Jim Farrell – VP, Strategic Planning and Investor Relations Dave Nord – Chairman, President and CEO Bill Sperry – SVP and CFO.

Christopher Glynn – Oppenheimer Rich Kwas – Wells Fargo Securities Noelle Dilts - Stifel Mike Wood – Macquarie Research.

Good day everyone and welcome to the Hubbell Incorporated Second Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. I’d now like to turn the conference over to Jim Farrell. Please go ahead, sir..

Good morning, everyone, and thank you for joining us. I’m joined here today by our Chairman, President and Chief Executive Officer, Dave Nord; and our Chief Financial Officer, Bill Sperry. Hubbell announced its second quarter results for 2014 this morning.

The press release and earnings slide materials have been posted to the Investors section of our website at www.hubbell.com.

Please note that our comments this morning may include statements related to the expected future results of our company and are, therefore, forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Therefore, please note the discussion of forward-looking statements in our press release and consider it incorporated by reference into this call. In addition, comments may also include non-GAAP financial measures. Those measures are reconciled to the comparable GAAP measures and are included in the press release and the earnings slide materials.

Now let me turn the call over to Dave..

Thanks, Jim. Good morning, everybody. Hopefully you had a chance to see our press release and the company document in the slides. I am happy to be reporting our results for the quarter, it sales up 7%, acquisitions contributing 5% of that, quite an improvement from what we call three months ago that we were reporting on a very slow and cold start.

Demand is improved nicely in most of our markets, non-residential to modest improvement still with biased toward renovation market not as strong and improvement as we would like and many expect but continue with improvement and will take it as it comes.

I think the residential market, we were cautious going in and I think that caution was well advised as we have seen some weakening in that but we are still growing, still very well positioned. Our industrial business was mixed with Harsh & Hazardous a little bit better than our high voltage test business, still struggling a bit.

And the positive side the utility spending, did continue to improve from the slow start and so we feel a little better about that.

On the margin side, nice improvement – continued improved on the margins with 30 basis point improvement up to 16.8% attributable to ongoing productivity initiatives as well as some lower facility closure cost that we incurred in the first half of the last year but a little bit of the mix – unfavorable mix that we have been talking about and we continue to face.

In the second quarter, we closed two acquisitions. Revenue contribution of about $45 million, one is in lighting, small one in power and would also closed another small deal earlier this month really in the Harsh & Hazardous electrical connectors business.

So we have now invested nearly $150 million on six acquisitions so far this year with deal and expected to contribute little over $90 million in revenue on an annualized basis.

And so all of that in the quarter, it contributed to diluted earnings per share of $1.51 up 10%, I am happy to have double digit earnings growth any quarter that I am get it, worked very hard to get to that this quarter but would wind-up that the market have improved and we are continuing to execute.

Couple of other items of note in the second quarter, earlier in the month of June that you may have seen an announcement that came out that in accordance with the terms of settlement agreement relating to a lawsuit that has been out there against two existing trustees and a couple of former Trustees of the Roche and Hubble Family Trusts whose judgement entered and that suit was by one of the beneficiaries under the Trust but the settlement of that contemplated the transfer of change in Trustees from the existing Trustees to a third party trust company and that happened in the beginning of the June.

Now, the second item of note you saw we announced earlier is on June 30th that Scott Muse informed me that he plan to retire, Scott has been running our Lighting business for the last 12 years. He has been involved in the industry from more than 35 years.

During his time in the industry and certainly as time with Hubble, he made major contributions to restructuring that business, reducing the cost as well as adding to the strength of the business with the acquisition of seven brands.

He has been truly dedicated to the company, to employees and to our customers and we will miss him as part of the team on a day-to-day basis but certainly hope and expect that we will be able to still count on him for council in advise in the insight into the market.

So we took the opportunity right now to expand Gary Amato responsibilities, Gary had to this place and responsible for the electrical systems platform as part of the electrical segment and his role has expanded to include oversight of the Lighting businesses as well.

