Ladies and gentlemen, thank you for standing by. Welcome to the 3M Second Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded Tuesday, July 25, 2017. I would now like to turn the call over to Bruce Jermeland, Director of Investor Relations at 3M.

Thank you and good morning, everyone. Welcome to our second quarter 2017 business review. On the call today are Inge Thulin, 3M's Chairman, President and CEO, and Nick Gangestad, our Chief Financial Officer. Each will make some formal comments, and then we'll take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on our Investor Relations website at 3M.com under the heading Quarterly Earnings. Before we begin, let me remind you of the dates for our future investor events. Please turn to slide 2. First, starting with earnings, our Q3 earnings conference call will be held on October 24, the Q4 call will be next year on January 25. And lastly, our 2018 outlook meeting will take place on December 12. Please mark your calendars. Please take a moment to read the forward-looking statement on slide 3. During today's conference call, we will make certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions. Please turn to slide 4, and I'll hand the call off to Inge.

Thank you, Bruce. Good morning, everyone, and thank you for joining us. For 3M the second quarter was marked by strong organic growth of 4% with positive growth across all five business groups. At the same time, we took a number of actions to better position our enterprise for success in both the short and long-term. This includes accelerated strategic investments to support growth and strengthening our portfolio along with M&A. I will now take you through some of the numbers. As I mentioned, organic growth across the company was 4% led by Electronics and Energy at 8%. Industrial, and Safety and Graphics continued to grow well posting organic growth of 4% and 3% respectively. Health Care also grew 3% and it was good to see our Consumer business turn positive with 1% organic growth. Company-wide total sales in U.S. dollars were $7.8 billion, up 2% year-on-year. We delivered earnings of $2.58 per share along with margins of 28%. Note that these results include impacts from both M&A and strategic investments, which Nick will cover in more detail. Excluding those impacts, core operating margins remained strong at more than 24%. Turning to free cash flow, we posted a good conversion rate of 85% in the second quarter. Our healthy cash flow enabled us to invest in enterprise by also returning significant cash to our shareholders. And in the second quarter, we returned $1.2 billion to our shareholders through dividends and share repurchases. That concludes my opening remarks and I will now turn the call over to Nick who will take us through more of the numbers. Nick?

Thanks, Inge, and good morning, everyone. I'll start on slide 5. As Inge mentioned, GAAP earnings for the quarter were $2.58 per share. Since we had several moving parts this quarter, I thought I would take a moment to cover each item to make our underlying second quarter performance as clear as possible. As Inge mentioned, we continue to execute our plans in Q2 to strengthen the company for the future. During the quarter, we made incremental strategic investments of $178 million; $39 million was growth related and $139 million related to portfolio and footprint actions. For the second half of the year, we anticipate another $0.20 to $0.25 per share impact from incremental strategic investments, largely footprint related. These actions drive greater productivity from our manufacturing and supply chain base and will improve our service to our customers. Looking ahead, we expect footprint actions to be, at a minimum, an expense of $0.10 per share in 2018. This expectation includes benefits from actions implemented in 2017. In addition, we had divestiture related activity in the quarter which added $0.57 to GAAP earnings per share, of which $0.54 relates to the identity management business. Taking into account these items, underlying earnings were $2.25 per share, up 8.2% year-on-year. Please turn to slide 6 for a recap of our quarterly sales performance. We posted good organic growth in the quarter of 3.5%, with volumes up a solid 3.8%. Selling prices were down 30 basis points year-on-year due to a couple of factors. Strong volume growth in electronics had a negative impact on price, and we saw less price growth in Latin America as currencies were more stable versus the U.S. dollar. We continued to actively manage the portfolio in Q2 and divested some non-strategic businesses which reduced sales by 100 basis…

Thank you, Nick. As I look upon the first six months of the year, I'm pleased with the performance from our global team. We are successfully executing the 3M playbook while delivering strong growth and premium returns. On the left hand side of this chart, you see the first half numbers. Robust earnings of $4.74 per share. Organic growth of 4%, margins of more than 25%, up 130 basis points year-on-year or up 40 basis points excluding the impact of M&A and strategic investments, and a free cash flow conversion rate of 70%. Equally important, we were active in taking action to strengthen 3M today and into the future. As you heard Nick discussed, we accelerated strategic investments in the first half which include an incremental $75 million to support growth in core platforms. This growth investments will continue throughout the year and they will contribute 50 basis points to 100 basis points of growth in 2017. We also invested another $239 million in the first half to optimize our portfolio and manufacturing footprint. This is part of the five-year plan we laid out in March of 2016 at our investor day in St. Paul, and we are making good progress executing that plan. These investments are important to strengthen the long-term competitiveness of our enterprise. Beyond strategic investment, we also continue to make good progress on our three key levers. The first is portfolio management and in March we announced the acquisition of Scott Safety which should close in the second half of this year. This acquisition will complement organic growth and further improve our position in the fast-growing personal safety market. In the first half, we also finalized three divestitures and announced another one. Ultimately, selling the businesses will allow us to focus on our biggest and best…

Our first question comes from the line of Andrew Kaplowitz of Citi. Please proceed with your question.

