Good day, ladies and gentlemen, and welcome to the SPX Corporation First Quarter 2011 Earnings Conference Call. My name is Annika, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. At this time, I would now like to turn the call over to Mr. Ryan Taylor, Director of Investor Relations. Please proceed.

Thanks, Annika, and good morning, everyone. Thank you for joining us. With me on the call this morning are Chris Kearney, our Chairman, President and the CEO of SPX; and Patrick O'Leary, our Chief Financial Officer. This morning's call is being webcast with a slide presentation, which you can access in the Investor Relations section of our website at spx.com. The webcast will be available until May 18, and we encourage you to follow along with the webcast as we reference the detailed information on the slides. We have included supplemental schedules in the appendix of today's presentation, which provides reconciliations for all the non-GAAP financial measures we discuss today. Our earnings press release was also issued this morning and can be found on our website. Before we continue, I would like to point out that portions of this presentation and comments are forward-looking and subject to Safe Harbor provisions. Please also note the risk factors in our most recent SEC filings. The Q1 results and the 2011 guidance numbers that we discuss today relate to continuing operations. And with that, I'll turn the call over to Chris.

Thanks, Ryan. Good morning, everyone. Thanks for joining us on the call. We continue to experience meaningful growth in emerging markets, as well as very strong demand and sales growth in our early-cycle businesses. As expected, headwinds related to our late-cycle power businesses are partially offsetting this growth in the first half of the year. We are encouraged, however, by indications that demand in our key power markets is gradually improving. As the year progresses, we expect our financial results to improve and to deliver significantly better results in the second half of the year. Looking at the first quarter. Our financial results were in line with the top end of our guidance expectations. Revenue increased 11% over last year, and earnings per share grew 31%. We were encouraged by the development of our backlog, which increased 4% sequentially. This reflects strong order trends in our flow market and continued positive order development in the U.S. medium power transformer market. We completed 2 strategic acquisitions in the quarter and are pleased to welcome the employees of Teradyne Diagnostics Solutions and B.W. Murdoch into the SPX family. Combined, these businesses generate more than $50 million of annual revenue. We believe the strategic impact of these businesses will be greater than their relative size. The key investments we're making this year are all going as planned. This includes the transformer plant expansion, the China manufacturing campus and our increased focus on innovation. And we've raised our 2011 EPS guidance by $0.05 to reflect a modest net improvement in our full year outlook. The composition of our Q1 revenue and earnings this year is very different than last year, particularly at the segment level. This dynamic is illustrated by the first quarter organic revenue results. On a consolidated basis, organic revenue increased 6%.…

Thanks, Chris. Good morning, everyone. I'll begin this morning with earnings per share. As Chris mentioned, EPS was up 31%, but the composition of our Q1 earnings vary quite a bit from last year. Segment income growth in our Flow and Test and Measurement segments increased EPS $0.26 year-over-year. This more than offset an $0.18 segment income decline in our Thermal and Industrial segments. This decline primarily related to our power businesses, specifically power transformers and dry cooling systems. In our Industrial segment, we recorded an $0.08 gain for an insurance recovery related to a product liability matter. We recorded a charge to operations for this matter in our prior year period. Please note that this benefit was anticipated in our Q1 EPS guidance. Currency and a lower effective tax rate were other notable positive EPS drivers year-over-year. Stock compensation was the most significant headwind. As compared to Q1 2010, the increase in stock compensation expense reduced earnings per share by $0.09, and this was a $0.04 headwind versus our guidance. On a consolidated basis, we reported $1.2 billion of revenue for the quarter, up 11% from the prior year. This was about $30 million better than we had expected, primarily due to favorable currency rates. Organic revenue grew 6%. Acquisitions contributed about $30 million of revenue or 3% growth and currency was a 2% benefit in the quarter. Segment income was better than expected at $115 million, 8% above our midpoint estimates and also 8% better than the prior year. Q1 segment margins were 9.5%, down 30 points from last year but mostly, better than we had expected. The lower margin related primarily to lower pricing on transformer shipments and reduced revenue from dry cooling systems. This offset steady margin improvement in our Test and Measurement and Flow segments.…

