Good day, ladies and gentlemen, and welcome to the Colfax 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. I would now like to introduce your host for today's conference, Mr. Terry Ross, Vice President of Investor Relations. Sir, you may begin.

Thank you, Chelsea. Good morning, everyone, and thank you for joining us. My name is Terry Ross. I am Colfax's Vice President of Investor Relations. With me on the call today are Matt Trerotola, 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 website, colfaxcorp.com. We will also be using a slide presentation to supplement today's call which can also be found on the Investors section of the Colfax website. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call. During this call, we'll make 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 statements 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 website. Now, I'd like to turn it over to Matt.

Thanks, Terry. Good morning and thank you for joining us today. We are pleased to report results this morning. They are in line with the expectations we discussed in December and on our previous earnings call. We continue to make good progress on our cost-reduction efforts, but our progress on growth initiatives has been offset by the end-market environment, which remains choppy with a mix of positive and negative indicators and no clear sign of recovery in the near term. Our operational progress in ESAB continues to build momentum. Net sales for the quarter were $877 million. The organic revenue decline of 0.3% represents what we believe to be solid competitive performance in a weak end-market environment. But it also reflects a low volume first quarter last year for the Gas- and Fluid-Handling segment related most to the timing of large project. Overall, we see end-market revenue trends generally consistent with our planning assumptions, which is allowing our leadership team to focus on execution. Our previously announced cost-reduction activities are on track to deliver $50 million of incremental cost-savings this year. As we have discussed, the majority of these savings will be from SG&A and we expect the read through to improve in the second quarter. Our plant consolidations and other cost-savings projects will add to the quarterly savings as we move through the year. As we begin to discuss Fabrication Technology, let me start by sharing how pleased I am that Shyam Kambeyanda will be joining us as the President of ESAB. Shyam brings a tremendous global perspective to our team having lived and led businesses on three continents. His commercial and operational experiences in multiple markets and regions allow him terrific insight on how to drive growth and performance improvement in both developed and emerging markets, which matches…

Thanks, Matt. This morning, we reported our first quarter results. Adjusted earnings per share were $0.30 per share, which was in line with our operational expectations and also benefited from lower than expected interest expense. Net sales were $877 million, a decrease of 3.8% from the same period last year. This consists of 0.3% organic decline and a negative 5.9% impact from foreign exchange, partially offset by 2.4% growth from the Roots and Simsmart acquisitions. Gross profit margin was down modestly, as improved gross margin in our welding business was offset by lower gross margin in Gas- and Fluid-Handling, largely due to sales mix and some dilution from the Roots and Simsmart acquisitions. SG&A expenses were flat for the quarter, as the savings from the programs Matt discussed earlier and the impact of exchange rates were offset by the costs from the acquired businesses, including integration costs, as well as a $2 million impairment charge and elevated levels of bad debt and legal expense. Adjusted operating income was $66 million, and adjusted operating margin was 7.5%, down from 8.9% in the prior-year quarter. Excluded from our adjusted results are $18 million of restructuring costs incurred in connection with our previously-announced cost reduction projects. Gas- and Fluid-Handling net sales for the first quarter were $433 million, with a 1.7% organic revenue growth, 4% negative foreign exchange impact, and a 5% increase from the Roots acquisition. Adjusted operating margin for this segment was 7.8%, down 75 basis points from the prior year due to mix, Roots and Simsmart, and lower volume in Fluid-Handling's Reliability Services business. For Fabrication Technology, revenue was $444 million, down 1.9% organically and 7% from foreign exchange. Adjusted operating margin was 10.3%, up sequentially from the fourth quarter by 118 basis points with higher gross margins from favorable…

Thanks, Scott. We delivered another solid quarter despite ongoing market headwinds. I'm encouraged by the pace of our operational and cost improvements, and our team is delivering more robust execution, even as we manage restructuring projects in almost every part of the corporation. We should build momentum in the pace of our margin improvement as we move through the year. And as Scott discussed, we remain committed to delivering the 2016 financial guidance that we shared in December and on our previous earnings call. Our challenge now is to begin gauging the environment looking forward to 2017. While Fab Tech trends have been to the favorable side of our expectations early this year, we will continue to monitor project activity and order rates in our major end markets over the next two quarters to get a better picture of 2017. We're prepared to take additional cost reduction actions if the data points to another year of declining volume, we're committed to improving operating profit even in a tough market environment, and I look forward to updating you on our outlook during our next quarterly call. With that, I'd like to open the session up for Q&A.