I think that's – he will do quite well there, he has a very strong and capable team behind him within the electrical systems businesses and so I think it will allow him to devote a fair amount of time as he works through the transition which Scott in oversight of the Lighting business.

So, with that, let me turn it over to Bill Sperry and he can give you some more color on the quarter and year to date results..

Thanks, Dave and good morning everybody, thank you for joining us. I am going to use the slide to the Dave’s reference to guide my comments and I will be referencing those page numbers as we go along here. Staring on page 3, with our summary of what was a quite solid financial performance for Hubbell.

The sales up 7%, two comments I think about sales, the first is organic growth of 2% sounding quite modest is actually a nice sequential compare versus the first quarter where we really had flat organic volume so an interesting sign of market pick up there.

I think secondly the acquisitions contributing 5%, that really comes from seven different investments we have made over the past 12 months and that seems like a good amount of deal of activity for us but what I particularly like how that spreading around our portfolio.

So of those seven, three are in power systems and two within lighting platform and two within electrical system and that's a good sign I think of our business model that work when the organic markets are modest and I think we can put some inorganic growth bring that to the table.

On the operating margin are 16.8% up 30 basis points, improvement from productivity continues to be very important contributor to our margin story, we’ll show you the CapEx implication later but we need to continue to invest to get that productivity and Dave commented that some of the less favorable product mix that needed to explore a little bit later (inaudible) and I agree with Dave’s comment of 10% growth at the EPS fine and attractive, demonstrating good operating leverage at $1.51 of EPS.

On page 4, we discussed our end-markets and again I think if you look at our order pattern through the second quarter, we continue to see the pattern of volatility that we witnessed intra-quarter over the last year or so.

So, for example for us April was reasonably strong, May quite weak and we ended June very strong and so interesting sign I think of where the recovery stand that order pattern in the quarter appears to have some variability to it. But its important to go through also here that the mix has been contributed from our different end-markets.

You can see the two greens between the reno and relight portion of non-res as well as the residential markets those are contributing the growth but not necessarily where are strongest margin parts of our portfolio are that creating some of the product mix headwinds that we have been describing and you see that the industry is reasonably flat as well as the utility.

On page 5, we will discuss the drivers of operating profit margin to gross S&A.

On gross margin side, you see an attractive 30 basis point improvement to over 34%, now the productivity really driving that as well as the absence of facility closure clause which last year we had included so yet the double benefit of the lack of those cost plus the productivity that comes from those actions.

And you see a little bit less favorable mix helping that gross margin extension down a bit.

The S&A side is more about volume and acquisitions, you see about $9 million increase there which is about 149 million that dollar increase is largely driven by the acquisitions we have been doing but you will see a 10 basis point favorable improvement relative to percent of sale down to 17.4% and that's where we benefit from the volume on those fixed cost.

Page 6 shows the results of those two drivers in OP and you see nearly 144 million of operating profit a 9% increase and 16.8% OP margin at 30 basis point increase and the drivers of growth and S&A both contributing to that improvement.

Page 7, we go to non-OP expense and see a couple of million of tailwinds really driven by foreign exchange results with the fact that we had some small gain this year compare to some small losses last year of the Brazil Real and Canadian dollar driving that (inaudible).

From tax headwinds of 100 basis points in the quarter to 33.4% and that's been driven by some discreet items including the fact that we had some property sale included in prior year as well as some return to provision adjustments in our entities and the lack of R&D tax credit in this year’s number creating that headwinds.

On page 8, we are showing the net income of $90 million and the 10% increase, good operating leverage of that 7% sales growth and the earnings per share at a comparable level of 10% growth as our share count was quite comparable during the period.

We purchased about 100,000 shares during the quarter which brings our year-to-date share repurchases to about 200,000. On page 9, we will switch to now breaking down into our two segments for the quarter.

So will start with our electrical segment delivering 612 million of sales and 8%, 5 point of that 8 coming from acquisitions, the strongest or organic contributors to the 3% of organic growth continue to be the resi market within Lighting as well as commercial construction and that's how the industrial markets were quite mixed with – for example the high voltage business is being down where as Harsh & Hazardous in commercial construction showing strength so mixed results within the industry.

