Greetings, and welcome to Ecolab's First Quarter 2017 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Monahan, Senior Vice President of External Relations. Mr. Monahan, you may begin.

Thank you. Hello, everyone, and welcome to Ecolab's first quarter conference call. With me today is Doug Baker, Ecolab's Chairman and CEO, and Dan Schmechel, our CFO. As discussed, in our results along with our earnings release and the slides referencing the quarter's results and our outlook are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements on these materials stating that this teleconference, the discussion and the slides, including estimates of future performance. These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described in the section of our most recent Form 10-K under Item 1A, Risk Factors, and in our posted materials. We also refer you to the supplemental diluted earnings per share information in the release. Starting with a brief overview of the quarter, continued new business gains and product introductions drove acquisition adjusted fixed currency growth in our Global Institutional, Global Industrial and Other segments during the first quarter. These were partially offset by a narrowing sales decline in the Energy segment. Product innovation and ongoing cost efficiency work more than offset the impact of higher-than-forecast delivered product costs, as well as soft economies and challenging end markets. These, along with lower interest expense, a lower tax rate and fewer shares outstanding, yielded the first quarter's 4% adjusted earnings per share increase. Moving on to some highlights from the quarter and as discussed in our press release, consolidated acquisition adjusted fixed currency sales for our Global Institutional, Global Industrial and Other segments grew 3%, but were partially offset by a narrowing Global Energy sales decline. Regional fixed currency sales growth was led by Latin America and North America. Reported operating margins decreased 20 basis points. Adjusted fixed currency…

Thank you, Mike. So, the first quarter was certainly not our prettiest, but better than it looks and it does set us up for the full year delivery. Most things are on track, pricing, new business, innovation, investments, industrial business acceleration, energy recovery and FX stabilization, but we did have a few surprises. Raws moved faster than forecast in the quarter, and we do believe will be net higher for the year. The good news is, our pricing also has traction and we believe will catch up on a dollar basis this year. Institutional sales were also soft. They were softer than expected, but they're better than they look. So, if you take and adjust the base business for Swisher exits, which we have done because of margin and other issues, we're really growing at about 5% in North America and 4% globally. That's still slower than last year and slower than we expected. The issue primarily is that U.S. restaurant same-store consumption is down. (05:14) you got to go sell more business. We're not going to fix the U.S. foodservice market by ourselves and the division is already all over this driving significant new business campaigns, and we've got the right team to do this. In total, Q1 was solid, not brilliant, but leaves us in position to deliver the year. The most important perspective on 2017 to understand is that the second half EPS ramp up is not nearly as steep as it appears. We need to do 14% EPS in the second half to reach our midpoint or $4.80. The first half run rate is really an 11% when you control for hedge and other non-recurring install and other expenses. So, we still have a step-up, but it's much more manageable moving from an 11% to a 14% than what may appear to be from like a 4% or 5% to a 14%. So, the step-up requires sales to move from 2.5% in the first half to 5% in the second half, which I believe is quite doable. Here are couple of facts. Energy trajectory this year, 0% growth really in the first half, we expect them to grow at least at 5% in the second half. If you assume that, then II&O (06:27) needs to go from 3.5% in the first to 4% in the second. We already have Industrial sales trajectory moving, it's accelerating. Institutional in the second half will lap the Swisher exits, and we've got a clearer view of timing on known wins and losses throughout the businesses, all of which are quite favorable to us. Net, we're making progress. We believe we're on track to go deliver a solid year. And so while Q1 won't win many style points, we do believe we're going to deliver a more Ecolab-like performance in 2017. So, with that, I'll turn it back to Mike.

Thanks, Doug. That concludes our formal remarks. As a final note before we start Q&A, we plan to hold our annual tour of our booth at the National Restaurant Association Show in Chicago on Monday, May 22. Looking further ahead, we also plan to hold our 2017 Investor Day on Thursday, September 7. If you have any questions, please contact my office. And now, operator, please begin the question-and-answer period.

Thank you. At this time, we'll be conducting a question-and-answer session. Thank you. Our first question is from the line of Gary Bisbee with RBC. Please proceed with your questions.

Hey, guys. Good afternoon. I guess, I'd love to get some more color on the Institutional business and the deceleration there. If Swisher bleeding off some of the lower margin volumes there is a big piece of it, I would have thought maybe that margins would have been better, and yet they were down quite a bit. So, any more color on the revenue, and any color on the margin to help us think how that trends the rest of the year? Thank you.

Yeah, I think within the Institutional margin, you've got some of the noise I referred to earlier. You certainly have some impact from hedging, not in the U.S. margin particular, but U.S. global or in Institutional global. And you also have investments that have been made, particularly in plant equipment, to enable a new platform for solids, which is now coming online. It's in the margin, but not yet fully or even partially utilized in some cases, as we're rolling that out late in the second quarter. That's also making it a little worse. And then we have a few rollouts, where we've got the mechanical equipment expense or the ME expense in the business, but not the sales yet. So, I would say if you look at Institutional margin, it looks like it's down, but there's a number of things, which really, I think, mask the underlying trend in their margin. And we expect, over the year, that their margin is going to start showing daylight between this year and last year. Pricing in Institutional was the best performer last year, and they're continuing on a very solid track this year. So, we're not really worried, ultimately, in Institutional margins.

