Good morning and welcome to the Chart Industries Incorporated 2015 Second Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, today's call is being recorded. You should have already received the company's earnings release that was issued earlier this morning. If you have not received the release, you may access it by visiting Chart's web site at www.chartindustries.com. A telephone replay of today's broadcast will be available following the conclusion of the call until Thursday, August 6. The replay information is contained in the company's earnings release. Before we begin, the company would like to remind you that statements made during this call that are not historical in fact are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied in the forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to the information regarding forward-looking statements and risk factors included in the company's earnings release and latest filings with the SEC. These filings are available through the Investor Relations section of the company's web site or through the SEC web site, www.sec.gov. The company undertakes no obligation to update publicly or revise any forward-looking statements. I would now like to turn the conference call over to Michael Biehl, Chart Industries' Executive Vice President and CFO. You may begin your conference. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Thank you, Kath. Good morning, everyone. I'd like to thank you all for joining us today. Begin by giving you a brief overview of our second quarter results,…

Thank you. Our first question comes from the line of Martin Malloy with Johnson Rice. Your line is open. Martin W. Malloy - Johnson Rice & Co. LLC: Good morning. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good morning, Marty. Martin W. Malloy - Johnson Rice & Co. LLC: I want to ask a little bit more about the mid-scale LNG project opportunities that you see out there. And outside of Magnolia, Venture Global, Parallax, can you talk a little bit about the timing of those projects when you might expect to get additional orders there? And I know they are multiple trains each, would you expect them to issue orders for certain amount of trains at a time? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Yes. We're quoting on projects which equate to nominally 30 million tons per annum, perhaps slightly higher than that. Project timings are very difficult to predict, because it is based on customers signing offtake agreements with those project developers in many cases. But orders are forecast and we're working on timeline that would result in orders for roughly half of that capacity -- potentially, roughly half of that total capacity over the next 12 months to 18 months and going out a couple of years for that full 30 million to 40 million ton opportunity. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. Samuel F. Thomas - Chairman, President & Chief Executive Officer: But I'd emphasize that at this point, it's very difficult to predict closely the timing of those orders. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. And then on the enquiries and opportunities that you're seeing on the D&S LNG containers, could you talk a little bit more about the end-markets there and the uses? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Yes. I think the largest opportunity is replacement of coal or more likely oil or diesel fired power generation on island nations, either in the Caribbean, Hawaii and there is also additional opportunities in Indonesia and the Philippines, where those island nations believe they can both improve air quality as well as reduce their cost by using LNG imports and either using tankers and storage tanks onsite or ISO containers to transport them. And these can be everything from running gensets for resort hotels up through base load power gen plants as large as 150 megawatts and potentially higher than that. Martin W. Malloy - Johnson Rice & Co. LLC: Thank you.

Thank you. Our next question comes from the line of Alex Potter with Piper Jaffray. Your line is open. Please go ahead. Alexander E. Potter - Piper Jaffray & Co (Broker): Hi, guys. Thanks. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Hi, Alex. Alexander E. Potter - Piper Jaffray & Co (Broker): I was wondering, right now, if you could look at the D&S backlog, how much of that is China? And then, within that China number in the D&S backlog, how much of the remainder or how much of that number I guess is PetroChina? Samuel F. Thomas - Chairman, President & Chief Executive Officer: About half of the D&S backlog is China, and about roughly $80 million range is for PetroChina, that still remains. We did this reduction, backlog reduction, we did take about $8 million of PetroChina out of that. Alexander E. Potter - Piper Jaffray & Co (Broker): Okay. And what is it, if you were to look at the remainder of PetroChina or I guess China D&S orders more broadly, I know the same question was asked last quarter, maybe if you can comment qualitatively on why you wouldn't bring it down further? What is it that gives you confidence that that remainder of the backlog is actually going to be delivered? Samuel F. Thomas - Chairman, President & Chief Executive Officer: We discuss with the customers on a regular basis weekly, if not monthly or monthly, if not weekly, I should say, what they intend to take delivery of what they have customer commitments and enable to put things into service. The fact that we've had rolling cancellations is a reflection that there is a fundamental optimism in China generally, and amongst our customers that projects are going forward. And it's…

Thank you. Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Your line is open. Please go ahead.

Good morning. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Hi, Rob.

