Good morning, and welcome to Nordson Corporation Conference Call today, Friday, February 23, 2018, to report Fiscal Year 2018 First Quarter Results and Fiscal Year 2018 Second Quarter Outlook. Today's conference call is being broadcast live on Nordson's webpage at nordson.com/investors and will be available for 14 days. There will be a telephone replay of the conference call available until March 9, 2018, which can be accessed by dialing (404) 537-3406. You will need to reference ID number 4186237. During this conference call, forward-looking statements may be made regarding future performance based on Nordson's current expectations. These statements may involve a number of risks, uncertainties, and other factors as discussed in the company's filings with the Securities and Exchange Commission that could cause actual results to differ. After remarks on the quarter, there will be a question-and-answer session. With that being said, I would like to introduce Mike Hilton, President and Chief Executive Officer of Nordson Corporation. Please go ahead, sir.

Thank you. Good morning, everyone. Thank you for joining Nordson's 2018 first quarter conference call. I'm joined by Greg Thaxton, our Senior Vice President and Chief Financial Officer. I'm very pleased to report that Nordson's outstanding global team has once again delivered record results. We successfully leveraged increased sales volume to drive improvement in operating margin, diluted earnings per share, and EBITDA, as compared to the first quarter a year-ago. Our technology leadership, excellence in customer service, and diversification efforts have helped drive this growth. During the quarter, we also completed the acquisition of Sonoscan as well as certain assets from Infiniti Dosing. I would like to extend a warm welcome to these employees that have recently joined Nordson; we're looking forward to expanding our capabilities with these great additions to the portfolio in the coming months. I will now provide some highlights on our financial performance and Greg will offer more detailed commentary in a few moments. Looking at the first quarter, sales, operating profit, diluted earnings per share, and EBITDA, were all first quarter records. We generated strong top-line against a very challenging prior year comparison where total company organic growth was 10%. Demand was robust in most all of our product lines and was largely driven by continued strong demand within electronics and medical end markets. We remain committed to delivering the best technology solutions, while employing continuous improvement initiatives to drive bottom-line results. Excluding one-time charges of $2 million and the incremental $6 million of intangible asset amortization expense in the current year's first quarter, adjusted operating margin was 23% in the current quarter, up 420 basis points over the prior year. EBITDA increased 49% in the quarter and EBITDA margin improved 250 basis points both as compared to the same period a year ago, representing very strong first quarter performance. Looking ahead to the second quarter, we are expecting organic sales growth to be more modest as we're up against challenging comparisons to the prior year where organic sales growth was 9%. I'll speak more about the outlook in a few moments, but first I'll turn the call over to Greg to provide more detailed perspective on the first quarter and our second quarter guidance.

Thank you, Mike, and good morning to everyone. I'll first provide some comments on our first quarter results before moving on to our outlook for the second quarter of fiscal 2018. First quarter sales were $550 million, an increase of 35% over the prior year's first quarter. This change in sales included approximately 19% growth in organic volume, approximately 12% increase related to the first year effective acquisitions, and approximately 5% increase related to the favorable effect of currency translation compared to the prior year's first quarter. Organic sales growth was at the high end of our guidance, driven primarily by strong demand in electronics and medical end markets. Within the Adhesive Dispensing segment, general product assembly, rigid packaging, and non-woven's product lines drove this segment's growth in the quarter, offset by softness in the polymer processing product lines. Japan and Asia were strongest regionally. Within the Advanced Technology Systems segment, the 83% sales volume growth over the prior year first quarter included 50% organic volume growth and 33% growth related to the first year effective acquisitions. This is very strong performance particularly considering the difficult comparisons to the prior year first quarter where organic growth for this segment was 23%. Although electronic end markets were the strongest, all product lines and geographies generated organic growth in the quarter. This segment's acquisitive growth includes the fiscal 2017 acquisitions of ACE, InterSelect, Plas-Pak, and Vention, and one month of the fiscal 2018 acquisition of Sonoscan, which as Mike noted, we added to do portfolio in January. Within the Industrial Coating segment, powder, container, and liquid finishing product lines drove this quarter's organic sales growth, geographically Europe, Japan, and Asia were the strongest. Moving down the income statement, gross margin for the total company was 55% in the quarter and operating profit…

