Good morning, and welcome to the FMC Technologies First Quarter 2011 Earnings Release Teleconference. [Operator Instructions] In the event of technical difficulties during this call, we will post updates at www.fmctechnologies.com/earnings. Thank you. Your host is Brad Alexander, Director of Investor Relations. Mr. Alexander, you may begin your conference.

Thank you, Christie. Good morning, and welcome to FMC Technologies First Quarter 2011 Earnings Conference Call. Our news release and financial statements issued yesterday can be found on our website. I would like to caution you with respect to any forward-looking statements made during this call. Although these forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and our outlook based on currently available information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. I refer you to our disclosures regarding risk factors in our SEC filings. All per share numbers discussed today will reflect our March 31, 2011, 2-for-1 stock split. I will now turn the call over to John Gremp, FMC Technologies’ President and CEO.

Good morning. Welcome to our first quarter 2011 conference call. With me today are Bill Schumann, our CFO; and Bob Potter, our Executive Vice President. First I'll share some highlights from the quarter, Bill will provide specifics on our financial performance and outlook for the remainder of 2011, and then we'll open up the call for questions. But before we begin our discussion of the quarter, I'd like to say a few words about Peter Kinnear who recently stepped down from his position as Chief Executive Officer. Peter is a true pioneer of the subsea business. Starting in 1988 with the Subsea business of $40 million, he oversaw the growth of the business to over $3 billion today. He has achieved an impressive list of accomplishments over his 40 years at FMC. During his 4 years as CEO, the market capitalization of the company has almost tripled. On behalf of all of the employees of the company, I thank Peter for his direction and contributions to our growth and success of the company. Now let's focus on our results. Earnings for the quarter were $0.35 per diluted share that included a tax benefit of $0.03 that we disclosed previously in the fourth quarter call. We recorded $1.4 billion in orders for the first quarter, of which $940 million was for subsea systems that included 71 subsea trees. Total company revenue was $1.1 billion. Subsea revenue for the quarter was $683 million, sequentially flat with the fourth quarter. Our first quarter subsea revenue performance reflects the early stages we are in with many of our subsea projects included over the past year. We still expect subsea sales to reach $3.3 billion for the full year. Surface Wellhead revenue was up 5% from the first quarter of 2010 on strong North American…

Thanks, John. Energy production sales for the first quarter were $856 million, down 4% from last year's first quarter and essentially even with the fourth quarter of 2010. The decrease from the prior year is primarily attributable to lower subsea sales. The lower subsea sales in the quarter were impacted by 2 factors. First, we're at the beginning of many of our subsea projects that were awarded in 2010. Most of the work in the early stages of these projects is engineering. Consequently, in these early stages, we recognize less costs, less progress and, hence, lower income than in the later stages of these projects when higher costs are incurred. As these projects progress into the second half of the year, we expect the revenue to accelerate. Second and more related to the sequential revenue comparison, subsea sales tend to be somewhat seasonal with the fourth quarter normally our strongest quarter and the first quarter often the lightest. Subsea sales of $683 million in the quarter were essentially even or flat with sales in the fourth quarter of 2010. Again, we expect sales to increase in the future quarters as progress increases and the seasonal effect of the first quarter is eliminated. For the full year, we still expect subsea sales of $3.3 billion. Surface sales were up slightly over the first quarter of 2010 as North American sales increased, but international sales declined as some delays impacted shipments. Energy production generated operating profit of $82 million in the quarter, down 48% from the prior-year quarter, primarily due to lower margins in subsea projects. These margins were in part a function of the sales level, higher bidding expenses and some timing of items that we expect to improve later in the year. In Surface and equally impacting margins, we also…

[Operator Instructions] Your first question comes from the line of Brad Handler of Crédit Suisse. Brad Handler - Crédit Suisse AG: I guess I could just ask you to expand please on your commentary about the stage of projects. Obviously, you used POC [percentage-of-completion] so you're making some assumptions about the profitability associated with those projects, which would direct to the lower margins. Or at least that's sort of the natural inference, so perhaps you could speak to why it sounds like that's not quite true.

