Welcome to the Xylem Third Quarter 2017 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions following the presentation. I would now like to turn the call over to Matt Latino, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, Kristie. Good morning, everyone, and welcome to Xylem's third quarter 2017 earnings conference call. With me today are Chief Executive Officer, Patrick Decker, and Chief Financial Officer, Mark Rajkowski. They will provide their perspective on Xylem's third quarter 2017 results and discuss the full year outlook for 2017. Following our prepared remarks, we will address questions related to the information covered on the call. I'll ask that you please keep to one question and a follow up, and then return to the queue. As a reminder, this call and our webcast are accompanied by a slide presentation available in the Investor section of our website. A replay of today's call will be available until midnight on December 1. Please note the replay number is 800-585-8367 and the confirmation code is 41782548. Additionally, the call will be available for playback via the Investor section of our website under the heading, Investor Events. Please turn to slide number 2. We will make some forward-looking statements on today's call, including references to future events or developments that we anticipate will or may occur in the future. These statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent Annual Report on Form 10-K and in subsequent reports filed with the SEC. Please note that the company undertakes no obligation to update any forward-looking statements publicly to reflect subsequent events or circumstances, and actual events or results could differ materially from those anticipated. Please turn to slide 3. We have provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics. For purposes of today's call, all references will be on an adjusted basis unless otherwise indicated, and non-GAAP financials have been reconciled for you and are included in the Appendix section of the presentation. Now, please turn to slide 4, and I will turn the call over to our CEO, Patrick Decker.

Thanks, Matt, and good morning, everyone. Thanks for joining us today to discuss our third quarter results. We had a very good quarter and I'm quite pleased with our team's performance across all of our businesses. Each segment delivered solid revenue growth and robust order growth. We've seen improving conditions in most of our end-markets and we're executing in the marketplace more effectively than ever. We're well on track to deliver on our 2017 commitments, and this broad-based improvement and the momentum we're building give us even more confidence in our long-term growth targets. Before I get into our quarterly results, we've had a number of questions about the hurricanes and their impact. So, let me address that issue first. We were very fortunate in that few of our own colleagues were affected personally in a significant way. From a business perspective, we always position our teams and equipment to ensure we can respond as quickly as possible when disaster strikes. But in this case, it wasn't just our customers who needed help. It was everyone in the path of each storm. One of the great qualities of Xylem is the passion our colleagues have for helping others in need. It's simply part of our mission as a company. With each hurricane, our employees donated their own money to help with relief efforts. And through our Xylem Watermark program, we redirected significant funding and expanded our employee volunteer initiative to assist these communities at a very difficult time. The rebuilding efforts are in the early days and our teams will continue to help. A couple of weeks ago, one team spent several days cleaning out flooded homes and prepping them for reconstruction. And next week, we're sending a group of our colleagues to Puerto Rico to help build water towers…

Thanks, Patrick. Let's turn to slide 5. Overall, revenues were up 33% to $1.2 billion in the third quarter. On a pro forma organic basis, this represents 5% growth with both Sensus and the base Xylem business contributing 5% each. Foreign exchange increased revenues by $18 million or a little more than 1%. In the base Xylem business, the 5% growth reflects strength across all of our end markets. Notably, it marked a return to growth in public utility, where we delivered 4% growth despite lapping a challenging prior year growth rate of 10%. The momentum we saw in the second quarter in our industrial markets continued to build during the third quarter, resulting in 4% growth. We also continue to see strong performance in the commercial and residential end markets, which were up 9% and 5%, respectively. Regionally, the U.S. was up 5% year-over-year with strength across all four end markets. Western Europe performance increased 3% with double-digit growth in commercial and modest growth in public utility. Emerging markets were up 8%, driven by double-digit growth in each of our key regions of China, India and the Middle East. This growth was partially offset by the lapping of large project deliveries in Asia and Eastern Europe. Our Sensus business grew revenues 5% and also delivered more than 10% orders growth in the quarter. Finally, orders for our base Xylem business were also strong, up 6% in the quarter. Moving to operational performance, we increased our adjusted EBITDA margin by 20 basis points to 19.2% in the quarter. This increase was driven by strong productivity and operating results from our base Xylem business as well as the continued solid performance of Sensus. Adjusted operating margin was 14.1% in the quarter. Excluding the 70 basis points of purchase accounting amortization for…

