Good morning and welcome to the Chart Industries, Inc., 2015 Third 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 website at www.chartindustries.com. A telephone replay of today's broadcast will be available following the conclusion of the call until Thursday, November 5. The replay information is contained in the company's earnings release. Before we begin, the company would like to remind you that the statements made during this call that are not historical in fact are forward-looking statements. Forward-looking statements involve risks and uncertainties that can 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 including the company's earnings release and latest filings with the SEC. These filings are available through the Investor Relations section of the company's website or through the SEC website, www.sec.gov. The company undertakes no obligation to update publicity 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, Chanel. Good morning, everyone. Thank you all for joining us today. I'll begin by giving you a brief overview of our third quarter results and then Sam Thomas will…

Thank you. And our first question comes from Eric Stine of Craig-Hallum. Your line is now open. Please go ahead.

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

Maybe can we just touch on your plans for cost cutting? I know you touched on a little bit, but any way you can go more in-depth on some of the levers you may pull in potentially a dollar amount maybe versus what you've called out to this point in the year? I think you've talked about $40 million? Samuel F. Thomas - Chairman, President & Chief Executive Officer: I think we're deeply involved in our budgeting process. And I think it would be appropriate to defer giving specific dollar numbers until we've gone through that.

Okay. But I mean safe to say, though, it potentially is a pretty significant number? I mean, your... Samuel F. Thomas - Chairman, President & Chief Executive Officer: Well, our past performance has demonstrated we have the capability to significantly impact our total cost structure.

Yeah. Samuel F. Thomas - Chairman, President & Chief Executive Officer: It's different now.

Okay. Yeah, that's what I was getting at. All right, I'll stay tuned on that. And then, maybe just talk about the backlog adjustments. I know last quarter you made the adjustments and I think the impression was that there were probably more, but maybe not of this magnitude. So is this something – I guess, first, I mean, do you feel like this was really the big cut and you don't expect a whole lot more? And then, I guess, the second part of that question is, is PetroChina – I mean, is there much left in backlog for PetroChina? Samuel F. Thomas - Chairman, President & Chief Executive Officer: You're correct that we substantially cleaned the backlog. Prior to the end of the third quarter, there had been a expectation which, at this point, looks like it was just a hope, that there would be a third and, particularly, fourth quarter bump in China demand that would involve delivery of a significant amount of this equipment. The magnitude of that bump at this point in time in demand for China, which we experienced in the previous two years, in the – late in third and fourth quarter – is not expected to occur to that magnitude and the demand profile is changing. So, we made the decision on that basis. It's true that PetroChina was a large part of this. The backlog that we have with them is relatively small, less than 10% of their sales rate for the overall China business at this point. But we considered – we continue to see them as a significant customer in the future.

And they would – you would characterize them as a customer or some of the orders that, depending on how things play out – they potentially do come back? Michael F. Biehl - Executive Vice President & Chief Financial Officer: Yeah. And they... Samuel F. Thomas - Chairman, President & Chief Executive Officer: We continue to receive orders from them and continue to have discussions and ship to them. And we continue to have discussions of additional opportunities, so yes.

Okay. Maybe just last one for me, just quick commentary on the pipeline you're seeing, given the agreement with Bechtel for floating LNG. Thank you. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Thank you.

Thank you. And our next question comes from Rob Brown of Lake Street Capital. Your line is now open. Please go ahead.

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

Could you just give – I think you said there was some one-time margin hits in the third quarter – but your guidance implies some margin degradation, I think, going forward. But could you give us a sense of the D&S margin trends over the next few quarters and into next year? Michael F. Biehl - Executive Vice President & Chief Financial Officer: Right now, in terms of D&S, we expect somewhere in the – I would say the mid-20%s, based upon where capacity is and order expectations over the next few quarters, that factors in the China margins, too.

Okay, good. Thank you. And then on the U.S. LNG market, what's your latest thinking? I know you had some big projects that were moving toward a pipeline. Have they extended out as well? Or are they still tracking as before? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Our specific customers remain optimistic. However, we do know from the press that getting off-take commitments from other LNG traders or end-users is reported to be very difficult to come by with people being reluctant to make commitments. So on that basis, we are less optimistic of near-term LNG export-related orders.