And just the – any more color on the revenue deceleration?

Well, Gary, I mean it really comes down to mostly same store's consumption in U.S. restaurant. And that we've dealt with many times in the past. Restaurants come in and out in terms of how successful they're being. I don't think we're the only ones feeling this. We've tended to manage this better than others. The division got on it early. They have a number of what I would call high-energy new business efforts underway that are gaining traction, and that's the only way you sell through this is you got to go gain more business. We, by ourselves, can't force the restaurants to consume more, and they're really just reflecting the softness in their business.

Great. And then the quick follow-up. With Energy it sounds like on the verge of rebounding, can you just review for us how you're thinking today about operating leverage coming back to the business? I know there's some cost you'd stepped aside from that's probably come back, but how strong could incremental margins be as we look to the next 18 months and the revenue rebounds there? Thank you.

Yeah. Typically, what we've seen in the past and what we expect this year is, let's call this the very early innings of a recovery. And we typically see really margin recovery and a lot of flow-through more in year two than in year one. And that's simply because as you're starting to see volume increase, you're simultaneously seeing some of the raw materials increase, pricing lags a bit. And so you end up with increasing sales, but not significant and sometimes even near-term decelerating margin before it starts expanding again. You also have some costs you've got to add back. The largest cost this year that we're going to have to add back is compensation. So, it's a business because of performance, it hasn't earned bonus over the last several years. They are on track to earn bonus this year, and so we've got to rebuild that. We're also rebuilding some other comp where it matters because the industry heats up, it becomes much more competitive. In total, for the year, I think we're pretty much where we thought we would be last call, and that is we're going to have some year-on-year sales growth in this business. Really, it's going to be a second half story as I alluded to in my opening remarks. And we also expect to be about even to have some minor potential accretion on the operating income line, too, as we start rebuilding comp and that somewhat offsets the volume benefit that we're going to see.

Thank you.

Our next question is from the line of John Quealy with Canaccord. Please proceed with your questions.

Hey, good afternoon. First question, diving back into the foot traffic topic. Inside Specialty and quick serve, did you also see that foot traffic issue or was it, as you've reported, more of a timing issue off a tough comp last year?

Yeah. In Specialty, it's more a timing issue, and it's not even just the comp. We've got a lot of new business that's being put on in Specialty right now. They're going to have a very solid year. The quarter is really just sort of an aberration. We've gone through this. As I've always described, that's sort of a – the way they feed their village is through hunting elephants, and they've landed several, but they just haven't brought them back to the village. They're coming. So, even there you've got some of the pressure as a consequence of they've installed a lot of these accounts, but they haven't yet started consuming our product in the first quarter. They're starting to in the second quarter, as they had to run out the old competitive product first. So, that also put pressure on the first quarter margin. There's going to be a little less pressure from that in the second quarter but still some, and all that pressure goes away in the second half as we realize the full effects of the new business volume in Specialty.

Okay. Thanks. And as a follow-up, Doug, a broader question, more on people. Sounds like you're adding and rebuilding some channel in the core businesses. Equipment Care seems like it's constrained a bit just trying to get talent for those folks and then Energy, we're adding back some compensation. When you think about broader compensation costs for the platform into 2018 in what could be a rising wage environment, talk about the puts and takes and how you're planning for that. Thanks, guys.

Yeah. I don't think we're going to see dramatic wage inflation in 2018 versus 2017. I mean, it's been fairly steady even over the last couple of years. I mean, many of the markets that we compete in are pretty full employment. And we've got several things going for us. One, we've got a great employment brand story. We've got great track record of growth. We're on the right stuff, stuff that matters to people who are joining the workforce in terms of our ability to talk about clean water, safe food, abundant energy and healthy environments. It really does resonate with people we're trying to attract. And in terms of how do you offset the wage pressure, it's really through efficiency programs. So, as we've talked, we've invested a lot in field technology. That's bearing fruit and enabling us to help our team do more and handle more as we take the admin off them and automate that kind of work. We have many more programs like that now that we have the installed base, the field technology in their hands, and that's in the base business or the run rate. So, those are really the steps we have to take, but I wouldn't be signaling that there's going to be some fundamental shift in wage pressures. We've had wage pressure. We expect to continue to have some wage pressure, but I don't think it's going to be at a dramatically different trajectory.

Thank you. Our next question is from the line of David Ridley-Lane with Bank of America. Please proceed with your question.

Sure. Now that you've broken out the Life Sciences business, can you maybe talk about medium-term expectations for revenue growth in that segment? And also, would you describe it as an above-average margin business, a business for you today or – what are your outlooks on margin as well?

