Good day, ladies and gentlemen, and welcome to the Thermon Earnings Conference Call Q4 2014. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn introduce your host for today's conference, Sarah Alexander, Director of Investor Relations. Ma'am, you may begin. .

Thank you, Sam. Good morning, and thank you for joining us for today's conference call. We issued an earnings press release this morning, which has been filed with the SEC on Form 8-K and is also available on the Investor Relations section of our website at www.thermon.com.

A replay of today's call will be available on our website after the conclusion of this call. This broadcast is the property of Thermon. Any redistribution, retransmission or rebroadcast in any form without the express written consent of the company is prohibited..

During this call, our comments may include forward-looking statements. These forward-looking statements are subject to risks and uncertainties, and our actual results may differ materially from the views expressed today.

Some of these risks have been set forth in the press release and in our annual report on Form 10-K that will be filed with the SEC on or before May 30.

We also would like to advise you that all forward-looking statements made on today's call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements may include, among others, our outlook for future performance and revenue growth, leverage ratios, acquisitions and various other aspects of our business..

During the call, we will also discuss some items that do not conform to Generally Accepted Accounting Principles. We've reconciled those items to the most comparable GAAP measures in the tables at the end of the earnings press release.

These non-GAAP measures should be considered in addition to, and not as a substitute for, measures of financial performance reported in accordance with GAAP..

And now, it's my pleasure to turn the call over to Rodney Bingham, our President and Chief Executive Officer. .

Thank you, Sarah. Good morning, everyone, and thank you for your continued interest in Thermon. Today, we have 2 of our Senior Vice Presidents joining me on this earnings call. Jay Peterson, our CFO, will follow me and present the financial details of our FY 2014 fourth quarter.

George Alexander, our Executive Vice President of Global Sales, will assist in the Q&A session by answering questions that pertain to global market segments and industry trends..

For those of you who are not familiar with Thermon, we are a leading global provider of thermal solutions. We serve oil, gas, chemical and power generation industries. Our Heat Tracing systems provide freeze protection and temperature control for piping, vessels and instrumentation.

These mission-critical systems ensure the continuous and safe operation of industrial facilities..

While Jay will discuss the financial details in a moment, I'd like to touch on some of the highlights of fiscal year 2014. Thermon recorded another strong fiscal year, generating record gross profit that was driven by double-digit MRO/UE growth. Records in adjusted EPS and free cash flow per share were also achieved.

Revenue for 2014 was $277 million, a 2% decrease over prior year. This slight downturn was primarily due to a softness in greenfield project billings from our International business units. FX also had a negative impact of $4 million on revenue, primarily attributable to the depreciation of the Canadian dollar.

Our record gross profit of $135 million was driven mainly by increased MRO sales, which grew to 67% of our total revenue stream. Our gross margin, as a percentage of revenue, finished at 48.7%, which was up 2 percentage points over prior year..

Adjusted EPS grew $0.29 per share to $1.20. Our MRO revenue grew 11.5% over FY 2013, due mainly to a colder-than-normal winter in North America and our growing installed base. We continue to successfully manage our operating expenses as our SG&A came in on target for the fiscal year. Our backlog on March 31, 2014, was $85 million.

Please keep in mind, this was a single data point and will fluctuate throughout the year as greenfield project schedules impact our deliverables..

Purchase orders received were up $7 million over prior year. Our expanded cable manufacturing facility enabled us again to meet the peak heating season demands without disruption of delivery schedules or order cancellations.

We're continuing to add infrastructure and assets to drive our growth strategies for both Greenfield and MRO revenue in our core market sectors. We are expanding our San Marcos facility by adding warehouse and increasing our 2-bundle production capacity.

We believe that we are well-positioned for growth in FY 2015 and are targeting mid-single-digit top line growth for the fiscal year..

Our global footprint continues to be a key component of our strategy to provide value to our customers worldwide and penetrate our targeted markets. As an example, we have recently established a direct office in Brazil.

We are continuing to benefit from a rebound in the chemical, petrochemical and power generation sectors that are related to the shale, oil and gas developments in the United States..

Thermon's updated pipeline remain robust with over 530 project opportunities and approximately $1.1 billion in estimated value. This was an increase over last quarter. We have continued to look for opportunities where we can leverage our leadership position in providing Thermon management solutions to the global energy and industrial markets..

Over the past several months, we have began investing more time and resources and to researching inorganic growth opportunities. As a result, our M&A pipeline is building, and we are evaluating several attractive opportunities..

