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Trane Technologies plc (NYSE:TT)
Q2 2020 Earnings Call
Jul 29, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Trane Technologies' Q2 2020 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Zac Nagle, Vice President of Investor Relations. Please go ahead, sir.

Zac Nagle -- Vice President, Investor Relations

Thanks, operator. Good morning, and thank you for joining us for Trane Technologies' second quarter 2020 earnings conference call. This call is being webcast on our website at tranetechnologies.com, where you'll find the accompanying presentation. We are also recording and archiving this call on our website.

Please go to Slide 2. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause our actual results to differ materially from anticipated results. This presentation also includes non-GAAP measures, which are explained in the financial tables attached to our news release.

Joining me on today's call are Mike Lamach, Chairman and CEO; Chris Kuehn, Senior Vice President and CFO; and Dave Regnery, President and COO. With that, please go to Slide 3, and I'll turn the call over to Mike. Mike?

Michael W. Lamach -- Chairman and Chief Executive Officer

Thanks, Zac, and thanks everyone for joining us on today's call. I'd like to start today's call with some perspectives on the unprecedented level of change we've seen around the world, both in business and in our personal lives over time period of just a matter of months and why and how this is particularly relevant for Trane Technologies. The COVID-19 pandemic has disrupted long lived paradigms and what was considered normal. It is exposed obvious truths about the many ways the old normal wasn't good enough. Normal has meant rapidly rising emissions and temperatures, creating a global climate crisis and pollution in poor health in many of our world's biggest cities where COVID-19 has had a disproportionately damaging impact in communities where the demographics are most socioeconomically challenged. Normal has meant hunger, even though, one-third of the global food supply is lost or wasted each year. And normal has meant inherent systemic racism, injustice and inequality.

At Trane Technologies, we want to be part of creating a better new normal. We will challenge the status quo to create a new normal for communities thrive where quality is foundational and where the environment is protected for future generations. We're putting a stake in the ground that Trane Technologies will lead by example by setting historic and ambitious commitments and taking action to change our company, our industry and the world.

Our Gigaton Challenge commits reducing our customers' carbon emissions by 1 gigaton or a 1 billion metric tons by the year 2030. To give you an idea of the size and scale, that's equivalent to about 2% of the world's annual emissions and that's just our company alone. As other companies join in, we can bend the curve on global warming. We're also committed to creating opportunity for all with the goal to achieve gender parity and leadership by 2030 and racial and ethnic diversity that is reflective of our communities. As Chair of the National Association of Manufacturers, I introduced a pledge for action which the Executive Committee unanimously adopted on behalf of its 12,000 members, focused on advancing opportunity for black people and other people of color through efficacy, education, training and workforce development initiatives.

We're having important dialog within our own organization and in our communities and how we can accelerate our efforts to combat racism and better support communities in need. This includes programs to eliminate hunger, support education and economic mobility, and to increase affordable housing. Our transformation plan for Trane Technologies is another example of how we're creating a new better normal for our team, customers and shareholders, executing against the new blueprint that culminated in May after 10-months of analysis and planning. Setting these and other plans in motion, our talented team around the world has exhibited all the commitment and passion for change that is marked our last decade.

Our goal is simple, to create a new normal, where opportunities accessible for all, where healthy food, water and medicines are move to people who need them, where emissions trend down and blue sky is trend up. Our business sits right at the intersection of making those things happen. With our unique positioning as a focused climate innovator transformed and fit for purpose. We can tackle these pressing and complex challenges and drive differentiated returns for shareholders.

Moving to Slide 4. The global COVID-19 pandemic continues to present ongoing challenges to virtually every aspect of daily life. As much progress as we've made, this crisis is still very much with us and the questions we were all contemplating months ago regarding the depth and duration of the downturn and the speed and shape of the recovery, it's still very much a question. As we navigate through the pandemic, the paramount importance is staying true to our culture, purpose and values. We're maintaining world-class employee safety as part of our DNA. The decisive and aggressive investments we made in the first quarter were important and necessary steps in order to bring all of our facilities online, operating efficiently and safely. As a result, today, we're up and running under new readiness protocols and well positioned to meet customer demand.

Despite very challenging global markets, our teams remain focused and agile with strong execution and solid financial performance. We outperformed our end markets broadly and effectively manage deleverage within our gross margin target levels in all regions and in all business units. We continue to play aggressive offense in order to emerge stronger and to thrive as business conditions improve and new opportunities emerge. We maintained high levels of business reinvestment in innovation and growth programs through the second quarter and we expect to aggressively invest in the second half. We're also accelerating our stranded cost and other fixed cost reduction initiatives to deliver more bottom line savings in both 2020 and beyond.

We remain in an exceptional financial position with strong liquidity and balance sheet optionality which are competitive differentiators for us. We have ample capacity to run the business, effectively deploy capital and remain nimble as market conditions evolve. We'll discuss this in more detail later in the presentation, but our best line of sight at this stage would put revenue somewhere between down 10% and down 15% for 2020, better than illustrative scenarios we laid out in quarter one. Our strategy remains unchanged. Secular mega trends of energy efficiency and sustainability are becoming more pressing every day. We excel at addressing these mega trends in challenging what is possible for a sustainable world, redefining a higher standard for what the world considers normal. This passion powers us forward to deliver top-tier financial performance and differentiated returns for our shareholders.

Please go to Slide 5. Bookings and revenues were heavily impacted by the pandemic in all regions in the second quarter. In the Americas, the impacts of the pandemic continue to be far reaching and severe. Broadly speaking, the economy is slowly progressing forward, but the situation remains tenuous and provides limited visibility. In North America, our Commercial HVAC business has been relatively resilient through the second quarter with bookings and revenues each down mid-single-digits, backlog continues to be strong and services are outperforming equipment.

Our transport refrigeration business outperformed the overall market as it continues to move through a deep down cycle, which has been exacerbated by the pandemic. Bookings are showing signs of stabilization, although it's too early to say the market has stabilized. Revenues were down more than 40%, outperforming the market, which was down more than 50%. Our Residential HVAC business had low single-digit bookings decline with distributors sell-through down mid-single-digits. June saw record bookings and backlog and July is off to a very strong start.