Good morning, guys.

Good morning, Andy.

Good morning, Andrew.

Nick, can you give us more color on what's going on with your ability to price? You mentioned the electronics pricing impact in APAC, the U.S. pricing continues to drift down. You did preview price versus raw as getting less positive as the year went on and it did stay positive during the quarter, but could you talk about your confidence that it will stay positive as the year continues? And then the negative pricing, you're seeing more choice and a market share gain for you or is it simply more competition?

Yeah, Andy, in the case of pricing both for the quarter and for the year, we're not – if I think about 3M's business model, where we take technology, use that to create value for the customers, that ultimately creates our fundamental pricing power. That hasn't changed. That remains strong. For the second quarter, we saw price down 30 basis points and as you mentioned we saw it down approximately 40 basis points in the U.S. On a global basis, what we're seeing, Andy, is two main things that have changed from first quarter are strong growth in electronics which was much more of a price down that the other businesses that we saw that strong volume growth there contributed to more negative price growth in Asia Pacific. And then in Latin America, where we often see price growth often driven by a weakening currencies against the U.S. dollar, we saw much more stable currencies there versus the U.S. dollar, so some of the corresponding price growth we see didn't materialize. The core price growth and this gets into what we saw in the United States. Core price growth, we traditionally see somewhere between 30 basis points and 50 basis points of core price growth. In the U.S., we see ourselves now tracking to the low end of what we've been expecting for price growth. We expect it to be closer to flat for the total year in the U.S. And we are taking in some markets selected price adjustments to gain market share, to accelerate volume growth. Some examples are our Industrial business and our Consumer business.

Okay, Nick. That's helpful. And then, Inge, can you give us a little more color on what's going on in your Health Care business? You've talked about seeing an acceleration in that business? Health Care also seems like the biggest target for your growth investments that are supposed to boost growth in that segment this year, yet you did see some deceleration in the quarter. Obviously, the deceleration looks oral care related, maybe that's shift Easter, but your growth investments, are they having their intended effect and could you still see some acceleration in that business in the second half here?

Yes, we will see acceleration of that business in the second half. And it is a very strong business for us. And you're right, we have made investment now for quite some time and in fact in Q2 we peaked that investment moving forward. So we see a couple of things happening for us. The accelerated investment for growth is now in a way hitting the peak for us, and you will see some of the business is really picking up in the second part of the year. And we have some easier comparison as well. So you comment on oral care and, as you'll recall, all will recall, we had a very strong first quarter, almost 5% growth, second quarter was flat. And I think when you look upon that there is of course an impact, as we talked about billing days and selling days in West Europe due to Easter specifically. But I also think you saw in the United States end-user demand was down in the second quarter due to the reduction of restorative procedures. So I think, if you take those together, the growth for oral care after the first two quarter is 2%. So clearly, we are continuing to grow and we take market share. So I'm not overly concerned about that shift in between Q1 and Q2 for that business. And Health Care will do very well as we move ahead into the second part of the year. So we're on plan and it look good for us.

Okay. Thanks, Inge.

Our next question comes from the line of John Inch of Deutsche Bank. Please proceed with your question.

Thank you. Good morning, everyone.

Good morning, John.

Good morning, guys. I'd like to pick up on the price theme just for a second. I think you have to go back to 2008 to see net price negative. And I guess I'm curious to know, are you guys – are you cutting price because your products are too expensive? Or because competitors have cut price? Or the underlying markets are changing out from under you? Maybe a little more color as to what's the context and nature of these adjustments? And in theory price cuts just don't happen on a one-time basis, there's a certain degree of perpetualness to it, right? Maybe you could help frame the durational context in your minds.

Yeah, John, you know as well as I do, it's a competitive world. We're constantly working to, how can we gain the market share that we think our products should be having? In this kind of competitive world, we keep looking for – where are there opportunities where price could have been a barrier for us taking market share? And in a couple of businesses I mentioned, Industrial and Consumer as well as Electronics in Asia, we look for where there are those opportunities. Partly how I think about this, John, we're also through our investments to accelerate growth as we're investing more dollars to commercialize many of our existing product lines. In some of those cases we looked at where are there opportunities where price – our current price position could be a barrier to us reaching the maximum market share potential that we felt we could attain. And we're making those selected adjustments. I do think we are at probably the peak of the price declines that we've taken to do that. I don't see much further downward pressure from the momentum we've had. And if anything, I see the second half of the year with some uptick in that pricing.

