Good morning. I would like to welcome everyone to Kennametal's Third Quarter Fiscal Year 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Please note that this event is being recorded. I would now like to turn the conference over to Kelly Boyer, Vice President of Investor Relations. Please go ahead.

Thank you, Denise. Welcome, everyone, and thank you for joining us to review Kennametal's third quarter fiscal 2016 results. We issued our quarterly earnings press release yesterday evening. It's posted on our website at www.kennametal.com. This call is being broadcast live on that website and a recording of the call will be available for replay through June 3. I'm Kelly Boyer, Vice President of Investor Relations. Joining me on the call today are Ron DeFeo, President and Chief Executive Officer; Jan Kees van Gaalen, Vice President and Chief Financial Officer; Marty Fusco, Vice President, Finance and Corporate Controller; Chuck Byrnes, President, Industrial Business Segment; and Pete Dragich, President, Infrastructure Business Segment. Ron and Jan Kees will discuss the March quarter's operating and financial performance, as well as our updated outlook. And we'll be referring to the third quarter slide deck posted on our website. After their prepared remarks, we will be happy to answer your questions. At this time, I would like to direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of assumptions, risks and uncertainties that could cause the company's actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements. These risk factors and uncertainties are detailed in Kennametal's SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliations to GAAP financial measures that we believe are most directly comparable to those non-GAAP financial measures can be found on our Form 8-K on our website. With that, I would now like to turn the call over to Ron. Ronald M. DeFeo - President, Chief Executive Officer & Director: Thank you,…

Thank you, sir. And your first question will come from Ann Duignan of JPMorgan. Please go ahead.

Hi. Good morning. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning, Ann. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Good morning, Ann.

Ron, maybe you are one of the team leaders could address in a little bit more detail the changes that you're going to undertake to the sales organization. You mentioned the substantial change and driving more through distribution. What are the risks that you face in doing that and if you could just delve into that a little bit more? Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay, Ann, fine. First of all, just let me set the stage by saying, we recognize that one of Kennametal's strengths is that we're problem solvers. We've got great technical selling capability, and over the years many of our 1,000 plus global salespeople have been excellent at determining critical customer issues and providing unique solutions to those issues. But simultaneously, if you reflect on our industry, Kennametal's a little bit different than others in the industry, some of that's good and some of that probably should change. About 65% or so of our business we sell direct, and these are general numbers. Our competition probably is almost the inverse. We think about 70% of the market actually buys product similar to ours through distribution. We also know that our operating margins aren't where they need to be, in particular when you do a comparison with what our competition has reported and where we are. Not all of that is sales and marketing related, but certainly a piece of it has to be. So as you think about Kennametal today, we want to make sure we keep that customer intimacy that our organization has developed quite effectively over the years, but then reduce some of the costs associated with how we service the market and how we approach the market. So the biggest, I think, opportunity area is probably in Chuck Byrnes' Industrial business, so maybe Chuck you want to comment on that. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure, Ann. In our Industrial North America business, we have more than 7,000 customers that are forecasted by less than $100,000 from us this year. We have just over 6,000 customers that are forecasted to buy less than $50,000 from us this year. Our cost to serve and, frankly, their cost to purchase are too high. The average transaction value for an invoice is about $500 with those customers. We have to drive that cost out of our business, while continuing to service that end user customer. We also unfortunately compete with our distributors at these small customers and I want to eliminate competing with our partners. Ronald M. DeFeo - President, Chief Executive Officer & Director: I think this is important for us. It's not the complete answer, but it's part of the answer and will be very helpful in establishing the right rules of the road for how we go about our business in the marketplace.

Great. Well, it certainly seems like you've thought it through well. So I wish you good luck in that and I'll get back in queue in the interest of time. Thank you. Ronald M. DeFeo - President, Chief Executive Officer & Director: Thanks, Ann. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Thanks.

The next question will come from Stephen Volkmann of Jefferies. Please go ahead.

