Welcome to the Fiscal 2020 Fourth Quarter Earnings Call for Applied Industrial Technologies. My name is Michelle 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 conference is being recorded. I will now turn the call over to Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.

Thanks, Michelle, and good morning to everyone on the call. This morning, we issued our earnings release and supplemental investor deck detailing our fourth quarter results. Both of these documents are available in the Investor Relations section of applied.com. Before we begin, just a reminder, we'll discuss our business outlook and make forward-looking statements. All forward-looking statements are based on current expectations subject to certain risks, including the potential impact from the COVID-19 pandemic, as well as trends in sectors and geographies, the success of our business strategy, and other risk factors. 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. In addition, the conference call will use non-GAAP financial measures, which are subject to the qualifications referenced in those documents. Our speakers today include Neil Schrimsher, Applied's President and Chief Executive Officer; and Dave Wells, our Chief Financial Officer. With that, I'll turn it over to Neil.

Thanks, Ryan, and good morning, everyone. On behalf of our entire team at Applied, we hope you and your families are healthy, safe and managing well. I'll start today with a brief operational update, including our ongoing actions in response to the COVID-19 pandemic as well as what we're seeing across our business in this fluid environment. Dave will follow with a summary of our financials and some specifics on our fourth quarter and outlook. And then I'll close with some final thoughts. I first want to take a moment to thank our entire Applied team for their strong effort and support throughout our fiscal 2020. I'm proud of what we've accomplished and how we've responded, particularly over the past several months as we face an unprecedented environment from the pandemic and manage to slower demand within our core end markets. It's inspiring to see how we've stepped up to the challenge collectively and remain focused on driving value across our customer and supplier base. Our top priority remains the well-being of our associates, customers, suppliers, and business partners as the COVID-19 pandemic continues to evolve. We've quickly adapted our operations and embedded various safety measures allowing us to swiftly adjust to our customers' requirements and solidify our supply chain. All our operations and facilities have remained open and fulfillment at our distribution centers and local service centers remains efficient. Our operating model and sales team has shown tremendous flexibility, effectively leveraging virtual communication platforms, system investments made in recent years, and our multi-channel capabilities. The resilient nature of our value proposition is apparent across many facets of our company from the motion control products we provide for critical break/fix MRO applications throughout essential industries such as food and beverage, agriculture, and pulp and paper, to leading fluid power solutions,…

Thanks, Neil. Before I begin, I will remind everyone that a supplemental investor deck, which recaps key financial performance and discussion points, is available at our Investors site for your additional reference. To provide more detail in our fourth quarter results, consolidated sales decreased 17.9% over the prior-year quarter. Acquisitions contributed 1.5% growth partially offset by an unfavorable foreign currency impact of approximately 1%. Netting these factors, sales decreased 18.4% on an organic basis with a like number of selling days year-over-year. Turning to sales performance by segment as highlighted on slide 7 and 8 in the deck, sales in our Service Center segment declined 22.3% year-over-year, or 21.1% on an organic basis. Lower industrial production activity and customer facility closures from COVID-19 precautions drove reduced MRO needs across the majority of our Service Center customer base during the quarter. Weakness was particularly acute within metals, mining, oil and gas, machinery and transportation end markets, partially offset by more resilient demand within food and beverage, pulp and paper, forestry, electronics and chemical industries, as well as growth in our Australian operations. Within our Fluid Power & Flow Control segment, sales decreased 6.8% over the prior-year quarter, with our August 2019 acquisition of Olympus Controls contributing 5 points of growth. On an organic basis, segment sales declined 11.8%, reflecting lower Fluid Power sales within industrial OEM and mobile off-highway applications, as well as weaker Flow Control sales from slower project activity. This was partially offset by Fluid Power sales growth within the technology end market during the quarter. Moving now to margin performance. As highlighted on page 9 of the deck, gross margin of 28.7% declined approximately 40 basis points year-over-year or roughly 70 basis points when excluding noncash LIFO expense of $0.8 million in the quarter. This compared favorably to…