Okay. So if I read between what you're saying, it sounds like you're saying that as you're looking at sort of strategy in the future, you said, hey, certain product lines in these categories are going to face upward limits if we don't actually adjust prices lower. So in other words, competitors weren't putting pressure on you, although maybe that happened thoughtfully (34:22), but this is very much 3M driving the strategic pricing, is that fair?

Yeah, John, I think the fair way to characterize it is, these are 3M decisions we're making not responses we're making in the market. These are 3M driven actions.

Okay. Understood. And then next, just the decline in share repurchase for the year kind of at the midpoint, what exactly are you signaling if anything? And maybe you could remind us what exactly is your dividend policy? Your stock's done incredibly well, but now your yield is kind of – it's bordering on below-average. I mean, is it a payout formula? Or is it a yield function? Or maybe you could just remind us again please.

I'll talk broadly on returning cash to shareholders and then go into specifically what you're asking on the dividend, and the share repurchases. So you know for us, John, returning cash to shareholders is a priority and we do it both through dividends and we do it through share repurchases. On the dividend front, we've reached a point where we think our dividend payout ratio is in the zone that we want it to be, and future increases in our dividend over time, we expect to be very similar to what we anticipate for earnings per share growth. So in the coming years, we expect our dividend to grow in line with earnings over time. On the share repurchase front, that's more dynamic for us, and you've probably heard me say this before, we have a two-fold strategy there. We do maintain a consistent presence in the market with a base level of repurchases, and then we augment that with opportunistic buyback based on relative value. We continually assess the market valuation through our own analysis, comparing it to how the stock is trading, and over time, we've found that to be a good risk-adjusted basis to be creating value. Now, in the case of lower purchases, both for the quarter and for the year, we adjusted the full-year range down based on where we stand through the first half of the year. The market has been strong and we're exercising discipline. And we anticipate that there will continue to be opportunities in the future to effectively deploy capital to maximize those returns. I would also add that our allocation of capital to share buyback is also influenced by other demands on capital such as M&A.

So in other words, Nick, is the money you're going to save from share repo this year, is that sort of earmarked for something else? Or is it kind of a wait and see then?

There's a bit of a wait and see on that, John, that we still plan to be putting significant capital into share repurchases. We have announced our planned acquisition of Scott Safety, which we anticipate to happen in the second half of the year. But as you know, this type of market, there can be dynamics, so we are keeping our options open for the second half of the year.

Yes, we'd like to have flexibility, John, as we move ahead.

Yeah, absolutely, makes sense. Thank you very much.

Thank you.

Our next question comes from the line of Robert McCarthy of Stifel. Please proceed with your question. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yeah. In terms of the strategic investments, you have spoken a lot about it on the call and it's been consistent with kind of your contemplation through the first half of the year. Could you talk about specifically what kind of returns you're looking for on these investments, whether paybacks or ROI? And talk about are the nature of the investments truly growth investments or there's some restructuring involved as well in certain areas where perhaps demand is not what you're thinking it is?

Rob, you can think of our growth investments this year in two big components. One is our investments in growth, and that's the minority part of the investment and it's aligned with what we originally guided back in December about an incremental $100 million that we anticipate to be spending in growth investments. There's a number of core product platforms we have that we're investing in commercialization dollars in some cases that can be advertising, merchandising, in some cases it can be people involved in adding people in the actual selling process of our products. And we anticipate that that will add 50 basis points to 100 basis points to our growth for the total year, and that's factored into our guidance now. And through the first half of the year, Rob, we're seeing our growth and our expenditures on that front tracking very much in line. But that's the minority of our total strategic investments. The more significant thing on strategic investments for us in 2017 is the actions we're taking in optimizing our manufacturing supply chain footprint. And that aligns with what we shared in March of 2016 when we laid out our five-year plan. And in optimizing our footprint and our manufacturing base, we anticipated over a period of the next few years we'd be investing between $500 million and $600 million, in some cases closing manufacturing sites and shifting manufacturing and expanding manufacturing in our more efficient sites, ultimately to reduce our total manufacturing footprint, to improve efficiency and to improve our ability to service our customers. Most of what you're seeing under strategic investments fits under that strategy. We took a number of actions in the second quarter, and in terms of the return, the way we've quantified that there's a couple ways I can…

