Ladies and gentlemen, thank you for standing by and welcome to the AMETEK Q3 2015 Earnings Call. During the presentation, all participant lines will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded today, Tuesday, October 27, 2015. I would now like to turn the conference over to Kevin Coleman, Vice President of Investor Relations. Please go ahead Mr. Coleman.

Great. Thank you, Miladen. Good morning and welcome to AMETEK's third quarter earnings conference call. Joining me this morning are Frank Hermance, Chairman and CEO; Bob Mandos, Executive Vice President and Chief Financial Officer; and Dave Zapico, Executive Vice President and Chief Operating Officer. AMETEK's third quarter results were released earlier this morning. These results are available electronically on market systems and on our website at the Investors section of ametek.com. A tape of today's call may be accessed until November 10 by calling 800-633-8284 and entering the confirmation code 21777510. This call is also webcasted. It can be accessed at ametek.com and streetevents.com. The conference call will be archived on both of these sites. I will remind you that any statements made by AMETEK during the call that are not historical in nature are to be considered forward-looking statements. As such, these statements are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risk and uncertainties that may affect our future results is contained in AMETEK's filings with the Securities and Exchange Commission. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements. I will also refer you to the Investor section of ametek.com for a reconciliation of any non-GAAP financial measures used during this conference call. We'll begin today with prepared remarks and then we'll open it up for questions. I'll now turn the meeting over to Frank Frank S. Hermance - Chairman & Chief Executive Officer: Thank you, Kevin, and good morning, everyone. AMETEK had a solid third quarter with strong operating performance and earnings growth. We delivered a record level of earnings at the high end of our guidance range despite what remains a challenging and slow…

Great. Thank you, Bob. Operator, we'll now open it up for questions.

Thank you very much. And our first question comes from the line of Allison Poliniak with Wells Fargo. Please go ahead.

Hi, guys. Good morning. Frank S. Hermance - Chairman & Chief Executive Officer: Hello, Allison.

Could you talk, Frank, a little bit about the deceleration, what was different from even last quarter that drove this Q4 a little bit weaker than you maybe anticipated? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. Sure, Allison. In essence, when you look across the company, EIG performed in line with our expectations. We saw in EMG that the combination of Aerospace which was very strong was offset to a larger degree than we had anticipated in our Engineered Materials Interconnects & Packaging business. And the net of that ended up with in the third quarter a minus 2% organic growth for EMG. And we believe that that is going to continue in the fourth quarter. So we are seeing the result of the, I'll call it, industrial recession that's being talked about substantially now. And we decided as a result that the fourth quarter, which also was very strong from the viewpoint of expectation, needed to be lowered a bit.

Okay. Great. And then just obviously acquisitions, you've been very active over the last 24 months. Can you give us somewhat of an update, how they're progressing? Obviously, the macro environment is certainly a large headwind here, but in terms of your expectations going into them, both on a revenue and maybe a profit side as well? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. I mean, we're pretty bullish on the acquisition environment. We're working on a number of deals. Without giving specifics, I can tell you that in the third quarter, we worked on a very large deal actually. It would have been the largest deal that AMETEK has ever done. But unfortunately or I guess fortunately, depending on how you look at it, we did find a contingent liability in that deal that caused us to basically not continue with that deal. Putting that aside, we are in due diligence right now on other deals. We feel good about it. As we mentioned, it's the primary use of our cash flow. It's difficult to predict when deals will close. But you're going to be hearing from us either this quarter or surely in the first quarter of next year with additional deals.

Great. Thank you.

And our next question comes from the line of Matt McConnell with RBC Capital Markets. Please go ahead.

Thank you. Good morning. Frank S. Hermance - Chairman & Chief Executive Officer: Hi, Matt.

Just a quick clarification. There was no M&A contribution in EIG. And I thought the Surface Vision deal closed within the first few weeks of the quarter. So, could you clarify when that will be hitting your results? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. No. Actually, what occurred there is that Surface Vision was in the quarter. If you go back a year to when we did the Zygo acquisition in the third quarter of 2014, we actually had a stub period for that business because we acquired it right at the end of Q2 of last year. So that when you do the comparison between acquisitions this year in Q3 versus last year, you get an abnormality. In reality, in the quarter, we saw approximately $15 million of sales from Surface Vision, which was countered by basically that stub period. So, that's a good pickup, Matt.

