Good day, ladies and gentlemen, and welcome to the Q1 2019 Parker Hannifin earnings conference call. At this time, all participants are in a listen-only mode. Later, we will host a question-and-answer session, and instructions will be given at that time. As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to Cathy Suever, Chief Financial Officer. Please go ahead.

Thank you, Candace. Good morning and welcome to Parker Hannifin's first quarter fiscal year 2019 earnings release teleconference. Joining me today are Chairman and Chief Executive Officer Tom Williams and President and Chief Operating Officer Lee Banks. Today's presentation slides together with the audio webcast replay will be accessible on the company's Investor Information website at phstock.com for one year following today's call. On slide number 2, you'll find the company's Safe Harbor disclosure statement addressing forward-looking statements as well as non-GAAP financial measures. Reconciliations for any reference to non-GAAP financial measures are included in this morning's press release and are also posted on Parker's website at phstock.com. Today's agenda appears on slide number 3. To begin, our Chairman and Chief Executive Officer, Tom Williams, will provide highlights for the first quarter. Following Tom's comments, I'll provide a review of the company's first quarter performance together with the guidance for the full year fiscal 2019. Tom will then provide a few summary comments, and we'll open the call for a question-and-answer session. Please refer now to slide number 4, as Tom will get us started with the highlights.

Thank you, Cathy, and good morning, everybody. Thanks for your participation and your interest in Parker. We're off to a great start. It was an excellent start to fiscal 2019. We delivered record performance across many measures. Starting with safety, as we always do, our safety performance remains our top priority. We had a 20% reduction in recordable incidents for the quarter, and we're striving to create a zero-accident environment for our people. That's the goal there. And we've gotten really strong engagement from our team members around the world on safety, and you can see the difference. With the engagement of our people, you see a big difference in the performance there. Let me start the call with some summary comments and key takeaways on how the business is doing. First, we had a number of all-time quarterly records, EPS, net income, ROS, and segment operating margins. We reached 17% operating margins for the quarter on an as-reported basis, which is really remarkable performance. It's an all-time record for us. And if you just reflect back to Investor Day in September 2015, so this is about nine months after Lee and I took our jobs. And we had a slide that we showed you that had a walk from 14.5% operating margin to 17% as our goal, and we wanted to achieve that over a 5-year period of time. So while we're all about continuous improvement, that's a nice accomplishment. It's a nice milestone to hit, and we're really proud of the team for doing it. We also in the business have experienced some very nice positive organic growth. The balance sheet has continued to get stronger, which is giving us more options and flexibility in how we want to deploy that capital going forward. The CLARCOR integration continues…

Thank you, Tom. I'd like you to now refer to slide number 5. I'll begin by addressing earnings per share for the quarter. Adjusted earnings per share for the first quarter were $2.84 compared to $2.24 for the same quarter a year ago. This equates to an increase of 27%. First quarter fiscal year 2019 earnings per share have been adjusted by a total of $0.05, including business realignment expenses of $0.01 and CLARCOR costs to achieve of $0.04. Prior-year first quarter earnings per share had been adjusted by $0.14. On slide number 6, you'll find the significant components of the walk from adjusted earnings per share of $2.24 for the first quarter of fiscal year 2018 to $2.84 for the first quarter of this year. The most significant increase came from higher adjusted segment operating income of $0.34, attributable to earnings on meaningful organic growth, income and synergy savings from acquisitions, and increased margins as a result of Win Strategy initiatives. Lower income tax expense equated to a year-over-year increase of $0.20. Lower interest expense resulted in an increase of $0.05, while lower other expense and share count each contributed $0.03. Adjusted per-share income was reduced by $0.05 due to higher corporate G&A, primarily as a result of losses in market-adjusted investments tied to deferred compensation compared to gains in those investments last year. Moving to slide number 7, you'll find total Parker sales and segment operating margin for the first quarter. Total company organic sales in the first quarter have increased year over year by 5.7%. There was a 0.6% negative impact to sales in the quarter from a prior-year divestiture, while currency negatively impacted the quarter by 1.7%. Total segment operating margin on an adjusted basis improved to 17.2% versus 16.0% for the same quarter last year.…

Thanks, Cathy. So we're very pleased with the start of the year. The combination of our sales growth, lower cost structure, integration of CLARCOR, and execution of the Win Strategy, and we're projecting another record year in fiscal 2019. So again, just in closing, my thanks to the global team. All of our groups around the world are doing a great job and are exceeding our expectations, and I want to thank our shareholders for their interest and their confidence in us. And with that, I'll hand it over to Candace to start the Q&A portion of the call.