This is Inge. Let us first of all talk about what is going on in the marketplace. And as you talked about initially, consumer if you like, what is going on in the retail and consumer space. When you lead a business in totality, it's not price that you initially think about, you think about structure. And if you take our Consumer business, in order to adjust our structure for the future we started that back in 2012. So 2012 was when we start to look upon our Consumer business in terms of how do we operate, and how do we think the future will look like, and how can we become more relevant to our customers? That was the question. At that time we had nine divisions in consumer, today we have four. So you think about that in terms of evolution of the portfolio. We started back very early to adjust for future that eventually could look different. And as you heard in the result today, there's slight difference in it in terms of consolidation for us as we have three or four business divisions growing. It's basically the office supply that still consolidation is going on. We have not seen any either in Consumer or in Industrial, any differences relative to the power for us to drive growth. We're often a price leader and we're executing those plans. So we don't see differences there. And if you think about 3M generally speaking as a business, 70% of our business is either design or specked in or regulated. So if you think about it from that perspective, it's a smaller portion of 3M that eventually could be impacted. And we will adjust relative to that. But we're not thinking of going on price because that's not our business model. Our business model is to introduce a product that is adding value either through different design or improved productivity, and then we're driving price based on that. But your question is on price, and I would say we are adjusting our business models as we move forward. And often that is for us the structure in commercialization and it's also footprint, right? So you saw the investment we are doing here and the first question relative to return on that $500 million to $600 million with an annual return by 2020 of in between $125 million to $175 million. Those are important things for us to improve our competitiveness as we move forward. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Thanks for your time.

Thank you.

Our next question comes from the line of Nigel Coe of Morgan Stanley. Please proceed with your question. Nigel Coe - Morgan Stanley & Co. LLC: Thanks. Good morning, guys.

Hi, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: So I hate to return to the same pricing, but I just don't think I've ever heard 3M trying to drive volumes or market share gains through price, so I'm wondering are you taking here a decision to invest some of the raw material goodness, the deflation in raw materials into price and hence market share? And just may be, Nick, thinks about that $0.10, $0.15 of raw material deflation benefit in the plan, how does that look on a net basis versus price at this point?

Yeah. For the raw materials, the $0.10 to $0.15 that we anticipated of benefits at the beginning of the year, there's been puts and takes as we go along on the raw material side, but so far we're still seeing ourselves in that range of $0.10 to $0.15. I'd say, the potential were, in the last couple of years were we could go past that number, I don't see that is a very high probability. I see this in this range, maybe $0.10 being a little towards the bottom end of that range based on what we're seeing in the raw material markets today. On the pricing front, I don't know what to repeat, but other than there have been these isolated places where we've taken action. In the second half of the year, we expect a more normal price growth for 3M as we've put in plan some actions to be bringing price back to a more normal level that we've historically experienced in 3M. So I don't see much changing on that front from our original guidance, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: Okay. That's fair. And just to clarify, when you say normal, do you mean the 30 bps to 50 bps ex-FX, will that be the second half of the year? Or is that more 2018? And then maybe just clarify as well the comment you made on the investment spending in 2018, you said $0.10. Now, is that $0.10 on top of the $0.05 to $0.10 run rate or $0.10 total?

On the strategic investment around growth, when we started the year we said that we expected that to be an incremental $0.10 expense and we continue to expect it to be that incremental $0.10. We're not increasing that number any further. And then on the price growth, Well, I'd say it is a more normal range, I do think it'll still be to the lower end on price growth in the second half of the year, approaching in the positive zone, but not up to the whole 30 basis points to 50 basis points that we normally are getting for core price growth. Nigel Coe - Morgan Stanley & Co. LLC: That's very helpful. Thanks, Nick.

Our next question comes from the line of Steve Tusa of JPMorgan. Please proceed with your question.

Hey, guys. Good morning.

Good morning, Steve.

So when you think about the Industrial business and I guess you can kind of throw Safety and Graphics in there as well, how much of that business currently goes through kind of the proper industrial distributors? And then how has that kind of trended relative to online and the Amazons of the world over the last, call it, two years here, three years, in rough terms?

Yes. This is Inge. If you think about – you combine the two businesses which is a good way to look upon it, I would say that think about it like a 50-50 model, if you think on it globally. Some countries will have more distribution than others. But if you think about the two businesses combined and how we go to market, I think it's 50-50 generally speaking. Again, if you take many businesses in both Industrial and in Safety and Graphics, they are spec in or designed in or also regulated in a way. So the push will maybe happen for some consumables that will go through e-business channels, if you like. But we have not seen a big trend in that space as of yet. Maybe it will come, but I think then you have to think about how will that impact you relative to what you do with your end customers. But we are prepared to move in that direction. And if you look upon our business in the second quarter, if you take the two businesses you're talking about, the increase relative to e-business was 9%, and they estimate it to be 14% for the second half of the way. But you have to think about it also, that piece today for us is 2% to 3% of our total business what we do e-business direct ourselves. Many, many of our customers are of course finding the platforms themselves but they will not impact us by definition as we see at this point in time on price levels.

