Maria Lee - VP of IR Dave Nord - President & CEO Bill Sperry - CFO.

Nigel Coe - Morgan Stanley Rich Kwas - Wells Fargo Securities Christopher Glynn - Oppenheimer Joshua Pokrzywinski - Buckingham Research.

Good morning. My name is Emily and I will be your conference operator today. At this time, I would like to welcome everyone to the Hubbell fourth quarter earnings call. [Operator Instructions]. Thank you. Maria Lee, you may begin your conference. .

Thanks, Emily. Good morning everyone and thank you for joining us. I am joined today by our President and Chief Executive Officer, Dave Nord; and our Chief Financial Officer, Bill Sperry. Hubbell announced its fourth quarter and full-year results for 2016, 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 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 slides materials.

Now, let me turn the call over to Dave. .

Okay, Maria. Thank you. Good morning everybody. Thanks for joining us. I'm going to talk about -- a little bit -- just give an overview our finish to the year and I'll turn it over to Bill to give a little more details. But, I'm on page 3 of the slides. You can see, we had a strong finish to the year.

Certainly, employees, after having a challenge every month and every quarter throughout the year, you see the fourth quarter, we had sales up 3%. Now, that was driven largely by acquisitions. They contributed 4% and we had, still, a point of FX headwind offsetting that. So the result organic sales were flat.

On the adjusted operating margin which includes our restructuring and related costs, we did have a 20 basis point improvement year-over-year. And our adjusted EPS was $1.35, up 3% from last year. We'll note that -- and I'll talk a little bit later, we did have higher restructuring and related costs than we previously communicated.

As a result of the ongoing challenges in Lighting and particularly, the increased demand in LED, we stepped up our cost actions and are working through a plan to consolidate two of our domestic lighting facilities that serve the linear-fluorescent markets. This action drove restructuring and related cost to the year to be $0.42.

I know we have been guiding throughout the year at $0.35. But, I also have suggested throughout the year that there's always plenty of opportunities and to the extent that we identify more actions that we think we can execute effectively and that will provide benefit going forward, we will pull some of those forward.

And I think that's, clearly, what I would say we've done in the fourth quarter. I think, free cash flow, also, was a very strong year as well, finishing well over 100% for the fourth quarter and for the year.

Before I move on to some specifics in the quarter year, let me take some broader observations on the market and maybe some business highlights for Hubbell since our last call. From a macroeconomic perspective, the end markets continued even in the fourth quarter, with what I've said throughout the year to be sloppy and choppy.

Although, I've certainly hope I can stop making that reference in 2017. I think, certainly, that is going to moderate, maybe with a little more predictability on the underlying markets. But some of the important markets like oil and core industrial, certainly showing signs of stabilization on a sequential basis.

When we look at some of the broad economic indicators, we're seeing strength in the residential construction market, driven by single-family and improvements. And the leading indicators for the non-residential markets generally point to growth.

We've seen in the fourth quarter the ABI trends recently indicated growth in billings, the Dodge Data is more promising and the non-res permits continue to slope higher.

But at the same time, some of the NMEA Data which really has got more specificity to the electrical industry, is a little more modest and particularly around lighting, where some of their forecasts suggest the luminaire markets was down in the fourth quarter and may be flat in 2017. Now that's information that comes from participants in the market.

There's a lot of analysis that goes into it, but I think that the data is still not all consistent, although, I'd say overall there's a positive bias. So, I think those non-res markets are mixed and as I said, I think there's an optimistic bias overall. And I think that's what we're generally seeing, at least from December into January.

For our core industrial energy markets, our year-over-year quarterly declines in the total industrial production are moderating. And, I think you saw in December, the ISM was up and manufacturing output was up. So that's certainly a favorable trend for heavy and light industrial businesses. And U.S. to worldwide rig counts still significantly off-peak.

But they have been increasing and certainly as you know, more rig activity bodes well for Harsh and Hazardous business. We can't control the end markets, as we have always said, so we stay focused especially on what we can control, things like product innovation, acquisitions and certainly operational improvements.

