Ladies and gentlemen, thank you for standing by. Welcome to the Fiscal 2015 Fourth Quarter and Year-End Earnings Conference Call for Applied Industrial Technologies. My name is Suzie, and I will 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 call is being recorded. I will now turn the call over to Julie Kho. Julie, you may begin.

Thanks, Suzie. 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 replay 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 the 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. At this time, I will turn the call over to Neil. Neil A. Schrimsher - President & Chief Executive Officer: Thank you, Julie. And good morning, everyone. We appreciate you joining us today. To recap the numbers from…

Thank you. We will now begin the question-and-answer session. And our first question coming from the line of Matt Duncan with Stephens. Please proceed with your question.

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

Neil, can you talk a little bit about the sales trends that you're seeing in the business month-to-month? Do you think things are starting to kind of bottom out a little bit on the energy side, or are we still seeing some headwinds there? Neil A. Schrimsher - President & Chief Executive Officer: Yeah. So if we look back at the quarter, I think month-to-month throughout the quarter, we saw modest positive progressions. I think Mark talked about the traditional core being up. I think from an oil and gas side, we'd say sequentially down in the teens. I think that's perhaps consistent with the rig count movement. If we think about to the start of the calendar year, the 50% rig decline, I think we're doing better. I know we're doing better than that, but we separate it, right? The greatest pressure, the volatilities around the upstream drilling and completion, the businesses that are upstream production service-focused are doing better. And so we saw that stability in our Q3 to Q4. And then, I think from the July standpoint, we saw kind of some seasonality that we see with the shutdowns and timeout and sales probably in the mid-single-digit decline range from that standpoint.

Okay. Very helpful. On M&A, just on Atlantic Fasteners, can you tell us any more about how big that business is? And you guys did a pretty good job paying down some debt with that good cash flow in the fourth quarter. How are you looking at M&A going forward as well? Neil A. Schrimsher - President & Chief Executive Officer: Yeah. So, it's a good-sized – it's a fair-sized business. It's smaller than our average acquisitions had been over a period of time and maybe some of our most recent ones, obviously, but it's a good addition for us. We like the Maintenance Supplies & Solutions platform, the extension into the Class C consumables. Last year, we took those products into our Fontana DC. This is a good New England addition for us. The sales team and managements coming over, they'll be part of our MSS business group. So, we think it just fits into our overall product expansion efforts that we want to have with current and also with new industrial customers. From an M&A standpoint, hey, we're committed to staying active. I think since 2012, 15 acquisitions. We were busy in our fiscal 2014 and in fiscal 2015, and we want to be as busy in fiscal 2016. And I'd say the pipeline, it fits our priorities. It fits our priorities around bearings and power transmission, fluid power, fluid conveyance, oil field supplies and Maintenance Supplies & Solutions. And then, I'd say we'll continue to look at right, smart adjacencies, either geographic or in product categories. But they'll make sense to our industrial customers, and they'll fit the supply base that we have.

Okay. All right. And then, Mark, just to make sure we get that Atlantic Fasteners deal in the model the right way, how big are their annual sales? Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: They have an annual run rate that should have an impact to us on a consolidated basis of a little less than 0.5%...

Okay. Very good. Thanks, guys. Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: ...overall.

Okay. Thanks, guys.

Thank you. Our next question coming from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question.

Good morning, guys. Thanks for taking my questions. Neil A. Schrimsher - President & Chief Executive Officer: Good morning.

Can you talk about the – where you think expectations haven't been met from an internal execution perspective versus external factors? It seems mostly that you've been dragged along by the macro; I just want to get your view on the relative split. Neil A. Schrimsher - President & Chief Executive Officer: Yeah. So, if we look internally, I mean, clearly, our internal plans are going to be higher than external guidance. And if I look back at the business in fiscal 2015, our fluid power business did well. And in our international geographies, we'd have: A, group meet, B, plan in that area. If I look across specific service centers, regions, and even in the last quarter a couple of areas, we had some performing very nicely. So, in that, right, we know we can. Our job then is to broaden that and be more consistent. So we know we've got challenges or headwinds in the environment. But if I put that around, there's still a lot of un-served market and we can do more with existing customers and we can expand our reach to new customers as well. So that's how I'd characterize it, right? There are positives within it. We'll recognize those. But from an overall standpoint, we're not satisfied, but we're going to be working hard coming into the year.

Okay. Thanks. And then, what level of economic growth, both overall and I guess, separately, in oil and gas, are you building into FY 2016 outlook? Neil A. Schrimsher - President & Chief Executive Officer: We've looked at each of the entities and operating units that we have by themselves and had obviously discussions with them and everyone has a different perspective. So, for instance, our oil and gas subsidiary organizations, they're going to have some tough comps for the next two quarters. And then, when we see the last two quarters, they'll have better comps and our expectations is that we should be doing a little bit better in our third and fourth quarters than we did during fiscal 2015 for those organizations. And so, each one of these has different perspectives. And so, we're looking to have some overall core growth within the organization and within the overall economic perspectives.