Brad, this is John. I'll start the conversation then let Bill fill in. What we're saying is the number of projects that we received, many of them about the same time, they're in their early stages of development, which is mostly design engineering, which drives the percentage of complete numbers fairly low until we get to the mid-cycle or later cycle of those projects when raw material is received, another part is received and then the percent complete starts to go up. We expect that to happen in the second half. So in the second half, our revenue for Subsea businesses will be substantially higher than it was in the first half, and we'll get leverage from that, which will drive the margins for Subsea higher in the second half than they are in the first half. I'll let Bill add to that.

Yes, Brad. On our projects and our POC accounting, we account for a project at the same margin throughout its life. But what happened in the first quarter is again, as John mentioned, we had so many projects early in their stage that we didn't incur a lot of costs and, therefore, didn't incur as much revenue as you might expect. Now why did that lower margins? Well, let me back up a minute and say the Subsea business for 2011 is really sized for $3.3 billion in sales in terms of staffing and SAR expense. And as you know, we have most of the backlog to enable us to reach that revenue number. But we had lower sales in the first half due to early stage due to some seasonality. Actually, our gross margins on projects are on budget, on the budget that will allow us to hit the 12% to 13%. But we had some under-absorption of manufacturing overhead in the first quarter because of the lower revenue amounts, and we had some higher expenses associated with bidding for the large number of projects that are out there in award. So consequently, our margins in Q1 were lower than our average -- we think our average for the full year and, of course, last year. So as our sales increase during the year, assuming we've maintained the same gross margins and SAR [stock appreciation right] expenses are under control, our margins in subsea should increase, allowing us to hit the 12% to 13% margin for the full year. So obviously, that means we're going to have margins that are going to be higher in the second half of the year, materially higher than the first half. Brad Handler - Crédit Suisse AG: Right, okay. I have to admit, I had not thought about sort of the other absorption issues. I'd always thought of POC as that consistent margin profile, so that's interesting. If we stick with that then, there's obviously been a conversation that's run several quarters about very high margins that you had realized over the last couple of years, say. How does what you're talking about in terms of getting back to that absorption level, so what kind of margins -- you're guiding towards margins that are back into approaching the mid-teens I think. I haven't run the math, you can correct me, but it would presumably have to approach the mid-teens, so back to kind of high levels where you were. What is that saying about kind of your outlook, the position, the potential for margins even further out as we start to get into '12, since you're starting from such a high base once the projects are in full swing?

Before I answer that, let me just kind of complete the story on the first quarter margins. Surface also hurt us pretty significantly in the quarter. We had a change in sales mix, which we had anticipated. North America grew very nicely, in line with the rig count. But our International business, as you know, is larger, and it's actually more profitable than our Domestic business. And so we got hurt a little bit on sales mix there, and we had some operational issues in Surface that are expected to diminish as the year goes on, not onetime but certainly items that can be controlled. And we had some growth initiatives. We're investing in frac assets. We're investing in some additional training and some other assets. So the Surface business also hurt us pretty -- I mean, for its size, pretty significantly in the first quarter. But again, we expect that to reverse throughout the remainder of the year. So both those things impacted the first quarter margins. Now, John, to answer your other question, yes, as we get to the end of the year, we expect, in order to average 12% to 13%, we're probably going to have to have margins above 13% at some quarter. Brad Handler - Crédit Suisse AG: Right, okay. So yes, the project mix anyway is a supportive. I understand your comment about Surface, but the project mix is as supportive of subsea margins where they have been in recent quarters for now, right? That's still where the project mix takes you to in terms of profitability, it sounds like?

Yes, we should get to the 12% to 13% range for the full year. Brad Handler - Crédit Suisse AG: Got it. Well, I'll let others probe more in terms of the Q1 issues. Thanks. I'll turn it back.

Your next question comes from the line of Rob MacKenzie of FBR. Robert MacKenzie - FBR Capital Markets & Co.: I'll depart from the first quarter results and ask a more perspective question. John, I think you mentioned you expect Congro to be awarded this year. Can you update us kind of on the status of what that may entail, the dollar opportunity there and other subsea processing projects that may have come on the radar screen in the past couple of months?

