Good day, ladies and gentlemen, and welcome to the Ingersoll-Rand Third Quarter 2016 Earnings 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, this conference is being recorded. I would now turn the floor over to Zac Nagle, Vice President of Investor Relations.

Thanks operator. Good morning and thank you for joining us for Ingersoll-Rand's third quarter 2016 earnings conference call. We released earnings this morning, and you can find our news release, our earnings presentation under webcast of this event on our website at ingersollrand.com. We're also archiving this call on our website. Please go to slide two. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause our actual results to differ materially from our anticipated results. This presentation also includes non-GAAP measures, which are explained in the financial tables attached to our news release. The participants on this morning's call are Mike Lamach, Chairman and CEO; and Sue Carter, Senior Vice President and CFO. With that, please go to slide three, and I will turn the call over to Mike.

Thanks, Zac, and thanks to everyone for joining us today. I'm going to begin by discussing our strategy and how as a foundation our business operating system drives top-tier financial performance for shareholders. Sue will provide more details about the quarter financials and guidance, then I'll close with a few comments before we answer your questions. As a matter of strategy more than 90% of our product portfolio directly addresses demands for greater productivity and energy efficiency with lower greenhouse gas emissions in buildings, homes, industrial and transport markets around the world. The strength and resiliency of our portfolio comes from our leadership in growing markets that are durable, because these markets are essential to addressing the global, strategic imperative to dramatically reduce greenhouse gas emissions and to conserve resources. Our business operating system is a systematic way our people work within the company to deliver against our strategy globally. It is a holistic approach that establishes strong baseline execution expectations, then builds on those expectations through continuous development of people and improvement of processes and standards. Respecting and engaging our people in the development and maturation of a business operating system, makes it sustainable and is a core element of what it takes to win over the long-term. Rigorous execution of the business operating system has enabled us to deliver consistent top tier financial performance across key metrics, including organic growth, incremental margins, EPS growth and cash flow conversion over many years. The third quarter demonstrated our consistent progress against these key metrics. We delivered strong organic growth of 3% across a diversified portfolio. We had record operating margins of 14.1% and drove leverage through the P&L, resulting in adjusted EPS growth of 17% Year-to-date, free cash flow is more than 100% of adjusted net income, demonstrating our ability…

Thank you, Mike. Let's go to slide 7. I'd like to begin with a summary of main points for you to take away from today's call. As Mike discussed, we continued to execute the core tenants for our business operating system in Q3, building upon our strong 2016 performance, across the three pillars of growth, profitability and cash flow. Adjusted earnings per share was up 17% on 3% organic revenue growth. Cash flow was 180% of net income for the quarter. Our performance was highlighted by record results in our North America Commercial and Residential HVAC businesses, where we captured additional market share, while at the same time expanding margins year-over-year. In our Industrial business, we drove 180 basis points of improved operating margin performance sequentially. We continued to take further actions on operational excellence initiatives, increased our commercial focus on aftermarket parts and service and added cost reduction activities to improve operating results going forward. The margin improvement was 70 basis points after adjusting Q2 margins for capitalized new product engineering and development cost that we highlighted in last quarter's earnings materials. We believe we are largely maintaining our growing market share across the portfolio, despite continued soft industrial end markets. During the quarter, we also extended our strong free cash flow performance by $644 million, bringing our year-to-date total to $992 million, up $527 million from the prior year. Given our long-term expectations for strong earnings and cash conversion, we also increased our dividend by 25% in October to $0.40 per share or $1.60 annualized, making our dividend highly competitive not only in our peer group, but across the broader market. Additionally, we now believe our free cash flow for 2016 will approximate $1.3 billion, up more than $200 million from our previous guidance of $1 billion to…

