Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question comes from James Bank from Sidoti & Company.
James Bank – Sidoti & Company
Hi, good morning.
Jim Lines
Good morning, James.
James Bank – Sidoti & Company
I knew if I hit star one about ten times, eventually it clicks. Jim, the percentage of backlog that we still have from the US or let’s just call them domestic projects, how much is still represented in the $37 million of backlog you reported this morning?
Jim Lines
I don’t have that statistic at my figure tips.
James Bank – Sidoti & Company
Okay. Well, I guess, what I am trying to get at is the high price inflationary worked -- clearly it worked in your favor with the gross margin in the first quarter here. Is that more or less work through or is there still some of that still in that $37 million?
Jim Lines
We’ve only still have in that $37 million sales that will be for the US market. The margin improvement that we enjoyed in our first quarter wasn’t so much tied to geographic sales mix, but more tied to the fact that the raw materials market had a rapid decline and our procurement team was able to take advantage of that and come in well below our costs that we have estimated for those projects. We’ve saw materials hit the floor and remain there for few months, December through March. And our procurement team as they were buying the materials for the projects where revenue would be recognized in the first quarter did a great job to take advantage and be opportunistic at that time. So it wasn’t geographic related, in my opinion, it was more the timing of where materials were.
James Bank – Sidoti & Company
Okay. And also – well, I guess then that would imply that it’s probably not repeatable given your guidance.
Jim Lines
We don’t believe so. Now having said that we are going to be aggressive in the market with our suppliers. There are times when there is capacity available at a given supplier where we are seeing them come off market pricing. And our procurement team – I am expecting them to be disciplined as they were in the first quarter and to take advantage of those opportunities. But we are not projecting and we would not recommend in your modeling to look at our first quarter margin as being sustainable.
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