Welcome to Johnson Controls Second Quarter 2019 Earnings Call. This conference is being recorded. If you have any objections, please disconnect at this time. I will turn the call over to Antonella Franzen, Vice President and Chief Investor Relations and Communications Officer.

Good morning and thank you for joining our conference call to discuss Johnson Controls second quarter fiscal 2019 results. The press release and all related tables issued earlier this morning as well as the conference call slide presentation can be found on the Investor Relations portion of our Web site at johnsoncontrols.com.

Thanks, Antonella, and good morning everyone. Thank you for joining us on today’s call. Let me start with some of the high level strategic highlights from the quarter, beginning on Slide 4. We delivered another quarter of solid results with continued improvement across a majority of our underlying fundamental metrics. The investments we’ve made throughout the sales organization and into new product development, combined with our ongoing efforts around commercial excellence, continue to drive strong organic top line growth across the board. We continue to grow our service business. A key element of our overall strategy in enhancing value for our buildings customers. And as I will share with you in just a second, these efforts are increasingly being acknowledged by our customers. With the exception of Asia Pacific, margins were higher in each segments as we remain focused on driving productivity optimizing our cost structure and improving our pricing discipline across our product categories as well as in our project businesses. Operational leverage is improving, which will become more evident over the next several quarters as the pricing we’ve built into the system over the last 12 months fully matures and raw materials and tariff impacts have stabilized.

Thanks, George, and good morning, everyone. So let's start on Slide 7 and look at our year-over-year EPS bridge. As you can see operational performance including synergies and productivity contributed about $0.10. And this was partially offset by $0.02 of continued product investments and the carryover run rate of our fiscal '18 sales force additions. We also saw some other items create $0.02 worth headwinds related primarily to FX, and its below the line items. But as George mentioned, overall EPS in the quarter was up 23%. So moving to Slide 8, let's take a look at buildings on a consolidated basis. Sales of $5.8 billion increased 6% organically led by continued strength in our shorter cycle product segment, which was up 7% and 6% growth in our field businesses where we saw continued strength in service and project installation, which were up 5% and 6%, respectively. The continued strength in our field business is a reflection of the strong backlog we've been doing over the past several quarters. Total segment EBITDA of $671 million grew 11% organically, driven by strong growth from our field and product businesses as well as ongoing productivity and cost synergy save. Total segment EBITDA margin expanded 50 basis points on an organic basis to a 11.6%. And as you can see in the waterfall underlying operational improvement contributed about 100 basis points and this was partially offset by the product investments and run rate sales force additions.

Thanks, Brian. Before we open up the lines for questions, just a quick update on our 2019 guidance starting with our EPS walk on Slide 17. The only change to our bridge versus what we shared with you last quarter is the EPS benefit associated with the use of proceeds related to the Power sale. With the earlier close, we've updated all of our assumptions with respect to net interest savings associated with our planned debt reductions as well as the reduction in share count, we should be able to achieve with our planned share tender. There are no changes to any of our operating assumptions or other below the line items. The additional $0.10 benefit from use of proceeds results in an increase to our adjusted EPS from continuing operations range to $1.85 to $1.95. This represents year-over-year EPS growth of 16% to 23%. Just to reaffirm some of the details of our underlying operating assumptions on Slide 18, again you will see there are no changes with the exception of the two items we’ve a boxed for you. And just a few final comments before we get to your questions. We are encouraged by our performance year-to-date and feel very confident in our outlook for the second half. Our end markets due remain healthy. Our competitive position is strong and we are well-positioned. As we close an important chapter in the history of Johnson Controls with the Power Solution sale, we're extremely excited to capitalize on the opportunities we have in front of us as one of the industry's leading building solution providers. With that, let me turn it over to our operator to open the line for questions.

Thank you. The first question in the queue is from Nigel Coe with Wolfe Research. Your line is now open.

Thanks. Good morning and congratulations on closing the deal early.

Thanks, Nigel.

Good morning, Nigel.

Good morning, guys. I’m not that familiar with the modified Dutch auction process. Maybe just why $4 billion, if you kind of push up to $8 billion, could it not have been up to closer to the $8 billion number. And then, does -- once it's closed, does that in anyway restrict you on further repurchases in the open market, ASRs or deal flow?