Thanks, Sue. As we conclude, I want to emphasize a few points that I think are important for you to have as takeaways as we head into the final quarter and into 2017. First, we're performing well with a solid strategy punctuated with excellent execution over time. As a result, we have delivered consistent, reliable top tier financial performance on organic growth, EPS growth and cash flow over industrial and climate cycles. Second, our management team is effective in anticipating and seeing around the corners. Our commercial HVAC business is strong and focused on the right growth areas with equipment, controls and service. We believe we have turned the corner with our Industrial segment, and starting to realize margin improvement versus the quarter 2 trough. And our Transport Refrigeration business is resilient. Our team is capturing margin expansion, despite downward sales. Finally, we're building a stronger, more valuable, more sustainable and less cyclical Ingersoll-Rand. The results we reported today are a direct result of the strategic work, persistence and tenacity of the talented people that represent the unique culture we've built. I'm proud of our people, who continue to deliver for our customers and our shareholders. Our momentum is strong as we conclude the year and head into 2017. And with that, Sue and I will now be happy to take your questions.

Thank you. Our first question for today comes from the line of Nigel Coe from Morgan Stanley. Nigel Coe - Morgan Stanley & Co. LLC: Thanks, good morning.

Good morning, Nigel.

Good morning. Nigel Coe - Morgan Stanley & Co. LLC: So, obviously, very good execution in a really challenging macro. Were any signs of softening as you went through the quarter. And I'm just thinking here about North American Commercial, up 9% orders, obviously a very good number, but you'd pointed to double-digit for this quarter. And so, I'm just wondering if there was any tailing off towards the end of the quarter that maybe just caused you to slightly miss that 10% bogie?

Well, maybe like a tenth of a point, Nigel was the difference. So, the good people here would not allow me to round that up, as they should not have allowed me to round that up. But that's the difference. Nigel Coe - Morgan Stanley & Co. LLC: Okay. And the kind of the frontload activity, you mentioned some larger projects in the hopper, maybe just give some color on that, Mike?

They were largely institutional, but we're seeing them around the world, there are some large lumpier projects. So, it's difficult to always know the exact timing but the pipeline looks pretty strong going into 2017. So, the backlog 2016 ending will be greater than it was of course 2015 ending and then we've got a good pipeline coming into 2017. So, we feel like the earlier comment about 2017 looking a little bit more like 2016 with perhaps more institutional tailwind and if anything a little less of the commercial headwind will net out to a pretty good year. Nigel Coe - Morgan Stanley & Co. LLC: Okay. And then a quick follow-up. TK for next year, you talked about North American trailer down 20%, but you think there is offsets, can you maybe just talk about maybe just round out where you see the offsets to that? And what do you think is the break point where perhaps it turns into a bigger headwind for higher. Thanks.

Yeah, Nigel. First, when you think about the TK unit itself, you've got North America down maybe as much as 20%, you've got APUs down, you've got global marine down, pretty much everything else is going to go up. That's North American truck, truck and trailer and Europe and Asia, air, aftermarket, bus and rail should all go up. So, there's a chance that TK pulls off something close to mitigating that. But when you back away and look across the company, institutional is going to be strong. We think industrial margins will recover. So, there's a lot of levers to pull inside the company and a lot of confidence in the teams that we've got across the company to make it work. We see EPS growth next year. So, that's how I would look at it initially. Nigel Coe - Morgan Stanley & Co. LLC: Great. Thanks Mike.

Okay, Nigel.

Thank you. And, our next question comes from the line of Steve Tusa, from JPMorgan.

Hey, guys. Good morning.

Hey, Steve.

Good morning.

So, just on the fourth quarter, Industrial, I think – just correct me if I'm wrong. Industrial profits are going to be essentially flat quarter-to-quarter? I know there is some moving parts around Cameron that changed the seasonality a bit. It's usually up. Anything to read into there. And then secondly, your free cash flow guidance of $300 million, I believe, for the fourth quarter is down pretty substantially from the third quarter. It's bounced around a bit, but last couple years, it's been actually definitely stronger than that. So, just curious as to why those two dynamics. And I have a quick follow-up.

So, Steve, let me start out with the industrial comment and the fourth quarter. So, you're correct that the operating income is about flat, but what you have is a dynamic in the fourth quarter where you really have more of the large compressors on a year-over-year basis. It's going to be a tough comparison. (34:58) going to be one of those areas, you have tools and material handling, which are high margin businesses that are going to be down on a year-over-year basis. So, in essence, you're going to have a volume challenge. You're also going to have some investments that are occurring in some of the business. For instance we're doing some investments in the Club Car business as well as in new products for the CTS business. So, it's really a story about volume and investment and a little bit less on the Industrial side with commodities, but also some impact there.