Thank you. And our first question comes from Joel Tiss of BMO Capital Markets. Your line is now open.

Wow, I never get first place. How is it going?

Good morning, Joel.

Good morning. So I just wondered if you could give us a couple of factors that give you visibility and confidence to raise the full year, and maybe if it's appropriate for Lee to give his run around the world because we're starting to hear other companies are hinting at slowdowns in some markets, as you know, auto, China, stuff like that. So I just wondered where you guys – where is it coming from? Thanks.

Joel, this is Tom. So I'll start with a couple opening comments, and I'm going to hand it over to Lee to go through the markets in more detail. But I would just say one of the things that are giving us confidence is when we look at the order pattern. So orders are doing well against some very tough comparables. But if I look at North America through the quarter and including October, North America was stable at some nice levels through the entire quarter. What we liked was EMEA. If you remember, last call I made a comment about EMEA softening a little bit and moderating, but I wasn't sure whether it was the holiday period. But what we saw in September and October that EMEA strengthened and stabilized at a low single-digit level for us, which is a good thing for the Europe area. Asia-Pacific did moderate through the quarter and Latin America remained strong. So really that mixture, in particular the fact that EMEA got better through the quarter, gives us the confidence. And when we look at all the end markets, and Lee will take you through this, they really held up quite well despite some of the geopolitical issues that you read about. So I'll let Lee take you through the regions and give you a high-level view of what we see.

Okay. Thanks Tom. So, Joel, I think just to tag on what Tom had to say, I think we were encouraged that organic growth moved in the direction that we expected from our last call. And I'll start with Aerospace, if I can, and then just walk through. But with Aerospace we were pleased with the quarter. We saw nice growth in the commercial OEM segment. It was up 6% year over year. And we're forecasting the growth for this year, which will get you to our organic midpoint of about 5% at the midpoint. And a lot of that has to do just with comps going forward. Military OEM was strong. That was up 12% in the quarter. There are a lot of factors leading into that. F-35 ramp-up production increased Department of Defense spending, so all positive for that. So that was up 12% in the first quarter, and we're forecasting full-year growth of 7% at the midpoint. Commercial MRO was good. Revenue passenger miles continue to be up. We were up 6% in the first quarter. We are forecasting 2% for the full year at the midpoint. A lot of that, again, has to do with comps as we go forward. And then lastly, the military MRO was strong, 5% in the first quarter, and again, adding onto that 4% for the full year, again comps. So it gives you an organic midpoint for the full year for Aerospace at 4.7%. On the Industrial side, just characterizing what Tom had to say, we look at North America being at the high end of that 5.3% to 2.5% growth range, Asia-Pacific and Europe at the lower end, Asia-Pacific a little bit ahead of Europe, and Latin America being above the range. So Latin America is strong but it's…

Yes, awesome color. I think I took enough time, thank you so much.

Thanks.

Thanks, Joel.

Thank you. And the next question comes from Ann Duignan of JPMorgan. Your line is now open.

Yes, hi. Thanks for all that great color, I'm trying to digest it here. But as a follow-up, could you give me more insight or more color on the comments you made about CapEx requests for distributors remain strong? What exactly do you mean by that?

Ann, typically what happens with our distributor partners when they're working with customers in their region, they may get some projects that would be capital-intensive for that customer, so it would be capital appropriation. And it just tells me that companies are spending as opposed to just MRO activity at a facility.

Okay, I got you. That's helpful. I appreciate that. And then just could you give us a little bit more color on EMEA just in terms of end markets and regions, just as you walk around the different countries on that large continent or continents?

