Thank you for standing by and welcome to ITW's Q2 2017 Earnings Conference Call. All participants will be on a listen-only mode until the question-and-answer session of today’s conference. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this time. And now I’d like to turn the call over to Michael Larsen, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Okay, thank you Bob. Good morning and welcome to ITW's second quarter 2017 conference call. I am Michael Larsen, ITW's Senior Vice President and CFO. Joining me this morning is our Chairman and CEO, Scott Santi. During today's call, we will discuss our second quarter financial results and update you on our 2017 earnings forecast. Before we get to the results, let me remind you that this presentation contains our financial forecasts for the third quarter and full-year 2017 as well as other forward-looking statements identified on this slide. We refer you to the Company's 2016 Form 10-K for more detail, but important risks that could cause actual results to differ materially from our expectations. Also, this presentation uses certain non-GAAP measures. And while we use very few non-GAAP measures, a reconciliation of those non-GAAP measures to the most comparable GAAP measures is contained in the press release. With that I'll turn the call over to Scott.

Thanks Michael and good morning. Overall, ITW continued to execute well in the second quarter as we delivered strong results and established several new all-time performance records for the company. Earnings per share of $1.69 was up 16% year-on-year, 14% if you exclude the $0.03 of share benefit from a legal settlement that we recognized in the quarter. Operating income of $874 million was up 10% year-on-year, was the highest quarterly operating income in the company's history. Q2 operating margin of 24.3% was also an all-time record for the company and was up 120 basis points, with enterprise initiatives contributing 100 basis points of improvement. After-tax return on invested capital improved 190 basis points to 24.8%. We are continuing to make good progress our pivotal organic growth. Year-to-date, our organic growth rate is up 3%, is up almost 2 full percentage points versus last year reflecting both improving demand in our industrial facing businesses, particularly Welding and Test & Measurement, and Electronics and continued progress on organic growth framework initiatives across all seven of our segments. Based on our Q2 and a relatively stable near-term end market demand environment, we're increasing our full-year EPS guidance by $0.12 at the midpoint. Overall, we continue to make good progress on our path to ITW’s full potential and the company is well positioned to deliver continued strong performance in the second half and beyond. With that I'll turn the call over to Michael who will provide you with more detail regarding our Q2 results and updated 2017 forecast. Michael?

Thank you, Scott. So starting with Slide 3, GAAP EPS increased 16% to $1.69. Total revenue was $3.6 billion, an increase of 4.9%, with organic growth of 2.6%. Organic growth was positive in all major geographies with North America up 1.4% and international up 4.2%, driven primarily by Europe, which was up 3.4% and China which was up 13.3%. Six of our seven segments had positive organic growth. It was great to see welding turn positive, up 3% for the first time since 2014. Sequentially, from Q1 to Q2, organic revenues accelerated 2.8%. Ahead of our historical run rate as welding, test and measurement electronics, and specialty products all exceeded their Q1 run rate. We increased operating margin 120 basis points over last year, which was driven primarily by continued progress on our enterprise strategy initiatives and volume leverage. Enterprise initiatives contributed 100 basis points of margin expansion. And five of seven segments increased operating margin. Operating income grew 10% to 874 million, making this quarter the most profitable quarter in the company's history. As Scott mentioned, we recorded an EPS benefit of $0.03 per share related to confidential legal settlement. Excluding this item, second quarter earnings were a $1.66 per share, an increase of 14% versus the prior year. Our effective tax rate was 28.4% in the second quarter, in line with our expectations. Free cash flow of 502 million adjusted for a discretionary pension contribution of $115 million was 85% of net income, which is in line with typical seasonality. In the quarter, we made the decision to accelerate future pension contributions, with surplus cash, essentially fully funding our US plan and setting the stage for lower pension contributions in the future. On Slide 4, you can see that we achieved an all-time record for operating margin in…

Thank you. Our first question is from John Inch of Deutsche Bank. Sir, your line is open.

Can we start off this line item unallocated in the op margins? I'm trying to remember what is that because it's run rate kind of in the mid 20s down to sort of - it was sort of a source of significant income, why was it almost zero this quarter? Is there any explanation?

Yes. So that is the impact of the illegal settlement, which was booked in that line item essentially. So what we do is we allocate our corporate cost to the segments on a percentage of revenue basis and because our corporate costs went down as a result of the legal settlement, we allocated less to the segments this quarter. So that's what you're seeing in that line, John.

