Welcome and thank you for standing by. At this time, all participants are on a listen-only mode until the question-and-answer session. This conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the conference over to Whit Kincaid. Thank you. Please begin.

Good morning, everyone. Welcome to Mueller Water Products 2018 fourth quarter and fiscal year end conference call. We issued our press release reporting results of operations for the quarter ended September 30, 2018, yesterday afternoon. A copy of it is available on our website, muellerwaterproducts.com. Discussing fourth quarter and full-year results and the outlook for 2019 are Scott Hall, our President and CEO; and Martie Zakas, our CFO. This morning's call is being recorded and webcast live on the Internet. We have also posted slides on our website to help illustrate the quarter's results, as well as to address forward-looking statements and our non-GAAP disclosure requirements. At this time, please refer to slide 2. This slide identifies non-GAAP financial measures referenced in our press release, on our slides and on this call, and discloses the reasons why we believe that these measures provide useful information to investors. Reconciliations between non-GAAP and GAAP financial measures are included in the supplemental information within our press release and on our website. Slide 3 addresses forward-looking statements made on this call. This slide includes cautionary information identifying important factors that could cause actual results to differ materially from those included in forward-looking statements. Please review slides 2 and 3 in their entirety. During this call, all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year, which ends September 30. A replay of this morning's call will be available for 30 days at 1-800-860-4697. The archived webcast and corresponding slides will be available for at least 90 days in the Investor Relations section of our website. In addition, we will furnish a copy of our prepared remarks on Form 8-K later this morning. I'll now turn the call over to Scott.

Thanks, Whit. Thank you for joining us today to discuss our results for the 2018 fourth quarter and full year. I'll give you a quick overview of the quarter, and then Martie will follow with additional commentary on our financial results. I'll then provide some further color on key areas later in the call. And finally, we will conclude with the discussion of our outlook for 2019. We had a solid finish to the year with 12.1% net sales growth and an 8.7% increase in adjusted operating income in the quarter. Improved execution and strong demand in our end markets helped us generate very good volume growth at both infrastructure and technologies. We also benefited from the price increases we implemented earlier in the year, which help us offset material cost inflation in the quarter. We continue to feel the impact of inflation primarily driven by higher prices for raw materials. In addition, we felt the impact from higher freight costs compared to the prior year. These headwinds have been especially challenging for the specialty valve portion of our business, which has longer lead times. We have responded by announcing price increases for many of our products in September, which we expect to help offset anticipated inflation in 2019. I am proud of how we executed this year evidenced by growing annual net sales of 10.9%, adjusted operating income of 11.4% and adjusted net income per share 20.5%. We made significant progress executing our key initiatives to grow and enhance our position as a leading water infrastructure company. We demonstrated our balance and disciplined approach to capital allocation as we further strengthened our balance sheet with our debt refinancing while increasing our reinvestment in the business and returning $60 million of cash to shareholders in 2018 through dividends and share repurchases. We've talked about how acquisitions that leverage our strengths can accelerate our organic growth. I am extremely excited about our announcement to acquire Krausz Industries, which I will touch on later on the call. This is a wonderful opportunity to broaden our product portfolio for our North American customers and expand our global reach. With that, I'll turn the call over to Marty.

Thanks, Scott, and good morning everyone. I will start with our fourth quarter consolidated financial results, then review our segment performance. Consolidated net sales for the 2018 fourth quarter increased $27.4 million or 12.1% to $254.3 million, driven by higher volumes at both Infrastructure and Technologies as well as higher pricing at Infrastructure. Gross profit increased 5.6% in the quarter to $85.5 million, yielding a gross profit margin of 33.6%. Volume growth and higher pricing contributed to this increase. We continue to experience the impacts from higher cost due to inflation as well as manufacturing inefficiencies in the quarter, which impacted our gross margin. The primary drivers of inflation include material costs, which increased approximately 5% year over year in the quarter, and higher freight costs. Selling, general and administrative expenses were $42.9 million in the quarter, up $900,000 from last year, with the increase primarily due to personnel-related expenses. SG&A as a percent of net sales decreased to 16.9% in the fourth quarter from 18.5% in the prior-year quarter. For the year, SG&A as a percent of net sales decreased to 60 basis points to 18.2%. Adjusted operating income increased 8.7% to $42.6 million in the 2018 fourth quarter. The adjusted results this quarter exclude $2.1 million of other charges. The improvement in operating income was primarily due to higher volumes and higher pricing, which were partially offset by higher costs from inflation and manufacturing inefficiencies at Infrastructure. Adjusted EBITDA for the 2018 fourth quarter increased 8% to $53.7 million. For 2018, adjusted EBITDA was $180 million or 19.7% of net sales. Turning now to taxes, for the 2018 fourth quarter, we reported a net income tax expense of $9.7 million or 28% of income before income taxes. This rate differs from the statutory rate primarily due to the…

