Colfax Corporation

Thanks, Stephanie, and good morning, everyone. Thanks for joining us.

My name is Scott Brannan, I am Colfax's Chief Financial Officer. With me on the call today is Steve Simms, our President and CEO and Clay Kiefaber, President and CEO of ESAB.

Our earnings release is available on the Investors section of our website, colfaxcorp.com. We will be using a slide presentation to supplement today's call which is also found in the Investors section of our website.

Both the audio of the call and the slide presentation will be archived on the website later today and will be available until the next quarterly call.

During this call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in our SEC filings.

Actual results may differ materially from any forward-looking statements we might make today. The forward-looking statements speak only as of today and we do not assume any obligation or intent to update them except as required by law.

With respect to any non-GAAP financial measures during the call today, the accompanying information required by SEC Reg G relating to these measures can be found in the earnings press release and the supplemental slide presentation again in the Investors section of our website.

gas and fluid handling which is the legacy Colfax Fluid Handling and Howden, and fabrication technology which is the ESAB welding and cutting business. We will also report corporate and other.

Other is principally pension and costs related to divested businesses which are unrelated to the 2 current segments. It is important to note that 2011 and prior historical reporting included corporate and other within fluid handling.

A breakout between fluid handling and corporate and other for the first quarter of 2011 is included in the non-GAAP reconciliation in the appendix of the supplemental slide deck.

It is also important to note that we will be able to report pro forma sales, including Howden and ESAB for 2011 but we do not have pro forma income, net income or earnings per share. As such, we are unable to make comparisons of results on a pro forma basis other than sales.

Finally, the first quarter had numerous significant financial events, the closing of the Charter acquisition and the issuance of new debt and equity. So please refer to our guidance in the slide deck for metrics appropriate for the remaining 3 quarters and the full year.

It is also noteworthy that the results for ESAB and Howden are included from January 13 and represent less than a full quarter of results. The pro forma sales discussed today are based on a similar period for 2011.

And with that, I would like to turn it over to Steve.

Thanks Scott and good morning everyone. Today we split the 3 areas for review in this morning’s discussion and we’re going to begin with an overview of the first quarter results followed by a status update of the integration of ESAB, and finally, our updated earnings guidance for 2012.

I will handle the first area and then Clay will join me to discuss the ESAB integration and then Scott will follow to provide more detail on the financials and our updated 2012 guidance. Q&As will follow then.

With that, let’s begin by covering our first quarter results. For the most recent period, we are pleased to announce that adjusted EPS for 2012 was $0.23 which is 10% higher than the $0.21 per share reported in the first quarter of 2011.

Howden had a higher than expected level of sales and profitability during the period which accounted for this above planned performance. Net sales for the 2012 quarter were $886 million, an increase of 11% and 10% organically compared to $797 million of pro forma sales for the 2011 first quarter.

Turning now to our business segments, for gas and fluid handling net sales for the first quarter were $425 million. This represents an increase of 24% and 16% organically compared to $343 million in last year’s first quarter.

With respect to the end markets associated with this newly created platform, our market definitions now reflect the combination of Howden’s air, gas products with Colfax’s fluid handling business. You now have these markets and the respective growth rates in today’s presentation.

As you review that data, you will note that currency had a negative 2% drag on sales and orders for the quarter.

In reviewing end markets for the gas, air and fluid handling segment, I will begin by focusing on our largest end market which is power generation. This is served extensively by product offerings like axial and centrifugal fans, lubrication pumps and rotary heat exchangers.

For the 2012 first quarter, sales increased by 30% both in total and organically. Sales were particularly strong in China which is in response to a local environmental legislation.

Growth is also strong in Southeast Asia for new-build projects and in South Africa for maintenance projects.

Volume remains robust for pumps in the Middle East as new power stations continue to come online. Orders were essentially flat for the quarter both in total and organically due to a slight softening in demand for North America as well as several project delays in India.

We expect that other than coal projects in North America, these markets will bounce back later in the year. In the meantime, strong demand for environmental upgrades and maintenance work is offsetting these areas which are lagging in demand.

Next, oil & gas and petrochem is a very robust end market for our screw and piston compressors, multi-phase boosting systems, pipeline transport pumps and total lubrication management and service offerings are very successful. The recent price levels for oil globally continue to drive record levels of new product quoting and activity to trough all of our served markets.

Sales for the 2012 first quarter increased 69% and 23% organically while orders increased 55% aided by the Thomassen compressor acquisition in March 2011. Organic orders declined 18% for the oil, gas and petrochem market while the overall bookings and sales were bolstered by the Thomassen acquisition.