Thanks, Dave. As we enter fiscal 2021, we see a significant opportunity ahead as we leverage our industry position as a leading technical distributor around new and emerging growth opportunities. While we're facing a challenge as the industrial economy transitions from a generational pandemic, we have a remarkably strong business model that generates cash and adapts well throughout the cycle as we demonstrated in our fourth quarter. This foundation will provide significant support to navigate through the near-term headwinds while staying focused on our strategic initiatives aimed at positioning and adapting the company for stronger organic growth relative to our legacy trends, greater free cash generation, and improved returns on capital in the coming years. I strongly believe our greatest opportunity is now in front of us, considering our cross-selling potential customers' increasing technical needs, potential greater US industrial production requirements, and likely ongoing, if not accelerated, industry consolidation in coming years. Our value proposition puts us in a unique position to emerge as a leading growth beneficiary from these tailwinds. We plan to leverage our comprehensive suite of technical products and solutions as we expand into emerging areas of growth from an ever more sophisticated, automated, and connected industrial supply chain. These growth opportunities, combined with our operational excellence initiatives, expansion of our shared services model, and leveraging our systems investments will further solidify our ability to expand margins in coming years. Long term, we remain committed to our financial targets of $4.5 billion in sales and 11% EBITDA margins. While the timing of these goals is dependent on the industrial cycle trajectory, I believe they are within Applied's reach and provide the framework for significant value creation as we execute our strategy going forward. To our customers and suppliers, our message is clear, we are the leading standalone distributor of industrial motion, power and flow technologies with growing capabilities across next generation automation and Industry 4.0 solutions. We have the most comprehensive portfolio and technical service capabilities, premier engineered solution expertise, and greatest track record of consistency and commitment to this vital space. We are investing for the future, developing best-in-class talent, and focused on solidifying Applied as the imminent return-enhancing channel for your critical industrial supply chain products and solutions. We're here to serve and partner with you during these unique times and what will be fast-moving and dynamic environment going forward. Once again, we thank you for your continued support. And with that, we'll open up the lines for questions.

Thank you. We will now begin the question-and-answer session. Your first question comes from Quinn Fredrickson from Baird. Your line is open. Quinn T. Fredrickson - Robert W. Baird & Co., Inc.: Hey. Good morning, guys.

Good morning. Quinn T. Fredrickson - Robert W. Baird & Co., Inc.: So, my first question is just on trends in the Service Center business. It seems like most of the recovery and momentum since April has been in the Fluid Power & Flow Control, whereas the Service Center business has stayed kind of steady. Is that just a function of more local customers in Service Centers than in the Fluid Power & Flow Control, or have your mix of the heavy industries or any other reasons why the Service Center hasn't seen that same recovery?

I'll start. I would say one would be the participation and presence with the heavy industries. And so, when we think about metals, mining, oil and gas, machinery, and transportation, that'd be heavy participation there. Since the beginning of the fiscal year, we have seen some improvements in order rates and trends, but it has been a little modest and gradual as we've gone through. And then, from the various shelter-in-place and customers coming back, the local customers perhaps have been a little slower to do that across some of the varieties. So, you are correct in thinking that is an input on Service Centers. Quinn T. Fredrickson - Robert W. Baird & Co., Inc.: Okay, thank you. And just secondly on gross margin, just any color you could provide on the near-term outlook. You've obviously got that continued point of sales and product mix tailwinds plus maybe some further volume recovery in local customers. Would your expectation be that gross margin is slightly higher sequentially but still down on a year-over-year basis in the first quarter?

Yeah. I think to start as we move through probably a good benchmark is sequentially I think relatively unchanged. If we look, probably a driver on gross margins was mix and local accounts, but we think coming through sequentially unchanged. And if I look at the comparison ahead year-over-year from last year, it would be a little bit more challenging as we go through the first quarter. But I would think sequentially kind of unchanged as we start the fiscal year.