And on these, I think there are some highlights I want to call out, since October. First, we're focused on product innovation and focused on the customer. Our commercial industrial business continues to introduce new products.

They introduced a new innovative update to a core product in the advantage series, Pin and Sleeve -- has new safety elements to it, power indicating LED lights and the like.

And they've also introduced the industry's first 4-inch floor box, the SystemOne, 4-inch recessed floor box, that provides a lot easier installation and we're already seeing a lot of wins and retail and in non-res construction.

On the Lighting side, Lighting launched a new item called SiteSync which has embedded wireless controls for outdoor lighting. It's built on flexibility, ease-of design, installation simplicity, all things that we know and have heard consistently from customers, are very important.

And more recently, Lighting held the grand opening or I'd say re-opening, of their state of the art Lighting Solutions Center that is used to educate our customers about features, cost savings, train -- employees train other market participants.

And we're looking forward to sharing that facility with investors and analysts over the course of the year. And, I think, Maria and Steve Beers will be working on some of that scheduling. So make sure you talk to them about that.

While we have to focus on customers, the other thing we know that we've been doing a lot of and you know, is continuing to focus on acquisition-related activities. More recently, not big numbers, but certainly important additions to the portfolio and added capabilities in the fourth quarter, the construction energy business expanded in the Harsh.

And bought a little product line in the UK that serves the Harsh and Hazardous Connectors and Lighting business. Really important -- one, because it demonstrates our continued commitment to the harsh and hazardous market and we're continuing to be ready as that market starts to recover.

In the Construction Energy business, also, we just passed the one-year anniversary of the Lyall acquisition which was a big expansion into the natural gas distribution market. And as we've seen and continue to see, the increased use and deployment of excess flow valves has been a big growth driver for that business.

And so far this year, the Power Systems business has bought a couple of small businesses. One in Brazil that manufactures switches for substation and distribution utility markets in Brazil. Obviously, a very challenging economic environment, but serving the utility industry certainly has potential.

And the other's a little acquisition that is a supplier of fiber-spliced enclosures and hardware expanding on our telecommunications capability. Both small -- not meaningful contributors to the top line, per se, but certainly significant to adding to our capabilities. And operationally, we continue to operate with discipline.

Automation continues to be a focus in all of our groups, particularly in Construction and Energy. And adding to the productivity, we're investing in capital. And in terms of cost actions, the big area that we have been focused on and continue to focus on, the actions continue and the savings continue to be realized.

We invested $16 million, $19 million of earnings per share in restructuring and related actions in the fourth quarter, bringing our full year totaled $42 million. That's higher than we previously communicated because of the Lighting actions.

On a diluted EPS basis, $0.19 of the $0.30 that we expect to incur around this consolidation was realized in the fourth quarter and the rest will happen in 2017. These costs were primarily employee related and a big part of it is the present value costs associated with exiting a multi-employer pension plan.

Now, I will note, that we just announced that to the impacted union last week, so we're still in discussions with the union. So, our plans are still being worked through with the union, including, the estimated costs and timing. And they are subject to the outcomes of those discussions.

So, there could be some change, but certainly the market demands that we get more efficient and we just can't afford to operate both those facilities.

So, also note that the cost in Q4 that we incurred, when I talk about the $0.19 for this plan, we were able to offset some of that cost with the benefit that we received on the sale of one of the other lighting facilities that we closed earlier in the year. And so, that helped mitigate that.

And that's one of the reasons that we were able to pull forward that action into the fourth quarter. Beyond, the Lighting restructuring, we're still continuing to focus on cost reduction of the other facilities and business processes.

So, across Hubbell, our savings and that's really the important, ultimate driver of why we're doing this, our full year expectation of an incremental $0.30 in 2016, we're going to exceed that a little bit.

And that brings our cumulative realized savings from all of these actions, since we started this in late 2014, to more than $0.45 of diluted earnings per share. So I think all very positive things, very -- a lot of activity, all contributing to future value creation. So, I feel pretty good about that.

So with that, that make, let me just turn it over to Bill and he can give some insights into the specifics of the quarter and how we finished the year.

Bill?.

