Ladies and gentlemen thank you for standing by and welcome to the Eaton First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a remainder, this conference is being recorded. I would now like to turn the conference over to our host Senior VP of Investor Relations, Mr. Don Bullock. Please go ahead.

Good morning. I'm Don Bullock, Senior Vice President, Investor Relations. Welcome to Eaton's first quarter 2014 earnings conference call. Joining me today are Sandy Cutler, Chairman and CEO; and Rick Fearon, Vice Chairman and CFO. As has been our historical practice we will begin today's call with comments from Sandy, followed by a question-and-answer sessions later in the day. I do want to let you know that we understand many of you have a very tight schedule today with a number of calls; what we will do is we will be holding our call to an hour today in respect for the fact that many of you have a number of those to try to get to. Before I turn it over to Sandy, I want to take a moment to draw your attention to the statement on Page 2 of our presentation. Our presentation today contains forward-looking statements. The comments on page two outline factors that could cause our actual results to differ from those in the statements. These factors are noted in today's press release and related form 8-K. In addition our presentation also includes non-GAAP measures, as defined by the SEC rules. A reconciliation of those measures to the most directly comparable GAAP equivalent is provided at the Investor Relations section of our website at www.eaton.com. And at that point I'll turn it over to Sandy.

Great, thanks Don, and thank you all for joining us this morning. I'm going to work from the earnings presentation that was out on our website; hopefully you have all had a chance to download this morning. Our first quarter, I'm to going to turn to page 3 to start this morning. Our first quarter was largely in line with our own expectations despite the concerns we have had about the challenging winter here in the U.S. so we've spoken about a couple of times this winter. I think one way of thinking about the year, this winter is that we were able to largely recover from the revenue impact from it. But we did incur some higher cost to do so through expediting and overtime. A couple of highlights on this front chart that hopefully will give you a good summary for what's in the pack today is that we did achieve operating EPS of $1.01 that included as we've said about $0.03 or about $13 million of premium expediting and overtime cost virtually all incurred in our Electrical Systems and Services business and that's because our major facilities are located right in the area the Carolinas so that that got hit particularly hard that knocked out workdays for us in January and February. Our core growth, I'm really pleased with 4.5% that was partially offset by the 1% of negative ForEx. We are confirming today our full year guidance $4.70 no change. But it does now include a $40 million charge for a restructuring in our industrial sector. I'll talk a little bit more about that. That's about an $0.08 hit in the second quarter this year. Our markets still we think will grow at about 3% this year, no change in that. Cooper integration remains very much…

Okay. If you will, can you provide the instructions?

(Operator Instructions)

Our first question comes from Scott Davis from Barclays.

Please go ahead.

I wanted to talk a little bit about big picture. I mean, Sandy, when you think about the Cooper integration, now you've anniversaried, you've had enough time I think to do the heavy lifting. I mean, is it -- do you think about potentially pulling forward your interest in doing M&A again particularly in electrical?

Yes, we, Scott, I think we've been consistent. First, let me just say we're really pleased with where we are in the overall integration, grade us as being slightly ahead of where we had hoped to be on the broad array of complex issues we're taking on. But we've really traced our ability to do M&A to two things. One, obviously finishing this integration activity, and we've said that mature year is 2016. And so I think it's going to be late '15, to what we're kind of back in a more active stage in that regard. And the second is, obviously paying off the acquisition debt and you'll recall that we had outlined about $2.1 billion of debt that we were going to be paying back and the last tranche of that is in the first quarter of 2016. So I think that's more likely the time period. We're obviously out continuing in the quoting activities, but unlikely to be at the altar if you're on anything substantial much ahead of that time table.

And then just a follow-up. We've talked a little bit about -- I don't think at least in your prepared comments, you talked about channel inventories. I mean, sometimes these things can whip around a little bit ahead of the building season. I mean what's your sense of where your customers are at now? Are they stocking up as usual seasonally, or are they stocking up more so than usual because they anticipate a bigger pull-through -- sell-through?

