L'Air Liquide S.A.

Joseph Marczely - Manager-Investor Relations Peter McCausland - Executive Chairman Michael L. Molinini - President and Chief Executive Officer Robert M.

McLaughlin - Senior Vice President and Chief Financial Officer

Matt Andrejkovics - Morgan Stanley & Co. LLC Ryan J.

Merkel - William Blair & Co. LLC Michael J.

Sison - KeyBanc Capital Markets, Inc. Mike J.

Harrison - Global Hunter Securities LLC Daniel Rizzo - Jefferies LLC David J. Manthey - Robert W.

Baird & Co., Inc. (Broker) Christopher S.

Perrella - Bloomberg LP (Research)

Thanks, Greg. Good morning and thank you for attending our fourth quarter earnings teleconference.

Joining me today are Executive Chairman, Peter McCausland; President and CEO, Mike Molinini; and Senior Vice President and CFO Bob McLaughlin. Our earnings press release was made public this morning and is available on our website, as are the teleconference slides.

To follow along, please go to Airgas.com, click the Investor Relations shortcut at the bottom of the screen, and go to the Earnings Calls and Events page. During the course of our presentation, we will make reference to certain non-GAAP financial measures.

And unless otherwise noted, metrics referred to in today's discussion will be adjusted for the unusual items identified in our earnings materials. Reconciliations to the most comparable GAAP measures can be found in our earnings release and slide presentation.

This teleconference will contain forward-looking statements based on current expectations regarding important risk factors, which are identified in our earnings release and slide presentation. Actual results may differ materially from these statements so we ask you please note our Safe Harbor language.

We'll take questions after concluding our prepared remarks as time permits, and we plan to end this teleconference by 12:00 noon Eastern. I will now hand it over to Peter to begin our review.

Thanks, Joe. I'd like to start with an overview.

As you probably have guessed, I believe that the best time at Airgas is right now. I believe that you make your money during the tough times and you count it during the good times.

With that said, thank you for joining us. A little history, over the last five years Airgas has achieved EPS equal to 99% of the midpoint of the guidance we gave at the start of each fiscal year.

During this same time we assumed an average organic sales growth rate of 7% but achieved only 5%. Our earnings for the five year period have averaged 13% per year.

Over the last two years, our earnings have averaged 5.6% and our average EPS was 93% of the midpoint of our guidance and then this year we landed at 95% of the midpoint of our original guidance with $4.85 per share for 2.8% growth, despite organic sales which were a full 2% below the midpoint guidance assumption. On the other hand, earnings – Airgas's earnings growth rates have compared favorably to our industrial peers during this period of very slow growth.

Over the last three years we've grown our adjusted EPS on average 6% per year by leveraging our industry-leading platform and strong cash flow. This recovery has disappointed everyone, not just Airgas, but this is not the first slow growth period in our history.

It feels a lot like 1998 to 2002 but without the plant closures. We feel like we're pushing on a string sometimes.

Missing goals is disappointing for investors and it's also very disappointing for Airgas associates, who work hard to deliver on their promises. Those associates will fall short of their full potential variable compensation this year by over $16 million.

We are definitely aligned with our shareholders. In the big scheme of things, a 5% EPS miss from the midpoint of original guidance does not have a lot to do with long-term value creation.

Value is created by doing the right things for the long term. That means continuing to invest in Airgas's proven business strategy despite soft spots in the economy.

It means not cutting expenses to the point of sacrificing customer service, losing valuable associates or operating in an unsafe manner. It means continued investment in capabilities that help customers succeed.

It also means providing Airgas associates the support and encouragement they need and deserve. As managers we understand that we need to balance the long term with the short-term and we do that constantly.

We have been outstanding stewards of our shareholders' capital. All that said, we've continued to invest in our platform and functional capabilities to serve customers this past year because we believe in the long-term viability of the U.S.

economy bolstered by abundant and inexpensive energy and fantastic innovation. This year we announced plans to build two new air separation plants and a new hydrogen plant.