I'd just elaborate that Q1 is our toughest year-over-year comp where we were at 29.4% last year but, again, the fundamental is still there and expect to see that trend improve then as we start to see some of that local account mix come back. Quinn T. Fredrickson - Robert W. Baird & Co., Inc.: Okay. Thank you very much, guys.

Thank you.

And your next question will come from Michael McGinn from Wells Fargo. Your line is open.

Good morning, everybody. Good quarter.

Hi, Mike.

I just want to walk through the margin incremental target. So you're taking additional and temporary cost actions but it seems like it's stagnant at that high-teens decrementals. Can you just walk me through the math with the structure on why – what could push you to maybe mid-teens or even below that?

We talked to a high-teens. We delivered a 15% decremental here in the most recent quarter. We do have some costs that come back in, in terms of reset on bonus targets, things of that nature, but also we've left some room, as we've talked in the script, to make some investments and position ourself for growth so we're not kind of caught behind, if you will, in terms of as that recovery comes. So continuing to make some strategic investments in the business and you see that reading through, and that's why we're still talking in terms of a high-teens versus potentially something that looks more like what we posted in Q4.

Yeah. And I'd say, Michael, we will see some SG&A as travel starts to reoccur more than it did in the fourth quarter. There will be some associated expense I think as general people find their way back to normal medical appointments and routines, there will be a little bit come in that. But our real view is be connected to our customers. We're important to them. We think we're one of the few that to get internal access into many of these facilities right now and we plan on fully participating and helping them and not reacting or just responding to it later in the time period.

Okay. And just going back to the top line real quick. Fluid Power, I think in the last quarter you said it was trending down mid-teen both your base business and FCX. Kind of improved, but you mentioned some of your customers restocked for some parts. Can you just frame the magnitude on how affected the top line, maybe the margin as well. And then is that why we're seeing just kind of – seeing a little dip back in here to the down mid-teens or any help there would be appreciated?

I don't think we saw, especially on the Fluid Power & Flow Control side a great deal of stocking or I'd say that phenomena is probably to this point we picked up on it a bit more on the Service Center side of the business really started around April. We've talked previously not a lot stocking and destocking in this business just given the randomness of demand. But, the other 50% does not break/fix. Here, again, there are some repetitive items used and I think just protecting themselves from potential supply chain disruption that – and the uncertainty of what was to come. We had some customers that may have ordered a bit heavier in April to protect themselves. So, I think what we're seeing is very stable demand in Fluid Power & Flow Control just given the more project and technical-based nature of that business, stocking, destocking that comes with that. And certainly, some easier comps as we go back to the comparisons between the growth that the Service Center side of the business is posting as opposed to Fluid Power & Flow Control. But both very stable and slightly improving demand trends as you look at the daily sales rates.

Yeah. Mike, this is Ryan. Just to reinforce what Dave said on, if you look at the Fluid Power & Flow Control segment performance in the quarter or the Service Center segment, keep in mind the comparisons are different there, right? As Dave mentioned, easier comps in our Fluid Power & Flow Control segment, which is helping the year-over-year trend there. We'd also say, though, when you look at that business as we talked about, this cycle we do have and we've seen expansion and growth within the technology and market, which is providing a nice balance to some of the legacy industrial Fluid Power business that we have and we expect that to continue here going forward. But keep in mind, as we go into the first quarter and maybe even to second quarter, the comps within that segment do get more difficult and that's why we say we would expect for the first quarter to be down mid-teens versus the down 12% organic they put up in the fourth quarter.

All right. And then just last one on me. Free cash flow was really good. It's great. I think the working capital as percent of sales lowest it's been since 2012. Can you just frame for me what a restocking looks like for you guys? Are we talking working capital a modest $20 million, $30 million use and mostly the back half? Or are we looking something more like we saw in 2012 timeframe where that was a much larger $60 million use?