Yeah, Life Sciences business chase (16:30) is a big market. It's very well designed for us. It's dominated by large multinationals who have significant hygiene needs, as you might imagine. With a change in their business model, where they're going from long-run to shorter-run drugs and even cosmetics, changeover is important. And so our ability to help manage changeover time, water consumption, hygiene, all fits very much their needs, and our ability to do it consistently across the globe is also important. So, as we look at this, it already is a higher-than-average margin business. We would expect it to remain so, given the fit for what we do and the critical needs that our customers have in this area. It's going to act a bit like Kay and then it's going to be lumpy, meaning we're going after large customers. They aren't all going to come on smoothly, so I think you're going to see some knockout quarters and other quarters that may be single digits, not double digits. But in total, our expectation for this business is it's a double-digit organic growth business. We will look to see if there are smart acquisitions to be made. But that's to be seen. We're not relying on it. Fundamentally, we've got the capability we need and we can build what we don't, and we're getting after this. So, we're quite excited about this market and the potential.

Sure. And as a follow-up, Europe appeared to be a pretty weak region for you in the first quarter. Would you put Europe in that category of things that you expect to have a second half improvement? Or is this a bit more macro related and should continue to be sluggish here for the full year?

No, I think Europe will do better as the year goes on. I mean, Europe is a combination of somewhat the environment, but I would also say, I think, there's some things we can do better in Europe. And certainly, we've got a couple of businesses pulling down the overall. I mean, as it stands, what I would say is, we expect Europe to have modest sales growth and modest OI ratio improvement for the year. And what we're going to work hard to do is improve that outlook as we go forward. I don't think it's going to dominate the news in terms of company performance, and I think the forward quarter is going to be better than this one.

Thank you very much.

Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your questions.

Hi. This is actually Greg calling on for Manav. I just wanted to ask for a little more color on the growth trajectory within Industrial and just any changes that you're seeing in terms of lapping the headwinds, whether it's in heavy or mining.

Yeah, I would say heavy, in total, I'll get down to organic, had growth in this quarter and we expect it to accelerate. Mining narrowed its decline, I mean it was low single digits, better than the fourth, which is clearly better than the third. We'd expect mining to start showing growth maybe as early as this quarter, more likely in the third quarter. So, I'm not sure it's all that important, but it's clearly making the progress we expect. And we expect heavy to continue to accelerate throughout the year. The comps for water, for heavy and mining, in particular, improve throughout the year. And so, we'd expect you're going to see overall acceleration in water as a consequence.

Okay, thanks. And then I know it's a bit early with the Anios deal, but just some early thoughts on how that integration is going and how you guys are looking at the opportunity set?

Under the heading you got to get the big ones right, we are. So, we really – we've liked Anios and admired it for a long time and for good reason. I think everything that we're learning is what a quality company and business it is. It's a lot easier to integrate a business that operates well because in all, the new stuff that you can bring to them and also the ideas you can take from them for the other businesses, it's going on a firm foundation. That's certainly what we have there. So, yeah, Anios, it's growing. We're seeing the operating leverage we expected. We're on track. We believe to deliver good synergy numbers. My hope is that we exceed it this year, we'll see. But yeah, we feel very good about it, still early days, but it's off to the right start.

All right. Thanks, guys.

Our next question comes from the line of John Roberts with UBS. Please proceed with your questions.

Thank you. Any thoughts on competing against Diversey or GE Water under the new owners? I'm curious whether that's behind the back half of the year new win improvement that you're talking about.

Well, I would certainly say I think anytime a company goes through a transition like the one that either GE Water or Diversey has to go through, i.e., a big ownership change, certainly causes distraction. We've seen it in the past. We expect to see it going forward, and we aren't shy about working to capitalize on it. We feel it's our responsibility. So, we have – let's just say, I talked about the Institutional efforts. We have very strong efforts everywhere to get after new business. We had a good first quarter from a new business standpoint. We had a very significant ratio against our key competitors in terms of win/loss, I would say stronger ratios than we had in 2016, which were quite strong as well, so we're all over this. I wouldn't say that's the reason we're confident we can accelerate, but it's certainly another, I guess, thought to put in the back. So, we'll accelerate.

And then costs are up for caustic, chlorine, propylene derivatives. Is that a big part of the cost headwind that you're talking about in the release? Or is it just one other thing among a lot of things?

Yeah, I think caustic and propylene, in particular, caustic's up this year for us. It's a main raw material in our Institutional F&B businesses, in particular. We also have propylene, which is expected to peak in the second quarter as new capacity comes on, as we go forward. And I think propylene run-up was the surprise that we had early in this year versus expectations. Caustic, we expected to see go up, and it did go up.

Thank you.

Our next question is from the line of Laurence Alexander with Jefferies. Please proceed with your questions.

Good afternoon. So, two questions. One, can you give a little bit more detail on the retention issues you flagged with the technicians for the equipment repair services business? And secondly, with the run rate that you're seeing in the back half of this year, to get there, you flagged a bunch of sort of one-off-ish factors that you think will slip away and let the underlying momentum show up. As we're thinking about the bridge into 2018, do you think the back half is a good run rate? Or should some of these one-off lumpiness factors come back into the bridge?

