濱特爾 (PNR) 2011 Q2 法說會逐字稿

Good morning.

My name is Julie, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Pentair second-quarter 2011 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Thank you, Ms.

Zawoyski, you may begin your conference, ma'am.

Thanks, Julie, and welcome to Pentair's Q2 2011 earnings conference call.

We're glad you can join us.

I'm Sara Zawoyski, Head of Investor Relations.

With me today is Randy Hogan, our Chairman and Chief Executive Officer, and John Stauch, our Chief Financial Officer.

On today's call, we'll provide details on our Q2 2011 performance, as well as our updated full-year outlook as outlined in this morning's release.

Before we begin, let me remind you that any statements made about the Company's anticipated financial results are forward-looking statements, subject to future risks and uncertainties, such as the risks outlined in Pentair's 10-K as of December 31, 2010, and today's release.

Forward-looking statements included herein are made as of today, and the Company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.

Actual results could differ materially from anticipated results.

Today's webcast is accompanied by a presentation, which can be found in the financial information section of Pentair's website at www.Pentair.com.

We will reference these slides throughout our prepared remarks.

Any references to non-GAAP financials are reconciled in the appendix of the presentation.

I would also point out that all financial results and references to year-over-year numbers in today's call and presentation are on a continuing operations basis and comparative with adjusted figures, unless otherwise noted or highlighted.

We will reserve Q&A time for investors and analysts after our prepared remarks.

We would ask representatives from the media joining us today to please reach out to our media contacts so that we can be helpful in answering your questions.

With that, I'll hand the call over to Randy.

Let me begin with Q2 results as shown on slide 2.

Pentair delivered a strong second quarter, with sales up 14%, margin expansion of 70 basis points, and EPS growth of 23%.

Underpinning these results are successful investments, a growing international presence, and strong execution across the board.

First, investments in more energy-efficient sustainable product offerings and added global sales coverage continue to yield positive top line results, as evidenced in Q2 performance.

Water sales were up 15%, or 7% adjusting to exclude clean process technologies or CPT and the 2010 Gulf Intracoastal Water Way, or GIWW, project sales.

Technical Products grew 13%, on top of prior year's 19% growth in Q2.

Second, fast growth regions are meaningfully contributing to Pentair's growth, approaching 20% of our total sales mix in 2011, compared to less than 15% just 1 year ago.

In the quarter, fast growth region sales were up 26%, excluding the benefit from the CPT acquisition and 55%, including CPT.

Third, we continued to drive meaningful margin expansion through continuous cost structure improvements and strong execution of lean deployment across Pentair with margins up 70 basis points.

And finally, CPT is off to a great start, with good top line momentum and plenty of growth opportunities for the combined businesses.

On earnings, we delivered adjusted EPS of $0.75 compared to $0.61 in Q2 last year.

The margin performance in both water and technical products, along with lower taxes from a more favorable geographic mix, drove adjusted EPS $0.03 above the high end of the guidance provided in April.

As a result, we're raising the full-year outlook to reflect the Q2B and some added CPT benefit we see in the second half, which John will cover in more detail later.

On free cash flow, we generated $180 million in the quarter, putting us on track to deliver more than $250 million for the full year.

Overall, we had a solid quarter and a good first half.

We believe we are well-positioned to deliver record adjusted earnings in 2011, all without a notable US residential recovery.

Let's turn to slide 3 for review of our Water business.

Water revenues grew 15% in the quarter with good growth across most of the businesses and regions.

Global expansion, distribution gains and innovation led to higher recurring volumes, which are up 4%.

Pricing was solid across all of Water, up over 100 basis points, largely, though, masked by timing of growth rebates.

Currency and the CPT acquisition contributed the remaining 13 points of growth.

We continue to make excellent progress in fast growth region expansion, with sales up 26% in the quarter, excluding CPT.

By global business unit, or GBU, residential flow sales were up 7% in the quarter, including 4 points of FX benefit.

US residential sales grew slightly, helped by greater penetration related to new products and improved service delivering quality, all evidence of lean enterprise progress.

Pump sales in Europe were up double digits, benefiting from a stronger flood season, as well as expanded distribution.

Our agricultural vertical sales, including irrigation pumps and crop spray products, was up 14%.

Residential filtration sales grew 12% in the quarter, with FX contributing 4 points.

The continued rollout of more efficient water softeners and a boost from OEM sales, enabled by improved lead times and service, helped offset what continues to be a relatively flat US market.

Fast growth regions in residential filtration continue to grow at a rapid pace, up over 45%.

China grew an impressive 44% in the quarter, as we leveraged the innovative in-country for-country product offerings like Pentair Fresh, along with increased distribution coverage.

Continuing at this pace, we expect over half of the sales from this GBU to come from outside the US by year end.

Pool GBU sales were up 7% on top of the 31% growth in the prior year.

While pool permits increased modestly off of a very a low base, we continue to attract new dealers through leading innovation around energy efficiency and sustainability.

This continues to be supported by a growing number of utility-funded rebate programs across the US, including a new one, a $600 utility rebate in Florida.

With less than 10% penetration, the opportunity for Pentair's IntelliFlo variable speed pump is enormous, as we move beyond traditional replacements and new pool construction demand.

With a lot of tailwinds, this business continues to post excellent sales growth.

The Engineered Flow GBU sales decreased 7% in the quarter.

Excluding the $7 million of GIWW sales that we had in this quarter in 2010, revenue grew a modest 1%.

Robust commercial and industrial sales helped offset a decline in larger municipal sales in the quarter.

In commercial, we're encouraged with the progress we're making to grow the HVAC and fire pump verticals outside the US, with good gains in the Middle East in particular.

Within industrial, demand remains strong for the reciprocating and centrifugal pumps in the oil and gas sector.

US municipal remains sluggish though, in the near term, based on funding concerns, but longer term we believe municipalities will have to resume repairing and upgrading their water infrastructure, given the stresses in the US.

In Filtration Solutions, sales were up 7%, ex-CPT, including 2 points of currency, reflecting broad-based strength across key markets, including food service and desalination.

We continue to be encouraged by the positive movements in desal and resulting code line demands.

In food service, we continue to grow our presence outside of the US with sales up 60% in China.

We also grew in the industrial, medical, and energy verticals.

Filtration Solutions continues to fire on all cylinders and CPT is the right catalyst for even greater growth.

The right half of the page shows Q2 water operating profits and margin.

