David Lamb - IR Wolfgang Dangel - President, CEO Tricia Fulton - CFO.

Mig Dobre - Robert W. Baird John Breth - Kansas City Capital.

Good day. Welcome to the Sun Hydraulics Corporation 2016 Third Quarter Conference Call and Webcast. As a reminder today's call is being recorded. At this time, I would like to turn the conference over to David Lamb. Please go ahead..

Good morning. Thank you for joining us for Sun Hydraulics' 2016 third quarter conference call. Wolfgang Dangel, Sun's President and CEO and Tricia Fulton, Sun's Chief Financial Officer are participating in today's call.

Please be aware that any statements made in today's presentation that are not historical facts are considered forward-looking statements. From time-to-time, the company provides forward-looking expectations for non-GAAP measures.

In these instances, reconciling the non-GAAP expectations in the corresponding GAAP measures is generally not possible without unreasonable effort. The variability in timing and amount of adjusting items could have a significant and unpredictable effect on our future GAAP result.

For more information on forward-looking statements, please see yesterday's press release. For your convenience, we have provided a brief slide deck entitled "Acquisition of innovation controls vehicle technologies and power controls business line." Summarizing the acquisition of innovation controls of LLC.

We will take questions once we have completed our prepared remarks. At this time we will allow a minute for anyone to access the slides who wants to. It is now my pleasure to introduce Wolfgang Dangel..

Thank you, David. Good morning. Thank you for joining us on today's call. Our prepared remarks are lengthier than usual following the announcement of our agreement to acquire innovation controls LLC and noted in yesterday's press release.

We will start today's call with an overview of our strategic vision, then move to the details of the acquisition and close with our third quarter results. Over the last year, we have been further developing and refining the strategic vision of the company. While some has been very successful historically, growth has stalled in recent years.

We have several initiatives in place that we believe will help drive Sun's organic growth over the next five to eight years. However, we also recognize that we want to grow more than organic growth will allow in our industry. Our 2025 vision is focused on growth and reaching a critical mass of $1 billion in sales revenue.

There are two significant components to reaching this goal; organic growth, and acquisitions. By 2025, we expect half of the $1 billion in revenue to be recognized to organic growth of our existing products and geographic markets.

And the other half to be derived from acquisitions of companies that advance our technology positioning industrial goods sector. All growth initiatives are intended to preserve Sun's history of superior profitability and financial strength. If you refer to page 2 of the slide deck, you will find a brief summary of the innovation controls acquisition.

Innovation controls headquartered in Tulsa, Oklahoma is a privately health provider of electronic control, display and instrumentation solutions. Innovation controls is recognised for per item innovative, ruggedized, integrated turnkey solutions that combine proprietary software platforms and customized hardware.

Founded by Frank Murphy III and Kennon Guglielmo from the merger of Murphy Controls and EControls, Enovation Controls is a strong financially sound company with a secure foothold in the fast growing industry of electronic control devices and displays, both of which complement Sun's current product portfolio.

Looking close at the acquisition, Sun is securing two of innovations for successful lines of business, namely power controls and vehicle technology along with the legal entity and branding. You can see product in application examples as well as related revenue streams of these business lines on pages four, five, and six.

The remaining non-acquired lines of business will continue to operate as a newly formed company not owned by Sun. Power controls provides electronic control systems, displays and customised instrumentation panels for all highway vehicles, stationary equipment and power generation.

These products are used in sectors such as construction, agricultural and material handling equipment, as well as utility vehicles, defence vehicles, generators and irrigation.

Vehicle technology provides electronic controls and infotainment solutions for recreational vehicles which are used in sectors such as watercraft, snowmobiles, motorcycles and all-terrain vehicles. Our strategic rationale as noted on page 3, for this acquisition in three fold.

First, it meets our long-term strategic vision as an important expansion of Sun's electronic and digital capabilities. This is a substantial step in that direction allowing us to offer integrated solutions of electronics and hydraulics. Secondly, the acquisition further diversifies Sun.

