Welcome to ITT's 2017 Second Quarter Conference Call. Today is Friday, August 4, 2017. And starting the call from ITT today is Jason Moss, Investor Relations and Treasury Manager. He is joined by Denise Ramos, Chief Executive Officer and President; and Tom Scalera, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12:00 PM Eastern. It is now my pleasure to turn the floor over to Jason Moss. You may begin.

Thank you, Paula. I'd like to highlight that this morning's presentation, press release and reconciliations of GAAP and non-GAAP financial measures can be found on our website at ITT.com/ir. Please note that our discussion this morning will primarily focus on non-GAAP measures. During the course of this call, we will make forward-looking statements, as defined in the Private Securities Litigations Reform Act of 1995. No forward-looking statements can be guaranteed and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements made on this call should be evaluated together with the risks and uncertainties that affect our business, particularly those disclosed in our SEC filing. So, let's now turn to slide number 3, where Denise will discuss our results.

Good morning, everyone. Thank you for joining us today to discuss ITT's second quarter financial results and strategic highlights. In the quarter, we continued to drive activities across the globe to optimize ITT's execution. And we took many significant steps forward in advancing our long-term growth strategies. So, let me start with a few highlights of our strong execution. At Industrial Process, we continued to successfully leverage the benefits of our ongoing structural reset and we delivered 230 basis points of sequential margin expansion. At Connect and Control Technologies, we delivered 210 basis points of margin expansion on a sequential basis and compared to the prior year, due to strong productivity, execution, and restructuring benefits. And at Motion Technologies, operational margins improved 170 basis points compared to the prior year, before foreign exchange, investments, and acquisitions impacts, despite increased commodity headwinds. Further demonstrating our strong operational execution in the quarter was the 56% increase in our year-to-date adjusted free cash flow to $85 million. This increase reflects our intensified focus on working capital that drove improved accounts receivable collections. So, let's turn next to our market expansion activities. In the quarter, we continued to invest in ITT's long-term growth potential. So far in 2017, we have funded over $6 million in targeted incremental strategic investments and increased R&D by 10%. These investments have helped to advance a number of critical market expansion activities that are unlocking top-line growth opportunities. Let me share a few of these with you. In our world-class automotive business, we continued to penetrate new and existing markets as we grew our presence on key incremental brake pad platforms. In China, we were awarded eight new platforms that were primarily front axle wins with local OEMs. These wins further demonstrate the breadth of our reach in the…

Thank you, Denise. Starting on slide 6 with Industrial Process, organic revenue decreased 10% to $192 million compared to last year's strongest quarter. Project activity declined 24%, primarily in global oil and gas and general industry markets. Short-cycle revenue declined 6%, due to lower chemical valves and oil and gas baseline pumps and service, partially offset by strong parts demand in oil and gas and mining. On a sequential basis, IP's organic revenue increased 2% compared to Q1 on stronger project and aftermarket activity. IP's adjusted segment operating income decreased 38% to $15 million. The decline primarily reflects lower volumes, impacts from pump projects with a high degree of complexity and higher incentive compensation costs. These were partially offset by incremental restructuring benefits and improved operational execution on lower volumes. On a sequential basis, adjusted segment operating income improved 49% and adjusted operating margins improved by 230 basis points. IP organic orders declined 5%, due to lower upstream oil and gas project activity that drove a 33% decrease in project orders. However, on the short-cycle side, orders grew 5%, driven by: an 8% improvement in baseline pumps, primarily in oil and gas and general industry markets; and 5% growth in the aftermarket, from oil and gas and chemical service in North America. Total Industrial Process backlog improved 8% compared to the beginning of the year to $374 million. Now, let's turn to Motion Technologies results on slide 7. Total revenue increased 12% to $290 million, including $22 million from the acquisition of Axtone, partially offset by unfavorable foreign exchange. Organic revenue increased 5%, due to 7% increase in OEM brake pads from share gains in Europe and China that was partially offset by lower KONI rail shock absorber demand in the U.S. as locomotive manufacturers face a slowdown in activity.…

The floor is now open for questions. Your first question comes from Brett Linzey of Vertical Research Partners.