Hi. Good morning, everybody. So just wanted to kind of keep going on that train of thought if we could. I guess you're saying a piece of the margin issue relative to your peers is in how you handle these customers. But I'm wondering kind of what the other pieces are. Ron, you mentioned that you're trying to drive efficiency at the existing plants. It sounds like you're saying that we're not going to see much more plant consolidation. How big a deal, how much margin can you get out of running the existing footprint better? And then beyond that, are there other areas like maybe is your product not quite right? Are you losing share somewhere where you shouldn't be? I mean, what else – I guess, I'm sort of asking what else have you learned in your first three months there that kind of accounts for the big margin differential relative to your peers? Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay, Steve. Thanks for that. That's a pretty broad topic, but...

I tried. Ronald M. DeFeo - President, Chief Executive Officer & Director: Yeah. So let's talk manufacturing footprint. We have somewhere about 49 manufacturing plants, down from in the 100 level not that long ago. More recently, I guess, we were in the high 70s. And we've reduced our manufacturing footprint sufficient with some of the changes in the business and partially as a function of the divestiture that took place. In reducing our manufacturing footprint, though, it always comes with a bit of a cost, okay? The cost sometimes isn't always measured, sometimes it's difficult to measure because in the transition of closing a manufacturing facility, you may not always have enough product to service your customers' needs and when that happens, you lose business, and then are you really better off or not? So there's some clear things we can do to lower our manufacturing costs by changing some of our footprint, many of those have been already announced and are underway. But as I walk some of the facilities and talk with our team, there's also some very, very critical things we can do within the four walls of each of our operations to lower our costs. We can apply smart automation in some places. We can change some of our processes. So I think if we continue to focus on individual plants and the productivity of those plants and drive that productivity, there's a lot that we can harvest. I'm not going to give you a 100 basis points, 200 basis points, 300 basis points of margin because, frankly, we just don't know how high, high is, because we want to make sure we also protect the proper service we need from each one of these operations. And one of the good things about putting the manufacturing operations underneath the business leaders, I'm convinced that when we break down the business into bite-sized pieces to combine manufacturing operations with selling teams that are close to the market, we'll get better trade-off decisions on whether we need to carry inventory to improve our order fill rates or whether or not we can improve efficiencies and automate in some of our operations. So manufacturing operations are an important part of what we have to do. We also have important supply chain work to do. We've benefited from lower raw materials costs this year. But I think, in general, we can do a little bit more make-buy work around our organization. I also would like to highlight our new product initiatives. When we put new product initiatives in place, we also have to have some of them have cost reduction targets associated with that. And I'd like Pete Dragich to kind of highlight our Road King product that we just introduced that I think is a good example of what we have to do in other places. Pete?

Thanks, Ron. Just to build on what Ron said, one of the benefits of the change in the organization is that we've brought the commercial teams together with the manufacturing facility. And as a result of that, the cost reduction efforts now are more targeted. What I mean by that is we understand very clearly where we are or are not competitive in the market by product, and now the teams are rallying around how do we address the cost structure if we need to and prioritize accordingly. One of the recent new information that was put out into the market was our launch of the Road King in Bauma. It's been a great success for us. But we anticipated what they – a (32:55) product that was launched into the market at the right price that there would be competitive reaction to that. And in preparation for that, from the very beginning of the launch of that product, we have set targets for cost reduction that the team is working on now and will be realized later this fiscal year. Ronald M. DeFeo - President, Chief Executive Officer & Director: Very good. Steve, I could probably continue on this. There's a lot of wood to chop. There's not one thing that I would point to that is the key differentiator. But I think we're going to work on all of those things, and I didn't really mention the importance of major accounts because we also have to grow our business, and by growing our business with major accounts and not be afraid to fight for the business and go after our competition and fight for that business with these major accounts. We have a lot of fixed costs to cover in this company. Manufacturing absorption is a big issue for us. So we've got to fight for big accounts and our teams are gearing up to do that.