We also commissioned a new distribution center and a new specialty gas plant and announced yet another specialty gas plant. We introduced Airgas.com, continued the expansion and evolution of Total Access and implemented our new district manager organization, all of which Mike will provide more color on in his remarks.

These are the things that impact value creation over the long term. During the last three years we also rewarded our shareholders for their continuing support with the repurchase of 6.3 million shares of common stock and an average dividend increase of over 20%.

Our latest dividend announcement on April 7 increased our quarterly dividend by 9% to $0.60 per share. In fiscal 2016 we see a slow economy and will do everything we can to achieve our targets.

These are uncertain times but I am confident that growth will resume in the U.S. economy and that Airgas will benefit more so because of our continued focus on the long-term and the specific actions we have taken during this period to make your company stronger.

There are no guarantees in life and past performance isn't always a predictor of future performance, however Airgas has a leading market position and an outstanding business characterized by a diverse customer base, including many non-cyclical customers and strong cash flow and an outstanding record of rewarding shareholders for their patience. Please turn to slide two.

Despite some headwinds such as the large and rapid decline in the price of oil, the impact of the strong U.S. dollar on our manufacturing customers and poor weather conditions throughout much of the U.S., we delivered organic sales growth of 3% for the year with gas and rent up 3% and hardgoods up 4%.

Within hardgoods, equipment volumes remain strong which has historically been a positive forward indicator for us. Full year diluted EPS was up 3%.

We continue to generate strong cash flow with free cash flow at $309 million for the year and adjusted cash flow from operations at $752 million for the year. During the year we acquired 14 businesses with aggregate annual sales of $55 million, our pipeline looks good and we're off to a promising start for fiscal 2016.

We expect to announce the closing of several transactions in the next few weeks and feel positive about acquiring $100 million of sales during the year. While some end markets are challenged, there are pockets of continued strength.

Construction growth was flat through the third quarter, but up 5% in the fourth quarter. While many manufacturers were challenged by the export environment, we saw continued strength in the manufacture of transportation equipment.

Like many others, we had expected the U.S. economy to be much stronger by now, and the level of uncertainty in the marketplace, makes it difficult for us to predict our near-term sales outlook.

While we are encouraged by the bright spots, the overall sluggishness in the economy tempers our near-term optimism. Looking forward, we are projecting EPS between $4.85 and $5.15 for fiscal 2016.

As I have said before, I remain bullish on the long-term development of the U.S. economy for an extended period of time.

Our recent investments to improve our platform, systems and product and service offering have positioned Airgas for growth when the economy improves. Consistent with our demonstrated track record, we remain committed to delivering sustainable long-term value to our shareholders.

Now, Mike will give you a deeper dive.

Thank you, Peter. Please turn to slide three.

We continue to invest in our sales and marketing strategy, which is focused on tailoring our value proposition to the unique needs of each major customer segment. In the fourth quarter, our Strategic Accounts sales were up 4% compared to the prior year, reflecting strength in construction, specifically general contractors, and the production of transportation equipment.

In the fourth quarter, sales of Strategic Products increased 3% over the prior year with the Bulk Gas and CO2 Dry Ice categories showing the most improvement by increased volumes. Safety Products were up 3% driven by volume.

Medical gas and rent was up 1% as increases in hospitals and surgery centers were partially offset by weakness in wholesale sales to homecare distributors. Specialty Gas sales were flat due to broad-based moderation in core Specialty Gas volumes.

Sequentially, CO2 and Dry Ice decreased 12% on normal seasonality in that segment. Our Radnor private-label hardgood sales were up 2% year-over-year, consistent with our total hardgood organic sales.

We remain focused on leveraging our infrastructure while managing expenses. As a critical element of our strategy, over 200 district managers are now in place and are in the early stages of finding success working closely with their customers.

As you recall from our Investor Day in December, the district manager role is essential to our future success and has the ideal span of control, quick and agile, close to the customer, branches and sales reps closely managed, and with full P&L accountability. Without question, our area vice presidents and district managers have a clear focus on top line organic sales growth as well as improved productivity and transactional excellence in all aspects of our order-to-cash process.