Turning to EMEA. Commercial HVAC bookings were down mid-teens, while revenues were down high single-digits. Services outperformed equipment with building access continuing to improve. EMEA transport was down approximately 20%, outperforming the broader transport markets, which were down approximately 40%. Asia Pacific continues to be mixed. China showing signs of improvement, having made the most progress against the pandemic. Growth in China was more than offset by declines in the rest of Asia, with developed countries generally recovering slowly, while many developing countries are lagging.

Now, I'd like to turn the call over to Chris to discuss the results for the quarter in more detail. Chris?

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Thanks, Mike. Please turn to Slide number 6. The pandemic has continue to significantly impact both top and bottom line results. Mike provided a good overview of our top line results on the prior slide. So I'd like to focus my comments on the bottom line. Adjusted EBITDA margins were down 80 basis points, primarily impacted by significant volume declines in the quarter. We continued to execute our recession playbook in the second quarter evolving with market conditions. We delivered strong productivity and managed deleverage within gross margin target levels, despite lower volumes, fixed cost under absorption and other pandemic and volume-related inefficiencies. We also maintained high levels of business reinvestment and continue to ramp up our facilities and further invest in employee safety measures. Price/cost remain positive in the quarter, while mix was a significant headwind, with steep declines in transport revenues in both the Americas and EMEA. There were a few other relatively modest puts and takes on margins and EPS that are outlined on the slide for your reference.

Please turn to Slide 7. Turning to the regional segments, I once again focus my comments on margins given Mike covered revenues earlier. In each region, strong productivity partially offset volume declines, fixed cost under absorption, investments in employee safety and other business reinvestments in innovation and growth programs to deliver better than gross margin deleverage. Price/cost was largely favorable, while transport mix was a headwind on lower transport revenues.

Now, I'd like to turn the call over to Dave to provide details and color on what we saw in our end markets in the second quarter. Dave?

Dave Regnery -- President and Chief Operating Officer

Thanks, Chris. Please turn to Slide number 8. As we've discussed throughout the presentation, the COVID-19 pandemic continues to have far reaching impacts across the global economy as it continues to evolve, which limits our forward visibility into our key end markets. With that caveat, this slide endeavors to provide our best view of our end markets at this point in time.

As we've highlighted, North America Commercial HVAC has been relatively resilient through the second quarter. Order rates continue to be soft and we expect a continuation of this trend heading into the back half of 2020, given the high level of economic uncertainty that persists. Services typically hold up better than equipment in a downturn as owners look to extend the life of existing equipment and we're seeing signs of that during this pandemic. On the other hand, the number of pandemic-related businesses and school closings or partial reopenings and generally low level of building occupancies are having a negative impact on services.

We're also seeing high levels of interest in comprehensive indoor air quality assessments and momentum in the universe of opportunity is huge based on billions of installed square footage that could ultimately be evaluated, but the opportunity is still in early stages. Our tremendous installed customer base and best-in-class sales and service capabilities put us in a strong competitive advantage as this market evolves. Longer term, fundamental energy efficiency and sustainability mega trends underpin sustained secular growth for these markets. We expect to outperform the markets in 2020 given competitive advantages throughout the value chain from channel to sales to controls and digital services to the largest most capable service organization in North America.

Residential HVAC had mid-single-digit sell-through declines in Q2, record bookings and backlog in June and July is off to a very strong start, which are positive indicators for this business near-term. Consumer economic indicators are mixed and volatile and unemployment remains at historic levels, which limits longer term visibility. Transport markets continue to move through a cyclical downturn in 2020 amplified by the COVID-19 pandemic. ACT's most recent forecast for transport still has the second half of 2020, down more than 40%. We continue to expect to outperform the market, but looking at a down 40% second half forecast suggest tough sledding ahead.

Looking out into 2021, ACT continues to project a snapback in the North America trailer market of over 20%. In EMEA, given the depth and impact of the pandemic on many European countries, most major cities are taking a cautious day-by-day approach. For Commercial HVAC, we see opportunities for overall market outperformance through our clear focus on our sustainability advantages. But, overall, visibility remains limited. In transport, we've recently introduced new products such as the Advancer product, I'll discuss on the next slide. These products have clear competitive advantages that will be tailwinds as market conditions improved.

Most recent forecast for the transport markets in EMEA have deteriorated dramatically from April's forecast, down almost 50% for trailers and down over a 100% for trucks for 2020, further pressuring our second half transport outlook. We have a slide in the appendix on the transport markets you may find useful. We've talked at length about Asia Pacific, while China continues to recover at a steady pace. With strength in data centers, electronics, pharma and healthcare, the rest of Asia remains mixed and difficult to call when they will improve.

Please turn to Slide number 9. We've been clear at Trane Technologies, we are playing aggressive offense during this downturn in part through heavy investment in a robust pipeline of product innovation and growth programs. Today, I'll highlight just four tangible examples that are emblematic of innovation, market-leading products and services we're bringing to market. Indoor air quality is generating tremendous interest in the market. Our customers are turning to us for our expertise to improve the safety of their buildings and to build the confidence of their building occupants.

In Commercial HVAC, we're providing indoor air quality assessments, which are fact-based data driven analysis on four key contributors to indoor air quality, contaminant source management, humidity control, filtration and fresh air intake. These assessments are not check the box exercises, we check everything thoroughly. Some large campuses and manufacturing locations can take hundreds of hours to complete. Once the assessment is completed, we work with our customers to implement a layered approach that balances the key contributors to indoor air quality, while finding opportunities to reduce energy intensity. The layered approach is fully customizable and might include modifications to control sequences, improve filtration or additional sensors that closely measure and adjust for changes in humidity and CO2. Our unmatched application expertise, direct service channel and remote services uniquely position us to balance energy intensity and indoor air quality in a customized solution for each customer.

Last week, our European Commercial HVAC team announced our synthesis balanced four-pipe chiller. The synthesis balance utilizes low global warming potential refrigerants to simultaneously heat and cool a building with zero direct greenhouse gas emissions. The synthesis balance can deliver hot water with temperatures over 150 degrees fahrenheit to replace the need for a separate boiler and is more than 350% more efficient than the boiler it replaces.