I think what's positive, what's been down is a lot more quoting activity and the activity with our distribution base around oil and gas markets. So that's North Sea activity in Norway. Germany continues to be strong, and mobile construction equipment industries continue to be strong. I think automotive, which is well-publicized, is down; again, not a huge impact for us other than what I mentioned before, but that would be the noticeable thing. So despite all the noise with Italy and Brexit, things continued to grow at a very low single-digit rate.

Okay. And I think from the comments that you've made and the visibility that you have, I think what you're telling us today is that even if dollar orders stayed as is, you would still deliver year-over-year growth in orders through the remainder of the year. Is that a fair comment?

The numbers I gave you are organic numbers with our best guide on FX impact. If there's a bigger FX impact, obviously that would lessen that organic guide number right now.

Okay, I got you. Okay, I'll leave it there because I think you answered most of the questions I would have asked in your first question.

Thank you, Ann.

Thanks, Ann.

Thank you. And our next question comes from Andrew Obin of Bank of America. Your line is now open.

Hey, guys. Good morning. We had a pool in my office if Adam was going to ask about Ag. I'm not going to ask about Ag, just a question on Aerospace and International. A), it does seem that Aerospace margins and incrementals were fantastic, and you alluded that it's a combination of the factors. But what changes in Aerospace during the year for the margins not to have this kind of strong performance? What goes away? And the second thing on International, once again, International margin is above North America, which is unusual. Once again, what changes in International over the year for this gap to go away?

Okay, I will start with Aerospace, and I'll let Tom take the International margins. But Q1 was a great quarter for Aerospace, and we've talked before. The company's long-term targets are 19% operating profit, and we see Aerospace going there. I think what happened in Q1 is excellent continued execution around the Win Strategy. Good mix during Q1, it was what I would call stronger legacy OEM shipments and less entry-into-service shipments. That changes going forward a little bit, and that's what we forecast. And then less R&D expense in Q1, we gave you a range of 6.25% I think to 6.75% last time. We came in at 5%, and that's just really timing, Andrew, in Q1. So that's factored a range of 6% to 6.5% for the balance of the year. So two things going on with the balance sheet why you see a midpoint guidance of 18.3% is increase in R&D expense on some things. It's come way down from where we were, but an increase in R&D expense, and we see the mix changing going forward.

And, Andrew, it's Tom. On International, we were excited, you're right to point it out. This is a big deal to have International higher than North America. When we finish the year, we'll have North America higher than International. But when you pattern International, Q1 always ends up being the highest profitability quarter for us, so this is a normal seasonal change for us. We will have as we go through the course of the year with Asia growing at a little less growth rate than it had before and Asia carrying a higher profit margin, that does impact us a little bit for the full year. But we're still going to see a full year with some nice improvement within International margins, 70 bps higher than the previous year, and we raised it 20 bps versus the prior guide. So we're very pleased with what International is doing.

And just to follow up on International, maybe we're not doing the math right, but it comes out that for International in the second half, we're going to have flat to negative core growth, and I was just wondering how to think about that. And how does pricing figure in it because we're hearing you guys are getting fairly good pricing across your regions?

Andrew, it's Tom again. So our International growth for the second half is going to be 2.5%. And so what you're seeing when you look at that is really the effect of currency. We have a second half based on what we see for currency right now of a 5% drag. Obviously, it's subject to change based on translation, but that's what you're experiencing with International.

Got you. Thank you.

Thanks, Julian – I'm sorry, it's Andrew.

And your next question comes from Julian Mitchell of Barclays. Your line is now open.

Hi, good morning.

Good morning, Julian.

Maybe – hi. Just firstly, a little bit more color on your comments on APAC. I think you said China still growing, but the region moderated in the first quarter, and it sounds like you're saying that it will continue to moderate in your assumption over the rest of the year. So maybe talk about how much of that is China-specific versus other parts of the region and how broad of a slowdown in China are you seeing right now?

