Good morning and welcome to Carrier's First Quarter 2020 Earnings Conference Call. This call is being carried live on the internet and there is a presentation available to download from Carrier's website at ir.carrier.com. I would like to introduce your host for today's conference call Sam Pearlstein, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning and welcome to Carrier's first quarter 2020 earnings conference call. With me here today are Dave Gitlin, President and Chief Executive Officer; and Tim McLevish, Executive Vice President and Chief Financial Officer. Except as otherwise noted, the company will be speaking to results from operations, excluding restructuring costs and other significant items of a nonrecurring and/or nonoperational nature often referred to by management as other significant items. The company also reminds listeners that the earnings and cash flow expectations and any other forward-looking statements provided in the call are subject to risks and uncertainties. Carrier's SEC filings, including Carrier's registration statement on Form-10 and our reports on Forms 10-Q and 8-K provide details on important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. This morning, we'll review our financial results for the first quarter of 2020, share what the remainder of 2020 could look like under a few scenarios, and we'll leave time for questions at the end. Once the call is opened up for questions, we ask that you limit yourself to one question per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue, if time permits. With that, I'd like to turn the call over to our President and CEO, Dave Gitlin.

Okay. Thank you, Sam and good morning, everyone. I hope that you and your families are all healthy and safe. Our thoughts go out to everyone affected by this crisis and our thanks go to the frontline workers who are fighting this pandemic. I would also like to recognize the incredible efforts of our entire team at Carrier, which has continued to deliver essential products and services to our customers during these challenging times. I have been so impressed with our 53,000 employees, they have stepped up in a truly profound way and I couldn't be more proud of this phenomenal team. Clearly, a lot has changed since we last spoke to you in February. Therefore, we are going to structure our comments as follows. First, I'll take you through the impact that COVID-19 is having on our business and how we are addressing these dynamics head on. Tim will then run you through our first quarter financials, as well as provide more detail on our approach to managing our liquidity, cash and balance sheet. And then I’ll provide more color on the remainder of 2020. Starting with Slide 2, in response to COVID-19, we jumped into gear early and aggressively. We started daily leadership team meetings that continue today and we established four priorities that have guided our decision making. Our first priority is the safety of our employees. Our office employees are generally working remotely while our factory personnel have largely continued in the workplace to support our customers, given the critical nature of our products and services. In our factories, we have gone to tremendous lengths to keep our people safe by implementing an extensive range of safety protocols, and we are now applying those best practices to our offices as we begin to transition office employees…

Thank you, Dave. Good morning. Please turn to Slide 4, where I will walk you through our Q1 results. But before I start, I want to point out that as we move from being a division of United Technologies, to becoming a fully independent public company, some of the numbers we report will not have a perfect comparison with last year's. The Form-10 carve out statements adjusted for that in some circumstances, but not all. We will try to help you understand those non-comparables with explanations, but it may be a bit messy and will continue to be so for the remainder of the year. With that caveat, let me jump into the results for our first quarter. Despite significant macroeconomic headwinds in the back-half of the quarter, it started out about how we had expected and reflected a solid start to the year. Sales of $3.9 billion were down 10% from last year, 9% organically, which adjusts for a 1% FX headwind. We reported an Investor Day that we face difficult year-on-year comparisons in each of our three segments. In HVAC, our residential results last year reflected a strong furnace season due to abnormally high shipments ahead of a new FER regulation. In refrigeration, our North America truck and trailer business came off a cyclical peak in Q1 last year. And in F&S, we wound down our residential intrusion business, creating a year-on-year decline in 2020. Additional pressure came from the warm winter this year and resulting softness in residential furnace sales. These items accounted for about half of our Q1 decline. The remainder resulted from the impact of COVID-19 on our business in the latter part of the quarter. It first hit China, where about 8% or $1.5 billion of our revenues are derived. This had a material…

