Good day, ladies and gentlemen, and welcome to the Parker-Hannifin Corp. Q4 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instruction will be given at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Chief Financial Officer, Cathy Suever. Ma'am, you may begin.

Thank you, James. Good morning, and welcome to Parker-Hannifin's fourth quarter and fiscal 2017 earnings release conference call. Joining me today is Chairman and Chief Executive Officer, Tom Williams; and President and Chief Operating Officer, Lee Banks. Today's presentation slides, together with the audio webcast replay, will be accessible on the company's investor information website at phstock.com for one year following today's call. On slide number 2, you'll find the company's Safe Harbor disclosure statement addressing forward-looking statements, as well as non-GAAP financial measures. Reconciliations for any reference to non-GAAP financial measures are included in this morning's press release and are also posted on Parker's website at phstock.com. The agenda for today's call appears on slide number 3. To begin, Tom will provide highlights for the fourth quarter and full fiscal year 2017. Following Tom's comments, I'll provide a review of the company's fourth quarter and full-year 2017 performance, together with the guidance for fiscal year 2018. Tom will then provide a few summary comments and we'll open the call for a question-and-answer session. Please refer now to slide number 4, as Tom will get us started with the highlights.

Thanks Cathy, and welcome to everyone on the call. We appreciate your participation this morning. Today, I'd like to share highlights on our fourth quarter, the full-year results and make some brief comments on 2018 guidance, and give you an update on our new Win Strategy. Before getting into the financials, I'd like to start our report on the safety of the company. During 2017, we were able to reduce our recordable injuries by 22% compared to the prior year. This builds on significant year-over-year improvements in the last several years. Our global team continues to focus on achieving our goal of zero accidents through a multi-faceted plan, which includes utilization of high performance teams. This team process generates higher levels of engagement and ownership across all of our key performance indicators. Now, the financial highlights of the fourth quarter results. This was outstanding quarter for Parker across many measures. Fourth quarter sales were $3.5 billion, an 18% increase compared with the same quarter a year ago. Notably, organic sales increased 6%, while acquisitions contributed 13% and currency was a slight negative. We are particularly pleased with strong organic growth of 6% for the second consecutive quarter, driven by improving conditions across many end markets. The CLARCOR acquisition, which closed in late February, was the main factor influencing the 13% increase from acquisitions. Order rates, which do not include the impact of acquisitions, increased 8% compared with the same quarter last year, mostly driven by a 10% increase in orders for both Industrial North America and Industrial International businesses. Net income for the fourth quarter increased 21% to $293 million as reported compared with the same period last year. Earnings per share was a record at $2.15 as reported or $2.45 on an adjusted basis, a 29% increase in adjusted…

Thanks, Tom. I'd like you to now refer to slide number 5. I'll begin by addressing earnings per share for the quarter and full-year 2017. Adjusted earnings per share for the fourth quarter were $2.45 versus $1.90 for the same quarter last year. Fourth quarter earnings have been adjusted to exclude CLARCOR acquisition-related expenses of $0.19 per share and business realignment expenses of $0.11 per share, which compares to business realignment expenses of $0.13 per share for the fourth quarter last year. Adjusted earnings per share for the full-year 2017 were $8.11 versus $6.46 for 2016. The 2017 earnings are adjusted for business realignment expenses of $0.30 per share and CLARCOR acquisition-related expenses of $0.56 per share for a combined total of $0.86 per share. The 2016 earnings are adjusted for business realignment expenses of $0.57 per share. On slide number 6, you'll find the significant components of the walk from adjusted earnings per share of $1.90 for the fourth quarter of 2016 to $2.45 for the fourth quarter of this year. Increases included higher adjusted segment operating income of $0.66 per share, reflecting the improved market demand, and benefits from the new Win Strategy initiatives. Lower income tax expense in 2017 equated to an increase of $0.04 per share, due largely to the stock option expense tax credit. Adjusted per share income was reduced by $0.11 for higher interest expense, while higher corporate G&A and other expense reduced it another $0.04. On slide number 7, you'll find the significant components of the walk for adjusted earnings per share of $6.46 for the full-year 2016 to $8.11 for the full-year 2017. Increases in 2017 included higher segment operating income equating to $1.17, a gain of $0.21 realized in Q2 from the divestiture of the Autoline product line, lower other expense…