Our European transport team recently introduced our next-generation trailer technology, the Advancer. The Advancer has the lowest total cost of ownership and is the most sustainable trailer refrigeration unit on the market. The Advancer delivers 30% better fuel consumption than any other trailer unit and reaches its target temperature 40% faster and takes 60% less energy to produce. We also recently launched our large Truck Hybrid Series. Our hybrid truck refrigeration unit can operate in three different modes to meet our customers' needs. The system automatically selects the best operating mode depending on the circumstance to deliver up to 50% fuel savings when operating in a hybrid mode. With unmatched operating flexibility, these hybrid units provide our customers full access to cities restricting or banning vehicles due to noise or diesel emissions. These are just a handful of the innovations we're bringing to market during the downturn. Making these types of investments through down cycles enables us to continuously expand our competitive position year-after-year.

Now, I'd like to turn the call back over to Chris to discuss our efforts to reduce our fixed cost base. Chris?

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Thanks, Dave. Please go to Slide number 10. At the time we announced the industrial RMT transaction, we recognize that there would be approximately $100 million of stranded costs from the transaction. We quickly mobilize the transformation office last year to remove $100 million of structural costs from the business by 2021. Our goal in January of this year was to eliminate $40 million of the $100 million in stranded costs in 2020. With the onset of COVID-19, we've significantly accelerated this timetable and total savings target. We now expect to eliminate the full $100 million of stranded cost target in 2020, a year ahead of schedule.

In addition, the programs we're executing to achieve the $100 million in stranded cost reductions in 2020 are expected to yield run rate fixed cost savings of $140 million in 2021. As we previously disclosed, we expect a one time expenses of approximately $100 million to $150 million to eliminate the $100 million in stranded costs. And the table on the bottom right of the slide shows our status today. We have spent approximately $75 million year-to-date with $44 million in the second quarter.

Please go to Slide number 11. We are operating from a position of financial strength as we move through 2020. We have a strong balance sheet, excellent liquidity and have maintained solid investment grade ratings over many years. Additionally, our consistent track record of delivering free cash flow of equal to or better than 100% of adjusted net income over time with a five-year average of 107% further bolsters our strong financial position. In addition to cash on hand, we have access to $2 billion in revolving credit facilities. During the second quarter, we refinanced a $1 billion credit facility, extending its maturity to 2022. The second $1 billion facility matures in April of 2023. Even if we were to fully utilize both facilities, we would remain well below our primary debt covenant of 65% debt to capital. Both facilities were undrawn at June 30th and remain undrawn today.

Please go to Slide number 12. Balanced capital deployment, as we have consistently done for many years. We see this as a time to aggressively reinvest in our business and to solidify and extend our market-leading positions through value accretive investments that will make us an even stronger company coming out of this crisis than when we went in. We expect to continue to pay a competitive and growing dividend and have already paid approximately $253 million in dividends year-to-date.

To preserve liquidity, we paused share repurchases during the first half of 2020. Entering the back half of the year, we will retain optionality for share repurchases as visibility improves. Regarding debt obligations, we paid $300 million in April to retire debt at maturity and expect to pay another $300 million to retire debt at maturity in February of 2021. We continue to evaluate strategic value accretive M&A. We expect to maintain a strong investment grade credit rating, offering us continued optionality as markets evolve. Lastly, we remain committed to deploying 100% of excess cash to shareholders over time.

And now, though our formal guidance remains suspended until market visibility improves, I'll turn it back to Mike to provide an update on the scenarios we presented last quarter. Mike?

Michael W. Lamach -- Chairman and Chief Executive Officer

Thanks, Chris. Please go to Slide number 13. In our Q1 earnings call, we shared two revenue scenarios, one, down 15%, and the only down 25%. To demonstrate that under both scenarios, we remain in a strong financial position, continued to make investments in the business, fund the dividend and play aggressive offense during the downturn. Looking out toward the back half of the year at the current pace and progression of the reopening of global economies, we expect to outperform both of these scenarios unless the pandemic or some other unknown negative catalysts catapults the markets lower. Given current course and speed, our best view at this stage is to expect revenues to be down somewhere between 10% and 15%. We will continue to confidently and strategically execute our downturn scenario playbook operating from a position of financial strength as we've done through the first half of the year.

Please go to Slide 14. Energy efficiency and sustainability megatrends are only growing stronger as time passes. Fundamentally, we excel where these global megatrends and sustainability intersect with innovation and capabilities services. We've been investing heavily for years into advance our leadership market positions to enable consistent profitable growth. As Dave outlined with a few tangible examples, we intend to press our advantage during this downturn to leverage a strong financial and competitive positioning and to invest heavily in the future of Trane Technologies. Not only focused on relentless investments in innovation and grow, but investments in blueprinting and transforming into a leaner fit for purpose, pure play climate innovator. The elimination are stranded costs and the execution of transformation initiatives, it will fundamentally improve the margin profile of the company over the long-term. Lastly, we remain committed to dynamic and balanced deployment of capital and we have a long free cash flow and deploying excess cash to deliver top-tier shareholder returns over many years.

And with that, Chris, Dave and I will be happy to take your questions. Operator?

Questions and Answers:

Operator

[Operator Instruction] Your first question today comes from the line of John Walsh with Credit Suisse. Please proceed with your question.

John Walsh -- Credit Suisse -- Analyst

Hi. Good morning, everyone.

Michael W. Lamach -- Chairman and Chief Executive Officer

Good morning, John.

Dave Regnery -- President and Chief Operating Officer

Good Morning.

John Walsh -- Credit Suisse -- Analyst

Hi. I guess, can we first start talking a little bit more about service. I guess maybe what would be contemplated in that scenario framework of down 10% to 15% for the service business and did you see kind of improving trends throughout the quarter?