So when we think about kind of what's going on in the world going back to Rob's question around the higher level strategic type of stuff, Grainger obviously came out and made some headlines talking about cutting price to drive growth. They have a great franchise historically. I mean, you guys obviously have one of the greatest franchises ever and you're talking about cutting price to drive growth. Is this just coincidence? Is this just kind of the macro environment that we're in? Or are these in some way linked to what's become a much more dynamic competitive environment in the Industrial or even Consumer channels if you want to throw Consumer in there as well. Any relationship there at all? Has Grainger at all called you and said, hey, let's take some of the pain because I know you guys go to them a bit. It's just – this deflationary environment is just something new for all of us, I think, over the last (51:44).

I cannot comment on Grainger, but of course in business, generally speaking, that would be more dynamic as you move ahead, right? I think we see that specifically in the retail area at this point in time. And then I think different company will have different impacts, right? If you think about what we're all about relative to our portfolio, as I said, a lot of it is spec in, design in and regulated. So by definition, to drive that in terms of price down, that's where you have to hold back to your technology platforms, to your brand equity, et cetera. So I don't see a direct correlation as you talk about this quarter to be honest. But I will agree to as we move ahead that in all businesses, in health care or electronics or consumer, industrial, dynamics will happen and we have to adjust to that and that's what we're doing by the way, right? When you see some of our investments in terms of strategic investment for the future is to make sure we are more competitive as we move ahead. And we take action on most things in terms of our infrastructure to make sure we drive out as much cost as we can, flatten the organization and make sure we have a more agile execution model as we move ahead. So you're prepared for whatever is coming at you, right. And as I always have said, when you take those actions, do it when you can not only must. So we are taking some of those – we do it now because we can and prepare ourselves for a much, much better, more competitive and more agile 3M as we move ahead. Will pricing be one part of those and be driven by the market? Well, let's see. But important thing that you have all your fundamentals in place so you can complete.

Great. And, Nick, just very quickly, just in the second half, the comps get just a little bit tougher yet you're kind of into the high end of the range even though the first half growth is more at the midpoint of the new range. So should we just kind of ignore the comps and assume that things accelerate in the second half of the year despite that? Do you see the true economy getting better in the second half? It just would seem that your peak growth rate probably happened in the first quarter. Maybe I'm wrong about that from a timing perspective – or days sales or something.

Yeah, when it comes to the comps, there's a couple of different things going on. One, like for instance our Electronics and Industrial, both of those, I agree with you, we're going to have slightly tougher comps in the second half of the year. In the case of Consumer and in Health Care, both of those will be seeing easier comps. I wouldn't call it a big statement on our fact that we're seeing an improving economy. We're seeing a fairly stable economy outlook for the balance of the year. Our move in the organic growth range to now would be 3% to 5% and take us confidence in our ability to maintain the growth trajectory even with the tougher comp that we'll be facing, primarily in the fourth quarter.

Got it. Okay. Thanks a lot guys. Thanks for the detail.

Thank you.

Our next question comes from the line of Deane Dray of RBC Capital Markets. Please proceed with your question.

Thank you. Good morning, everyone.

Good morning, Deane.

Hi, Deane.

Just to start off in Consumer with the U.S. being down 1%, this is seasonally where we see a back-to-school impact in Consumer. How did that play out in the quarter? We've seen industry reports where spending has been higher year-over-year, and want to see how that rippled through for you guys?

So we're not through that, but I think the headline there is that this is the strongest we've seen in the past and maybe slightly stronger. I think, what you see is if you compare maybe the last couple of years versus five, six years ago, is that they wait longer to make the purchase today versus three, four, five years ago. So we will see more growth coming for that category specifically. If you look upon our performance for Consumer in United States, we can basically go right down to the office supply by definition. So there's nothing else going on there. And when you talk about back-to-school, it looks very solid for us.

Good to hear. And then a follow-up question, Inge, there was some interesting announcements regarding succession planning at 3M this quarter, looks orderly, looks well signaled, especially compared to the past. Can you comment on these announcements? Maybe specifically on expectations regarding timing?

