Good day everyone and welcome to the Anixter International Second Quarter Earnings Conference Call. (Operator Instructions) At this time it is my pleasure to turn the conference over to Mr. Chris Kettmann for opening remarks and introductions. Chris?

Thank you, Lorrie. Good morning, and thank you, all for joining us to discuss Anixter's Second Quarter 2010 Results. By now, everyone should have received a copy of the press release, which was sent out earlier this morning. If anyone still needs a copy, you can go to Anixter's website or call Chris Kettmann at (312) 553-6716 and I can resend the information. On the line today from Anixter's management team are Bob Eck, President and CEO; Dennis Letham, Chief Financial Officer; and Ted Dosch, Senior VP of Finance. After management completes their opening remarks, we will open the line for Q&A session. Before we begin, I want to remind everyone that statements in this conference call, including words such as believe, expect, intend, anticipate, contemplate, estimate, plan, project, should, may, will or similar expressions are forward-looking statements. They are subject to a number of factors that could cause the Company's actual results to differ materially from what is indicated here. These factors include general economic conditions, including the severity of current economic and financial market conditions, the level of customer demand, particularly for capital projects in the markets we serve, changes in supplier sales strategies or financial viability, political, economic or currency risks related to foreign operations, inventory obsolescence, copper price fluctuations, customer liability, risks associated with accounts receivable, the impact of regulation and regulatory investigated in legal proceedings and legal compliance risks, potential impairment of goodwill and risks associated with the integration of acquired companies. These uncertainties may cause our actual results to be materially different from those expressed in any forward-looking statements. We do not undertake to update any forward-looking statements. Please see the Company's SEC filings for more information. At this point, I'll turn the call over to Dennis.

Thank you, Chris. Good morning and thank you for joining us. Before going into the current quarter's results, let me start by highlighting our expectations for the second quarter as we discussed on our call three months ago. For those of who were with us on the last earnings call, you will recall we described the start to the first quarter of 2010 where daily sales continued their nearly nine month pattern of being virtually flat. As discussed that trend changed in March with a noticeable improvement in daily sales rates that continued through early April as we released our first quarter results. Those positive trends then became more broad-based across the various end markets and geographies in which we operate. Daily sales rates continue to rise through the first two months of the second quarter before leveling off, but not regressing in June. Now three weeks into the third quarter, these higher sales levels that we're experienced in June up continued into the early part of the third quarter. As a result, we are on track with our previously discussed expectations at this stage of the recovery. As a reminder, our backlog equals approximately four weeks of sales and a high percentage of our orders continue to ship within 24 to 48 hours of receipt. So while the trends over the last four to five months have been positive, some uncertainty in the macro economic environment remains, and there is no guarantee that this positive trends will continue for the remainder of 2010. Furthermore, we believe that a more significant improvement in financial results will require extended positive trends in the expansion of those macro economic trends to more fully include Europe. Before turning to the details of the drivers of our second quarter operating performance, let me note…

Thanks Dennis and thanks everyone for joining us today. The second quarter demonstrated good recovery across our reporting segments and end markets. We have been saying for the past several quarters after seeing two to three quarters of macroeconomic growth, we would expect to see a rebound in capital spending that will lead to growth in our sales. We believe we are seeing that effect and the numbers we reported today. The organic growth that we achieved is the result of continued focus on our market initiatives as well as helping new business wins in all end markets. Expenses were well controlled and the rising demand environment and we were able to improve our operating leverage. Strong cash flow continued both from operating results and working capital management and we repurchased that in quarter reducing our balance sheet leverage further. Overall we're very pleased with the performance of our organization during the quarter. The Enterprise Cabling and Security Solutions end market continued to show improving trends. The recent project trends that we have seen globally in the enterprise market reflect ongoing investment and new IT infrastructure, project activity for data centers and other IT upgrades were strong in North America and in the emerging markets. Our year-over-year comparison in the emerging markets were strong was nonetheless dampened somewhat by lower sales in Venezuela due to the situation in that country. New business development was very strong across all geographies for the enterprise cabling and security solutions end market. Sales for the federal government and global customers have continued to show very strong results as well. In leveraging our technical and supply chain expertise along with global platform, we have been able to deliver a service offering that has proven valuable to customers with complex requirements. Our leadership in technology reflected…

Thank you. (Operator Instructions) We will go first to Matt McCall with BB&T Capital Markets.