In closing, our management team would like to thank our employees throughout our global organization for their hard work and dedication. We would also like to thank our customers, investors and advisors for their support and confidence. Thank you again for joining us today..

Jay Peterson will now address the financial details of Q4. .

Thank you, Rodney. Good morning. I would like to start off by discussing our Q4 results, then turn to our fiscal year results, and then conclude with high-level guidance for fiscal year 2015. First off, revenue. Our revenue this past quarter was $67.5 million, and that's a decrease of 6% over the prior year's quarter.

Orders for the quarter totaled just under $62 million, and our trailing 12-month order activity totaled $267 million, and that's a 2.5% increase versus the prior year..

Order activity, on a pro forma basis, excluding the large Kearl Oil sands project, grew 12% from $235 million to $262 million over the same time period. Our backlog of orders ended March at $85 million versus $95 million at the end of Q4 fiscal year '13, and that's a decrease of 11%.

However, on a pro forma basis, again, excluding the Kearl project, our backlog grew 14% year-on-year from $68 million to $77 million..

Gross margin dollars grew this past quarter to $32.7 million, and on a relative basis, our margins improved to 48.5% due to the high mix of MRO/UE revenues. Versus the prior-year quarter, our margins increased by 400 basis points due to the favorable mix, and to a lesser extent, material cost reductions in copper and polymers.

And our MRO/UE mix for Q4 was 71% of revenues, whereas Greenfield totaled 29%..

Core operating expenses for the quarter, that is SG&A, and this excludes amortization of intangibles and transaction-related expenses, totaled $14.9 million, and that's a reduction of $2 million from the prior year. Our operating expense, as a percent of revenue, came in at a competitive 22%. And again, that excludes the depreciation and amortization.

The number of our full-time employees at the end of March was 829, and that's up slightly from the 821 as of calendar year March 2013..

In terms of earnings, GAAP net income for the quarter totaled $9.6 million compared to a prior year of $5.6 million. And this growth was attributable to our strong gross margins, managing our operating expenses and a reduction in interest expense.

Our EBITDA total $18.3 million for the quarter, and that's an increase from the prior year performance of $15.7 million. And our EBITDA, as a percent of revenue, was 27% for the quarter..

In terms of the full year 2014 performance, our top line revenue was $277 million in fiscal year '14. And as Rodney said, that was a decline of 2%, and that our topline revenue was negatively impacted by foreign currency translation by approximately $4 million.

And pro forma, excluding the FX impact, our top line revenue reduction would have amounted to 1%. And major currencies impacting our revenues this year were the euro and the Canadian dollar..

Margins for the year were 48.7% versus the prior year of 46.8%, and that's an increase of 190 basis points. Margins were positively impacted by an increase in MRO/UE mix, and that's an increase from 58% in the prior year to 67% in the current year. Gross profit increased by 2% to a record level of $135.2 million.

Operating expenses for the fiscal year were flat compared to the prior year at $62 million, and this excludes management fees in fiscal year '13 and depreciation and amortization. And as a percent of revenue, OpEx totaled 22.5%. And again, that excludes D&A..

In terms of earnings, for the year, our GAAP EPS decreased from $0.85 a share to $0.80 a share.

Note, however, that our GAAP earnings were negatively impacted by a $0.45 charge relating to the retirement of our long-term debt and, number 2, approximately $0.03-a-share impact from the combined effects of foreign exchange when considering both translation and transaction impacts..

Adjusted EPS grew from $0.91 a share to $1.20 this past year. And please refer to the table in our earnings press release for the details on all of these adjustments..

We grew free cash flow earnings to $1.33 a share from a prior year use of cash of $1.10. And in aggregate, we generated $43 million in free cash flow. And that's measured by cash flow from operations, less capital investment. And that's versus a use of cash of $3.4 million in the prior year.

EBITDA for the year totaled $74.4 million, and that was 27% of revenues..

In terms of the balance sheet, our cash balance at the end of March was $72.6 million compared to $43.8 million in the prior-year period, that's an increase of 66%. Our net debt position and leverage continues to decrease. One year ago, March, our net debt was $74.3 million.

And at the end of March '14, it was $48.9 million, and that's a 34% reduction..

And regarding our net debt leverage, as we ended fiscal year '14, our debt-to-EBITDA leverage was 0.7. And recall at the time of our IPO, it was well above that. And the time of our CHS acquisition, it was actually above 4. For manufacturing operation, we continue to run a highly capital-efficient operation.