Okay. And then, on free cash flow?

Yes. Free cash flow, that's a great question. So what we've done in 2016 is we've really changed the way that free cash flow has come in. So every quarter as we've started out 2016, we've had positive cash flow as opposed to having everything really backend loaded. So again, I think where we're at at $992 million at the end of the third quarter, is fabulous. We brought it forward and we brought it forward by paying attention to things like terms on accounts receivable, making sure that accounts receivable is balanced with accounts payable terms across the globe, with working through inventories and making sure inventories were there to serve the customer, but not too much to have additional product on hand. So we've really managed this very, very carefully. And so what you see in the fourth quarter is really that instead of doing heroics to end the quarter, we've normalized it, which is really how we want to operate the business and how we want our cash flow to come in.

Okay, great. And then Michael, as just a quick one. You mentioned EPS growth next year. I think in prior presentations this fall, you talked about top tier EPS growth, I know you had a bit of a low tax rate, that helped that growth a little bit this quarter still top tier even without that low tax rate. Is there something outside of the fundamentals next (37:17) the tax rate going back up or pension or anything else that kind of will keep you from getting to top tier and I guess with the fundamentals as they are with all that in, I mean, are you still talking that way or is this just hey the bogie is really just growing earnings given the headwinds that we have in TK et cetera?

Yeah. I think Steve, it's a balanced and diversified portfolio, lots of service. We're investing heavily in the service channel as we've done all year long, and that's paying dividends. So, I think our eyes wide open on some of the challenges, but net-net, I'm talking about top tier growth from operations. Sue you might want to comment?

So, let me comment on the general business first. So, Steve, as we're going through and we're looking at the business, we still see strength in the commercial business for next year. We see strength in the residential business going into next year. We'll see improving margins coming out of the industrial business. So, we're going to get some good play on that. We're going to remain focused in terms of the price cost spread. We know we'll have a few headwinds on the steel side, but we'll still have a bit of deflation that occurs on the basis of copper that we already have locked-in and some of the aluminum that we have locked-in for 2017. We're also going to hit productivity really, really hard in the business, that's part of our hallmark of our operational excellence, and we're going to offset inflation. We're going to continue to press on corporate. So earnings per share growth next year on – I think is going to come from all of the different parts of the business, as well as tax. Now, tax is something that we're really proud of, and we're really proud of because it's – we started to talk about a low 20%s tax rate earlier in the year, we got there faster than we expected, but we got there by really doing what we call operationalizing tax. Which is basically we assign tax partners to each of our SBUs, they're working projects within the SBUs to actually work down the effective tax rate. Things like trading hubs, things like energy credits, things like really legal entity simplification. So, we've really operationalized that, I think it's kind of cutting edge. I still don't think our tax rate is going to go below the low 20%s, I think that's where it should be. So, yes, we'll get some tailwind out of that going into 2017 because I think the low 20%s is where we project the rate. But I think, it's operational also and something I think that's really good for Ingersoll-Rand.

Right. So, the low tax rate sustainable that – that's kind of the bottom line of that conversation, tax rate is feasible.

Yes that is absolutely the low 20%s tax rate is sustainable.

Okay. Awesome. Thanks a lot guys.

Thank you. And our next question comes from the line of Julian Mitchell from Credit Suisse. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks a lot. So, I guess my first question would be on Thermo King. You sized that 25% of the business is North American trailer. I just wondered if you could give any further splits out of that business in revenue terms and also just focusing on Europe for a second, you sounded confident about Europe next year. A lot of the truck OEMs there have actually been talking about Europe slowing and maybe volumes falling next year on truck. So, maybe just give a little bit more detail on your Europe perspective for TK.