Thank you, Dave. Good morning, everybody. Appreciate you taking the time to be with us this morning. And Dave just highlighted two important themes that kind of permeate our release here.

One is that restructuring program that Dave highlighted -- and I'm going to be talking mostly about adjusted numbers, but he gave you an update on how much we're spending and how much were saving. And we're very pleased with the traction we've had on making our cost structure more competitive.

The second is the acquisition program which you'll see is really driving growth in the quarter and the year, across the company. Dave gave you a feel for some of the small power systems deals we did in 2017, just to give you the feel for what was closed and how it impacted 2016.

Consistent with our program affecting both Electrical and Power segments being active, the Power side making two acquisitions. And in Electrical, Dave mentioned and referred to Lyall, but the building for us of a natural gas distribution hardware and components company, has proven to be, to date, a very good investment -- strong growth.

And so that $180 million or so, invested last year, we invested in it about nine times. I know you all ask is frequently about the M&A market and where valuations are. Our typical program is closer to eight, so we paid up a little bit this year for higher growth.

I'm going to use the slides to guide our comments, here and I'm going to start on page 4 where Dave left off. And just looking at the end markets and you can see the 3% overall growth is really representative of flat organic markets, all driven by acquisition.

And Dave made comments on the non-res side and, I think, we're seeing a little bit of bifurcation there. Where in the Commercial Construction side, we're still seeing some decent growth and Dave referred to some of the lighting experience being much flatter.

On the industrial side, those arrows are still pointing down, but we really are seeing, now, the stabilization as our fourth quarter volumes were very consistent sequentially with our third and second quarters. So, it leads us to believe, those two areas are bottoming and poised to rebound.

Utility markets, you see the transmission arrow being down red, so we did have some projects slide to the right. And when we get to that segment, you'll see, they were dependent on acquisitions for growth. And the resi market continuing to show us favorability, both, from the construction side as well as the reno side.

On page 5, you'll see the adjusted operating income at $124 million or 14.5%, a 20 basis point improvement which is driven off of a flat gross margin year-over-year. As we saw the headwinds from mix and material costs and price being offset by restructuring and productivity gains.

And then on the S&A side, really, the 20 basis points of favorability coming there. Page 6, you'll see our adjusted EPS of $1.35, $0.04 higher than last year, being driven by the operating income being higher.

The important drivers here, where we utilized our balance sheet -- borrowed a little bit of money to finance our acquisitions and some shareholder buybacks, that were constructive to EPS.

But you got some distortion on the tax line as R&D last year, was effectively, the full-year effect all squeezed into the fourth quarter, so showing a quarterly-comparative negative. On page 7, we'll turn to segment results and we'll start with Electrical segment. And you'll see sales performance of 3% to $602 million.

Again, the consistent theme, where that growth is being all driven by acquisitions, as organic growth was absorbed by foreign exchange. And you saw that dichotomy in non-res, where we had Commercial Construction, our Rough-in Electrical businesses growing, but the Lighting business being flat in the quarter on the units basis before price.

On the more industrial side, again, oil being down mid-single digits, some of the heavy industrial pieces being down mid-single digits, but those are versus prior year and sequentially both of those showing stabilization and sequential flatness which I think is quite a good sign.

On the operating income side, you see flat in dollars and a 20 basis point decline, for the Electrical segment, as price and material cost headwinds and mix overcame the benefits from restructuring. Page 8, we've got our Power segment fourth quarter results and 4% growth to $253 million.

You'll see acquisitions adding more than that, so the weak organic volume being driven by some of the outside-plant telecom business having very difficult compares against a very, very strong quarter last year and some of the delays in some of the large transmission projects creating a little bit of drag to our volume there.

On the operating income side, you'll see an increase to $55 million or 21.6%. The price material cost equation which we've been talking with you about for a couple of quarters now, has caught up to the business, where price actually went negative for the first time this year. And combined with some cost headwinds provided some drag.

They happened to enjoy, from a previous acquisition, a reduction of an environmental liability that created a little bit of a one-time lift in that reported -- or adjusted 21.6%. I'm going to transition, on page 9, to talking about our full year. You see 2016, we did $3.5 billion of sales an increase of 3%. Again, all driven by acquisitions.