Thank you, Greg. Again I'd like to thank our global team for delivering these strong results. Our second quarter guidance reflects more modest sales growth as compared to the prior year's challenging second quarter growth. Our strategic priorities and capital deployment objectives remain consistent. We'll continue to focus our efforts on technology leadership, product tiering new applications, and market penetration to drive growth over the long-term. We will continue to leverage the tools within the Nordson business system to drive operating efficiencies across the organization and we'll continue to see high quality companies that fit our targeted spaces will help us achieve long-term growth and profitability. With that, we will pause and take your questions.

Thank you. [Operator Instructions]. Our first question comes from Charlie Brady from SunTrust. Your line is open.

Mike, can you just talk about the commentary about in Adhesive Dispensing the inefficiencies from that facility consolidation? Can you comment on kind of the impact in that quarter, is that done now at the end of the first quarter or is that continuing into 2Q?

Yes. So as you recall, we've laid out a plan to consolidate three facilities into one and to finish that consolidation by the end of this fiscal year. At the moment, we have four facilities running because we are transitioning equipment and capability between those three and the new facility. So I'd say the biggest impact is probably in this quarter, but we'll see some continued impact as we systematically close those remaining three facilities, but it's not all going to happen at once, but it is happening according to plan and we will be through that by the end of this fiscal year.

Would you expect the EBIT margin impact in Q2 to be at a similar impact to Q1?

Charlie this is Greg. I would say it'll be a similar impact in Q2. Generally we expect that impact to kind of scale down as we get into the back half of the year but if we're looking at Q2, it's probably going to be a similar impact.

Okay. And can you remind us --

Let me just make one more comment, Charlie.

Sorry.

As we look to next year obviously we will have the facilities consolidated, we won't have the duplication of costs and as part of this facility consolidation. We've also invested in new equipments which should add some efficiencies, so we should see some benefits into 2019.

Thanks, that's helpful. Hey, on Advanced Tech, can you remind us what the current mix of the non-electronics piece is right now and kind of how you think that shapes out for the year?

Yes. If you look at it for the year we're probably looking at about 30% that falls into the medical category, about 20% that falls into non-electronic sort of general industries, and the rest falls into electronics with typically around 15%, 20% that will be sort of mobile phone, another 15% or 20% or so that would be into kind of like automotive electronics and then the rest would be across semiconductor and a variety of other applications.

So we're looking at about half of that being non-electronic, half of that segment being non-electronics related.

Great, thanks. I'll hop back in the queue. Appreciate it.

All right. Thank you.

Thank you. Our next question comes from Mike Halloran from Baird. Your line is open.

Could you just talk about the backlog trends by segment as you work through the quarter and what's the thought process is when you look at the second quarter, how growth should track across the three businesses?

Yes. At a high level we had a pretty nice backlog, I think up about 9%. Order rates were positive as well. What we look at though is what equipment is going to be delivered in the quarter and so some of the backlog is not going to be delivered in the quarter. And then, when we look at year-on-year comparisons, second quarter and third quarter, very strong for us. So we're in that period of time where the order rate comparisons gets a little bit more challenging. So our guidance really reflects what we think is going to be delivered in the quarter in general and then what we think the outlooks against the comparison. I'd say at high level, if we look at the expectations for the businesses and maybe I’ll give you a little bit better feel for the year as opposed to just quarter-to-quarter because as you know we have projects that can go in and out, and we have the seasonal -- seasonality. But if we look at what we expect for the year, we expect this to be another growth year for the company. We expect virtually all of the product lines to be up. The one challenge there will be particularly our dispense systems in the electronics area which are most linked to the mobile phone kind of business and having such a tremendous year. Last year that's going to be a challenge. Our hope is that the other general industries activities and the medical business will offset that.

So when I think about on a forward basis here obviously really impressive electrical onboarding this quarter. What's the thought process moving forward in terms of how is the pipeline look with -- what are the customers are saying out there, I mean is there a pause against these really difficult comparisons or is the thought process you can be able to maintain this high level even if there's not a lot of growth, but at least maintain the pace of revenue as it sits here today?

