Good day, ladies and gentlemen, and welcome to the Ingersoll Rand First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference, Ms. Janet Pfeffer, Vice President of Business Development and Investor Relations. Ms. Pfeffer, please begin.

Thank you, Janine. Good morning, everyone. Welcome to Ingersoll-Rand's First Quarter 2013 Conference Call. We released earnings at 7:00 this morning, and the release and slides are posted on our website. As Janine said, this call will be recorded and archived on our website. If you could please go to Slide 2. Statements made on today's call that are not historical facts are considered forward-looking and are made pursuant to the Safe Harbor Provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated. This release also includes non-GAAP measures, which are explained in the financial tables attached to our news release. A couple of things to note before I turn it over to Mike. We will be talking to adjusted margins during our comments this morning, which exclude restructuring and spin-related costs. Our news release and tables give you a reconciliation of GAAP to adjusted margins. This is consistent with how we gave guidance in February. Also, earlier this year, we transferred a business line from Security Technologies to residential security. There was $18 million of revenue in the first quarter and about $80 million for the full year in 2013. There's not a meaningful impact on margins and no impact at the consolidated level. But in the charts and comments, we will focus on year-over-year change in revenue and orders for those businesses on a comparable basis, so as to best represent underlying performance. The move is also now reflected in our sector revenue guidance for Residential Solutions and Security Technologies. Now to introduce the participants on this morning's call, Mike Lamach, Chairman and CEO; Steve Shawley, Senior Vice President and CFO; and Joe Fimbianti, Director of Investor Relations. With that, please go to Slide 3, and I'll turn it over to Mike.

Okay. Thanks, Janet. Good morning, and thanks for joining us on today's call. We're pleased with our ability to deliver above our earnings commitment in the first quarter, with solid operational execution. Our revenues for the first quarter were down 1% versus last year, both on a reported basis and excluding foreign exchange, reflecting top line performance pretty close to our view that the demand environment will start out tepid and improve somewhat as we move throughout the year. Orders were also down 1%. At $3.1 billion, revenue was towards the bottom of our guidance range, which was $3.1 billion to $3.2 billion. We saw a slight decline in Climate and Industrial. Residential revenues were up 6% year-over-year on a comparable basis, and Security Technologies revenue was down 3% on a comparable basis. We increased adjusted earnings per share from continuing ops by 14%. Adjusted earnings per share for the first quarter were $0.42. That's about $0.04 above the midpoint of our guidance range of $0.35 to $0.40. Better performance from operations were about $0.02 above guidance assumptions, again, on a revenue base which was at the lower end of our guidance range. The tax rate, at 18.5%, was about $0.04 positive to guidance. These were partially offset by the devaluation of the Venezuelan bolivar, which occurred after we gave guidance. The bolivar devaluation resulted in a $0.02 negative impact on earnings, which was booked in other expense on the P&L. Adjusted margin decreased 10 basis points. Operations before corporate unallocated costs increased adjusted margins by 30 basis points. Versus 2012's first quarter, adjusted operating margins were up in 2 of the sectors. Residential delivered a 390 basis point improvement and Industrial margin was up 110 basis points despite slightly lower revenues. Lower revenues and mix were a headwind for…

Thanks, Mike. Please go to Slide #4. Orders for the first quarter of 2013 were down 1%, both on a reported basis and excluding currency. Global commercial HVAC bookings were down low-single digits. Transport orders were up mid-single digits. Industrial orders were down 1%, with order growth in Europe offset by lower bookings in Americas and Asia. Residential bookings were up low-single digits on a comparable basis. Commercial security orders in the quarter were down mid-single digits on a comparable basis. Please go to Slide #5. Here's a look at the revenue trends by segment and region. The top half of the chart shows revenue change for each sector. For the total company, first quarter revenues were down 1% versus last year on both a reported basis and excluding currency. Climate revenues decreased 3%, with HVAC revenues down slightly and transport revenues down mid-single digits. Industrial revenues were down 1%. Residential was up 6% on a comparable basis. Commercial security revenues were down 3% on a comparable basis. I'll give you more color on each sector in the next few slides. On the bottom chart, which shows revenue change on a geographic basis, revenues were up 1% in the Americas while Europe and Asia were down mid-single digits. Please go to Slide #6. This chart walks through the change in adjusted operating margin from first quarter 2012 of 7.5% to first quarter 2013, which was 7.4%. Volume, negative mix and foreign exchange collectively created a 130 basis point headwind to margins. Our pricing programs continued to outpace material inflation, adding 90 basis points to margin. Productivity offset by other inflation was also 90 basis points accretive to margins. Year-over-year investments and other items were higher by 60 basis points. In the gray box at the top of the page, you…

