Greetings, and welcome to the Graham Corporation Second Quarter Fiscal Year 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karen Howard, Investor Relations for Graham Corporation. Thank you. You may begin.

Thank you, Christine, and good morning everyone. We appreciate your participation in our second quarter fiscal 2015 financial results conference call. You should have a copy of the news detailing Graham’s results that was released this morning. We also have slides associated with the commentary that we’re providing here today. If you do not have the release or the slides, you can find them at the Company's Web-site at www.graham-mfg.com. On the call with me today we have Jim Lines, our President and Chief Executive Officer; and Jeff Glajch, our Chief Financial Officer. Jim and Jeff will review the results for the quarter and the first half of 2015 as well as our outlook. Then we will open up the lines for Q&A. As you are aware, we may make some forward-looking statements during this discussion as well as during the Q&A. These statements apply to future events and are subject to risks and uncertainties as well as other factors which could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release and in the slide deck, as well as with other documents filed by the Company with the Securities and Exchange Commission. You can find these documents on our Web-site or at www.sec.gov. With that, I'm going to turn the call over to Jim to begin. Jim?

Thank you, Karen, and good morning everyone. We hope by now everyone has reviewed our press release. Let me begin on Slide 3 with a few opening remarks. Fiscal 2015 is an important year, a foundation year is more appropriate that will demonstrate the steps taken by the Company to expand its capacity during the downturn were done at the right time, in the right way and have enabled the Company to achieve strong revenue and profit growth. Our strategies are simple; penetrate deeper into our markets and use this increased capacity to take greater share, along with elevating the level of our predictable, less cyclical base business. We will concentrate effort in refining, chemicals and petrochemicals, power generation, U.S. Navy, and other closely related markets. We are executing our strategy to double our revenue and are developing longer-term initiatives to leverage our competencies and financial strength to diversify and drive further our growth. Moving on to Slide 4, we had a solid quarter from every perspective. Highlights include, revenue expanded to $35.6 million, up 45% from the same period last year and up 25% sequentially. Net income was $4.2 million, which is up 62% from last year's second quarter and up 75% from the first quarter of this year. Exceptional work was done by our managers and employees to deliver such a strong quarter. Just a superb job was done by the entire team. Order level matched our strong revenue allowing the Company to exit the quarter with a solid backlog of work. Reaching the midpoint of the year as strong as we have has permitted revenue guidance to tighten to the upper end of our initial range and we expect full year revenue to be between $125 million to $130 million. Referring now to Slide 5 for a little more detail, second quarter sales were well balanced between chemical and refining industry sales. We are benefiting from strong North American chemical industry investment that began to expand revenue levels starting in our fourth quarter of fiscal 2014. We hadn't seen this level of North American investment since the 1990s. This change to bring new capacity investment back in North America has been perfect for us thus far. Power industry sales were steady, as were sales to our other markets including those to the U.S. Navy. Domestic sales were 61% of total sales, again driven by North American chemical industry investment and further enhanced by sales to U.S. based liquid utilities and those to the U.S. Navy. I'm passing the quarter review on to Jeff for a more detailed review of our financial performance. Jeff?

Thank you, Jim, and good morning everyone. As Jim mentioned, we had a strong quarter and a good first half of the year and we are on path toward our full-year guidance which we have tightened to the upper end of the revenue range. Q2 sales were $35.6 million, up 45% when compared with $24.5 million in the second quarter last year. Sales in the second quarter were 61% domestic and 39% international, representing the strong domestic petrochemical order level for the first half of last year. In last year's second quarter, sales split was 58% domestic, 42% international. Domestic sales increased to $21.9 million compared with $14.1 million last year, an increase of greater than 50%. International sales also increased to $13.7 million from $10.4 million last year. Gross profit increased to $11 million from $8.3 million in the second quarter last year. This increase was driven by volume gains, partly offset by the mix of projects in this year's second quarter compared with a much more favorable mix in last year's second quarter. Gross margin was 30.9% compared with 33.8% for the same period last year. Gross margin was up 310 basis points however from the sequential quarter which was 27.8%, due primarily to leveraging our fixed cost base. EBITDA margins increased to 19% from 18% in last year's second quarter driven by leverage in SG&A. While actual SG&A spending was up by $300,000 or 7%, the percentage of sales the SG&A represented was down 480 basis points to 13.4% of sales in the second quarter this year. Net income increased to $4.2 million from $2.6 million, or $0.41 a share, up from $0.26 a share. On to Slide 8 to look at the first half results, sales in the first half of fiscal 2015 were $64.1 million,…

