Good day, ladies and gentlemen, and welcome to the Raytheon Third Quarter 2018 Earnings Conference Call. My name is Candace and I'll be your operator for today. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Kelsey DeBriyn, Vice President of Investor Relations. Please proceed.

Thank you, Candace. Good morning, everyone. Thank you for joining us today on our third quarter conference call. The results that we announced this morning, the audio feed of this call and the slides that we'll reference are available on our website at raytheon.com. Following this morning's call, an archive of both the audio replay and a printable version of the slide will be available in the Investor Relations section of our website. With me today are Tom Kennedy, our Chairman and Chief Executive Officer; and Toby O'Brien, our Chief Financial Officer. We'll start with some brief remarks by Tom and Toby, and then move on to questions. Before I turn the call over to Tom, I'd like to caution you regarding our forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives and expected performance constitute forward-looking statements. These statements are based on a wide range of assumptions that the company believes are reasonable, but are subject to a range of uncertainties and risks that are summarized at the end of our earnings release and are discussed in detail in our SEC filings. With that, I'll turn the call over to Tom.

Thank you, Kelsey. Good morning, everyone. Raytheon once again delivered strong operating performance in the third quarter. Sales increased 8.3% and our bookings, sales, EPS and operating cash flow were all better than expected. We continue to see strong global demand for our advanced solutions. Book-to-bill in the third quarter was 1.28, driven equally by international and domestic. And, for the second time this year, we achieved record backlog, which rose to $41.6 billion at the end of the quarter, an increase of nearly $5 billion year-over-year. Given this and the opportunities we see in the fourth quarter, we are again increasing our bookings outlook for the year by another $1 billion. It's worth noting that since the beginning of this year, we have increased our bookings outlook by a total of $2 billion over our original expectation and we now expect a full-year book-to-bill ratio of over 1.1. We are pleased with our bookings performance this year, which positions us well for continued growth in 2019. Toby will discuss additional details about our initial 2019 outlook along with our third quarter performance and updates to guidance in a few minutes. Given the growth of the DoD budget and upcoming competitions we see for advanced solutions, I'd like to spend a few minutes discussing our strategy to continuously innovate and refresh the technology in our current franchises and to use that expertise to create new franchises. We try to be the disruptors of our own technology and make investments in order to keep our franchises relevant, so they continue to be value generators for decades to come. We demonstrated this in the innovative solutions we featured at AUSA earlier this month. First, we received positive feedback from our customer on the Lynx Infantry Fighting Vehicle. We are leveraging our strong…

Thanks, Tom. I have a few opening remarks starting with the third quarter highlights and then we'll move on to questions. During my remarks, I'll be referring to the web slides that we issued earlier this morning. So everyone would please turn to page 3. We are pleased with the strong performance the team delivered in the third quarter with bookings, sales, EPS and operating cash flow all better than our expectations. We had strong bookings in the third quarter of $8.7 billion resulting in a book-to-bill ratio of 1.28. Sales were $6.8 billion in the quarter, up 8.3% with growth across all of our businesses. Our EPS from continuing operations was $2.25, up 14.2%, which I'll give a little more color on in just a moment. I'll discuss guidance further in a few minutes, but at a high level, we are updating our expected sales growth from the previous range of 5% to 7%, to a range of 6.5% to 7.5% and we are raising our full-year 2018 outlook for EPS as well as making other updates and as Tom mentioned earlier, we are raising our bookings outlook by $1 billion. And although not on the slide, I want to point out that our operating cash flow in the third quarter was better than our prior expectations due to favorable collections on some of our larger contracts we previously expected in the fourth quarter. Operating cash flow was lower than last year's third quarter as expected due to the previously announced $1.25 billion discretionary pension plan contribution we made in the third quarter 2018, partially offset by lower net cash taxes. Also during the quarter, the company repurchased just over 630,000 shares of common stock for $125 million bringing the year-to-date share repurchase to 4.5 million shares for $925…

Thank you. And our first question comes from Jon Raviv of Citi. Your line is now open.

Hey, good morning, everyone.

Good morning, Jon.

In January, you guys issued some cumulative cash flow targets that implied or that talked about $7 billion to $8 billion in 2019 and 2020. Can you talk about some of the building blocks going from this year to next, given the operating cash flow guide in 2019? It just seems that since that January target was issued, sales are clearly better. So I'm just curious, what some of the changes are, and if you could also mention CapEx in the next year as well, that would be helpful too. Thank you.

