“Project CapEx is increasing from the larger sale of gas backlog, a trend I expect to continue.”

In context

“The remaining decline primarily relates to EMEA, which had a 4% volume decrease led by on-site customers. Despite the lower year-over-year volumes, operating profit of $2.3 billion increased 15% and resulted in an operating margin of 27.9%, representing an increase of 440 basis points or 350 basis points when excluding cost pass-through. This profit growth was achieved from a combination of higher pricing, fixed payment contracts to mitigate volume decline and a stable cost structure. Every region achieved triple-digit basis point margin increases when excluding cost pass-through effects. EPS of $3.57 rose 15% from prior year or 16% when excluding the effects of currency. As Sanjiv mentioned, we remain confident in our ability to deliver an average EPS growth rate of double-digit percent. Project CapEx is increasing from the larger sale of gas backlog, a trend I expect to continue. However, despite the higher CapEx, return on capital reached another new high at 24.9% as our NOPAT continues to grow at a rate faster than the capital base. Slide 5 provides more color on capital management, including cash trends. Second quarter operating cash flow of $2.2 billion was only up 1% from last year despite the higher earnings. This is due to unfavorable cash tax timing, which increased almost $300 million in the quarter. These outflows will stabilize for the second half, and so I expect the OCF to EBITDA ratio for the balance of the year to be closer to the expected low 80% range. Available operating cash flow, which we define as OCF less base CapEx remained steady at $1.6 billion per quarter and thus provides ample liquidity to pursue our capital allocation policy, which you”