Our expanded Airgas Total Access telesales business continues to perform well. Airgas Total Access revenues exceed $500 million on an annual basis.

This program continues to deliver strong organic growth. During the quarter Airgas Total Access sales again outpaced the company averages, growing sales in the double-digits.

Our recently enhanced e-business platform is enabling customers to interact and transact with Airgas through a robust suite of functionality and services. Adoption of this new digital channel is underway.

Many of our customers have signed up and are now using the channel self-serve and answer many of the common questions they typically call us about. From our over 1 million customers, we have been adding over 12,000 new digital accounts per month and are on track to add over 100,000 in the next year.

The new platform has been live since August and is performing as planned. Currently orders per day are up 14% over the same period with over 1,200 orders a day being processed with no performance issues.

We continue our commitment to strengthening our supply chain. In addition to our previously announced ASU and hydrogen production facilities in Calvert City, Kentucky, we recently announced our plans to build a new ASU in Tuscaloosa, Alabama.

This new ASU is under long-term contract with Nucor Steel and will supply tonnage oxygen, nitrogen, and argon via pipeline to Nucor's steel manufacturing plant in Tuscaloosa. The ASU will also produce oxygen, nitrogen, argon to support the region's merchant bulk gas market.

Helium continues to be a challenge. After several years of shortage allocation and unpredictable supply, our volumes remain approximately 25% below pre-shortage levels.

Tired of disappointing our customers, last year we decided to embark on efforts to strengthen the diversity and reliability of our helium supply chain. In addition to completing a long-term renewal with one supplier, we entered into a new agreement to source liquid helium from Exxon in Wyoming.

In order to manage the supply chain for this helium throughout our network, we spent approximately $11 million on helium transportation, storage and transfilling assets. These agreements will serve us well for many years to come by helping us to reliably supply our customers, but they have also resulted in net higher product and distribution costs.

As you know, helium is truly a global product and recent additional helium production capacity in the Middle East coupled with the global economic slowdown has created a worldwide helium supply surplus which will challenge our ability to pass on all of the increased cost to our customers in the near-term. However, in spite of this near-term challenge, Airgas's ability to consistently and reliably supply its customers with helium for years to come has been dramatically enhanced.

Additionally on April 20, we broke ground on a new Specialty Gas facility in Stryker, Ohio. This new facility will produce hydrocarbon mixtures for the natural gas and refining industries for customers in the Marcellus Shale regions of Western Pennsylvania, Eastern Ohio, and West Virginia.

Next week, we will open our new Specialty Gas facility in Tooele, Utah. This state-of-the-art facility will provide a critical link in the supply chain for high purity and precision blended specialty gases used in research and commercial applications across the Western region.

This new facility will add needed capacity and supplement an existing facility that has been operating at capacity for several years. As we look forward to – we continue to believe in the long-term growth prospects for the U.S., we remain committed to delivering long term growth and value and we will continue to look hard at our operating cost and more tightly manage capital expenditures until sustained growth levels return.

Airgas associates have a clear, well understood mission on growing our top line by leveraging our extensive suite of products, services and customer value creators. As such, Airgas is well positioned to deliver market-leading organic growth.

Thank you. And now I'll hand it off to Bob to review our financial results and guidance.

Thank you, Mike, and good morning, everyone. I will focus on the key elements of our fourth quarter results and then move on to our FY 2016 guidance.

Please turn to slide four. Fourth quarter consolidated sales increased 3% year-over-year to approximately $1.3 billion, reflecting a 1% contribution from acquisitions and 2% organic sales growth with gas and rent up 2% and hardgoods up 2%.

In aggregate, organic volumes were flat and pricing was up 2%. On a sequential basis, fourth quarter sales were down 2% from the third quarter, primarily driven by the challenge described by Peter earlier and the normal seasonality in our All Other Operations segment.

Gas and rent represented 63.3% of our sales mix in the quarter, down 10 basis points from the prior year and flat sequentially. Gross margin for the quarter was 55.2%, an increase of 30 basis points from the prior year.