Thanks. Good morning everybody. BB&T Capital Markets: Thanks. Good morning everybody. [Multiple Speakers]: Good morning. Matt McCall - BB&T Capital Markets: Okay. So, just wanted to clarify couple of those last points, Bob, I think you said year-over-year growth a little slower. I assume we're talking about relative to the 7% that you just reported. Is that correct in your Q3 outlook?

I think, what we're saying, as you know, we don't provide guidance. What we were saying is that based on the economic trends we see out there, while we expect improvement year-over-year, we think the sequential trend which has been very strong from Q1 to Q2, that rate of increase quarter-over-quarter may sequentially decrease.

Okay. But, it sounds like the trends that you saw in the quarter improved, and sound like maybe peaked in June and then it's kind of stabilizes that level in July. So, that would lead us -- are you kind of carrying through that July period, the July trend into the next two months to get at that point. Is that point driving that? BB&T Capital Markets: Okay. But, it sounds like the trends that you saw in the quarter improved, and sound like maybe peaked in June and then it's kind of stabilizes that level in July. So, that would lead us -- are you kind of carrying through that July period, the July trend into the next two months to get at that point. Is that point driving that?

We have carried into the third quarter the kind of peak sales rate and booking rates that we saw late in the second quarter. Adjusted all these peak sales rates and booking rates that we saw late in the second quarter. Adjusted only for the fact that there is one more holiday in Q3 plus, the impact of Europe vacations and OEM factories shutdowns would normally occurring in July and August.

Got it, okay. And then you did talk about some second half strength both from some customer win rates and then you talked about -- what is the last one -- the project activity with the EPCs, how does that net out? How -- what's the magnitude to those wins on those respective end mark or those respective segment to your business? BB&T Capital Markets: Got it, okay. And then you did talk about some second half strength both from some customer win rates and then you talked about -- what is the last one -- the project activity with the EPCs, how does that net out? How -- what's the magnitude to those wins on those respective end mark or those respective segment to your business?

Well Matt, as you know, we don't call out specific customer contracts or specific wins as we go through the quarters. So the way to think about is this, we've had a number of new contract wins in the OEM supply business, we've had new customer acquisition in the other end markets, and we expect those to be a positive effect as we go through the second half of the year. The other piece was regarding the wire and cable business whereas we've been saying it's a lag or out of the recession because of the project cycles, not only the engineering cycles but also when the electrical and electronic products tend to go into the project. So we expect normally to have sort of enterprise cabling come out of recession first and electrical and electronic wire and cable tends to come out a little slower. And what we said was, what I was trying to convey was that based on the activity we've seen in bidding activity, project towards our booking and billing rates, we'd expect to see a pickup in the wire and cable business in the second half of the year. Matt McCall - BB&T Capital Markets: Hey perfect, and then you mentioned, final question, you mentioned the continued weakness in Aerospace and Defense, did you have any parts of your business and that you've seen deceleration either in June or July in the daily sales rates?

No, this time. Matt, the daily sales rates continued strong as we said through the increase through the first couple of months on the quarter, leveled off more in June and that higher rate has continued in July and virtually all of those same business with the exception of Aerospace. Matt McCall - BB&T Capital Markets: Got it, thank you all.

Moving on, we'll go next to Shawn Harrison with Longbow Research LLC.

Hi, following on some of those questions, may be if you can just talk about you have to start but within the enterprise business, have you seen any I guess, pressure in terms of project spending just related to public sector budgets coming in or anything that would lead you to believe there could be some deceleration in the back half, or do trend look like you're going to continue to improve given the positive dynamics status and the spending etcetera that you touched on?

Hi, following on some of those questions, may be if you can just talk about you have to start but within the enterprise business, have you seen any I guess, pressure in terms of project spending just related to public sector budgets coming in or anything that would lead you to believe there could be some deceleration in the back half, or do trend look like you're going to continue to improve given the positive dynamics status and the spending etcetera that you touched on?

We do not see deceleration; we are seeing public sector pressure. And having said that, we have a very, very broad mix of customers in the enterprise business from the markets that our contractor and integrated customers participate in, the security market, lots and lots of different vertical markets variety, so if there were some pressure say in state and local government, it's being offset by strength and other sector. So, we're not seeing a slowdown. I think what we're trying foreshadow is that we're being a little cautious about the second half of the year because recent economic forecast have been a little more skeptical, I guess, about continued strong recovery. So, we're trying to be cautious as well as our outlook and not get too far ahead of ourselves, and project for you that we think there's going to be acceleration from Q2 and to Q3.