Water operating margins were 14.2% in the quarter.

This reflects an outstanding base margin performance of over 15%, offset slightly by CPT, adding to a 40 basis point improvement year-over-year.

Price and materials came in as we expected.

We're making meaningful progress on lean enterprise in water, and it is reading out in the numbers of lower costs and quality and improved on-time delivery across our GBUs.

CPT margin pressures are seasonal and temporary, with sequential margin improvement expected as we drive volume leverage and productivity.

Overall, I'm very pleased with our water performance this quarter and excited about its future.

Now let's move to slide four for a review of Technical Products.

Technical Products sales were up 13%, and up 9%, excluding currency, reflecting broad-based growth across most end markets we serve.

Industrial, general electronics, and energy all posted strong double-digit growth.

Communications is down in the quarter, a trend we expect to continue in the second half based on lumpiness of some of the telecom programs we serve.

Infrastructure, a growing part of Technical Products' portfolio, was up 10%, and notably, we recently won a $4 million order to provide cabinets for another charging station project in the emerging electric vehicle charging market.

Technical Products grew a solid 29% in fast growth regions, led by China up 33%, and Eastern Europe up over 50% in the quarter.

We're investing to drive this growth, building our distributor base and adding selling and marketing resources in more key markets like Russia, Middle East, and Mexico.

I'm particularly pleased with Technical Products' operating margin performance, posting another quarter of 17%-plus margins while investing in growth initiatives.

Through every cycle, Technical Products' earnings power has increased and 2011 is no different as we expect to advance margins another roughly 170 basis points, or 17% for the full year.

We expect the breadth and depth of our product portfolio, brand, strength, and global capabilities to enable us to capture more and more growth opportunities as we move forward in Technical Products.

Please turn to slide 5 as I cover the market trends and key assumptions for the balance of the year.

Clearly, we had a strong start, with first-half sales up 13%, segment margin expansion of 170 basis points and over 30% earnings growth, putting us in a good position as we enter the second half.

On the top line, CPT is tracking slightly ahead of expectations with an additional $190 million in sales expected in the second half.

The $47 million in the second half 2010 revenue related to the GIWW project provides a difficult comparison.

Adjusting to exclude both CPT and GIWW, we expect our recurring base business sales to grow in the 8% to 10% range for the full year.

We expect those things that helped us in the first half to continue, like global capital spending tailwinds and strength in fast growth regions and investments in innovation and expanded distribution.

In Technical Products, however, we do anticipate industrial growth rates to moderate, reflecting more normal tech product growth in the second half of this year.

From a market view in Water, we see no near term improvement in US residential markets, still, we have a significant installed base to serve with over of 80% revenues generated from repair, replacement and upgrades.

We continue to capitalize on the secular trends around energy efficiency and sustainability.

We expect municipal spending to remain under pressure, negatively impacting our large pump project business.

As a result, Engineered Flow is expected to be down roughly 25% in the back half, reflecting the difficult GIWW lap, and down around 5%, ex-GIWW, because of US municipal weakness.

Outside the US and across both segments, we expect a mixed Europe with some growth in Germany and Eastern Europe offset by smaller pockets of weakness in other parts of Western Europe.

In fast growth regions like China, Brazil, and India, we anticipate continued robust growth.

On the margin line, price and productivity should still offset inflation.

Despite a back half of the year with incremental deal integration costs and amortization along with increased investments, we continue to expect margin expansion of roughly 100 basis points for the full year, which will be quite an achievement.

So despite all of the headlines, our view of served markets and the opportunities therein remains unchanged since our last update with you in April.

We believe we are well on track to deliver greater than 20% earnings growth on record sales of nearly $3.5 billion.

Beyond the numbers, we continue to rapidly advance our strategy to expand globally, innovate, and drive TAMs across our business as outlined on slide 6.

In fast growth regions, sales were up 20% year to date, and with this growing comes scale to drive better operating leverage.

We're just beginning, we believe, to see the benefits of our investments over the past several years.

We've added manufacturing capabilities, global lean enterprise deployment, local engineering, and channel development in key markets like China, Latin America, and India.

These investments are beginning to pay dividends in the form of top line growth and margin improvements.

We have now turned our focus to drive added distribution, penetration, and coverage.

In the quarter, we had a strong Pentair presence, including CPT, at the Aquatech show in Shanghai, and we're looking forward to the upcoming show in Amsterdam in November.

We also opened up our first flagship showroom in Shanghai in partnership with a large distributor, another means to increase brand awareness with consumers in China.

And we're relentless in our pursuit of in-country for-country products with the new wall-mounted ARO filtration system called Pentair Giro, as an example, that was designed and manufactured in India, specifically for the Indian market.

Turning to innovation, our investments in sustainability, energy efficiency, automation, and safety are driving demand for products.

In the quarter for example, our energy-efficient Eco-Select product suite contributed nearly 40% of our Q2 Pool sales, compared to just around 30% last year.

In addition, we launched our new standardized global RO systems platform for low brackish water, won the Best Green Product Award for Pentair's Rain Switch in Malaysia, and continue to be a key player in providing protective enclosures and cooling solutions for recharging stations in the emerging electric vehicle market, just to name a few.

In other growth accelerators, our Pentair integrated management system, or PIMS, we continue to serve our global customers better every day by improving product quality, on-time delivery, workplace safety, and delivering cost and cash to boot, as evidenced by our year to date gross margin improvement of 120 basis points and strong cash flow generation.

And on the strength of excellent on-time delivery rates and rapid sales growth, Pentair was recently recognized as True Value's 2010 Partner of the Year, a title that is awarded to only 1 of its 1,800 vendors across all categories annually.

We're very excited about the new CPT acquisition, which advances our strategy in every aspect.

We expect CPT will add over $140 million in annual revenues in fast-growth markets.

It has leading innovative and highly-valued filtration technologies including ultra filtration, nano filtration, and membrane bioreactors, and provides us an opportunity to leverage lean enterprise to drive greater profits.

CPT is a clear fit and high-impact acquisition that we believe creates a stronger, more global growth profile company in Pentair.

In sum, we're committed to our long-term growth agenda and continue to make good progress.

Now let's turn to slide 7 for a more in-depth update on the recent CPT acquisition.

The business is performing exceptionally well, as CPT grew sales double-digits and won nearly $20 million in new systems and projects just since we closed.

