Graham (GHM) 3 Aug 182019 Q1 Earnings call transcript

Company Profile

Participants

Karen Howard	IR
Jim Lines	President & CEO
Jeff Glajch	CFO
Joe Mondillo	Sidoti & Company
John Sturges	Oppenheimer & Company
Bill Baldwin	Baldwin Anthony Securities
John Bair	Ascend Wealth Advisors

Call transcript

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Operator

Greetings and welcome to Graham Corporation First Quarter Fiscal Year 2019 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Karen Howard, Investor Relations for Graham Corporation.

Karen Howard

Thank you, Dana, and good morning everyone. We appreciate your joining us today to discuss the results of Graham's fiscal 2019 first quarter results.

copy wire news this a distributed that have the across morning. should of release the was You

We also have we are slides associated with here the today. providing commentary that

find or If www.graham-mfg.com. slides, the don't the release you you website have can them at on company's the

the call our today will are review and Chief Officer our and Jim Jeff outlook. with me the Jim Glajch, and our Lines, quarter, the Jeff Executive as Chief On as for well President results Financial Officer.

lines for the We open will Q&A. then

are as as These you and as and provided filed want on Securities we which factors, stated are to materially the forward-looking Commission. which and our some slide may out statements the discuss during with some These cause uncertainties call. factors As and the other other risks events could be found aware, also at differ make from deck during earnings uncertainties, actual website we the today's during that what measures, with point as will non-GAAP company this on useful or future documents we and as sec.gov. release in in and are our to risks as are to is documents discussion evaluating performance. statements well subject Q&A. financial well the the apply can I well other to believe Those in call, Exchange by results

GAAP. additional the this results as presentation information consider in substitute not of prepared isolation should with in for You a accordance or

the release. GAAP my it And Jeff? Jeff tables reconciliations in today's We pleasure call earnings the to to is comparable of begin. measures that, non-GAAP over provided have to turn to with accompanying

Jeff Glajch

everyone. and Thank mooning you, good Karen,

Slide deck. X could of you the If turn to

last million, which First quarter compared of with up was the revenue quarter first of year. XX% had $XX.X

the portion of standard. due that the new increase million approximately revenue the of $X However, to revenue adoption a of recognition was

XX%. our excluding up that, sales were So

recognition minor it work Jennifer the a analysis see revenue profitability be next recognition million. a complement out suggest by $X.XX internally did revenue Officer if in quarter in about all $X.XX team which speak detailed of much will XX-Q, did that the that and week. the there not income the only While we and standard in our anyone I were Net with write-up of impact The the in who a update, million is in the detail internal led complied on Chief early the $X.X you our quarter And written Accounting share Condame, the very want work to will that is all impact was that well filing XX-Q. of quarter. in Orders will we interested share. or of $XX was I'd $X.XX very the

$XXX nearly at strong remains backlog Our million.

a to If turn talk to you X about detail little more the quarter. Slide

from was more impact be to two $X.X year. project the permanent, XX%. or This I of As year. in million of sales international quarter. previous been particular were the large $XX.X of by quarter was sales, profit but expect one from than mentioned in in however, $X.X couple has Canada, represented over quarters up We up domestic this to million would only years three past which million this last versus in a two-thirds earlier, sales quarter not shift revenue Gross of order. The the $XX.X very that domestic sales domestic were rather the one third driven split due up

and because XX% have million driven the a year. at was by $X.XX I as margin been was earlier X.X% EBITDA mentioned closer from gross in we margin $X.XX Our in share up profit points. versus last actually quarter $XXX the revenue XX.X% margin were the out basis gross margin. gross adjusted profit was margin profit profit up per recognition, of earnings the to $X gross very If low adjustments, revenue income would the our stronger

slightly position the X, due quarter in timing the is On our decreased out did a this pay the capital in of dividends just nothing down $XXX,XXX cash that. Slide $X.X million, from to cash and some quarter. standpoint working We in beyond