Selling, distribution, and administrative expenses increased 4% over the prior year with operating costs associated with acquired businesses representing approximately 1% of the increase. The remaining 3% reflects normal inflation as well as expenses associated with the company's investments in long-term strategic growth initiatives including its e-business platform and continued expansion of its telesales business through Airgas Total Access.

Operating income for the quarter was $148 million, down 2% from last year's operating income and operating margin was 11.3%, down 50 basis points from the prior year, primarily reflecting margin pressure from low organic sales growth. Sequentially, operating income was down 9% and operating margins were down 90 basis points, driven by the sharp pressure – driven by the margin pressure from the sharp slowing in organic sales growth relative to the third quarter.

EPS of $1.15 was flat compared to the prior year adjusted EPS. There were approximately 76 million weighted-average diluted shares outstanding for the quarter, an increase of 1% year-over-year.

Return on capital, which is a trailing four quarters calculation, was 12%, down 20 basis points from the prior year. Full-year free cash flow was $309 million, compared to $441 million in the prior year and adjusted cash from operations was $752 million, compared to $776 million in the prior year.

The year-over-year decrease in free cash flow is primarily driven by an increase in capital expenditures, reflecting investment in revenue generating assets, including two air separation plants, our e-business platform, and a new hardgoods distribution center. Total debt decreased by approximately $170 million year-over-year to approximately $2.3 billion at March 31.

Our fixed/float debt ratio at the end of December was approximately 71% fixed and our debt-to-EBITDA ratio was 2.4 within our targeted range of 2 to 3. Turning now to slide five, we'll look at our segment results.

Sales in the Distribution segment were up 2% in the quarter versus the prior year to $1.2 billion. Organic sales in the Distribution segment were up 1% with pricing up 2% and volume down 1%.

Distribution, gas, and rent organic sales were flat with pricing up 2% and volume down 2% year-over-year. Distribution hardgoods organic sales were up 2% with pricing up 1% and volume up 1%.

Sequentially, Distribution sales were down 2%, reflecting the impact of the significant and rapid decline in oil prices and the strong dollar that they had on our energy and chemical and manufacturing customer segments as well as the impact of challenging weather conditions throughout much of the U.S. Gas and rent represented 59.4% of Distribution sales in the fourth quarter, down 40 basis points compared to the prior year and up 10 basis points from the third quarter.

Distribution gross margin was 55.9%, an increase of 60 basis points from the prior year, primarily reflecting margin pressure in the prior year from a spike in power cost at our ASUs and mix shift to lower-margin propane in the prior year. Operating income in the Distribution segment decreased by 3% year-over-year to $139 million, and operating margin was down 70 basis points to 11.8%.

Both reflect negative leverage on pressure of expense inflation and continued investments in the business in a very low organic sales growth environment. On a sequential basis, Distribution operating margin decreased by 90 basis points driven by margin pressure from the sharp decline in organic sales growth relative to the third quarter.

Our All Other Operations reflect our CO2, dry ice, refrigerants, ammonia, nitrous oxide business units. Sales for All Other Operations were up 10% from the prior year, with organic sales also up 10%, primarily driven by increases in our ammonia and refrigerants businesses.

Sequentially, sales in All Other Operations segment decreased by 4%, reflecting the normal seasonality of the businesses. Gross margin from All Other Operations was 46.9%, a decrease of 160 basis points from the prior year, primarily driven by a mix shift towards lower margin ammonia and refrigerants as well mix driven margin pressure within our CO2 business.

Operating income for All Other Operations was $9 million, an increase of $1 million over the prior year and operating margin was flat at 6.5%. Please turn to slide six, capital expenditures.

Year-to-date capital expenditures represented 8.8% of sales. This increase in CapEx was primarily driven by our investments in revenue generating assets, including two air separation plants, our e-business platform, a new distribution center, and capital to support strong growth in our rental, welder and generator rental businesses.

Excluding major projects, CapEx as a percent of sales was approximately 5%. Turning now to our outlook.