Hi. Good morning, all.

Hi, Brett.

Good morning.

So, you talked about the $0.03 of incremental investments in the quarter that you funded. I guess what are you assuming for Q3 and Q4? And then as you start to plan for 2018, do you need some more step-up there, as you have had time to sort of reassess CCT and some of the product refreshes you're doing in IP? Any color would be good.

Yeah. Absolutely. Yeah. Thanks, Brett. I would think about the $0.03 of incremental as the right number per quarter for the balance of the year. So, we're continuing to invest in the North American facility start-up. Those costs have been kind of ongoing as we advance towards run rate production at the end of the year. So, we would expect to be at kind of this level of investment. We did indicate on our guidance that we're raising our level of investments, so it could tick up a little bit, maybe $0.03, $0.04 on average per quarter. But absolutely to your point, it's beyond just the Motion Tech facility start-ups. We are investing in other platforms that we talked quite a bit about on the prepared remarks in EV, in Rotorcraft, and high-speed rail. So, we're seeing some really nice market expansion opportunities and we are investing at a higher rate in those in the second half of the year.

And then, any early thoughts on 2018? Does it start to level out or do you see sort of a multi-year step-up here?

Certainly, the Motion Tech start-up costs will be behind us in 2018 as we get the leverage and the benefits of that facility up and running. It's definitely one of those numbers that we hope stays at elevated levels because it indicates that we see a good opportunity to drive some incremental market expansions. We historically average a decent amount per year, in the $0.10 range per year. So certainly, I think the one thing that would go down would be the Motion Tech start-up costs. Those would not repeat, but we're hoping that we continue to see good growth investments into next year, but I would say a little touch down next year from where we are as we exit 2017.

Yeah. And I think along with that, we're looking very closely at these investments and really investing in those areas that we think have the highest growth potential going forward. So, we talked in the script about electric vehicles, about the build-out of the automotive platforms, looking at some things in aerospace like rotorcraft, looking at some things in our industrial businesses, looking at sensors. So, those are the areas that we're tending to focus on with the investments that we're making. And they're all good investments because they're building into the growth prospects in many of these industries that we operate in.

Okay. Great. And then just shifting back to Motion Tech, I guess, as we look by region at the underlying market growth, what are you assuming for the second half of the year for automotive markets and any early planning assumptions in 2018? And then within that context, you provide a little bit of color in the prepared remarks, but could you put a little finer point on the size of the share gains and opportunities you see by those markets within the context of the guide?

Yeah. In terms of the markets, you think about the European market, actually that's been a little bit stronger than we had expected coming into the year. And in fact, our performance has even been stronger than what we had expected. So year-to-date in Europe, we've been growing at about 10%, and that's about 10 times what the market's been doing. So, we're hopeful that the market is going to continue to get some strength as we go out into the future. China, the growth has moderated a little bit, but still, good, good market growth. That is the highest growth market that we have. And we've been growing 10 times that market. So year-to-date we were growing at about 31% in China. And we talk about many of the new wins that we've been experiencing there. North America, that's where there's a lot of attention and we see that in North America, it's down a little bit, started out the year saying it would be about flat to maybe down a little bit. So, still pretty consistent with what we thought heading into the year. And in terms about our performance with the new facility that we're building and putting into place, that's really been a story about 2018 because in North America today, only about 7% of our total friction volumes are in North America. And so, we've been winning new platforms that are coming into play beginning in 2018 and then into 2019. So, we're going to see some nice double-digit volume growth for us in 2018, despite the market being flat to down a little bit.

Okay, great. I'll pass it along.

Thanks, Brett.

Your next question comes from Jeff Hammond of KeyBanc Capital Markets.

Hey. Good morning.

Hi. Jeff.

Good morning, Jeff.

So, great sequential improvement in IP margins. I think you talked about some of these complex projects wrapping up and restructuring benefits come in. Can you just talk about how you think about the sequential margin trajectory into 3Q for IP? And what's kind of the right jumping-off point as we go into 2018?