Thank you And our first question comes from the line of Joe Ritchie with Goldman Sachs. Your line is now open. Joseph Alfred Ritchie - Goldman Sachs & Co.: Thanks. Good morning, everyone.

Good morning. Joseph Alfred Ritchie - Goldman Sachs & Co.: So, my first question, maybe you can just touch on the extra days from a clarification standpoint. So, three extra days in the quarter, did they occur in any particular month? Clearly, we have a leap year, so I'd expect one at least in February. And then secondly, what kind of impact did it have to your organic growth? Is it right to think about it as like a two to three-point impact or how should we think about that piece?

The answer to the first part of your question, Joe, is we are on a 4-4-5 reporting period. You'll note our quarter ended this time on April 1 rather than March 31, so we do have different days occasionally in the first and fourth quarter. And compared to last year, we had three additional days that has – the leap year, obviously, is one of them, but it really has to do with the 4-4-5 reporting more than any other reason. And I can confirm your second comment that is the impact as to how much further increase the organic decline would be if you factored in those extra days. Joseph Alfred Ritchie - Goldman Sachs & Co.: Okay, great. Thanks, Scott. And then maybe just focusing for a second on Fab Tech, the growth there was encouraging this quarter. It was much better than peers. I guess, what do you attribute the performance to? I think last quarter you'd said that you thought you might be gaining share. Is that starting to come through now and how should we think about the sustainability of it?

Yeah. We are encouraged by the progress in Fab Tech. I think a few things there. First is that in North America, in the back half of last year, I think we really stabilized our operational performance and we got through to the other side of the channel integration there. And I think that's enabled us to gain back some share in that market and get to a more stabilized position there. In addition, we're seeing the global growth in the industry outside the U.S. as healthier than it had been, and we're getting some benefits from that based on our strong positions around the world. Joseph Alfred Ritchie - Goldman Sachs & Co.: Okay. All right. Great. And then maybe one last follow-up there. Matt, maybe just comment a little bit on the commentary that you mentioned in your prepared comments, the progress that you're making with the channel and with distributors specifically, maybe a little bit of color there would be helpful.

Yeah. In North America in particular, we've had a significant focus on strengthening our position with the channel. And we did some important work last year on our operational performance in order to bring them the kind of service levels that they expected and then we've also been working on our kind of the way that we manage them and the marketing programs that we do with them and also on our end-use marketing programs. As we brought the Rebel out, we booked with some significant effort into end-use marketing that has brought leads into the channel, and I think that the product, it's a great product alongside of the marketing that we've done has had the channel go from kind of a little more heads in on that product to pretty excited about it and really pulling for it. Joseph Alfred Ritchie - Goldman Sachs & Co.: Okay. Thanks, guys. I'll get back in queue.

Thank you. And our next question comes from the line of Nathan Jones with Stifel. Your line is now open. Nathan Jones - Stifel, Nicolaus & Co., Inc.: Good morning, everyone.

Morning. Nathan Jones - Stifel, Nicolaus & Co., Inc.: Just a follow-up on Joe's question there. I know part of the strategy was going to be getting Rebel carried at the two distributors who are largely LECO and Miller distributors. Have you made progress getting Rebel distributed through those specific channels?

I'm not going to comment on specific distributors, but what I will say is that we've got a number of large distributors that have taken initial orders for the Rebel and we've had some reorders come in as well. We're still in the early days here. The product came out in terms of shipping in the first quarter. But I would say that the energy for the products in the channel has significantly exceeded my expectation. Nathan Jones - Stifel, Nicolaus & Co., Inc.: Okay. That's helpful. The next question is on the expected delays in some of these projects that you were looking for. Can you give us a little bit more color on the specific markets that those projects are in? I think you also said that that slipped out to 2Q and 3Q, your confidence level that they actually go in 2Q and 3Q and don't continue slipping to the right?