Rob, the Congro project, I think the significance of the Congro project is it's another subsea Processing project to add to the list that keeps growing, and it's in Brazil. So when you think about Petrobras and what they're doing with Marlim before that, what they did Jubarte and now Congro, it's the significance although it's an important project, I think it'd be in the maybe $100 million range or something like that. But the real significance of Congro is that we're gaining traction on subsea processing projects. So that's what we're excited about is that these projects are being named, and it looks like we're gaining traction in the industry's acceptance of this technology. Congro uses a little different technology than some of the other systems, both in terms of separation and boosting, and our understanding from Petrobras is that it will be awarded this year. Robert MacKenzie - FBR Capital Markets & Co.: Great. Are there any other processing projects that are moving up on the calendar that we should be aware of?

Well, I think we've said this before that if you look out the next 2 years, you get close to 10 named subsea projects, they, of course, will move around. But that's almost double of what we saw just a couple of years ago. So I don't know. Congro’s obviously one. Cascade Phase 2 is a repeat. That's been moved down into the next year, but that will go ahead. There's a West Africa project with Total, a boosting project that should go ahead this year. Eventually, there'll be more Marlim projects next year. So I think the list remains largely the same, but certainly isn't shrinking. And again, Congro is again another one that looks like it's going to go forward, which is what encourages us about subsea processing. Robert MacKenzie - FBR Capital Markets & Co.: Okay. Thanks. And if I can switch to Marlim. You just mentioned the possibility of incremental orders on that. Did I hear you correctly?

Well, I think the belief is within Petrobras, that this is technology that helps them deal with the severe water cut issues they have on many of their subsea wells. So the idea is that Marlim technology, which is a pilot, we need to consider it as a pilot, once it gets in the water and used by Petrobras and get comfortable with the technologies, that they'll apply that to their other wells. It's hard to predict the timing of that, but surely Petrobras' intention is to take this technology and use it on many of their older wells with high water cut. Robert MacKenzie - FBR Capital Markets & Co.: Okay, great. Thanks. And I guess my last question is that some of the gas projects in the Far East. Can you update us on Prelude and some of those other projects that are being talked about?

Sure, Rob. I think this is where we're really encouraged with the subsea activity. Typically in North West Shelf gas projects in Asia, there'd be 1 every 2 years by Woodside or maybe Chevron, Gorgon. But now, as we look this year, we've got Prelude which looks very much on schedule to be awarded this year. Wheatstone is on schedule to be awarded this year. So that's 2 that are pretty firm this year, and then impacts Ichthus [ph], which has moved -- it's moved a lot. But now it looks like it's proceeding because the tender documents are out and are being submitted so that'd be -- if those all happen this year, that would be 3 major gas subsea gas projects in Australia versus 1 every couple of years. So that's pretty exciting that, that market is growing as many people forecasted. Robert MacKenzie - FBR Capital Markets & Co.: Great, thanks. I'll let someone else have a turn.

Your next question comes from the line of Jim Crandell of Dahlman Rose. James Crandell - Dahlman Rose & Company, LLC: John, I'd just like to first echo your comments about Peter for an outstanding job and wish him the best here going forward. First question is can you provide a little bit more color on bidding, in general, on subsea projects, John? How competitive is it? Has it significantly worsened on certain types of projects? I mean, not yourself, but I hear that certain companies that were looking to replace their backlog are bidding, in many cases, some significant discounts on some of the projects out there.

Right. I mentioned that, Jim, somewhat in my earlier remarks. We're in a recovery stage for the industry. In 2009, there were only 5 subsea projects that were awarded. Everybody wore down their backlog. It was no different for us. Last year, we were successful in rebuilding backlog, which we were pleased to do. But the other suppliers didn't, and they continued to work down their backlog. So it's just understandable that it's probably more important now that they rebuild their backlog as quickly as they can. A lot of the major projects that are being tendered in 2011 are towards the back end of the year. So we'd expect as the products, many of the ones I mentioned, like Wheatstone, Angina [ph], Ichthus [ph], that'll all be tendered later this year, that there would be a lot of competitive intensity as the other suppliers rebuild their backlog. We've seen that in some of the big projects that have bid over the last year. So we have to get deeper into the year when these major projects are bid. We expect them to be fairly competitive while people rebuild their backlogs. And then as that happens, which will be later this year and into early next year with backlogs built, then we'll see some of that pricing pressure come off, which is why we expect pricing to improve in 2012 once these major projects are awarded. But the big ones, which we know are the big West Africa projects that will be bid and the ones I just mentioned a little bit earlier, the Wheatstone Project and Ichthus [ph], which will be large projects bid this year. James Crandell - Dahlman Rose & Company, LLC: And you expect that those projects will be bid very competitively?

