Robert George - VP Ronald Robinson - President & CEO Dan Malone - EVP & CFO Richard Wehrle - VP & Corporate Controller.

Brad Wong - Piper Jaffray Michael Shlisky - Global Hunter Securities LLC.

Good day, ladies and gentlemen. Welcome to Alamo Group First Quarter 2015 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions] This conference is being recorded, Thursday, May 7, 2015.

I will now turn the conference over to Mr. Bob George, Vice President of Alamo Group. Please go ahead, sir..

Thank you. By now you should have all received a copy of the press release, however, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746 and we will send you a release and make sure you are on the company's distribution list.

There will be a replay of the call which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-888-203-1112 with the passcode 2637152. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days.

On the line with me today are Ronald Robinson, Chief Executive Officer and President; Dan Malone, Executive Vice President and Chief Financial Officer; and Richard Wehrle, Vice President and Corporate Controller. Management will make some opening remarks and then we will open up the line for your questions.

Before turning the call over to Ron, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results, among those factors which could cause actual results to differ materially are the following; market demand, competition, weather, seasonality, currency related issues, and other risk factors listed from time to time in the company's SEC report.

The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I would now like to introduce Ron. Ron, please go ahead..

Thank you, Rob, I just want to thank everyone for joining us here today. We are going to begin the call with the Dan Malone, our CFO, will give the review of our financial results for the first quarter of 2015, and then I will provide a little more color on the performance of the company and our individual divisions.

And then following our formal remarks, we will look forward to taking any questions you might ask. So, Dan, please go ahead..

Thank you, Ron. Alamo Group's first quarter 2015 net sales and net income were again company records. Our results were significantly held by the contributions of the businesses we acquired in 2014, from specialized Kellands and Fieldquip.

Partially offsetting our acquisitions driven growth was continued weakness in the agricultural equipment markets, as well as the negative effects of the strengthening U.S. dollar on the translation of non-U.S. sales and earnings.

Our results were again impacted by non-cash charges related to sales of inventories acquired from specialized, which were subject to $5.4 million step up to fair value in the final purchase price allocation. $1.8 million of this step up was expense during the first quarter of 2105, and $4.3 million has now been expensed since the acquisitions.

This leaves $1.1 million remaining to be expensed in subsequent accounting periods. The large movements in foreign currency exchange rates have impacted our results both at a local currency levels and then in the translation of non-U.S. operating results into U.S. dollars for reporting purposes.

Our local currency margins are largely protected by the fact that the cost of our business units are predominantly in the same currency as the revenue streams, though we do utilize forward contracts and pricing actions to mitigate currency risk, to the extent that we have significant sales that are not denominated in local currency.

On the other hand, the translation of non-U.S. operating results in the U.S. dollars or consolidation reporting purposes, were significantly affected by the strengthening U.S. dollars. This negative impact on our company's first quarter 2015 consolidated net sales was $7.5 million, or 4% of net sales. However, because of the mix of non-U.S.

earnings amongst the affected currencies, the net effect of changes and currency translation have less than a $0.01 impact on our first quarter earnings per share.

Our year-to-year earnings per share comparisons also continue to benefit in the first quarter and should continue to benefit through the end of the third quarter from the repurchase of shares form a major shareholder at the end of the third quarter 2015.

First quarter 2015 net sales of $207.8 million represent a 20% increase over the first quarter of 2014. Excluding acquisitions, first quarter 2015 net sales were $160.3 million, down about $12.3 million or 7% from the prior year quarter.

However, sales were down by about $4.8 million for 3%, when the previously mentioned unfavorable currency translation effects are excluded from this comparison. Net income for the first quarter was a record $7.4 million or $0.64 per diluted share, compared to $7.2 million or $0.59 per diluted share in the first quarter of 2015, an increase of 2%.

Excluding the previously mentioned non-cash charges relating to the inventory step up, net income for the quarter was $8.5 million or $0.74 per diluted share. The operating results of our recent acquisitions never related interest expense and income taxes contributed $1.9 million to first quarter 2015 net income, or $0.17 per diluted shares.

Without the non-cash charges related to the inventory step up, these acquisitions contributed $3 million to the first quarter of 2015 net income, or $0.27 per diluted share. Industrial division first quarter 2015 sales of $116.9 million represented a 50% increase compared to the prior year first quarter.

