Good morning. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the EnPro Industries’ 2017 Second Quarter Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Chris O’Neal, Senior Vice President of Strategy, Corporate Development and Investor Relations, you may begin. Chris O’Neal: Thank you, Krista. Good morning, and welcome to EnPro Industries’ quarterly earnings conference call. I’ll remind you that our call is also being webcast at enproindustries.com where you can find the slides that accompany the call. Steve MacAdam, our President and CEO and Milt Childress, our Senior Vice President and CFO, will begin their review of our second quarter performance and our outlook in a moment. But before we begin our discussion, I will point out that you may hear statements during the course of this call that express the belief, expectation or intentions, as well as those that are not historical facts. These statements are forward-looking and involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties are referenced in the Safe Harbor statement included in our press release and are described in more detail, along with other risks and uncertainties, in our filings with the SEC, including our Form 10-K for the year ended December 31, 2016. We do not undertake to update any forward-looking statements made on this conference call to reflect any change in management’s expectations or any change in assumptions or circumstances on which such statements are based. Our earnings release and conference call presentation materials contain additional disclosures regarding non-GAAP financial information, collective references to EnPro and our subsidiaries, the deconsolidation of Garlock Sealing Technologies, or GST, and OldCo LLC or OldCo during the periods ended June 30, 2017 and 2016, and pro forma illustrative financial information presented as if GST and OldCo, were reconsolidated for financial reporting purposes during these periods. These disclosures are important to understanding comments we will make on today’s call, and we urge you to read them carefully. Just as we did in the last few quarters, we are providing pro forma segment sales and pro forma segment adjusted EBITDA information in conjunction with GST and Oldco's joint-plan reorganization, which was consummated and became effective earlier today to provide investors with additional pro forma information illustrating each segment’s results as the GST and OldCo had been reconsolidated with EnPro during the reported periods. Given the confirmation of the joint-plan and due to requests from investors for this type of information, we believe this disclosure of pro forma operating results is instructed to investors as it reflects the performance of all of our subsidiaries. And now, I will turn the call over to Steve.

Thanks, Chris. Good morning, everyone, and thanks for joining us today. Aand we had an active second quarter with solid year-over-year demand in a number of our markets and an exciting new acquisition in our sealing product segments, and half way the court’s final approval in the seven year old asbestos claims resolution process. I first want to highlight that our businesses performed very well on a year-over-year basis, despite the 1.5% decline in pro forma sale. If we just look at Sealing Products and engineered products on a normalized basis, which adjust for year-over-year differences in foreign exchange translation and acquisition results, pro forma sales would have been up approximately 2.3% and 4.5% respectively. The growth was offset by the expected sales decline in power systems that was driven by work with largely timing issues and tough year-over-year comparables related to record after market part sales in the second quarter of 2016. Our recent investments in commercial, operations and innovation capabilities, have helped us to capitalize on the improved demand patterns in Sealing Products and engineered products. Pro forma adjusted EBITDA increased 1.9% year-over-year due to five factors; first, volume increases in Sealing Products and engineered products; second, the positive impact from companywide cost reduction and restructuring activities that occurred last year and early 2017; third, favorable effect of currency on Power Systems EDF program; fourth, contribution of our acquisition of Rubber Fab in April of last year; and finally, to a smaller extent, our acquisition of Qualiseal, which impacted the final month of the quarter. In the second quarter, several other markets we serve maintain the momentum that started in the first quarter of this year. We experienced strengthened semiconductor, food & pharma, metals & mining, and general industrial. The general positive market momentum was offset by lower…