For example, this last fiscal year, our CapEx spending totaled $3.4 million, including both maintenance and growth capital, that amounted to 1.2% of revenues..

And finally, guidance. Two guidance points that I'd like to provide. First off, we are planning for top line revenue growth in the mid-single digits for the fiscal year.

In addition, due to growth investments in our 2-bundle capacity, our planned CapEx for this year with total $9 million, and that's up from typical prior year levels of $3 million to $5 million. I would now like to turn the call back over to Sam to moderate our Q&A session.

Sam?.

[Operator Instructions] Our first question comes from Brian Drab of William Blair. .

First question is, it looks like the -- so the backlog's ticked down sequentially over the last several quarters, but the pipeline has ticked up over the last few quarters. So from, by my numbers, $880 million to $1 billion, to $1.1 billion, I believe you said, Rodney, on this call, and the pipeline is obviously a leading indicator.

So I'm just wondering when we should expect to see the backlog start to trend up. .

Brian, this is George Alexander. As you mentioned, our pipeline is trending upward. We're also seeing strong activity in our quotations, virtually from all of our business units around the globe.

So we are confident, we're bullish on the fact that our backlog as always going to start ticking up, but the caveat being that, again, that is bit of a lumpy process.

But again, the indicators that we have as it relates to quotations and the strength of our order bookings, and so forth, do give us confidence that the backlog is going to start ticking upwards. .

Okay, okay? And then can you comment at all as to what expect from the breakdown between Greenfield and MRO for fiscal 2015?.

We think we will see more of a normal distribution. We won't -- we don't anticipate to get to the 60-40 historical number that we've seen in many years in the past. We don't anticipate that. But we do expect higher percent of Greenfield billings this coming year relative to what we saw this last year. .

Okay, so just digging a little deeper on that.

If I put Greenfield at 35% of revenue for fiscal 2015, that gives me growth in Greenfield of about 12% and growth in MRO of just slightly better than 0? Call it 1%, and that gives me a mid-single digit growth rate of -- does that makes sense to you, that we could have a situation where Greenfield is up double digits in 2015 and MRO is only up 1%? I would have expected stronger growth in MRO.

.

This is George again. We had a very strong year, as mentioned in the opening remarks in MRO/UE as far as FY '14 is concerned. And we do expect the Greenfield project business to tick upward, as we said.

The type of projects though are likely to be -- they're not they're not going to include any megaprojects like the impact from the Kearl project, but we do anticipate and are seeing a lot of activity in the Greenfield projects, albeit smaller in terms of the size of the projects, and that's again from every one of the business units.

But again, we had a very strong year in FY '14 and MRO business. So we do think that, that will -- that we'll maintain that level, and -- but the upside exposure for MRO is definitely smaller than that for Greenfield. .

Okay, alright, that makes sense. Okay, I'll leave that one at that.

And then, can you just comment whether you expect to grow or see a decline in overall for Canada in 2015?.

Canada is -- again, it's going to have not -- it's not projected as one of our growth areas for FY '15. Again, they have a tough comp. Canada's had the Kearl project as we talked about, the Kearl oil sands as part of their billings for the last 3 years. We're rolling off of that project, so they've got a tough comp.

So we are not projecting Canada to be a growth area this year. .

Okay, and then just a last question. We've talked in the past about where you'll make up for that -- the challenges in the Canadian business, than I guess refinery and petrochem markets in the U.S., and a lot of other markets globally. Maybe could just touch on how you offset the Canadian decline in 2015. .

The growth of bridge for FY '15 is being driven by the fact that, as Rodney mentioned in his speech, that we are hiring additional sales personnel in key regions around the world that are targeted for growth. We have -- we did experience in FY '14 growth in the U.S. market.

We believe that growth will continue to be fueled, as it's fueled by the development in the shale oil and the downstream aspects of the shale oil and gas. We're seeing a lot of activity in the ethylene Cracker Construction business in the Gulf Coast, Texas-Louisiana Gulf Coast.

Russia continues to be a positive area for us with -- as far as activity there. Although we do realize that there is some risk that's associated with that due to the political environment there, but it's still -- right now, it's still a very positive growth area for us. As mentioned earlier, the Latin American market is strong.

We've opened up office in Brazil. That's a targeted growth area for us and Asia Pacific is also projecting -- projected as growth overall. So in summary, every business unit, except Canada, is projected as a growth area for us in FY '15. .

