Good day, ladies and gentlemen, and welcome to the Colfax Corporation First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to hand the conference over to Terry Ross, Vice President of Investor Relations. Please go ahead.

Thanks, Karen. Good morning everyone, and thank you for joining us. My name is Terry Ross, and I'm Colfax's Vice President of Investor Relations. With me today on the call are Steve Simms, President and CEO; and Scott Brannan, our Chief Financial Officer. Our earnings release was issued this morning and is available in the Investors section of our Web site colfaxcorp.com. We'll also be using a slide presentation to supplement today's call, which can also be found on the investor section of the Colfax Web site. Both the audio of this call and the slide presentation will be archived on the Web site later today, and will be available until the next quarterly call. During this call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties including those set forth in our SEC filings. Actual results might differ materially from any forward-looking statements that we might make today. The forward-looking statement speak only as of today, and we do not assume any obligation or intent to update them except as required by law. With respect to any non-GAAP financial measures during the call today, the accompanying information required by SEC Regulation G relating to those measures can be found in our earnings press release and supplemental slide presentation under the Investors section of the Colfax Web site. Now, I'd like to turn it over to Steve.

Good morning everyone, and thank you all for joining us today. Earlier this morning we reported our first quarter results which were in line with our expectations. Adjusted EPS for the 2015 first quarter was $0.36 per share which demonstrated strong operational execution and aggressive cost control, given the lower volume in the quarter. This adjusted EPS represents a 16% decline versus the $0.43 per share reported last year, driven by foreign exchange translation and the timing of project orders, especially in gas and fluid handling. Net sales were $911 million for the first quarter, a decrease of 14% over the same period last year. This consists of 10% growth from acquisitions offset by a negative 11% impact from foreign exchange, and a 12% organic volume decline. We previously provided guidance for lower revenue in the quarter due to the timing of large projects in gas and fluid handling segment, and the end of SCR-related spending in China, but additional strengthening of the U.S. dollar further reduced reported revenue. Turning to our business segments, as expected, gas and fluid handling net sales for the first quarter were $422 million, an organic decrease of 17% compared to $574 million in last year's first quarter. Adjusted operating margins for this segment were in line with expectations at 8.6% compared to 9.8% in the first quarter of 2014. Orders for the first quarter were $447 million, down 15% organically. Overall, we saw another strong quarter for bookings in oil, gas, and petrochemicals offset as expected by weaknesses in power generation. As in previous periods, I will note that the timing of large project orders makes comparisons across sectors and quarters difficult. We see this dynamic when we look at the largest gas and fluid handing end market, power generation. As expected, revenues for…

Thanks, Steve. As Steve mentioned earlier, sales for the first quarter were $911 million, down 12% organically, compared to the 2014 first quarter. Foreign currency declines across the Board, but most significantly in Europe, Russia, and Brazil were an 11% drag on our reported revenue performance. Adjusted operating income was $81 million, representing an adjusted operating margin of 8.9% for the first quarter, flat to the prior year, even with the lower volumes. Fabrication technologies adjusted operating margins were 11.7%, up 50 basis points from the 11.2% in the 2013 first quarter -- 2014, excuse me. While slightly below our expectations due to lower than expected volumes on both ESAB and Victor products, it was a strong margin performance in light of these factors. As Steve mentioned, adjusted operating margins in gas and fluid handling represent solid performance in light of the very low project-related volume in the first quarter. Excluded from the adjusted results are restructuring costs of $3.8 million incurred in connection with the cost reduction projects. Corporate and other costs of approximately $12.4 million were in line with our expectations. Interest expense of $12 million for the quarter includes approximately $2 million of non-cash amortization of debt discount and deferred issuance costs, as well as facility fees and the cost of bank guarantees and letters of credit. Our effective tax rate for adjusted net income and adjusted net income per share of 29.5% for the quarter was also in line with expectations. Excluded from the adjusted tax rate is $13 million of tax benefits associated with the resolution of certain liabilities for unrecognized tax benefits. Working capital performance was in line with seasonal trends, and is significantly better than last year's first quarter. We finished the first quarter with a stronger balance sheet as we continue to improve our credit profile. Finally, backlog in gas and fluid handling segment was $1.35 billion at the quarter end. Our book-to-bill ratio for the first quarter was 1.06 to 1, matching the historical averages for the first quarter, but slightly elevated because of the low volume of project shipments that we've discussed earlier on this call. Our first quarter adjusted operating profit performance was in line with the updated guidance we provided on the fourth quarter earnings call. Although orders were below our first quarter expectations, our expectations for 2015 organic revenue performance remain unchanged. However, I do want to address the movement in currency translation since our last call. The U.S. dollar has continued to strengthen, most notably against the Euro since our February call. The currency movement since the February update would impact full year adjusted earnings per share by less than $0.05 per share. Therefore, we will not be changing our 2015 guidance range. Now, I'll turn it back to Steve.