This innovation controls we now have access to new highly specialized markets and customer seeking complete machine control. Thirdly, it adds talent. I have often mentioned our desire to acquire talent complementing our current competencies. This acquisition does just that especially with regard to engineering.

The innovation control team instantly edged over 50 experienced engineers and technical personnel in addition to a sales group with strong customer relationships and insights. This team comes with a proven track record of new product development and technical innovation.

Innovation controls superior profitability and financial strengths significant growth opportunities and key accounts create a sizeable benefit for Sun going forward. Innovation controls today is a highly successful business on a standalone basis.

I'm particularly pleased that the current management team will remain in place which was a critical component in our consideration of this acquisition. While we feel it is important for innovation controls to continue operating on a standalone basis, multiple opportunities exist for revenue and cost synergies.

Ultimately, we envisioned this acquisition as a natural fit for Sun and look forward to the continued success of both companies. Tricia will now provide insight into the financial details of the transaction..

Thank you, Wolfgang. This is an exciting new chapter for Sun as we welcome the Enovation Controls team into the Sun group. Pending regulatory approval, the acquisition is expected to close over the next 30 days.

The executed agreement as noted in the up to date 8-K filing dictate Sun will acquire Enovation Controls vehicle technology and power controls lines of business. For the remaining two lines of business will continue to operate as a separate entity not owned by Sun.

Going forward, Sun will maintain Enovation Controls LLC legal entity continuing to sell products under distinct brands of [Murphy Controls and Zero Up] while retaining the key elements that have allowed the business to run so successfully on a standalone basis.

The company will continue to operate as it has with key management and personnel remaining in place, including co-founder Kennon Guglielmo. The acquired company will consist of approximately 300 employees in locations around the globe, including the United States, England, Germany, India and China.

Turning to pages seven and eight, the acquisition has the potential value of 250 million with initial consideration of 200 million and in additional earn out potential of up to 50 million based on revenue and EBITDA targets over 27 month period following the close of the transaction.

The transaction will be funded with 60 million in available cash with the remaining balance financed through our credit facility. Enovation's revenue for 2016 is estimated to be 80 million and 2017 revenue is estimated to be 80 million to 96 million. 2017's EBITDA is estimated at 16 million to 20 million.

At the high-end of this range to 2017 EBITDA multiple is approximately 10.3 or 6.7 when taking into account the expected tax synergies, tax benefits and synergies. Synergies of 2020 are expected to reach 5 million in profit annually while favourable tax benefit should generate over 35 million in value.

The acquisition is expected to be immediately accretive to EPS in 2017 and beyond with the preliminary 2017 GAAP EPS accretion of $0.25 to $0.35 per share. Acquisition cost for the transaction are expected to total approximately 1.8 million including financials, transaction, tax and legal advisors.

Given Wolfgang's comments, the acquisition of Enovation Controls is consistent with and supportive of Sun's vision. The acquisition expands Sun's participation in high growth markets and diversifies our product and end market mix.

These things together with a history of strong financial performance makes Enovation Controls an ideal fit with Sun's growth vision. With that, I'll hand it back over to Wolfgang to discuss Sun's quarterly results..

Thank you, Tricia. Global demand was slightly less than anticipated with profitability in line with the high range of our regional estimates prior to the effects of currency. Regionally the America's and Europe each experienced declines primarily attributed to continued impact of lower oil prices and lack of investment in the mining sector.

Asia Pacific once again was the bright spot. As South Korean demand we covered in Q3, rallying the region to a 12% increase year-over-year. As expected, demand in Australia and China remain robust, given our increased marketing efforts in this region.

Despite to these uncertainty, we continue to make investments that will strengthen Sun's market position now and looking forward. Our acquisition of Enovation Controls is evidence of those efforts and it's just one of many initiative we are undertaking.

As discussed previously, we are acceleratingly manufacturing efforts acquiring talent to complement our current competencies and acting on opportunities where we can grow in both new and existing geographic regions. We have made progress in many areas over the last quarter that we have more to do.