Hi, Julian. So, let me start with the quarter, that we've got in North America. You can add about 20% or so to Europe and the rest of the world in terms of trailer. Truck is a little less than 20%, aftermarket is a little bit less than 20%, APU in container are high single-digits, bus, air and rail are low double-digits. So, we've got North American trailer down, we feel pretty good about our plans, pipeline and the other businesses with the exception of marine container, which we don't think will recover much next year. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks. And then my second question just around the balance sheet. Your net debt has come down very rapidly, there was no buyback in the last few months and you talked a little bit about a fairly attractive M&A pipeline, it's been a while since the last couple of deals. So, maybe just give us an update on how you're thinking about sort of size of preferred acquisitions and any sort of financial criteria for them?

Yeah. I think one of the things we wanted to highlight for you was that in the last five years and we could go probably a little bit longer than that, but 18% per annum cash flow return on invested capital, we're doing well. So, even with the timing on Cameron not being great, we didn't lose a beat last year and we're not losing a beat this year in maintaining a strong cash flow ROIC. The kinds of things that seem to populate the list for us would be channel investments and product extensions where we're selling products through existing channels that we have today with the sales force that we have today. There's a healthy pipeline of that, probably 50-50, I think across channel versus product and it's important to be patient there. They would be more accretive if they can be closed, don't say share buyback at this level. So, the optionality is important to wait it out to make sure that we do the right thing. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thank you.

Thank you. And our next question comes from the line of Jeffrey Sprague from Vertical Research Partners.

Thank you. Good morning, everyone.

Hi, Jeff.

Two topics, first one, just back to Industrial, the comment broad based recovery. I truly want to understand what you mean by that, it would appear that you clearly mean controlling what you can control and improving operations internally. But are you also notwithstanding the pressures you still see in Q4, actually calling a turn in those end markets and see visibility of that happening?

Jeff, we're seeing flattening really, not improving markets, flattening markets and easier comps coming into 2017, but a lot of what we'll do in 2017 is improve margins to the op excellence restructuring and cost activity. And then, very good product launches coming in this quarter, fourth quarter and next year as well and that's really our game plan for Industrial for 2017. We are not counting on a broad based Industrial recovery though.

Okay. That's what I thought. Thanks. And just back to kind of the institutional markets and what you're seeing in the project book. Are those skewed towards new projects or is there a lot of retrofit going on in the institutional outlook and maybe just in general, if you could speak to kind of the retrofit pipeline that you're seeing?

Yeah. I'd say, it's largely energy efficiency retrofits replacing old antiquated systems with newer systems and those projects can get very large. So we'll see it from universities to healthcare to municipalities, state governments, federal installations. This is pretty much the market that we anticipate continuing into 2017.

Great. There's actually just one really quick one, maybe for Sue, just pension next year. Sue, any initial thoughts?

It's Sue. Our pension I believe as we look at it at this point is going to be flat for year-on-year in terms of pension expense, so I know a lots of people are calling headwind on pension because of discount rates falling and of course obviously ours are down 75 basis points from year end also. But I think with the way that we have the portfolio setup with the asset returns that we've got, my expectation is that we are going to be flat.

Great. Thanks.

Thank you. And our question comes from the line of Joe Ritchie from Goldman Sachs. Joe Ritchie - Goldman Sachs & Co.: Thanks. Good morning, guys.

Good morning, Joe.

Good morning. Joe Ritchie - Goldman Sachs & Co.: So, my first question, Sue, going back to your comments earlier on cash flow, good job on the working capital. I'm just curious as we think through the bridge to 2017, are there any items that reverse in 2017 or is the right way to think about your free cash flow growth really EBIT growth should equal free cash flow growth in 2017.

What we're focused on is really exactly what you said that the EBIT growth should be the free cash flow growth, and that's exactly what's happening in 2016 is, the operating income growth is falling through, our percentage on working capital is remaining true. We are not having to invest heavily in terms of capital, but we're also doing all of the projects and all of the items that our businesses bring forward that make financial sense. And so, if we can keep that rigor going, that is exactly the model we want which is see the EBIT flowing through. Joe Ritchie - Goldman Sachs & Co.: Got it. That makes sense. And then, Mike, I just wanted to square some comments you made earlier on Thermo King. So, with North America trailer down next year, and your comments around hoping to offset with other parts of the Thermo King portfolio. Can you square that with what your expectation is for op income for Thermo King. Would you expect it to be up next year given that you think there is going to be some natural offsets on the growth side.