Thanks, Scott. While end market conditions remain challenging, the first quarter results were largely in line with expectations. We continue to see improved operating margin and working capital performance across all our businesses as demonstrated by our performance in the face [ph] of lower volumes. This operating performance will deliver significant benefits when our end markets recover. In line with our prior guidance, we expect the second quarter to return to more typical order and shipment levels. Given the macro environment challenges, we also continue to expect 2015 will be a year without revenue growth, but with continued margin improvement. However, based on the growth initiatives we discussed at our December Investor Day, we expect bookings to turn upward in the second half, which will position us well for 2016. As I previously stated, our team is very focused on driving organic growth regardless of the external environment. We continue to invest in new product development and commercial processes that will move us toward our organic growth expectation of one to two percentage points above GDP. And importantly, the stronger more stable operating performance in our fabrication technology segment is allowing our senior leaders to direct more of their energy toward growth initiatives. We are also committed to our strategy of bolt-on acquisitions, and remain confident in the strength of our acquisition pipeline. I previously discussed a number of attractive opportunities that could be announced in the second quarter or early third quarter of 2015, and these opportunities remain active. In summary, we continue to make progress turning Colfax into a business that can perform at all market conditions and deliver superior growth organically and through M&A. With that I'd like to open the session up for Q&A.

Thank you. [Operator Instructions] Our first question comes from the line of Nathan Jones of Stifel.

Good morning Steve, Scott, Terry.

Good morning, Nathan.

Good morning.

I wonder if we could talk a little bit about the follow-on orders you've got in the Middle East for Howden. Obviously, nice order in the fourth quarter, some follow-on orders in the first quarter, and then another one in the second quarter. Can you talk about what you view as the opportunity there, what kind of timing you're looking at, can you continue to win orders this year? Just any color you can give on that?

Sure. Nathan, thanks for the question. The Middle East, as you know from Ian Brander's presentation in December is a major area of focus for the business, and so we continue to see progress and continue to believe that we'll see that progress throughout the course of the year. We don't know that we'll see in oil and gas the continuation of the strong momentum that we have experienced year-to-date. But we think that we're well positioned for that business as orders continue to move through our opportunity funnel on that vertical market. If we think about the power generation business, and study that for our Howden business, we've looked at that funnel and have concluded that it has grown significantly on a year-over-year basis. We know that of those orders that have been awarded our hit rate has increased versus our historical run rate. So we believe that on the power gen side we will start to see that business bottom, and experience order growth in the very back end of the second half.

And on the Russian business, I know investors were very concerned about how that business was going to react, but it sounds like investment in midstream is still continuing, you won a nice order in downstream there, can you talk about what the risks and opportunities are there for you going forward?