Thanks, Cathy. I am very pleased with the progress we are making towards our key goals. We're just now approaching two years into the implementation of the new Win Strategy. Not only are we delivering immediate results, but we continue to see opportunities that will allow us to drive ongoing EPS growth for the next several years, driven by four key factors. First, the new Win Strategy, which continues to drive better overall operating performance. Second, lower fixed costs as a result of our restructuring activities. Third, higher levels of organic sales growth. And lastly, the CLARCOR acquisition will yield incremental earnings and synergies. I would especially like to thank our team members around the world for their dedicated efforts and the outstanding year that we had in FY 2017. Overall, Parker is in a very strong position as we celebrate 100 years and reflect on all the great things we have accomplished and our bright future ahead of us. All signs point to a strong 2018, in which we expect to generate record levels of sales and earnings. So, at this time, James, we're ready to take question and you can go ahead and get us started.

Thank you. Our first question comes from Andy Casey with Wells Fargo Securities. Your line is open.

Thank you. Good morning, everybody.

Morning, Andy.

I was wondering if maybe Lee or Tom, could you run through what you're seeing by region?

Andy, this is Tom. Maybe what I'd like to do is kind of walk through what we're thinking for the guide, because...

Okay.

...obviously what happened on the regions is influencing the guidance. And I know that'll be a question that everybody on the phone's going to have. So let me start with the top line and I'll include the market view on that as well, Andy. So, first, the guidance is $13.6 billion; and round numbers, organic of $4 billion, currency of $1 billion, acquisitions of $8 billion. And so we use a lot of different inputs, economic models, discussions with our teams, end market activity, of course talking to our customers and distributors. And the way that 4% organic looks, it's 5% organic growth for the first half total Parker. If you look at just Industrial for us, it's around 6% if you add North America and International together. And then, for the second half of our year, what we used is our traditional first half, second half splits. So we have decades of experience of data that are first half, second half split, barring some macro event in the second half, is almost always 40%, 52%. So you take a first half at 5% organic total for the company, 6% industrial to a 48%-52% split compared to prior year, and you get to $13.6 billion. What that gives you is that yields at 2.5% organic growth for the second half. Now, that gives some insight on margins, and I'll come back to the markets that influenced that organic look. Of course then the other part on our top line is putting a full-year CLACOR in there as well. Now, on the margin side, I want to give you some color on legacy margins. So this is base Parker business without CLARCOR, and that's going from 16.1% in FY 2017 to 17.2%, so a 110-basis-point improvement on the legacy business. So,…

Okay. Thank you, Tom. And then a follow-up on that 17% to legacy margin. Does that imply – I think your fiscal 2020 goals were 17% for total company.

Yeah.

So you're already there in the guidance in fiscal 2018. Does that just mean you have to pull up CLARCOR to get to the 17% threshold or do you expect incremental legacy growth beyond that 17%?

Well, we're not done. So we definitely expect legacy margins to continue to improve. We originally set that target of 17%. Really our goal is to get that on an as-reported basis, and that was barring some large deal like we did with CLARCOR, which we're ecstatic over. So, ideally, I want to get it to 17% on an as-reported basis and I'd like to get the whole company to 17% with CLARCOR in it. But, remember, if you add that amortization, depreciation in the CLARCOR business itself, it has 10 points of headwind round numbers with that amortization and depreciation. So we see continued margin expansion. All the actions that we're going to do underneath what Cathy talked about with our realignment activities are on the base business and, of course, the costs to achieve are with the combined filtration business, and continue to make us faster and more cost-effective. So we see margin expansion in the future beyond the 17% obviously.

Okay. Thank you very much.

Thank you. Our next question comes from Joe Ritchie with Goldman Sachs. Your line is open. Joe Ritchie - Goldman Sachs & Co. LLC: Thanks. Good morning, everyone.

Hi, Joe. Joe Ritchie - Goldman Sachs & Co. LLC: Hey. So, Tom, it seems like with CLARCOR you guys are finding a lot of ways to accelerate costs and realize synergies. I guess what's the scope for initiating more spend than the $90 million you have targeted? And then also, specifically, if I'm doing the math right, if you're expecting $40 million in benefits next year, that alone should be like, what, roughly 275 basis points or so to CLARCOR margins next year. Is that right?