Yeah, Jon, it's Toby. Let me take a crack at that. So you're right, we had talked about a $7 billion to $8 billion range over the next couple years. Since that time, we made a discretionary pension contribution that we talked about improving cash flow all else equal of about $1 billion over the 2019 to 2020 period. Our operating cash flow outlook for 2019, that I mentioned earlier in the $3.8 billion to $4 billion range is in line with that original range in additional pension benefits. So, things are continuing to track as we would expect there. A little bit more color. We do expect to see some higher cash from operations, and pension as I just alluded to, but there is going to be a partial offset with higher cash taxes, if you want to think of it certainly compared to 2018. And then from a CapEx perspective, think of it for 2018 maybe slightly increased as a percentage of sales, 3% to 4%, as we continue to invest in the business compared to in the roughly 3% range that we are seeing for 2018.

Thank you. And our next question comes from Robert Spingarn of Credit Suisse. Your line is now open. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: Good morning.

Hey, Rob.

Good morning. Robert M. Spingarn - Credit Suisse Securities (USA) LLC: On the margins for next year, given the higher sales, is there no opportunity for leverage there? Maybe you could talk about the upward and downward pressure on that; or are you simply being conservative? Is it mix, is it labor tightness or conservatism?

Yeah, Rob, let me take a crack at that. So, as we said, this is our initial look at 2019, and we did say in – margins in line next year with what we're seeing this year at the segment level. As we discussed before, the margins can be impacted by the timing of risk retirements as well as mix, especially as we start up new programs and – including development programs at lower margins. We are continuously focused on margins and we'll continue to do so through the balance of this year into 2019. I think if you want a little bit of color on the mixed side of things, right now for the current mix we see is roughly 60% from fixed price contracts. Again, we've talked a lot about the mix that we're seeing in development versus production cost type versus fixed price higher classified and CRAD sales. I just mentioned – and not new news, but when we start programs up, we start them up at a lower-margin rate until we get to a point where we're comfortable that we can retire risk and move on the margins. That said, as I mentioned, we're still in the planning process for 2019. There are these factors that are influencing margins. We see improvements in some areas right. So we got some puts and takes, but overall, we're pleased with the margin performance. We're early in our process and we're always focused on trying to improve our margins.

Thank you. And our next question comes from Doug Harned of Bernstein. Your line is now open. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: Good morning.

Hi, Doug.

Morning Doug. Douglas Stuart Harned - Sanford C. Bernstein & Co. LLC: On Missile Systems, you've had a couple of years here where you've had very strong growth in backlogs. You're continuing to get that and – can you talk a little bit about what's going on there? Obviously you've had some wins, but we are looking at, you took guidance down some on revenues and on margins for Missile Systems this year. What's the flow here? How should we look at this over the next year or so in terms of revenue and margins?

Yeah. Doug, I'll start here and I'll give you a little bit of color on what we did here relative to the outlook for this year. As far as sales go, we see a couple of changes from our prior guidance. We have been expecting an international order for production program that would have had a favorable impact on sales by – including by liquidating some inventory in the fourth quarter. The timing of that award has moved out of the year. We also see a shift in the ramp-up on a couple domestic backlog programs that's moved into 2019. Overall, we're still growing at 8% to 9% and that's on top of 10% growth last year. So we're pleased with what Missiles is doing and how they're growing. Relative to the margin, when you look at their year-to-date performance and we've discussed this on prior calls, we are seeing an increase in new development programs, right. Higher CRAD, higher classified work, and they all bode well for the future, but they have impacted margins in the short term and additionally, the latter – later timing of the international program award I just mentioned, impacts the mix in Q4 which has also impacted their margins. We do expect margins at Missiles to improve in Q4 and in 13 – low- to mid-13% close to 14% range, really driven by the timing of potential program efficiencies. As far as 2019 – I'm not going to get into 2019 at this point, but I will say, as we said before, as I just mentioned what Rob talked, we continue to focus on margins in the business. We continue to make capital investments to improve our productivity, especially in the factories and always look for ways to be more efficient to try to offset the impacts of mix. So, overall we expect to deliver solid margins next year on good growth and we'll be more specific as we get to January.