We are optimistic about potential growth in 2017 and are prepared to seek out new opportunities. I will now turn the call over to Tricia again to elaborate on the quarter's results..

Thank you, Wolfgang. Third quarter sales were 45 million down 6% over Q3 last year. Currency negatively impacted the quarter by 800,000 compared to the prior year with no price increases in 2015 or 2016, pricing did not have impact on sales during the quarter. Earnings per share were $0.19 down 41% over last year.

The lower earnings were the results of reduced volumes, CEO transition costs and currency fluctuations related to the pound sterling. Additionally in Q3 last year we sold the building in Korea and took a one-time gain of $0.04.

Turning to regional results for the quarter, demand in both the Americas and Europe were each down 10% over last year while Asia-Pacific demand improved by over 12% and Wolfgang mentioned Asia was definitely our great spot and we feel this growth is directly attributable to our increased marketing efforts.

Q3 sales in China were up over 27% compared to Q3 last year. Continuing this trend, Australia was up 19% and Korea was up over 8%. Gross margin for the quarter decreased by 5% from 39 to 34, the decline result is from decreased revenue which hindered our ability to absorb fixed cost.

Selling, engineering and administrative expenses increased 11% for the quarter primarily attributable to be aforementioned CEO transition cost. The provision for income taxes for Q3 was 34% up from 33% in Q3 last year. The Q4 tax rate is expected to be 33%. Inventory turns remained at 10, and day sales outstanding were 36.

Our balance sheet remained strong with net cash from operations of over 9 million or 21% of sales for Q3. Looking ahead to the fourth quarter, please keep in mind fourth quarter estimates exclude any impact related to financial consolidation of the acquisition of Enovation Controls.

Q4 sales are estimated to be approximately $46 million, up 4% compared to $44 million in Q4 last year. The estimate assumes a negative impact from currency of $500,000. Q4 earnings are estimated to be $0.13 to $0.15 per share compared to $0.19 last year.

For 2016 estimate includes $0.05 for M&A activity expenses including professional fees associated with the acquisition of Enovation Controls, $0.02 for global sales and marketing expenses and $0.01 for CEO transition costs. The additional forecasted revenue will add approximately $0.02 of EPS.

The currency is not expected to materially influence earnings for Q4. For the year revenues are expected to be approximately $193 million down 4% from the prior year. Earnings per share estimated to be $0.88 to $0.90 compared to earnings per share of $1.24 in the prior year.

This concludes our prepared remarks, we will now like to open the call for questions..

[Operator Instructions] We will go first to Mig Dobre with Robert W. Baird..

Yes, good morning everyone, can you hear me okay..

Yes Mig, good morning..

Yes, good morning. [Indiscernible] your slides on the website, so hopefully there will be a – that’s down the line.

Sort of a – from my perspective you might have seen this and we published this morning as well, this looks like a pretty big shift in strategy for the company and I’d love to hear a little more about that to not only why it was necessary because I think you’re pretty clear about that.

But exactly how aiming for billion dollars sales is sort of consistent with the long term sales of some hydraulics and with the culture of the business itself?.

Sure Mig, good morning. Well, this is to be seen as a transformational acquisition and as you said it might be perceived as a shift in strategy.

We’ve done quite intensive work on the board level over the last months I would say discussing the future of the company and looking as far as 2025 and this is where evolution statement eventually is deriving from.

It’s pretty much in alignment with what we see in the industry as I pointed out earlier on Mig, the company has done historically very well delivered superior financial results on an ongoing basis, but the challenge has been growth over the last five to six years and we’ve seen shift in technology in the industry.

There is electrification and digitalization creeping into hydraulics and this is one of the main drivers for this acquisition. Now let me explain to you the process that we embarked on about a year ago, we did a pretty in-depth analysis make if, because we were obviously – exactly for the reasons you’re asking for.