Dave Regnery -- President and Chief Operating Officer

Yeah. Thanks for the question, John. This is Dave. I'll take the first shot and then Mike could add comments and Chris. During Q2, we saw equipment and services down really in every region and services was much more resilient than equipment. As the quarter progressed, if you remember, at the end of the first quarter, we were about our service being -- our service business being impacted by not being able to have access to buildings, as the quarter progressed, we had those safety protocols worked out with our customers so that became much less of a problem. We still have a few areas in the world, maybe some countries in Asia, where that's still a problem, but for the most part, we've overcome that. As far as your question on the outlook, we expect services [Technical Issues] better than equipment in the back half. We are seeing a lot of interest in our service business in our indoor air quality assessments and we're also seeing a lot of opportunities in service in our digital connections.

John Walsh -- Credit Suisse -- Analyst

Great. And then maybe just a question around the conversations you're having with customers and there is probably a wave one of decisions as it relates to a building, maybe it's air changeovers, cleaning, wave two, I would think would be some more of the higher retrofits you talked about, where do you think customers are on that decision process as it relates to maybe doing larger heavier renovation or retrofits of their systems for indoor air quality?

Dave Regnery -- President and Chief Operating Officer

Yeah. I would tell you, we're going at this at a very holistic level, OK. So when we do an assessment and we've been asked to do thousands of these assessments, it's really at a system level. So the first thing that we would do is we would come in and make sure that the system was in fact operating as it was designed. Once that has been achieved, we start layering in different options for our customers to evaluate not only the indoor air quality, but also the energy intensity. And that could be things, such as fresh air exchanges. If you're exchanging 3 times an hour, perhaps you want to move to 5 times an hour. Filtration, if you're going to change your filters, what would that sequence look like and what would the ramifications be to the rest of the system. We see a lot of people out there just changing filters that could solve a problem or could actually cause an additional problem, meaning you could have too much friction in your air ducts, and you won't be able to move air through it, thus causing a less clean air into the indoor air quality assessment. So we take a very holistic view. We then go and we look at the energy intensity because everything I just mentioned, filtration and fresh air exchanges, tends to use more energy and we're working with our customers to find other ways to offset that energy.

Michael W. Lamach -- Chairman and Chief Executive Officer

John, in some cases where the capacity of the system, so as Dave said, when -- you might increase filtration to a very high moral filter, but the pressure drop across the filter may not support the ability for the fan. The fan maybe undersized or the casing, so the duct work could be undersized and you could actually implode systems or bulb -- fan motors. And so it's the level of modeling and sophistication and retrofitting required for each unique situation and that's I think a tremendous advantage of us, our capability to be able to provide that. So as Dave said, as we've done thousands of assessments done, I assume we're going to be doing thousands more assessments for a long time and it's such a big opportunity. It's hard to put a number on it, because we're talking about buildings of square feet around the world and everybody dealing with same kind of issues and problems.

John Walsh -- Credit Suisse -- Analyst

Great. Thank you. I'll pass it along.

Operator

Your next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed with your question.

Joe Ritchie -- Goldman Sachs & Co. -- Analyst

Thanks. Good morning, guys.

Dave Regnery -- President and Chief Operating Officer

Hi, Joe.

Michael W. Lamach -- Chairman and Chief Executive Officer

Hey, Joe.

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Hello.

Joe Ritchie -- Goldman Sachs & Co. -- Analyst

Mike, maybe you can kind of touch on just the commercial market for for a second. There is a lot of consternation out there regarding what non-res construction is going to look like through the end of this year and then into next year. And I'm wondering, one, if you could just kind of give some commentary on how you think things are going to play out and how your business is positioned? And then two, just as it relates to 2020, is there a possibility for some type of like budget flush from facilities, because maybe they haven't spent as much money in the first half of the year and there may be some opportunity for additional spending in 2H?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah, Joe. I'll start and then I'll give Dave a chance to put more color on that. But, yeah, look, I think that in terms of buildings reopening, there could be a need for buildings reopening to do service that's been further delayed, but frankly, I think we will take precedence over that as these indoor air quality assessments to make sure the buildings actually can open and open safely. So if you think about a strategy for returning to school K3, 12 [Phonetic] in the U.S. would be a great example of that. It's not a function of just going in and doing deferred maintenance. It's a function of going in, as Dave said, and looking at if whether not the systems are working to design or code or to standards or what might be done to provide more reassurances. And so my sense would be that, in some cases, you could see what would have been provided in maintenance being spent on more retrofits into the system itself.

And how that looks into 2021, it's hard to tell. I mean if you think about our business today in North America, it's 50% services, 50% equipment. Of the 50% equipment, really only 20% or 30% of that is equipment reported as dodge put in place the balance of that is retrofit. So my sense is the 70% of our business, there's going to be a tremendous amount of interest, I would say, in our indoor air quality first, and then I think as everybody knows, it's just not a matter of putting in a new system or retrofitting a system to have better indoor air quality characteristics, you then have to maintain that system again at that new better higher standard. So I think in the long run, it really helps our model. It helps our business, and clearly, it creates a safer environment for occupants.

Dave Regnery -- President and Chief Operating Officer

Yeah. I mean the only color I would add to that, Mike, is there is a lot of science behind indoor air quality and we've been at this for a long time. So we know how to do this. We've been selling this for years. It's just now, we're getting a lot of attention, obviously, because of COVID-19. The other area that we're seeing and I mentioned it earlier, is in our digital connections. We're seeing a lot of customers now asking to be remotely connected. They understand the advantage of that now. So that's another area that they're making investments in and we think that will continue into the second half.

Joe Ritchie -- Goldman Sachs & Co. -- Analyst

That's helpful, guys. And one quick follow up here. You guys mentioned that on the resi side of your business in the Americas, the distributor sell-through was only down mid-single-digits. I'm just curious like where do you think inventory levels are? Is there a possibility for a restock to also kind of help that business?

Michael W. Lamach -- Chairman and Chief Executive Officer

Well, we're actually, Joe, in a great position to answer that, because half of our business would be independent wholesalers and half of our business is the company-owned wholesale distribution point. So we sell both -- we see both the sell-in and the sell-through. But it's such an archaic time one like I have never remembered before or you saw in April and May, the normal sort of sell-in that you would do to independent distribution really didn't happen as independent distributors made a decisions about what they thought the economy was going to hold for them and probably some preservation of working capital, some hesitation there. What they found out was that consumer was relatively resilient during that period of time and probably on average found out they were holding say 25% less inventory as they enter June than they needed to, and of course, the sell-through really didn't change and we saw that on the company-owned side of the equation. So that led to a record June in bookings for us and that's led to a record July.

