藝達思 (IEX) 2010 Q1 法說會逐字稿

Good day and welcome everyone to the IDEX first-quarter 2010 earnings results conference call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Heath Mitts, Vice President of Corporate Finance. Please go ahead, sir.

Good morning and thank you for joining us for our discussion of the IDEX first-quarter 2010 financial results. This morning we issued a press release outlining our Company's financial and operating performance for the three-month period ending March 31, 2010. The press release, along with the presentation slides to be used during today's webcast, can be accessed on our Company website at www.idexcorp.com.

Joining me today from IDEX management are Larry Kingsley, Chairman and CEO, and Dom Romeo, Vice President and CFO.

The format for our call today is as follows. We will begin with an update on our overall performance for the quarter and then provide detail on our four business segments. We will then wrap up with the outlook for 2010.

Following our prepared remarks, we will then open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay beginning approximately two hours after the call concludes by dialing the toll-free number 800-642-1687 and entering conference ID 62850085, or simply log onto our Company's homepage for the webcast replay.

As we begin, a brief reminder. This call may contain certain forward-looking statements that are subject to the Safe Harbor language in today's press release and in IDEX's filings with the Securities and Exchange Commission.

With that, I will now turn this call over to our Chairman and CEO, Larry Kingsley.

Thanks, Heath, and good morning, everyone. Before we discuss the first-quarter results, I will run through some general comments as to what we are seeing out there. As we ended '09, most of our end markets had stabilized, and some were beginning to grow again. Throughout the first quarter, this trend continued with order rates and many of our Fluid & Metering and Health & Science markets growing at a better pace than our original expectations.

Operationally we are positioned very well to respond to take advantage of the demand surge and to take share with very competitive lead times. I will dive into detail later in the presentation. But briefly in terms of where the upside is coming from, Asia, the Middle East and most of the developing markets look just great for the full year. In Q1 we saw orders and sales growth of over 30% in Asia, and the global infrastructure investment is now translating to orders. The water business is doing well with major new water monitoring programs and capital improvement projects underway. The federal governments globally are allocating spend to new programs, particularly in Europe.

Our Health & Science segment grew very nicely in the quarter across all businesses. Market growth, especially international again, has been solid, and we continue to take share on new instrumentation platforms. Our operating metrics across the Company reflect strong margin performance, and we have line of sight to very solid operational execution throughout the year.

With regard to capital deployment, on April 6 we announced a 25% increase to our dividend. And, as you know, we just announced last week that we completed the acquisition of Seals Ltd., a new unit in the Health & Science segment. Seals allows us to move into an attractive adjacent product segment within our core HST portfolio, and we continue to move along in the late stages of diligence on additional acquisition targets with both the Fluid & Metering and in the Health & Science segment.

So I'm going to turn over to slide four, the financial performance overview slide. For the quarter orders are up 10%, and that's 8% organically. Sales are up 9%, and that is up 6% organically. First-quarter adjusted operating margin of 16.8% was up 410 basis points from the comparable last year. The stronger profitability is a result of leverage on the organic growth. All of our segments experienced year-over-year margin expansion.

Q1 EPS at $0.46 was up 55% versus the comparable EPS last year. Free cash of $21 million(Sic-see press release) was up 50% from the first quarter of '09. So all-in-all a very good quarter and a really good start to the year.

In Fluid & Metering now, to jump into the segments, orders are up 17% in the quarter, and that is 14% organically. Sales increased 10%. That is up 7% organically. Adjusted operating margin of 18.8% was up 410 basis points here in the segment as well for the quarter. We saw a year-over-year improvement in nearly all of the markets during the first quarter, and we are seeing strong global demand for the newer products.

Within our energy markets, topline growth is materializing as expected. Our investments in the BRIC countries, as well as in the Middle East, are doing quite well. They are paying off, while the domestic markets are still a little slower to return to growth. In most all regions, however, are mid and upstream fuel management projects, as well as the LPG applications are trending quite well.

Within our water business, US municipal markets continue to struggle with near-term funding, but we do remain very bullish that we are very well positioned for these projects as they materialize, and we are going to capitalize on those opportunities.

In Europe the highlight for the quarter was the UK. Our water strategy has really come together pretty nicely. We want a multiyear program associated with the Asset Management plan in the UK water industry. And this first program is an example of the type of water project that we have been talking about, the activity that we now have underway.