I'll start and then maybe if Tom wants to add in, he can. But we saw the improvement between Q1 and Q2. As we go through the back half of the year, we're going to start seeing more of the restructuring benefits that we started, that we had from 2016 coming into 2017. And then, we're looking at even some more incremental reductions and SG&A reductions that will benefit us in the back half of this year and then also benefit us as we go into 2018. In terms of these projects, we are planning to get some of those issues behind us, where we're going to have much stronger execution around these projects and just improved execution around the contracts that we have with these projects. And that's going to give us a boost into the back half of this year. And then, we continue to drive other productivity actions, specifically around supply chain. So, all those things are going to build into the margin progression that we're going to see as we get into the back half of the year. And we're really not planning on any volumes to be able to achieve this margin expansion.

Okay. Are you able to put some numbers around kind of margin trajectory? Do we get into the 8s? Are we kind of approaching double-digits with all these positives?

Yeah. Our goal is to exit the year in a double-digit range for IP. That's what we've been driving towards. That's what we think we're going to be able to do based on all these actions that we have underway right now.

Okay. Great. And then on Motion, it looks like you had a $5 million top-line hit on FX and $5 million bottom-line hit. As FX swings positive with the weaker dollar, how should those numbers flip?

We definitely, Jeff, would expect to see a pick-up on the revenue line for MT, probably a little bit of a tailwind potentially on the OI line. Not a big margin mover relative to what we thought previously. So, some of the translation benefits that we would expect from the currency trading levels at this point would benefit MT's OI. But certainly the biggest impact on our revenue is going to be in the Motion Tech segment. But I would say less of an impact on OI. What happened in this quarter that was unique that hit MT's results was a revaluation or change in philosophy with the Czech koruna and that was kind of a one-time event that hit us by about $2 million in Q2. So, that was a little bit of an anomaly. So, the number certainly this quarter was higher than normal. But we would expect to see some positive momentum on the translation line. But it's always hard to predict transaction. And that's what we saw with this Czech situation in Q2. So, a little bit of favorability, but not a huge story, more on the top-line, for sure.

Okay. Thanks a lot.

Thanks, Jeff.

Your next question comes from Nathan Jones of Stifel. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Good morning, everyone.

Hey, Nathan.

Morning, Nathan. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: I'm going to go over to CCT. You've seen some pretty good margin improvement there, some volume, some of the connector restructuring done there. Can you talk a little bit about how you'd expect margins to progress there? And maybe if we look a little bit longer-term over the next two or three years, what do you think the right target margin level for that segment is?

Yeah, absolutely. Good progress on the margins certainly from CCT compared to Q1 and compared to the prior year. Our view, Nathan, is we're going to continue to see sequential margin improvement from the Q2 jumping-off point. So, our plan within CCT is to drive sequential margin gains and start to exit this year at a rate that's squarely in the mid-teens. And I think that gives us a pretty good jumping-off point to go beyond for the longer-term. So, clearly, we have our ECS business, which is an area that we've been doing some transitions. And we think as the year progresses and into next year, that business performing at a much higher level is going to give us some very solid margin lift. And we've done some restructuring. There are benefits that we expect to start to build into the second half and into next year related to the CCT combination and some leverage that we're seeing in supply chain, some leverage we're seeing in functional activities as well. So, we like the trajectory we're seeing for this year and we do expect to build on it into the next couple years. And if you think about the entitlement for these two businesses that we've now combined, we think over time – we're not giving a commitment for next year or any particular point in time, but we believe the entitlement for these businesses is in the high teens and that's kind of where we have our sights set, and we'll see where things go over time. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Then, just one on IP, we've been hearing that there's some chemical plants moving out to bid in North America that I think should be right in ITT's sweet spot. These are the facilities going downstream, the ethylene crackers that were put in over the last few years. Can you talk about what you've heard about those projects, what you know about where they are in the bidding stage and what the opportunity on those kinds of things might be for you?

We are pretty bullish about what's happening in the petrochemical market, particularly in the Gulf Coast. It's early days with those projects, but it's something absolutely that our team is focused on and is working with the customer there to be able to participate in that opportunity. And we see that as something in the future that could benefit us, because our products do fit extremely well. And that's one of our sweet spots, is in the chemical business. So we're excited about that and that's something that, hopefully, we can see coming down the path. Too hard to say yet if it's going to be this year or it's going to be into 2018. That's something that we're just going to have to evaluate as we continue the conversations with the customers. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Okay. But something over the next 12 to 18 months likely?