So as it relates to the modified Dutch auction, I mean, the way that process works, that will be launched this week. And as I mentioned, it's got a floor price of 36, and it's got a top end price of 40. And as the book gets built over the next 20 business days or so, we would expect that tender to be completed sometime in early June. As far as the amount of the tender itself, I mean that was -- there's a lot of discussions with our -- among the management team here and outside advisors regarding what the right limit is for going into the market and buying back shares at this time. And I think $4 billion was a number that we all landed on. I would just point out that there's an opportunity for us to upsize that by $500 million should we decide to do that. So right now I think in terms of $4 billion to $4.5 billion, but our initial play is going to be at the $4 billion level and we'll see how demand plays out. And your second part of the question, Nigel? I’m sorry it was what?

Yes, Brian, so thanks for the detail. Just -- does it in anyway bind you from a time period on further repurchases, so M&A any restrictions following the close of the deal?

No, not at all. Not at all. There's -- the implications of the tender really provide us more optionality after the tender is complete to decide if we move forward share repurchases what approach we may use.

Great. And then just my follow on is, George, here, obviously, you’re expressing a high degree of confidence in your end markets and the order flow. Turning to your short cycle businesses within products, I mean, in '15, '16 we did see some pressure from channel from oil and gas pressures in some of the businesses. Have you seen any signs of pressure in some of the shorter cycle businesses?

Not at all, Nigel. If anything, we’ve seen a very robust market within these businesses. If you look at our -- mainly in our Fire & Security product businesses, we are up low teens and that’s across both all three of the key platforms here, fire detection, security as well as in specialty products with our fire suppression business. In addition, that’s supported with the field up above mid single digits and that's pretty much broad-based across the globe. So there's really no signs right know on the short cycle metrics that would suggest that there's any significant slowdown here.

Great. Thanks very much.

Next question is from Gautam Khanna with Cowen & Company. Your line is now open.

Good morning. This is Jeff on for Gautam. Thanks for taking my question here.

Good morning, Jeff.

So a quick one on the Power proceeds. What's baked into your guide assumption as far as the debt reduction? Is it the $1.5 billion or the $3.4 billion? And also what about -- which -- what repo assumption is baked into that guide, the math like a tender dollar amount for '19?

Yes. So the debt pay down, so $11.6 billion is net proceeds. Debt pay down is $3.4 billion. The $1.5 billion is actually a tender that's part of the $3.4 billion to buy back that debt. The remaining $1. 9 billion will be taken out over the next several weeks through either normal maturities of debt or commercial paper pay down. So $3.4 billion of debt which will generate $40 million a save this year in annual run rate of a $100 million. As far as the share repurchase, what’s baked into the guidance we've given you is $4 billion in a tender that will be taken out by early June. And then the remaining $4.2 billion we had to make some assumptions relative to what we were earning to calculate our guidance based upon. So we've assumed the remaining $4.2 billion for now will be put on our balance sheet in some intro on -- some interest earning investment. And then as we make final decisions on what approach in share repurchase we’re going to use, we will update the guidance accordingly.

Okay. That’s clear. So any -- that would be incremental. And then maybe one on order pipeline, if I may. So you mentioned Q3 orders are tracking mid to high single digits. Can you kind of dissect that a little bit by HVAC product like unitary, applied, resi, kind of which is the strongest or just any color there would be helpful? Thank you.

Yes, when you look at our -- if you just look at what played through in Q2 is that strong product growth and that’s been pretty much across the board, double-digit growth in our building management systems. Mid to upper single-digit growth in our HVAC platform, and as we talked about in our specialty products, we had nice double-digit growth. So that’s continuing. When you look at our field and our installations as well as service, it's broad-based across all of the domains with the project pipeline that’s been building and what we’ve been able to convert here in the quarter and what we see in the pipeline to convert here in the third and fourth quarter. So it's -- obviously, we are performing very well in HVAC. When you look at our HVAC businesses across the globe, I would say that we are beginning to really accelerate our performance and then with that we're seeing the volumes come through. That is putting a little bit of -- from a mix standpoint at the gross margin level, a little bit of pressure on our business, but overall we’ve been performing well. So just to sum up, I would say, it's broad based. It's across all domains, across all regions and a nice split between both project based business as well as service business with service grown above 5%.

Next question is from Jeff Sprague with Vertical Research Partners. Your line is now open.

Thank you. Good morning, everyone.

Good morning, Jeff.