You'll see the adjusted OP margins 50 basis points behind last year, at 14.6%. The three drivers there being negative mix which we've talked about all year; the price and material cost headwind; and foreign exchange drags. The tax rate was favorable.

Last year we had some costs of our reclassification which you'll all remember, were not tax-deductible, so we had a favorable compare there. And you'll see earnings per share, a 3% growth. And Dave commented on the attractive free cash flow performance for the year. Page 10, the themes are not that new here on the full-year Electrical segment results.

3% growth from acquisitions, growth out of non-res, lighting for the year was mid-single-digit grower. Commercial construction similarly growing. Oil down high teens for our Harsh and Hazardous business, as we had thought it would be. And heavy industrial down mid-teens.

So, that's the mix effect as those two markets, really losing so much volume -- high margin businesses for us and importantly, when Dave gets to talking about our outlook you'll see that affect really starting to moderate as those markets volumes start to stabilize.

On the operating income performance line, you'll see the same themes for the year of mix and FX headwinds, as well as some cost increases. And that price headwind overcoming, actually, a tailwind for material costs, was really concentrated in the Lighting business where we saw really the effect of that price.

For the Power segment, on page 11, the 4% growth to $1.45 billion, all acquisitions -- same theme. Performance up 30 basis points as they had favorable price-cost performance. Cash flow, Dave referred to at the top, strong year for us. You see more income. As we're acquisitive we're going to have more D&A.

The working capital improvement was, really, largely driven by inventory management which was better this year. I think last year, as our restructuring program was getting into high gear, we have some redundant inventories that we managed better this year and the improvement in Other being driven by deferred taxes.

So, being able to get free cash flow at 113% of net income. Capital structure, on page 13, we had an interesting demanding year on our cash needs.

We made acquisitions in the $173 million range; share repurchases in $250 million; and you'll see we paid down the overnight Commercial Paper and built cash balances, utilizing our internally generated cash flow, as well as a new 10-year bond, you'll see, that we put out at the beginning of the year, at 3.35%.

So, good long term capital to put in the base here. The result is a net debt-to-cap of 19% which we consider to still be opportunistic to be investing and were happy that this capital structure's being supported by healthy operating cash flow. So, I'm going to hand back to Dave to switch from 2016 to our outlook for next year, for 2017. .

All right. Thanks, Bill. So let me just close out 2016 with a quick summary and then we'll get on the 2017. Certainly, end markets, in the aggregate, came in generally in line with our expectations as flat. And, I think, if you back a year ago, that's kind of what we thought.

There was a question of whether there was upside to that, whether we're being conservative. But, I think, the year played out more like we expected. We would have rather it been better, but at least we navigated it and our adjusted diluted earnings per share came in with in the range we expected, up 3% and reported EPS was up 10%.

We accelerated cost actions to address some of the product trends and we absorbed these higher restructuring and related costs and as Bill just mentioned, our free cash flow came and strong at 113%. So, I think all-in-all, a good year, not an easy year, a lot of uncertainty, but we've navigated it.

So, let's turn to 2017 and what are we looking at this year? First, let's talk about the end markets. We're cautiously optimistic about 2017. We think the overall -- cutting to the chase, we think end markets, for us, will be up approximately 2%.

Which is still a slow growth environment, but certainly feels a lot better than a flat markets we saw overall in 2016. Equally important, I think there's going to be -- we think there's more consistent growth across the end markets than what we saw in 2016.

I mentioned, hopefully were not talking about sloppy and choppy -- more consistent and particularly against all of our markets, as you see in the pie chart on page 14, flat to up. We haven't seen that for a couple of years. So, that's the good news, even if it's modest. Consequence of this more consistent growth, is less headwind from the mix on sales.

While the larger growth pies, here, are in the somewhat lower-margin businesses than the Oil and Gas and Industrial, they're will still be a little -- some mix headwind that we'll be navigating, through, but nowhere near the level that we've experienced in the past.

And at some point, maybe toward the end of the year, that will start to neutralize and will turn positive. And really look forward to that environment again. We're not expecting a V-shaped recovery in oil markets, although the recovery could be stronger than 0 to 2 that were planning for.

