Simon R. Moore - Director of Investor Relations Paul E. Huck - Chief Financial Officer and Senior Vice President M. Scott Crocco - Principal Accounting Officer, Vice President and Corporate Controller

Donald Carson - Susquehanna Financial Group, LLLP, Research Division P.J. Juvekar - Citigroup Inc, Research Division Vincent Andrews - Morgan Stanley, Research Division Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division David L. Begleiter - Deutsche Bank AG, Research Division Duffy Fischer - Barclays Capital, Research Division Kevin W. McCarthy - BofA Merrill Lynch, Research Division Robert Koort - Goldman Sachs Group Inc., Research Division Alina Khaykin Michael J. Harrison - First Analysis Securities Corporation, Research Division Jeffrey Schnell - Jefferies & Company, Inc., Research Division Mark R. Gulley - BGC Partners, Inc., Research Division Michael J. Sison - KeyBanc Capital Markets Inc., Research Division David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division

Good morning, and welcome to the Air Products and Chemicals' First Quarter Earnings Release Conference Call. [Operator Instructions] Also, this telephone conference presentation and the comments made on behalf of Air Products are subject to copyright by Air Products, and all rights are reserved. Air Products will be recording this teleconference and may publish all or a portion of the teleconference. No other recording or redistribution of this telephone conference by any other party are permitted without the express written permission of Air Products. Your participation indicates your agreement. Beginning today's call is Mr. Simon Moore, Director of Investor Relations. Please go ahead, sir.

Thank you, Gwen. Good morning, and welcome to Air Products' First Quarter Earnings Teleconference. This is Simon Moore. I'm pleased to be joined today by Paul Huck, our CFO. As we announced in October, Paul will be retiring at the end of February. I'm also pleased to be joined by Scott Crocco, who will succeed Paul as CFO. Paul will review our overall Q1 results, I will review the segments and Scott will provide our outlook for Q2 and the rest of 2013. We issued our earnings release this morning. It is available on our website, along with the slides for this teleconference. Please go to airproducts.com to access the materials. Instructions for accessing the replay of this call beginning at 2 p.m. Eastern Time are also available on our website. Please turn to Slide 2. As always, today's teleconference will contain forward-looking statements based on current expectations and assumptions. Please review the information on these slides and at the end of today's earnings release, explaining factors that may affect these expectations. Now I'll turn the call over to Paul.

Thanks, Simon. Good day, everyone, and thanks for joining us. Let me start by saying it's been a pleasure working with all of you over the past 9 years. I will truly miss it. Let's turn to our results for the quarter on Slide #3. Our overall earnings per share results were in the top half of our expectations. However, softer-than-expected economic growth in the U.S., a deeper contraction than expected in Europe and continued soft volumes in China and a weaker electronics market prevented volumes from growing as much as we had hoped. Despite the weaker economic environment, we continue to take actions to improve our businesses. Pricing held firm. We are almost complete with our Europe restructuring actions, and our plants ran well. We also repurchased 5.7 million shares this quarter. We did this opportunistically when we saw the weakness in our share price in the fall. Our cash projections had us repurchasing shares later in our multiyear planning cycle. When we saw the weakness in the price, we decided to move the repurchase forward. Overall, we spent $462 million and paid an average price of $80.69 per share. We still have a little under $500 million left in our repurchase authorization. Our cash priorities remain the same, investing in good high-return projects, increasing our dividend each year and maintaining our A bond rating. For the quarter, sales of $2.6 billion were 10% higher versus prior year, with the Indura and DA NanoMaterials acquisitions contributing 6%. On an underlying basis, sales were up 4% on higher volumes in our Tonnage Gases segment across all regions. Our Equipment and Energy segment and our Performance Materials business also posted strong year-on-year volume improvement. Not surprisingly, this was partially offset by weakness in our European Merchant and Electronics businesses. Sequentially, overall…

