Good morning. My name is Jennifer, and I will be your conference operator today. At this time, I would like to welcome everyone to the IDEX Corporation Third Quarter 2013 Earnings Call. [Operator Instructions] Thank you, and, Mr. Yates, you may begin your conference.

Thank you, Jennifer. Good morning, everyone, and thank you for joining us for our discussion of the IDEX third quarter financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the 3-month period ending September 30, 2013. The press release, along with the presentation slides to be used during today's webcast, can be accessed on our company's website at www.idexcorp.com. Joining me today from IDEX management are Andy Silvernail, our Chairman and CEO; and Heath Mitts, our Vice President and Chief Financial Officer. The format for our call today is as follows: We will begin with Andy providing a summary of the third quarter 2013 financial results. He will then walk you through the operating performance within each of our segments. And finally, we will wrap up with our outlook for the fourth quarter and the full year 2013. Following our prepared remarks, we'll then open the call for your questions. If you should need to exit the call for any reason, you may access the complete replay beginning approximately 2 hours after the call concludes by dialing the toll-free number (855) 859-2056 and entering the conference ID 26074681 or you may simply log on to our company's homepage for the webcast replay. As we begin, a brief reminder: This call may contain certain forward-looking statements that are subject to the Safe Harbor language in today's press release and in IDEX's filings with the Securities and Exchange Commission. With that, I'll now turn the call over to our Chairman and CEO, Andy Silvernail.

Thanks, Mike. Good morning, everybody, and I want to thank you for joining us here for the third quarter call. Before we get into talking about my comments and the results, I want to -- as a New Englander and as a die-hard Boston Red Sox fan, we're pretty excited about the World Series starting tomorrow. And so we hope that their results are outstanding also. A few summary comments before turning to the numbers. I want to talk a little bit about the third quarter execution of our strategy. I also want to talk, just what we're seeing in the current environment and then a few comments on investment and our capital deployment, generally. So starting with the third quarter, the theme really here is -- was make your own luck, and we've talked about this a lot within the company. And we're pleased with the results in what continues to be a very challenging environment. The global economy, as we look at it, it really lacks sustained results and action throughout the globe. It continues to be pretty spotty and pretty choppy. But I'm very happy with how our teams are delivering. As you saw in the quarter, we had very solid order growth, double-digit EPS growth, record free cash flow and improving return on invested capital. So generally, overall, we're pretty happy with the third quarter results. And I think when it comes down to it, we're executing the strategy that we laid out a year or so ago pretty well. If you recall, there were 3 elements of our strategy that we've been talking about pretty consistently. The first was really investing for global growth around our core products and our core customers; then executing around that core for great quality, delivery and cost; and then…

[Operator Instructions] And our first question comes from the line of Mike Halloran with Robert W. Baird. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: So really good leverage on the HST side from all the change you guys have made lately. So could you talk about a couple of things? One, anything going on there that you don't think is sustainable. In other words, is this a good base to build off of? And then two, maybe you could talk about what kind of lever you'd be expecting when you start seeing a little bit more normalized or healthy demand patterns across that enterprise.

So, Mike, first of all, what I would say is that generally the performance that we're seeing here is sustainable. We had a couple of items in the quarter that were a little bit discrete, meaning a little bit better profitability than you would normally see. So what I would say is the base we're building off is slightly below the overall performance that we saw in the third quarter, but it's going to be pretty close. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: So still very good. And then the leverage on a forward basis, what kind of incrementals should we think about with all the changes you've made?

I think you're still going to see pretty healthy incrementals. As we said before, in particular, this -- HST has the same kind of contribution margins, generally, that the rest of IDEX has. With -- the biggest piece that's kind of different is that we think we can grow the Optics business meaningfully without having to add a lot of structural cost, and that has a pretty high contribution margin. So historically, we've shot for 30% to 35% across the enterprise. You're going to see better than that, I think, for the next year or so in HST as you get traction. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: Makes sense. And then on that dispensing order, I think you said front half of next year expected. Any reason why we wouldn't see kind of that normal spike on the margin line in FST in the front half of next year as a result of that order, all else equal?

