Good day, ladies and gentlemen, and welcome to the Ingersoll-Rand First Quarter 2016 Earnings Release. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ms. Janet Pfeffer. Ma'am, you may begin. Janet Pfeffer - Vice President-Treasury & Investor Relations: Thank you, Lauren, and good morning, everyone. Welcome to Ingersoll-Rand's first quarter 2016 conference call. We released earnings at 6:30 this morning and the release is posted on our website. We'll be broadcasting in addition to this call through our website at ingersollrand.com, and that's also where you'll find the slide presentation that we'll be referring to this morning. The call will be recorded and archived on our website. If you'd please go to slide two. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause actual results to vary from anticipated. And our release also includes non-GAAP measures which are explained in the financial tables attached to our news release. And to introduce the participants on this morning's call, Mike Lamach, Chairman and CEO; Sue Carter, Senior Vice President and CFO; and Joe Fimbianti, Director of Investor Relations. Please go to slide three, and I'll turn it over to Mike. Michael W. Lamach - Chairman, President & Chief Executive Officer: Thanks, Janet. For those of you who don't know, that's Janet's last time she'll be to read the Safe Harbor statement. She's retiring at the end of this month after a brilliant career…

Our first question comes from Josh Pokrzywinski from Buckingham Research. Your line is now open.

Hi, good morning, guys. Michael W. Lamach - Chairman, President & Chief Executive Officer: Good morning, Josh. Susan K. Carter - Chief Financial Officer & Senior Vice President: Morning.

Just on the price-cost equation here, clearly a pretty strong contribution in the first quarter. Can you help us with how that dimensions out, just based on purchasing agreements and hedges you already have in place, over the balance of the year? Susan K. Carter - Chief Financial Officer & Senior Vice President: Absolutely. So you're right. The 160 basis point spread between price and direct material deflation was a strong start to the year. What we expect for the first half of the year is strong performance on a year-over-year basis because last year we were still in an inflationary environment in the first half of 2015. So I think the second quarter will be slightly less favorable than the 160 basis points. But what we've adjusted the full year to now, Josh, is 80 basis points of favorable spread between price and direct material deflation. And so the first half-second half reflects basically the year-over-year compares to last year. And then as we look at the 80 basis points, though Q1 performance was driven by strong price performance, and we expect some of that to continue in Q2 and also strong performance from the material side. Price is one of those areas where I think you never want to reach out and assume that you can continue to get price at a big execution level throughout the year in a strong deflationary environment. But as it comes to the commodities themselves, here's what we expect. So we have about 70% of our copper locked in for the year through our contracts. We expect that copper and aluminum are going to be fairly stable in terms of what happens throughout the rest of 2016. You'll see some ups and downs. But generally I think those are going to be pretty stable. We're seeing a slight uptick in steel, but I don't think that's going to impact us in 2016. Because of the way that our contracts are written we wouldn't start to see that until the very end of the year. So I think our supply base and our commodity teams have done a great job of getting us the deflation that you're seeing in the results. I expect that to continue. All of the tier 2 pricing really seemed to come in in Q1 also. So I think we had a great environment and I think we'll have a great result. So if you recall, we had given you a look at the full year I think 30 basis points to 40 basis points when we last gave guidance. And as I said, we took that up to 80 basis points favorable spread for 2016.

Great. That's helpful. And then, Sue, just as a follow-up, I remember last quarter you talked about some of the toggles for the tax rate and specifically mentioned intercompany debt. Could you just maybe update us where we're at on the total tax strategy in light of some of the Treasury rulings? Susan K. Carter - Chief Financial Officer & Senior Vice President: Right. So I think the first way to start out that question, Josh, is to say that we've looked at all of the proposed Treasury regulations, and we don't expect those regulations to have an impact on our effective tax rate in 2016. As we think about the tax strategy that I talked about, getting us into a low-20s% type of tax rate on an ongoing basis, I also don't expect those regulations to have an impact on us getting into those areas. And the reason that I say that is when we're looking at our tax strategy, intercompany debt is one element of some of the things that you can do – trading hubs, procurement hubs, making sure that your transfer pricing is absolutely aligned, and other tax-efficient projects can help us get to where we want to go. We've also been looking at a project that helps us look at effective tax rates by each of our SBUs so that we're all working on taxes, we do our plans, and we do our forward looks. And I think that'll help us with an overall tax strategy that doesn't get impacted by the proposed Treasury regulations. We'll obviously continue to look at those and make sure that we understand all of the sort of derivative impact that might be out there from the regulations, but no impact on the rate and no impact on our strategy going forward.

