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Hubbell Inc. (NYSE:HUBB)
Q3 2019 Earnings Call
Oct 29, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen thank you for standing by and welcome to the third quarter 2019 results call. [Operator Instructions]

I would now like to hand the conference over to your speaker today Mr. Dan Innamorato. Please go ahead sir.

Daniel Joseph Innamorato -- Director of Investor Relation

Thanks J.P. Good morning everyone and thank you for joining us. I'm joined today by our Chairman and CEO Dave Nord; and our Executive Vice President and CFO Bill Sperry. Hubbell announced its third quarter results for 2019 this morning. The press release and slides are posted to the Investor 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 considered 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 in the slides.

Now let me turn the call over to Dave.

David G. Nord -- Chairman and Chief Executive Officer

Thanks Dan. Good morning everybody and thanks for joining us just to discuss our third quarter results. Hopefully you can see from our press release this morning, another quarter of solid earnings growth and free cash flow generation for humble, continue to feel confident about our market position and our ability to deliver differentiated results for investors. I want to start my comments on page three of the presentation, some of the key takeaways for the for the quarter. First, you know, and key the end markets are growing modestly overall. You know, you could see that, you know, transmission distribution continues to stand as driving strong growth, both top and bottom line. And that's driven by our ongoing investment at our large utility customers in hardening and upgrading the grid. You know, on the electrical side, things are about Bit more mixed with some pockets of growth offset by some softness in certain markets. And we'll talk about that in a couple slides. On the margin front, we remain effective and actively managing price cost across the portfolio, which is driving margin expansion.

You'll see 30 basis point improvement on an adjusted basis year-over-year. Free cash flow remains a critical aspect of our story and we're tracking above prior expectations driven by continued working capital improvement. We continue to invest restructuring dollars in our footprint optimization initiative with more to come in the fourth quarter and into next year. Putting a lot of work organizationally into improving our operating intensity. It's paying early dividends with strong cash flow generation. And we see these efforts driving significant upside to margins over the next few years. Still, we also completed the divestiture of the hastily high voltage tech business in the quarter and recognize the gain that we've adjusted out of results. I'd also reached an agreement for a bolt on acquisition for a power segment. We think these transactions add value for our shareholders and we're exiting a noncore business with lower return characteristics and redeployed the capital to acquire a higher-margin business in an attractive adjacency and we'll walk through the details later.

Finally our strong year-to-date results position us well to tighten our full year earnings per share expectations. We're certainly incrementally more cautious around top line trends particularly the electrical business than we were a quarter ago. But we have solid visibility into continued strength in our Power business in the fourth quarter and we're executing well on margins across the portfolio. It gives us confidence to tighten our full year commitments and we remain confident in our ability to deliver on them. Before I turn it over to Bill let me just highlight a couple of key accomplishments as well in the quarter. First on the Aclara front. They launched a pilot programmed for its synergized RF communications and controls platform with a large electric IOU customer and was also chosen for an AMI deployment with one of its largest co-op customers. This is laying critical ground work and demonstrating proof points on the scalability of Aclara's AMI platform as well as the synergies between Aclara and Hubbell and our unique breadth of product offerings across the distribution automation space key elements of the strategic basis for that acquisition.

Burndy released the tint zinc plating solution for its compression terminal line which is more environmentally friendly and safer solution with improved corrosion protection. Lighting won a product innovation award from the Architectural solid state lighting magazine for best retrofit for the lighting design for the Duke Ellington School of Arts in Washington D.C. It's the fourth consecutive year Hubbell Lightings won this award. They also had 4 products included in the IES annual progress report for their innovation and unique product attributes. All good testimony to their investment in new product development. And on the electrical side of Commercial and Industrial they delivered the largest single order for bridge controls ever in August. Industrial Controls division has become a safe and reliable supplier of choice to replace the U.S.'s aging lift bridge population. Organizationally we had different changes during the course of the year. Most recently we had a leadership change in Lighting as a previous leader has taken on a new opportunity outside Hubbell. We named Jim Farrell as the acting Group President of Hubbell Lighting. Many of you know Jim from his experience as -- in Investor Relations. He's got over 15 years experience at Hubbell and he has been at Lighting you recall as the VP of Finance for several years and has been instrumental in a lot of the activity there in improving their performance. We're excited to have Jim continue to executing on our strategy and wish him well in this new role.

With that let me turn it over to Bill.