Hey Doug, its Tom. Just one thing to add relative to Missiles, which is a big plus for us, is the fiscal year 2019 budget had the funding in it for multi-years so we're not just one other franchises but for two. So it's a multi-year – five-year multiyear for SM-6 and then also another five-year multi-year for SM-3. So it's pretty clear for us, because that does give us insight into the factory and stability there for about eight years. So, again, five year is the last option awarded to carry out three, giving us eight years of factory stability. And the bottom line is, we see missiles as being a very healthy business for us here out in the future.

Thank you. And our next question comes from Robert Stallard of Vertical Research. Your line is now open.

Thanks so much. Good morning.

Good morning, Rob.

Hi, Rob.

Tom, obviously, some issues in the Middle East at the moment and specifically Saudi Arabia; given your experience of the region, I was wondering if you could give us your perspectives on what could happen here and whether there could be any negative ramifications for your business?

Yeah. I'll start it off and then Toby, obviously, this is something that we've been watching very carefully, but as you know, and I think as you kind of alluded to upfront, we have supported the kingdom of Saudi Arabia in securing defense for more than 50 years and through that course of time, we have seen issues that have occurred at different periods of uncertainty. And we've always resolved them through the end and by doing this one thing, it's actually following the direction and position of the U.S. administration, which were right behind in making sure that we understand where they are going and that we're locked in step behind them. Also our business and just to remind everyone, is not dependent on any one customer or one program or one franchise. We are a global company providing technology and security solutions for over 80 countries and we have numerous global franchises. So I'm pretty confident that we will weather this complexity, mainly it's kind of a geopolitical environment we have right now and then working through that. That said, we have looked at things and Toby can kind of give you some of the financial details of what this potentially could mean to us moving forward.

Yes, so just given the events, to give you a little bit of color and sight to how we're thinking about Saudi; sitting here today, as Tom mentioned, we continue to be aligned with the administration's policies and we plan to honor our commitments. We don't usually get into customer-specific financials, but again, given all the events of late, I will tell you that our Saudi business represents nearly 5% of our year-to-date 2018 revenue. And looking ahead, we see it flattish year-over-year in 2019. This includes our backlog for both defensive and offensive weapons, as well as services and support programs. As far as any new orders, we have an assumption in the fourth quarter of 2018 for a couple of follow-on support contracts and next year we have a major award assumed for the TPY-2 Radar program, which, as all of our bookings are, is factored. And as Tom said, and just to reinforce it as a reminder, our sales aren't dependent on any one contract or foreign country specifically, and again, it just goes to show the strength of our diverse portfolio. But that's a little color on how we're thinking of Saudi based on what we know today.

Thank you. And our next question comes from George Shapiro of Shapiro Research. Your line is now open.

Yeah. Good morning. Tom, I just wanted to follow-up...

Good morning, George.

...a little bit with Doug's question on Missiles. I mean, if I compare your growth rate in Missiles this year, I mean you've kind of down-picked it through the year. Lockheed will have a faster growth rate and has upticked it. It's not directly comparable; I mean, they have Patriot and air missiles, you have it in IDS, but is there any competitive issues that you've lost that would suggest why they are raising their forecast while yours are coming down in that area?

George, we don't – I don't see any issue there. I mean, we all started from different points. We've been on a ride here since 2015 with increases and actually have accelerated growth through that business here since that time. So we're very happy with where we're at relative to Missiles and where we are going. We just had a big – several being wins here. One is the Naval Strike Missile which will be a replacement to the Harpoon missile, which we believe is close to about an $8-billion franchise program and several others like that. We are heavily participating in the hypersonic new missile work that's going on with DARPA with two programs, one is the HAWC and the other one is the TBG, Tactical Boost Glide. And we're also participating on the Army programs. The PRSM precision strike weapon which is replacement to ATAC, I know all of these are upside to us because we didn't have the Harpoon before and we didn't have the ATacMS before. So, we feel we're very competitive and then even on hypersonics, there's a whole other area nobody seems to be talking about, which is the counter-hypersonics, which we're heavily engaged in. A lot of this activity is classified, so I can't go into a lot of details, but we're very positive about the missile company and its growth moving out here in the next several years.

And George, I would just add on the financial side of it, the revised outlook, it's in line with where we started the year out with the original guide for missiles and I mentioned when – on Doug's question we did have an international order move out of the year where we would have had some inventory liquidation. That's the major driver for the change in the revenue guidance and that was not competitive, that was a sole-source order – it's a timing issue. And I'd also tell you, quantitatively we've talked about before how the company – at the company level, we see our competitive win rate in the 70% range plus or minus. I'll tell you, Missiles is above that based on a year-to-date basis this year. So, really just timing is the way to think of it.