Thanks, Tim. So what does this mean for our expectations for the full year? For our scenario planning in this uncertain global economy, we looked at three key indicators to frame our thinking. First, macroeconomic projections like GDP. Second, indicators more directly tied to our business like new housing starts. And third order trends. At a macro level, starting with GDP, our current guidepost for 2020 assume U.S. GDP declines about 25% in the second quarter, and 5% to 10% for the full year. Expectations for Europe are similar. We assume China shows growth in Q2 and accelerates from there. When we look at macro indicators specific to our segments, we assume headwinds from lower replacement volumes as unemployment rates impact home owner purchases. U.S. Housing starts being down 10% to 20% this year and continued softness in non-resi construction starts in North America and Europe, as we see from leading indicators like the architectural billing index. And in our refrigeration business, the forecast declines in North America and Europe truck trailer will be even steeper than we had originally forecasted. ACT forecast North American truck trailer production to be down 45% this year, and European truck trailer is likely to be down 20% to 30%. Container drops are likely to be far more muted. So then on Page 8, let me share some color with you on orders. We start with our China experience. Q1 orders were down 40% year-over-year with February being the lowest month down 50%. In the category of good news, the China recovery has been very positive. Our daily order rates returned to pre-crisis levels in mid-April, and our April orders in China were flat overall. The recovery has been a bit spotty and one month doesn't make a trend, but for us, China's decline…

[Operator Instructions] Our first question or comment comes from the line of Steve Tusa from JP Morgan. Your line is open.

Hey, good morning.

Good morning, Steve.

Just on kind of the bridge a bit, thanks for the color on kind of the guideposts. Any color on price cost and what you expect to run through what you're seeing out there for the year?

Yes. On the price side, Steve, we're still looking at overall price tailwind, but it's going to be minor. It's going to be in the range of $4 million. We actually sell $4 million in the first quarter, it's probably $20 million for the full year. Keep in mind, we're coming off a couple of years of a lot of price tailwind. It was north of $200 million in 2018. It was closer to $175 million last year. But we do think there's going to be a little bit more price challenges in the overall system, but we're still looking at some net tailwind from price. And then Tim took you through the cost side. We're going to be very aggressive. You saw that we upped our Carrier 600 for this year from $175 million to $225 million. We're being very aggressive, especially on the supply chain side where we got some tailwind from commodity pricing, but a lot of aggressiveness on the negotiations and resourcing activity. And we're also certainly seeing a lot of headwind in factory productivity. But we are really going after G&A in this climate.

Right. And then just lastly on the balance sheet, a little bit better cash. I think that's an incremental positive. But you're still going to end with some pretty high-leverage. And I think there's a covenant out there that you guys have. Can you just talk about what that covenant is? And how much of a hard line it may be? Like, how concerned should we be about that? And any actions you're willing to take in the intermediate-term other than just generating cash to shore up the balance sheet?

Yes. This is Tim, Steve. So, yes. We do have a covenant that covers both our revolving credit agreement and our term loan. And I think it's attached to the Form-10. You can see that it says that it's first measured in our third quarter, at the end of our third quarter. And the covenant is four times debt to EBITDA. According to the projections that you see in our scenario planning, we do anticipate that we will be in compliance with a covenant at that point. And we're expecting that it only gets better from there. We have some cushions, so we're not unduly concerned about that. But obviously, we want to ensure that we have liquidity. And you can assume that we're taking actions to ensure that we have access to that.

Okay. And what if you do breach it ultimately, in the next several quarters? You're wrong in your projections?

No. Let's just say we're going to make sure that we don't. I mean, obviously it would preclude us from access to revolving credit agreements. And it would put our term loan in some -- and I guess in default. But we will assure that we're not going to run into that problem. We've already in this transaction. You can be sure that we've already taken precautions. We're not going to put ourselves in jeopardy.

Yes. Steve, it’d Dave. First of all, its net debt that 4x multiple. And also like Tim said, behind the scenes we are working it. So I think we're in pretty good shape, we're managing it quite well.