Yeah. So, first, the main segment where we've seen the slippage is in Oil and Gas, and in particular in Oil and Gas in countries where there's been the effect of the lower oil price has significantly affected the economies in either state-owned oil companies or public oil companies that are feeling quite a bit of pressure. And these are good projects that really there's a good case for them to move forward. But there's a degree of caution there that I think has people dragging their heels. We've seen projects pushed from 1Q to Q2, some others pushed from Q2 to Q3. And it remains to be seen whether they'll get traction in Q2 and Q3 and those projects will go through to fruition or whether they're going to continue to push back. That's going to be a critical thing that we'll be watching here in the second and third quarter. Nathan Jones - Stifel, Nicolaus & Co., Inc.: Okay. And I guess, last one. You noted and I saw it in the slide deck that and even outside of the inflationary countries, pricing in welding was basically flat and it had been quite negative through 2015. Are you seeing continued stability there? Do you expect that to maintain itself at flat going through the rest of the year? Do you see any other pricing headwinds in the future? Just any color you can give on the pricing environment there.

Yeah. So, first, we've been doing a lot of hard work, one, on value pricing in our business and training our sales folks around the world and giving them the tools to value price. Second, we did a lot of work late last year on what I call dynamic pricing in terms of having clear visibility to some of these dynamic impacts like currency effect on our raw materials and inflation, and making sure that the teams have clear visibility of those coming at us and have clear accountability for driving appropriate price in the face of those. And so I think those are two things that have helped us to move in a positive direction in terms of price realization. And at the same time, last year, there were some – a little bit of downward pressure from some of the metals movement. This year, we're seeing metals start to move upward. That's going to create some upward pressure on price and we're going to be certainly being proactive to be sure that we can maintain margins in an increasing metals price environment while at the same time keeping a sharp eye on making sure that we hold on to our share. Nathan Jones - Stifel, Nicolaus & Co., Inc.: And you're confident you can push the metals' price increase through?

Yeah. I think we have every expectation that we ought to be able to maintain our margins as the metals come back. Nathan Jones - Stifel, Nicolaus & Co., Inc.: Okay. Thanks very much.

Thank you. And our next question comes from the line of Andrew Obin with Bank of America Merrill Lynch. Your line is now open.

Hi, guys. Good morning.

Morning.

Just a question on these one-time charges. Those were not part of your outlook. So, this $0.03, $0.04 of SG&A charges in Fabrication, that's just on top of whatever you were guiding, right?

That's correct.

Okay. And we don't expect more of those.

We do not.

Okay. Just a question, within Fabrication, what's your framework for steel demand outlook in North America and Europe specifically? Because there's been some conflicting data, some people are more positive, some people are more negative. What's your macro framework for steel demand?

Yes. I'll comment on welding demand, which should have some close link to steel demand, which is, in North America, we're still – things stabilized, but are still on the negative side and we have not seen anything that indicates a change there yet this year. Whereas around the world, and particularly Europe, I think these have more stabilized where, as I said in my comments, our volume is a little bit negative, but we're on the positive side given some price changes. And I think I'd say that the steel demand in Europe seems in a more favorable place than it does in North America. And then finally, I'll say, in China, in March, there was a small light of recovery on the steel demand for upfront, and I'm not really sure how that's going to play out, between the efforts there to curtail production and drive some improvements in steel prices versus, in March, an increase in steel demand. So it remains to be seen kind of how that's going to play out.

And just the last question, could you talk about the cadence of organic performance in Gas- and Fluid-Handling second quarter versus the second half of 2016, as backlog is coming down and orders remain sluggish?

Well, the outlook for the second quarter is for continued volume decline. So we will see a lower revenue number than what we saw in the back half of 2015.

And second half?

Second half, we will also see a decline in volume. We did guide to, I think, 2% to 5% down for the year. We were marginally up in the first quarter, so that we're trending towards the lower end of that guidance in Gas- and Fluid-Handling, as Matt mentioned. So that would imply continued down volume for all the quarters in the balance of the year.

Okay. I'll follow up offline. Thank you very much.

You're welcome.

Thank you. And our next question comes from the line of Joe Giordano with Cowen & Company. Your line is now open. Joseph Giordano - Cowen & Co. LLC: Hey, guys. Thanks for taking my questions. Just curious, since you gave your initial guidance, how much cushion do you think you have now, in terms of the FX moves that you see, in particular in some of the – like in Russia and Brazil, and how much support does that give you in the back half?