Well, I'm not going to calculate 2019's yet for you, but let me just talk about the integration itself. We are clearly finding opportunities to go faster. And I think it speaks to the great fit that CLARCOR and our filtration businesses are together, great product, people, channel, cultural fit, et cetera. And as we put the combined team together, we see opportunities to pull in some of those actions from 2019 to 2018. So, kind of the themes that we're looking at early on the savings are focused on corporate overhead, which is a little more straightforward to go after, facility rationalization, manufacturing optimization there and logistics. And as we move into year two, which will be 2019 and 2020, still a facility lift we'll get, and now you start to bring in more of the supply chain savings and then you bring in more of the productivity savings as you get a chance to put the Win Strategy and all of those things into those divisions. So, that's why when Cathy went through it, of the $140 million, it's $40 million, $40 million, $20 million as far as the split between 2018, 2019 and 2020. So we are very optimistic and very encouraged by what we see to continue to work that and make terrific progress. Joe Ritchie - Goldman Sachs & Co. LLC: Okay. No, that's helpful. And it sounds like the – I guess, maybe just my follow-up there is just on growth. And talking about the first half of 2018 in Industrial and the 6% growth, the order trends are pretending faster growth in that. And so I'm just curious, maybe you could tell us a little bit about the buildup to 6% and what you saw as kind of the trends progress throughout the quarter, just to get a sense for the conservatism of that number?

Well, the trends to the quarter were pretty consistent as far as what we saw, as far as orders. When we look at April through what we saw through July, we're pretty consistent. On the International, we showed 10%. We had Asia at mid-teens, and Latin America and Europe kind of in the mid- to upper-single digits. So we saw a good progress there. Now part of what you've got to remember is, especially when you get to Q2, you get to tougher comps with International because that's what's started turning last year for us was Asia particularly turning quicker. So, if you look at the first half of 6% is a higher Q1 upper-single digits, but moving down to mid-single digits as you move through the second quarter. And while we're pleased with these order rates, we recognize that it's hard to continue, especially as we start to move against these comps at double-digit order rates. So they will start to glide down and will move down to some, what I will call, more nominal growth rates, which will still be terrific for us. And you leverage that on top of what we're doing and had done already on the cost structure and continue to do, is going to mean nice earnings accretion for our shareholders. Joe Ritchie - Goldman Sachs & Co. LLC: Got it. Okay. Thanks, Tom.

Thank you. Our next question comes from Nathan Jones with Stifel. Your line is open. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Good morning, everyone.

Morning, Nathan. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: I'll follow-up to Joe there and start maybe looking at the second half. I think you said 2.5% organic growth in the second half. Leading indicators are still positive, global economy is improving. I would have thought that potentially the order rates are going to be better in the first half and maybe drive a better organic growth in the second half. Can you talk a little bit about your assumptions that go into that 2.5% organic growth in the second half?

Nathan, it's Tom. The assumptions are pretty straightforward, 48%-52%. Decades and decades of data that has showed that's our traditional split. I recognize I'm probably not smart enough to be able to forecast FY 2018 accurately, but I've got decades and decades of experience to tell us, maybe barring some unusual event, that's going to be 48%-52%. So, when you do that kind of math and you look at comparison to 2017, that's what yields that 2.5% growth. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Does that then imply that you're assuming a relatively neutral demand environment. You're not assuming any improvement in the global economy as we go forward, say, over the next six months getting towards the second half in order to sit in that 48%-52% split. If the global economy improved, then maybe it'd be a little heavier to the second half than usual?

I feel pretty good about the global economy right now. We've already experienced, as you've seen in our orders the last couple of quarters, this is pretty good activity right now and we look forward to continue. And the splits kind of is what drove the second half. But we feel very good. I mean, if you look across the regions, this is a great environment for Parker right now. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: And then just one on the order rates. Do you have any indication of whether or not there's restocking going on at the OEMs or whether this is – you're pulling through real demand here?

Nathan, it's Lee. On the distribution level, I would say there is some modest restock taking place. There's been a surge in activity and I have North America mostly in mind when I make that comment. And then on the OE side, I would say modest but it's pretty much pull-through demand, the best we could tell at this point in time. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Thanks very much.