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Thanks very much Dave. Good morning everybody. I appreciate you joining us. I know it's a busy morning. Like Dave I'm going to use the slides to govern some of my comments. I'm going to start on page four of the overall results. You'll see that we generated $1.20 billion of sales in the quarter 2% growth considering the divestiture that Dave mentioned organic growth was up 3%. Operating margins expanded 30 basis points to 15.8%. That was absorbing some extra investment in footprint restructuring. It was really driven by a very solid performance on the price/cost side. Adjusted EPS $2.34 as Dave mentioned reported results have the gain on sale which we've adjusted out to help facilitate your ongoing comparisons of operating results. And for free cash flow $151 million generated which has year-to-date increase for the nine month period of 16% on cash flow. So let's look at sales and disaggregate that into how each of our end markets is contributing to our 3% organic story.

We can see some bifurcation on the page with some strong areas and some other areas of softness. Let's start with the strength. Starting with nonres and new construction. We continue to see low single digit performance there. Our commercial construction and ROUGH-in electrical areas are benefiting from that. And as Dave mentioned, youtility facing more markets are really the most noteworthy. I'm including gas in there. As you all recall, we're in the distribution components business there. So utility facing area where conversions to gas have been increasing, and the MRO spent, upgrade and strengthen the infrastructure continues to drive impressive growth there, as well as across transmission and distribution of electrical side. We're seeing grid hardening, and projects on Transmission side including renewables, so very favorable trends in utility. On the softer side, upstream oil continues to be an area of softness. In our Lighting business there relight national account area has experienced softness.

Those are proving to be discretionary projects more nice to have and we have seen some deferral of that spending and then heavy industrial where we have quite a bit of exposure into steel industry for example were in sympathy with steel prices. We're seeing some spending by the producers coming down there. So the good diversification across that portfolio of end markets delivered us 3% organic growth helped by some strong pricing. So lets -- how do sales translate down into operating income remember 2% sales growth now you see here 4% OP growth to a $190 million of adjusted operating income a 30 basis point margin expansion to 15.8%. That's absorbing the extra investment in footprint restructuring driven by the price/cost management which has been very constructive really all year. On the our earnings per diluted share $2.34. The increase in OP you see on the left being absorbed by higher tax rate. That tax rate is quite in line with our expectations this year around 23% on an adjusted ETR rate. Last year happened to be sub-20% I'd say a naturally low as we had some favorable true-ups for tax reform in the third quarter of last year.

So let's take that enterprise performance and unpack it into our 2 segments Electrical and Power. And starting on page seven we'll cover Electrical. You see sales of $689 million roughly comparable to last year considering the divestiture organic growth of plus 1%. Some of the strong areas gas as we mentioned nonres construction both the connector side and commercial construction products benefiting from that. You see industrial and the national account side of Lighting being weaker. And as that translated into operating income you see $96 million a 13.9% margin. 2 decisions we made in the quarter: one to invest in the footprint restructuring and the other the divestiture drove down those margins. Had we not done those 2 the price/cost positives would have offset the lower lighting volumes to have margins to be flat in Electrical for the quarter. On page eight we'll transition to the Power segment which you see had a really nice performance in the quarter. Net sales grew 5% to $515 million. That's essentially all our legacy Hubbell Power Systems product products which grew high single digits. Aclara had flat contribution on the sales line.

They've got some natural lumpiness as they live off of large project orders and as some roll off the new ones roll on in different time periods. We've got a very nice pipeline of projects in front of Aclara and their growth for the year is going to be solid in the mid-single digits despite a flat quarter. The operating income for Power segment you see $95 million up a 160 basis points to 18.4%. You are seeing both strong volume and good price/cost. So really attractive incremental drop on the volumes there. On page nine we wanted to give you an update on our operations starting with the footprint work that we're doing that we have spent a lot of time talking to you all about. Just to level set remind everyone we had started the year with 58 manufacturing facilities and about 11 million square feet. We've got 10 projects under way that will take about 0.5 million of square feet out this year. Those projects are all going well. We think we've got some good ones right now.