And we certainly have the capacity to capitalize on that growth, but right now we're just being a little bit cautious in, that area particularly, with the -- because it's such a high margin, it creates such volatility in our outlook. We're going to be a little bit biased there.

We did -- you'll note, we did bump up our expectations on the Construction side, both on the residential and non-residential, from what we -- our outlook back in October, to a point more of growth on both of those markets. And, I think, there's a lot of support for that. Certainly some of the indicators are there and the general sentiment's there.

And, I think, to the extent that some of the proposed policies and investments and more stimulus in infrastructure could certainly support improvement in there, but I don't think we'd see that until the end of the year, at best. That would be more of a 2018 impact for us.

Of course, the wild card's still -- all of that growth is some of the things are front and center today, both trade and tax policies. So, much too early to size the impact of that. I think for us, clearly, there some implications as a net importer, you know, border taxes would have an implication on us.

And we're beginning to and we've done some work around modeling that and one of the advantages, I think, we have is, because of our significant domestic footprint and the capacity that we have there, we have a lot of flexibility to manage, depending on how that plays out. And the question will be what that does to overall demand.

All of our businesses are looking at that, evaluating that. We don't expect a significant impact of that on 2017 and again, that would be more of a 2018 issue. So what does that mean for us? Turn to page 15. On our outlook, we expect to outperform the end markets, modestly.

Certainly from new product development, to the extent that we get share gain, but really, more on the more new product and innovation. Offsetting that, is continued challenges on the Lighting side on pricing. We saw that ramp up throughout the year.

Certainly, the compares would get easier than the latter part of 2017, but we'll still be facing that head-on, for -- largely, in the first half of the year and hopefully that will moderate in the second half of the year. We think our earnings per share, on a reported basis will be in the range of $5.60 to $5.80.

That includes $0.25 of restructuring and related costs.

We expect, as I mentioned earlier, incremental savings from prior actions of $0.20, but we're going to have to -- some of that is going to get used to support our Lighting pricing pressure, a little bit of continued FX headwind and some of the material cost headwind that we're going to deal with.

In terms of cash flow, we're targeting free cash flow equal to net income. I think we've demonstrated in 2016 that we got back to focusing on it as a net borrower and I think there's more opportunity, with discipline, particularly around our working capital management.

And note that these expectations don't contemplate any additional significant acquisitions. That doesn't mean there aren't acquisitions that continue to be explored. They would be added to this, all on the upside. And they're important. They continue to be an important part of our strategy.

You've seen, the added three points to our annual sales growth for the last decade and I think we would expect, we certainly target to do, at least that kind of level of acquisition growth on top of this.

So on page 16, I think we started this last year, just to give you of how we get from this year's $5.24 to next year's $5.60 to $5.80, we do have the tailwinds from restructuring and our related costs, both from the incremental savings in from a lower level of spending; as well as the top-line growth and to some extent, some of the acquisition roll-over benefit, as they head into their second year.

Price cost productivity, excluding the price at Lighting, is expected to be a net headwind, largely driven by some material costs, namely, steel that will exceed our price increases. As we've talked about you know over the course of time, our price increases typically lag the commodity inflation, so we think there will be a net drag this year.

We certainly try to get ahead of that. And if we do, that would be an opportunity, but that's not typically how it works. We spiked out price at Lighting this year because it's sizable. It doesn't fit our typical cost-price productivity equation, given the competitive dynamics.

Because, as I mentioned earlier, calendarization in last year price pressure in Lighting worsened throughout the year. We anticipate a reverse of that pattern in 2017, based on the easier compares.

And a lot of that attributable to LED adoption -- the pricing around LED adoption, so as those rates of adoption start to moderate, I think that can help mitigate the pricing pressure. In foreign exchange, we still expect it to be a headwind, certainly more modest than the last year. That's got both translational and transactional impacts.

So those are the key elements getting us to our $5.60 to $5.80. You might have noticed the absence of mix and pension from this page, we've talked about -- I think we talked about in the third quarter we had that as some of our headwinds and other considerations.