Good morning. George, you made a comment in your opening remarks about I think operating leverage really picking up or kicking in the higher gear or words to that effect in the back half. I just wondered if you could elaborate on that a little bit more right from our seat, kind of the observed incremental just that the segment levels 28%, which is solid underneath that its actually better, right, with the currency and other noise. But it's not clear to me from the guide that we would observe much more than high 20s, maybe it's 30-ish or so in the back half. But any other color on all those dynamics, the leverage, how price cost is playing through and how to think about how that scales up into the back half will be helpful.

Let me start by saying that when you look at our incremental margins today, Jeff, they were actually in the low 20s and that’s before productivity and investments. So when you look at the mix of that, it's really driven by high teens within our field businesses and upper -- mid to upper 20s in our product base businesses. And so on a go forward basis, when we look at what we're doing both from a pricing standpoint and productivity standpoint, we are -- we’ve a roadmap to get those businesses on the incremental margins to mid 20s. And that's driven by getting our field businesses up to 20% plus in our product base businesses, up to 30% plus over the next couple of years. Now recognize when you look at our price -- pricing activity this year, we made significant progress. Last year we got behind and for the year we were negative. I think it was roughly about $35 million. Now with all of the actions that we took in the second half of last year and then we’ve continued that this year taken into account not only the inflationary pressures, but also the tariffs, we feel very confident that through the course of the year that’s going to continue to accrete margins pretty much across the board and very confident of that. So when you look at the year, we are going to continue to grow kind of mid single digits across the board. That levers nicely. So it's -- when you look at the total year, it's about 30 basis points of leverage. It's about 60 basis points of productivity in synergies that somewhat offset with the reinvestments that we're making, that kind of the business through sales force as well as technology. We do have a little bit of pension headwind and that nets us to being able to achieve about 40 to 60 basis points for the year across all of the businesses.

Great. Thanks for that additional detail. And then just back to redeployment, as I’m sure you know, HVAC consolidation speculation has been ramped for the better part of six months or so. Can you just update us on your view on that? It would seem going ahead with plan A on the tender and the debt reduction would be a fairly clear indication that in the near-term you don't see an opportunity there, but I don’t want to put words into your mouth. Just what do you see kind of the optionality moving forward for this pure play building efficiency company that you’ve created.

Yes. So, I mean, when I look at where we are, it's been as I’ve communicated multiple times, we are very much focused on execution. We have an incredible portfolio that has historically underperformed. We are beginning to accelerate our performance, beginning to get more consistent performance, delivering on our commitments and as I said there's tremendous runway here as we continue to improve. And that’s been the focus. And so when we announce that we were going to redeploy the proceeds not only in the debt pay down, but also the buybacks it's believing that we’ve got a lot of opportunity here in front of us. We did announce the $4 billion tender. And as Brian mentioned, we'll see how that plays out and we have every intend here to continue with the plan that we have to buy back up to roughly $8.2 billion in buybacks. Now relative to the industry, certainly a lots of speculation. I’m not going to speculate on it. Certainly, when I stepped up to take over, we recognize that the building space is a very attractive end market and we had tremendous opportunity to reinvest and be able to deliver on growth. And that’s what we’re focused on doing. And as you’ve seen others, they’re doing similar, right? They’re streamlining their portfolios and positioning to do the same. But at this stage, I think we have a tremendous opportunity with the investments we've made and the continued investments we're making to be able to deliver a strong performance.

Great. Thank you for the color.

Next question is from Steve Tusa with JPMorgan. Your line is now open.

Hey, good morning.

Good morning, Steve.

Good morning, Steve.

Can you maybe just talk about what you're seeing in China. You put up some pretty good growth there. Obviously, the order slowed a little bit, but maybe just delve into a bit of the dynamics there on HVAC?

Yes, let me start, Steve, by saying it's roughly about 6% of our total revenues and it's broken out into about two thirds in the field and a third in products. And so we were -- this is something we’re watching closely, because as things with all of the trade discussions and maybe seeing a little bit of the slow down we were concerned for the year. I think through the course of second quarter, we are feeling a little bit better that I think as Brian went through the segment, we are seeing good order growth, good pipeline development. And then from a revenue standpoint, we actually did better than what we originally thought and how we converted revenue in the quarter. And so we still want to make sure that we’re watching this closely to make sure that with the investments we're making there, that -- they’re going to play out as planned. But at this stage and the other part I notice from a service standpoint not only is it important to get higher market share in the install base, but we've been very much focused on getting the service revenues. And so right now it is ramping up. It's about a third of our revenues in China. We see this as a big opportunity going forward, especially as we -- if we were to get into a down cycle, this would be a very attractive segment for us.

