Welcome to the Fiscal 2015 Third Quarter Earnings Call for Applied Industrial Technologies. My name is Tina, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now like to turn the call over to Julie Kho. Julie, you may begin.

Thank you, Tina, and good morning everyone. Our earnings release was issued this morning before the market opened. If you haven't received it, you can retrieve it from our website at applied.com. A reply of today's broadcast will be available for the next two weeks as noted in the press release. Before we begin, I would like to remind everyone that we'll discuss Applied's business outlook during this conference call and make statements that are considered forward-looking. All forward-looking statements, including those made during the question-and-answer portion, speak only as of the date hereof and are based on current expectations that are subject to certain risks, including trends in the industrial sector of the economy, the success of our various business strategies and other risk factors identified in Applied's most recent periodic reports and other filings made with the SEC, which are available at the Investor Relations section of our website at applied.com. Accordingly, actual results may differ materially from those expressed in the forward-looking statements. The company undertakes no obligation to update publicly or revise any forward-looking statement whether due to new information or events or otherwise. In compliance with SEC Regulation FD, this teleconference is being made available to the media, and the general public, as well as to analysts, and investors. Because the teleconference and its webcast are open to all constituents, a prior notification has been widely, and unselectively disseminated, all content of the call will be considered fully disclosed. Our speakers today include Neil Schrimsher, Applied's President, and Chief Executive Officer; and Mark Eisele, our Chief Financial Officer. With that, I'll turn things over to Neil. Neil A. Schrimsher - President & Chief Executive Officer: Thank you, Julie, and good morning, everyone. We appreciate you joining us today. The third quarter of our fiscal year…

Thank you. We will now begin the question-and-answer session. And our first question comes from Matt Duncan of Stephens, Inc. Please go ahead

Good morning, guys. Neil A. Schrimsher - President & Chief Executive Officer: Good morning.

First, can you talk a little bit about the organic sales trends that you're seeing in the business, Neil? Are you seeing that change much through the quarter and into April? Neil A. Schrimsher - President & Chief Executive Officer: Yeah, so I'd say, in overall sales and really organic, in January and when we talked I think when we were on the call, we felt very good about sales in February. We experienced and felt the slowness and then some improvement in March. As we look forward into April on our total sales basis, they're running plus double-digit. So, acquisitions are contributing, but underlying cores contributing positively as well, so seeing some improvement as we move to March – to April in a year-over-year basis.

Okay. Neil, looking specifically at the acquisitions that you guys made in the energy environment, how are their businesses tracking recently? Just to kind of give us a feel for how they're being impacted by the slowdown we're seeing with rig count off 50% plus at this point? Neil A. Schrimsher - President & Chief Executive Officer: Sure. So, if you look from Q2 to Q3, I would say the sales decline is over 25%. We've got seasoned leaders in those businesses that's probably worked through 10 plus of these cycles in every one of those groups. So, if we look kind of in that upstream category on the production side, they're faring better and if we look sequentially from even March to April, we would see positives on the production side. On the drilling and the new-new side, a bigger drop-off and then as we sort through that, a portion of that is in Canada with seasonality also. So, no doubt there's reduced demand. But accessing those drillings rigs in remote location, the road bans came on earlier in March to be determined when they come off, is it going to be May or June. So we know there will be activity once those road bans are lifted, but we also know it's going to be at a reduced level. So as we work through this, we said, hey, we knew in January it was coming and so we worked at being responsible at looking at our cost to serve in those areas and take the appropriate actions

Okay. That's helpful. And then last thing from me. Just looking at – put the acquisitions aside for a minute, looking at your own business, we've heard from some of the your peers that we're finding out that everyone seems to have a little more energy exposure than we thought before, because your customers obviously have that exposure and they've also got some export exposure. Is there any way to quantify as you look at your more industry driven customer base, how you think the drop in energy may have impacted those sales if at all? Neil A. Schrimsher - President & Chief Executive Officer: Yeah, I don't know that we've got a great way of knowing it. We think coming into this, our participation in some of that business was lower. I think as we look at it sequentially, perhaps some of that is playing out. But I think, undoubtedly energy reverberates in some of those support industries and our customers have grown into that business as it improved and so they will be feeling an impact. But there's also a portion of why a strong U.S. dollar impacting some machinery OEMs that had an export side of their business, they're being impacted a little bit there as well. I think we're seeing that in some of those general macroeconomic indices and metrics in the first quarter, right, they were positive and many of them, not as positive as they have been.