Yes, because they're the first big projects that come up for some of these companies that are anxious to rebuild their backlog, and they're tendered projects. There are other good-sized projects that aren’t tendered, maybe they've got an incumbent and they’re direct award, but these are tendered where we'd expect 2, 3 maybe even 4 suppliers to all bid on those projects. James Crandell - Dahlman Rose & Company, LLC: Second question, John, as you look at your business that’s now covered under frame agreements going forward and now with the BP win, as you look at your progression of orders going forward, and assuming a certain market share, what percentage of your future orders do you think could be covered by frame agreements?

Well, future depends on the mix of these huge projects that are tendered. They're going to swing any particular quarter, but I appreciate the question. If you look at our first quarter inbound, which we were excited to get close to that $1 billion, particularly when there was no major project. Of that almost $1 billion that we inbound for subsea, over 40% of it came from us either being an incumbent or from an alliance partner. And between getting $1 billion in inbound of relatively small projects and then having such a high percentage be from our incumbency or being alliance or frame agreement partner is really encouraging to us because not only does it mean that we can get -- we're on track for the possibly $4 billion of inbound for this year. But the margin pressure, when you're an incumbent or a frame agreement partner, is a heck of a lot different than when you're intensely competitively bidding to fill your backlog on a $500 million project. So we're encouraged, and you're right. The addition of our global BP frame agreement just adds more business in that frame agreement category. James Crandell - Dahlman Rose & Company, LLC: Good, okay. Thank you, John.

Your next question comes from the line of Chris Glacine [ph] of Simmons & Company.

Talking about subsea inbound and reflection of projects continuing to get delayed and the competitive dynamics, we had previously thought that we could get as high as $4 billion in subsea inbound this year. Where do you think that stands today? Is that closer to $3.5 billion?

Well, we think the $4 billion is still possible. But a number of projects, which I alluded to, that have moved from late 2011 into early 2012, that obviously makes it more difficult, and if more major projects that are in 2011, if they happen to move out, that'll clearly make it more difficult, and then we have still uncertainty in the Gulf of Mexico. So that's our challenge. But then you look at the first quarter, and we hit almost $1 billion without a major project, and we're encouraged. So I would say that the $4 billion is still possible. Clearly, more difficult. But we're encouraged by the first quarter results. Now if you want to look the next 12 months out and pick up those few projects that moved from fourth quarter to first quarter, then the $4 billion looks very realistic.

Okay. And then what is your sense as to -- Quest is forecasting a 20% improvement to about 450 trees awarded this year. I know that, typically, you guys prefer to look at it on a dollar basis. But just wondering is that a tenable number? Or do you think it'll come in less than that based on the aforementioned project delays?

Well, I think Quest has the same issue I do on the $4 billion. I mean if the major projects stay in 2011, then we're good. If they move into early 2012, it's a little tougher. Since we're just talking everything about strictly about calendar year, but yes, the number we don't have the -- I mean Quest hasn't published the number of trees for the quarter. But we think it'll be almost 100 trees, which would be on track for around 400 or so. But you're right, if some of those really big projects slip into early 2012, then it will be hard to achieve that, but I'm not sure if that matters. If you look over a 12 to 15-month period and you got to 400-plus subsea trees, I think that says the same thing about the growth of the market.

That's very helpful. Thank you.

Your next question comes from the line of David Anderson of JPMorgan.

John, question about kind of your outlook on the subsea market. Let’s just beat the pricing argument to death if we can. How much do you need the Gulf of Mexico to come back to start seeing pricing pickup? I mean the Gulf of Mexico's typically been a pretty big onesie, twosie market. How are you thinking about that over the next 12 months? How much is in your projections and how much do you need that to come back to start seeing pricing pick up globally?