Thanks for that. Also just following up on Jeff's question, how do you view the market share dynamics of commercial? I know there is really only three major applied guys -- applied suppliers in the U.S. But obviously applied is kind of a loose term, if you will, it's customized work. I mean, when you kind of look at the market structure, do you look at it as three major players in the U.S and pretty consolidated or do you look at it as there's various verticals within, in which there are kind of a range of solutions that compete in those markets. Does that make -- does that question make any sense whatsoever?

Yes. Let me give it a shot. Let me start with the residential, because I think it builds into the commercial. Residential is a space that we’re obviously not in the top two or three. And this is based that we’ve been reinvesting in North America with new product and as well as expanding our distribution and that’s playing through pretty nicely. Our residential North America business was up 11% and that’s to a tough prior year comp.

Right.

And a lot of that not only is the technology and the product, but also of course would be the pricing increases that we've seen here over in the last 12 to 18 months. Now if we talk about commercial, this is where we’ve been relatively strong and then there are three key players here in this space. Certainly that we had over the last decade had underinvested. Over the last two or three years, we’ve significantly ramped up that investment. And I believe with the products that you see coming to market now are going to be very well-positioned to be able to gain more of that share. A big focus, our strength here is in national accounts, so there might be some segmentation of the market with how we serve customers. But I think when you look at our commercial HVAC equipment, it's up 13%.

Yes, I guess, I’m just asking about market structure. I guess a very simple way to ask it a little bit -- put it a little bit more of a finer point. Is it consolidated or am I -- are we looking at it the wrong way? Should it be segmented in a, hey, there are various solutions for these buildings, and so it's not as saturated or consolidated as it would look when we just talk about a chiller, which is basically Carrier, York and Trane, right? That’s kind of what I’m asking.

Well, I mean, when you look at the commercial space, what I would say, it's similar. When you look at the landscape within the market, its similar to the applied space we have five or six key players. Now there's differing footprints and different product mixes within that, but there's mainly five or six key players within the commercial space.

Okay. Would you consider that that saturated and consolidated or not?

I’m not going to -- I mean, at this stage I think I’m not going to speculate, Steve, relative to each of the players in the market positions. But what I would say is that we're focused on the investments we're making and making sure that we've got the right footprint in how we go to market to be able gain market share and grow within the key end markets that we’re serving.

Okay, fair enough. Thanks a lot.

All right.

Next question is from Andy Kaplowitz with Citigroup. Your line is now open.

Hey, good morning, guys.

Good morning, Andy.

Good morning.

George, despite the slowing in field order in the quarter, you obviously seemed quite positive about your pipeline. You made a comment in the presentation, I think for the first time around your field backlog that you now have some visibility into fiscal '20? Could you elaborate on what that means? Do you have enough projects now in backlog where you feel that field sales growth has a good chance of continuing to grow in the mid single-digit range in 2020?

Yes, let me start by saying that when we book projects, on the short end, they turn within three to six months or some can be multi-year. Our average project turn is somewhere around depending on the mix, it's typically about a year. So we are now building a pipeline, as I said, we’ve a very strong pipeline. Pipelines were up high single digits. We continue to add sales force. Now we’re maintaining our sales cost as a percent of revenue now, because we’re getting productivity with the sales force that we had added last year. So in line with that, we continue to expand our sales force. We are going after this pipeline, converting the pipeline and what we are turning now, we have some projects that will support the second half, but there is -- a lot of the projects that we are executing today that will set us up with backlog for 2020. And so, that’s what gives me confidence that as we continue to execute through 2019 that we will see that -- we will see continued progress here as we are setting up 2020.

Okay, George. At this point though in the year, you would say above the average visibility into the next year versus what you've seen?

Absolutely. I mean, we have -- we are halfway through the year. Like I said and with the pipelines that we have, all of our pipelines attract across the board now. We can see that by segmentation, by region, by install, by service and through our regular reviews, monthly reviews, I'm very encouraged in our ability to be able to continue to support the execution through the second half of 2019, but even more important now, setting up for that continuing in 2020.