And in one case we're consolidating 2 foundries into a big 24/7 operation moving out of a high-cost Northeast location into Puerto Rico and another couple of regional consolidations: one in our Harsh & Hazardous business one in gas distribution. So those projects are all proceeding and we're happy with them. We've been talking to you about $0.40 of spending in this year to improve our margins next year. As we enter the fourth quarter here, it turns out some of our cost estimates were a little bit conservative. And some of those costs are coming in a little bit under budget. And we're going to reinvest that into incremental productivity actions in the fourth quarter, and help deal with some of the electrical volume softness Dave was talking about. We've indicated sales per square foot at the bottom of the page, and the target of improving that by 20%.

We've improved 20% from '17 to '19 so we want to keep that momentum going as we go from '18 -- 2018 to 2020. And of note we think those footprint actions really helpful to 2 important free cash flow levers which is a high area of focus for us. Number one we're taking out fixed cost and that allows to enhance margins and increase our income. But secondly the fewer facilities and more efficient operations are allowing us to reduce inventory days and with less working capital that's also helping us drive free cash flow. So we're really looking to have free cash flow outstrip our earnings growth and you'll see 16% year-to-date. We're trying to get to -- you recall last year we did $420 million trying to get next year 2020 to $500 million that we promised you. So the $460 million will be about halfway which would be about 105% conversion rate on adjusted net income and we think we got a path to get there. So operations really helping us drive free cash flow.

Also wanted to comment a little bit on the portfolio actions that Dave mentioned at the outset. Starting with divestiture of Haefely our high voltage test equipment business based in Switzerland. As you may recall they made large Impulse generators and transformer test systems. And we found that that business was noncore with what we were trying for. They had atypical project sizes which are large systems different than the rest of the company. The drivers, the business tended to be electrification in developing economies as well as transformer technology changes. We found it to be a cyclical business and had been in a trough for an extended period of time. And so we found an opportunity where we think the business was more valuable to another player. And we're take the proceeds from that, which were 38 million, redeploy that into our next acquisition, which is in the power systems arena, to business that Protect substation assets with tight fitting components that are fire resistant.

It's got a high-margin high-growth profile. And so for balance sheet neutral just redeploying those proceeds we think that's a good portfolio move to make. That acquisition can find but subject to customary closing conditions and so we're expecting either in late fourth quarter or early first quarter to close that. I'd say it also on the business development front we've got a potential other acquisition that could close in the fourth quarter. Those are often hard to predict but wanted to just highlight that we're reinvesting in acquisitions as our balance sheet is very supportive of that.

So with that I want to hand it back to Dave to talk about outlook for our markets and outlook for the rest of the year.

David G. Nord -- Chairman and Chief Executive Officer

Okay. Thanks Bill. Turning to page 11 let's talk about the end markets first and then outlook. As we've talked about this morning we're seeing some mixed end-market trends with some puts and takes across the portfolio. On that I think end markets are trending a bit below our prior expectations at closer to 2% versus 2% to 3%. And as a result we've tweaked down our growth expectations across a few of our electrical end markets. But again we're once again seeing stronger growth in the full year in Transmission & Distribution. Going around starting clockwise the Electrical Transmission & Distribution is now we think 4% to 5% it was 3% to 5% prior closing in closer to the high end on better visibility. The nonresidential still 1% to 3%. We talked about the softness in Lighting particularly our national accounts. But core nonres we think it's still solid. Industrial now 0% to 1% versus the 1% to 3% prior.

And that's driven by softening mostly on the heavy industrial side steel and heavy industries. The light is still holding OK. Oil and gas now 0% to 1% versus 1% to 3% prior. Oil markets I think most people know haven't been recovering. Rig counts down and so you've seen that we're taking that down a bit. And then residentials 0% to 1% versus 0% to 2% prior. We continue to expect modest growth but a little more modest than prior. So if we turn to page and pull out together for our overall outlook. That market dynamic plus price we expect sales growth of 3% to 3.5% for the full year. As we talked about in the prior slide this embeds this modest end market growth but we expect to continue to achieve solid traction on price. The wrap around of Aclara and the impact of the Haefely divestiture adds about a point on net and then we think that foreign exchange would be a headwind of little less than a point.

We're tightening our full year adjusted EPS expectation $7.95 to $8.10 based on our strong year-to-date results and the expectations for continued execution in the fourth quarter against what we anticipate will be somewhat softer market conditions at least in the Electrical segment. And we're raising our expectations for full year free cash flow conversion to more than 100% of adjusted net income based on our results through 9 months and what we see in the fourth quarter. We feel good about our ability to continue executing on our working capital initiatives and generating good cash for shareholders. So if we turn to page 13 we put this in a little bit of a graphical form. So we expect strong growth from core operations with some what I call nonfundamental headwinds from incremental R&R investment and a higher tax rate that Bill talked about. So in closing I think we all start to think about and talk about next year 2020 and we're certainly committed to continuing to execute on the fundamental drivers within our control. We continue to actively and effectively manage price talks and will start reap some of the cost saving benefits from the restructuring actions we've taken this year.

