Crane Co (CR) 2011 Q2 法說會逐字稿

Good day everyone and welcome to Crane's second quarter 2011 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to the Director of Investor Relations, Dick Koch. Please go ahead, sir.

Thank you, operator, good morning, everyone. Welcome to Crane's second quarter 2011 earnings release conference call. I am Dick Koch, Director of Investor Relations. On the call this morning we have Eric Fast, our President and CEO; Andrew Krawitt, our Principal Financial Officer; and Richard Maue, our Principal Accounting Officer.

We will start off our call with a few prepared remarks, after which we will respond to questions. Just a reminder; the comments we make on this call may include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release, and also in our annual report 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in a table at the end of our press release, which is available on our website at www.craneco.com in the Investor Relations section. Now, let me turn the call over to Eric.

Thank you, Dick. I'm pleased with our second quarter results, as strong core revenue growth and continued solid execution are sustaining the momentum that we carried into 2011. Sales grew 16% in the quarter, driven by a core sales increase of 10%. Operating profit increased 22% in the quarter, and operating margin was 12.4%. For Crane overall, sales, operating margins, and earnings improved both on a year-over-year and sequential basis, increasing our confidence in the Company's prospects for the balance of 2011. Accordingly, we have raised our full year sales, EPS, and cash flow guidance, and increased our quarterly dividend by 13%. For 2011, our sales are now expected to increase in a range of 14% to 16%, compared to our prior estimate of 10% to 12%, reflecting higher core growth of 8% to 10%, favorable foreign exchange of 3%, slightly higher than our April guidance, and 3% from acquisitions, including the sales from our recently completed acquisition of WT Armatur. We have increased our 2011 EPS guidance from the previous range of $3.05 to $3.25, to a range of $3.30 to $3.45.

My messages today will echo the themes of my April remarks, but with added confidence in 2011, as we have another good quarter behind us, and expect a strong second half of the year. Our Engineer Materials and Merchandising Systems segments are generally tracking to investor day guidance, while our longer later cycle businesses of Aerospace and Electronics and Fluid Handling are exceeding our previous guidance, and providing strong sales and earnings growth. For the full year, our Aerospace group sales forecast has improved, driven by both OEM and after market demand. In Fluid Handling, sales have now increased sequentially for 5 quarters and we expect sales to further improve in the second half, supported by a higher backlog. We expect to leverage higher Fluid Handling sales into expanded margins, and we now expect Fluid Handling operating margin to exceed 13% in 2011.

Our message is not just about one quarter, but about positioning ourselves for growth longer term. Over the past few years, we have increased our sales and marketing effort in Aerospace to do a better job covering the airlines. We have developed a sales force in Fluid Handling that has expanded our global coverage, including emerging markets, effectively bundling products within our portfolio to provide an enhanced value proposition to our customers. We're investing internally in capital projects to enable growth and to assure that we don't face constraints as we look forward into 2012. Our new product development efforts have continued, even though the worst of the economic downturn. The maturation of the Crane business system, combined with solid management teams is enabling us to win in the marketplace. All of this is adding up to core growth rates, better than we anticipated, and positioning us to continue our momentum into 2012. We are tracking towards our overall Crane 13% margin target when our core sales reached $2.6 billion, with corresponding EPS in the range of $3.50 to $3.75. Andrew will now take you through the businesses and provide some additional financial information.

Thank you, Eric. I'll turn now to segment comments, which compare the second quarter of 2011 to 2010. Aerospace and Electronics segment sales increased 23% to $172 million, while operating profit increased 42% to $37 million, and operating margins increased to 21.7% in the second quarter of 2011. Backlog was $432 million at the end of the quarter, as compared to $431 million at the end of 2010. Aerospace group sales increased $18 million, or 21% during the quarter. OEM sales increased 20%, reflecting broad based growth across large commercial transports, regional and business jets. After market sales increased 22%, reflecting significantly higher spares, and repair and overhaul revenues, as well as modernization and upgrade sales, primarily for the C-130 carbon brake control upgrade. Excluding modernization and upgrade, our more traditional after market sales increased 16% compared to the second quarter of 2010, higher than anticipated demand for commercial spare parts, including initial provisioning items contributed to the increase.