Mike, this is Heath. No, you'll see a pickup in that first half, just as you would in normal -- when we've had projects in the past, we would expect it. It's just the project is at normal levels of profitability for that business, so we will see a spike in the first half next year. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: Good. And then last one for me. Maybe you could just talk a little bit about underlying trends, as you work through the quarter, and just take a cross-section of what that typical short-cycle industrial kind of business would be? It doesn't sound like you're seeing a lot of improvement there. But any signs that you're getting a little bit of a sequential improvement in that kind of book-and-ship short-cycle industrial business or still pretty mixed?

Mike, it's still pretty mixed. So we're happy. If I kind of dissect it a little bit, right, so let's look at FMT orders. I mean, obviously, we're happy to post a 9% organic number. A bunch of that is certainly initiative driven. But also, it's a pretty easy comp. So I don't want to get too far out over my skis on that one. It would be great to kind of pound your chest a little bit, but I want to be realistic. I think if you look second quarter to third quarter, I would say the overall environment looks similar. We've seen a little bit of the same thing around North American distribution volatility. We certainly see it in our gas business, a little bit in our Micropump business, and those fall into the industrial side of HST. And so that's something that we've seen this for a while. There's been a lot of spikiness around that. And I think as you got close to the government shutdown this time, people got a little bit nervous in the third quarter. So far, order books for the fourth quarter don't show that there's any meaningfully negative thing. But at the same time, there's a lot of craziness going on in the world. So that's why we really remain pretty cautious.

And our next question comes from the line of Matt McConnell with Citi Research.

So this is probably the third quarter in a row of a record gross margin, I think. So can you give us a sense of what's driving that? Is there mix that's benefiting? Or could you quantify price, cost maybe? Or is there anything else worth noting that's driving the gross margin improvement?

Matt, from a price perspective, it's really no different than what we've seen in other quarters. That's not a -- that's a kind of consistent piece of it. I would say, we've got -- we're getting a lot of benefits from the restructuring that we did, certainly, last year. And also, if you look at, at our Optics business, our Fire business and our Water Services business, in particular our water business in total, those 3 businesses have meaningfully changed their margin profile. And so, you're certainly getting some benefit of that. And I would say, certainly, from a mix perspective, right, contribution margins are pretty darn good. And so, when you get some nice growth here, top line growth out of FMT, that helps there. So it's really across the board. There's no one item that you'd put your finger on and say, "That's the answer." And that's what we like, by the way, right? We want to see our teams driving profitability, pulling multiple levers.

Yes. And to that point, I mean, incrementals have been about 60% year to date. I think guidance implies that goes more like to the mid-30s range. Is that...

Yes. You got to remember, right, we've got a lot of benefit out of the restructuring that we did last year from some of the complexity reduction, and that's not going to necessarily increase. That being said, we are going to do some targeted restructuring in the fourth quarter that we're going to eat in our P&L. And if you look at our earnings bridge, it certainly is in there. And I -- we're just going to pay for that. There are some things that we can do and we're going to do that are really just right for the business. And so, we'll do that in the fourth quarter. So we'll get a little bit of benefit, not a lot, but a little bit of benefit in 2014 from that.

Okay, great. And with leverage ticking down, I mean, net debt to cap is 17%, so I know you're working the M&A pipeline as much as you can. But how do you think about buybacks here? Any inclination to get more aggressive with share repurchases, as you have plenty of cash?

No. When we think about share repurchases, Matt, we really think about it from an intrinsic value standpoint. So we don't think of it as kind of how much cash you do or don't have on the balance sheet per se. It's more around a very long-term view of the company. And so, our overall strategy about being pretty consistent, except in times of dislocation, we'll keep that strategy in place.

And our next question is from the line of Allison Poliniak with Wells Fargo.

Just touching on the margins. Andy and Heath, you guys were, the first half of the year, really tempering us, I guess, on our expectations, just given some of the increased investments you were planning to do in the back half. Obviously, nice expansion in Q3. Was any of that investment pulled back? Or were you still able to achieve this with those investments?