Thanks, Patrick. In summary, we are pleased with the operating performance and financial results in the quarter, particularly in our Flow Technology and Test and Measurement segments. We continue to expand our business in emerging regions, supporting the infrastructure, development in power, food and beverage and vehicle service markets. Our backlog increased 4% sequentially and order trends in most of our end markets are moving in a positive direction. We're encouraged with the broader global economic trends and we're seeing positive signs in the order activity of our late-cycle businesses. The cyclical recovery of our U.S. Power Transformer business appears to be underway and we anticipate a return to growth in that business in the medium to long term. We are excited about the recent acquisitions. We're evaluating additional strategic actions and have sufficient financial flexibility to continue to make investments as opportunities arise. That concludes our prepared remarks. And at this time, we are ready to take your questions.

[Operator Instructions] Your first question comes from the line of Shannon O'Callaghan with Nomura.

Can we talk a little bit more about what you're seeing in Thermal, kind of both in China but then some of the other markets? I mean, first on China, with the decline in volume, which I know you expected, I'm just curious if you're seeing any change competitively in China as the book of volume to go after is reduced. You guys have sort of stabilized the competitive situation in recent years in China. Is there any change there? Is anyone getting any more aggressive now that the volumes are a little lower there?

It's really no different than we've reported over the last several quarters, probably the last couple of years, Shannon. The competitive landscape hasn't really changed. We do have local competitors on the scene. We think we'll continue to be a major player in China. We have seen a slowdown in the quoting activity as the stimulus impact has abated in Japan. Longer term though, we still see it as an attractive market, and I think the need for buildout of additional power-generating capacity in China is great. As we've said in the past, I think as we look forward, that's not going to relate only to coal opportunities, but I think nuclear and other forms of renewable energy in China. And we're actually excited about that opportunity because as you know, we serve all those markets.

And you're going to see India develop as a very important market for us. There is a significant amount of quoting activity for large-scale power projects in that market. As you know, we're really sort of starting up in that market. And so we're learning how to do business in India. We are working on localization of the products and establishing relations. And obviously, some of our relationships with existing Chinese EPCs and other broader global EPC relationships continue to be positive. And as I think we discussed on our last call, we continue to see Korean EPC is very active in the Middle East market and we continue to quote on opportunities there.

Yes, and the final piece to that, that I would add, Shannon, is that we're also encouraged by the increased quoting activity we do see in the retrofit business both in the United States and in Europe. And so while we saw this trough in Q2, our expectations, as Patrick mentioned in his remarks, are that we're going to see significantly greater revenue growth in Thermal in the second half of the year. And beyond that, we are encouraged by the order activity and the opportunities that we see both in developing regions and in retrofit opportunities.

And do you think that the retrofit in developed markets, I mean, is it starting to get more of a cadence to it that you can believe in instead of just kind of a few one-offs here and there?

Yes, I would describe the volume of activity going on as being significantly different than we've seen over the last couple of years. As you know, these projects take longer to develop and the timing of them is sometimes difficult to predict. But the activity that we're seeing and the opportunities that we're involved in do encourage us.

Yes, frankly, being able to maintain a book-to-bill of around 1 in Thermal without the large-scale power project is actually very encouraging and an indicator that the broader power market is starting to show some signs of firming up.

Your next question comes from the line of Steve Tusa with JPMorgan. C. Stephen Tusa - JP Morgan Chase & Co: I just wanted to talk about the Thermal margin. So you're -- where are you exiting the year kind of second half? Does that imply kind of a low double-digit margin in the second half of the year that you're guiding to?