The OEM after market mix was 57% to 43% in the second quarter of 2011, slightly more favorable than the 58% to 42% mix in the second quarter of 2010. Operating profit in Aerospace increased by approximately $9 million, reflecting very good leverage of our higher sales. In the second quarter of 2011, Aerospace engineering spending was $11 million, equal to both the first quarter of 2011 and the second quarter of 2010, and consistent with our targeted amount for the full year 2011. Market conditions in Aerospace remain positive, supported by favorable industry economic indicators,and enthusiasm at this year's Paris Air Show. Build rates for large transports are projected to increase over 2010 levels, and we have recently seen improvement in business and regional jet activity. After market sales are expected to remain strong, aided by the improved health of the airline industry. Given the current environment, we are now forecasting that 2011 aerospace group sales will be approximately $400 million.

Looking beyond 2011, recently announced higher build rates for the 737 and A320 should positively impact future sales. We note that increased fuel costs could negatively impact sales, and that potential industry supply chain challenges could also temper the rate of growth. Electronics group sales in the second quarter increased $14 million, or 26%, with increases in power solutions, microwaves and microelectronics. Electronics operating profit increased $2 million compared to the second quarter of 2010, with operating margins remaining in the mid teens, impacted in part by ERP implementation costs. In the defense portion of our business, which comprises approximately two-thirds of our projects, results were in line with expectations, although timing around the release of government funds has impacted the delivery schedule of certain projects. Results in the commercial portion of our electronics business continue to be favorable, driven by demand for power solutions from the commercial aviation market, as well as higher sales to medical device customers.

For electronics in 2011, we expect sales to increase at least 10%, slightly better than our investor day guidance, as we continue to have confidence in both our military and commercial businesses. Last year, several programs transitioned from development to production, and these programs are ramping up production in 2011. In June, Merrimac recorded its highest monthly revenue since we acquired the company in February of 2010. The defense portion of Electronics is concentrated in intelligence, surveillance and reconnaissance, or ISR, a market we expect to continue to grow despite reductions in overall government spending. Engineer Materials sales increased 2% during the quarter. Transportation related sales increased 46%, as a result of significantly higher industry build rates for refrigerated and dry trailers. Building product sales were 2% higher than the prior year. Demand for our RV-related applications decreased 8%, as OEMs significantly reduced their build rates to bring dealer inventory into alignment with retail demand. Several RV manufacturers stopped production for a 2 to 3 week period starting in late June.

Operating margins were 15.2%, compared to 17.3% in the second quarter of 2010, and operating profits declined modestly to $9.1 million from $10.2 million. During the first quarter, we implemented price increases that positively impacted the second quarter, but raw material costs such as resin, which is related to the price of oil, increased more than we expected. In response, we have announced a second round of price increases to take effect in the third quarter. We continue to monitor raw material costs, and will seek to implement price increases as appropriate and as market conditions permit. We are also maintaining our focus on productivity in order to meet our mid-teen margin goal, notwithstanding the challenges of these input cost increases. Overall in 2011 for Engineer Materials, we project an increase in sales and profit consistent with our investor day guidance. Although the industry expects dealer shipments to increase approximately 7% in 2011, we more conservatively believe that our RV-related sales will grow only slightly. Demand from transportation-related customers continues to be strong and we forecast that building product sales will show a slight increase in 2011, driven by non-residential remodeling.

We are continuing our new product development initiatives, as we aim to expand our content to existing customers, and find new applications in existing as well as new markets, such as ocean-going containers, decorative interior wall panels, and walls and floors for step downs. We are pleased with the market acceptance of our Aero Skirts, which are large panels attached to trailers that reduce fuel consumption and meet California regulatory requirements. Merchandising Systems sales of $94 million increased $19 million, or 26%, primarily reflecting $13 million of sales associated with the December 2010 acquisition of Money Controls, as well as sales growth in both our payment solutions and vending businesses. Segment operating profit of $7.1 million declined from the prior year because operating profit in 2010 was favorably impacted by the receipt of a patent litigation settlement.

We are continuing our new product development activities in vending, including online vending, and are driving efforts to enhance productivity. Although visibility for our vending business is somewhat limited, reflecting its short cycle, book and ship nature, results are tracking to our guidance. The integration of Money Controls into our global payment solutions business is on schedule, and we are beginning to achieve the synergies and visions. As stated previously, due to purchase accounting adjustments, Money Controls was dilutive to our earnings in the first half of 2011. However, it was marginally profitable in the second quarter. We continue to believe that the acquisition of Money Controls will have an overall slightly accretive impact to our full year 2011 earnings. For the full year, the Merchandising Systems segment is tracking to the guidance we provided at investor day, with sales and operating profit both expected to increase over 2010 levels.