Acquisitions contributed sales of $44.7 million to this division during the current year first quarter. Excluding acquisitions, first quarter industrial division sales were $72.7 million, representing a decrease of $5 million from the first quarter of 2014. The effect of the strengthening U.S.

dollar on the translation of sales by this divisions non-U.S. operations accounted for $1 million of this difference, while the remaining $4 million is primarily due to a large investor quarter that drove up prior year first quarter partnerships [ph].

Excluding the above, this division shipments of both hoggards [ph] and parts were slightly above the prior year quarter, as weather disruptions and a slow start-end and moving products substantially offset continued steady growth in our sweeping, backing truck excavator and snow removal product lines.

And as Ron mentioned in the earnings release, we continue to seek evidence of steady organic growth in this division's new orders and backlog. Agricultural division sales of $48.5 million in the current year first quarter, a decrease of 5% from the prior year quarter.

Excluding the Feildquip acquisition 2015 first quarter sales in this divisions was $47.7 million or 6% lower than the first quarter of 2014. These year-to-year comparisons reflect the continued general slowdown in agricultural equipment markets as currency did not significantly impact this division sales.

European division first quarter 2015 sales were $42.4 million or 4% lower than the first quarter of 2014. Though even excluding the Kellands acquisitions, this division's sales in local currency grew by 5% over the prior year quarter. The unfavorable effect of the strengthening U.S.

dollar on the translation of this division's first quarter 2015 sales was over $6.2 million when compared to average currency exchange rates in the first quarter of 2014. Total company margin continue to expand in the first quarter of 2015.

Excluding the previously mentioned non-cash charges related to the inventory step up, first quarter 2015 gross margin improved to 22.8%, and operating income improved to 6.7% of sales, compared to 22.1% and 6.2% of sales respectively in the first quarter 2014.

The higher margins of recently acquired companies and continued margin improvement in the industrial division more than offset unfavorable margins in the agricultural division.

As of the end of the first quarter 2015, our trailing 12-months free cash flow which we defined as net cash generated by operating activities, less than that of capital expenditures and retirements, was $29.1 million, an increase of 49% over the comparable trailing 12-months period ended March 31, 2014.

Our average first quarter 2015 effective income tax rate was 35.8% which compares unfavorably to the 33.8% effective tax rate for the first quarter of 2014, primarily due to the mix of where our earnings occurred during the quarter.

In summary, our record first quarter 2015 results reflected highly accretive sales and earnings contributions from our most recent acquisitions, and favorable local currency results in Europe which helped us overcome headwinds created by the strengthening U.S.

dollars and continued weakness in agricultural equipment markets, as well as continued improvement in the company's operating margins and free cash flow. I'd now like to turn the call back over to Ron..

Thank you, Dan. As Dan said, I mean we're basically – I think pleased with the first quarter results even though obviously there were few headwinds that the company faced during the first quarter.

Acquisitions certainly played a big part in the record results and I think it is evident that – continued evidence that the specialized acquisition is nicely accretive to the company's result and has been since we acquired it late in the second quarter of last year. So, and that is continuing to be a good addition for Alamo Group.

And as we said, also even without the acquisition I thought the results were reasonable given some of the challenges in the quarter, especially the number one thing was there was some weather which caused some slowdowns and distractions and – as we lost a few production days at some of our manufacturing operations, as well as things like, people were thinking more about snow removal than they were about replacing motors or street sweepers or some of our other types of products.

But – and even our industrial divisions which has certainly been the lead in our growth over last several years and I think is still doing well, they are certainly, obviously is up 50% based on the acquisition but even excluding the acquisition, though the sales were off a little compared to a very strong first quarter of last year, but I guess we don't see a lot to worry about in that as we felt that – like say, if you take out one big order from last year they would have been up a little bit, and that the bookings and backlog in the division were up and at healthy level.

So I think we feel that bodes well for the rest of the year, just as we had even commented in our fourth quarter results from last year, that this first quarter was starting off little slow but it was good to see the bookings and backlogs come in at healthy levels and that are up.

Even our Ag division was certainly soft as the whole sector there resolved and I think we again – our sales were up a little, we certainly think holding up better than many of the other agricultural equipment manufacturers, with our sales being certainly not all this is the sales of some the products specifically, some of the rolled crop products, big ticket items like combines and some of the big tractors.