Operating profit $95.5 million, 7% increase but you will notice that at 10 basis point decline in OP margin and that's driven in part by the fact that the acquisitions as they come in are additive to OP dollars but they subtract some of the OP margin by a little bit and need the volume to offset the less favorable mix as well as some of the inflation that we get.

On Page 10, power for the quarter up 3% when the net effects against the acquisitions you see that organically resulted in flat performance and that doesn’t sound so great other than I’ll just ask you to recall on the first quarter and we were organically down three points, so that’s actually improvement in utility end market and I think you saw the fact that the retail demand for electricity have gone attractively positive earlier in the year that seems to be veining now and date is not perfectly up to date but I think we benefited from some of that effect in the end market.

The OP for the power 160 basis point improvement but again I’ll call your attention the fact that that was really driven by the fact that we had some extra cost last year in terms of some of the consolidation. So I don’t want to set up that trajectory as being an organic one the natural rate to be a lot flatter going forward.

Cash flow on Page 11, you see our cash flow is below last year by a little bit despite the fact that we had more net income and you’ll also see some efficient investments in working capital compared to last year.

So the difference comes both on the other line which is result of some estimated tax payments as well as some lower pension liabilities driving that basically $20 million difference and see a little bit extra CapEx which again where we continue to invest in areas like new products and productivity and are getting great returns on that capital.

So a lower free cash flow number but not attracting from your annual target of trying to get cash flow to equal net income.

So now we’ll switch one Page 12, from a look at the quarter to look at the year-to-date results where our snapshot at half time has sales growth to $1.6 billion or 5% increase just to compare that to a 3% increase in the first quarter, so nice acceleration in comparing to an annual guide of the 5% to 6%, so showing some recovery from that first quarter period.

Operating profit at 15.4% year-to-date, a 50 basis points improvement and that compares to the annual guide of 20 to 30 that you can see that we are expecting a harder time to get margins and in the second half we will talk a little bit more about that at the end of this slide.

You see the tax rate headwind and the cash flow similar to how we were describing the first half.

The page 13, year-to-date, $1,151 billion of sales 7% increase, the bulk of that coming from acquisitions, similar story to the second quarter where you see resi being a big contributor to the organic growth and also (inaudible) business, industrial again mixed with high volt down for the first half versus Harsh and Hazardous and general manufacturing side of industrial being both contributing.

Operating profit up 9% to $164 million, 14.2% sales, 30 basis points improvement. Again the volume helping us productivity being crucial to that and the acquisitions hurting margins a little bit as we add in the first year.

Power on page 14, showing flat year-to-date sales performance where acquisitions have contributed three and so we are still catching up on the organic side and that's slowly start to the year hurting that. On the performance side though, you will see operating profit up 8%, very healthy improvement to 18.3% margins.

Productivity being very important to success within power and I will comment that they have been seeing up usually competitive pricing environment and utility and market and so you see an unfavorable price cost dynamic in (inaudible) business which traces off again utilities also see some of that price pressure.

So the productivity has been a powerful driver there. Cash flow for the year-to-date on page 15 very similar story to Q2 where free cash flow is lower despite the higher income and despite efficient working capital investment but that same $20 million driver you see on the other line coming from tax payment and pension liability.

Page 16, trade working capital, you see the sequential improvement from first quarter of ’14 to second quarter, we were surprised by that shortage of volume in the first quarter. So you can see we overbuilt our inventories a little bit.

You can see going back to ’13 that sequential improvement not necessarily typical and at the same time the compare between 2Q ’14 and 2Q’13 suggest we still have efficiencies to gain and we are focusing on that.

Our capital structure on page 17, you’ll see step down in cash levels to little bit less than $600 million being driven by the $160 million invested in deals year-to-date and still with plenty of cash to continue invest in the pipeline that we feel is reasonably robust and our current level of activity is reasonably good practice for us to see how that's going.

And with that data, I am going to switch back to you to go to our outlook..

