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3M Co (MMM 0.41%)
Q3Â 2019 Earnings Call
Oct. 24, 2019, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the 3M Third Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]
As a reminder, this conference is being recorded Thursday, October 24, 2019. I would now like to turn the call over to Bruce Jermeland, Vice President of Investor Relations at 3M.
Bruce Jermeland -- Vice President of Investor Relations
Thank you, and good morning, everyone. Welcome to our third quarter 2019 business review. With me today are Mike Roman, 3M's Chairman and Chief Executive Officer; and Nick Gangestad, our Chief Financial Officer. Mike and Nick will make some formal comments, and then we'll take your questions. Today's earnings release and slide presentation accompanying this call are posted on our Investor Relations website at 3m.com under the heading Quarterly Earnings.
Before we begin, let me remind you of the dates for our future investor events. Please turn to slide 2. Our Q4 earnings conference call will be held on January 28th, 2020. Please note we will be providing our 2020 guidance during our January call. As a result, we will not be having a 2020 outlook meeting later this year. Please take a moment to read the forward-looking statement on slide 3.
During today's conference call, we will make certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions.
Please note that throughout today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the appendix of today's presentation and press release.
Please turn to slide 4 and I'll hand it off to Mike. Mike?
Michael F. Roman -- Chief Executive Officer
Thank you, Bruce. Good morning, everyone, and thank you for joining us. The 3M team executed well and delivered a strong operational performance in the third quarter, building on our progress in the second quarter. While the macroeconomic environment remains challenging, we continued to effectively manage costs, improve productivity and invest for the future.
We exceeded the cost savings plan that we laid out in April, at the same time reducing inventory by $180 million. This is on top of the $250 million reduction in Q2.
Our underlying margins were strong and we generated robust free cash flow with a conversion rate of 106%. At the same time, we are making good progress on our four strategic priorities for value creation; portfolio, transformation, innovation, and people and culture. For example, two weeks ago, we finalized our acquisition of Acelity, which is an exciting addition to 3M's healthcare portfolio.
In Q3, we also divested our gas and flame detection business and announced the sale of our ballistic protection business, all part of our ongoing effort to optimize our portfolio. Later in today's call, I will also discuss our guidance for the full year and provide an update on PFAS. Please turn to slide 5 for a summary of our third quarter results.
Organic growth companywide was minus 1%. We continued to face softness in certain end markets, namely China, automotive and electronics, which represent 30% of our Company. Growth in the rest of our business was positive and we saw strength in end markets such as residential construction, medical and consumer retail, which Nick will discuss.
We also continue to see good returns from our investments in innovation, including the priority growth platforms we have shared with you in the past. Year-to-date, these platforms are up 9% as we create differentiated solutions for customers in areas such as auto electrification, connected safety and structural adhesives. Turning to EPS, we delivered GAAP earnings of $2.72 per share, a 5% increase year-over-year. Please note that this includes a $0.14 benefit from the Q3 divestiture that I talked about earlier.
We generated underlying margins of 23.8% with all business groups above 23%. For the second consecutive quarter, we improved our margins on a sequential basis while reducing inventory, which shows that our productivity actions are working.
We also saw notable improvements in both EMEA and Canada, two areas where we have deployed our new business processes end-to-end. In these areas, we are seeing improved margins, better use of data analytics, lower inventories and enhanced customer service, which gives us continued confidence in our ability to realize the benefits from our transformation journey.
In summary, I'm pleased with our team's progress in the third quarter. I thank them for their efforts and continued focus as we move forward. That wraps up my opening remarks. I will come back with some additional comments after Nick takes you through the details of the quarter. Nick?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Thank you, Mike and good morning, everyone. I'll start on slide 6 with a recap of our third quarter sales performance. Third quarter organic sales declined 1.3%. Volumes were down 160 basis points, while selling prices were up 30 basis points. The net impact of acquisitions and divestitures increased sales by 60 basis points, while foreign currency translation was a 130 basis point headwind to sales. All in, third quarter sales in US dollars declined 2% versus last year.
Looking at growth geographically, the US declined 1% organically. Consumer and Healthcare each delivered solid growth in the quarter. This was more than offset by declines in Safety & Industrial and Transportation & Electronics. These two businesses were impacted by weakness in end markets and channel inventory adjustments, which further softened as we moved through the quarter.
Asia Pacific declined 4% in Q3. Japan's organic growth was up 3% with broad-based strength across most of our businesses. Organic growth was down 9% in China, driven by continued weakness in automotive, electronics and export-related markets. For the year we expect organic growth in China to be down mid single-digits. EMEA grew 2% with positive growth across all businesses; Latin America/Canada grew 3% led by strong growth in Canada and Mexico.
Please turn to slide 7 for the third quarter P&L highlights. Companywide third quarter sales were $8 billion with operating income of $2 billion. Operating margins were 25.2%, which included a 140 basis point benefit from the Q3 divestiture. Overall, I'm pleased that our actions to drive productivity continued to gain traction, with strong underlying third quarter margins of nearly 24%.
On the right hand side of the slide, you can see the breakdown of our third quarter margin performance. First, the biggest impact to Q3 margins was the year-on-year decline in organic volume, along with our actions to lower production volumes and reduced inventories to improve cash flow in the quarter. Partially offsetting these headwinds were benefits from the restructuring actions taken in Q2, as well as net gains related to property sales. In total, these factors resulted in a 160 basis point reduction to margins versus last year's third quarter.
Acquisitions and divestitures contributed a net 100 basis points to margins, primarily due to the gain from this quarter's divestiture, which was partially offset by the M-Modal acquisition. Higher selling prices continued to more than offset raw material inflation, contributing 30 basis points to third quarter margins. While selling prices came in a bit lower than expected, our sourcing efforts reduced raw material costs, resulting in a net benefit, which we expect to continue as we move forward. And finally, foreign currency, net of hedging impacts, increased margins by 80 basis points.