That's probably right. That's what we might expect. But we have to see how the project plays out. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: We know what can happen with those things. But thanks for the color. That's helpful.

Sure.

You're welcome.

Your next question comes from John Inch of Deutsche Bank.

Thank you. Good morning, everyone.

Good morning, John.

Hi, John.

Morning, guys. What did actually China auto do in the quarter? And I forget what it did in the first quarter. You gave us the blended, but what was the second quarter?

Second quarter growth was 23% in China automotive, and that got our year-to-date to 31%. So, I think what's interesting about the China market and even the wins that we talk about for the China market, John, it's certainly a faster-moving market for a lot of different reasons. There's so many more players inside that market. So, there are tax incentives from the government that move volumes from time-to-time as well. So, one of the things for us that we watch, obviously, is the rate of production and growth in the broader markets in China. But as you hear us talk quite a bit, the wins that we're generating in China tend to move a lot faster into production. There's a lot more opportunities with the local OEMs. We had five of our eight wins with the local OEMs. They tend to start production faster. So, it's a market that I would say is more volatile and fast moving. And what is important for us is the growth is still good and solid and adding incremental wins that have a higher velocity into revenue is another part of China that I would say is different than what we see certainly in North America or in Europe.

The other thing from China that's going to benefit us out into the future is electric vehicles are really important in the China automotive market. And when you look at our penetration of the electric vehicle market there, we currently have about a 14% market share. So, we think that that's also a good future opportunity for us as that market continues to build out in China.

Yeah. So, Denise, talking electric vehicle, I'm not an auto expert, but I know those vehicles and hybrids have regenerative braking. Is that a substitute risk for brake pads, or is it complementary? Maybe you could talk a little bit of how that all kind of fits in the plan.

Yeah. When we think about electric vehicles, it's a very broad space right now. There's a lot of changes and a lot of dynamics going on in that space. A couple of areas of opportunity that we've been looking at, we know that with rotors, that there's an application there that could specifically be associated with coating these rotors that may be really important in the electric vehicle market going forward. So, we're actively looking at that. The other thing that we're looking at is currently, the brake pad that we have today in conventional vehicles is basically about the same that we have in electric vehicles. And we think that there's some opportunity to have some redesign associated with that, which could also be a benefit for us going forward as we work with these manufacturers as to how it's going to progress into the future. Your question specifically about regenerative braking, that's something that we're looking at, we're dealing with from a customer perspective. That is something that would reduce the amount of aftermarket associated with brake pads. And we'll just have to see how that plays out over time. But there's so many different dynamics going on in this market right now, that it's going to take some time to be able to have this all play out.

Yeah. No, that makes sense. You called out some aerospace and auto pressures in price. I mean, I think auto, we understand. What exactly is going on in aerospace that warranted calling out in the presentation?

Yeah. I think, John, to your point, the auto is kind of the typical – you always see us talk about the auto price pressures because those are contractual and we know that those are just part of the nature of doing business in the automotive world. And certainly in aerospace, you've heard probably other players in the aerospace world talk about Boeing and other, the large OEMs in the aerospace world, talking about additional Partnership for Success, and the typical price pressure that results from those kind of interactions. So, it's the nature of the industry that we're in in aerospace. There's nothing specific or unique to us. And like others, we're going to work aggressively with our customers to make sure that we address those issues the right way. But, I would say, this is the nature of the market in aerospace. And the key for us is to keep driving the kind of margin expansion and productivity inside of our operations like we did in Q2. But, I would say, nothing unique in either automotive or aero as it relates to pricing, just the nature of the industries.

Yeah. You got to like that tagline, Partnership for Success. It's like, whose success again? Quick question lastly on CCT. That wasn't directed at you, by the way. CCT, you guys put the business together. I'm presuming there were these cost saves associated with overhead. Could you just remind us what was the magnitude of that kind of prospectively and did any of that manifest itself in the quarter just in terms of the margins?