Slide seven walks through the primary elements of our fiscal 2016 first quarter and full year guidance. The left-hand column of this slide shows the year-over-year walk for the first quarter, using fiscal 2015 first quarter adjusted EPS of $1.18 as the starting point.

Helium net cost pressure, as Mike described earlier, is expected to be a headwind of $0.03, and the base business is expected to be down 1% at the low-end and up 3% at the high end of the range. In aggregate, we are estimating EPS for our first quarter to be in the range of $1.14 to $1.18 or flat to down 3% year-over-year on organic sales growth in the low single-digits.

The right-hand of the column on the slide shows the year-over-year walk for our fiscal 2016 adjusted EPS guidance range. Variable compensation reset following a below budget year is expected to be flat to a $0.14 headwind.

Helium net cost pressure is expected to be a $0.06 to $0.09 headwind and our base business is expected to contribute an incremental $0.09 to $0.50 representing a 2% to 10% growth on organic sales growth in the low-to-mid single-digits. In aggregate, we expect EPS for fiscal 2016 to be in the range of $4.85 to $5.15, which represents year-over-year growth of flat to plus 6%.

Thank you. And now I'll turn it back to Joe to begin our question-and-answer session.

Thank you, Bob. That concludes our prepared remarks.

As we begin the Q&A portion of our call, to allow as many participants as possible to ask questions, please limit yourself to one question and one brief follow-up and then get back in queue if you have further inquiries. The operator will now give instructions for asking questions.

Yes. Good morning.

Actually this is Matt Andrejkovics calling for Vincent. Thanks for taking the call.

Can you just comment on the type of marginal business you're seeing from Total Access? Last quarter, it seemed like there was a decent amount of initial uplift was from smaller customers adding hardgoods, so there was some weakening effect on the mix.

Are you still seeing that dynamic? Are you starting to see some better overall mix effects from Total Access?

Let me take that. As we spend more and more time – for existing small Airgas customers, the growth opportunity is primarily hardgoods because they're probably already a gas customer of ours.

However, as we spend more and more time as this matures and we're spending more time on targeting and pursuing new – new, new small customers to Airgas, the blend of gases and hardgoods is much more balanced. And I think the last data I saw was something like 50% of the new small customers that we were adding that were new to the company were buying gases.

So, we spend a lot more time. Our focus now is less on selling hardgoods to the small existing customers and more on account acquisition.

The opportunity, the best opportunity for us is account acquisition, whether it be in the industrial segment or the service side using Total Access.

Got it. Thanks.

And then, just a follow-up. You had some pressure from ammonia prices in the fall, but we've seen ammonia come down a little bit in the first quarter.

So was wondering if you are starting to see any benefit from that or maybe it might push into fiscal 2016 at all? Thanks.

Our pricing typically lags ammonia costs on the way up and we typically hold on to our pricing a bit longer and are slower to reduce pricing when ammonia declines. So, our ammonia business right now has been a positive contributor to our results and we're expecting a pretty good year coming up with ammonia.

Thanks very much.

Thanks. I guess the first question I had was I just want to understand the cadence of sales throughout the quarter and then hopefully you could comment on what you're seeing in April so far?

Well, we started out, as you know, Ryan, from our call last quarter, with a good January following a strong third quarter. And we hit the wall in February, had some weather challenges and then that continued into March with some of the dynamics around the volatility of the pricing in oil and the strong dollar as we talked about.

So basically February was very weak. March mirrored February from an organic sales standpoint.

And relative to April, we ended – for the full quarter basis, we ended distribution at 1% same store sales, weighed down heavily by February and March, and for April we're off to plus 2% on the distribution side with a little bit more weight towards gas and rent.

Okay. That's helpful.

And then, secondly, are you seeing the falloff in oil prices and the energy weakness spreading more broadly to some of the other industrial markets?

Well, now – you know, that's – our energy and chemical segment declined dramatically. In fact, it went from a plus 7% in Q3 to a minus 4% in Q4, okay, that is energy and chemicals.

Year-over-year.

Year-over-year, okay.

Yep.