Well, I'll give you a two-part answer to that question. FX actually was slightly negative to our guidance for the first quarter on a weighted average basis. As early in the, say, the first half of the first quarter, some of the emerging market currencies, and Brazil in particular, were way down. They've subsequently recovered significantly. So, we were at less than 1% of a negative to guidance in the first quarter. As of yesterday, we were at the sort of plus a little over 1% for the balance of the year. So, blending that out, the FX is maybe a 1% tailwind for the year in total. Joseph Giordano - Cowen & Co. LLC: That tailwind versus your initial guidance?

Correct. Joseph Giordano - Cowen & Co. LLC: Okay.

It's still going to be down relative to the prior year, but relative to guidance, it's a tailwind. Joseph Giordano - Cowen & Co. LLC: Okay. Now it makes sense. And then curious, what we're seeing in terms of kind of severe moves in things like iron ore price in China, I know outlook is down for Mining broadly. But, are you seeing anything different in those markets, based on where pricing has gone over the last couple of months?

On the CapEx side, are you asking? Joseph Giordano - Cowen & Co. LLC: Yeah. I mean, have things become – has sentiment improved, do you feel, in where you're playing in those mining industries, albeit at a lower level, you're seeing the metal recover at least?

No. At this point, we have not seen any meaningful change. However, if metals prices continue to recover, that will be a good thing in terms of the timing of the Mining segment recovery. I've seen a wide range of points of view on when and how fast the metal segment will recover. But, we're going to be monitoring that pretty closely through this year. Joseph Giordano - Cowen & Co. LLC: Okay. And then maybe, lastly for me. In terms of orders on gas and fluid, I know it's tough to look at some of these things that are choppy on a one quarter basis, but what's your feeling? How comfortable are you on normalized order pattern? Have you feel like, for the most part, you've stabilized at a lower level, and you see a minus 38% here on Oil and Gas? But, what's your view on where markets have found a stable level?

Well, I think we tried to address that in the prepared comments. I don't think we can confidently say that the orders have stabilized. We do have continued potential risk in Oil and Gas, although we do have some potential significant opportunities there as well. And, as Matt said in his remarks, exactly how the regulatory comments in China are going to affect the immediate order book, which will be somewhat offset by the acceleration of some of the, particularly at the control regulatory steps, that leaves a bit of uncertainty in the market. So, I think it's too early to call it a stable situation. There's some positive things and some negative things, and we're going to monitor them carefully, and I think we'll have something a little more definitive to say by next quarter.

The only thing I'd add there is that, we went through on our Investor Day, sort of segment by segment, a logic and analysis for why the growth would come back in each of those segments. And I think that analysis still holds true. And the real question mark for us is, what's the timing going to be, and is it going to be in the back half of this year or is it going to be pushed back a little bit? And as I said in my comments, if we conclude, it'll be pushed back. We intend to take more proactive cost action to make sure we can get earnings moving back in a positive direction. Joseph Giordano - Cowen & Co. LLC: Thank you.

Thank you. And our next question comes from the line of John Inch with Deutsche Bank. Your line is now open.

Thank you. Good morning, everyone.

Good morning.

Good morning. So, can we just start with the Rebel? How much did that financially benefit you in the first quarter, which was always part of the expectation? And I think, Scott, you said it's going to – improving or accelerating in shipments, I suppose, in the second quarter. What are you thinking for the second quarter?

We haven't disclosed specific numbers for that product, and we're not intending to, John.

But, Scott, based on historical product launches, what represents a run rate, I guess, of sales that you might expect over time and like, how soon does it take to get there, if you maybe frame it in that way?

Yeah. I guess, the segment that we sell into there, the full segment that we could address with multiple variations, is a couple hundred million dollar segment. And I think our early performance suggests that, as we had targeted, that we'll be able to take significant share position, let's say, double-digit share position in that segment. And so, that would say, as we get through not only the initial variation but the subsequent ones, that gives you a little bit of an idea of this kind of size in North America. And then this summer, we'll go through our European launch. And we've had some positive reaction from some of the early showing that we've done in the market there as well. So, definitely a product that will contribute to growth at the global level in the base point level, but it's also one of a number of segments in the market and we'll need that multiple products over time to move the needle in a big way.

Yeah. No, that makes sense. Can I ask you about the China power market regulatory directives? Just to be clear, is this new that transpired in the first quarter or was this always the framework? And if I understand this correctly, you're expecting power order outlook weaknesses could be related to newbuild in China, not particulate regulation? Is that correct? And do you expect particulate regulation benefit like in terms of new orders in China for you guys this year?

