Good day, ladies and gentlemen, and welcome to the Terex Corporation's Third Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, today's conference is being recorded. I would now like to turn the call over to Brian Henry, Senior Vice President, Business Development and Investor Relations. Sir, you may begin.

Good morning, everyone, and thank you for joining us for today's third quarter 2017 financial results conference call. Participating on today's call are John Garrison, President and Chief Executive Officer; and John Sheehan, Senior Vice President and Chief Financial Officer. Following the prepared remarks, we will conduct a question-and-answer session. Last evening, we released our third quarter 2017 results, a copy of which is available on our website at terex.com. Today's call is being webcast and is accompanied by a slide presentation, which includes a reconciliation of GAAP to non-GAAP financial measures that we will use during this call and is also available on our website. All per share amounts in the presentation are on a fully diluted basis. We will post a replay of this call on the Terex website under Investor Events in the Investor Relations section. Let me direct your attention to slide 2, which is our forward-looking statement and description of non-GAAP financial measures. We encourage you to read this as well as other items in our disclosures because the information we will be discussing today does include forward-looking material. With that, please turn to slide 3 and I'll turn it over to John.

Good morning, everyone, and thank you for joining us and for your interest in Terex. I'll start by summarizing our third quarter performance followed by a review of the progress we are making executing our strategy and the discussion of our business segment. John will cover our capital market actions, and review the financial results including the details of our increase to our full-year 2017 EPS guidance. I will follow with a brief summary before we open up the line to your questions. Our momentum continued to accelerate in the third quarter, all three segments increased their sales, improved operating margins, and grew backlog. Sales of $1.1 billion were 5% higher than last year. We generated $72 million of operating profit in the quarter, 48% higher than last year, and expanded our margin by 190 basis points. Cranes remained profitable in Q3, AWP improved margins, and MP continued its strong operating and financial performance. We delivered adjusted earnings per share of $0.50 and generated $49 million of free cash flow. For the third quarter in a row, we grew year-over-year backlog in every segment. Our total segment backlog grew 44% and bookings grew 18%. Combining our year-to-date results with our current view of market dynamics, our operational expectations for the fourth quarter and our capital market actions, we are increasing full-year adjusted EPS guidance to $1.20 to $1.30 per share. John will walk through the details of our financial results and improved outlook. Turning to slide 4, with the focus element of our strategy complete, our efforts are concentrated on simplifying the company and implementing our Execute to Win business system. In the third quarter, we completed an important element of Execute to Win, the annual Terex-wide talent review process. We conducted detailed on-site reviews around the world, which culminated…

Thank you, John. Slide 9 demonstrates how we continue to execute our disciplined capital allocation strategy. In September, we monetized our remaining holdings of Konecranes shares for proceeds of $221 million. In total, Terex received approximately $770 million for the sale of the Konecranes shares, bringing the total consideration received by Terex for the disposition of MHPS to approximately $1.6 billion. These amounts demonstrate the significant value to Terex shareholders that was created by the sale of our MHPS segment and the Konecranes MHPS combination. In August, we completed a repricing of our term loan that will reduce interest costs. This further increases the efficiency of our recent recapitalization. Our term loan rate is now at LIBOR plus 225 basis points, improving by 25 basis points what was already the lowest rate in the company's history. We continue to invest in the Execute to Win priority areas and we are seeing benefits from these investments in our operating results. Finally, we continue to return capital to shareholders. We repurchased approximately 22.3 million shares for about $770 million in the first nine months of the year. And our board authorized a new share repurchase program in the quarter of up to $225 million, of which $154 million was remaining as of September 30. This disciplined capital allocation strategy including the efficient return of capital to shareholders through share repurchases will continue to govern how we deploy capital. Turning to slide 10, overall, we were pleased with our financial results in the third quarter. This is the first quarter since Q1 2012 that all of our segments grew year-over-year, which speaks to the overall improvement in our market and our commercial capabilities. On an as-adjusted basis, our operating margin was 6.5%. Importantly, we increased our margin in every segment. Please note that…

Thanks, John. To summarize, our sales, operating margin, and backlog increased in all three segments. We're increasing full-year guidance for the third consecutive quarter. Global markets for AWP products are improving. Our Cranes segment continues to execute its restructuring program. Materials Processing, our most consistent performer, is having a great year. We have considerable positive momentum. We will continue to execute our transformation program, simplifying the company by implementing our footprint and cost reduction plans and building capabilities in our Execute to Win priority areas. Finally, we'll continue to execute our disciplined capital allocation strategy and return capital to shareholders. With that, let me turn it back over to Brian.