On the other hand, manufacturing declined, but it's still positive. So, we went from a 6% growth in Q3 to a 3% growth in Q4, clearly impacted.

Now the part that's difficult to figure out on manufacturing is – that combines the pressure due to the currency, it also gets the fallout of reduction of water tanks and piping and things from the energy and chemical piece. And I don't have clear visibility into how much of the halving of manufacturing is related to one versus related to the other.

Right. And that's fair.

All the other distributors have said that it's spread but it's very difficult obviously to pinpoint it exactly. So appreciate the comments.

Thanks.

Hey, guys.

Hi, Mike.

Peter, I was encouraged to hear that acquisitions are picking up here and that your confidence of hitting the $100 million is better. Given the slow environment, are folks thinking it might be better to be part of a bigger company and is that upside potentially this year?

I guess it's all – yeah, it could be upside, but for the last few years independents have not been in a real hurry to sell even though some very high prices have been thrown at them by some of our competitors. So I think most people have a positive long-term outlook for the U.S.

economy and see the future – this decade anyway, the next 10 years – as being a good time for our industry. And I'm not sure – so I'm not sure that a short – the soft spot in the economy that we're experiencing right now is going to have a dramatic impact on the outlook for these distributors.

And it will probably be more driven by personal reasons and we continue to keep in touch with as many of them as possible. And so it's always been tough to predict acquisitions, but we're hopeful that we're going to have a good year.

Great. And then Mike, when you think about your organic growth outlook for 2016, low-to-mid single-digits, how much of that is price, which tends to be a little bit within your control?

And then when you think – and as you sort of think about the mid-single side, what needs to happen just sort to get that, particularly because the base business EPS part of that is pretty meaningful at $0.50?

The – I guess I would characterize it this way, that if was looking at mid-single-digits as something I'm commenting about, I would guess probably half is going to be price and then not every one of our segments of customers is going to contribute equally. We are seeing – we are feeling and are getting more confident that the construction segment this year will have a much more meaningful impact than it has had in the past.

And also reaching that, I don't think we need oil to dramatically increase. What would help would be stability, both in currency and in oil.

So that people would get comfortable that we know where we are as opposed to kind of feeling blind.

Great. Thank you.

Hi. Good morning.

Good morning.

Good morning.

Mike, I was hoping that you could give a little more detail on the helium efforts and are these mostly upfront costs that kind of abate over time or maybe explain why we're seeing a smaller impact in the rest of the year than in Q1? And can you also maybe address, you're committed to being in this helium business long term.

Why does it make strategic sense to make these investments?

Well, we – I mean, we have thousands of customers that expect us to be a supplier of helium just like their supplier of oxygen and nitrogen. We must be good at it, we must be reliable.

And we've learned over the last few years that just because you have contracts with people to supply your products, doesn't mean you're going to get it. And that may – with that as a backdrop, that's not something we take lightly in a commitment to be able to reliably supply our customers.

A lot of customers we have, we have because we're reliable. And that's primarily why we have them.

And taking more direct control of this to make sure and I say direct control meaning more suppliers and dealing with people that manufacture it directly and having control of the reserves that are going to be used to produce the product is what we're trying to do. The reason the impact is not the same is that our helium volume is probably one of our more seasonal products that our volumes are not even.

I mean, we have a portion of our helium volume is in the recreation and entertainment industries. And it's very seasonal.

So I think getting – we knew, we needed to get behind it and also over the year, we expect to be managing prices. And we're going to be working on recovering all that.

I think the highlight here is that it's in – because of the oversupply and there is a lot of helium sitting in containers all over the world waiting to be shipped, our ability to recover it and make it an invisible, seamless effort is going to be challenged in the near-term. But over the long-term, this is going to be a really good thing.

I would add to that that outside of the MRI, liquid helium market we're the largest supplier of helium in the United States. And we have many, many important customers that use helium for chromatography, for weather applications, for welding, for leak testing in addition to the balloon business.

And so it's important for us to be reliable and to diversify our sources. We expected helium – a better bounce back in customer demand than we've gotten, post shortage and – but we do, we are optimistic that we're going to grow our helium sales, they are growing.