Well, we have been successful with three different orders awarded here in the first quarter. We're continuing to compete aggressively in that space, and again the opportunity funnel is sort of as we had expected. We don't see any significant growth beyond that as we think about our business in compressors and so -- or Howden in general. So we think that part of our business has generally been affected by many of the issues that we've spoken about in the past, and certainly teed up in December. So when the orders are being awarded we've been very competitive. We're not counting on duplicating this result in Russia through the balance of the year. If it does happen, honestly, we'll be thrilled with that. We are aggressively pursuing those opportunities. We think we're well positioned. You can see from our track record that we're winning at a nice pace, but we're trying to be fairly sober of what the opportunity looks like in Russia for Howden. On the ESAB side, Nathan, we continue to do well there. It's a very tough market place, but as I outlined in the comments, from an ESAB standpoint we believe that overall year-on-year we're probably flat. If we pull out the Ukraine, and with a flat trend in that market we believe we're building share.

All right, great, thanks very much.

Yes.

Thank you. Our next question comes from the line of Chase Jacobson from William Blair.

Hi, good morning.

Good morning.

Hi, Steve. So you touched on it a little bit, but the mix in fabrication technology, you know its shifted back a little bit more to consumables, a little bit more than we thought it would on a year-over-year basis, given the addition of Victor. You mentioned the port issue, but was there anything else that's worth calling out there? And then with that, when we look at the price mix headwind, how much of that was related to the mix rather than the price?

That's a good question. I didn't really comment on consumables, but to answer your question in a broader way, what I would say is that what we experienced particularly in North America was a real slowdown in our welding business tied to oil and gas. And we saw that throughout the Gulf region and also in Western Canada tied to oil sands. And as you know, those are key places or key markets for both our ESAB and our traditional Victor business, and so that's been the most significant variable affecting not only Victor, but the mix, so to speak. And so what we saw was that Victor experienced a decline here, as well as Australia. As a result we saw most of what you've noted in the price mix issue, most of that is tied to the mix problem tied to Victor there and in North America. Pricing, we believe continues to come through at about a 1.50 to 2, and so we think that's reading through, but the bigger issue we had was on the mix and that was tied to oil and gas, and that was driven largely in North America.

And I would add, I don't think there is any unexpected change in mix between equipment and consumables. The prior year numbers didn't include any of the Victor product, the numbers do vary a little bit from quarter-to-quarter due to seasonality with the fourth quarter generally being stronger for equipments. I don't think there's any particular notable trend in there.

Okay. And then I guess following up on the previous questions about some of these large project opportunities that you've been seeing in the Middle East in the gas and fuel handling business. Over the last month or so we've been hearing more, I guess I'll call it noise at this point, about pressure on the supply chain as it relates to oil and gas and energy infrastructure projects in general. Can you talk about what you're seeing there, I know Colfax is well positioned from a cost standpoint, but what you are seeing there in terms of not only competition but pressure from your customers on trying to get the price down further?

We haven't experienced that issue. And again, I would just reinforce again, most of our focus is on mid and downstream. I think we've been pretty consistent in that. So I believe much of the price pressure that I have read about and listened to in description tends to be a little bit more on the upstream side, and so we haven't run into that. And if you look at the key orders that we've flagged here, these are orders and partnerships that we've been working on for years, and so it's typically because of the technology solution that we're bringing to the problem and a very strong partnership. So the combination of technology, our expertise, and our support, particularly to Howden around this sector has given us the opportunity to not only win the orders but win the orders in a margin and pricing level very much in line with what we had anticipated. So we're not seeing the price pressure that you're referring to.

Yes, I would add that generally speaking we compete on the total cost of ownership is generally how the buying decision is made. It's not specifically on the actual, just cost of the project by itself.

Okay, thank you.

Thank you. And our next question comes from the line of Brian Konigsberg from Vertical Research.

Hi, good morning.

Good morning.

Mainly just starting on fab tech in the U.S., and just kind of back to the disruptions you noted during the quarter. I think when we talked about the outlook at the analyst meeting, I mean part of the anticipation was you would be able to claw back some of the share that you had lost over the last couple of years. Some issues [indiscernible] kind of reemerging. Is that still your anticipation, or is the view of recapturing that business changed?