Okay. And finally, just could you give us a little bit more color on the M&A pipeline? Should we assume that, given market headwinds and maybe the prospect of rising interest rates, are you seeing more incremental opportunities or better valuations out there? Neil A. Schrimsher - President & Chief Executive Officer: Yeah. I don't know that I'd call it more, but I also wouldn't call it less. And so, we know our priorities that characterize the pipeline as robust. We're busy and, I mean, we want to busy then throughout the year. And I've said before, right, you never perfectly control the timing, but we will stay busy. I think this economic environment right now I don't know that it creates more opportunities, clearly not creating less than it would. And if it stays this way for a period of time, perhaps, in time, it creates a few more opportunities, but I wouldn't say that's impacting the pipeline right now.

Okay. Great. Thank you very much.

Thank you. Our next question coming from the line of David Stratton with Great Lakes Review. Please proceed with your question.

Good morning. One question... Neil A. Schrimsher - President & Chief Executive Officer: Good morning.

...revolves around the Atlantic Fasteners. And historically, I know you said that you have a very, very small market share in fasteners, and I was wondering what this does to that. And also, is this going to be an area that's going to receive much more attention going forward being fasteners? Neil A. Schrimsher - President & Chief Executive Officer: Well, I think it's been a part of our Maintenance Supplies & Solutions business. We like that business. It fits our industrial customers. We say we represent 18 product categories across, and we're intent on expanding those with current and new customers. So we've made investments in MSS and moving inventory into existing DCs. We'll continue to look at this. This was just a nice addition to further move into, one, a geographic area, and also if we look at in-customer base, they do a very nice job in vendor managed inventory solutions, both with MRO customers and what might be termed as MROP on the production side. And we think that logically ties in into kind of initiatives and continuous improvement we'll with those industrial customers, right, as we go through and work with them on lean and material flow, this is just a good extension in that area. So fasteners will be a piece of it, but all the rest of those industrial consumables, kind of those C-Class supplies.

Thank you.

Thank you. Our next question coming from the line of Ryan Cieslak with KeyBanc Capital Markets. Please proceed with your question.

Thanks. Good morning, Neil and Mark. Neil A. Schrimsher - President & Chief Executive Officer: Good morning, Ryan.

Just first off, a point of clarification. The comments you made on July sales trends, I think you said that a decline in the mid-single-digit range. Was that specific to the energy business or is that sequentially? I just wanted to get a little bit more color on that trend in July. Neil A. Schrimsher - President & Chief Executive Officer: So I'd say July year-over-year total, that would be mid-single digits from that July standpoint, right, because obviously, we know when it's in the books. And then, we would see kind of improvements as we move from there. It's early in August, but we would see improvement. So for us, maybe not all surprising as it go from closing of fiscal year into a new one, but that's the year-over-year metric.

Okay. That's helpful. Thanks. And then, Neil, when you think about the sales guidance for fiscal 2016, I know you guys have some more difficult comps coming up here in the first half, how should we be thinking about the cadence of core sales growth throughout the year given that the variation in comps and just how things are looking right now with regard to overall industrial demand near term. Neil A. Schrimsher - President & Chief Executive Officer: Yeah. So, we think, hey, it's a challenging environment with the deceleration of some demand, oil and gas net headwind. So we think our tougher comps, the tougher part of the environment is early in the year. We expect to continue to improve and gain traction as we move along. So, our toughest comps are going to be in our first quarter then in our second quarter. And we think things then continue to improve a little bit going out from there. So, we think we're realistic in the environment that we have, but our internal plans and our initiatives and our actions are obviously to do better.

And then, Neil, you'd mentioned some your growth opportunities you're looking at here as you into the new year for you guys. Maybe if you could just provide some additional color on that. Is that more – in some of your traditional verticals, are you seeing some opportunities organically on the MRO side, maybe just some color around, maybe some new growth opportunities you guys might have here in the new fiscal year? Neil A. Schrimsher - President & Chief Executive Officer: Yes. So we think our opportunities, one, around the core or with current customers to expand our offering with them – kind of greater penetration, reaching new customers, we think we know we have the opportunity in targeted vertical markets, but also to improve in local markets in the footprint of each one of our service centers. From the product expansion standpoint, there we're focused. We'll be focused on MRO fluid power products. We'll be focused on other consumables that make logical sense where we already exist with customers. And then on the fluid power side, we're really using our capabilities in those investments on midsize OEMs from a technology standpoint, right? We will combine electrical and controls into those hydraulic and pneumatic offerings for mobile and industrial customers. And then we'll take that service and repair capabilities in those offerings also to support some of the best MRO opportunities with larger customers that we have as well. We think those things help us. And then, operationally, we're going to be focused on just continuous improvement. We know we made progress as we move throughout the year around inventory, around receivables and payables. We think there's more we can do in working capital. And then we'll be focused on also right actions around margin. And then, for us, that really means kind of reducing price variability. And so the combination of customer mix we think helps us as we go through the year and also the expansionary products come in at expanded margins, so product mix can help us as we work through what we admit is going to be kind of a tough macro environment, especially the start.