Yes, I think our best sense, Scott, NAAD is going on right now. So we've had a chance to have a lot of conversations with distributors in our electrical businesses. This winter was so tough on people who were involved in the construction side, whether that was residential or light commercial that they saw whole weeks that they missed in terms of being able to get on job sites. As a result, they were really careful with their inventories. So we do not think the inventories are overstocked on the electrical side, and I think as we're starting to see ground opening up, people being able to get going that we think -- that we're in that kind of normal seasonal pop-up at this point. And perhaps in some of the areas of the country like the northeast for example that really had a very difficult winter, we'll see them rebound a little bit more strongly, but I would say I think it's a plus at this point, not a neutral.

Our next question comes from John Inch with Deutsche Bank.

Hi, Sandy. The restructuring in the second quarter, it just seems a little unusual in terms of the timing. I hear your macro commentary, but I'm trying to dovetail that with the fact that you obviously saw April rebound, right? It sounds like Cooper is on track. What exactly is out there that would cause you in the second quarter to kind of pull forward some cost saves? Is it – I mean, I'm just trying to understand the timing, that's all.

Yes, I wouldn't say there is anything unusual about our timing, John. We take these actions when we think it's right within our businesses and we've done the right preparation, and that always takes some time, and frankly, we're not all the way through them, which is why we're not sharing them in terms of how much is in each individual business, what we'll get there as we roll them all out. But as we watch the first quarter unfold in terms of what I call some of the global GDP issues that's really what caused us to believe this was the right time to move ahead on them. Frankly, if we'd seen the world sort of taking off and I'd call, less of the growth anxiety, these may or may not have been the right thing to do. So we think it's just a very prudent hedge against the likelihood that we see weakness pop out in any of these markets. So we've not changed our own view of the 3% growth. Frankly, a number of you felt we were too somber in our 3% for this year. We still think that's about the right number because the world does have -- I call it, growth anxieties right now.

Yes that makes sense. But the hedge, just so I'm clear, right, the hedge sounds like, it's because -- this isn't sort of cadencing to your internal plan, like, I mean, I'm trying to understand, did you expect, for instance, April is obviously rebounded, but did you expect it to be rebounded even more? Are there things you're seeing perhaps, and -- obviously we know what's happening in emerging markets and then there's the question mark around Europe. I'm just making sure there's nothing else.

No, nothing else, John, really, just our kind of sense that that the world is probably not going to accelerate substantially beyond the numbers that we've got out there at this point. And we think that these plans, as our businesses, have reviewed them with us, make really good sense and all they do is make our businesses more competitive, and also give us, I think a stronger self-help earnings story, obviously as we go into 2015. So I think a net plus all round from the very, very fast paybacks, as you can see roughly a $35 million payback next year for the $40 million this year. And so they are very attractive programs.

Yes. It looks like the street including ourselves kind of mismodeled the second quarter a little bit. So the first half based on the midpoint, right, is going to be above 45% of the year based on the midpoint. Historically, you've had a bit of a stronger first half. Is that what you would expect, Sandy, Rick, going forward that your first half is about that, again, kind of pro forma for Cooper et cetera, is that about right, and maybe we just mismodeled it or is there something else about sort of the sequential that you think we should be thinking about?

No, I don't think there is something else John. I think that frankly and we're aware that the consensus was up in the high 120s for the second quarter. Frankly that looks too strong to us. It is true that we tend to have our strongest quarters in the second, third, and fourth quarters. But this year was having obviously a $0.08 share that put you up at a $1.18, and so on adjusted basis if you would add that to our $1.10 midpoint. And -- it's again we're tracking toward a $4.70 guidance. I know the consensus is out there, it's been a little bit north of $4.80, and I suspect that difference got swapped into the second quarter. We obviously don't know what's behind everybody's individual thinking, but I think that balance if you say first half and second half is -- that's reflected in our guidance, this point is a pretty good way to think about an average year for Eaton.

Yes that makes sense. Then just lastly, this is the year of Cooper integration I guess with respect to facilities, manufacturing, distribution, heavy emphasis on Europe. How are you guys feeling sort of four, five months in the year sort of under our belt, what's the trajectory and what is the point like has everything gone okay in Europe? I realize you spent a little bit less money, but that's obviously one of those things where you sit here in North America and Egypt -- you hear all these headlines about you can't do anything in France et cetera so what -- how is the progress been, any kind of an update would be helpful?