For the most part, we did not experience any supply chain issues that were internal to us. The supply chain issues that I referred to were the West Coast port strike that we had earlier in the year. So from that standpoint we believe that most of the supply-related issues, particularly at midway, which is what you're probably referring to, Brian, that that issue is largely solved at this point. And so that also is why we feel that as we get to the back half of the year, particularly for ESAB, that we believe towards the later part of the year we'll see some increase. Because one, the operational issues are largely behind us; two, the customer conversions that we've completed are certainly reading through in the sales that we had anticipated. And honestly as you probably remember, we do have some comps that will probably be favorable for us as we get into that back half. We had the SAP or ERP conversion this past year, which was a bit of a struggle, and that will be behind us. And so we think that the back half will start to pick up. When we think about market share, we believe that certainly in North America we've been slowly stabilizing and building our position. As near as we can tell at this early point, our business is down in the mid single-digits, so slightly below what we're seeing from competition. So we did not capture share in the quarter in the U.S. for sure.

Great. And maybe just more broadly, can you maybe address the guidance a little bit more. So obviously first quarter was fairly week; to hit the guidance you need a pretty substantial ramp in both the revenue and also the earnings. I mean we talked about some of the order activity you believe can still be okay. You got some good orders in Q2, and you're anticipating some improvement in the second half. But backlog is down pretty meaningfully year-over-year now, and gas and fluid handling was down sequentially, maybe can you just give us a little bit more color on how you bridge from Q1 for rest of the year, and what are the big drivers?

Well, I think I can refer you back to the commentary that we made at December because I believe we look at our backlog -- we look at the more typical [indiscernible] type of business, and the year so far has essentially played out almost exactly as we predicted it would here in the first quarter, the difference between the revenue guidance and the reported revenue is purely foreign exchange. So there was no surprises in the operational performance here in the first quarter. As far as the backlog -- the backlog is pretty much exactly where it was on a constant currency basis, the deterioration in the backlog is almost a 100% attributable to the foreign currency effects. So essentially we're seeing the year play out as we expected. We were very clear that we expected the first quarter to be weak at the top line, and the second quarter to be more typical but not showing growth, and then we would have some growth in the back half. So I don't think anything that's happened here in the first quarter would cause us to change that, other than the comments I made before where the FX, as of today, would bring us down a little bit more, but the FX changes from day to day, so I think on balance we're comfortable with our guidance.

If I could -- I'll just add a couple f points, Brian, to your question about the order book and the optimism around it. Remember, again from December, we talked very clearly about two or three very important drivers to long term growth, and we believe they're starting to fall into place. One is the passage of environmental legislation in China to take on the issues of particulate emissions throughout the country. As we've said before, those standards are to be passed at the very end of 2015, or early 2016. Our teams are now beginning to see inquiries on our response plan to that impending opportunity or pending opportunities. So that was number one. That was one of the most significant opportunities that we flagged at the investor conference. The second thing that we talked about was the incredible level of activity that we have behind our compressor business, focused largely in the Middle East, but also our heavy duty fan business in the South East Asia, and power investments there. We've taken a very careful look at our opportunity funnels associated with that opportunity and we've seen that those funnels have increased in size. We've looked at the win rate of those projects which have come through the funnel. Our win rate has increased significantly; it's just above 50%. And so we believe that as we think about the heavy duty fan market, as well as compressors, the opportunities we identified in December are starting to fall in line with the way that we had anticipated. Finally, the other key part of our strategy for long-term growth, and midterm growth, is the aftermarket. We've taken a very careful look at that in general, and specifically in North America. And what we've seen there is, again, the size of our funnel has increased nicely, up in the high single digits. Our conversion rate is very solid. We've gone deeper in the funnel to make sure that for those planned shut downs, that the orders we have in the funnel are correlated there, so we feel that these are orders that will move through the system later this year. So we feel very, very positive about our ability to see this bookings pick up as we get into the back half of 2015.