Thanks, Martie. I'd like to comment on a few key areas and then discuss our full-year 2019 outlook. We are in the early stages of a transformational process as we take a company with a strong history in manufacturing iron and brass products for municipal and residential infrastructure to one that provides more intelligent value-added solutions to help customers manage and deliver important resources. Mueller Water Products is uniquely positioned to leverage its large installed base of fire hydrants and other products with new technology offerings that can help our customers deliver the most important water resources to their communities. As a reminder, we have four key strategic areas we remain focused on to drive results. Delivering integrated customer focused support and alignment of our people products and processes is foundational for executing our other key strategies. The strategic reorganization we announced in September of last year was focused on creating an integrated customer centered support structure with centralized common functions and integrated information technology. We reconfigured our divisional structure around products with five business teams that have line and cross-functional responsibility for managing specific product portfolios. Under the new organizational structure, engineering, operations, sales and marketing, and other functions have been centralized to better align with business needs and generate greater efficiency. As part of this process, we recently launched our new Mueller brand identity at the 2018 WEFTEC Conference to bring our family of brands more closely together in support of our ongoing efforts to drive revenue growth. The changes we have made over the past year have led to improved execution of our key initiatives across the organization. We are well-positioned to grow and play an integral role in building the future of our industry. Accelerating the development of new products will help us expand our market…

Thanks, Scott. Corporate SG&A expenses are expected to be between $35 million and $37 million. We anticipate that depreciation and amortization will be between $50 million and $53 million, net interest expense will be between $20 million and $21 million, and capital expenditures will be between $56 million and $60 million. We anticipate that our effective income tax rate for the full year will be between 25% and 27%. We will benefit from a lower corporate income tax rate in 2019 compared with our 2018 blended rate. However, our 2019 estimated effective tax rate reflects the elimination or reduction of certain deductions that benefited 2018, such as the elimination of the domestic manufacturing deduction. With that, operator, please open this call for questions.

Thank you. Our first question is coming from Seth Weber with RBC Capital Markets. Your line is open.

Hi. Thanks. This is Brendan on for Seth. Just a couple of start here. Were there any pull for -- I mean your volume was a lot better than we have thought. Was there any pull forward ahead of the price increases that you announced?

We don't think there was too much there. We did as – as we said in the prepared remarks, the September price increase was fairly rapid with a kind of short window with relatively few releases allowed for our channel partners. So we don't think much got fold into the year, but certainly there is some possibility. But to give everybody an idea here, the notice period was right at minute at 30 days and the pull-forward allowance was for a single release, since our people couldn't push full pricing into the future for very long, so there may have been a little bit there. Yeah.

Okay, thank you. And then another pleasant surprise versus our model was the profitability in your Technologies business. You mentioned earlier that it benefited from some of the delayed orders last quarter. Was that the driver really for the profitability this quarter? How should we think about your ability to sustain profitability going forward? And is that $30 million sales, is that kind of like your breakeven point going forward? Thanks.

Look, I think the – as we said last quarter, we always want to make sure we're real straight about that. I told you I think we left a couple of million dollars on the dock at the Q3 call. And so, obviously, we got the benefit of that couple of million bucks. So, it helps sales in Q4. So, you saw it come through. So, if you take that away at our marginal cost, maybe it would have been slightly negative or breakeven, but you should think about the Technologies business as yes, somewhere in that bare margin $30 million – $32 million, breaking through the breakeven mark. But there's a lot of pieces moving in that business, but we were pleased with performance. I was especially pleased with manufacturing performance, which helped. If you'll recall in Q3, it hurt. So, performance matters and execution matters. And I think, the team did a better job.

All right, thank you.

Our next question comes from Michael Wood with Nomura Instinet. Your line is open.

Good morning. Thanks for taking my question.

Good morning, Mike.