Fluid Handling sales increased 13.5% to $289 million in the second quarter, with a core sales increase of 6.4%, and a favorable foreign currency impact of 7.1%. This marks the third consecutive quarter that core sales have increased on a year-over-year basis, continuing the measured recovery in Fluid Handling which began in late 2010. All business experienced a year-over-year improvement in sales. Backlog has grown for the past six quarters, and at $323 million, is 19% higher than at the end of 2010. Importantly, we feel our backlog is properly priced, reflecting our disciplined pricing methodology. Both MRO and project related business continue to improve, with quote activity generally increasing. Market conditions continue to strengthen on a global basis for our ChemPharma and energy businesses. Spending by chemical companies and refineries is increasing due to higher plant operating rates, catch-up maintenance, deep auto-maching projects, and better industry profits.

North American and Asian power markets are also continuing their recovery. Fluid Handling operating profit of $37 million was 15% higher than the prior year, primarily reflecting the higher sales, and operating margin was 12.8%. The relationship between customer pricing and input cost was in balance during the second quarter. Operating leverage for overall Fluid Handling in the second quarter was lower than expected. A large portion of the sales increase was derived from foreign exchange, there were several miscellaneous smaller expenses, including transaction cost for the WTA acquisition that impacted the quarter. Although we expect better core operating leverage going forward, we note that revenues from foreign exchange translation, and WTA purchase accounting costs, will also impact this metric in the second half of 2011.

Earlier this month we announced that Crane had acquired WT Armatur, a manufacturer of highly engineered valves with zero fugitive emissions, used in severe service applications. WTA, which had 2010 sales of approximately $21 million, is expected to be slightly dilutive to earnings in 2011. The addition of WTA's bellows sealed globe valve complements our existing product offering of low fugitive emission valve technology, and aligns directly with our objectives of providing comprehensive solutions for demanding chemical and petro-chemical applications. For Fluid Handling, we have increasing confidence that we will see stronger second half sales as compared to the first half, aided by strength in our later, longer-cycle process valves businesses. For the full year 2011, we expect Fluid Handling will exceed our February investor day guidance for both sales and operating profits, with an operating margin in excess of 13%.

Turning now to more detail on our total company results and forecast. For overall Crane, we experienced some raw material cost pressure in the quarter, but in aggregate, our increased selling prices largely offset material cost increases in the quarter. Although we've been largely successful this far in raising prices, we have been mindful of competitive pressures in an environment where input costs remain elevated. Foreign currency translation positively impacted EPS by approximately $0.04 in the quarter. As a reminder, the operating profit impact of foreign currency translation for Crane tends to be about 10% to 15% of the revenue impact. On a year-to-date basis, foreign currency translation has positively benefited EPS by approximately $0.05. We now expect foreign currency translation to benefit second half results by a similar amount, which is a $0.02 more than we expected back in April.

Our tax rate in the second quarter of 2011 was 31.4%, compared to 31.2% in the second quarter of 2010. As previously communicated, we expect our 2011 full year tax rate to be approximately 31%. Please also note that the revised EPS guidance range of $3.30 to $3.45 includes the $0.05 per share gain we recorded in miscellaneous income in the first quarter, primarily related to the sale of real estate. Overall free cash flow was $21 million in the second quarter of 2011, compared to $43 million in the second quarter of 2010. We have increased our free cash flow guidance to a range of $140 million to $160 million, compared to our previous guidance of $130 million to $150 million, reflecting the potential upside associated with our higher EPS guidance, but also considering our needs for higher working capital to support the higher projected sales. Capital spending for the second quarter of 2011 was $10 million, a significant increase over the $4 million spent in 2010. As stated on investor day, our capital expenditure guidance for 2011 is $40 million, compared with $21 million in 2010.

During the second quarter of 2011, we repurchased approximately 421,000 shares of our common stock for about $20 million. Our policy is not to pre-announce these purchases but to report them at the close of the quarter. On a year-to-date basis, we have repurchased approximately 1.056 million shares for about $50 million, which is equivalent to the amount of cash deployed for share repurchases during all of 2010, and meets our objective of offsetting the expected dilution related to our stock incentive plan. Our balance sheet remains strong and we ended the quarter with $231 million in cash. We also have access to our $300 million revolving credit facility, half of our long-term debt of $400 million is due in 2013, and the other half is due in 2036. Now back to you, Dick.