Yes, that's a good question. I mean, the Gulf of Mexico is important, but I think it's the international markets that's really going to drive the pricing. That's where the big projects are. That's what, in the near term, is going to fill the backlogs of all the suppliers, and that'll get them comfortable with higher pricing levels. So I think the Gulf of Mexico helps. But frankly, with these big projects, there’s -- in the next 12 to 18 months, there's $7 billion to $8 billion of major subsea projects, very few to be awarded, very few of them in the Gulf of Mexico. That's what has to happen for pricing to improve. But clearly, the Gulf of Mexico helps. The only other thing I might mention about the Gulf of Mexico, Dave, is that the majors really haven't slowed up too much. As you know, I think in the fourth quarter we picked up some fairly good-sized orders from Shell. Exxon is proceeding with their plans with Julia and Hadrian. BP has got plans. Chevron, of course, is proceeding with Jackson [ph]. So the majors are proceeding with the project developments in the Gulf of Mexico, including even some awards. It's the independents, like you suggested, the onesie, twosies, that we really need to come back, and that's what’s uncertain. But I don't think it represents a huge part of the global market, which would drive pricing improvement. I do want to mention that we have a great position with the independents in the Gulf of Mexico. So it's very helpful for us if the independents are able to come back, and hopefully, that will happen as these permits -- number of permits approved increases.

Great. Thanks, John. And also, just kind of moving over to your Processing segment. We're hearing frac pumps are just in very, very tight supply out there. Bill was talking about some of the expansion that you guys are doing there. Can you talk to us a little bit about what's going on in that part of your business? I assume you guys are running full out right now. Is that true? How long does it take -- if somebody's to place an order today, how long is it taking? And kind of give us a sense kind of what percentage are you expanding your kind of manufacturing capacity. I'm talking specifically about the frac pumps.

I'll let Bob give a lot of details. But as we said, we're increasing capacity. And you're right, we're running flat out. We're taking advantage of our manufacturing capacity around the world with other businesses. And so to support the workload on frac pumps, we've been using our machine tools around the world, which has really been helpful. But the capacity additions will give us dedicated capacity to support that product line. But I'll let Bob give you some more details on capacity.

Yes, let me just stick with the capacity expansion for a second. We expect to see some of the capacity additions that we've invested in beginning to show up in early third quarter, which is going to contribute to higher throughput and reduce some of the lead times. You ask about lead times. They're still running about 12 months. Demand for frac pumps continues to be very strong. Service companies are working that equipment very hard out there with these multistage fracs. To give you an idea of kind of how it's going for us, our Q1 shipments were 45% of the total shipments we made in 2010. So in the first quarter alone, we've seen a significant uptick in the amount of shipments we're making. Obviously, on the kind of specific numbers about capacity, our organization works pretty hard to get that competitive intelligence from our competitors. So I'd really prefer not to make it so easy on them by giving it out publicly. But obviously, our capacity expansion has been targeted to meet our growth and share expectations over the next 2 to 3 years. So we think we're in good shape. We've got to get it online, begins in early third quarter, and that capacity expansion will extend through -- into first quarter of 2012.

That's great. Thank you.

Your next question comes from the line of Kurt Hallead of RBC.

This is actually Justin Sander calling on behalf of Kurt. Just wanted to follow up with a question on the Energy Processing margins, looking at 18% to 19% outlook for the full year. Can you give us a little more insight on how much is pricing power, how much cost creep you're seeing, what are the dynamics there as far as being able to take price versus cost coming out?

Well, we've averaged over 19% the last 2 quarters, and that's driven largely by the mix of Fluid Control versus some of the other businesses. And as we go forward through the remainder of the year, what we expect is the other businesses, being Loading, Measurement and Material Handling, will increase in their size, and they carry a little bit lower margin. So we're giving guidance between 18% and 19%. Now in terms of cost pressures, we really aren't seeing a lot of cost pressures yet. Fluid Control is just running flat out. We've seen some price increases there, not a lot, but some. And margins have done about what we expected in all those businesses, and we continue to expect that for the full year.

Okay, great. And then just another follow-up on the talking around the subsea margins. I understand that the operating leverage in the business and the volume will drive the margins up in the back half of the year. But looking from a pricing standpoint, as you kind of move margins up in the back half of the year from a gross margin standpoint, given the pricing dynamics, would you expect gross margins to stay where they are right now? Or would you expect them to maybe fall down even a little bit further but then get the benefit from the higher volumes?

The gross margins increased a little bit as we go through the year, not much. Most of the increase in margin is a leverage, if you will, and Surface coming back to normal operating rates -- normal margin rates.

Got it, okay. Thanks very much.

Your next question comes from the line of Brian Uhlmer of Global Hunter.