Thanks, Mark. We delivered solid results year-to-date and we're on track to deliver on our financial targets for the full year. The changes in our full-year guidance reflect our expected full-year operational performance, as well as updates to our foreign currency assumptions. At the top line, we now expect to deliver full-year revenue of approximately $4.7 billion. On a pro forma basis, we project organic revenue growth of 3% to 4%, which includes organic growth from the base Xylem business of roughly 3% and organic growth of 6% to 7% in our Sensus business. We continue to anticipate generating $130 million in cost savings for the full year, a 10% year-over-year increase; and, as I said previously, we are on pace to meet that target. Our adjusted operating margin is now forecast to grow about 50 basis points, excluding roughly 60 basis points of margin dilution from Sensus purchase accounting. Here, we've narrowed the range of our previous guidance. At the bottom line, we now expect to generate adjusted full-year earnings per share of $2.39 to $2.41, which excludes integration, restructuring and realignment cost of about $50 million. We've increased our projection for those costs from our previous forecast of $40 million as we've accelerated certain activities that we now plan to execute in the fourth quarter. EPS growth is projected to be in the range of 18% to 19%. Finally, as Mark discussed, we expect to deliver free cash flow conversion of at least 110% this year. This contemplates anticipated capital expenditures of $190 million to $200 million. Now, please turn to slide 11 and I'll walk you through our end-market assumptions. Please note that our growth estimates on this slide reflect pro forma organic revenue from 2016 for Xylem and include the impact of Sensus. Our growth rate projections for each end-market remain unchanged from last quarter, so I'll just review these very quickly. Public utility constitutes about 47% of our 2016 revenue. For 2017, we continue to expect revenue to grow in the low to mid-single-digit range with Sensus delivering 6% to 7% growth and the Xylem base businesses up low single digits. We continue to expect that full-year revenue in our industrial end-market will be up low single digits. And moving to commercial, we project revenue growth to be in the mid-single-digit range in 2017. In residential, we continue to anticipate full-year revenue growth in the high single-digit range. Now, please turn to slide 12 and Mark will walk you through more details on the outlook.

I'll briefly update you on our guidance for the full year and also highlight some of the key planning assumptions for the fourth quarter. As Patrick mentioned, we're increasing the midpoint of our full year earnings per share guidance range, which is now $2.39 to $2.41. At the midpoint, this reflects a $0.05 increase from our second quarter guidance. The components of this $0.05 increase include the following: An increase of $0.02 to update our euro FX rate assumption from 1.15 to the October average of 1.17; there's a $0.01 increase for better operational performance in the third quarter; and lastly, another $0.02 related to recent orders momentum and the strong backlog that we have as we enter the fourth quarter. Now, I'll highlight a couple of the key assumptions for the fourth quarter. We're anticipating 5% to 6% pro forma organic revenue growth in the quarter. As I mentioned, we're assuming the FX euro rate to average 1.17 in Q4. Our adjusted operating margin is expected to be in the range of 15.4% to 15.7% and our adjusted EPS will be in the range of $0.75 to $0.77. With that, I'll now turn the call back over to Patrick for closing comments.

So thanks, Mark. I'm pleased with our performance this past quarter, particularly the momentum that our teams continue to build. Their execution is strong, which is enabling them to capture more growth in our improving end markets. We're making substantial progress on our strategic priorities. Our focused and disciplined approach has us on track to achieve our near-term objectives while continuing to advance toward our longer-term business goals and growth targets. There is still a significant amount of work to do, but we have tremendously committed and capable teams executing this work. Working together, I have great confidence that we will accomplish our objectives, including further value creation for our shareholders. Now, operator, we can open up to questions.

Thank you. The floor is now open for questions. Thank you. Our first question is coming from the line of Deane Dray with RBC Capital Markets.

Thank you. Good morning, everyone.

Good morning, Deane.

Good morning.

Hey, maybe I can start with a couple of the big growth numbers this quarter, the China and India numbers up 30%. And for China, could you put this growth in context? We've heard reports of the Chinese amending their five-year plan regarding water, specifically and nonrevenue water. Are you beginning to see – are you in discussions where this might be an opportunity for – especially, given your work with Sensus and being able to come with a more integrated strategy towards nonrevenue water?

Yeah. Thanks, Deane. This is Patrick. So, I would say we are in the early stages of beginning to do some pilots in those markets, most notably in China. But I would say this order growth and revenue growth that you're seeing really doesn't reflect any of that. We're in the early stages of that. This is tied back, though, to your comment about a broad government mandate around environmental quality and water quality. And we've seen that momentum really building over the course of the last year or so. And, of course, we're also coming off of some easy comps in the second half of last year, but do feel good about the momentum that we're seeing in both of those markets as well as the Middle East.

