Good morning. I would like to welcome everyone to Kennametal's Fourth Quarter Fiscal Year 2017 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.

Thank you, Carrie. Welcome everyone and thank you for joining us to review Kennametal's fourth quarter and fiscal year 2017 results. Yesterday evening we issued our earnings press release and posted our call slide deck on our website. Today on the call we will discuss the June quarter and full year operating and financial performance as well as our outlook for fiscal year 2018 and we'll be referring to the slide deck throughout the call. After our prepared remarks we will be happy to answer your questions. At this time, please direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that constitute forward-looking statements and involve a number of assumptions, risks and uncertainties that could cause the company's actual results to differ materially from those expressed in or implied by those statements. These risk factors and uncertainties are detailed in Kennametal's SEC filings. Also we will be discussing non-GAAP financial measures on the call today. Reconciliations to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and on our Form 8-K on our website. With that I would now like to turn the call over to Executive Chairman of the Board, Ron DeFeo.

Thank you Kelly and good morning everyone. Thanks for joining us on the call today. I'm really pleased to introduce Chris Rossi who as of August 1 assumed the role of President and CEO of Kennametal. Chris comes to us from the Dresser-Rand operating unit of Siemens. In addition to his 30-plus years of leadership experience, he has an exceptionally strong operational background that will serve Kennametal well as we move forward with our modernization and end-to-end process improvement plans. As Kelly mentioned, I have assumed the role of Executive Chairman and this should be my last conference call. I look forward to supporting Chris and the team going forward. Chris?

Hello, everyone. I'm honored to be joining Kennametal and happy to be on the call with you today. I look forward to working with the team and getting to know our investors and analysts over the next several months. The company has obviously made really great progress already; still there's a lot more to do. So I plan to roll up my sleeves and help improve on the good work that's already underway. Thanks and I'll turn the call back over to Ron.

Thanks, Chris. Also on the call today, Jan Kees van Gaalen, our Chief Financial Officer, Patrick Watson, our Corporate Controller as well as the Presidents of our three business segments, Chuck Byrnes for Industrial, Pete Dragich for Infrastructure and Alexander Broetz for WIDIA. Let me begin on page two of the slides that are posted to our website. Our fourth quarter fiscal year 2017 results were in line with our expectations with some exceptions. The growth rate for sales exceeded our expectations, both at the total sales growth level of 8% and at the organic growth level of 12%, and of course organic factors out currency effect and days of businesses. Every segment posted strong quarterly growth. Our quarterly adjusted operating margins increased 220 basis points year-over-year to 11.2%, but a bit worse than our expectations. It should be noted that the quarterly margin was impacted negatively by 2.5 percentage points due to a LIFO charge and higher variable compensation versus year ago. Adjusted EPS for the quarter increased to $0.56 from $0.44 in the prior year quarter. The LIFO and increased variable compensation factors accounted for $0.13 negative in EPS in the quarter. On a total year basis, fiscal year 2017 has been a year of significant and positive change at Kennametal. I'm pleased to report that the results show progress in the three areas that we've focused on: growth, simplification and cost reductions. Excluding divestitures, sales increased 2% for the total year and organic growth was 4%, which exceeded our expectations. Improved sales execution is evident in these results. Total year adjusted operating margin increased 300 basis points to 9.2%. Adjusted earnings per share improved to $1.52 from $1.11 in the prior year. Now let's turn to slide three and look at the organic sales growth. We've posted…