So, Julian, this is Lee. So China did moderate, there's no doubt about it, but we're still seeing growth across the region and in China. I think what everybody has to remember, we've just come off some incredible great growth comps in China. So we're still seeing growth, but at the low end of that range that we gave you. What's noticeable is still strength in what I would call natural resource end markets there and construction equipment markets. We do forecast some infrastructure spend going forward for the year. It's already starting to ramp up, so there's a little bit of stimulus happening from the Chinese government. I think what's also positive is we're seeing excellent growth throughout the region in Australia, Japan, and India. Those are all noticeable growth areas for us. So you put all that together, and that's why we came up with the growth in that low single-digit rate.

Thank you. And then my second question just around the North America margins, you obviously had some issues affecting the margin last year. You came in squarely in the middle of your incremental margin guide for the first half in Q1. Maybe just update us how comfortable you feel with the incremental margins for the balance of the year and how the productivity effort is progressing and the duplicate cost-out?

Yeah, Julian, it's Tom. You're right, we had forecasted at 10% to 20% for the first half, came in at 16% MROS for Q1. I mentioned in my opening comments, a very important milestone is that we've closed all those plants that we want to close. Remember, part of the issue we've had the last several quarters is we were running duplicate plants due to demand and productivity levels, and so that's a huge milestone. And all the lines that we wanted to move, they got moved as well. Now there's a number of them that got moved during Q1. And when you move a production line, you go through a requalification with the customer, and there's a production ramp-up curve that you go through, so that will be happening in Q2. But we feel very good about where we are for the second half. So our first half MROS, we're now looking at a 15% to 20% MROS, and the second half still, as we had articulated last quarter, at a 40% to 50% MROS. The lines that have moved prior to Q1 moves are all moving in the right direction. Productivity levels are increasing. So we feel very good about that. I think the fact that North American margins were basically the same as prior period, and you compare what we did in the prior periods as far as plant closures, which was very minimal compared to what would be going on now, the underlying efforts in North America are getting better. You can see it. There's no way you could have held North America margins flat with the amount of plant closure work and production line work that has been going on here without some good underlying productivity on everything else that's working. And I think the other part is the International margins and Aerospace margins are indicative of all the Win Strategy initiatives that are going on. Those margins moved, but they moved demonstrably for several reasons that Lee had touched on with Aerospace, but because the Win Strategy is working. So I feel very good about the margin expansion. Of course, we forecasted that in the guide going forward. I know North America has been an important question for shareholders and analysts. And I would just tell you we've reached an important turning point, and we feel good about the future there.

Great, thank you for the detail.

Thanks, Julian.

Thank you. And our next question comes from Joe Ritchie of Goldman Sachs. Your line is now open. Joseph Ritchie - Goldman Sachs & Co. LLC: Thank you. Good morning, everyone.

Good morning, Joe. Joseph Ritchie - Goldman Sachs & Co. LLC: And, Tom, congratulations on getting this plant closed. I know it's been a long time coming and a pretty arduous process.

Thank you, Joe. Joseph Ritchie - Goldman Sachs & Co. LLC: I guess my first question, look, it sounds like you guys feel really good about your end market backdrop and what you're hearing from an order entry perspective. How do I square that with the comments that CAT made this quarter regarding inventory levels being elevated? Just maybe any color that you can provide there would be helpful.

Joe, it's Tom. So I'll start, and if Lee wants to add anything on. I think we've seen some isolated, and I would call it not material, where customers have made a supply chain adjustments basically where the supply chain has caught up and they're rebalancing their demand signals that they're giving to their suppliers. But I think the theme for us that has been a big positive, North America stayed strong. EMEA strengthened better than we thought, and EMEA is 60% of our International. Asia moderated, but it's been off a very high. So that mixture in International made us feel good about that. Lee touched on what's driving the organic growth for us is distribution and the natural resource end markets having enough strength and power to overcome the geopolitical noise that we're hearing. And I would characterize automotive and automotive-related, like tires and machine tools, some of that is the automotive cycle, and some of it could be some of the tariff noise. It's hard for us to attribute what's to what. The mills and foundries that Lee touched on clearly is probably trade-related. Power gen, semicon, and marine, that's been something that was soft, stayed soft, so that didn't really change. So it's really that composition, Europe getting a little better than what we had thought, and the distribution and natural resources having enough strength to overcome the geopolitical noise that we've heard so far. We will obviously keep our eyes and ears open to all that and we always give you our best look every quarter, but that's the view right now. Joseph Ritchie - Goldman Sachs & Co. LLC: Okay, that's helpful, Tom. And maybe as my follow-up question, just was there anything that occurred below the line this quarter? That number seemed to be a little bit more elevated than usual to get to your EBIT bridge. So I'm just wondering if there were any one-time items in that number.