And then, just given this is the one-year anniversary for Sensus and, Patrick, you said in the coming months you'd hear more about some of these new pilot programs. But I was hoping, you can just give us some hints, directionally, as to what types of applications did these pilots address in terms of watershed monitoring, environmental, maybe nonrevenue water? But just directionally, where are these pilot programs focused?

Sure. Yeah, I'll keep my comments a little bit opaque for competitive reasons, as you can appreciate, but certainly, you nailed it in terms of nonrevenue water is clearly a big mandate that's beginning to gain momentum around the world. So, we've got a few things going on in that area. You're absolutely correct in talking about smarter watershed management. There's a lot that goes into that around water quality, but also kind of advanced analytics before the water hits the treatment plant and some value that we can really drive and add there. So, those are a couple of a handful of areas that we're focused on.

Great. Thank you.

Thank you.

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

Good morning, Nathan.

Good morning, Nathan. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Patrick, a couple times in your prepared comments today, you talked about executing better than ever. I'm wondering if you could give us a little more color on the areas that you feel the execution's improving, what areas you're focused on to continue to drive that forward?

Sure. Thanks, Nate. Yeah, I'd say a couple, three areas that come to mind for me. First, is on the commercial side and we're still in the early innings on this. It's a fragmented market; a lot of competitors out there. I think our teams are more aligned than ever. Now, it's always a bit like ducks swimming. I mean, there's a lot of work that goes on behind the scenes here, but I do feel the momentum there in terms of our commercial teams, whether it be the tools we've given them, the incentives, but I think, also, just it takes time for people to get familiar with the portfolio, and I think that the ability to generate and share leads, we saw that at WEFTEC, as a good example. The unity there at the booth was outstanding. So, that's one area. The second is in the area of R&D, and I think the investments that we've made over the last few years are beginning to pay off. And we're seeing that in the movement of our vitality index, but more importantly, some of the share gains that we've had in a couple of our core markets. So, those are a couple of areas. I mean, certainly, the third would be the whole productivity focus around procurement and Lean deployment. While, again, we're still in the early innings there, that's really what's allowed us to fund these other investments we've made on the front end and in R&D while continuing the margin expansion.

And one last point, Patrick, I also noticed the really good progress the team's making on the Sensus integration work.

Absolutely. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Then, second question here, you've got – in Water Infrastructure and Applied Water, you had 3.2% cost reductions, 4.6% cost reductions. Can you talk about any early read on what kind of numbers we should be expecting for next year? Are you still ramping up cost reductions? Are you starting to plateau on the opportunities there?

No. I think that we still have opportunities here, too. We've not plateaued. So, we have opportunities here to continue the margin expansion, absolutely; and, that really is, again, being driven by the various productivity initiatives, but also bear in mind that we are in the early stages of the simplification work that we talked and the rollout of Global Business Services and some other tools or programs that can continue to further the margin expansion.

Yeah. Listen, Nathan, as you heard us talk about in our Investor Day work, I mean, Tony Milando and his team have plans to continue that momentum in Lean Six Sigma and, certainly, global procurement with new tools and capabilities. And just to reemphasize the last point Patrick made, we're just getting started on our Global Business Services work. So that's all ahead of us. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: Maybe I could just rephrase that a little bit. Infrastructure and Applied Water, you put up about 30% incremental margins this quarter. Is that kind of a level we should be expecting you to be able to generate next year?

Yeah. So, we – I think as we indicated it at Investor Day, just to reiterate that, that we – historically, we have been generating about 35%-plus in incremental margins on a blended basis; this, again, excluding Sensus. This is the legacy Xylem businesses. And in our long-range targets, we had built in about 30% plus incremental margins. And the only reason for that modest degradation was the mix of business, because we do expect to have higher growth in both treatment, as well as in the emerging markets. Treatment has a somewhat lower margin, in general. But emerging markets, lower margin, not because of emerging markets, but because of the mix of project activity there that would lead to slightly lower incremental margins. So still around that 30% mark. Nathan Hardie Jones - Stifel, Nicolaus & Co., Inc.: That's helpful. Thank you.

Thank you.

Thank you. Your next question comes from Scott Davis with Melius.

Hi. Good morning, guys.

Good morning, Scott.

Hey, Scott.