The other FMT served markets are also improving. We are seeing better performance than we anticipated and talked about last quarter. And we are seeing that both for distribution to the end markets. We are also seeing that, though, in the OEM direct buying patterns.

So in summary for the Fluid & Metering segment, the energy and water markets are growing as we had expected, and we are definitely optimistic about what we are seeing out in the rest of the segment.

Our updated thinking for the year is that within the segment chemical and industrial will grow in 2010, and therefore, the FMT segment in total will grow in the high single-digit range organically.

In our Health & Science segment, if you flip over to the next slide, total orders were up 28% for the quarter. That is up 27% organically. Sales were up 18% in total net, 17% organically. Operating margin of 21.8% was up 760 basis points compared to the prior year. It is obviously driven by volume but also cost reductions and prior year acquisition-related costs. Again, all the businesses experienced strong margin expansion.

As expected, we saw a return to year-over-year market growth in the life sciences, and the end market growth is pretty broad based, but definitely most pronounced in the international markets and particularly in India and China. Our expanding product range here, though, and the solutions capabilities continue to drive growth as well, and we are seeing very nice instrument content gain, particularly in the new analytical and diagnostic platforms.

Within our more industrialized Health & Science markets, we have also seen good strong growth. General market recovery varies by geography, but new products and take share strategies are clearly paying off. So obviously 17% organic sales growth in the first quarter exceeded our short-term expectations. In the quarter we did receive the benefit of increased OEM purchases in advance of their platform rollouts. But all said, we are definitely winning big, and we anticipate excellent growth to continue for the full year.

For the year we expect HST organic revenue growth to be high single digits for the segment.

I'm going to take a few minutes here and just talk a bit about the Seals acquisition that we announced last Thursday. As we have discussed, our strategic focus, our capital deployment in the segment, is within the analytic instrumentation life science markets. And with Seals what we have now is the combination of great new technology, some additional material science and some great new products that immediately contribute to the HST revenue stream. And beyond their core strength in the life science applications, we intend to develop the line to serve other HST and FMT markets as well. And Seals supplies some of the same customers that we have historically served.

There is a growing need for higher levels of purity in food as we've talked about in pharmaceutical, and we also see some great opportunities in electronic manufacturing. Basically multiple opportunities across the portfolio.

Today about 40% of their current revenue is in life science applications, 20% is in food and pharma, and the remainder is in the other industrial electronic applications. Regionally about 60% of their sales are in Europe, about 20% is in the US, and 20% in the rest of the world.

So we welcome Seals to the IDEX team. It's a great addition, and, as I said, we get multiple things out of it.

I'm going to turn to dispensing now. I'm on slide eight. Total orders in the quarter were down 27%. Organically they are down 30%. Sales increased to but were down 3% organically. Operating margin at just over 20% was up significantly compared to the prior year as a result of our restructuring initiatives, as well as just continued broad-based operational improvement. Overall the underlying market conditions continue to be soft in both North America and Europe. We expect the general environment to remain challenged in order activity within the US retail channel, as well as the European market to be slow for the remainder of the year. And, as you know, we have talked before the lumpiness in this business is largely driven by program orders. Our team's persistence, though, has paid off in the quarter as we were able to book a sizable DIY -- that is a do-it-yourself -- replenishment order, and that will benefit the first half of this year.

However, despite the recent order, our year-over-year results for the segment will be unfavorable still due to a significantly larger, similar kind of DIY replenishment order in Q1 of '09'. All said, the impact to the growth rate to the total Company is minimal as the segment is about 9% of sales.

I want to say, though, our dispensing team has done just a great job managing the business, and the segment is obviously very profitable, and it will generate a good deal of cash this year.

So moving on to fire and safety, for the quarter total orders were down 1%. Organic orders are down 4%. Sales are down 2%, and organically down 5%. Operating margin at 21.2% was up 30 basis points compared to last year, primarily due to mix within the segment. As ,expected the global activity versus the domestic market continues to be strong and growing, particularly for rescue equipment. But our band clamping business is performing well. Also, it is experiencing solid growth year-over-year. It is the fire suppression portion of the segment within North America that is negatively impacted by Muni budget constraints.

And moving forward, emerging country markets will be by far the best growth opportunities and for rescue in particular. The China rescue market is expected to grow significantly over the next several months and years, and we will leverage our in-country capabilities, as well as our global portfolio, to express those expanding needs. Band-It is enjoying the benefit in the segment, too, of just a good general rebound in the economy, as well as solid sales execution against strong broad-based but also very good new product performance.