Let's now turn to slide 8 for a closer look at earnings per share. Third quarter earnings were $2.72 per share, which included a $0.14 benefit from this quarter's divestiture. Excluding this benefit, overall earnings were solid as the 3M team delivered strong operational performance.
Looking at the components of our year-on-year earnings performance, the net impact of organic growth, inventory reductions and the other items that I covered on the prior slide reduced third quarter per share earnings by $0.16. Acquisitions and divestitures combined increased third quarter earnings by $0.10 per share versus last year. Foreign currency, net of hedging, was an additional $0.05 per share tailwind in the quarter.
Our third quarter underlying tax rate contributed $0.08 to per share earnings year-on-year. The lower rate is primarily a function of last year's tax reform and the benefits it created for US-based companies with a significant portion of their manufacturing in the US. And finally, we reduced average diluted shares outstanding by 2.6% versus Q3 last year, which added $0.07 to per share earnings.
Please turn to slide 9 for a look at our cash flow performance. As Mike noted, we delivered very strong cash flow in the third quarter. Free cash flow was $1.7 billion with a conversion rate of 106%, which included a negative 27 percentage point combined impact from the Q3 divestiture and cash payouts of previously accrued respiratory-related legal settlements.
For the full year, as a result of increasing cash flow, we are raising our expectations for conversion to a range of 105% to 110% versus 95% to 105% previously. Third quarter capital expenditures were $349 million and remain on track to be in the range of $1.6 billion to $1.7 billion for the year. During the quarter we paid $828 million in cash dividends to shareholders and returned $142 million to shareholders through gross share repurchases.
Please turn to slide 10 where I'll summarize the Business Group performance for Q3. I will start with our Safety & Industrial business, which declined 3.3% organically in the quarter. Similar to the first half of the year, we saw a continued end-market softness and channel inventory reductions, which impacted most of our portfolio.
Looking geographically, Safety & Industrial's organic growth was led by a 2% increase in EMEA and a 1% increase in Latin America/Canada, while the US and Asia Pacific each declined. Safety & Industrial's third quarter operating margins were 26.8%, which included a 3.9 percentage point benefit from the gas and flame detection divestiture. Overall, underlying margins in this business were solid in the quarter when considering negative organic growth and inventory reductions.
Moving to Transportation & Electronics, third quarter sales were down 3.4% organically compared to last year. The Electronics related businesses declined high single-digits organically as demand remained soft in consumer electronics, semiconductor and factory automation end markets. Our automotive OEM business was down 3%, in line with third quarter global car and light truck builds.
Advanced materials grew mid single-digits organically, while both transportation safety and commercial solutions each grew low single-digits. Geographically, Latin America/Canada grew 7%, EMEA was up 1% organically while the US and Asia Pacific each declined mid single-digits. Transportation & Electronics third quarter operating margins were 25.2%, down 250 basis points. Similar to Safety & Industrial, margins were impacted by lower sales and inventory reductions.
Turning to Healthcare, the business delivered 2% organic growth in Q3. Organic growth was broad-based across most of our Healthcare business. Growth was led by a high single-digit increase in health information systems. We continue to invest in this business, including this year's acquisition of M-Modal, which recently launched a new AI clinical documentation software that provides real-time insights to clinicians.
Medical solutions, our largest business in Healthcare, was up low-single digits in the quarter. We are excited to have Acelity join this team, which Mike will cover shortly. Food safety grew organically mid single-digits with oral care up slightly. Separation and purification was down mid single-digits, primarily due to softness in China. Looking geographically, Healthcare grew across each area. Healthcare's third quarter operating margins were 26.7%, impacted by 1.5 percentage points from the M-Modal acquisition. Also impacting margins were inventory reductions, Acelity acquisition-related costs and investments in priority growth platforms.
Lastly, third quarter organic growth for our Consumer business was nearly 3%. Sales were led by mid single-digit growth in home improvement and low single-digit growth in consumer healthcare, while stationery and office, and home care declined. We saw continued strength in many of our leading brands, in particular Filtrete, Command and Nexcare. Looking at Consumer geographically, EMEA, Latin America/Canada and the US each grew low single-digits, while Asia Pacific declined. Consumer's operating margins were 23% in the third quarter, up slightly year-over-year.
That wraps up our review of third quarter results. Please turn to slide 11 and I'll hand it back over to Mike. Mike?
Michael F. Roman -- Chief Executive Officer
Thank you, Nick. I would like to make a few comments about our acquisition of Acelity, which was finalized earlier this month. We are excited as we bring together two innovative companies focused on improving healthcare outcomes for patients. Acelity offers an impressive range of medical solutions, including their groundbreaking negative pressure wound therapy. They are an ideal fit within our Healthcare portfolio, complementing our existing business and further accelerating 3M as a leader in advanced wound care, which is a significant and growing market.
Acelity has annual revenues of $1.5 billion and year-to-date they have delivered organic growth of 5% and EBITDA growth of more than 10%. We look forward to leveraging the fundamental strengths of 3M, especially our global reach and technologies to build upon these results and drive even greater value. We expect the acquisition to be $0.25 dilutive to GAAP EPS in the first 12 months or $0.35 accretive excluding purchase accounting and anticipated one-time expenses related to the transaction.
We are pleased to welcome the talented people of Acelity to our 3M team and are confident in the value of this acquisition will deliver to our customers and our shareholders.
Please turn to slide 12 where I will discuss our guidance. Today we are updating our guidance to incorporate the Acelity acquisition along with our expectation of continued softness in China, automotive and electronics. With one quarter remaining in the year, we are providing our guidance for Q4. We anticipate earnings in the range of $2.05 to $2.15 and an organic sales decline of 1% to 3%. On this slide, you will also see our updated full year guidance for EPS and organic growth.
Before turning to Q&A, I would like to make a few comments related to PFAS. We continue to proactively manage this issue and I would like to provide some specific updates of what we have done since our last earnings call. As you may know, in early September we testified before a congressional subcommittee in Washington DC. We reminded the committee that the weight of scientific evidence does not show that PFAS cause adverse human health effects at current or historical levels; opposition shared by public health agencies and independent science review panels.