Thanks, Ron. Hello, everyone. Let me take a moment to also welcome Chris Rossi, my former and now new colleague to the team. I will begin by reviewing the income statement, starting with the quarterly results on slide seven on both a reported and adjusted basis. On a reported basis, EPS for the quarter was $0.30 compared to a loss of $0.83 in the prior year quarter. Sales in the June quarter increased 8% to $565 million with organic sales posting at 12%. Fewer business days, as well as a 2% unfavorable currency exchange, negatively impacted quarterly sales this year. Sales grew in every end market. Adjusted gross profit increased 8% to $182 million this quarter over the prior year. Adjusted gross profit margin decreased slightly by 30 basis points year-over-year to 32.2%. The main factors at the gross margin level were higher raw material costs, a LIFO inventory charge, and higher performance-based compensation, partially offset by incremental restructuring benefits, organic sales growth and favorable mix. Adjusted operating expenses decreased by 3% to $115 million and as a percentage of sales improved by 240 basis points to 20.3%. We are really pleased with the progress we have made this year on operating expenses and will continue to focus on further improvements as we move forward. The favorable change in OpEx is due primarily to incremental restructuring benefits, offset partially by higher performance based compensation. These improvements at both the gross profit and operating expense lines contributed to improved adjusted operating income by 36% in dollar terms and 220 basis points in margin terms. Versus our expectations, operating margins were impacted this quarter by a LIFO charge and increased variable compensation, in addition to productivity challenges as a result of higher than anticipated organic sales. For the fourth quarter of fiscal…

Thank you, Jan Kees. Turning to slide 15, with regard to our fiscal year 2018 outlook. We expect to see increasing demand in our end markets and organic sales growth to be within a 2% to 4% positive range. Given the run rate at the end of fiscal year 2017, we may have some upside potential here. But we will know this as we get deeper into the year. Also, remember that comparables will get more difficult as we move into the second half of fiscal year 2018. In the meantime, we remain focused on productivity improvement and cost-reduction plans and if stronger revenue happens then, all the better. We expect our tax rate to continue to be in the 18% to 22% range consistent with the rate for total year 2017. With revenue up 2% to 4%, our operating margins are expected to be up significantly, reflecting the traction that we've captured in our fiscal year 2017 with our cost-out programs, as well as continuing the work on these initiatives in fiscal year 2018. And frankly, the added compensation cost is embedded in our base year, and we will not have that incremental difference entering 2018. Our EPS outlook for the coming year is $2 to $2.30 a share on an adjusted basis with the midpoint of which is up over 40% compared to 2017. So with our current modernization and end-to-end process improvement programs now underway, our capital expenditures are expected to increase and be in the range of $210 million to $230 million. Therefore, free operating cash flow is expected to be within a $0 to $20 million range. This is consistent with what we have communicated regarding our modernization plans. So to summarize on slide 16, on balance, Q4 was a very good quarter. And for the full year, our fiscal year 2017 has been a year of really significant change. After reorganizing the company to allow for positive transformation, we got to work on those three key initiatives, growth, simplification, and lowering costs which will now become modernization going forward. We've achieved substantial progress in all three of these areas. The markets are definitely cooperating with us more now than they have in the past couple of years. This is good news. Nevertheless, we continue to be laser-focused on getting costs out and margins up with a strong team in place, and now with Chris on board even that much stronger. We're building the foundation today for sustainable improved performance into the future. A with that, I'd now like to open it up for questions.

The first question today will come from Ann Duignan from JPMorgan. Please go ahead.

Hi, good morning.

Good morning, Ann.

Good morning, Ann.

Good morning. First of all, could you just talk about the cadence of organic growth that you anticipate, I mean, I know the comps are tougher in the back half? But would you expect that back half flat or back half down year-over-year, just thinking through the guidance there, please?

I don't think we'd expect it down year-over-year, Ann, in the back half of the year. I think we're looking at the 2% to 4% overall that will probably show meaningful organic growth in the first half of the year. And frankly, if things happen and develop positively, we probably could show some growth in the back half of the year. But right now, I think we're being a little bit guarded in our view of the overall revenue.

Okay. I appreciate that. And then, just Chris, I know you're only a couple days in so this is maybe unfair, but would you have the opportunity to review and potentially revise the CapEx spend plan as you see fit? Or is this $210 million to $230 million, is that kind of locked and ready to go regardless?