Thank you, Eric and Andrew. This marks the end of our prepared comments. Operator, we are now ready to take questions.

(Operator Instructions) Our first question comes Deane Dray of Citigroup.

Hi, good morning. James filling in for Deane. With the aerospace after market, I remember on the last quarter you guys mentioned that there could have potentially been some pre-buying ahead of the quarter, given any supply disruption, people probably trying to pre-empt that. Did you see any of that in the aftermarket sales for Aero this quarter?

James, I would say there may have been a small amount of that, but nothing to a notable degree for us.

I heard you reference the 737 and the A320. I was wondering if you could give some more clarity on what exposure you have to that American Airlines order that came out -- I think it was last week, the 460 planes. Maybe you could quantify the number you guys could probably get from that, if that platform builds out.

James, what I'll say is that the impact of that is built into our updated guidance. Clearly, both models are important to us as a Company. But we built in the impact of our latest guidance.

On the American order, these are planes that not going to start to ship for 2, 3, 4 years from now. We're on both planes. We have a little more content on the 737 than we do on the 320, but we've got plenty of content on both. I consider this a win for everybody.

Obviously, you gave some granularity on the Fluid margins, I thinks that's sufficient. How about the M&A pipeline for [Spolton] and Fluid, I think in a couple of years. Is this something we should expect to see throughout the year? I think they're about 11% on that debt still. I was wondering if you could give us an update on the M&A pipeline?

We've had a long-term strategy of filling out our process valves in our Fluid Handling business. We did Krombach 18 months ago, or 2 years ago, and WTA. We continued that process to fill it out to be the leading, or a leading supplier of process valves. Again, focused on strengthening our existing businesses. I would say generally in M&A prices are clearly back to 2008 levels, if not starting to get above, and you see both private equity and strategic buyers well-armed here. As I look at the pipeline we don't have anything imminent but this can change. The environment can change rapidly and we're very proactive in terms of our M&A efforts.

Alright, that's all I have, thank you.

Thank you. Our next question comes from Jim Foung of Gabelli and Company.

Hi, good morning. Good quarter.

Thank you.

I want to just kind of swing back on the commercial Aerospace business. You touched upon the 787 and A320. By 2014, Boeing Airbus will have higher production rates on all their airplanes. Then I suppose we'll see the new airplane programs entering service. So, I was wondering as we get to that kind of period, what kind of revenue growth we can expect on the Aerospace business or sales number as we get to 2014 when these production rate levels peak?

The way -- I'm not going to give a specific number here, Jim, but the way I'm thinking about it is, first off we've done a very good job both at Airbus and Boeing. So, these 7, 8, 9 year backlogs that they've got on their core planes, we're extremely well positioned on them. So, we're going to have solid core growth, as well as aftermarket and initial provisioning. On top of that, as you know, we've spent a lot of money in the last 4 years on the new development programs for the 787, for the A400M, we did a whole landing gear indication and control unit that's going to go on the A320. So, those are revenues that you don't see in our current revenue that will be on top of our existing core revenues as we get to '12, '13 and '14, and we would expect those to build. That's the way I would to characterize it. We'll do an Investor conference in February. Certainly for '12 I think we can break out the revenues from the new programs maybe in the aggregate for you, to give you a better picture on that.

Okay, at the next Investor conference. Okay. I guess the second question is just swing back to Fluid Handling. I guess you made a comment that the backlog in your Fluid Handling business is appropriate price. I was just wondering, could you expand on that comment. Do you mean that the margins in the backlog are equal to your current margins in that segment?

What we mean by that -- I'll take this, Andrew -- what we mean by that, and I think this is really important is that we're -- we feel like we're not only participating along with the market, we think we're gaining share in the market in process valves and we're winning without giving on price. So, as I look at the third and the fourth quarters, and even into the first quarter 2012. When we look at the backlog, we just want to make comfortable that backlog is priced appropriately, so we can get the right leverage on the incremental volume. We actually went back and had both of the key units take a look at that, and we feel very confident about it.

Okay, great, thank you.

Thank you. Our next question comes from Ajay Kejriwal of FBR Capital Markets.

Thanks, this is Ben on for Ajay I just wanted to follow up on this previous questions with the Fluid margins. With the backlog, what was the contributions from FX in the quarter?