So in total for the segment, we still expect organic growth to be flat to down slightly for the full year with international growth to be offset by domestic municipal spend issues. Band-It and rescue will be up, and fire will be down. So profitability and cash flow obviously will continue to be outstanding.

I'm going to move on to guidance. I'm on slide 10. We expect Q2 EPS to be in the $0.45 to $0.47 range. Q2 organic revenue growth will be up 5% to 6%. FX will have a positive impact of about 1 point. For the full year, we have raised our guidance. Our EPS range is now $1.75 to $1.80, once again driven by the organic revenue growth assumptions that are mid-single-digit range. And given the improved first-half outlook, we now expect FMT and HST to achieve closer to high single digit organic sales growth. And, as I said, we expect Fire & Safety to be flat to down slightly.

For dispensing we continue to expect organic sales to be down slightly for the full year. That is inclusive of the large first-half order.

Operating margin for the Company will be approximately 16.5% on a full-year basis. Our flow-through on that incremental organic revenue will be about 45%. For the year we expect FX to also have an impact of about 1 point positively. These estimates obviously do not include any acquisition-related impact from the Seals transaction. And as far as other following items, the 2010 tax rate is anticipated to be 33%. The full-year CapEx will be between $28 million and $30 million. We will obviously continue to convert cash very well, well in excess of net income. And I would also note our projections here exclude any estimate for any additional restructuring cost for the remainder of the year.

So with that, we are going to open the line for questions. Operator?

(Operator Instructions). Jim Lucas, Janney Montgomery.

First question on more of a housekeeping. With regard to the corporate expense line, we had saw a big jump in the fourth quarter and then things leveled off here in the first quarter. Is this essentially the run-rate we can expect going forward?

Yes, you could use that assumption, Jim.

Okay. And with regards to Health & Science, I mean clearly a very strong showing across-the-board. I was wondering you made the comment about OEM orders going forward. Any color you can provide with what you are seeing from impact with regards to stimulus and the impacts on the NIH?

Also, with regards to mix, this is one of the better margin showings we have seen in quite some time. Was this really all the stars aligning, or is it the type of margins we can expect to see going forward?

Well, let's start with the top line, Jim. Obviously organic orders performance of 27% is huge. There are a number of new platforms -- I want to call them planning for positive sales blanket orders that are built within bad. We bridge this a number of different ways to first understand that impact. So if you look at first quarter at 27% versus if you factored out all of those new platform ramp-up kinds of commitments, you are still bridged to something like 17% organic orders, and obviously that truce was a sales number.

As far as how much of the total order performance in the quarter was related to NIH or stimulus kind of funding, we actually do not think that is a huge number. We think there's couple of points that is tied into that. But most of our customers are seeing pretty nice international gains as well. So, as I said in the prepared remarks, as we can discern where the sell-through numbers are on a geographic basis, international performance is better than US, and US obviously is where you can see that NIH impact.

As far as the margin performance in the quarter, the team is just doing a great job. We got a lot of costs out. We are seeing some benefit there. We lapped some of that later in the year. You will not see the same kind of year-over-year margin improvement. But we are certainly at this point, too, a very, very competitive cost position, and we are going to see -- continue to see reasonable organic performance I think, fantastic margins across the business.

So it is not really the stars aligning in terms of best mix. Mix will bounce up and down slightly in the segment, it always does, but it has never been one that hugely varies. I think that what you're seeing now is really good leverage, frankly, obviously on the cost actions that were taken and obviously very good flow-through on that organic revenue.

Okay, very helpful. Thanks. And finally, with regards to the acquisition pipeline, could you talk about what you're seeing from valuation standpoint out there? And the types of deals that you are looking at today, are they more comparable to the Seals where we're seeing bonds and singles, or is there potentially something bigger in the pipeline?

It is a little of both in terms of size. We have got quite a few things going on right now, and they are in the Seals size range, 2X the Seals range right now. Some that are probably less probable that are a little bit larger. There are enough of them, but I think we feel very good about capital deployment for the full year and are all going to be strategically right down the middle. Really, really good adds for us.