Yes, exactly. As you can see that, you can back into that from the updated segment guidance that we gave. Historically, if you look back over the last 2 or 3 years, the first quarter margins for Thermal are in fact seasonally weak. But the primary drivers are the factors that we discussed on the call. C. Stephen Tusa - JP Morgan Chase & Co: Right. And so when we kind of head into next year, what are some of the mix dynamics if you're talking about a better cadence of orders in U.S. and retrofit, maybe getting through some of the tougher projects you're seeing here in the first quarter. Should we view this first quarter margin as kind of a baseline rate seasonally for next year? Or are you seeing more profitable projects as you kind of move into next year?

No, I think you're going to see more profitable projects. Because one of the fundamental differences is a dearth of large-scale dry cooling projects in terms of orders being placed. And I think, logically, that is going to pickup as the next 12 to 24 months goes on. And we're going to move back to a more normal margin level. So we're not changing our long-term expectations for the segment. And I do think, as we start picking up some larger scale orders in emerging markets and certainly as we get back to a more normalized level of retrofit. Logically, if there is a continued lack of investment in large-scale projects, we should see our replacement orders rising. We mentioned a few on the call today, the nuclear order in Switzerland. But there is strength developing in the replacement market in the United States and Europe. And so from a quoting point of view and this also applies to Flow on the system side, from a quoting point of view, things look very good. We still have not gotten to the point where people are pulling the trigger on placing the orders. But logically, that will come. C. Stephen Tusa - JP Morgan Chase & Co: Your South Africa backlog was obviously down quarter-over-quarter, right?

Yes.

Oh, yes. I mean, we're basically working off those projects. C. Stephen Tusa - JP Morgan Chase & Co: So then you can obviously back into a nice -- in the rest of the world, that must have implied a pretty nice sequential bump in orders there?

That's right.

Exactly.

Your next question comes from the line of Scott Gaffner with Barclays Capital.

Well, I guess, we can officially call SPX a flow company now. 50% operating profit.

We'll make [indiscernible] very happy.

But you did mention in Flow that the systems orders I think were still a little challenged. Could you maybe give us a little bit more detail there what you're seeing?

Well, I mean, I wouldn't describe them as challenged. If you look at the quoting activity, they call that front log in the Flow group, the quoting activity and the potential projects of scale is actually very encouraging and to some extent, that is building because of the lack of placement of large orders. And so I think on a forward look, given the organic growth we developed and still developing the backlog with relatively smaller orders, I think the same dynamic is there, as we discussed in Thermal, that there is sort of a building demand for large-scale projects. And I do think that, that will open up, particularly, you can tell from the results that we had very strong food and beverage and power dynamics in Q1. And so I think as the year goes on, you're going to see some larger scale orders in Flow.

Across the entire platform, I would describe the activity as robust. I think across all end markets, certainly in the component part of it, but to Patrick's point, very encouraging signs on the systems side.

So are the larger scale projects, I mean, are those mostly in the oil and gas markets or are we seeing some of those in food and beverage as well?

Yes, all across the markets, particularly in food and beverage.

Okay. And then just in the emerging markets there. I know historically or recently sort of the global companies have been taking you into the food and beverage markets in the emerging markets. Are you seeing any demand locally there for your products?

Actually, we have. And what we've seen recently like in the past couple of years is an inflection really where we're seeing business shift to the indigenous suppliers, homegrown customers, particularly in places like China. So you're exactly right. It's our global customers that took us there and that we continue to provide. But we've developed similar relationships and significant relationships with indigenous suppliers as well. So the business model is really playing out as you would hope it would, as you establish your toehold in those markets and grow your business. So we're pretty pleased.

All right. Thanks a lot. I appreciate it.

Your next question comes from the line of Julian Mitchell with Crédit Suisse. Alexander Virgo - Crédit Suisse AG: It's Alex Virgo for Julian. Just a quick one on the Japan impact, it seems pretty high. I was just wondering if you can give a little bit more color around that $0.13?