Perfect. Thanks for the answer.

And our next question comes from Joe Ritchie from Goldman Sachs. Your line is now open. Joseph Alfred Ritchie - Goldman Sachs & Co.: Thanks. Good morning, guys. Nice quarter. Michael W. Lamach - Chairman, President & Chief Executive Officer: Thanks, Joe. Susan K. Carter - Chief Financial Officer & Senior Vice President: Thanks, Joe. Joseph Alfred Ritchie - Goldman Sachs & Co.: I guess my first question, maybe starting on Industrial where you did see decelerating trends. I noticed that you didn't take up the restructuring at all for the quarter, and if I recall correctly there were some cam shipments that were expected to be released in the beginning part of this year. And so I'm just wondering is there still opportunity for further action in Industrial and I guess what's the strategy at this point? Susan K. Carter - Chief Financial Officer & Senior Vice President: Yeah. So the $0.02 of restructuring that we spent in Q1 was related to Industrial. We are continuing to work on restructuring actions for the remainder of the year, and those are going to primarily be in Industrial. So we called out in the guidance about a $0.01 for each of the next three quarters. I think what's important about the restructuring and the way that we look at it is that the restructuring really does have a payback within 2016. So we fully expect to realize the benefits of that $0.05 of restructuring, and that is also what will help us with my comment earlier in my prepared remarks about Industrial margins improving in the back half of the year. So some of that productivity kicks in and some of the restructuring actions that were actually started almost a year ago are going to kick in. Now on the ECC…

And our next question comes from Julian Mitchell from Credit Suisse. Your line is now open. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Hi. Thank you. I just want to say thanks a lot to Janet for all the help, and all the best. In terms of the first question, that would really be back on the Industrial margins. They used to be at sort of 16%, 17% of the odd quarter here and there, and they are down to 9% to 10% right now. And the guidance embeds that by the end of the year I guess they climb back into the sort of low-teens in the next three quarters. So maybe just help clarify what's driving that sort of 400 point-plus margin recovery. Is it just about productivity or is there something going on with the mix as well of Industrial versus compression? Susan K. Carter - Chief Financial Officer & Senior Vice President: So Julian, great question. On the Industrial margins, your math is absolutely correct that in the back half of the year we do have the operating margins for Industrial improving into the low-teens. And as we look at what's going to happen in the back half of the year, it truly is productivity, still lower inflationary type of rates. So you've got productivity offsetting other inflation. You still have positive price in the back half of the year. And you have just a skosh more volume in the back half of the year than the front. I don't want anyone to think there is a lot of volume recovery that we've built into this; we have not. But there is by virtue of how the quarters pan out roughly $50 million of additional revenue in the back half versus the front half.…