Yes, Joe, I'll take this one. We have some investments that help support some deferred compensation plans. And those investments incurred losses this year compared to gains last year. So you see the swing year over year, and it's purely from the market moving on those investments. That's the biggest item. Joseph Ritchie - Goldman Sachs & Co. LLC: And, Cathy, how should we be thinking about that number on a go-forward?

We're anticipating that we'll continue to see losses compared to last year just based on what the market looks like today versus before. So we have added a little expense in the next few quarters in the other income line related to that. Joseph Ritchie - Goldman Sachs & Co. LLC: That's helpful. Thanks, everyone.

Thanks, Joe.

Thank you. And our next question comes from David Raso of Evercore ISI. Your line is now open.

Hi, thank you, just a quick question. The guidance appears to have the back half of the year, you talk about $0.15 a share out of the implied back half. And is that solely currency? But also, the tax rate at 24% through the rest of the year, is that an upward revision of how you thought the tax rate would be sequenced through the year? I'm just trying to figure out that $0.15 out of the back half.

Yes, David, it's primarily the tax. And what is happening is we had some very favorable discretes in the first quarter that started the year out at a pretty low rate. But as we are finalizing our calculations related to tax reform, specifically the GILTI tax, which is very complex, and as we're pulling those together and finalizing that, we've built in a 24% rate for the rest of the year to compensate for right now what we're seeing in that. So a little bit higher rate in two, three, and four quarters that offset the very low rate we achieved in Q1. Keep in mind, we do not forecast tax credits that we do get for stock option exercises. And so our number may be conservative, but we have no way to forecast that. We are forecasting 24% run rate for the next three quarters.

And for moving forward, just use 24% for fiscal 2020 and onwards as that base case?

I think as we look at the GILTI and what we can do and as we look at all of tax reform and how we can work with it, I would use 23% on an ongoing.

23%, okay. And quick question on North America, the margins were maintained, but it seemed like your description of your end markets, resource markets, strength in distribution, it almost seemed like there could a little upward bias to North America on the margin, just given that mix. Is the mix as you thought, or is the mix a little better and maybe price/cost is trimming that back? I'm just trying to understand the North America margins being maintained.

David, it's Tom. North America being maintained versus our guide was related – it came in exactly how we expected. The sales forecast hit our expectations. The MROS, just for clarification, I articulated a 10% to 20% MROS range for North America, and we came in at 16%, so right in the middle. So it was right on what we were thinking, and we feel good about that. Like I mentioned, we've had a couple big turning points to get all those plants closed, all the lines moved now. We've got to get them qualified and up to production rate, but we made a big turn in North America.

And lastly, your trailing net debt to EBITDA now is down to 1.6 – 1.7 times. Can you give us a bit of an update how you're looking at the M&A markets?

