Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
To start with, Matt, basically as we said before,we expect that in the second, in the third, and in the fourth quarter,we are going to have good turnarounds again. Remember from our experience in the last couple of years, we are very optimistic after the second quarter and then the third and the fourth quarter were really below par that what we expected and the customers really do not do as much work as they are supposed to do. We are a little bit conservativebased on past records. We think that the market is there. The turnarounds are there, but we just hope that the customers are going to spend the money.
Matt Duncan, Stephens Inc.
Okay. Then last thing and I will hop back in the queue. Just on price, I know you guys had put a wage increase through back in June. Jon, I appreciate maybe for competitive reasons you do not want to give us too much detail here, but just in broad strokes are you getting enough price to help make up for the wage inflation that you put through and maybe just give us an update on that process?
Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Well, the process is going very well. Our team is in discussionswith customers. There is a couple of dozen of these conversations going on. They are all progressing apace. We feel very positive about where they are heading. In some cases, we are having very innovative discussions, being very creative with our customers in ways that we can mutually solve each other’s needs even better than we have been. We feel very good about it. At the same time, we did cite the labor inflation pressure in the first quarter and the timing of our increase. You are correct to allude to that. I think the expectation might be that with the price of oil declining that might take a little bit of the edge off some of the inflationary pressures that we are experiencing, but we will see how that plays out.
Matt Duncan, Stephens Inc.
Okay. Thanks, guys.
Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Thank you, Matt.
Operator
Our next question comes from Andrew Obin with Bank of America Merrill Lynch. Your line is open.
Andrew Obin, Bank of America Merrill Lynch
Yes, hi. How are you? Congratulations on a good quarter.
Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
Thank you, Andrew.
Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Thank you.
Andrew Obin, Bank of America Merrill Lynch
Hey, can you talk a little bit more on what specifically you are doing inside the company to control SG&A cost? I know you have sort of refocused compensation, but can you talk about specific initiatives, how you are changing the way the company is operating to put maybe more cost controls to take advantage of all of the growth you have had over the years?
Sotirios J. Vahaviolos, Chairman, President, and CEO, MISTRAS Group, Inc.
Go ahead, Jon.
Jonathan H. Wolk, EVP, CFO, and Treasurer, MISTRAS Group, Inc.
Yes, thanks. Sure, Andrew. Thanks for the question. You are correct about the compensation program. We have more closely aligned the management compensation incentive program with operating income margins and growth and operating income, and I think that is just beginning to play out and will have a big impact going forward. But in addition to that, on a global base, where all of our teams are looking at operating expenses, we are doing careful reviews, particularly, in the international and services segments where we’ve been acquisitive in the past. This is a great time to sort of circle back and look for efficiencies that can be gained from combining duplicative redundant functions or efforts. We are undertaking that kind of review.