Yeah. We've seen a little bit of that come through, John. Remember, we combined it. We combined it from a leadership perspective at the end of last year and then we combined it from a reporting perspective beginning of this year. And so, as a result of that, we've been working on combining some of the functional areas, looking at where we can leverage some of our spend. In total, we think that as we get into 2018, that the result of that is going to be an improvement when we factor all that together of about 100 basis points or about $5 million or so on a pure run rate basis going forward. In terms of this year, Tom, what's the impact that we've seen this year?

We'll probably get about in the $3 million of benefit this year and on a full run rate, that would get us up to $5 million. So, there's a little bit of incremental benefits next year. We'll see second half benefits in the margins. But it's like any transition of this variety, John, too, once you get started, you start to see new opportunities. There are footprint opportunities and other next-tier considerations that I think the team is continuing to work on, but those are not fully vetted yet. But we're on a path of generating good savings with our first couple steps forward.

Yeah. Got it. Okay. Thanks very much. Appreciate it.

Thanks.

Your next question comes from Matt Summerville of Alembic Global Advisors.

Thanks. Good morning. I want to talk about Motion Tech for a moment again. If you look at your absolute flow share in this business by region, meaning for every new or legacy platform that comes up for bid, what is your win rate?

It's certainly varied by geography. So, China, as I mentioned, Matt, is a very different market than North America and Europe. I would say so to put that in context and maybe this is the best data I can kind of give you on China. Our win rate in China is exceeding our expectations for our win rate in China. So, our team in the market is starting to generate some cumulative benefits, if you will, from being in the market, having the R&D and manufacturing capabilities. And we are actually outperforming our own internal expectations of our win rates, and we've been kind of trending ahead of our award tally for the year. So, that's probably the best dimension I can give you around China. And it's a similar story, I think, in Europe, where we obviously have had a really good track record in Europe of gaining share. And what we found is with a switch over to copper-free brake pads, some of the new technologies and formulations, our win rate is going up. And I would say that our win rate on projects that we go after is typically – and so you can read into this how you will – the win rate on projects we go after has historically been very high. And you can argue maybe we're being too selective in what we go after. But the reality is, the projects we're going after these days that include these new technologies, our win rate in Europe is higher than what we've historically seen. And then in North America, I think the projects that were essential to building out the North American platform, particularly GM and the wins with Honda and the continued strong relationship with Ford, those were critical. And we've been exceeding our expectations in the amount of volume and the content we had in North America. So, I know it's not a great mathematical question, Matt, but I would say in all three categories, for different reasons, we're exceeding our expectations from a win rate perspective.

Got it. And then with respect to Motion Tech on the friction side again, what is your outlook 2017, and if you have any thought on 2018, what the aftermarket portion of that business should grow at and whether or not you're seeing better, meaning less volatile, quarter-to-quarter linearity in that aftermarket business based on your customers' buying patterns?

Yeah, I think the aftermarket linearity is still a little bit elusive in the aftermarket. The independent aftermarket, in particular, is a well-established relationship that we have. The volumes are expected to be up this year. And I think it's typically a part of our business where we have kind of low to mid-single-digit growth based on the number of references that we have with our customer. But absolutely, linearity has over the last eight quarters, has not fallen into the patterns that we were expecting. So, I think that's something we'll continue to deal with. But on an annual basis, it's been a good healthy marketplace for us. On the dealership aftermarket, that is more customer behavior, buying patterns, market dynamics and that one is driven by the amount of OEM platforms that we win, and the length of service that those vehicles have been in and when they come back to the dealership. So, that part of the aftermarket is driven by different demand factors. And typically what we've seen is OEM volumes come down a little bit, we historically see aftermarket volumes increase. And that's the nature of the business that we have in automotive, which is about 40% to 45% in the aftermarket. So into 2018, a lot of puts and takes. What we've basically have said today is we do expect to see double-digit volume increase in China and North America based on our wins. But I would pause there and hesitate to give any more specifics on 2018 other than I think we're as well positioned as we can be.