So if you look across the total segment, as I said, I think we're expecting that the other parts of business, the non-electronic parts of the business, particularly the non-dispense part of the businesses will help offset which will be what is a challenge year-on-year. That said, if you look at the particular parts of the business, our inspection business is strong, our service treatment business is strong, the new acquisitions are doing well. The dispense business had a strong first quarter but it's going to be challenged the rest of the year just because of the significant business we did last year and the change. On long run, we still expect things to be strong in the electronics segment. Now this is the time of the year that we typically meet with all of the potential innovators in the business and we have lots of projects going with them. The challenge is we don't know which ones of those are going to go forward and what the impact is going to be. But our focus has been to take advantage of whatever growth comes out of that to be flexible, but also to continue to drive the diversification of the business. So to drive medical, to drive the non-electronics piece, and we're seeing good traction there.

And then just on the price cost side and the inflationary side, it seems like you guys are in a good spot. But just want to hear how you guys are -- what are you seeing from an inflationary perspective within your portfolio or the supply chain and how you're feeling about it relative to your own financials?

So I'd say, we're -- you're seeing some movement in some commodity materials. I think we do a pretty good job in our global sourcing activity of mitigating that impact, and as we continue to innovate with new products, we're able to offset any push there. So we don't see that as a big concern for us.

Anything on the labor side?

I think we're seeing the typical kind of increases year-on-year and most of those hit in the first -- the first quarter. And at the end of the day our focus is to take all the skilled people that we have and leverage that through our business systems to increase and drive productivity, I think we've done a good job there as well.

Thank you. Our next question comes from Matt Trusz from Gabelli & Company. Your line is open.

Good morning. Thank you for taking my questions.

Yes, good morning, Matt.

Can you provide some additional granularity on how that non-polymers pieces of ADS performed from an end market perspective and just overall how do you see customer spending levels in 2018 and from the Tax Act you think that there will be any impact on their CapEx plans?

Yes, if you look at our sort of non-polymer part of the business, packaging tends to be largely linked with the consumer product side of things, it continues to grow, many of our customers are challenged with growth, but there's a lot of focus on productivity and improvement which helps us, plus we continue to drive new applications and recapitalization through technology. So that's been solid. I would say our non-woven's business, the diaper and other related products has been solid. Product assembly can be a little here but we expect that over the year to be solid. And if you look at the underlying drivers of growth, a lot of that links to middle class, improvement in middle class, consumption-related activities we expect to see that continue to be strong. I'd say as a direct effect of the Tax Act, I think people are still trying to sort that out and figure out what that means to the extent that we would see an uptick in investment in the U.S. that would be encouraging for us. And as I mentioned, a lot of our businesses where customers looking at productivity improvement falls into a sweet spot. And I'd say in a broader note talking just about the polymer part of the business, we're seeing nice improvement in order entry across all those product lines, so that's encouraging as well.

Great, thanks. And then turning to polymers, are you seeing elements of softness in the end markets facing that business? Or you encountering company specific type of challenges, it would be great to have more color either way?

It's really neither. We have parts of the business that are bigger order intake particularly the pelletizing part of the business and that can be lumpy. And so we're really just looking at a year-on-year comparison where we had a big order in the first quarter last year and didn't have a similar big order this year. Yet if I look at order rates they're up nicely across all of the product lines there. So not a concern that we have just timing and that that like product assembly and some of our electronics business can be lumpy at times and year-over-year doesn't always line up, but if you look at year-to-year, we expect to see improvement.

Understood. Thank you.

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

So just back on the mobile phone customer base, you said this is the time of the year, you're starting to see projects, are they coming in with fewer projects or are they indicating to you that they're going to do less this year or is it still pretty robust?