As far as what we are seeing out there in terms of valuations, I would tell you that we are comfortable of the acquisitions that we are in process with, they are going to be really good returns to the Company. As you know, we prefer proprietary deals versus auctions, and I would make that comment specifically to what we're seeing on the proprietary side, and the auction side is a bit of a mixed bag right now. And in some cases, in several cases we have chosen early to opt out because we don't think the valuations are warranted.

So anyway I think it's going to be a good year for capital deployment for the Company. I think we're going to be very pleased with what we put back at the end of the year and say, these are all solid adds. As you know, we build technology and growth into all of what we have by way of acquisition. We are really pleased with what we've done over the last several years. You will see similar things to come here.

Christopher Glynn, Oppenheimer.

A little further into the HST orders. I think you called out some OE stocking. But if we could look at what the leadtimes and to recognize revenues are with some of the mix of these things, it just seems a little tough to tie it back to high single digits organic growth what you're seeing here. So maybe if you could help a little bit more on that front.

I would bridge it in two steps. First, what we talked about is bridging 27% organic orders to 17% organic orders given a fairly broad-based -- really robust representation of that 17% organic blend. The difference there, that 10 points, has not so much the classical stocking element to it, but it has the ramp-up associated with some new platforms that are coming out pretty strong from our customers. So while we are typically subsystems on those, the advanced look on all of that looks pretty positive.

When you look at the bridge, if you want to bridge it between 17% and call it high single digits, that is just more of you that the world is continuing to understand how robust the economy is. We feel very good about our execution. One could argue at this point looking forward that high single digit for the segment is perhaps a bit pessimistic.

I think as we go forward by a quarter you will continue to hear us talk pretty positively about what we are seeing. But so far it has been solid execution, and I think we are in a really good position operationally to take advantage of the surge in demand that we do see, as we look forward, more of the same.

Okay. Then I don't think you mentioned the accretion or impact of sales. If you did, I'm sorry I missed it. But any commentary there?

I did not -- specific to the acquisition?

Yes.

No, I did not. We just do not have that assumption built in one way or the other for the short-term or beyond 2010 at this point.

Mike Halloran, Robert Baird.

A question on sequential revenue trends through the year. Could you just refresh my memory on what a typical sequential revenue trend for your HST and FMT divisions look like through a year? And any reason you think that would deviate this year relative to what that historical trend would look like?

Well, I will let Dom give you what the sequential seasonal pattern looks like for the two segments. But I don't know that I would compare 2010 to '09 obviously given the nature of '09 for all companies in all businesses. But why don't you --

Sure. I think, Mike, you have to go back to probably '06, '07, '08 timeframe. HST historically pretty linear by quarter. There have been times in the fourth quarter where [SIAP] has gotten a little bit ahead of itself with our customers where you have seen a minor dip in the fourth quarter. But our assumption is kind of sequential, good linearity within the quarters for HST. And probably where you are going is FMT, which historically Q1 is the lowest quarter and Q2, Q3 and Q4 tend to be the upticks. So that is a wait and see for us, but I'm sure that is where you are at in terms of historic linearity. So we will have to wait and see how it plays out. The good news there, though, is on orders, even without the blankets we are seeing nice Q1 quarter growth as well.

And I guess the reason I bring it up is you guys commented on the 45% incremental margins for the full year being still the target. If you take that normal sequential build, you get something a little bit above or certainly above what your current guidance range is. I'm just kind of wondering from a full-year perspective if there is something else going on that I'm missing.

For FMT the answer is no, and there is some upside for certain with respect to the full-year operating line.

Charles Brady, BMO Capital Markets.

This is Tom Brinkmann standing in for Charles Brady. I just had a couple of questions for you about some of your end markets, what you are seeing. How about the chemical and refining end markets domestically, have you seen any pick up there?

We have, Tom. We are seeing, as I mentioned I think in my prepared remarks, a little bit better order activity and fairly broad-based for our Fluid & Metering markets that were expected to be a bit slower in terms of pickup that were chemical in some of the more general industrial end segments. We are seeing that as a combination of project activity but robust MRO demands, too. I mean it is kind of a good blend.

As you know, we started the year with the assumption that what was really going to drive good growth across FMT was energy and water. We are certainly seeing that and feel very good about that, particularly what we are seeing happen in water. But we what we had assumed at the beginning of the year was there would be a bit of a drag in terms of the chemical and, call it, industrial pieces. I would tell you that we are feeling incrementally better about that portion of FMTs. So again, we will continue to monitor it, put the quarter out again, and see where we are at the end of Q2. But right now certainly we do not see the drag in the segment at all.