Okay, fair point. The other question just is touched on being copper are essentially neutral right now to the business. Maybe to the other side of that, copper is stabilized, what are you seeing in terms of competitive pricing dynamics right now within either the enterprise or the wiring cable business?

Okay, fair point. The other question just is touched on being copper are essentially neutral right now to the business. Maybe to the other side of that, copper is stabilized, what are you seeing in terms of competitive pricing dynamics right now within either the enterprise or the wiring cable business?

We're not seeing any particular competitive pricing pressure at the present.

Okay, and then one final just clarification question in interest expense Dennis for the September quarter, I guess it should tick down, but maybe if you could give us a range?

Okay, and then one final just clarification question in interest expense Dennis for the September quarter, I guess it should tick down, but maybe if you could give us a range?

It should tick down marginally from the third quarter number, the second quarter number, which was 13.2 million, but then we only took out $28 million worth of debt so it won't come down materially, okay.

Around may be 13 million or so?

Around may be 13 million or so?

That's in the ballpark.

Okay, thank you.

Okay, thank you.

We will take our next question today from David Manthey with Robert W. Baird.

Hi guys, good morning. [Multiple Speakers]: Good morning David.

Could you give us the number of shipping days in the second and third quarters, just so we are clear?

64 days in Q2, we just completed in 63 in Q3. We only would have both the 4th of July and the Labor Day holiday affecting our Q3.

And Q2 would have only been Memorial Day. I mean you've got some foreign holidays that float around the fringe of that but with the U.S. being 65% of the volume -- the holidays that Ted just mentioned are the primary factors.

Okay and then just to complete the picture, Dennis I don't know if you have first quarter and fourth quarter there also? Robert W. Baird: Okay and then just to complete the picture, Dennis I don't know if you have first quarter and fourth quarter there also?

First quarter had no holidays in addition to basically the way it fell because New Year has got caught up in kind of the tail end to the year and fourth quarter would have Thanksgiving and Christmas in there plus the attended weakness that comes with the day after Thanksgiving, the Christmas Eve type holiday as well, so that probably is three to four days out of the forth quarter which would put you at 61, 62 type number.

Okay, great and then thinking about the sequential thoughts here, in terms of when you're saying things stabilized in June, I guess we're -- you're implying that the run rate of sort of late May then continued into June because June flattened relative to whatever you were looking at, that would imply that it flattened relative to May, is that correct? So it's longer than just a three weeks in the end of the period here, it was probably more like four or five weeks it's been running like that? Robert W. Baird: Okay, great and then thinking about the sequential thoughts here, in terms of when you're saying things stabilized in June, I guess we're -- you're implying that the run rate of sort of late May then continued into June because June flattened relative to whatever you were looking at, that would imply that it flattened relative to May, is that correct? So it's longer than just a three weeks in the end of the period here, it was probably more like four or five weeks it's been running like that?

No. I think the acceleration that we have described continued through April, May and the early part of June and then as we went through the last couple of so weeks of June and the first few weeks of July on a per day basis, we've seen a flattening of those sort of early June run rates.

Okay, so it was a June, July flattening. Robert W. Baird: Okay, so it was a June, July flattening.

Right, yeah, so I think the right way David, and then give it a sort of acceleration through the quarter stabilizing at the end of the quarter.

Got it, okay. Well, and as we think about the trend into July and into the third quarter, a slower quarter-to-quarter growth rate would be normal for you, if you got back and look historically you've always seen real strong sequential trends from first quarter to second quarter, and then those growth rates sequentially have moderated from second quarter to third quarter so is that basically what you're telling us is that were you seeing sort of normal trends not that there are some sort of inherent weakness here? Robert W. Baird: Got it, okay. Well, and as we think about the trend into July and into the third quarter, a slower quarter-to-quarter growth rate would be normal for you, if you got back and look historically you've always seen real strong sequential trends from first quarter to second quarter, and then those growth rates sequentially have moderated from second quarter to third quarter so is that basically what you're telling us is that were you seeing sort of normal trends not that there are some sort of inherent weakness here?

Correct. Right.

Okay. All right and then last question as it relates to copper. Based on where inventories are sitting right now, Bob I don't know, did you say that copper would have virtually no impact next quarter? Is that the implication? Robert W. Baird: Okay. All right and then last question as it relates to copper. Based on where inventories are sitting right now, Bob I don't know, did you say that copper would have virtually no impact next quarter? Is that the implication?

No I don't want to call out what copper is going to do next quarter because certainly it could be affected by significant swings in the stock market for copper which we - as you know we aren't in that position to call that out. I am not trying to foreshadow coppers impact in Q3.