Yes. I would point out further to what Dave just said. Its net debt and as an EBITDA as adjusted, there are some carve outs exceptions to it. So again, we're comfortably in compliance with it. But again, we want to make sure.

Okay, great. Thanks.

Thank you.

Thank you. Our next question or comment comes from the line of Nigel Coe from Wolfe Research. Your line is open.

Thanks. Good morning, guys.

Good morning, Nigel.

Yes. So, nothing surprise that we're seeing CapEx getting cut in this environment and some of the investment spending is pushing to the right. Can you maybe just talk about where you are down back a little bit on the investment spending and the CapEx? And whether we should think of this as a more of a push as opposed to a shove [ph]?

Yes. I would say Nigel, it's probably more of a push. We did scale back on investments like automation. We're really focused on keeping the shops running. So to have industrial engineers in the shop, figuring out how to implement automation is not ideal timing, so we did push some of our automation spend. We are doing ERP consolidation. We pushed that to the right. So a lot of the discretionary actions like that that don't necessarily affect growth, we have pushed out. We've been pretty tenacious at preserving investments that affect our growth agenda. So our view is that, like an outfielder, it's easier to run forward than backward. We came out, we were aggressive, we saw what was happening, we've made the right cuts to the budget. We'll see how the year progresses. If things open up a little bit, we'll pull some of the investments we pushed out into next year, we'll pull back into this year. But we've really gone to great lengths to preserve investments that have the highest payback that are going to protect our growth agenda.

Right. Thanks, David. And then you gave a number for housing stuff in the U.S. down 10% to 20%. And then you've talked about replacement demands being down. I struggled to think about how to think about replacements in this environment given where unemployment is? What's your view right now on resi replacement?

Yes. Look, it's probably down in the 15% range or so, as we look at it. There were 3.8 million Americans last month that did not pay their mortgages. So, it's going to be a tough climate for at least a while. But where there's demand, there's demand. And there may be a little bit of movement to a little bit more parts by for the next few months to replacement. We haven't actually seen that just yet. But we do think there's going to be a little bit of headwind on the replacement cycle. But, we'll see as we get into the summer months, if employment, of course, the numbers remain extremely challenging right now. But as folks come back to work and society starts to reopen, we'll hopefully start to see a little bit more traction there.

And then just a quick one on free cash flow. Is that all in free cash? Or is it some kind of concept of adjusted free cash flow? Is that including one timers?

No, the free cash flow is -- I mean, it's free cash flow, traditionally its operating cash flow, GAAP operating cash flow plus capital expenditures or less capital expenditures.

So, it's real cash. Great. Thanks guys.

Thank you.

Thank you. Our next question or comment comes from the line of Jeff Sprague from Vertical Research. Your line is open.

Thanks. Good morning. I hope everyone's well. Just a couple, first, just on the on the CapEx push Dave. So, it does sound like you're not doing any good damage to the growth plans. But I would think this also then pushes out some of your underlying productivity plans right? So, you're taking temporary actions to contain costs but automation and ERP was a big part of future productivity. Can you just elaborate kind of on the interplay between those factors?

Yes. Jeff, when you look at productivity, it was a key element and it is a key element of Carrier 600. But I will tell you that only a piece of that is automation. There's another piece that just comes from really application, the carrier operating system. So, it will have a short-term impact. I actually think what you're going to see with the new normal, is you're going to see people leaning more forward on automation as you get out into the end of this year and into future years. So look, we're going to free up the investments on automation as we get towards the end of this year into next year, because I think it's going to be really critical to our overall story. We hadn't really baked ERP consolidations into our overall cost savings numbers. So, I don't see that impacting Carrier 600. It impacts overall productivity and some of the manual nature of what we do. But we'll have to catch up to those investments next year.