Well, I'll do the second first question. No, I think the second half, it'd be a more realistic run rate model for what we would expect in 2018 in the first. I mean, the first had – the single largest impact is hedging, and hedging is going to account for literally like a 4.5 point with a 5-point drag on EPS, 5 percentage points, 500 basis points in the first quarter. It's going to be 4 in the second, so 4.5 for the first half all by itself. It does go away. It's simply – these were foreign hedges that we put on in a rising dollar environment. It's really not that there are huge negative costs in the first half. We're just comparing against a year-ago period, where you had very favorable contributions from the hedging activity as the dollar was rising. So, you got to go – we normalize, we look at our GP progression ex-hedge to understand really what's going on underneath, and it's all the stuff you would expect, which is why we're very quite confident in the second half. So, we do not expect next year to have year-on-year hedging impacts, simply because we aren't benefiting this year from them. So, there's nothing really to compare against. The others were sort of oddities, and normally you don't get this many stacked up, but a lot of it's good news. We're investing in new technologies for institutional solids. We have a lot of new business wins, where we have a lot of installs focused on a specific quarter, where we're not realizing the volume from those installs, but you're realizing the cost. We typically don't have this many stacked up at one time and in a couple quarter period. I don't mind it, but it does make GP look artificially low for a period of time, and we know that goes away. Based on our history, this is unusual. If it happened again, I would explain it again and be happy about it again. In terms of GCS, it's really not a retention change. Retention's always been a bit of a challenge there in the field workforce. We spend more than other people training our team. They get poached at times by competitors. There's not a change in retention of our employee base. What's changed is just how fast we've been able to add on new people to replace those that are leaving. And there, we got a little bit behind in Q4 and are catching up on Q1. I don't think this is going to be an ongoing challenge for the business. It's just a bit of a near-term challenge.

Okay. Thank you.

Our next question comes from the line of P.J. Juvekar with Citigroup. Please proceed with your questions.

Yes. Hi. Good afternoon. Your QSR trends were a little slow this quarter compared to last year and some recent trends. Can you talk a little bit about that? A lot of new restaurant chains that are opening up and taking share away from old chains and just tell us how you're positioned with the new chains.

Yeah. No, I think our QSR business, I'm not worried about at all. You're right, the quarter was a little bit soft in terms of growth rate, I mean, but it's still growing at what five and change. But it's going to accelerate throughout the year. We've sold a bunch of business in that – in QSR. And we've rolled it out a lot of it, we're going to start seeing the volume coming in, in the second quarter, and we'll enjoy 100% of it kind of at run rate in the second half. So, it's just a timing issue. It's nothing fundamentally wrong or to worry about our QSR business.

And also, your Energy business, the peak was in 2014. Do you see that business going back to that level at some point? I'm not looking for a year or a date. Or is there something change structurally in that business, where customers are using less chemicals per barrel of oil or something like that? Is it all cyclical or you think there may be some structural change that has happened? Thank you.

Yeah. I don't think we've seen the peak sales and OI in our Energy business for all time by any stretch. So, yeah, I think ultimately we'll reach and I would expect to exceed those levels down the road. Has there been change in the industry? Yeah, I would say all kinds. And in some areas, yeah, it's more efficient, we're more efficient. It can take less chemical in some cases, but there are other applications that take more. The net story that we've always talked about, which is easy oil transitioning to harder-to-get oil is still fundamentally the driver and that has not changed. So, that market continues to become more attractive over time as exploration picks up, which really isn't this year, but we think more meaningfully in 2018 and really in 2019. They're going to have to go after the harder-to-find oil because the easy oil's gone and when they do that, the average, if you will, consumption of our technology per barrel will continue to rise and that's the fundamentals in the business. So, we plan on continuing to gain share. The market will recover. It's not going to be identical to the business that we had in 2014 because that industry continues to evolve and will continue to evolve, but I think we're in great shape to evolve with it and continue to increase our competitiveness.

Thank you.

Our next question is coming from the line of Christopher Parkinson with Credit Suisse. Please proceed with your questions. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Great. Thank you. Can you just walk us through the recent improvements in Food & Beverage? And also whether or not you believe you'll see the full benefits of the strengthening North American sales team throughout the balance of this year? Or do you think that's all going to also be a theme in 2018 as well?

Yeah, look, I mean, several things. Yeah, I think F&B you saw acceleration. We expect continued improvement throughout the year as we go forward. So, we expect the second half to be stronger than the first half. The team has been investing in more corporate account head count, I think, wisely. That business has been successful over a long period of time, probably analysis the team did said hadn't been expanding the corporate accounting probably as fast as we've been expanding share and if we want to continue to have capacity there, we got to add to it which they've been doing. And I think it's already showing that it was the right move. So, I don't know, I remain – yeah, I would expect that business to be better this year, and knowing what we know now, I would say we should at least hold that growth rate moving into 2018. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Great. And just very quickly on the Pest Elimination business, you mentioned you saw strong growth in North America and APAC, but can you just comment on the key puts and takes in Latin America and then Europe in both the short and long term? And also, just the overall longer-term view of that business, is that a segment which you'd consider doing M&A in, as well as any other initiatives? Thank you.