Thank you. And our next question comes from Carter Copeland of Melius Research. Your line is now open.

Hey, good morning gentlemen.

Hey Carter.

Good morning, Carter.

Nice win last night, those Dodgers knocked my Braves out, so I'm counting on you guys.

We are trying.

We're going to be going to some warmer weather, so we'll see how that plays out.

Well, that's not in your favor, but hopefully you'll pull it out. Look I just wanted to talk about the, sort of, news of yesterday and the whole bidding environment, and obviously, the opportunity pipeline for everyone looks a little bit more robust, but we're seeing different levels of sort of strategic aggression, if you will, in terms of going after stuff that people deem vital to their franchise. I just wonder maybe Tom, if you could kind of walk us through your thought process on what that means for you guys in terms of IRAD investment, cost structure, just in general, how you compete in that kind of environment?

Yes, thanks for the question, Carter. Let me start with – first of all, Raytheon is not a platform company, and instead our innovative solutions and our franchise is across multiple platforms. So, I think that helps us relative to some of the rhetoric that you heard yesterday bouncing around. So, we have not really seen those kind of impacts relative to our competitions', so it hasn't really been meaningful to us. But in the endgame, we feel that when the contracting environment is such that we have a level playing field, we do quite well and as Toby just mentioned a while ago, our win rates are in the 70% across the board for the company. So, we feel we're doing a very good job relative to winning new competitive business. And the other element is we take that competitive business to the international marketplace relative to expanding these franchises globally, which has helped us out quite a bit. All that said, price is important and it's important to our customer, so we have to be cost-effective. So, one of the things that we have been doing is using our technology and technology we've been developing and bringing to these competitions, not just to enhance the performance of our solution, but also to take out the cost significantly. And so we've been looking at cost on day one of every one of these competitions to figure out our overall strategy; who we're going to go team with, what type of technologies we're going to bring to the game, what we're going to have to do in our factories to get cost out, and I think the work that we have been doing seems to be paying off. And again, you have to look at our results, and our results are our win rates. So we are very comfortable and now at the same time, we do understand that folks will do a return on investment relative to some of these major franchise programs, and we'll do long ball relative to those and try to determine what makes sense for them and where they can expand these franchises, both globally, and do a lateral exploitation of them into potentially other solutions for the customers. I will tell you we do that on a daily basis here and that's why we have a franchise strategy and we look – I think that's one of the reasons why our win rates are so high in this market.

And I think just real quick relative to the investment, I mentioned CapEx on Jon's question for next year; from an R&D point of view, think of it similar to where we are this year, around 3% of sales.

Thank you. And our next question comes from Seth Seifman from JPMorgan. Your line is now open.

Thanks very much and good morning.

Good morning, Seth.

Tom, maybe just a follow-up on that last question from a little bit of a different angle, you mention Raytheon as not being a platform company and we just got news within the last couple of weeks and that Harris and L3 are planning to merge creating a more sizable defense contractor that also is kind of more not a platform company. Does that have any impact on the way that you view the competitive landscape and the way that you think about deploying cash?

Well, first of all, we don't see a direct impact relative to the merger of the two companies, L3 and Harris. We – turns out they are not our main competitors across our markets. We do run into them on certain competitions and we are definitely pleased with the portfolio of advanced solutions we have. We have been investing significantly here since about 2014. That was our roadmap that we laid out for our investors that we said that we were going to grow the company and we have been doing that year-over-year. So we essentially have accelerated growth through that time span. And again, I think those investments have been paying off relative to the competitions that we have been in and that's what's leading to this greater than 70% competitive win rate moving forward.

Thank you. And our next question comes from Sam Pearlstein of Wells Fargo. Your line is now open.

Good morning.

Hi. Good morning, Sam.

Good morning, Sam.

I wanted to go back and just look at the margin again. You talk about 2019 is overall flat and you have now reduced 2018 a little bit; so in terms of where you were after last quarter, it's a little bit down, but can you just talk directionally about the different segments where they may be up, where they may be down, because what you just said about Missile Systems would imply that that should be up. Last quarter there was a contractual matter that moved out of the year and now this other piece. So wouldn't that – that should be pushing Missile Systems at least up. So I am trying to just think about what might be down.