You know we certainly expect that the severe mix headwind that we saw in 2015 in 2016 to moderate. So we think that's -- should be at a level that that's not worth contemplating in this analysis. And the last item, on pension, we're now looking at pension expense roughly flat year-over-year.

It's a change to what we saw in October, really due to two factors. One is discount rates which lessened, but it didn't completely offset what we were looking at as the headwind in the year-over-year incremental increase. The other is, we approved the design change for our non-collectively bargained U.S.

plans which included shifting our active defined-benefit plan participants to a defined-contribution plan and a full freeze of plans by 2020. Getting more predictability to our cost profile, substituting a defined benefit with a defined contribution.

Something that -- you know, we closed the plan originally, in 2004 to new participants and now we're freezing the benefits over the course of the next three years. So that provides some -- and helped mitigate that headwind, kind of neutralize it for next year.

So, all-in-all, a lot of activity, as I mentioned, focused around cost, focused around growth. I think we'll continue to do a lot of more of the same, with more emphasis this year on innovation, product investment -- because as I look at the market going forward, I think the market trends are positive.

Our cost structure and our execution around our cost structure is positive. I think the technological shift that we've seen in Lighting can start to impact the rest of the electrical industry and we're very well prepared to take advantage of that.

But we'll be looking at where best to invest our efforts to make sure that we're well-positioned well into the future. So with that, let me open it up to questions. .

[Operator Instructions]. Your first question comes from the line of Nigel Coe from Morgan Stanley. Your line is open. Please go ahead..

I just wanted to start up with the bridge for 2017, and maybe quantify the impact of the Lighting price decline.

Looks to be about $0.25, is that about the right number?.

Yes, you're in the right ballpark there. We're sort of suffering in the 2-point range, and it's a little hard to anticipate how long that continues. But, you know Nigel, the way we've ended the year, as Dave said, where it's a little bit heavier in the back half than the front.

I think it's only prudent for us to assume that it persists, and that kind of precipitated some of our cost actions to keep being aggressive there, and manage against that. .

Okay. And with that 2 points, is that a gross impact? So is that gross price? I'm assuming you're getting some deflation on the inputs, as well. .

Yes, but it affects top line as well. Yes. .

Okay. And then, just switching to the stipulation that you called out in some of the heavy industrial and energy-centric businesses.

Can you just remind us, the roughly 10 points of oil and gas mix on sales -- or little bit less than that, how much of that is levered to North American lands business? And maybe you could just talk about whether you saw that pick up sequentially in 4Q versus 3Q. .

Yes, we really haven't seen the pickup sequentially. We're pretty happy that we've seen, you know, comparable sequential numbers for now a couple of quarters. But we really haven't seen pick up.

I think, if the anticipation going forward is some of the larger mega-projects, maybe, are the slower ones to get turned on, and the spending is more by smaller companies, and I think, that would be okay with us. I think we'd still look forward to serving those.

Part of what we did during this downturn is, we adjusted our headcount, you know Nigel, to kind of lower our cost, and kind of make our decrementals kind of manageable.

But the other thing we did was we actually put capital into the PP&E in that business, to try to increase some of the automation and be able to be more productive when that volume comes back. So, we're eager to see some of those green shoots start to come through. But we didn't yet, in the fourth quarter. .

Okay, and finally, you referenced the mix pressures that you experienced through 2015 and 2016. Can you give us just some color in terms of how much margin pressure you absorbed within your Harsh and Hazardous business. .

Yes, I'd say the decrementals that we experienced throughout 2016 in Harsh and Hazardous were in the 30% range. So it's a pretty decent drag for us to have to overcome, so that's why we're quite interested in that -- returning to a growth business. .

Your next question comes from the line of Rich Kwas from Wells Fargo. Your line is open. Please go ahead..

Bill or Dave, I should say, on the Lighting side, as a follow-up.

So is this pricing pressure related to the fluorescent -- rolling out of the fluorescent stuff and then into the LED? Or how much of this is the legacy fluorescent versus just LED -- enhanced deflation on the LED side?.

I think it's a combination of both, but certainly a big element of it is on the florescent shift to LED. A lot of unit price differences in that market.