Thank you, Jeff. I am now referring to Slide 11. We are extremely pleased by the order level in the second quarter. It is a difficult comparison to the exceptionally strong level of orders in the second quarter of last year. I do however consider the progression of order levels during the past three quarters to be more reflective of our markets at this point. Order levels moved from the mid $20 million range to just over $30 million in our first quarter to our second quarter being $35.4 million for new orders. We had a more balanced mix between domestic and international bookings. Domestic orders were 47% of the total in the quarter. Notable orders included two separate orders for oilsands projects that are reflected in our refinery industry statistics, a pumping system order for a U.S. based nuclear utility, two separate orders for the North American chemical industry, an order for a new refining capacity in China, and an order from a U.S. refinery adding ultra-low-sulfur diesel production capacity. We continue to have the healthy pipeline of open bids. The bid pipeline provides optimism that book-to-bill for the year could be greater than 1. Onto Slide 12, we have a healthy backlog level of $114.8 million as of September 30. There is a good balance across our key markets; 38% of backlog is for the refining industry, the chemical industry is 21%, our backlog for the U.S. naval work we're doing is 21%, and our power market backlog is at 13%. Quality of new orders is encouraging as they have been on the stronger margin than what we recently relieved from backlog as revenue. It is important to note that approximately one-third of current backlog is from customers for markets not traditionally served in our recent past. Backlog conversion is projected to be 70% to 75% across the next 12 months, 15% to 20% across 12 to 24 months, and remainder two years and longer. Let me close our prepared remarks with Slide 13. Fiscal 2015 guidance has been tightened to a revenue range of $125 million to $130 million, gross margin in the range of 30% to 31%, and this is due to the backlog margin that converts during the second half of the year as well as the degree of outsourcing during the second half of the year. SG&A guidance is 15% to 15.5% of sales and our effective tax rate is 33% to 34%. I wish now to open the call for questions. Christine, please open the line for questions.

(Operator Instructions) Our first question comes from the line of Chase Jacobson with William Blair. Please proceed with your question.

Nice quarter. So my first question I guess related to the tightening of the revenue guidance, over the last couple of weeks we've seen a couple of other engineered equipment companies talk about finishing their products but their customers are telling them that they're not ready for it and they're delaying the shipments. Obviously you guys did not have that in the quarter, but how worried are you about that in the second half of your fiscal year?

That's something that has been ongoing actually since we booked that slug of work in the first and second quarter of last year and when we had indicated that we anticipated this to occur, and no surprise to us it is occurring. Much of the North American chemical work due to the convenience of our customers has been delayed or pushing to the right in terms of its conversion. The difference between us and some of those other companies, and I'm familiar with the commentary from those other companies, we're a little bit different in that our revenue recognition standard is percent of completion. Those companies have completed contract revenue recognition standard. So therefore they are affected more on the impact of a delayed conversion. We tend to be less impacted by that because of how we recognize revenue. Secondly, because of the anticipation of this type of impact and the moving of projects to the right, our operations team has kept enough whip in operations to be flexible and deploy our workforce to active projects when we're advised the project is put on hold. So I think we have thought in anticipation of this and have been able to address it without worry, without much worry as to how it would affect our second half revenue, but I do think a big distinction between Graham and those other companies that have commented, as you've just advised, is the revenue recognition standard.

Okay, that makes sense. The other question is on profitability. Just want to be clear on the gross margin, if that's because of – I know it's only a small change but is that because of what's already in backlog or what's coming into backlog? And then on the SG&A line, it was pretty low in the quarter, but going forward the next couple of quarters it's going to increase. Can you just maybe give some specifics around what's going on there and how we should look at that kind of beyond the year? I don't expect you to give guidance, but given how much it's going to increase as a percentage of sales, just trying to get a sense of how you think the business or where the business should be going forward in terms of SG&A?

As it relates to gross margin, the recent orders in our fiscal Q1 and fiscal Q2 of 2015 really aren't in any appreciable way generating revenue in the second half of the year. The margin that we're going to deliver in the second half of the year remains to orders that were booked primarily 9 months ago to 15 months ago. And as you might recall during some of our prior conference calls we had commented upon our aggressiveness to preserve market share, to defend our installation base in North America against some international competition, and those decisions which were right are now flowing through backlog. So that has an impact on margin. And then secondarily, because of the strong level of bookings in Q1 and Q2 of last year, which we've also commented upon, that has stepped up the degree of outsourcing that we are doing and that has an impact of compressing the margin as well. Not too different from what we experienced in the first half, but that in a nutshell is what's causing the margins to be fairly similar between the first half and the second half, and as you would take our guidance that we've given, it would suggest that the second half margin is between 31% and 32% on average.

