Good morning and welcome to the Regal Beloit Third Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mark Gliebe, Chairman and Chief Executive Officer. Please go ahead. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Welcome and thank you everyone for joining our third quarter call and thank you for your interest in Regal. Before we begin today, I would like to welcome Robert Cherry to Regal. Rob has taken the role of Vice President of Investor Relations, previously held by John Perino, who recently took the role of Vice President of Financial Planning and Analysis for Regal. Rob brings years of Investor Relations experience to Regal and we are glad to have him on our team. Rob will now take you through our introduction and Safe Harbor statements.

Thank you, Mark. Good morning and welcome to Regal Beloit's third quarter 2015 earnings conference call. Joining me today are Mark Gliebe, Chairman and CEO; Jon Schlemmer, COO; and Chuck Hinrichs, Vice President and CFO. Before turning the call back to Mark, I would like to remind you that the statements made in this conference call that are not historical in nature are forward-looking statements. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results and actual results could differ materially from those expressed or implied in forward-looking statements. For a list of factors that could cause actual results to differ materially from projected results, please refer to today's earnings release and our SEC filings. On slide four, we state we are presenting certain non-GAAP financial measures in this presentation. We believe that these are useful financial measures to provide you with additional insight into our operating performance and for helping investors understand and compare our operating results across accounting periods and in the same manner as management. Please read this slide for information regarding these non-GAAP financial measures and please see the appendix for a reconciliation of these measures to the most comparable measures in accordance with GAAP. Now, I will turn the call over to Mark. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you, Rob, and again, welcome, everyone. We'll follow our normal agenda. I'll make a few opening comments; Chuck will give you a financial update; Jon will provide color on markets, operations and performance of our legacy segments, and then I'll do the same on our PTS Segment. After that, I'll summarize and then we'll move to Q&A. Let's start with the third quarter highlights. Regal grew sales 6% and we increased adjusted operating margins to 11.5%, representing a…

Thanks, Chuck, and good morning, everyone. Before I discuss segment performance, I'd like to start by giving an update on our margin improvement progress and the benefits coming from simplification. We had another quarter with significant progress on our margin improvement efforts. In spite of the currency drag and a weaker top line, our adjusted operating profit margin was a 11.5%, an increase of a 180 basis points for the quarter. Our simplification initiative, our cost control efforts and the PTS acquisition, all continue to contribute to the improved performance. This was the third consecutive quarter of year-over-year margin improvement and we expect similar performance in the fourth quarter. During the quarter, we completed our largest ERP conversion to-date, converting over $500 million of business to a Single Global Instance of Oracle. I would characterize our team's execution as near perfect. On average, our team has been converting three ERP systems every year and now we have nearly 75% of our global sales on our standard ERP platform. Simplifying our ERP systems makes it easier for our customers to transact business with us and also enables our continued efforts to improve our internal efficiencies. In terms of footprint simplification, as planned, we completed the restructuring of our Kentucky-based motor parts making operations. We have ceased production in our Mt. Sterling and Winchester, Kentucky facilities and we are now making motor parts in our Mexican manufacturing facilities near where our motors are assembled. And given the weakness in our core market, we've made the decision to accelerate future restructuring programs. These programs will deliver additional simplification benefits in 2016 for our legacy businesses and synergy benefits for our recently acquired PTS business. We are estimating $7 million of restructuring expenses to be incurred in the fourth quarter. While the fourth quarter…

We will now begin the question-and-answer session. The first question comes from Julian Mitchell of Credit Suisse. Please go ahead. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Hi. Thank you. Just a question around the GSP impact. So, I guess, in Climate Solutions, most of the adjusted income increase year-on-year was GSP related in Q3. Looking forwards, how big should the GSP impact be do you think? Charles A. Hinrichs - Chief Financial Officer & Vice President: Good morning, Julian. Thanks for the question. The GSP refund for the total company was about a third of the improvement, and about 75% of that goes to Climate. Going forward, we would expect – and, of course, this is based on volume, but we would expect about $600,000 per quarter of GSP benefit, which is included in our guidance.