So was it about 20 [indiscernible] Michael, kind of the run rate that has been? There's nothing else in there, right?

No, there's nothing else of significance in there, yes.

Food equipment was a little weak and it seemed like - if I go back to my notes, I thought some projects, I realized it was a tough compare, but I thought projects were being - have been deferred from the first quarter into the second quarter. Did those not hit or was there anything else kind of going on in the segment?

Those did John, that was on the international side and you international up a solid 3% in line with expectations. I think what you saw a little bit in Q2 here was a slowdown on the restaurant side of the business, which is only about 20% of our business, but it was down in the 7% range. Our business as you know is primarily focused on the institutional side and institutional was actually up in that 2% to 3% range in the quarter. And for us, the QSR side was also positive and the retail side. So overall, the slight slowdown that you're seeing here is as a result of the restaurant side. And as we look into the second half here based on the current run rates and backlog in that business, we’ll be back in that 2% to 3% range organic growth in the second half for the business.

And then lastly Michael, your auto guidance, you’re still sticking to the 3, so that implies your core growth – ITW’s core growth is going to go negative in the second half? How would you parse that out sort of between third and fourth quarter?

So the decline in automotive OEM, if you look at in the second half is going to be in Q3. So that's when you see the bulk of the decline in North America auto builds down 6% and actually down more than that with the D3s where we have relatively higher content. And then the decline in builds moderates in Q4. And so, if you translate that that's part of what's driving the Q3 versus Q4 organic growth rate for the company. So we’ll be you know we are guiding to 1% to 3% for Q3 and that implies a better organic growth rate than that in the fourth quarter, really primarily driven by the auto builds.

Right, which helps to explain why your fourth quarter EPS doesn't decline sequentially as much as it does or as it has historically, is that a fair statement?

That is a fair statement.

Our next question is from Andrew Kaplowitz. Andy, your line is open.

So Michael, this one might be for you. Maybe talking about price versus cost in general, I know you mentioned that you would have 20 to 40 basis points of headwind this year; I think you had talked about 10 to 30 last quarter. It doesn't look like that big a deal on the total impact of ITW, but it lead to a decline as you mentioned in construction products. So as you go forward here, can you pass through more price in that segment to offset rising costs or should we set out flat margin profile for that segment going forward for a while because of price versus cost?

Andy, let me just put it in context, I mean, we just reported record operating margins at 24.3%. So price cost was a little bit more of a headwind really as a result of the primarily the price of steel. We have passed on - we’ve made the price adjustments essentially we need to make for 2017 and we're set up for the pressure on price cost to moderate here in the second half of the year and margins would continue to improve from here on the construction side.

And Scott, shifting over to welding, obviously it's continuing to improve. I know in the past we talked about, you know, welding used to be a high-single digit growth business and assuming that this is a relatively traditional recovery, is it fair to say that welding growth could get back here into at least the mid-single digits has it’s been in the past. And do you have any visibility that tells you that we're still on the sort of upward glide. I know you mentioned the better industrial results. So, is that the way to look at it going forward?

I absolutely believe that the underlying potential is every bit as positive in welding as it has been historically on a go forward basis. We are, you know, Michael talked about it, I think the encouraging thing in Q2 is that we saw the industrial side of that business turn positive in a pretty significant way in Q2. I think it's, you know, we hate to call one quarter trend. So I think we're in the wait and see mode here a little bit, but overall I would say that we are at least hopeful that what we saw in the second quarter will continue and if it does, then we would expect welding to be back at some point here to its traditional place in our portfolio as one of the strongest organic growers in the company.

Next question is from David Raso of Evercore ISI. David, your lines open.

I was curious about the guidance, the organic sales growth guidance. If 3Q does come in at your guidance of positive 2%, to reach the full-year guide it implies the fourth quarter again. It clearly has to reaccelerate close to 4%. Can you explain why do you expect that much of an acceleration in the fourth quarter?

I think we’ve just talked about this a couple minutes ago. I mean the key driver here is really if you look at the IHS forecast for the second half, the decline in domestic builds is greater in Q3 than Q4. So that delta is really what's driving the bulk of what you're describing, which is a 1% to 3% organic growth rate expected for Q3 and then implied a higher growth rate than that for Q4. So it's primarily driven by the forecast for auto builds in North America.