I think this – we've held up a little bit better there, we held up a little bit better last year than many others, and I think even in first quarter, our sales were soft because the general Ag incomes were down, but I think the diversity of the markets we serve with our products in that sector have helped us not beyond as much of some of the other products have, you know, things like ranching, having [ph] farming, are all doing a little bit better than the big row crop farming, and we have a good exposure to those other types of sectors which has helped us.

And so – but certainly as I said, Ag will soft [ph] and will probably remain soft throughout most of 2015, but I think the long-term prospects for Ag are still quite good and we feel we're in good shape to participate in that. And as Dan also mentioned that the strong U.S.

dollar also impacted our international results, as we said European – our sales are actually up in local currency, but down when we translated that U.S.

dollars, but we were pleased that our European sales have continued at a healthy – improving levels given that Europe itself is still in the bit of a challenging economic situation, and it's good to see that – it hurts with the strong dollar on the translation of those earnings, it has really not affected our sales on a day-to-day basis in Europe since we have a bit of a natural hedge on the our operations there from a currency point of view because most of what we sell in Europe, we build in Europe and so we're not here from a currency point of view on day-to-day sales where we are strictly on the translation of those results back to U.S.

dollars. But then again, I mean that part of the effect of translation is likely to impact results throughout 2015, but I think as we have shown over the years, generally we've done pretty well with currency changes that was always as all U.S.

companies engage in international business are challenged when we see such big currency swings in a short period of time like we have with the U.S. dollar in the last three or four months.

Also we were excited in the quarter that we were able to – we did a small acquisition in Brazil, it is the smaller one and oriented towards the Ag market at Brazil but we think it has good long-term growth potential, staring small but we believe with some of our products and our technology that we can put into that operation, it should do quite well and Brazil is one of the major Ag economies in the world, it's a hard one to export to, it's – and so we've mentioned before that we wanted to start a presence in that market, and like I said, we may have started small but we're very – even with Brazil economy being off right now we're very optimistic that that should have nice growth potential in the coming years.

So certainly – I mean, we are concerned about some of the short-term challenges we have, the Ag markets like I said on-stage, weak the dollars, probably going to stay strong, I think there is still some weakness in some brag [ph] doing this and by the European economy but even some weaknesses in parts of the U.S.

economy with the oil field slowdown, in addition to the Ag. But I think we still feel we are in good position – well positioned for long term growth, and it actually can do very well this year, even with some of the headwinds we're facing, we feel we're being benefitted by improving backlogs, sales levels are good, and as long as the U.S.

economy doesn't take any further disruptions in the overall U.S.

economy, I mean we actually feel that we are probably just quite well to have a good year, with the weather problems of the first quarter pretty well behind us, with a lot of moisture out there, so vegetation is growing which is good for us, I think the farms unit is soft, the planting is going well and should be a good production season on the Ag side.

So some of these headwinds we'll face but especially with the contribution from the acquisitions we think we're in actually good shape and that this year should continue to be a positive one for company, with even with some of the headwinds that we are facing.

So with that I will finish the prepared remarks and would like to now turn it over to take your questions..

[Operator Instructions] We'll have our first question from Brad Wong, Piper Jaffray..

Hi gentlemen, thanks for taking my question, I appreciate it.

I was wondering if there is any way you can provide more color on the backlog, what is it specifically in there – what are we kind of looking at for the time being?.

First of all, most of our backlog – especially at this time of year should shift during the year. Like I say, some of it has spread over the year but most of our products are in sort of the two to four month lead times and some of it will certainly go beyond that, most of it should shift during this year.

I don't know, as far as other color, as I said industrial was up, Ag is not, they are down, Europe and local currency was up, so – that's – I can tell you in industrial and sweepers of excavators and all have done quite well.

Some of the things like – I think [indiscernible] been all for little, probably some of the oil field activity there has impacted that a little bit but I mean – more products were probably flat during the quarter but like I said that's comparing almost to a strong quarter, really strong first quarter last year.

So I think there is still lot of very healthy level but in general like I say, Ag product certainly have been soft, incomes were down, and we commented on that market. Europe I think, it's both been Ag and industrial products that have – little bit of both only been up a little bit.

So like I said, that's about all the color I can really give on the backlog situation..

That's very helpful, thanks..

Sure..