We're going to do our best using the tools at our disposal. I think we're in much better position this time. If you look at our – kind of coming out of the last couple of cycles where you look back, we were at, say, maybe a 60% to 70% of net income in terms of free cash as we did some restocking and build some of that working capital that comes with the volume. As we talked in the script, we're still targeting a 100%. That's balancing, again and continuing to leverage the investments we've made in systems to bring back inventory thoughtfully and continuing the initiatives around our collections to be able to fund some of the AR growth that's going to come with the volume with further performance improvement in terms of past dues. So, we see that being more balanced this quarter. There will still be, as we talked about particularly again the back half of the year, some demand and tug from the operating working capital that comes with the recovery, but we'll be much more I think disciplined and thoughtful and being able to manage through that coming out of this cycle.

Appreciate the time. I'll pass it along.

Thanks, Mike.

Your next question comes from Joe Mondillo from Sidoti & Company. Your line is open. Joseph L. Mondillo - Sidoti & Company, LLC: Hi, guys. Good morning. Just a follow up on that last working capital question, both inventory and payables. So, inventory was down about 13% and the revenue being down 18%. How do you think you fared with your inventory management in the quarter? And do you foresee more opportunity to reduce inventory? And then on the payables side, your payables were up over 20%. Could you just help us understand what's going on there and what to expect going forward?

Sure. I think the inventory, we'll address that first. Do you still see opportunities as we work through, I like the results, and kind of where we had traction in Q4, as we've continued to work to leverage the investment that we have in inventory and bring down some of that stocking level commensurate with the decline in sales we've seen. That was not fully balanced across the business. So, we still have some opportunities that will provide some source of cash for us particularly as we work through the first half of 2021. On the payable side, we don't see anything unusual about the trends there in terms of – so there was no change in discipline or approach in terms of payment terms. So, I see that as a function of kind of the inventory – commensurate with the inventory purchases and that reading through. So, we'd expect our payables trends to continue to look much like they have in the prior quarters. We've continued initiatives around obviously terms expansion, use of purchase card programs, et cetera, to help extend terms. But I think the real opportunity comes to us in terms of the continued management of inventories and working through, here again, some more opportunity there as well as like the traction that we've made on the collection side of the equation, actually, despite a tough environment, brought down overall past due about 3% sequentially in the quarter. So, pleased with the performance of the team there and we'll continue to work that one as well. Joseph L. Mondillo - Sidoti & Company, LLC: Okay. And then, a question on Fluid Power & Flow Control segment. The margin was better than I was looking for, a very good expansion there considering the challenges. How do we think about that margin that you put up in the fourth quarter and how to think about sort of the year-over-year comparisons going forward?

Sure. Some of that margin, I mean, it's a combination of both very nice and improved gross margins in the business. That was one of our synergy case opportunities at FCX that showed ongoing progress in terms of margin expansion there. Some of that, just here again just the technical nature of the value that we bring there helps us protect some of those margins on kind of both sides of Fluid Power & Flow Control. Certainly, the overall operating margin benefit as well from the kind of the cost countermeasures reading through. We'll still expect gross margin expansion as we move forward. Some of that temporary benefit will roll off as we do see the recovery but will replace with volume benefit. So still like our prospects for continuing to show improvement in operating margin across that business. Joseph L. Mondillo - Sidoti & Company, LLC: Okay. And I guess just lastly that segment I know does have a little bit more of a backlog component to it. The particular parts of that segment that do have sort of backlog driven as far as your visibility and what that backlog sort of looks like. Did that come down throughout the quarter and is that maybe why you're expecting the year-over-year declines to increase a little bit in the first quarter? Just talk about the visibility that you have in that segment.