I would say, kind of from November through now is when that project activity is underway. I'd say the activity is pretty robust. We're not clear though in any one year which ones are going to go forward. I think it's prudent to be a little bit cautious just given the magnitude of sort of phone changes that occurred in our customer base last year. But I'd say it will be clear in the next couple of months which ones of these are going to go forward and have an impact. At this point, it’s going to be tough to offset the really, really strong year we had last year even if you know a reasonable amount of those projects go forward and that's kind of the expectation we have. But outside of the phone business, if you look at auto electronics, some of the other markets, some of the new technologies like flexible circuits which are going into a lot of different things, we're seeing a nice demand there. And we continue to introduce new products that are getting traction. But last year was a particularly strong year because of all of the innovation around the new phones introduced.

And what are you seeing from the China handset OEMs?

We're seeing good, I'd say good activity. We're working again with them on projects as well. I'd say well we're in that period of time where we expect to see orders come in. It'll be interesting to see what degree of innovation comes through in their new phone offerings, which will probably be a little bit later this year.

Okay. And then in the guidance you mentioned project timing, I guess stuff in the backlog that's pushing out and into future quarters; is that -- are you seeing a greater component or backlog that's pushing out the normal or is that just kind of normal timing you have some longer cycle projects?

Yes. I don't think it's anything unusual. I mean if you look at the projects that tend to be longer that are in our polymer area, that are in our product assembly, some of our orders in other parts of the businesses are released in tranches. And so it's -- I'd say it's nothing particularly unusual, we're just trying to give you the best commentary we can here and give you the best transparency we can.

Okay, perfect. Thanks a lot, Mike.

Yes.

Thank you. Our next question comes from Allison Poliniak from Wells Fargo. Your line is open.

Just going back to the ATS and I guess this is more than middle handset, Nordson has been fairly successful obviously with diversifying the customer base, gaining some share. I know you mentioned the model numbers, model change might not be as significant this year, but is there opportunity outside of that for you guys to maybe further diversify that customer base, gain greater share, just any thoughts on that?

Yes, absolutely. So I mean what -- there are certain end markets that are growing nicely that become sizable. So we talk about auto electronics is one that will continue to grow not just this year, but in the long run, and we have specific offerings that are getting traction there. We've talked about in the past on the semiconductor side, doing both dispense and inspection at there. And we started to see more customers interested in both the most sophisticated dispense applications that relates to some of their process changes as well as the inspection both on the X-ray side of things as well as more sophisticated bond testing equipment. And so those are applications I'd say and opportunities within the electronics space that really not necessarily tied to the phone systems that are encouraging for us. And then, we talked about sort of the Chinese suppliers on the phone side who are continuing to make good traction there. So the diversification effort within electronics continues both on a customer and application basis and we continue to introduce new technologies it's getting good traction but beyond that we're also trying to drive growth. So, for example, we acquired Plas-Pak last year. They had a segment that we didn't participate in which was animal health and we're seeing some nice growth there. And then of course in the medical we largely expanded that, we're seeing good growth in the medical side of the business. So within and outside the electronics piece, we're trying to continue to drive that diversification.

And Allison, this is Greg. I would add beyond that some of the other acquisitions that we've done in the electronics space, so some of the flex coding dispensing acquisitions, the Sonoscan acquisition, those also will allow us to gain share in spaces that we haven't participated in before.

That's great. And then just going back to the commentary around potential acceleration from the Tax Reform in terms of investment, I understand obviously folks are still kind of working through all that, but if we do get a sense of I guess sort of the figure turns on in terms of that investment maybe in the next three months. How quickly I guess going back to historical, would you recognize that, would this be more of 2019 event for you potentially?

It depends a little bit in terms of what part of the business is -- that's related to. So if its consumer product related businesses that could be quicker because likely those will be line upgrades or things like that that could happen sooner. If it's something like platform investment in the automobile side that's probably going to be a longer-term kind of activity, so it depends on the nature of what that investment would look like. If it's a whole new facilities that folks are starting up, they're probably not going to make that happen in the next six to nine months. So it depends a little bit on the nature of what that investment is. If it's ramp up because consumers are benefiting from tax relief as well and looking to spend some of that initial money in the sort of capacity that could be quicker.

Yes, I'd suggest that as Mike mentioned it's really about the scope of the project on our customers and as opposed to our ability to deliver our product within a short timeframe. We could do that, it's how big is the scope of the project for the customer.