On the – about the weather, just wondering we can talk about the last quarter as we are kind of experiencing weather, you maybe more than seeing at Boston? In fact, you've talked a little bit in your prepared remarks around weather maybe helping plantation growth a little bit but is there any benefit that you get will receive some of the weather conditions?.

Certainly, our snow removal groups did well in the first quarter in spare parts, not in much, I mean like the whole goods didn't see hardly any effect just because it was too late for people to start re-ordering but we are already starting to see some healthy levels of orders coming in for next season and I think the big part of snow removal will be as we go into the next season, so the bookings for the next several months which will turn into order, sales and sort of the late summer and fall months..

Okay. And then going on the acquisition front, any color there around – are there opportunities that you see maybe other regions that you're looking at or if Brazil is also placed to make continue to grow in the near term? Any color would be great..

Absolutely, I mean, certainly Brazil is a place we would like to continue to grow in, both by organic growth which we're optimistic on but further we're still looking for complementary acquisitions there as well.

Actually the pipeline of acquisitions is fairly active right now, but there is nothing eminent or of any size that we – that seems on the horizon. But we're looking at a number of items right now, and hopefully some will – could even happen later this year..

Very good. I will hop back in line. Thanks, a lot..

Thank you..

We'll go next to Mike Shlisky, Global Hunter Securities..

Good afternoon, guys..

Hi, Mike..

Let me just take a clear step back, I mean since the last conference call back in March, I'm just curious, just broadly speaking, the – has your tone, has your view changed at all for the better or for the worst on how things are going as far as your outlook for 2015 has gotten worst, has gotten better, it's kind of how to tell with – in release.

Any kind of thoughts on that?.

Yes, I'm sure we gave a lot, but I would say outlook is any better at all, certainly not better, is it worse, not really, I mean private quarter end of that – was little bit weaker than I think we anticipated.

But I'll say with the backlogs where they are and the prospects in general, I think some of the internal things we've got going, we've got some new product introductions that have gone very well this year already, I'm probably a little worried that the U.S.

economy in general is showing few signs of weakness but unless there is some change overall, I'm not – I would say my outlook hasn't really changed for the year, I think we're in good shape and I think that – quite say, our backlogs and our product acceptances has been good. We think that we still feel good about where we are and everything.

Even I think when were together then, I said the first quarter was off to a soft start and I said currencies are something that we didn't – I said that we couldn't really comment on that at debt times, who knows how – where they will be and how long they will be there.

So I think – I'm sort of assuming in all this that the dollar doesn't get stronger, because – I say, that certainly as you can see it does have an effect and it has, and if it got any stronger than this – I tell you, that bad effect could get multiplied.

So generally I think I feel pretty good, I said weather was off to a slow start, and that's where it was and I'd say currency, I really don't know what's going to happen with currency. I think we're probably – real surprises in the other sectors..

I would add that worrying about the dollar was pretty in the first half of last year, so those comparisons in the first half of this year versus the first half of last year is going to be tough unless there is a huge recovery, it's going to affect our year-to-year comparisons..

Perhaps I can ask in a different way, especially the deals you've done in the Kellands [ph] and Fieldquip, you have three fold backlogs, it sounds like you've got FX from the other supplier there. I guess it is possible to grow revenues outside of your M&A in 2015.

Is that fairly on your way off screen?.

Well, like you just said, excluding currency effects, excluding [cross talks]. It's going to be tough, I think with the Ag softness and with currency – like I say, currency which took a growth and like I say, we were up in Europe and after currencies we were down.

And certainly I don't think internal growth can offset the softness in Ag and currency, so I think we will be lucky to hold our own on that – those fronts..

We're talking topline..

Yes, exactly..

And topline, one thing as we said, of course we are about the end – while the next quarter will be substantially done with this write-up of inventory effects, we'll have that one behind us and so – like I said, few things like that but it could further help. And then there are margins continued actually to improve in the first quarter.

And so I think – I actually think we could fair better on the bottom line than the top line..

Got it, got it.

And then, just curious, I started to say you got some appreciated year in the first quarter, of time period I get after you last specialized and after you last that your anniversary, other ways you can get similar margins, add that deal after a year in your portfolio – have you found ways that kind of cut cost there or increase your results maybe unfold [ph]?.

Yes, I think with the specialized situation there is short of short term, medium term and long term synergies and certainly I mean we've already benefited for some of the short term, we still – by the end of this year we ought to have them on our operating system, and we believe that will give us little bit better control, and some other things like inventory and take advantage of some other things.