It’s important to note that Thomassen growth has accelerated since the acquisition date as a result of an effective integration process focused on practical synergies.

Overall the oil and gas market remains very strong. Upstream global investment reached record levels in 2011 as we continue to grow as we move into 2012.

Strong double-digit organic revenue growth is forecasted. We expect mid to long term prospects for expansion of refining capacity in the Middle East and Brazil and significant investment in upgrades for low sulphur fuel in the Russian refinery market.

Emerging markets continue to provide growth opportunities related to heavy oil transport and multiphase solutions. And we are excited about the prospects for our lubrication services businesses.

Turning now the marine market, this industry segment is comprised of both commercial marine as well as defense customers and served primarily by fluid handling. Sales for the 2012 first quarter were essentially flat organically compared to the year ago timeframe.

Booking softened for the quarter as the supply demand dynamics continued to rebalance and we expect new shipbuilding activity to continue its decline from the peak in 2011.

Defense is now a very minor part of our overall business which is noteworthy that we received a large order in the first quarter for aircraft sprinkler systems. Despite the industry softness in this sector, we anticipate our overall sales into this market to be relatively flat for the balance of the year.

Next, we’ll turn to the mining end market where we sell both centrifugal and axial fans. These products are used by customers in this sector to provide necessary mine ventilation.

Sales for the 2012 first quarter increased 7% and 10% organically while orders increased 22% and 26% organically. Demand from developing nations for mine raw materials like coal, iron ore, copper, gold and nickel will continue to stimulate very positive demand for our Howden range of products.

It’s worth noting that gold mine production is now at record levels and iron ore production is expected to double over the next 20 years. Howden continues to focus on this market as these demand factors provide strong growth opportunities over the long term

Finally, I’d like to touch upon the general industrial segment which is actually the combination of several sub-segments which are served by our gas and fluid handling products. More specifically, products in demand by this segment would include a variety of industrial fans, compressors, tunnel ventilation, pumps serving various industrial needs such as elevators, waste water, diesel engines and chemical processing.

For the first quarter of 2012, sales increased by 9% in total and organically. However we’ve experienced a recent decrease of 4% in orders and 6% organically.

This drop-off reflects a general industry softening due to - primarily due to the weakening economic conditions in Europe. We expect this end market decline to moderate over the balance of the year.

As I stated in our release, the profit margins did improve in this segment driven mainly by mixed volume and 2011 restructuring and the early success of a number of CBS Kaizen events.

Margins improved in most geographies but of particular note were major gains in China and Africa. Our fluid handling team has accelerated their drive toward lean as well with a more focused methodology towards the implementation of process flow and demand pull.

We will continue to turn up the CBS intensity level across the entire platform as we know there is a significant improvement potential on a number of fronts.

Now I will hand it over to Clay to speak about ESAB’s results and status of our profit improvement initiatives. Clay?

Thanks Steve. Good morning everyone.

Our fabrication technology segment represents the ESAB welding and cutting business. Sales for the period January 13 to March 30, 2012 were $461 million, up 2% from the 2011 first quarter.

Consumable volumes were up 2% for the quarter. Volume growth was strong in North America, Russia and the Middle East while volumes were down in Europe and flat in most other regions.

Pricing and mix contributed 4% to the sales increase which is generally in line with the rise in the price of raw materials between 2012 and 2011. Our 2011 acquisition contributed less than 1% and foreign exchange rates reduced total reported sales by 5%.

Adjusted operating margins for ESAB were 7.4% generally in line with internal expectations and broadly in line with the first quarter of 2011. This margin percentage is not directly comparable to what Charter had previously reported due to the inclusion of joint venture earnings and differences in accounting for research and development, pensions and amortization expense.

Margins were positively impacted by the higher volumes in North America and the Middle East and the cost savings of approximately $4 million from the restructuring programs ESAB started in 2011. These improvements were partially offset by reduced volumes in Europe, higher production costs in India and Asia and the start-up of a new consumables facility in the United States.

Turning now to profit improvement initiatives, the major initiatives begun by ESAB in 2011 include the rationalization of European capacity, the replacement of a high cost North American plant with a more efficient one, a reduction of European fixed overhead and the reduction of product range complexity to drive margin and working capital improvement.

On our last call, we also introduced $100 million cost savings target across the Charter acquisition encompassing corporate redundancies, Howden and ESAB. We’re making significant progress on developing the action plans necessary to finalize the expected timing of both the savings benefit and the expected restructuring charges.