I'll just give you one intraquarter data point there which is July, because it is such a quick book in turn business that it is relevant. So the numbers there were quite extraordinary. June bookings up, say, 40%, July bookings say up 50%. All that pushed out from what would have been the normal seasonality of April and May. So the important thing I think for investors and look at right here is how healthy is the consumer, what's the sell-through, the actual take rate from the consumer, and are they mixing up or mixing down. Interestingly, we're seeing a mix up and that's different. We're fortunate to that, because part of it seeing in terms of our growth and our performance has been, we're now in the value segment of the market in this downturn, but ironically we're seeing growth in both. We're seeing growth in -- for us at the entry-level, at the value price points and we're seeing the premium systems also continue to have some solid strength.

Joe Ritchie -- Goldman Sachs & Co. -- Analyst

Thanks. Great color, guys.

Operator

Your next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

Scott Davis -- Melius Research LLC -- Analyst

Hi. Good morning, guys.

Michael W. Lamach -- Chairman and Chief Executive Officer

Good morning, Scott.

Dave Regnery -- President and Chief Operating Officer

Good morning.

Scott Davis -- Melius Research LLC -- Analyst

On the M&A side, Mike, what's your appetite to potentially going outside of the cold [Phonetic] chain? I mean you could define your exposure to buildings pretty broadly in building controls and all kinds of things may be unrelated to the cold chain, is that in your -- is that a possibility or you more likely to stay within your core?

Michael W. Lamach -- Chairman and Chief Executive Officer

Well, it's interesting, Scott, because as you really look at the value chain inside the cold chain and the adjacencies that we would have still inside the cold chain, you easily get to a $250 billion or $260 billion market. And even the example that Dave gave, which is the electrification of heat in Europe, right, we've never been in the boiler business, we never been in the heating business per say in Europe. But now you create a solution where between cold air and hot water, you maybe 3 or 4 times better than independent solutions and we find ourselves now really in an adjacency, which is growing the business in Europe with ductless four-pipe systems that allow us to participate in a $1 billion market in Europe that we didn't participate in before.

So one of the beautiful things about the work we've done in the transformation is all the strategy work to understand these adjacencies and see where the leverage is. So right now, everything we're looking at is, fundamentally, is how we see the adjacencies in the HVAC and refrigeration space. It doesn't mean that over the long run we would look, but I think we're seeing great opportunity right in our sweet spot in our core competencies, use a lot -- utilizing our channels, our engineering talent, our R&D, all the things that we're really good at.

Scott Davis -- Melius Research LLC -- Analyst

Okay, that's helpful. And just as a follow up, the indoor air quality stuff is dynamic for sure, is there any sense that perhaps government level standards could be established and maybe that's helpful for you guys like CDC or governments around the world that, I mean, may perhaps catalyze some of these changes because we all know without -- sometimes a little bit of a push, sometimes building owners can be a little slow to move?

Dave Regnery -- President and Chief Operating Officer

Yeah, Scott. There is some talk about that. Obviously, we'd be a big part of any kind of standards that were derived. We've worked with ASHRAE, which is really the organization that kind of monitors this and has a lot of testing associated with it. We've been asked by our customers, if you see in the presentation kind of an emblem there, they want their employees to know that in fact an expert has come in, has taken a look and have made changes to make the environment a safer place. So there is a chance that could become like the next lead, but right now, there is no quote standards around that as we speak.

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. The only thing I'd add, Scott, is building codes generally adopt like in the case of the U.S., for example, ASHRAE Standards, in fact, ASHRAE Standards are adopted throughout the world often in terms of codes and standards. So although the federal government is not mandated a particular standard, it's all built into the building codes that you would see in various states and municipalities around with the country here.

Scott Davis -- Melius Research LLC -- Analyst

Okay. All right, guys. Good luck. Congrats on that and keep the wheels on and doing well.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thanks, Scott.

Dave Regnery -- President and Chief Operating Officer

Thanks, Scott.

Operator

Your next question comes from the line of Steve Tusa with J.P. Morgan. Please proceed with your question.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Hey, guys. Good morning.

Michael W. Lamach -- Chairman and Chief Executive Officer

Good morning, Steve.

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Hi, Steve.

Dave Regnery -- President and Chief Operating Officer

Good morning.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Can you just talk about what you think the market did for resi HVAC? I mean, I think you guys said you were down mid-singles for the quarter. Did you -- do you think you gain market share?

Michael W. Lamach -- Chairman and Chief Executive Officer

There is no doubt about the second part of your question. I think, Dave, the market might have been down 11%, 12%, because the weak April, May.

Dave Regnery -- President and Chief Operating Officer

Yeah. And it really has to do with the weak April, May as Mike said.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Right. And is that...

Dave Regnery -- President and Chief Operating Officer

June was extremely strong.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

How you define the market is it just the HRI kind of factor shipments?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. You can do that in hardy. I mean you triangulate between the two for sure. Yeah.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Okay. When it comes to kind of the pipeline for commercial and these are orders, I mean it -- you would think that this is a late cycle market and things will fade here over time, are you expecting orders to kind of decelerate here or has that kind of bottomed as well?

Michael W. Lamach -- Chairman and Chief Executive Officer

Well, for new put in place dodge data the 20%, 30% of the North American commercial business, you've really got to pull that apart, take it apart by vertical market and some vertical markets are obviously going to be growing and be more resilient. Warehousing and data centers have been more resilient as an example versus retail office buildings or retail restaurants, that sort of thing. So you have to really pick that apart. But for the balance of the business, I think there's going to be a very active multiple year opportunity around going into the 70%, 80% of the business, right, both the service business and the retrofit business, the demand that we drive really looking at what the outcome needs to be around some of these IAQ assessments. And whether or not a customer can do everything at one time, think about a large school district or campus, so they want to prioritize certain things over time, you could really run out multi-year asset plans for customers around the facilities and what would work.