forward. you be increasing quarter, hand a dividend Cash we from approximately quarter the end announced of at quarter have may per the are quarterly $X is As to dividend $XX noted million we last share. will or our $X.XX that night so our per $X.XX going million $X.XX on

capital for again I'd the the million, talk and about $X.X Capital find regard, the appropriate not however, phone in will very cash We're make to want to simply make or million rest the to for $X which earnings Lines look to higher acquisition for cash are we relative over working beyond the quarter flow shareholders. but that, to acquisition $XXX,XXX in add utilize to this an be We candidates. also very this more With acquisition pass place and we continuously the rather to year expected that. low of in an for was candidate to state, like keeping timing this discipline acquisition, will an to that continue year. our should the to in our outlook Jim our nothing at is be to

Jim Lines

refining attention you, qualify that Slide from At Please revenue boosted turn good was are markets. our or first during factors Quarterly refining total improved two-thirds our revenue. to morning in to Jeff, oil revenue your refining markets million. quarter. There important revenue Thank $XX everyone. quarter revenue the just reflect under and of two to fundamentals the X. continues It's

million may is in recall several been with Due elevates was low specialized would our XXXX material dollars cost more calls, it from fiscal a of the conference that course quarter. materials order with in high from revenue. you material prior to of revenue secured in as cycle. the revenue First quarter third its costs If high have standard now

start first quarter. and resulted the realized planned in for quarter that our second from in allowed second to actions for in Secondly, our as productivity took somewhat, for the issue change exclude million end less were quarter an was accounting timing markedly welding domestic Revenue operations a sales enabling to a backlog other other of fiscal in outlined by had at what terrific was revenue compared which service. particular as the greater less down, as total, require caused million to production greater team we somewhat markets job be for quarter or lower standard Adjusted operations process increased. order been developed all-in-all revenue with Canadian XX% $XX.X is the has The sands team. more up again material Revenue of the if fiscal markets is revenue methods XXXX. That's that XXXX by $X hours, appreciable cost the realized I year. well oil by those that that our our for distorted adjust growth order first high previously to a were terrific benefit planned view however, the quarter that previously

And rebound petrochemical quarter across all having are capacity. net activity between and level we the We reference $XX downstream are currently in for U.S. one easy There key the good ethylene petrochemical full-year up industries. wave for for and to will an orders second expansion was X. projecting nonetheless year plant Slide new oil order million There for now orders and $XXX earlier comparison was revenues million.

orders. We to quality with from $XX level previous also commercial high had compared of healthy our improvement nuclear two the were however, in market. million million order a levels Bookings in off XX quarters,

Months Trailing Our encouraging a Twelve as order with XX. million net June trend $XXX is of

the million order new now trend Twelve of Slide XXXX, we million. to anticipate consolidated On will $XX.X orders this As add and from the we remains are fiscal second continue current to Months off $XXX at backlog XX, drop should quarter healthy we across quarter Trailing in, increase. a

$XX represent to the date earlier from the XX, XX, On at work million, has June million $XX last It nearly U.S. a On year. illustrate compared XX% is one-year has backlog compare the percentage was backlog to brand of and bottom XXXX, total. to Our that with being and non-Navy backlog $XX Navy backlog earlier June up non-Navy a $XX it XX, overall one-year downturn. for June very is doubled contrast million accelerated to with total. backlog to severe a sizeable million. backlog of Navy how of approximately was XXXX, important On approximately continues from

Importantly, as order improved margins. with well quality has resulting greater stronger in backlog

will I'm to provides front a XX%. provide effective rate $XX the million between between to expected following Gross be benefit to months. enables you. improved upward convert million Slide full-year loading please guidance. will to $XX.XX $XXX an continue to the in for based years XX% Dana Revenue or developments us on more that, tax and projected the production XX% spend On line XX, margin XX% between XX% Full-year for three within million. reminder We questions. to range open the guidance. to two next from the be positive modify order will XX%. pleased be onward. $XX The extended With to XX to is and backlog Thank million. is SG&A