I mean, basically, about 1/2 of that $0.13 relates to Japan. The other 1/2 relates to the broader nuclear issues that we discussed. And so that really reflects about the 1% revenue that we talked about. Alexander Virgo - Crédit Suisse AG: Okay. Great, thanks. And then the second question was just on the Thermal retrofit quoting activity. I think you call out lower Thermal margins in the second half because retrofit is decreasing. But then, you're talking about retrofit quoting well for the second half. I just wanted to talk about that.

Right. I mean, basically, a lot of this -- if you go back to last year, we had a significant number of projects. Some of them actually come up at fairly short notice. And obviously, the plant may be shut down or have reduced activity during the retrofit project. So there are performance incentives for speed to get the plant back online. So it really is just timing within the year and the comparison between one year and the previous year.

Your next question comes from the line of Scott Davis with Morgan Stanley.

I wanted to talk a little bit about Flow and following up a bit on Scott's questions. I mean, when you think about the positive mix effect that you had this quarter and maybe you can talk about that mix in the backlog a bit. But is this generally driven by higher commodity prices, not just oil and gas, but really food?

No, I wouldn't really describe it that way, Scott. I think it's the realization of an expected demand that's been there for a while, that was just slow to recover. And I think, it's just more than anything, reflective of economic recovery, which is occurring at a different pace in different parts of the world. As you know, a lot of that business for us in the replacement -- or excuse me, in the component part is the replacement business. What we saw, being slow to recover were the systems and particularly, the big systems opportunity and now, that's starting to get some traction. And the interesting thing is that we're seeing that recovery virtually across all the end markets.

I mean, it's a high-end metals market because of the sanitary nature of the food and beverage market. And so if you look at the last few years, surcharging for inflation is well developed in the market. And as you track our gross margins, you can see that we do successfully pass-through price increases in this market. But really, in line with the inflation in the core materials. So the demand is very strong, and it's primarily, at this point, components-driven with a lot of small systems. And obviously, the business is very well-positioned against emerging markets, where we expect to see continued strength in food and beverage.

Okay, that makes sense. And just keeping on the theme of higher commodity prices, I mean, this is not going to be the first summer where we've had $4 gas. But nonetheless, it's -- there is kind of a potential shock to how people think about driving their cars. I mean, does that -- I know traditionally, you guys haven't been a SAR [ph] play, but does the fact that maybe people drive less this summer or there's a bit of a shift to buying smaller cars versus trucks, we saw that in the most recent SAR [ph]. I mean, does this impact the buying behavior of your guys in, I mean, I know it's more developed markets, but does it...

Not significantly. We are primarily an OEM-related service business for OEMs and their dealers for diagnostics, typically around 60-plus percent. And the drivers of the demand are really new vehicles and rollout. And then as you look globally, there's different dynamics in different parts of the world. So I would say that the overwhelming drivers are product proliferation and increased electronic content. And that while other factors do impact the performance of the business, I think the next 2 years, it's going to be more about new vehicle rollouts, electric vehicles and new technologies around air conditioning and other areas.

Okay, makes sense. Thanks, I'll pass it on.

Your next question comes from the line of Ajay Kejriwal from FBR Capital Markets. Ajay Kejriwal - FBR Capital Markets & Co.: Just on the Thermal guidance for the second half, you talked about order activity having picked up globally. Maybe talk about how much visibility you have on the second half based on the backlog you already have. You have a pretty sizable backlog. So on the revenues and margins for the second half, what's the confidence level?

Well, as I mentioned in my remarks on the call, we've got about 2/3 of the revenue in the backlog. And so looking at the quoting activity they have, looking at the strength that we're experiencing in the evacuative [ph] market and don't forget also, in that segment, we also have some seasonal short cycle businesses that are very profitable in the latter part of the year, particularly Q4. Those businesses mostly, related to the U.S. heating and commercial markets. So I think, in terms of how we feel about Thermal, it's obviously our highest visibility segment by nature. But they've had an excellent track record in the last 2 years of executing on the projects in the backlog. And actually, certainly, the last year in Q1, probably executing slightly ahead of our forward targets. So we feel very good about the second half, first half dynamic, understanding that nobody likes a back-end loaded plan. Ajay Kejriwal - FBR Capital Markets & Co.: Yes. And then maybe switching to Transformers. Lead times have stretched to now 8 to 12 months. Are you seeing any shift in the amount of business you do directly with customers as opposed to market bids?