The major components of our profit improvement plan are the rationalization of the 2 corporate headquarters -- this has been completed and $10 million of savings is included in the 2012 guidance -- the implementation of CBS and related productivity improvements which will continue, the supply chain and global sourcing initiatives, including the rationalization of freight globally, SG&A reductions globally, further production rationalization, the implementation of a more variable overhead structure for our automation and cutting businesses and the implementation of a disciplined pricing process and strategy.

Based on our work to date, it’s our current expectation that savings from these programs will flow to profit and restructuring charges will be recorded as follows. Restructuring charges for 2012 are now expected to be $30 million, up from $25 million.

There are no changes to the expected 2012 savings which are included in the guidance. For 2013, incremental savings beyond the amount in the 2012 guidance resulting from these programs are expected to be $55 million to $65 million.

The remainder of the savings will be realized in 2014 with full realization expected in 2015. We will provide further updates on these later years on future calls.

And let me give you a sense of what’s happening - what’s been happening over the last couple of months. First of all, we recruited some seasoned executives to our leadership team as evidenced by the addition of Vincent Northfield as our Vice President of Global Operations and Ken Konopa is our Vice President of Global Marketing, and Gary Hoover is our Vice President of CBS.

And it’s really important to note, I mean the experiences that these guys have really fit what we are trying to do with our businesses.

Vince has an awful lot of experience in lean and really driving improvements and on-time complete which we are working on as well as reducing working capital and the cost structure across the globe. And we are putting that to use in our business.

Ken who is a degreed chemist comes to us with a lot of experience from Danaher of running a significant business over there and again, his functional expertise is marketing. He’s helping us a lot of new product development especially voice of the customer and those kinds of applications.

And Gary has a significant amount of experience with CBS policy deployments, the application of lean across the number of different businesses. They in turn have recruited some exceptional talent to blend with some very talented associates in the existing organization.

Second, we restructured the organization into a global functional one with a regional focus on customers. This structure better leverages our resources for new product development, operations and global sourcing as well as the back-office functions for decision support.

The corporate functions are much leaner with a clear focus on adding value.

new product development, especially the process and improving the needs for speed to market; the implementation of process flow demand pull throughout our supply chain and operations; the implementation of the sales and operations planning process that systemically improves our service to customers while enhancing our working capital performance, and finally, the simplification of the European operating model.

In closing, while we have significant restructuring to work through, our focus is really on building the best model and the best teams to compete for the long term. I am more excited than ever to lead this team of committed associates in realizing our collective potential as well.

And now what I would like to do is turn it back over to Scott for more details on the financials. Scott?

Thanks Clay. As Steve mentioned, sales for the first quarter were $886 million, up 11%, 10% organically compared to the pro forma numbers for the similar number of days in the 2011 first quarter.

Adjusted operating income was $63.4 million which represents an operating margin of 7.1%.

Fabrication technology margins were 7.4% in line with expectations. Gas and fluid handling margins were at 9.6%.

Gas and fluid handling margins are at a seasonal low point as Howden has seasonally lower sales in the first quarter. Given Howden’s high engineering costs, this significantly decreases the operating margins for the first quarter in gas and fluid handling.

But despite this seasonality, Howden had a stronger than expected first quarter. Howden’s performance above internal expectations accounts for essentially the entire improvement in adjusted earnings per share from the first quarter 2011 level.

Corporate and other reduced margins by 1.3%. Expenses of $42.9 million associated with the Charter transaction in this quarter are not included in the calculation of adjusted net income as this acquisition is transformative and not part of our recurring business development efforts.

Also excluded from adjusted operating income are restructuring costs of $8.6 million incurred in connection with the cost reduction projects that Clay discussed, $33.7 million of significant year one fair value adjustments related to acquisition inventory write-up and contract backlog, and $2.3 million of costs associated with asbestos insurance coverage litigation.

Interest expense was $19 million reflecting drawdown on the $1.8 billion term loan made on January 13 and 25 as well as a $35 million repayment made in March. Interest expense also includes $4 million of non-cash amortization of debt discount and deferred issuance costs as well as facility fees and the cost of bank guarantees and letters of credit.

Our effective tax rate for adjusted net income for the quarter was 31%. Once all the reorganization activities associated with the acquisition structure of Charter, ESAB and Howden are completed, we expect the effective tax rate on adjusted earnings to become approximately 29%.