It's still pretty steady and I think here again as Ryan indicated, we're seeing the benefit of tech market hang in very nicely that's helped to provide some buffer but really we've seen pretty stable backlog position across the quarter, really does come down to more of that comp issue as we talked about in terms of the year-over-year comps now starting to get a bit tougher in that business. Joseph L. Mondillo - Sidoti & Company, LLC: Okay. And then I guess last thing for me regarding your debt and how you're thinking about managing that. Should we expect you to continue to try to consistently ramp down the debt throughout the year? How are you thinking about that debt pay down?

Sure. I mean, strategic leverage will be a priority just in this environment. We still like our position and with $269 million of cash on the balance sheet as we ended the quarter. So as we talked on the call and the script, the priorities will still be deleveraging kind of the modest capital requirements is going to give us some flexibility to pursue some selective bolt-on M&A. We talked about the priorities there in terms of the M&A and still very active pipeline. So, as we're able to sort of getting back out, perform diligence, et cetera, we expect some disciplined work around the M&A funnel as well. But deleveraging will still be a priority in this environment. Joseph L. Mondillo - Sidoti & Company, LLC: Okay. Thanks for taking my questions.

Sure. Thanks, Joe.

Your next question will come from Adam Uhlman from Cleveland Research. Your line is open.

Hey, guys. Good morning. Hey, wanted to – I might have missed it but can you size the magnitude of the temporary cost savings here this past quarter? And then can you confirm your debt planning on being in place for the entirety of the first quarter?

Yeah. I would say, we don't really size them fully, but I would say, two thirds of the decline we had in the fourth quarter were more around specific actions and really those will continue for the duration of the first quarter that we're in. And so I think that will help.

Okay. Got you. And then I guess as society as a whole has shifted a lot of transactions to e-commerce. I would suspect that you've probably seen a lift in sales through that channel. I was wondering maybe you could speak to the activity levels that you're seeing there? And then maybe more so on any investment programs that you have in that channel to expand your scope and breadth of offerings?

Yeah. I think the good news on that side is the tools and the capabilities exist. I don't believe we have a higher investment requirements in doing that, doing a little bit more with engaging with customers and follow up. But from an electronic standpoint, I would say mid-20s, 25% or so of the business comes in that way, that includes applied.com, EDI, electronic data interchange, but also within procurement systems, connections between ourselves and given customers. And so that could ramp a little bit. What we are seeing is also just more virtual connection with engineering teams and procurement teams and onsite teams. And so, while we are physically present at times, where we could, technology to generate demand and serve their requirements.

Okay, got you. And the last thing for me, do you have any additional restructuring costs planned for the current quarter or the first half?

I would say, we'll continue to evaluate and look at and where we have requirements or opportunities that we will act on. I wouldn't say at this stage that they are meaningful. Personally, I think we're in line on our cost. Leadership team continues to have the right focus. In our sessions and reviews now we're spending a lot more time on customers and our growth opportunities as we see those opportunities ahead of us rather on cost and cash. We know how to operate in the cycle and we demonstrated it in the fourth, will again in the first. That's where we're spending our time, effort, and energy.

Got you. Thank you.

Your next question will come from Chris Dankert from Longbow Research. Your line is open.

Hey. Good morning, guys. Thanks for taking the question. I guess earlier we've been talking about seeing some increased break/fix demand as some of this equipment that was kind of idled in an unplanned manner, turns back on. I think you've briefly mentioned something like that in the prepared remarks. But just, are we starting to see that break/fix demand come back in any meaningful way as things turn back on, or is it a bit slower than you would have expected, I guess?

I think the ramp has been gradual. I think customers are still dealing with time out whether as they adjust shifts or production schedules, some to their demand environment, some may be virus-related. But as that equipment comes back up from being down or idled for a long period of time, we are starting to see a little bit more of that. And our view is that only increases as demand across these industries, including these heavy industries, starts to come through.

Got it. Got it, understood. And then my apologies if I missed it, but did you comment at all on the impact of pricing in the quarter? I assume it was nominal. But just kind of dot the i's there, I guess.

It was nominal, offset inflationary impact, but negligible in terms of the impact on the overall growth.