We've made the investments, Allison. Obviously, in my remarks, we anticipated that people would have some questions around this, just because of the margin expansion. But we've made some pretty nice investments across the globe, and we feel pretty good about that. And I think it's showing in some of the order book.

No, that's great. And then just touching on the water comments, making sure I understand it. It's really IDEX-specific, not necessarily the market coming back, but your specific business and some of the market share you're gaining there?

Allison, did you say the water business?

Yes, correct. Sorry.

Yes. So I think it's mostly IDEX today. I will say that the business is modestly better. And the reason I say that is just some of the book-and-turn business has improved. There have really been 2 things that have driven most of the growth on the services side. So I'm going to split this, Allison, between services and industrial, because the services is really the piece that's touching the municipal market, which I think is what you're asking about. On the services side, we've had a really nice product introduction out of our iPEK business that has won a bunch of share in the U.S., and that's been a big piece. So if you kind of segment their daily book-and-turn business and that piece that we know is really about new products, so let's set that piece aside for a second, and then you look at our water services business, which is really a monitoring business, in which we're seeing some nice wins there, too, you can really see the very specific wins that are initiative based on how we've targeted markets. So if you take those 2 pieces out and you just kind of look at the underlying book-and-turn business, and you look at the not so much the order pattern, but the quote patterns, what they would tell you is it's modestly improved.

And our next question is from the line of Nathan Jones with Stifel, Nicolaus. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Could you start by kind of giving us a little bit more color on the expected organic revenue growth in the fourth quarter by segment?

Sure, you bet. Well, we don't typically break it out by segment, but we can give you kind of overall, our expectations for the business, which is we think that you're going to have about 5% coming directly from organic and another point from acquisition. As you know, we don't kind of break it out specifically like that. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Okay. If you think about margins, obviously, a phenomenal performance over the last couple of years, taking costs out and improving the margins. Do you have any opinion on where peak margins for these businesses might fall?

What we've said in the past is we think that this is a portfolio that has the potential to be in the low 20s, right? And what I said before is I thought in at least 1 quarter of 2014, we'd hit 20%, from an operating profit margin. Obviously, we got pretty close here in the third quarter of this year. The -- so I think next year, we'll have at least 1 quarter where we'll hit 20%. And then as we go forward, I think we have the potential to be in the low 20s with the current portfolio as it's constructed today. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: That's helpful. And I guess with the guidance for the fourth quarter, you're going to get pretty close to it there as well.

Nathan, this is Heath. Let me just add a little color. While we don't guide at the segment level for the next quarter out, just to give you a little flavor, though, and I want this on the record, is that all -- we're anticipating that all 3 of the reporting segments are in positive territory in terms of organic revenue growth in the fourth quarter. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Great, that's helpful. In terms of further investments, in terms of taking out cost, taking out complexity, have you formulated those plans for next year? Have any idea kind of what cost benefits there will be going into 2014?

On the -- just the cost outside, we're going to -- as I said before, we're going to do some modest stuff that will eat in the P&L here in the fourth quarter on just kind of classic restructuring. We've got one facility that we're targeting to close. And then just some general restructuring around complexity reduction. And again, a lot of this, frankly, is happening outside of the United States. So the paybacks are just longer, right? So in the U.S., typically, you'll get a 12- to 18-month payback on that kind of stuff. When you look at anything outside of the U.S., it's 2 years and sometimes can even be more than that. So now that being said, on an ongoing basis, we are really going after -- maybe complexity reduction is not the right word, it's really complexity optimization. Because in our business, complexity is a piece of the competitive advantage, right? And you got to make sure you don't go too far down that path. And so for us, that's an ongoing thing, and we think there's some runway with continuing to do that in the portfolio. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Can you quantify the expense in the fourth quarter?

I don't think -- no, I don't think so.

We'll give you a sense for it in about 90 days.

And your next question comes from the line of Scott Graham with Jefferies.