This growing installed systems base will help support compelling and recurring revenues going forward from replacement components and services.

We continue to leverage our strong technologies portfolio, now extending it into anaerobic membrane bioreactor systems, for example, that improve effluents, lower discharge costs, and raise biogas yields to not only provide water reuse, but also an energy source for a number of different industries.

This all uses our proprietary sidestream ultra filtration solution, which is simplest to maintain.

The integration work is on track and going well.

We're in the process of dividing product offerings across all verticals, especially desalination and beverage.

We're also developing plans for more optimal combined go-to-market approach in key regions with the goal of selling more together.

A good example of that is the CPT team just recently secured a code line sale with a customer in Brazil that prior to this we have never made a sale to.

That's the kind of thing we expect to happen more and more as we work together.

All critical on-boarding activities were successfully complete from training to consolidating financials.

We're rapidly moving forward in the application of lean enterprise and rollout of the PIMS tool kit with early insourcing and combined procurement opportunities already identified.

Simply put, CPT is off to a great start.

Now let's turn to slide 8.

For our standard work, details of free cash flow are on the left of the slide, and a summary of our debt levels, including the recent $500 million acquisition related to public debt.

Free cash flow was strong in the quarter, reflecting a solid Q2 performance.

Year to date, we have generated $117 million of free cash flow.

And we believe we're on track to deliver greater than $250 million for the year.

We'll return approximately $20 million to shareholders through dividends in the quarter with an annual dividends of $0.80 per share.

On ROIC, which is shown on the bottom-right section of the slide, we continue to make progress on this important commitment, adding another 90 basis points for return on invested capital of 9%.

Our goal continues to be to drive ROIC into double digits.

With that, let me turn it over to John to review in greater detail the Q2 performance and 2011 guidance.

Let me begin on slide 9, titled Q2 Performance Excluding CPT.

We acknowledge that the inclusion of CPT in your models takes some work.

I wanted to show you what the Q2 numbers look like excluding the impact of CPT.

The base business, excluding CPT, had a very solid quarter.

Revenue was up 8%, 9% excluding the impact of GIWW, which was around $7 million in Q2 of 2010.

Operating income growth of 18% was driven by strong margin expansion in both water and Technical Products, related to volume, productivity, and solid execution of managing the price/material cost equation.

Overall, Pentair margins reached 13.8% for Q2 2011, which were up 120 basis points year-over-year.

Overall, Water grew 5% organically, 7% excluding the impact of GIWW.

ROS expanded 130 basis points to 15.1%, due to volume leverage, price material cost management, and lean improvements.

CPT results for the approximately 7 weeks of ownership were $54 million in sales, and roughly $3 million in operating income, inclusive of typical integration costs.

This was in line with expectation.

Overall, a very solid performance for the base business plus a good start for CPT.

This gives us confidence that CPT will enhance our overall business outlook and be additive to our previous Pentair longer-term expectations.

Please turn to slide number 10, Updated 2011 CPT.

The combined Pentair and CPT teams have put forth a tremendous effort over the last 7 weeks to review the business drivers, R&D pipeline and backlog, connect with the functional and country leaders, and understand the global sales channels.

And, we are more excited than ever about the synergy opportunities, particularly revenue in the next several years.

We have completed our purchase accounting work and wanted to give you the final impact of this analysis and effort.

We now expect 2011 revenue for CPT to be around $240 million, about $10 million higher than our previous estimate, driven primarily by more robust backlog and the benefit of fast growth markets.

EBITDA is still on track to be 15% per year, so the base CPT business and 2011 contribution is actually stronger than we anticipated.

ROS, inclusive of amortization and depreciation, however, is now expected to be close to 8% of sales as the value of technology came in a little higher than anticipated, causing a slightly higher amortization rate.

Since the amortization of the fixed amount, we fully anticipate the margins of CPT to accelerate quickly from the 8% starting point to our anticipated ROS margin target of 15% by 2014, consistent with our previous expectations.

On an annual basis, D&A will be around $24 million, and we expect ongoing, incremental annualized interest related to the CPT acquisition will be around $30 million.

Our ongoing tax rate, inclusive of CPT, is now anticipated to be 30.5% for the rest of 2011, reflecting a more favorable global mix and tax structure.

The Q2 benefit is about $0.02 for the year-to-date true-up to an ongoing lower rate, and a one-time tax adjustment related to a change in the Wisconsin tax law.

All in, and reflective of the stronger CPT base business, we have lifted our 2011 outlook to approximately $0.05 accretion versus the original $0.03 of accretion.

We have also included on the lower left an easy way to depict the expected accretion of CPT given all of the geography impacts on operating income, interest, and taxes, with the inclusion of it in our results.

Simply, the operating income is taxed at a blended CPT rate of around 27% and the $30 million of incremental interest is comprised of roughly $120 million of European float, taxed in Dutch rate, plus the $500 million of bonds, taxed at both the US and Dutch rate for around $13 million of after-tax interest on an annual basis, reflecting approximately 8 months of 2011 ownership.

This nets to the $0.05 accretion we are now anticipating.

We have also included an update on the adjustments related to deal costs, inventory step-up and customer backlog.

I will give you a better view of this by quarter in a few slides.

Please turn to slide 11, titled Updated 2011 Adjusted EPS Outlook.

Our guidance for Q2 2011 was $0.68 to $0.72 per share.

We delivered $0.75, excluding the CPT acquisition-related costs.

This is better than the low end of that range of $0.07 and better than the high end of the range of $0.03, and was up $0.05 versus the midpoint of the range.

We have added those deltas to our previous full year guidance of $2.33 to $2.45 per share, which puts us at $2.40 to $2.48 per share for the year.

Adding in our current expectation for the CPT business, we are at our new guidance expectation of $2.42 to $2.50 per share on an adjusted basis of 21% to 25% versus 2010.

This means that we expect the second half of 2011 for the base business to be in line with our previous expectations.

While growth rates may be moderating slowly, slightly, we feel comfortable that our price/material cost estimates are in line, and our base productivity expectations are reading out.

While While North American residential and municipal markets remain constrained, we still see good industrial growth and accelerating fast market penetration.

All in all, we still feel that the second half is in line with previous expectations.

Please turn to my next slide, slide 12, labeled Q3 2011 Adjusted EPS Guidance.

We wanted to remind you that GIWW was a very prominent component of the Q3 2010 results.