Okay, that is good. Also, I just wondered if you could talk about the difference in if the water end market is doing better, if that is some municipal-oriented activity and how that compares to your little bit more downbeat outlook for the fire suppression market with municipal spending?

Well, there's couple of different things going on. First, I would broadly categorize what's going on in water as the very solid execution, what is going on with our team and it is global to move forward as domestic. So what we're seeing is water infrastructure projects getting to the point of monetization internationally before they are here in the US.

At the same time, what we're seeing is out of the US municipal spend budget that water is a higher priority than fire right now. And there's obviously various forms of stimulus, most of which in the US have not made their way to program orders. But it is certainly looking better. And when we look at what is going to happen over the next few years, not just the rest of this year, for water, we have got pretty good assurances, frankly, that the global infrastructure stuff is going to drive fantastic growth. And the US municipal spend will come back in terms of priority ahead of just about everything else.

The US municipal spend around fire, in terms of your question, the comparative, I think will continue to drag a little bit this year, as we said. And you may see that in many other municipal categories, too. The good news for us, even as it looks within this segment, the Fire & Safety segment, is kind of the same story, that we see prioritized spend for rescue tools globally, more than domestically, but even in the world of the domestic rescue tool spend, it's also pretty reasonable.

So you have got to look at where the priorities for how the money is being spent. All up water is certainly in a very, very good position and looking very good looking forward, and I don't think fire gets any worse.

Okay, that is good color. Thank you.

And also, speaking of uses of money, if you could just talk a little broadly about how you make your decisions about the uses of cash? Obviously the 25% hike in the quarterly dividend was nice. How does that compare with prioritization of, say, a special dividend or share repurchases in the context of your plans to make additional acquisitions?

Right now we are definitely growth focused. Our primary capital deployment thinking is acquisitions, and we're looking forward to a solid capital deployment plan for the year and beyond. And we have got a number of things that are already teed up that look good. We are always going to make the right decisions. We are going to make good acquisitions at good prices, but by and large, the focus is capital deployed to grow the business.

Ned Borland, Hudson Securities.

Two quick ones here. One, can you share with us the magnitude of the large retail order for dispensing?

For some market competitive reasons, we are not going to get into a lot of detail. But I will give you some further color again here on what we see. Let me step back a couple of steps. So these infrastructure projects are going on all over the world. In many cases the water infrastructure work has already been privatized. That is the case with the UK. And in the UK, they run a five-year cycle. And there are 10 districts, I think, it is in the UK. This order and what was recognized was the first of five years. So it was only recognized 20% or so of the commitment. It obviously gives us a good bit of comfort that we are going to continue to see good growth for awhile to come. I would expect that we will see nice order volume out of the other water applications globally.

Now it may not always be multiyear in nature, but that will definitely be the case for the stuff that -- the follow-on from what we see here in the UK.

Okay. I was actually thinking about the order for dispensing that was going to ship in the first half of the year.

I'm sorry, I'm sorry. For dispensing that order is DIY, so it is a retailer. So placing an order for essentially new equipment to go into stores in the US, and that order books and ships in the first half of this year. And essentially the impact there is you have got a Q1 order which fully ships by the end of Q2. And, as I said in the prepared remarks, the comparable was -- again, it is always lumpy -- but the equivalent last year was a big order that largely impacted Q2, Q3 of '09. So that order books and ships in the first half of this year.

Okay. And just to get back to the water and infrastructure-related projects, I guess the duration of most of these projects is multiyear. Would you ship at consistent volumes along the duration of the project, or is there some sort of sweet spot along the way that we should be thinking of from a margin perspective?

Not from a margin perspective. If anything, the margin increases as you go into the later phases of these programs. There is not a huge variability from start to finish, though.

Scott Graham, Ladenburg, Thalmann.

Nice quarter, guys. I wanted to maybe get under a couple of numbers here. That Health & Science number, which not only the sales number was terrific, but also the orders number. Maybe to the extent you're able to, Larry, Dom, split order of magnitude, was this about the same in core versus industrial? Did the industrial get helped by an easy comp? Because that is an extraordinary number. And I was just hoping you can give us a feel for the weighting of one versus the other.