I haven't had a chance to go onto the details of all the capital, but at a high level I've looked at the overall initiatives and where that spend is. And these programs are really pretty far along and have been well thought out, so I would expect that that range is reasonable. And I wouldn't expect a big change to that because the initiatives are already sort of in the plan.

Okay. In the interest of time, I'll just get back in queue and take my detailed questions offline. Thanks.

Thanks, Ann.

Thanks, Ann.

The next question will come from Julian Mitchell of Credit Suisse. Please go ahead. Lee Sandquist - Credit Suisse Securities (USA) LLC: Good morning, this is Lee Sandquist on for Julian.

Hello.

Hi. Lee Sandquist - Credit Suisse Securities (USA) LLC: Firstly, just welcome aboard, Chris. And best of luck, Ron.

Thank you.

Thank you. Lee Sandquist - Credit Suisse Securities (USA) LLC: What type of seasonality of earnings should we expect as we move into fiscal year 2018? Is it the traditional 40/60, one-half/two-half split likely to continue?

From a revenue point of view, I think this year we were more like 48/52 something like that, 48% first half, 52% second half. I think we are expecting something similar in 2018. For – in earnings per share basis this past year we really were more like 24% first half, 76% second half. And if you were to take the LIFO adjustment and modify that, we actually had stronger earnings in the second half. We don't think that pattern will exactly repeat in 2018. We think it will be more like one-third/two-thirds. One-third first half, two-thirds second half. Lee Sandquist - Credit Suisse Securities (USA) LLC: Understood. And how should we think about the divergence of growth rates between the three segments? Should Infrastructure continue to lead?

I think Infrastructure will have excellent year-over-year performance in part because the first half of the year was quite weak last year and so we're going against a very weak base period and the Infrastructure team has really come up with great new products, great new initiatives, that have overcome that weakness, and frankly a recovering energy market. I think the Industrial businesses or the metalworking businesses will reflect the general economic trends more directly. Lee Sandquist - Credit Suisse Securities (USA) LLC: Great. I'll pass it along. Thank you.

Thank you.

Thank you.

The next question comes from Walter Liptak from Seaport Global. Please go ahead.

Hi. Thanks. Good morning. And welcome, Chris.

Thank you, Walter.

I want to ask about the bonus compensation. And was it abnormal in the fourth quarter the way you guys did accruals? Did you accrue at the same level based on your guidance going into the third quarter – or in the third quarter as well as in the fourth quarter?

Yeah, Walter. See this is pretty simple actually when you think about it. The prior year was a pretty bad year and accruals were eliminated in the fourth quarter of last year, more or less. And in this year we had a pretty good year and actually accruals will probably increase a little bit because we actually outperformed some of our expectations. But that whipsaws the earnings a little bit, as you might imagine, on a quarterly basis. So, relative to expectations we spent a little bit more money, relative to the prior year it was a substantial change.

Okay. But were bonuses accrued through the full year or just – were they loaded into the fourth quarter?

Yes. Yes. They were accrued through the full year but the fourth quarter impact year-over-year was the most...

Important.

Yeah, well, it was the biggest deviation.

Okay. Great. And I wanted to ask about the CapEx programs. How are you guys looking at the return on investment for these? Like what's the payback period on the CapEx that you're doing?

Well you know each project has its own precise payback and analysis. We've laid out a $200-million to $300-million capital plan at our Investor Day which we said ought to generate, along with the related initiatives, $200 million to $300 million of savings. A capital investment of X also allows you to save money in Y initiatives and other initiatives. So I think we are right on track with that. Frankly, as we get into each individual capital project we are learning. So what we might have assumed in the beginning we're modifying. But despite that, the net is we believe there's a tremendous amount of savings and efficiency potential that's embedded in modernizing our operations.

Okay. All right. Thank you.

What's acceptable with a 3% cost of capital, if I get a 20% rate of return on a CapEx I should be spending that money all day long. Okay. And that's the kind of situation we're in here at Kennametal.