Operator

from first & with the Company. Our of question Joe proceed Mondillo Please Instructions] your line Sidoti comes question. [Operator from

Joe Mondillo

margins $X looked and you I time gross big I went and as around XXXX, million you last exclude was even was even this was and as revenue So, margin, was at quarter. was this a low think at wondering, if kind XX% and when it don't the around as of of of we it back I last saw time percentage refining the total XXXX the of were sort

characterize in I the the pricing just maybe quarter you would past. that to relative work you that saw wondering the shipped and So did I you am guess how the within

going your guess of I your gross orders margins? thinking forward and you’re sort how market And regarding pricing and about

Jim Lines

sometime average material tendency That occurred. normalized the of of great it down was mentioned margins, in some to cost margin pull If qualitatively was to has content that the third it backlog it will has high back from of question into more you dealing what have for a order equipment is was been material What which was thank of I revenue looking quality, the superior running pulling was we and order secure I a high to to that that's higher should future quarters that the revenue would to immediate materials margin next more up traditional the margin more can say up typical begin appreciable that’s not we got a what's through see as content the running with of what of out so quarter been the it’s revenue in had of and order. clarification. we the cycle. material quality But reflective and gross a forward Jeff what’s because for importantly bookings down does able building product the types the level. rather is been we've back few but bringing margins What quarter a specialized bookings in quarter. was necessarily maybe Sure the require to that move revenue coming margin superior on those or and

So were margin not of it this high or I you bounce two level would was and the say the of revenue content back, Joe comparable three was in level because that get same material while margins quarter what years don't the content. revenue material you saw on to the

Joe Mondillo

thinking of gross think low you about - sort margins XX of in the in sort just in peak. then around general cycle the range I last XX% peaked And

take cycle seeing differences of sort XX% the surpass two your last sort peaks think margin and in margins even cycle your how do the the of little XX% you you can sort so think cycle? maybe you're peak it Just out I getting where your it’s play of seen at there or and margin of how go kind pricing peak this this know last ago, just core downtrend the and similar wondering and you're how a you maybe Navy the last go, you think wondering but where of gross though we've think average with can below operating of can out work about from you gross two just about of peaks looking equation, that let’s sort business

Jim Lines

we gross not at apart. cycle it a with had There pricing even that point a high time no environment, year years margin pricing was the were three minus we point in to into that pick in it have that XXXX though reflected XXX full a gross at is we at so was time. million lot coming means of didn’t in question the the plus row. let that fiscal of that We flat projected off stride by or environment strong strong in were volume. parse more in did mid-level so but that up peak initial me try XX% power pricing margin fairly The We

and are we We have gross both XX% power fiscal where at those the nowhere no pricing in was eclipsed that margins not XXXX fiscal years. strong near years XXXX that today. near XXXX

at results said the it look generally we we gross because is. and going that because it you work be its consolidated maybe if our may However down cited consistently material forward we but as this margin extract contract will that does as pull it content business type of of

low mid in with margin strong op would We margin to a it basis the However, get the including fundamentals the at gross on anticipate next be the peak fine. maybe. averages to XX% we line consolidated in as should some pricing

stronger be of would work core course. Our

Joe Mondillo

comment I chemical wondered know processing starting your sort the out are press order market of a that end put you then on obviously of we up I things sort release there. couple that you to And in could specifically saw if heat

wondering how power like been you you're anyway. sort projects pipeline gen you bit provide we’re of going continue think has really weak wondering up seems to sort little Just your that I'm a forward. color of you then area orders if there and life to some could of And could seeing do It on if also see on comment ramp business. a that? some the starting of