And perhaps it's early to talk about a different number. But with this kind of acceleration is Carrier 600 on the path to be in $700 million and $750 million something like that?

Well, it is early. A couple of months doesn't make a trend. But look, I'm confident, I've always been confident in the Carrier 600 number, and I think there's room to overdrive it. But we'll see how the rest of the year plays out and we'll update that as we get out to the end of this year.

And then just finally. So then on the dividend, we should expect that's kind of on hold until you get pass this Q3 covenant, make sure you're kind of clear the decks there?

I think that would be directionally fair, Jeff. You recall that back in our Investor Day that we said that we would expect the $550 million dividend, and we thought that was a competitive dividend in a normal circumstance. Obviously, we're not under normal circumstances. And preservation of cash and addressing our high leverage is the high priority right now. And so we're deferring a little bit the decision and the level. I mean, in this environment, we perhaps will or we likely will consider reducing that amount and still be competitive from a yield standpoint, from a payoff standpoint. But yes, you should anticipate to hear something in the near future. But again, it's not likely to be at the same level that we talked about Investor Day.

Thanks. It makes sense. Good luck.

Thank you.

Thank you. Our next question or comment comes from the line of Julian Mitchell from Barclays. Your line is open.

Hi, good morning. Maybe I'm just trying to stick to the one question rule, perhaps focusing on margins for a second. So, I think at the midpoint of the scenario plan you've got about maybe about 25%, 30% decremental margin dialed-in for the year. Maybe just help us understand, how you see the relative mix within that as transport refrigeration probably one of the businesses that falls the fastest this year in sales terms? And then also related to that, should we expect the decremental margins to be widest in the second quarter? Or you're assuming that decrementals are pretty level over Q2 to Q4? Thank you.

Yes. Julian, it's Tim. As you know, we usually think of what we call a drop through rate decremental. Usually, I like to think of it as incremental, but unfortunately in this environment, we talked about decrementals. That’s about a 28%. What you saw in the first quarter actually was much favorable to that. But that was largely because we had the better part of 10 percentage points worth of benefit from cost reduction in the quarter, about $40 million lower cost. And that contributed to a much lower drop through. And interestingly, our sales in China were hit during the quarter, the hardest of ours and China tends to carry lower general margins through and we benefited by about 4%. So, that's why you see the 14%. You actually may not see the 14%, you may see a 19%. But remember, we talked about a $24 million standalone cost, that's the first quarter component of the $107 million that you ultimately see for the full year. I will also point out that I think you may have seen from UTC's released yesterday, numbers that are a little bit different. About $20 million difference in profits. So if you adjust for that there's some unusual things where it was different from most of them. You may have construed at a 24% from them. As we think about the rest of the year, again, going back to the 28%. Yes, I would say second quarter is likely to be the hardest hit quarter. And the deeper the drop in revenues, it makes it difficult. We aren't just scaling back production, we're shutting the lines down. We're closing shifts, we're in some cases, closing factories. And you go deeper into the cost pool there and I would expect that to be in the second quarter. We will experience some mix degradation, the reverse of what you saw, I mean, some of our higher margin businesses, the residential, HVAC and others will be hit. How I simply think about rest of year, decrementals though, is that we’ll be hit by two or three points with JV income, because there's no offsetting revenue component to the drop in earnings that we're anticipating. And then all other of the costs, the factory disruption, et cetera, is largely covered that, and the margin mix is covered by our cost reduction. So we anticipate, if you look at the projections we’ll probably be about 30%, couple points worse than the normal 28%.

Very helpful. Thank you.

Thank you. Our next question or comment comes from the line of Deane Dray from RBC Capital Markets. Your line is open.

Thank you. Good morning, everyone. And let me also say congrats on the debut. I'm not sure anyone was expecting quite as a tough environment, as you've had to face in your debut here. But appreciate all the color and all the actions that you're taking.

Thanks Deane.