In our testimony, we also announced a number of commitments that build upon our existing efforts related to PFAS, including supporting new coordinated research into PFAS; establishing a clearing house to share best practices on detection, measurement and remediation; supporting nationwide science regulation; and continuing to work with former customers to help ensure that unused AFFF containing PFOS is properly handled.
We also reaffirmed our commitment to ongoing remediation of our manufacturing facilities and historical disposal sites. With respect to litigation, the AFFF multidistrict litigation is still in the early phases and at this time no trials have been scheduled. Outside of AFFF, the earliest we expect other product related trials to begin would be in the spring of 2020. Moving forward, we will continue to keep you updated as developments unfold.
In summary, as I look across our Company, I see the strength of the 3M model. We have deep competitive advantages in our unique technology platforms, advanced manufacturing, global capabilities and leading brands. We also have experienced teams that know how to manage through macroeconomic slowdowns which our businesses tend to see early. In these situations we put an even greater emphasis on improving our operational performance and reducing costs, enabling us to generate strong cash flow as we did again in the third quarter.
And throughout the business cycle, we remain focused on winning with our customers and keeping them at the core of everything we do, a great strength at the heart of the 3M culture. As a result, we are well positioned to lead out of this slowdown and deliver strong growth and premium returns as our markets recover. Thank you for your attention and we will now take your questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from the line of Andrew Kaplowitz with Citi. Please proceed with your question.
Andrew Kaplowitz -- Citi -- Analyst
Hey, good morning guys.
Michael F. Roman -- Chief Executive Officer
Good morning, Andrew.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning, Andrew.
Andrew Kaplowitz -- Citi -- Analyst
Mike or Nick, can you give us more color into your revenue guidance for Q4. If you look at sales comps, they are reasonably close between Q3 and Q4. You're forecasting continued deceleration in your guide. So you're expecting some of your markets just to get worse in Q4, and could you give us some color by segments, are the biggest changes there in Safety & Industrial and then in Healthcare, if you're not going to reach the high end of your range, how much of that is the China flow in that you mentioned?
Michael F. Roman -- Chief Executive Officer
Andy, I would say when you look at Q3 versus Q4, Q4 has a very similar dynamic to Q3 and you start with industrial production and GDP, they're pretty much in line quarter to quarter. We, as I said in my remarks, are still anticipating some -- that slowing in China automotive and electronics continue through Q4, so that outlook continues to remain the same.
I would say our view of Q4 is on the top line much like Q3 and with a range around it, and then we are -- our focus continues as you expect to focus on execution, there are growth opportunities, that 70% that has positive growth in Q3, there are growth opportunities there, so we're going to be pursuing those and there are much of healthcare as part of that.
Andrew Kaplowitz -- Citi -- Analyst
Okay, Mike. And maybe shifting gears, Nick, can you give us more color on how you're thinking about all the moving pieces in our margin, obviously good performance in the quarter. Your guide to around 23% in Q3 and you came in closer to 24% ex the divestiture, so you had talked about second half restructuring, currency tailwind lessening impact from inventory de-stock. And then you've got this transformation optimization ramping up. So can you talk about which of these variables were better than expected and if it's possible, could you give us some early color on how you're thinking about these variables into 2020?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Okay. Andy, quite a bit, you asked there. First of all, we are -- I am very pleased with our margin performance in Q3. When we strip out the gain on our divestiture, nearly 24% and we're seeing productivity actions that we're taking, gain traction. And at the same time we're continuing to lower our production volumes and inventories with our focus on improving cash flow; so very pleased with that.
Now when we look at what's going on in the margin performance itself in the quarter, there is about 150 basis points that we lay out that's negatively impacted from organic growth, inventory reductions and other items, and about a third of that headwind is just directly related to the lower organic growth. And then the remaining two-thirds is tied in with our lower production, lowering our inventory levels and is partially being offset and being benefited by our restructuring actions which are coming in exactly as we expected and we also had a gain on the sale of some property that will just go into a little more depth on.
We continue to do -- have a portfolio process where we're reviewing our assets that we have in place, looking for, are they optimal and can we be moving to more cost effective operations. We continually do that. In the third quarter we consummated a transaction disposing of an office building that resulted in a net benefit of about 50 basis points to our margin or about between $0.06 and $0.07 per share. So those are the main things going on in the quarter from a margin perspective.
If I -- as far as next year, Andy, I think it's really too early. We're still focused on delivering 2019. We'll give guidance on that in January.
Andrew Kaplowitz -- Citi -- Analyst
All right, thanks, Nick.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah.
Operator
Our next question comes from the line of John Walsh with Credit Suisse. Please proceed.
John Walsh -- Credit Suisse -- Analyst
Hi, good morning.
Michael F. Roman -- Chief Executive Officer
Good morning, John.
John Walsh -- Credit Suisse -- Analyst
I guess, maybe going back to electronics and automotive markets, maybe even China as well, you know in the Q you have the reported numbers, you kind of give us some direction on the local currency growth on the call. But you know, are you actually seeing the second derivative start to improve in those end markets. So if you look at some of the external data, electronic markets declines have kind of stabilized at least where they are in terms of negatives and gotten a little bit better sequentially. Auto could potentially flip next year as second derivative gets better. But can you talk specifically to your businesses in those -- that touch those markets?
Michael F. Roman -- Chief Executive Officer
Sure, John.
John Walsh -- Credit Suisse -- Analyst
-- that we saw in the quarter?
Michael F. Roman -- Chief Executive Officer
Yeah, just maybe kind of look across all of those, starting with automotive. So automotive, the build rates are still negative and actually I would say the projections, they were worse than the projections, maybe a bit better than what we saw in the first half, but still negative. And so that was something that is an update to how we look at the second half of the year.