Okay. Thanks, Steve, and please go to Slide 12. Just as a reminder, for purposes of giving guidance for 2013, it's on as-is basis. It assumes the current Ingersoll Rand with the 4 current operating sectors is in place for the full 12 months of 2013. As we announced in December, we expect the security spin to take place in the fourth quarter. But to be clear, this guidance does not reflect the spin, given we do not yet have the carve-out financials and the specific date of the spin won't be known for several more months. Consistent with our February guidance, we have broken out spin and restructuring costs from the core EPS guidance, in order to give the best representation of the company without the impact of the impending spin. But there is no change or update to the information we gave you last on the spin. It's proceeding according to our time line, and we won't have pro forma financials for a couple more months. We expect to file the Form 10 in the June time frame. Based on our results in the first quarter and our visibility for the remainder of the year, we are reaffirming our consolidated outlook. Our revenue outlook for 2013, therefore, is unchanged at $14.2 billion to $14.6 billion, which equates to 1% to 4% growth versus 2012. U.S. nonresidential construction starts and Put in Place trends have not changed significantly since our prior guidance. Institutional markets are expected to be down for the year by 3%. The 2013 outlook for commercial and industrial Put in Place is unchanged, up 8%. Increases in bank and office buildings and retail support our view of a stronger second half versus first half for the unitary HVAC business. We continue to expect low-single digit growth…

[Operator Instructions] The first question is from Nigel Coe of Morgan Stanley.

So just wondering on the share repo you've -- you stated in the press release you started that off in April, which was a bit sooner than we expected, yet I want to reconcile that to your share count assumptions, which are, I think, 300 million for 2Q and 300 million for the full year, which suggests that you've taken baby steps in the repo in 2Q. I'm wondering if you just have some thoughts in terms of $2 billion, how much would be pre-spin and post-spin.

We haven't changed that view, Nigel. It's going to be around $900 million pre-spin through the end of the year. We're stretching it out a little further, starting a little sooner in Q2 than we thought about before. So we haven't changed the total profile, $900 million this -- pre-spin and then $1.2 billion or so post-spin.

Okay. And obviously, you're still looking through the documentation. But do have any more intel in terms of the tax domicile of the spin co?

We -- Nigel, in the announcement, we intend for it to be an Irish domiciled company. We won't have anything back on that yet for a couple of months relative to SEC filing, conversations with the IRS, et cetera.

The next question is from Steve Tusa of JPMorgan.

The -- I think in a couple of your segments, the year-over-year revenue change on the low end was tweaked down by 1%. You guys didn't change your -- the revenue, the $14.2 billion low end of range. I mean, is that just rounding and stuff like that?

Pretty much, Steve. It's just a rounding issue.

Okay. And then, I guess, there's no change to your share count even though you're kind of starting the stock buyback a little bit earlier than expected?

Not significantly, no. It's still around 300 million for the average for the year.

Okay. And then just lastly, on -- I guess, any commentary on resi HVAC kind of into April here, in the first few weeks of April?

Steve, added [ph] for the new quarter, I wouldn't view that as the most important quarter of year. But no comments on second quarter as of yet.

The next question is from Jeff Hammond of KeyBanc Capital.

It looks like your segment guidance is, overall, not really changing. I just want to maybe -- if you can give us a sense of shading, where you kind of feel better or worse within the businesses versus your internal expectations as you kind of leave 1Q into 2Q, and maybe just kind of talk about trajectory into 2Q versus kind of how you were originally thinking about it?