I just want to get a tiny bit more granular on your projects and how you flow them through for your revenue recognition and how it affects your margins. So I guess my question is really during the early stage engineering, do you recognize revenues at all or does it start when you get into a plant? And how do you recognize associated costs when you get your raw materials in, et cetera? So I can try and work the projects through the model for the margin progression.

Well, good luck on that model progression, Brian. But when we start a project, it's primarily engineering. And engineering may be 10% to 20% of the total project costs. But the initial, say, 3 months of a project, maybe even 6 months, are almost entirely engineering. And therefore, you're only accumulating costs of at most 10% to 15% of the whole project. And so consequently, we recognize 10% to 15% of the revenue from the project over that time period. Then we begin to receive raw material, completed sub assemblies. And our costs really begin to escalate during that time period when we're receiving equipment. And so our costs escalate and, consequently, our progress and revenues increase. And then at the end of the project when the assembly in test, we're back again, so it's primarily labor, and the cost accumulation is relatively slow. So we have kind of an S-curve, if you will, for the total cost of each project. We're executing over 100 projects at any point in time, but there is a maturity issue here. And given the amount of backlog that we received -- orders, I should say, that we received in 2010, in the early stage of those, we've got a lot more engineering content, and we're not receiving as much material and subassemblies as we would normally receive during an average quarter.

Okay. Do you recognize some margin from those projects during the engineering or you recognize some but do you hold some back?

No. What we do is we say, well, see our average margin's going to be 20%, 25% on this project. And regardless of whether it's engineering, receipt of raw material and what have you, we recognize that margin based on the amount of costs that we're incurring.

Okay, thanks. That's very helpful. And second question, I wanted to address the stock buyback and kind of what your thoughts are going forward on that where you expected some this quarter and just wanted to see what the plans are in the buyback?

Well, our plans are not changed. In terms of using cash, we want to use -- our first priority is to use cash to support the businesses. And this year, we're going to spend over $200 million, perhaps as much as $250 million, on capital expenditures to support the Production business, to expand the Fluid Control business. And we've also got some capital that we except to spend in the Surface business in North America. So that's the first priority. Second priority is acquisitions. We haven't had many recently. But we're constantly looking for acquisitions. And particularly, I think you'll see us buy some smaller technology-oriented companies to fill in technology that we think we need for our subsea Processing area. And then finally, if there's any excess cash, we use it to repurchase stock. And as you saw, we really didn't generate any excess cash in the first quarter. It was consumed in some working capital, consumed in capital expenditures. But we do have $5 million authorization outstanding, and the stock repurchase program is still in effect. It just didn't buy many shares in the first quarter.

Okay. Thanks. Great answer. That's my 2. Back to you.

Your next question comes from the line of Michael LaMotte of Guggenheim Securities.

It's Joseph Triepke here on behalf of Michael LaMotte. A quick one on orders if I may. It looks like revs per tree for 1Q inbound came in at about $13 million. Looked a bit light. Just wondering is that a function of mix with more trees than manifolds and controls or is there's some pricing component there?

Yes. Well, it's really function of -- it does look light, and it's because we booked 32 trees from Petrobras. These are trees that don't have tree-mounted controls on them. They’re relatively inexpensive, and there's no manifolds or subsea system equipment associated with it. So that drove the number down. If you were to back out the Petrobras numbers, our revenue per tree would be $20 million to $26 million per tree. So it was all skewed by the big expansion to our lot 2 award that we got from Petrobras.

Okay, that's helpful, thanks. Then just as a quick follow-up, there's been some talk of sensor installations on DOPs post-Macondo. I was wondering if there's any such talk going on about monitoring of subsea trees and whether or not sensors could become an add-on feature that could help boost revenue per tree at some point in the future.

No, there hasn't been any change to the specification of the trees.

Thanks, guys. I'll turn it back.

Your next question comes from the line of Jeff Hillary [ph] of Tudor, Pickering, Holt.

I just had a couple of questions on the Surface business. I guess first on orders, is there a seasonal component to that? Just curious, it was a little bit lower than it's been in the past couple of quarters in what I'd see as an expanding market. So just curious to get some color around that.