Okay. Great. Thanks Bill. So you have gotten a good sense of where we have been, what we have accomplished. So let me give you sense of where we see things going on at least for the rest of this year. First on page 18, little discussion on our outlook for the end market themselves, and I’ll start up on the upper right side, the utility side.

We see that growing at flat to 1% as market and you recall at the end of the first quarter, we had an outlook that was flat and we were concerned about as we watching those order rates because of the weather.

I think that's moved from cautious, we recall in May, based on the order rates we moved it to confident at flat, not terrible exciting but certainly a lot better for us and I think I would characterize this as continued improvement but cautious about improvement, certainly the utilities have been spending.

Some of that is attributable to pent up demand, some of it is attributable to their improved profitability and they saw in the first quarter from the meter spinning but I think I saw some data recently that underline electric demand has dropped back down and so there is volatility there but we are cautiously optimistic that that's going to continue to improve.

On the residential side, we started the year with about 10% growth different from a year ago when that was viewed to be low, we said that that may turn out to be high and I think we are starting to see some of those signs particularly on the single-family.

We still feel good about our position, our business but certainly that market is a little bit softer as the year has progressed and so we are monitoring that carefully. The non-residential market, we see up 2% to 3% at a little bit softer than we with last forecasted, we call that market was impacted significantly by the slow start to the year.

It has started to recover but not at the rate that we would have expected in order to meet the prior expectations but that could change as year progresses but right now we certainly see more inquiries and more bidding but more on a smaller project business, not yet seeing big uptick in the large project business and then the renovation is still not supporting there.

And then on the investor side we’re still looking at 2% to 3% overall growth with some mixed market the high voltage still being down portion as of this business recovering.

So overall, looking at growth rate, so 2% to 3% for the market and that trends like to our segments you see on page 19 on the power side which is little less than third of our business, see the sales growth that translate into 3% sales growth.

All of that arguably coming from acquisitions with the market growth being mitigated by a more challenging pricing environment and some currency exposure that we think could exist there. The electrical side, we see 6% to 7% growth rate on sales reported.

To said that the non-residential slowly improving, residential we still think is solid and will be double digit for us, the industrial low single digit and then acquisitions adding 4%. So, all of that translates into overall sales increase of 5% to 6%.

Turning the page, with our balance growth on the top-line and early in the year our concern was what the top line was going to be there and right now we feel better about it being there, so that’s a good start.

On the margin side I think there’s more challenge that we’re going to face, some because as we have talked over the last three months, some of that market growth is coming from segments that are lower margin contributors as on average in the portfolio, we look at some of the commercial construction projects, some of the commercial and the C&I lighting, I think we have seen some real, more challenging pricing environment, really across all of our businesses not much contribution as Bill mentioned in the quarter and I think that's even more probably acute within the lighting segment with competition in that business.

We also have some margin compression when you look at the lighting business around the LED, the good news is continued improvement in the adaption rate, continued improvement in the underlying cost but the market not yet getting to the level of pricing commensurate with the value being delivered in those new products, so we have got to adjust accordingly.

Some of the things we are looking at therefore that could impact us in the second half.

We are certainly continuing to work our productivity initiatives but we are going to take even a more aggressive look at cost reduction actions across all of our businesses but particularly in the lighting segment to make sure that we have got the cost structure consistent with what – where the overall market seems to be settling.

So, still feel good about 20 to 30 basis points but with some work to get there. If I look at that and I think Bill will talk a little more about that. And then the tax rate of 33%, little disappointing because we have had some upward drift in that.

We have got a lot of actions that we are working on to try and bring that back down but with the 33% assumed rate. So mid-single digit growth, margin expansion, with market step are at least cooperating on the demand side and it's up to us to work through the margin side.

So Bill do you have any more to the outlook?.

Yes, I think it's worth commenting a little bit on the shape of the rest of the year. I think that Dave referenced some of pricing challenges.