Yes. I mean, we're seeing really strong execution in our industrial businesses and that's really an emphasis on the long-term approach we've had towards product development and Lean really coming to fruition there, so a great margin in the quarter. I think it's a record, actually, for us in the first quarter, the margin in the industrial business well on track. Also seeing good margin improvements in the residential business. Of course, Q1 is the smallest and almost a meaningless quarter in the grand scheme of the year there, but good execution coming into the year. I think from an inventory position perspective, they've done much to ensure that we've got the right product at the right time for our customers there. So good momentum, I think, with that business going in. Security actually had a pretty good quarter. But there's a bit of a mix shift going on there, whereas the climate business, Trane, would be a bit indifferent as to applied or unitary institutional versus commercial. I mean, it has a little tougher impact on the security business in North America. We see much higher commercial activity, banks, office buildings and such, versus institutional, so that mix hurts a little bit. We also closed a factory in Q1 in China and merging that into an existing plant that we have in Mexico. And so the costs associated with that and the opportunity later in the year to sort of deal with the landfill there, are other opportunities for us. I think the margins there will certainly shape up to the back half of the year to be as what we forecasted all along, and that's roughly to be flat for the year. And then, really, from the climate side, the TK bookings were good, particularly in North America, that related to trailer. So it's a solid sign going forward for us, that the new product acceptance has been great. We're ramping that up as quickly as we can to make sure we take advantage of it fully. And in HVAC, it's a bit of a mixed bag. We see growth in North America, growth in China. We see it certainly in North America to be on the office and retail side. And institutional markets will still be down about 3% in North America, so the growth will come mainly on the unitary side of the business. And in China, we're kind of seeing what we expected there, which is recovering book to bill. I want to say book to bill in China for the quarter was about 1.26. So we need that to continue, but it's a good start.

The next question is from Shannon O'Callaghan of Nomura Securities.

Hey, Mike, just maybe a little more color on how you see these verticals playing out in the commercial HVAC side. I mean, the bookings were down mid-single, but it sounds like you're seeing some encouraging indicators on the noninstitutional part. Can you just maybe give a little more color on how you see that playing out?

Yes, in fact, Shannon, I'll probably back you up to quarter 1 last year. Interesting, quarter 1 of last year in our unitary portfolio throughout the company was up 29% quarter-to-quarter. It was just a phenomenal start to last year, so we're really coming against a less pretty tough comp there just for comparison. It was a pretty good applied quarter too. We're up 13%. So equipment orders were up 20% in quarter 1 last year. Now in the year, what we're seeing is that we'll continue to see applied institutional, particularly K-12, and down negative 10 mid-digits, health care may be a little bit better than that but still negative. But the real growth will come from office and retail and actually from bank buildings, and we do fairly well there. In fact, we're the market leader there as it relates to share for unitary product that goes into that market. So -- and that's something, again, if you look at the places that volume will hit us, it will hit us in places that we've had ongoing Lean efforts and ongoing product development efforts over the last couple of years. So I feel pretty good about our ability to convert on that volume at relatively strong incrementals.

Okay. And then just on the resi side. I mean, I know it's early here. But in terms of what you've seen so far there, new versus replacement, any change in sort of consumer behavior?

Well, new is up about 30%, replacement up high-single digits, maybe 10%. So clearly, the market is still sitting at 85% replacement. There's no real mix shift there. The only shift within that, I would say, continues to be the decline of R-22 in the portfolio. And as we said all along, that's a good thing.

The next question is from Jeff Sprague of Vertical Research.

Just wondering if we can get a little more color, Mike, on price costs going forward. You indicated you've got 8 quarters under your belt now. But just how do you see the rest of the year playing in the context of maybe where your hedges are on copper and other raw mats and what kind of benefit you may have on the cost side relative to price pressure that you're expecting in the back half, if any.

Yes. Sure, Jeff. In the first quarter, we saw price cost positive 90 basis points, and I think that the material inflation environment will continue to be fairly tame, not only sort of the market but what we've locked in. So we've actually been lapped most of our larger price increases. So for the year, I think price will just be under -- maybe just under 1%. So I would expect the gap to material inflation to be closer to 40 to 50 basis points, which is a little bit better than we thought we would have at the beginning of the year. We actually -- I'd have to check this, but I think we're probably now a larger buyer of aluminum than copper. Again, a multiyear effort to move away from copper to aluminum. So copper is becoming less important to us there. We hedged out in Q2 about 3/4 of our demand and for the full year, about 2/3 of our demand. And then for aluminum, here, we're typically buying that through finished product with suppliers, and so we're buying that not directly but through rep purchases.

And just wondering on the share repurchase. You hit it a couple of times already and no apparent big change in your plan. But relative to kind of what you ultimately plan to do with leverage ratios, it does seem like you really could and perhaps should do more earlier. Just your thought process on that and why kind of soft pedal it.