We expect to invest another $0.40 in restructuring spend next year and continue delivering significant cost savings and margin improvement over a multi-year period. As far as markets we continue -- we see continued runway in our DNB Markets with all the fundamental drivers around grid hardening and modernization still intact maybe at a potentially more moderating growth and as we have more some difficult comps but still certainly continuing to grow. On the Electrical side things are little more uncertain with some puts and takes across the end markets but we remain focused on executing again on the fundamental drivers within our control. And we're confident in our ability to deliver differentiated results regardless of the macroeconomic while continuing to position the company for long-term success.

So with that let me open it up to questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Christopher Glynn of Oppenheimer. Your line is now open.

Christopher Glynn -- Oppenheimer. -- Analyst

Thank you. Morning. Morning, Graham. Hey, I was just wondering a little bit more on the Power fundamentals. You mentioned grid hardening and modernization. From a couple other perspectives wondering how much runway you are seeing with respect to maybe utility capex fundamentally shifting from Power-Gen to T&D? And also besides that is California starting to come into play prospectively?

David G. Nord -- Chairman and Chief Executive Officer

Well I think on the first part I mean I think that the shift from Power-Gen to T&D has been a contributing factor and we expect that dynamic to continue. And that all is part of modernization grid hardening smart in the grid. On the second on California certainly there has been increased investment increased intention -- attention to the need to focus on more reliability of the grid throughout California. Certainly in the northern parts and we're seeing some of the implications of that right now with the need to shut down power to protect. And so we expect that to continue although that's only been part of the story for us. I think it's the broader shift into T&D from Power-Gen that's contributed. Okay?

Christopher Glynn -- Oppenheimer. -- Analyst

Okay. And then on your acquisition pipeline just wondering if that's skewing more Power or Electrical?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. We're seeing opportunities Chris in both. If you looked backwards we've had a skew toward Power over the last five years or so but as we look forward we're seeing opportunities in both segments.

Christopher Glynn -- Oppenheimer. -- Analyst

Okay, thank you.

Operator

Your next question comes from the line of Deepa Raghavan of Wells Fargo. your line is open.

Deepa Raghavan -- Wells Fargo. -- Analyst

Hey, good morning all. Couple of questions for me. First one did you benefit from storm activity this quarter? If yes can you quantify that for us? I was also thinking on Aclara coming in flat. Is that something what you'd expected? Or was that slightly below what you are expecting?

David G. Nord -- Chairman and Chief Executive Officer

Well first on the storms there was no meaningful incremental impact. I mean it's more of a normal level of storm activity that we saw. So nothing that was positive year-over-year. On the Aclara side I think it was a little less than we expected but remember that last year we had some very significant growth high-double digit high -- 20%-plus in some of the periods. And so the comps got a little tougher this year. I think there's also some projects that have pushed out a little bit to the right. So but there's a whole lot of order activity that we expect to be coming online certainly in the next several quarters.

Deepa Raghavan -- Wells Fargo. -- Analyst

Got it. My follow-up is on Lighting. Can you provide us your general thoughts on Cooper Lighting sales to signify and what this perhaps could mean to Lighting assets such as yours. If you can help us parse some of the competitive merits or demerits that will be helpful? Secondarily how are you thinking about our time line to fill in the Lighting vacancy?

David G. Nord -- Chairman and Chief Executive Officer

Well I think the merits and pros and cons of Cooper signify would have to be addressed by them. They are the ones doing as we look at from my history in the market I think there's been a lot of churn throughout my 14 years. And it's not clear that all of it has resulted in the positive impacts that are intended. It's a tricky industry. I think there's dynamic that sometimes suggests that in some places bigger isn't always better unless executed well. So with any large transaction like that I'll put that in the category of large I think it's all about the execution. We feel very good about our position our position in the market our position with our technology and product development. So but it's always -- we're always paying attention to what's going on from a competitive situation. So hopefully that answers the first question. The second question around the time line there's no time line that I can commit to. I mean we evaluate candidates internal candidates as well as Jim is in position and we expect he is going to be doing a great job. So I don't think we're going to miss a beat as we're going through this process. Okay?

