Question-and-Answer Session
Operator
Thank you. We’ll now begin the question and answer session. (Operator Instructions). Our first question comes from Terry Darling of Goldman Sachs
Terry Darling - Goldman Sachs
I am just trying to decipher what you are really telling us with the low end of 3Q guidance and if I take the low end of revenues and the high end of restructuring and the high ended tax, and kind to try to solve for what the detrimental margin assumption would have to be on a 2% sequential drop in revenues, its like a 60% detrimental, if I have got the math right. I’m just trying to figure out what would have to happen for that to actually occur, is there some pricing concern? Was there something in the second quarter that you know maybe feels little one-time? Any help on that for us?
David Speer
Well, I think if you look at the you know, the revenue range, first of all you have to understand that the third quarter has built into it the normal seasonal weaknesses that we expect to see in Europe is, that’s a heavy period of vacations, and in fact, we shut down. So that’s a sequential comparison. We expect the third quarter even on a normal basis is somewhere in the 5% range lower than our second quarter.
I think obviously the broad ranges lead to some different calculations that could lead you to look at comparisons such as what you've made given the broad range of activity. Clearly, the trends we saw with the margins in the second quarter improving to 9.9%, our base assumptions would have those margins north of 10% during the quarter and I think if you look at all ends of this, you know the range of earnings therefore before becomes much broader as Ron pointed out, it's a range of improvement over Q2 of 8% to 42%.
So obviously, a pretty broad range. So I think in terms of the math on the low end you could end up with I guess, a calculation I haven't done it that would have detrimentals like that, but I think the likelihood of detrimentals like that based on those revenue assumptions are remote.
Terry Darling - Goldman Sachs
That's helpful. And then if we go to the high end of the range just on the revenue discussion, which segments would you expect to be the driver, is that mainly transport or there are some other segments that you know are obviously uncertain at this point what will be most likely to be driving that kind of a sequential improvement?
- To read the full transcript on Seeking Alpha, click here »