So 2 questions that I had. How much of the restructuring savings are still to run through the P&L in 4Q? And how much is their spillover in '14?

The run rate that we're at right now is pretty consistent with what you'll see in the fourth quarter. There was, obviously, some fourth quarter actions taken last year that there'll be a little bit of an incremental benefit for. But we're -- for the most part, we're at that point. In terms of what spills over into '14, it's really the restructuring actions that we've completed here in the back half of the year, which are much smaller in aggregate versus the $30 million of costs we took out a year ago, and that will obviously have some benefit. There are some things we're going to do here in the fourth quarter, as Andy just discussed, that will obviously have some benefit as we go into next year in terms of footprint optimization and so forth. But we're not in a position to quantify that until we get some of these things done. And part of that isn't -- not trying to be cute with the numbers, it's that some of these things that we're getting done here in this quarter and we're going to just eat it in the P&L. We're not going to call it out separately. Some of those things are non-U.S. based, and they just have longer payback periods.

Got it. So the other question relates to M&A, and a little bit quiet over the last 12 months, the whole bid-ask thing I know is working against a number of companies. Although you guys, I think, are more intentionally targeting the -- or at least more of the pipeline count is below 100. So just kind of wondering if you see anything, perhaps, closing in the fourth quarter? What is your confidence on closing something, maybe even within the next 6 months, if you need to extend the questions timing a little bit there? Just give us a flavor there, would you, Andy?

I think -- let me just talk for a second about the overall market. I think the themes that have been playing out here for almost, geez, for going on 18 months, 2 years, about expanding multiples in the markets. And I think, as everyone knows, there are multiple drivers to that. You've got, certainly, the incredibly low cost to money, you've got some people chasing growth and you've got private equity that really has raised, what I'll call, the cover bid in a number of the places. And so, certainly, things that are north of $100 million, $150 million of enterprise value that are of any quality at all, you're seeing a lot of competition for those assets. That being said, the comments that we've made here for a while still ring true, which is in our sweet spot, which is kind of the small to middle market, there are still things to get done, and that's where we spend the bulk of our time. And so, if you look at our funnels and you look at our activity levels, they're pretty good. It's just breaking some of those things loose. So, Scott, to get to the point here, it's always hard to tell, right? In these sorts of things until you kind of get down to the last piece of it, it's difficult to say. And as I said in the second quarter and it holds true here in the third quarter, we've been close on a number of things that ultimately, for either price or terms, was not really the right thing for us. And so, we're going to be discerning. It's very hard to overcome buying something at the peak and it's very hard to overcome buying something for a very high price. And so, we're going to be very disciplined about this. So the answer is I don't know, Scott, around the fourth quarter or in 6 months. But I can tell you, we're working our tails off to do this. It's a very important part of our overall strategy, and it's something we're going to continue to do. And ultimately, right, these windows will open back up and we'll be certainly in a great position to execute.

Are the number of opportunities more skewed toward FMT right now?

No, they're really not. They're really not. Actually, if you look at valuations, the valuations are actually a little higher on FMT-like properties than they are on HST-like properties. I would say that the funnels look pretty comparable.

Okay. Last question that I just thought of. I'm sorry, I always like to ask you this question, Andy. The -- on HST, particularly on the health, medical, the whole life sciences side of things. One of the things that I think you guys have been waiting for is this whole -- this next product cycle. Is there any change in your view that even if we pretty much like everything being pushed to the right, does it seem that way to you a little bit here even in that business? Or last time, I think we talked maybe about middle '14, where maybe you would start to actually see it and monetize it. Has that been pushed to the right? Just give us your sketch on that.

No, I don't think it has. So just for clarity, right, you're talking about what makes up about 30% of the HST segment?

That's correct, yes.

And in those businesses, certainly, I would say, that across our landscape of customers, the product cycles are moving forward. There is no inclination at all that those are slowing down. And I think you'll -- what you have is you've got some product cycles that are a little bit long in the tooth in a number of segments. So certainly, if you look at parts of diagnostics, that's absolutely true. And if you look at the analytical instrumentation market, that's a very competitive market for new product development, and that's moving forward. And then on the biotechnology side, that's a footrace. And so, I expect that that's going to continue to really take off. So my overall expectations for product cycles have not changed.