I think we had a more conservative view of the overall projections and so we're planning for this. We did see additional channel reactions to those negative build rates. We had talked about it in the Q2 call that we thought a majority of the channel response to the decline in automotive and electronics more broadly took place in the first half of the year, but we did see some additional adjustments, a big part of that in, I would say in China, but more broadly than that as well.
Electronics continued to be a drag in terms of end markets, they were negative growth as well. There are some signs out there that people are optimistic, it's going to improve. We have some early indications that semiconductor is looking like it might start to improve. Certainly, there has been some consumer electronics, OEMs and brands that have talked about increasing sales. We've yet to see that necessarily play through the supply chain for us, but it's a -- I think the Q3, Q4, if what I said earlier to Andy's comment, we see auto, electronics and China kind of in line between Q3 and Q4. So we haven't seen that, what I would call a bottom in an upturn yet, although there are some signs in electronics side anyway that there is an outlook for improvements coming.
John Walsh -- Credit Suisse -- Analyst
Okay, thank you for that. And then I guess as we think about at least the acquisitions and I know you don't want to get into next year, but maybe we can talk about the underlying you're seeing in the back half of this year, obviously M-Modal will flip from being a headwind to a tailwind based on your prior guidance for that business. We have Acelity coming in. But can you talk about the underlying healthcare business either in terms of incrementals, if you were to take out all the noise, are you seeing anything different than history or maybe just help us understand what's going on there on an underlying basis?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Hey, John, just to clarify, are you talking about growth or margin when you're saying that?
John Walsh -- Credit Suisse -- Analyst
Oh, sorry, on the margin side, on the margins because there is going to be a lot of noise in that margin number particularly on Q4 with the acquisition dilution.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah, thanks for clarifying that, John. So what we're seeing in healthcare from a year-on-year margin performance, the biggest thing as I said earlier is coming from our M-Modal acquisition. And yes, that will start to flip next year. Other things going on there, we're continuing to invest in a number of priority growth platforms. We've built a number of growth platforms that you've seen us lay out and healthcare has a disproportionate amount of those and we continue to invest in that.
We also in the current quarter -- is some investments we're making as we get ready for the Acelity -- as we were getting ready for the Acelity acquisition, that's part of that. Just from a historical standpoint, you know, we reorganized this business earlier this year and added our separation/purification business to be part of this. And I think, John, you know we restated and shared what those were. On a restated basis for last year and the year before that, the healthcare business was operating on about a 28% operating income margin.
John Walsh -- Credit Suisse -- Analyst
Great, thank you for that.
Operator
Our next question comes from the line of Julian Mitchell, Barclays. Please proceed.
Julian Mitchell -- Barclays -- Analyst
Hi, good morning.
Michael F. Roman -- Chief Executive Officer
Good morning, Julian.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning.
Julian Mitchell -- Barclays -- Analyst
Good morning. Maybe just starting with the Healthcare division, not so much on the margin side which I think you've clarified, but maybe organic growth. So I think the organic growth year-to-date in Healthcare is running at about 2%. Also just wondered, you know, when you're looking at that maybe over the next 12 months, what are you expecting to accelerate that number. And related to it, separation/purification rolled over, it sounded like having been flattish in Q2. How long do you expect that downturn to last and maybe tied to Healthcare, the Acelity GAAP dilution has shrunk a bit versus what you said at the time of the deal, so what drove that?
Michael F. Roman -- Chief Executive Officer
So, Julian, I would start with just -- this remains a very attractive business, the end markets are very attractive with some strong growth trends. The demographics play well here. So as we look forward, we see that as a strong growth driver for us. If you look in the quarter the 2% growth, it was positive across nearly all of Healthcare and it was led by good growth again in health information systems and food safety, strong growers; medical solution was up low single-digits. The headwind that we faced with separation and purification as you talked about and that was primarily due to elevated channel inventories in a few areas of the world and one of those is China where we have a significant separation/purification business. So that that was the headwind.
We did have both drug delivery and oral care were up slightly in the quarter and we expect drug delivery to continue to improve sequentially as we go forward and oral care continues to grow strongly globally. We saw some softness in the US and we think the strength globally will carry us to better growth as we move ahead. So the overall markets of strong portfolio and the medical solutions business getting stronger with the integration of Acelity.
By the way, the results in health information are reflecting some of the early synergies that we're getting from our M-Modal acquisition, bringing those teams together, that's really starting to play out in the market for us as well with our customers. So I think we do see it improving as we go into next year.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
And Julian, in regards to the improved guidance that we're giving in regards to Acelity, we had previously said that in the first 12 months we expected it to be $0.35 dilutive to GAAP earnings and we now expect it to be $0.25 dilutive in the first 12 months to GAAP earnings. That $0.10 better EPS impact is primarily related to lower than expected financing costs. We saw interest rates from the time we announced that to when we actually obtained that financing improve, that's one piece and the most significant piece. We also are seeing better than expected EBITDA projections for that business than we were assuming back in May when we announced this deal.
Julian Mitchell -- Barclays -- Analyst
That's good to hear. Thank you, Nick. Maybe one quick follow-up. Switching tack, just looking at the firmwide P&L for Q3, very good performance on SG&A to sales coming in at 18%. Just wondered how much you thought that was sort of variable cost or something temporary like currency affecting that number or that ratio and how much is related to fixed cost reduction efforts that Mike you've been putting in place for the last 12 months and whether that sort of lower SG&A to sales run rate may be sustainable?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
If I look at this year on year, third quarter last year to third quarter this year, we're down about 80 basis points year-on-year. That's -- it's a combination of a couple of things, first of all, FX is not having a very material impact on that as a percent of revenue because it affects both the numerator and the denominator, not a big change there. The two biggest things, Julian, that are impacting that, one is the restructuring actions that we took in the second quarter, we're seeing that benefit. The second -- and that I would see as sustained. The other thing that's impacting that is the gain we had on the sale of the building that I mentioned earlier, that will not be repeated action. It's about half and half.
Michael F. Roman -- Chief Executive Officer
And Julian, I would just add. As Nick said, we are executing well against our plan for the restructuring actions. Our teams are also responding to the dynamics that we see in the market and I think you see good operational and cost discipline as part of every business, so those are both playing through.