Yes, that's actually a pretty important inflection point in the development of the cycles in the business. And we mentioned, I think Patrick mentioned in his comments this morning that with lead times stretching out in the plant is filling up for this year and taking orders into next year, we are in a position to be more selective about the orders that we take. And so I think we are at that inflection point.

Yes, we're taking more than 50% of our orders from direct interaction with the customers. Ajay Kejriwal - FBR Capital Markets & Co.: And that goes to your comment that pricing should increase later this year, right?

Exactly.

Exactly. Ajay Kejriwal - FBR Capital Markets & Co.: Good. And any impact from tornadoes in the south? A lot of damage to the transmission infrastructure. Is that any opportunity for you?

We haven't become aware of that directly. We have experienced the impact of the hurricane -- excuse me, the tornadoes in Alabama at our EGS joint venture with Emerson. We have a facility in the joint venture in Alabama that was pretty severely damaged and is impacting their year. But from a customer perspective, I would imagine that we would see an impact, but we haven't heard of that directly yet.

Your next question comes from the line of John Inch with Merrill Lynch.

It's Elana Wood. I'm wondering did you take any orders for large transformers in the quarter? And if you did, how much did they add to the backlog, the sequential backlog?

We did actually. I think the last call, we mentioned that we had our first 2 large transformer orders in the backlog that would be produced at the new facility. We now have 5 and some active quoting activity on some other opportunities.

Less than $10 million to the Q1 backlog, Elana.

Okay, thank you. Do you have any updates within Test and Measurement on your electric vehicle opportunity? And maybe any new program wins or any new relationships?

Well, we did talk -- I think, publicly, we've talked about not only the Chevy Volt but the Daimler Smart car both in the United States and in Europe. So those are 2 very big opportunities. But we see this as a very interesting market opportunity longer term for the company. I think a lot will develop as those products continue to develop and as their performance continues to improve and extend. And we think we're in a pretty nice position because of the unique relationship we have globally with key OEs and their dealers all over the world to be able to step in and be a key provider. So I think we're off to a good start with the programs that we have, and we think there's other opportunity for us.

Okay. And then I just have 2 below-the-line questions. It looks like you reduced your full year guidance for equity earnings in EGS by about $5 million. So has the outlook deteriorated over the last couple of months or I'm just wondering what was driving this?

Well, the tornado comment that Chris just made, we also experienced a fire at the South Milwaukee foundry in the joint venture and that impacted the service delivery somewhat. And the development of revenue in our Brazilian acquisition has not moved as fast as we'd hoped. And all of those items are reflected in the updated guidance.

Okay. And then just lastly, other corporate expense this quarter of $31 million. It seems like it's a lot higher year-over-year. I'm just wondering if there's anything material, anything notable to call out?

Yes, there is. There's 1 item there, Elana. It's deferred compensation expense. We actually increased at about $3.7 million or $3.8 million. It's offset completely by the earnings on the deferred comp accounts, which is now shown below the lines. So really, if you take the increase in the corporate cost for that, it is completely offset by a credit in other income. And then, the rest of it, really just reflects the elevated spending that we have for our innovation projects that we talked about at the guidance meaning and also, our investment in infrastructure in India.

Great, okay. Thank you so much.

At this time, there are no further questions.

Great. Thanks, Annika. We appreciate everybody's participation in the call this morning. Thank you for logging in. And if you have any further follow-up questions, I'll be in the office. This is Ryan Taylor. I'll be in the office the rest of the day to chat with you. So thanks again. And we'll talk to you soon.

Ladies and gentlemen, this concludes the presentation. You may now disconnect. Thank you, and have a great day.