Got it. Got it. And then, to the extent you're kind of willing to comment here, I guess trying to put all these pieces together, it seems to me like back-of-the-envelope math assumes SG&A kind of comes up in something of a seasonal fashion for the first quarter off of a very impressive fourth quarter kind of controlled SG&A level. Is that the right way to think about it here?

Yeah. We expect that here again. That's the difference between the mid-teens versus the high-teens decremental we're talking about. Once again, that is travel, et cetera starting to ramp back up. So, there's virtually none in Q4 as well as, here again, positioning around some investments as we work to make sure that we're ready to capture the opportunity on the upside. So, not poring through to our strategic priorities and have not shut off funding on some of those projects that we see will continue to drive growth for us in the future.

Got it. Got it. Well, thanks so much, and good luck going forward here guys.

Thanks, Chris.

And your next question will come from Steve Barger from KeyBanc Capital Market (sic) [KeyBanc Capital Markets] (00:48:25). Your line is open.

Thanks. Good morning, guys.

Good morning.

Back to your commentary around pace of Service Center improvement, are you confident you're retaining your typical share or are you seeing any kind of aggressive price competition from smaller competitors that you should be concerned about?

I think we're confident in the broader capability in doing it. I still think the environment overall is productive with good recognition on cost to serve. I think for us just the ability to be connected and then be connected with motion control, bearings, power transmission products, but then also to be connected and have expertise around Fluid Power & Flow Control and now even as we start a little bit more on automation in those solutions, I think that is helping us. So now, we feel very good about our position.

Great. And I want to make sure I understand the revenue dynamics, if 1Q revenue is down 17% to 18%, it looks like you'll have the normal sequential step down from 4Q. But do you expect 1Q is the trough quarter for revenue in dollars and then sequential improvement for the rest of the year?

I think as we think about it assuming these kind of historical trends hold that we would see our year-over-year sales declines would not materially improve until the second half and then we would return to growth in the fourth quarter.

Okay.

And Steve, this is Ryan. Just on Neil's point with that, the comment of not really seeing the year-over-year trends improve into the back half, that will be an assumption if we just assume normal sequential patterns from where we are today. And then what that implies ultimately then for the year-over-year trend because the comparisons really don't change much from the first to the second quarter. And then they change more materially into the back half.

Yeah. I mean obviously 2Q is normally down a little bit from 1Q. I was just wondering if that pattern changed this year because of the weakness that we've seen starting in April that it sounds like that you expect kind of stability in this level plus or minus.

Yeah. I think that's a fair assumption to start with, right? And certainly depending on the cycle coming off of what is very low level, as you mentioned April, depending on our execution of growth strategies that we're deploying right now, that can vary that trend. But, I think what we would say is just as a guiding post, if you assume normal sequential patterns on historical averages, that dynamic of no material improvement in the year-over-year trend into the back half is how I would think about it again, as a starting point.

Got you. Switching gears, a big part of the strategy is helping customers to think about or integrate robotics, automation, Internet of Things. Can you talk about how those customer interactions or your commercial efforts have evolved over the past five or six months as you've had to step back from the physical?

Well, to your point, right, we're still making connections, sometimes physically on, sometimes they are virtual sessions. And when they're virtual sessions, you can really expand your participation and level of expertise. So, as we think about Applied and our Internet of Things Connect (00:52:00) program with customers, we're working to deal with problems that they have or solutions that they're looking for, and how can we solve them around discrete operations, discrete automation opportunities. And so, I like what we're able to do and help them on communications, connectivity type devices as they look to connect IT with their operating technology, things around use of robotics that helps in their social distancing or material handling; even some of those that have some cleaning techniques around them, which has some encouraging potential for us to go through; use of vision which helps them upon quality and inspection. And then connecting this data which lets them do more remote management, remote monitoring whereas in the past, maybe they've relied on traveling people or experts to go around to some of their sites or facilities as they can connect them and review those similar things. They're just able to do it a little bit more productively, effectively, maybe safely in this environment. And so, those are the things that we're working on. And connecting with our suppliers. Because is more technology, more sensors, more capability coming in to those products. So, we think we're well positioned to connect those items from our suppliers to specific customer needs and then be part of reviewing and in interpreting the performance data around them.

