Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Robert Cornell - Barclays Capital
Robert Cornell - Barclays Capital
You mentioned that you hadn’t seen the bottom yet, did that include a comment on January as well, is January continuing to drop away?
Keith Nosbusch
January is continuing along the lines of our guidance for the remainder of the year so I would say January is similar to what occurred in November and December.
Robert Cornell - Barclays Capital
You gave the organic growth guidance the 12 to 17, how would you expect that to array as you go forward. In other words, none of the balance of your quarter is going to be exactly 12 to 17, its going to be a pattern. Are you going to see a greater then, are you going to have to have a greater then that decline because your first quarter is only down 5 so how do you see the other three quarters of the year laying out in terms of this organic growth guidance.
Keith Nosbusch
We see the second quarter dropping substantially from a sequential standpoint. But we expect similar declines year-over-year in each of the remaining three quarters.
Robert Cornell - Barclays Capital
So the exit rate of organic growth in the fourth quarter will be about what do you think, in your model, in your guidance.
Keith Nosbusch
At about the high end of the range.
Robert Cornell - Barclays Capital
You talk about the adverse margin effect being attributable to volume but did you actually have an inventory build in the quarter that’s going to have to come off in subsequent quarters.
Keith Nosbusch
Yes we did and that’s what we’re planning for to have that come down which will positively impact cash flow and negatively impact the margin line.
Robert Cornell - Barclays Capital
You saw October was decent and November and December fell off, obviously the whole fall off was surprising but when you look at it was there anything in particular as to that in terms of end markets, controlled products was off more then I expected relative to architecture software and that’s a bit of a backlog business, I’m surprised that that business has much of a miss relative to my model in A&S.
Keith Nosbusch
If you remember the split in controlled products and solutions about 60% is solutions and that actually did not fall off and so the magnitude of the fall off was in the product side of that business. The product side of that business is very heavily associated with MRO and I believe what we saw here was companies trying to conserve cash. It wasn’t just the fact that they were slowing some of their projects but they stopped buying MRO as a way to conserve cash over the last couple of months of the year.
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