Okay. Thanks. That's helpful. And then, maybe Ron in your past life you haven't really shied away from longer term forecasts. Have you thought about what good could look like at Kennametal in the three to five-year timeframe? I mean, where can we ultimately go on this journey? Ronald M. DeFeo - President, Chief Executive Officer & Director: Well, I've thought about it, Steve. I'm not ready to make news on that today. There is a lot of choppy waters in front of us right this minute and we want to kind of work through the choppy waters a little bit first. But I don't think you have to look back too far to see what the potential is in this business and it realize those kinds of performances with a lot of these same problems still embedded in the organization. So I think good could be very good with this company.

Okay. Thanks, Ron.

The next question will come from Adam Uhlman of Cleveland Research. Please go ahead.

Hi, guys. Good morning. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning, Adam. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Good morning, Adam.

Hey. I was wondering if we could circle back to the raw material cost issue. The company historically has had some pretty long supply agreements that's helped insulate it from changes in material prices. I guess, maybe could you talk directionally about any changes in how those contracts have been structured? And, generally, I'm just trying to get at for how long should we expect these benefits to flow through Kennametal. Ronald M. DeFeo - President, Chief Executive Officer & Director: Yeah, a lot of the big powder and raw material issues fall under Pete's new organization. So, Pete, why don't you comment on that?

Yeah. As far as the raw material commitments that we've had in the past, the majority if not all those expired at the end of last fiscal year. With the investments that we've made in our own supply chain, primarily in our Huntsville facility and Bolivia brought most of our material requirements in-house. So we're no longer in a situation where we have long-term commitments that would put us at a disadvantage buying external. Ronald M. DeFeo - President, Chief Executive Officer & Director: And we, and part of our new organization, have established a position that the executive leadership team called a strategic sourcing and supply planning led by Brian McCloskey, who is a long-term operations leader in the company; a lot of other things that'll also be part of this corporate initiative led by Brian, but certainly supply chain and planning will be part of that.

Okay, got you. Thank you. And then, secondly, back to the comments on changes in the distribution strategy. Historically, Kennametal sold through exclusive distributors on the Industrial side and there's not very many of them in the past who are exclusive to just selling Kennametal product, I guess. Has there been a change in thoughts about the requirements that distributors are exclusive or somewhat exclusive of Kennametal product? And then, also, has there been any change in the strategy of direct sales for the infrastructure segment? Should we expect distributors to start to sell that product now? Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay. What I – that's going to involve three of us answering this question and let me just start by saying the days of distribution exclusivity are probably over for most products, okay? But there are good solid relationships that are crucial where you have primary relationships. In my former life, I can think of probably only a couple of franchises that are what I'd classify as exclusive. Within our business, we've come to appreciate that the customer sets the rules and the customer wants to determine who they buy from and we want to be present where the customer wants to buy. But more specifically, I'll turn it over to Chuck, who can comment about some of the implied views in your question. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure. Thank you for that, Adam. We are taking a direct initiative to improve our relationships with our distributor partners. We just had a very successful ISA show a few weeks ago. We are, as Ron said, going to position ourselves to react to however the end user wants to buy. That could be through our current channels, through an integrator or through a channel we don't currently authorize, but we need to do business with to satisfy the requirements from the end user. We're open to any of those opportunities. What is clear though is we can't afford to do business with very small customers; it's not a cost-effective model for us. Ronald M. DeFeo - President, Chief Executive Officer & Director: And on the Infrastructure business, Pete?

Yeah, Ron. On the Infrastructure business, what we've done is rationalize or continue to rationalize our direct sales team, primarily due to the challenges that we've had in end markets. A portion of that rationalization includes redeploying direct sales team to where we have growing markets like we talked about in construction. In addition to that, we are moving, like Chuck is in Industrial side, to more distribution. We've had very good success in Canada, for example, with distribution, primarily because of geography and history there. We are evaluating that in the U.S. while those other locations close. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good. Thanks. Next?

The next question will come from Eli Lustgarten of Longbow Securities. Please go ahead.