First, just wanted to ask about the 2019 outlook. It looks like it implies roughly 25% conversion margins. Since you had a lot of operational issues in 2018, and you're going to begin to lapse some inflation, I'm just curious if you can give us some color, commentary in terms of those conversion margins and why they are maybe not a bit stronger like we've seen in the past.

I think it's a fair pick up on you part. The reality is I think the outlook we provided kind of takes the averages of the last two years if you think of about both the demand point of view and then what is going to happen from a material inflation net-to-net. And what we do as you lap Q1 and Q2 inflation is, you look at what the sequential has been and there's still going to be inflation next year. So I think that the reality for us on conversion margin is going to be some period, not for long of lapping some – our backlog and some period of lapping inflation. I think that's the weighted average.

Great. And then Scott you had mentioned in some of your prepared remarks that you have accelerated some productivity initiatives; you also talked about some investments. Can you update us on that longer-term target that you had with the 100 basis point growth, 50 basis point net productivity and whether or not you can achieve that in 2019?

I think what we do with our guidance is try to get you to the sales number and the OI number. I think the – how much more we're going to make there and how much of it comes from productivity and then you've got the increased depreciation associated with the increased capital investment. There are a lot of moving pieces there. I tend to think of those as long-term targets, if you think about averaging the last two years, if you think about what's gone on, I think you should use that model for your multiyear look at the business, but discretely next year is going to be or I should say this year and early part of next year, perhaps some big executions that surround large casting foundry, just use that moment to remind everybody that we will be out of the in-sourcing of big bodies sometime during fiscal 2019, big valve bodies as we bring our large casting foundry online. There will be a lot of moving pieces and that I'm sure will have some start up on things of that nature. But I think as a whole, 100 basis points of improvement, 50 basis points of flow through are achievable in the long-term for this business. I continue to be convinced that the opportunities that we see from a manufacturing productivity point of view is a healthy one. And I think we have an open field in front of us. I think as you get into the anomalies of each quarter as the investment comes on or as start-ups happen, there may be some noise in that, but I'm not terribly worried about it. And as this quarter, I think – I saw the cost savings, reviewed the cost saving projects; they were real savings. I always just had had to wait in the quarters associated with the things we talked about in the prepared remarks.

Great. Finally, can you just give us a little bit of color in terms of the Krausz margins once that deal closes, so we can better model in that impact?

I'll get Martie to fill in the nitty-gritty, but overall this is a business that caught my attention early because there are – EBITDA margins and their EBITDA margins are – they're similar; they're not identical, they're similar. But I think that what I saw is that when you think about how much money is going into quite repair, Infrastructure repair, and whether you see that as growing over the next 5 years to 10 years or shrinking. I think it is going to take more and more of utilities budget. So I like the repair space. And when we reviewed the multi-year model, I think that here we got it for a fair value for where we think it could be. But, Martie, do you want to be a little more particular?

I think, Scott, yes, overall, like you said, they had revenues for fiscal 2017 at about $43 million; through 2018, we have seen them continue with the kind of growth rate that they have exhibited in the past. As Scott said, when we look at their EBITDA margins we could sort of put them in a comparable sort of the same things zone as where Mueller Water Products are as well. So, but I think importantly as we look – as we think about what the synergies are and the fit with the company, we just think this one goes very nicely clearly from a customer perspective. Certainly the overlap that we have with our customers, certainly from a product perspective, as well as from a manufacturing perspective.

Great, thank you.

Our next question comes from Brent Thielman with D.A. Davidson. Your line is open. Brent Edward Thielman - D. A. Davidson & Co.: Great, thanks. Good morning.

Good morning, Brent. Brent Edward Thielman - D. A. Davidson & Co.: Scott, yeah, just maybe back on the acquisition. Is this indicative of the transactions you're cultivating in the pipeline. I guess given the margin profile seems to be in the same zip code, is it unique versus other things you're looking at out there?

I wouldn't call it unique. When we think about – in this particular case, Brass, Gas and Repair was a value stream when we think about where our product gaps are. All of the businesses, all of these value streams have some product gaps. So those bolt-ons that helped fill out product offerings are something that definitely we want to do in the future. But that is not to say it's the only profile we have. We have markets as I talked about on previous calls, especially as it relates geographic expansion and more industrial or maybe more storm water or waste water exposures, things like that, then we would also invest. We're looking for where we have strength and we can leverage our strengths or where a target may have strength and can put us into markets that we are in today. So those are all of the basic 101 things we look at. But yes, if there were more for us out there, I would definitely be interested. Brent Edward Thielman - D. A. Davidson & Co.: Okay. And then on the Infrastructure segment, a lot of companies this quarter have been talking about, in some cases, pretty extraordinary challenges with weather and just getting work done. It doesn't look like they were – it doesn't sound like there was much pull-forward that's pleasantly surprised with the volumes. Have you gotten feedback that that hindered your growth to some degree, or is this the volume expectation you'd have going in the fiscal 2019?