Thanks, Paul. Please turn to Slide 5, Merchant Gases. Merchant Gases sales of just over $1 billion were up 14% versus prior year, driven by the Indura acquisition. Underlying sales were down 1% on 3% lower volumes and 2% positive price. Sales were down 1% sequentially, underlying sales were down 2% on 1% positive price and 3% lower volumes due to seasonality. Merchant Gases operating income of $171 million was up 3% versus prior year and up 6% sequentially. Segment operating margin of 16.9% was down 180 basis points compared to last year but up 110 basis points sequentially. Versus last year, operating income was up on the benefits from our Europe cost reduction programs and profits from the Indura acquisition, partially offset by lower volumes, particularly in our Europe packaged gas business. Overall, we are pleased with the performance of the Indura business. We continue to see solid growth in the base business and are excited about a number of small on-site opportunities that bring together Indura's local knowledge and our on-site expertise. As we have said, given Indura's large hardgoods business, their margins are in the low double digits, about what we expected but below the Merchant segment average. For the quarter, Indura negatively impacted segment margins by about 80 basis points. Margins were also impacted by the lower volumes and higher pension costs. Versus prior quarter, we did see the expected seasonal volume weakness and higher pension costs, but improved productivity and prior quarter Indura acquisition costs improved margins. Let me now provide a few additional comments by region. Please turn to Slide 6. In U.S./Canada, sales were up 2% on 1% higher volumes and 1% higher price. Liquid oxygen, liquid nitrogen volumes were up on strength in chemicals, foods and metals. We continue to be successful…

Thanks, Simon. Now please turn to Slide 10, and let me provide you a brief summary of our outlook. From an economic perspective, we still expect modest but improving growth in FY '13, with global manufacturing at the low end of our 2% to 4% range. In the U.S., inventory de-stocking and fiscal cliff concerns negatively impacted manufacturing in the first quarter. The pending debt ceiling and spending debates add to uncertainty, which depresses hiring and investment and lowers consumer confidence. Going forward, we expect slow but modestly improving growth, driven in part by the recovering housing market and the Fed monetary policy. In any scenario, reduced government spending will lower 2013 growth. So overall for the year, we expect U.S./Canada growth to be close to the low end of our 2% to 4% range. Europe is in a recession now, and we are forecasting slow improvement through the rest of the year. In China and throughout Asia, there were some positive signs in manufacturing in Q1 driven by stimulus spending. We expect to see the benefits of this in the second half of the year. In electronics, industry production is weaker than last year, and fab utilization has softened. We expect this to slowly begin to recover in the second quarter. Our full year EPS guidance is $5.70 to $5.90, up $0.05 from our previous guidance, with the positive impact of the share repurchase partially offset by the slower economic environment going forward. CapEx is expected to be about $2 billion, consistent with the more focused guidance we gave in November. And our backlog is at $2.8 billion, down slightly from last quarter, as we brought onstream a number of projects. As we have said in the past, it is not unusual for the backlog to move around quarter-to-quarter.…

[Operator Instructions] And we'll take our first question from Don Carson with Susquehanna Financial.

Yes, 2 questions actually. On the inventory revaluation in Electronics, I know in the past there's been offsets to -- within the corporate line. Did that occur this time? And am I correct in saying or in understanding that you expect to reverse this as the year goes on? And then just secondly, how much of the European $60 million of restructuring did you get? I think you had $40 million left to come there.

I'll take the second, Paul, if you take the first.

Okay, yes. On the inventory, Don, there is some offset which occurs in the -- in there, but there are impacts which occur in the Merchant area also. And those -- and that offset is really around what occurs on the LIFO accounting, and the bulk of that is offset against the Merchant area for us in this quarter. So there is a small impact there. But for the large part, the Electronics and Performance Materials segment, that flowed directly through to the bottom line in the consolidated results.

And the second question, Don -- this is Scott. In terms of the Europe restructuring, we're on track to wrap that up by the end of the second quarter. And we saw in this quarter about a $0.03 benefit. And as we take the actions then going forward, we expect to have that step up modestly in the second quarter and then to get to a run rate of about $0.05 per quarter, $60 million or so on an annualized basis. So consistent with what we've said in the past, we would expect to see in fiscal '13 about a $0.15 favorable impact from the cost-reduction actions in Europe.

And we'll go next to P.J. Juvekar with Citi.