And Brian, I just wanted to ask you about cash flow. Obviously, you’ve kept the guide at 95% conversion. Seasonally, we'd expect a bigger ramp up in the second half of the year. You talked in the past about needing to go after pockets of inventory that you have in your business, maybe standardizing cash collection in some of your smaller markets and collecting more from your JVs. So can you give us the confidence level that you have to get more cash out of your business in these areas, and how important are they to reach the goal for the year?

I think if you look at last year and the third quarter, our free cash flow, adjusted free cash flow was $0.5 billion. We are expecting about $600 million in Q3 of this year. And then last year Q4 was about $900 million and we're expecting -- I'm rounding number here, $1 billion, $1 billion plus in Q4 of this year. So with those numbers, we deliver the 95% free cash flow. I would tell you from the standpoint of improvements that we are making, if you look at year-over-year trade working capital as a percentage of sales, we’ve made a 40 basis point improvement in March of last year to March of this year. And I also look at things sequentially and sequentially we've gone from 12.1% at the end of the first quarter to 12% at the end of the second quarter. So, we are seeing improvements in trade working capital as a percentage of sales. Now having said that, if I look at trade working capital globally and where we've made progress with our cash management office over the last 15 months or so, I would tell you that payables, we standardize terms with our vendors. I think we've got things in really good working order in most major locations as it relates to payables. When I look at inventory, I would say there's probably a couple of pockets, one in Japan, one in North America that we need to go to work on. But we are talking huge numbers. It's probably $50 million to $100 million of opportunity. And the area that I think we really can continue to improve on is accounts receivable and we've kind of got all hands on deck on that as we speak and we are going to see that gradually improve and actually that improvement is what’s driving some of the year-over-year improvement that we are going to see in the back half of this year versus the back half of last year. And then the last thing I'd say relative to joint venture dividends, we continue to have conversations with our joint venture partners, regarding whether or not we take out current dividends or reinvest those in the business and we will update you as we move through the rest of the year. Most of those conversations take place in the back half of our fiscal year with decisions made at that time. So we are hopeful that over the next several months here, that we can get some positive developments relative to our joint venture dividends as well. But that’s all kind of baked into our 95% guidance we provided.

Appreciate all the color. Thanks, guys.

Next question is from Deane Dray with RBC Capital Markets. Your line is now open.

Good morning, everyone. This is David Lu on for Deane. I just have one question. I know you mentioned orders tracking on mid to high-single digits for the third quarter, but did you see any level of pull-in of customer spending from the second half of the year into the first half to get ahead of tariffs or price increases? Any material impact there?

No, I think we saw a normal flow in the quarter and we track these year-on-year, but nothing unusual or significant as far as that.

David, the only thing we talked about last quarter remember is in North America we did see some pull-forward from Q2 to Q1, but nothing from second half into first half.

Got it. And then if I can just sneak one more in. Any update on tariff headwinds? I know the list three tariffs kind of stay at the 10% range, but you were projecting for I think 130 to 140 of total headwinds between 2018 and 2019. Could we potentially see some upside from lower cost increases here?

That’s about the range that on a 2-year basis the impact that we are seeing, and as I've said earlier that, we are well positioned from a pricing standpoint to offset those. Certainly, we’ve been planning our supply chain so that on a go-forward basis, we can mitigate some of that. But our plan right now is we are planning for these tariffs and that’s what ultimately is in our guidance.

Great. Thank you very much.

Thank you.

Next question is from Tim Wojs with Baird. Your line is now open.

Hi, everybody. Good morning.

Good morning, Tim.

Good morning, Tim.

Just wanted to go back to pricing and just try to -- George, is there a way to kind of frame what pricing in backlog and your orders is right now versus what might be running through the P&L or what that looked like maybe a year-ago?

Yes. So, the easiest way to frame it up is a year-ago pricing on our revenue was -- impacted our revenue by 1% to 2% and then pricing this year is going to be 2% to 3%. And so, think about it as an order of magnitude what’s coming through on price. And so that is in our product businesses, it's shorter cycle. So you see the realization quicker. You will see realization on service increases quicker and then the one that's been more of a -- of a cycle time impact is the work we are doing around our installation project-based business.

Okay. Okay, great. And then, I think you had mentioned this, but I missed it. On the gross margins is -- I think they’re down slightly year-on-year, year-to-date. Is that really more a function of mix relative to price cost or anything else that’s kind of running through there?