To be clear, we've guided something less than we had this year for fiscal 2019. We think the markets remain heavy. I think we're right in line with or remain healthy. I think we're right in line with our longer-term guidance that we're kind of in a 150 basis points better than GDP number. Now to answer to your question specifically, we saw a meaningful impact, a year and a half ago when Harvey roared through Houston, but we didn't see as much with the Mexico beach or Florence up in the Carolinas. So I'm not really sure why that is. Certainly, we have presence in both of those markets. But I think the damage to drinking water infrastructure was a lot different in those two events. Brent Edward Thielman - D. A. Davidson & Co.: Okay, thanks, and one more if I could. Do you see the industry responding on the tech side of the business with price increases to offset inflation, or is that more likely to be absorbed? And I guess if you could just help quantify what those costs are as a percentage of the COGS, that would be helpful too.

I'm not going to get into segment COGS cost. I think certainly with brass increases and you think about meters and radios, there's been inflation. But obviously, we think healthy markets allow material increases represented back in price. The only thing I would say different about the Technologies business is as you tend to get into longer-term price agreements where you take these large transitions. So it will be a longer cycle or a longer leg to recover inflation in the Technologies business. Brent Edward Thielman - D. A. Davidson & Co.: Okay, thank you.

Our next question is coming from Andrew Buscaglia with Berenberg. Your line is now open.

Hi, guys. Thanks for taking my question.

Hi.

Can you just comment on – your residential exposure is about 30%. That's definitely coming into more focus given recent concerns in that space. Can you just talk about how you guys play into that sector and where you fit in the cycle there and how you guys are thinking about any potential downside from there?

Certainly I think you're referencing the cooling nature of resi forecast.

Yeah.

I think the thing to remember about us is that we tend to be early-cycle and we tend to be in the lot development stage. So if you think about pipe going underground, and hydrants going in and valves going in, it tends to be when the land is being developed. I think historically, you should think about us suffering from an overhang of over-development in the past, but we do not believe the inventory of lots even in this lower outlook period as such that we are going to be impacted as negatively as, say, a home builder. We have 1.4 million or 1.5 million homes targeted as the outcome. We think we have in front of us still a fairly healthy 2019 and potentially even in 2020. The caveat here, and this is for everybody. Philosophically, we understand that if the interest rates accelerate rapidly, then cost of money for municipalities, cost of money for homeowners, home development, you could temper future demand. From what we've seen from the Fed and from what we've seen from the interest rate environment, while we expect it to go up, I think a rapid rise would hurt us more. I think that's how you should think about it. Think about our (00:34:51).

Okay. Okay, yeah. That's helpful. And did you guys disclose the multiple you paid for Krausz, or would you like to, and then talk about the synergy potential, how that would factor into the multiple?

Sure. Go ahead, Martie.

As we think about it from a multiple perspective, looking at their forward EBITDA, looking a couple years out and certainly not factoring in any what we would deem one-time costs or associated acquisition expenses, looking at that two-year out adjusted EBITDA, we say we've probably paid a little less than 10 times.

Okay.

And with respect to synergies, I think we'd expect to have savings strongly on the cost side as we look to leverage our capabilities, and I think importantly on the revenue side as well.

Okay, all right.

As we said, we think there's one – as we look at it from a customer, as we look at it from a manufacturing, as we look at it from a product perspective, it really is a very complementary fit with our business today. It also gives us expansion from a geographic perspective as well.

It sounds like it. So it sounds like you can get a coupled or maybe a turn out of there with the synergies that you guys talked about. So, yeah, thanks for that. I just wanted to see how expensive a deal like this would be, but I guess looking out, it seems like a pretty good deal.

We think so, we're excited.

All right. Thanks, guys.

Thank you.

Our next question comes from Brian Lee with Goldman Sachs. Your line is open. Brian Lee - Goldman Sachs & Co. LLC: Hey, guys. Thanks for taking the questions. Good morning.