Can you talk about your utilization rates in Merchant business by region? And given some low rates, is there any possibility of consolidation of merchant facilities in any region that you can do?

Yes. Great, P.J., good question. So let me just go over the numbers that we talked about. So for the U.S./Canada -- and again, these are our LOX/LIN utilization rates. So in the U.S./Canada, the low 70s; in the Europe, high 70s; and in Asia, in the mid-70s. And I think one of the things that as I know you know in this business, we have a very modest distribution radius for product out of these plants, perhaps 100 miles. And so in that environment, it gets very difficult to create value just by shutting down capacity. It's certainly something that we look at on an ongoing basis, but it isn't really one of our expectations for one of the big drivers going forward. We are working hard to bring load to those facilities. We're doing that in a disciplined manner relative to pricing with our applications expertise and loading up our sales teams. So as we said, that's one of our big opportunities going forward as those assets load up.

So I understand that -- sorry, go ahead.

P.J., I think the thing is, as Simon said, our pricing has been good in most regions here as we go through. And so we don't think the utilization rate is impacting pricing.

No, I understand that you don't transport gases in Merchant more than 100, 200 miles. But is there a way you can do piggybacking on on-site projects and then shut down some older merchant facilities?

So I think anytime that we have an opportunity to do that, P.J., we would absolutely take a look at that. To be honest with you, in U.S./Canada, there's only a modest amount of new ASU on-site opportunities. So again, we look at that every time. I just -- I guess my point is I don't think that's going to be a huge driver of the growth going forward. I think more of an opportunity is to leverage the economic recovery that we're expecting to grow the volumes.

And then secondly in electronics, there was a sequential decline. How much of that was seasonal? And then you talked about equipment decline, can you just talk about how much was equipment versus gases and chemicals?

So P.J., this is Scott. From a sequential in electronics, it's about half between equipment and materials and heavily driven from a materials perspective from seasonality.

We'll go next to Vincent Andrews with Morgan Stanley.

Could you talk a little bit more on -- you talked about electronics rebounding in your 2Q, or I assume that was your 2Q and not the calendar 2Q. What gives you the confidence in that at this point? And what signposts should we be looking for to know that that's actually happening?

Yes. It's a good question, Vincent, thank you. I think a couple of things there. First of all, obviously, we just talked about the seasonal pattern, right, and we recognize Q1 as typically weak. We typically see improvement through the year. So I think, to some degree, you would expect a typical seasonal pattern. I think as we talked to some of our customers, that's the feedback that they're giving to us. They wouldn't be surprised to see utilization rates be a little bit soft here but then continue to improve through the back half of the year. And again, as we look at what some of our customers are talking about, they're also looking, for example, I think both Intel and TSMC have pretty robust capital spending expectations for this upcoming year of 2013, which obviously goes to one of the concepts we've been talking about, that the big, strong players in this industry are the ones who have the ability and the capacity to continue to invest in the new fabs, and those are the companies that we're the leading supplier to.

Okay. And just as a separate follow-up to that. I believe in the 2Q guidance you gave, you were talking about sort of the annual outages in refineries as being a negative for this quarter, for your second quarter. And just help me understand, I mean, it's obviously -- there's got to be some mismatch between the size of the outages this year and last year and so forth, right, because otherwise, they're annual and there shouldn't really be a comparable issue. So what's the difference this year versus last year?

As far as that's concerned with that, Vincent, is that in last year and this year, the outages are probably about the same from a maintenance standpoint. We had -- our plants ran better in Q1 of this year than they ran in Q1 of last year. And so we had some plant issues in Q1 of last year which we talked about at that point in time. We are over them, and so we had a very good first quarter in that. As you look at this, the high point for turnarounds is typically our quarter 2 for the refineries. There's also turns which occur in quarter 1 and quarter 3. There's not that many which occur in quarter 4, we think. So this is typically the high point for the maintenance activities which we would normally expect. The aberration was more in the prior year than in the current year.

And related to your own productivity versus the customer?

For last year, yes.

And we'll go next to Jeff Zekauskas with JPMorgan. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: When one reads accounts of Chile, there's a sense that electricity prices have really moved up. Can you give a sense of Indura's margins on a sequential or year-over-year basis and the volume growth pro forma year-over-year? How's that acquisition doing?