Kind of a similar question on your D&S margins, they were down this quarter, is this sort of the new run rate, given the lower volumes or how should they trend? Michael F. Biehl - Executive Vice President & Chief Financial Officer: The expectation is that they would be in 26%, 27% range over the remainder of the year. I mean, keep in mind that, there was a small amount of restructuring in there. But our expectation is that it should be an improvement in the third and fourth quarter. Now with that said, some of it is, where the volume in China goes to.

Okay, good. And then, on your CapEx expectations for the year, could you give us some update on where you are out there and where you are out on facility expansion thinking? Samuel F. Thomas - Chairman, President & Chief Executive Officer: We continue to move forward slowly with the facility expansion and we actually will be putting part of the – part of it in the service later this year, right now in terms of CapEx, we're looking in the probably the mid 50s, 50 to 55 range in terms of our spend for the year. But, we also are continuing to look at as projects come up of deferring those, which we have the ability to do until next year. But we do, in terms of the expansion, will have a large part of that coming through in the second half.

Okay, great. Thank you. I'll turn it over.

Thank you. Our next question comes from the line of Eric Stine with Craig-Hallum. Your line is open. Please go ahead.

Good morning, everyone. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good morning, Eric.

I know you've talked about that I guess through last quarter, the cancellations that you had seen, you weren't expecting them to get a whole lot larger. And now, the cancellations are higher than you've seen in the previous cycle. I mean do you feel kind of the worst is behind you there, is it an ongoing process, how should we think about that? Michael F. Biehl - Executive Vice President & Chief Financial Officer: I think it's an ongoing process, and let me make a clarification. They aren't cancellations really, there – what we did is look at the backlog and look at whether the customers were going to take the orders are not. I mean it wasn't a formal cancellation that we received from the customers. It was more – we made the decision that unlikely that the order, the original commitment was going to be delivered in China and decided to scrub it out of backlog. So, I want to make that clarification. But, it's an ongoing process. And as Sam mentioned, we have continued our dialog with the customers, including PetroChina, as to what they believe their take will be. So, I can't guarantee you that we won't have further reductions over there. Samuel F. Thomas - Chairman, President & Chief Executive Officer: It's probably worth saying, Eric, if you can tell me what oil prices are going to be and China's industrial production growth, I can tell you what our order cancellations will be.

Right, understood. Recognizing it's tough. But, so only just to clarify, $8 million of this is PetroChina. So, I mean you still sound like you have a fair degree of confidence that they still plan to move forward on significant business, just the timing is the uncertainty? Samuel F. Thomas - Chairman, President & Chief Executive Officer: That's correct. We're trying to make the most balanced judgments we can that accurately reflect what we believe we're going to deliver. Alexander E. Potter - Piper Jaffray & Co (Broker): Okay. Got it. Well, then maybe turning to orders, I know ex the adjustments that you made, the orders were up sequentially and I know earlier this year, you weren't certain if you'd seen the worst or not, and actually thought second quarter might be down sequentially. So, I mean any thoughts on what you're seeing early here in the third quarter? I mean are you seeing order trends start to improve, or is that uncertain as well? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Very good prospects with respect to LNG exports in E&C. D&S continues in North America to see orders like we saw in the second quarter. So they are related both to LNG projects and also to industrial gas activity where our customers are upgrading their distribution equipment to provide lower cost of service. That continues to be a bright spot. Europe is flat with mixed signals and China is soft. Alexander E. Potter - Piper Jaffray & Co (Broker): Okay. Samuel F. Thomas - Chairman, President & Chief Executive Officer: I think that our experience early in the third quarter is reflected in our earnings guidance. Alexander E. Potter - Piper Jaffray & Co (Broker): Okay, understood. Maybe just a last thing on the LNG order pending. I mean is this – just to clarify, is this something, I mean are there additional steps that Magnolia needs to take in terms of financing in off-take agreements or is it beyond that? And – I mean what's your level of confidence that this pending order becomes an actual order? Samuel F. Thomas - Chairman, President & Chief Executive Officer: There's two parts to that. A customer sent a purchase order, the contract is in the process of being novated. So while the end customer has sent us a purchase order, we don't have that purchase order fully bedded down, that we would report it as backlog. We have a high level of confidence that at least half of that order will be booked within the next couple weeks. And a commitment subject to additional customer off-take agreements that the balance of the order would be placed during 2015. Alexander E. Potter - Piper Jaffray & Co (Broker): Okay. Thank you.