The short answer, Scott, is it was all good. And it's not really so much against an easy comp, frankly, as it is specific projects that OEM platforms won on both sides of the house of what we formerly talked about as core/noncore.

So we definitely have good evidence. We go through, as you well know, very detailed operating reviews here, and very solid platform wins both on the analytical and the diagnostic side, but also on the more industrial-exposed portions of the business. So I'm very, very pleased with the team's execution in the quarter and for some of the stuff that has become here.

Okay. That is a very good number. The flipside is I do have a follow-up question to an earlier question about the corporate expense, which I don't know if you mean in dollars or on a percent of sales basis, Larry, that this is kind of -- or maybe the new run-rate. Either way, however you slice that, it looks kind of hard. I'm wondering if you can get into a couple of things as to why?

Well, the short answer, Scott, is, that some of what you have in the quarter is management bonus obviously, and that is a function of this team doing a great job through the back half of '09. So on both a dollar and a rate basis, you have that impact. As well as in the quarter, there was a fairly high legal expense number. So you will see it improve. Do not assume that we are spending our way frivolously out of this recession.

No, I expect -- I'm not thinking that at all. (multiple speakers)

Scott, as well, there were some deal costs in the first quarter for our acquisitions. (multiple speakers)

I suspected that as well. Okay. Actually the last question, Fire & Safety. I guess specifically I'm not really concerned about fire because I think you had a good bead on what that is because of your relationships. But I think more interestingly is how the Band-It and rescue tools businesses are developing. I know Band-It is a pretty high margin business for you. Are you starting to see -- this seems to me to be a bit of an earlier cycle, maybe an early indication if you have got OEMs doing business with Band-It on a solutions-driven platform basis, that seems to be a positive not only for Band-It but also maybe backing up into some of the fluid FMT businesses. Can you maybe talk about some of the things that are happening at Band-It and maybe to the extent possible rescue tools as well?

Sure. Band-It is an earlier cycle business. There is no doubt about that. However, with Band-It -- and I think we talked about this last quarter as well -- very solid new products that have come out that we are seeing nice incremental revenue out of. Some of it a little bit faster than we had anticipated.

But what is really good news is again back to the earlier question around how much of what we are seeing is a restocking contribution, we have dissected Band-It in extraordinary detail to understand by channel member what is going on in terms of restocking health versus sustained, and it is not a lot of restocking, frankly. If you were to look at Band-It on a stand-alone organic basis, you would see something like 13%, if memory serves me correct, and we think a good chunk of that is new product revenue.

Now is there a couple points of contribution associated with the broadly-based restocking, what happens in both OEM and distribution channels? Perhaps. But it is certainly not a bubble that we think falls back off anytime soon.

As far as rescue, what is going on in rescue is international wins. We are seeing -- and we've talked about this pretty consistently right through the downturn but now it is even better. We are seeing just outstanding national commitment to rescue tools from a number of the emerging markets, and not the ones that are always so popularly discuss. But fairly small places around the world that care a lot more about rescue. If you were to look just at the domestic rescue numbers, it would be kind of blase.

But what is really going to drive growth is, as I said, China, some of the other developing markets, and disaster recovery is top of mind right now. But slightly different elements as to what is going on, but frankly, all looking pretty good within the segment.

And then fire suppression, as I said earlier, we do not think it gets any worse domestically. We are kind of down to a minimum truck allocation, truck spend, and type of truck, truck appropriation. So I think all up the segment obviously continues to be really profitable, generates lots of cash, benefits from the current mix, which is rescue and Band-It up, and fire softer. So certainly not a drain in any fashion on the Company. As you saw, we were up margin a bit in the quarter.

(Operator Instructions). Walt Liptak, Barrington Research.

Good quarter. So I wanted to ask one more on the corporate expense. Sorry about this. But I wonder if you could break out what management bonus was incremental, how much legal expense and deal expense was incremental in the quarter?

You know, Walt, well, the accrual for bonuses right now, as you know, is an estimate. You will see that when the full year shakes out in the K. Legal expenses obviously were not big enough for us to call out as a specific item relative to earnings. They are obviously lumpy relative to run-rate but not relative to our performance in the quarter.

Okay. And then I guess without that number we would have to do some guessing. So the corporate -- can you give us a corporate expense number for the full year like in dollars?

We are not going to guide at that level at this point. We gave you the margin for the total Company, so obviously you can model backwards to the segment margins as a total.