Yeah, well, we love the Pest business, and so absolutely, on your M&A question, and we've done M&A and we would be a happy acquirer of a good business at a reasonable price. It's the second part of that equation that's been hard to find recently. People have been paying, in our mind, too rich of multiples in pest. Pest is attractive for many reasons, but one of its real attractiveness is its return on invested capital. It doesn't require a lot of capital. The only way you screw that equation up is you pay too much for a business. Now you've got too much invested and you've lost the heart or the secret to that business, in a sense. So, we're going to be wise people as it comes to M&A. In terms of what's going on, it's really more a Europe story. Latin America's a relatively small business, and Europe is just sort of – you get paid as you serve. Our service calendar was a little out of whack in the first quarter. There's catch-up activity underway in the second quarter, and so I'm confident ultimately that all comes back around and I'm not really worried about the Pest business. I think those guys are doing the right things and they've got good momentum. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Great. Thank you.

Our next question is from the line of Tim Mulrooney with William Blair. Please proceed with your questions. Tim M. Mulrooney - William Blair & Co. LLC: Yeah. Good morning. I know the drilling business was up double digits in the fourth quarter. How did that do in the first quarter?

Yeah. It was up double digits in the first quarter. I mean, grew faster, obviously, than in the fourth. Tim M. Mulrooney - William Blair & Co. LLC: Okay. Did the completion business, the other part of WellChem, did that follow suit in the first quarter? Is that continuing to improve as well, or is that piece of the business still in kind of a holding period?

Yeah, WellChem was up just north of 20% in the first quarter. We expect it to continue to accelerate based on our projection of what's going to happen in terms of rigs and rig activity. Tim M. Mulrooney - William Blair & Co. LLC: Got it. Thanks. And just one more, shifting gears to your Global Industrial margins. It looked like they took a step back in the first quarter, I think down 60 basis points on a fixed currency basis. Was that driven by the re-segmentation? Or just generally, what are the main puts and takes there?

Yeah. I would say the big noise in the Industrial business was hedge, particularly in the water business. If you get out – so in water, I think it was off 70 basis points, and 50 basis points of that was a hedge. So, that's the dominant story there. And that's a little bit just kind of one-time comparison. If you take it out, you start seeing the natural trajectory you would expect to see in our Industrial gross profit margin. They are getting pricing. Pricing accelerated in the first quarter for our Industrial businesses versus what they were able to get last year, so they're on track in terms of doing what they need to do to offset raws. Once the hedge comes off, which is after second quarter, I think you'll see a more natural view of their GP. Tim M. Mulrooney - William Blair & Co. LLC: Okay, got it. Thank you.

Our next question is from the line of Mike Harrison with Seaport Global. Please proceed with your questions.

Hi, good afternoon. Doug, this may be the first press release I've ever seen that referred to the Angolan kwanza as a component of the FX impact. Wanted to see if you could talk a little bit about within the Energy business, North America growing faster than international. How does that really affect the business? Is it really just where – in drilling and completion, where you guys have a significantly higher share within North America or does that extend to the production chemicals as well or the downstream piece? And then also curious about the margin impact of that. Is the international side higher margin than the North American side of Energy?

Yeah, there's not a significant gross profit difference one to the other. And so here's what's going on. I mean, you would see this in other Energy-related businesses. So, North America went into whatever you want to call that, a recession, clearly much earlier than the balance of the world, and they're coming out of it earlier than the other parts of the world. So, if you will, the Vs just aren't lined up, U.S. versus international. It's really driven by structure of the industry. Much of the international business or big hunks of it are owned by governments. It's used to pay their bills. So, when oil dropped, they actually worked to up their production. That works for a while, but without new CapEx, you can't keep at that pace forever. So you're starting to see that curtail and it will continue to curtail until they start drilling again. U.S. business dropped off dramatically in terms of its productivity when the oil price dropped because it's more privately owned, and so it reacts to the market and doesn't chase lower-margin business with more dollars, which other parts of the world will. But now you're seeing it rebound as the oil price rebounds and they're starting to chase the opportunity. The big picture in the oil market, I would say, is that you're starting to see a rebalance of supply and demand. So, demand this year is projected to be 1.2% growth, and production right now in the first quarter was down 0.4%. So, that's the stuff that everybody needed to see. We're going to see oil bounce around, we always thought, we talked $45 to $55. We didn't expect a big recovery this year in terms of oil price. We think that's more a 2018 story. We also don't see oil falling off a cliff either. And so I think there's slow improvement in activity, which we're seeing is – what we're going to continue to see until we start seeing prices more in the 60s and north, and there's a great deal of confidence that that's really going to stay. When you see that, I think you're going to see a big upturn in activity, and that's when you're going to see even faster growth than we're projecting now for our business. Good news is, though, our Energy business, it's no longer a drag on the business. I think it'd be minorly accretive, but just being neutral is a significant improvement over the last two years and going forward, this business can be a very strong piece of our growth story.

All right. And then turning over to the Institutional division, I was wondering if you could comment on the impact of the travel ban as well as the strong dollar on the hospitality industry and the tourism industry in North America.

Yeah, I don't – I would say this. Room demand isn't – it slowed a bit in North America. It was better in Europe and parts around the world, so I just don't think the lodging isn't really the story. I really think it's what we talked about earlier. What we saw that was unusual and correlates with sort of what we see in our metrics was consumption was down in U.S. restaurants. It wasn't negative, it was just much slower growth than we've seen in the past. And that's a hole or volume that we thought we were going to see that we didn't see, but we believe it's overcome-able by getting after and stepping on new business activity, which the team's done. And I would just say this, our U.S. Institutional team is very strong, they're very good when focused and they're very focused.