Yeah. So, first of all, the fact that the government was evaluating the supply-demand issues in power is not something new. The specific decisions that they took in the first quarter, which were pretty significant in terms of wanting to get the supply-demand back in balance and sort of an acknowledgment of an overbuild that they had coming through the pipe and specific actions to get supply and demand back to the balance, that was a new news in the quarter. So that's the answer to the first. And what that will mean is that the best indication we have is that they'll push through with a number of the products that have already gone pretty far down the path, but that the new ones coming through the pipe are going to be stalled for a while. At the same time on the particulate front, in the same meeting, they kind of reinforced and strengthened what they want to do on the particulate front. And so, that has some positive effect, as Scott commented, in kind of accelerating the pace at which the environmental projects come through related to that particulate regulation.

But it sounds like that isn't the headwind. Is that the way to think about it with respect to China and the power overall?

Yeah. I think it still remains to be seen. But it will be a headwind on the newbuilds front for sure. It'll be a little more positive news on the environmental front and in the coming quarters, we'll be able to get clarity of the extent to which it will be kind of more neutral or a meaningful headwind. And I think for this year, John, it mostly affects the order-rate analysis as opposed to what we expect for revenue for the year.

Yeah. No, that seems clear. Maybe one last one, oil has obviously bounced a lot. How do you think of your business project offering on the pump side and oil at $45? Is it enough to kind of begin to stimulate do you think like demand again for Oil and Gas applications or you almost need it a little bit higher? I mean you made it clear that you probably should be able to offset raw material cost increases. I don't think that's a concern. It's really the question – well, the $64,000 question is, oil gone up enough to actually get infrastructure tied to the stuff beginning to move in the right direction or does it actually need to go a little higher? What do you think?

There are a couple of thoughts on that. So, first, we've got specific technologies and applications and we shared some at the Investor day about some of those that we've been driving that have value to customers at $45 a barrel of oil because they're enabling them to extract more efficiently in existing reserves, and so we do see opportunities for those technologies at the current oil level. And then secondly, certainly over time as there is more demand, there will be some investment in the Oil and Gas area even at the $45 level, and I know there's been some news of some North Sea investments and things that are moving forward. But it would take something higher than $45 to drive real upswing here in terms of the investments that would drive pumps demand.

And some of it, similar to the Mining question, John, some of it is the capital expense budget of our customers. And they may need to see this for a little bit more sustained period of time before they're comfortable increasing their capital expense budget. So, to Matt's point, it's definitely coming, it's just a question of the timing.

Yeah. And it's a good first step. Appreciate it. Okay. Thanks, Matt and Scott.

Thank you. And our next question comes from the line of Chase Jacobson with William Blair. Your line is now open. Chase A. Jacobson - William Blair & Co. LLC: Hi. Good morning.

Good morning.

Good morning. Chase A. Jacobson - William Blair & Co. LLC: Can you talk a little bit about – I apologize if I missed this. Can you talk about the margin performance in the Gas- and Fluid-Handling business because the revenue is up? I'm assuming it was price, but can you give any color on how price or mix impacted the margin there and how it should play out throughout the rest of the year?

Well, this business is largely project business, so there isn't a precise price metric, although the pricing in the four market business was in line with our typical results. The principal reason that the overall margin didn't improve was the acquired businesses did not contribute to the margin in this particular quarter, the base business outside of this, and we had a bit of a downturn in the Reliability Services business which, again, relates to the spending budgets of the oil and gas companies that Matt talked about. If you exclude those two things, the base Howden business and the equipment business on pumps, the margin was actually slightly better. But it was – the overall margin for the segment was diluted by the acquired entities and the fall-off in the higher-margin Reliability Services business. Chase A. Jacobson - William Blair & Co. LLC: Okay. And then, Matt, I don't think you'd talked much about capital allocation. Any change there or is the focus really on internal now and acquisitions later? And maybe any general commentary about the M&A environment. Thanks.