The next question comes from Andy Casey of Wells Fargo. Please go ahead.

Thank you. Good morning and good luck, Ron, and welcome, Chris.

Thank you, Andy.

Thank you.

I wanted to ask a question back on the fiscal Q4. I appreciate the discussion about higher variable comp and the LIFO charge. I'm just wondering the adjusted $0.56 was beneath – I'm using pennies here, Ron, so forgive me, was beneath the implied guidance of $0.60. I'm just wondering was the LIFO charge contemplated in the prior guidance, and if so, kind of what are the other headwinds did you encounter?

The LIFO charge was not encountered in the prior guidance. In fact we did an analysis at the end of our third quarter and did not expect it, but LIFO by its very definition requires unique analysis at the end of periods and at the end of the fiscal year. So it was not encountered. The additional headwinds beyond that were probably some additional variable compensation. But if you factor the small amount of variable compensation relative to our expectations and LIFO, we're pretty much right on expectations.

Okay. Thank you. And then a question on the outlook. It looks like the embedded operating margins are somewhere around 11.5% at the midpoint. That's very good progress, up 200 basis points on the low single-digit organic growth. Within that, there's a lot going on within Kennametal. Can you help us understand how much carryover cost reduction benefit you're including in that margin expansion, just so we can kind of determine the quarter incremental margin you're forecasting in case the growth ends up being more than you expect?

Well, just I'd give you a rough estimate here from my standpoint about 90% of the incremental margin improvement is coming from carryover cost savings.

Okay. That's helpful. Anyways, good luck Ron. Thanks.

Thank you. Thank you very much, Andy.

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

Thanks, guys. Good morning.

Good morning, Ross.

Good morning.

Guys I wanted to focus on your COGS a little bit. Your cost of goods sold was $1.4 billion in fiscal 2017. Can you remind us what portion of that is tied to industrial metals and the relative importance of tungsten over cobalt? And kind of with that, are you experiencing big shortages of cobalt? There's certainly a lot of articles about what electrification and technology, a lot of technology, iPhones and so forth are doing to these metals, and there's been a lot of cost increases. You guys haven't really talked about it. I'm curious what you're also assuming for your raw material guide in fiscal 2018 on that?

I'm going to let Pete address because he runs our Infrastructure which includes a lot of our raw materials side of the business. Pete addressed the cobalt question and just the general raw material kind of outlook. Pete?

Thank you for the question, Ross. As you said, we've seen increases in cobalt over the last few months. We do have supplier relationships and secured contracts to ensure that we have supply, so that's not a concern for us at this point. What we have done from a cobalt standpoint is put this in perspective in FY2017 that represented about 10% of our overall raw material cost. So that can help you put it in perspective relative to the tungsten. So we have factored in that into the plan in the year-over-year increase in the cobalt and I think that we have a situation where we're not concerned about supply.

Okay. And just on that, the 10% of overall raw material costs, what are raw material costs again as a percentage of COGS?

JK, do you have that number?

About 20%. (40:09)

Okay. In general, Ross what we've done here is we've anticipated raw material cost increases and we haven't anticipated pricing to recover those raw material cost increases. We are expecting productivity offsets to those raw material cost increases. We are separately though, implementing price increases to try and offset it if I can, but it's not in our base plan. So in other words, we don't want to assume that we can get it all in pricing, but we're going to operate as if we can get it all in pricing.

Got it. Thanks, Ron. That's helpful. And then just, can you explain what the LIFO charge was actually for? Like, what's going on behind that, and I apologize for some of my ignorance on the vagaries of LIFO accounting charges, but what does this mean for fiscal 2018? Will this be an ongoing year-on-year margin headwind? Or was this just kind of a onetime thing that impacted the fiscal fourth quarter?