Operating cash flow for the first quarter was negative $109 million. Inventory balances increased $56 million and working capital as a percentage of sales increased to 22% at the quarter end.

The first quarter has historically shown levels of working capital build up. However we expect these metrics to improve in future quarters as we vigorously apply the Colfax business system.

Finally, our backlog in gas and fluid handling was $1.4 billion at quarter end, and as is our standard seasonal pattern, orders exceeded shipments in the first quarter and our backlog now stands at a record high at the quarter end.

Turning now to the 2012 guidance, we are making no fundamental changes to our expectations for operations in 2012. We are raising our expected adjusted net income in line with Howden’s first quarter over performance in operating profit and bookings.

This will offset the additional shares associated with our equity offerings such that our adjusted EPS expectation of $1.45 to $1.65 remains unchanged. As a result of the recently completed equity offering, the establishment of fair values in the opening balance sheet, the impact of the cost reduction initiatives Clay discussed and the finalization of the transaction costs, we are updating certain assumptions in our 2012 outlook which are listed in an appendix to the slide deck.

Of particular note are the following. As Clay mentioned, restructuring costs are now expected to be $30 million for 2012.

The final fair value for inventory and contract backlog was $78 million, substantially all of which will be charged to the GAAP earnings in 2012. We do exclude this item from our adjusted earnings.

Total amortization for 2012, including this $78 million, is expected to be $105 million.

The full year GAAP basis effective tax rate is now expected to be significantly higher at 80%. This increase is caused by an increase in valuation allowance provided against the legacy Colfax deferred tax assets which was caused by the new debt structure associated with the acquisition.

As is our practice, we will not give specific quarterly guidance. However given that there is no historical quarterly data available for ESAB or Howden, we believe some direction on seasonality would be helpful to investors.

In broad terms, the first quarter is historically weakest for sales, the second and third quarter are very comparable and the fourth quarter is the strongest. And with that, I will turn it back to Steve.

Thanks Scott. We are also very pleased with the results of our equity offering we completed in the last month.

We sold 9 million shares of common stock, raising $294 million. This has significantly strengthened our financial position and provides us with substantial flexibility to execute our business strategies.

I’d have to say it was only 2 weeks on the job I have been and remain on a very steep learning curve.

However having said that, I’ve become increasingly impressed with the skills and abilities of the teams that I continue to meet here at Colfax. And with the market opportunities that our team has briefly described in the past, the combination of our brands, technologies and solid market position provide us with a unique opportunity to profitably build something very special here within our industrial markets.

In the interest of time, I would now like to open the session up for Q&A.

A couple of questions. First on the power gen side, I wanted to follow up on a couple of comments that you made, Steve, with regards to the softening in North America but more specifically the project delays in India.

Is that a short-term issue or is there something within India in general that’s ongoing?

In talking with our team, they feel that the issue in India is really just a short-term bump as there is no change. In fact, they are quite optimistic with the full year forecast.

And was there anything specific with regards to that short-term bump?

No, just the delay of work processing, no change in commitment, no change in anything that we have seen in the market from the customer base.

If you take a look at the demands that’s out there, the needs for electricity in that market, I mean that’s what you ought to look towards Jim. Obviously there’s going to be a need for more power in India.

So it is a short term issue.

And with regards to the oil and gas side of the business, that can be very lumpy we know on the order side. Are you seeing anything specific within the order pattern?

Obviously the growth rates remain very strong there but just curious what you’re seeing on the order book?

No substantial change, Jim. We continue to be pretty optimistic about our forecast for the full period on each one, or each component part in both Howden and fluid handling.

And just know again the projects continue to be larger and larger in scope. And so it’s a lot more volatile when they actually hit.

And finally, just with regards to the M&A pipeline where you continue to look on the bolt-on side. Can you talk about how that pipeline is looking today.

I think you put it well. We’re still focused on bolt-ons.

I think with the digesting of what’s going on at Charter, new platforms will be ways out but I’d say that the pipeline is very robust. We’ve been very aggressive and there are some significant opportunities across the entire business and also very interesting in terms of the geographies that they represent.

So we are excited about a number of bolt-ons.

So the organic sales performance in the quarter was above the range that you shared us too, it looks like in both major segments for the full year. And I know you didn’t specifically update that sales guidance but the aggregate sales guidance was unchanged overall.

Are there comps that get progressively more difficult during the year, is the macro uncertainty that’s kind of holding it back from being more optimistic about that, or can you elaborate a little bit on that?