I think our team hasn't missed a beat in terms of the sales activity. One of our reviews here a month ago, one of the sales engineers from Olympus indicated that they're – he's probably making 5 times the sales pitches, just because of being able to do it virtually, cast a wider net and be able to be more efficient with delivery. So, I think we've had some learnings come out of this, but the team has adapted well to the COVID environment and still driving growth.

Have you seen a commensurate increase in closings relative to that increase in pitches? In other words, are people just curious and trying to figure out what the capabilities are, and then they're likely to revert if we get a vaccine or whatever, or do you think this is driving a permanent change in how people are thinking about the importance of automation, robotics, vision or anything else?

I think it's driving more around the importance and the use and the adoption. So, we don't feel like we're in perpetual presentation mode as we go through. Now, we know we have some projects that got slowed as we would go on site and help with commissioning and pull through. Now, we think that's going to start to ease as we go into this quarter or perhaps future quarters because people are more comfortable with safety routines and having individuals through. But no, I mean, we think it's meaningful. We think it is here to stay and will be part of the ongoing value proposition.

And last one for me. You talked a little bit about this already, but any lessons learned that you're applying to your own business in terms of automating or digitizing? Just anything that's making you more productive based on how – what you've learned from talking to customers about their requirements?

Yeah. So as we do that both with our supplier products and as we talk with customers and as we think about Internet of Things and technology, we're not missing the beat at using technology to improve or drive our own internal productivity. I think we always have a focus on that. But as we think about warehouse management, opportunities, and flow of material and put away, as we think about routines and practices that we can have in service centers and technology to help with shared services or pull out more what has been more manual or mundane tasks out of those operations and free up time for those individuals to spend more time connecting with customers and quotes and quote follow ups, we'll continue to work those. I like some of the things we've done. I still feel like we have a nice runway to also help ourselves.

That's a good detail. Appreciate it. Thanks.

Thank you.

And your next question will come from Michael McGinn from Wells Fargo. Your line is open.

Thanks for the follow-up, guys. I just wanted to ask about the international business. Any color, one of your competitors, Inenco, has seen some positive trends out of Australia. Can you just frame for us what a recovery looks like in the Service Center business and what the gap historically has been between your international and domestic, and where it currently is today?

Well, I think we've mentioned in the quarter our team in Australia, Australia-New Zealand, they had growth and so continued to participate and have that now. So, I think the team is faring very well. They, too, have dealt with some of the pandemic coming through. I think New Zealand has 100-plus days of string going on, so operations continue there. But I think Australia has fared very well. So, we continue to see that activity and our local teams or are fully participating in that. And they, too, right, as we grow our offering and capability including service and predictive preventative maintenance and remote monitoring, we're seeing those trends come through.

Okay. So, the growth by FQ4 framework that you outlined, that's both a Service Center and a FP comment or is it more weighted towards one or the other?

Mike, can you just repeat that question? I'm not sure we fully understood it.

So, the peak to trough would by growth by the fiscal fourth quarter would apply a bigger move for Service Center. I'm just confirming that both Service Center and Fluid Power you're assuming growth by the end of the year, if that's the case or...

Yeah, we...

...if it's more weighted one sector.

Yeah, we would say is it's – because we did not give a specific color around by segment as relates to the fourth quarter, but we would expect a recovery in both of those segments starting to really materialize on a year-over-year trend basis as we get into the fourth quarter.

Okay. That's it from me. Thanks.

At this time, I'm showing no further questions in queue. I will turn the call back over to Mr. Schrimsher for closing remarks.

I just simply want to thank everyone for taking the time joining us today and we look forward to the continued interaction throughout the quarter.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.