Okay. Thank you. Okay, great. That helps. So, just to kind of follow up on the end market question. Did you say Oil & Gas was kind of expected through the quarter? And it seems like just based on the magnitude of the deceleration, maybe it was more than just EMIP. So, anything besides that in the Process side that's coming in weaker than expected or just this industrial malaise is touching most of your businesses, it seems? Any change in Oil & Gas specifically? Frank S. Hermance - Chairman & Chief Executive Officer: No. We had given an estimate in Oil & Gas back in the first quarter. We said that our total exposure was around $400 million. And we expected about a 10% reduction in that due to the upstream portion which was around $40 million and, in fact, that's what we're seeing. We called it right. Our people did a really good job of estimating what the impact would be. And therefore, on the EIG side, we have not changed our outlook based on Oil & Gas, and it really performed, as I said in my opening remarks, in line with expectation. The difference was there's obviously a global macro condition here that is having impact on a number of businesses, but when you really isolate the change in EMG, it did come down to our Aerospace businesses, which did very well, being offset by weakness in our Engineered Materials, Interconnects and Packaging business. And when we look at that Engineered Materials, Interconnects and Packaging business, it is really a global macro that is driving that. It's not a specific item, et cetera. It's just the global macro condition. So, that is the area of the company that we've seen an impact due to the industrial recession, for lack of a better set of words. Does that help?

Yes, it does. Thanks very much. Frank S. Hermance - Chairman & Chief Executive Officer: All right, Matt.

And our next question comes from line of Joe Radigan with KeyBanc. Please go ahead.

Thanks. Good morning, guys. Frank S. Hermance - Chairman & Chief Executive Officer: Good morning, Joe.

Frank, coming into the year, I think you were expecting or at least you guided to about 30 basis points to 40 basis points of margin improvement, which was consistent with what you've seen in the last few years. You're trending, I think, basically 100 basis points up year-over-year through three quarters. It sounds like that's going to continue into the fourth quarter. So, I guess my question is, obviously, you guys know what you're doing in terms of cost management, but as we look at this sort of slow growth going forward, can you continue to get margin expansion, or does the shift focus to more just sustaining where you're at in this industrial recession type environment? Frank S. Hermance - Chairman & Chief Executive Officer: Great question, Joe. No, we're pretty bullish on margins. And you're absolutely right that we started the year with a lower number. But you may recall in the first quarter, we took some specific actions when we realized that the year was going to be weak, as most industrial companies were seeing. So, as a result, our guidance has been in the 100-basis-point arena, and that's what we're expecting for the entire year, that we're going to be up about 100 basis points. As we go into next year, which, really, was the key part of your question, we're going to be very aggressive on the cost side of the business. And one advantage of our MIP (26:30) strategy is that there are a lot of actions that we can take to basically improve the operating performance by putting various manufacturing facilities together, being more aggressive in the materials side of the business which, as you know, we've put tremendous infrastructure in place that we can continue to drive good earnings growth there. We've got value analysis and value engineering which is picking up steam in the company. So, we are in the process right now of putting our budgets together for next year. I'm not prepared to give you an exact number. We will do that in the January or, I guess, maybe early February call, whenever we're going to have it in the beginning of the year, and we'll give you guidance. But I can tell you, margins will be up. No questions asked.

Okay. Great. And then, can you give us a rundown by region, kind of what you saw by region? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. Sure. If you look at our performance in the main geographic areas, the U.S. was flat. This is all organic. Asia was down 7% and Europe was down about 1%. So Asia, if you look at the change when you go back in time, we were growing our Asia business in the double-digit positive arena. And now, we're seeing obviously the effects of what's going on, principally in China. And the organic growth in China in Q3 was actually a negative 12%, and that compared with last year's third quarter when we were up 17%. So, very significant change in China. And then, just sort of a slower growth in the other parts of the world, Europe is hanging in there. Probably a little bit better than we had expected.

Great. Thanks, Frank. Frank S. Hermance - Chairman & Chief Executive Officer: All right, Joe.