So for the fourth quarter, are there any other businesses that we should be thoughtful about that you expect an acceleration or is it really that significantly sensitive to the auto swing in 3Q and 4Q year-over-year.

All of the other businesses, David, as we usually do is a model based on current run rate adjusted for typical seasonality.

[indiscernible] industrial.

Right, I mean, that’s the other thing. I mean, we are seeing what we just talked about, you know, the industrial businesses; welding, test & measurement, electronics, there is some positive momentum in those businesses. But it is primarily driven…

Run rated out from here.

Yeah. I mean what we usually do is we take current Q2 run rate and order rate and we run rate amount adjust for seasonality, but there is no assumption of a significant acceleration beyond that built into Q4.

But that math is what it is, just taken some of those CapEx businesses, run rates run them out. They do give you a little better organic growth in 4Q then 3Q or recently right, that's the idea of…

Yeah.

Solely auto, but auto is the main issue. Second question, last question, the gross margin is down year over year; they haven't been down year over year for six years. I wish all my companies could have 42% gross margins, but still to see it down 70 bps year-over-year, was that what you were expecting and is that how we should think of the rest of the year if you can explain that in more detail?

Yeah I think price cost was a little more unfavorable than maybe we expected. We've talked about this lag in the past between when you start realizing price increases and when the material costs show up in the income statement. And I think what the timing was off maybe a little bit versus what we expected, but as I also said on price cost, we would expect that to start to moderate that pressure here as we go into the second half. We've made the price adjustments we need to make based on current material cost and if anything some of the pressure we've seen on steel may be easing here in the second half. So we feel fairly confident that we have this one baked in our guidance for the rest of the year.

So for the full year, if you think about the growth, the operating margin is up 150 bps. Do you expect any improvement year-over-year in the gross margin or is it more of an SG&A story for this year?

It’s both; you will see both, David.

So you expect gross margins to be still higher year-over-year, okay. Thank you very much, I appreciate it.

Our next question is from Nigel Coe of Morgan Stanley. Nigel, your line is open. * *** 24-48 *** Nigel, your line is open.

Couple of quick follow-ups. Just as kind of, just to put final points on the second half auto, it looks from your comments Mike that your [indiscernible] in 3Q and then flat in 4Q. Is that a fair run rate?

Yeah. So we -- I’d rather not Nigel -- if I start giving guidance by segment here based on external forecasts, it gets a little tricky, so I'd rather not go down that path, but I think if you model this, you can yourself, based on the data we have provided you, can get pretty close.

And then just thinking about welding, obviously welding is coming off the trough, so the recovery is going to be somewhat lumpy, but if you think about the sequentials from what we saw in the first half to the second half, we normally see seasonality down slightly from the first half, but obviously coming off the trough, it could be a little bit better than that. So how do you view the second half versus first half in welding?

Yeah. I mean that is correct. I mean, we've modeled the second half based on current run rates, which is the commercial side, up 5; the industrial side, which was the new news, up 5, that business was down 2 in prior quarter; and then oil and gas is still flattish, down actually 1% here in Q2. So we haven't seen a pickup on that side yet.

Okay. And just a quick follow-on on the margin bridge, you actually called out overhead efficiency and restructuring of 40 bps, but what exactly is overhead efficiency and how does that differ from the enterprise initiatives?

This is more discretionary cost management, so it's your day-to-day blocking and tackling on the cost side.

Next question is from Joe Ritchie of Goldman Sachs. Joe, your line is open.

So I guess my first question is on, maybe if you can give a little bit more color on EF&C and the progress that you're making there on the margin side and I guess the reason I'm asking the question is because it seemed to have a little bit more of a negative impact in 2Q to 1Q. So any color around that would be helpful.

Yeah. I think we're really pleased with the progress and maybe I’ll let Scott talk to the operational side, but on the financial side, we are ahead of what we had modeled when we made the acquisition by a pretty wide margin at this point. As you may recall, they came in at EBIT margins in that 7% range. A year later, we are already at 11. So I think we’re really pleased with what we're seeing financially and then maybe operationally. Scott --

I would just reiterate what we've talked about in the past, which is it’s a terrific fit with our business I think from a leadership, the quality of the leadership team that we've inherited, we are very pleased. It is all going very well. It does take some time to do what we usually do. So this is a four to five year integration process. And as Michael said, we are ahead of the game, but we are, at this point, four quarters in on a four or five year run. So -- but so far it's been everything we hoped that would be.