I think that really what we've said the strategy this year was, Jeff, to devote pretty much all of our available cash after dividends to share repurchase. That's roughly the $900 million. I think that when we talked about that, we said, "Look, we feel pretty comfortable about doing that from operating cash flows, worst case." So if we didn't -- are able to complete the spin this year, we'd still be able to at least do that. And that's what comprises our current guidance. I think that as we go through the rest of the year, we'll try to take advantage of whatever we can, timing of refinancings, et cetera, to try to continue to pull this thing up further, as far into the year as we can. It's pretty tough when you start, even in April and May, to get a big impact on your average, but we'll certainly be opportunistic and take advantage where we can there.

The next question is from Andrew Obin of Bank of America Merrill Lynch.

Just a question in terms of looking at your outlook for the remainder of the year. Given where the first quarter played out, where you're guiding for the second quarter seems to hit the high end of your revenue outlook. We need to see some pretty good acceleration in the second half. Could you just talk us through the markets? What needs to happen to get to the upper end of your guidance?

Yes, you're correct, Andrew. We need second half revenues to be about $375 million or about 5% higher than the first half of the year so -- I'm sorry, than the second half of last year. And so we were looking at it this way, about 1 point, we should get from price. Residential's growth rate from the first half to the second half is only about 1 point higher in the second half. And then given the momentum in housing, it seems pretty reasonable. On a dollar basis, the large increase would be in commercial HVAC. And within that, the majority of that growth will come from North America and Asia. In North America, in particular, we project good growth in unitary equipment and in contracting parts and services. And we've made investments in contracting parts and services and had more feet on the street there than we've ever had in anticipation of being able to drive that business. For unitary, we believe the growth in equipment is going to be in the retail and office and bank building verticals in particular. That's, of course, the growth outlook we've got for the second half of the year there. With TK, revenue goes from negative in the first half to a positive in the second. It will end about flat, but most of the swing is in North America and we feel good about that given the bookings we saw in the first quarter. The commercial security outlook has always called for a stronger second half for nonresidential construction in our key institutional markets. And so we need for that to improve in the year. With that being said, the other actions we're looking at there to make sure that we're protecting the profitability of the business in the event that those markets don't recover. As an example, the integration of a plant in China into Mexico and the benefit that we should see in the back half of the year there. So we ultimately [ph] all of Asian businesses to accelerate as we go through the year. Again, the book to bill was good in quarter 1. We've seen that so far in our bookings, but we'll need to see traction there continue in that region to support the second half forecast.

Got you. And just a follow-up question. On security revenue and profit, you had very good fourth quarter and we've seen a sort of decline in sequential performance. Could you just give us more color as to what happened on a sequential basis on that business?

Well, you're going to see fundamentally the shift we're talking about in office and retail markets. And so they're typically in the security business. We're not selling the premium brands. We're selling sort of the next tier down and it's a more competitive environment. So when that business grows there -- I was commenting earlier about the institutional markets are more important in the security business. As those commercial markets grow, it's not the same effect that we have in Trane, where we're clearly comfortable watching applied or unitary grow. In the security business, it's much more beneficial for us to see institutional markets grow.

The next question is from Steve Volkmann of Jefferies.

Curious if you have any comments about -- I know this isn't a particularly important quarter, but some of the competitors seem like they had some positive order rates in HVAC, both commercial and resi and I know the mix is always an issue. But just curious if you think there are any trends with respect to market shares that we should be cognizant of?

When we look at commercial unitary and you look at that from large all the way down to widest [ph] , remember that we sell the bulk of the white[ph] through our climate business there. Again, reflect back on the quarter 1 last year, it was a plus 29% growth rate. I don't think anybody was close to that last year. I think one might have been 20%, one was 6% and one didn't report it even so, it was a really good quarter last year for us there. When you look at the res business, you don't want to draw conclusions here on any one month or any one quarter for sure, particularly not the first quarter, which, as you said, is the most unimportant quarter of the year for us. So our 23 -- our 2013 forecast doesn't show share loss in any of the SEER ratings or efficiencies in the marketplace, any portion of the market. Just executing our multiyear product strategy, a channel strategy, we're extremely cognizant of the interaction between price and share and fixed cost leverage. And so we're going to make decisions there based on this type of analysis and doing what we think the optimal outcome is for the business based on that mix. So long story short, we're not forecasting a share loss in '13. We saw a nice share gain in 2012, kind of recovering from 2011. We see the continuation of that, particularly with all the 13, 14 SEER products really now in the portfolio coming into the season.