Thanks, John. As a reminder, during the question-and-answer session, we ask you to limit your questions to one and a follow-up to ensure we have time to get to everyone. With that, I'd like to open it up for questions. Operator?

Thank you. And our first question comes from the line of Ann Duignan with JPMorgan. Your line is open.

Hi. Good morning.

Good morning, Ann.

Good morning. My questions are around – just the whole working capital, the zero fee cash flow forecast. In order to get even close to that, I have to take up inventories in Q4 to something closer to 100 days. Can you just expand on the comments you just made about investing in future organic growth? Are we stuffing the channels on into the end of the year or how should we think about that?

Ann, I'll start now. Turn it over to John. So, first in terms of matching supply and demand, I assure you, we're not stuffing the channels. So, we've been managing that very closely throughout the course of the year, because that's the important thing we can do as a manufacturer in the environment. So, no, we're not stuffing the channel, but I think, John, do you want to cover the free cash flow element?

Sure. As we indicated in our comment, Ann, we did update our free cash flow guidance to be approximately zero. This was a small reduction from the free cash flow – previous free cash flow guidance, which at the midpoint, was about $25 million positive. We've been managing free cash flow very carefully over the course of the year. In fact at the end of Q3, our working capital as a percent of sales was 23% compared to 26% a year ago. We did generate $49 million of free cash flow in Q3, although I acknowledged that year-to-date the free cash flow has been negative by approximately $100 million. We've used free cash flow for funding our restructuring and transformation program year-to-date that's been $79 million. On top of that, we've had $40 million of debt refinancing costs back in Q1 – principally in Q1, that we paid, that was a drag on free cash flow. We are growing. We have been growing over the course of 2018 and that has increased our working capital. And versus our original guidance, we are adding inventory as we have been seeing a very strong 2017 and we expect that growth to continue into the future, and we need to have appropriate working capital to be able to fund that growth. So, our improved operating performance as demonstrated by our free cash flow of $49 million in Q3 is generating cash, and we're offsetting or using that cash to invest in our strategic costs priorities to fund future growth.

So, Ann, again, I think it's really a function of the – we are seeing some accelerated momentum. Our markets really are improving on a broad-based growth across, really, all three segments. So, if you look at the three segments and you add a little bit of production in Q4, that's really what's driving that relatively minor change in free cash flow for the year.

Okay. I appreciate the color. And then my follow-up is around, as we look forward into 2018, if current pricing and input costs remain as is, what would you expect to deliver in terms of incremental profits on AWP?

Okay. Ann, a couple of questions there. In terms of 2018 guidance, obviously, we won't be providing 2018 guidance at this time. We will provide that guidance at the – in our first quarter call. So I won't comment on the guidance side. I will say overall, global pricing has been competitive across our markets and specifically, if you look at AWP and we've commented on this during the course of the year, about 60% of our volumes under annual agreements that run through the calendar year through 2017. As you recall, when we entered into those agreements back in the fourth quarter of last year was a very different market environment, coming off of three declining years. So a difficult pricing environment that set us up for this year. We do believe that the improving demand environment will improve our pricing ability as we go forward. We are in the process of starting the negotiations for our program agreements for 2018 and these are long-term relationship agreements. So, we're sitting down with our major customers and explaining the cost inputs that we're seeing and why we believe we need to see some price increases going forward to cover those cost inputs, while we are responsible for driving productivity. We absolutely acknowledge that. So those conversations are taking place, but in terms of actual guidance for 2018, we'll do that in Q1.

But if you're successful with these negotiations, the incremental profit should improve in 2018 versus 2017. Is that a fair takeaway?