Thank you. And then, just one last one on the connector side, can you just flesh out the issue with the military-related business? And I thought you maybe gave a revenue impact, but I may have missed it, and what you think the OP impact is this year. And I guess how does that end up getting itself resolved, if you will?

Okay. Yeah, you may recall in Q1, we reported that we received a stop ship notice from DLA and it's related to just six military-spec connectors. You may also know that there has been other connector peers that have recently faced increased scrutiny from the DLA. So, we've been working closely with the DLA to make sure we give them the information that they have requested. And it's related to the compliance with their program qualifications. And so, as we went through that information that we gave them, we didn't see any issues related to the performance of the products in the field. So, frankly, we were somewhat surprised when we received notice last month that they removed us from the QPL. So, what that means is we are going to be going through a longer process to obtain DLA approval to get back on the QPL. So, that's the background. Now, in terms of the impact on the financials, the value of the products, of these six military-spec products that we sell, is only about $10 million in annual revenue. The other thing important to note, that none of our other connector products are directly impacted, and we can continue to ship those without restrictions. We have estimated our financial impact in the second half results. And then, we've also estimated it for the full year guidance. Let me just also mention another related matter, which you also may recall from the public filings we've had over the last couple of years, that we had received a subpoena from the Department of Defense back in mid-2015 related to the same thing. And so, we've been producing documents for them. We've had preliminary discussions with them. We want to resolve the issue. So, you'll also notice that we accrued $5 million in Q2 associated with that. Tom, any other comments you want to add from a financial perspective?

No. I think you covered it, Denise, and the estimated impacts that we thought were important from a OI perspective, we recognized in Q2. So, we'll watch to see if there any other impacts in the second half of the year. But everything that we know about it at this point, we've addressed in the quarter. And we're just making sure there are no secondary impacts elsewhere in the back half of the year. But at this point, our July indicators have been on track from an order perspective. And we're just going to keep working through this issue as quickly as we can and get this behind us. But that's kind of where we are and I think we've addressed the impacts of this in Q2 and in our new guidance that we put out.

Thanks, Denise. Thanks, Tom.

Yeah.

Your next question comes from Damian Karas of UBS.

Hi. Good morning, everyone.

Good morning.

Hi, Damian.

Tom, you spoke about some of the regional share trends in Motion. Maybe a little bit bigger picture question here on North America specifically. So, it sounds like you notched a few more platform win this quarter and your double-digit expectation for next year obviously shows a lot of confidence in that part of the business. I guess at the core, what do you think is driving your wins in North America? And, as a result, have you been seeing an increased competitive response, given all these momentum you're carrying at the moment?

I think at the core, obviously, we have relationships with GM and Honda, for example, our wins in this quarter, on a global basis. So, they know ITT very well and the strength of our R&D capabilities, our manufacturing reputation because, again, we're just starting to bring the facility online from a test perspective. So, just interesting to note that the wins that we've generated in North America are a reflection of our operating system and our operating model. That model that's worked in Europe and is working very well for us in Wuxi is what we are building in North America. And the wins that we've generated in North America for that facility; when we won the awards, we hadn't built the facility yet. So, I think it's a real strong testimony to the way we operate, the relationships we have with the customers, our conviction and commitment to replicate the quality and performance that they get from us on a global basis underlies all of that. So, it's a real testimony, I think, to the global strength that we have. And that's why we're excited that we're getting test production out of the facility in Mexico and kind of moving into that phase. At the core of our manufacturing capability is automation. And we think that that's where we have a distinct manufacturing advantage. We, obviously, invest in those core capabilities to make sure that we have high-quality, repeatable performance. So, there will be competitive responses. There always are, but the beauty of winning platforms inside automotive is you have multi-year visibility. And if you can continue to perform and deliver for your customers, you don't create many entry points for competitive threats. So, our goal is to continue to execute, perform these contracts and maintain that manufacturing and automation advantage that we have today.

Okay, that makes sense. And in IP, you're seeing some positive trends on the short-cycle side of the business. Can you give us an idea on what you're expecting for the second half? Do you think baseline pump and valves continue to kind of run at that mid single-digit type growth rate?