And our next question comes from the line of Andrew Obin with Merrill Lynch. Please go ahead. Andrew Burris Obin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Yes. Good morning. Frank S. Hermance - Chairman & Chief Executive Officer: Hello, Andrew. Andrew Burris Obin - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Just a question on growth. With the latest guidance, EPS growth is now likely to come in at sort of mid-single digits, and this is – even if we exclude 2009, this is the lowest level in a decade. And from your perspective, what can get EPS growth to reaccelerate in the near-term? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. First of all, I mean, if you go back – you said a decade. If you go back to 2008 and 2009, when we were in the recession, we surely had – our earnings growth was negative. The key part of how we're going to get the numbers up is it's basically going to come down doing more deals, using that strong cash flow to acquire companies. And, obviously, we look at that on a return-on-invested-capital viewpoint, but that will also drive EPS growth. And then, we've been very careful as we've made the cost reductions in the company to focus on the operations side of the business, not on our engineering and sales and distribution side of the business. And that's – you heard me in my opening remarks talk substantially to that. So, we're going to continue. And with those engineering efforts, we're hoping that we'll be able to offset some of the effects of the global macro. So, the basic answer to your question is to get better organic growth and do deals. That's the key. And we'll continue, as we…

And our next question comes from the line of Matt Summerville with Alembic Global Advisors. Please go ahead.

Hey, Frank. A couple questions. First, just to put this into context, can you talk about, first, what your organic order number looked like in the quarter and what the organic book-to-bill would have been? And then talk about the linearity you experienced. I guess, I'm trying to all put this into context. I've obviously been familiar with AMETEK for a while now. Typically, the fourth quarter is your best EPS quarter of the year. Are you really just trying to derisk that going to $0.63? It's been quite a while since you've had a Q4 less than what you've earned really throughout the prior part of the year. I'm just trying to put all of this together. Frank S. Hermance - Chairman & Chief Executive Officer: Okay, Matt. Well, you asked a number of questions there. Let me see if I can answer each of those. Yes, I'll say we definitely derisked the fourth quarter. We just felt with the global macro that we're seeing and the changes that I've already talked about that we just decided to essentially derisk it. And we're going to obviously concentrate in Q4 on getting good results for the following year. So, as you say, you've known us for many, many years and we definitely did derisk it. The order numbers, overall orders were down about 2% in the quarter. Organically, they were actually down 5%, but that number is not a fair representation of the business. And the reason is that last year in that quarter, we had some very large one-off orders. So, I think if you normalize that out, the organic growth was in line with, or lack thereof, was in line with the sales growth. So, I think you put that whole picture together, you see a slowing macro. We just decided that we were going to derisk Q4.

And then just to revisit the China question. I think you said you were up 17% last year, down 12% this year. While I get the comp could give you those (35:26) that's actually a pretty surprising number to me. Can you talk about from an end-market standpoint more of what you're seeing there? And I realize it's not a gigantic part of your sales, just more of trying to get a bigger picture of what's going on there. That's a big decline. Frank S. Hermance - Chairman & Chief Executive Officer: Yes. You were breaking up there. I think I got your question. So actually, this is not a change. Last quarter, I don't remember the exact number, but it was in that – it was negative 5%, one of the guys is telling me. So, there really hasn't been a major change in our outlook there. I mean, basically, you're looking at a situation in China that is a basic change. You look at the PMI in China. I was just reading a report actually last night. The latest PMI came out at 47% for China when it was running at close to 60%. So, there just has been a change in the industrial environment in China. So, I don't think it's a major change sort of sequentially in Asia, but clearly it is a major driver in our organic growth. The other thing, I said minus 7% and minus 5%, those numbers were for all of Asia, okay? The minus 12% in China was offset by strong performance in Japan actually last quarter and this quarter. And also, some of the other parts of Asia are doing much better. But the drag is definitely China.

Thank you. Frank S. Hermance - Chairman & Chief Executive Officer: You bet, Matt.

And our next question comes from the line of Richard Eastman with Robert W. Baird. Please go ahead. Rick C. Eastman - Robert W. Baird & Co., Inc. (Broker): Yeah. Frank, you had mentioned the EIG business with core growth was down about 2%. You had suggested that that was at plan. Is that... Frank S. Hermance - Chairman & Chief Executive Officer: No, that – not our original plan but at our forecast. If you look – let's just take EIG and segment this, so you have a flavor as to what is actually going on here. Our Aerospace businesses in EIG were very good. They were up mid-single digits in the quarter on sales and orders, actually. So that part of EIG performed as we had anticipated. You look at the Power & Industrial piece of EIG, that was up low-single digits which was our expectation. The drag was in Process where that was down low-single digits and because Process is a larger part of EIG, that drove that negative 2% overall organic growth. And yes, that's basically what we said last quarter when we provided the outlook. We said that the organic growth for EIG for the entire year was going to be basically flat, and that's what we're predicting now. So there hasn't been what I would call a major change in EIG. It's been pretty much as we anticipated. And the issue is very simple there, it's Oil & Gas. That's what's driving it and it's the upstream piece. Rick C. Eastman - Robert W. Baird & Co., Inc. (Broker): Okay. And then so... Frank S. Hermance - Chairman & Chief Executive Officer: Does that help? Rick C. Eastman - Robert W. Baird & Co., Inc. (Broker): Yeah. And so fourth quarter then, core growth…