Yes, I'm going to appreciate the question because it is a very important activity that our teams are involved and where we are really very pleased, whether it be the overall activity and you're right, this is the belly of the beast if you will, the 2014 and '15 are the really heavy lifting years of execution, and the teams are really doing it, I'm just very, very pleased. Specifically in Europe, we are through all of the planning phases, and we're into the action phase. And so that as you say, the fact that it always takes a little longer to get things done in Europe, we think we did a very good job of planning, communicating, and we're now in the execution phase. So we're in the action phase and it's moving ahead very well. So if anything, I think we're moving a little faster than we had originally anticipated, and that's good news. I would say as important as are all the cost synergies, the area I'm equally really thrilled about is, is how well the reception is going in terms of the marketplace with our improved competitive position and the synergy opportunities. And you really saw that come through in terms of that very strong organic growth in the Products segment, in spite of the weather problems that were out there. You can see that our organic growth overall for our electrical business of about 2.9% or 3%, really fared pretty well when you look at many of the other global competitors. And we think that's a testimony to how well this is coming together.

Our next question comes from Ann Duignan with JPMorgan.

Sandy, can you give us some color on your bookings within the different segments? Normally you give us how much mobile bookings were up distribution, et cetera, et cetera, just in the different businesses if you have any more color.

Sure. Now, I think, let me start with the one you just referred to, Hydraulics is that, in a little bit of a change for us. In this quarter where you've been seeing over the last six to nine months that our mobile bookings have actually been stronger than our stationary, this time mobile was up 7% and stationary was up 41%. Now that huge 41% gives you a feel for what's going on in the oil and gas industry and that was the biggest push. Within mobile, as I mentioned, the construction was very strongly, and then the negative, as you would expect would be mining and then we saw ag being slightly negative as well. If you flip it and look at it from a distribution and an OEM point of view because a bunch of -- most in the mobile and in many of the big oil and gas activities are what I would call OEM-oriented, there again, it was heavily more OEM than it was distributor-oriented this particular quarter. If I flip you over to aerospace for a moment, the overall bookings of two, and remember, we had very strong bookings the last quarter, so we don't average ours on a rolling average. We just give them to you as individual quarter. This was really a situation where you had all the great commercial strength being offset by defense weakness, and then I mentioned on the aftermarket side that the commercial was very strong but the military was also a very healthy positive. So a nice balance there. And then if you go back up into the electrical businesses, I think the comments you've heard from other electrical companies, I wouldn't typify the market much different. I'd say there's been improvement in construction markets. Oil and…

Okay. And that's a great color thank you, appreciate it. And just a follow-up on Brazil, you noted that market. And could you just breakout you different business segments in Brazil, whether it's ag-related or truck or automotive?

Again, overall for our Vehicle Latin America view, when we last gave guidance, we thought the markets for the full year would be down on the order of 2. We think it is more likely that they're going to be down on the order of 4. In the first quarter and we've got some question always about the accuracy of quarterly data stream. So take this with a little bit of salt, if you will. We think it probably is down on the order of 6, and within that you saw Brazilian ag being the bigger number certainly down somewhere between 10% and 15% in the first quarter with the light vehicle markets being down something just below 10%. And then the truck and bus numbers look to have been down just a couple of percent. So somewhere in those ranges when you try to get the overall feel for the market.

Our next question comes from Steve Winoker with Sanford Bernstein.

Just to put a finer point on the Cooper cost synergies, you had moved to $5 million I guess out to 2014. Have these specific actions now taken place in the last quarter so that that catch-up is or that's cleared -- is it complete clarity on that or is it still to be done?

We have things that we'll do all through the year this year, but we've not changed what -- and I think as Tom outlined for everyone who had the chance to -- Tom Trowse identify for everyone had the chance to attend our meeting in New York, he tried to give you an indication, about each of the categories via the cost or the synergy sales categories. The vast majorities of decisions have been made, and so we're in an executing mode. So I would say no, there has not been a change in either scope of what we're taking on nor schedule. And we feel, we're now, three-and-a-half months or almost four months into this year, and it continues to feel very good in that regard.