Dave, I think what we've said for the last couple of quarters is as long as copper stays in the general range of around $3 a pound, the impact on revenue is probably somewhere between 1 to 1.5 percentage points. When we're doing year-on-year comparisons that could be a plus or minus depending on which direction the comparisons that could be a plus or minus depending on which direction the comparison is and then about 20% of that revenue impact will be the impact on gross margin. So, first quarter we were looking at 15 million on a 1.270 billion and volume this quarter we are looking at 19 million on the current quarter volume. So, it's a factor but it's not a big factor at this point in time, until copper were to make a move significantly out of the $3 range for an extended period of time.

Terrific. All right. Thanks a lot guys. Robert W. Baird: Terrific. All right. Thanks a lot guys.

And we'll go next to Ryan Merkel with William Blair.

Thanks. Two questions from me guys. My first question is on Europe, sequentially its awesome gross margin pressure. I am wondering if you can provide some more color there and then what turns that around going forward.

Ryan a couple of things, one certainly is the strengthening of the dollar. I think we have talked in the past and estimated that about 20 to 25% of our product purchases there are U.S. dollar denominated. So, in the short term with how quickly the dollar strengthened that puts some pressure on our margins which is probably the single biggest driver there.

Okay that makes sense then my second question is on the emerging market segment. You saw pretty good operating leverage out of the other segments, but in the emerging markets you didn't see very much operating leverage. I am wondering why that was and then how do we think about milling that going forward, does that start to improve?

Yeah I think Ryan the answer is that we had a little more expense in the business due to the initiatives. I mentioned that our Wire & Cable initiative in Calah was now hired at full staff. So, the way to think of that is a number of investment headcounts added into the business. Not a whole lot of investment in other fixed cost but we had a lot of heads into the business and those heads are right now unproductive relatively speaking which you have to hire sales people, they have to then build a pipeline and then we have to close the pipeline and turn it into cash. So, honestly we are right where we want to be, we have made investments in Asia-Pac as well in a similar fashion. So, I am very comfortable with where we are at and if we execute well in our initiatives we will see a turn around in that as we go forward.

Okay thanks. Great quarter guys.

Thank you.

Moving on we'll go next to Hamzah Mazari with Credit Suisse.

Good morning this is Chris Parkinson on behalf of Hamzah. Thank you. Can you just add a little more color on the improvement in your North American business besides exiting the low margin contracts and when the incremental margin of [15.7%] you have begins to normalize in terms of timing?

Well I think when you look at the incremental margin, both company-wide as well as North America. Our comments over the last couple of quarters have been that once we get into a recovery mode, we think we can drive incremental operating margins with average between 10 and 12%, over a six-to-eight quarter recovery period, okay? But the early quarters in that being at-or-above the high-end of that range and the latter quarter has been at the low-end or slightly below that range as consolidated operating margins move up. So, I think the trend you are seeing there is just kind of the initial leverage that you are going to get out of the recovery as it's nothing more and nothing less than that.

Okay. And then, could you add a little more in your comments on the current acquisition landscape or particularly in the emerging markets and the how aggressive you plan on getting there, given that visibility, so I've gone a little bit better?

So, I think rather than calling our specific sort of opportunities, I will just say that there are opportunities in the pipeline. They are in emerging markets, they are in EMEA, they are in North America. What we intend to do as we look at acquisitions as what we always done; we are basically looking to either add new customer base, add geographic coverage, add products or technology. And certainly we want to have acquisitions that we think fit somewhat within our operating model that we've established, or that we can leverage our operating platform.

Perfect. Thank you very much.

Moving on, we will go next to Gary Farber with CL King.

Yeah, thanks. I just had a few questions. Can you say if you are taking market share, as part of your revenue growth, is that driving it at all?

Early to tell frankly, we think we're doing well in the markets we're in. But, we are early in the recovery and frankly, the market sizing data lags. So, it will be sometime before we can actually get a reasonable grip on how much the markets have grown in the same time period.

Right. Okay and then, as far as the third quarter, typically what percentage of your sales would come in September?

Well, we typically, we work on a 445 fiscal calendar, and September, probably, in the third quarter, carries a little more weight than just a map of 445 because of the vacation softness that we see or the OEM softness we see in July and August. So, you know, it's going to be a few more percentage points above just the [5 13s] number.

So, would you say that's the best read of the quarter itself is going to be, how things recover in September?