Yes, David. As I mentioned in my opening comments, which I'll repeat, we really look at four main levers when we think about capital deployment. Obviously, I'll get to your M&A piece. So we're going to look at dividends and we're going keep that increase record, and we are going to have dividends continue to grow with the operating net income of the company. And we expect to expand them as we go forward over the next several years. We're going to invest in CapEx for organic growth, but we're going to make some productivity investments as well. This is a unique time between additive and automation robotics to really look at productivity initiatives throughout the company, so we're doing that. On the acquisitions, to get specific on your question, we are always out there working that. We've been building relationships for years and years with a lot of companies, and we'll continue to do that. Our pecking order there is one we want to continue to be the consolidator of choice. If it's in our space, the $130 billion motion control space, we'd like to be at that. We may not decide to swing, but we'd like to be aware of what's going on and have those relationships. All things being equal, we want to invest in aerospace, engineered materials, instrumentation, filtration. It has a little higher margins, a little more resilient over the cycle, so we'd like to add to the portfolio there. And then lastly would be share repurchases. The 10b5-1, we'll obviously continue it, but we have enough capacity, to your point, to look at discretionary share repurchases as well. And we're going to look at all four of those levers on a simultaneous basis and what makes the most sense to optimize value creation for our shareholders, and we'll do that in concurrence with our board and try to do that to the best of our ability. So the good thing, and you pointed it out, we have a lot of capacity. We're in a much different position on capital deployment than we were two years ago or 18 months ago, and that's a great thing for shareholders. We're going to put it to work. You've heard me talk about we want to be great generators of cash. We're going to keep doing that. And we want to be great deployers of cash. So I think you can look forward to us putting it to work.

I was looking for with maybe some of the recent economic anxiety, whatever it may be, have the multiples being asked by sellers changed?

I would say not yet. I think it's still fairly – a lot of it depends on what technology platform you're going after. Some areas are valued higher than others. And we're going to obviously try to pay at the right value that wins the deal but also wins the deal for our shareholders and creates the right kind of returns, and we will be selective. We will pick the right properties that make the most sense. But I would still characterize the M&A environment as fairly high still from a multiples standpoint.

All right, I appreciate the time. Thank you.

Thanks, David.

Thank you. And our next question comes from Nathan Jones of Stifel. Your line is now open. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Good morning, everyone.

Good morning, Nathan. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: I'd like to go back to the Aerospace margin profile here. It's up nearly 500 basis points year over year. I think Lee explained maybe a couple hundred basis points lower R&D year over year. There's a comment you made, Tom, in your prepared comments that there are prior-year investments paying off here. I would think the numbers you gave – or that Lee gave on the mix, OE grew faster than aftermarket. So it wouldn't seem to be a mix tailwind here. So I'm wondering, why the margin profile for the rest of the year is not a little bit higher than what you're pointing to given those dynamics?

Yeah, Nathan, this is Tom. So the investments I was referring to was – remember, we were at 11%, 12% R&D. And that was if you go back the 10 years we've been working basically the Aerospace super-cycle, which is a unique part of the whole Aerospace business, a unique opportunity to win an extraordinary amount of business both on the airframe and engine side. And we took advantage of that, and so there was heavy R&D to do that. I would say what is driving us – what Lee was referring to, we had just a mix. Aftermarket and OE stayed about the same as we were in Q4, but we saw a higher mix of legacy, which was a temporary delivery pattern. EIS does not go out at the same margins that legacy goes out, because with legacy you've had years, in some case decades of working on the cost and price relationship. And so it's pretty much a night-and-day comparison in margin, very similar to maybe the margin gap you would see in the OE to aftermarket for Aerospace. So that was the unusual part that spiked out the first quarter. We don't expect that to repeat. That was an unusual for the quarter. But what will repeat, which is why you see Aerospace margins growing versus prior period, is the great job they're doing on the Win Strategy. They are working up the EIS learning curve and getting better at that. And the R&D is down from – we're going to be we're projecting in that 6% to 6.5% range. And for the quarter we're around 5%. So we had a little extra tailwind on R&D as a result of that – timing-wise we'll spend that money as we go forward in the next three quarters. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Okay, got it. So there's some mix within the mix there. And then I've got a little bit more of a philosophical question for you. I think maybe this time next year or when we started fiscal 2018, Tom, you had said you thought we were going to be in a relatively good multiyear growth outlook for the industrial economy. A fair bit has gone under the bridge, shall we say, from a macro perspective over the last four or five quarters. Can you talk about what your expectation is over the next few years, maybe how it's changed over the last 12 to 18 months, if at all?