Jim Lines

primarily That's see necessarily second into debottlenecking, capacity investments America starting Brownfield always because to we in do not moving a investment. going industry facilities. Joe for of new we wave are seeing ideal be revamp the chemical the North up

would have for in capacity quarter was coming came So that capacity. our a large we new we last did new call in order also have some a last we that fairly from base. revamp And this installed quarter the orders petrochemical that

should good front next some international the also a of couple quarters. us petchem opportunities break have pretty batch for North in that We and petchem of American over

seeing risky. expect we’ll improvement the are XX environment. order ago. strong are But our we to a market market would we come and capture an some directionally say orders it months we stronger more We feel about today directionally the in those petchem we feel than in where some petchem see to down is to stronger ability And was general

is trough ago the work great market. as done market - somewhat In your that to the expand the coming question but market seen it nuclear backlog market nuclear our of diminish the compared the it off about and power we nuclear think market Regarding to for for of I XX%. a our was market the backlog related backlog I to nuclear market power a nuclear The type our a whole, was don’t about year but team level. had the up want

that good I job to that get the the nuclear has backlog and market. So healthier team a done to a level for around turn

principally the renewables see serve our would tuck we’re is backlog. characterize opportunities more aggressively and we right it nuclear positioning there after Our opportunistic go simply an market. the we and power into generation when that our for of I outside order market And

strong across can a the power the margin primarily the of not our be has there market work. to because We’re that terms inferior And rest potential commercial also onerous. player

and we opportunities situationally work it look at when makes therefore sense. So opportunistically grab those that

Joe Mondillo

ask on sort and given you're there certainty customers sort and model I to directly concerned not you're projects any that of a of CapEx what sort terms wanted be of of was into. all really things. the then you're wondering you certain now, you of Are put in questions, slowdown uncertainty to though of are risk have not. your sort at projects anything looking more your works installing that? hearing at installation I about think like demand hearing know more is how until couple they or of that any I people inflation or I and waiting which specifically is in given exposed we’re business sort the just spending that what little as certain And don't just seeing And or the side tariffs material But on pause

Jim Lines

our for everyone experiencing across elevated purchase goods tweeted, in our the basis it our And XX% chain price the ours. XX% Well of through input for the type of us to is supply that end has was certain cost customers the up the therefore that like tariff pay for costs went was issue. and markets. same one day and Once commodities to

to at our affected is it an pace though projects seen the point that So What for functions hearing are deal we is Having or the for customers causing it. our we impact. not be paying said the of we’re that get of will it, with this your to the impact these cost projects bad, a down of haven't too customers. correlated cost tariff procurement saying

we So as a in our on say haven't and chain. where an in up as a competitors supply meaningfully a impact What had the using it. We degree that markets, cost use more domestic would a international's to international use can. tariff I similar really we’ll chain deal supply an international supply they has Joe put chain international we’re or because step

get will us about That's And national long-term, our the impacting impact but And don't So a actually we've ourselves. in us is on and and this think lower, where the potential time, Graham companies think see international at but our over to industrial short-term that's talked work asked it's effect think right I impact. therefore nation this biggest on seed we having it about he I having just particular. hat, and are put on is is our recently and competition the the having met with costs issue, a for congressman margin international input with work. and about

Joe Mondillo

follow commentary, last on orders either even increasing. to you just a expansion sort or that with a you're the in gross of seeing terms think margin the pause of just disadvantage only not I a competitive cold the also imagine in the So, currencies do sort would considering see dollar of that downturn

dollar pause your increasing a within order do So competitors expansion think see decreasing, the you margin maybe in books? gross cost could you

Jim Lines

actually impact in petro this our where chemical I'm primarily is sector, an internationally for but chemical have we has some of us, on it's see a competition refining America, will in markets. America, the petchem investment in will impact North in back where think international in sector, judging but large where market, this and North the toward swing not nice project. a every course geographic I business our not

So, I type the think think the will the those and through and I we take order our orders of be that on on discernment at, okay orders process exercise that margins balance. we selection take we'll

Joe Mondillo

last ask was that then SG&A SG&A, understand I this wanted going I your year to And the budget. question with what's

– look Just potentially thinking the at sort into on you as attrition are sort you we see some of least potentially Do some wondering department just a thinking that sales hiring about sort to put pause you complete theoretically going of in and XXXX, budget. of think how you extent.