Deepa Raghavan -- Wells Fargo. -- Analyst

All right. Thank you. Good luck to you and thanks.

David G. Nord -- Chairman and Chief Executive Officer

Thanks.

Operator

[Operator Instructions] Your next question comes from the line of Josh Pokrzywinski of Morgan Stanley. Your line is now open.

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Hey, Josh. Josh we can't hear you if you're -- you may be on mute.

David G. Nord -- Chairman and Chief Executive Officer

We'll just take the next question operator.

Operator

Your next question comes from the line of Nigel Coe of Wolfe Research. Your line is now open.

Michael Metz -- Wolfe Research. -- Analyst

Morning guys, This is Michael in for Nigel. So just touching up on the implied 4Q guidance. Can you talk about some of the moving pieces inside the segments. Just looking at normal seasonality it seems like a bigger drop off than usual. I'm just kind of wanting to know what your thinking is that's driving that?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. I think one of the pieces is the pricing and how that layered in over last year and as we get to fourth quarter we're anniversarying some of those increases and so you kind of lose the lift that comes from that. And then on the Lighting side we are anticipating some of that. We were down mid-single digits in the third quarter so we're anticipating some of that continuing into the fourth and then strength in the rest of the Electrical and certainly as Dave was saying continued strength in the Power side.

Michael Metz -- Wolfe Research. -- Analyst

Got you. That's very helpful. And then on Aclara just looking at the backlog does that provide more clarity and visibility into 2020? Or were customers hesitant to spend in the quarter and that got pushed out to the right?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. No I think we've got 2 concepts right? A backlog which is even near term and then a pipeline. And we're finding there's even a little bit of graying between those as part of the pipeline starts to become very close to backlog and that's where we start to see some 2020 volumes coming in. So there does -- it is lumpy by its nature kind of large customers putting in large orders and so you do -- if your question is is there visibility to that there is and we feel confident about the forward-look there.

Michael Metz -- Wolfe Research. -- Analyst

Okay. That makes sense. And if I've time for one more? Just speaking on the kind of sell-in to sell-out what are you guys hearing from channel inventory levels from your customers and the inventory drawdown from customers that we saw earlier this year? Is your perspective that that's mostly over? Do you expect it to continue into the back -- into the end of the year?

David G. Nord -- Chairman and Chief Executive Officer

I would say that the meaningful amount of it is over. I think there are certain customers that we've heard are still working off some of their inventory. But we're not expecting that to have a significant impact although you'll find some -- at least we have found some distributors who still have some inventory to work off. But the vast majority I think have gotten to the level that they want to be at.

Michael Metz -- Wolfe Research. -- Analyst

Make sense. I'll leave it there. Thanks for the help guys.

Operator

Your next question comes from the line of Justin Bergner of G. Research. Your line is now open.

Justin Bergner -- G.Research -- Analyst

Morning bill, First off I want to ask about Power margins. They remained very strong in the quarter I guess they were even up a little sequentially. How sustainable is that? I know you have seasonality and some timing of price/cost but did that sort of exceed your expectations and what can we expect going forward?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. I think it was -- it did not exceed our expectations. We had both volume at the legacy Power Systems products which those drop-through with attractive incrementals. We also had price cost favorability. Continuing that price cost favorability I think is the essence of your question where that will start to flatten out some of the pricing comps for example in fourth quarter get harder that probably is offset by maybe easier raw material comps and then how that plays into next year. We're sort of hoping we can hold onto some of that benefit but hard to have the same as you noted sequential quarter-over-quarter kind of walk. I think the other driver ultimately of Power margins will be from within Aclara. And as the previous question talking about some of that project pipeline in the more AMI kind of richness that can come through and Dave highlighted in his opening comments some of the AMI advancements on some piloting within IOUs as well as some larger deployments inside of the co-op world start to suggest as that margin richness comes that would help power margins as well.

Justin Bergner -- G.Research -- Analyst

Great. One clarification question if I may? In terms of your revised guidance are you absorbing some additional headwinds in terms of either tax restructuring or divestiture?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. So the tax is the same as we've thought. The restructuring is the same as we thought and we are absorbing the lost OP of our divestiture. Yes.