And I think that's what, when you look at the facilities that we're consolidating, that's where the demand profile for the product that we were making, has really dropped off to make it uneconomical to continue to operate the two factories the way we were operating. .

So it was cleaning out the fluorescent, and then. Go ahead. Sorry, Bill. .

Rich, yes. You can see we finished the year with LED adoption in our C&I businesses, up around 2/3 now of our volume. So, as Dave said, as that starts to flatten, maybe that eases some of that tension. .

Okay.

And then during the quarter, did you, at the distributor level, whether it was for Lighting or other stock-and-flow type products, how would you characterize the demand over the course of the quarter? And what did you see in January versus December post-election?.

I think we certainly saw a pickup in December post-election, really across our businesses. I think that's consistent with what we heard from distributors -- what we've seen in other market participants.

And, I think some of that -- as I've said, we always have volatility in the fourth quarter, depending on where distributors might stand on their inventory levels, on their incentive levels.

But I think there was -- certainly in my conversations, there was more optimism, similar to ours, about investment that would be occurring beginning in 2017 at some point. And, I think, we haven't seen, at least in most of our businesses, any significant drop off in January, which is good. That hasn't always been the case.

We've had a lot more, in the past, volatility between January and December. But, I will also caution that, whenever I say that, then February ends up proving a different dynamic. And, from our standpoint, we're just hopeful that a lot of the rhetoric that's going on around trade and tax doesn't start to put more caution in the market, prematurely.

And, I'm really hoping that we're not talking about sloppy and choppy in 2017. I'll accept that maybe we're talking about the growth coming a little bit later, but not the volatility that we saw last year. .

I think, Rich, the other thing your question's getting at a little bit, is, Dave described end markets of 2%, and our expectation of outperforming that slightly for the full year. We ended Q4 with flat organic markets, and so, I'm expecting Q1 to be a lower-than-average growth quarter for the year -- year over year.

So just as you think about that -- so, that just reflects, too, on your January orders comment. .

Okay. And then, just a quick last one on, you've referenced the net-import position.

I know you're still working on it, but is there any way to think about it in terms of magnitude, for you?.

I think a lot depends, Rich, on whether or not -- how the maquilas get counted, whether or not materials that cross the border -- how you count that. So, I think there's still too much variability there for us to give you good guidance on what will happen to us. .

[Operator Instructions]. Your next question comes from the line of Christopher Glynn from Oppenheimer. Your line is open. Please go ahead..

Just, want to try to reconcile some of the trends in Lighting in the forward comments. So, I think, flat lighting units in the quarter, compared to, I think, 5% or 6% in the third quarter. Yet you bumped up the non-resi outlook slightly for 2017.

Seemingly contrary trends, but maybe some off-beat linearity is part of the answer? Could you help me understand?.

I don't know if I would characterize it as off-beat linearity, but that's maybe a good term. One of the things that we're -- in fact, I'm spending some time with the NMEA folks to better understand some of their analysis.

But if you think about it, lighting has had such growth over the last -- the lighting industry overall has had such growth over the last three to four years, I sort of analogize it to what we saw in the utility transmission business, where you had tremendous growth, and then at some point, that levels off, admittedly, at high levels of absolute activity.

And so, begin to wonder whether that isn't something that could influence the lighting dynamic, specifically. But the flip side is, the non-res market hasn't -- has had modest growth for several years, sans the lighting side, so I think that's kind of mitigating it.

So, we're looking at our non-residential, non-lighting construction business to being more stable, but the lighting piece still being a little bit volatile. And it could conceivably be slower growth than -- for this year, than we've experienced, and than you might expect. I don't know if that helps, but --.

Yes.

And digging further into that context of 2017's lower than this year, would you characterize 4Q as probably even an air pocket within that?.

It could be. It could be. I think there were indications of the some demand profiles being impacted by the uncertainty around the election. I've heard that in a number of different places. So, at least the early part of 4Q and December didn't really recover that, although it was certainly better.

And, I think, January -- and, I think, you probably heard that from others, at least that's what we seem to hear from the market. So, we're hoping that, that phenomenon was an air pocket, and that we'll start to see a pickup.