And your next question is from the line of Paul Knight from Janney Capital.

It's Paul Knight, Andy. And I wondered if you could put a little color around what markets you see is gaining any traction in the HST side. Particularly, do you see anything special occurring in mass spectrometry, sequencing or chromatography? Is there any highlights you see?

Yes. I think that there are some, and I'll touch on all 3 of those, actually. If you look on the mass spec side, what you're seeing is very typical that you see in that marketplace, which is you're seeing mass specs now reach a price point and a capability point where the applicability to a number of applications is starting to open up. So the overall growth rates in that market continue to be very good, and I expect that they will be for a long time, just because the number of applications that they can touch now becomes accessible. And that's really very consistent with how these markets play out over time. And then a large installed base gets put in place. It really drives an aftermarket, and then the product life cycles continue to evolve. So we're pretty positive on mass spec. On ultrahigh pressure liquid chromatography, the overall -- if you look at kind of just the HPLC world, the unit volume there has been coming down for years in very small increments, while the UHPLC business continues to grow pretty quickly. Those businesses are now, from a dollar volume standpoint in the industry, are actually 50-50. And so, the UHPLC applications continue to grow there. On genome sequencing, I actually think it's kind of funny that it hasn't gotten the press, but the progress there has been much faster than people anticipated 3, 4, 5 years ago, including myself, in terms of getting down to applicability in the point-of-care market. We're still not at the point where you're going to sit in a doctor's office and they're going to give you an answer in an hour. But the cost points have definitely changed. And what that really matters so much is personalized care. And how that is exactly going to play out, that's -- I don't really know. But certainly, with the pressure on reducing the overall cost of treatment, that's going to be a meaningful piece of that. So I think all 3 of those, Paul, are going to be good stories for that 30% of our HST business.

Do you think you're seeing the pharma and biotechs finally pick up their R&D?

You got to realize that in the pharma side, that whole game has changed massively, right? It's changed so much over to the generics. And so I think the classic pharma guys, they're putting their money really in new drugs and they're trying to find kind of that next breakthrough drug. So I don't think you're going to see big changes in their R&D budgets. I would not expect to see that, but I think modest incrementals from here from what are pretty low levels right now, right? And the game has changed very, very much towards the generic guys. On the biotech side, that is, as you know, a really, really volatile market in many, many ways, because they're really trying to get the next breakthrough. And ultimately, they are kind of an R&D pipeline oftentimes for the big pharma guys. So that's going to be volatile, but it's going to grow pretty quickly.

And your next question comes from the line of Charlie Brady with BMO Capital Markets.

Just on the dispensing order, that roughly $23 million or so, does that fall ratably over the first half? Or is it heavily weighted one side or the other?

Charlie, the way that, that is going to flow, very, very typically with these sort of things, is that they're trying to get them in for the season. And so, you'll see that -- I mean, just from the fact of our ability to execute and our customers' ability to execute, it has to be somewhat ratable, somewhat. There'll be a little bit of a push here towards the end of May. There's no doubt about it. That's just the way it works. But I think you're going to kind of look at a manufacture-and-ship schedule, and I've looked at it discretely, that's going to be pretty level loaded.

Okay. And did I hear you correctly that in terms of a margin impact, it's not going to have a -- any kind of material negative impact on the overall segment margins?

Correct.

Okay. And just switching gear, on HST, you commented that the 30% of the business that's tied into -- OEM-related, there was a bit of a headwind there. Can you quantify in the quarter how much of a headwind you had from kind of the -- those programs not being there this quarter versus last year?

It's -- I'm going to guess here, 1 point or 2, in total, for the segment as a whole. There were 2 really discrete things that we comped in the quarter. But at the same time, let me be clear, the day rates in that side of the business weren't anything to get overly excited about either. So that certainly is -- that certainly was real, it was certainly there, but the day rates aren't exactly like they're blowing the doors off.