We have a national platform, so for customers that need helium in many different places all over the United States, Airgas is advantaged. We have a special Total Access-type customer service capability in place.

And now we've strengthened our supply chain and we think the market will eventually return.

All right. And then looking at the Spec Gas side of the business that was weak or quite weak for the first time in quite a while, what's going on there?

And if there is some impact from the weaker oil and gas markets that's impacting that?

Well, the challenge in discussing Specialty Gas is it covers a very broad array of products and mixtures and applications. And it's also got some products in it that make comps particularly difficult because they're very expensive.

There's some very expensive products in there that generate a lot of dollars but don't generate a lot of margin. So what we're concentrating on and the announcement of some of our new plants, is we're concentrating on calibration and emission control and process chemical type of control mixtures that are used to calibrate analyzers and that's the market that's growing, that's the market that has tremendous – is a tremendous value creator for customers when you can make those mixtures very precisely especially repeat them over and over and over and over again.

And as a result, as we looked at our capacity, we made some investments a number of years ago and based on the growth of that, particularly with the midstream and with the natural gas pipelines and things like that and a lot of these mixtures are used as BTU standards to calibrate the analyzers that are used to measure the BTU content of natural gas, within 12 months to 18 months, we're going to be out of capacity. So, we are just like we're trying to stay ahead of our atmospheric gas demands and our needs by either buying product or building out capacity, we're trying to do the same thing in certain portions of the Specialty Gas market.

Right. And Bob, just really quickly what's the big other income item, the $3.4 million on the P&L?

Probably, the biggest driver of the change in this quarter, there is about $1.6 million of gains on the sale of a number of facilities related to doing some consolidations that we've done.

All right.

And then other part is really kind of, it's non-operating, but a good chunk of it it's actually operating, it's equity earnings from our Carbonic joint venture and some joint ventures that we have with Red-D-Arc over in Dubai and some other areas.

All right. Thanks very much.

Hi, this is Dan Rizzo in for Laurence. You mentioned a couple months ago or a little while ago that you were seeing an uptick in rental business a couple of quarters ago and that also seeing an uptick in request for quotations, I assume that's a kind of dried up or is that – is it still kind of showing sign of life?

Now, are we talking about rental equipment?

Yeah. Rental equipment, sorry.

Okay. We have a rental equipment – Red-D-Arc is our rental equipment business.

There's two main pieces of Red-D-Arc. One would be the rental of welders.

And let me just make it simple, welders and other equipment related to welding, which is used by contractors. The other part of Red-D-Arc is the D&D equipment, which is rental – long-term rental of generators into oil and natural gas fields to provide portable power, to process product that's coming out of wells after the drilling is over.

And in quarter-to-date March for the Red-D-Arc business, we had growth of over 11% growth in Q4. So it continues to be strong and we're expecting it to continue to be strong.

Would that...

Year-to-date the growth of that segment was or that business in gas and rent or the rental part of it was about 14%.

Would that suggest that, that I mean, while things are slow now, that – I mean that the dawn on the horizon sort to speak, that things will pick-up potentially later in the year?

We are expecting less pickup. Well, I shouldn't say that.

For the D&D part of it, we are expecting it to be stable. For the Red-D-Arc part of it, which Red-D-Arc supplies two primary customers, they supply contractors who are building new things, new power plants and refineries and things like that.

And Red-D-Arc supplies contractors who are doing maintenance on those similar kinds of facilities. In Q4 of this year that we just finished, it was an extremely weak turnaround and maintenance season.

And it was extremely weak for a number of reasons. One, was the plants were running full out and they didn't want to take them down.

But a bunch of it was related to strikes that were going on in a lot of the refineries that the companies postponed the turnarounds and they've rescheduled them for later in this fiscal year. So for the piece of the Red-D-Arc business that's related to building new, we expect it to be strong.

For the piece of the Red-D-Arc business that is related to repairing and maintaining facilities, we expect it to improve as the year goes on.