The growth rates are pretty interesting and I don't think, following you guys as long as I have, I can remember kind of this much volatility in the growth rates. Meaning, like treatment up 14%, for example, just seems like such a big number to me, in general. I mean, can you help us understand how, maybe, water utilities are acting differently in the marketplace? I mean, is there – is it kind of getting lumpier over time and there are things – weird things going on, like budget flushes and stuff that – or is this just pent-up demand that's just coming off of multiyear recession time period?

Yeah. Scott, it's a fair question. I think the way I would describe it and characterize it would be that part of the – look, we're very pleased with the execution of the teams. I mean, there's an element of share gain in a number of these areas, but having said that, we did have a relatively easy compare; tough second half of last year where we did have the so-called air pockets that were out there. And so, we're lapping that now. Even having said that, you're still seeing pretty robust growth rates here. So, there is some level of just continued fundamental market recovery here in the public utility side, but I think what we're seeing here in general is, while we don't talk a lot about the industrial piece, because we don't have a lot of heavy industry, we're more the light industrial piece, we've seen some rebound and recovery and strength there. And then, I would also say, obviously, the Sensus business, just given the nature of meter deployments and the AMI deployments, that could be a little lumpy. That will be a little volatile from quarter-to-quarter; shouldn't be volatile from year-to-year, but maybe from quarter-to-quarter.

Yeah, that makes sense. And then, I know there's been a lot of M&A speculation and when – one of the things – and I'm not going to ask you to comment because you're probably going to say no anyways, but the – when I – we can do the math and what you can financially afford maybe and, of course, you could issue stock, I guess, if you really saw something interesting, but do you feel like you've got the people and the systems in place to really manage doing another sizable deal after you've done Sensus and such?

Well, thanks, Scott. As you said, I'm not going to comment on market rumors and speculation. All I would say there is we – I certainly do feel, and certainly the board feels, that we've got both the financial and the management capacity to do deals of size, but we're only going to do it in a very disciplined manner. We're going to be focusing on good returns on capital. We're only going to focus on assets that are clearly in line with the strategy that we laid out back in Investor Day, but certainly we've got that capacity. But, look, we're going to focus on deploying capital that's really going to create value for shareholders.

Yeah. Well, so far, you've done that. So, good job, good luck, guys, and thank you.

Well, thank you, Scott.

Thanks.

Thank you. Your next question is from Joe Giordano with Cowen. Joseph Giordano - Cowen & Co. LLC: Hey, guys. Good morning.

Good morning, Joe.

Good morning, Joe. Joseph Giordano - Cowen & Co. LLC: Similar with Scott's discussion, I'm more interested in – when you look across the potential M&A spectrum, how are you looking as far as new technologies more towards the Sensus-type communications and analytics versus more traditional infrastructure that might be a logical fit into the portfolio, but has a different – it's certainly a different type of investment? So, how do you kind of compare or contrast that when you're weighing decision?

Sure, Joe. So, I would just – I'd go back to what we laid out in our Investor Day back in April. There are three areas that we have highlighted. One is obviously kind of the digitization of the water sector. We call it systems intelligence. We talked about industrial water services and we talked about advance in industrial water treatment. So, those are the three broad areas that we have prioritized. Now, look, the water sector is a very fragmented industry and we've got a very healthy pipeline of potential targets that are out there that we look at. And we absolutely love the digital space. And there are a number of opportunities that we are continuing to look at there that will fill out some technology gaps that we've got in our offering. So that remains to be a top priority for us. But those are really the three areas that we continue to focus on that we laid out back in April. Joseph Giordano - Cowen & Co. LLC: Can you maybe talk about some of the trends you're seeing within industrial treatment, specifically, as far as maybe some of the burden shifting towards them from a regulatory perspective versus just from a PR perspective. If a company is kind of wanting to be that zero-discharge kind of greener footprint, what are you seeing there over the last couple of years?

Sure. Yeah. Yeah, so we definitely are seeing trends that are shifting that direction. Part of it is the financial burden that some of the utilities face and they want to offload some of that to the deep pockets. Others, in some cases, is regulatory moves on the part of various governments. It's not been a dramatic shift, I mean, and I wouldn't suggest that we're like in double-digit land there in terms of that kind of shift, but it's been, certainly, a strengthening of that demand in that sector. It is still a very, very fragmented industry in that regard. And so, that obviously provides some challenges along the way in terms of margins and so forth, but it is certainly healthier now than it's been in the past. Joseph Giordano - Cowen & Co. LLC: And maybe last from me, can you maybe just give us an update on some of the pilots that – I think, over the last couple of quarters, you talked about some pilots you had for Sensus, mainly, some big stuff, potentially, in Asia that you've kind of been going through. So, any incremental progress there?