Yeah, we've been happy with what we've seen in the short-cycle business in the first half of this year. It was better than what we had expected. So, that's a positive. And as we enter into the back half of this year, we're really maintaining the guidance for the back half of the year that we had at the beginning of the year, still a lot of volatility, a lot of uncertainty. You see what happens with oil and gas prices. Distributor inventories still tend to be relatively high. And so, we're just monitoring it and we're watching it. And we'll see how it unfolds as we get into the back half of the year. It could be a positive, it could be a negative to us, but we think we're trying to be prudent in these numbers and knowing that there's still a lot of uncertainty with what's going to happen there.

Okay, great. Thanks.

Thanks.

Your next question comes from Joe Giordano of Cowen. Joseph Giordano - Cowen & Co. LLC: Hi, everyone. Good morning.

Good morning.

Hi, Joe. Joseph Giordano - Cowen & Co. LLC: I just want to clarify what you said on Tesla. You mentioned specifically the platforms there that you had brake component content. Is that something different than like what you would traditionally be supplying?

Yeah. What was going on the Tesla right now is we've got black plates and we've got shims. And those are the two components that we have on the Tesla models. We're self-sourced on those components and so we're happy with the products that we've got there. The friction pads that we have, we have on a number of other electric vehicles. And as we continue to progress down developing brake pads that are even more specific to electric vehicles, we hope that we can penetrate even more of the new platforms that are going to be coming out. Joseph Giordano - Cowen & Co. LLC: Okay. Thanks for that. On the IP side, are you seeing either a consistent or a pick-up in customers delaying taking delivery of like longer lead time items? I know a bunch of other companies have talked about that so far.

Yeah. We've seen that for a while now. I think it's just the nature of what's going on out there in terms of the projects that are getting built and customers still some uncertainty around some things. So, yes, we've been seeing customer delays. I don't know that it's any different than what we have been seeing. So, it continues to be a factor in the marketplace, but it really hasn't gotten any worse or gotten any better at this point. Joseph Giordano - Cowen & Co. LLC: Okay. Fair enough. And then, on CCT, can you maybe flesh out – I don't know. Maybe you don't want to do this, talk about the businesses as they used to be. But if we were to think about how the old ICS business margins are progressing versus where that is, like what kind of order of magnitude change have you been seeing in that part of the business?

That's a really good question and we're happy to answer that question because, actually, we've been seeing some really, really nice improvement in ICS, just a big change in terms of that Nogales facility and the operations around that Nogales facility. We've been improving operationally with on-time delivery, with our production rates, with our labor efficiency. It's been really, really positive. So we've had four quarters of sequential margin improvement. And if you factor out the DLA issue that we're dealing with and what we put into Q2 for that, we would be at around double-digit margins for that business. So, happy with it, and we're going to continue to drive more productivity through that facility, but it's been a nice turnaround. Joseph Giordano - Cowen & Co. LLC: Okay. And maybe last for me, now that asbestos is isolated in its own entity and you guys have managed that pretty well, what it would look like to unload this to like an insurance company? Like is there an opportunity to package this with cash and just get to a point where we don't have to talk about it anymore, like what are you allowed to do? Are you allowed to raise capital or do something like that or raise debt to do something like that? What are you allowed to do and how would that look if you were to go down that path?

Yeah. There's a lot of things that we always think about from an asbestos perspective. We evaluate all various options, all various alternatives to us. And if it makes sense, it's something that we will be considering. At this point, we've not seen anything from that perspective to say that it's a path that we want to go down. A lot of gives and takes on this one, a lot of things that you have to consider when you think about what you want to do with asbestos. But we have run that extremely well over the past five years or so. And we're happy with just the progression that we've had in really working through some of the issues that we've had with it. So, for right now, happy with where we are, but believe me, we continue to look and evaluate all options to see what would make the most sense going forward. Joseph Giordano - Cowen & Co. LLC: Yeah. I mean, I think everyone agrees that you've handled it really well. It's just I guess it acts as some sort of weight on the balance sheet, to an extent. So, appreciate your comments, and thanks very much.

Thank you.

Thanks, Joe.

Thank you. There are no further questions at this time. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.