Okay, great. That's helpful. And just maybe to finish up the same question on TK. Obviously, pretty strong orders there.

Yes, North American trailer revenues were actually right on for the first quarter. Market acceptance for the new Precedent product was a lot stronger than our original expectations. We had truck orders up 30% in the first quarter. I think the industry was down like 2% for total industry based on the ac [ph] volumes, so good success there. We're ramping up on production of the new products to meet the increased demand, saw actually a nice growth in marine although it's a very small business for us. Yes, all in all, I think it supports the back half of the year forecast for us.

So a quick correcting comment here, it was the trailer business in North America that was up 30%. I mean, we do define [ph] it between truck and trailer, but the trailer was the piece that was up 30%.

The next question is from Julian Mitchell of Crédit Suisse.

Yes, if I look at the EBIT margin bridge on Slide 6, the 130 bps headwind you had from volume mix and FX, FX, I guess, doesn't really do a lot for the rest of the year based on spot rates. Volume-wise, you've talked about an acceleration in some areas being built in. If you think about mix, you called that out as a headwind in 3 of the 4 segments. Security, I guess, carries on because of the institutional markets being weak. But if you focus on resi and the resi HVAC and also climate tech, I mean, climate tech, you should see mix become a tailwind, I guess, as Thermo King revenues recover. Is there any reason why mix therefore wouldn't snap back in subsequent quarters?

Yes, if you take a look at what we're expecting, really, the Thermo King story is a positive mix story, Julian. If you look at the contracting service and parts stories on the Trane commercial business, that's a positive mix story for us in the second half of the year for sure. So the thing that may be a little bit tough will be the security mix through maybe even the second quarter because of the vertical market dynamics that Mike just went through. But there's no reason why we shouldn't see mix come back to a more normal profile for, certainly, the second half. The other thing that Mike mentioned, the expectations for China. And what happened with our China bookings in the first quarter was we're -- actually book to bill in China was well over 1, like 1.2. We get great margins out of both the commercial HVAC business there and also the industrial business. So that should also serve us well from a mix standpoint in the second half, Julian.

Got it. And then just secondly, if we think about Security specifically, you talked a little bit about sequentially Q4, Q1 and so on. Cameron [ph] , obviously, had pretty bad numbers and cut guidance yesterday. What is it that's changed exactly or changed in your outlook? Is it simply just the institutional side coming down and you're not yet seeing a pickup on commercial to offset it? Is there anything going on competitively or pricing-wise? Or is it just institutional volumes in the U.S. and Europe are a bit worse?

Institutional volumes are down. Where we've seen actually growth in the HVAC business in Europe, we have not seen growth in the Security business in Europe. And so I hope there is -- that's a bit of a lagging effect in the back half of the year before Security Actually shows a bit of an increase in Europe as well. So that should help us in the back half of the year there. But Europe was below our expectations. The mix in the Americas was a bit more skewed towards the commercial sort of brands as opposed to institutional brands there. But again, there's also a lot of activity spent in the quarter moving a very large plant, closing it down and then the process of moving that to Mexico, and the benefit of that really shows up in the third quarter and fourth quarter relative to margins. So I think the top line makes sense. I don't think there's a lot of shifts going on there at the top line. And then from a margin recovery perspective, I feel pretty good about Security continuing to work to flat by the end of the year.

And then lastly, just residential mix. What are you expecting on resi HVAC mix for this year?

Well, our unit volumes were actually up close to 10%. So you can tell from the reported numbers that the volume numbers gave you, that we're continuing the mix as well in the opening price point section of the market. We'll continue to see that happen throughout the year, taking a large share in that full product range as well. So that's sort of what the volume is, Julian. It's going to take us another year, 1.5 years, a couple seasons probably before I would tell you that, that mix shift down wouldn't impact the res business. But the [indiscernible], the combination of price, volume and fixed cost leverage really is the analytics that go into that decision. And any time you can run the business with an improvement of 390 basis points, it feels pretty good going into the next quarter. And we're going to continue what we're doing there and improve business from there.

The next question is from Jamie Sullivan of RBC Capital Markets.

So just to follow on, you talked about the mix in Climate a little bit. Can you just remind us what the mix of equipment versus services is in that business?