Okay. Thanks, Nathan.

Thank you. Our next question comes from Steve Volkmann with Jefferies. Your line is open.

Hi. Good morning, everybody.

Morning, Steve.

I know you sort of do your business reviews kind of at the end of the year and curious, as you think about your portfolio and the simplification stuff that you're doing, whether there might be an opportunity to sort of further streamline the portfolio, maybe do some divestitures or something along with the process of kind of reducing the overall complexity.

Yeah. Steve, this is Tom. When we look at the portfolio, we're pretty happy with it. Now, we'll continue to look at whether we're the best owner. I think it's always a good practice. And if you look at us the last five years, we have divested of about $350 million of business that we didn't think was core or were the best owner. But when you look at how the company has been built, we are an integrated motion and control technology company, with 60% of our customers buying from two-thirds of the company. So, obviously, our customers are voting with their hard earned wallet. This package that Parker offers makes sense to solve problems for them. So I don't see any big things for the portfolio on that end, but we'll continue to be good stewards and look at that. But, as I mentioned in my opening comments, there's a lot of activity going on with the whole simplification actions. I'll just tick through a couple real quickly. So the division consolidations, when we started this as part of the Win Strategy, we were at 114 divisions, this is what are corporate Parker right now. And we're going to end the fiscal year at 90 divisions in FY 2018, so 24 divisions. But to get to 24 divisions going down, we have to combine 48 divisions, so 48 divisions out of the 114 divisions, and round numbers that's like 45% of the company has gone through some kind of a consolidation process, pretty impactful that much activity. Then we used to have separate hydraulics and automation businesses. So those housed all of our motion technologies, so hydraulics had hydraulics obviously, automation had pneumatics and electromechanical. So we looked at those and said to ourselves, it makes more sense that they be underneath one leadership on operating structure, because our customers are looking for one motion technology solution. And let's do that together, let's put all of our motion technology together. So we combined those two business groups effective in June of this calendar year. And then I mentioned the things that we're doing in Europe, Middle East and Africa, with a much more pan-European approach on customer service and our sales structure, which is really doing a lot to kind of reduce, I would call, the higher part of the organizational structure, still keep all of our key sales people or at least most of them, and have a much more efficient sales leadership structure in Europe. But I would still say that – so those are some pretty impactful structural things we're doing this fiscal year. But the big nut is still the whole revenue complexity, 80%-20% and looking at all of our part numbers, our code activity, et cetera, and streamlining that and that will be day-by-day, hand-to-hand combat working through that over the next several years and that'll have a continued margin lift for us as well.

Great. That's helpful. Thanks. And maybe just to follow up then. As I look at the difference between North America and International, we're at roughly 400 basis points now in terms of the margin. And I guess I've been doing this long enough with you to remember when you actually had some parity there a few years back, and I'm curious as you look at the two businesses and the trajectory over the next couple of years, do you expect that to close and are there any sort of structural reasons that those margins should be that different?

Steve, it's Tom again. I don't know what time period you're talking about, but in my time they've never been the same. Maybe there is some data point historically, but they've always had a difference. And the difference really kind of stems to two things. One, the mix of OEM and distribution is higher distribution in North America, hence why one of the key growth strategies of the company is to grow that international distribution in Europe, in Asia, and Latin America to drive that. We want to grow distribution around the world, including North America. We would like to change that mix in the rest of the world. So, that'd be one big one. And then the SG&A is higher in Europe than it is in North America. Hence, when you hear these actions that we're talking about, especially this year, are all geared at trying to lower that SG&A and get these more in line. Remember, the mix issue between OE and distribution, that won't be solved in a year. That's going to take – took us 60 years to build the network we got in North America. I'm not going to be happy to wait that long, but obviously we're going to stay at it very aggressively. But that will take time to change the mix part of things.

Great. Thank you so much.

Thank you. Our next question comes from John Inch with Deutsche Bank. Your line is open.

Thank you, everyone. Good morning. Thank you and good morning.

Morning, John.

Hey. So, CLARCOR, what was the organic growth in the quarter. And I guess you're saying your Industrial growth you expect next year is 6% first half, 2.5% second half. What about CLARCOR? Is that going to follow the same pattern?