And our next question comes from Nigel Coe from Morgan Stanley. Your line is now open. Nigel Coe - Morgan Stanley & Co. LLC: Yeah. Thanks. Good morning. Michael W. Lamach - Chairman, President & Chief Executive Officer: Good morning, Nigel. Susan K. Carter - Chief Financial Officer & Senior Vice President: Good morning. Nigel Coe - Morgan Stanley & Co. LLC: Hi. I really hope Janet isn't calling a peak here. I don't think she is. But thanks for all the help. Susan K. Carter - Chief Financial Officer & Senior Vice President: She is fine. Nigel Coe - Morgan Stanley & Co. LLC: So this North American auto expenses is really interesting, Mike, and I'm assuming that's really driven by these large-type projects, finally some big spend (49:04). I'm just wondering what's changed here. I mean is it just a case of old equipment we're seeing here, so the extended replacement cycle can move through? Is it budgetary? I mean any color there would be helpful. Michael W. Lamach - Chairman, President & Chief Executive Officer: Yeah. Nigel, I think all that's true, but the constant persistent investment we've made over five years, six years, seven years in that business, the constant investment in the channel and the service footprint is really paying off. And I just think the focus we've had on all of that development being around energy efficiency, sustainability, new refrigerant development, all of that is such a powerful story when you look at it. This is what we were waiting for. This is what we hoped to have seen, which is outsized growth relative to the market and outsized profitability or margin expansion relative to the market. So this is a huge effort by lots of people all the way through to the technicians providing service on the street for us. This is a real accomplishment. Nigel Coe - Morgan Stanley & Co. LLC: Okay. And obviously very early to call 2017 at this point, but if you just look at your North American commercial HVAC operations based on the backlog of pipeline, is it reasonable to assume that perhaps you might see some acceleration next year? Michael W. Lamach - Chairman, President & Chief Executive Officer: Well, the thing you have to think about though is what happens to the office and retail business. As an example, our national accounts business has been doing extremely well into retail. Office building is doing really well, as you can see, kind of the high-teens bookings rate again. Unitary, that's been strong again. Some point you'd think that that would begin to subside and be replaced by stronger applied growth, which I think will happen. So I think what you end up with is maybe a change in the mix between unitary and applied, but I do think continued strong performance through 2017. Nigel Coe - Morgan Stanley & Co. LLC: Great. Thanks, Mike. That's helpful.

And our next question from Steve Tusa from JPMorgan. Your line is now open.

Hey, guys. Good morning. Michael W. Lamach - Chairman, President & Chief Executive Officer: Hi, Steve. Susan K. Carter - Chief Financial Officer & Senior Vice President: Good morning.

On the Climate side, I mean just a very big margin number, obviously, and I'm trying to just wrap my head around the seasonality dynamics, 1Q to 2Q. In the last couple years you've had increases, like in 2014 you guys saw a doubling or almost a tripling of the profit number in Climate. Can you just maybe speak to maybe what you expect seasonally there or maybe just at a high level what you expect for the margin in that business as we move through the year? And my guess is the seasonality is a bit muted because you're now seeing the onset of commercial, which is a less seasonal business than some of these other things, or just maybe help us square that, just with the first quarter basis so high that just having trouble kind of getting low enough in Climate. Michael W. Lamach - Chairman, President & Chief Executive Officer: Yeah, Steve, so I think that looking at something certainly in the 16% margin range for the entire segment is going to make a lot of sense for us. Again, to Sue's point, price I think subsides a little bit, material inflation kind of clips along pretty much at the same rate, bookings look good, pipeline looks fairly strong. We're not seeing – the container business on the transport side being down of course is not all that problematic for us in terms of margins as long as European trailer and North American trailer are doing well. So you put that all together and you're probably dealing with something in the 16% range.

Can you at some point soon kind of get to that 17%? Will you kind of hit that at some point this year? Michael W. Lamach - Chairman, President & Chief Executive Officer: I don't know. I mean, really looking at Q3 and Q4 at that level of granularity around guidance, Steve, I don't know. I mean Q2 is seasonally a pretty good quarter for us. Quarter three can be. So we've got an outside shot at something like that.

Okay. And then just on the kind of go-forward leverage, so you had this nice pop off the bottom on margins. Should we continue to expect that if this kind of current mix holds, that if commercial HVAC does really continue to roll on here and we have a bit more of an extended cycle than I think most people were expecting probably three months to four months ago, can you still leverage that business really well, or do you have to add cost or anything like that? I mean I feel like you got to have plenty of capacity here to let it rip a little bit before you start to throw money at the business from a capacity perspective, right? Michael W. Lamach - Chairman, President & Chief Executive Officer: Well, the service business and the controls business are growing so well, too, and our margins are obviously much higher. So it's a little bit distorting about how we might think about fixed costs being factory costs. So I do think that there is some capacity we have even in our field service and controls capability that wouldn't require incremental investment. Obviously it's feet on the street, but we stay in front of that, and we typically hire long in the service business. So I don't see why having leverage for the full year – it starts with a 4 – would be a problem in the Climate business.