Well, first of all the announcement was not about succession planning. The announcement was around we have a job to do. And if you saw the two announcements we did, we announced Mike Roman to take on the growth piece of the enterprise, right? So leading the five business group and the international piece. So that's around growth, and we need more growth, so that will be his focus. And then H.C. Shin was appointed Vice Chair, and he's taking on all the efficiencies, so everything going in relative to manufacturing and supply chain. And also R&D was put, and strategic planning was put under his plate. And as I said earlier, now succession planning started first day in office, right? So as a CEO you have to look upon it from the first day you walk into office. That's your obligation, and I have done that. And we have many very strong leaders in the company, Mike and H.C. are two of them, and they both have had tremendous successful record relative to leading businesses. H.C., the last six years led international, replaced me in that role before I became CEO. And before that, he in fact led the Industrial business group. Mike Roman has led the Industrial business group the last three years, before that was the Strategic Planner for the company, have lived both in Europe and Asia and have had good results. So we have two very solid individuals that have a job to do here. And so that's the whole point I would like to make with any comments around it.

Thank you.

Thank you.

Our next question comes from the line of Julian Mitchell of Credit Suisse. Please proceed with your question. Julian Mitchell - Credit Suisse Securities (USA) LLC: Hi, good morning.

Good morning, Julian. Julian Mitchell - Credit Suisse Securities (USA) LLC: Morning. Just a question on the EPS bridge. So in Q2 you had about $0.08 of tailwind from organic growth and productivity. In the first quarter that was about $0.22. And the price-volume dynamics, despite the questions so far, aren't grotesquely different in Q2 from Q1. So I wondered if there was something else going on that had weighed on the operating leverage in Q2? Maybe the timing of the business transformation or something like that? And how you thought about that $0.08 tailwind in Q2 in the context of what we should see in Q3 and Q4?

Yeah. Julian, if I think about the different quarters, as you're talking about Q1, Q2, we did see core underlying margin expansion once we strip out the gains in the strategic investments in Q1. And in Q2, we're more or less flat. So that's mathematically much of what's describing what you're seeing there on that EPS differential between Q1 and Q2. As we dissect that a little deeper, Julian, where did we not see some of the margin expansion we had seen in the past, and what does that mean for the second half of the year? Our Industrial business is one of those businesses where we didn't see as much leverage as we have seen in the past. And as we look to the second half of the year, we're expecting for the total year that we're going to be seeing 50 basis points at a minimum, possibly higher, of year-on-year margin expansion, stripping out the gain and strategic investment impact, so if we get to the underlying 50 basis points or slightly higher. Some of the reasons that will drive added leverage in a business such as Industrial, we do see that improved pricing that I talked about earlier. We do see improved results from our productivity programs, and probably some added belt-tightening going on. Julian Mitchell - Credit Suisse Securities (USA) LLC: Understood. Thank you. And then just my second and last question would be around the growth outlook in the EMEA region. I think a lot of companies this earnings have talked about a disconnect of the good soft data not necessarily translating into hard orders or sales. Should we think about your first half overall organic growth in the region of 1%? That is a good placeholder of what you expect for the second half? And maybe just any update on how you're seeing business in Europe in recent months?

Yeah. I think, when we look upon the rest of the year, I think you can see slightly more growth than you have seen in the first half of the year. So we look maybe for 2% in the second part of the year. I would say the comment relative to West Europe specifically is more around, I think Germany is still doing well. And if you look upon our figures and the way we do business over there, if you take manufacturing PMI in Germany, the second quarter was 59%, if you compare that to like 50% and 51%, 52% for China. So Germany, by definition, which is the big engine in Europe are doing well on the manufacturing side. And our business in Europe, if you look upon the portfolio, our Industrial business is very strong. So from that perspective, it's okay if you look ahead. We have not seen much of an impact to us relative to Brexit. I think countries like Spain are improving, but very much based on a lower base and some trouble they've had in the past. So when I look upon it, I would say Germany is doing well, which is a key element for you to be successful in Europe, and Nordic is doing fine, and you start to see some uptick maybe from countries like Spain. France goes sideways as we speak, but with the outcome of the election, I think that will be more positive if they can execute what they have promised, and why not? So, I think, as an outcome for Europe, generally speaking, is more positive than negative in my view. Relative to 3M, we have been on this optimization of the organization for quite some time, and if you joined, or for those of you that joined in Neuss, Germany here, a little more than a month ago, our whole execution of the EPS and SAP system is going very, very well. And I was – last week, I visited both center of expertise that we have. We have one service center in Poland and we have one supply chain center in Switzerland. I visited both of them and things are going very, very well for us in that execution. So for me, Europe generally speaking, externally, look more positive than negative. And I'm not talking only here the next two quarters. I'm talking a little bit further out, and our structure in place in Europe start to really gain momentum and deliver for us. This quarter was a little bit tough on top line but, generally speaking, I'm pleased with the progress we have made and that will pay off as we move ahead. Julian Mitchell - Credit Suisse Securities (USA) LLC: Great. Thank you.