And our next question comes from the line of Christopher Glynn with Oppenheimer. Please go ahead. Christopher D. Glynn - Oppenheimer & Co., Inc. (Broker): Yeah. Thanks. Good morning. Frank, got a question about how things trended from earlier in the quarter through September and into October. And, I guess, there's a quantitative aspect to the question. But on a qualitative side, do you feel like the reset on the macro is in or is that a question for another day? Frank S. Hermance - Chairman & Chief Executive Officer: Say that again? Is the... Christopher D. Glynn - Oppenheimer & Co., Inc. (Broker): Yeah. Just wondering how things tailed up during the quarter if you compare the early part of the quarter to September and into October. And do you feel like the reset in the macro is in place or is that a question for another day? Frank S. Hermance - Chairman & Chief Executive Officer: Yes. Yeah. No. No. I feel it's in place and, actually, if you'll look at the order trend in the quarter, it was actually up from the beginning of Q3 to the end of Q3. But the absolute levels were lower than we had anticipated. And, yes, I think we have taken the global macro now into account and we dealt with through the costs and we're looking at now what next year is going to look like. I'm not looking at further deterioration. I don't feel that. But I do feel like, as I said before, the target for the fourth quarter was a very high one. And you look at numbers that were up in the $0.68, $0.69 region. And with this global macro, you couldn't make that ramp. It's just too big a ramp. Christopher D. Glynn - Oppenheimer & Co., Inc. (Broker): Okay. So, you don't see any further unraveling in the macro? Frank S. Hermance - Chairman & Chief Executive Officer: No. Christopher D. Glynn - Oppenheimer & Co., Inc. (Broker): You feel like there's a good read on the macro from where you sit right now? Frank S. Hermance - Chairman & Chief Executive Officer: I feel there's a good read on the macro now. Yes. Absolutely. Christopher D. Glynn - Oppenheimer & Co., Inc. (Broker): Thanks. Frank S. Hermance - Chairman & Chief Executive Officer: You bet.

And our next question comes from the line of Nigel Coe with Morgan Stanley. Please go ahead. Nigel Coe - Morgan Stanley & Co. LLC: Yeah. Thanks. Good morning. Frank S. Hermance - Chairman & Chief Executive Officer: Hi, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: So, Frank, no more questions on Zygo. I think I get it. Frank S. Hermance - Chairman & Chief Executive Officer: Okay. We're good. Nigel Coe - Morgan Stanley & Co. LLC: Just I thought your 4Q comments were interesting in terms of you derisked the 4Q guidance. So, just want to clarify that. So, based on prior years, there should be, what, $0.02 or $0.03 of contingency based on your plan? Frank S. Hermance - Chairman & Chief Executive Officer: There's contingency. There's definitely contingency. So, I'm not going to speak to the amount. But if things go well, we'll beat that number. Nigel Coe - Morgan Stanley & Co. LLC: Okay. And clearly, Oil & Gas took a toll on the Process performance. You've said in the past, upstream very weak but midstream, downstream – I wouldn't say good but holding the line. What is your current commentary on midstream and downstream and how do you think that looks in 2016 (46:04)? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. Great question, Nigel. There has been no change. What we said at the beginning of the year is the upstream piece was going to be down about 25%, and the mid and downstream piece would be down slightly, low-single digits. And that's in fact what we're seeing. The mid and downstream is holding in there and we have not seen a deceleration in that piece of the business. I know there was some concern a quarter or two ago, of whether we were going to see that. And in fact, we have not seen it. So the impact on us is largely the upstream part of the business and it's down about what we had expected. Nigel Coe - Morgan Stanley & Co. LLC: Okay. And then just finally, Frank, pricing has been pretty strong year-to-date. Have you seen any deterioration in pricing given the weakening macro? Frank S. Hermance - Chairman & Chief Executive Officer: Just a little bit. We have been talking numbers on pricing, I think the first few quarters of the year at about 1.5%. And when we rolled up Q3, it came in about 1.3%. But that's sort of a normal variation. So, I don't think there's been a deceleration. But it's not the 2% that we were seeing a number of years ago. And very few industrial companies are seeing a 2% number. So, we're actually fairly happy with staying around that 1.5% level. Nigel Coe - Morgan Stanley & Co. LLC: Great. Thank you very much, Frank. Frank S. Hermance - Chairman & Chief Executive Officer: Okay, Nigel.