I think the fair read is that we're coming into the quarter with healthy sales and booking rates and assuming that holds up well. But we'll have a good quarter.

Okay. And then just lastly on Venezuela, is that, I mean, is that a material portion of your revenue at all?

It's meaningful to the Latin American numbers and that's why we call it out as a little bit of a dampening effect. We have had very strong numbers in Venezuela in the past. So, importantly, while Venezuela is on a negative path, which is, I think, you know if you read the papers here, you will understand. The rest of Latin America is growing, in fact, stronger than the emerging market numbers would lead you to believe.

And Venezuela, just relative to specific to your business. Would you say that things here is getting more difficult?

I think, things have been difficult this year. And I don't think they're getting any more or less difficult at the present moment.

Okay. Alright, thank you.

Moving on Buckingham Research, we will hear from Ted Wheeler.

Hi, good morning everyone.

Good morning, Ted.

I just want a small clarification, you commented on Aerospace and the bill rates improving I guess sort of the middle timeframe of next year but I think I then heard maybe supple chain responses to that could be seen later this year, is that how I should think about it?

Yes, I think that's exactly right.

Okay, so you could see a little bit of a pick up before that for you in there, yield result.

We think, I just said.

And one other on the OpEx guidance that you've been giving I think that maybe six to eight quarters of incremental margin based on the capacity that you kind of already have or didn't reduce but what if sales keep going or in this 12% range, would that shorten that period of time of incremental margin leverage? I think the guidance is a little bit more high single-digit would produce this sort of upbringing or maybe it's net picking, but I am just curious.

I think that the fact the incremental margin in the quarter was 15 to 16%; it is inductive of the strong 12% growth in the quarter. When we've been talking about the 10 to 12% incremental margin target over six to eight quarter recovery period that was within expectation that we were dealing with high single-digit growth, so if -- I'm not suggesting any which a performance is going to happen but if we were to have a double-digit revenue growth continuing then, you're going to see higher incremental margins continue and that it will on the tail end of the recovery period accelerate when you have to bring some additional cost in the play because you will have absorb the access capacity that the organization has whether that's sales, time capacity whether it's warehouse capacity or what have you which is really a good problem.

It's a good problem. And I gather we're not sort of making plans to do that just yet, in other words it's a….

No.

Okay. And just lastly on pricing I guess I've been hearing that your customers have been still a bit unable to adjust to copper prices. I mean is there any possibility that copper stays at three bucks, there's still some catch up from the wire fabricators and cable makers to raise prices or do you think that whole equation is in balance?

No. I think right now, the equation is relatively in balance. You'd have to talk to the manufacturers to find out how much price advantages they'd like to get if they could in the market. I think its in-balance currently given that there are still I believe a lot of access capacity in the manufacturing space and that's what's creating the sort of the limited ability to say push through higher price increases.

So, really the impact of copper on the upside has been muted by that for you guys?

True, that's fair.

Pretty quarter, thanks.

Thank you.

Our next question today is from Brent Rakers with Morgan Keegan.

Hi, good morning. I'd like to see if you guys maybe touch a little bit more on the gross margin side, maybe given us a little bit of help in terms of the three different geographic regions and then maybe the follow up to that would be, what would take that overall company gross margin, what would it take to get that level back to that kind of 24 to 24.5 that was normal between '04 and '07?

One of the factors that we talked about in the past that has a fairly significant impact is the mix of the business. As we talked about our OEM supply business, it is the portion of the business that was off the most and also happens to be our highest margin business, so as that begins to recover to a similar mix of our total business that we saw back in the '07, early '08 timeframe that will have a natural and upward pressure on that gross margin and not necessarily get us back to 24, if that was really happening at a time when everything was say perfectly aligned to a high copper price, high demand, high supplier capacity utilization, keeping upwards pressure on all goods at that point in time. But we would expect to see gradual margin improvement, partially by mix of the business, partially by some of the initiatives Bob talked about earlier.

And somewhat by geographic mix as well, as we've talked about many times in the past, Europe is the higher gross margin segment and again as like Ted described in OEM supply, it was the most negatively impacted in recession and is clawing it's way back as the mix stays more sort of North America focused, that does put a little bit of downward pressure on the gross margin.

Bob, any sense on how far the apples-to-apples gross margin is down when you axe out the effects of both geographic and division mix?