That's an objective. But it's obviously to drive some pricing to cover the cost inputs that we're seeing, Ann.

Okay. Thank you. In the interest of time, I'll pass it on.

Thank you.

Thank you. And our next question comes from the line of Andy Casey with Wells Fargo Securities. Your line is open.

Thanks a lot. Good morning, everybody.

Good morning, Andy.

Question on the guidance. I know it's kind of short term, but it's based on a 95 million shares for the full year. What's the share count as of the end of Q3?

So, Andy, I'll take that question. I say it a couple of things, I'll expand on your question a bit, and just say that as you saw today, we increased our full-year guidance range to $1.20 to $1.30 per share versus our previous guidance at the midpoint, that a $0.15 increase in our guidance. As you saw in chart 11 of the presentation materials today, $0.10 of that $0.15 increase is coming from operation. And I think it's also important for me to note that in Q4 of 2016, we had a – I'll call it a one-time benefit from taxes of $0.10 per share. So, when you look at the Q4 2016 results, we effectively had EPS of zero. And with the guidance we're providing today, the implied Q4 EPS would be $0.19 per share. So, a substantial improvement in our overall year-over-year EPS. On top of that, when you look at the operating margins, the operating profits of each of the segments from the implied Q4, AWP is up substantially year-over-year in the fourth quarter. Cranes will make money for the third quarter in a row. And our MP segment would expect to have double-digit operating margins in Q4. So, overall, the Q4 performance that is implied by our guidance today we believe is actually substantial. In terms of you're thinking about modeling, the implied Q4 share counts that you should think about would be 87 million shares. And as of the end of the third quarter, we did have about 86 million shares outstanding including the dilutive effect of common stock equivalence.

Okay. Okay. It's just – it's hard for me to get down to that $0.19, but I can follow-up offline on that.

Yeah. We'd be happy to do so with you.

Okay. Thanks. And then on Cranes, in your prepared remarks, John, you talked about the OKC bottlenecks. I'm wondering, are those the only bottlenecks you're seeing? Are there any going on in Germany? And are those bottlenecks at this point behind you?

Thanks, Andy. In regards to OKC, I think it is important to note that OKC actually produces for all three segments. It's really the only plant that we have in the world that produces for all three segments. And in terms of the production for AWP, which is really our center-of-excellence for telehandlers and our MP lines, they're on schedule and no bottlenecks. Where we have had bottlenecks – and I might also add on our Cranes business, our Crawler Cranes business, is also on schedule. Where we have had bottlenecks or delays in our ramp-up is really in the products that we move from Waverly, Iowa. And so, the team, we're coming up the learning curve. Each month, it's gotten sequentially better. So, the team's continuing to make progress, but we have missed deliveries out of our OKC facility. In terms of the other facilities in Zweibrücken, Germany, the team is principally on schedule there. No real significant disruptions on our Wallerscheid facilities over in Zweibrücken. So it really is in OKC, and it seems making progress.

Okay. And then if I could sneak a follow-up on that. We've heard about supply-chain constraints from other manufacturers. Are you running into any of those, or is this all internal?

In terms of supply-chain, there are some modest delays, but I think the teams are doing a good job of managing as production increases. So, I would not say that the supply-chain is a significant cause of any disruption at this point in time. As we see production improve, it's a good opportunity and a good challenge to have, frankly for us and for the supply base. I will comment though, because I was asked this question, in terms of direct labor, as the labor markets around the world tightened? It is taking us longer to staff up on some of the incremental shifts and incremental labor. But again, it's really a timing issue. And so, the good news is, is that we are seeing an improvement in the demand environment, supply-chain does have some modest delays here and there, but overall, I would put it in the normal day-to-day operations of a manufacturing site. And we haven't seen any significant cause for concern on either to the suppliers and/or on our direct labor side. But it is tighter than it was clearly a year ago.

Okay.