Thank you. Good morning, everyone. (39:32) nice to hear your voice. One, can I get a clarification or anything? You guys just mentioned the normalized tax rate is mid-20% versus the 11% to 13% this year. Should we expect a normalized tax rate next year? Jan Kees van Gaalen - Chief Financial Officer & Vice President: Directionally, yes, absolutely. Ronald M. DeFeo - President, Chief Executive Officer & Director: Yeah, normalized will be in the mid-20%s. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Correct.

Okay. Thank you. And one other clarification because I just had a company tell us that with the number of days in the quarter same as last year, I just had a company just before you guys had three extra days in the quarter, it surprised everybody (40:08) Jan Kees van Gaalen - Chief Financial Officer & Vice President: We're flat, Eli.

I'm sorry? Jan Kees van Gaalen - Chief Financial Officer & Vice President: We're flat. Ronald M. DeFeo - President, Chief Executive Officer & Director: In terms of days in the quarter. Jan Kees van Gaalen - Chief Financial Officer & Vice President: In terms of days in the quarter, we are flat.

You're flat. Okay, thanks. Now, could we talk a little bit about move with WIDIA and the separation for it? I know there's a big debate, I know, of what to do with that product line. You do have that relationship, supposedly with Fastenal that was made that really never developed into anything. Could you give us an idea of what you're trying to do with that? And as a second part to it, I thought five years ago, Kennametal used to be two-thirds just direct sales, one-third indirect, with moving towards at least 50/50. So I'm surprised to hear that you're still with two-thirds direct sales. I'm just wondering what's happened in the last five years? Was it just screwed up by the prior management or what happened on that basis? Ronald M. DeFeo - President, Chief Executive Officer & Director: I wouldn't say it was just screwed up. I don't think that would be a fair statement. I think the bias in our company is direct sales and it has always been that bias, although, we really cherish the relationships we've had with certain critical distribution partners. The WIDIA brand has been almost 100% a distribution product. But it really didn't get the kind of traction and support I think that it needs in part because responsibility for that brand was kind of buried within a variety of silos and organizations. Now, that may not be a completely fair assessment on my part. So rather than comment on the past and when I was only a board member and not a member of management, I want to talk about the benefit of giving it visibility at the executive leadership team. It's clear to me that WIDIA is and has been for a long time a very well-recognized product and brand. It has a great history in Germany, it has a terrific reputation in India and it has an okay reputation in the United States with some specific parts of its product range, notably Hanita, as having excellent performance history. But every brand needs some sunshine, and it needs a little bit of differentiation. And I want the WIDIA team to help me figure out and help us figure out how to get at the differentiation it needs and to get the sunshine required for it to grow. I think Alexander Broetz has got the passion for this, as does the U.S. and Indian team. But, frankly, we know we'll compete against Kennametal, but that'll be okay because we have a lot of other competitors to compete against. And I hope to make WIDIA a much more aggressive part of our business portfolio. And that's about all I want to say at this moment.

What about the relationship with Fastenal? Does that continue as is or get modified or what happens on this? Ronald M. DeFeo - President, Chief Executive Officer & Director: I think that relationship should be built upon. I don't think there's a problem that I know of in that relationship. Nothing helps the relationship more than some renewed spirit and support to grow a brand. So I hope that this is what will be encouraged and will grow our relationship with Fastenal as we will with other third-party distribution partners.

And one final question, can you talk a little bit about what's going on in pricing across the marketplace? Do you guys think it – it seems to be getting a little more competitive. Can you talk about that? Ronald M. DeFeo - President, Chief Executive Officer & Director: Eli, you know, my experience on these things is that pricing is much talked about, it's always a worry. It's a competitive industry, a competitive business, but where it's fundamentally starting with pretty good gross margins and gross profit. So I wouldn't forecast that there is a huge amount of price competition underway, but in pockets there is. Certainly, in some of Pete's business, we're going to follow up cost of materials. And some of that price erosion is, by definition, going to happen. In some pockets of Chuck's business, we're going to have specific bidding issues against key competitors when we're trying to get long-term contracts. But that's where our product technology is going to offer real advantages for Kennametal, as well as some of our new selling approaches inclusive of the NOVO software that we have, and approach to product selection. We've got a lot in the quiver at Kennametal that we can pull from, but we just have to pull it out and use it.