Thank you.

Our next question comes from the line of Joe Ritchie of Goldman Sachs. Please proceed with your question. Joe Ritchie - Goldman Sachs & Co. LLC: Thanks. And good morning, everyone.

Good morning, Joe.

Hi, Joe. Joe Ritchie - Goldman Sachs & Co. LLC: So, Nick, I want to kind of circle back to some of the comments you made earlier on the strategic investments, and just doing some of the back of the envelope math here, it seems like you're going to put forth about $400 million towards strategic investments this year, call it roughly $100 next year, and then we'll see in 2019. And then the payback in 2020 on an annualized basis is $125 million to $175 million. I'm just wondering like what is it about the investments that you're making? It just seems like it's taking a while for the payback to actually be seen in your margins. And so maybe if you can just provide some color on that? That would be helpful.

Yeah. Joe, thanks for asking that question. There's different types of actions a company like us, like 3M can take. Sometimes an action where we enter into a restructuring where we're reducing the size of our workforce, that can be a much faster payback. And you've seen actions like that that we've done and see very fast payback. When it comes to optimizing our manufacturing and supply chain footprint, those paybacks take time to materialize. We don't start seeing benefits, Joe, until we actually have the manufacturing site closed that we've chosen to action, and have the new manufacturing going on in a new location. That takes time to happen. It takes time to work with work councils, with employee organizations, it takes time to, in some places re-qualify that product if we're moving. It can many times be several quarters before we – from the point we announce it until we've actually physically made the change and start realizing those benefits. So this is different, and this is why this one takes longer to get happen. Still a very important part of our strategy though to be by 2020 getting to those savings that we're projecting. Joe Ritchie - Goldman Sachs & Co. LLC: Nick, that's helpful color. I guess, just a clarifying question on that, so this year you have gains that are essentially offsetting all of the investments that you're making. Next year there's going to be additional investments that you're making. Is the right way to think about 2018 that there's going to be a net negative to your margin from these investments? Or are there going to be other offsetting items as well in 2018?

Well, I can't speculate on whether there will be more M&A activity that will happen because those we announce once we have clear line of sight that they'll actually happen. But in terms of the footprint side, we'll still be seeing the negative impact in absolute terms in 2018 on our margin and on our EPS. We expect in 2019 to become positive, and then by 2020 to be the full amount. As far as the M&A and what that might do in 2018, I think it's too early for me to speculate on that piece. Joe Ritchie - Goldman Sachs & Co. LLC: Okay. Fair enough. And maybe just talking about the growth investments that you're making, and just to make sure that I understand that well, so you mentioned about $100 million in growth investments this year. And so if I just kind of think about just the payback from those investments, you mentioned it was about a point of growth, so call it like $300 million or so in revenue, at your operating margin 25%, say, if you're talking about, call it, roughly $75 million in profit. The question, I guess, is regarding these growth investments, do you think that going forward this is going to be part of the status quo or you're going to have to continue to make these investments? Or are these investments going to drive like a longer cycle product growth across your portfolio?

Well, first of all, it's $104 million additional investment for commercialization this year. And we said it will drive 50 basis point to 100 basis point of growth. And six, seven months into the year, we see that coming exactly as we laid out. I think, it's important to think about it. This is products and categories where we already have a very good position in the marketplace. So this is more, sell more of the same, but penetrate different parts of the world. So this is not relative to total new products or anything, this is category of products into markets where we already have a very good return and a good position in some parts of the world, but not everywhere. So we selected those programs in August of last year in order to make those investments. So with success, I think they will get more investment as they go, but it will be part of the normal business model. So this was an acceleration for us and an additional push. And I would say pretty safe product lines for us to penetrate more and broader, and deeper around the world. Joe Ritchie - Goldman Sachs & Co. LLC: Thanks, Inge.

Thank you.

Our next question comes from the line of Laurence Alexander of Jefferies. Please proceed with your question.

Good morning, guys. Just a quick one. You flagged certain markets where in organic local currency terms you've been in decline on filtration, roofing granules, office supplies, European health care, European energy, European consumer. If you look at that cluster of businesses, I think I might have missed one or two, if you look at that cluster of businesses, do you see a line of sight to getting that cluster back to a growth track next year? Or do you need a change in the macro environment to get there?