Jeff, this is Scott. The acquisition is doing very well. We're very pleased with the business that we've acquired, and we've seen all sorts of opportunities. I'll remind you, too, that this acquisition was -- we had some cost synergies, but it was heavy on -- from a growth perspective. And in the early days here, we've been able to identify several small on-site opportunities in steel and glass, and we're pursuing them. So we are very pleased with the acquisition. In terms of your question of margin, as we've said before, to be in the low teens, given that the nature of that business is more in the hardgoods. But we do see sequential growth not only from the markets that we're in, but also, as I've mentioned, from our offerings. And as we expand and identify more opportunities, both from small on-sites, as well as in the applications arena, we expect to see continued good growth. So we're very pleased with that. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Okay. And then your pension contribution, I think, was $320 million in the quarter. Are you...

$230 million. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: $230 million, I misspoke. I'm sorry. Are you expecting to contribute under $300 million this year or what's your expectation?

Yes. So -- Scott again, Jeff, modestly up from the $230 million, won't be $300 million, $275 million or so for the year.

And we'll take our next question from David Begleiter with Deutsche Bank.

Scott and Paul, just on the backlog, I know it does move up and down. But would you expect the backlog at year end to be higher or lower than it was at the end of Q1?

I would say -- so this is Scott, Dave. As you mentioned, it's lumpy, especially as we've got more larger deals, China gasification and so forth. But I would expect it to end the year about where it is now, kind of bumping along but moving sideways. Again, a lot of good opportunities that we're out there looking at.

And just Europe, Scott, I know it's been under a lot of scrutiny, restructuring and management changes. Has a corner been turned in Europe? And what's the margin potential in the European Merchant business from where it is today and where can it be in 2, 3 years if filings pick up and pricing holds?

So from a cost perspective, as I mentioned, we're running through and almost finalized with the provision. But I also say that we're focused on additional cost reductions beyond simply people reductions. We've got a lot of initiatives going on from a supply chain perspective, as well as trying to push price. And as you saw in our results, we do have prices up. So in terms of where could it get overall, we're looking at this and trying to make substantial, continued improvement, recognizing that the economy in the short term and for some time is not going to be a big tailwind. And so we're going to continue to drive the business and do what we need to do in order to get it profitable, both from price and cost. But hopeful, again, from a volume perspective, through applications and making sure that we're going after the right customers and the right locations to drive margin improvement.

And we'll go next to Duffy Fischer with Barclays.

Let me just add my thanks to Paul for all the years you've put in. Thank you.

Thank you.

When you look at the Asia volumes being flat, we've seen your competitor come out this morning with bigger numbers there now. Some of that may be new start-ups. DuPont yesterday was kind of talking about 8% sales growth in Asia. To be flat seems like one of the disappointing areas of this quarter. Can you kind of talk about what you think volumes are doing in Asia and kind of how you're doing relative to the market in Asia?

Yes. Duffy, this is Simon. Good question. And of course, I know that you know one of the big differences is, when we talk about this region, we're just talking about our Merchant business, right, and whereas other people are talking about the impact of Asia of their whole company. So for example, if you had large tonnage plants starting up in Asia, they'd be included in the other guy's Asia comments but not in ours. And I know you know that. But just if I could then focus on what we've seen in Asia, couple of different things going on. We commented that argon has been particularly soft in Asia in our Merchant business. And you have a dynamic there of some of the steel companies who own their own air separation units. Sometimes, they need a little bit of extra argon. If they're not running as hard, they actually have a little bit of extra argon to put into the marketplace. So that has impacted our wholesale demand for argon, as well as soft photovoltaics market. Again, as we said, LOX/LIN volumes have been up x conversions about 2%. So that's a positive. Obviously, we're working hard to make that number larger. We've also seen a little bit of softness in our cylinder business in Asia. And as we commented, we've done some things to focus on the higher profitability customers, so have done a little bit of business-shedding there as well. So we do expect to see a pickup in economic activity and volume growth in the back half of our year in Asia, particularly in the Merchant business. And again, just as a reminder, we have a lot of significant asset investments in the Tonnage business that are expected to come onstream this year as well in Asia.