We feel good about our positioning, particularly because some of the things we experienced in 2016 were a result of having to react to pricing.

Some are the shift in our representations in the market, and some just a function of our own operations, while having -- as we're shifting the culture in our Lighting business to be more positive, moving some of our facilities to get our costs in line.

You know some of our -- you would hear in the market that some of our service levels were not at the standard. And so that's going to have an impact on our demand. We're getting a lot of that in line. And so, I think we have a level of optimism that we can outperform the market if all of that works.

Okay?.

Yes, thanks for that. And that was quite a number of footprint sites that you addressed during 2016, for certain. Sticking with that restructuring comment, the $0.25.

Should we conceive of that, sort of level loaded for 2017?.

No, Chris. I think, while through 2016, we were sort of doing that $0.08 a quarter to get to $0.35, I think you're going to see much more front-end loading here, as we're sort of more organized to get projects implemented sooner. And so of that $0.25, I'd be thinking about first quarter being in sort of the $0.11 range, plus or minus.

So more front-end loaded than sort of and even go at it. .

Your next question comes from the line of Joshua Pokrzywinski from Buckingham Research. Please go ahead. Your line is open..

On the Harsh and Hazardous -- I guess, I understand the caution, particularly coming off the last couple years to maybe call a trough, and see that inflect.

But how should we think about the normal lag between rig count, and when you start to see those orders definitively get more impacted? Or is there another metric we should keep an eye on?.

No, Josh, I think rig count is still a pretty good metric. You know the challenge is going to be that they're going to have to go through one sort of MRO cycle before we start to see that pickup. But we do know, that the U-shape of rig count during the year, ending December at higher than the average, is certainly a good sign.

We also tend to get -- the project side, you tend to get a little bit of visibility here. It's not as just, quick cycle book-and-bill, as some of the rest of our businesses. So, I think will be able to see it coming. And so that's why you see some of the caution in our guide, I think. .

Is that something that should be starting to hit you by mid-year? Or is that more of a, through second-half element?.

Yes. I think it's too hard for me to predict it that way. If you compare it back to our most recent cycle back in 2009, you know, the oil prices came back so quickly, that you saw new rigs coming on. And so, our volume came back in a V, in line with that.

So I'm kind of deviating from that prior cycle here, Josh, and sort of just needing to see that count start to be put to work, as opposed to a lot of new stuff. I think, that's why you're seeing us at that 0% to 2%. .

And if I could just follow up on some of the restructuring commentary.

I guess, if we snap the line here today, Bill, how do we think about the $0.25 of spend reading out into savings? Not that we're here to get 2018 guidance, but how should I think about carryover savings for that $0.25, and the pace of how that comes through from 2017?.

Yes. So, I think we've been -- as you add up sort of, our 2 1/4 year program, we're sort of in the 2-year payback mode, being about $0.45 on $0.93. As we taper to $0.25 next year, I think that goes to 2018, probably down to $0.15 to $0.20.

And then, I think the way we're looking at it, that $0.15 to $0.20 is a perpetuity, right? And because of our inquisitive nature, we think we're going to have facilities to consolidate -- independent of economic cycles, even. And so, we're kind of eager to get back to reported results.

We think the adjustments help you all understand year-over-year comparisons, but I am eager to get that kind of constant $0.15 to $0.20 in the background and just being steady. But that two-year payback, you know, continues to look like a pretty good gauge for the savings on our spending for now. .

So we should think about, just again, snapping the line here today, assuming nothing else, kind of another $0.20 of carry-over savings, net savings, reduced spend higher savings into 2018?.

Yes, you'd be more like $0.12 on the $0.25, you know. Right? But--.

Well, no. Because you also have $0.25 going to $0.15 to $0.20 going of spend. .

Yes. You're saying -- okay. I thought you're doing savings on the spending, but you're saying the impact on reported, yes. .

There are no further questions at this time. I now turn the call back to our presenters. .

Okay. Thanks everyone for joining us. Steve and I will be available all day for calls. .

This concludes today's conference call. You may now disconnect..