Yeah, John. For the fourth quarter, we had relatively low-single-digit to almost flat growth for CLARCOR itself. Part of that is because they had a really strong March and so the fourth quarter just was even, we were okay with that. Going into fiscal year 2018, we're expecting low-single-digit organic growth for CLARCOR for the year, a little heavier first half as their seasonality is strong in the first half compared to second half, as it is for Parker.

So, a little bit below the corporate average, right, of 4%. So I think that's natural if you're kind of restructuring that business, you're going to create a little bit of disruption in terms of people moving around and stuff. Is that what that is or is there something else about the CLARCOR mix, their end markets or whatnot. And I'm assuming you're not baking any revenue synergies into those assumptions.

You're correct that we don't have revenue synergies built-in. Keep in mind, the aftermarket business doesn't tend to have the volatility or the market-driven change like OE has. Aftermarket tends to be a little bit more steady and low-single-digit growth continuously, rather than the peaks and the valleys, and they're heavy aftermarket.

Okay. So you're saying there is actually no restructuring disruption.

Well, not to the sales, but to the margins...

Yeah.

We'll certainly be building inventory for the facility consolidations and things like that. So there'll be some disruption in the margin level, but not at the sales level.

You've given us some CLARCOR numbers, but of the $8.80 midpoint adjusted, what's the EPS attributable to CLARCOR?

We're projecting a $0.20 accretion from CLARCOR in fiscal 2018.

Okay. And then just lastly on Aero. I think Eaton had kind of punk (50:17) Aero numbers too. Is military just dragging that in some manner right now, or is there something else going on that – I realize Aero doesn't get a lot of attention per se. But I'm just curious kind of what's going on, because aftermarket looks pretty good, OE not as great, I mean is it military or is there something else?

John, it's Tom. Let me just walk you through the four major buckets for Aerospace. This is looking at our 2018 guide. So, for commercial OEM, we've got it as flat. And it's a mixture of single-aisle continuing to grow, our A350 content is very high. So, that's incremental growth for us, being offset with other weakness in wide-body like Boeing 777, and then weakness in bizjet and helicopters, which is trying to find a bottom, but still not helping us. So those kind of net out to a neutral. Military OE is flat. The good thing is in Aero's F-35, we have a great content, F-35 missiles and the KC-46 tanker program, offset with legacy fighters starting to wean off, F-15s and F-16s. Commercial MRO at plus-3%, driven by available seat miles in air traffic around the world. And the military MRO at plus-5%, and that's F-35 provisioning and just the aging fleet and the need to do some repair and replacement. So, that nets out to 1.6%, 1.5% growth in FY 2018.

Just last, how did China do? China has been really strong for lots of multi companies. How did it do kind of not just on an absolute basis, but just the cadence of business in China, did it pick up? I know you've got your own Parker expansion initiatives. Just what was going on in China in the quarter?

Again, John, it's Tom. China continued to do very strong, mid-teen growth in the quarter and virtually every end market as you get go down the list, being positive. And the Asia team in general across – in addition to China, we've got every country in positive territory, every country growing. And Asia was the first region for us that turned and had a terrific year for us last year and it looks like it'll be another strong year as well.

Thank you. Appreciate it.

Thank you. Our next question comes from Jamie Cook with Credit Suisse. Your line is open. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Hi. Good morning. I guess just a follow-up, two questions. One, Tom, I know revenue synergies aren't assumed in your numbers for fiscal year 2018, but is there potential upside in terms of CLARCOR revenue synergies in 2018 or should we think about that as more of a 2019 opportunity, even though it's not in your numbers? And then, second, just your assumption on margins, OE versus aftermarket, and just price material cost in 2018. Some of your customers are starting to talk about passing through price. I'm wondering if you're able to do that as well? Thanks.

Okay. So I'll start with... Jamie L. Cook - Credit Suisse Securities (USA) LLC: Revenue synergies potential.

...revenue synergies. Yeah. Thank you. I would say, we'll start to see maybe some in 2018, but you're right, I think this is more of a 2019 exposure for us. We continue to want to use that as a contingency and more of an upside for us. We always like to exceed expectations. So I think that's an opportunity for us. But, again, I would see that more in 2019 than 2018. Aftermarket versus OE, the traditional difference for us has been about 10 points in margin, and that's still about the same. And I'll let Lee comment on the pricing environment.