Great. And then the opportunity with the on-site businesses around Indura, roughly what are we talking, 2,000, 4,000, 6,000 tons per day? I mean, what's the cumulative opportunity over a 2- or 3-year period there look like?

Yes. And Duffy, this is Paul. If you take a look at that, the thing which we're looking at are what we would call the small generated gas type of plants. So typically, most of your opportunities there are going to be under 100 tons a day, but they turn out to be a good opportunity for us, very nice things which we do. And we are finding a lot of them principally because the business was focused on packaged gas previously. And so now as we bring our applications expertise into this country, we think we're going to be able to sell a number of these plants over the next few years.

And we'll go next to Kevin McCarthy with Bank of America.

I guess following the sizable share repurchases in the first quarter, your net debt's up to about $5.4 billion or 2.2x to 2.3x trailing EBITDA. I guess 2 quick questions. First, how does that compare at this point to what you would consider optimal leverage? Is there room to take that higher? And related to that, did you purchase any additional shares in January? And would you care to venture any thoughts on the likely pace of execution on the remainder of the authorization?

If you take a look at our leverage overall, right now, it's on the high side, so -- because we move the share buyback forward with those things for where we would like to run it. Now as far as buying back shares in January, no, we haven't. As far as a buyback in the future -- of this year, we would look at this from an opportunity standpoint. As you can see is that we bought the shares at a low price. If the stock does drop down, we would look at that again.

Okay. And then second question if I may on Tonnage. Can you refresh us on projected start-ups in the March quarter, other projects that may be ramping if we're thinking about sequential contributions to growth?

I'm sorry, yes. Sorry, Kevin. Yes. So we've updated our major projects slide in our package, and we do have some projects that we expect to come onstream here soon. So particularly in the second quarter, really the Yankuang project in China will come on stream. In the third quarter, we would expect to see PetroChina in China. That's, again, very exciting project, as it's the first steam methane reformer, the first hydrogen plant that's ever been outsourced by a state-owned oil company in China, so a great opportunity. And then we have some electronics projects that are expected to come onstream later in the year. So that's kind of the framework of how things look for the rest of the year.

And we'll go next to Robert Koort with Goldman Sachs.

Wanted to ask a question on the U.S. Merchant business. You guys had taken some lumps previously on the performance there, and you mentioned that the new signings were above the prior year and that your lost customers were below prior periods and more normal. Do you have a net win when it comes to new signings versus lost business?

Yes, we do. Yes, absolutely, Bob. And I think I would just -- for the quarter, that is absolutely the case. We had a lot more new signings, lot more new business coming onstream. Obviously, when you look at the year-on-year comparison, right, we see some of the business that was lost through the second half of last year.

Okay. And then maybe a longer-term question. As we see shale gas continue to expand in the U.S. and the promise of a lot more light oil, does this diminish the hydrogen business at all? You've always talked about more heavy sour crude slates, but it looks like the U.S. market is maybe moving opposite to that. So how does that impact your business?

As far as that is concerned, it depends where that goes. For right now, as we look at this, there's still a good amount of heavy crude which comes into the refiners, which they process. And it also gets around what sort of the product mix which they make. We've talked about this before, that as they tend to move more and more to more transportation fuels, even a light sweet crude, they wind up cracking that further down. So as the U.S. market, especially the Gulf Coast where we have a large presence, turns into more of a market for export, that -- and that's going to favor more use of hydrogen and principally, the export which is going out is diesel, which is the heaviest consumer of hydrogen in the mix.

And we'll go next to John McNulty with Credit Suisse.

Yes. This is actually Alina Khaykin, sitting in for John. Quick question on the guidance. I believe you've raised the midpoint by a bit. So what has changed since last quarter? Is it more restructuring, is it the share repurchases or is it faster growth in some of the markets?

So this is Scott. If you look at the impact from the share repurchase, roughly $0.10 up from what the previous guidance was. But then given the economic situation that we're in and the environment that we saw in the first quarter, and as we talked about a decelerating momentum through the quarter, we've taken that down by about half, just given the uncertainty of the economic growth going forward. And so that's what translates into taking it up by about $0.05.