Well, I think, generally speaking, you will have from time to time some businesses that are not growing as fast as the rest of them. I think, the important thing for us is to make sure that all businesses can capitalize and use our four fundamental strengths in order to be strong. So the four fundamental strengths we have talked about is our technology platforms, our manufacturing capabilities, our geographic reach, and our brand equity. If you follow those categories, you will grow over time, and you will perform very, very well. And there's none of the businesses you listed there that I would say will fall out of that frame specifically. So I'm not overly concerned relative to any of them that you talked about specifically. And I would say, all of us leading businesses, we would like all businesses to grow every quarter, the whole time, right? But that is not reality. So I would say, our competitive position based on the four fundamentals of the company is very strong, and we should be able to outperform the local market wherever we compete. And as you know, we have talked about 1.5 times IPI, industrial production index, as a target that we have done in the past. And I think we should do closer to 1.7. So I'm optimistic relative to the future.

Thank you.

Thank you.

Our next question comes from the line of Andrew Obin of Bank of America Merrill Lynch. Please proceed with your question.

Good morning.

Good morning, Andrew.

Good morning, Andrew.

If I could just summarize – it's been a bit of a frustrating call – but just to summarize, your predecessor focused on driving top line, and there was this view that top line comes at the expense of margin that if you get growth you're not going to get margin. And this quarter I think seems to bring back those fears. On top of that of course you have the Amazon fear. If you look forward, do you think your new strategy for expanding some key products means that margin is now capped for a while as we're pursuing this growth strategy? Or do you think 3M still has levers to drive margin up both near-term and long-term?

Andrew, no fear. Don't be overly concerned relative to that strategy. And I think you have to think about it in a way that a certain element at a certain time you need to do with the business. And I think what we have done, we have worked very hard on the portfolio in order to make sure that we stay in businesses where we can use our four fundamental strengths. And if there's some businesses that have been underperforming, in every single case have been – the reason have been that they have not been able to use the four fundamental strengths. I think that's the basis for it. We have also said that by shifting and moving in the portfolio, our performance will be much better over time. And I think we have proven that in Electronics and Energy. I think we have proven that in Safety and Graphics. I think we have proven that in Consumer, if I go back to the 2012 starting point. And in Health Care we didn't need to do much because that portfolio was very strong by definition with high margins. Now we are focusing more in on the Industrial, and we are taking action there. And one – that's one-third of the company, so we need to get Industrial up and growing at a faster rate. And we have now had three good quarters of growth as we speak. And we are now taking action and more focus as we move forward relative to productivity, organizational structure, et cetera. So for me, it's not a question of one quarter, it's a question of how will it look as we go forward. I'm totally confident with all the work we have done, the way we have worked on the portfolio, the way we are improving the way we go to market, that we will continue to lever very well and deliver good result as we move forward. If not, I wouldn't execute the plan at all.

Thank you. That's a great answer. And just a question in terms of what would it take to get high-end of your guidance on top line in terms of key regions and businesses, if you could outline the bull case scenario?

Yeah, we upgraded the range from 3% to 5%, as you saw, right? And I think to be in the middle of that is very doable. We have 4% growth in the first part of the year. I think, we're not talking about businesses, but I would say from a geographical perspective, if we can capitalize more on our strengths in the United States, even more on that will help us. And I think the same for West Europe. So I think, it's – the United States, where we are – we are doing fine, but I think we are so strong here that we should be able to take even more of the opportunities in the United States. And as I said earlier, West Europe looks slightly better in my mind than I thought maybe two, three quarters ago. Let's see if that can come through during the rest of the year. If that's happened, then maybe can push us up to the higher end. But let's see? So let's hold for the – let's hold the range for 3% to 5% for now, and then we can talk next quarter to see how it look like if we can give you some more color to it. But 3% to 5% is very, very realistic for us. And as I said earlier, I'm very pleased with where we are after two quarters in terms of the result. 4% growth after two quarter is respectable for us I think and pretty good.

And just to reiterate, because I am getting these e-mails, you outlined a margin growth strategy in Europe, you're sort of positive on margin opportunity in Safety and Graphics. None of that has changed?

No. Nothing of that has changed.

No, nothing has changed on that front.

No, no, no. Not at all.

Absolutely not.

Not at all.

Thank you.

That concludes the question-and-answer portion of our conference call. I will now turn the call back over to Inge Thulin for some closing comments.

Thank you. As I said earlier, I'm pleased with the performance through the first six months of the year. We are successfully executing the 3M playbook and positioned to deliver a strong 2017. As you saw today in our updated guidance, this includes good progress relative to our four primary financial objectives: earnings per share, organic local currency sales growth, return on invested capital, and free cash flow conversion. At the same time, we are making investments to accelerate growth and strengthen our portfolio, which will build on an even more competitive 3M for 2018 and beyond. Thank you very much for joining us, and have a good day.

Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation and ask that you please disconnect your lines.