Yes, Sam, so we are not going to give specific detail by business for 2019 really just because we are early on in the process. What I can tell you, to give you a little bit of color, we do see most of the business margins in line with 2018 and I'm just going to leave it at that for now and we'll go into the segment-by-segment detail and year-over-year flux on the January call.

Thank you. And our next question comes from Peter Arment of Baird. Your line is now open. Peter J. Arment - Robert W. Baird & Co., Inc.: Yeah. Thanks. Good morning, Tom, Toby.

Good morning.

Hi, Peter. Peter J. Arment - Robert W. Baird & Co., Inc.: Hey, Tom, question I guess on the budget. It's nice to see the 2019 budget coming in on time; can't remember when the last one was on time, but thinking about 2020, there's been a lot of discussions around kind of a flatterer top line. Potentially, I assume investment accounts are more inflation oriented; how do you see that kind of the Raytheon portfolio setting up? You've obviously had a lot of wins and you're gaining share, but just maybe some commentary on that.

Let me just lay things out here. It's a great, great question. First of all, there was this – the administration talking about a potential 5% cut to the fiscal year 2020 budgets. Many of the agencies are in 5% cut from fiscal year 2019 and there's been some further discussions out there, some other information that says it's really for the defense budget. It's really they're looking at potentially 2.5% cut. Now that was off of a number that included OCO so we're not positive; some of the 2.5% or majority of them could come right out of OCO and then – therefore have zero impact, but even if it's full 2.5% against the fiscal year 2019 budget, what that will do is take it back to the fiscal year 2018 budget and if you remember, the fiscal year 2018 budget was 19% increase over the fiscal year 2017 budget. So bottom-line, the fiscal 2018 pretty healthy Defense budget. So we're on – based on the award that we received – will be receiving in 2018 and also 2019, we feel that we'll be in a really great shape for fiscal year 2020 and that's one of the reasons why we have given a fairly leading-forward guidance relative to revenue growth in 2020 – in 2019; 6% to 8% growth. And so bottom line is, we think the budget process is right in the line where we need it to be, and we obviously will be watching on a day-to-day basis. The other one, I just mentioned earlier, which is helps us relative to some stability here over the next several years is the multi-year awards on SM-6 and then also on the SM-3 five-year multi-years on both of those taking us out giving us the stability in the factory for about eight years. And bottom-line is that we still have a long process to go on a fiscal year 2020 budget before it's finalized. Congress has to weigh in on the Defense level standings and then – but do remember, the Congress did provide increases significantly above the Trump administration's request for the DoD top-line at fiscal year 2018 and a DoD modernization budget in fiscal year 2019. So bottom line is it's not over until it's over. We got to go through a long process, but right now we believe that we are at a – even at the minimum, we're in a very good position moving forward.

Thank you. And our next question comes from Cai von Rumohr of Cowen and Company. Your line is now open. Cai, your line is now open.

Cai, are you there? Cai, are you on mute? Cai von Rumohr - Cowen & Co. LLC: Excuse me...

Let's move to the next... Cai von Rumohr - Cowen & Co. LLC: I was on...

There you are. Cai von Rumohr - Cowen & Co. LLC: So you've raised your bookings target by $1 billion for this year and look for book-to-bill over 1.0 next year; could you comment on the relative book-to-bill between foreign and domestic, both this year and kind of the trends going into next year?

Yeah. So Cai, for this year, based upon the $1-billion increase, the book-to-bill for both domestic, foreign and the total company are kind of sort of in the same ballpark. I think around 1.1 plus or minus is just a coincidence. Tom mentioned even in the quarter, we have 1.28 and that was – 1.28 domestically and internationally. So, right around 1.1 for both the domestic, foreign and total company. As far as next year, I think at this level, just at a high level we expect to see continued growth both domestically and internationally, and will quantify that more in January.

Thank you. And our next question comes from Rajeev Lalwani of Morgan Stanley. Your line is now open. Rajeev Lalwani - Morgan Stanley & Co. LLC: Morning, gentlemen.

Good morning.

Hi, Rajeev. Rajeev Lalwani - Morgan Stanley & Co. LLC: Tom, Toby, you touched on this a little bit before, but just on the under-levered balance sheet, I mean, with the sell-off that we've seen in the stock and maybe a declining number of M&A opportunities out there, is that pushing you to maybe change your stance maybe a bit more front-footed versus what we've seen over the last year or so?