Okay, got it. And then on Indura, how are you progressing towards the $20 million synergy target? And could there be upside from that?

As I mentioned before, we're progressing very well. And again, the cost synergies are relatively modest, driven more from a corporate governance and an oversight, and we're on track there. But really, this acquisition was driven by the top line growth synergies that we can bring, marrying their local knowledge in the hardgoods business with our application knowledge and on-sites. And so, as I mentioned before, very happy with the acquisition. It's running very well, and we look forward to continue to drive top line growth in that new market.

We'll go next to Mike Harrison with First Analysis.

Just looking at the Tonnage business, how much of that hydrogen spot volume growth do you think is sustainable and sort of driven or supported by the pipeline? And how much of that was more temporary, driven by the competitor issues that you referenced? And can you maybe address, while you're talking about the pipeline, any surprises, pleasant or otherwise, since the pipeline has been up and running for 4 or 5 months now?

Great. Mike, good questions. So again, if we just kind of break down the Tonnage volume growth, we said about half of that was from new projects. So obviously, that's sustainable. The other half was from base business load-up. And I think of that base business load-up, probably half of that was increased volumes in the U.S. Gulf Coast. So to be honest with you, we call them spot volumes for a reason. There was an opportunity here where customers' demand exceeded their capacity to get product from somebody else. And we were extremely pleased that the pipeline enabled us to literally move product from one region to the other, support these customers in their time of need and also create a good opportunity for us. So one of the things we talked about in our sequential guidance going forward is we wouldn't be surprised if we saw a little bit of softening of some of those spot volumes. But again, those are exactly the opportunities and exactly the reason why we invested in the pipeline. In terms of the pipeline, I think things are going very well. The team's becoming very familiar with that and emphasizing how to best utilize it. We're getting the efficiency benefits that we expected out of it. And I would say probably, since it's come onstream, I would say the volume opportunities have perhaps exceeded our expectations as well. So things are going well down there.

And then just looking at the Merchant business, a couple of questions. One, how much of a headwind was helium under U.S./Canada Merchant volumes? And then can you give a little bit more detail on the LAR business in the U.S. and what steps you had to take in order to alleviate the supply constraints that you were facing?

Yes. So I think as we've said a couple of times in terms of helium, but overall, as well as in the U.S./Canada, it was down in U.S./Canada. So it has a little bit of an impact on the top line. I think, overall, for the company, not much of an impact. And as we said before, given the teams out there working very hard to drive price increases, it has a very modest bottom line impact. In terms of argon, obviously, I think we talked about this at our event in November, some examples of where we're worked hard to improve the recovery of argon at certain plants and also improve the purification. So it's not one single project, it's a matter of getting a little bit more argon out of a few different locations. And again, I'd just also point out that we've seen a little bit of demand softening as well. So argon, really, I think we would say, generally speaking, was not a constraint during the quarter.

And we'll go next to Laurence Alexander with Jefferies. Jeffrey Schnell - Jefferies & Company, Inc., Research Division: This is Jeff Schnell on for Laurence. Just going back to Europe, you mentioned that Europe is in a recession. But have you seen any signs of a stabilization or conversely, are any regions within getting worse?

This is Scott. So we actually saw in the first quarter a deceleration and a bigger impact from the holiday slowdown. Now early on, we're just partially way through January, we have seen that turn, and we are hopeful that as we get past the holiday slowdown, that we see sequential growth not only in the second quarter, but then through the rest of the fiscal year. In our forecast, we anticipate that for the full year, we get back about even, slightly unfavorable overall from a manufacturing output in Europe. Jeffrey Schnell - Jefferies & Company, Inc., Research Division: And then you mentioned briefly in your prepared remarks, but can you talk about which projects and regions you're seeing customers scale back on CapEx? And are you seeing an increased reluctance on behalf of these customers to sign larger contracts given the uncertainty?

And so as far as that's concerned, we said the gasification area in China is still plowing forward, so we're seeing contracts occur there. Then if we turn to the hydrogen contracts in the U.S. and around the world and also if we turn to electronics, we are seeing customers hold back. Certainly, within the U.S., investment plans are holding back somewhat because of the uncertainty around tax rules and things like that, which are holding back things.