Our next question comes from Scott Graham Jefferies. .

A couple questions for you guys.

On the orders number that you gave us, Jay, for the quarter $62 million? what did that compared to a year ago?.

For the quarter?.

Yes. .

Let me look at that up, Scott.

And it'll take just a second, okay?.

Sure. In the meantime, maybe just more of a question for you, George. The project side, the Greenfield, side has been weak now for a couple of quarters and actually down in 3 of the last -- 3 of the 4 quarters of '14. I know that the pipeline is building in the sort of a comparable non-curl [ph] orders are building.

When would you expect Greenfield to turn positive for you? Is that a second-half event or could that be the second quarter?.

We're actually projecting upturn in the Greenfield in the first half and have it building -- it will be building throughout the year.

And again, we -- a lot of that is based on, in the first half, is based on the backlog that we currently have an and house as you know Greenfield projects, they tend to sit in the backlog for anywhere from 3 to 6 months. So we have fairly good visibility there.

The thing we don't have the control over again, as you know, is any changes in scheduling based on the construction schedules of the project. But we're pretty -- we're feeling pretty good about the upturn, a modest upturn in the first half of the year. And then that continuing to build and get stronger as FY '15 continues. .

So in the past, we've kind of seen this before though, right? Because in each of the last 2 years, we were kind of counting on a certain shipment schedule and to your point, it's not in your control, it's not a Thermon issue, but in fact, these things do tend to push out, not pull forward.

So make I guess my question would be, if you're expecting an upturn in Greenfield in the first half, are there any kind of fudge factors that you guys have put in, kind of learning from the last couple of years' experience on that?.

Now Scott, that's a good point. And there is. And when we look the -- when we look at our coverage report in terms of forecasting the results for the quarter, we do apply a probability factor, particularly for those projects that are at risk due to factors that are beyond our control, that are related to customer-required activities.

Some of those things are inspection, timing of inspection, terms of delivery and that sort of thing. And those are largely out of our control. We certainly expedite the process, but in the end, we can't control whenever the level is pulled. .

Understood, understood. .

Scott, I've got your answer, if it's convenient for you now. .

Please. .

Orders grew for the quarter 5% from $59 million to $61.8 million. And I think it's also interesting, is that if you look at it sans Kearl, they grew in the quarter from $56 million to $62 million, round numbers, or 11%. .

You saying sands x Kearl. .

x Kearl, yes. .

Interesting. Okay. Two other questions for you, and this is more of a general question. I guess this is for Rodney and George.

And I asked this last time around, I was -- I'm just wondering, with the rising of -- the rises in opportunities, are we now maybe starting to see that the benefits of the larger facility kind of come through in the orders in other words, are you now able to bid on business that you weren't able to bid on before and/or maybe winning pieces of that with these I think the orders were up last quarter and that looks like there up again this quarter, is that what's happening here, or is it more just market-driven?.

It's a combination -- Rodney, it's a combination of both. We are definitely able to bid on projects that, previously, our delivery reschedules would have been a negative factor in the purchase order decision. But some of it is also market-driven.

We had -- I think last year's winter was crucial for us to make sure that we had the capacity to shift a lot of heat or cable in a very short period of time because of the early winter we had in North America. And I think that definitely helped that MRO/UE sales number last year. .

And Scott, just to add to that. In -- for fiscal year '14, the -- as we mentioned, MRO/UE sales were up significantly year-over-year, and that was true in all of our business units. So the additional capacity definitely helped us meet that increase in MRO business because, again, that's relatively short turnaround requirements. .

Understood. And here's my last question.

The Emissions business, how big is that business right now if you're able to say that? And how did it fare for the full year 2014?.

Scott, this is George.

The -- what we call our Bundle business, which is a little bit broader than the Emissions business, the Bundle business includes the process analytical part of the market as well, so -- and I don't have the exact numbers on the CEMS only business, but the CEMS business the process analytical, and my guess is, and that's what it is right now, the guess, is probably an equal contributor.

But year-over-year, the business did grow. And at it's at least third of my fourth year, consecutive year in a row that we did see significant growth in our Bundle business. So it's still -- the two together represent about 10% of our total revenue. But it is one of our growth areas, it is one of the areas that we're investing resources in.

As you have seen in the releases, we have some CapEx dedicated to increase our capacity. Our growth this year in '14 was actually somewhat dampened by the fact that we have more demand to deliver in the bundle area. .