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

Thank you. And our next question comes from Alex Potter of Piper Jaffray. Your line is now open. Please go ahead. Alexander Eugene Potter - Piper Jaffray & Co (Broker): Yeah. Thank you. I was wondering if you could... Samuel F. Thomas - Chairman, President & Chief Executive Officer: Good morning, Alex. Alexander Eugene Potter - Piper Jaffray & Co (Broker): Hi. I was wondering if you could shed a little light on, I guess, the implied margin degradation. Obviously, the revenue guidance came down a bit, but not by as much as the EPS guidance came down. So I'm just wondering kind of what the change there is from a margin standpoint versus where you were at with guidance this time last quarter? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Yeah. A large part of that is reduced commodity prices coming through in lower sales prices and reduced margins because of competitive pressure, particularly related to China and related to energy and chemical pricing for petrochemical and industrial gas applications. Alexander Eugene Potter - Piper Jaffray & Co (Broker): Okay. So it sounds like – I mean, the competition had been fierce last quarter. But from what it sounds like over the last several months, it has turned out to be even, I guess, more fierce than what you had expected and pricing pressure has resulted? Is that a fair way to characterize it? Samuel F. Thomas - Chairman, President & Chief Executive Officer: It is. And the areas where we have proprietary products and higher margins, less competitive intensity, are being more dramatically impacted by delays than some of our longer standing industrial products where there is more competition and hence more price pressure. Alexander Eugene Potter - Piper Jaffray & Co (Broker): So a…

Thank you. And our next question comes from Greg McKinley of Dougherty. Your line is now open. Please go ahead. Gregory J. McKinley - Dougherty & Co. LLC: Yeah, thank you. Following up on that last question, I'm wondering if you could try to help me separate out some of these charges by segment so that I can understand what the – I guess, you call it core performance would be versus the non-recurring. So we had indicated there's $4.9 million of charges and I think $1 million of that we said was due to facility shutdown and severance that hit cost of sales, but then separately we say restructuring reserves impacted D&S margins by 2%, which is... Michael F. Biehl - Executive Vice President & Chief Financial Officer: Well, restructuring reserves, and there was – in addition, there was inventory reserves that are classified as part of restructuring. So there's about $1.4 million of inventory reserves that were taken in Distribution & Storage, both in China and the U.S., lower cost of market reserves that we recorded in the quarter, that impacted the margin. So that's above and beyond the $4.9 million of restructuring expenses that we incurred in the quarter. Gregory J. McKinley - Dougherty & Co. LLC: Okay. So if I – so taking that in total, then we'd have – we had 2% in D&S, which would include the $1.4 million. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Yeah. Gregory J. McKinley - Dougherty & Co. LLC: And then you had the $1 million of facility shutdown and severance costs, which is also within D&S. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Yeah, the majority of it is. There's a small piece in BioMed, but nominal. Gregory J.…

Thank you. And our next question comes from Chase Jacobson of William Blair. Your line is now 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 I just wanted to ask about the cost-cutting, particularly as it relates to your comment about kind of what you've done in the past. If I look back, I think in the 2006 to 2008-2009 timeframe, you were running around 13% to 14% SG&A of sales. But over the last three years, 2013 to 2015, you've been closer to 17% on average and a little bit higher this year. I mean, when we look forward – and I know you're still going through the budgeting process, but can you get it back down to that lower double-digit level? Are we still looking at kind of a upper mid-teens percentage of sales for SG&A as we go forward? Samuel F. Thomas - Chairman, President & Chief Executive Officer: There's a balance between those two levels. We had consciously expanded our SG&A to enable us to go after the significant growth potential, particularly related to LNG markets. As that demand is tempered, we'll pull it back. There is a balancing act of trying to estimate how much capability to retain for future growth. We do believe we've got the business very well positioned, and we don't want to just exit those markets because we do believe there will be a normalization of oil prices and hence increased demand for our LNG offering. So I guess I would say I don't anticipate going back to the same levels, but I believe they will be lower than they have…

Thank you. And our next question comes from Pavel Molchanov of Raymond James. Your line is open. Please go ahead. Pavel S. Molchanov - Raymond James & Associates, Inc.: Thanks for taking the question, guys. First, about Magnolia, given that Magnolia has not yet finished its permitting cycle with FERC and the DOE, how are they in a position to place a firm order for equipment? Samuel F. Thomas - Chairman, President & Chief Executive Officer: They have enough equity capital to – and have committed to buy this equipment – in order to give them the ability to get online faster. Pavel S. Molchanov - Raymond James & Associates, Inc.: Okay. But if they don't get the permits, what would be the purpose? Samuel F. Thomas - Chairman, President & Chief Executive Officer: You have to direct that question to them. Pavel S. Molchanov - Raymond James & Associates, Inc.: Okay. Fair enough. Let me try a different one. Your book value right now is about $30 a share; the stock is obviously well below that. Bearing that in mind and the fact that your CapEx will be only $30 million next year, you're talking about being free cash flow positive. Are you feeling at all more enthused about share buyback? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Our position hasn't changed. It's a topic of regular discussion with the board. We do have the ability to do that with our balance sheet and credit facility. But markets are tough, and we'll continue to evaluate and do what's best for shareholders, keeping a balance between share buyback as a potential and investments in the business. Pavel S. Molchanov - Raymond James & Associates, Inc.: All right. Appreciate it, guys.

Thank you. And our next question comes from Rob Norfleet of Alembic Global. Your line is now open. Please go ahead.