is And how so expansion that of don't you coming of lot we whole know about or XXXX that sort maybe year are we off not year-over-year? a significantly XXXX pretty SG&A see already up thinking in

Jim Lines

do highly terms likely Joe and we that in it this spend, strong that likely this channel spend the multiyear will expansion that that. don't about in intend absolute to from particular XXXX. But on increase thinking capitalize and our will time to we're to expecting SG&A expansion up. proportion revenue SG&A way, be – we markets. XXXX need to expecting able is the S it go And anticipate point the We across management in we're We're at to a

ready talents we a ready opportunities we're on tenured organization secondarily, And richness we organization we for fair have five and their As the eventual customers ready go something to there's do capitalize bringing to and the that sales or of have to in the long the a ready to sell in time an organization to with the we she continuity example. different. of strategies deploy. amount an employees. departure to some And our he new ready to necessary then methods forward our need and and years to as that's And that individual

way the need we a been we are to So bring type a to industrial of plug takes and anyone on these we we that's optimize therefore we've to early how play. able a peer, from haven't found fair individuals to time individuals ready that and competitor and away hire It sell the these price. amount or of get sell

go would relative to expansion, at therefore anticipate proportion but in XXXX. revenue So to the the least not spend I up, to across absolute XXXX

Joe Mondillo

and And terms you little all one last that if I backlog bit can – just your out given squeeze releases a of the first in quarter declined of also with orders. just put in some these know the one I press in

the You work XXXX lot fiscal of backlog. have project going to that's a in off fall

regain year-over-year enough be least is this of your entering would the growth the was wondering you thinking year relative down that this Do sort saw we think this or risk potentially what of to think backlog some year. thoughts fiscal of more you're do Just the what could yearend at end orders sort is backlog sustain entering you a orders strong there could you at you that and backlog year? looks Do year? to this are on backlog landing like that think where

Jim Lines

on premise. expecting to next that We A question three judgment are one, we're a which a to build in organization million. – our or I'll at building and backlog bidding that on of and the expand give opportunities robust continue great you judgment pipeline our right see we midyear is in now guidance the XXX our quarters. we'll land of my to fair pipeline backlog of is our two midlevel accordingly and My close

we're that backlog. growth the environment suggest building readying with Multiyear conviction strong for a So order have, multiyear would that's growth. I

Jeff Glajch

commercial talked past Jim Joe, over about backlog more this XX is Jeff. has months. one prepared the I If in remarks comment. our doubled his how add could just

we growing about commercial is will is, expectation our backlog Jim the continued growth that Our see backlog. as on talking

Operator

line Please your the John from comes question with next of Sturges from Oppenheimer & proceed questions. Our Company.

John Sturges

bit couple looks looks it difficulty some Been point. It welder training but ago had you're finding going – similar in program slog because the meet in years order own likely had turned. that demand. to to of curious about training demand I'm personnel a to – see like your you rise at you cycles

So, gotten curious labor I'm certainly people days? just hire how because you're it's not easier to handling these

Jim Lines

seeing We qualified of are a people. shortage trade’s skilled

deter Therefore However, ability to we've - actually going and what lab, that cannot training workforce. to welding are we it had grow. own our roughly been. investing capacity build to our of expand its doubling our We're

we'll So, the We'll large level and them and from we entry hire type get welding very that and the that not outside, be even we we'll to if the auto fabrication ready. with bringing an from people, welder large ground the our weld weldment's. welder, it's the And of the ASME a geometries them is common and train outside, accustomed way. position

a enter there's well ground, period as organization. trained long to therefore production So, a the person training with

we've So, looked at quite simply. this

ability We strong grow an have demand the of us. front in to

own a of said, our double to program and closer time. our through workforce. own as educational – And workforce intend and both or training programs, building of talent our the look also to at training is the combination build so put we the we have We I at training we're can to size already ready. through welding We'll hiring XX – skill lab just our talent programs doubling our people