Okay.

And you feel that -- is there any reason why that trend should not continue into '15?.

Absolutely not, absolutely not. We're planning on it. .

Yes, we're planning on it. .

Our next question comes from Charley Brady of BMO Capital Markets. .

Just with respect to the CapEx, my first question is, the timing, how that's going to be -- not going to be spent.

Is it ratably throughout the year? Is it more front end-loaded or back end-loaded?.

I believe it is more in the second half of the year, Charlie. It will be more in the second half of the year. And most of that will -- not most of that, but it will be skewed more to the fact back half of the second half of the year, the last quarter of the year. .

Okay.

And will that expansion be done by the end of this fiscal year? Or does it carry over to the next fiscal year as well?.

End of this fiscal year. .

End of the fiscal year. .

Okay.

So once it's up and running, should would expect -- is there any kind of meaningful incremental uptick in SG&A administrative type expense associated with that?.

No, not really. It -- the -- let's say it's going to cost us $5 million-ish, and the useful life of those assets and that building, depending on the asset class, will be a very, very long life. So we're talking a very small amount of incremental depreciation per year, per quarter. .

Okay, and assuming no meaningful uptick in staffing levels and I guess [indiscernible] to manage that capacity then?.

Very nominal. .

Actually -- this is Rodney. There'll be some efficiency gains for us because it's just not adding up 2-bundle expansion component. It's also adding a very large warehouse that will increase our efficiencies in the handling of the 2-bundle product line and raw materials. .

Thanks for the additional color, Rodney. I appreciate it. And just one more for me.

I don't know, maybe I missed it, did you quantify how much Canada was down in the quarter?.

In the quarter, Charlie?.

Yes. .

In the quarter, Canada was down in aggregate 27%. .

Our next question comes from Jon Braatz of Kansas City Capital. .

A couple of questions surrounding gross margins, if we're going to move more towards Greenfield, should be a little pressure on the gross margin. But at the same time, you're talking about raw material cost being somewhat benign.

Everything else being equal, how do you think those 2 factors would play into the margin opportunity or margins for next year?.

This is George. I think that your comment about the growth in Greenfield projects is appropriate. It is going to put a little bit of pressure on margins because the Greenfield projects are -- generally come in at lower margins. But again, we're talking about a move of -- Greenfield moving from 67%, maybe down to the low -- somewhere in the low 60s.

Maybe not getting down to the traditional level of 60%, but tending in that direction. We do expect our MRO/UE business to remain strong. And the margin content there is -- we don't expect any deterioration in that. And so I do think that's a little downward pressure on it, but I don't think it's... .

Jon, this is Rodney. I'd like to just give a little bit more on Greenfield versus the MRO business. Remember that we separate our numbers at $1 million for Greenfield. If it's a new construct project and it's below $1 million, it goes into the MRO/UE category.

This year, without the megaprojects that we've done in recent years, the average dollars per order is going to get closer to the $1 million. There's a lot of activity we've already seen in that range.

So it's a little difficult when you're coming up like this to determine how much were going to have at $800,000, how much we're going to have at $1.2 million. So those dynamics will filter in a little bit with a different metric, I think and a different look for this year. .

Okay, okay. George, you talked a little bit about the opportunities ahead for this year, and including Russia. God only knows what Putin is going to do.

But how big of opportunity is that -- or I should say, what potentially could that be in terms of a lost opportunity if we don't get that business in Russia?.

Russia represents about 6% of our total revenues, so -- but more importantly, for us, it's Heat Tracing paradise. It's cold, it's got a lot of natural resources, a lot of oil reserves, a lot of activity in the Arctic Circle.

And there's a lot of our customers our existing customers, both Russian customers as well as International customers, that are involved in those processes.

And while we acknowledge the fact that there is risk factors there that are, again, out of our total as it relates to potential sanctions and so forth, and it is somewhat unpredictable, but the activity that we see related to both the state-owned enterprises, the Rosnefts and the Gazproms, as well as the International players, the Exxons, the Totals, et cetera, it's still very active in Russia.

So we are projecting growth there and, at this point in time, it's -- the amount of quoting we're doing, the amount of the order flow from Russia, supports that. But we do acknowledge there is a risk factor. .

Our next question comes from Jeff Hammond of KeyBanc Capital Markets. .

So -- is there a way to quantify what the headwind is from Kearl wrapping up? How much is the Kearl business going to be down in the end of fiscal '15?.