Good morning, Brian. Brian Lee - Goldman Sachs & Co. LLC: Hey. Hey, Scott. Maybe first thing just on the -- just wanted to ask a few clarifying questions. Martie, you alluded to the revenue that Krausz had done in 2017 and that they had been growing in 2018 in sort of the level you'd been expecting them to or that they have been at. Can you give us some sense of what that is? What is that historical growth rate then? Are they in the mid-single digits the way you guys are forecasting for your segment into next year?

First of all, I'd say we'll certainly – once we close the transaction, we'd expect to give you more insights as well, so let me just say that but no – I think certainly as we cited the market that they play in and I think Scott referenced it in some of his prepared remarks but as we look at the type of care market and we think about how municipalities will look for alternative ways to more efficiently manage their expenditures certainly the ability to repair products rather than a full replacement is one of the reasons we think that this is an attractive market for us, as we looked at the Krausz acquisition and importantly as we looked at where municipalities we think will continue to spend the aging infrastructure which is certainly something that is not new news to anybody but you know continuously how do municipalities manage their expenditures we think this is a great area for them to do it. They have seen I think very nice growth probably in the low-double digit over time. And I think, as we look at type of fair market, we think that will continue to be a good long-term market. Brian Lee - Goldman Sachs & Co. LLC: Okay, great. I appreciate that color. And then on Technologies, you also alluded to part of the big results this quarter was some 3Q to 4Q push-out. Can you quantify in dollars sort of you know what that amount was?

I said last quarter, Brian, that we probably left about a million bucks on the dock, while we went through some extra QA and that's how you should think about it, a couple of million bucks. Brian Lee - Goldman Sachs & Co. LLC: Couple million bucks, okay. That's great. And then maybe just going back to the earlier question around margin expansion targets for 2019. I know there's a lot of moving pieces in the macro that have been impacting your costs. And then also resulting in driving some pricing action this year, but as you think about the conversion margin, you've historically talked about 35% to 40% or more, 25% to 30% based on the guidance you're giving for next year. Just wondering if you can – not so much walk through the puts and takes, I think I get what's going on in terms of why that's a little bit lower than what you might historically have targeted, but is that a new normal in your view I guess is the first question. And then, if not what are some of the sort of initiatives that you think you start to put into play as you move through the year I would imagine to get you back towards your original targets in the out years?

Okay, I'm going to try to answer this, but this is one of the reasons that couple of quarters then I tried to get out of the conversion margin game. You got to look you know what our primary inputs are, and they are around brass and scrap metal. If you think about a longer-term view, basically metal prices and all of them dropped from 2015 through basically the fourth quarter of calendar 2016, and they started to inflate. And so, you got tremendous conversion margins as your material cost ran away from you; it gotten lower and lower. And then, as they turn, we've been in this flag of getting price after we see inflation. And I think that I don't want anybody to sit there and say, oh, this is the new normal. I think it's completely reasonable to expect and try to put it in the prepared comments for us to actively manage markets to get products. So this year, we've just barely covered our material inflation with price increases. So that's a good outcome. Now if everything flattened out, you can do that math. Over next year, we will have these in conversion margins. If our blended cost, the blended cost changes whether it's labor, freight, all of the input costs; if it's going to inflate, we're going to get dilution; if it's going to deflate, we'll get margin expansion. And that always happen, I just want to reiterate very happy, saw in September with the freight increases we put through, the order book stays strong, we continue to see strong words in the October. So, I'm not forecasting a new normal forever. I think if you go back to my long-term guidance, 150 basis points better than GDP, 50 basis point of margin expansion over the long-term, a year, take out this quarterly noise, you'll see that we think we're on the right path with both our investment strategy or selling strategy or acquisition strategy. So, we'll feel pretty good about the future. Brian Lee - Goldman Sachs & Co. LLC: Okay, great. That's, I appreciate that color. Maybe two last ones from me and I'll pass it on. One is, you alluded to the manufacturing efficiencies having impacted you. I know you had talked about that coming into the quarter. Can you give us some quantification of what that impact was? And if those issues are all behind you or if there's some still lingering impact heading into fiscal Q1? And then secondly, just any updates you can provide on the tax liability issue that's been playing you guys? Thank you.