Thank you. Our next question is from the line of Hamzah Mazari with Macquarie. Please proceed with your questions. Hamzah Mazari - Macquarie Capital (USA), Inc.: Yes. Thank you. The first question is just around M&A. Given some of the larger assets have changed hands already, maybe just refresh us on your ability or appetite to do a larger deal versus sort of return of cash at this stage.

Yeah, on our appetite, we'd be very comfortable doing a deal of size as long as we feel it's going to be a good deal for us. The story about the asset, just as when is quite complicated. So, I would just say that doesn't change my view. I think I even said a year ago, I'd be surprised if we do a big deal in the very near term and quite surprised if we don't do one over the next five, six years. I think that my view still holds there. So, our appetite isn't diminished at all. I think we just go in eyes wide open and try to fully understand what the risks are and the challenges are in any deal and as a consequence, what price makes sense. Hamzah Mazari - Macquarie Capital (USA), Inc.: Great. And just a follow-up, you mentioned earnings were back-end loaded. Obviously, there's a lag in terms of your pricing. Could you just remind us, how many of your contracts are cost-plus? Is there a greater lag on pricing in certain segments or business lines versus others? Thank you.

Really in Energy, it's about 30%. Water's just a little south of that in terms of percent. Those are where we have the big cost-plus contracts, there's a few others spattered across the other segments, but they're not significant. But, yeah, those will always lag. I mean, they lag going down, and they lag going up simply because you've got to realize the cost in your business before you're going to be – before you're able to price for them. Hamzah Mazari - Macquarie Capital (USA), Inc.: Thank you.

Our next question is from the line of Dmitry Silversteyn with Longbow Research. Please proceed with your questions.

Good afternoon. Thanks for taking my question. A lot of the questions have been answered, but let me just follow up on the strength that you guys are seeing in Paper and textile, particularly Paper, the market that I know you weren't very enamored with when you bought Nalco. But since they've been doing better and picking up momentum over the last several quarters, so I'm just wondering if it's just better execution or if the market's coming back and kind of what you're feeling about that business these days.

Well, since all my prior stance seems to have worked, I'm going to tell you I'm still not enamored with the business because it seems to spur them on. Now I would say that's not really – where we were on that is, I just said as a stand-alone, we probably wouldn't have bought it. But as a business that came along, it was a pretty darn good business in many respects. We haven't changed our feeling on it. It's got a great team, and I think the team has gotten better. So, how are they growing it? It's called the old-fashioned way. New business, they've had new technology. They're gaining share, they're doing smart things in terms of getting their portfolio to be more focused on where you see growth in that industry like tissue, towel and boxes versus newsprint and other materials, so those have been smart moves. They don't happen overnight, so it's been an ongoing effort. So, yeah, you've seen sales acceleration. As they keep selling new business, they're going to keep seeing sales acceleration. And I think they've managed the challenges successfully. So, I don't – that's the story there. Textile is not that fundamentally different. If you sell new business, good things happen, and if you don't, they don't.

The restaurant comment you made about sort of foot traffic not coming back as strongly or being maybe not down, but certainly slower. We've heard some version of that, not just from you, but from other industry participants. Going back to really the recession, if not all the way back to 9/11, is there a secular trend here that people are just not eating out as much around the world? And should we start thinking about this industry as basically being a flattish industry, where any growth you guys get is a bonus or not?

Yeah, I mean, same-store sales, look, I don't think is the singular metric that drives our business – or, excuse me, traffic. Traffic's been down, I think, every year since 2008. I keep asking the team, is there one person left to walk into our restaurant based on these metrics. Clearly, if you look at the sales in that industry, they were also up over most of those years. And yeah, there are changes going on in that industry. They're not dramatic. I don't think they're going to hit huge inflection points, but we watch them. So, certainly there's higher percent of takeout than there was 10 years ago. I'd expect in 10 years, there'll be even a higher takeout than there is right now. So, you see some of these changes over time. With that said, the challenges in that industry simultaneously continue to increase. People continue to get into that business, start new concepts, grow their business, food safety, clean labels, i.e., organic food without additives and the like. All these things are also impacting that business and our customers, and our ability in food safety is more important even today than it was 5 years ago and 10 years ago. So, I guess – I think when I take all of the shifts that are going on in that industry and net it out, it's still quite an attractive market for us, both in the U.S. and around the world. And we have significant share possibilities, not only in the U.S., but in particular, around the world, that we continue to get after.

Last question, sort of, bookkeeping question, what should be the tax – what's a good tax rate assumption for you guys for the year? Is it the 25% that you did in this quarter?

Yeah. I think we've said 24% to 25%.

24% to 25%. Okay. Thank you.

Our next question is from the line of Andy Wittmann with Robert W. Baird. Please proceed with your questions. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Great. Thanks for taking my question. I wanted to ask on Energy, in particular, around the pricing, clearly you guys have had to concede a little bit of price and I think that was even a bit of a factor in 1Q. Doug, I was just wondering, when the price comps and the healthier customers get to the point where that could inflect at least neutral, if not positive, is that part of your forecast for the rest of this year when you talk about the flat – the top line being flat to up modestly?