Ajay, it's Andrew. It was a good portion of the growth that did come from FX. We talked that the margins associated with FX tend to be between 10% and 15% of the revenue impact. They were in that range.

Okay. Thanks. And then you guys mentioned potential recovery in North America, Asia power markets. Could you maybe give us some more color on what you're seeing, at least in North America?

Well, I think we're seeing some continued times of recovery, as we talked about it, Ajay. It has been a gradual recovery, but what we're seeing is that at the margin things are getting better and positive signs continue. We're not seeing a ramp up or a steep slope in demand, but a gradual recovery that is continuing and positive for us.

Okay, thanks, and no slowdown in MRO. Is there anything different month-to-month there?

We're confident in the trends for both our MRO and our project-related activity, Ajay. I think the overall message in Fluid Handling is that we're quite positive about the second half and what it's going to do for us as a Company.

Okay, thanks.

Thank you. Our next question comes from Mark Barbalato of Vertical Research.

Morning gentlemen.

Good morning.

I guess my first question is, can you give us a sense by business segment of the pace of orders as you guys progressed through the second quarter?

The way I would characterize things is clearly in our short cycle businesses, our book and ship businesses, Engineer Materials and vending payment systems -- this a book and ship business and so it's very hard to predict. You can almost see the uncertainty in the economy. No clear trends here. But as we said -- as Andrew said at the outset, we feel very strongly that both those businesses will be in or around where we guided for 2011. So, there's no clear positive trends there. There's some uncertainty, but comfortable that it's about where we guided, a little bit more, a little bit less. Where we do see very confident trends and backlogs in performance is in our 2 big late long-cycle businesses, in Aerospace and Electronics and in Fluid Handling. We like the trends that we see in both those businesses. We're confident about it, and as I just said on the earlier question, we're not That's the way I would characterize what we're seeing in the marketplace.

Great, thank you. And then, is there any update on Krombach? It sounds like any operational issues were left far behind.

We didn't really talk about it, because we're seeing quarter-over-quarter improvement and nice progress there. We've got a lot of opportunity left for us, which I view as a real opportunity, but clearly making some strong progress, in terms of getting the shipments out and booking the profit. Orders have remained very solid here, actually quite good.

Great, thank you very much.

You're welcome.

Thank you. Our next question comes from Ron Epstein from Bank of America.

Hi, this is actually Elizabeth in for Ron this morning. Just on the Aerospace side, I was wondering what sort of opportunities you think you'll have potentially on the C919. Also, on the re-engine 737 are there additional opportunities for you?

Elizabeth, we had previously announced that we were selected for the brake control system for the C919, so that could be very positive for us. Of course, shipments on that aircraft drop may not be until 2015 or 2016. It's sort on the future horizon. I would say in general re-engining provides some opportunity for us, but it's probably too early to comment on that specifically.

You might have said this earlier, but what portion of the raise in guidance was due to the WTA acquisition?

Actually the WTA acquisition we expect to be slightly dilutive in the second half.

Dilutive in the second half. Okay. Okay, thank you.

Sure.

Thank you our next question comes from Matt Summerville of KeyBanc.

Morning. I have a couple of questions. First, as we look at how the backlog has evolved in Fluid Handling, I'd describe it in 2010 as more of a small step function increase quarter-on-quarter-on-quarter, and now we've started to see, for the last 2 quarters, bigger increases on a sequential basis, Q1 over Q4, Q2 over Q1. Do you expect, Eric, that type of trend, based on the quoting activity you're seeing to continue in the back half of the year? Are we still going to see those more sizeable increases in backlog?

I don't actually know the answer to that question, Matt. The way -- I expect it to stay very strong, and as I think about it in a macro sense, when you look at the markets we serve, we serve the chemical business globally, energy, and as part of energy, power. So, there's not a chemical company in the world that does not have higher sales, earnings, and CapEx here. They're making more money so they're incredibly focused on through put efficiencies, de-bottlenecking, making sure the plants are up 100% of the time. You could say the same about the energy and the refinery business. We're mostly downstream in the refinery. I see that globally. You've even seen a recurrence of profitability here in North America in refineries, because of the cheaper feed stock. In power, I think there's a global shortage in power, and with some of the nuclear being held up, you may even see more in some of the traditional power markets of coal, gas, et cetera. On a macro basis for our process valves, which are geared toward those 3 businesses, I feel very good about both trends, and both for project activity and MRO.