Well it’s some above but it’s mostly just the seasonality of these businesses. We were very close to our internal expectation for sales for the quarter.

So we didn’t see anything in these results that would cause us to change the sales expectation for the year.

And Clay, at ESAB you talked a little bit about some of the efforts, working on product development and how that’s going to change. How do you feel about the current split between consumables and equipment, very close to one of your competitors, somewhat different from one of the other major guys in the space?

Is that something that you think needs addressing and if so, when could you get to that given the amount of restructuring work you have to do in that business?

Yes that’s definitely something that we’re focused on. When we take a look at, I mean what we want to do with our new product development, first of all, is develop the process, so we can actually introduce products much more quickly to market and focus more on the actual customer needs in those markets.

That’s been a weakness as we take a look at the business. But our plan is most definitely to go after more solutions which is a combination of consumables and equipment.

And again if we take a look at it in terms of what our goals are for gross profit and those types of things, we look at more of a shift especially in utilizing equipment is a very positive thing to help us get there.

We actually have some great examples of that internally, South America has done a great job traditionally with that. It's just that over the last 3 or 4 years the new product development has been shut up, as we are turning that back on and we view it as real opportunity for us.

And then lastly, if you can just give us a little bit more color on the general industrial orders. You mentioned that Europe was attributable for part of the softness.

Any particular end markets or specific kind of business lines that caused that softness you are seeing with kind of conditions changed over the last quarter?

No, not really. No significant patterns there.

So just on the restructuring, I think you mentioned $100 million again and then Clay, you talked about $55 million to $65 million in 2013. But it looks like, I think qualitatively a couple of times you said you feel really good about the integration, you are bumping up the restructuring.

I mean, are we kind of - what was the $55 million to $65 million previously? Are we starting to feel any differently about this $100 million number to the upside?

Jeff, let me - this is Scott. Let me take that first and then I will let Clay respond to how he feels of that.

We had not previously provided any guidance at all towards 2013. The restructuring programs that Charter had put out prior to the acquisition implied that there would be about $30 million of savings associated with those activities.

We’ve combined all those activities into - we are not - all the things that were started, we are completing but some of the future activities are there as we’ve replaced with different activities. So we’re going to be addressing this restructuring as one large bucket going forward.

And I will let Clay talk about how he feels about that.

Yes in terms of the restructuring, there is probably 4 or 5 different buckets that I have put this into. First of all, when you take a look at this business, it’s pretty obvious that there is a lot of SG&A that’s been associated with it and something changed back in 2008.

So we have done is we’ve gone back and we’ve taken a look at that to try to understand what those drivers are and then analyze them in terms of did they actually provide profitable growth or driving profitable growth? Those are good if they don’t then we want to do something about that.

So a lot of the restructuring has to do with SG&A and one of the key areas there obviously is Europe.

In addition to that, plant consolidations and closures, right now we have 6 in process that we are working on as we go through it. Clearly we have had excess capacity as well, as it’s not been in the right locations, so we are addressing that.

And that’s a significant part of it as well. Freight consolidations, sourcing -- global sourcing that again is something that wasn’t organized to really happen at 2 different organizations, one for supply chain, one for procurement.

We’ve put those together so there is a very definite focus on driving global sourcing across the organization. And then lastly, in terms of the functional organization that we are putting in place so that we get some leverage with operations and new product development, those types of things.

So some of those are shorter term than others. I think we talked about this on the last call where we can drive some of those this year but in terms of the real restructuring, that’s what provides that bump in that benefit for next year that will support that $55 million to $65 million.

And I am always optimistic about opportunities for improvement over and above that as well.

So they came to the $100 million as you get $10 million from the corporate costs this year, $25 million to $35 million in ’13 and the balance in ’14?

That would be correct. It is on top of that $30 million that was left from Charter.

So that would be a fair way to describe it.

And then just on the beat, I mean it sounds like the upside was really Howden margins, is that fair?

That’s spot on.

And what kind of drove that and why doesn’t that persist because it seems like you’re just raising by the first quarter beat?

Well, Howden has a wide variety of products across, a wide variety of geographies as well as for market and aftermarket product. So it is a significantly backlog driven business, we have good visibility as to sales and expected margins in the future.

And looking through it, we didn’t see any reason to raise the guidance for the balance of the year.

And just to add to that, remember one of the things that we were able to was to introduce them to CBS fairly early. So we are just end of that process obviously over the last quarter and we’re optimistic about what we can derive there.

But just give us a little bit of time to get to know the business and drive that through it.