Yes. So, last year, we talked, we had probably lost about 3 points of top line to price in that business. And it started getting modestly better as we went throughout the year last year. We saw continued improvement in the first quarter. Second half, I would say it would be neutral to positive on price. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Interesting. And then just regarding the double-digit increases on the drilling side of the business, there's just been this trend in the industry to make kind of the fracked wells, in particular, in North America consume more sand and make them much more efficient than they've been even a year or two ago. Does the same go for chemical? Are you – is your double-digit increases in your drilling revenues driven by the number of wells or the amount of chemical that's consumed by the new technologies being used in the wells?

Yeah. I would say, right now, it's more a reflection of rig count increase and activity increase. Yeah. I would say several things. I mean, what we've been working on products and programs and have them, that reduces the need for companies conducting a frac in terms of how much water they need, how much sand they need, et cetera, to conduct this. Less is better. And we'd rather cannibalize ourselves than get cannibalized. Some instances, it takes less chemical, and there are other applications where it would take more of our product to get that same result. I think, over time, I mean, this kind of shifting of how much technology it takes to get an end result, I think, if you look over any long period of time, it typically gets more efficient. We would expect that to continue to be true, but challenges continue to grow. And so the need for technology evolves. So, I had somebody try to say that fracking's going to disappear, and I do not think that's the way to think about it. It's going to continue to evolve and change, but there are plenty of opportunities for us to introduce new programs that bring great benefit to those conducting a frac that's going to represent new opportunity for us even as others may dissipate slightly. Andrew John Wittmann - Robert W. Baird & Co., Inc.: Thank you.

Our next question is from the line of Shlomo Rosenbaum with Stifel. Please proceed with your questions. Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.: Hi. Thank you. Most of my questions have been answered. I just have a couple nits I want to ask about. Doug, how do you feel about the organic growth in the Healthcare business? It's definitely on a better trajectory than it's been prior to this Anios acquisition. How do you feel about the existing business and the ability to improve the growth over there over the next several years?

Yeah, well, Healthcare, yeah, clearly has improved. I mean, it's a 5% underlying organic rate, if you peel out Anios and the other. And, look, I think the team's doing a very good job. I mean they went through and are doing a lot of integration work that started even before, obviously, the close of Anios. They continue to drive and accelerate their underlying business. So, the work that we did and the work that team did around getting clarity around the program, clarity around the message for customers, adding resources where they needed them, we've continued to add additional talent into that team and it's paying dividends. So, where am I? Yeah, I'm proud that the team's been able to build this up to 5%. And then the other side of me is greedy, and I think that team's capable of doing even more, and it's only because I think they're great. So, 5% is good, 7% is better, that's our focus. Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.: Okay. And just a follow-up, where does the Swisher integration stand? We're still calling out costs for the integration and stuff on that a little while after I would have expected.

Yeah, us too. It took us longer to exit the hygiene business than we had planned, which delayed our exit from a number of facilities because we had to continue to operate it until we could move it. And so it was a couple quarters after we had thought we were going to be able to move it. So, that delayed a number of things. That's why you're seeing some of the charges come through now versus, say, third quarter of last year, et cetera. In total, I think the Swisher noise is really going to be out of the business come third quarter as we go through. So, then it's just going to be a completely natural part. The exiting and the comparison with hygiene and all the other stuff will be out of the base. Shlomo Rosenbaum - Stifel, Nicolaus & Co., Inc.: Thank you.

Our next question is from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed with your questions.

Thank you. Good afternoon, everyone. Doug, I was wondering if you could talk a little bit about the different categories in Food & Beverage, mostly trends that you see in dairy, in farms, in protein. Can you help me understand what is happening there?

Well, the most significant probably underlying change would be in dairy. Clearly, dairy was under a lot of pressure. The market's improved somewhat. I don't know that all dairy producers would call it a victory yet, but it certainly helps as we've gone through. Food continues to be pressured by consolidation. There's a lot of, obviously, big headline acquisitions that have been made in that industry. Some others that seem to be contemplated, but not consummated. And brewery beverage is strong and that's more a continuing story. So, the inflection one would be mostly in our dairy business.

Do you see that decline in dairy being impacted by the fact that there is negative advertisement, justifyingly so, about cow's milk? It's not supposed to be good for you. Is that having an impact?

I don't – you know what, I don't believe so. I honestly haven't seen those advertisements, but of course, I live in a state that borders Wisconsin, so we wouldn't likely be airing them in this market. So, anyway, no, I would say if anything dairy has gotten better because it was so depressed. I have not seen any impact from the advertising you talked about.

Okay. And then lastly, you said that the world of energy has changed a lot since 2014 and you expect that it will become substantially bigger over time. How about the margin? Has the change affected the margins in one direction or another?

I don't think we feel that our ability to earn the type of margins that we were earning or targeted has changed. So, the margins have been most impacted near term just by loss of volume on a fixed overhead base, particularly in plants. And so I think as this business comes back, which we expect it to, as we continue to roll out technology and the needs for technology continue to grow as old oil becomes new oil, which is harder oil and needs more technology, we think we'll continue to see margin expansion. Now, that's all predicated on us being a great value-added supplier to our customers. Only reason people are going to pay margin to us is if they get great value, and I think our team understands that. Stuff we have on the drawing board, we are quite pleased with. Stuff that we're launching, we think has got great runway. So, I mean, we remain bullish about this business.