John Sturges

in a with had build capacity years – you meet ago. you curious, it I'm of current several next – capacity years? capacity say additional made would you the can there the Or ability? required Is the capital spending And create finalizing couple

Jim Lines

for look with line, $XX is And $XX suitable million peer or we rate. roof run market, the suitable nuclear million million million then a normally think $XXX for to roof roof of at As a - nuclear lines that's of we $XXX our work. line

the that time. think we context, growth roof for some we line put in have So, ample for some

caveat want there. However, I a put don't out to

with require to build expansion the we having U.S. – that expansion incremental would be that if the that a plan. that that and be it facility type secured be to there. incrementally looking we those But product modeled only have And work specialized at why to All positive the for are have reason into with take work discussions very able on Navy. facility should if offering would primes will items may we facility expand We U.S. there the we're more wasn't our would but navy. some CapEx our a naval

John Sturges

I in was or Batavia it be I curious would mean expansion into of Michigan? that and forward Graham going

Jim Lines

be in That would Batavia.

Operator

next comes Capital. Our from question. with from proceed of your line Please [indiscernible] Desjardins question the

Unidentified Analyst

expectations this and rest about year investment talk operating large for your fairly I you Can regarding rest through cash flows the know flow that understand this for capital of of the particularly was that capital, working how working quarter year?

Jeff Glajch

dividend we be but positive. be to We capital was obviously we actually flow expect expect and that be have investment our quite to a year, of the paying off operating cash to be positive strong for our

very quarter it that the specific level very, still that is move at which the grow, XX X% low about we capital. when sales, the it a projects today in over as it we increase low year typically a at and networking little can were level capital last percentage you at As working zero of at versus months that trailing this timing XX% we but type fiscal X% look some stay our at level. was If in expect see we a and will sales, and of look between of we to end target is typically of

answer dramatically absolute this our it is where do we will see will we impact cash increase working through do in of as yes, we position that think expansion capital some early we dollars So move that relative is to this not. part of

Unidentified Analyst

talk for expectations your about XX XX months? to for And can bookings that Navy you

Jeff Glajch

fiscal quarters XX the in over expect XX or expectation next have backlog naval actually going it to higher to absolute backlog, in fair two that longer our a naval add backlog convert months we’re but the that the to is compared and end is while XX over of would amount the next we period We of timeframe and at XX will vision months not terms where today. our one our to the

Unidentified Analyst

But it be and and sounds based like flows to in that of there the leverage timing on this that just going ebbs is of timing that quarter? the

Jeff Glajch

Sure.

Operator

question. question with next from the of Please line Our proceed comes your [indiscernible].

Unidentified Analyst

My first seasonality in? how to come is bookings any is, the question there

Jim Lines

our from perspective, Not to really aftermarket our be lower dollars as of aftermarket terms there a a some our seasonal although which seasonality place a the seasonality customers amount there around is that we are in business orders. is really, when revenue booked, can ourselves some of don’t intake view order of segment or business

Unidentified Analyst

the my could then please you then way commission tell looking those to the us are all is looking capital what fees question how to relate going and use? a where Graham to about put are of you’re core and for next you for And guys

Jim Lines

having sales for support how and customers to for and you sell, is of we in look immense way capability, that. integrate in create we you build have or way provide our look into products and to as be the process, facilities a evaluating engineering of acquisition targets amount management, technical core the is a to business the application opportunity the number while amount our a do that we built is they of our the with facilities customers provide integrate how we able partners We our we there expertise projects. we There at the unique value their ramp ourselves and fair to expense go are on we do one is and with come gap the and market, similar key capabilities, differentiators products knowledge new way existing that into personnel to personnel

and we think differentiator platform. lot of our is of we customer phasing create extract value, that However a value the on lot key we

is and that those key differentiator in The and second very arise have frozen, the there projects large large, take executing we is churn, is capability very project contracts, issues unique always the fixed engineering not we there management, iteration. designs price very there engineering are that complicated for on

