Good morning, ladies and gentlemen. My name is Shanelle, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball International Third Quarter Fiscal-Year 2017 Financial Results Conference Call. All lines have been placed on listen-only mode to prevent any background noise. After the Kimball speakers' opening remarks, there will be a question-and-answer period where Kimball will respond to questions from analysts and investors. [Operator Instructions]. As with prior conference calls, today's call, May 4, 2017 will be recorded, and may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the forward-looking statements. Risk factors that may influence the outcome of forward-looking statements can be seen in the Kimball International Form 10-K and today's release. The panel for today's call is Bob Schneider, Chairman and CEO of Kimball International; and Michelle Schroeder, Vice President and Chief Financial Officer of Kimball International. I would now like to turn today's call over to Bob Schneider. Mr. Schneider, you may begin.

Thank you, Shanelle, and welcome, everyone, to our third quarter conference call. The financial results for our third quarter ended March 31, 2017 were released yesterday afternoon after the market closed. As in prior calls, we have an Investor Presentation slide deck that has been posted to our Investor Relations section of our website to accompany this conference call. And the slide deck includes some very important trending that makes it much easier to see the picture of how Kimball International is performing. I will start with a few brief comments before I turn the call over to Michelle, who will provide us with the key financial highlights for the quarter. We will then open the call to questions from analysts and investors. Our third quarter results exceeded my expectations, particularly with this being our normal seasonal low sales period, and what I've been seeing with competitors' published results. Sales increased 2%, while GAAP net income more than doubled compared to the prior-year. Our operating income was 7.2% which our team feels very good about, given it was our seasonally slow quarter. Excluding the restructuring charges in the prior-year, net income increased a very strong 63%. Our team is very proud of the results. Now I'll touch on a few of the key highlights for the quarter ending March 31. I'll start with orders. Our order activity was extremely strong during the third quarter. Our orders increased 12% on a consolidated basis with the commercial, government, education and finance vertical markets, all seeing significant double-digit percentage increases. Michelle will discuss the individual vertical markets shortly. We were very pleased with the level of order activity during the quarter and how dispersed it was among four of our six market verticals. Taking a different slice at orders, so we can compare…

Thanks Bob. I'm happy to note that our sales in the third quarter of $153.1 million, was the 15th consecutive quarter we recorded year-over-year sales growth. So we are definitely actively focused on sales growth. Third quarter sales in five of our six vertical markets increased over last year. The largest increases were in the finance, hospitality and government vertical markets. We increased our full focus on strategic accounts within the financial services industry, and banking institutions continue to keep their brand images modern, particularly in customer-facing locations but also in their corporate facilities to assist in talent acquisition. Our increased emphasis on this vertical resulted in some nice projects shipping during the quarter, resulting in a 24% increase in sales in this vertical during the quarter. Third quarter sales in the hospitality vertical market increased 9%. Shipments in both of our program and custom business increased. Our program business was particularly strong with double-digit increase in revenue for the quarter, driven by increases in most of the major brands that we sell to. Of all of our verticals, note that this one is probably the most volatile, given the large project nature of the market. Sales to the government vertical increased 7% in the third quarter, with increases to both the Federal and State Agencies, and then sales in the education vertical market were up 4% and sales in commercial market increased 1%. The only vertical market where we saw a decline in sales for the third quarter was in the healthcare vertical, where sales declined 21%. We believe there has been some spending delays in this vertical, due to the uncertainties with what's going to happen with the Affordable Care Act. Also I must say it was a bit of a tough comparison to last year, when sales…

[Operator Instructions]. One moment please for the first question. Our first question comes from the line of Kathryn Thompson of Thompson Research. Ms. Thompson, you may please ask your question.

Good morning, guys. This is Steven on for Kathryn.

Good morning, Steven.

Hi Steven.

I've got a few - I guess, I want to start with project business versus day-to-day to confirm, you said, project sales orders were up 38% year-over-year.

That's orders.

Okay, it was orders. And would you say that sales trends in the quarter followed a similar trajectory in project being up meaningfully over day-to-day?

Yes. I don't have the exact percent, Steve, but our project business has done well for quite a while.

Right, I remember you saying that last quarter. Is there any discernible trends you would call out that's driving projects so much greater than day-to-day?

Well, the day-to-day portion of our business, like the whole industry, has been stressed since around the election, but with respect to the project business, that's been strong. I can't really point to anything discernible on that. It's been pretty broad-based throughout the country and I think it's a reflection of 2.5, three years of coming out with a lot of new and innovative products that designers are thrilled with and specifying on some pretty big projects.