And, Andy, I'll just come back to your first question. And we will follow up with you individually, but for the benefit of the others on the telephone, I would say that when you look at the guidance that we've provided today in the presentation chart, there's both guidance with respect to the company as a whole and then each of the individual segments. The total company guidance is what I would call operative, the EPS guidance range at the middle point – midpoint of the range of $1.25 per share, the 4.9% operating margin. Those are the operative portions of the guidance that you should look at. The segment guidances are, as you can see with the squiggly lines, approximations and do approximate or do add to the overall company. But it is the overall company guidance that is ruling there.

Okay. Thank you very much.

You're welcome.

Thank you. And our next question comes from the line of Steven Fisher with UBS. Your line is open.

Thanks. Good morning.

Good morning, Steven.

Just a follow-up on the cash flow. Last quarter, you talked about $50 million to $100 million working capital build ahead of 2018. Is that still about the same level that you're planning for? And how much cash flow tailwind do you get next year from the absence of restructuring for the full year? I know you said $79 million to-date. Is that going to be $100-plus million? And then is there a general target of cash flow conversion that we should keep in mind as you normalize operations over the next year or so?

Yeah. Thanks for the question and the focus on cash, because it is a primary focus of this leadership team. As it relates to the working capital build, inventory build, I do think that something in the $50 million to $100 million range is a reasonable number to think about. As you think about 2018, while we're not providing guidance with respect to operations or cash flow for 2018, as I said in my previous comments, we did have – we have had to-date in 2017 $79 million of restructuring and transformation costs, as well as $40 million of costs associated with the capital recapitalization that we did back in the first quarter. We don't have any plan for repeating a capital recapitalization in 2018, so that – certainly that will not repeat. And I would say that the restructuring and transformation costs will be lower in 2018 than they were in 2017. So hopefully that's a few data points that can help you with respect to your thinking about your models.

That's helpful. And then just wondering how you're thinking about the need and the motivation to take market share as your markets recover here? Just wondering how focused you are on share versus maximizing the profitability of the volume that you do achieve, and I guess I'd ask that for both the AWPs and Cranes?

Yeah. Thank you. So it is part of our Execute to Win priorities. One of the areas that we've invested heavily in is around commercial excellence, which helps drive our account management, pricing waterfall, visibility into the marketplaces. So we're spending a lot of time and effort to continue to improve the up-front side of our business. In terms of markets we're in, competitive markets, there's no doubt about that. The way to win in competitive markets is to provide customers with a solution that meets their or exceeds their needs. And if you heard in my opening comments and highlighted across all three of the business segments, a critical element of Executive to Win is product and product development. And so ultimately what drives market share is having competitive products in the marketplace that meet or exceed the needs of the customer. And so that's what we're focused on. Do we monitor, as any OEM does, market share? Yes, we do. Is it an indicator of our ability to meet the needs of customers? Yes, it is. And so it's something that we are focused on. But again, the real focus is bringing products and services to the marketplace that are competitive that allow you to provide a solution to the customer and for us to get a return on the invested capital that we've made in the business. So it is a focus, but innovation helps drive that. And as you saw in my opening comment, we've brought the innovative new products that are driving productivity across the three business segments. And we think that's the best way to meet the needs of the customer and that will ultimately lead to a competitive market share position.

All right. Thanks a lot.

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

Hi. Good morning.

Good morning, David.

Hi. I know you don't want to talk about 2018 too much, but we all recognize, right, where the stock is. Everybody is trying to figure out how comfortably can we get over $2 or not, right? I mean, that's the issue. So it is what it is with AWP. I mean, it's such a big driver to the earnings. Can we at least lay out a little bit of a framework on the puts and takes to consider for 2018 on AWP, particularly with, you know, in the channel hearing about that price increase that you're putting through Jan. 1? Can you give us a little perspective on how to think about the margins? I mean, it was good to see AWP expand their margins year-over-year for the first time in seven, eight quarters. But just a little bit of color, John, would be helpful on, sort of what's in the backlog, because it looks like the way you're guiding fourth quarter Aerial revenues, which I understand it's not a big seasonal quarter, a lot of that backlog is earmarked already for shipping past January. And I'm just trying to get a feel for how much pricing is going to be in that backlog, right, shipping after January 1 should have some of that price increase in it. And you also alluded to some supplier conversations or maybe some costs are coming out. If you can at least give us some indication, is that something that might benefit more MP or Cranes or how much is it Aerials, because again, I mean, the share count reduction maybe adds $0.20 year-over-year, the interest expense reduction adds $0.05. It's really AWP that makes a difference of is it $2, $2.25, or not? So again, I know you don't want to touch 2018 too much, but just a framework on puts and takes around AWP pricing and costs would be great.