Julian Mitchell -- Barclays -- Analyst
Great, thank you.
Operator
Our next question comes from the line of Andrew Obin with Bank of America Merrill Lynch. Please proceed with your question.
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
Yes, good morning.
Michael F. Roman -- Chief Executive Officer
Good morning, Andrew.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning, Andrew.
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
Just a question, sort of another broad question on growth. As we think, auto probably will remain a headwind specifically in North America and even if China bottoms into 2020. Just wondering what kind of set of macro assumptions do we need for 3M to grow top line organically in 2020 overall. I'm not asking for your forecast, but if you could just outline what's the baseline macro scenario that gets 3M growing in 2020. Thank you.
Michael F. Roman -- Chief Executive Officer
Andrew, I'm probably not ready to give the forecast, but I would say what you talked through, just automotive electronics and you think about broader across what we've been talking about in our businesses, absent a recession and/or some other major downturn in the markets in 2020, we expect to have positive growth across the Company. You will see at least in a year-over-year comparable improvements less headwinds in automotive and electronics as I talked about earlier, we're seeing some early signs that we might have some upside in electronics going forward that has to play out; yeah, right. We are focused on Q4 and Q4 will tell us a lot about what to expect certainly in early 2020, but absent a recession we expect to have positive growth.
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
And just a follow-up on electronics, historically you guys have been very good at calling out electronics a lot better than other suppliers into the industry. It seems that was one area of the shortfall in the quarter. Can you give us more specifics as to what sub-segments within electronics end market and I'm looking at one of the slides where you give the full blown disclosure, what specific end markets or products drove deceleration in this quarter versus previous quarter? Thank you.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Well, I would (multiple speakers).
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
I'm referring to slide 18.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah, I'll talk about the four end markets in electronics broadly that are -- that we talk about when we talk about driving our growth Consumer electronics, we saw softness in that, you know, continued to to come through in Q3. Factory automation, there is no sign that that's turning around at this point and that also remained soft. Auto electrification, we saw lower build rates in Q3 in automotive electrification related platforms, and makes and models. And so that was impacted by the overall auto build rate and so that -- we still had some growth in our auto electrification portfolio, but not as strong as we had seen earlier in the year.
And then semiconductor, I would say it declined into the quarter, but as I said, there are maybe some early signs that we'll see that pick up as we go forward, so that's kind of the view of the four. So, really three of them are -- were soft in the quarter and our frame is to -- that's the outlook for Q4 as well.
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
Terrific, thank you very much.
Operator
Our next question comes from the line of Steve Tusa with JP Morgan. Please proceed with your question.
Steve Tusa -- JP Morgan -- Analyst
Hey guys, good morning.
Michael F. Roman -- Chief Executive Officer
Good morning, Steve.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning, Steve.
Steve Tusa -- JP Morgan -- Analyst
So given you aren't going to do the kind of a year end meeting, will there be a point where you guys kind of -- it just seems to me like a lot has changed since we last kind of sat down and walked through the strategy, like a little less than a year ago. Will there be a time here in the next six months or so and certainly in the context of like maybe what you might learn on the PFAS front, where we're kind of all get together and reset kind of the long-term view or are you still of the view that it's steady as she goes, there's really no change to kind of the longer-term framework and algorithm you provided last fall or winter whenever that was in Minnesota.
Michael F. Roman -- Chief Executive Officer
Yeah, Steve, certainly the first year of our five-year plan hasn't turned out as we anticipated given the slowdown in those key end markets we've been talking about. We do have -- parts of our five-year plan that are -- just as a reminder, are doing well. We're on track for a strong performance in free cash flow conversion and return on invested capital, but you're talking about growth, when we look at growth in the outlook.
Our Q4 earnings call is where we will give an outlook for next year, which is really the next indicator of where we are to get back on track with the longer five-year plan. I think we are taking the right actions, I think it's early today to give an update on the five-year plan, but we'll be looking for the right time to do that as we come out of our guide for next year.
Steve Tusa -- JP Morgan -- Analyst
Okay. So there is no like you're still kind of, hey, we'll see what happens here and we may or may not reset that. I mean, is there a chance that you would look at that or is there basically no chance that this is basically just a cyclical element in your first year and you assume everything kind of bounce it back?
Michael F. Roman -- Chief Executive Officer
We're always looking at the long-term plan versus what we see in the markets and I think as we get a better view of 2020, we'll incorporate that and then we'll come back to you.
Steve Tusa -- JP Morgan -- Analyst
Okay. And then just one last thing on kind of the deleverage, the core underlying leverage. I mean I appreciate you guys had some pretty significant inventory headwinds. It still seems to me, especially with the property sale that there is a bigger decremental kind of volume impact even when you strip out the impact of inventories. Is there anything that kind of changes that over the next couple of years, are you guys spending more you know than you would otherwise be spending in kind of a tougher environment. I mean how do we think about the type of growth you guys need to have, you know, that kind of 40% incremental margin or some real leverage on the margin as things come back up because it looks to me like the decremental leverage remains a little bit tough when you strip out everything, but volumes.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah, Steve. Part of our year-on-year comparison is we are, as you noted, aggressively pulling out inventory out of our own supply chain. We're estimating year-on-year that's having a 150 to 200 basis point negative impact on our margins. So to partly answer your question, reaching a point of more stability on our amount of inventory and production that we have in our supply chain then in itself is in the future going to start to create some of the tailwind to us when we depleted that inventory out.
And by the way, in our guidance here we are estimating that we're going to take about another $50 million of inventory out of our supply chain in the fourth quarter.
Steve Tusa -- JP Morgan -- Analyst
Okay. And then one last quick one on the price cost. Is that that materials benefit -- that's kind of like detached from volume, right? So like if volume goes down, obviously your materials are going to go down or is that -- how does that kind of reflect that dynamic, just remind me about -- just remind us of that.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah, that's detached from volume, that's looking at what we're getting from prices versus what we're paying for our raw materials and and we really don't factor in a volume component to that.