And Sandy, do you have a sense for upside from there as you continue to sort of, now that you continue to make progress, from your end you kind of talked about a high level, you feel good. I mean do you -- are you starting to find new areas of opportunities without -- you don't need to quantify it, but are you getting a sense for even more there on the cost side?

I think we'll get a better sense, I think as we've got a very full place and what we're working today. And I think there are always more opportunities. The question is will they prioritize high enough that we'll get at them during this very focused two, three years of execution. So I wouldn't want to advertise as we've got excess capacity to take things on right now. We're pretty busy. There's a lot going on. I think the team is doing well, and we get out towards the end of this year, we'll have another projection as to whether we think it steps up from there. But you'll recall, we just increased in February what we thought not much would happen so much this year, but what would happen over the '15, '16 time period, and I don't anticipate that we're going to be raising a lot during '14. I think the potential would be out there in the future, and we'll look at that as we get towards the end of this year.

And just so I understand that ESS commentary on mix, weather, and corporate allocation, to sort of say that you're on similar on what you would expected, and I guess that's two-tenths or 20 basis points for corporate. That allocation, year-on-year, you've would done it before, just how -- what kinds of things are we talking about there? I know it's small, but I'm just trying to get a sense of the health of the business.

It's a whole -- no, it's -- these are areas where we have services or assets that support both the segments, and as we've just looked at you can almost think of it as an activity costing model. We've simply just said, we think that about $4 million more per quarter should have been assessed against the ESS segment and the Products segment. So nothing that affects the health of the business or the orders or the competitiveness, it's really an internal cost allocation issue. And once we came to this determination during the first quarter, we thought we were better to kind of project it out over the whole year, and that's why we increased the segment margin target for the full year in products by 0.25 and took it down by 0.25 in in the Systems and Services.

Right. And you're not seeing any pricing pressure in the electrical businesses, are you?

Well, I would say that in every business, there are always pricing pressures, but no, I'd say at this point, we're comfortable with our margin projections vis-à-vis all the cost reduction work and new product introduction we do as well.

Next question comes from Jeff Hammond with KeyBanc.

Just on ESS, I mean outside of may be the weather and some of the timing noise, can you just characterize what you are seeing in those project related power quality, power distribution outside of may be what your expectations were and just tone there?

I think the big issue Jeff and then I will come on a couple of specific areas was, just as the weather got worse this winter and you saw an awful lot of job sites frozen out, so a lot of things didn't start and they were people also delaying either the quotation or the awarding of large projects with a pretty unusual quarter in terms of the number of large projects that were actually awarded and we're able to track that data pretty carefully, because we've got such a good window. And I'm speaking primarily here about the North American impact. I'd say the second issue, comment a little bit in response to Ann's question earlier is that the -- if you look at the large data center side of the market, in the U.S. it was a pretty weak quarter in terms of data centers wanting to receive their equipment. Now we see just the opposite happening in the second half of this year, where the schedules for the second half look pretty robust with what we've got in hand at this point. So I think those are just examples of, because there are always hundreds and hundreds and hundreds of these projects, not just one project. But we're feeling much better about as we see this fill for the second quarter and the balance of the year, a very unusual first quarter and our experience in that regard.

Okay. Then just remind us on this synergy split between EPG and ESS. Why that is, what's driving it in terms of the actions and the savings timing and does that start to shift into '15?

Yes, at this point what we had said is, if you take the roughly $95 million of year-to-year, that was 2013 to 2014 acquisition synergies and that consisted both of sales synergies and cost synergies. And you remember that we said that about $8 million of that shows up from the corporate line, so you got about $87 million that then shows up into the two segments that approximately 75% of that would show up in the products segment and approximately 25% in the S&S or ESS segment. That's indeed what it looks like is pretty well happening and it has to do specifically with the mix of all of the projects. We've not yet looked at that for 2015 and laid it out over the two segments precisely, we'll do that as we get to later this year. It's many, many, many, many projects if you could imagine. But right now I think that's a pretty good planning template for you to be using for this year.