Right. Thanks, David. And again, I appreciate your interest in 2018. I'm going to refrain from providing too much insight. But I do think it is important to think about AWP and where we are in the business, where we think we are in the cycle. Again, we did – we had increased sales, margin, and backlog in the quarter. So I think that does show an underlying accelerating momentum in the global aerials market. Customers are seeing substantial improvements in North America and in Europe on utilization rate, as well as rental rates. If you follow our customers for the first time in quite some time, they're seeing year-over-year rate improvements. And so the underlying market is strong driven by the synchronized global growth that we're seeing around the world. So the overall market environment going into 2018 as compared to 2017 is considerably stronger. And so we are engaging. These are long-term relationships with these customers. So we're engaging in conversations about, here's what's happened to input costs, plate steel prices in the United States have gone up 40% year-over-year, 12% to 13% in Europe. And so having detailed conversations with our customers so they understand the reality that we're facing, so that we can engage in a conversation around what would be a reasonable price level going forward in 2018. So, that's what the team is working on now as part of the Commercial Excellence, the account management. Obviously having pricing discussions and any improvement is always a difficult challenge. I will say this, as it pertains to AWP – the 2017 purchase agreements, they cover production through the end of 2017, the new agreements would cover production and deliveries in the quarters and beyond. So there will be – some of the backlog will be re-priced in delivery. Others will be at that price. There is a crossover price realization in that Q1 but in general our pricing agreements are effective calendar-year to calendar-year. And so as we move over into the next calendar year, the new pricing will take effect. So that's how I'd answer it is we are seeing that momentum in the marketplace. It is globally on the AWP side. And we're encouraged given where we were a year ago. We're clearly at an industry in a much better position than we were a year ago when we were talking about a significant decline as a result of the replacement cycle. And what we've seen is the underlying construction demand, the underlying economic activity has helped to offset the replacement cycle that does exist within AWP. And as we moved out in the out years and get through the replacement cycle with strong economic activity, we like that business. We think there's opportunity for growth in our AWP going forward.

And I appreciate that strong volumes secure a lot of ills. It puts less pressure on the incremental margins that are needed to drive the earnings, but can you at least give us a little perspective. Within that backlog, how would you characterize the mix in the backlog, the conversations you're having? Is it more the ultras? Is it more the scissors? Just some perspective. There's puts and takes on pricing and costs but obviously mixed. You're up now shipping with the weaker U.S. dollar, should be helping your profitability in Europe on AWP. Again, if you could just give us a couple of more puts and takes on the mix, be it product or geographic? And what's in the backlog and the type of conversations you're having?

Right. In terms of the product mix, David, I wouldn't say there's anything fundamentally different. It's within the range of what we see from a product mix standpoint. As our new product lines come out, our XT line of booms, we're encouraged about that. From a backlog standpoint, we have seen backlog growth across the world. We did see an increase in backlog in Europe. Europe has been stronger and so we did see an increase in backlog in Europe. And you're right, as the euro weakens a little bit, that does help our overall profitability of our AWP business. When it was $1.05, that was a tough place for us. As it's improved, that will help to drive profitability in our AWP business.

Yeah. And to be clear, you mean a weaker U.S. dollar versus euro...

Correct. Yeah. I'm sorry.

...because you're shipping from Washington State?

Yes.

Okay. Terrific.

You got it.

I appreciate the sensitivity in 2018, but that was helpful. Thank you, John.

Thanks, David.

Thank you. Our next question comes from the line of Jamie Cook with Credit Suisse. Your line is open.

Hi. Good morning. Two questions.

Good morning, Jamie.