Thank you. Our next question comes from Matt Summerville from D.A. Davidson. Your line is open.

First, in Adhesives, just back to some of questions that were asked earlier. Can you get a little more specific, Greg, in terms of what the absolute impact will be from these inefficiencies this year; is it a $3 million impact, a $10 million impact, somewhere in between, can you just help quantify that?

Yes, Matt, I would say as I provided in my comments, if you look excluding the one-time charge at the dilution, you get back to prior year without those inefficiencies. And so that helps you quantify that. And as we mentioned, we will probably have that similar drag in Q2, and then as we get into the back half that dissipates somewhat and then we're past that by the end of fiscal 2018.

So if you think about this business, is there anything you're seeing demand or otherwise that leads you to think once you get beyond this facility rationalization consolidation, you start to see those efficiencies, is there any reason that this cannot get back to a 30% plus operating margin business over the next 12 to maybe 24 -- maybe 24 months is a better number than 12?

Yes, if you look at the total, if you look at the total segment, yes, I think that's certainly as we've talked that's our overall goal is to get back to the 30%. So I'd say just to tell you what we're doing, we're going from three facilities to one, but in that we've incorporated new technology that will allow us to get more efficiencies, but also additional capacity and we're also working in parallel, a consolidation in Europe from two facilities to one which will also be done by the end of this year. So we'll have around the globe, the most the latest technology, most efficient facility, so that will help in this area. And then when you look at the total segment, our aspiration would be to get to that 30% level. As you said, it may not be next year, but our aspiration would be to get there and we think we see a path to do that.

And then just back to the events-type business of 50% organic in the quarter, can you help parse that or give a bit more granularity with mobile half of that increase or all the increase with medical a quarter up, can you give some sort of weighting to how you would chop up that 50%?

Yes. I would say, if you look at all of this stuff, other than the key dispense parts of the business, it was up nicely double-digits. The dispense was really linked to -- we had some big orders come in, linked to particularly flex circuit technology. So there's a new application in Flex circuits that's getting traction across all of the mobile platforms and then some others. And we-re very well-positioned with our technology to take advantage of that and we had some sizable orders come in and that was the biggest single driver. Now beyond that, we also saw nice growth in all of our inspection business as well, but we had some -- couple of big projects that came in that are really linked to technology moving from rigid to flex circuits of us being well-positioned with our capability around the globe and our product performance take advantage of that.

Longer-term Mike, if you look may be beyond the next couple of quarters in the funnel, the conversations you're having with customers whether it'd be things like 3D stacking, whether it'd be things like moving from rigid to flexible circuitry, are there are other opportunities in the funnel, if you want to call it a funnel that can be substantial like what you saw in fiscal Q1?

I'd tell you in one quarter that's a pretty big increase. I wouldn't put things in that. I'd say high level trends. Number one auto electronics is just going to continue to grow. I mean we're not to self-driving vehicles yet and it's continuing to grow and to get to there, if you believe we're going to get there it's even more. I'd say number two, trying to do more on wafers prior to dicing is likely to continue to grow as other customers look to adopt that kind of technology because of the benefits that come with it and that's both a dispense and inspection opportunity for us. And then, in our inspection business, as Greg talked about a little bit, we've bought some smaller companies that have regional positions and we've had a lot of success with things like MatriX, and now Select, and that we expect it with Sonoscan as well, globalizing those businesses more effectively, so that we're in fact growing our global position, so those are some of the things that make sense. I mean we have wafer level offerings and bond testing now based on where customers are going that we haven't had before. And these are significantly larger higher priced items. So I think there's some growth opportunities there based on where the technology is heading. There are other projects that the folks are working on; we really can't talk about the nature of those, but the ones I've highlighted I think are good trends for us.

And, Matt, this is Greg. I'd add kind of high level in with that topic is and this has been a good driver for us for several years now is the demand for those end markets continue to require more precision, tighter spaces for dispense, faster demands for both dispense or the TNI. And those trends and those changes that take place in those end markets are good for us and oftentimes we're in a limited group or perhaps the only supplier of that can deliver the needs that they have from a manufacturing perspective. So high level the trends in those end markets continue to be in our favor.