Great. Thank you very much. Ronald M. DeFeo - President, Chief Executive Officer & Director: Yeah. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Thank you.

The next question will come from Andy Casey of Wells Fargo Securities. Please go ahead.

Thank you very much. Good morning, everybody. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Good morning. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning, Andy.

Just a quick question on the quarter and then I'll get back to the high level. You had a lot going on in Infrastructure compared to Q2. You highlighted revenue went down basically due to the divestiture, but the profit went up, call it a little over $13 million. Could you kind of give us a bridge for that sequential Infrastructure profit increase versus Q2? Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay. Marty, do you, or...? Martha A. Fusco - Vice President-Finance & Controller: Yeah, sure. From an Infrastructure side, Andy, raw material benefits, as we had been talking about all year coming in the second half, is the primary driver there on the Infrastructure side of profitability.

Okay. Thank you. And then, Ron, you highlighted reduction of bureaucracy and what I paraphrase as increased accountability looking to drive improvement in Kennametal. Do you see a need for changes to the incentive structure? And if so, what sort of focus areas should we look for? Ronald M. DeFeo - President, Chief Executive Officer & Director: Yes, the incentive structure will change in 2017. At the managerial level, which will comprise somewhere around 500 of the top leaders in the company, we're going to go to a common metric or couple of metrics for everybody. So we will rise or fall together. Today, we have a very complicated incentive structure. Different parts of the organization get paid differently based upon their individual areas, which leads to more silo management. And my attitude, and I've demonstrated this visually for the company, is I've put on the Kennametal hat and that's the basis upon which I make a decision. Whatever's good for Kennametal will be good for that decision, whether you're in sales, manufacturing, marketing or whatever department. And so the incentive structure's going to change. And it will also be much less dependent upon incremental sales. It's going to encourage profitability and cash flow, profitability and cash flow. And so we can't predict that the markets are going to get better in 2017 and, frankly, they may not. So in order for us to get where we're going and want to do, we've got to drive some changes in those two things.

Okay, thanks. And a follow-up on that, have you seen any instances where sales were being gone after at the expense of margin? Or is it just getting everybody on the uniform -? Ronald M. DeFeo - President, Chief Executive Officer & Director: No, I wouldn't say sales as the expensive margin, I'd actually like to see us be a little bit more aggressive now and then using price as a weapon, okay, because we start with a pretty good gross margin. But where I would see, as we grow after sales, is by adding complexity to our product line. So making that new product that's a custom product, that we could have used the standard for, adding additional manufacturing complexity because we add now a new 100 SKUs where we could have used products that were already in our catalog and thinking that that 100 SKUs will actually grow our revenue. So those are the kind of things that I think kind of get in our way.

Okay. Thank you very much.

Our next question will come from Joel Tiss of BMO. Please go ahead.

Hi. Thank you, guys. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning.

Just a couple of my questions have been answered already. But I wondered if you could talk a little bit about the pipeline in new products. Is that something that needs to be jumpstarted or there's already a lot in there and it just needs to be focused? Ronald M. DeFeo - President, Chief Executive Officer & Director: We have a number of very good products in our pipeline. I don't think it has to be jumpstarted. What's been changed is a really new focus on the critical few that are really going to make a difference. I think both in Pete's business and in Chuck's business, that's what's underway. We also are going through what we believe to be a very successful launch of Beyond Evolution. Maybe, Chuck, you can comment on that because it's right in the middle of its launch right now. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure. Thanks for that question, Joel. As Ron mentioned, our Beyond Evolution launch is going very well. In fact, we have the unfortunate situation where demand for holders has actually exceeded our expectation. So our deliveries have been limited frankly by our ability to keep up with demand. We also will be launching – I hope you come by and see us at IMTS. We have a major new product launch that's currently being tested at major customers as we speak and we will have those results ready and that product will be announced for a launch at IMTS this year. Ronald M. DeFeo - President, Chief Executive Officer & Director: Which is in September of this year.