Sure. And that probably, I would assume, explains the drop that you saw in fluid power sales, correct? Neil A. Schrimsher - President & Chief Executive Officer: Right. So in our fluid power from a U.S. standpoint, really flattish but our look on balance of the year and going forward, we believe we have growth opportunities there because we are expanding our value-added services. So to those OEM customers, we're really doing more work and we're doing more work around some additional products. Those solutions are getting smarter with controls. Those solutions are getting smarter with electronic interfaces and we're able to provide those capabilities.

Great. Thanks, Neil.

Thank you. And our next question comes from the line of Jeff Hammond of KeyBanc Capital Markets. Please go ahead

Hi, guys, this is James filling in for Jeff. Neil A. Schrimsher - President & Chief Executive Officer: Hi, Jim.

Hey. So you mentioned that you were happy with cost controls in the quarter and then that definitely showed through and then you're also maybe taking additional or looking at additional actions. Can you maybe just speak to that? And if you could, quantify the ERP benefit versus headwind this quarter? Neil A. Schrimsher - President & Chief Executive Officer: Yes, so as we think about ERP, I'll start there with where we're at. So we're deployed across Western Canada, U.S. operations. We've talked about going through the financial implementation and really there from payroll to fixed assets to general ledger all complete. We'll finish the consolidation side of it in the early part of the fiscal year, so it could turn into a little bit of fiscal 2016. So all of that goes well, that has some support costs, internal and external to it. We know that will diminish as we go forward. So our look at SG&A is no doubt, right, we need to volume adjust around energy markets and we're doing that but we can also have opportunities for continuous improvement in kind of, core underlying support operations or functions. And some of that will just be external cost controls and some of it would be as we get more efficient and productive internally.

Got it. And then just moving to capital allocation. In terms of M&A, you obviously announced a new share repurchase program. How are you thinking about M&A and what's the environment like out there, right now? Neil A. Schrimsher - President & Chief Executive Officer: So we remain active in M&A and I'd say, we work to our priorities, think about our pipeline, we've got prospects really at each stage from initial discussions to ongoing dialogue to diligence. And, our goal is to be as active in the M&A as we were in fiscal 2014, as we were in fiscal 2015, really every year going forward. We've been a little bit more active in share repurchase but our belief is we generate shareholder value and how we execute the business, and investments we'll make and that will include M&A and around some technology. And then returning cash to the shareholders with dividends and share repurchase.

Got it. Thank you.

Thank you. And our next question comes from Jon Tanwanteng of CJS Securities. Please go ahead.

Hi. This is Craig Bibb. I'm in for Jon. Could you break down the components of your outlook and how much is organic and how much is M&A? And what's the implied economic growth underlying that? Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: I don't have the exact percentages as we go forward into the fourth quarter for that breakdown of what you're looking at, but we do expect to have core operational growth in sales. Obviously, local currency growth within our foreign operations and we do expect some modest growth in our U.S. operations from that perspective. I think when we look at our acquisitions, some of those are coming off starting May 1 because we purchased Reliance May 1, a year ago. So the month of April is really the last month that they're in our numbers as an acquisition item whereas in May and June, you'll have comparable numbers to compare against. So we look at the oil and gas guys, like Neil mentioned earlier, for the folks that are dealing with upstream production, their sales seem to be stabilizing and looking better than the sales from the upstream drillers which are dealing with the Canadian seasonality as well as the downtick in activity because of the change in pricing.