Enovation Control similarly to run as a very strong focus on engineering driven sales and from a product development standpoint we saw a lot of similarities between the two companies, so differentiated products, highly agile engineering force very fast in terms of responsiveness to the market, so we did a proper analysis and proper due diligence and we have the strong feeling that Enovation Controls is really the perfect fit for some.

In terms of aligning ourselves, the changes that we see in the marketplace today and for the next decade..

Okay, I appreciate that and then I’m trying to better understand that billion dollar goal, you’re starting with $200 million of revenue right now, you want to be at a billion five 2025 you’re saying half of that won’t be done organically for M&A or should I understand that you’re aiming for $400 million of organic revenue and $400 million of acquired revenue to – is that the math?.

I say the math is pretty much split 50:50 exactly as you said, we still feel tremendous opportunity within the Sun product lines, I elaborated on that earlier on also in terms of covering the global marketplace better and penetrate markets where we’ve low market shares to-date in much more details over the next 10 years.

So we still feel strongly that half of the growth could be organic growth.

Nevertheless in terms of paying tribute to the technology trends in the industry we’re looking at adjacent technologies that will support our competitive positioning in the market and innovation controls obviously is exactly in that range that’s the strategic rationale behind the acquisition.

So, besides hydraulic we see electronics creeping into this industry as we said, there is more and more digitalization coming in, more and more intelligence of the end use of machinery and equipment requested and this is why we want to open up to those type of trends as well..

From my perspective I think, your goal especially when I’m looking at your organic goal over this timeframe is that I think some very ambitious one, but maybe little overly sold. But, I think I do get your point in terms of trying to augment organic growth with the fundaments.

If I switch sort of question here to the business itself, I appreciate the color on sales and – but I’m wondering if you can give us a flavor for growth margins well, and may be a little bit of detail of exactly how you’re planning on driving the $5 million worth of synergy is this something that would come through SG&A?.

Sure. I’ll address the margins question. At the gross margin level PC and VT margins actually exceed those of Sun, their model is a little bit different so getting down to the operating margin level, they’re very similar.

They tend to have more R&D, engineering and selling expenses than percent of sales, so they’re driving a lot through gross margin but very strong operating margins equal to or even exceeding in some cases where Sun is of operating margin levels..

Finally, ask that make from a synergy perspective because the second part of your question was referring to synergies.

If you look at the power controls business, almost 40% of the power controls business today is tied to the construction, utility leak or material handling, spec and markets and that as you know is exactly the wheel house of Sun Hydraulics, so obviously we’re expecting additional pool through on both sides of the business.

On the revenue side we were rather moderate when you look at the synergy so it’s after full four years we are expecting an impact of $5 million to the bottom line. On the cost side we’re even more conservative, there is very little calculated income across any spend synergy perspective..

And then maybe if you can provide me with a little bit of color on the quality of the asset that you find from your due diligence work, I do know that obviously there is like lot of engineering and software development costs and so on that these business incur, where would you say investments have been here over the past couple of years, what sort of shape is this asset that you’re buying it.

Does it require investment on your thought or is this something that’s already --?.

No, this is already in decent shape.

As I said this is highly successful on a standalone basis similar profitability levels as Sun and if you look at the assets that we’re acquiring obviously there is intellectual property involved I pointed, I mean we’re acquiring an engineering team of roughly about 50 people, highly experienced people in the electronics and software environment.

Then the significant sales team with strong direct customer relationships. The fixed asset basis is reasonably small because the bulk is in intellectual property and basically engineering skills that this company brings to the table..

Okay.

Maybe Tricia just one for you, can you help us understand how this is going to be – going to the P&L, are you going to break this out into two segments, any color there would be helpful?.

Sure. It will be a full consolidation and as a segment level we will move from one reporting segment to two reporting segment in our SEC filings. Right now we’ve hydraulics so we will have hydraulics and electronic controls as two separate segments so we will be able to have the reporting visible for you guys at this level..

Is there any way you can sort of help us with maybe the last full four quarters or something that we can actually build some models on going forward doing so we – as the deal close?.