I would also like to focus that across all of our businesses, technology plays a critical role. We're introducing new technology everywhere to drive growth. We haven't talked about core adhesives all that much, but we talk a little bit last year about some of our newer non-woven technologies targeting completely new set of customers through a tearing approach. We have some new applications that get into supporting makers of the athletic wear that look like there's some promise. So across all of our businesses we're looking for either applications or product opportunities really to create, as we kind of monitored the last couple of years is how do we create our own growth. I think should the economies continue to improve likely they have last year and hopefully this year and obviously we will float on top of that.

Thank you. Our next question comes from Walter Liptak from Seaport Global. Your line is open.

I wanted to ask about the acquisitions Infiniti Dosing and Sonoscan, I wonder if we can get some details looks like they're small, but if we can get may be of how much cash outflow, how much the prices on them and their revenue contribution?

Yes, so in Infiniti was pretty modest, Walt. That's -- I'd say capability in a particular pumping operation that we add to our portfolio will be part of Simtech business. That's relatively modest in terms of a few million dollars. The Sonoscan is little bit more significant than that, probably similar in size to previous acquisitions like MatriX where we expect to grow nicely and will be tens of millions of dollars of revenue for us going forward.

Okay, great. And with these two deals happening at the beginning of the year, was it just coincident timing or was it once the tax reform went through, you were able to get the deals going and any thoughts on M&A for the rest of the year now that the tax reform's done?

Sure. So Walt, I would say these particular ones are ones that we're in the pipeline that we've been working. We have a nice pipeline of opportunities that we continue to work these two just happens to come forward in the first quarter. I would say our priorities maybe a high level question our priorities and capital deployment remain the same, support organic growth, and that includes some of these initiatives we talked about. We'd like to keep up our dividend strategy as we've discussed. We have modest offsets for share dilution although we didn't do much last year. And then, M&A would be a priority. We have a good pipeline of M&A opportunities and our focus last year and continuing through the first part of this year has been to reduce our leverage, so that we have the capacity to move quickly should opportunities come forward, and so that's probably going to continue for certainly the next couple of quarters as we continue to de-lever the capacity there going forward.

Okay. With that comment about the good pipeline, is it activity on M&A picking up or you're seeing more businesses come to the marketplace or is it fairly steady with what you saw in the last couple of years?

I'd say it's fairly steady. I mean these things you never can time sometimes you work in years on projects to get them to come to fruition, so you can never really time them. I'd say we probably still see the most activity in the medical -- in the medical space but they're smaller properties like these tuck-ins that we've done to support our Advanced Tech or EFT business as well. So we see -- I’d say a similar type of pipeline as we had before and we just want to be prepared should something of significance come forward we need to act on.

Thank you. Our next question comes from Liam Burke from B. Riley FBR. Your line is open.

Mike, you touched on it briefly on one of the previous questions on the tiering being one of the contributors of the growth there. How is that -- is it continuing to develop the way you want and are you seeing any competitive responses there?

I'd say it is continuing the way we want. The one reference, specific net reference I was making had to do with some new products that we developed in China or emerging markets outside of China, so a lower tier non-woven set of customers. I think last year that we had about 60 or 70 new customers that we've never had before. So going a little further down on the pyramid still with good profitability and we're continuing to see traction there. And then I'd say another area where we're seeing some good traction is in the electronics space, particularly a lot of the automotive from formal coating type applications or a tiered -- or a tiered product and we have tiered products as well for the mobile side of the house. So yes, I'd say it's playing out the way we’ve expected. I think we've been pretty successful. We do have competitors. So but I don't see any significant change there I think it's a combination of having the right offering and then having the full team from the applications team through the supply chain to just secure it and then the service after the sale on all these businesses is critical. So I think that model continues to work and we continue to look for opportunities where we can further tier our various businesses.

Great, thanks Mike. And Greg, on the consumables was the percentage contribution to revenue within the normal range?