Justin Bergner -- G.Research -- Analyst

Is that like $0.05 or something in the order of that?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. That's a good ballpark.

Justin Bergner -- G.Research -- Analyst

Great. Thanks for taking my questions.

David G. Nord -- Chairman and Chief Executive Officer

Okay.

Your next question comes from the line of Steve Tusa of JPMorgan. Your line is now open.

Steve Tusa -- JPMorgan -- Analyst

Hey, guys, morning, Just on the free cash I know you guys kind of reaffirm the long-term targets but it seems like you guys are obviously doing pretty well against that. I missed the beginning of the call so I'm not sure if you kind of clarified? Is there anything kind of unusual in the base this year that kind of reverses it all? Because it just seems like you're really kind of close to the long-term targets even though you're not quite there yet on -- from a timing perspective?

David G. Nord -- Chairman and Chief Executive Officer

No. I think we -- what you missed is that we feel good about this year. And you're right we are -- but we've been focused on trying to get ahead on those long-term targets. I wouldn't say I'm ready to advance those long-term targets but if we can continue to do what we've been doing we certainly think there should be upside to those targets as well. But that remains to be seen while a better insight into that with another quarter behind us when we close out this year and see exactly how this year closes out. But certainly the things that we have been doing that are driving the focus that we've had on it I think are leading us to where we want to be.

Steve Tusa -- JPMorgan -- Analyst

Any major influence that you had from the supply chain initiatives that you guys have been talking about or is it kind of too early to see the fruits of that labor?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

No. I think you have seen Steve you've seen our inventory days improve which I think is the direct result of that. And to Dave's point the way we're modeling next year we're seeing a continued step down and improvement in inventory days. So I think that feels like it has legs to it to help drive as you mentioned about the long-term target.

Steve Tusa -- JPMorgan -- Analyst

Right. Okay, great. Thanks a lot.

David G. Nord -- Chairman and Chief Executive Officer

Thanks.

Operator

[Operator Instructions] We have a follow-up question from Christopher Glynn of Oppenheimer. Your line is not open.

Christopher Glynn -- Oppenheimer. -- Analyst

Thanks for taking the fall. I Just wanted to go back to the kind of preliminary 2020 comments Dave. Did you suggest that both segments are positioned for some positive margin trends next year over 2019 granted if the economy doesn't fall off the cliff?

David G. Nord -- Chairman and Chief Executive Officer

Well certainly the easier one to say is going to be positive is on the Electrical. It's because some of the challenges there particularly on Lighting. But I think Power can continue to power through it. They're at high levels but certainly we see the opportunity for those to continue to grow. So our objective overall is with our focus on margin as well as growth and cash generation that we're going to continue to improve on those.

Christopher Glynn -- Oppenheimer. -- Analyst

Thanks again.

David G. Nord -- Chairman and Chief Executive Officer

Okay.

Operator

We have a follow-up question from Justin Bergner of G. Research. Your line is now open.

Justin Bergner -- G.Research -- Analyst

Great, thanks again, If I do the math on the Lighting down mid-single digit that would suggest I guess that the commercial industrial and construction energy sort of combined were up 3% organic. Am I serving the right ballpark there? And are you actually doing better than your end markets because that would seem to be a little bit better than your end market view if we maybe ex out the Lighting piece?

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. Your math is good. And the -- I think when we consider the end markets we're incorporating some of the Lighting into that. So it feels like our products and brands are doing just fine. I'm not sure that I would say there's a ton of share gain or outperformance. There's been -- Dave made reference at the top to some new products that have done well some new introductions but I'm not sure I'd note any great share shift.

Justin Bergner -- G.Research -- Analyst

Okay, thanks.

Operator

[Operator Instructions] No further questions at this time presenters please continue.

Daniel Joseph Innamorato -- Director of Investor Relation

Thanks operator. Thank you for joining us today and I'll be around all day for follow-ups if anybody needs us. Thanks.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Daniel Joseph Innamorato -- Director of Investor Relation

David G. Nord -- Chairman and Chief Executive Officer

William R. Sperry -- Executive Vice President, Chief Financial Officer and Treasurer

Christopher Glynn -- Oppenheimer. -- Analyst

Deepa Raghavan -- Wells Fargo. -- Analyst

Michael Metz -- Wolfe Research. -- Analyst

Justin Bergner -- G.Research -- Analyst

Steve Tusa -- JPMorgan -- Analyst

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