back. expect from it's standpoint. will and what that's, yet, and And

on more on side. saw is decrementals a good productivity. and particularly and -- couple focused renegotiations some our that the And on really we I'd I remiss spend. maybe saying mean, also and of to the of underlying hard without indirect cost team make focused be rapid points direct the just

more our quickly a just And on cash. mean the to an spend really helped these on the We're That from focused we're some putting perspective. and decrementals structure I underlying did cash front. good So bit see overall really in flow capital favorable in secondarily times. we cost priority free short working that. is productivity along trending adjusting scenarios a the then, that with

here is it and half. off the expect to in think case beginning that the back would to pay I be

of I out is point typically think on the business. our to seasonality other the thing to based

flow we cash of where generate majority our to be The second of half the cash. tends

a with with we're we about working. as cash performance So leverage the that and cash free the seasonality, well from feel the good for perspective year overall we're where flow at as the

the topic Thank I kind but you. organizational up, have That's great might of be color. follow a sustainability. semi

I you probably pandemic you areas to administrative, to continue production, look unfolds. there effectiveness. now. does like some looking areas at a your more you've separately. you're a are you marketing, looks for continue it where at But the you any So think, just probably you think diminish are few mean where or indefinitely remotely certain areas mean adapting really while environment internally. I structure. working decentralized are there been start operating or there logistics, to as some months are point, when But where it functions, And situation

a naturally of some thinking, to but gaps So collaborative guess, the structure decentralized lack lead of may anything product there. some wild It's just or development, productivity separation the kind just side. creative more function on I'm and or the

range look in at your the long of for So, term as sustainable you term.

to you're As as operating inclined diminution are as less which then ones some without continue and less know you Thank might effectiveness. you. -- be you

shifts virtually, to -- operating digital and some try tools. how our think product from let are I we of the our protocols we've our above obvious beyond plant. let manage we're the plants. safety our and building I getting and to with who and me our at need functions answer our other Well, learned we plants there running, that When at the employees ensure and of visits anyone people all me think our that safety better -- are gone or And look

time -- I able you're management And and our development, time to, Now come program environment to flexible accelerating project the and to you're believe, in what have see used the talk agile And execute have we're we a know to seen require We're future why about more scrums we away system. it about in do. you if actually software work go to But transformation, agile, talked because of place. our tools digital that's process together. two digital where for come there us, which that coming improve cetera. we're collaborate seen predominantly are in I accelerating delivery familiar from I very and weeks have sprints. structured and ideas with going And with is the able to and back is us people work et agile approach then in our great we people actually requirements. And and will

a good how on-site there us have to a, launch do is case around that we we're into perform operations that function. So our with we've do But and will some this flexibility. learned do is year development do that and standpoint, I the engineers and think have to to it's We And world learned a how YouTube to the videos come have running there with testing. how come our some virtual we've and employees I offices and sessions. example. safely for product would is on a say record good

not not all it's shut as engagement. having any So if offices and are we're down

making expected. just Because than at of getting on workforce flexible right not we where how we're progress. better digital tools we're we're very don't collaboration our So, to I and a managing digital, are think driving going I see we're really the better be now actually anything lot

Because do my it. maybe safety people not we're to there point aren't we all -- we about this is what things well-being. why talk So those, last and is, used can

and Here those balance how how to life. have right. Do work is people, of to all to manage their home how things,

change, So support the and we're management. it's employees this with working new because trying of way so to change of

you. but Okay, confidence providing one, guidance? for thank last enough you to required feel Thank restore And be financial just one to would then you. what

countries still on, seem to the have how the I think so contained seeing pandemic is that answer cases. uncertainty is new early you much know is, the there as some to Yes, of globally question And report things progressing. that now to we're

need we really be a containment, economies see And down. and I keep have to know have to think believe to globally But doesn't need are going don't we we necessarily yet. vaccine. that opening I So just to some that view there shutting we're

world. stability of give much control are. color as around, the the to around we pointing we're you did from as as some things to we what one scenarios, to going that's be forward where that looking sales But think and of we're measures these So that try we the going is QX can

we much as can As we with transparency provide have, information to the provide it. we're going

July as also well. just Sara outlined As

thank much. Great, very you

Well, morning. to you joining thank for I want us this

stronger. So even We're confident in and flow the in though managing this emerge actions free this we're environment, growth. uncertainty persists generating taking in to we're decrementals, cash investing strong

hope to conclude aligned the this again you Operator, on we manage is through goals near-term the call. for healthy. and you your and time stronger. safe team Our remain emerge Thank may now and you

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