So it's hard to know, sort of, if you think about the percentage of the 20% what would decline and compare that against what the opportunity is from an IAQ basis resulting retrofits and service opportunity within that, it's too early to tell Steve. But there is reason to hope for us that there is going to be a busy time for us relative to being able to drive demand through what we know how to do from an IAQ assessment. And then as Dave side and I followed on to Dave, all this is a tremendous tax on the energy efficiency of a building. So whether a building is occupied at 50% or at 100% in terms of running the systems, you still running those systems at very high usage rate and the intensity of course is very high with HVAC and lighting systems. So if you're going to take these IAQ ideas, which all are attacks on energy used in the facility, we're going to have a second round or really a parallel round of when customer taking action to improve indoor air quality, looking for offsetting energy conservation measures to neutralize that, that I think is an opportunity as well. But it's too soon for us to tell kind of what really plays out.

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Okay, great. Thanks for the detail.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Andy Kaplowitz with Citigroup. Please proceed with your question.

Andrew Kaplowitz -- Citigroup Inc. -- Analyst

Hey, good morning, guys. Nice quarter.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thanks, Andy. Hi.

Dave Regnery -- President and Chief Operating Officer

Thanks, Andy.

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Good morning.

Andrew Kaplowitz -- Citigroup Inc. -- Analyst

Mike, can you give us a little more color regarding the contributors to the better than gross margin decremental margin that you delivered in the quarter, because it looks like you had several productivity projects that were effective, price versus cost was obviously very strong in the quarter, and then we know that you would, you said, you would continue to deliver a decremental in line with gross margin better than in Q4, but given some improvement in your markets, why couldn't you deliver decremental -- decrementals closer to Q2's performance?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. Let me just kick it off with a general comment. I'm going to give Chris for more specifics, but we wanted to establish a sort of a set of guard rails. The guard rail being -- we were going to run the leverage no worse than the gross margins of the company. And we are making a commitment for shareholders to know what to understand will be one side of the guard rail. What we also said is we're going to play aggressive offense around running the business for the long run and trying to emerge a much stronger company through this. Now to the extent that we can do both and invest in everything that we want to do, including the products and services that Dave mentioned launched in the quarter, there is a possibility of doing better than the worst guardrail. So that's what happened in quarter two. But you have to realize these differences between a 20% leverage rate and a 30% leverage rate in a quarter like just past or last quarter might have been $20 million or $30 million, right, which in the grand scheme of things. If we choose to make an investment which runs at the 30% as an example or we take another action, it's not as meaningful to us inside the core. But the one thing that investors should look at is the commitment that says, there is a guard rail that says, we're going to run the business with decrementals for the full year at or inside our gross margins. Chris?

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Yeah. Mike, I would just add, all-in it is a mix. It's not clear today how much is temporary versus permanent. But we are really proud with the productivity, the tight spend control we had in the second quarter. With that, what is permanent are the structural cost take outs that have happened that we've announced here and getting a full year ahead of taking out the $100 million of stranded costs from the transaction. And maybe last just to add there is we think around the fourth quarter of this year, we may actually see deleverage be a little bit better than gross margins. We -- you may recall, we had a couple of one timers in the fourth quarter of last year that we should comp better against here in the fourth quarter, Andy. But otherwise Mike's laid out for you kind of the guard rails and happy where we landed in the second quarter.

Andrew Kaplowitz -- Citigroup Inc. -- Analyst

Thanks for that. And then Mike, I just want to follow up on some of the residential comments you made in the sense that you did mentioned 50% growth in residential bookings if I'm not mistaken in July, which obviously you see change in demand just for a month, obviously. But we know it got harder home sales have improved a bit, but did you see -- do you see this boost is more of a fundamental change in the market given the evolution of work from home? So maybe this change is more sustainable. I mean we know you're not going to have that kind of growth every month. But just as, there is something different about the market from what you can tell?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. And that's why it was important this time to give you the best information we can to make it as simple as we could for any investor to understand was to look at the sell-through, because it's just aberrations, we're seeing where distributors might have had 25% less than they would have normally needed coming into June. And you see those 40% and 50% kind of growth in order rates. It's little bit of a catch-up, but I think that that sell-through is what to look at here. And look, I mean best guess and it's hard to know, because we've only seen seven months of the year, you could see sell-through kind of downside, downtime. Dave, I think that's probably five was a best case, 10 may not be the worst case, we don't know. We haven't seen the rest of the year yet, but the sell-through is important thing. The aberration, was really in, when you think about any independent wholesaler thinking about their own working capital, playing out their own recession playbook, worried about really less about a pandemic maybe and certainly about a pandemic, but more also about the long-term effect of a recession, there was a retrenchment. And depending on how you placed that as a distributor, you either did or didn't have enough stock to serve customers. So then frankly, you get more into a panic situation in June and July and it's a whipsaw. So I wouldn't pay attention to the 40% to the 50%. I pay attention to the sell-through. And I think that that sell-through is probably going to be in that 5, 10, Dave.

Dave Regnery -- President and Chief Operating Officer

Yeah. I think it's around probably closer to 5. The other thing that's a little bit different too is and Mike mentioned it earlier is we're seeing -- we're actually mixing up on SEER. So in past downturns, we tended to sold more lower SEER products. We're actually selling -- we're actually mixing up and the high SEER products are very attractive to homeowners and some of that obviously could be because a lot of people are working from home and they understand the advantage of those products.

Andrew Kaplowitz -- Citigroup Inc. -- Analyst

Thanks guys.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thank you.

Dave Regnery -- President and Chief Operating Officer

Thank you.

Operator

Your next question comes from the line of Gautam Khanna with Cowen. Please proceed with your question.

Gautam Khanna -- Cowen Inc. -- Analyst

Yeah. Thanks. Good morning, guys.

Michael W. Lamach -- Chairman and Chief Executive Officer

Hey, Gautam.

Dave Regnery -- President and Chief Operating Officer

Good morning, Gautam.