The project added $31 million of revenue last year at high teens ROS or roughly $0.05 at EPS.

While CPT results are encouraging, and accelerating versus Q2 2011, we are also accelerating some integration activities within the quarter.

These consist of migrating IT networks, PCs, updating software platforms, continued sales office combinations and training, as well as other activities that will impact us by about $0.01.

CPT seasonal strength is in its fourth quarter, led by higher project activity, annual service contracts, and aftermarket component sales.

The base recurring sales in Q3 are still expected to be up high single digits, and we anticipate a 12% to 18% EPS growth on our core business for Q3.

Overall, we are anticipating another solid quarter in Q3, with high single-digit growth plus CPT revenue, and continued productivity in the core, plus the benefit of accelerating CPT margin expansion.

Please turn to the next slide labeled Q3 2011 Pentair Forecast.

For Q3, we anticipate revenue to be between $865 million and $885 million, inclusive of CPT.

This is an overall growth rate of roughly 12% to 14% with organic, meaning ex-acquisition growth, of approximately 3% to 4% or roughly 7%, excluding the head winds from 2010 GIWW shipments.

This compares to an organic growth rate of 12% in Q1 and just over 8% in Q2, only modestly lower on a comparable basis.

We expect water to be up roughly 16% to 18% and approximately 7% to 9% on a recurring organic basis, excluding CPT and GIWW impact.

Technical Products should be up around 5% to 7%, as year-over-year comparisons get a little tougher, but global opportunities around infrastructure and electronics are still encouraging and abundant.

Overall operating margins should be around 11.5% at the midpoint, inclusive of CPT and about 12% excluding the impact from CPT, as we continue to integrate the business into Pentair.

We expect adjusted Q3 EPS to be about $0.55 to $0.58, and the year-over-year growth rate is negatively affected by the benefit in 2010 of the GIWW shipment.

Overall interest is anticipated to be around $17 million, and the tax rate should be about 30.5% as previously discussed.

In summary, Q3 may be a little optically challenging, but will still be a solid quarter, and should set us up for the delivering a very solid second half of 2011.

Please turn to slide number 14, labeled Full Year Outlook.

For the full year, we expect revenue to be about $3.5 billion inclusive of CPT, or up 14% to 16% versus 2010.

We expect adjusted operating income to be between $410 million to $420 million, and operating margins around 12%.

As previously stated, we now anticipate full-year adjusted EPS to be between $2.42 to $2.50 or up 21% to 25% versus 2010.

Full-year adjusted income at the midpoint should be up around 24% and we now expect free cash flow to exceed $250 million, and ROIC to be 9%, inclusive of CPT.

For the full year, we expect interest to come in around $57 million to $58 million and the full-year tax rate to be slightly north of 30%, which reflects the ongoing rate of 30.5% plus the one-time benefit in Q2.

Overall, we are encouraged with the first half performance, excited about the potential of CPT, and confident in our cost actions, which we believe will drive a record year for Pentair.

Please turn to my last slide, slide number 15, labeled Adjusted to Reported EPS Forecast.

Before I hand it back to Randy, I just wanted to make sure that you have the adjustments by quarter for modeling purposes, which are limited to 3 categories, deal costs, which have all been booked in quarters 1 and 2, in SG&A.

Customer backlog adjustments, which started in Q2, will be complete by the end of 2011, and the inventory step-up impact, which started in Q2, and will be complete by the end of Q3, both reflected in the cost of goods sold.

In addition, we are considering some modest repositioning actions focused on optimizing the combined Pentair and CPT sales organizations and go-to-market approach.

We would anticipate that if these actions are taken, they should help accelerate the earnings potential of CPT, but they have not been contemplated in our reported EPS forecast at the current time.

I will now turn it back to Randy, who will give us a quick summary, before we turn it over to you for questions.

2011 is shaping up to be a record year for Pentair with solid top line performance, excellent margin expansion in the base business, and our new CPT acquisition firmly in the fold.

And while the macro environment is mixed, we believe our strategies to invest in global growth and innovation while leveraging PIMS will deliver sustainable, profitable growth as our first-half results demonstrate.

As we turn the page to slide 17 again, we want to remind everyone that we'll be hosting our annual Analyst Day on September 14 in New York, and we hope to see you there.

Thank you for your time, and now we'll turn it over for questions to the operator.

Thank you.

(Operator Instructions)

Your first question comes from the line of Robert Barry with UBS.

Hi, guys, good morning.

Congrats on the solid quarter.

I wanted to ask about the price inflation dynamic in the quarter.

I think last quarter you expected to get about 150 to 200 basis points of price this year.

And I think to of set inflation.

I was curious what your latest views were on that.

Still feel that we'll be in that 150 to 250 basis point range.

Water was impacted slightly in Q2 by some sales rebates in our pool business, which those come in as we forecast what the business is going to do for the pool season.

And that was a few million dollars in the quarter.

That won't impact the full year timing issue between Q2 and Q3.

Okay.

A question on pool actually.

Did you continue to add dealers in the quarter?

Yes.

Yes, we did.

What was the same store sales basis growth rate in pool?

I don't have that right off the top.

Pool grew around 6%, 7% in the quarter.

7% as Randy mentioned.

We probably got a point of share from adding dealers.

We do have a retail component in there that we're building out pretty aggressively and that was a piece of it as well.

And a question on slide 11 which was very helpful related to the tax.

How much is the lower tax rate adding to the EPS guidance?

What we've done is our previous guidance around 32% for the year did not reflect the impact that CPT has on the overall tax rate.

So as we look at our full year estimates of both the base business and CPT, the ongoing tax rate now is around 30.5%.

That is inclusive of the double taxing of the bonds, as I shared in my comments.

We anticipated that some of the tax benefit when we gave the $0.03 increment for CPT and some of the additional $0.02 is also taxed.

The difference between the $0.03 and the $0.05 is like a little bit better performance in the business and maybe $0.01 extra in tax.

Okay.

If I just look at mid to mid, and maybe I'm not thinking about it right.

$2.39 to $2.46 is $0.07 higher.

$0.02 of that is the change in CPT, $0.05 is second quarter, and then if I go to my model and lower the tax rate, it's going to add another $0.05.

The problem is --

Is there double counting there?

Is some of that $0.05 embedded in the -- ?

The geography, the interest is going up substantially and the tax rate is getting better.

That's why we were sharing with you the little chart on slide, we did the waterfall graph on page 10.