Great, thanks. And then just a follow-up, has there been a lot of work done, or is this something that's always been ongoing at Kennametal? A lot of work done on sort of going through the product lines and determining sort of the value streams like where you add value and where maybe some of the products have become more commoditized? And is that part of what you guys are working on? Ronald M. DeFeo - President, Chief Executive Officer & Director: It's definitely what we're working on and definitely some products have become more commoditized. But it is an effort that's – I don't want to misrepresent anything. I mean this is work that's been ongoing at Kennametal for some time and is part of our normal process. I think the change we're trying to do is we had almost orthodoxy about new products in that we wanted to have 40% of what we sell each year to be products that were introduced in the past five years. That led to some less than the best decisions, let's put it that way. And it was less about the number of 40% and more about focusing on the biggest opportunities. Pete, do you want to say something?

Yeah. Just to add to that, Ron, I think one of the things that came from that 40% target was somewhat of incrementality as far as the new products were concerned. As a result of that, we didn't see significant changes relative to customers being willing to convert to the new product. Over time, they generate complexity as we kept the old product and cost. What we've done over the last 12 months, 18 months, is to reduce what's in the pipeline, ensure that it's focused on our customers want, and to some degree will be a game-changing product versus one that's incremental. As we've done that, and the (53:16) being an example, our intention to balance out the old product in very short order and get that cost structure out of the system is what we're focused on now and, I think, cross-functionally the team has really rallied around that.

That's great. Thank you very much.

Okay, Joel.

The next question will come from Ross Gilardi of Bank of America Merrill Lynch. Please go ahead.

Thanks, guys. Good morning. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning, Ross. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Good morning.

I just want to go back to the distribution versus direct. It seems to make a lot of sense on paper as you've explained the company's had a culture really geared more towards direct in the past. But how do you just go to being much more via distribution? I mean, do you have to buy shelf space onto these other distributors? Do you have to incur a lot of upfront costs? I mean, it sounds like the right strategy, but I imagine there are a lot of challenges associated with doing that. So can you talk a little bit about that? Ronald M. DeFeo - President, Chief Executive Officer & Director: I think personally most of the challenges will be our own organization because we love to do business direct. But the cost of doing business with a lot of these small customers, like Chuck had mentioned, is pretty high. But I think if we go to our distribution partners with the right approach, I think they'll have open arms. Chuck? Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure, Ross. That model fits with how we service the small customers. These small customers not only buy standard products and, frankly, our distributors don't have a lot of shelf space filled with standard products. We ship many of our C items in less than 24 hours. So there's not a lot of inventory in the chain for what these customers typically buy. We'll be able to satisfy them with our current supply chains and through our current distributor customer base without disrupting the channels much at all.

But do the distributors want these standard products? Does that mean – there should be a reason why they're not – they don't have a lot of shelf space devoted to them in the first place? Ronald M. DeFeo - President, Chief Executive Officer & Director: But do they want these customers is really the question. You go to a distributor and say I'm going to bring you a bunch of customers, I think the answer's likely to be yes. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Yeah. And, Ross, our distributors are excited because they can add value on B and C items, keeping it very close to these customers where I currently inventory at a couple places around the country. They'll have inventory local for these customers actually improve on the B and C item deliveries.

Got it. Okay. And then, you made some announcements on covenants a week or two ago, you had a filing out there. Could you elaborate on that a little bit? And what changes have you made your covenants? And can you just talk about like what the key covenants are versus what they used to be? Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay, good. Jan Kees? Jan Kees van Gaalen - Chief Financial Officer & Vice President: Yes. Yes, Ross, we agreed with our banking group to extend and amend the revolver. As I mentioned already, the revolver is extended to 2021. And until December 2017, we have also increased the ratio from 3.5 to 3.75 in terms of debt to EBITDA. And we've allowed for larger cash restructuring payments to be excluded from the computations and we've brought that up to $120 million.