Steve Tusa -- JP Morgan -- Analyst
Yeah. Okay, great. Thanks for all the details as usual guys. Very helpful.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Thanks.
Operator
Our next question comes from the line of John Inch with Gordon Haskett. Please proceed with your question.
John Inch -- Gordon Haskett -- Analyst
Thanks, good morning everybody.
Michael F. Roman -- Chief Executive Officer
Good morning, John.
John Inch -- Gordon Haskett -- Analyst
I just want to pick up on the point of the year-end meeting. Is this just a suspension for this year based on economy influx or is this permanently you're not going to hold these anymore. And if so, I'm actually curious, how do we get our gift bag of stocking suffers.
Michael F. Roman -- Chief Executive Officer
Well, John, definitely, we think it's the right thing to do this year. So we have a really clear view of what we saw in the quarter as we started the year. We think we can give a better outlook at the earnings call. We did in last year too, and the dynamic with similar. We saw changes in the end markets coming and we thought it was a better place to give, I think just better quality outlook for the year. So we're going to do it again this year.
John Inch -- Gordon Haskett -- Analyst
Yeah, I don't disagree. Honestly, November last year was a little early, just based on the way things were fluctuating. So I was not [Indecipherable] much of a surprise. I do want to ask you though, the US did seem to step down in the quarter, kind of versus the trajectory and I'm not sure that we're hearing that really from other companies. So I'm curious kind of what's your read, Mike and Nick, on the US, what kind of got worse, was there some inventory, is this transitory or what's kind of going on the underlying. And Asia also seem to get a little worse, but I think you sort of explain that with the additional inventory step-down that kind of occurred in some of those end markets, but what's going on in the US?
Michael F. Roman -- Chief Executive Officer
Sure, John. You know, the IPI as I said earlier, IPI is kind of similar Q3 to Q4 worldwide. But in the US we saw a significant decline in IPI and a revision down in the third quarter. And Q4 actually is projected to go negative. So you're seeing a broader impact on industrial production, broader manufacturing. We're certainly seeing that and that's impacting our Safety & Industrial business. Our auto business is certainly caught up in that. We have good growth areas in much of Healthcare. There are some segments, you know, consumer and retail spending continues to be strong in the US and there are some other segments like construction where we've seen significant growth opportunities.
But that broader industrial, manufacturing sort of markets is weighing on the US results. And then we saw with that slowdown, we saw additional channel actions in the quarter. And so that was part of what you saw coming through our numbers, especially in our Safety & Industrial business.
John Inch -- Gordon Haskett -- Analyst
And I'm assuming, I mean, obviously we all read -- saw the September ISM print. I'm assuming everything you've seen thus far in October doesn't -- the trend since September kind of more or less the same with respect to the United States or is there any other -- is there any difference thus far, I realize it's only -- you still got another week to go, but --
Michael F. Roman -- Chief Executive Officer
I would say that as we've talked in the past, channel tends to react pretty quickly. So we -- it's early days in October. We'll see if there is additional reaction there. But I think, I would say what I said earlier that Q4 and Q3 kind of in line and October starting out as expected.
John Inch -- Gordon Haskett -- Analyst
And then just lastly Nick, on the $0.35 of Acelity accretion, how much -- like, how should we spread that, there's obviously going to be some in the fourth quarter through the next four quarters. How would you spread that and then what about the restructuring savings that we took in the second quarter from those actions. How much hit the third quarter and how would you expect again sequentially the restructuring savings from your second quarter actions to play out?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
So the restructuring savings, just as a reminder, we expected an annualized benefit of $225 million to $250 million, where we expect $110 million of that to impact the second half of this year and that's playing out as we expected and it's almost evenly split between Q3 and Q4. And then the balance of that, we expect to hit in the -- to benefit the first half of 2020. That's in regards to the restructuring.
As far as Acelity and now you're on to -- you're not talking about the GAAP impact, but now from a $0.35 -- once we exclude the purchase accounting and the transaction in the integration costs, we expect that a large chunk of that is going to be hitting in Q4. Right now all we've guided, we expect about $0.15 on a GAAP basis, but on a non-GAAP basis we're not providing guidance yet. But of that $0.35, we will be seeing that more evenly spread over the next four quarters.
John Inch -- Gordon Haskett -- Analyst
Maybe the point is in fourth quarter, how much of the fourth quarter of Acelity, is that $0.15 of your fourth quarter guidance.?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah. From a GAAP perspective, it's a $0.15 headwind to us in the fourth quarter and then another $0.10 headwind in the first three quarters of 2020.
Michael F. Roman -- Chief Executive Officer
Yeah, John, just to be clear, that is included in our guidance.
John Inch -- Gordon Haskett -- Analyst
Yeah. Okay, all right, We'll work details offline. Thanks guys. Appreciate it.
Michael F. Roman -- Chief Executive Officer
Yeah.
Operator
Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.
Deane Dray -- RBC Capital Markets -- Analyst
Thank you and good morning everyone.
Michael F. Roman -- Chief Executive Officer
Good morning, Deane.
Deane Dray -- RBC Capital Markets -- Analyst
Hey, I would like to circle back. I know, inventory has come out multiple times during this call. But maybe you can just clarify the interplay here. You're referring to customer channel inventory adjustments and we've seen this multiple quarters, now you called it out with Safety & Industrial. Just because of lower demand it gets reflected in your organic revenue growth. So we get that. But then as 3M you're also taking inventory down. You did $180 million in this quarter, you said there is another $50 million. The interplay between the two -- how -- what inventory you actually taking down, is this all the result of lower customer demand. And then, Nick, help us understand the cash flow impact as you liquidate this inventory.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah, Deane, this is impacting our cash flow positively and it's the single biggest driver why you're seeing us increase our estimate of cash flow generation for the full year, as we are realizing these benefits of reducing inventory within our own walls. Some of that is in response to what we're doing, responding to what we see a lower demand right now. So that's part of it, Deane. But part of it is also that we are seeing opportunities for us to be managing our own supply chain more effectively. It was part of what we've talked about for the last few years around business transformation. I would say we are starting to see some of that benefit and that's part of fact, reason why we have this confidence that we can be bringing down our inventories and improving the cash flow as you're seeing.