At present, Jeff, we went into fiscal year '15 with approximately $7 million in backlog with Kearl. Last year, in terms of revenue, Kearl invoiced $25 million. .

Okay, and that's $7 million that'll ship in fiscal '15?.

Yes. How much additional invoicing there will be, we don't know. It won't be a lot, but right now, we have $7 million in backlog, $25 million last year, $31 million in the prior year. .

Okay. So I guess what I'm struggling with kind of the guidance in the way you're kind of directing people on OE versus MRO, as you got this kind of $18 million gap to fill, you got -- I guess part of your order backlog had headwind has been Kearl. But it just seems like the trend there has been kind of a headwind.

So kind of what gives you the confidence in that healthy Greenfield growth? Is it just simply maybe easier comps into the back half?.

The last thing you mentioned is true. This is George. The last thing you mentioned is true. We are going to have some easier comps, but to just give you a little bit of flavor, as we talk about, we don't project growth, we're not projecting growth in Canada. But our business in Canada, x Kearl, remains very, very strong.

The business in the -- that we're getting out of the SAGD activity and our MRO business in Canada is still strong. So we don't -- we're not expecting, we're not projecting to see the $15 million decrease just because Kearl is not there. The difference in Kearl is not there. So that's in addition to -- so our activity in Canada remains strong.

Our other business outside of Kearl remains very robust and very active. So that gives us confidence that we can make up a little bit of that deficit in Canada itself, and then take that and add it to the comments I made earlier about the rest of the business units. So that's what we're getting our mid single-digit growth projections. .

Okay. And then just back to the gross margin, I mean clearly, you get an uplift from still -- the still-healthy mix of MRO. But just as you look geographically, Canada has always been kind of your highest-margin business. And so how should we think about that as we think about the gross margin trajectory into '15.

I mean are gross margins under some pressure into '15 from that and just the normalizing MRO-Greenfield mix?.

Yes, it's kind of a double-edged sword, Jeff. With the uptick in Greenfield, projects that we expect -- there will be a little bit of downward pressure on margins. But again, as Rodney mentioned, this uptick as largely in smaller Greenfield projects. It's not on megaprojects.

Whenever we're involved with megaprojects, they tend to be even lower than your typical Greenfield project margins. So it's kind of an offsetting effect as it relates to the lack of a megaproject versus an uptick in smaller Greenfield projects.

So again, that's why my comment earlier was that I do expect a little bit of downward pressure, but I don't think it's going to be significant. .

Okay, great.

And just finally, how should we think about tough compares in MRO? And if you look at that of kind of back half of fiscal '14, how much do you think of that strength was just driven by the really cold weather?.

This is George again. In North America, that certainly had an effect. But again, we had strong MRO/UE sales in all 4 business units. So it was positive across the globe and that's mainly driven by our install base and our incumbent status, and the other things that drive MRO business.

But yes, there's no doubt that we did get an uptick in North America because of the severe winter, especially in the power side. .

[Operator Instructions] Our next question is a follow-up from Scott Graham of Jefferies. .

So that was an important line of questioning, the Kearl, because we're all wondering that. And I just wanted kind of frame that -- your responses to that question with kind of what the guidance is. So if we look at Kearl, off of that mass, that's a 6% decrement to sales.

So I think what I hear you saying, I don't want to put words in your mouth, Rodney, but I want to hear maybe you say it, that you see, x Kearl, Thermon as a company kind of getting back to that organic double-digit, low double-digit top kind of top line growth, again, x Kearl in fiscal '15.

Is that what you're messaging here?.

Yes. .

And then would it be fair to say then that, by extension, with the project pipeline that you see out there building, that, that can continue into fiscal '16?.

Yes, it can. I mean the energy industry is not through drilling yet. And obviously, a lot of the activity we see in the pipeline is associated with that. And we still believe there's a lot of runway left. .

Understood. Last question, and this is about the MRO business, which I think you're kind of saying flattish. But correct me if I'm wrong, flattish more because the second half was so strong. The first half of the year looks like the comparisons are actually fairly benign.

Can you be up in the first half and then, let's say, down in the second half on MRO? Is that maybe what you're thinking as well?.

Yes. .

And at this time, I'm not showing any further questions. I'd like to turn the call back to management for any closing comments. .

This is Rodney. Once again, I thank everybody for their continued interest in Thermon and we look forward to our growth year and a profitable one. So again, thank you very much. .

Thank you, sir. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day..