Maybe I'll take part one, Martie, you can take part two. On part one, last quarter, I said you'll recall, just to remind everybody on the call, we lost a holding furnace in one of our facilities. We, I think, kind of running efficiently by melting and then pouring; you can get the benefits of having a large holding furnace. And as a result, we also had the repair costs. And basically the way the system works, right or wrong, we end up with anything we put in inventory is a higher cost, is there with a higher cost. And so when you sold those in Q4, the ones that we made in Q3 that was still in inventory, you basically have lower margins. I forecast that I think on the Q3 call that was going to be $1 million hangover, so and it was right around that number, I'm not going to get exactly because I can't recall it, but it was – let's call it $1 million of manufacturing inefficiency hangover from Q3. Apart from that, we saw a relatively good performance at the foundries apart from that hangover from Q3. So, we don't see any residuals, but I think this is a – these things are part of the business and such as the management team did – the management and I think we have the safeguards in place. And on the tax issue, Martie?

Yeah, I'm really, Brian, no updates I think since we last provided our disclosure in and around the Walter tax situation. I think we have said at that time we continue to work constructively to reach an agreement. We did call out that we think that certainly we need to consider the refunds for certain of the years or fight against some of the liabilities that's the net liabilities would be substantially than those the IRS put forth in proof of claim. But until there is further progress, we are not in a position to predict the amount or the extent to which we might be responsible and we do not have any update with respect to timing of reaching a resolution with the parties. Brian Lee - Goldman Sachs & Co. LLC: All right, thank you.

Our next question is coming from Joe Giordano with Cowen. Your line is now open. Tristan Margot - Cowen & Co. LLC: Hey, guys. Good morning. This is Tristan in for Joe. I'm sorry. I'd just like to go back a little bit on the profitability discussion if we look at Technologies next year, is your guide – what's implied exactly for your guide next year at Technologies?

I'm not providing guidance at the segment level. I think it's meaningless at this point when we're talking about what is less than 4% of sales or something like that. So we're going to continue work Technologies, we're going to continue with the innovation we put in place with, our Mi.Net product lines, our radios, our meters; we're going to continue the integration of both cellular leak detection along with AMI leak detection. We're going to continue to integrate with Smart Hybrid and hopefully a smart valve at some point in future and focus the team on development of sustainable differentiation and sustainable differentiated products, and not getting into a cycle along $90-ish million business with the vagaries of community demand, so not going to go there. But I feel very good about the progress the team has made both from a manufacturing point of view. I'm very happy with the product development reviews with as far as their new collector system, how many different software initiatives they have underway right now, improvements to both range, power utilization of our radios, very, very happy with Technologies. Tristan Margot - Cowen & Co. LLC: Sure. Fair enough, Scott. And could you remind us how much of your manufacturing and procurement is done in China?

We have a facility in China. I don't think we published it, but it's not much.

I don't think we brought that out. But it's not that large. Our largest plants are all located in the U.S.

And let me say again, if you think about what the impact of tariffs have been, and I don't know that number, but it's less than $1 million or so. So, it's not a big number like we did a year and half ago long before there was any trade dispute, we knew that we wanted to be able to get all of our bodies, all of our disks, actuators, and be in control of our own destiny. That's why a month ago we told you about the launch of the Chattanooga large casting facility, so that we would be able to 3D print all the tooling and then take cycle times from what right now is 12 or 14 weeks before May and equally long for domestically made valve bodies, and we should be up and running. We'll have peak caps (00:48:11) running probably in June through September of 2019 and this full production with the ability to make American made and American sourced valves completely by September. So I think we have a leg up everybody else who continues to bring in foreign made valve bodies. Tristan Margot - Cowen & Co. LLC: Okay, thanks. So you're not seeing any – you're not expecting any tightness in the supply chain at all right at this point?

I don't know about tightness. It's really difficult with the rhetoric around the next $200 billion and what's involved and what's not involved and what those actual dates are. So, what we have learned over the years is, you can no longer say there is -- the ripple effect or what it could do to domestic supply in some other area will certainly impact the supply chain. If the automotive sector always doesn't start changing how they buy steel, it will have an impact, maybe, it will impact scrap. Maybe, but I haven't foreseen how that will happen. I can tell you that today we believe that given the status quo that tariffs will negatively impact 2019, and we think we have that expectation in our guidance. Tristan Margot - Cowen & Co. LLC: Great. Thank you, guys.

Thank you.

Our next question comes from Walter Liptak with Seaport Global. Your line is open.

Hi, thanks. Good morning, guys. I wanted to just do a couple of follow-ups, one on Krausz. Can we get the geographic breakdown? It looks like their center came out of Europe, but might have a lot of exposure in the U.S.