Yeah. Sure. So as we said on previous calls, we've taken the opportunity to buy back some shares. We've spent half of the $100 million that was authorized by the board. We continue to see that as an option if we find that to be the attractive option going forward. But our primary focus on the capital allocation front is around the acquisition pipeline. We've been driving a pipeline of more bolt-on acquisitions. And if we can find the right ones to do there, we'll be moving forward with bolt-on acquisitions. It is a bit of a tough environment right now with the choppy markets in terms of buyers and sellers being able to come together and find a meeting of the minds on price, but that continues to be our intent. And as I've said in previous calls, as we move into next year, we will be moving the attention back to the question of where would it make sense to have the next platform acquisition that could accelerate our growth and strengthen our portfolio. Chase A. Jacobson - William Blair & Co. LLC: Okay. Thank you.

Thank you. And our next question comes from the line of Jeff Hammond with KeyBanc Capital Markets. Your line is now open.

Hey. Good morning, guys.

Good morning.

Good morning, Jeff.

Hey, just on – you made the comment about the orders and that kind of gives you some question over next year in gas and fluid. Has it really come down to the moving pieces within Power Gen and whether some of this Oil and Gas drops? I mean, what are kind of the keys on whether you see the visibility for growth in the next year?

Yeah. I think it's fair to say that the two biggest factors there is whether the kind of large projects in Oil and Gas get traction. And a number of those are more downstream projects in Oil and Gas. So, as I said before, they are projects that should be attractive projects even in today's environment, but the capital was just being withheld from them. So, one is whether these large projects get some traction, and as you said, kind of how the pieces come together on the Power front, those are definitely the two largest factors.

Yeah. Jeff, we feel pretty good about the stabilizing of general industry. That's in the flattish kind of range. The Mining and Marine markets are much smaller than the other two. So, I think you did hit the nail on the head. It does come down to the Power and Oil and Gas orders which will determine whether 2017 can return to growth or not.

Yeah. And the other thing I mention is, we're really working hard to drive as much aftermarket growth and strength in our aftermarket capability as much as possible and to realign resources to be going more to where the growth is in order to – taking into our own hands a little bit in terms of trying to drive as much growth as we can in a tough market environment.

Okay. And then just on the guidance, maybe Scott can you give us a new share count and interest expense? And then just in the segment growth rate, are we kind of still in the band that you originally had laid out, the down 5% to 7% for Fab Tech, down 3% to 6% for Howden, flat to down 3% for Fluid-Handling?

I'll start with the last part of the question. I would say they were at the edge of the band on both, so we would expect Fab Tech to be near the better end of the band, maybe a little bit better than that. But that's kind of the zone we're in when you adjust for the extra days. And we would expect gas and fluid to be at the lower end of their band or maybe just a tad to outside of it. But as I said in the prepared remarks, when you balance these together, we're comfortable with the revenue guidance affirming what we gave in December. Well, as far as interest goes, I'll leave some of this to you. Our interest expense, which I have commented around in the past, as most of you know, is almost entirely variable rate borrowing. We assume the four Fed increases in our guidance I'd say is pretty clear that there's going to be something less than that. So I'm not going to call how many Fed increases there's going to be, but that will result in some very significant savings, and I would say that our new lower cost-borrowing facilities are worth $2 million to $3 million of reduction to the original guidance. And then the rest of the reduction would be based on factoring and when and how often do you think the Fed is going to increase, and I'll leave that up to you.

Thank you. And our next question comes from the line of Schon Williams with BB&T Capital Markets. Your line is now open. Christopher Schon Williams - BB&T Capital Markets: Hi. Good morning.

Good morning. Christopher Schon Williams - BB&T Capital Markets: I wanted to clarify exactly how much are we talking about again in SG&A that you're kind of calling out as a bit unusual but not necessarily backing out? Did I hear kind of $2 million to $3 million? Is that the right number?

No. It's a little more than that. There's a $2 million impairment charge and then there's a $4 million or $5 million of bad debt and legal expense. Christopher Schon Williams - BB&T Capital Markets: And why exactly the bad debt – I mean, can you talk a little about that? It sounded like you're insinuating that some of that would not repeat, I don't know, why do you have confidence that may not be able to (47:57)?

There was a large customer in the African region that accounted for most of the bad debt, and we don't have any further exposure to that customer. Christopher Schon Williams - BB&T Capital Markets: Okay. And then, just so I'm crystal clear, again, on the SG&A, from a year-over-year basis, this was kind of a – Q1 kind of an easy comp. I'm just trying to get a sense of, are you talking about, moving forward, Q1 actually being kind of the high watermark for SG&A this year, or are you talking more about kind of year-over-year improvement, versus where you were in 2015?