Great, that's helpful, thank you.

Thank you. And our next question comes from the line of Jeff Hammond from KeyBanc Capital Markets.

Hey, good morning guys.

Good morning, Jeff.

Hey, just to come at the guidance from the welding side, because I think you were saying flat up to for the year, your core is down 6, maybe just speak to where you maybe have less feasibility or backlog, where your comfort level is getting back to flat up on a core level for welding? And then just separately, can you hit growth rates by geography for the welding business in the quarter?

If we look at the growth rates by geography, you know the way to look at it I think for this period is that in the North American market, as well as Latin America and Europe, we experience mid-single digits decline. The source of that decline is fairly consistent from region to region, to be honest. It's the -- oil and gas had a significant impact in our business, as I outlined in North America. The same would be true in Latin America, particularly as it relates to Brazil. We did experience solid performance in comparison at Peru, Columbia, and improved performance in Argentina, but overall, mid single-digit decline. In Europe, our business in total again was down mid single-digits. We would weight much of that decline to the situation of oil and gas. It would also add to that particularly in the Nordic Region and the U.K. slowdown in the offshore part of our business as well. So that's the picture that we've seen in the largest regions for our ESAB business. In Asia, overall, we experienced trends again about the same. We do have a year-on-year comparison where we have very large capital order in last year's first quarter not present here, so if we were to remove that we would still see pretty good growth there, but it's tied largely to a one-time chunk of business in the prior year. As we think about ESAB, specifically, Jeff, in our optimism for the back half of the year, it goes back to a bit of what I highlighted a minute ago, and that is we believe that the operating challenges that we've been struggling with largely in North America with Midway are largely behind us. We've gone through and examined the conversions that we won in a number of different states, not only in the U.S., but also in the Mexico, and Canada. That volume and order rate is coming through as anticipated if we look at the forecast and our work with the customer. So we believe that those two variables are true not only in North America, but elsewhere around the world. And then the third component that I highlighted a minute ago was the fact that for ESAB the comparisons on a year-on-year basis become a little easier as we move into quarter three and quarter four. A year ago, we were dealing with the SAP conversion issues, a number of issues related to suppliers [ph]. So I think those reasons give us the optimism for our ability to hit the forecast for ESAB in the back half.

Okay, great. And then just to follow-on on the China legislation, is this -- I guess do the orders typically come, right, when this comes in place, do you typically see China start to mandate and force us right away, and what's kind of the lead time around once the legislation goes in versus you starting to see orders or shipments?

Good point. First off, the Chinese is -- based on our experience in SCR are fairly aggressive in enforcement of the rules and regulations. So we anticipate that this will move along fairly swiftly once it's solidified. The compliance timeframe is through 2020. So we've got a healthy timeframe to work through the opportunity. We've now been approached by number boilermakers and we're working in partnership to identify a variety of different solutions that we believe will fit the pending legislation. So I would anticipate that we may start to see orders toward the very, very tail-end of the fourth quarter, more likely in the first, and then from there just depending on the solution I think you can assume our normal time in terms of once we receive the order to the time it ships. It's anywhere from 12 to 18 months. And I think that kind of timeframe is probably what we are talking about as we roll that product or that solution out.

I think some of that could even come faster than that. I think the Chinese are very aggressive that as soon as they understand the regulations, and there is, as I'm sure you know, a significant need for this there. I think you'll see a pretty rapid turnaround both in orders in this year and revenue fairly early next year.

Okay, very helpful guys. Thanks.

Thank you. And our next question comes from the line of Kevin Maczka from BB&T Capital.

Thanks. Good morning. Can you hear me okay?

Yes, we can.