That's the way to do CPT.

And that'll help you as you look at the geography, and then you think of the impact of CPT.

Okay.

But so then bottom line is, and maybe you touched on it in one of the later slides, in the current update versus last quarter, there's no incremental head wind that you're seeing in the back half?

Nothing that we didn't already anticipate like more moderating growth in industrial.

So really, the business outlook is set.

And it's a little bit better with CPT.

Yes.

Okay, perfect.

Thank you.

Thank you.

Your next question comes from the line of Hamzah Mazari with Credit Suisse.

Good morning.

This is Chris Parkinson on behalf of Hamzah.

Can you just give us a quick update on basically any cross selling initiatives following the CPT acquisition?

And your views, are there any areas of particular focus given the Company's end market distribution?

I gave you the one example in Brazil which literally was something that hasn't shipped yet.

It was in the second quarter, it's an order we just booked.

That's kind of example where they -- the CPT team has a different reach globally than our business did, and much deeper into municipal globally, much deeper into industrials.

The case example I gave you where the CPT team sold some code line product was actually to an energy company in Brazil which we've never made a sale to before.

So what we're doing is we're filling out the product line and making it available to the CPT team.

Then there's straight forward cross selling.

For instance, in their systems business, they didn't use our enclosures, they didn't use our tanks, they didn't use our housings.

And that's getting all changed right away, as you can imagine.

We call that the insourcing opportunity.

And we a good handle on all that.

And I'm really encouraged by the it's more the receptivity, the welcome-ness of the CPT team has to that.

It's a real win-win.

So two efforts.

One is the insourcing into their systems business in particular as well as insourcing their membranes, the ultra filtration membranes into some of our innovation platforms on for instance the residential side.

And then it's the filling out the product line and leveraging their frankly higher touch deeper relationships, with the very attractive customers outside the US.

And the last piece will be to leverage our position in the US to help them grow, particularly in the beverage, dairy and water in the US.

Perfect, thank you for the color.

And a quick question.

Can you give us a real quick update on the [muni] pipelines?

Is it still basically maintenance-oriented or do you believe there's inflection over the intermediate or longer term, or where do you see that happening?

If talking just about leaving aside for a minute the filtration side -- the Filtration Solutions business, which is serving desal globally, our large pump business in municipal is largely US.

So we don't get the benefit of some of the spending, we don't have as much exposure to that outside the US.

I'm just talking about the US market.

We saw the quote activity fall -- rate drop down so our backlog is at a low point right now.

Quote activity is picking up.

That's encouraging, but until it turns into funded orders, I'm not going to hold my breath.

And that's why we said what we said about the second half, ex-GIWW being down 5% for that business despite the fact that commercial and industrial sales will be up globally.

So that -- and that -- we anticipated that.

I wish it wasn't true.

But that's the reality we're seeing right now.

And I think it will remain break and fix.

Something has to change there.

And the opportunity we believe is actually going to be different when it comes back.

It's going to be water reuse which is attractive for us and CPT, and our other opportunities on the back side of wastewater.

And they're going to have to find new creative ways to pay for it.

The municipalities are going to remain constrained for a while, even though they have pricing capability in water.

It's going to be an interesting debate as to how that gets solved.

It has to get solved, particularly where there's heavy drought.

Perfect.

Thank you very much for the color.

Your next question comes from the line of Deane Dray with Citi Investment.

Good morning, everyone.

We've had a lot of focus on the up side coming out of CPT from the water perspective.

I'd be interested in hearing a little bit more color on the other part of the business, the food service.

I know you called out some pretty heady growth coming out of China.

Could your just take us through what the opportunity is?

How do you go to market?

So we're very comfortable, and you know the water sector, you know all the water customers.

You do some business in food service today.

How much of this is new territory for you or selling additional CPT products to existing customers?

Great question, and let me differentiate between food service.

We use food service to describe what we do with Starbucks and McDonald's and Darden Restaurants and the like.

And so that's the in-restaurant or in hospitality versus food and beverage, which is at the factory level, which is the focus of the CPT.

They are the world leader in the beer business in beer membrane -- excuse me, BMFs, beer membrane filters.

And we've had a number of very encouraging discussions with the highest level with the leading manufacturers of beer, and they actually view CPT as part of the Pentair fold as giving additional opportunities for us to expand what we offer in those areas.

That's one of those areas where we're filling out, if you will, the product portfolio to leverage their very, very strong coverage in the beer business.

Similarly, they have leading positions in a number -- they've had some really great reference installations in the soft drink area.

So again, because of our reach and our depth, we're having very encouraging discussions to try to grow that.

Their market share is leading everywhere in the world in beer.

It is spotty in soft drinks, so we see an opportunity to fill out market share globally.

And in the dairy business, in particular, their share is low in North America which is the largest dairy market.

We see real opportunities for them to grow here.

Leveraging the MBRs in particular, not just on the product side, but on the waste side, it varies, I mentioned the anaerobic membrane bioreactor application.

That's basically taking the waste in huge dairies and turning it into one, a water reuse opportunity, and two, into biogas that they can use to fund the facilities.

It's a big focused area for us.

Their positions with what they call the Sutmo, the market leading positions in I'd say the highest quality, highest value valving and valving manifolds that are used in beverage, as well as Halfmit, which is CO2 removal and CO2 reuse, which is a green activity.

That's also a cost savings for the businesses.

So a lot of our -- the water investments are easier to think about.

The food and beverage ones are very exciting as well.

Is there a big margin differential between the water and foods market?

Food and beverage is higher.

And in some cases meaningfully so.

But when you take a look at the life cycle on the water side, it's good margins too.

That's good to hear.

And over in Technical Products, as you were clicking through the end markets, what jumped out to us was the comment about the opportunities in charging stations for electric vehicles, and it was kind of reminiscent of the opportunity you all had in the wireless base stations a couple cycles ago.

What is the opportunity, what's the content for Technical Products, and how do you see this growing from here?

I mentioned the one project.

It's over $4 million in content for us.

In that one project.

And that's just to place maybe a thousand units out in the field.

And what we're doing, is we're doing basically the housing pedestals, wall mount, a bunch of different pieces in both the power source and then the individual charging stations.

And we -- I'm not going to give you a number, because I've seen some spectacular numbers for the opportunity.

I'd like our team to come up with our own sense of what that opportunity is.