We had a price cost tailwind for the first half of the year as you all know, very hard to sustain that, we tend to think during the year that tends to be flat so that feels like they could create some headwind for us and in the mix side I think could be felt particularly in Q3 we have both high voltage as well as some of them in fact that the commercial constructions businesses of ours can be a little bit lower margin amongst our portfolio against a pretty sweep mix of business we had last Q3, just to remind everybody that.

last year’s Q3 was a 100 basis point improvement upon the prior year and that creates a pretty tough compared to try to continue to extend on so the 20 to 30 basis point guide suggests from where we are at half time essentially a flat second half on margin and I would say meeting our Q3 margins of last year that should be pretty tough to do.

So I think the shape of the second half of the year feels a little bit influenced by some of those factors which I just wanted to add. So, I think that would conclude our prepared remarks and happy to turn it over to you all for some Q&A..

(Operator Instructions). And first we’ll go to Christopher Glynn with Oppenheimer..

Thanks, good morning..

Good morning, Chris..

Hi Dave.

The question on lighting talking about aligning some of the cost structure there, I think one of you competitor sort of adding structural cost with the growth opportunities from the technology changes in the industry, can you kind of talk about what the tradeoffs are there?.

Yes, I mean part of the challenge is balancing where you need to add structural cost where you need to make the investment particularly when you look at product innovation, LED engineering and that capability. So that’s going to continue and that’s necessary but it’s not necessarily complementary to improving margin.

So you better then look at the other side of the equation which is where your cost structure and particularly your fixed cost structure and there’s a lot of that in our facilities, we have done but certainly a lot more opportunity for productivity initiatives to be addressed more aggressively with some incremental investment that might be necessary.

I think for example you have seen the benefit of that on the power side where we’ve had improved margins significant contribution from productivity initiatives from investments that have been made over the last several years that we are starting to realize.

So I keep (inaudible) credit for continuing to deliver but some of that investment that we made when he was divisional president and the Bill probably was running the business.

So we have examples internally where we make the investment, sometimes when you can afford it, sometimes when I think in the lighting business because of the dynamics that exists in that market and the change that we are taking more aggressive look at thing that we might just need to do in the shorter term for the benefit of the longer term..

Thanks that helpful. And on the price, so we see a little pressure at power systems.

Is that kind of a stable sort of pressure or something that you think could accelerate?.

I think Chris, it feels between those two I describe it as stable. I think it's existed there and it alters between when on a big project you have to get competitive and that alternates between them more blanket and stock could just flow and whether you have to be competitive there.

So I would say it feels like a competitive industry right now where price I think utilities are facing the reasonable amount of challenges in their own business and they are looking for as cost competitive product as they can get..

Okay.

So it sounds to me like it might be a little bit more mix between project and stock than kind of comparable price decline, is that fair?.

I describe it as competitive I would say and that you need to show up for the quality product at a good price you know every day..

Okay. Thank you..

Rich Kwas with Wells Fargo Securities..

Hey good morning everyone. I just wanted to drill down a little deeper on the lighting.

When you look at LED, are the LED margins still comparable to traditional lighting margins at this point?.

Yeah I would say that for us historically they have been rich and I think there is some of the most recent adaption has been in product areas that are taking what were traditional fluorescent products in transitioning those into the newer technologies and I think that's where Dave’s comment about industry needs to focus hard on getting the full value of that product priced into it as oppose to merely trying to match the price of the legacy technology.

So I think it's a function of some of the more recent adoptions and it has been in that kind of product area that has made the compares more challenging..

And is that more just like competitive strategy by other players out there in your view?.

Yes, I think that's where the market in those product lines..

So I think that Rich, (inaudible) light there, if you walked around light where you could see why there is so much excitement around the industry, a lot of new products but you also – it’s clear that while there is a few of us in the room who have very strong positions as evidenced by simply the four space and some great product, there is more almost an unlimited number of new entrance who are trying to take advantage of the changing technology as an opportunity and I think that's created more competitive pressure than we have normally seen.

So it's not, again attributed to any one player but it's more of a broad market dynamic that we are going to walk our way through..

Okay. And then on M&A so the frequencies picked up the size per deal though is still kind of within the range of what you typically do. How would you characterize the landscape among the other larger players out there with how they are competing for deals particularly as you look at potentially move up to scale in size..