we to and low high a requirements, tolerances volume of not construct niche a production that so value are the exact characteristics we’re in lot that customer function specialized interaction sell. We similar of to of contract do option there very that management to for change but watch look capabilities are industrials office can personnel not to is and very third fabrication the business, complicated tolerance, value customers, particular of type large built where depth businesses operating because at low high we sensibility for user dimensions, able what business but and with complex to to we mix the custom of XXXXs tolerances sell size manufacturing have volume support large and we unique of critical very our held the cost quality developments capability we the A businesses again model to operations, are given the the capability. capability differentiator we not when an Graham’s a is the business fabrications with that mix model that have with of for that fourth my there experts be severe these production, is on incredibly particular high that look for and look would a home is capability, and is all engineering being for it’s of and the with posses equipment similar we’ve small we’re a cultural a

great to to maximize and risk the is objectives how equipment the team customers that deal produce provides how operating understand operations once aftermarket technical an of time in to mitigate and products support ensure their meet performance, resources have improved operational and the the We produced. their

that and our how that capabilities within and we’re at. customers the looking are is and cultures we for Graham differentiators value So serve we four for drivers target look the there complementary key

Operator

Securities. the Our Bill line proceed next Baldwin question. Please comes Baldwin from Anthony of question from your with

Bill Baldwin

Jim.

at Looking in and arena. longer if term a international tremendous be competitive you that longer deem to the and

same focus to you here et it that et activity offer on That value proposition there sense identify that M&A overseas. to conclusion If cetera. added cetera the based be trying building specialized makes to allow capabilities you your able come upon the that to to do you will

Jim Lines

you higher high there's had in coming in markets there's we partners off, and But partners. with cost drop point and high with with fixed I where what very cyclical our use we find but right large have just operations planning higher now caliber as but international business elected fabrication are a you the you a the steep severe that have bricks-and-mortar downturn that. with work strong our time that and a breakeven where we have sensibilities of quality a is bricks-and-mortars some deal to energy a very we was Sure, don't at when do at psychodynamic occurs to have of margin fabrication analysis all where a shared demand can there share you model

have through solution different for would we and there here arises this have cost the what don't different then what which With our we've into that for than suitable for fixed is is and China, to have found Asia. self a orders need their analysis be would operation are we put therefore we suitable work secondarily India an suitable operations

we because are elevators footprint fixed are cost have share dynamics the a global any breakeven energy goes the cycle and that not sort of markets margin costs of ensure chose therefore variable that model. through operating So to chose to and simply that's type of have we an a the can

the by of crash tolerance, so to do utilizing what you're your the is saying common outside can the and the So to States you shared as tolerance qualified United to train able If find be welders model. the by advocate people required the you equipment

have peers, we place our peers to like We do able company. order our there from put part, personnel, that, competitive and the is the an Asian way a as actually to were who have an an little our different put that an well order level or do we a Chinese we're as into an that fabricator been bit same a of Indian example with when company or don't company surveillance we

to badge, products standard grand in the at fabrication customary don't low that's quality end built to comparables built because that standards and to a in a and they’re it’s quality model, a owners we quality are and make is region it be it shared standards. exacting something do specialists been quality regularly that we specialists to fabrication facility our are when our it a margin has very are Our users noticed have we to of that's our our standards, quality more cost product produce a our sure building being that's we there produce

Bill Baldwin

your and And operating. support your and the installed States that product United then once up once based. equipments service The equipment in from -

Jim Lines

a team into the markets but India, haven’t headquarters into go in do of do, performance large typically if provide and performance not South we do a Batavia refinery budget and planning, into analysis long go into here we organization that go a localized our international user chemical over next but that our Southeast have long-term we capability in send Asia, localize out one might China, you the or or T.V. forward. improvement proven go We go they from range fairly them America that's will years there built the two Thailand into in

Bill Baldwin

U.S. now But that and… works can for you that right support effectively the you you find from equipment that

Jim Lines

typically paid a was for so and have market it's opportunity half it it fee work our for I us do – out it probably therefore five service where it's if typically a years and ago the because force. now capacity had five yes provide to have organization ago, the we actually about in We to thought times that built than we've based we've years got two