So, I'm going to punt that down the road here a little bit for us to be honest. We want to dial in what North American trailer volumes will be. We're going to probably set around a 20% down number, and make sure we don't do anything. In the event that it's only down 10% or if it's down 30% we want to optimize the cost structure to match it. So, I know that if it's down 15%, we're working a plan to be relatively flat. We'll see as we get closer and dial this in, but we need a few more months on this before we can really come back to you on that. Joe Ritchie - Goldman Sachs & Co.: Okay. Fair enough. Thanks guys.

Welcome.

Thank you. And our next question comes from the line of Steve Winoker from Bernstein. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Thanks and good morning all.

Hey Steve. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Hey Sue just want to clarify the commentary around price cost heading into the fourth quarter. You've been talking about 20 basis point to 30 basis points spread for the second half, so given the 60 basis point this quarter should we be looking at flat next quarter, and then into 2017?

Yeah. So, let's talk about the fourth quarter first. So you are right if you do the math and you have an 80 basis point spread for the year it would get you to flat to maybe 20 basis point spread in the fourth quarter. But what we see happening and again the third quarter came out better than we had hoped at 60 basis points which was really about 50-50 materials equation and the other price. As we start to look at 2017, I think what 2017 does is it reverts to what we've said all along which is that we would have a 20 basis point to 30 basis point spread between price and cost and as you start to look at commodities for 2017, so steel has moved around a little bit. We saw an increase earlier in the summer to over $800 a ton. We currently see spot prices back in the $700 range. So, we have about a six-month time lag between when those prices move around and when we see it. Translated, that means I am going to see some steel inflation in the fourth quarter as well as probably the first quarter of 2017. However, I still continue to see tailwinds coming out of copper and aluminum going into 2017, helping us to offset that balance. So, we have line of sight to what we think the commodities are going to do and therefore we have line of sight to what our costs are, so that we can price per our operating model with top line margin expansion and get back to the 20 to 30 basis points for the year. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay. And Mike, lean obviously has been so important to your story for IR, but I am just looking at Climate in it and Industrial this quarter. Excluding volume and mix and 20 basis points on productivity versus other inflation for Climate and down 100 for Industrial. What's going on on a lean path here?

Yeah. Really, it's the volume running through Industrial's so low on the large equipment, which is where the big heavy fixed costs tend to sit. So it's more volume dependent. If you look at what's actually flowing through there's good productivity on that lower volume. So, Steve, the long story short is volume helps productivity, cost reductions we've taken need volume to apply them to and that's – it needs to happen in the Industrial business. But look, fundamentally, you'll see us turning up the gas again in 2017, and we'll make sure the pipeline – we try to keep the pipeline 125% of what we think it needs to be. We try to calendarize that by quarter. So what we're doing now and we do every month is to make sure that we've got that pipeline lined up to be 125% of where we want it to be for our plan, allowing for things to break or timing to be different. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay. Mathematically, though, on 14, where you show volume separately in the waterfall chart versus productivity, you're actually saying, look, there's a volume effect running through the productivity as well as in the volume part of that chart.

Absolutely. Because we're trying to separate productivity on volume from volume at standards. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Right. Okay. And just, sorry, one last thing. You talk about the replacement market being so significant for IR. Are you seeing as a result of the new investments, breakeven paybacks coming in shortening for customers that's sort of driving a shortening of the replacement timeframe for specific end markets in any kind of big way?

Yeah. I think the combination of the regulatory effect and the thought about getting in front of that when customers have the opportunity. Plus, from our point of view, there's a passion at the company around energy efficiency and sustainability. I think you hear that every time you talk to us. That combination I think is helping our people in the field make the story more compelling. And I do think it's led to why we're seeing share gain globally across the board. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Okay. Thanks.

Thank you. And our next question comes from the line of Andrew Kaplowitz from Citi.

Good morning, guys.