Yeah. Jamie, I would just say our assumptions for pricing and costs are pretty flat going into FY 2018. There are some dynamics changing, but I think from a planning standpoint we're just assuming pretty flat. Jamie L. Cook - Credit Suisse Securities (USA) LLC: Okay. Thank you. I'll get back in queue.

Thank you. Our next question comes from Mig Dobre with Baird. Your line is open. Mig Dobre - Robert W. Baird & Co., Inc.: Yes. Thank you. Good morning. Tom, going back to Industrial. I'm wondering if there is a way that you can bucket for us maybe what percentage of your business you would guess is currently operating under what you would consider a mid-cycle or a normalized volume environment? And related to this, when we're looking at your Industrial guidance for the back half of the year, the organic growth, what exactly does that imply for this bucket? Does it mean that we're getting close to normalized volumes or is there something else we need to think about?

So, Mig, it's Tom. It's always hard for me to do this early, mid-, late-cycle. Basically I can't figure out how to do this. So I would just suggest you that what we're seeing, if I take distribution as a good example, so distribution is high-single-digit growth right now and it's going to glide into something that's more like mid-single as we go probably into Q2 and then somewhere in that 3% to 4% as we go into the second half. So it's going to start through the course of the next nine months, you're going to glide into some more normalized growth from what we saw. So we had two quarters in a row of 6%. We're forecasting another 6% for the first half. Again, we talked about Industrial. So, that would be 12 months of 6% growth, which is pretty good. And second half starts to become some more normalized level. Mig Dobre - Robert W. Baird & Co., Inc.: Okay. Well, then one for you maybe Cathy. Looking at the below-the-line-items guidance, so as far as I can tell, your adjusted for Autoline for 2017, you're roughly guiding for $35 million worth of higher expenses in fiscal 2018, yet your interest is $80 million higher. I understand that pension helps you a little bit. I'm trying to figure out how incremental CLARCOR costs, maybe some additional comp, wouldn't push this number higher than $500 million?

Well, I'm glad that that's the way you're thinking. We've done our best to keep costs down. We've had a lot of initiatives to simplify our SG&A costs or fixed costs, including at corporate, and these are activities. But you did hit on the Autoline gain won't be there, correct. We are continuing to make investments that will go through the corporate G&A for things like Internet of Things, growth. We're growing our additive manufacturing and we're looking into investments into robotics. So we are continuing to make investments that will go through the corporate G&A line. You hit on incentive compensation, we have some incentive comp plans that are market-based and they will see a little bit higher expense in 2018. Interest expense, you had a high number there. I have $42 million incremental interest expense year-over-year. And you're right, pensions will be dropping. We saw some nice gains in our pension assets in fiscal 2017 that will benefit our expense line in 2018. And yeah, just some other puts and takes in smaller amounts. Mig Dobre - Robert W. Baird & Co., Inc.: Great. Appreciate it.

Thank you. Our next question comes from Joel Tiss with BMO. Your line is open.

Morning, Joel.

Hey, guys. How's it going?

Good.

A simple one and then a little – not really that detail. Anyway, the margins in the Aerospace division, is this kind of a new run rate? Is all the R&D still abating? And we can stay at these kind of levels and build on that, or is it just more of the mix in this quarter that kind of jumped it up so high?

It's more of the mix, Joel. They saw some very heavy aftermarket mix in the fourth quarter. Fourth quarter volume for the aftermarket does tend to be our highest quarter. So the mix was good. Just because of the timing of some of the development costs, I don't know if you remember, in Q3, our development costs were up a bit. Those came out of Q4 kind of run rate. So, Q4, just for the quarter, had lower levels of development costs. But we expect development costs to continue to be about 7.5% of sales going forward. And margins in the fourth quarter were kind of a one-time anomaly and they will return back to where we were seeing them during most of the year.

Okay. Thanks. And I wonder if, Lee, maybe, you're the best guy for this, if you could give us a couple of examples of, like, the revenue complexity, like, what are the things you're working on, and a couple of the – like, maybe the targets for 2018. Just give us maybe some guidepost that we can watch out for to stay updated on. Thank you.

Well, that's a big topic, Joel. I don't know if I could it justice.