Excellent. Okay. And then on the healthcare and finance verticals, the trends you called out that were impacting sales. I would assume that those same trends are impacting the orders in each of those segments?

Our orders in the finance vertical were up about 32% and our sales in the finance vertical were up about 24%, so we saw nice increases in finance in both sales and orders.

And Steven, you can see that towards the back of our press release in the tables.

Yes, and the other one, I think, you had called out was healthcare, that was as well. We saw a decline in both orders and sales for our healthcare vertical in the quarter. Again going back to the - we believe there was some delay due to the Affordable Care Act, plus we had a pretty strong quarter in sales and orders in Q3 of last year, so it was a tough comparison.

Right, okay. And then I was wondering too if throughout the quarter on a sales and order basis, did you see a gradual sequential improvement by month? A couple of peers have called out that the quarter got progressively better to start the year. I was wondering if you saw anything…

We saw the same thing, Steven. March was much improved from the start of the quarter and much improved from what we had been seeing. Nice trending, and then as we got into April, we continue to see nice levels of activity in our business, and so it's very encouraging.

Excellent. And my last question regarding new products, clearly very strong growth here. Is there any discernible trend by vertical in new products and are you targeting one vertical over another, or just any discernible trends within new products growth?

Yes, good question. We aren't targeting any specific vertical. It's really all of them. You look at education, we've had a lot of new products last couple of years. Healthcare, we ramped up tremendously starting maybe 2.5, three years ago, so it's very broad-based and impacting really all these verticals.

And then with the change in the trends in office, we've seen a lot of new products related to the office arena as well, so very broad.

Excellent. Thank you guys.

Thank you.

Thanks Steven.

Thank you. [Operator Instructions]. Our next question comes from the line of Paul Sonkin of Gabelli. Your line is now open.

Good morning.

Good morning, Paul.

Yes, so I guess I don't have OCD [ph], but on Slide 21, I just wanted to clarify the outlook. It says operating income of 8% to 9%, but except Q3, which tends to be lower during seasonality. So does the 8% or 9% incorporate that lower Q3?

It does, Paul, and what we're trying to be very transparent about here is, generally speaking, we think we can get this to 8% to 9% on a consistent basis. However we wanted to make sure that we didn't mislead anybody to think that our third quarter would necessarily be above 8%. And Michelle, I think we came out with a guidance in November?

Yes.

And we were coming off a very good Q1 and actually had a pretty good Q2 also but didn't want to imply to anyone to expect that in Q3. So we're just trying to give a little bit of heads-up. That quarter is always a difficult quarter due to the sales challenge. There is…

So I guess, then what you're saying is that on a rolling four quarter basis, you're targeting 8% to 9%, but because of vagaries in seasonality, it might not fall within that range in any given quarter?

In - well, specifically Q3.

Specifically Q3, okay. And then other question that I had was in terms of the price increases for National Office, if you could just talk a little bit more about that, like how much was the price increase, when was the last time you did a price increase, have you been finding that price increases have been sticking?

I don't want to get too specific, Paul, in terms of what we do from a pricing standpoint. But I will tell you in the industry, generally mid-to low-single digits is what price increases have been. We did do this increase at the end of March and I believe the one prior to that was over a year ago.

It was about a year ago for National.

But in terms of stickiness of it, when we do price increases, there are generally contractual agreements with some customers that extended out a little bit before it sticks, but this price increase has been like others and a significant amount of the orders that we are seeing are at the new price.

Okay, I see. So for the industry it's traditional to do a price increase every year?

The last several years, that's pretty much been the case.

Okay. And again, how much - so you think it pulls about $6 million into the third quarter from the fourth quarter?

That's our estimate, yes.

Yes, it's really difficult to try to figure that out.

Of course, yes.

Yes, that's our best guess.

Okay. All right, thank you very much. I appreciate it.

All right, thanks, Paul.

Thanks Paul.

[Operator Instructions]. And I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Schneider for closing remarks.

Thanks, Shanelle, and thanks, everyone, for joining us today. As I mentioned, I was very pleased with our third quarter results. Our employees remain focused on growth, margin improvement and creating value for our shareowners. And if anyone happens to be in Chicago for the office furniture trade show that's going to be happening in June, please stop in to see our Kimball Office and National Office Furniture showrooms. We appreciate your interest in Kimball International, and look forward to speaking with you on our next call. Thank you, and have a great day everyone.

At this time, listeners may simply hang up to disconnect from the call. Thank you, and have a nice day.