Julian, I would add, too. For the Climate Solutions Segment, the 320-basis-point improvement, 140 basis points did come from the catch-up portion of GSP. So we had about 180-basis-point improvement in the Climate Segment, excluding the GSP improvement. So we had another nice quarter of margin gain in the Climate Solutions. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thank you. And then, just looking out into next year, you announced, there's some higher restructuring charges in Q4 than they were in Q3. I just wondered if you could put an overall figure around the sort of incremental savings from restructuring going into 2016? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Julian, as you know, in December of last year, we laid out a three-year plan. And Jon reminded everybody in his prepared remarks, but the center point of the commentary we gave back in last December was roughly a 70-basis-point improvement each year for three years beginning in 2015. And that we laid out what piece we thought was going to come from simplification, what piece we would – come from other areas. So that's still the way we view it. Nothing's changed relative to that. Obviously, we have some market headwinds in front of us that are causing pressure. But as we sit here today, we still believe on average a 70-basis-point improvement a year for three years. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Got it. So the restructuring has only been stepped up sort of slightly in light of the top line challenges? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Well, I would say, with the restructuring we have planned we're still on pace. As you know, it's been a pretty aggressive pace that we've been executing the restructuring. The synergy targets that we have for PTS, our intention is to pull those forward. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Great. Thank you. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you, Julian.

The next question comes from Josh Pokrzywinski of Buckingham Research. Please go ahead.

Hi. Good morning, guys. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Good morning, Josh.

So if you could just kind of walk us through – I know you don't like to break these things down individually, but if I had to lump them all together, kind of price cost, the peso and any movements around LIFO, how that might have come in third quarter versus what you thought and how we should think about those sequentially into the fourth quarter as a group, kind of, either better or worse than where we were in the third quarter? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Well, from a company basis, price cost was slightly favorable in the quarter. So we would expect that to continue through the end of the year. In terms of the peso, as we communicated, as you know, we hedge the peso. And we tend to hedge out years in advance. So while – if you look at the immediate point in time, our hedges on the peso may be actually underwater, given the very quick drop of the peso. If you look over a three-year period, we've effectively smoothed and locked in those peso improvements. And the benefit for us is because we manufacture substantially in Mexico. So we'll get the benefit as we move forward. We'll get deflation kind of locked in for the next two years to three years. And then, I'll let Chuck comment on the LIFO portion? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you, Josh. The LIFO was about $2 million for the quarter, a modest amount and it was a nominal amount in the third quarter of last year.

And will that be bigger or about the same in the fourth quarter? Charles A. Hinrichs - Chief Financial Officer & Vice President: I think it will be a comparable amount. But it really depends on where copper and steel prices are at the end of the year, which drives that calculation. And you'll recall that in the fourth quarter of last year, we had an $8 million of benefit for LIFO benefit and other inventory charges. So it'll be still be a headwind in fourth quarter against prior year.

Got you. That's helpful. And if I can just ask one more, Chuck, can you remind me on the refi that you guys are starting to talk about a little bit more? It sounded a couple of quarters ago or even the last quarter like there was an intention to maybe look at that into year-end. Has the posture on that changed at all? And that's moving to the right? Or how should we think about that? Charles A. Hinrichs - Chief Financial Officer & Vice President: I think it hasn't changed, Josh. We still think that it would be in the near term, but it really is dependent on credit market conditions, interest rates. We can be opportunistic when we choose to execute. So we want to be – we want to do the right thing at the right time.

Understood. All right. Thanks, Chuck. Charles A. Hinrichs - Chief Financial Officer & Vice President: Thanks, Josh.

The next question comes from Jeff Hammond of KeyBanc Capital Markets. Please go ahead.

Hey, good morning, guys. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Good morning, Jeff.

Hey, just on the guidance change. One, did you have this GSP in your guidance? Or is that kind of a new add? And then, just as we look at the headwinds, it seems like oil and gas, if anything, isn't a little less bad; margins seemed to be coming in better. Can you talk about maybe the biggest areas that drive the $0.20 reduction in guidance? And maybe just speak specifically to PTS, because that seemed particularly weak in the quarter? Mark Joseph Gliebe - Chairman & Chief Executive Officer: So the answer on GSP is we have had that in our guidance. We never really could predict the timing of when we would be reinstituted and we'd start receiving the payments, but it has been in our guidance all along. And so, as Chuck mentioned, the way to think about it is going forward a $600,000 positive margin impact each quarter going forward. So it's good news. We should think about it that way. Relative to the quarter, the biggest issue for us is top line in all the areas that we described. PTS – the business – both the business, legacy business and the business we acquired is exposed to oil and gas. And we carried a backlog into the year and that backlog held up our first and second quarters certainly. And so we burned that backlog off. And we're dealing with the realities of markets being down substantially. So that's putting a drag on those two businesses. Fortunately, we have some offsets, renewable energies that are helping, but not enough to offset the entire impact.