We'll take our next question from Mark Gulley with BGC Financial.

I want to talk a little bit about what's happening in Algeria. Is the unrest there hurting your ability to get helium recoveries from the facility there, and whether or not you're seeing any pressure on future LNG projects due to political uncertainty in that region?

As far as that's concerned, Mark, we haven't seen an impact on our plants for helium in Algeria. The place where this occurs is pretty far from our plant, with that is concerned. But it's a situation which we obviously watch, and we want to be able to get people and to have the country still work and be able to ship product out. So we'll watch that. As far as the impact on future LNG projects, I don't think anyone -- I don't think the situation here is going to have a single impact here on people looking at LNG projects. They know the Middle East is a tough place to operate. They've operated there for years with these projects, so I'd still see projects going forward. The other thing is that a lot of the development on LNG right now is really occurring in the Australia area and Indonesia area.

Okay. And then secondly, on the structure of the balance sheet and leverage, I do applaud your share repurchase plan and that sort of thing. But if I look at your cash flow statement, it appears as if you're having to borrow to pay the dividend, that is your free cash flow is not quite supportive of the full dividend payment. Is that something that would concern you, Scott? And how should I think about maybe the potential for future dividend increases if I'm right on my logic?

Yes. Mark, I'll let Scott speak on this. One of the things which you got to realize here is that as we invest capital, new capital for growth, we do increase our borrowing activity. So it looks like we are going to borrow to pay a dividend. In actuality, we are leveraging our product -- our projects as they go in. We make an equity contribution and a debt investment in these things -- for those things. And so -- and that depends upon the type of project. Certainly, an on-site project, which we're seeing a lot of our projects being right now, we're putting a lot more debt against those projects for us. In general, I don't see this concerning us going forward as far as the structure of the balance sheet.

But just to build on that, obviously, the focus going forward is going to be expand margins and bring those projects onstream, on time and profitably, load the assets, and so looking to generate more cash out of the investments that we've made through margin expansion.

And we'll go next to Mike Sison with KeyBanc.

Nice start to the year, and have fun there, Paul.

Thanks, Mike. I will.

In terms of Tonnage, you had a nice start to the year. Any changes to the outlook for the contribution for earnings this year? Is it still the same? Is there a potential for upsides, a little bit early to tell maybe?

Well, on Tonnage -- and they have had a good start to the year. You're right, poor thing. I think towards the top end of the range, you're going to look at that as one of the things which is going to drive us there. So perhaps as we look at the full year that -- and that we have business which is going well, and we hope is continue to go well.

Okay. And then second question in terms of the outlook for silicon growth, you were at mid-single digits at the beginning of your fiscal year. Any changes to that? Maybe give us a feel for how the first quarter went so we can see how that's expected to unfold as the year progresses?

So this is Scott. In general, no change, but we would expect it to be a little at the bottom end of that range that we gave before.

And we'll take our last question from David Manthey with Robert W. Baird. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: I was just wondering if you could quantify the maintenance impact this quarter. And just -- is this a factor, as you talked about before, where it was different last year than it is this year and therefore, there's the year-to-year impact as opposed to being significantly higher this quarter? Or was it just higher this quarter for some reason?

Yes. If you take a look at that, the impact was about $0.03 a share for us versus the prior year... David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Right. I'm sorry, it was lower this quarter $0.03 relative to...

In this quarter against the prior year, that's right. And as I said, it was the prior year amount of spending which we didn't expect going into the quarter 1 of last year, but we had about $0.03 a share which was favorable year-over-year. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Okay. So having said that, as we move forward, the level we're at now is a more normal level, is that what you're saying?

No. I think as we move forward, so if we go into quarter 2, right, as we look at quarter 2, quarter 2 is going to be down in the Tonnage area because of increased maintenance, which comes about by the turnarounds. And we get -- and not only the cost impact, but we also get the volume impact of that flowing through also.

Okay, thanks, everyone. Please go to our website to access a replay of this call beginning at 2 p.m. today. Thank you very much for joining us, and have a great day.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.