Yes I think it would be difficult for us to comment on other people's pipelines.

I would say that our activity feels reasonably robust Rich and I think you are right to characterize the sizes as what we would call average or typical to what Hubbwell has been doing I think this last $160 million we invested at around eight times so I’d also say it's been at typical valuations that we are used to but certainly between strategics and product equity buyers, there is certainly lot of interest out there and we are trying our best to get out there and build relationships with sellers and make some of those transactions happen..

Okay.

So incrementally the bigger sort of deals are still -- it sounds like a little more of a challenge for you to compete on?.

Yes, I just say they are less frequent in our conversations and I think it would be right to suggest that as you got bigger, multiples -- you would have to expect the multiples who would probably pick up any sympathy with that size which I would expect would be right there..

Okay. And just last one from me with the McGraw-Hill data that was out in the second quarter for non-resi suggest a pretty nice uptake in starts and Dave you talked about smaller projects driving the chart here leading the chart here, and large project still somewhat tapped.

What do you make of the macro data out there in terms of starts activity I know if you provide any color just around, you comments on smaller projects versus larger projects and what you are seeing in terms of conversion, potential conversion of larger project as we move to the next 6 to 12 months?.

Well, I mean I think that you know there is still caution out there when you are looking at the big projects. There is funding consideration for sure but there is also underlying demand, you can look at a lot of – some of the commercial office space in certain markets and how that's being absorbed or not absorbed.

So I think that's where some of the caution is and slow recovery on the larger projects. The smaller ones are, they are a lot easier to execute and execute that completed in a timely fashion while the market is still strong. So I think that’s where – my view is that's where the while the bias is to the smaller projects.

But we are keeping at it and we would expect that that we are going to see more activity with – well I don't disagree with a lot of that leading indicators would suggest that there is an improvement that's coming.

We all know though that has been kind of the story for the last couple of years and it keeps sliding to the right and we just – I am going to wait and see and ready to go..

Okay. Got it. Thank you. Operator Thank. We will put Nigel Coe with Morgan Stanley..

Hey good morning guys. It's Trueon (9ph) for Nigel. I just wanted to ask about month-over-month cadence, you guys mentioned how things played out from the beginning of 2Q to the end of the quarter.

What kind of trends are you seeing so far in July?.

Yeah I think True, we finished June with 10% growth in orders which is pretty strong especially after disappoint May and July I would say has started off reasonably okay.

I would describe it as having the easy compare for us but between the backlog that we built in 2Q and the order pattern that we are seeing late June and into July, I think that's really the backbone in buttressing Dave’s comment about how we are feeling from confidence perspective on some of the volume assumptions..

Okay. Thanks. And then I don't want to press too hard but I just wanted to dive a little bit into the fiduciary settlement for the trustees.

Has there been any change or more activity on your end just as far as conversations with the corporate trustee or the beneficiaries themselves or do you have any sense for whether or not you think this could be a potential occupational impact to either the business or the outlook, or even A class shares?.

True, as I mentioned I mean it was the transfer as a result of a legal settlement. We approach all of our shareholders as I have talked about in the past, we brought ourselves in transparency with our shareholders. We are available to answer any questions.

We try to keep ourselves in the market to make sure that we are sharing our perspective on our strategic election and our execution against that. I think that the market has generally welcomed that. But we don't -- at the same time; we don't talk about what individual conversations exist with shareholders to the extent they do..

Right. Understood. Thanks guys..

Next we will go to Noelle Dilts with Stifel..

Thanks. Good morning. First I just wanted to dig into the utility market a bit more hoping you could talk a little bit about what you are seeing in distribution versus transmission and even the international markets.

And our work actually suggest that we could see an improvement in large project spending and next year 2015 in the U.S., I am curious with consistent with your expectations..

So Noelle, specific to the quarter, we characterize T&D as flat. I would say the T portion of that was down but I would also say that that was more timing related. I think what our folks are saying is affirming of the second half on the T side.

And as you look out into ’15 I would agree with the theses that transmission spending will remain sort of at these high levels but that will translate to modest growth.