Okay. And then, just back to the peso. So it sounds like you're getting a modest benefit near term, but the greater portion of the benefit from the weaker peso just gets spread over multiple years based on your hedging? Charles A. Hinrichs - Chief Financial Officer & Vice President: Right. That's correct, Jeff. And it really depends upon, of course, what that future spot price will be. But we've locked in decreases in our peso expense through our hedging program for the next two years to three years.

Okay. And then, just finally can you give us an update on how you think about free cash flow for the year? Charles A. Hinrichs - Chief Financial Officer & Vice President: Yeah. I mean, we had another good quarter in the third quarter. Fourth quarter seasonally generally provides additional free cash flow as we lower our working capital investment. So I think we're going to be something in the $200 million to $250 million range of debt reduction, and then the free cash flow number would be above that.

Okay. That would imply pretty low free cash flow quarter for 4Q? Charles A. Hinrichs - Chief Financial Officer & Vice President: No, it should be a very strong free cash flow number.

Okay. I'll follow up offline. Thanks, guys. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thanks Jeff.

The next question comes from Bhupender Bohra of Jefferies. Please go ahead.

Hey, good morning, guys. Charles A. Hinrichs - Chief Financial Officer & Vice President: Good morning. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Good morning.

So I just wanted to go through if you can go through the monthly progression of the orders in C&I, I don't know how it started in July, August and September, but what we heard from most of the industrial company, kind of, September was pretty weak. So if you can give us some color. And especially, the next question would be how it happened actually in China? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Okay. I would say, as we moved through the year, it got progressively tougher as we went through the quarter. I will say, however, it was choppy. We'd have a week of up, a week of down. China, I'll now comment on China. China was certainly choppy through the quarter. As we entered into October, we were actually feeling a little bit better, but then only to see a down week this last week. So China is pretty choppy overall.

Okay. So, as you saw the weakness coming in, like, did you guys, kind of, move some cost reduction initiatives like from fourth quarter, like, to cover the third quarter? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Well, as you probably know, we've been working on simplification now for a number of years and these are big moves and, kind of, well signaled. We've been communicating what we've been doing with our two Kentucky facilities now for quite some time. The good news is we completed them in the quarter. And we've ceased production in those Kentucky facilities. That business – the impact there will be felt in both C&I and a little bit in our Climate Solutions business. I would say, where we got more aggressive was anything related to oil and gas. We've got very aggressive in right-sizing businesses related to the oil and gas, because of the steep decline in orders.

Okay. And how big is – if you can remind us, how big is that business and... Mark Joseph Gliebe - Chairman & Chief Executive Officer: Yeah. So oil and gas is roughly 7% of total company sales and roughly two-thirds is upstream.

Okay. And just a follow-up question for Jon on new efficiency product here, if you can just give us a number, like, how much of the highly efficient products have contributed to sales and anything in this particular quarter?

We've been consistently running in the – I'd say, in the 20% to 23% range when you look at high efficiency product sales as a percent of overall sales. So it's been pretty consistent is the way I would describe it. We did have in Climate a slight mix improvement in the quarter. That was all about high efficiency sales. And I would say, that was related to, one, you have a little bit of a benefit because of the pre-build we did on standard product prior year, but also the SEER 14 and higher SEER units tend to be a slight improvement for us on mix. And that's what we expected to see. And we're seeing some of that. The other area, I would say, that I've been quite pleased with is, our Pool segment, our Pool market was one of the positive end-markets in C&I. And a lot of that's being driven by high efficiency pool motors and controls. And we're feeling very good about that product line. We've been continuing to bring out new products in the Pool area. So those are a couple that I would highlight, but overall sales in the 20% to 23% range for high efficiency sales.

Got it. Thank you.

Thanks, Bhupender.

The next question comes from Nigel Coe of Morgan Stanley. Please go ahead. Nigel Coe - Morgan Stanley & Co. LLC: Yeah. Thanks. Good morning, guys. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Good morning, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: Yeah, morning. Just wanted to – obviously, the theme here is sales weakness offset by very strong margin trends. 4Q, there is some puts and takes, but you'll probably exit the year well north of a point of margin expansion. You've got a 150 basis points to 200 basis points margin expansion target over three years. How you think about that target in relation to what you've done this year? Is it more of a head start on that target? So do you feel more confident in the higher end of that range? I mean, how do we think about that target here? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Yeah. I don't – really nothing's changed relative to the target. We commented as we went through the Investor Day that it was going to be, on average, 70 basis points over a three-year period. We're still sticking with that target. And we'll get the benefit of further restructuring. And some of the restructuring we just completed, we'll get that benefit as we go into 2015. We should also – we'll see headwind in the PTS Segment from volume loss, but then some offset from the synergy. So there are some key variables related to volume that we have to overcome. So I think even though – if we end the year slightly over our 70-basis-point target, I think the 70-basis-point target over a three-year period is still the right way to think about it.