As far as the WTA acquisition, can you quantify what the magnitude of cost was weighing on the margin in the second quarter. Then Andrew, what you expect the purchase accounting adjustments to be for that acquisition in the back half?

Well, let me just talk about the transaction costs. Our estimate at this point is that transaction costs for the WTA are going to be about $1.5 million or so. Not all of that was in the second quarter. We had some costs in the first quarter and we'll have costs in the third quarter as well, but that --

Most of it was.

That will help you gauge the impact of the transaction costs. We haven't broken out yet the amortization impact for WTA, but when we -- as we go forward we'll have better visibility around that.

I was thinking more have an inventory step-up standpoint in the back half, Andrew, as opposed to intangibles amortization.

Okay. There will be an impact on the inventory step-up in the third quarter and we included -- let me say it this way at this point. We said it's going to be slightly dilutive, and when we put our forecast out we included that in it. It's not going to be specific here though, Matt.

So, the transaction costs and the inventory step-up are all in this revised guidance, is, in the end, what I'm trying to get to.

Yes, absolutely, Matt. It's built into the guidance range that we provided today.

And then 1 final question. The sequential decline you saw in the Aerospace and Electronics backlog, is there anything to read into that? Are there 1 or 2 deals that maybe got pushed out or deferred or canceled? Can you just talk about that dynamic that you saw in backlog in Aero in Q1?

In Q2 you mean?

I'm sorry, Q2, yes, apologize.

So, the Aerospace and Electronics backlog did decline slightly in the quarter, and there were timing difference in there between orders and sales, which, the sales were strong in the quarter. We did have military programs deferrals in the Electronics group, including 1 program cancellation that may come back at a later date. There was some noise in there.

Great, thank you.

I think that the overall message is we are very confident about the backlog and our prospects for growth going forward.

Perfect. Thanks Andrew.

Thank you. (Operator Instructions) Our next question comes from Robert Barry of UBS.

Hey, guys good morning,. Good morning. I apologize, I hopped on late, so if these are dupes just tell me and I'll read the transcript. But could you talk about the mix of large project activity in the Fluid backlog now, and how that's changed sequentially?

Historically we've not really given a profile of the backlog, but what we did say earlier is that we are confident with the pricing that is in the backlog, and also with trends in both project and MRO-related activity, and I think, as you know, our overall mix in Fluid Handling between projects and MRO is about 50/50.

Got you. I just know in the past couple of quarters you've talked about how the quoting activity in some of the larger projects has been weaker, but starting to pick up. I was just curious if there was any acceleration in the large project side.

Yes, well I would say -- I would characterize it as a continued gradual improvement in project activity. The quoting activity continues to increase, but it's not a step change function. It's a gradual, measured recovery that we're seeing. We're very positive about it and the prospects for our second half in Fluid Handling.

A question on cash. You've had very good cash generation. The amount of excess cash on the balance sheet seems to be building. I saw that you did buy back some stock in the quarter. I was just curious what your latest thoughts were on use of cash.

No change Rob, in terms of our overall strategy. We continue to be focused on looking for acquisitions that strengthen our existing businesses, and our share repurchases are largely to offset the impact of expected dilution from our stock incentive plans. We recently raised the dividend, reflecting our confidence in the Company. I would say acquisitions first and foremost would be our desired use of that cash.

Okay, and then just finally on the strength in the Aerospace business, I was wondering how much of that might be driven by a market share gain, and even the possibility of market share gain in that business impacting results in the near term, or had there been some market share gain a year ago that's kind of impacting the business now?

We announced possibly that we're doing the C130 upgrade on the brake control. So, that's clearly -- I don't know if that's market share gain but it's added business. I would call it a market share gain. I think what you're seeing is an overall terrific market and we're doing a very good job covering it, and very good job of covering the aftermarket particularly with the airline. Where you'll see the market share gain here comes in '12, '13, '14 and '15 due to the 787 and the content there; the A400M; the landing gear integration control unit we have on the 320. We've got some nice wins here that are just coming into production, and you'll see that in the out years.

But even starting in 2012, with the 787, it will start to ramp this later this year.

Sure, we're starting on the 320 now as we start into -- some of our units are starting to go into that original production line for the A320.

Excellent. Congrats on a very solid quarter.

Thank you.

I'm showing no further questions at this time. I would like to turn the call back to Mr. Koch for closing remarks.

Thank you very much for joining us today and for your continued interest in Crane. Bye-bye now.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, you may all now disconnect. Thank you and have a good day.