Thanks, Steve. As discussed before, the pro forma segment results that I will discuss are prepared as GST and OldCo, have been reconsolidated on the basis described in our earnings release. As a reminder, most of the difference between consolidated and pro forma segment information is in Sealing Products, with only small differences in engineered products and power systems stemming from foreign operations of those segments included in GST foreign subsidiaries. It’s important to note that the pro forma results do not represent the financials as of today's reconsolidation. Our pro forma second quarter sales of $347 million were down 1.5% from the same period of 2016. As Steve noted, excluding the impact of foreign exchange translation and acquisitions and divestitures, pro forma sales in our Sealing Products and Engineered Product segments were up 3.2% and 4.5% respectively. This strong performance was more than offset by our pro forma sales decline in Power Systems due to lower engine and aftermarket part sales versus last year. Pro forma gross profit margin for the second quarter was 36.3%, up 30 basis points from the second quarter of 2016. Total pro forma segment SG&A declined in the second quarter of 2017 by $3.3 million to $78.6 million. Companywide, cost reduction and restructuring activities that occurred throughout 2016 and early 2017 continued to contribute to year-over-year improvement in the second quarter. Pro forma adjusted net income, which adjusts pro forma net income for items such as restructuring, legacy environmental reserves and tax effects associated with these items, all are shown in the reconciliation table in our earnings release was $22.1 million, down slightly from prior year due primarily to higher interest expense. Pro forma sales in the Sealing Products segment were $229.7 million in the second quarter, up 2.9% over the second quarter of…

Thanks, Milt. We’ll close with a discussion of the current market conditions and our outlook for the remainder of the year, and then take questions. As we’ve discussed many times in the past, we have limited visibility into future demand due to short cycle and mix nature of most of our businesses. Most of our businesses have order lead-times between a handful of days and a couple of months, and the component nature of our business is largely obscures demand correlations with macro end market indicators. Notwithstanding this limited visibility, demand in many of the markets that we serve continues to show signs of stability and demand in some markets such as general industrial and metals and mining, has improved modestly. Accordingly, we remain cautiously optimistic that we will maintain our improved year-over-year performance through the end of the year. It’s important to note, however, for Sealing Products and Engineered Products, we expect the second half demand to be lower compared to the first half of the year due to our typical seasonal patterns. While power systems will have the stronger second half. Given continued strength in a number of our markets, the current economic forecast and customer order patterns expect to strengthen the second half of the year in Power Systems, and the recent Qualisio acquisition. We're increasing guidance for 2017 adjusted EBITDA from our previous full year range of $193 million to $198 million through a revised estimated full year range of $200 million to $205 million. This revised range excludes the impact of further M&A activity, changes in foreign currency rates from the end of the second quarter, anticipated gain on the reconsolidation of GST and OldCo, and any second half of the year litigation or environmental charges. Just to reiterate, this guidance is based on our limited visibility into the second half of the year and demand levels that we’ve been experiencing recently. Before I open the line for questions, I want to reiterate my excitement, not only for our second quarter results but also for the many growth initiatives that we have underway across our Company. We are well positioned to drive growth in the value of the Company as we emerge from the ACRP, and we look forward to an asbestos free future. And now, we'll open the line for your questions.

[Operator Instructions] Your first question comes from the line of Ian Zaffino from Oppenheimer. Please go ahead, your line is open.

The question would be, given the better outlook, how is that affected your -- maybe your view on capital returns and then also M&A. Aare there some areas that you could go into now versus what you were thinking maybe six months ago? Thanks.

Well, let me start with the second part of your question Ian and then Milt you can address the capital, the use of capital. Yes, things are pricey in the M&A world, Ian, as you know and everybody knows. I mean, it’s hard to find -- it's hard for us to find deals that are, both strategic and reasonably priced. We did, with Qualiseal, it's a great fit for us. Aerospace has been a key area of growth within Sealing Products of recent years. This fits literally hand and glove for us. I mean it is almost the ideal product line for us to buy with a lot of synergies on product lines that we already have, serving adjacent and similar applications but direct swap outs for what we bought. So it's a really-really nice product line extension for us. So we still have other stuff in the pipeline. It’s still too soon to call in a pipeline of what we will complete through the back half of the year. We have one smaller deal in Sealing Products, which we will close in Q3, most likely. But it's small and it’s really more of start-up planned acquisition. And so rather than us building the plant and starting up a line, we’re buying a plant that has the product line that we want. But it’s not enough to move the needle one way or another. But other than that, we don't have anything that I would say is eminent. And I don't think our posture has really changed, given the outlook of markets, we're looking at it as the same as we have in the past, which is we want really good strategic fits and we don't overpay for it. So that's basically how we think about it. But Milt, why don’t you pile onto that.