On the distribution side you have heard Dave and Bill talk about will talk about how we saw a rebound coming on off of the weakness of Q1 as the meters were spinning we saw electricity demand increase and we did see a pickup in spending into the second quarter, the question is what is that look like going forward given electricity demand an unknown, so on balance I think we’re more comfortable with the 0 to 1 and we think that that sort of suggest a little improvement second half versus first..

And then anything notable going on in international?.

International is mixed, I mean we have a fairly sizeable business in Brazil that has had some hard times, they are seen a little bit on the T side not as much on the distribution side but we’re certainly looking to expand in another geographies and so on balance I would call it flattest slightly up..

Okay and my second question is really just looking at this gulfstream, petrochem opportunity and some of the industrial spending we think it happen over the next few years just curious to know your thoughts on capitalizing on that opportunity that’s what you are seeing but I’m curious to see your comments there..

I’m sorry the question was around petrochem opportunity?.

Yes, just a kind of gulf coast CapEx if we do see this huge build out cycle happening down in the gulf coast, I guess if you are seeing some opportunity there, how you think if you are doing anything to kind of capitalize on that opportunity, on the Harsh and Hazardous side..

Yes, so for the Harsh and Hazardous business phases of there, one of our acquisitions this year is right in the middle of what you are describing, so it’s obviously a trend that we like, we feel we are well positioned for. And we think we are the worthy of investment, yes we agree with your view..

Okay, thanks..

[Operator Instructions] Moving onto Mike Wood with Macquarie..

Hi, thank you. Congratulations.

Can you give us some more color around your second half of margin commentary, just to better quantify for us the impact of price cost versus productivity in the second half or if you could give us the first half benefit from price cost given that you said you expect the full year to be flat?.

Yes, Mike I was just giving some color and texture around the fact that we had some contributions from price cost productivity in the first half and as we talked with you and everyone we are always assuming over the course of the year that stays neutral.

And so I am suggesting that could be headwind in the second half and then I am just trying to call your attentions specifically to 3Q look how sweet the combination of mix and price cost was in Q3 last year that drover 100 basis points gone up and those margins and if you looked on two year improvement basis, it's hard to lap 100 and do better than that given some of those dynamics.

So I was just trying to give a little of that flavor..

Okay. Great. And just in terms of follow-up, you had some recent organizational changes mainly the chief growth officer with Bill probably to help facilitate with larger deals.

I am just curious if you could comment in terms of your either progress or frustration there in terms of getting some larger deals closed and if you pipeline at all has changed since you last updated us at the Analyst Day..

Okay. Yeah, well Mike I think that you know Bill has been in that role for six months now.

I will tell you that he has been very active, very proactive and there is a lot of forming that's involved in that and really long way from harvesting anything but I think certainly is opening up some possibilities and some of the dialogs and conversations that as I have said earlier this year I mean I would expect that pipeline of possibilities as we move through the year to increase.

Now that’s a low base of zero to one so maybe there is two or three as the year progresses. But that the more opportunities we have, double – look at the possibilities and likelihood of closing one. So I think that that's all been very positive. We will see. We will see. .

Thank you. .

We take a follow-up question from Christopher Glynn with Oppenheimer.

Yeah. I was just wondering if inventory purchase accounting in the quarter was worth calling up the impact..

Yes I would include that in our commentary Chris that acquisitions were hurting OP margin and that includes some of the acquisition counting that writes up inventories.

That that tends to burn off after a quarter or two but it does and that first year of us owning it, they not really trying cranking at full margin yet, so that’s a pretty consistent across our portfolio of our activity you can see (inaudible) initially they can drag margins down but they can become contributors in your Q3 and that that pattern where is typical and we continue experience that..

Alright, thanks..

We have no further questions. I’ll now turn the call back over to our speakers for any additional or closing remarks..

Okay, well this concludes today’s call. I’m certainly available in case anyone has any follow-up questions and once again thank you all for taking the time to join us this morning..

This does conclude today’s conference. We thank you for joining us..