Okay, got it. And I was a little bit surprised to hear that the top priority for cash flow is business reinvestment; I think I heard that correctly. And could you talk about that versus debt reductions? I would think that the company's still got a – despite the amendments here, would still have an emphasis on debt reduction at this point. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Yes, we're currently having, in terms of debt, only two bond issues outstanding, 2019 and 2022. With regards to these debt issues, we will look, at times, to buy back this debt if we can. Unfortunately, not a lot of the debt is traded actively. On the other hand, we have many opportunities in our business and Ron focused on this in terms of the fix in place of making investments in productivity and automation around our organization to drive the cost of goods sold down. And so we will be focusing on optimizing and making our operations more efficiently whilst obviously looking proactively also at the debt number.

Got it. Thanks very much. Ronald M. DeFeo - President, Chief Executive Officer & Director: Thank you, Ross.

The next question will come from Steven Fisher of UBS. Please go ahead.

Hi. Thanks. Good morning. Ronald M. DeFeo - President, Chief Executive Officer & Director: Good morning (58:21).

You mentioned in the release that destocking in the indirect channel has been subsiding. So as you looked at the destocking rate exiting the quarter, how different was that from the earlier part of the quarter and to what extent do you think customers feel like inventories are now at the right levels? Ronald M. DeFeo - President, Chief Executive Officer & Director: I'm going to let Chuck answer that question; he's closest to it. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure. In our Industrial business, we get very good access to inventory information at our distributors in Asia and very strong support from our distributor customers in the Americas in the form of point of sale data. We did see a slight amount of destocking in distribution in the quarter for Industrial, I think about $2 million versus over $20 million in the first half. There's been a significant reduction. More positive for us is February/March, that was definitely nearly zero. We have very good data that shows us our sales into the channel was being supported by the sales of our customers into the end markets.

Okay. That's helpful. And then just a couple of quick timing questions. Ron, you mentioned you'd like Kennametal to be a more aggressive marketing company. So what's your base case for when you could start to recover market share? And then from a margin perspective, given your approach to taking costs out, assuming that revenues are kind of at a run rate similar to where we are now, how quickly do you think you could get back to a sustained double-digit operating margin? Ronald M. DeFeo - President, Chief Executive Officer & Director: I think the aggressiveness in the company needs to start this afternoon. I mean, it's always going to be this afternoon. We're going to keep the pressure on improving the speed of execution in this company every day. So it'll take some time to get the new organization in place, effective, although, I think, less time than people think because I think it will be a very natural transition for the organization. How long will it take us to get to double digit margins? That is a really good question. I'm not going to be able to answer that question for you today, but I think double-digit margins are clearly possible with our existing revenue base, about where our existing revenue base is. Whether or not I can pull that off in 2017 with a lot of the changes underway, we're going through our planning process right now and I'd probably say that's a hard road to achieve because I've got to recover wage increases, I've got to recover bonuses that weren't paid in 2016 and we've got to recover some additional costs that are embedded in our organization. So I've got to offset those. So it will take some work to do, but certainly it's not that long. But we're going to be working on trying to get there as quickly as possible.

Terrific. Thanks a lot. Ronald M. DeFeo - President, Chief Executive Officer & Director: Okay.

The next question will come from Walter Liptak of Seaport. Please go ahead.