Yeah. Making progress. I'd say, Joe, just for competitive reasons, I'd rather not give too much more information on specifics around the pilots themselves, but I feel good about the momentum there. These things are longer term specification, and we would expect for there to be news there, hopefully, sometime in 2018. Joseph Giordano - Cowen & Co. LLC: Good. Thanks, guys.

Okay, thank you.

Thank you. Your next question comes from Ryan Connors with Boenning & Scattergood Ryan M. Connors - Boenning & Scattergood, Inc.: Great. Thanks. Good morning.

Good morning, Ryan.

Good morning, Ryan. Ryan M. Connors - Boenning & Scattergood, Inc.: I wondered – one thing you didn't mention, at least not very prominently, is raw material costs and input costs and that being any sort of a headwind to margins. So, I wonder if you can expand on that, what you're seeing on that front, and then tying that to a discussion of pricing and price/cost management.

Hey, Ryan, let me take that one. We haven't seen a significant ramp in those direct material costs. In fact, it's somewhat moderated from the tick-up we saw in the second quarter. We're seeing a little bit of it in stainless steel, a little bit of it in copper, but it's really modest. And certainly, what we're looking to do commercially is really make sure that, to the extent where we do see a tick-up in those direct material costs, that we're making sure that we pass it along to the customers, certainly where we can and where we have strong value propositions. And that's work that's ongoing. Ryan M. Connors - Boenning & Scattergood, Inc.: Okay. That's great.

And I would just add, Ryan – sorry, this is Patrick. I mean, I know there's been some other commentary in the space around impact on like brass and copper. Less than 10% of our overall Sensus revenue, not even Xylem, but less than 10% of our overall Sensus revenue is actually exposed to brass and copper; again, different composites in our materials et cetera. And again, that's relatively – I don't want to say it's easy, but it's relatively easy for our procurement teams to mitigate that. Ryan M. Connors - Boenning & Scattergood, Inc.: Okay. And then, the follow-up would be just a more discussion of strategic pricing. It seems that since organic growth is picking up, that should be a good thing for supply and demand balance across the industry. I know pricing has been kind of a headwind the last couple, few years. Is that something we should expect to turn around and we should expect growth to become a contributor to price, say, from next year and beyond, or what's your view there?

Yeah. I mean, we certainly would like to believe that the supply/demand equation would be coming into our favor, and it's certainly a focus area for us. And we, certainly as a leader in the marketplace, want to be disciplined in that regard. Whether or not we build that into an outlook, that remains to be seen. We really need to get another quarter or two behind our belts here to see real sustained momentum in terms of demand before we build it into an outlook. Ryan M. Connors - Boenning & Scattergood, Inc.: Okay. Great. Thanks for your time.

Thank you.

Thanks, Ryan.

Thank you. Your next question is from John Walsh with Vertical Research.

Hi. Good morning.

Good morning.

Hey, John.

Hey. So, just a question around investment spending as we think about next year. I know you've talked about what you think your incrementals would drop through, but should that be a headwind or a tailwind as we think about the absolute level of spending or as a percentage of sales?

Yeah. John, we're – we still have work to do to really drive some of the commercial synergies that Patrick was talking about earlier in some of these pilot projects. We're going to continue to be innovative and look to continue to invest in R&D to ensure that we have the leading portfolio of solutions for the marketplace and for our customers. So, that – and as we talked about during Investor Day, that is going to continue to be an area where we'll make continued investments. So, that's something that we'd expect to continue to do, certainly, in 2018 and beyond.

And I would – the other couple of areas I'd offer, John, would be, one, certainly emerging markets as we continue to build out for the future there. That's where a big share of Water Infrastructure investment is occurring and will continue to occur. So, we'll continue to support those markets. And then, secondly, I would say, not even in terms of just the R&D engineering support, but as we are building out new capabilities to sell some of these new digital value propositions, there will be some investment in sales and marketing there as well; but, all manageable within our – all manageable within the productivity for investment statements we've made before and will have no impact on our margin expansion goals and aims, here.

Got you. And then, just thinking about the public utility market for Q4 in your full-year guidance construct, you know, we're going to come up here against a much easier comparison in the year ago. You have good visibility from your shippable backlog, but will still need some book in ship. Some of your peers have said they've seen slippage. It doesn't appear you've seen that, but can you kind of talk to what are the toggle points to kind of hit the lower end or the higher end of that low to mid-single-digit market for the full-year guide?