Got it. That's good to hear. And I guess as my follow-on question, maybe going back to a little bit of discussion here so far an organic growth, so clearly understand the auto build down in the second half of the year and then you guys take a run rate on the rest of your businesses. But to the extent you can provide any color on how business trends went throughout the quarter on the remaining businesses, that would be helpful.

Yes, actually we – typically, we don't see much anything unusual. We actually did see quite an improvement in the month of June. So we feel really good about the momentum going into the third quarter here.

Was it anywhere specifically Michael?

It was actually broad based and the international side continues to be strong. And then in North America, in the month of June, now, it's one month, so I wouldn't read too much into it, but really broad based, a meaningful organic growth rate in the mid-single digits, maybe a little higher than that.

Our next question is from Ann Duignan of JPMorgan. Ann, your line is open.

If we could just focus on foodservice again, just given all the headwinds that are facing the restaurants in this environment, are you seeing any increase in competition for your institutional business, I mean, you've always had a strength in that segment, but I'm just curious if restaurant is under pressure, are the competitors refocusing their efforts on institutional, if you could just give us some color there would be great.

Ann, this is Michael. We haven't seen any change in the competitive dynamics on the institutional side. As you pointed out, we have a really strong position there that's been our focus for a long time and we were pleased to see the business up in a year-over-year basis, again in Q2 and feel very good about our competitive position.

Okay. And then as my follow up, could you just talk about share repurchase and what your ending share count was on a diluted basis at the end of quarter? Thanks.

Yeah. I think we ended up at 347 and so we are executing the program we laid out back in December, which is $1 billion for the year. $250 million per quarter is the plan and that is the plan for the back half here in Q3 and Q4. I will point out that we have a board meeting coming up where we will, as we typically do, discuss capital allocation and surplus capital deployment specifically and after that meeting, here in a couple of weeks, we’ll provide an update, not just into the dividend, but also any potential further share repurchases for the year.

Okay. And any update on acquisition pipeline.

Not much of an update here, Ann. We’re not necessarily a great proxy for what's going on in the broader M&A market. I mean, we're really focused on executing this enterprise strategy and deliver the types of results that you've seen from us over the last four years. So that's our primary focus right now.

Our next question is from Andy Casey of Wells Fargo Securities. Andy, your line is open.

A lot obviously has been covered already, a couple of detailed points on total revenue, you raised it a little bit. It looks like it's based primarily on currency. What sort of translation rates are you building in there specifically for the euro?

Yes. So currency was still a headwind in Q2 and what we, as we always do, Andy, we're modeling based on current rates. So I think if you look today, it’s about 1.17 for the euro. Last year, I think we were 1.12 average. That dealt, the $0.05 just as a rule of thumb drives $0.05 of EPS for the full year. And so in the second half, that’s the $0.03 of EPS favorability versus guidance. But it's nice to see that if rates stay where they are, we're not going to be talking about headwind on currency, which it's been a while since we're able to say that.

Sure. That it good news. Second one, when you look across your businesses and including the comment you made to an earlier question about June seeing disproportionate strength relative to the rest of the quarter, did that drive any incremental backlog growth at the end of the quarter that you will realize in the second half.

Andy, most of our business is really booking and ship -- I mean we get the order today, we ship tomorrow and replenish the inventory the day after. So we tend to be fairly short cycle and so we've not seen a significant change in backlog. And as I say, we’re not really a backlog driven company.

Our next question is from Steven Fisher of UBS. Sir, your line is open.

You guys have a few businesses that have margins that are notably below the rest of the company at this point and looking at test and measurement, autos, polymers and fluid, I know you have had obviously in test and measurement, a pretty good year-over-year improvement, which is impressive, but how focused are you on bringing those segments up to the company average or margin improvement results come more so from the other businesses.