Chase, on your SG&A question, this is Jeff, if you look at SG&A in the first half of the year it was $9.1 million, and if you were to take our guidance range on revenue and SG&A, it would suggest that SG&A in the second half of the year is somewhere in the neighborhood of $10 million, maybe a bit higher than $10 million, so about $1 million higher than the first half. And the difference there primarily is, if you look at the mix of what we sold in the first half of the year versus the second half of the year, there's more commission on the second half of the year sales than on the first half of the year sales, that's the biggest item. And then to your question about how do you think about it more in the future, I would look at the whole year as kind of your base when you're thinking going forward. So don't look at the first half or the second half but kind of combine the two. That will get a more normalized mix of our SG&A cost including commissions.

Okay. And just one quick follow-up on the gross margin. I know last year in the first half there was a very strong mix of the aftermarket. This year, is that changing throughout the year, is there more or less of that in the second half versus the first half? I mean is there anything from the aftermarket business to read into the margin?

Nothing to read in that would suggest we are going to be outside of our guidance range. We do have a nice amount of that type of aftermarket work in the second half, but to be quite candid that's offsetting the margin that we are dealing with from those strategic decisions we took to protect market share.

Okay, thank you.

Our next question comes from the line of Jason Ursaner with CJS Securities. Please proceed with your question.

Congratulations on a strong quarter. Just following up on some of Chase's questions, last quarter one of the key messages was that orders hadn't kind of pushed through to the finish line but you had confidence in the higher bookings materializing and that should start to flow through in the second half, the fiscal second half for you guys. Is that still how you're looking at it or some of these orders, because they are coming in stronger, are they just coming in to hit this year and it would just purely be a timing that some might stretch out to next year, or maybe conversely with some of the strong revenue you got this quarter absorbing things you might have expected to not hit until the back half?

Jason, for the major orders, those that have press releases typically, those generally will have an order shift cycle of 12, maybe 15 months for the revenue recognition cycle being the last 6 to 8 months of that 12 to 15 months. So what we've booked in our second quarter minimally flows through as revenue for our larger projects in the second half. Our short cycle work, which is fairly consistent from quarter to quarter, that of course flows into revenue and that was modelled into our guidance that we've given and also our commentary from a quarter ago, but really it comes down to there's not sufficient time for a major order to be reflected in the second half revenue, it just doesn't convert that way with our type of products and our cycle times.

Okay, but are you expecting Q2 revenue to be the peak for the year, and I understand you're moving to the upper range on the previous guidance for sales, but qualitatively it doesn't sound like you guys are really implying a sequential decline in the back half, so I guess I'm just trying to reconcile that whether it's something timing-wise or it's kind of steady from here and maybe a bit of conservatism?

If we just take the midpoint of our guidance, just use that as a reference point, it would imply 64 million in the second half and implying equally 32 million per quarter, is the simplistic way to do the math. We do expect quarter to quarter variation in Q3 and Q4 but that's generally it would not imply that we're expecting our Q3 or Q4 to push materially above Q2.

Got it. So going back to last quarter with the second half expected to be stronger, is it just that this quarter came in a lot better than expected or things pushed out a little bit in the back half?

We had very high productivity and utilization and conversion and we didn't have our customers get in our way. So that certainly does help, and that really is what benefited the second quarter, customers got out of the way.

Okay, sounds good. Appreciate the commentary. Thanks guys.

(Operator Instructions) Our next question comes from the line of Joe Mondillo with Sidoti. Please proceed with your question. Joe Mondillo - Sidoti & Company: First question, in terms of the orders that you are receiving today, how does the gross margin look compared to the gross margin that you're actually realizing on the P&L look like?

The gross margin projection for the short cycle orders is consistent, not much variation. For the larger orders, we are seeing an improvement in the booked margin relative to the relieved margin. Joe Mondillo - Sidoti & Company: Relative to what margin?

The relieved, what we took as revenue. Joe Mondillo - Sidoti & Company: Okay. And so that's just given more of a saturation within the market, you have more leverage in terms of pricing and such like that?