Yeah. So, right now we would – kind of a right down the middle of the fairway would be a mid-single-digit growth in fourth quarter for public utility. Obviously, to go above that would have some modest impact on our full year growth. But you're absolutely asking the right question. At this point in time, does it really matter what the full year number is? It's more what momentum are we seeing in the fourth quarter, to your point, and we would say that would be mid-single digits.

Great. Thank you.

Okay. Thank you.

Thank you. Your next question is from Robert Barry with Susquehanna.

Good morning. This is Mike DeLalio on for Rob.

Sure. Good morning.

Hey, Mike.

Good morning. Can you unpack the double-digit order growth at Sensus? What drove that and how fast would you expect those orders to convert?

Sure. Yeah. They've been fairly successful relative to recent project wins. Alliant is one of those. Again, we don't book the entire value of the deal up-front. We do that as commitments and purchase orders are made and issued. And there's been broad strength across all of the end markets, not just electric. We've seen increased activity in gas and in water as well. So, it's been fairly broad-based. And these deployments typically – they have a little bit of a ramp; so, we saw a little bit of that in Q3. We'll see some more of that in Q4 and into 2018.

Okay. And based on year-to-date orders, it feels like the Sensus segment should be up more than mid-single digits next year, perhaps more than the target 6% to 7%. Is that a fair assumption?

Listen, we are definitely seeing some momentum in that business, but we'll give you more details on Sensus and the other parts of our business for 2018 as we go through the next quarter's call.

Yeah. I would say – Mike, this is Patrick. I would say that the – what we have been winning here in terms of projects of late and some others that we have line of sight to, were always necessary there for us to be able to support the range of 6% to 8%. And so, these things will kind of come and go and, obviously, it's our job to continue to build that funnel in that pipeline, which the teams are doing a great job of doing. But I would say, at this point in time, I'd still look at that 6% to 8% as an appropriate kind of guideline.

Okay. Thank you.

Okay.

Thank you. Your next question is from Scott Graham of BMO Capital Markets.

Hey. Good morning. Nice quarter.

Thank you, thank you.

Good morning.

So, I have two questions that are on previous questions, but maybe a little bit broader. On the cost side, I know that your long-term goal, 2020, is sort of 17%, 18% operating margin; looks like you're tracking a little ahead of that. I know that this – nothing ever straight-lines, of course, but would that suggest that maybe some of the saves in the first half of 2018 maybe were pulled forward? Should we be looking at the 100 basis point per year expansion goal maybe a little bit differently in 2018, because you're ahead in 2017?

No. I wouldn't read too much into it, Scott, in terms of the pace. You're, right. It's not going to be linear. A lot of it comes down to the mix of business that we have in any given year. And you'll see some probably higher treatment growth and emerging market growth next year, again, which will have a little bit of a dilutive effect; not going backwards, just not as heavy incrementals in that area. But then, it's our job, obviously, to drive the other parts of the business hard and make up for that. And then, we've also got – we've got some impacts from – you'll begin to see the benefits of things like Global Business Services come in over the course of, probably, the latter part of 2018, into 2019, et cetera. So, there's always going to a blend here and it's going to be our job, obviously, to walk you guys through the pieces of that once we get to the end of this year and are giving guidance on 2018.

Great. Okay. Yes. It makes sense. Thank you. The other question was kind of really about pricing. I think that we all have a tendency – I know certainly I do – to gravitate towards your utility market and you kind of think sort of zero pricing, but you're in a lot of other markets. And so...

Yeah.

...pricing is pricing wherever you get it. So, I guess kind of piggybacking on a prior question, you have good momentum in sort of the other three broad markets that you serve here and just sort of wondering if there are pricing opportunities in those markets?

No. You're absolutely right, Scott. So, the teams in the field are working it hard, ears to the ground, playing the leadership role where we can, hoping others are disciplined where they need to be disciplined on pricing; and so, appreciate your comment. It's far more than the 47% that happens to be in utilities. It's the other 53% that we have opportunities here as well.

And as you can appreciate, as we have our business reviews with our teams, each of them have different competitive position, market dynamics. But I can assure you that this discussion in terms of making sure that we're getting paid for value and being very aggressive with that is right at the top part of that agenda.

Good to hear. Thank you.

Yeah.

Thank you.