Well, there's a certain seasonality and a portion of the – particularly the selling component – is variable and this is our lowest quarter for sales. So, I don't think it would be accurate to say, as a absolute dollars, that this is our high watermark. Certainly as a percentage of sales, this is going to be by far our high watermark on cost of sales – I mean, on selling, general and administrative expenses. So, I think you can look for continued improvement in the percentage of SG&A to total sales, and you'll certainly see, in the next couple of quarters, movement in the absolute value. We have a very strong fourth quarter, so I think that it's highly likely that the SG&A in the fourth quarter would be higher than the first, even after the cost savings. Christopher Schon Williams - BB&T Capital Markets: That's helpful. And then one more, if I may. Share repurchase has been at kind of $20 million, $21 million the last two quarters. I mean, is that kind of a good pace going forward, or could that actually accelerate if, I don't know, if some of the M&A timing is kind of more variable? I mean, could we actually see that pace pick up as we go through the year?

Well, there's $100 million governor on the whole thing, so we're not going to see anything higher than that. That is the maximum board authorization that we have. I think Matt's comments attempted to address this, I'll restate them, but it's a dynamic management issue here. We see what's the best use of capital for our shareholders. If we have attractive acquisition opportunities, we would certainly give them a high weighting. Obviously, what our stock is trading at is part of that equation. So we have to look at what provides the best return to shareholders over the course of the year, and we'll allocate our capital that way. But we're not going to do more than another $50 million, because that's our maximum board authorization. Christopher Schon Williams - BB&T Capital Markets: Okay. That's helpful, guys. I'll get back in the queue.

Thanks.

Thanks.

Thank you. And our next question comes from the line of Andrew Kaplowitz with Citigroup. Your line is now open.

Hey. Good morning, guys.

Morning.

Morning.

Scott, can you quantify how much impact the recent acquisitions you had in your Gas- and Fluid-Handling business had on your margin? Was it like 50 basis points, 100 basis points? Does that impact change over the next couple of quarters? Do you still think you can have higher margin in 2016 than in 2015 in Gas- and Fluid-Handling?

Okay. The first question, well, I'll let you do the math, but I think I've given you enough information to do it. We disclosed the exact amount of revenue from the acquired entities, which I believe is in the $23 million or $24 million range, but the exact amount is in the materials. And the business was only marginally profitable for the quarter. So, if you factor that in, you can calculate the precise dilution that was caused by that. Second question is, we do expect these acquisitions to return to a more normalized range, as we discussed in our – when we originally acquired these businesses, sort of the circa high single-digit 10% type of return. We do expect to see that in the future quarter. So we definitely expect these acquisitions to contribute going forward. In terms of overall margin for the year, we do expect a better margin in Gas- and Fluid-Handling for the full year than what we had in 2015.

Okay. That's helpful, Scott. And then maybe (52:36) Marine orders seemed to trim back down a little bit here in Gas- and Fluid-Handling. You were pretty optimistic about the growth there, and last quarter mentioned good pipeline of activity. You talked about deferrals here on this call. What are you seeing in that market, and if you can talk about the outlook a little bit more for that particular market?

Well, the order rate was very – the order rate for new ships, not just Colfax's business, but the order rate for new ships, was pretty dismal in the first quarter. Whether that's going to be a continuing trend or whether that was a blip is hard to tell. There's been a slight bounce back in the OSV business. We've actually taken a few orders there. I think in Matt's comments, we indicated we sort of expect a high single-digit decline in order rate for the balance of the year, not quite as large as the first quarter where the whole new ship orders were weak for the entire industry.

Okay. And then just one quick clarification. Restructuring expense was a little lower than we thought in the quarter, but right at your annual pace of $70 million that you guys have guided to. I would have thought that maybe in the current environment, it could be a little bit more front-loaded in restructuring, but it doesn't seem that way. So should we just expect pretty consistent levels of restructuring expense here over the next few quarters?

Well, the reason that it takes a little longer is, outside of North America, it takes longer than you might hope to get these restructuring project to a point where you've done enough things to actually record the charge. So it isn't any indication that we weren't working at the pace that we expected. So, the projects are moving at the original planned pace; there isn't any slowdown in the pace, it's just the criteria that have to be met before you can record an accounting charge. To your second question, I think we will see a little higher cost in the second quarter, and then a more normalized pro rata type of level over quarters three and four, but we will see a little higher restructuring cost in the second quarter.