The ones that stick out and if you go to the, there's a schedule in the 8-K, attached to the press release that actually lays out the impact that I talked about on the call, I talk about every call of the amortization of the intangibles related to acquisitions and due to the more recent acquisitions in test and measurement, electronics and in polymers and fluids, that’s where you see the bulk of the impact. So you really, on an apples-to-apples basis, need to add back this quarter 320 basis points in test and measurement, 400 basis points in polymers and fluids and really 150 basis points, if you look at it at the enterprise level and just as an aside, if you and we've done this for you on that same schedule, if you translate that into an EPS impact, it's about $0.10 a quarter. So $0.40 of non-cash expense, $0.40 of EPS on an annual basis. We are focused on improving margins in all of our businesses and I think what's really encouraging is you're seeing our businesses there are clustered in a tight range in the mid-20s operating margin and I think that really is a result of our businesses leveraging this really unique business model with a very high level of efficiency. And so what we have today in our view is a really highly diversified high quality portfolio with no weak links anywhere. These are all, if you compare our operating margins here to peers, on average, they are 500 basis points better than -- higher than their peers and in some cases, significantly more than that. So I hope that answers your question.

And then why are the consumables or welding, why is that declining, is that just lagging the equipment declines we saw over the last couple of years and if so, if the equipment is turned around, how quickly could the consumables turn around and what the underlying would drive it to become positive that’s not already driving it with the equipment sales.

Yeah. It’s a good question. I mean, first of all, it's a fairly small part of our business, 20% of our revenues. We’re focused, as you know, primarily on the -- of our businesses on the equipment side. Consumables were down slightly in the current quarter and it's really tied back to the international side, which is primarily oil and gas. And so as the oil and gas cycle starts to make its way into the welding consumable side, we should see an improvement on the consumable side as well.

Thank you. Our next question is from Mig Dobre of Baird. Mig, your line is open.

Can we talk a little bit about any changes, if there are any, in your view vis-à-vis longer term capital deployment, how you're thinking about M&A, any areas where you'd like to add to the portfolio, any updated thoughts here would be helpful.

Yeah. Mig, I mean, at this point, nothing has really changed. I think we've been very consistent in terms of our ability to generate strong cash flow, maintain a strong balance sheet and allocate our capital or our shareholders capital with very high level of discipline and so our number one priority is invest in our businesses and to drive organic growth and productivity. That's our number one priority. That only consumes, in our very asset light business model, about 25% of our operating cash flows. The second priority is the dividend. And so as you’ve seen, we've been leaning into the dividend with a meaningful increase last year, I just talked about we have a meeting coming up in August here. We allocate about 25% to 30% of our operating cash flow to a dividend that has been growing slightly faster than earnings certainly last year. And then that leaves a fairly sizable portion for external investments, some combination of acquisitions and we’ve talked about the criteria that we're looking for there from a strategic and from an 80-20 improvement standpoint. We also talked about that not being really the primary focus for us right now and then any remaining surplus capital, we've returned to shareholders through the share repurchase program and so $1 billion this year that we're executing is really our estimate of surplus cash available in North America. So that's a rebound line of our capital allocation strategy and Mig, just given the performance of the company and our strong position here, we haven't changed anything.

I guess what I'm trying to figure out is, if there's any way that we can understand as to whether or not you’re, call it, more active now when evaluating potential acquisitions than you were say six or twelve months ago.

No, not really, Mig. We're really focused on executing the current enterprise strategy and continue to make progress on our pivot to organic growth. I think we’re really encouraged by 3% organic growth in the first half, almost two full percentage points better than all of last year and last year was another significant improvement over the year before that. And so that’s the type of momentum that we're trying to generate here really with a laser focus on getting the organic growth rate going.

Thank you. Next question is from Nathan Jones of Stifel. Sir, your line is open.

Starting off here in test and measurement and electronics, obviously, very good margin performance there. It looks like record quarterly margins. Was there anything in terms of mix that influenced that or are we just looking at the enterprise strategy taking hold there and some leverage on volume and how should we think about those margins going forward.

Yeah. I mean that's -- you got it. It's exactly what you described, it’s over 300 basis points of enterprise initiative impact and volume leverage. So back to -- you see what happens in these segments, you get a little bit of organic growth to volume leverage and the earnings growth we're able to drive with that is really significant, which is back to again why we're so focused on getting the organic growth rate going. So we would expect the test and measurement business to continue to improve from here.