Okay. All right.

Thank you.

Unfortunately, none of this stuff is a simple answer.

All right. Thank you very much.

Hi, guys. Good morning.

Good morning.

First off, the $0.00 to $0.14 variable comp reset on earnings that are seemingly below plan here and that's on top of a $0.08 to $0.09 hit last year, shouldn't that factor be zero or less on a year-to-year basis? And I'm just wondering under what circumstance would the variable comp be lower year-to-year?

Let me make sure I understand your question. So, the variable comp, the adjustment for if we get to the high-end of our range basically represents that we're going to be at or above plan, and have that much additional variable contribution in fiscal 2016 versus 2015.

So, 2015, the year we just completed and reported on, obviously we didn't make our targets. Our internal management targets that are aligned throughout the field and we fell short of that.

So, if we make our plan for this year, that's a reset and basically, that would be additional payout, all of which is factored in. It has to be accrued relative to being paid out.

Okay. And on the low-end, zero represents you do not hit the plan, and therefore, there is no increment in the variable comp?

Correct. There is no incremental payout at that level.

So, we're not going to pay out more if we just get to where we made this year.

Well, is there any reason that number would be lower? If you're far enough below plan, I would imagine doesn't variable comp flex down also?

Yeah, I think if you looked at this last year, it was a higher number I believe, it was up to $0.16. So, I mean it's not a negative number, if that's what...

It could go lower.

Yeah, yeah. It could – if we deliver less, we're going to make less.

Yeah, absolutely.

Okay. All right.

And then, on the pricing, I'm wondering how it is that in the gas industry broadly you're able to capture some positive pricing in what seems like a deflationary environment? And maybe if you could help us by disaggregating pricing in gas and rent versus hardgoods?

If I missed that, I apologize.

Yeah. Well, I mean, make one piece very clear.

Our expectations for hardgood price increases – we don't really have any expectations for hardgood price increases in this environment. On the other hand, on gases, I mean, the labor component of particularly packaged gases – I mean, in bulk gases you've got power and – well, you got power, is your big component.

But in packaged gases, you have a tremendous labor component. And with wage increase, with healthcare benefit increase and things like that, that's going to be one of the big drivers.

Okay.

And power – and I would also say, Dave, that power prices don't always follow oil prices.

Right. Absolutely.

Utilities get increases for investments and other things.

Right.

And there's a lot going on if they have to buy extra power. So every power grid is different and you can have a period of time when you're having power increases and the price of oil is down.

Right.

Got it. Right.

Thank you.

Sure.

Thank you for taking my call. I just wanted to follow up on the implementation of the district managers, do you have everybody in place at this point or what percentage are in place?

They are in place.

Okay. And could you add a little color on the argon market, have you seen increased supply with the drop in steel production in the U.S.?

Argon is currently and is expected to be a product that's in tight supply for a long time to come because the number of very large production plants that are announced and are being built is limited. And even you look at the plants that we're building, by argon production standards the plants we're building are very small argon producers.

So, right this very moment everything is running. There is adequate supply, but we're one plant outage away from going into a very, very tight period.

So, it's not a supply with a lot of flexibility to handle any upsets. And as construction improves, a lot of the construction, particularly the ones we participate in, there is a tremendous amount of argon that's used for welding the piping that's used throughout these different energy related investments.

So we expect it to be tight for a long time.

All right. And positive for pricing at the same time?

Yeah. Yeah.

All right. And then last question on refrigerants, has the R-22 inventory shrunk to an appreciable degree, where is the industry sort of sitting at at this point?

Well, I was going to say yes until you added the word appreciably.

Okay.

Not knowing exactly what appreciably means, the pricing has begun to firm, their – product is moving, but my own personal opinion is that there is still a massive supply of product scattered throughout the various supply channels, but I don't have a specific – I can't give a number. I don't know that.

Okay. That's fine.

But pricing is firming?

Pricing is firming, yes.

All right. Thank you very much, guys.

Okay.

Great. Thanks again for joining us all today.

We'll be available all day for any follow-up questions.