Charles, this is Heath. At the segment level, it was probably a couple of points.

Yes.

And your next question is from the line of Matt Summerville with KeyBanc.

I apologize if this has been answered already, Andy, but this is the first quarter in HST where you've generated 20%-plus operating margin since you bought CVI. Is that kind of -- are you -- have you set a new kind of low-water mark from profitability in this business, given the restructuring, the cost takeout, the productivity, all that?

Matt, that question was brought up a little bit earlier, and what we said to folks is, is that's a little bit inflated this quarter. There were a couple of discrete items that -- where we've got a little bit higher profitability than we normally would have. But I would say, generally, just below that is probably a new good mark, given the mix and given the overall volume.

And then with respect to what you guys are doing with purchase materials, supply chain, what's sort of the annual savings run rate you're getting from specifically those initiatives?

We don't specifically break that out per se. What I can tell you is that our ultimate goal is to drive net productivity, both on the sourcing side and on the conversion cost. And so, obviously, in a world of low inflation, that's easier to do and can certainly help drive the bottom line, and we get a little bit of that today. But we don't actually break out that number discretely.

As you're thinking about price increases for 2014, is there any reason that you would not get your typical 1 point, 1.5 points?

I think it will probably be right in that range. Obviously, it falls into different buckets. It's harder in our HST businesses. It's a little bit easier in parts of Diversified and in parts of FMT. But generally, you should expect to see what you've normally seen out of us.

And your next question is from the line of Kevin Maczka with BB&T Capital Markets. Kevin R. Maczka - BB&T Capital Markets, Research Division: Well, Andy, first of all, I guess, as a Tigers fan, I'm a little less excited about the World Series. But I guess, congratulations to your Red Sox. Quick question on free cash, you've always been a really strong free cash company. And I see CapEx ticking a little bit lower here. I'm just wondering if you can comment on that. And maybe, more importantly, on the working capital lines, you've made some real, nice strides there in the last couple of years. I'm just wondering if you can say any more about what's left to be done there that you haven't done yet?

Sure, Kevin. Let me touch the capital side first. We're a little bit lower on the capital spend than we had expected to be at this stage of the year and, ultimately, just how it flows through when we did our operating calls here with our group here in the quarter. We were pushing them on that too, on making sure that we're not holding back any smart investments. Certainly, not intentional, being a couple of million dollars behind where we want to be. And we really -- frankly, we want to put as much capital as we can into organic growth. I mean, it's -- the return on invested capital is very, very high for our organic growth projects. And so, we are -- as we went through our strat planning cycle here in September and as we'll talk to our board in November, organic growth investments are going to be critical. So we certainly don't want to hold back capital to that regard. The -- as we think about working capital, we have made nice traction, and that's really come in a handful of ways. I think, first and foremost is we put a lot of time and effort into really understanding buying patterns, really understanding complexity of what we're buying, consolidating suppliers into the folks who are really our A suppliers and putting intelligent processes in place that aren't just squeezing our suppliers, and we look at our suppliers as being partners. And at the end of the day, right, our incremental margins and our return on capital, to save a couple of pennies in the supply chain when you can drive velocity, that's the trade-off you want. And our partners, I think, like that, and I think that has helped pay off. That being said, the gains that we've gotten here in the last 18 months, those get hard to replicate as you continue to drive that down. But we can get incrementally better as we go forward. Kevin R. Maczka - BB&T Capital Markets, Research Division: So you brought up baseball earlier, so can use a baseball analogy here on all of these supply-chain partnering initiatives and things like that, that are hard to replicate? Are we in the later innings there now?

No. I think we're kind of still middle of the game here. There's a lot to do. And also, this is like one of those things that when you kind of open the box and you start going through it, you find new stuff every time, right? And it's really a matter of sticking with it on a consistent basis. Kevin R. Maczka - BB&T Capital Markets, Research Division: Okay. And then just finally for me on the large dispensing order, I know you're always chasing things like this, but can you just give some sense for what else is out there? Are there other large, lumpy orders like this that we ought to be expecting over the next few quarters?