Okay, great. Thank you.

Our next question is from the line of Robert Koort with Goldman Sachs. Please proceed with your question. Christopher Evans - Goldman Sachs & Co.: Hi, Doug. This is Chris Evans on for Bob. I was wondering if you could describe some of the strategic rationale for carving out the Life Sciences division. Earlier you gave some pretty favorable organic growth estimates. I was just wondering if you could also add in maybe some of the industry structures, the competitors you'll be going against and maybe your thoughts on inorganic opportunities in that new sub-segment.

Well, the reason we broke it out is it creates focus. So, previously, we've been serving the Life Sciences industry in part from the F&B business and in part from the Healthcare business. And both were doing a good job with the tools at hand, but neither had a complete set of tools. So, if anything, once we decided to do it, we wondered why it took us so long. That's a shot at myself. So, getting focused, I mean, think the Kay business going after QSR, textile, going after textile, we have many examples of this. That's how we succeed. So, now we've got a freestanding business. It was a significant investment last year and we're still paying some of the incremental investment this year in the first half before we fully lap it. And the second, has enabled us to have dedicated corporate account teams, dedicated marketing teams, dedicated corporate account finance teams to really understand how to develop and position programs to specifically meet this industry's need. The structure is multinationals, which is what we like, fragmented competitive set, which is what we like. So, by and large, what we're competing against is a lot of regional folks who are offering services to this industry. And so our ability to put together a global program we believe will give us the same kind of advantage here that it does in other industries we serve because certainly the pharma need for consistency, you might imagine, would be fairly high in areas that we're serving. So, I don't know if that helps give you color. Big business, plenty of opportunity. We can grow without doing M&A. If we see M&A that works, we'll certainly be quite open to it. Christopher Evans - Goldman Sachs & Co.: That's great. And then just you cited higher delivered cost across to your segments. I was wondering if you could give a little bit more color on this specific breakdown on 1Q and maybe the cadence of expectations, how you'd plan to address those for the remainder of the year.

Yeah. I think if you look at – it's kind of a combination of just underlying commodity costs starting to rise and then transaction costs and foreign currency that – because a lot of these are U.S. dollar denominated, so if I'm buying them in reals, et cetera, I got to pay a higher price given the devaluation over time. We see that rising, ironically peaking around the second quarter. Part of this is the propylene conversation we had earlier, but still being somewhat a year-on-year drag in three and four, which is not at the same level, but overcome by pricing. And I talked earlier that we have pricing traction. Pricing is never easy. We're getting it. Institutional, I think was ahead on ramping up its pricing activity last year, trying to get in front of the caustic moves and some of the other stuff they knew was coming. And you see the Industrial businesses now accelerating their pricing activity, which they need to do, given the increased raw materials facing them. So, I guess, we're confident we're going to end up with some daylight between the costs we realize incremental on raws and FX related to raws and the pricing that we're going to get. Christopher Evans - Goldman Sachs & Co.: Thank you.

Thank you. Our final question today is from the line of Dan Dolev with Instinet. Please go ahead with your questions.

Hey, thanks for taking my question. Can you talk a little bit about, is there any chance that some of the weakness in Institutional could be because of a tougher competitive environment? I mean, specifically, we know at least some companies that used to be traditionally in other businesses like uniform rental are starting to make a bigger push into like hygiene and some of your legacy product. Can you maybe talk about that competitive environment? Thanks.

Yeah, I guess – no, I would not say – I mean, look, we do a lot of analysis on our business to understand retention, new business, acquisition and sort of current customer consumption. Retention really – I mean, if you look at our historic retention rates, I mean, we're under – we're better retention rates than we've been historically in that business. So, if it was competitive activity, you would see it in worsening retention rates, and that's just not what we're seeing as really the story. The big dip is in kind of same-store consumption. It's not a loss of product placements, if you will, in those units. It's a loss of consumption across those products. And that's the story. So, we aren't – we don't believe that we're infallible or unbeatable or anything else, we pay a lot of attention to competition. I just don't think that's the story.

But do you even see that traditional uniform rental competitor in – when you compete for business, or are they not in the same categories?

Yeah, I don't know that that's really a huge piece of emphasis for them, to be quite honest. I mean, they just made a large acquisition. They've been quite successful in the businesses they're in. I just – I don't know that that's really an avenue they're going. I don't know that it lends itself. I mean, that's a little bit – they're a much better executor, I would say. They're a good company, does a very good job in the businesses they're in, but it's hard to take people in one set of business and make them kitchen hygiene people just because they're in the back of the restaurant. That was Swisher's play. It wasn't very successful, although I grant you, and I think the company you're talking about is a much better executor.

I agree with that. Thank you very much.

Thank you. At this time, I will turn the floor back to Mike Monahan for closing remarks.

Thank you. That wraps up our first quarter conference call. This conference call and the associated discussion to slides will be available for replay on our website. Thank you for your time and participation. Our best wishes for the rest of the day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.