For Trane, call it, say, maybe 35%.

Is services?

Actually, closer to 60-40, 40% services.

Great. Okay. Great, that's helpful. And what are you assuming this year for growth from those 2 pieces? Can you give us a little color there?

Yes. I think from a services perspective, we're going to continue to see services growing mid-single digits. And for us, it's a function of technician support, service dollars, kind of covering the market, building out the footprint. So we have been able to track to sort of headcount additions like clockwork in terms of volume growth. So I would consider mid-single digit growth to be in the cards there for us.

The next question is from Steve Winoker of Sanford Bernstein.

Just first specific question, margin impact of the product line transfer. I know you talked about the top line. What was the specific margin line impact for the 2 units?

Joint venture. So we were consolidating it and it was -- we reported a very low sort of number there. So almost negligible, maybe a 5% operating margin or less on the shift itself.

Okay. And then could you maybe speak to -- you mentioned it's the first of 6 phases on the ERP or the IT system to go live and the corporate cost impact. But if you sort of look at that relative to your productivity expectations and benefits, maybe talk about how that is playing out, both through the rest of the year and into -- as you see going forward.

Yes. I think, if you're talking specifically on corporate cost structure, Steve kind of gave you a little bit of reconciliation between the $42 million unallocated this year and $32 million last year, and part of it was the stock-based comp that he talked about a second ago. But we would think 2013 would be about $180 million. Last year, it was $163 million. And the largest investment we're making there is really around common systems. And we really don't get the benefit of that common system work until they sort of cross at least the midpoint of the implementation, kind of the fourth to the sixth phase, before we start to lap the costs. So we've got another 1.5 years or so, maybe a bit longer, worth of hill to climb before we get the recovery there. And we have no changed expectations. We believe it's a significant item in getting our overall IT costs down to, what we believe, are world-class levels and that there's as much as 50, 80 basis points of improvement when we're done, just on the cost of systems, let alone the cost of supporting the systems and of course, the benefit of the information you get from better systems.

The next question is from Deane Dray of Citi Research.

I was at the ISC West trade show last week in Las Vegas and there was a lot of new products for Ingersoll Rand security, and was hoping you could comment on what the underlying drivers should be, especially regarding education. A lot of products on the lock side and doors and so forth. And how meaningful could that be for the business over the near term?

It's probably the #1 growth driver in that business, really is the electronification of mechanical locks. And I would say the #1 market for that would be of all education, K-12 and higher ed. And it's really partially attributable to the unfortunate things that we're seeing around the world. And the thing about that lock is the ability to do that in a relatively -- that whole system, a very inexpensive way of implementing a system in a wireless way, with lockdown ability inside of 10 seconds. And I think some of our competitors would have that capability twice a day versus every 10 seconds. And so there's a real advantage to that. We've got excellent organic capability for product development. We're working on, of course, channels to market there and have had great success with particularly colleges and universities adapting the system you saw, the electronic lock you saw, the wireless lock as well as the aptiQ card system.

Yes, that's the system that uses the smartphones, correct?

Well, it's one of the options that they can use with aptiQ is using a smartphone. But yes, near-field communications would certainly be one of the potential options that you could take, along with the ability to format with any other credential.

Great. And then just to switch over to the Trane residential side. Was hoping to get some context about how this cycle could be playing out and how might it differ. So there's not any efficiency SEER 13 type of change going on. Maybe there's some of the equipment that's in the field has been fixed repeatedly as opposed to replaced. But just take us through in a normal -- what -- how the cycle may play out in terms of within that context, no regulatory boost. Maybe what's out there is a bit more aged.

Yes, I mean, we can get into the algorithm to do that. And actually, that's really going to be useful for us here. But clearly, the systems that are there are aging and we're seeing less repair than we would have seen from 2 years ago. And that trend continues toward system replacement. R-22 is down 20%. So when we are seeing replacement, we're seeing full [ph] replacement itself. Without sort of trying to model it totally out for you on the phone here, it lends toward, I would say, a slow release of the replacement demand over a 3- to 5-year period.

I am showing no more questions in the queue, and I would like to turn the conference back for any further remarks.

Thank you, Janine. Thank you, everyone, and Joe and I will be available for follow-up questions later today. Have a good day.

Ladies and gentlemen, thank you for participating in today's program. This does conclude the conference, and you may all disconnect. Everyone, have a good day.