Ian, with our improved earnings, we obviously are seeing a corresponding improvement in our return on invested capital because our investment profile remains fairly consistent with what we have planned for the year. So to your question about returns, we would expect to see some improvement that's consistent with our improving earnings outlook. Just to add one other thought, we outlined in our Investor Day earlier this year what our plans are for the business, our approach on capital allocation. And now that we're reconsolidated and we have asbestos chapter behind us, our intent is to continue to proceed along the path that we've, we're very strategically oriented -- we're very strategically oriented team and we'll have more capital. So we hope to over time to increase the level of investments we’re making, both internally in our innovation programs, as well as strategic bolt-on acquisitions. So we're very excited about the reconsolidation and the additional flexibility gets us moving forward.

Your next question comes from the line of Jeff Hammond from KeyBanc. Please go ahead, your line is open.

So just on Power, just want to understand the moving pieces a little bit better there that may be impacted 2Q. And then how should we think about second half growth versus first half or year-on-year, and where the margins shake out? Thanks.

Milt, I'm going to let you address the outlook. Let me give you, Jeff, just a little bit of a flavor for it. Even though we are percent completion, so it levelizes that somewhat just to give you a sense. We're going to ship four times more engines in the second half then we did in the first half, maybe more than that. I mean it's a dramatic increase. Now we are percent completion so it dampens that somewhat. But we've got a lot of programs underway in shop and we will -- and it will be less dominated by EDFs in terms of the percent completion in the second half as the first half. So the change in the top line, we tried to guide you all to that for this quarter was exactly what we expected, maybe a little bit under on aftermarket parts. But again, we had a record in Q2 of last year. So nothing concerning with, our service revenue was actually up. So it was a very solid quarter for Fairbanks. It's always going to be vary variable from quarter-to-quarter from our sense, because of the volatility of shipments of new engines. So we're really confident in the second half outlook for power systems. But Milt let me let you add to that.

Just to set the planning field a bit. Jeff as Steve has said, we do expect higher revenues on engines in the second half for two reasons; one, is the percentage of completion and additional revenue that we expect, plus the shipment of the mast engines. We’ve talked about that in the past. We do not recognize any revenue on the mast engines in Q2. We expect to recognize about $10 million of revenues, those were accounted for under completed contract in the second half of the year. And as you’ll recall, those were at zero margins. So the fact that we will have $10 million of revenues in the second half of the year will show up in the top line. But it’ll obviously have a negative impact on our margins in the second half of the year for that part. And so the real key for us in terms of your question about margins for the second half of the year is going to be where we end up with aftermarket parts. We have a pretty good read on the engine side, as Steve noted and as I just mentioned, both with mast as well as percentage of completion on a number of new engine programs that we have underway. The aftermarkets, obviously, is a big driver of our margin that we end up with in the second half of the year. So we’re expecting, as Steve mentioned earlier, the second half of the year in Power Systems to be stronger than first half of the year. We had the benefit -- first half of the year. So when you look at margins, we had the benefit from currency going with us in the first half of the year. We had indicated in the first quarter that that had a positive impact of, I think, it's roughly $1.5 million -- $0.5 million increase in the program and in the first quarter, it's about $3.3 million increase in the second quarter. So our reported segment margins in first half recognize the benefit of that and the second half, given the outlook that we’re providing. So just based on exchange rates and effect at the end of the quarter, there is no assumption, up or down on how currency might affect the EDF contract. So independent of that, we’re going to expect margins, EBITDA margins overall, to be lower than they were reported in the first half of the year. But keep in mind, part of the reason they’re higher the first half of the year is because of currency as I’ve explained. So revenues and margins down.

But overall EBITDA -- the overall total dollar to EBITDA is up fair a bit, Jeff.

And then, can you just talk about what…

Jeff, let me clarify one point on that. If you exclude the EDF contract adjustments from the EBITDA in first half of the year then we expect the second half of the year EBITDA to be up conservatively from the first half. I just wanted to make that one clarification.

So I guess Qualiseal, can you talk about revenue and EBITDA. What's the revenue run rate for that business? Looks like you did $40 million for it?