Okay. Is there something, either an event or something in your sales that would cause you to think that maybe we're going to have another shoe to drop in energy or you guys confident that we're past that point? Neil A. Schrimsher - President & Chief Executive Officer: I don't know that we see another shoe to drop. I mean, so, we adjust our business for the environment that we see now and as we look at it going forward, we'll stay responsive to it, both prepared for improvement but also prepared if it softens or further weakens

Okay. M&A, just in terms of valuations, are you comfortable with what you're seeing or – can you comment on that? Neil A. Schrimsher - President & Chief Executive Officer: We are. I mean, our approach is that we're going to be disciplined, we're going to be a strategic acquirer. It's going to fit to our priorities. We're going to stay a core industrial distributor and look at what's important to our customers and what will flow through our business well. So we know our priorities. That's what our pipeline represents. And, we think we go through this process well. And we are a good fit to many of these companies.

Do you find yourself competing with private equity in the deals you're looking at? Neil A. Schrimsher - President & Chief Executive Officer: I would say, our real one is that we work at establishing long-term relationships with prospects and targets and why we would be the logical fit. So I'll say, I'll stop short of saying private equity is never involved but it's not a high involvement in the areas that we are involved with.

Great. All right. Thanks a lot, guys. Neil A. Schrimsher - President & Chief Executive Officer: Okay.

Thank you. Our next question comes from the Garo Norian of Palisade Capital Management. Please go ahead

Hi, guys. I want to just check in. I believe one of the strategies you guys have been working on in kind of increasing the SKUs particularly maybe in the safety area, and just was curious how progress is going on in that strategy? Neil A. Schrimsher - President & Chief Executive Officer: Yeah. So, Garo, I'd say, maybe not so much in safety as, perhaps, overall consumables in that. And I would say good on a couple of fronts. We're just going through our kind of three-year strategy outlook. And then as we look at our customer base and segment and stratify it, we see nice progress in the amount of products that are being bought across categories from our largest customers and even mid-sized customers. We'll have to work for opportunity, as we grow smaller customers up to medium and large customers and expand that base. So there we've had nice progress. In our maintenance supplies and solutions business, we continue to look to connect those to just our core Applied customer base. And we're looking at having good vendor-managed inventory solutions and how we help on what could be up to 50% of the SKU count but only 10% of the spend for more of Applied customers on the (0:27:05).

And then just following on that, are all those products kind of available at all of your distribution centers at this point? Neil A. Schrimsher - President & Chief Executive Officer: I would say we do not allocate them to every one of our distribution centers, but we feel like we had very effective coverage from Southeast to West to Midwest to North Atlantic. So – and we will evaluate where we extend those to either in our distribution centers or, perhaps, that business gets improved or augmented even around acquisitions in that space.

Okay. And then secondly, as you guys are starting to put the plan together for fiscal 2016, can you give a sense of what kind of underlying macro assumptions are being incorporated? Is it kind of a continuation of the current environment or do you see things a little – planning for things a little bit worse or a little bit better? Neil A. Schrimsher - President & Chief Executive Officer: So, as we think out over the three-year horizon, I mean our approach is we believe we have size, scale capabilities, we should be 2x market. That would be my dialogue with the teams in doing that. As we think about entering into the first part of the fiscal year, we're entering that annual planning cycle right now. And so we just finished our three-year, our long range and so we'll be working our fiscal year next year as we go in. And so it may be a little early, but I would say, we're not going to assume a greater environment than maybe what we're operating in right now and we'll close this fiscal year that it will not just dramatically or magically turn as our fiscal year starts in July 1. But we think there's going to be kind of a pickup as it moves through that fiscal year. At least that's what some of the macroeconomic indicators might say today and what some of the economic forecasters may have in that. But we think underlying, right, there's going to be a 2% to 3% type market would be what we would start to look at.

Great. Thanks very much. Neil A. Schrimsher - President & Chief Executive Officer: Okay.

Thank you. Mr. Schrimsher, there are no further questions at this time. I'll turn the call over to you for any closing remarks. Neil A. Schrimsher - President & Chief Executive Officer: All right. I want to thank everyone for joining us today and we look forward to talking to many of you throughout the quarter.