We've done integration in a very high level and a number of the companies we're talking about are really more technology companies and they're not really manufacturing companies.

We're very excited about the opportunity.

But I can't give you a number now.

I think that's a fair thing for us to mention and we'll give you that September 14th.

Is there an opportunity in thermal in these charging stations?

Will they be outdoors?

Yes, a lot of them will be outdoors.

Generally, at the power source itself -- at the transformer, there may be cooling opportunities.

But it will probably will air to air.

Not full air-condition I wouldn't think.

But I'm getting out of my league here.

Okay, thank you.

Thank you.

Your next question comes from the line of Michael Cox with Piper.

Thanks a lot, and congratulations on a nice quarter, guys.

My first question is on the capacity extension that you've done in China and India.

Where do you sit today in utilizing that?

And what sort of runway for growth do you have in the facilities you've already built out?

Well, as many of you have seen, you've been through the facility, we doubled the facility in Suzhou.

In Wushi, we have a pump manufacturing capability.

And we still have big opportunities.

I would say we're 60, plus or minus 5% utilization right now, and filling rapidly.

Since we, particularly with the focus on the in-country for-country, we talked about Pentair Fresh, we talked about a number of other things.

We now make code line in China.

Which lets us get underneath or inside if you will the duty that made us uncompetitive in China with our code line, and we're gaining rapid market share there.

And so we still have a lot of room for growth with the -- with the space we've built.

And we have fantastic leadership there.

Would you anticipate a similar type program in Brazil at some point?

We made the acquisition in residential filtration [hedro-filtrose].

And John and I are going down as soon as we get clear of a few things in Brazil.

And we think Brazil offers that kind of opportunity.

Whether we'll build out in a similar fashion or not remains to be seen.

It's clearly investable.

It's an exciting opportunity for all of our products and the ones we talked about for CPT.

That's why CPT has a better position than we do on the industrial municipal end.

And we can leverage that.

So yes, we think we have at least that much of an opportunity in Brazil.

And my last question on the GIWW.

What sort of head wind does that leave in the fourth quarter?

If I remember correctly, most of that was pulled into the third quarter last year.

Right.

It was mostly third quarter.

It's going to be $16 million or revenue roughly in fourth quarter and $31 million in Q3.

Thanks a lot.

Thank you.

Your next question comes from the line of Christopher Glynn with Oppenheimer.

Good morning.

I liked the slide that showed the water ex-CPT there, John.

Looks like you did high 30s incremental margins again.

So just want to ask for an update how you see the fundamental sustainable incremental margins for the base business.

And once we get a year end with CPT, how you think those revenues leverage compared to before?

That's a great question.

If we take CPT and GIWW out of the equation because we're looking at this ourselves.

Our incremental margins at the segment line were over 35% and expected to be 35% for the full year.

We obviously have slightly higher corporate costs as we're still continuing to invest in marketing and our sales offices globally.

And it's north of 30% at the overall Pentair level.

Clearly for CPT we're in the process of figuring out what the incremental margins should look like.

For CPT, I think we're expecting more of the 20% type of incremental, and we would still be targeting our base business north of 30%.

We have to figure out the mix.

And the difference is the project business did not go out at the type of incremental margins that a component-based business could be.

And there are exciting opportunities as Randy mentioned.

We're continuing to build out reference sites, but starting to place more projects into key vertical markets.

Between the component mix and the project mix, 20% incremental for CPT is the more credible number right now.

Thanks.

That's really helpful.

And since you mentioned the general corporate.

I didn't catch it if you talked about it earlier.

With the acquisition now and the investments, which we think about for a run rate in the back half of next year for the general corporate?

For Q3 and Q4 in our corporate guidance, we have between $15 million and $16 million a quarter.

It usually runs a little higher in the beginning of the year.

We have the accelerated accruals and stock options and those types of things.

And the variability in corporate flops around between the medical expenses.

We're not seeing anything unusual at the moment.

I'd say between $15 million and $16 million in Q3 and Q4 is the general run rate of corporate.

Okay.

And last one, the expanded distribution in Europe in the resi flow side.

Can you talk about where you are in that strategy?

And what the opportunity is?

Our focus has been Eastern Europe in particular, but we've made progress in France and the UK as well.

We haven't reached that much in Italy and Spain.

There's not a lot of action in those countries right now.

Eastern Europe is the biggest opportunity and we make good progress there.

Great, thanks very much.

Thank you.

Your next question comes from the line of Garik Shmois with Longbow Research.

Hi, thank you, good morning.

First question is just on the sequential movement for your EPS guidance, 3Q to 4Q.

If you look back, historically Q3 tends to be a stronger earnings number than Q4.

If you could walk us through what you're expecting?

Is it seasonality, CPT, or something else there?

For us, just to set the basis and we didn't have a Q3 earnings guidance.

We had a back half.

Historically for us, Q3 and Q4 are relatively flat with each other with the difference being that we have less of a pool season in Q3, more of a pool season in Q4 as the early buy, and then some of the residential businesses are stronger in Q3 and fall off in Q4.

That's just the normal trend.

But Q3 and Q4 tend to be generally the same.

What's happening in the dynamic is last year was helped by GIWW in Q3, and that's why I think the distribution was set off.

And overall, we've learned a lot more about CPT and we realize that they have annual service contracts which for the most part the profit is let in Q4.

The way that the after market of the membranes and components ship out is more skewed to Q4 due to maintenance cycles of those businesses.

And then their projects tend to be booked early in the year and shipped in Q4.

So a lot more skewing to the Q4 in CPT, I think we have original estimates that suggested that, but I think in the firming up but now know that.

We'll see CPT more skewed to the back half of the year on a go-forward basis.

Thank you for that.

And I guess one more question on CPT, you mentioned the 15% return on sales.

Longer term target.

What kind of annualized revenues would you need to get to that 15% view?

It's actually a little inverse of the thought.

The higher the revenue, the more likely the higher the projects and therefore the more squeeze on the overall operating margins.

There is enormous opportunity and a lot of demand for most of the products and all of the projects that CPT is participating in.

And the challenge for Randy and myself and my trock would be working with our business leaders to choose the right profitable projects by country and by vertical.

And we expect north of double digit for sure of growth on an ongoing growth basis.

And that's what our view of the 150 basis point a year margin expansion is based upon.

You know, if I could, on that, the -- our goal is to get to 15%.

That's the goal for the whole Company.

And we know structurally, the business can make it.