Some of you have heard me talk about this, where if you look at our company over the last 15 years, you see the global expansion, really the China pull from 2003 to 2008, the financial crisis. And then industrials, not just us, but industrials in general somewhat treaded water in that 2011 to 2015 range. Then we had the second largest contraction in our history, and everybody else felt it, the whole natural resource contraction in 2015 and 2016. So part of what I was characterizing is this feels like a different part of the cycle. It's not treading water clearly. It's not the global expansion that we saw with China. It doesn't have that same kind of pull, but it feels more broad-based. Part of what – and for legitimate reasons, a lot of concerns and questions have been around the geopolitical issues around the world between trade and interest rates, Brexit, those types of things. But what we were very happy with as we look at our end markets and our order patterns, they held up pretty well despite all that. So provided, which we can't control the geopolitical things, provided that none of those go tilt and create some really step change down, I think there's enough strength there that the industrial activity – we're only in our second year of an expansion. So everybody talks about being in the ninth year of expansion. We're in the second year of expansion. So that's why I felt this has got some room to go. Remember when we did our first IR Day, at that time it was Lee, Jon [Marten], and myself, we were hoping for a 1% to 2% world. And our range that we gave you, taking out currency, at a 2.5% to 5% world, while it feels like a big range. Even if it's at the low end of the range, with everything we've got with the Win Strategy, we can perform extremely well at that type of growth target. And that's why I think you see the enthusiasm and how we feel about where we can go is that I think we're prepared for the low end of the range if it happens. And again, I hope none of the geopolitical things impact it enough. But we'll see what happens over the next couple years. Who knows? Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Okay, thanks for the insight.

Thanks, Nathan.

Thank you. And our next question comes from Jamie Cook of Credit Suisse. Your line is now open. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Hi, good morning. Most of my questions have been answered. Just two quick ones, one, the Filtration and Engineered Materials revenues were down year over year. I don't know if there was anything to read into that. And then my follow-up question, it sounds like you guys didn't see this in mining but some suppliers to the mining OE companies have talked about weakness in order trends and sales in the third quarter. I'm just wondering if you saw that in any particular geography? Thanks.

Jamie, it's Tom. The technology platforms you saw, the difference would be most likely the Facet divestiture, which that was the piece of the Filtration business that we sold due to the Department of Justice settlement. So that would make the year-over-year comparison not as favorable for us this year because it was in the prior-period sales. Regarding mining, mining for us is holding up okay. It's still in that mid to upper single digits for us. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Okay, thank you. I'll get back in queue.

Thanks, Jamie. We have time for one more question please.

Thank you. And our final question comes from the line of Neil Frohnapple of Buckingham Research. Your line is now open.

Hi, guys. Good morning.

Good morning.

Lee, did organic orders benefit in the quarter at all from distributors or customers maybe building inventory to get ahead of any of the price increases, or is the growth really just more indicative of underlying market demand?

No, I would say the growth is definitely just from underlying demand. I didn't see any – there was no big event on the price increases that people would be pulling forward.

Okay, great. And then just lastly, are you facing any notable supply chain constraints in any of the segments dealing with expedited freight, extra overtime, any other cost items that could be dragging on margins that could potentially improve from here?

Neil, it's Tom. No, we didn't really experience anything. We've been fortunate that our supply chain – we're in the region to serve the region, and the team has done a nice job of balancing out the supply chain challenges. We may have had an isolated issue or two here, but in general I would say the supply chain has done a really good job for us in the past, and we're in good shape on that.

Okay, thank you. Congrats.

Thanks, Neil.

So maybe before I turn over to Cathy to finish I just want to make one comment to all the investors and analysts that are listening. The gentleman down at the end of the table here, Ryan Reed, who all of you know as the Director of our Investor Relations is leaving us, which we're not excited about. As you all know, he's done a great job for us. We are very happy for him, for the opportunity. He's leaving the company for bigger job in Investor Relations. And I think all of you know he's done a great job, and we will obviously work very hard to fill that job, but he's got big shoes and did a nice job. So we just want to say thank you and congratulate him on his last earnings call with Parker, and we wish him all the best.

Okay. Thanks Tom. This concludes our Q&A and earnings call. Thank you for joining us today. Robin [Davenport] and Ryan will be available throughout the day today to take your calls should you have any further questions. Thanks and have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.