Good morning. One, some of your larger customers talked about potentially pull forward in demand into Q3, Q4 from 2018, just because demand has obviously been trending a little better than expectations. Are you at-all concerned about that when you look across the different markets? And then my second question is, understanding you don't want to talk about the end markets for 2018, what about where are we, the other driver of profitability for 2018 is the self-help side. So in 2018, we should get some benefit from the reduced manufacturing footprint as well as sort of Strategic Sourcing. So can you talk to whether we're on track for that or how much that could incrementally help 2018, because again, your longer-term guidance didn't assume much – didn't really assume top-line growth. Thanks.

Yeah. Thanks, Jamie. I'll take the first question and then I'll have John kind of talk about where we stand on the restructuring side. So, in terms of again the concept of – we have seen some synchronized global growth around the world across all of our businesses, AWP, Cranes, as well as MP. So, there has been underlying growth. In terms of the AWP markets, specifically about pull ahead, the fourth quarter, especially in North America, is a seasonally low quarter, so on the margin, it doesn't appear to be significant. Matt and the team aren't saying, we're seeing – we're concerned about moving too much demand into 2017 that pulling demand out of 2018 at this point in time. I think it's just the response to the overall underlying rental market is quite strong. So, we're not seeing a dramatic shift yet in terms of the order and backlog of pulling out of 2018 into 2017 from that perspective. John, would you like to talk about some of the restructuring activities and the progress that we're making?

Sure. So, as you call that, Jamie, the self-help side really entails our continued cost reductions through our restructuring programs. Our restructuring programs are absolutely on track. And as you might recall, we did reduce SG&A year-over-year in 2016 by $41 million, and we're on track to reduce that SG&A another $45 million here in 2017, excluding the impact of incremental incentive compensation and the investment in our Strategic Sourcing Organization. On the Crane side, we've been doing some real heavy lifting. You know about the closures of the various manufacturing facilities and all. And overall in the Crane segment, we will get $25 million of savings in 2017 from our restructuring programs, and that will move to an annualized rate of $30 million in 2018. So, we've been absolutely focused on cost reduction. I'll give you a data point. Our corporate head count year-over-year at the end of the third quarter was down 15%. So, we are absolutely focused on the self-help that we need to continue to reduce our cost structure and become increasingly more competitive and that the self-help area as you called it, is going to support our getting to our 2020 target of 10% operating profit and greater than 20% return on invested capital. So, I think we are making progress and that progress will translate into – move over into 2018.

And Jamie, I just add on that, as we laid out in Investor Day and then spoken of key element of our Execute to Win as our Strategic Sourcing initiative, which is a major change for the company. It is a significant investment as John indicated. And in terms of – when we – we'll see the benefit, again, we're kind of midway through our Wave 1. And as I said, it's 700 suppliers, 14,000-plus SKUs, the teams are getting ready to do supplier visit here at the end of Q4 and into Q1, then we'll sit down in Q1 and Q2 with the final negotiations and awards. So, in terms of Strategic Sourcing in 2018, we won't see the savings of that to the back half of the year. But we're confident we're going to see savings. And as we outlined in our Investor Day back in November a year ago, 700 basis points to 800 basis points of that getting to 20% ROIC comes from Execute to Win and the lion's share of that is coming from Strategic Sourcing. So, a lot of hard work going on right now within investment, with no yield in savings, but as we get into the back half of 2018, we'll begin to see the benefits of the investment we're making.

Okay. Thank you. I'll get back in queue.

Thank you. And our next question comes from the line of Nicole DeBlase with Deutsche Bank. Your line is open.

Yeah. Thanks. Good morning.

Good morning, Nicole.

Hey, Nicole.

Hi. So, I'm going to ask a question about Cranes. I think last quarter, you kind of talked about being a little bit cautious, not wanting to talk more optimistically and stating that we're in the midst of a crane recovery. Now that we've seen another acceleration in backlog and order growth this quarter, I guess, it will be good to get an update on your thoughts of, could we be at the precipice of a crane recovery?