All right, great. So, first a clarification on the fab tech and the price mix, the negative 2.4 [ph] I think is the worst number we've seen there, but just to be clear, you're seeing the price component of that was still positive one to two?

Yes.

Okay, got it. And then, you touched on the growth rates in a business by region. Can you touch a little bit on share as well? Your big competitor reported this week and made some comments that they believe anywhere that they're taking share there and it look like, and I know the quarterly numbers can bounce around quarter-to-quarter, but it seem like their growth rate there in terms of volume was much better. So can you just address how share might be moving positive or negative in the different regions?

Sure. I think that in this period as near as I can tell also reading some of the same comments, I'm going to guess that we probably saw share erosion in North America. And I believe we were probably more significantly affected as I've outlined in the Gulf state regions as well as in the Western region of Canada with the oil sands. We believe that we're holding and building probably expanding share in Latin America looking at the same data that you referred to. From a European standpoint, which is a key market overall as we've described before, this has been a market where we've historically been losing share for many years, but probably beginning 18 to 24 months ago we stabilized share over the last 12 months, we feel it probably increased share. As we talk about specifically the first quarter we think our shares probably were about flat during the timeframe. I know that Lincoln posted very strong growth in Europe and my guess is that there may be a source of share loss elsewhere, but Europe is the one place where we have the best or most clear view of what's happened in terms of market share because of the panel data that's available, and because of the panel data we know that we've expanded share over that timeframe. So I would imagine in the first quarter in Europe we're probably flat in overall market share. In Asia, we've seen over time we believe an expansion of market share. My guess is we saw an increase here in share as well looking at the statistics that you referred to in the first quarter. In addition to driving top line as you know we've been very successful improving margin in Asia which has been our number one priority, but we've been able to achieve both organic growth and margin improvement at the same time. So that would be my quick overview of the key regions for ESAB.

Got it, thanks. And then just finally from me on Victor, it sounds like that one may be miss the internal plan on the top line as well, and Steve, I think you mentioned the port as well as the oil and gas in North America, can you just kind of parse that out a bit more? How much did the port really affect you? Are those sales that you expect to be made up quickly or was it really more of an oil and gas issue and may be that doesn't come back as quickly [ph]?

The port issue should come back based on the backlog and our ability to work that down pretty quickly. The oil and gas business is not something that we anticipate having a significant positive effect going forward; we've reflected that in our forecast for the balance of the year.

Okay. But again for the balance of the year you're still -- for overall fab tech keeping the positive zero to two, even though oil has gotten worse?

We are keeping in mind that we also had a fairly conservative, what we think is a conservative view on 2015, where we pulled together our guidance in December. So we believe that the guidance that we provided makes sense. We certainly reflected the softening in oil and gas and believe that we can deliver in the range that we highlighted here.

Okay, thank you.

Thank you. And our next question comes from the line of Mark Douglass from Longbow Research.

Hi, good morning gentlemen.

Good morning.

Steve, can you talk about the extent of the oil and gas decline in ESAB [indiscernible] above double digits since you're seeing the down mid-single organically? [Indiscernible].

Yes, we would peg the decline at above double digits for oil and gas. If we look at the -- to give you another sort of data point, if we look at oil and gas as a percentage of our total business I think as an industry, the industry takes [ph] it it's somewhere between 13% to 15% of the industry, and we probably say that's a pretty good parameter for where our business rests as well.

Right, okay. And then, the move from the Florence facility to Texas; is that mostly white collars or manufacturing that's getting moved at all, split between Texas and Mexico? And then if so, based on some of that issues with, I think [indiscernible] plan, what are you thinking as far as disruption, could that be enough to may be hurt your sales your ability to deliver later in the year?