Yes, this is Bob. Bill talked about the fact that our international order intake's been a bit light, though there are a number of major projects out there, particularly in the Middle East and Asia. In Asia, it's Indonesia, it's Malaysia, and so strong opportunities coming. But we have had some timing impact on the inbound order rate, which is what has driven some of the underperformance of the Surface Wellhead business in the first quarter. We're a little light on volume on international. It's offset by a stronger North America, but we expect some of these major orders to book in the fairly near term here, which will give us a good opportunity to get the Surface business back on track, second half.

That's helpful. And then maybe an analogous question on the Processing business. You talked about the frac pump capacity expansion really hitting in the third quarter. We've kind of run a couple of quarters in a row with big orders and quite a bit lower revenue. Do we kind of stay at this level until you get to the second half of the year or do we see some improvements in the second quarter?

Well, we're going to see some steady improvements in the Processing business in total because we're seeing much better inbound in the non-Fluid Control Processing business coupled with the continued strength in Fluid Control. So the Loading Systems business is starting to see the LNG orders hit the books, and that's going to benefit our shipments in the second half. And then like manner [ph] Measurement, in particular, continues to track very closely to the kind of major project activity worldwide as they build pipeline infrastructure and again, we're teeing the business up for a very strong second half.

Okay. Great. Thank you very much.

Your next question comes from the line of William Conroy of Pritchard Capital.

Really just wanted -- it's back to the subsea inbound that you saw in Q1 in the absence of any major projects and just wanted to get your thoughts on the sustainability of that level of business that falls below that major project threshold as we push through the year.

Well, first of all, what's included in that number is our customer support or aftermarket business, and that's holding up really well, even in the Gulf of Mexico. So that's not a small piece, and we'd expect that to continue. Clearly, the $1 billion, none for major projects, is unusual. I'm not sure that, that can be kept up, but it's certainly encouraging that there's a lot of smaller projects out there that are happening. And I think they'll add to our ability to get to the $4 billion. But when we look at the pieces, a big portion of it came from our partners where we already have an existing relationships. They're not tendered. They're just add-ons to existing work that we've done for them. So although it was unusual to have -- I think unusual to have almost $1 billion with no major project included, I think a lot of it is sustainable, although I think that's on the high side.

That's helpful. Maybe just to follow up on the tail end of that answer. In terms of the add-ons and the pieces, do you have any sense that, that pipeline is still relatively full? Or do you feel like maybe some of that got drained to the extent there's a pipeline of orders or potential orders out there?

No, I don't think it's strange at all. I think you have to go back to the longer-term outlook, and capital spending in deepwater is increasing. The number of rig counts are being added. The number of deepwater rigs is being added, is increasing. So I think it all supports continued growth, whether it's the major projects these smaller call-offs, and I don't think it's drained.

That's very helpful. Thank you so much.

Your final question comes from the line of Geoff Kieburtz of with Weeden & Co. Chris Enright - Weeden & Co., LP: This is Chris Enright in for Geoff. Just a couple of quick questions. The inbound subsea orders, are margins similar to the outbound, the orders you're executing currently?

Yes. I think Bill referenced that. The margins on the first quarter inbound were as good as what's existing in our backlog. The good thing about subsea is we've got such visibility we can see all the margins in our backlog, and really for the next year, and what we inbounded was -- the margins were solid. Chris Enright - Weeden & Co., LP: And a quick follow-up. How that progresses, how that changes, is that a function of how much of the order flow comes from large projects? As you said, it might be more competitive versus orders that would come from either follow-on orders or orders from frame agreement, direct awards?

Yes, that is a great question. Since we've rebuilt our backlog and the $1 billion that we entered in the first quarter is certainly even more helpful, we're in the position to target the projects that are important for us strategically or that have margins that are acceptable to us. So we're in the position to, I think, to add to our backlog carefully depending on how competitively intense these major projects are. But you're correct. We're going to have to navigate through the pricing of these major projects, which will be tricky throughout this year. But again, we are certainly -- we're encouraged that a large percentage of our inbound came from frame agreements or incumbent position because it doesn't have that pricing intensity. Chris Enright - Weeden & Co., LP: Great. Thank you very much.

This concludes our first quarter conference call. A replay of our call will be available on our website beginning at approximately 2 p.m. Eastern Time today. We will conduct our second quarter 2011 conference call on July 26 at 9 a.m. Eastern Time. If you have any further questions, please feel free to contact me. Thank you for joining us. Operator, you may end the call.

Thank you again for participating in today's conference call. You may now disconnect.