Thank you. Your next question is from Brian Lee with Goldman Sachs. Brian Lee - Goldman Sachs & Co. LLC: Hey, guys. Thanks for taking the question.

Good morning.

Sure. Good morning, Brian. Brian Lee - Goldman Sachs & Co. LLC: Hey, good morning. I had a couple of modeling ones. Just maybe first off, on the lag between Applied Water orders growth, you've seen mid-single to high-single-digit growth the last few quarters, and then China foot to the low-single digit revenue growth that you're putting up. How should we be thinking about those trends converging? And then, has there been anything specific to the mix that's been driving what seem to be longer lead times there?

Yeah. Let me take that one. I would say that there is a bit of a lag. And as I mentioned in my comments earlier, we are – because of that strong orders growth, we are going to see an acceleration of revenue growth in AWS next quarter, which – into that mid-single-digit range, which is very encouraging given recent performance of the business. And some of it's a function of the nature of the projects and some of the wins. They've won some large projects that go beyond 2017 and actually set that business up very well for performance in 2018. So, the trajectory has changed. We're seeing some momentum, but not all of that manifests itself in Q3; but, we'll see that trend line improve in Q4.

And some of those – some of the mix of that order growth as well, Brian, is – I think people have traditionally thought of the Applied Water business as largely a domestic kind of North America business, but we've got good mix in the emerging markets there. So, Middle East is a good example where we've gotten some really good project wins on that business that have longer lead times, not quick turn like they are here in the U.S. Brian Lee - Goldman Sachs & Co. LLC: Okay. Great. That's helpful. And then, just second one on Sensus. I know there were some questions around this earlier, but if we could dive into some of the specifics a bit. Just in terms of smart electric growth, what are you guys thinking about in terms of how much runway there's still left there? Obviously, there's been some good growth here the past couple of quarters, a lot of that due to Alliant, but when does that start to moderate? And then, with water bouncing back to double-digit growth at 4Q, can you comment on whether those comps into 2018 for water, specifically, set you up to continue at that level, or how should we just take that Q4 jump into context as we head into 2018? Thanks, guys.

Sure. Yes. I'll start with the latter first, being water, because that's still the lion's share of the business here. And so, we would say that that double-digit growth comp in Q4 is largely a comp benefit in terms of easier comp. So, if you moderate that down, again, we still really feel like we're talking about a 6% to 7% kind of organic growth for Sensus next year. Obviously, we'll model that for you guys when we give guidance, but I wouldn't expect that to be much different. In terms of electric, I mean, we think there's still a lot of runway in both electric and gas and the lighting piece. So, there's a lot of project activity out there. It is competitive. We think we have a terrific offering. There are some other great competitors out there, but we feel good about our offering as well. And we think there are going to be some more big wins there. We need those and we expect to get those to support that top line growth rate, but I certainly wouldn't be expecting it to be growing double-digit into perpetuity. So, it is going to be impacted by some lumpy projects, but we look at the pipeline and it's a bit of a Lavachart, different projects that lay on top of each other, and then we have a really, really solid base business that gives us confidence that you really should be thinking about that 6% to 7% growth for next year. Brian Lee - Goldman Sachs & Co. LLC: All right. Thanks, guys.

Thank you.

Thank you. Your next question comes from Jim Giannakouros of Oppenheimer. Jim Giannakouros - Oppenheimer & Co., Inc.: Hey. Good morning, everyone. Thanks for squeezing me in here.

Hi, Jim.

How are you, Jim? Jim Giannakouros - Oppenheimer & Co., Inc.: Doing all right. Quick follow-up on – just so I understand the Applied Water orders and the momentum that you're seeing there, and you're citing strength in the Middle East, is that market commentary – is that something that you're doing differently there, maybe to establish the local presence or comments that you made on the investments you made in sales? I mean, what's driving that and your confidence that you can kind of sustain growth there in Applied Water into next year?

Sure, Jim. So, yeah, so I would say our commentary on the Middle East, in general, is we did have really robust revenue growth coming off the back of a couple of quarters for the first time in about a year or so of orders growth, and those are now converting. I say it's a broader Middle East commentary as opposed to just Applied Water, but it is absolutely the impact of us having made investments there in a greenfield manufacturing location, as well as a rental branch. And what that allowed us to do, the first products that we moved into that facility were products to support the Applied Water business, and supporting, mainly, the commercial building market and industrial. And really, what it did for us was not just help us from a cost position, but really from a lead time perspective. So, there are jobs that we're able to bid on now that the teams either would have not bid on before or would not have won the order because the lead times were too lengthy relative to competition. So that really is what's driving that growth, there, in the Middle East. And we are certainly seeing a little bit of market recovery there, but this really, right now, is just us taking some share there. And I don't say that in any kind of chest pumping. Really, it's just a matter of now maybe getting more of our fair share of the market based upon better lead times. Jim Giannakouros - Oppenheimer & Co., Inc.: Okay. Thank you.