If we can start, just we've heard the expression this too will pass. Looking ahead, could you expand on the comments or the examples you were giving on how the buildings of the future are going to change? We've heard some similar comments from your competitors, this earnings season about air purification, touchless credentials and so forth. But are these just thoughts? Or are these actually starting discussions with customers? How close are you to marketing and actually getting orders for this type of the new normal buildings?

Well, thanks Deane for the question. Actually, it's absolutely underway. We've been in discussions and we've actually seen real progress with customers, whether it's the State of Florida or with hospitals where we've distributed our new OptiClean negative air machines. We're coming out of the gates fast on this one, because we believe it's critical, not only for our business but it's critical for society. There are a shockingly number, high-number of sick buildings out there. And one of the characteristics of a sick building is the ventilation system. You look at the room I'm in right now, you would expect a certain number of air changes per hour, say in the 10 to 15 range. And many buildings around the world have staggered in there and they don't have the number of changes per hour. You look at the filtration system in many buildings as you have the returnee are going through a filtration system, you'd expect it to be able to filter out contaminants at a 0.1-0.3 micron level and many filtration systems don't have that. We have that with our electric static filters for homes, UAV or HEPA filters in commercial buildings. Many buildings don't have that. You want your ducts cleaned every three to five years and that doesn't happen. So as we look at the transition to healthy buildings, I think you should expect that Carrier's going to be front and center on that. And it's very real, and it's the same in our other two segments. You mentioned touchless, in our fire and security business, we already have a Blue Diamond app that can eliminate a lot of the touch points. Let’s say, you go from your car to your office building, there's usually eight to 10 touch points. And like I said in…

I appreciate all that color. And just a quick clarification from Tim if I could, just with regard to capital allocation and cash preservation. The expectation was that Carrier was going to have investment grade rating with your expectation you'd be paying down debt. So what's the outlook in your discussions with the rating agencies? Are they giving you some leeway here, in terms of the path of the deleveraging? Thanks.

Well, it's still intention to maintain investment grade. We’ve been in conversations with the agencies. As I said, they’ve recognized that short-term liquidity is critically important in this crisis situation with the uncertainty about the economy. We've been in regular discussions with them and I think they are supportive of our game plan. And I think we'll be just fine.

Great to hear. Thank you.

Thank you. Our next question or comment comes from the line of Carter Copeland from Melius Research. Your line is open.

Hey, good morning Dave, Tim. I hope you're well.

Thanks Carter.

Dave, I wondered if you could talk a little bit about the portfolio. I mean, these sorts of discontinuities and changes have a tendency to make you think about the business in different ways. And I know that sort of optionality around the long-term, appearance of the businesses is something you thought about, you mentioned tangentially at the Investor Day. I wondered how this whole crisis may be changing that thinking if at all.

Yes. Carter, what I’d tell you is that, what we said at an Investor Day remains consistent today, that our number one priority is on execution. We really feel very strongly that we can unleash tremendous value just by doing what we said we were going to do. As we get sales consistently in mid-single digit range, and we get EPS at the high-single digit rate and we get cash flow about equal to net income, we know that consistent track record or performance will have a significant impact on the overall valuation of Carrier. And then we're playing from a position of strength. So our number one priority is focus on execution. Our number two priority is to really take a very dispassionate look at our current portfolio. And of course, we've been doing that for quite some time. And we said that we would put our current portfolio through a very specific set of criteria. Are we the rightful owner? Does it strategically fit? Does it meet the financial criteria that we've set out for ourselves? And if it doesn't, we'll be dispassionate and do the right thing about divesting those parts of the portfolio. I think once you make that decision, you will of course have to look at the current environment and decide if you're going to do something like that, when would be the right time and this is not the ideal time to do something like that. But we'll look at the right time, if there are parts of the portfolio that we decide don't meet the criteria that we've set. And then in terms of that third category, overall, more strategic types of transactions, that is not our priority right now. We know that our peers have made themselves more pure plays SFV. But our focus right now is on that first category of execution and on the second category of the real portfolio analysis that we've been going through, and we'll deal with that second.