Okay. That's really good color. I appreciate it. And then also just on the ERP initiatives, certainly a lot of the implementation now behind you. Just maybe if you could talk about how you expect the new ERP system to benefit or impact you guys here in the fiscal year, and maybe is there any significant benefit implied in your guidance you laid out here today? Neil A. Schrimsher - President & Chief Executive Officer: I think it's in the total. I think the areas that it helps us would be real-time visibility around data and transactions help us further make improvements in working capital in each one of the components. And then from a transaction side in thinking about establishing the right guides and levels and reduce price variability around products or customers from a local standpoint. I think those are the areas that it gets us. While we had some of that before, it just gives us faster visibility to it, and we know when we're making good tradeoffs and decisions and when we have opportunities for improvement.

Okay. Great. The last one for me and I'll get back in the queue. Mark, how should we be thinking about free cash going into the fiscal year? A very nice free cash generation this quarter. Obviously, some benefit on the working cap side. How should the trajectory of free cash look here in the coming quarters? Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: Yeah. I think that our view is for all of fiscal 2016 that our cash provided from operating activities should be solid. It should be greater than the net income dollar amounts that we have. Our view on CapEx for the fiscal year is for CapEx spending in maybe the $13 million to $15 million range. And so that gives you an idea that our CapEx should be smaller than our depreciation expense again in fiscal 2016, just like it was in fiscal 2015 for things. And so yeah, we're looking for that for the whole year. Now when we look at our individual quarters, we think again that the cash provided from operating activities will be more heavily weighted in the second half of the year, providing the good guys and the first half of the year will be a little less. And that's what our traditional, I guess, seasonality or what we would call within cash flows has worked in the past, and we expect that to be again this year. So lighter in the first half of the year, heavier in the second half of the year.

Okay. Thanks, guys. Best of luck. Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: Thanks.

Thank you. Our next question is coming from the line of Adam Uhlman with Cleveland Research. Please proceed with your question.

Hi, guys. Good morning. Neil A. Schrimsher - President & Chief Executive Officer: Good morning. Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: Good morning.

Turning back to the commentary on July, I might have missed it, but I think you said that your total revenues were down mid single-digits for the month. So would that mean that your core operations are now declining double-digits year-over-year? And then I'm wondering if you could put that into perspective of what the June year-over-year growth rate was. Mark O. Eisele - Vice President, Chief Financial Officer & Treasurer: No. I mean, the core operations are not declining double digit, Adam. The vast majority of our acquisition revenue from a year ago came on July 1, and so that's now baked in the numbers. So we have a very small amount of acquisitions that will happen for the first four months of fiscal 2016 with the old Ira acquisition that we purchased at the end of October. And so the mix is that we're seeing some of the normal seasonality with our July sales within our core operations and so they have been slightly down. But I wouldn't say it's anything more than the mid single-digits that we talked about.

Okay. Got you. Thanks for that clarification. And then could you expand on what you're seeing by industry within the major verticals, how many of them are you seeing year-over-year sales growth, and where are you seeing the declines? Neil A. Schrimsher - President & Chief Executive Officer: Sure. So, of our kind of top 30, 13 of them were up. I think increases would be in the expected categories like automotive, utility, food, and some of the construction-related ones like lumber, wood, aggregate, and so forth. Declines, as you would expect, in oil and gas. And I think mining may be stable off of a lower base and then some of the machinery manufacturers, but a large group or category and I think that varies to where they play in market. So if they're into some of those that are down or a little more global participation, I think those are the ones that we would see being down. Others that are serving some of the more – the earlier segments that we talked about are faring better right now.

Got you. Thank you. And then the gross margin progress this quarter was very strong, particularly compared to most of the other distributors in the space. I'm wondering if we could dig in more about what exactly is working from the core service center operations that help you expand the gross margin. And then if maybe you have any comment or detail on the difference between mix as well as just price, costs, that would be helpful. Neil A. Schrimsher - President & Chief Executive Officer: Yeah. I mean, our view overall is that we think kind of macro price was not a big contributor. Mix in our business, a lot of what we sell, break/fix MRO, we sell one time a year. So I think some traditional metrics around product mix doesn't fit in. With that said, as we expand product categories and drop in some of the consumables and other things, those can be – those will be – those are helpful from a margin standpoint. Customer mix and some of the initiatives around doing well with small, medium accounts as well as large accounts can be helpful. And then it's just making good, smart decisions, kind of talked about earlier, right, reduce that pricing variability, set good guidelines and flow. We represent so many products. I mean, clearly, we're best off when we establish those guidelines and adhere to them in moving forward. And I think all of our teams, too, are still focused with our customers. How do we add value? How can we lower their owning and operating costs so that value-add, one, helps our customers and, two, can help us in kind of that product price delivery.

Great. Thank you.

Thank you. At this time, I'm showing we have no further questions. I will now turn the call back over to Mr. Schrimsher for any closing remarks. Neil A. Schrimsher - President & Chief Executive Officer: Thank you very much. I just want to thank everyone for joining us today, and we look forward to talking with you throughout the quarter.