Yes, Liam, I'd say it's up closer to the high 40% now. As you think about some of the acquisitions we've completed particularly the Vention acquisition which is a consumable product, so running total company more in that 47%, 48% range.

It’s great. Thank you, Greg. Thank you, Mike.

Thank you.

Thank you. Our next question comes from David Stratton from Great Lakes Review. Your line is open.

When looking at your balance sheet, I know that the majority is variable rate debt and given the recent rise in interest rates that we're seeing, can you just kind of give us your thoughts on how you see your capital structure going forward and if there's a plan to maybe shift to more fixed rate or just what are your thoughts on that?

Yes, generally, David, we're always looking at the appropriate mix of that capital structure we'll be taking a look at that coming up as our revolver is coming to maturity, but we tend to keep a pretty balanced, kind of, across the cycle level of both fixed and floating to kind of allow us to be prepared to manage the business appropriately. So we'll focus on that, but it will be a balanced, probably similar to historical trends.

Thank you. And our next question comes from Charlie Brady from SunTrust. Your line is open.

Hey thanks. Just want to follow-up on Industrial Coating systems and the margin performance there, pretty strong performance for a first quarter which tends to be the lowest quarter and in general you have a pretty big step-up into Q2, is there some timing that's going on there that would change that normal seasonality or what's driving that strong margin performance in Q1?

Well, you know, for a long time, we've had a continued focus on that business improving the profitability and the team has done a nice job of doing that. I’d say year-over-year comparisons are probably a little bit more a mix of business than anything else. We did have -- the revenue was up which is helpful from a volume leverage standpoint and then we probably had a little bit better beneficial mix of business year-over-year. But the trends continue to improve in that business and the team is very focused on that, but they're at very nice level given the scope of what they supply.

Would you expect the typical revenue kind of -- revenue seasonality, I guess throughout the years you've seen typically?

You're talking about that business or in total?

About IC. I mean I guess what I'm trying to get to, was there some pull-forward that would just skew the 1Q results higher than the normal seasonality would indicate and therefore we've got some pull-forwards in the rest of the year or it was just a great quarter and the rest of the year kind of continues with the same pattern you'd normally see?

Yes. I wouldn't say there was a significant pull-forward there, no. And we would expect similar pattern where the second half of the year is typically stronger than the first half of the year from a volume perspective. In that business, we've got a variety of different product lines, so the mix can have effect year-on-year, and I think most of what you're seeing here is a little bit of volume leverage and a mix effect year-over-year.

But Charlie back to a comment Mike made earlier, this is -- this segment as well as the other segments, we continue to focus on those continuous improvement initiatives and believe that generally across the board we can continue to raise margins everything else being equal from period to period. There's improvement opportunity across the business.

So just on that Greg because this is a business that one point if you got to 12% EBITDA margin was going to be a Home Run, a few years back we're high-teens right now. I guess our thinking kind of been we're kind of top end of the range, kind of 17%, 18% EBIT margin not much more there, it sounds like that's not really the correct way to look at it and maybe you guys see a little more upside over the next two or three years beyond that level; is that correct?

Yes, I think what our goal going back five or six years ago was at the high end -- this is a cyclical business, right, so at the high end of the cycle we got to be approaching 20%. And obviously we will be lower than that if we're at the low end of the cycle. But still our aspiration is still get to that 20% level and I think the team has done a great job, it's not easy to get there when you think about the scope of what we do because of all the things that we buy in as being largely the OEM in that particular space. But we're very focused on improving that. And I’d say from a company level, we talked about moving to a global sort of shared service approach to help us scale and grow more effectively and integrate things more effectively and we're in the beginning of that process as well. We're looking to standup our North American service center in the May/June timeframe this year and then move to Europe and then move to Asia. So we're doing some other things to help leverage going forward in the short-term that probably adds some additional cost but in the long run that will be a benefit.

Thank you. And I’m showing no further questions from our phone lines. I would now like to turn the conference call back over to Mike Hilton for any closing remarks.

So thanks everyone for all of the questions and interest this quarter. I'd also like to put a big thank you out to our global team who continues to exceed my expectations. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a wonderful day.