To be clear, they're an Israeli company with about – think about them as 75% of their total sales is U.S. based.

North America.

North American based. Sorry, I shouldn't say U.S.

Okay, 75% U.S. Okay.

I wanted to clarify, 75% come from North America.

From North America. Got it, okay. And the sectors, it looks like part is muni and there might be some irrigation. I wonder if you could help us with understanding the sector mix.

The majority is in drinking water and stored water management. But I think that the review probably read that on websites as such is that as you think about water use, and agri is such a big part of it, that I believe the company feels that they have a tremendous opportunity to go in and do site repair in these subterranean systems that a lot of the Ag systems use.

Okay.

But it's not much today, but it is a growth opportunity.

Okay, that helps. Thanks. And I apologize if you talked about this already, but the Atlanta tech center, consolidating things there, have you talked about the dollar amounts or timing? And I think you spoke about some cost savings from that tech center. I wonder if there's any quantification about that.

Martie?

So in terms of setting up the Atlanta Center for Excellence, that is underway. We do think that we'll incur some one-time costs associated with that, probably in the neighborhood of about $5 million. And then we do expect that we will get the savings over time as well associated with that. We'd probably look for less than a three-year payback I would say on that. And in terms of timing, as I said, it's in process and I think we would look to have it fully up and running in our 2019.

Okay, great. Thank you.

Also, let me – just to expand on it a little bit further, I think certainly we think Atlanta is attractive from a talent perspective. But I think also I want to point out that when we look at where our other facilities are and particularly as you look at the location of our Chattanooga facility, we think by moving this to Atlanta, it will certainly make it much easier and enhance the synergies and the leverage that we get from having the manufacturing facility in Chattanooga as well as the technology center, as well as our Albertville plant which is just a little over two hours away.

And I think, the mix of putting technology in arm is really what we're going for. So the savings obviously are great but that's not the starting...

That's not the driver. It's a factor, but it's really not the driver behind the decision.

Okay, all right. Thank you.

And our next question comes from Jose Garza with Gabelli Management. Your line is open.

Hey, good morning, guys.

Good morning, Jose.

Hey, Scott, I was hoping you could maybe just comment on inventory levels at the distributor level and anything notable there.

I was actually in the field with a couple of large distributors, both at GWI and then meeting a couple others. I don't see anything out of the ordinary there. They're still looking at their gross margin, return on investments, how many turns they're getting. They're around their historical averages. We've not seen any kind of end-of-year buying to get the levels for programs or anything like that. So I think that we're pretty much at the norm. And with that said, I think as we went through October, we were watching both these levels pretty closely, especially as it relates to the Infrastructure and they were basically in line with our expectations.

Okay, excellent. And just on Krausz, it looks like they might have just one facility in the U.S. Is that accurate or do they have more, manufacturing facilities?

Yeah. They have a single facility in the U.S. as far as doing any value add and I think they have two more warehouses.

Exactly. They got some distribution facilities. They have one large and two sort of smaller ones.

There might be some painting and things like that going on at the one large one.

Okay. And just lastly for me, on the gas side, on the gas distribution side, I guess a little bit higher growth rate on that business. Anything worthwhile noting there or maybe is there some projects or is it new product introductions or anything that's kind of, I guess, a little bit higher growth rate of that business as you guys look at 2019?

Well, actually, I had one person say to me that the consequences of not maintaining your water infrastructure are a little different than the consequences of not maintaining your natural gas infrastructure, and therefore, they're a little more hyper about it. But nothing – there's no fundamental change other than that you do have a little bit better growth associated with GAAP, because it's not a 100% penetrated. So if you think about water every house is served by water. But today, gas line pass many, many houses that are being served and so you have that opportunity to become a lower-cost way to heat or to manage water. So it's just the dynamic of having the natural growth plus that little bit as you get more adoption of natural gas for home.

Okay, I appreciate it. Thanks, guys.

Well, I just want to – I think we're near the end or, operator, is there are any more calls?

We have no further questions.

Great, so I want to thank everybody for coming. Like I said, I thought we had a pretty good quarter and I think that the growth was the highlight for Q4, and I think that we had decent performance as well from our manufacturing facilities even though we had some challenges from the cost side. So all-in-all, I feel pretty good about 2019, and I look forward to seeing you all again soon. Thank you very much. Operator?