Good morning, Andy.

Good morning.

Mike or Sue, last quarter you gave us a breakdown of what your Industrial business looked like in its major sub-segments. You talked about Club Car aftermarket, large machines, small rotary, small air. You said larger machines, I think, were trending down 50% and smaller equipment was down a little. How would you characterize those segments, the sub-segments, in 3Q and do you see any improvement in your large factory exposed air business and do you have any initial thoughts as we head into 2017 on those sub-segments?

Yeah you're seeing some of the smaller equipment growing, which is a good sign. You're still seeing really severe contractions in large machines. But we're ready to lap that, I think, next quarter and so that's why I think it's going to stabilize where it is. And you're seeing a still good growth in oil-free machines and contact cooled machines that would be supplied into pharma, food and bev in particular, markets which – again, the earlier comments I made, were really trying to direct more of that proactive activity into the markets that are actually growing. We don't see a lot of relief coming in iron, steel, air separation, those sorts of markets.

Okay, Mike. That's helpful. And then on Climate, can you give us a little more color, I mean you said a marginal change in your guidance this year to 4% versus 4% to 5%. When I look at the sort of the pieces, it looks like the only change here is in transport, down low single digits versus flat to down last quarter was your guide. Is that North American trailers, just APUs and marine still being weaker than you thought or is it something else?

I'd say it's exactly that, Andy. It's exactly what you just said, it's North America trailer, APU and marine as being weak and not really a surprise. We've been thinking about this really all year. We thought it would actually be earlier in the year, it's actually the back half of the year. But certainly, that's the change really as you come through now the final quarter.

Got it. As you look into 2017 through, marine is very, very low, right? So, we really shouldn't have an impact from marine any more at this point?

I would hope not. We're trying to look at crop yields and other fundamental factors that determine if you're going to see produce and food and perishables move. So, structurally, you're getting to a pretty low level here.

Okay. Thanks, guys.

Thank you.

Thank you. And our next question comes from the line of Shannon O'Callaghan from UBS.

Good morning.

Hi, Shannon.

Hey, on the institutional improvement, not only in 2016 but you talked about 2017. When it first started for you, it seemed like it was mainly in K through 12 education, now it sounds a bit broader than that. Can you talk a little bit more about how that's developed and what kind of visibility you have into it?

Yeah. It's the typical way is it does evolve. It really is always kind of a K through 12 led institutional recovery, and then it moves up through higher ed, through healthcare and then eventually with state, city and federal projects. And a lot of that is based on just property values, the ability to tax against those values and have bonds pass local city vote. And so, you're into that cycle here now. It's still about 25% below where it was last time on a volume basis. So, there's quite a bit of room I think on the institutional side to continue to grow.

Okay. Great. And then, Mike, you were talking about some of the M&A in terms of channel investments, product extensions, which all sound like good places to go, but they also don't sound very big. The buyback you talked about over the last bunch of years was several years ago. Can you just maybe update us on your current philosophy around buyback? I mean, given where the stock has traded, obviously we talked about it for a while, but doesn't seem like there is big M&A in the pipe. So, maybe just update us on your philosophy on buyback?

Yeah. Maybe to step back even one step further, I mean, the first thing we want to do is make sure that we are absolutely investing in the business fully and I can check the box and say we're absolutely doing that. I can check the box and say, we've now put the dividend in a good place relative to the peer group and we're proud of that. So, it really does come down to what do you do with the other pieces of this thing and if you think about it over the long run, roughly half of the cash going to either acquisition or share buyback. We'd certainly like to grow the company, but we're not going to do that at the expense of making a poor capital allocation decision. So, what you see right now is a large number of channel and potential product expansion investments that might fit the portfolio. If we could close, they would be worth the – the juice is worth the squeeze on those, so that's really why you're seeing us hold back here. Now, with all that being said, we've continued for at least seven years I guess now that I have been saying this, always controlling dilution of the share count, so Sue alluded to the fact that's roughly 2.5 million to 4 million shares and we'll continue to make sure it's part of the program going forward.