And, Nigel, I would add that if you recall earlier in the year, when we announced the PTS acquisition, we made it clear that the PTS would be accretive to that 150-basis-point to 250-basis-point target. That's still our expectation. And I agree with Mark; we're running slightly ahead of the three-year plan, which is good news, especially, given the volume headwinds. Nigel Coe - Morgan Stanley & Co. LLC: Okay. Great. That's fantastic. And then, switching to Climate, the bridge is comparing and contrasting your sales with the OEM customers is helpful, but a couple of questions there. First of all, obviously, the material price formulas, pass-throughs would have been an impact on the top line. So I'm wondering, was the 3Q impact of the MPFs significantly different to 2Q in terms of the top line impacts? And then secondly, I'm a bit surprised there wasn't a more of a mixing benefit for you year-over-year given that you had a higher mix of 13 SEER shipments versus this year. So I'm just trying to understand why there was a mix of benefit this year?

So the MPF question, I would say that there was a slightly larger impact in the third quarter versus second quarter. And that's simply just because of the timing. As the commodities fall, we've said that we typically lag back three months to six months, one to two quarters depending on the specific contract. So that would have been the reason; not any other reason, just the timing. Mark Joseph Gliebe - Chairman & Chief Executive Officer: And then, on the mix, relative to the mix, we did see a slight improvement in the quarter as related to mix. And so that's where our customers will be up-selling now to, say, perhaps a 15 SEER or a 16 SEER system more likely to using an energy-efficient motor in those applications. So in a 13 SEER or 14 SEER system, in most cases, you're going to use the same kind of motor; typically, not an energy-efficient one. Yes, some applications that do require it, energy-efficient one. But for the most cases, it's the same motor. Nigel Coe - Morgan Stanley & Co. LLC: Understood. Then just a final question on PTS. I think, Mark, you mentioned, you're still on track with your targets. So I assume you're still on track to $0.70 of accretion this year. If that's the case, do we think about this as a pull-forward on cost synergies from prior year, so therefore, we should moderate out year synergies? If you just confirm those two questions? Mark Joseph Gliebe - Chairman & Chief Executive Officer: Yeah. You're right. We did guide to, on an adjusted basis, $0.70 to $0.90 kind of range, and then throughout the year, we pointed everyone towards the lower-end as we saw the top line challenges. So in and around that $0.70 is the right way to think about it for the year. And then, we did set out a $30 million four-year plan on synergies. And our intention is to try to pull that forward and we're aggressively heading down that path. Nigel Coe - Morgan Stanley & Co. LLC: Okay. Thanks, Mark. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you.

The next question comes from Liam Burke of Wunderlich. Please go ahead.

Thank you. Good morning, Chuck. Good morning, Mark. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Good morning. How are you doing, Liam? Thank you. Charles A. Hinrichs - Chief Financial Officer & Vice President: Hi, Liam.

Good. Thank you. Chuck, on the PTS side, you mentioned cross-selling is part of the contribution on the synergies. How have the revenue synergies been with the new organization? And do you see that accelerating? Mark Joseph Gliebe - Chairman & Chief Executive Officer: So I'll take that one. So, yes, we do include cross-selling. And we are seeing nice cross synergy benefits. We used as an example on our last call the benefit of the solar application in the renewable energy space. We're seeing benefits as a result of the two companies coming together. As you combine our capabilities, it gave us more opportunity than we've had in the past. So that's just one example. There are many others. But we feel good about what's happening there.

Okay. And, Chuck, on the CapEx, do you forecast any need for any significant incremental capital projects as you look through 2016? Charles A. Hinrichs - Chief Financial Officer & Vice President: No, we see nothing large on the horizon, Liam. And we'll be updating that CapEx number when we give our 2016 guidance next quarter.

Great. Thank you very much. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you, Liam.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Gliebe for any closing remarks. Mark Joseph Gliebe - Chairman & Chief Executive Officer: Thank you, everyone, and thank you for your interest in Regal. At the beginning of the year, we told our investors that in 2015, we would be laser-focused on two objectives: improving our operating margins and successfully integrating the PTS business. Through the first three quarters of 2015, we have made great progress on both, and we expect more to come. Thank you and have a great day.