Thanks, Nicole. So, again, as we've characterized the crane markets, they're clearly challenging, but they are stabilizing. Last week, as I said in my comments, it was great for me because I had the opportunity to spend time with about 500 customers all week in Zweibrücken from literally around the globe. And the customer's attitude has improved. On the Crane side, they're not yet seeing the utilization rates that perhaps you're seeing in the Aerial space. And I would say that's pretty much globally. As we look at the crane markets and we go around the world, Europe what's impacted this year has been the change in the subsidies in European win side, especially in Germany, which has impacted crawler cranes. We think as we bring our new line of Demag cranes to the marketplace, that that's going help us to win business in a challenging market. North America is stabilizing but still relatively soft, but clearly better positioned than it was a year ago. Middle East, rough-terrain cranes continue to be challenging as this OPEC oil prices stick. We'll perhaps see some improvement there. We are seeing some good quoting on some larger transactions in the Middle East on infrastructure projects. So, that's encouraging that you're beginning to see that type of infrastructure activity in the Middle East. Australia, I've spoken about that in the past, it used to be a very strong market for us. It went to virtually nothing. So, we'll beginning to see improvement there in our Pick & Carry line and actually imports of some of our cranes. So, we're encouraged there. Latin America remains challenging. It's driven by Brazil. On the margin, we see a couple things here or there but remains a challenging market. Towers business, towers cranes business, we continue to see good growth there. And that's really driven in North America and the UK up right now, relatively small business within cranes, but we see a good growth. And our Utilities business is a solid contributor, consistent growth, they execute well. And so, that market is very consistent. That's what we like about that in that market. So, overall, I think we're seeing improvements. It's challenging, but stabilizing. And I think the year kind of played out the way we had anticipated. We thought the first half of the year would be down, it was. The second half of the year is stabilizing and increasing. So that's how I'd characterize the crane market. It's improving, but it's still challenging. There's not any euphoria when you talk to cranes customers, but they're clearly – attitudes are demonstrably stronger than they were a year ago.

And if I...

Okay.

...tie that all together, I think that's best demonstrated by the $500 million backlog, up 57% that we had at the end of Q3.

Okay. Got it. That's helpful. Thanks, John and John. And then for my follow-up, a business that we don't talk about as often is MP, and the incrementals have been really strong all year and stepped-up to like 50% in the third quarter. And I'm just curious what's driving that strength? And whether you view that as sustainable over the next several quarters?

Thank you. MP, as I said in my comments, is a consistent performer and they execute well. Strong operational and financial performance, sales were up, profit is up, great conversion, 27.5% incremental margin conversion through the course of the year. Really what's driving that is growth in our global crushing and screening business, and we're seeing that around the world, so we'll see backlog improvement there. We'll see improvement in our Fuchs business. As we've expanded our commercial capabilities, expanded distribution, we're seeing an improvement in our Fuchs business. Also, the converse of high steel prices as scrap steel prices are going up, which also helps us in the Fuchs business. We've seen good growth in our environmental business. So that's what's driving that. The concrete business, we did see a reduction in backlog, but again, we think that's being driven principally by the regulatory change on the refurbished trucks. So bottom line is that we're seeing good synchronized growth really around the world across the businesses that are comprised with our MP, and they do a great job of consistent performance, and they're increasingly a more and more important part of our portfolio, and frankly we're thrilled with that.

Great. Thanks. I'll pass it on.

Thank you. Our next question comes from the line of Mig Dobre with Baird. Your line is open. Mircea Dobre - Robert W. Baird & Co., Inc.: Hi. Yes. Good morning, gentlemen.

Good morning, Mig. Mircea Dobre - Robert W. Baird & Co., Inc.: First, maybe a clarification from your prepared remarks. You mentioned an order being cancelled I think out of China. Maybe additional color there in terms of the size, how you're looking at monetizing the inventory that you talked about having built, and whether or not this was really the thing that lowered your free cash flow guidance?