And then I think there is some longer term things we want to do with their manufacturing but – so, now we think we're certainly nowhere near the end of the synergistic opportunities so we can achieve with specialized..

Great, and then finally one last one if I may, on the snow business, given what happened in the first quarter, pretty heavy snow throughout much of the country.

How do you feel about the oil coming in for next snow season which probably you face a little bit later on in your year?.

I think we're optimistic but it's too early to tell, I mean here we have been – you know they are just still putting away equipment from last winter. It's too early, I mean I think we're optimistic but it's too early to really comment on..

Okay, great. Thanks so much..

Thank you..

[Operator Instructions] We'll go next to Rod Stelardy [ph], Bank of America..

Good afternoon, gentlemen..

Hey, Rod..

Hi, just a few questions. So just expanding on Mike's questions, from the back half of the year clearly you've got pretty difficult comps at couple of great quarters in the second half of the year.

Even lap specialized and you've got currency headwinds, so can we grow the bottom line in the second half of the year or do you need to see like real acceleration and trends from where they are now?.

I think we have potential to grow the bottom line, I think like we say – currencies, and I think general economic conditions will certainly play a part; Ag, we assume will be soft but not worse, I mean, yes, so as long as things I think don't deteriorate in any of these fronts, I think yes, we feel that we do have a potential for bottom line to improve..

Okay, great.

And it looks like organically, including FX you were down about 7% on the top line in the first quarter, does that sound right?.

Including FX, yes..

And then you said your FX impact was 400 bips, so you were down 3% FX, is that correct FX for that rate?.

Correct..

And then what do you think like the production day loss cost you and the other weather impact, I'm just trying to get a sense that the quarter sort of run rate organic growth if you kind of take out the noise, is anywhere to do that?.

That's real hard, it was like we had – I don't know, we lost four to five production days in total, and it was couple of different plans, it's hard to – those kind of things are harder to quantify. So, I really can't – I don't think we have that kind of numbers..

Okay.

And then in Europe, there is some optimism that economies get all of this better, I mean are you feeling that in order trends in general or is it just sort of steady state sluggishness?.

As we pointed out, our backlog ended up there and we saw 5% organic growth in local currency as in the quarter. As you said, I think that Europe is improving but it's real slow improvement and I mean, I think UK is doing – for us is doing much better than, improvement there have been better than France.

I'm sort of kind of watching the UK elections this month, and hopefully like I say that election is going to be an interesting one to follow as to what if there is going to be any change of tone in that market. But as we've said, I think we are seeing some improvement but it's very gradual, Europe I think is still very challenged..

Okay. And then could you just address oil and gas, sort of what portion of your North American industrial business is intact as another energy producing states and do you feel like you're staying any slowdown tied to tighter state in municipal budgets in the energy states that you mentioned some concerns about the U.S.

economy, I don't know if that's more specifically what you were referring to?.

It's almost – like there is a little bit room, concerns about what it's going to do to budgets, budgets in the U.S. aren't growing as fast as they were last couple of years.

We don't think oil and gas is actually – some of our growth in vacuum trucks has been and we've had some good successes in some of the more oil and gas related, the majority of our vacuum trucks go to governmental municipal areas but as we've commented, some of the non-governmental, some of the more industrial users were vacuum trucks has also shown nice growth in the last couple of years, and some of that's been in sort of the – some of the oil field related using vacuum trucks to clean up drilling sites or refineries or stills.

And so we've noticed that's softened a little but – again, the majority of sales there are to governmentals than to normal industrial type customers but it's the non-governmental.

And like I said, budgets in general are slowing down – growth is slowing down, we think that's somewhat being affected by oil and gas but that's one been – it's been way too early to see if there is – there is going to be any continuing effect there..

Okay, great.

And then just to add, I mean, look it's pretty clear that your business is performing, it's holding up better than large Ag, I don't think anyone will deny that but it looks like you saw a deterioration in organic growth just from Q4 to Q1 and that's not long enough to the timeframe but does it feel like it's gotten a little bit worse certainly there have been some more concerns on variant livestock more recently.

So would you feel like there has been incremental deterioration in first quarter or just still characterize that as just sort of phase [ph] – you know, it's down a little bit..

Yes, that's right. You know, really when we're comparing against the first last year, I mean our Ag was down last year, it was actually flat in the first quarter.