The term that you used around lumpy is right. These things tend to be in, from a customer perspective, in multiyear cycles. And so, we don't have anything here on the radar screen that looks anything like this. And frankly, I got to give the team a ton of credit. This was a share win. The win that we got here was very much a share win, and it came down to offering the best technology, absolutely great service and incredible attention to detail in the process. And so, while I don't see anything like this on the horizon, that team really needs to be congratulated for executing very well.

And our next question comes from the line of Mark Douglass with Longbow Research.

Can we talk about IOP? You mentioned expectations for positive orders before the end of the year. How much of that is just the easy comps? And how much -- are you seeing something there in the channel that's giving you a little more confidence going to 2014 that people are going to get back on the horse and start purchasing components again?

I think the first thing is easy comps, Mark, to be honest with you, right? We started seeing that. We consciously started to walk away from unprofitable business here. So the order run rate and the sales run rate that we're at today, we do have easier comps in the fourth quarter. So I want to be clear about that. That being said, there are some signs out there that are a little bit better. And part of that just comes down to the bottoming of a number of the markets that we've been playing in. We have a decent position around semiconductor. There are some expectations that next year that's going to pick up. We don't buy -- I'm not banking our plan on that and our teams aren't banking our team plan on that.

Never bank on semi.

Never. That's exactly right. And then they've done a pretty good job from a new-product perspective. So I feel, I'm going to say, cautiously optimistic about that. This has all have been -- this has all been about profit expansion, positioning the business properly, focusing on the right end markets and getting our teams focused on those markets. And as we go forward, I think that's where we can start to move the needle organically.

Okay. And then, a lot of questions answered. But looking at FMT, talking about HST margins, what kind of run rates are possible in the FMT margins? I mean, it seems like 25% is realistic, assuming more organic volume growth there.

Yes. I mean, you can certainly -- it's possible. At the same time, right, I mean, you do have to make reinvestments in these businesses, right? And so, a lot of the benefit that we've gotten in FMT this year is from our Water business, which was a lower performer and has really improved profitability, very, very meaningful, just generally. And then if you look at our Energy business, not only have they had very nice order and sales growth, they've done a terrific job from a profit expansion. So I don't think you're going to find that same bag of tricks again in 2014 and beyond with our current portfolio. And you do have -- mix can swing a little bit. So I think where we're at today, we feel pretty good about -- you'll see kind of normal incrementals with volume as you go forward. But we feel pretty good about where we are.

Okay. Actually I have one more question. On ag, you mentioned you're watching it very closely. Do you think it's likely that it declines in 2014?

I don't think so. There's nothing that's happening in the channel that says that. But there's enough noise around crop prices and farm income that you've got to be mindful. And also, and we just recognized that when the end -- when the customer, meaning the OEM, when they turn off the spigot, they don't turn it off slowly, right? And so we are -- we want to make sure that from an inventory standpoint, we're intelligent. And as you know, in the past, when that does happen, we tend to see a pretty healthy swing in our business mix that moves over to the aftermarket. So if you remember, this is, what, a 60-40 aftermarket, 65-35 aftermarket?

65-35.

So it's a healthy piece of aftermarket that doesn't necessarily get impacted so much by that spigot being turned on or off. So I think for 2014, we still have a positive outlook. We're going to keep our eye -- and the team are really keeping our eye on the trends. But generally, they hold up well even when you see a slowdown there.

And we have no further questions in queue at this time.

Thanks, Jennifer. Well, everybody, thank you again for joining us for our third quarter call. Again, we're happy about our overall execution in the quarter, and I'm very proud of our teams and what they've gotten done here. At the same time, we're very mindful of an economy that still has issues. And so we're going to be prudent, we're going to be intelligent about where we invest in our core. We're going to be very focused on execution, and we'll be intelligent with our capital. So again, I appreciate your time, and I look forward to talking to you here for the fourth quarter call. Take care.

Thank you. This does conclude today's conference call. You may now disconnect.