Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of Kevin Maczka with BB&T Capital.
Kevin Maczka - BB&T Capital
I guess I’ll ask my first question around these margin goals. Your operating margin goal of 15%, obviously you are handily ahead of that already. The 20% SG&A margin goal, maybe you could have hit that already if you weren’t spending on growth initiatives. But can you just comment directionally on that? Does your guidance increase suggest that maybe you will be closer to that level in the back half of the year?
Mark Blinn
We set out as a target for 2010. I think, to your point, 20.5% on an adjusted basis, we’ve made substantial progress to that. What we can say and I think you’ve picked up on an important point, we’re going to continue to invest where we think we see strategic opportunities. So as you look at our comment around the guidance on the back half of the year, it is continued performance that you’ve seen the likes of. Also to point out, we have seen relative to the guidance in the beginning of the year a weakening dollar, which has provided a benefit. So what I would say is the goal still stands out there as one we expect to achieve and we set out for in 2010 and we’re continuing to drive that going forward.
Kevin Maczka - BB&T Capital
Just to follow-up on the backlog. The orders, the backlog, impressive given the later cycle nature of the business to see those improve like they did. The book-to-bill around 1. So I guess my question is, do you expect to burn more of that backlog in the second half? Or with your commentary about the pump orders potentially leading the valve and seal orders higher as well, is it your expectation that you will maintain that backlog in the back half as well?
Mark Blinn
That’s kind of a roundabout way of getting bookings guidance going forward, which we don’t give. But let me just give you a better clarity and understanding on what’s going on. When you look at bookings, backlog, sales and cancellations, that really captures what’s happening in our business. As Lew mentioned, we’ve had very little in cancellations. What you are seeing in our backlog and we talked about this last year is these are very complex, long lead-time projects that you’ve seen that are working through our backlog right now, and so that’s kind of what you’ve seen. You’ve seen that aspect in the book-to-bill, but more importantly you’ve seen the strong bookings that we’ve reported. We’ve been very pleased with our bookings now for the last three quarters, all things considered.
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