Our next question comes from Jeff Sprague with Vertical Research.

Couple of quick ones. Sandy, just your view on restructuring to come back around to that. So you could kind of say in essence you've taken and make it into restructuring here and you too running it through kind of your operating number. How do you think about that relative to gains, I mean the essence of my question is you'll have a gain on the aerospace stuff? Do you view that as an opportunity to fund some additional restructuring, do you view those type items kind of in the same sentence, if you will, or they're totally kind of discrete factors for you?

We've not -- obviously we've not included in our $4.70 midpoint operating earnings per share guidance any gain from our announced divestiture to Safran of our two aerospace units. At the time that we close that transaction, we'll be in a position to talk a little bit about what that gain would be and we do expect to close it in the second quarter. I think it's just premature for us to comment, until we close it, Jeff, at this point. At this point, we want to be very transparent about the -- taking the charge this year, its $0.08. Some people will interpret that that we've raised our guidance by $0.08 because we've obviously kept a $4.70 operating earnings per share midpoint, and we didn't have the $0.08 in that beforehand. And then we want you to have visibility to what we think the benefit is for 2015, because I think increasingly in these periods of relatively slow end market growth and I would characterize 3% as still in the relatively slow area, we think it's increasingly important that the self-help story, if you will, would accompany this as a really powerful part of the earnings story. And with a $185 million of self-help going into next year, we think that's pretty powerful.

Thank you. And just two other quick ones, could you comment briefly on what you see going on specifically in the U.S. utility market on the distribution side, putting aside kind of the weather noise, but how the year plays out in your view? And then I was just wondering on tax, because the modest change this year in anyway change your view where tax rate had been, '15 and in the out-years?

On utilities, Jeff, really, no different than what our original guidance was this year. We had said we thought the market would be flattish from last year to this year, that's still our view. I think the first quarter was rougher on some utilities and others depending on where they were weather-wise. And obviously, some areas got pretty beat up in terms of distribution. But we don't see it as being substantially different. We think overall, it's likely to be a flat year, and that's pretty much what we're hearing back from our customers in this regard. And on the tax rate, our guidance for this year remains around 5%. So really no change. And as I mentioned, in terms of the guidance for the second quarter, we feel it will have trended up slightly from where we are in the first quarter, and it's probably likely to be a little bit north of the 5%, because we were a little bit south of it in the first quarter.

And Jeff, that keeps our view for '15 at the 8% to 10% range that we talked about on our last earnings call.

Our next question comes from Shannon O'Callaghan with Nomura.

So Sandy may be a little bit more on the booking for ESS, you mentioned and we've had sort of two straight down quarters of bookings. We're talking about more robust data center activity in the second half. Is that sort of when maybe we finally turn the corner back into positive bookings for ESS? Just a little color on what you see coming in the pipeline.

I would say data centers Shannon is just one part of it. It's -- the data center clearly, the big end data centers, the three phases as we call them, that is in this particular segment and we do see better activity in fact, we're pretty confident of their much better activity in the second half. But I'd say, the other bigger potion is the Canadian markets have been quite weak coming out of the backend of last year versus a year ago, and it was true in the first quarter. And as I mentioned, I think it was Jeff's question relative to the -- what was unusual about this first quarter was that, we had really huge bookings in the fourth quarter of 2012 and first quarter of '13. That compounded the fact that when we saw this quarter and the first quarter of 2014 with very few big bookings, and I'm talking about these are over a certain dollar size. The market really just kind of pulls back in terms of actually placing those orders and you see it in the NEMA data, the National Electrical Manufacturers Association's data, quite a different first quarter. We think that was very much related to not only the fact that people lost workdays, but that there were so many job sites frozen out, that people just were waiting. Now, we're seeing that in terms of, I mentioned in my comments at the beginning of the call, we're seeing that in April because it has definitively changed in terms of this larger activities. So no, it's not simply power quality, it's on the power distribution side as well.

And I guess on the margin side for ESS, I mean even if you add back the factors you called out for the quarter, margins didn't go up much this quarter, when do you think you really start to transition into the margin improvement phase, for ESS obviously, it's baked into the '15 number, but as we phase sort of across the quarters, when do you think you really kind of turn the corner?