As John said, we viewed CPT as a great opportunity but also gives us a platform to build a strategic position that's frankly unmatched.

What informed that view is our view, when you take a look at the pressures on the world and take a look at the pressures on not just from population but wealth growth, which frankly drives pressure on energy and food and water even more -- even more strongly than population growth itself.

And you take a look at the stresses the world is under in water, both in terms of water directly and water used in energy and food, there's two undeniable technologies that are going to be put to play.

One is desalination if you're near the ocean, and the second is water reuse, wherever you are.

When John talked about those systems and putting in those -- and making those bids, we are I think we have a leading position in terms of the reference sites and we intend to continue to lead in building out those reference sites.

We're going to be number one in those businesses.

It's our goal.

Great.

Thank you very much.

Thank you.

Your next question comes from the line of Scott Graham with Jefferies.

Kind of the same question but look at a little bit differently.

The third quarter guidance versus the fourth quarter guidance, relative to the organic growth.

You guys have a stated goal of 8% top line growth, which is certainly admirable, and you've been achieving that recently.

But more because of the comparisons being easier.

This quarter, our organic growth was about 4% and maybe a point or two for the GIWW.

Third quarter, the organic growth, if my math is right here looks about flat to plus two kind of thing and then the fourth quarter organic growth probably looks closer to your target.

Is there anything in the third quarter other than what you've mentioned in your bridges, GIWW, shifts in -- any other shifts in other businesses?

Particularly residential, that we're kind of pushing out from the third quarter to the fourth quarter?

You're right.

Our long term goal is 5% to 8% organic over a sustained basis.

And we're actually better than that if we had US residential growing at all which it isn't with the exception of pool.

The other US residential businesses are.

As we mentioned, we don't expect growth in the second half.

In the third quarter, more of a normal pool.

And then pool is stronger in the fourth quarter than the third quarter.

That may be the whole difference.

There is a point of growth, you know, related to an end of life program around telecom and technical products that's negatively impacting the Q3 results more and a little bit in Q4.

And that is a program that's end-of-lifing that we've been shipping, the light speed program.

Other than that, we're growing, as Randy said, around 5% core, 6% core for the year.

And we're doing it without the market help that we anticipated on North American residential.

If I could just summarize what you're saying just to make sure.

The fourth quarter organic will be a lot better than the third quarter organic for the reasons that you've put in here -- in the slides plus what you've just said.

Certainly, the third quarter of 2010 was your most difficult comparison of the year.

I get that as well.

Right.

But you're fully believing that what we don't have in 3Q, we will have in 4Q and we'll be in that 5% to 8% in the fourth quarter.

And in fact, even though residential has weakened sequentially, that's your -- you're not changing your residential thinking on your sales growth.

It's just all of these sundry items.

That's absolutely correct.

That's really all I had.

Thanks.

Thank you.

Your next question comes from the line of Joshua Pokrzywinski with MKM Partners.

Close enough on the name.

Just wanted to go back to the third quarter of last year and make sure I'm remembers the comp correctly.

Wasn't there a pretty decent de-stocking in some of the wholesale channel, particularly around residential flow.

Seems like we should be bumping up against that now?

Is there anything we should be keeping in mind as far as an easier comp there?

That doesn't always seem to be flowing through numbers, and maybe a partial offset to GIWW.

And secondly, an update on the distributor at large, has access to credit.

Curtailed event buys or is there any change of tone there?

Our performance and execution on delivery has improved so much that actually, despite all the flooding talk in the US, there's actually -- there was more inventory in the channel than the floods needed.

We don't have a good comp coming.

We have ample inventory in the channel.

And a big part of that in residential flow in the US is retail as well as through the pro channel.

I'd say in the retail they're not constrained by financing at all.

But they're cautious.

And none of these headlines about uncertainty and Washington craziness and it doesn't help any of these guys.

Our distributors have credit available.

In fact, if you take a look at lending in general, there's credit available for people who are worthy of getting credit if they want it and they're not drawing it.

And I'd say they're counting on us and other manufacturers continuing to execute at a high delivery level with shorter lead times and running at lower inventories and I don't think that's going to change any time soon until there is a broad-based belief that the US economy is going to grow.

I guess what I'm saying or asking is there risk of another round of de-stocking from some of these headline issues?

Or have we already hit bottom on inventory and they're now relying on your lead time?

We have not assumed that there would be a significant de-stocking because the inventory levels are not all that large.

I'm not going to predict what will happen if the US defaults on their debt.

I can't get there.

Right now we're pretty much in the low inventory levels.

People are buying what they're selling.

We're seeing a flow through in our sell-through rate, consistent with inventory.

The two issues related in Q3 are just nothing more than we've got that end of life, otherwise our core volume would be up 5%, and this is not a whine or excuse, for us, foreign exchange we look at as part of organic.

We sell in Euros in Europe, and so we have a North American based business and a Euro-based business.

And when that dollar gets weaker, we'll see more sales being shipped out of the US and there's some arbitrage there and overall, our core volumes are running organic growth range of 5% to 7%.

And that's without any bounce-back in residential.

Thanks, guys.

Thank you.

Given the time, can we just get a check in terms of how many people remain in the queue?

There are seven participants remaining in the queue.

We'll go through quickly.

Certainly.

Your next question from the line of John Quealy with Canaccord.

Hi, thanks.

Chip Moore for John.

If you look at your base business, looked like sales came in slightly below the range your guys were projecting, excluding CPT, was there anything a little more challenging than you thought, or is that more of a timing issue?

North American residential flow was slightly lower and then we did have a desal project business in our [coline] business that got pushed out to Q3 and Q4.

And if you look at the strength in desal that you mentioned, do you do that more as a potential restart to that market or is this more of a one quarter phenomenon?

We think it's -- the financial crisis really stalled a lot of the big projects, the financing and everything ground to a halt.

And we view this as a secular growth coming back.

So we believe we're on the up trend on that.

And we're seeing those projects turn to quotes and wins and backlogs at a lot different rate than the North American [muni] market.

Thanks.

Your next question comes from the line of Ajay Kejriwal with FBR.

Hello?

Ajay?

if your line is on mute, would you please un-mute?

We'll catch up with him.

Move to the next one.

Your next question comes from the line of Mark Barbalato with Vertical Research.

Hi, guys.

Thanks for taking my question.

So you guys have been performing pretty well despite a weak residential and housing market and obviously, you guys said earlier that you're not looking for much contribution in the second half.