There's a mix component. We have talked about over past several years that there is a greater margin potential for refining work versus petrochemical work, and we've had a decent amount of refining orders in Q2 which provided the opportunity for an improved margin relative to the revenue that went through in Q2 which had a large component of North American petrochem. Joe Mondillo - Sidoti & Company: Okay, that's what I thought actually. And that brings me to my second question actually, just given what we've been seeing within oil prices, and also in addition to that sort of the slowing that we're seeing in emerging market regions, is there any concern that those orders within the oil refining space dry up at all or pushed out at least?

Certainly, Joe, we have our eye on that and are watching those two aspects of business drivers very carefully. We have over our history been closely correlated, although we lag, the price of oil and we also are watching the global economy and the pace of GDP growth around the world which could have an impact. As I think about it right now though, while we are watching it very closely, our bid pipeline still is very strong and the quality of the conversations that we're having with our customers suggest they are optimistic about their projects, so therefore we remain optimistic. And one of the things I'd like to just, we're all thinking about oil and we should be, but as I think about the last decade, the last 15 years and the trajectory at Graham, we started our growth cycle in the early 2000s, or going back even further, in the 90s, crude oil was $25 a barrel and we had very strong order intake, not necessarily driven off of new capacity but the feedstock diversification, debottlenecking, sweet to sour conversions, and then as we saw crude oil go from $25 to $100 a barrel between 2003 and 2010, we had a very strong order intake again around feedstock diversification, capacity creep, bottom of the barrel conversion as well as new capacity. And as we look at where oil is today in the $80 per barrel range, we're still very optimistic about the longer-term outlook because investments being made today, as it would relate to new capacity, with that investment not planned to come on-stream until 2017, 2018, while interesting the volatility of crude oil pricing, our customers are more long-term oriented in their thinking for new capacity as well as investments in revamping and feedstock flexibility and getting more out of the fixed assets, we still remain very optimistic about the refining segment of our business being a very strong driver of our growth. Having said all that, of course we're being mindful of the long-term implications of a sustained reduction in crude oil price, but I think if it stays between – I believe, we believe if it stays between $80 and $120, it's business as normal. Joe Mondillo - Sidoti & Company: Okay. And can you remind us or actually just inform us, where are you seeing the orders come from this quarter, specifically it was a pretty big quarter in terms of oil refining orders, what region of the world are you seeing that come from?

We had a couple of orders for oilsands projects. That of course was Canada. And then we had some Middle Eastern refining work that came in, and a couple of U.S. projects were secured, as well as a new capacity project was China was won. So it was our usual end use locations, Canada, North America, Middle East, China or Asia. Joe Mondillo - Sidoti & Company: Okay. And then just in terms of maybe a little bit of more of a bigger picture question on the gross margin. You've been consistently 30% to 31% range for a few years now, with I guess this year was the first big year where you're starting to see pretty good growth on the top line. I guess my question is, do we need to see a much more robust growth in orders, growth in sales, to really start to see the gross margin leverage up to that higher range, I think you guys have a peak range of closer to 37% or 38%, do we need to see more of a robust environment to get to that?

There are probably three leading indicators that we as management are looking for. One would be of course a stronger pace of orders that helps with the pricing power. Secondly, product mix. As we see more refining outweighing bookings or sales to the petrochem market, we should have a natural margin lift. And then thirdly is, depending upon how the orders come in and the degree of outsourcing, we've had very high outsourcing in our first half, we're going to have a very high outsourcing in our second half, if we could have executed all that work under our roofline we probably would have had or our estimate is we would have had 120 to 140 basis points higher gross margin had we been able to do that work under our roofline. So some of it is the pace at which orders are led, if it all came in a very short period of time as it did June through September of a year earlier, that pushes outsourcing and that has an impact of dampening margins. But as we look at a more normalized order level, consistently strong bookings, a more balanced degree of outsourcing, and then product mix going more toward refining, going more toward ejector systems, we should have a natural margin lift to get us off of the 30% to 31%, the 31% range that you're citing here. So there's three factors that we're watching, that we're looking at, that we're modeling in our outlook to move from where we are to where we project it will be. Joe Mondillo - Sidoti & Company: Okay. And just in regard to the third bullet that you sort of mentioned, with the capacity expansion project that you're doing, that should resolve that, that's number one, and number two, when is the expectation of that project to be done?