Okay. And then one last quick one. You guys took up the price cost year-over-year by I think 40 bps you said, but you only took your margins up by 30 bps. Anything – that's just volume and mix at Industrial, is that kind of that moving part? Michael W. Lamach - Chairman, President & Chief Executive Officer: Well, inflation kicks in just in terms of wage increases beginning in April for the full year, and we kind of see sort of the cost increase there as well. Puts a little bit of a squeeze...

Okay. Michael W. Lamach - Chairman, President & Chief Executive Officer: ...on margins there. But fundamentally, Steve, there's not anything really changing other than the fact that it's hard to believe that price would stay high as it normally is, and material inflation should stay about where it is, but we're looking at just closing that gap a little bit probably from the price side.

Great. Okay. Thanks a lot. Appreciate it.

And our next question comes from Jeff Sprague from Vertical Research Partners. Your line is now open.

Thank you. Good morning. Michael W. Lamach - Chairman, President & Chief Executive Officer: Good morning, Jeff. Susan K. Carter - Chief Financial Officer & Senior Vice President: Good morning.

Hey. Mike, can you just elaborate a little bit more on kind of the bookings strength? And was that a – that 25% number, is that global or are you speaking to the U.S.? Michael W. Lamach - Chairman, President & Chief Executive Officer: It would be the North American commercial business.

North American commercial. It does sound like Europe, though, is fairly strong for you on share gain. How do you see that playing out over the balance of the year? Michael W. Lamach - Chairman, President & Chief Executive Officer: I went – probably I saw five, six of our factories and operations in Europe a month ago. I met with the engineering teams. I saw product launching between August and December, Jeff. It's one of the best stories I've seen, absolutely the fastest cycle time between ideation and product launch. They're hitting it right on the money in terms of what the customers are looking for. It's been a great story for us on the ECC side in Europe. But I'll also tell you, switching over to FRIGOBLOCK, FRIGOBLOCK was a family-run German company. If you put sort of a paradigm around that, you might think slow to change or difficult to incorporate in the operating system. What I found there was one of the fastest implementations of an operating system that we've put in place across the company. It's very exciting. And the openness around that – and then the openness of our transport refrigeration team to include that hybrid electric technology into the truck platform is also very positive. So I left Europe feeling very bullish.

And then could you address what's going on in 14 SEER? Probably still early in the season to know for sure, but does that price gap versus legacy 13 SEER holding in that 10% to 15% range? Susan K. Carter - Chief Financial Officer & Senior Vice President: Yeah, Jeff, it is holding. And I think the great news about the 14 SEER is what we saw was the balance of 14 SEER and greater product is still about 80% of the revenues in 2016. So we're seeing price, we're seeing the favorable mix that we expected out of the product. And we're also seeing that the balance between 14 SEER and even the 15 SEER and above has not really changed, which does create a good environment as you alluded to with the price and cost differential.

So is that 40 basis points of positive mix, Sue, that you elaborated all in residential? Did you actually have more than that in residential than you saw somewhere else? Susan K. Carter - Chief Financial Officer & Senior Vice President: So it was not all residential. It was a combination of residential and also Thermo King. On the Thermo King side, and one of the things that we saw was we saw more strength than we expected in truck and trailer both in North America and in Europe. And then the big declines on Thermo King came from the marine container business that I said was down about 60%. So the 40 basis points of mix was primarily from res and from Thermo King. And my recollection is it was split pretty evenly.

Thank you.

Our next question comes from Jeff Hammond from KeyBank Capital Markets. Your line is now open.

Hey. Good morning, guys. Michael W. Lamach - Chairman, President & Chief Executive Officer: Hi, Jeff. Susan K. Carter - Chief Financial Officer & Senior Vice President: Good morning.