We haven’t disclosed that yet. At the time of the announcement, we indicated the number of employees to get some size. It’s the revenues -- under $15 million, so just a size of a bit.

It looks like you took EBITDA guidance up $7 million. It looks like, I guess, you would have 3.3 of the FX and then some contribution from Qualiseal?

And so our guidance, if you take those two things into effect, we brought it up modestly, if you exclude those two items. And just as a reminder, our Q2 results came in slightly above what we had indicated on our Q1 call that we thought Q2 would be. You might remember we had really strong year-over-year results in Q1 and we wanted to remind all of our investors on our call we had in Q1, not expect the same year-over-year improvement in Q2 for number of reasons. And we’d indicated that we expected our Q2 results to be about the same as Q1, and we ended up beating that a bit. And that’s really the basis for bringing up our guidance for the full-year a bit on top of the EDF contract and the Qualiseal acquisition impact.

Because if you look at the second half, it looks like you're calling for EBITDA to be slightly down year-on-year. So I just want to -- I didn’t know, I want to understand a little bit better just because it seems like you've got pretty good momentum in Sealing and Engineered Products?

Well, Jeff we do. We do have good momentum. The order pattern seems the same. We've tried to be -- we've tried to be conservative in our guidance, because we have such short cycle, and things change pretty quickly in our world in terms of how order patterns look. But yes, we wanted to put a number out there that we’re confident that we can achieve a beat. So that's what's reflected in the current thinking.

Yes, if you at what's embedded in our guidance, currently Jeff, we had a talk specifically around corporate expenses. But if you look at our guidance, our segment EBITDA is up year-over-year. We’re expecting some higher corporate expenses this year that offset and match that a bit. So to Steve's point, our outlook does include improved performance and segment EBITDA at the segment level.

Your next question comes from the line of Joe Mondillo from Sidoti & Company. Please go ahead, your line is open.

I just wanted to follow-up just relative to the guidance I'm sort of focusing on the Sealing segments. Outside of the GST subsidiaries, the Sealing segment did a little weaker than I was anticipating. GST, the subsidiary, had huge margins -- actually had a huge quarter. So if you take that out, the Sealing segment was actually a little weak. And I'm just wondering what's actually going on there. I know you cited in the press release heavy duty stock gaining, which soon really be a surprise, nuclear, which -- that's the lumpy business, I think. But looking beyond that going into the back half of the year, the margins were flat on the ex-GST part of the Sealing segment in the first half of the year. Are you still expecting a seasonal -- why is it weak, and are you expecting a seasonal drop off spill like usually do in the back half of the year?

Joe, the reason that Sealing Products margins have been under a little bit of pressure and been basically been flattish, has been really three issues, three markets, if you will; the first is trucking as you said that. The aftermarket, which drives the profitability, the aftermarket in our core wheeling business has just been, has just been soft. I mean we haven't lost position, but it's running a couple of percent below what it was a year ago. Other parts of the business are doing well. We're doing great in air springs, actually doing okay in OE; volume in all product lines, we're still struggling with the trailer tail business, but that's not a whole lot different than it was last year. We've done a lot of stuff to try to right that. We're hoping to have a little bit better second half, but we still got a lot of work to do in that business. So trucking aftermarket has been just a little bit weak. And the other two pieces in Sealing were nuclear. At any time, we see a drop in nuclear revenue those are very nice margin products for us. So we don’t see that improving a ton in the second half might be a little bit better later in the year. We've got some orders that are due to ship before the end of the year. Significant orders of good margin nuclear stuff that should be more helping next year than what we’ve seen this year. It varies a lot based on just nuclear facility refueling cycles around the world. So that's another one that has impacted that. And the third is actually the industrial gas turbine business where we sell parts into that that has been weak as industrial gas turbines have been under pressure…

Were any of those markets changing for the worse throughout the quarter, or is there anything lumpy or anything? Because the first quarter you actually saw year-over-year expansion in margins. And then the second quarter here, we actually saw a year-over-year decline in margins. So I'm just wondering…

I would say, it's just -- Milt, you can pile on. But my sense is it's just a general -- the quarter-to-quarter volatility in the mix that we've had. But no we didn't see -- there's not -- if anything, trucking is -- I think, we still it's soft but we think it's stable, might be a little bit better in the second half than the first half. But again not enough that really -- nuclear will be slightly better, but very flat and still very weak relative to our normal history. And then industrial gas turbines, I think, will be more or less the same. So we don't see it deteriorate -- anything that's deteriorating honestly, at this point. But Milt, do you want to address Joe's question about Q1 versus Q2 margins?