Thank you. Our next question comes from the line of Rob Norfleet with Alembic Global Advisors. Your line is open. Please go ahead.

Hi good morning. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good morning. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Hello, Rob.

Just quickly on D&S and the E&C in both those segments, clearly, we're seeing the lack of fixed cost absorption due to the lower volumes. Can you discuss currently the overall operating capacity rates and any additional things or initiatives that you're looking to undertake to potentially help that, meaning are you looking to possibly idle any additional capacity or facilities? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Our operating rates are decreasing as we burn through backlog, as you would expect, number one. So, a nice way of saying that is, we are open for business and happy to accept orders. We don't see any capacity constraints on the horizon. And in terms of we continue to look at opportunities as backlog decreases, if we don't have immediate order prospects, which would rebuild that backlog, we will continue to take out expenses. That's part of being in a capital goods cyclic business it's what we do every day.

Okay. That's helpful. And secondly, in terms of the mid-scale LNG orders that you discussed, Magnolia, Parallax and others, first of all – can you kind of discuss what the margin profile on this work looks like? Is it more traditional E&C margins kind of in that upper 20%, low 30% range? And secondly, which manufacturing facilities would most of this work be performed in likely La Crosse? Samuel F. Thomas - Chairman, President & Chief Executive Officer: In terms of the margin profile, there is a wide range, but it's fair to say that you can expect historic E&C margins for those projects. In terms of the facilities that benefit the most from those orders, it would be our La Crosse facility and our New Iberia, Louisiana facility for cold box fabrications and our engineering facility, our engineering offices in The Woodlands. If there's additional work for those projects that would be done in our D&S facilities in the Czech Republic, and in New Prague, Minnesota, as well as contributions to our Tulsa air cooled heat exchanger facility.

Okay, great. And lastly I just wanted to – a general question on competition. I know you all had noted earlier in the call that competition in the brazed market and others remains fairly intense, with Japanese and other European companies competing. Can you just kind of discuss what you're seeing from a competitive landscape situation and obviously has anything changed over the last three to six months as to have how these companies are bidding on projects and the type of work that they are looking at, which maybe they weren't traditionally focused on before? Samuel F. Thomas - Chairman, President & Chief Executive Officer: The industrial gas air separation market, which is a large market for heat exchangers has been a global market for a number of years, and pricing levels vary with industry capacity, not unlike the steel industry profile. There is some additional pressure on us compared to the period from 2006 to 2012, with a stronger dollar than we had and our competitors are either yen or euro based or renminbi based. But certainly, when the dollar is strong, it cuts into our margins to compete head-to-head with Japanese or European competitors.

Great, that's helpful. Thank you.

Thank you. Our next question comes from the line of Chase Jacobson with William Blair. Your line is open. Please go ahead. Chase A. Jacobson - William Blair & Co. LLC: Hi. Good morning. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good morning. Chase A. Jacobson - William Blair & Co. LLC: So, as it relates to the guidance, just as we look at the current guidance versus the guidance you gave last quarter, the EPS is down about 20%, the revenue is down about 7%. You had a foreign currency gain and a lower tax rate in the second quarter. So, what got worse over the last three months on the profitability side, and how much of that is in E&C versus D&S, because it seems like BioMed is reasonably in line with your expectations? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Your comments about BioMed are correct. The primary deterioration for D&S is China, although there is some deterioration in Europe. The currency issue was, as you mentioned, was sort of an aberration of the way the euro traded against the dollar during the quarter. We've now settled out over currently at $1.10 euro to dollar. So I don't see both that positive benefit coming in the rest of the year based on lower forecasts. Within E&C, it's a reflection of the order profile, soft order intakes so that we won't get the benefit of orders later in the year to boost up E&C's results. So, it's spread between the two, and for those reasons. Soft order intake in both, we perhaps had optimism when we reported our first quarter results that order intake based on the general economy and oil prices improvement was going to give us a lift in the…

Thank you. Our next question comes from the line of Noah Kaye with Northland Capital Markets. Your line is open. Please go ahead.

Thank you. Good morning. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good Morning.