Michael F. Roman -- Chief Executive Officer
Deane, I would add that, and we had a plan come in the year to take down inventory significantly and follow-on to our go live in the US last year August. We have built inventory ahead of that. We talked a lot last year about what customers did Q2 to Q3, but we built inventory to manage through that. We didn't take all of that out by the end of 2018 and had a plan to do that in 2019. And so what you're seeing, part of a -- significant part of what we're doing is that plan and executing it, while we see a slowdown and having to to manage our operations against that slowdown.
Deane Dray -- RBC Capital Markets -- Analyst
That clarification was very helpful. And just as a follow-up, I know there was some SG&A questions, but it also look like corporate costs came in lower, was that all -- was the real estate gain there and then interest also looked lower and what were the dynamics there?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
The real estate gain, that was all incorporated, Deane, you're correct on that. As far as interest expense, the total net interest expense came in slightly lower and this will be the last, what I'll say low quarter for a while and this is part of the $0.15 guide we're seeing on Acelity because late in the quarter we issued more debt and we will be seeing our interest expense increase in the fourth quarter. So we've ran I would say pretty steady interest expense over the last three quarters, we'll be seeing that uptick in going into Q4.
Deane Dray -- RBC Capital Markets -- Analyst
Thank you.
Operator
Our next question comes from the line of Scott Davis with Melius Research. Please proceed.
Scott Davis -- Melius Research -- Analyst
Hi, good morning guys.
Michael F. Roman -- Chief Executive Officer
Hey, Scott.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning, Scott.
Scott Davis -- Melius Research -- Analyst
Is there any color you can give us on how the rating agency's view the PFAS overhang, do they circle a number around it and call it one turn of debt or something like that and just -- or is it just not far along -- enough along on that yet.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Scott, I describe it is, I'd say both our rating agencies as well as everyone else on the equity side as well is interested in what that will be, it's something they're watching and monitoring just as we're monitoring. I'm sure saying, you're monitoring as well. But there is not a specific thing that I know of that they are building in their estimates for that -- for our rating.
Scott Davis -- Melius Research -- Analyst
Okay. And you know I have -- and cycle timing is always tough. But you're taking down inventories now and then presumably sometime in 2020 things get better. I mean, is there a top line impact, you think missed orders or risk at all in the inventory plan or is it just -- or inventory so high that it's just not an issue.
Michael F. Roman -- Chief Executive Officer
Yes, Scott. I would say, really what I was talking about this -- big part of our inventory actions this year are follow-on to our go live in the US and that we don't see that impacting our service. That's -- we're getting us back to where we should be. And I would say we -- what I highlighted in EMEA and Canada, as we get deployed end-to-end, we actually see additional benefits. And we -- we can get more efficient and manage cycle times differently and days of inventory outstanding will go down and service will go up. And so we're seeing that kind of virtuous combination. So I don't -- nothing we're doing is putting at risk service and I would say it's a indication that we're moving forward and getting in a position to have better service at lower inventories.
Scott Davis -- Melius Research -- Analyst
Are the customers' holding less inventory too, Mike?
Michael F. Roman -- Chief Executive Officer
Well, when you go through distribution across a number of our models, they're all getting more efficient. They're driving out structure and the cycle time as well. So I think some of what you see in inventory reductions in the channel is just them driving more efficient models, big part of it this year is the slowdown in the end markets, but in general I think you're seeing all supply chains get more efficient, at least the ones related to us, we are seeing them get more efficient inside our four walls and then with our channel partners as well.
Scott Davis -- Melius Research -- Analyst
Okay, super helpful. Thank you.
Operator
Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.
Joe Ritchie -- Goldman Sachs -- Analyst
Thanks, good morning guys.
Michael F. Roman -- Chief Executive Officer
Good morning, Joe.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Good morning, Joe.
Joe Ritchie -- Goldman Sachs -- Analyst
So maybe my first question, just touching on the decremental margins, I think Nick in your prepared comments you provided the good decrementals in Safety & Industrial and I'm just trying to figure out the divergence between the decrementals in that business versus the decrementals in the Transportation and Electronics business. And so any insight that you can provide on either how much of that is either mixed or end market specific as opposed to how those businesses are being run and how to think about those decrementals margins moving forward?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
As far as the decrementals between SIBG versus TEBG, I think there is a lot of things in common, Joe, actually more than what they're different where they're both seen volume reductions impacting them as well as taking inventory -- as well as taking inventory out. On the TEBG side, there is also some mix benefit that's impacting the TEBG numbers a bit more than the SIBG numbers, partly from the geographies in which TEBG sells as well as the businesses where we're seeing the growth versus negative growth this quarter.
Joe Ritchie -- Goldman Sachs -- Analyst
So is it fair to assume then if things stay negative for the next couple of quarters, the decrementals then in the Transportation and Electronics business should remain kind of at pretty high levels whereas you'll be able to manage Safety & Industrial a little bit better?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah. Over time, Joe, I'm sure you'll observe this too, TEBG will have higher incrementals and higher decrementals, partly given the fixed asset base that we have there that when things are going up, we tend to see a lot more of that fall to the bottom line and when things are going down, we'll see more of that flow. So it will follow what's happening with our volumes in the coming quarters, Joe.
Joe Ritchie -- Goldman Sachs -- Analyst
Okay, fair enough. And then, Mike, maybe one question for you. As you kind of think about things on a higher level, not too long ago you guys performed a strategic review of the Health Information Systems business. I'm just wondering, given what we're seeing in the markets today, is there another thought to kind of look across the portfolio closer to see if there is any opportunity from a divestiture standpoint.