I think there is a lot of backers that go into this one, one that we haven't touched down here, the currency. As Ted has mentioned earlier about the impact of the stronger dollar negatively impacting Europe margins in the current quarter, when we were back at the 24% margins, keep it in mind, much at that time we were dealing with an environment where the dollar was depreciating so that dollar denominated product that was being sold at Europe was creating capital role in short term pricing advantage or margin advantage there. So, there is a ton of factors that go into this, mix is by far the biggest, but you have to look at currency, you have to look at where copper was at, where the inventory was priced relative to where the copper price points were in the market, those sorts of things. I think the other thing we are playing it would be vendor rebates to some degree as volumes rebuild and we have the opportunity to earn more under those programs that helped margins a little bit, so there is a ton of individual components that go into the Delta as it came down and as you rebuild it, I think that the important thing is that the margins have stabilized and have now started to show some pickup with the mix starting to bend a little bit, if we get a little bit of help on the dollar firming, not firming but kind of stabilizing against the euro level help some in Europe.

Right, then maybe just couple of house keeping to wrap up, any sense on the gross margins by geography in the quarter and then I didn't see the DD&A number provided in the release or on the earlier commentary if you could maybe help me with those.

We typically haven't given gross margins by region but I can get you the appreciation numbers there. 8.4 million.

All right. Thank you.

And sir anything further? (Operator Instructions). Our next question today is from Jeff Beach with Stifel, Nicolaus.

Yes. Good morning, Bob and Dennis.

Hi Jeff.

First I don't believe I could have missed it that you mentioned security if you did, would you just talk about the growth there and trends in that part of your business?

We did in fact mentioned and it was worldwide approximately 8% organic growth. Very strong in EMEA and the emerging markets positive number but more modest in North America largely because it's our more mature market growing off a larger base, so we are seeing more rapid sort of wrap up in the other parts of the world. But still a solid number across the board and good trends in North America and we feel good about the market. I called out that these trends weren't securing public and private places that we have seen continues to happen and importantly for us the trends where it's IP security continues to shift - the market continues to shift from analog to IP which is a positive trend for us as well.

All right. The second were the project activity picking up at this point. Has there been a shift in your overall mix of projects and can you give us if there has been something meaningful what its projects are as a percentage of your sales?

We are in the middle of that shift, we have talked about in a very strong economy projects are about 20% of the sales mix in a recessionary environment though less than 10 typically and we are going through that shift to call out exactly where we are in the shift I think we would be taking a complete stab in the wind.

Okay. But it is -- projects are obviously helping drive the sales?

Absolutely.

The last thing with your continued losses in Europe, can you give us any color between your different business segments, what's making money, what's losing money?

We don't call out operating results by end markets because they share an operational infrastructure. That's why we report operating earnings based on the geographic segments. I think we have talked in the past on some of the calls about initiatives we have underway. We have in the enterprise business we are adding additional suppliers and products into the business. In OEM supply we are pursuing new business; we are pursuing geography expansion with Wire & Cable across the continent. So, all those different items are in motion, we opened a redistributor that we have talked in the past in Europe that is in its early phase, it's beginning to ramp up some volume as well. So, there is a mix of things happening, we are focused very much on expenses in Europe as well. I guess I can tell you that it is as you look across the organization you look across the reporting segments, the single biggest focus right now of the management team is improving profitability in Europe.

Just as a reminder Jeff, when we finished last year, went into the first quarter, we were talking about an expectation of taking Europe from the last position we have last year to something that would be marginally in the black this year. We were in the black in the first quarter. A head win for the strengthening of the dollar and the impact that had on gross margins in Q2, we would have been marginally in the black again in Q2. So, and as we work through the timing around that inventory valuation on dollar inventory, you would expect that as the year progresses, we would end up on line with our regional target have been marginally in the black, but it would be choppy. It won't be into a straight line trend.

The other thing maybe of note in Europe as Bob and Dennis said it's an area of intense focus for us, not only was the OEM supply business, the off the most over the last 18 months, from the end market perspective. But Europe was off the most from a geographic perspective. But the compound that OEM supply in Europe was the single portion of our business segment off the most significantly. So, like in this quarter, even though it was marginally negative at the operating profit line, it was about a 240 basis point improvement in operating margin year-over-year. And we would expect to see that business continue to have some of the best fixed cost leverage as the business returns.

Alright, thank you.

And gentlemen, there are no further questions at this time. I would like to turn the call back over to you for additional or concluding remarks.

Thanks for joining us today. We believe that the global economy is undergoing a modest recovery and our global reach, strategic initiatives and value-added business model position us well to support our customers in the improving economic environment. Thank you.

Once again, that does conclude today's conference. I'd like to thank everyone for your participation.