You have continued to reduce head count, I think quarter-over-quarter, the annualized cost savings associated with that have increased I guess in the last couple of quarters from $20 million to $40 million. As you see these greater savings, going forward how much do you think you can take out – operating expenses in the back half of the year? Can we just sort of talk about that as a starting point? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Well, we've stated the calculation on an annualized basis of what it was in comparison to where we are. We continue to work on it, and we'll continue to right-size our expenditures and headcounts to the work available, being careful that we maintain the capability to ramp up quickly and effectively at the start of the cyclic upturn. Because, just as this business is ugly in a cyclic downturn, the opportunity for established credible players like Chart to grow very quickly and very profitably in the early stages of cyclic upturn are significant. We intend to maintain that capability.

I guess just turning to the LNG outlook, you talked about the challenge of contracting off-takers. Any view on where the regulatory landscape stands, change to better or worse with respect to greenlighting projects at this juncture? Samuel F. Thomas - Chairman, President & Chief Executive Officer: First, we don't have enormous insight into the issues with our customers, project developers getting committed off-take contracts. It's – that's something that is confidential as we don't have enormous insight into. I can only report what they tell us which is, they're making good progress and they feel confident that they'll move forward their commitments. With respect to the regulatory landscape, there are time periods for getting DOE and other approvals, which seem to be well understood by them. And the comments we get is that the regulatory landscape is positive in terms of significant plentiful supply of natural gas in the U.S., so political need to restrict the amount of gas which gets approved for export. And then it comes down to local site environmental issues, whether there are any protests. And you will note that the majority of these projects are on the Gulf Coast Lower Mississippi area, which has tended to be tolerant of hydrocarbon projects.

Okay that's very helpful color, thank you.

Thank you. Our next question comes from the line of Greg McKinley with Dougherty. Your line is open. Please go ahead. Gregory J. McKinley - Dougherty & Co. LLC: Okay thank you. Could you talk about the order reversal, how much of your guidance change was attributable to that? Samuel F. Thomas - Chairman, President & Chief Executive Officer: A significant part, not directly correlated, but a large part of that order cancellation were orders that we'd anticipated shipping in the second quarter and the review show that was unlikely to happen. So, I would say that that's the – that's a large contributor. But a second large contributor was also the soft orders in the first and second quarter for the E&C business. So as I responded to an earlier question, the degradation of expected earnings is roughly evenly split between those two. Gregory J. McKinley - Dougherty & Co. LLC: Okay. If we could maybe talk about your expectations for China as it's implied in your guidance right now, I think you indicated in Q2, Asia orders in D&S were down about 35% or so. Can you remind us of what Asia D&S was in 2014 and how the current environment is impacting – what do you think it will be in 2015? And is that – is your view for 2015, is that reflective of the current status of order flow or does it anticipate any recovery or any color on that please? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Our forecast does not anticipate significant -- any recovery in the third quarter and growing marginal, if any recovery in the fourth quarter. Gregory J. McKinley - Dougherty & Co. LLC: Okay. Samuel F. Thomas - Chairman, President & Chief Executive Officer: There has…

Thank you. Our next question comes from the line of Jeff Osborne with Cowen & Company. Your line is open. Please go ahead. Jeffrey Osborne - Cowen & Co. LLC: Yes, good morning. I just had two quick ones. One, Mike, I was wondering if you could just update us on what the tax rate assumption should be for the year? And then, Sam, I didn't know if given the pricing environment, if there is kind of a rule of thumb on pricing per million tons for some of those midstream – mid-scale facilities that you're talking about. Just how do we kind of handicap what the size potential is there, the TAM that you're going after? Michael F. Biehl - Executive Vice President & Chief Financial Officer: I would expect in the 30% range for the tax rate is a good rule of thumb to use. Jeffrey Osborne - Cowen & Co. LLC: All right. Samuel F. Thomas - Chairman, President & Chief Executive Officer: In terms of cost per ton, our customers have discussed all-in cost for these facilities in the $500, $600 per ton level. However, that's not necessarily the best guide for charged content, because that includes all of the civil works and construction of tanks. And there is also – so, we're only a part of that and our content varies. In addition, there is a significant difference for Greenfield versus Brownfield development, which is included in these projects. Jeffrey Osborne - Cowen & Co. LLC: Is it safe to say you're in that 20% to 40% range was what I was thinking, but I just wasn't sure how meaningful pricing is down? Samuel F. Thomas - Chairman, President & Chief Executive Officer: That's probably reasonable. Jeffrey Osborne - Cowen & Co. LLC: Great. Thanks much.