Well clearly, it has to step up in the second quarter in order for us to be able to hit this 14.5% guidance we've provided for the full year. So we don't think this takes a long time to be addressed.

Our next question comes from Eli Lustgarten with Longbow.

Can we talk a little bit about the first half, second half, I mean it's obviously, most of you were disappointed with that second quarter guidance well below our modeling, which probably got wrong. But in order to make your numbers, we're talking a step-up of the earnings now to at least $1.30 kind of the quarter in the second half. And can you run us conceptually, what takes us up that much between the first half and second half? Do you have that booking or the expectations of power quality, what's driving that profile, big profile step-up in the second half versus first half?

The first part Eli, if you take your $1.10 in the second quarter, add $0.08 for the restructuring, so the actual run rate without restructuring is $1.18. So to hop yourself up to $1.30 would be a 10% increase. When you typically look back at our company, the difference between seconds and thirds, that's not an unusual number and we're obviously also the synergies continue to increase in this time period, and we do expect the segment I just talked about, Electrical Systems and Services those margins will get better. You'll also see I think the earlier point we made on aerospace that aerospace started this first quarter 13.4% and we're talking about a full year margin there that are at 14%. And then I wouldn't ignore the vehicle piece because on top of the traditional seasonal in vehicle, we have seen obviously the bookings get stronger around North American heavy duty in the industry, and there's a fairly attractive step-up occurring as we get into this year. So I think those would be your major factors in this regard. Now, also, if you look at our corporate areas of interest in pension, they start to trend down as you go across this year as well. So those would be the major points I would point to.

So, it's just a normal -- this is nothing businesswise, backlog in shipping or anything, that gives you this expectation from a macro standpoint, and how you're running the business internally?

No, we think it will be a fairly normal progression ex the $0.08 that was hitting this quarter, and that makes it look like you're jumping from $1.10 to some quarters that would be like a $1, $1.30 and it's the $0.08, when you put in there, I think it makes it feel like it's not that kind of jump.

And you talked probably about the industrial restructuring, but I guess you never were specific about where it is, is that pretty well spread across or it's mostly in one segment? Can you give us some idea of exactly what you're trying to doing that (inaudible)?

Until we're announced with all of our employees, we're not in a position to do that. After we have finished all of that, then we'll be in a position to be able to do that.

Yes. But is it spread or is it more focused?

It's in all three elements of what we call industrial sector. So it's in Hydraulics, it's in Aerospace and it's in Vehicle.

Our next question comes from Andy Casey with Wells Fargo.

Just a kind of a high-level question first. When you look at what you're seeing across markets and axing out the Q1 weather impact for a moment, are you more or less confident in a pick-up in improved U.S. CapEx from your customers and commercial construction during 2014 than you were when you put together the initial forecast towards the end of last year?

Well I think you have to be more confident just because the numbers that are available from the Department of Commerce would indicate that the first quarter was 7.5% and so our guidance of 7% to 8% doesn't sound like it's very wild when the first quarter came in at 7.5%. And it's a bigger number on the private put in place, it's a negative number on the government, but I think again some of the input you heard from various companies who have announced, I think they are looking at just individual elements of the non-residential and not looking at that whole chart that we referred people to historically.

Okay. So if we look at that Sandy and take into account the stronger March/April customer activity that you referred to, do you think the April improvement is just catch-up to where you thought you would be, or is it potential upside?

I wouldn't raise our forecast right now. I think that it's really an indication on these larger projects that there was some push out and awards in the first quarter. I think we'll have a better sense Andy, when we get through a full quarter of seeing how that stabilizes over in April, May, June. So I think it's a little bit early to call that it's going higher than 7 to 8. And remember our number is a nominal number, you'll hear some people talking real numbers and ours is nominal just to be clear in that regard.

Okay and thanks for that. And then lastly on that April project activity improvement. What -- if everything holds, what sort of revenue recognition lag would you expect based on the projects that you're seeing come in?