Thanks, Jim.

Thank you.

Thank you. Your next question comes from Jose Garza with Gabelli & Company. Jose Ricardo Garza - Gabelli & Company: Hey. Good morning, guys.

Hey, Jose.

Good morning. Jose Ricardo Garza - Gabelli & Company: Thanks for fitting me in. Mark, I guess if you could just kind of comment on – looks like the receivables kind of picked up a little bit. I don't know if there's anything that you'd kind of want to point out there.

Not really. I mean, it's part of that – it's just the timing of revenues. We had pretty strong performance in the last month, and days are roughly in line with where they've been. And we continue to focus on driving down past dues and improving terms. Jose Ricardo Garza - Gabelli & Company: Okay, fair. And then, just on the European public utility side, that's kind of been flattish. I don't know if there's any kind of noticeable change from your customers that you've kind of noticed over the last few months?

Not really, Jose. I mean, I'd say the – as we spoke to earlier in the year, we've seen – I'd say, let's set UK aside for a moment. Across the rest of Europe, it's still in that low single-digit kind of area, kind of steady Eddie. I think in terms of UK, we haven't seen the growth there this year that we had historically seen during the typical five-year amp cycle. There are a couple of reasons for that. One is just the nature of the spending that the utilities are doing. They're trying to smooth out that spending so it's less of a Bell Curve, which impacted them from a cost pressure and inflation standpoint. So, there's been some of that; I was over in the UK just about a month ago. And so, we expect that to still be an attractive opportunity for us. It just probably smooths out a little bit for the next couple of years rather than coming through in lumps. But beyond that, it's still kind of low single-digits in Europe on the public utility side. Jose Ricardo Garza - Gabelli & Company: Okay. Very helpful. Thanks, guys.

Thanks, Jose.

Thank you.

Thank you. Our final question is coming from Walter Liptak with Seaport Global.

Hi. Thank you. Thanks for squeezing me in and good quarter.

Thank you. Thank you.

Thank you.

I wanted to ask about – you guys called out the procurement and Lean, the benefits that you're going to be getting from that in the future. I wondered if there's any larger buckets of cost saving. Is there – are you done with any kind of special charges related to consolidation of facilities as mostly kind of operational excellence going forward?

Hey, Walt, we're going to – this is Mark. We're going to continue to look at opportunities to be more efficient in our manufacturing and supply chain. But as Patrick had commented on earlier from a prior question, there is a substantial effort underway to significantly improve the efficiency and the effectiveness of our back-office operations and we're embarking upon a Global Business Services program that is going to provide us with – certainly, with substantial efficiencies and savings in the coming years; but, also, will entail some restructuring as we get into that program moving forward.

Okay. Great. Thanks for that clarification. And then, maybe as a last one and maybe you don't want to do this, but the emerging markets, the opportunities in China et cetera, have you quantified the opportunity there?

We have. It's always tough to get data in that market that you can rely on. And that's not a critical comment; it's just the reality in terms of – especially, given the nature of some of these mandates. So – for example, the whole non-revenue water discussion is a very, very broad complex discussion; not ever easy to put a definitive dollar amount on it. All I would say is it's big. And it's certainly big enough and attractive enough for us to go after. But I would say, as we think about kind of where emerging markets, overall, go over time, if today we're around 20-some-odd percent of our total revenue, that number, in my view, certainly ought to be up north of 30%; maybe closer to one-third over time, as we think about just the mix of spending and the investments that we made. And that really would capture, I think, more than our fair share of the growth right there.

Okay. Great. All right. Thank you.

Okay. Thank you.

Thank you. I will now turn the call back over to Patrick Decker for any additional or closing remarks.

Great. Well, thank you, everybody, for your interest and the questions and your support. So, in the meantime, safe travels, Happy Holidays, Happy Halloween and we'll be in touch with you all, hopefully, here in the near term. Thank you.

Thank you. This does conclude today's Xylem third quarter 2017 earnings conference call. Please disconnect your lines at this time and have a wonderful day.