And the next question comes from the line of Brian Konigsberg with Vertical Research Partners. Please go ahead.

Yeah. Hi. Good morning. Frank S. Hermance - Chairman & Chief Executive Officer: Hi.

I know Nigel might get it, I'm actually still pretty confused about the M&A, but I'll take it offline. It almost seems to me like maybe organic is being overstated the way it's being discussed, but... Frank S. Hermance - Chairman & Chief Executive Officer: Oh, no, not at all. Not at all, yeah. I think this stuff here is what confuses you. If you're just looking at absolute numbers, there was $15 million of acquisition growth. If you look at it that way. It's only when you compare it to the third quarter of last year does it cause the confusion, and that's the way we typically talk about acquisition growth is on a comparison basis. So, it really just depends how you look at it. There's nothing strange going on here. It's just the way you look at it.

Okay. Frank S. Hermance - Chairman & Chief Executive Officer: All right.

Okay. I'll follow up with Kevin after. Just separately, most of my questions have been answered. But maybe just talk to free cash flow conversation. So, you took it down a little bit and I think you were previously 115%, now you're 110%, CapEx has taken down a little bit. Maybe just talk about the puts and takes there. Is it maybe a little bit on working capital that you're not getting out is what you thought, or are there items? Frank S. Hermance - Chairman & Chief Executive Officer: Right. You hit it, Brian. When you see a slowing macro, we did have some working capital buildup. It was not substantial, but it did go up and that was a driver. And we're giving you rough estimates here. I think the 110% is actually conservative. It's going to be better than that. But we did want to be fair in saying that it probably is not going to reach the 115% level.

Okay. And do you think the $70 million is – oh, I'm sorry. Go ahead. Apologize. Frank S. Hermance - Chairman & Chief Executive Officer: No. I didn't say anything.

I thought... Frank S. Hermance - Chairman & Chief Executive Officer: I think there's some background.

There's some feedback. Yeah. Just the CapEx at $70 million, so you're confident that it will still be spent, it still assumes do some pickup in the fourth quarter? Flat with last year but obviously you've been trending below? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. No. It's definitely possible we'll spend less than that. We dropped it from $75 million to $70 million, and it would not surprise me if we ended up at a $65 million number there.

Yeah. All right. Great. Thank you. Frank S. Hermance - Chairman & Chief Executive Officer: Hey. You bet.

Our next question comes from the line of Joe Giordano with Cowen & Company. Please go ahead. Frank S. Hermance - Chairman & Chief Executive Officer: Hi, Joe. Joseph Giordano - Cowen & Co. LLC: Hi, guys. Thanks for taking my questions. So, you mentioned, Frank, that the Engineering Materials and Packaging are the biggest variants from when you last gave guidance. And I was just wondering if there was anything specific on the cost side incremental to what you had already planned or what you typically do as part of your continuous improvement that you've identified over that period that you're going to put through? Frank S. Hermance - Chairman & Chief Executive Officer: Yeah. No. That's a great question, Joe. What we decided and I think I mentioned this on my last call was that the total cost improvements through the whole company that we talked about last quarter was $145 million. And what we have done is increase that to, I would call it, a conservative number which is $150 million. So definitely, we are active on the cost side of the business and we put additional measures in place, not all in EMIP but obviously that would be a place where some of this would occur. And so yes, the answer to your question is we have taken additional cost actions in the business. Joseph Giordano - Cowen & Co. LLC: That's (51:33) Frank S. Hermance - Chairman & Chief Executive Officer: And that's why – if I could just add a comment. That's why when we were asked question about Q3 and derisking it, we really did derisk it given that fact as well. Joseph Giordano - Cowen & Co. LLC: So that's a realized $150 million for 2015? Frank S. Hermance - Chairman &…

And, gentlemen, there are no further questions at this time.

Great. Thank you, Miladen. Thanks, everyone, for joining our call today. As a reminder, a replay may be accessed at ametek.com and streetevents.com. As always, I'm available for further questions at 610-889-5247. Thanks, again.