Yes, Joe, it's the year-over-year comparison that's what I was referring to. The expansion of margin in the first quarter and then you saw year-over-year decline in margins in the second quarter.

Well, actually it was flat -- I'm not sure exactly -- are you looking at EBITDA, if you look at…

Well, I'm looking at I'm excluding GST, because GST is…

Yes, we look at it as the entire business, so you're right. I mean our strength in the quarter was really in our core Garlock business and that's where we saw the year-over-year increase in metals and mining, and general industrial. So we had a very strong quarter there. And Steve has I think has hit all the tabloids for some of the softness that we've had in other parts of the segment. But we're performing well. We don't have any major concerns in the segment, and we typically do have a softer top line in the second half of the year than we do in the first half of the year in the segment. So that'll obviously have some impact on margins in the second half.

I might have missed the outlook when you were talking about the power systems. But aftermarket is that a question mark or do you have idea compared to the first half of the year, how aftermarket parts pan out in the second half?

Steve, do you want to take or you want me to…

No, go ahead.

Joe, last year, we have the opposite of what we're seeing this year. Last year, we had a strong first half of the year in parts and power systems primarily we saw most of that in the second quarter. So we had an all time high, as a matter of fact. We referred to on the call, the tough year-over-year comp in our prepared comments. It had to be an all time quarterly record for us in terms of part shipments in Q2 of 2016. This year, it's reversed. We had a soft first half of the year and we're expecting a stronger second half of the year on the part side. We're not necessarily expecting, and don't expect to see, the same record quarter or results that we had in the first half of the year. But nonetheless, we do expect increase in our parts revenue in the second half of the year.

Also, I wanted to ask you. Relative to the Engineered Product segment, should we anticipate a typical seasonal decline sequentially in the back half of the year compared to the first half?

The answer is, yes, subject to some of the limited visibility we have. And Steve may want to talk a little bit more about this. But we've got stronger order patterns going into Q3 or into Q3 than we typically have. So we're optimistic that we could see maybe the first half, second half differential being a little bit smaller than we’ve seen in the last few years. And as you know, in this business, we leverage quite well. So Craig your question about margins relative to activity levels in the second half is going to be driven in large part by how the rest of this quarter plays out.

Joe, that’s essentially what Jeff was circling around earlier, that’s what’s not reflected in our guidance. In the second half of the year, we’re assuming that we see the normal seasonal pattern while again nothing is going to go wrong. But we just normally see things slowdown in the second half of the year to the extent that we break from that. We won't break from that pattern completely, but there is a strong possibility that we will end up the year with a little bit less of a seasonal curtailment than we've seen in the past in demand in Engineered Products. We did not build that into our guidance on purpose, because of all our businesses that is extremely short cycle both the entire segments and is very, very hard to tell. So even though our order book is decent, even going into Q4, it's not been unusual in the past to have some of those orders late in the year, actually get delayed and pushed into the first quarter of next year. So we thought it would be prudent to not count on that happening. So that’s basically what’s embedded in our guidance.

And then also relative to the guidance, do you still have $38 million roughly going from $30 million last year of R&D expenses, is that still is the budget there?

I guess if you look at where we are for the first half of the year, we're running a little bit behind that. But our current plans would call for us being in that ballpark Joe. Now, the big driver there is the level of R&D spending that we have in Power Systems for the new engine and some of timing of that, that timing can’t shift a bit. So we would expect to be in the ballpark of the guidance that we provided, perhaps a little bit less.

And you have 30 in the guidance?

Correct.

Also, is there any way you can give any idea on amortization related to the consolidation of GST, or is it still too early? -- the purchase accounting amortization relative to the consolidation of GST. Do you have any idea and how much that is going to be a quarterly or is it too early?