Gautam Khanna -- Cowen Inc. -- Analyst

Good morning. To follow up on Steve's question about Commercial HVAC bookings, as we move into the second half and into the first half of next year, I'm just wondering, it sounds like there's a lot of potential work the installed base as they kind of rescope what they want, but does that also lead to a potential air pocket as these projects are rescope and you do the assessments, is it just a natural lead time that's pretty extended to actually convert some of these folks into us to take on these new solutions that you are pitching?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah, I'd tell you, Gautam, we've really seen the whole spectrum there, right. In some cases, we have customers that need to do major work like they want to increase the amount of outside air they're bringing in which actually means they need more cooling capacity. So that could be the longer lead side. And I would tell you that on the shorter lead side, we're seeing customers that really just need to fix some of their handling equipment to make sure the dampers are working properly and maybe increase the fan speed, so that we can increase the filtration rate. So it's really all over the board. And it's pretty early days here, right. I mean, so we can't -- we're obviously tracking this very closely and we'll continue to do that, but we're probably a quarter or two away from being able to actually give you more color around the size and what the whole opportunity will be.

Gautam Khanna -- Cowen Inc. -- Analyst

And I know this is a stretch, but would you be willing to pontificate on whether you think Commercial HVAC sales could actually in aggregate the up next year versus this year based on that opportunity sets?

Michael W. Lamach -- Chairman and Chief Executive Officer

It's too early for us to be able to say Gautam. What I would tell you is our sales force, commercially we think about it really as a it's a 100% commissioned sales force, which is very unique out in the marketplace. They're not going anywhere and if there's less things for them to do around new buildings and new construction, they're going to get after the billions of square feet that are out there where people need help. So I can tell you that we're going to have all the urgency to outperform the market going forward that you'd expect. And for us, the most important thing is, whatever the market is, we want to outperform the market. We want to grow EBITDA margins and that's always been the case the product growth teams, it's been the case around our product development cycles, it has been the case around why it's important for us to own and operate and service our commercial channel.

Gautam Khanna -- Cowen Inc. -- Analyst

Thanks, guys.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Josh Pokrzywinski with Morgan Stanley. Please proceed with your question.

Joshua Pokrzywinski -- Morgan Stanley -- Analyst

Hey. Good morning, guys.

Michael W. Lamach -- Chairman and Chief Executive Officer

Hi, Josh.

Dave Regnery -- President and Chief Operating Officer

Good morning.

Joshua Pokrzywinski -- Morgan Stanley -- Analyst

Just to to ask kind of the second half outlook question maybe a little differently. Mike, how should we think about backlog consumption or backlog levels within the down 10% to 15%. Is that kind of a backlog neutral type establishment or do you think that that's really just predicated on, hey, we have a lot to convert here particularly in resi and beyond that we just don't know?

Michael W. Lamach -- Chairman and Chief Executive Officer

Well, first of all, resi, don't even think about backlog, right. I mean, a typical quarter, we might pull two or three days worth of backlog across the quarter. It was different here as we pulled 10 times that across the quarter or more than that across the quarter, I'm sorry, month-to-month, so that's an anomaly. On the commercial side, Chris, do you have a point of view on that?

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Yeah. I think it could be trending flat to slightly down on backlog by the end of the year depending on the order rates to come in what we're seeing. But I think it's a little bit too early to tell where we're in the land. I think the service offerings, Dave and Mike have talked about with indoor air quality and otherwise could also be a catalyst year for backlog and for projects that I'd say at this point too early to tell.

Michael W. Lamach -- Chairman and Chief Executive Officer

We have a business we here we call it turnkey for us, generally speaking projects under $100,000, we're going in and doing retrofits in energy conservation projects and going forward you probably going to find a lot of indoor air quality projects going in that. So part of it is trying to understand how much increase in turnkey that we demand generate versus what do we are seeing in terms of traditional projects going through design plan spac, sourcing, construction and then ultimate delivery of products and services is hard to know. So this is the earlier point that I think Steve asked just be more time here to see how this really plays out in terms of the kinds of opportunities and retrofits we see with IAQ.

Joshua Pokrzywinski -- Morgan Stanley -- Analyst

Got it. And then just follow up on where we stand with. I guess some of the initiatives proposed by, I think, talked about, retrofitting 4 million buildings. I think you have long enough memory as July on the American Reinvestment and Recovery Act, which didn't seem like a needle mover at the time, but any perspective you'd have on either lobbying to make sure HVAC is a big piece of that or sales teams that are particularly geared to focus on it, any either lessons learned from history or perspective on what's been out there so far?

Michael W. Lamach -- Chairman and Chief Executive Officer

We're a huge supporter of that, because the payback on that, it's not a handout, it's a payback. And so to -- it's not a handout, it's a payback. And so to the extent federal and state buildings could be retrofitted, this always has been an enormous opportunity that I think that sort of thing could really unlock for us. And certainly we're talking to the administration frequently around the opportunity they would be a strong supporter of that type of activity and we're uniquely suited to be able to go address those challenges, because frankly, it's really doing two things. It's not just infrastructure renewal, indoor air quality and energy savings, we're doing the stuffs typically with reducing greenhouse gas emissions dramatically if not completely if they use our week-wise [Phonetic] portfolio. So it just checks so many boxes that are good for the country and for the world and the paybacks on these things are very short.

Joshua Pokrzywinski -- Morgan Stanley -- Analyst

Great. Thanks, Mike.

Michael W. Lamach -- Chairman and Chief Executive Officer

Thanks, Josh.

Operator

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

Julian Mitchell -- Barclays -- Analyst

Hi, good morning. I think there has been a lot of discussion on the buildings facing market. So maybe turn the spotlight to transport refrigeration for a second. Your comments on the second half outlook, I guess, were fairly downbeat understandably, but just wondered if you could frame sort of likely timing as you see it today for a recovery and any kind of historical context this market tends to see quite rapid rebounds when they do occur, is there any reason why you would think this time might be different?

Dave Regnery -- President and Chief Operating Officer

Yeah, Julian. I'll start and Mike can add some color. But in North America, ACT right now, is saying that 2021 will have a rebound of the -- in the 20% range. IHS in Europe has got a little bit more conservative bounce back. So their models are saying that we obviously have our own internal models that we track. There has been a lot of deferred buying I would say, especially in the long-haul space in North America. So we're hoping that ACT is correct. But I'd tell you there's still a lot of uncertainty out there right now and I would tell you that a lot of these trucking companies, they're very good business people and they -- they're not going to make investments that they don't need or they can't really see the return on. So we're cautiously optimistic on 2021.