And then you talked about kind of pockets of weakness within the order trends. Can you just overall talk about - you’re not changing the guidance, so maybe overall order trends are in line with expectations.

But where are you seeing sources of upside within the order book?

I think we feel very confident with power generation. As we said there were a couple of specific reasons why some businesses deferred in the first quarter, we fully expect to get it back.

We also feel very strong about oil and gas of both the organic business as well as the acquisitions, the COT-Puritech acquisition on the fluid handling side and the Thomassen compressor acquisition for Howden, we feel very good about that market. We feel strongly about mining which is a very small market and then we think general industrial and marine will be flattish to perhaps slightly up.

So on balance, both the end markets pretty much are on balance where we thought they were going to be on our last call and haven’t seen any reason to change the guidance.

Just to touch on the restructuring just one more time, could you just talk about what exactly was spent on, I believe it was $8.6 million in the first quarter and what is actually being spent on for the rest of the year and what kind of benefits we are seeing from that?

I think the best way I can answer that is refer you to our Form 10-Q. We have a specific footnote in the Form 10-Q that goes through that in extensive detail.

I think that would be the most efficient use of time here.

Does it also talk about what is being spent for the rest of the year? Because I am just trying to get an idea of sort of a timeline, sort of how you’re looking at the business and how the restructuring is playing out?

Yes, that is included in that footnote.

And then I guess the second question just is regarding Europe in general. Could you just talk about that region in general among the different businesses?

You mentioned general industrial being somewhat weak there but you also said that you expect that to moderate throughout the year. What gives you sort of that conviction and sort of what are you seeing over there?

I will speak for the gas and fluid handling markets. We had a pretty strong first quarter on shipments and then we had a little bit of weakness in orders.

The general industrial typically is not a real long cycle market. So it’s up 9 versus down 4, so relatively speaking, that’s a flattish sort of trend.

You can't give too much weight to one specific quarterly statistic by itself. So I think we feel that overall given particularly what we have seen so far as in the first month of the second quarter, that we’re reasonably comfortable that flattish to slightly up is something that we feel relatively confident about on the gas and fluid handling side.

And I will let Clay speak to the welding side.

Yes just to add to that, for the air and fluid handling at least, you need to take a look at that new-build versus aftermarket as well, so new-build has been flatter if you will than the aftermarket has. That’s something to note there.

In terms of ESAB, actually Europe has been holding up better than our original expectations. In Southern Europe it is weaker obviously than Northern Europe.

I think you’ve probably seen that with some of the other businesses that you cover. But so we have been relatively conservative internally but we have been pretty pleased with the first quarter in terms of the volume that we’ve seen coming out of Europe.

So overall can we say that directionally that you saw a dip in the first quarter but you’ve seen somewhat of a stabilization going forward?

It was relatively flat for the first quarter across all business segments. So and we haven’t really seen any significant change in that frankly.

So we expect it to continue to be flattish.

Again on the air and gas side, there isn’t a lot - we don’t have a lot of business in Southern Europe anyway. So that’s how it mitigates some of the impact on us.

And then just lastly, I apologize if I missed the comments on this. But the oil and gas you mentioned that it’s strong but the orders were down organically 18%.

Could you just address that again or just talk about that?

Really what’s happened there is we’ve seen a bit of a timing to be honest with you. The Thomassen acquisition has done very, very well for us and that’s been a major area of focus.

But the timing of orders shifted out on us, the team is still very optimistic about that recovery in the balance of the year. So they believe it will bounce back.

So no fundamental change structurally to the business or expectation.

And it’s important to look at that Thomassen acquisition a little differently. That was acquired in March of last year and what the Howden team has done is really worked with them on accelerating that.

I mean a lot of that has to do with driving more aftermarket sales through those channels that Thomassen had as well as selling more of the Thomassen products through the Howden channel. So they have done a nice job in doing that and that’s really driven more of what we consider almost organic, but I mean technically it’s not because when it was acquired.

How are you feeling about your previously discussed 3 to 4 year margin trends for each business? Do you feel pretty confident that you can achieve mid-teens operating margins in Howden, low-teens operating margins in ESAB and 20% or greater operating margins in fluid handling?

Those margin expectations that you guys have, that we’ve talked about before with the team, they are still on line. We still believe that’s doable.

Okay, that’s like a 3 year timeframe?

Yes, 3 to 4 year timeframe.

Thanks Stephanie and thanks everyone for joining us today. And we look forward to talking with you again next quarter.

Thank you and have a great day.