Okay. And then just a question more broadly on the industrial operating businesses. I would assume over the last two or three years that you've probably seen some demand related pricing pressure in those businesses. You're now talking about those businesses improving. How are thinking about your ability to potentially raise real pricing more than just to cover raw materials as we go forward and see industrial, the industrial economy recovering.

Yeah. I mean Nathan, I appreciate the question. That's not really how we think about it. I mean, we price for value, as we continue to innovate and deliver value to customers, that's how we get price. We’re not, in terms of the price cost equation, we are just trying to cover our increases on the raw materials side. The margin performance by ITW continues to be driven by the enterprise initiatives primarily and then the volume leverage that you're seeing. So those are the key drivers of margin expansion at ITW, not the price cost equation.

Our next question is from Jamie Cook of Credit Suisse. Ma’am, your line is open.

Two questions. One on polymers and fluids, I know, the business declined organically in a quarter and I guess the comps were a little tougher, but can you talk about the main drivers, how much of that was auto and what your exposure is there? And then my second question, just broadly on China, you continue to see pretty good growth there. I know a lot of its driven by the auto business, but just sustainability of China growth in the second half of the year across your different segments. Thanks.

Yeah. So polymers and fluids, as you point out, is really more of a comp issue in the automotive aftermarket business. We launched, the business launched a new product last year and typically, when we do that, you see a ramp up in the quarter that didn't repeat this year. So the only other thing I can point to is really on the polymers side is in selling into the wind industry, there's a little bit of a decline in that part of the business, but overall, stable. And I would just point out that even though as you saw revenues were down slightly, margins continued to improve in that business, which is certainly encouraging. In terms of China, the growth continues to be really strong and it's not just the automotive business, it's really across the board. Excluding automotive, China was up 11% this quarter. And on a year-to-date basis, up 16% and it's really broad based. So we feel really good about our position in China and we feel good about our ability to continue to perform at a high level in the second half.

Our next question is from Walter Liptak of Seaport Global. Sir, your line is open.

Wanted to ask about just kind of the overall margin profile for the company. It’s a great performance this quarter. I think in the past, you talked about getting to 25% overall and I think that was a 2018 number. And I just wondered if volume, the organic growth continues to come back, are we thinking about the wrong way, if we're thinking mid-20s is where the operating margin improvement ends, could you get to 28%, 30% with operating leverage coming through?

It's a good question, Walt. I mean how I would think about it is for the year, we expect to be at 24%. We have a clear line of sight to another 100 basis points of margin expansion from enterprise initiatives, obviously for the second half of ’17 and also for ’18. So those -- that alone takes us to that 25% range. And then, you have to model what you think the organic growth rate is going to be for the company. And historically, our incremental margins on organic growth have been in that 30% to 35% range, maybe at the higher end of that range recently. And so theoretically, that's where we would be -- where we would be maxing out. So I certainly wouldn't think of the 25% as a cap in any way say perform. We really believe that there's more room to grow here from a margin perspective. As again, we really continue to make good progress on organic growth with strong incremental margins.

And then if I can ask you a follow-up on the food equipment question that was answered, I think earlier this year, you talked about mid-single digit growth for that segment and I wonder if that's what we're still looking for, because you're a little lower in the first half. Is there enough line of sight on business in the second half to be mid-single digit for the full year?

I think we probably -- this year, I think long term, certainly we have a lot of conviction around being able to grow the food equipment business in the mid-single digits, which would be 200 to 300 basis points above market. Right now, a little bit of a slowdown on the market side. We talked about that. And for this year, we’ll probably be slightly below mid-single digits in terms of organic growth in the food equipment business.

Thank you. Our next question is from Barry Haimes of Sage Asset Management. Sir, your line is open.

I wanted to just follow-up on one comment you made earlier that you thought steel pressure might ease some in the second half and it's widely expected the section 232 decision is going to be out fairly shortly, which arguably could have upward pressure. So I'm just curious what you're seeing in the marketplace that makes you think that steel could come off in the second half? Appreciate that. Thanks.

Yeah. I mean I think we are seeing a slight moderation on steel prices right now. The tariff really, I mean that’s anyone's guess. If that were to happen, then we will react accordingly.

Thank you, speakers. We show no further questions in queue.

All right. Thank you, Bob. Thanks for dialing in and have a great day.

That concludes today's conference. Thank you for your participation. You may now disconnect.