I'll answer the second half of the question. Our facility expansion is done and we have grown into that expansion now, we have filled in our rooflines with work. We always will have outsourcing as part of our mix. We feel that's an important aspect to handle surges in demand and also have a flexible cost basis that when demand weighs in, our cost structure is okay. We're a little more weighted than normal in our first half with the extent of outsourcing in terms of the number of production hours being done in someone else's facility, but as that pulls back to a more balanced 10-ish to 15% range, which is how we've modelled our business, we would see the improvement in gross margin that we mentioned a moment ago. So again, those are the three factors we're looking at to elevate gross margin. Joe Mondillo - Sidoti & Company: Okay, great. Thanks a lot.

Our next question comes from the line of Christopher Mccampbell with Southwest Securities. Please proceed with your question.

I guess I'm just trying to get a little better understanding of revenue guidance in relationship also to the slide presentation, are you saying I guess couple of questions ago that the expectations are that there really shouldn't be much in terms of sequential growth when we look at first half over second half, and how does that relate to the near-term target of $200 million in organic revenue? I mean does that mean that we have a step-up or is there a sequential growth, what does near-term mean, and if you could maybe give a little more color on that please?

The first part of the question is 2015, and within our guidance that we've given, again taking the midpoint as the reference point, it implies the second half was comparable to the first half, and therefore lower to mid 30s per quarter revenue building out to 34 to go to the middle of our guidance. That doesn't imply that's our execution horsepower, that's the extent of what we could do, that's just where we are with the quality of that backlog and what that corresponding revenue translates with that level of production hours. As we move into – we believe as we move into next fiscal year and we get the backlog out of the business that was booked 12, 15 months ago, some of it has a rougher margin. I'm not faulting the decisions we made at that point in time because they were strategic to defend our market share and keep competition out of our core end-use customers, but however you have to deal with that in terms of its impact on margin and corresponding revenue. So that bleeds through in Q3 and Q4 in the way we just described. In terms of where we're going in our strategy from the $100 million to the near-term target of $200 million, while we haven't been definitive in how long that will take, during the Investor Day we did comment that we – if we thought in terms of the last growth cycle, the 2005 through 2009 where we had a top line CAGR of about 24%, 25% and we have the same level of optimism of our pipeline today as we had back then in 2000, that implies again that we get there in sometime between three and five years, and that's what we've mentioned during the Investor Day and that's how we're modelling the recovery based on the information that we have and the quality of bids in our pipeline.

Okay. And you obviously continue to build cash from being successful at managing the business. Can you give us an idea of the acquisition atmosphere out there and what you are seeing?

Chris, this is Jeff. We are continuing to look at opportunities. Pricing had gotten a little more expensive for a while, seems to be coming back a little bit, not a lot but a little bit right now, and so we are continuing to see where things fit from a pricing perspective as well as obviously finding that company that's the right strategic fit for the business. So that activity is ongoing but as you know we are not likely to be one that will pay a very high, extremely high price. So it was harder to find those in the recent past.

Is there ever a point where cash balance is such that you would look at being a little more proactive in terms of maximizing shareholder value in terms of dividends? I know you've got a relatively thin float, so you may not be as interested in share buybacks, but does it have to be exclusive where essentially we're saving all of the cash for an acquisition as opposed to paying a more meaningful dividend?

Sure. Chris, we are continually looking at our capital structure vis-a-vis not just acquisition, internal growth and acquisitions, but also looking at other options such as dividends and share buybacks and things like that. So I can assure you that's something that's always on the agenda, and I suspect it will continue to be on the agenda. So it's not all exclusive, we can look at all the options certainly.

Our next question comes from the line of Dick Ryan with Dougherty & Company. Please proceed with your question. Richard A. Ryan - Dougherty & Company: Jim, I was just looking at the power line, that kind of fairly steady decline, it kind of bottomed out over the last couple of quarters, we're seeing a little uptick. Can you talk a little bit about what you're seeing in power and maybe more particularly on the nuclear side?

Sure, Dick. We are seeing what we believe is a bounce off of the post Fukushima pullback on the spending of the U.S.-based nuclear utility market. So we are seeing more vibrancy there. And in addition to that, we've also added sales management resources into that segment of our business to drive channel management, to drive opportunity generation and to begin to expand our backlog as we have begun to see the market improve. So we're very optimistic about that and the strategies that we've undertaken to open up the bid pipeline to be more broad and to have many more opportunities to pursue and to hopefully secure, so we begin to grow backlog and then correspondingly grow revenue. That will take some time but we're in the midst of doing that now with the personnel that we've put in to drive that strategy. Richard A. Ryan - Dougherty & Company: What does the bid pipeline look like, I don't know if you can quantify anything, or the backlog?