It's too early. We’ll be -- according with the requirements of the three consolidations, which is consistent with the large acquisitions we’ll be filing. I think it's within 75 days information at that time we’ll have. We’ll have the final step up of our PP&E and intangibles and goodwill and all that. And you’ll see, by time we report Q3 and our balance sheet in Q3 will fully reflect the final step up in basis, as well as indicate the gain on the reconsideration.

Your next question comes from the line of Liam Burke from FBR Capital. Please go ahead, your line is open.

Steve, can I ask just follow-up on your R&D discussion. How has the new product pipeline been in vis-à-vis the R&D budget?

Could you just clarify that for me…

Well, typically on the R&D side, you come out with a series of product innovations, the adjustments and changes. And that drives; A, your pricing; and B, your competitive position. So just as a sense, you’ve had a lot of activity, so to speak, especially on the M&A side. How is that going on?

Well, R&D and -- did you mean R&D or M&A?

R&D please…

We’ve been -- I don’t know, if you want to look back at the Investor Day material but the key is that our Company for 20 years that proceeded, about two or three years ago, didn’t spend much money on product development and R&D. We didn’t really have a process. We didn’t have the cash to fund it. A lot of regions, we’ve been EnPro, has been the asbestos liability. And before we were EnPro, it was driven by other issues. And so, we had essentially prime the pump with our own R&D activity. And so when you look at the actual revenue that we’re getting today from the level of spending that we've had in the last few years, it is very, very minor, including the OP2, which is our largest investment we haven’t sold in. And we’re going to commercialize that engine later this year. And by the way, it's a winner. I was with the team recently in Q2 where we actually showed the performance data of the engine to some customers for the first time. And again, we have it broadly broadcast this to the industry. We’re going to do that at the POWER-GEN show later in the year once we get some endurance testing under our belt. But some of our metal customers, we actually showed the actual performance data that we've seen from the test end on the OP2 tool. And I got to tell you, this engine this is a big deal. Our customers referred to this as a quarter-o-quarter game changer. I mean this is the most fuel efficient engine in its class, and the savings that customers can get is actually phenomenal in fuel sales, right. So we’re very excited about it. But then, that’s OP. So we've gotten no revenue…

And Steve on the pricing front is pricing relatively stable?

Yes.

Your next question comes from the line of Justin Bergner from Gabelli and Company. Please go ahead, your line is open.

Just wanted to follow up on the last line of questioning around OP2 plan or the Trident OP. I just want to understand what was incremental in terms of the developments for the program in the second quarter versus what was shared at the investor even earlier in the year?

Nothing just more confident that that's all real performance. And frankly, Justin, the feedback from the marketplace. When we came to the Investor Day, no customers had seen what we showed you guys. And so I don’t know what it was six or eight weeks. We had a session where we had number of customers in the room and we actually chose to share that and give some feedback on how we're thinking about going to market, their level of interest, so forth. And so our confidence really gained, really grew in the commercial viability of this engine platform. So that's really what changed. We're continuing to do development activity and run the engine in the second half of the year, we will see more of the endurance testing activity that we talked about in the Investor Day.

On the EBITDA guidance, you mentioned major changes, namely Qualisio, better than expected performance in the second quarter and the EDF’s contribution. Are there other second order effects, be it stronger Engineered Products margins, changes in your Power Systems outlook, the benefit of currency, June 30th versus March 31st. Are any of those factors playing a role?

No.

Justin, just to clarify on Power Systems, we were expecting this, the first half second half phenomenon so that's not -- we talked about that we're expecting a stronger second half of the year in power systems than we had in the first, that's not a change from where we were a quarter ago. It’s just a matter of the patterns that we expected this year. So just to clarify that point.

But would there be a slight benefit from using June 30th currency exchange rates versus March 31st?

That's not, well no -- the guidance clearly has baked into June 30th currency level. So yes, that is in our guidance number. What's not in there is the difference between the end of Q2 and today, because as you know, the euro always continues to strengthen from where we ended the quarter. So it's not -- the guidance does not include anything that's happened since the end of Q2, it's all reflected -- it's all based on what we saw at the end of June.

And the organic sales guide seems relatively unchanged then versus prior?

That's a good assumption.