Good morning. This is actually Nick Chen for Rob this morning. Thanks for taking our questions. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Hi.

Great. So just to clarify, first of all, something that was said earlier in the first question. Looking at the reductions in backlog in China, you commented that PetroChina now accounts for less than 10% of the overall China backlog. Is that correct? Michael F. Biehl - Executive Vice President & Chief Financial Officer: Yes, less than $10 million.

Less than $10 million. Michael F. Biehl - Executive Vice President & Chief Financial Officer: Yeah. Although, as Sam pointed out, they continue to give us new orders and they continue to take equipment from the backlog that we have.

Okay, great. That's very helpful. Thank you very much. In terms of capital allocation, are you seeing any sort of distressed or attractive targets in select markets right now? And would that be a priority use of cash? Samuel F. Thomas - Chairman, President & Chief Executive Officer: We are seeing offers of companies or assets for sale that are in financial distress. We evaluate all of them carefully. However, with the discipline that we exercise and the constraints on market share, I don't expect an enormous amount of acquisitions in that area.

Great. That's helpful. And then just, again, looking back at sort of the fixed cost absorption dynamic and the weaker pricing that's going on right now with margins, for E&C margins now in the sort of low 20% range, which is I think close to past trough levels, is the work that you're bidding on today similar to those margins or lower? We're just trying to sort of figure out the operating leverage of the business and what to expect in a low revenue environment. Samuel F. Thomas - Chairman, President & Chief Executive Officer: The blended rates – there is significant dispersion of the range of gross margins or pricing levels, but the blended rates would be comparable to that.

That's very helpful. Thank you very much. I'll hop back into the queue now.

Thank you. And our next question comes from Jeff Osborne of Cowen & Co. Your line is now open. Please go ahead. Jeffrey Osborne - Cowen & Co. LLC: Yeah, great. Good morning. I just had two questions. One is on the D&S side. I was wondering if you could just touch on what the exposure is to non-LNG applications? You talked about strength, Sam, in industrials and beverages, food processing, et cetera. Just can you remind us on how – what the level of investment or revenue that's coming through in that segment? And then, I had a follow-up, but I'll wait for the answer on that one. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Well, I would guess that at this point something like 75% or 80% of our revenue and backlog is industrial gas related non-LNG. Jeffrey Osborne - Cowen & Co. LLC: Got it. That's helpful. And then I'm actually down in Dallas at the High-Horsepower conference that you're sponsoring this weekend, a lot of focus on marine. Can you just remind us on what your revenue content per boat would be, just roughly? Samuel F. Thomas - Chairman, President & Chief Executive Officer: That goes all over the map from the – depending on the application and the level of equipment we're providing in addition to a tank. But it could be anywhere from $0.25 million to $10 million or $15 million. So it's a pretty wide dispersion. Jeffrey Osborne - Cowen & Co. LLC: Very good. Thanks so much, guys. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Thank you.

Thank you. And our next question comes from Anjali Voria of Thompson Research Group. Your line is now open. Please go ahead.

Good morning. With regards to your cost reduction initiative, do you have room to further idle or close additional facilities should you need to, or is the emphasis on head count reduction? In addition to that, if you could also speak to a D&S facility in China that I believe was slated to go online in Q4, could you update us on that as well? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Yes. There are potential facility closures. We continue to evaluate them. The new facility in China, in Changzhou, will be operating – only parts of it will be operating at relatively low levels in 2016.

Okay, great. With regards to the BioMedical space, you highlighted a customer consolidation. Do you expect further softness in order flow, or could you sort of discuss how that should play out over the next few quarters? Samuel F. Thomas - Chairman, President & Chief Executive Officer: It is a dynamic situation. The customer consolidation that I talk about are in the home healthcare service provider space where you've seen a fairly regular stream of announcements of acquisitions and consolidation in that space. It's a – the market demand, the overall unit volume of respiratory concentrators is stable and growing at mid-single-digit rates, but there is significant competitive pressure. So it depends how successful we are in the marketplace and in providing superior products at the right pricing levels.

Is that translating into any price pressure as well? Or is this merely a market demand dynamic? Samuel F. Thomas - Chairman, President & Chief Executive Officer: Pricing in that market is very sharp and competitive.

Okay. Thank you very much.

Thank you. And I'm now showing no further questions at this time. I would now like to turn the call over to Mr. Sam Thomas for closing remarks. Samuel F. Thomas - Chairman, President & Chief Executive Officer: Thank you, Chanel. With the economic and energy price issues we've talked about quite a bit now being more persistent and expect to be longer than previously expected, we're actively working to continue to adjust our cost structure to reflect these challenging conditions. Chart provides excellent value to our customers, and we remain confident in the fundamental drivers of our business. We remain steadfast in our pursuit of our strategic goal of delivering long-term growth. Thank you everyone for listening today. Good bye.