Thank you.

Thank you. And our next question comes from the line of Brian Konigsberg with Vertical Research Partners. Your line is now open.

Thanks. Good morning.

Morning.

Actually, just following up on Andy's question just with the restructuring. So how much of the savings did you realize in the first quarter and maybe can you talk about the cadence of those savings through the rest of the year by quarter?

Well, we affirm the $50 million expectation for the full year. Less than one quarter of that was realized in the first quarter, and not significantly less than that. And we would expect it to improve by a couple million a quarter. So it's a little bit back-end weighted but not massively back-end weighted.

Right. Thank you. And, actually, Scott, I'm not quite sure you said what the contribution was for the three extra days. I apologize if you said and I just missed it. So, the organic contribution from those three days was what in the quarter?

Between 2% and 3%.

2% to 3%. Got it. And just lastly on the applications for downstream within the Oil and Gas, is it primarily refining or is it other applications within petrochemical? Can you just give us a little bit of breakdown of the downstream exposure you do have?

Well, it's all of the above, but certainly refining is the most significant from a dollar basis.

And then it spans across petchem and would you throw LNG in that as well or...?

Yeah. It does. And LNG is an area that there's been some nice growth projects. Petchem is an area that we've seen some more activity, and we're seeing in more, but that refinery part of downstream has had some challenges. It is very broad-based, so it does cover all those areas, but certainly refining is the largest single from a dollar value of sales.

Okay. And if I can just one last real quick one, just on the compression. Can you just give us an update? You're making some good progress in the Middle East. How is that? And that was, I think, share gains for the most part. Just can you give us an update? When you talked about delays, is that kind of part of the equation?

Yeah. Definitely, some of the large compressor orders are part of what's – part of the delays that we're seeing in Q2 and Q3 that we commented on.

Yeah. So, from a revenue standpoint, you see a very strong quarter, which is the production of the large orders. Those are large percentage of completion jobs that the jobs are being constructed now, so you're seeing very good revenue base. The declining orders are, as Matt commented, those are for the, one, the comp is very difficult against last year and, two, there's some orders that have been deferred. And we're quite encouraged as we've looked at projects more in the mid-spec range, including, for example, some of the opportunities to take Roots to other places where they had not been as focused. We see a lot of good pipeline opportunity that gives us good optimism about where we can go over time in that compressor business, but there is a short-term challenge around some of the larger orders in places like the Middle East, as you mentioned.

Got it. Thank you.

Thank you. And our last question comes from the line of Matt McConnell with RBC Capital Markets. Your line is now open.

Thank you. Good morning.

Good morning.

Good morning.

Just a couple of clean-ups on the guidance. I think between FX getting slightly better and share count slightly lower and interest, would I be right to size that around maybe a $0.10 incremental buffer versus your prior outlook? Does that sound about right?

I think that sounds a little bit high. Obviously, interest expense is something that is – it could be variable by a few cents depending on your outlook for Fed hiking. But I think $0.10 is a little high.

Okay. All right. Thank you. And then switching to Oil and Gas within Gas- and Fluid-Handling, how much backlog is there now? Because your organic revenue has been up 25% the past couple of quarters. What's the status of the backlog there? I mean, orders, obviously, have been different from that. What kind of growth would you expect out of that vertical in the next quarter or so?

I'm not quite sure I understood the question, Matt.

So your...

The backlog is disclosed and it is clearly down. And we did comment on that. But help me understand the question.

So, your organic sales growth in Oil and Gas has been up 25% for the past two quarters. When would you expect that to moderate kind of consistent with what you've seen in organic orders for that vertical recently?

We expect it to moderate over the balance of the year. But we expect the Oil and Gas revenue to actually be positive for the year because of completing the large projects in the backlog, whereas the order rate we expect to be in decline for the factors we just discussed.

Okay. Thanks. That's helpful. That's what I was looking for. Appreciate it.

Thank you.

Thank you.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Mr. Terry Ross for closing remarks.

Terrific. Thank you, Chelsea. Thank you, again, for joining us today. We look forward to updating you next quarter. Take care.