And we have no further questions in the -- we do. We do have one more question. Your last question comes from the line of Joe Mondillo from Sidoti and Company. Please go ahead, your line is open.

I just have two questions, number one. The legal expenses related to GST and such. Where is that -- is that hitting the P&L right now and…

It's excluded from our EBITDA numbers that we've talked about. We’ve taken out everything that's related to the asbestos case.

And Joe, the majority of those have been obviously in GST. There have been some internal level expenses if you look over the history. But as Milt said, both of those pieces are adjusted out when we give the adjusted number. But they're certainly in the real number -- the reported consolidated number.

And are there any GAAP operating income segment margins?

Where do those fit?

Could you repeat that question, Joe, and specifically…

I'm just wondering what line item they hit on a GAAP basis?

Yes, let me check here, I don't know…

I can follow-up on that.

Will you follow-up with us on that…

I just wanted to also ask, not on my follow-up. Just lastly, I just wanted to ask on the EDF contracts. How much -- can you quantify how much less of that contract we have? Is the euros at 1.18 now, if we keep appreciating, is it just going to be a consistent quarterly adjustments, like we've been seeing. Or is there anything else in that contract that you'll see a positive benefit beyond the quarterly adjustments that we've been seeing the last couple of quarters that will benefit as the euro keeps appreciating?

No, where we end up on the contracts can be a function of two things, its currency, as you pointed out, as well as our cost and efficiencies. And we are working that we're getting into -- starting to get to fuller swing. So it's entirely possible that our production efficiencies could improve as we accelerate into the program. So those are the two drivers. So we're always looking at cost changes and currency.

So relative to the currency though, I believe going back a year or two whenever that was when you wrote down the contract. The contract going forward was really not profitable. If the currency continues to appreciate, does that make the contract profitable or is that not how it works?

Given the exchange rates right now, it's hard to envision getting back into the profitability level for this contract. It becomes -- it would require a stronger and stronger euro as we go on, because of fewer revenues that are left in the program.

Yes, but Milt, on percent completion basis, remind me, we’re about a third of the way through that and that’s different from engine shipments. But on a little less than a third, correct?

Yes, cost wise, Steve, we’re over half way.

Just because all at a cost…

Yes because of on the cost…

On the cost, yes, okay. But Joe, as you know, the reserves with the currency hit from the year ago were through the end of the contract. So you are right in the regard that any appreciation in the euro overtime will be a positive adjustment, like it was in Q2.

And then just lastly related to EDF and more so Power Systems, looking out to 2018, if I recall I mean you have 50% of the EDF at the end of the year I'm not sure where you’re going to be at. But I was always thinking that 2018 was going to be another maybe tough year compared to 2017. But do you expect maybe that 2018 could actually be a better year on margin profitability…

Are you talk about the whole segment, or for EDF?

For the whole segment, really…

Yes, it will be better. Next year will be better for the whole segment, because, one will be lined down on EDF. Keep in mind, we’ve only shipped two engines, we’ve got 27 to ship even thought the cost were half way or so. As Milt said, these are all the same engines. And so the factory that the team is getting better and better at producing them in the consistent basis, we’ve got all the 99% now of any of the very challenging requirements for EDFs built into our system in terms of how we operate and so forth. So once we get to the end of the year, we’ll be through that. Now, what could change also, which is likely to change, is the schedule for delivery of EDF engine, because the facilities that EDF is working on in France are not going to be ready as soon as the original or as the current engine schedule that’d be half. So there is a chance we’ll make less engines next year and deliver them; although, we’re still cracking along as if we got to ship them on the current timeline. But EDF will be a smaller portion of the impact on Power Systems in '18 and '19. And we will see the beginning and the ramp up of some of the normal base of government engines that we’ve enjoyed historically. Basically, we won’t be out of the cliff probably until ’19, but we’ll be coming out of the cliff in '18.

And Joe to answer your previous question, we can go ahead and knock it up now. The ACRP cost will be in other expense.

And we have no further questions in the queue, at this time. I turn the call back over to the presenters.

Thank you, Krista. And thank you all for joining us this morning. If you have any additional questions, please give me a call at 704-731-1527. Have a good day.