Well, I will hit that real quick. Bottom line is, we are committed to a balance capital development strategy and you can see that we are continuing to investment in our selves; those investments are paying off and our win rates on competitive – we believe that's the right thing to continue to grow our top lines as you're making – continuing with those investment and obviously we're also supporting the pension and our dividend and ensuring we do drive total shareholders return relative to this capital deployment strategy that we have in place.

Yeah, I'll just add, I mean I wouldn't expect to see any dramatic shift or reallocation of capital around the framework, or within the framework Tom talked about. We do see value in our stock clearly and we are committed in – over time to continue to reduce our share count. The guidance we have for this year is about 1.5% reduction year-over-year and then – and again in January we'll give you some insight on to how we are thinking about the total aspect of capital deployment for 2019.

Thank you. And our next question comes from Myles Walton of UBS. Your line is now open.

Thanks. One confirmation and then one question; so on the confirmation, Toby, is it 2019 and 2020 look still – or it's combined now, it's $8 billion to $9 billion of operating cash flow, and then secondly, on IIS, Tom or Toby, the IIS number look increasingly better. I'm just curious, is Warfighter FOCUS becoming less and less of a headwind? You mentioned some of the uppers, but I mean it's a short cycle business. Are you just seeing that short cycle business come through a lot quicker than I would have otherwise thought?

Yes, Miles, let me take that one first. The Warfighter FOCUS is – bottom line is that program is rolling off a lot slower than we initially anticipated and we are picking up other similar work, both domestically and internationally, to fill the hole for Warfighter FOCUS. So bottom line is that team is been very successful with that but they've also been very successful in winning other awards and bringing other business on board. Competitive win rates are very high and they're actually making quite a bit of progress on the international front relative to their international cyber work. They just won a major deal in Oman, and so the business is doing really well.

Yeah. So I think – you're right on the cash, Myles, just to confirm, how you characterize the cash is correct.

Thank you. And our next question comes from Sheila Kahyaoglu of Jefferies. Your line is now open.

Thank you, and good morning.

Hi, Sheila.

Hi. Just touch upon (54:32) for a minute. There was an improvement in the quarter on a sequential basis. The performance overall has been weaker than expected. Maybe can you talk about what's going on in that business at the moment, and how you think about potential optimality from here?

Yeah. I think relative to Q3 in the quarter – let me start with bookings. There was 13% year-over-year growth and if you remember, they had a 29% year-over-year improvement in Q2, so the trend there is positive and encouraging. The Q3 sales growth was a little lower than our expectations, however, the team did do a good job in controlling cost in the quarter. And we were pleased with the return to profitability that you alluded to in Q3, with margins in line with our expectations. Looking forward to Q4, we do expect to see continued bookings growth about in line with Q3's growth rate. We do expect stronger sales growth and another quarter of positive operating profit and margins about in line with Q3, 9%-10% give or take from that perspective there. As far as the optionality, everything remains in play. As we've talked about in the past, we did go into the commercial cyber business to unlock trapped value in the company, and over time, we expect to do that and all options are out there that we will consider at the right time.

Thank you. And our next question comes from Richard Safran of Buckingham Research. Your line is now open.

Tom, Toby, Kelsey, good morning. How are you?

Good morning, Rich. How you're doing?

Good morning.

Lot has been asked, so I wanted to just talk to you about productivity for a second if I could. Tom, Toby, I know you've been talking about productivity improvements for quite some time, and I wanted to get a sense from you about how much runway you think you have left here with productivity improvement initiatives? To the extent you can discuss it, could you talk about how productivity is factored into your 2019 margin guide, and if improvements are still having a meaningful impact?

Yeah, Rich. I mean, as I mentioned earlier and we do all the time, we're always looking for different ways to improve our productivity through capital investment, through initiatives to our supply chain, utilizing Six Sigma, more from an automation point of view, we talked about our shared services that we stood up several years back that we continue to try to maximize the benefit from there. We continue to see productivity. We've got assumptions in the 2019 numbers that we talked about earlier and the way to think about it, we're getting more productivity and it's needed because right now when we set margins in line, we are seeing the headwinds from the mix within the business and that improved productivity is helping to mitigate the impact from a margin point of view of the improved mix – the negative mix from a margin point of view.

That's all the time we have today. Thank you for joining us this morning. We look forward to speaking with you again on our fourth quarter conference call in January.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude the program and you may all disconnect. Everyone have a great day.