Julian Mitchell -- Barclays -- Analyst

Thanks. And then just my second question is around capital deployment and your sales outlook is a bit better than what it was for the year back in April, maybe there's a little bit more visibility in general today than the three months ago. So I just wanted to check in on that appetite to put the balance sheet to work in the next call it six to 12 months and how you're thinking about the priority of acquisitions relative to buybacks at this point?

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Yeah. Julian, this is Chris. I'll start off an answer. I mean I think our strategy here around deployment has not changed. Right now, we're making sure we're funding the business with the investments that it needs, as Dave highlighted, with the four product introductions we've had in the quarter that's really important for us to make sure that's priority number one. I think we're keeping our optionality open for the second half as it relates to share repurchases. As it relates to dividends, we're locked into dividends here for through the third quarter, we'll hop $275 million paid out approximately in dividends by the end of September. And after that, it's really looking at visibility into the future. The better visibility we have would give us a lot more confidence in deploying more at that point. So, but right now the focus is on investment. Mike, anything?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. Julian, I think that our litmus test around share buyback versus M&A is just sort of the intrinsic value of what we think the share price, the share value is and what we think the long range return is for the acquisition, the M&A and so we've always been sort of agnostic and fair about looking at that. I mean clearly, all things being equal. We will be rather build and grow the company and have the opportunities if that presents itself. And so we are seeing a pipeline. It is active. We will do some things on -- in the back half of the year. Frankly, COVID and travel has actually hurt things like due diligence. The amount of time we'd spend in the speed in which we could perhaps react and go see things and so that's been a little bit more challenging for us, but I think we'll still be active this year with some M&A.

Julian Mitchell -- Barclays -- Analyst

Great. Thank you.

Operator

Your next question today comes from the line of Andrew Obin with Bank of America. Please proceed with your question.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Appreciate ma'am [Phonetic]. Just a question, AIA, I think recently just published the summary 2021 forecast for non-res construction and I think most of the forecast that they have sort of indicated that I think buildings are going to be down next year and I thought another way of asking question about market outlook for next year, but I think last year, I think Mike was highlighting the fact that you guys have multi-year visibility on the cycle and just wondering what you sort of think about visibility on the cycle in light of this? And because it's late on the call my second part is a lot more specific, what kind of visibility do you have on institutional market into the second half, specifically hospitals and education? Thank you.

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah, Andrew, remember that, the AIA data is going to really look at 20% or 30% of our North American Commercial HVAC business and correlate to that, it's not going to correlate to the other 60%, 70%, which is going to be service and retrofit of the equipment base or even 70%, 80%, which is relative to the service plus the retrofit base. So we would intend to do better I think as a result of the service business and driving retrofits and these IAQ opportunities on that front. As it relates to sort of institutional activity in construction, it's a very late cycle activity. These projects take a long time to get started. There's typically funding, bond issuance, tax, taxes that funded these projects, they are often multi-year projects or a multi-phased projects and so they tend to last a long time and there is plenty of infrastructure required. Now, Dave, anymore comments you might have on individual verticals or anything that might be helpful.

Dave Regnery -- President and Chief Operating Officer

I would just say that, this is abnormal times and maybe last year we had a lot more visibility, but obviously things are changed right now. I said, like I told you earlier, it's pretty fuzzy right now as to what the verticals are. The good news is, is that we're very diverse in the verticals. So we're not over-weighted in any one vertical. And I think I said earlier, we are seeing strength in warehousing and strength is the right word, but they're stronger than other verticals and things like retail and office have slowed down considerably.

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. I think market-wise I'd worry more about the parts of the market that are much more consumers sensitive like commercial, retail, big box, those sort of things. We're seeing more bankruptcies, more mall closures things like that, sort of the light unitary, the rooftop market, those respond much quicker to economic shock.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

I think what I was sort of referring to is I think lack of elective procedures really disrupted sort of finances at the hospitals and I think sort of some of the dealers we talk to highlight at this uncertainty, so I was just wondering if any sign of hospital behavior returning to normal by year-end?

Michael W. Lamach -- Chairman and Chief Executive Officer

Yeah. Look it's put pressure on hospitals finances clearly without being able to do elective surgeries and whatnot. So that's something to keep an eye on. But one thing for certain is the healthcare infrastructure in the United States is not going to fail, right. If you think about any stimulus or any risk of that happening, I think that would be a place where you would see support coming in to help hospitals in that situation. So I'm not worried about the long-term or even the mid-term effect of healthcare. I think we've gotten through, hopefully we're getting through the worst of this non-elective surgery component, which drives revenues through the healthcare system.

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

Really appreciate it. Thank you.

Michael W. Lamach -- Chairman and Chief Executive Officer

Okay. Thanks.

Operator

And at this time, I will turn the call back to the presenters for any closing remarks.

Zac Nagle -- Vice President, Investor Relations

Hi. This is Zac Nagle. I just wanted to thank everybody for joining the call today. We really appreciate it. And as always Shane and I will be available in the next coming days and today to take any questions or calls that you may have, so please reach out. Thanks, and we'll speak to you soon.

Operator

[Operator Closing Remarks]

Duration: 67 minutes

Call participants:

Zac Nagle -- Vice President, Investor Relations

Michael W. Lamach -- Chairman and Chief Executive Officer

Chris Kuehn -- Senior Vice President and Chief Financial Officer

Dave Regnery -- President and Chief Operating Officer

Michael W. Lamach -- Chairman and Chief Executive Officer

John Walsh -- Credit Suisse -- Analyst

Joe Ritchie -- Goldman Sachs & Co. -- Analyst

Scott Davis -- Melius Research LLC -- Analyst

Steve Tusa -- JPMorgan Chase & Co. -- Analyst

Andrew Kaplowitz -- Citigroup Inc. -- Analyst

Gautam Khanna -- Cowen Inc. -- Analyst

Joshua Pokrzywinski -- Morgan Stanley -- Analyst

Julian Mitchell -- Barclays -- Analyst

Andrew Obin -- Bank of America Merrill Lynch -- Analyst

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