Boy, it can vary, Andy, from a month to three to five months. We have a very hefty backlog, so we're kind of well covered in the near-term in that regard. But I think importantly from a tone point of view when you look at the difference between the bookings in our Electrical Products segment and our Electrical S&S segment, it's hard to reconcile the two that you're up a plus 6% on the distributor side, but the project side didn't really come through that's where that the difference in terms of, there is some end market difference such as big data centers, but an awful lot of it goes into light and bigger commercial construction and we think that's the piece that we'll see filling in here in the second quarter.

Next question comes from Joe Ritchie, Goldman Sachs.

Just a few quick questions. Sandy, can quantify, it seems like you've been pretty happy with how April has started. Can you quantify what electrical bookings are up in April?

Since we haven't closed the month we really don't have a final number, but they feel a lot more across-the-board like what we saw in products for the first segment. So in both segments, whether it's the S&S, or whether it's the products side.

Just to clarify there, it seems like what products is trending towards in Q1?

Yes.

Okay helpful. And then, secondly, does the incremental restructuring that you've talked about for Q2 and the incremental savings in '15 give you any upside to that preliminary 17% margin target that you've talked about before?

No, I wouldn't change them now. I would really -- we will obviously -- we will have to go through our planning at the end of the year. But I would say, I think it just gives additional credence to them at this point in spite of the slow growth environment.

And you guys have been pretty good at calling the truck order number. Is there a preliminary read on April?

We don't have a final number. What we're hearing from customers though is that we think it's going to be let's say, a very attractive number, again, looking like this kind of trend we've seen over the last four months. There's really good tone and activity out there.

Okay. That's helpful. I guess one last question on the Hydraulics side of your business. It was interesting to hear that your mobile was up, I guess outside of China. Do you have any sense how much of that is underlying demand today versus just a restock of the channel?

We do believe in Europe and in the U.S. that the channels are in pretty good shape. We've talked a lot about this over the last couple of years that that adjustment is going on. I think you've heard from at least one of the big OEMs that they are starting to do restock into their channel and that's all helped the opposite of that is the situation in China today where I think there is more and more recognition that that channel is very full, and that the utilization rate of newer equipment sold over the last couple of years is still fairly low. So I think most people in the industry are thinking that things are looking up in the U.S. and Europe. There are kind of sideways in South America, the way you've got more of a mining orientation, same true in Australia and that China is the area that's harder one to figure out, looks like it's off in the future some time.

We'll be able to take one more question and then as normal, we will be available after to follow-up questions. Our next question is from Mig Dobre with Baird.

Thanks for squeezing me in. Going back to Hydraulics here, you reiterated your 2014 margin guidance, and I'm looking at what obviously was a very good first quarter. I'm wondering how should we be thinking about incrementals for the rest of the year here?

Mig, normally our Hydraulics business like a number of our industrial segment business -- sector businesses have stronger first half than they do second half. And so I'd say that's probably may be the best guidance I can give you in that regard both from a volume point of view and then obviously the margins as well. So we're pleased, we've started stronger as we should have in terms of achieving this margin. We'll take a look at the full year projections as we get to mid-year. But I think I'd put another category we're off to good start. We're very much on schedule and we're particularly pleased not only with the 240 basis point increase in the margin, but with the continued very strong bookings background, because that's what's going to give the ability really to power this business up further from a revenue point of view.

Sure, I appreciate the color. And my last question is really on your guidance. As you sort of look at the earnings guidance range and assuming the midpoint may be as the base case, what do you think you could have some of the upside and downside risk at segment level, may be that could take you to either the high-end or the low-end of your guidance?

What we've said is the big issue and we said this back when we issued our original guidance. If you model the 2% to 4% growth rate in our end markets you get the two wings of our guidance. The 3% is really the midpoint of our guidance. So I think the big plus or minus really has to do how we see these world markets for our end markets. So at this point 3% still looks like our best view.

But you wouldn't call out a specific segment for upside or downside risk, specifically?

No, I think we're very comfortable with where we are from an execution point of view. A lot of it's going to deal with just how strong these markets play out for the balance of the year.

Thank you all for joining us today. As always, I'll be available for follow-up questions along with Mark Doheny. Thank you again, and we look forward to your follow-up questions.