Yes, the two areas that we’ve had the pressure, let me start with APAC. It's been -- mainly we’ve been foreshadowing that here this year because of what we had in backlog. That’s going to play out in the second half of the year, but with the work we are doing that will begin to improve and we will see that in 2020. The other is the mix of -- when you look at North America -- when you look at the domain together, we are performing in HVAC very well, and at the gross margin level, that's less in Fire & Security. But other than that, we are getting price and margin expansion across all domains and across all regions in the plan as we execute on the second half.

Great. Well, good luck on the second half. Thanks.

Thanks.

Thanks.

Next question is from Josh Pokrzywinski with Morgan Stanley. Your line is open.

Hi. Good morning, guys.

Good morning.

Good morning, Josh.

Hey, Josh.

We’ve covered a lot of ground on the quarter, maybe shifting gears thinking about where we are at in the cycle. I think one of your competitors yesterday -- I will put words in their mouth a little bit, it seems like we are in a bit of a golden age for HVAC and kind of building investment in general that between energy, efficiency and greenhouse gas emissions that folks are just spending a lot more and putting a lot more attention on that, which seems to favor the JCI portfolio. Within that, do you feel like you are winning your entitlement or have you seen new entrants or kind of new product lines pop up in the space? First question there.

So, you are absolutely right. The opportunity that we have around sustainability and energy reduction does play to our strengths. I highlighted a couple of examples that we’ve recently won. We are executing with the University of Hawaii and the other is a new project that is all focused on sustainability and being the smartest building in the Middle East. So the reason why we are well positioned not only do we have leadership HVAC, which as we know is a significant consumption of energy, but that combined with our building management systems and our ability to optimize not only the equipment, but beyond the equipment, the rest -- the use of the building is what ultimately delivers on the vision of our customers. And so what I would tell you is that in our building management systems, we had double-digit growth. I mean we are at low teens in the quarter. And that's the way that we serve the market today. What’s happening is, as we move forward, those capabilities are converging. It's enabling us now to use our digital vault, which is our proprietary cloud-based data solution to be able to deliver on what I would say is entitlement of energy reduction. And so for us, I think in spite of the cycle, that’s going to be an attractive space for us and one that we are well positioned.

Got it. So you don’t see anything competitively changing or new entrants or anything like that?

No, what I would say is that it's a combination of having leadership product, having technology platforms and then having a footprint in the key markets that you're serving that is close to customers and being able to take their vision with ours and convert it into what the next generation solution is going to be and that’s what we are doing.

Got it. And then just to pivot a little bit off of that, how pleased are you today with your mix, George? I think looking at some of the other folks in the HVAC landscape or in the buildings landscape, you do a bit more your own installation and you have kind of a wider range of service from the super high-end stuff to I think the things that would be maybe a bit more locally competitive. Within this kind of new regime for building investment, do you think JCI's organization does too much, too little, the right amount as it pertains to kind of product mix and what that ultimately means for operating leverage?

So let me just simplify it. When you look at the portfolio, we are about -- say about 40% installed, about 35% or 30% service and about 25% product. And what I would tell you is the investments we are making product is to put ourselves in a leadership position across each of the platforms. I think we are making great progress. We are now where we would like to be, but we are on track to the plan that we’ve got in place with the reinvestments. And if you look at our -- and that is core not only for our direct channel, but also making sure that we leverage all distribution to lead the industry. The second is our field based businesses. We’ve got an incredible footprint across the globe and it's not only leveraging the product, but also our technology platforms that enable us to bring compelling solutions that ultimately drives sustainability, energy reduction and ultimately efficiency for the customers that we serve. And while we’ve done well, especially during the cycle is that we’ve had significant growth in our installed business, creating that installed base and what I’ve been doing here since I've taken over is, put a big focus on service, that are field-based businesses we have significant opportunity to expand our services and how we service that installed base. And so that is an another area that we believe that we can -- there's a lot of room to grow. It's very attractive from a margin standpoint and it's going to be a key contributor to our long-term success.

Great. Thanks. I will leave it there.

Great. Operator, I'd like to turn the call over to George for some closing comments.

So, thanks again all of you for joining our call this morning. As I said earlier, our end markets remain healthy. We are strengthening our competitive position, and I believe we are well positioned not only for the remainder of this year, but setting up 2020. We are very excited now with the sale of Power Solutions to capitalize on the opportunities that we have in front of us and truly position Johnson Controls as the industry's leading building solutions provider. So on that, I look forward to seeing many of you soon, and operator that concludes our call.

This concludes today’s call. Thank you for your participation. You may disconnect at this time.