Hey. So what's driving the 1Q order growth in residential, and what gives you the confidence to kind of move that forecast up ahead of the selling season? Michael W. Lamach - Chairman, President & Chief Executive Officer: Well, I mean first and foremost the product line really at this point has been fully developed, and we've hit stride, all the good success with the furnace product, all the good success with the new launches, the variable speed, growth in Nexia. All these things have just been really kind of coming together. Operationally, we just find the pipeline for projects and productivity and quality to be improving. Deliveries have been exceptional in terms of on-time delivery and having product available where you need it, when you need it, really investing in the warehousing and investing in the product availability. So just a sense here that things have gone right for a long time here and that we'll do better, particularly as the mix moves up north of 14 SEER, which it is. So as the mix moves north of 14 SEER, we do better anyway. And as the mix moves more toward replacement and away from new construction, we'll do better.

Okay. Great. And then how's the M&A pipeline kind of informing how you're thinking about buyback through the balance of the year? Michael W. Lamach - Chairman, President & Chief Executive Officer: There is no doubt we want to grow the company and grow value over the long run. So we said we're looking at ideas and businesses that we know and run and are successful with. FRIGOBLOCK and Cameron were great examples; different examples but great examples of being able to take businesses, put them into an operating system, improve the businesses and deliver essentially what we said we were going to deliver from an accretion perspective. So we feel good about our capability in doing that. We also feel patient. We feel like we don't have to – we're not compelled to do anything around M&A. We've got great positions in the marketplace, and there's not a compelling need for us to go do something and potentially do something where we pay too much in that process. So, Jeff, we'll continue to evaluate that. When we see opportunities that fit the criteria we'll pull the trigger. And we clearly want to grow long-term value to the shareholder, and that's probably the best way to do it. With that being said, you couldn't pass up in January. The stock price dislocated 20% from the peer group. I mean we jumped in on that and acquired $250 million in January at $51 a share. So we're going to be dynamic, we're going to be opportunistic, and we're going to grow shareholder value. If that means we find the right bolt-ons to do that, we're going to jump on those, too.

Okay. Thanks.

And our next question comes from Steven Winoker from Bernstein. Your line is now open. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Thanks, and good morning. And also appreciate the additional detail in the disclosure today. It's helpful. Let's see. So first of all, Mike, how are you reconciling all of this discussion about commercial HVAC strong growth relative to what is pretty lackluster Dodge data, ABI, all these macro data points? Are you attributing it all to share, renovation, control, service? Just maybe a little clarity on that would be helpful. Michael W. Lamach - Chairman, President & Chief Executive Officer: Well, it's sort of all of the above, Steve, which is probably hard to give clarity on that. But if you take Latin America, we're up mid-teens in Latin America. That's clearly our people out in the street creating demand, making it happen. Mid-teens bookings growth in Asia. I mean Asia is not that strong. Again, our team is hitting the street. Europe, we talked about product development, and the pace of product development there is best-in-class in the company and product management, best we have in the company around getting exactly right on these product growth teams and understanding where we're competing, how we're going to win against very specific competitors in the market. These products launched, and they do exactly what they were supposed to do. That's a positive for us. So there's a lot of self-help here happening and the backdrop on the markets, with the exception of the Middle East, isn't bad. So you've got decent markets and really strong execution. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay. And how are you doing on – what's the growth rate on VRF in the quarter, progress, any developments there? Michael W. Lamach - Chairman, President & Chief Executive Officer: Last year we were about 30% growth. This year we're about the same, Steve. We continue to do well on the market. We continue to sell VRF. We're beginning to also see interest in what's referred to as four-pipe chiller. So this is simultaneous heat and cooling around water circulating through buildings versus refrigerant. It's big in Europe, picking up a little bit of interest in the U.S. The idea here is we're going to have whatever products are demanded in the marketplace, and then we're going to work with our customers to figure out what the best solution is for the building. And that's why our business was up 30% last year. It's why our business is up about the same this year as well. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay. Great. Thank you. Michael W. Lamach - Chairman, President & Chief Executive Officer: Okay.

And that concludes our Q&A session. I would like to turn the call back over to Miss Janet Pfeffer for closing remarks. Janet Pfeffer - Vice President-Treasury & Investor Relations: Thank you. And thank you, everybody. Joe and I will be available for follow-up calls later today and it's been a pleasure to work with all of you. Have a great day. Thanks.