Second quarter is when started feeling the softness and I think some softness – our second quarter results last year were the softest, but the first quarter when we were flat this year, the first quarter saw we were down on single digits, so compared to a little bit stronger last year, certainly I'm not seeing any improvement in Ag, but I'm not ready to say it's getting worse, I mean I think from a manufacturers point of view, inventories are getting into a little bit better shape at the dealer levels, I think that – but, it's still, it's very soften Ag, but I'm – like I say, I'm certainly not saying it's getting any better but I'm not sure I would say it's getting worse..

It's Dan, it's currently it's really hard to compare like a fourth quarter to a first quarter because fourth quarter – we have a lot of preseason program shipments being breakdown in the Ag sector, so it's such a highly seasonal business, it's really difficult to compare like a second quarter to a third quarter or a first quarter to a fourth quarter, it's hard to draw a conclusion..

Yes, I understand. I just was more curious your qualitative comments while I was just understanding the flow of the market. So, thank you, I'm all set..

Thank you..

We'll go next to Paul Siren, Visceral Financials [ph]..

Hi, good afternoon. And so – I wanted to follow-up on the operating margins.

As you mentioned, you were up year-over-year although they were down from good performance in the second half which included specialized as well, so I'm bit of coming account, I know there were rather headwinds and other headwinds on top of it being a seasonally lighter quarter.

So, can you give us some color on the cadence of operating margins throughout this year and where you expect the full year to end up? And then as a follow-up, where do you see the goodness going on the margin line over the longer terms for the next three to five years? Thanks..

Well, I mean we're continuing to see continued year-to-year sort of improvement but again, with us it's dangerous to try to compare other than current year quarter to prior year quarter, and we see continued improvements, there is a lot of things that are moving in the right direction.

We continue to see improvement in the industrial margins, we continue to see improvement in the European local currency margins, we have – obviously, negatively affecting it as agriculture won that, partly due to our product mix in the current market, the mix isn't as favorable as it is.

When the market is robust, a lot of higher end products move better when the market is robust, so it's really kind of a hard question, it's been answered overall but we have seen continuous improvement and I would expect it, we would – we still see continuous improvement..

Yes, as we said, I mean I think – yes, I believe our margins probably are not where they should be and that's why we joined hands while they have been improving the last several years and I believe the next several years they will continue to improve, as I said, because I still think we're underperforming the margin levels we need to be at.

The timing of how fast we get there certainly depends on a number of factors and things like currencies and all as we've discussed today, it also depends on some factors like Ag, win in that market turns with something I think it will, I don't know – I can't say exactly when but I'll think there is – the other thing is going to help margins a little bit as volume especially in Ag where we actually lost a volume.

So I think those are two things – some of the factors, and as Dan said, it's hard to compare like a fourth quarter to a first quarter or first quarter to a second quarter.

Second, our first and fourth quarters tend to be our weaker two quarters, our second and third quarters tend to be our stronger two, it's just in general there is not as huge as sales differences, there is a mixed difference in the second and third quarters tend to be high amount of spare part sales because more equipment is being utilized in consuming spare parts, so the mix of sales versus spare parts is little bit higher in spare parts than the second and third quarter which is a much higher margin item for us.

So, I say you've got to careful about what quarter you're comparing. But I think in the next few years I mean we believe that now in which you grow the top line but our margins should continue to gradually improve.

How fast it will be dependent on things like the economy, volumes, currencies and a few things like that which are very hard to predict right now..

And we will get some help from lower steel prices as well this year..

Okay, that's great. And just to make sure I'm hearing you correctly, when you say you expect year-over-year improvement – that would seem to suggest as we go throughout fifth year, you expect to be ahead of the year ago quarter, operating margin, and I know there is lot of uncertainty with foreign exchange..

Yes, that's right. I mean, like we say we don't give guidance for say – just exactly where we think but I mean I think we feel that we should see some margin improvement but like I said, there is lot of unknowns right now currency and Ag volumes and these kind of stuff..

Got it, thanks..

Thank you..

We have no further questions in the queue. We'll turn the conference back over to management to offer any additional or closing remarks..

Okay. Well, thank you very much for joining us today. And we appreciate your time and interest and we look forward to speaking with you on our second quarter conference call..

That does conclude today's conference. Thank you for your participation..