Hi. Thanks. Good morning and thanks for taking my questions. I wanted to ask about a different timing issue on these changes to the sales channel. It sounds like you're in the process of taking the product more through distribution and less direct right now. I wonder how long do you think it'll take before we're to that mix of direct versus indirect that you want to see. And then, as you go through private line simplification, it sounds like, and customer simplification, typically when that happens there's some lost sales. There's some business that you – this is marginally not profitable and you have to walk away from. Does this mean that we're going to see lower volume growth over the next year or two years as you go through the process? Ronald M. DeFeo - President, Chief Executive Officer & Director: Walt, let me answer the latter part and then I'll turn it over to Chuck on the former. It's my desire and I think is the company's view that we really can capture a lot more business among our major customers. We have a top 100 customer list. That top 100 customer list is a great list of tremendously successful companies. We want to build our share of wallet among those customers. If we do that, I think whatever dislocation there might be by shortening our product line, making changes in our manufacturing operations a little bit, I think we can more than offset. So the first part of the question, I think, Chuck, I'll turn it over to you. Charles Michael Byrnes - EVP-Industrial Business Segment & Vice President: Sure. Walter, we've set a goal to move the majority of these smaller customers to an indirect model within 12 months. We've already started the process and have already met with customers to start this discussion. But again, the customer in the end will help us make the decision on how they best buy, what the best model to service their business is. There's some very loyal customers that utilize our engineering services, that utilize custom solutions in much of their buy, that are sub-suppliers to those very large customers that Ron talked about that we're going to begin to focus very heavily on, that will continue in a direct model even if they do buy lower amounts per year from us. This isn't a one solution fits all. We have already begun to meet with our VARs and our large national chain in here in the Americas and they support this initiative completely. So we have jumped into starting the process probably in the last four weeks.

Okay. Sounds great. Just a follow-on to that, historically, inventory turns and inventory levels have been higher at Kennametal I think because you have to have that quick turn, have that quick 24-hour delivery and maybe some of that goes to the smaller customers. What implications are there for improving some of your inventory metrics? Ronald M. DeFeo - President, Chief Executive Officer & Director: Yeah. I'm not sure we're going to see our inventory metrics change a whole heck of a lot in the near term. We've got to get some raw material efficiency in our organization. We have taken quite a bit of inventory out of our company. I want to get our revenue growing. If we get our revenue growing, I think our efficiencies will drop to the bottom line on inventory. Okay? Thank you.

Okay. Thank you.

The next question will come from Steve Barger of KeyBanc Capital Markets. Please go ahead. Ronald M. DeFeo - President, Chief Executive Officer & Director: Steve?

Just a couple of quick cash flow questions. Do you have a number for the cash charges for 4Q and for FY 2017 related to the restructuring? Jan Kees van Gaalen - Chief Financial Officer & Vice President: Steve, many thanks for that question, but we do not provide forward-looking information on that. So we will report obviously as we go through the year 2017 on those numbers. Ronald M. DeFeo - President, Chief Executive Officer & Director: You probably back in. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Yeah, you can – but obviously you can back into it, but because most of the information is available to you.

Yeah, I was just asking because you had changed your covenants to exclude larger cash restructuring payments you had said. I know CapEx can swing around any given year. But just broadly speaking, with the new footprint, what do you think that'll be as a percentage of revenue? Ronald M. DeFeo - President, Chief Executive Officer & Director: I'd like not to comment on it as a percentage of revenue and more just in the range of about where it is today for now. If it goes up a little bit, it'll go up $20 million. But it's in the $130 million to $150 million range.

Okay. And last question. As you've noted, free cash flow conversion has been strong, a lot of that has been working cap release. As you think about profitability and working cap and just the net effect of restructuring, is FY 2016 the trough for free cash flow? Jan Kees van Gaalen - Chief Financial Officer & Vice President: Look, we will continue to focus on collecting our receivables faster and making sure the inventory turns faster and extending our payables. And so this is a continued focus from the company. We will try to move our working capital lower. But obviously depending on how the sales numbers evolve, there may be less or more progress. Ronald M. DeFeo - President, Chief Executive Officer & Director: The way I would answer that is a lot of our future free cash flow's going to be driven off of the amount of progress we're making on profit. Jan Kees van Gaalen - Chief Financial Officer & Vice President: Yeah.

Got it. Thanks very much. Ronald M. DeFeo - President, Chief Executive Officer & Director: All right, Steve.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the floor back to Ron DeFeo for his closing thoughts. Ronald M. DeFeo - President, Chief Executive Officer & Director: Yes, thank you. And I appreciate everybody's participation today. We've probably gone a little bit longer than the company normally would. Please follow-up with Kelly, Jan Kees, myself, Marty, the rest of the team. We appreciate your interest in Kennametal today. Thank you.

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