So first of all, we are on LIFO, so occasionally there will be a LIFO charge or a LIFO credit that will be posted at the end of the year to the accounts. This is typically a fourth quarter charge, but effectively reflects what may have happened in earlier quarters. So you can't take the $0.05 and allocate it completely to the fourth quarter. In terms of the details for the LIFO charge, Pat, do you want to give some color to that?

Sure, as Ron indicated, we did an estimate at the beginning of the fourth quarter, and at the point in time did not anticipate a charge. The charge really came through based on our final inventory position versus our internal expectations.

LIFO has some benefits, some substantial benefits in terms of tax and other benefits, but it has some risks. And this is one of those risks.

Thanks, guys.

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

Hi, good morning.

Morning, Adam.

Welcome Chris.

Thank you.

I wanted to start with – on slide three, you detailed out the monthly sales trends. And it looked like the growth slowed in June. You had mentioned that you ran into some productivity issues. I was wondering if you had any shipping delays or anything that impacted the sales growth rates in June. And has that bounced back so far, or did it in July?

All right. Well, we won't comment, Adam, on July, but we would say that it is not unusual for the quarters to bounce – for the months to bounce around within a quarter like this. And frankly, I was delighted, and we were delighted with our June numbers. But we weren't expecting April and May to be as high as they were, and I don't read anything into this. In fact, our view was that we were just going to ship our product the way we normally ship our product to close the year, and that's what we did. And I wouldn't read anything into that. I'd look at the monthly trends that are embedded and we've shared there, and as you see they jump around a lot.

Okay. Got you. Thanks. So then just a clarification, the corporate and other expense was income (43:58) this quarter, I guess, was there any unusual gains? And then what's embedded within your fiscal 2018 guidance?

I think nothing is really embedded in our fiscal 2018 guidance there, and I wouldn't read much into that corporate gain or loss of any consequence. It's just the normal things that we do to finish the accounting of our year.

Yes.

Okay. Thanks.

The next question comes from Samuel Eisner of Goldman Sachs. Please go ahead. Samuel H. Eisner - Goldman Sachs & Co. LLC: Yeah. Thanks. Good morning, everyone. Good luck, Ron. And Chris, nice to work with you.

Morning, Sam.

Thank you, Sam. Samuel H. Eisner - Goldman Sachs & Co. LLC: Just going back to the guidance, if 90% of the incremental EBIT is coming from cost saves, I think I get something in the range of $6 million to $7 million of organic EBIT growth on something close to $60 million or $70 million of organic revenue growth. So that implies pretty weak organic incrementals relative to how this business has historically performed. Just curious what else is embedded in that incremental margin that you guys are using in order to kind of roll up your guidance. Is it negative price costs? Are you not seeing as much growth in more profitable categories? If you can just help us understand why that number is so low relative to history.

Sam, that's a great question. And in fact, I've given you some of the bread crumbs on that by saying, we've got raw material cost increases embedded in our plan and virtually no pricing to offset that. So we're taking a fairly conservative view on these things and saying, what if we can't get pricing? What if we can't get productivity? We want to force the organization to work on productivity improvements and cost reductions. But we are going after pricing. And we do expect to get productivity and we don't expect that we'll have weak incremental margins. We just don't want to embed them in our business plan as we enter the year. You guys want to add anything to that? Okay. Samuel H. Eisner - Goldman Sachs & Co. LLC: Got it. And then looking out at the $200 million to $300 million that you guys have put out there and you highlighted at your Analyst Day of the modernization savings, is there any update to that? I mean, Chris, I recognize that you're only a few days on the job here. But those are pretty large numbers that have been outlaid in the past and I'm just curious if are we sticking by those or are we not touching them just yet? You want to understand the business a little bit more? Just how do we think about more the medium-term at this point?

Yeah. I think based on what I've seen the plans for this capital have been in the work for some time and they seem pretty well developed to me. I'm also – I also am supportive of them so I think that you guys should think about that number as that's kind of the best estimate that we have right now. Obviously as I get into more detail maybe there will be some change there but I think it's reasonable to expect that that's the range we're going to be in.