Bill Baldwin

share on know might may like protect it through be, on order and protect you like brand there some it can so would passed looks not but international the good you you Graham your shared just through to if domestic market financially model be still Very internationally. your then over projects can it competitive

Jim Lines

until in if return cite market XXXX. up market in for zero in the the banking from share to today, and - strategy expand market particular we and if ejector systems we the to market had penetrate, through We China put distillation. systems and Indeed to some ejector improved I we’re place let me thought refining respond share in a just participate success, look China at key XXXX application,

somewhere and we a market XX% We have model. XX% believe share margin shared between with

Bill Baldwin

Outstanding.

Jim Lines

you. Thank

Bill Baldwin

business center executed in utilizes experience standard your to but for through that That the model. shared capture then

Jim Lines

up have team a about technical we localize management in and order have the and been to particular turning our growth selling China case we're not customer to a is international there regions. the beachhead Suizhong, evaluated did office side a structure and supported our similar eight home or deploying set localized There strategy in and we've subsidiary we China in a concept here do by are take personnel that our to of directional the facing but that high China been technocrats actually successful, market. In this to to the seven and was attention serve that clear that markets other attention, other has we've

Operator

Bair Our next proceed Advisors. line Please of from question comes from Wealth question. Ascend with John the your

John Bair

or bidding there. to seems market markets perhaps either refining near And are full to I words in capacity. any was expand running other seen meaningful operator expansion. look capacity In type their starting domestic add-ons expansion you’ve The be to at these opportunities uptick even if new wondering Greenfield some

Jim Lines

running capacity would debottlenecking American work refining with that revenue market. of types cycle of as that's the batch a now had I projects characterize increase through to secured We our those North

year bid next to are the have going we break or that pipeline potentially others So in over our so.

to incremental get So leverage with they get add than that how rather conversion, speak we Greenfield has we of the home help them they’ll North any capacity invest the decades do that. been because to feedstock turf. industry there incremental that three out to of They they that’s the have bottom lived their American get it in to look to have capacity, barrel of for begun to base, investments the trying two these to flexibility asset that assets last as and our is are out be decades, on it of continue see more strategic what figure investments of and but do around more course refining more we’ll space those and

John Bair

this the being whatever. about market it with sulfur a call little about the again, diesel more for brought in attention asked And tanker I up re-ask but the last both low market with IMO I’ll

million may X.X from capable more to a I reports attention to million those that paid anywhere day meet standards. some refined say not X.X barrels Just wondering there's think a be to if being being that of now

seeing customers anymore, address seeing your you're So or or customers increase wondering potential in if any to that?

Jim Lines

with correlated to we regularly needing much I to questions quite get first in you with for anything honest had our IMO exception Jeff and an MARPOL the be from and it markets last haven't refiner commentary of the two investment weeks heard and do end I’ll the about doing I have standards. or those within time any

to vessels. lower correlate haven't fuels we noticed So standards with would pollution uptick marine that bunker the an the really for

have that on. heard our of project working finally for I one a once, we’re from remark However refiners

John Bair

congratulations and good, increase. good thanks dividend quarter for the very Okay,

Jim Lines

you. You’re welcome. Thank

John Bair

been I weren’t have to when nice dividends, see client same. the you say paying stock so it’s and any since had that the

Jim Lines

of Well thank that you very time. period much for us for with sticking

Operator

have gentlemen would for to we question-and-answer the call of I like And and end back to session. management turn Ladies reached the closing the remarks.

Jim Lines

for Thank the you, you Dana. time your And this on thank everyone morning. call

the guidance one to also conference quarter. in forward have again more reflect and next the on outlook our a you call fiscal we the We’re look progress year. enter as a we Jeff you updating good pleased update weekend. for I Thanks stronger to XXXX and update And into have to to that on

Operator

today’s concludes conference. This

You may lines your you your participation. for Thank time. at this disconnect

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