The backlog is about 10% of our overall backlog, which is not too dissimilar from where it has been. A couple of anecdotal comments is, year two, I think we've been adding or at least in this past quarter certainly we added backlog that was superior to the revenue that was relieved from backlog. So that's a positive sign. And the team again is building the opportunity pipeline to be larger than it had been the last 12 to 18 months and we're very encouraged by the progress that's being made there by the sales leader that's driving that and her team. So the quantity of the pipeline, it's in its typical range, Dick, of between $50 million and $75 million of trailing 12 month bid. Richard A. Ryan - Dougherty & Company: And now that your footprint here has been pretty much domestic with the acquisition a couple of years ago, are you able to look internationally at all, is that part of this build in the business?

We have had some international work over the last few years from Korea, from Eastern Europe, we are looking at that, we do have some international bids in our pipeline now. I'll be candid though, our initial battleground to win on and to grow share in is in North America because it's right in front of us and we think we can do so much more there than we currently are doing and the international sales strategy and channel management strategy is a little more complex. So we've chosen to wage the initial battleground in North America, but we are preferentially looking at international opportunities in a more reactive way than a proactive way. Richard A. Ryan - Dougherty & Company: Okay, good. Thanks guys.

Our next question comes from the line of John Bair with advisors. Please proceed with your question.

Nice quarter. Kind of as a follow-up to the power market question there, I was just wondering if the power companies in general might be shifting some of their resources to upgrade or work with lower input cost from declining gas prices, oil prices, coal prices and so forth, do you have any sense that there's an impact there that might help out those markets for you?

As we look at the power segment as a whole, not just speaking about the nuclear utility, we do kind of identify that low-cost natural gas is creating a shift in the industry back toward what we saw in the late 90s and the early 2000s of combined cycle power plants, and I think we're still a couple of years out from that really being significant but we're getting the indications and the directional changes are clearer to us now than they were two years ago, so we do think there will be a pickup in what's referred to as a combined cycle power plant analogous to again the 1998 through 2003 combined cycle power wave that we were participating in. As it affects the nuclear utility, I think they have adjusted and understood now the impact of how natural gas will change the power generation mix and the nuclear utilities are getting back to investing in their current assets to keep them running, power augmentation, life extension, Fukushima related mandatory investments around safety, all things that will benefit our business. The one area that we are trying to understand a little bit better and because it's a tax incentive base, it's hard to discern the direction of the renewable energy market which is also a driver for Graham, whether that be waste energy, solar energy. Because there's tax credits that are related to that, it's hard to identify the longer-term direction of that, but that's been part of our sales mix the last three or four years, has been 3 million to 5 million of renewable energy type sales, and it's really hard to judge accurately the direction of that in the next three to five years unfortunately.

Okay, thanks. And then another question, given that a lot of the condensate and oil production that's coming out of some of the shale plays here, particularly in the Gulf Coast and so forth, is higher quality, is that still impacting upgrades to the refining complex from a sour to sweet processing capability because from what I've seen in the [indiscernible] where a lot of those refineries can't handle this higher-quality crude?

That is correct and I believe from what we're hearing as well as what our judgment is, the refining industry in the U.S. is trying to understand the implication of blending in shale-based crudes into the crude slate. They have a positive effect in that they are lighter, sweeter, therefore less energy intensive to process, but most refiners aren't processing that exclusively and the undesirable consequence of using that as a blended feedstock is there is an emulsification, there's an undesirable outcome when they blend it with the normal crude slate that the refining industry is trying to understand its implication. So we can't really judge accurately at this point the strength of the investments around revamping as it would relate to shale-based crude oil feedstocks, but I think the industry is still trying to ascertain how best to handle that low-cost desirable feedstock.

Okay. Thank you very much.

We have no further questions at this time. Mr. Lines, I'd now like to turn the floor back over to you for closing comments.

Thank you, Christine. As you've heard, we are very optimistic about our outlook for the remainder of the year, we are very excited by the results of our second quarter which validated that again the investments that the business made over the last three to four years were the right investments to make, they were done on time, they were done the right way and had us ready to handle the surge of orders that we did take on about 12 months ago that has resulted in a significant lift in profitability as well as revenue level, and there's much more that this Company can do and we'll keep you updated quarterly on future conference calls. Thank you for your time.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.