Or just a summary of a couple of topical things.

Yeah. We've got a process inside our company we call Parker Operating Protocol, and it really gives us segmentation across our product line base. As you know, we've been building some of these products for a long time, there's a long tail. And it gives us an opportunity to reduce the complexity of that long tail by either moving into standard products or finding alternative methods to take advantage of that. So I think what you can expect to see is, say, well, how can you measure this, you can expect to see margin expansion as we go forward in this and, quite frankly, higher opportunities as we focus on core opportunities and not be distracted by peripheral opportunities, if that makes sense.

Okay. All right. Thank you.

Thank you. Our next question comes from Ann Duignan with JPMorgan. Your line is open.

Hi. Thanks for squeezing me in. I guess my question would be, if you're pulling forward the synergies costs for CLARCOR into 2018 from 2019, why aren't you pulling forward the savings?

Ann, this is Tom. When you pull forward the costs, a lot of those costs might be hitting in the final quarter of 2018. So we won't be able to see those savings. I mean, that's the quick answer.

Okay. So it's just on the margin pulling it in from one to the other.

Right.

Actually I think that was part of it. I think most of my other questions got answered along the way. So I'll leave it there and follow up offline. Thank you.

Okay. Thanks, Ann. At this point, we'll take one more question, please.

Thank you. Our next and final question is from David Raso with Evercore. Your line is open.

Hi. Thanks for the extra time. First question, cadence of the orders throughout the quarter, and obviously any color on July, now that July is completely done. That would be greatly appreciated.

David, it's Tom. Orders were pretty consistent, didn't see a lot of variation, which was good, consistently at a pretty high level throughout the quarter and July was indicative of what we reflected in the guide. So, nothing unusual in July.

And then also thinking about the buckets of orders. I mean you have out of your old school investors more of a machinery, big mobile growth. Others thinking maybe factory floor CapEx, stationary type stuff comes in next. And then you have obviously the consumer life sciences type bucket that's little more multi-industrial, decides of course your internal improvement story. I know you have a lot of end markets. But can you give me a little color on – if you want to even talk about even the actual quarter, not even going forward, I assume mobile is the biggest growth. What are you seeing in the factory, stationary and then some of the even non-Industrial, so to speak, the consumer and life sciences. Just for folks who get nervous about the strength of mobile second derivative slowdowns, obviously inevitable over the next few quarters. Some of those other end markets, what are you seeing from them?

So David, it's Tom. I would just in round numbers characterize it. So distribution was high-single digits, mobile high-single digits as well, Industrial kind of in that 3% to 4% range, and then when you blend the whole things that's how you get to 6% organic growth that we had in the quarter. And I think that's kind of to be expected in distribution right now, and high single digits I think has been influenced by some of the recovery in oil and gas, and some of the general Industrial supply chain, that supports all that. We fully expect that to kind of glide over the next couple of quarters down to a more nominal growth level.

It's interesting mobile is not double-digit. I guess for diversity of your end markets, that's encouraging to hear, it's not just mobile. But can you help me a little bit on factory floor and stationary then? What are you actually seeing, and is it accelerating, is it big one-off-type projects? Just for a little better understanding, trying to look beyond the mobile markets.

Well, the Industrial, which would be the stationary stuff, is in that approximate 4% level.

But I'm just saying what are you seeing there, what is driving that? Is that any particular geographies or big projects? Just trying to understand how much we can assume. Is that something still on the come, so to speak, it can stay at this level or even accelerate? Or as mobile slows, expect stationary factory to, at best, stay kind of where it is on growth?

I think stationary is going to be pretty consistent from what I've seen so far. Remember, our stationery includes buckets that are high – it is a bit of a mixture, you've got telecom and semicon that are very high, you've got power gen that's soft right now, life science soft, but we view that it'd go on to more neutral for FY 2018. So it's a mixture of things that make up, that's the way we classify Industrial.

That's helpful. Thank you for the extra time. I appreciate it.

Okay. Thanks, David. Okay. This concludes our Q&A and our earnings call for today. Thank you everybody for joining us. Robin and Ryan will be available throughout today to take your calls should you have further questions. Thanks everybody. Have a good day.

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you very much for your participation. You may now disconnect. Have a wonderful day.