Thanks, Mig. Yeah, the order that we lost really – it actually was in India, and it was a cancellation of our 3800 crawler crane product. It is really a great product and good global demand for that larger crawler crane from our Demag line. Without getting into all the specifics, the product was basically geared towards the India wind markets and there were some changes in that. It was a substantial order for us that had north of $20 million. The cranes were produced and ready to deliver. At the end, the customer had some financing issues associated with some of the changes. And so what the team – Steve and the team have had to do was to find new customers for that. It was earmarked approximately half the cranes to go in Q4 and the remainder of the order that the team is working hard to place in 2018. So again, it didn't hurt us in the quarter, given at the level that we're at. Every – a large order like that is important to us, but Steve and the team were able to overcome that cancellation late in the quarter and still drive profitability.

And certainly, as we indicated in the prepared remarks that we expect to have about half of that order in inventory at the end of the year, or to say the converse, ship about half of the products in the fourth quarter. So it is a contributing factor to thinking about the working capital that we'll have at the end of the year and free cash flow for 2017. Mircea Dobre - Robert W. Baird & Co., Inc.: Okay. That's helpful. Then my follow-up, sticking with Crane here, your orders here have been running about, call it, $350 million over the last three quarters. Your revenues have been considerably below that. You've been building up backlog. I'm looking at your fourth quarter guidance, it essentially implies a little bit of an uptick, but certainly not a hockey stick here. What I'm wondering is, at what point do we actually start to see a real inflection in your volumes, given the fact that you have built up backlog? And then related to this, on the margin side, again, we're really not seeing a whole lot of movement sequentially, even though you've done a lot on the cost side. You talked about it earlier. How should we think about the incremental margin ramp-up as your volumes do inflect down the line?

Yeah, so in terms of the progress, and the team is making progress in terms of the backlog, as John indicated. Most of that increase is in North America and Europe. A lot of it is to the larger, longer lead time crane, so that's driving some of the lead time. I spoke about some of the ramp associated with OKC. So some of that is products that are in backlog with normal lead times. As we drive the ramp, an improvement there would convert to sales from backlog. As you indicate, we do see an uptick in Q4 based on our guidance of converting some of the backlog into revenue. So that's what's going on there. With some larger cranes, a little bit longer lead time. And as we move through 2018, that backlog will convert into sales. John, did you want to comment on the incremental?

Yeah, actually, I would say we're making really nice progress in the improvement in the profitability of the Crane segment. If you look at Q3 and Q3 of 2016, we lost $10 million on $283 million of revenue. This quarter, we made $1.4 million on $302 million of revenue. So that's a 62% incremental margin. Okay, it's more or less in the breakeven area, so we improved the profitability by $12 million year-over-year. When you look at the implied margins for Q4 for the Crane segment, that would be a 1.2% operating margin for Cranes in Q4 of 2017 compared to a negative 2.1% in Q4 of 2016. So, by no means... Mircea Dobre - Robert W. Baird & Co., Inc.: Well...

...do we view that we are done with what we need to do. We need a step-change increase. But I think for what we thought we needed to get done in 2017 we are getting that done. Mircea Dobre - Robert W. Baird & Co., Inc.: Again, not to be argumentative about this, but essentially your revenue sequentially has been flat in the third versus the second quarter. When I'm looking at the guidance for the fourth quarter, you're guiding for an incremental sequentially, $30 million of revenue and there's really not a lot of pull through in terms of operating income, maybe a couple of million bucks. While at the same time you're taking costs out. So I think – again, that's what we are all trying to figure out here, exactly when we should be expecting an inflection in earnings. Is it early 2018, is it late 2018?

And I totally acknowledge that. We have brought the breakeven point of our Cranes business down substantially to $1.2 billion. And as I said a few moments ago, we will now take the business to the next level as we meet the targets that we set out as part of our Investor Day in 2016. So, I'll say, stay tuned for 2018 guidance and we look forward to providing that to you in February. Mircea Dobre - Robert W. Baird & Co., Inc.: Thank you.

Thank you. Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the call back to Mr. John Garrison, for any closing remarks.

Again, thank you for your interest in Terex and your questions. If you have any additional questions, please do not hesitate to reach out to Brian Henry and we will try to address the questions that you have. Again, thank you for your interest in Terex.

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