Michael F. Roman -- Chief Executive Officer
Joe, we are always evaluating our portfolio, it's an ongoing process. It's one of the things as we've built to become a more active portfolio manager, it's really become an active ongoing process and we're focused in that as I've shared in the past that we're focused on optimizing the value of our portfolio on an ongoing basis and looking at everything from what we do with our organic investments to where we focus our acquisitions and what we do to optimize all parts of our portfolio, including divestitures and we showed examples again where we were -- when we identified parts of our portfolio that we could create greater value by divesting them, we're ready to take those actions. So I think of it as a very active portfolio pipeline on an ongoing basis and something we top priority for us.
Joe Ritchie -- Goldman Sachs -- Analyst
Okay, thank you.
Operator
Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.
Nigel Coe -- Wolfe Research -- Analyst
Thanks, gents, good morning.
Michael F. Roman -- Chief Executive Officer
Hi, Nigel.
Nigel Coe -- Wolfe Research -- Analyst
Hey, so, Nick, can we just go back to the inventory impacts. I think you said 150 to 200 basis points, so was that $150 million to $200 million, can you just clarify that?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
That was 150 to 200 basis points impact based on our year-on-year change in inventory levels and throughput that we're putting through our factories.
Nigel Coe -- Wolfe Research -- Analyst
Yeah, OK. Can we just dig into that because I mean that implies $500 million gross margin impact just based on the 150 on revenues. And theoretically that comes back in 2020 you stay about the inventories. But it seems like apples-for-apples you cut inventory by about $400 million [Indecipherable], so I'm just wondering how enough it can be as big as that impacts just because of the fixed cost absorption, so maybe just kind of clarify that point, please.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
So, Nigel, part of that analysis is looking at how much we built inventories in the third quarter of 2018 compared to how much we reduced inventories in the third quarter of 2019. In the third quarter of 2018, we were still building inventory is fairly substantially and that's now flipped. So all of that 150 to 200 will not flow through 2020 because some of that is a statement on the benefits we were getting in 2018.
Nigel Coe -- Wolfe Research -- Analyst
Got it. Okay, that helps. We'll take that offline on that one as well. And then you kind of alluded to this in the answer to I think Joe's question on the geographic mix location of the sales and you're growing in EMEA, which is your lowest margin region still, you're declining heavily in Asia, which is your highest margin. So maybe just address the mix impact that you're seeing right now on margin.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah. So some of our businesses and that as we look geographically, Asia Pacific is one of our higher margin places and EMEA is one of our lower margin places, so geographic mix is having an impact on us. On the EMEA side, you're accurate in saying it's one of our lower -- it is our lowest margin parts of the world. However, I will point out, and thanks for bringing that up, we've been on a journey of rate increasing our margins there and we are very pleased with the progress we've been making in 2019 on our progression to moving our West European margins up to 20%. 2019 has been a substantial step toward reaching that by 2020 and we are highly confident we'll be there by next year.
Nigel Coe -- Wolfe Research -- Analyst
Got it. And then just one quick one, Nick, on the FX hedge the 8 basis points of impact this quarter, how does that evolve going into 2020, do we flip into FX negative 2020, I mean any views on that?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
It depends on whether you're asking about margin or EPS. We continue to have a number of unrealized gains that if currency stay where they are, we'll see those gains flowing through in the next two years from our hedging. Right now I'm not willing to say whether I think it's going to be a benefit or not because there's just too much volatility in the FX market to say, but if you look at our 10-Q that we will be issuing, if we lay out here is the amount of unrealized FX hedging gains that we will unwind in the next year or two.
Nigel Coe -- Wolfe Research -- Analyst
Fair enough. Thank you very much.
Operator
Our last question comes from the line of Laurence Alexander with Jefferies & Company. Please proceed with your question.
Laurence Alexander -- Jefferies & Company -- Analyst
So, good morning. Just one last inventory question. On the last call you reduced inventory by about $70 million more than in Q3, but the margin impact was about 50 basis points less. Is there a -- is that just simply because of the year-over-year comparison issue that you're speaking of or is that also because of which business lines you will reduce inventory.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
No, Laurence, it's solely a function of the comp that we're going against in 2018.
Laurence Alexander -- Jefferies & Company -- Analyst
Okay. And then just to clarify, the 150 to 200 basis points, I think that Nigel was referring to, I think some of the questions on the call framed it has as a full year impact, is it a full year impact or is it just a Q3 impact?
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
That was just a Q3 comment on the impact it's having on our total margin.
Laurence Alexander -- Jefferies & Company -- Analyst
Okay, thank you.
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Yeah.
Michael F. Roman -- Chief Executive Officer
Thanks, Laurence.
Operator
That concludes the question-and-answer portion of our conference call. I will now turn the call back over to Mike Roman for some closing comments.
Michael F. Roman -- Chief Executive Officer
To wrap up, I am pleased with our team's progress in the third quarter, which demonstrates the strength of the 3M model and our ability to perform across the business cycle. Moving forward, we are focused on delivering greater value for our customers and shareholders, building on the momentum from our execution and results in Q3, driving strong cash flow and improving growth. Thank you for joining us.
Operator
[Operator Closing Remarks]
Duration: 67 minutes
Call participants:
Bruce Jermeland -- Vice President of Investor Relations
Michael F. Roman -- Chief Executive Officer
Nicholas Gangestad -- Senior Vice President and Chief Financial Officer
Andrew Kaplowitz -- Citi -- Analyst
John Walsh -- Credit Suisse -- Analyst
Julian Mitchell -- Barclays -- Analyst
Andrew Obin -- Bank of America Merrill Lynch -- Analyst
Steve Tusa -- JP Morgan -- Analyst
John Inch -- Gordon Haskett -- Analyst
Deane Dray -- RBC Capital Markets -- Analyst
Scott Davis -- Melius Research -- Analyst
Joe Ritchie -- Goldman Sachs -- Analyst
Nigel Coe -- Wolfe Research -- Analyst
Laurence Alexander -- Jefferies & Company -- Analyst
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