Do you have a view on those markets recovering or an outlook on 2012?

We'll give you our thoughts on that on September 14th.

Our focus in both residential filtration and residential flow our two biggest businesses that are suffering from that flatness is to grow aggressively outside the US.

And that's what their innovations have been focused on.

And that's what we've been driving.

That's where I have them focused.

The US residential market is no downside -- it has to come back eventually.

It will be driven by housing sales.

Housing sales will give us a lift even before housing starts.

But I don't really have an outlook.

We haven't really developed an outlook or plan base for 2012.

We'll develop it by the 14th and have it.

Then I'll wait for the 14th.

Thanks, guys.

Your next question comes from the line of Jim Lucas with Janney Capital Markets.

Hey, Jim.

Hey Jim--

People may be going to other calls because we're past the --

Mr.

Lucas, your line is open.

Julie, if we could just jump to the next call.

Certainly, your next question comes from the line of Mike Halloran with Robert W.

Baird.

Hey, everyone.

Just a couple of quick sequential questions.

Just want to make sure I understand the normal seasonality, 2Q to 3Q.

If you were to adjust for all of the year-over-year impacts, specifically GIWW and back out the CPT acquisition, when you think about the guidance, do you think it reflects normal seasonal trends 2Q to 3Q?

Yes, in the course of action, we see a big drop in the pool business from Q2 to Q3.

And that's really what happens seasonally from Q2 to Q3, and as pool had a more normal first half in their cycle, the most difference taking out CPT from Q2 to Q3 is that one business.

That makes sense.

And then on the Technical Products side if I think about the back half of the year, I know you pointed out maybe a little bit more conservative trends, slowing trends in the back part of the year.

When you think about the seasonality there, it implies maybe flattish to down TP sales sequentially.

Are you actually seeing those signs of weakness beyond just the comparison as being tough and seeing really good performance in that unit?

Second to third quarter in tech products a little bit of a step down because of the European holidays.

The European market is important to us, particularly in Germany.

But generally, no.

They've had about eight, or seven good quarters in a row of great growth.

And we're saying moderate down to that 5% to 7% growth.

So it's a comps issue.

That inclusive of that project as I mentioned.

There's high single digits excluding that.

And right now the trends, the macro trends that we talked about in water all benefit Technical Products.

And the industrial production cycle is pretty strong right now.

And we're seeing that capital and cash as it drives productivity in the factories.

So pretty good backdrop for Technicall Projects right now.

Sounds good.

Appreciate the time.

Thank you.

Your next question comes from the line of David Rose with Wedbush Securities.

Good morning.

I just wanted to finish up on the CPT and a final question on the fourth quarter.

Sure.

Can you kind of clarify a little bit more the margin impact from systems sale on CPT?

You had $20 million-plus dollars in system sales, that pushed down margins a bit more than you would have liked or I would have expected.

Is there an impact we see from that?

And going forward -- how does that change going forward?

Let me take the first part of it and I'll let Randy address the market.

The reason you pursue the system in CPT both on the beverage and water side is twofold.

You're installing a system which is going to protect and secure an installed base because you have proprietary technology that will be replaced with your membranes and/or your septic valves.

Second piece of it is we're gaining service contracts.

No service contract allows us to go in and work on the maintenance and get a long term maintenance contract.

The initial sale of the system doesn't provide what looks like a significant margin benefit, but the life cycle of the system or the project is very substantial margin.

And for the right vertical markets, we want to pursue those aggressively.

What we don't want to do is dilute the capacity utilization or the resources to chase markets that are not what we would call our core vertical markets strategically.

The $20 million I mentioned was orders.

We haven't actually shipped those yet.

Marketing the margins near term.

As John described how the systems business works, one of the opportunities for us to improve the systems margin -- that includes a lot of bought true equipment.

If you look at the embedded margin on the product, it's still 50%-plus.

They have a lot of pass through.

We're going to be insourcing a lot.

We're going to be insourcing the pumps, enclosures, the housings, the tanks, more valves.

So we believe we can be competitive on the systems business and actually raise the margin as we raise the manufacture of it.

I appreciate the value of that going forward with systems sales.

As I'm sure one of your competitors appreciates as well.

And big question is how long does that take?

If your mix continues to be weighted towards systems sales, then I'm assuming the margins will be compressed, at least for the rest of this year and you start to see the shift next year?

I want to remind everyone we're starting at a $0.15 EBITDA.

When you rebuy a business, you restate at fair market value all the assets.

And continued growth on this business at the growth rate that they're delivering now and that we expect to happen.

We'll leverage that D&A up relatively quickly.

And there's a fair amount of capacity.

And it's not inexpensive to build a membrane facility, and that's volume-dependent as well.

And we're pretty confident we can grow the systems, grow our installed base and continue to raise margins.

Lastly, on the revenue side, clearly there's a level of comfort you have in the fourth quarter for the meaningful step-up.

And you've walked through the different nuances.

I was wondering on the CPT side, if you can give us a little bit more clarity on what percentage of that business do you feel is effectively booked or contracted versus what you expect to sell through either new orders or bid activity that you're working on?

We've been generally conservative with our CPT revenue forecast as we get to know the business, so the revenue that we're projecting is primarily all booked.

Okay.

And so there is up side to that number?

Possibly.

Thank you very much.

I appreciate it.

And lastly, if I can, Aurora pumps, seems like you have some weakness on that side.

Is there any reason?

Aurora was focused on mostly commercial HVAC and fire and they're mostly in the US and the commercial market was creamed.

Actually, they're up a little bit because of, in the Aurora area because of export sales.

And again, I mentioned in the script in the Middle East in particular.

So the Aurora decline was going on for the last 10, 12 months anyway.

Okay.

Great, thank you very much.

I appreciate your help.

Thank you.

The last question has been withdrawn.

You may proceed with any closing remarks.

Thank you all and look forward to seeing you at the investor conference in September.

Thank you.

Julie, can you please just restate the replay number?

Certainly.

Thank you for the participating in today's Pentair second-quarter 2011 earnings conference call.

This call will be available for replay beginning at 2.30 Eastern time today through 11.59 PM Eastern standard time, August 26, 2011.

The conference ID number for the replay is 8038045.

Again, the conference ID number for the replay is 80384045.

The number to dial for the replay is 1-800-642-1687 or 1-706-645-9291.