And Sam, at the time of the Analyst Day that we plan for mid December, I think on December 12, there will be an update and obviously you will see certain of the estimates that we presented last year at the Analyst meeting in November you will see them firming up for the first periods.

Yeah. I'll put my two cents in here. And I remain pretty committed to this as the Executive Chairman of the Board and say, I think all plans that are developed will be modified over time. But we believe pretty strongly that there's this amount of savings opportunity in front of us. Exactly which projects and how those projects morph over time, that's kind of one of the reasons we wanted to get Chris on board, to make sure we drive the right projects and lead the right changes and have those things become a reality. But please remember that we reported operating margins of 9.2% or 9.3% in fiscal year 2017. Our competition is at 20%. Okay. And we've got a huge opportunity still in front of us in this company to get our margins up, to get growth back, to recapture some market share – which we're doing, and this is part of the game plan. So exactly whether it's the same projects we laid out or a few more or a few less, I think that's part of what we want this useful management team to take on. Samuel H. Eisner - Goldman Sachs & Co. LLC: That's helpful. If I could sneak one more in here just going back to the organic growth questions in first half relative to second half. Curious if you can kind of parse out a few of the end markets that you guys sell into. In particular what you're seeing – excuse me, what you have embedded in there particularly for your energy business and in Infrastructure related to rig counts. Thanks.

Why don't we have Pete talk a little bit about that. I mean our end markets are complicated because they cross the lines between our metalworking business and our Infrastructure. But Pete, energy in particular.

Energy in particular as you saw year-over-year we've had significant growth that's correlated with the doubling of the rig count. We have seen recently slowing in the rate at which the rigs are being put back into service. However our sales are expected to continue to grow in FY18. It's embedded in the plan, not only with the volume increases that we see with what we currently sell into the market but with new product introductions that were in the process and have in the pipeline currently.

So, Chuck, why don't you comment on some of your end markets?

Sure. Sam, you wanted specific to energy. We had a very strong fourth quarter in the Industrial business. However we don't see that carrying through fiscal 2018. We're back forecasting our energy business to be relatively flat through the period. We do, however, continue to see strong growth in our general engineering business which is where we reported our distribution sales. That should still be our strongest growth area. Samuel H. Eisner - Goldman Sachs & Co. LLC: All right. That's helpful, guys. I'll hop back in queue. Thanks.

Thanks.

The next question comes from Joel Tiss of BMO Capital Markets. Please go ahead.

Hey, guys. Thanks for having me. I wanted maybe Pete, and Chuck too, to give us a little – just keep digging in the color of the businesses and kind of the – I want to get a sense of what's the environment out there for you to be able to get mix – to get higher mix business and – for 2018? The reason 2018 and 2019, we can fuzz it up a little bit, and the pricing environment just more from a competitive standpoint.

Why don't you start, Chuck?

Sure. Joel, as I think you're aware we did raise our custom solutions pricing in the spring, it was effective April 15. Those are longer lead time custom made-to-order items. We're just starting to see the benefit of that pricing action. We have announced – our customers were informed this week, we are going with a general price increase effective October 1, and we feel there's a very strong likelihood we will be able to succeed in raising prices per our plan.

Thanks, Joel. And in the Infrastructure business as well from a pricing standpoint we have actions underway. I have high confidence that where we've got large customers and contracts in place that are basically indexed off, the raw material increases we talked about earlier that will flow through. A large portion of the Infrastructure business is made-to-order, so every time we quote we have the opportunity to take those raw material costs into consideration as we price. And I would also say that we have ongoing efforts that will continue into FY 2018 and beyond to make our supply chain more efficient and we do produce a lot of our materials internally and a lot of products are underway and it will be included to modernization that will increase that efficiency and improve our performance. Beyond oil and gas, obviously, we've experienced growth in mining globally, pretty excited about that. A lot of that came from our ability to introduce new products that have been very competitive. Again, we've got additional products in the pipeline for FY 2018. The same applies in construction. We did have some challenges in construction in 2017 but I think that we're going to be able to turn it around as we go forward.