And I think what you're seeing, Shannon this is another point on that is, we're going to be patient with this and with the cash that we have, because we really want to create long-term value. We'd really like to invest in some of these opportunities, to your point some of them in the smaller size with channel investments, but also in new products. And so, it doesn't mean that we are going to just make an either or decision, we're being patient with the cash that's on the balance sheet and we're finding the best opportunities, but we want to let some of those M&A opportunities flavor a little bit and see if we can close them, because we think that's important too.

Okay. Great, thanks.

Thank you. And our next question comes from the line of Joshua Pokrzywinski from Buckingham Research.

Hi, good morning, guys.

Hi, Josh.

Good morning.

So a couple of questions. First on Industrial margins. Mike, you talked about some of the initiatives there to get margins back up, obviously, some progress this quarter. But to see the kind of jump back to even 2015 levels for margin, 2015 levels. Does that require a particular mix to get there beyond just some productivity improvements and running the business more efficiently?

Well, mix matters, Josh. I mean, definitely, if you look at the high margin material handling and tools businesses, they matter a lot. But if you look at a normal mix that we would've seen sort of pre-downturn, about 70% of the downturn that we've seen has been volume related, the balance being some currency and then some mix. So fundamentally, we do need volume to return, but with that being said, if volume doesn't return next year, and we have the same mix of business that we have today. We have a healthy expectation to expand margins in 2017 in the Industrial business based on the actions we know we can take at these low levels of volumes. And we'll be bold about that and you'll see us commit to that probably in February.

Got you. And then, just following up on some of your comments on institutional and some of the bigger projects that are in the pipeline. I guess that triggers off a little bit of an alert on performance contracting. So I'm trying to understand maybe some of the mix of orders that are coming in that are more project related and have some pull through revenue versus pure equipment type, and I guess it wouldn't be bookings shipped, but more of your own content type orders. And can you maybe help dimension some of that out for us?

Yeah. Josh, I don't have an exact split for you, but I'm amazed at the size of equipment and controls orders that we are getting that are not performance contract based like the Chunnel tunnel and I can name a handful of sort of marquee projects like that. So we are winning a lot of that sort of work and we are loading up on that work as well. With that being said, performance contracting is an interesting place for us to play and there is a healthy amount of pull through that comes both not just in equipment but in service. Performance contracts always have a healthy service component that comes along with the guarantee.

And when we think about a more institutional mix in 2017, that would have that type of flavor to it?

It's going to be large applied and performance contracting, and so it will be equipment and controls and service with and without an energy guarantee is the way to think about that.

Got you. Appreciate it. Thanks.

Welcome.

Thank you. And we have time for one more question. Our final question for today comes from the line of Robert McCarthy from Stifel. Robert McCarthy - Stifel, Nicolaus & Co., Inc.: Hi good morning everyone. Obviously we've covered a lot here, but I guess the – I'll try on 2017 one more time. I mean Michael in the context of the last couple of years on the third quarter call, you definitely one year I think you provided a constructive range for EPS growth and then last year, you just talked about kind of the rhetoric around what you liked in terms of your overall HVAC portfolio. But do you think you have a good line of sight to 2017 on a forward basis versus previous periods in other words from 2014 to 2015 or are you – do you think there is more uncertainty in terms of the outlook this time versus the last couple of years when you were reporting 3Q?

Robert, I'll tell you, I don't have a public point of view that's primetime at this point. So, good try, I appreciate the last question is one more shot at it. But we're putting our plans together now and there is a pivotal process at all companies to put that together, so I don't want to sort of put an end here too soon on that, but we understand what top quartile will be, we understand what our goals are, what our operating system is set out to do. And so, there is not a lot of acrimony inside the company to understand what good performance looks like. That's what you'd expect for us next year, and I'll dial that in as we get closer into next year. Robert McCarthy - Stifel, Nicolaus & Co., Inc.: Thanks for your time.

Thank you.

Thank you. And that concludes our question-and-answer session. I would like to turn the conference back over to Zac Nagle for any closing comment.

Excuse me. I'd like to thank everyone for joining today's call. As always, we'll be available for questions today and over the next several days. And we look forward to speaking with you soon. Thank you.

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