Good question. First of all, it's a combination of both manufacturing and white collar positions as well. The specific area that you referenced there on the supply-related issues, we feel pretty confident about our ability to effect the transition because much of the product that we will be shifting, or products they were already manufacturing in those locations. So we see this as a -- well, first of all no plant shutdown is a pleasant thing, neither for the team of people involved in the shutdown or -- and no transition like that is an easy one, so it's tough to say that it's an easy one, but what I would say is that this is a transition, which should be very much in our sweet spot given the fact that at both sites we're already manufacturing these kinds of products. The transfer of capital should be fairly straightforward, and we've had to add relatively little headcount to take on the added production. And this is the second phase of two phases. We've already moved a fair amount of the business out of South Carolina, and we did that without disruption to shipping service levels or lead time. In fact lead times were improved as we've done that.

Okay, I'm sure Texas loves you and South Carolina hates you, but thanks for taking my questions.

Yes.

Thank you. And our next question comes from the line of Walter Liptak from Global Hunter Securities.

Hi, thanks guys. I wanted to ask you a question about gas and fluid handling, and, yes, in your commentary you talked about the LNG orders declining the rest of 2015. I wonder if we can get a little more color on that comment, is it -- are you seeing projects pushed to the right? We're seeing with other companies, capital projects pushing, or is that in line with previous expectation?

Walter, it's basically in line with our forecast and what we indicated in our Investor Day, what we've seen in the first quarter is performance that exceeded our expectations, and we're not anticipating that on the full year.

Yes, these projects take generally years from their start to when they result in a full order, so I think we're seeing it play out pretty much as we expected. As Steve mentioned, we had that, we had a very good fourth quarter and we had some additional successes here in the first, but the pipeline pretty much shift as we expected it to when we put out our original guidance.

Okay, looks good. And kind of similar question in general industrial, you sounded a little bit more optimistic about the funnel there, but with other companies we're hearing of projects pushing because of the uncertainty of the price of oil or whatever. I wonder if you'd comment on that general industrial.

Well, we've -- and again going through the industrial pipeline or the funnel opportunities from a sales standpoint, the funnel's very attractive for us. These projects particularly have relatively long lead time, but based on the status of a number of key projects there, we think that we will win those as the year unfolds. And as I mentioned in my comments, we actually think that we'll see growth on that side of the business for the balance of the year, both in terms of shipments and orders.

Yes, and I think the phenomenon that you see here in the first quarter is largely related to the significant projects in the steel industry, some of which is just the timing of either production or order rates. So I don't think there's any trend here that would indicate the reversal of our pretty consistent showing of growth in the general industrial market.

, : .:

Thank you. And our next question comes from the line of Joe Giordano from Cowen and Company.

Hey, guys, thanks for taking my questions. Just to follow-up on oil and gas, I was wondering if you could maybe parse out a bit the relative strength [indiscernible] if you can -- how much of that was chemical-related. So your commentary across the street sounded pretty good there. How much would you attribute just to those Russian and Middle East specific orders and how much of a decline would you put as the general oil and gas market?

Well, I think in Russia, it certainly reflects the strength that we've been experiencing now for six months running, but I'd say overall it's been about a 50/50 split or a 50/50 balance.

Between Russia and the general market?

Yes, yes.

Okay. And chemical was up, was it positive for you guys?

Yes, I mean our chemical business tends to be smaller projects, but it's been very consistent.

And then to follow-up on Walter, what he asked on general industrial, do some of the competitors in the industrial space have been talking about more of a, there seemed kind of seize-up of spending right now. Your commentary seem more positive, and I'm just wondering if you are seeing that and are anticipating that kind of banning as year goes on, or are you not seeing that same spending freezes or same expand [ph] maybe some of the others in other products might be seeing?

We are really not seeing that, as I tried to comment earlier, if you exclude these very large projects that we actually continue to be up. So obviously general industrial is a big wide conglomeration of activities, a few of which are up, a few of which are down, but we're not seeing any overall negative trend there at all.

Okay, great. Thanks, guys.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back to Terry Ross for any closing comments.

Great. I want to thank everyone for joining us today. We look forward to updating you next quarter. Thank you.