Thank you. Our next question comes from the line of Pavel Molchanov with Raymond James. Your line is open. Please go ahead. Pavel S. Molchanov - Raymond James & Associates, Inc.: Thanks for the question. Most of them have been asked. Just one more on the Magnolia, if I may. You've talked before about $40 million to $50 million per train of addressable cold box revenue, and I think for Magnolia, you said its $80 million for four trains. So where is the disconnect? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Trains vary in size significantly. Where we've talked historically, we were talking about base load trains which were nominally 4.5 million tons per train. And in the case of Magnolia, these are significantly smaller trains. I believe each – they are 1 million tons -- 2 million tons per train. Pavel S. Molchanov - Raymond James & Associates, Inc.: Okay, that's clear enough. And anything new on the Parallax front? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Nothing beyond the public announcements that have been made by Parallax and auction here (56:57). Pavel S. Molchanov - Raymond James & Associates, Inc.: Okay, clear enough. Thank you. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Thank you.

Thank you. Our next question comes from the line of Anjali Voria with Thompson Research Group. Your line is open. Please go ahead.

Thank you. Good morning. I was wondering if I could ask a question. Samuel F. Thomas - Chairman, President & Chief Executive Officer: You're very faint.

Is this better? Can you hear me now? Is this better? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Yes.

Great. Okay. Apologies. I had a question about SG&A. I know you touched on the decrease this year was due to lower variable cost, bad debt expense, cost reduction initiatives. First of all, I was wondering if you could perhaps provide some color on that, if you could maybe even quantify how much each of those represented. And then secondly, on the same subject, is it fair to say that these favorable Q2 SG&A levels don't really extrapolate based on where you've put your guidance, and if so, could you address why that's the case? Is there some accrual adjustments in Q2 or what the – if you could just sort of go through those items, I would appreciate it. Samuel F. Thomas - Chairman, President & Chief Executive Officer: I think we're struggling to answer your question. Michael F. Biehl - Executive Vice President & Chief Financial Officer: No, there weren't any accrual adjustments in SG&A expenses and it's really is a combination of lower incentive as we said. Based upon performance, there is some reductions in – I guess if you call it an accrual in terms of bad debt expense that we've previously accrued, that we received debts of them (58:47), that was really a nominal piece of it and cost savings. So, if you look at as we go forward, over the year, we would expect in terms of SG&A to average in the $50 million range, which is lower than the first quarter, but a little bit higher than where we were in the second quarter. And again that is based upon our incentive performance which is very...

Okay. And then in terms of your, I mean, of course now timing is the name of the game here, but we've heard some announcements out of Golar LNG where they are now talking about moving forward with Gimi and the Gandria, which is the two FLNG vessels outside -- after the hilly that you all were involved with, do you know -- what is your optimism on that front or do you have any idea of what that's looking like for you over the next several months or going into 2016 or something like that? Samuel F. Thomas - Chairman, President & Chief Executive Officer: They are potential orders for us. We have done engineering work on those projects. The actual timing as to when the orders will be released is a little fuzzy.

Okay. Fair enough. And I guess lastly, does your – does the Cheniere or Parallax announcement, does that change your position or the timeline or scope of that project, or is it still largely the same for both of those LNG export terminals (1:00:40). Samuel F. Thomas - Chairman, President & Chief Executive Officer: I think it's a positive announcement that Cheniere who has quite a bit of creditability and large potential capacity has said that they would use their muscle and credibility to move those projects forward. But the timing has not changed and the estimates is really driven by proceeding with construction after FERC and DOE permits are achieved. So, there's been no changes in the projected project timing.

Okay. Thank you very much. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Anjali, one thing I'd like to clarify on the SG&A run rate is that, keep in mind that Thermax came in in the second or in the third quarter and fourth quarter. So, it would drive our SG&A run rate up. The other thing that is in there is the Owatonna lease shutdown built into there, which is about $2.5 million. So, just want to give you a little bit more clarity on that.

I appreciate that. Thank you.

Thank you. And at this time, I'm showing no further questions. I'd like to turn the call back over to Sam Thomas for any closing remarks. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Thank you. We remain committed to long-term growth of shareholder value by understanding our customer needs and providing them with superior products and value. We're taking appropriate cost control measures to deal with the current headwinds, while retaining the ability to respond quickly to improve demand and customer needs as markets come back. Thank you very much for listening to our call. Have a good day.