Okay. Alright. With the orders in HST and FMT very nicely up, it looks like you're being conservative on the back-half revenue and margin. I wonder if you can just address that observation. I wonder about if you are being conservative, why? Is there incremental costs or something in the back half that we should know about?

You know, it is a fair statement, Walt. We obviously took our organic assumptions up, and we talked about some of the reasons why we see broader-based positive performance coming out of the end markets in FMT. We see sustained, very good growth in HST. You add those two segments up, that is just under three quarters of the Company in total. So you do have to get to some pretty conservative assumptions in the back half.

At the same time, we took EPS up obviously a fair amount for the full year. Is it conceivable that we continue at this pace through the full year broadly based, no drags anywhere, economy helps a tad, not a lot even, frankly, but continues to be good, and we go above the upper end of the range it is possible. Yes, it is. And so we are perhaps being slightly conservative right now? I mean you could argue that I suppose.

We feel good, frankly, about execution. So I mean, irrespective of everything else, I think I'm in good shape with respect to how I think the team is doing, and I think we will have a good year.

Okay. Good. And then if I could switch to the Fire & Safety. You mentioned domestic is down, and the rest of the world is where you're getting the growth. I wonder if you can give us numbers about order trends, what were order trends in total for the quarter? I may have missed that, the organic orders, and how much is domestic down and how much is ROW up?

We have historically not really broken down organic order subsegment, but I think if you want, we can give you that.

Well, it is probably an easier comp if you think about the subsegment. So let's just call Band-It up double-digit plus fire all up/down, 13%, 15%, and then the rescue side down slightly but within that mix down double-digit kind of numbers in the US and offset by the foreign growth that Larry mentioned.

Matt Summerville, KeyBanc.

Just more a question on FMT. You talked a little bit geographically speaking about the water piece of the business. I was wondering if you could give a little more detail into what you're seeing across the three major geographies in the non-water pieces of FMT?

And then I just want to make sure that I'm comfortable with your commentary on the chemical side of the business. You guys were definitely, even just a quarter ago, much more pessimistic on that piece of the business. I guess what I'm trying to get a feel for is, what do you think has happened to drive a potential inflection point in a positive direction there?

Sure. Starting with water, as I said a minute ago, certainly what we are seeing is international projects translating to orders faster than domestic municipal spend. All that said, we are seeing some pretty good signs that domestic activity is now going to bear some fruit here pretty shortly.

Energy, you did not ask about, but specifically energy is good globally. Again from where we play and where the reinvestment is is going up partially around distribution of fuels globally. Pretty strong activity and also even in the areas such as LPG as I think I mentioned in my prepared remarks. But kind of a consistent story globally for what we are seeing happen in energy.

So if you take water and energy and look at those growth rates for the segment not terribly different than what we thought about at the beginning of the year, but I would say incrementally we are certainly seeing better activity out of those alone. And then, as I said a minute ago, with respect to lack of drag, the other big segment, the other big end market for Fluid & Metering is chemical. And we did not have very high hopes for chemical globally for the year.

It is getting better. And it is a blend of projects that we can identify where we have got product going into new lines, and that is both international applications as well as US, but also with what we are seeing in MRO-associated spend. And some of what we had going on last year was a bit of a double whammy where there was not any chemical new capital programs, and there was not -- and the MRO spend was really tightened down. So I would say low single-digit organic assumptions for chemical for us globally are pretty reasonable for the full year.

As far as where we -- the lack of growth anywhere, if you want to call it that in FMT, Continental Europe is still flat. Where we are seeing the strongest growth now versus our earlier end years assumptions are a bit of a pickup domestically. Yes, a bit different than what we had said a quarter ago, but not radically different than our assumptions.

As we look forward, I think the good news is because it is so broad-based I don't think FMT suffers any real drags for the full year. We will continue to watch it, and we will have again a clearer view a quarter out, but so far so good.

I am not showing any other questions in the queue at this time. I would like to turn the conference back over to the host.

Well, we would like to thank you for joining. As always, we appreciate your interest in the Company. Obviously the Q1 results were good, and we are really very well positioned to grow. No concerns in terms of operational execution at this point. We are managing all very well. We are very pleased to have the Seals team join IDEX. Welcome. We are going to put our balance sheet to work, and we want to thank you. We will look forward to speaking to you through the quarter and next quarter's call.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the teleconference. You may now disconnect. Good day.