I'd like to make one or two more comments. End markets, transportation, probably strong in some of the machinery categories, concerns, some potential weakness in North America in auto, perhaps a little bit offset by some auto strength in China. I think geographically we're seeing positive trends in Asia and positive beginnings even in places like Latin America, Brazil. So if I were to characterize the overall economic environment we're in, it's a bias for a recovery across the board.

That's great. Sorry to take so much time. I just wondered one more nuance is are you able to sell or are you starting to sell products, kind of higher end products that are coming off of your new machining capabilities, or it's a little bit too early for that still?

I don't see that as a way to differentiate our new machining capabilities. So, I think what we're doing with our new machining capabilities is improving the quality of much of our existing products, tightening the tolerances, lowering the cost by having them be more automated. So it's less about the inventions of new products and more about the performance and productivity and tolerance tightness on our existing products.

Less scrap, more uptime.

Yeah, those kinds of things.

Less maintenance.

All right. That's great. Thank you very much, guys.

All right. Joel.

The next question comes from Steve Barger of KeyBanc Capital Markets. Please go ahead.

Hi, good morning. (54:45)

Hi. Question for Chris, as you look at the FY 2018 plan, is your initial focus on driving incremental efficiency through the plants given improving demand trends or do you see more opportunity to drive upside to the organic growth range?

I think that as I look at the plan and again, I've reviewed it over the last couple days, like any plan it has certain number of risks and opportunities and if I look on the growth side and my assessment is that those initiatives are well thought out and well underway and I think the team is energized in driving those quite effectively. And then on the operations side, I've had a lot of experience over the years of these type of initiatives and my assessment is that they're again well developed and well thought out and they're working on the right things. So I'll certainly – as I get into this, I'll certainly look for opportunities to accelerate where we can. But right now I can leave you folks with sort of my opinion is that this is an energized team, they've got a well thought out plan and they're going to come to work every day and make it happen.

Understood. And so, Ron or any of the segment heads, can you talk about any additional initiative for driving out growth in 2018? Any comments on penetrations at – new distributors, how that's going?

Well, let me just say this. Each one of our leaders here has what we call big plays or big bets. They've got major initiatives in critical potential growth areas that have the opportunity to help us exceed the embedded revenue targets that we communicated here today. It would probably take a fairly long time to go through each one of them, Steve, so we probably don't want to extend the call. But happy to do it in a more detailed follow-up conversation. But Pete's got his new products and big significant initiatives, some of which we frankly don't even want to disclose to our competition. Chuck is the same way, and Alexander is certainly the same way. We haven't talked about WIDIA, but WIDIA had a 10% growth. And we're hoping to have that brand accelerate its growth levels probably as one our biggest growth forecasts internally for 2018. So it's a host of things. But as a famous senator that's now deceased, once said, a penny here, a penny there, before you know it, it adds up to billions. And we're organizing growth from a lot of improvements and initiatives, and it's going to add up to meaningful change.

Got it. And since you brought up WIDIA, I'll ask one last one. I heard you say you don't expect the back half to be down. Is that true for all segments. And for WIDIA, specifically, should we expect profitability in every quarter that ramps through the year?

I expect profitability every day, every week, every month, every quarter. So I think we do expect WIDIA to be profitable each quarter, but it's going to get progressively stronger over the course of the year.

All right. Thanks. Welcome aboard, Chris. And Ron, I look forward to seeing your next job posting announcement.

I don't think so.

Thank you.

And this concludes the answer session. I would like to turn the conference back to Ron DeFeo for any closing remarks.

I appreciate everybody's support. Thank you all that listened to our call and please follow up with Kelly, myself, and any of the leaders here. And I want to especially wish Chris great success as he takes over the leadership of this fine company.

Thanks, Ron.

All right. Thank you.

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