Okay, great. And, Tim, I wondered just a quick clarification. Thanks for the color on truck trailer. Can you tell us what the container orders look like both at maybe end of the quarter or April trends?

Yes. Carter, it's Dave. Container orders have actually been pretty steady. So, we're going to see how things play out. But when we look at overall container orders, and there's been a couple of months where it's been positive, a couple of months where it's been negative. Overall, Q1 was down 7%, I believe. When we got into April, it was positive. So on balance, it's probably flat to down just low-single digits right now.

Great. Thanks, Dave.

Yes. Thank you, Carter.

Thank you. Our next question or comment comes from the line of Josh Pokrzywinski from Morgan Stanley. Your line is open.

Hi, good morning, guys.

Good. Morning.

So I understand we've covered a lot of ground here already and I appreciate the color. I guess, in regards to some of the cost actions in Carrier 600, how do we think about operating leverage on the way out? Tim, you talked about the 28% target number. Obviously, a lot of things moving around, some temporary, some pull forward of the total. How should we think about exit rate incrementals being above or below that target number just as some of these temporary costs come back?

Yes. I would generally – again, a lot of the recovery from a higher decremental came from the costs actions that we identified as a kind of this year impact. Again, Carrier 600 is kind of separate from that. We took these to offset the higher decrementals with the disruption and so forth. So I would expect that we should be coming out of this as we increment back up at a similar rate 28% give or take 1% or 2%.

Got it. That's helpful. And then just related to that, I guess, supply chain was a part of Carrier 600. Obviously, everyone's taking a harder look at their supply chain today with some of the interruptions. Anything that changes with respect to that are needs to be reshuffled?

No. When you think about supply chain, we've talked about 55% of these savings will come from supply chain. And we're still on that level. It's going well. Remember, David said, there's probably 6,000 suppliers and we're going to consolidate, probably cut it in half. And as we become more meaningful, we're able to partner better, we get some better pricing, we get some better terms. That's a big, big component of it. And that's tracking very well.

Great. I appreciate the detail. Best of luck, guys.

Thank you. Thanks, Josh.

Thank you. Our next question or comment comes from the line of Gautam Khanna from Cowen. Your line is open.

Yes. Thanks for the detail guys, and congrats on the first quarter. I'm curious, when you look at the commercial HVAC and fire and security backlogs, what do you perceive to be kind of at-risk, perhaps serving industries that are going to be very hard hit by the recession? So, whether it's hospitality or what have you. Could you give us some framework on parts of the backlog that might stretch for an extended period, even when you have site access against? Any sort of framework for that?

Thanks, Gautam. This is Dave. One piece of good news is that our sequential backlog in the first quarter was up. It was up about 6% in HVAC and about a third of that in resi and two-thirds in commercial HVAC. So the backlog position did improve in the first quarter. We look at, to the extent that there is any shift from left to the right. It’s really -- we think it’s going to be relatively minor. We’re talking a month here and there. We feel that there are some construction sites that once they come back on there’s going to be really some pent up demand. Our experience in China was this, that after folks came back from the Lunar New Year, that was factories were allowed to open February 10. Basically all of our factories, they were generally on line as you got into that February 20, timeframe. We had the backlog and we started to ship the backlog. What followed was a lot of the construction sites that had the migrant workers in China, they were quarantine a little bit longer. And then they started to receive the backlog and then that was followed by new orders sticking up as we got into April. And we think it will be a similar phenomenon as the construction sites come back online in the U.S. and Europe, they'll start to take delivery of the backlog. There may be some push out a month here or there, but frankly, some places like universities or education has been taking this opportunity with folks out to actually accelerate some of the construction. So some is being accelerated, some will naturally get pushed out. But where it gets pushed out, we're talking maybe weeks or a month or two here, it's not going to be significant.

Okay. And just a follow-up for Tim. Could you actually disaggregate the $425 million of costs into structural versus variable? I don't know if you said that in the opening remarks.

Yes. So I’d just go down on the charts to the $425 million. The Carrier 600 and the $50 million incremental will be a structural that will be enduring. The investment, if you recall, we said that our investment this year originally was going to be $150 million. We expected it to scale back to an incremental $100 million next year and then $50 million before we will go back to normal. This $75 million that we pulled out will be pushed in, likely invested next year, so kind of push out that schedule a little bit. And the $300 million is really one time action, that was furloughing, most all of our salaried employees, it was deferring merit, it was cutting back on. Obviously, it wasn't hard to cut back on travel because there wasn't any travel anyway, but it's reducing services, supplies, et cetera. That will likely -- I mean it won't be caught up, but it is not a structural change, it will come back.

Thank you very much, guys.

Thank you. We have time for one final question. Our last question will be from the line of [indiscernible] from Citi Group. Your line is open.

Good morning guys. Thanks for taking my question.

Thanks, Lad.

Can you talk about within the fire and security business, just how much of the overall businesses is driven by regulatory or statutory requirements? And should therefore be more resilient? And can you also talk about in that business what restrictions on building access and social distancing measures could potentially mean for productivity in the field business?

Yes, thanks for the question. We look at -- there's a piece of the fire portfolio. You think a fire's a much bigger piece than the security piece. And there is a piece of the fire that's regulatory in nature. We look at the fire and security portfolio in two aspects. There's the products piece and then there's the Chubb [ph]. Products is about 60%, Chubb is about 40%. Within the 40% that's Chubb, you have a monitoring and installation and a services piece. And the services piece is where you do see some regulatory. And that has generally held up during this downturn better than the installation piece, which got hit pretty hard in the March timeframe into April, especially in Europe. On the product side, some of our businesses like Edwards, that's held up quite well, because there is a regulatory piece of that. And we actually saw growth increases in parts of our Edward's business and others that like GST, where we have a regulatory piece in China. Some of the security portfolio is less regulatory in nature. But what's interesting there is we are starting to see a lot more demand for some of our products that are going to be critical in this new normal. So as hotels start to think about how they're going to gear up in the new normal, we're in discussions with a number of them with our Entity [ph] system, where folks can bypass the front desk, go directly to the room and use more touchless type applications. We're seeing that with real estate brokers for our super business. So, even though, it's not regulatory, some parts of the security portfolio could be quite compelling in the new normal. And we're in some pretty interesting discussions as folks -- as some of our key customers gear up for the new normal.

Okay. That's very helpful. And then just maybe one last one from me. I know the order information you gave was very helpful. I guess just going forward the U.S. and the EMEA were actually pretty similar in April. So as we go through the year, do you expect the U.S. and EMEA to continue sort of trending in similar directions? Are there differences in the COVID-19 responses and protocols that could push for more divergence amongst those two regions?

You know, quite honestly, it's hard to say, because it's even hard to generalize the U.S. and it's hard to generalize Europe. When we look at Europe, Germany has been coming on back online quite well. Recently, we see the automotive manufacturers coming back. We feel good about Germany. Spain and Italy have been coming back online over the last two to three weeks in a fairly positive way. France is more delayed. 80% of the construction sites in France are still not operational. So I think France will be lagging and probably the UK lagging behind Germany and some of the others. And you're probably going to see a bit of a mixed bag in the United States, as different states come online at different times. I think if you were to compare the two, our experience so far over the last few months is that the U.S. has generally been three to four weeks behind Europe, in terms of on the way down and on the way back up.

Thank you. I'm showing no additional questions in the queue. At this time, I'd like to turn the call back over to management for any closing remarks.

Well, I'd like to thank everyone for taking the time to join us today. Please know that Sam is also ready for your questions. And we appreciate your time and attention this morning. So thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.