As we said the 2016 revenue estimates are around $80 million and then 2017 it’s a pretty broad range but we believe it will be between $80 million and $96 million there are some significant product launches in there that will drive some of the outside of that revenue target..

Okay.

But there is some sort of seasonality or something that we need to be aware here in terms of quarterly progression?.

No, there is no seasonality Mig involved here.

As Tricia pointed out it’s more than related to product launches, the company is highly innovative, they have a number of product launches laid out over the next two to three years, so obviously once the product is launched we feel an incremental increase in sales but there were numerous projects in the pipeline..

And this is a much faster revenue recognition on new products you’ve historically seen out of Sun, new products for Sun have taken up to five years to mature. The cycle for PCMVT are much shorter than that on recognizing the revenue from product launches..

Okay.

Then two more, first is on the interest side on the $150 million of borrowings, can you remind Tricia if you exactly what the right would be here, what we need to expect next year?.

At the rates that we’re at now, it would be LIBOR plus 200..

Okay. Got it. And last one, it is for you Wolfgang. And in terms of a broader operating philosophy at start and again thinking just the legacy business here.

You sort of and know the industrial space as being a company that really hung on to its employee base through thick and thin and sometimes that meant that that margins was really a challenging one when demand was weak like we've seen in the last couple of years.

You're getting bigger and you, I mean, get obviously a lot broader in terms of your exposures.

Is this philosophy that you applied in the past on the whole going forward or will you be sort of forced to shift here closer to your industrial period that are going through capacity expansion and then restructurings on a downside?.

No, I would not foresee any changes compared to the successful model that has been put in place here in Sun over the last 47 years.

I pointed out, I mean, we are keeping these two companies pretty much on a standalone basis and just one want to be opportunistic when it comes to synergies as I pointed out before on the revenue side through the pull through activities.

Of course we will puts the heads together from an engineering standpoint and make sure that we learn from each other. So, from I think can tremendously learn as far as the electronic control side is concerned. We are in the electronic control side of the business already today.

As you know with High Country Tech based out of Northern California, it will be a substantial strengthening of that activity and as I pointed out make the -- it technology landscape is keeping purely mechanical engineering capabilities, have very little chance to survive on the long term basis.

If a company is not prepared to adjust to electronics and digitalization trends that are creeping in this industry.

But will keep the company pretty much on a standalone basis and just be opportunistic when it comes to joint product development activities and predominantly generating revenue as far as pull through business is concerned on both sides..

All right, thank you and we'll continue this conversation tomorrow at the Industrial Conference..

Looking forward to seeing you there, thank you..

Thanks, Mig..

[Operator Instructions] We'll now go to John Breth with Kansas City Capital..

Wolfgang, Tricia?.

Hi, John..

Good morning, John..

Wolfgang, going back to your one of your initial comments you had mentioned that organic growth has slowed and when you look back at the numbers, 2016 revenues are going to be sort of similar to 2011.

Yes, the global economies have grown and I know you weren’t there in 2011, maybe Tricia can answer this, but when you look at the core business today versus 2011, are the growth opportunities not as significant today as they were, when you're looking back in five years ago.

Is the organic growth rate just going to be do you think slower than what it may have been from a longer term perspective? Are the opportunities still there?.

I think that’s a very good question, John. I mean, first of all we have to take into consideration a couple of factors here if you ask me. First of all I think looking back over the last decade, this type of business that we are in has tremendously benefitted from China, I would say.

China itself is a market in terms of consumption and in our times in terms of machine building that we acquired hydraulics. We had I think the world had probably seen or had a shot in the forearm I think for the last decade and that was a extraordinary situation.

I think if China is softening, I think we have to get used to far much lower growth rates particularly in terms of output of machinery and equipment of our customers. That's the first aspect. The second consideration I think that comes into play is you have to look at specific set up of our end markets, John.

So, besides China, we see we've been tied into oil and gas, mining, construction machinery, material handling. Now unfortunately, I would say over the last, particularly over the last three years, all of those segment have been sluggish at first, some of them have been down significantly. So, these two factors I think strongly come into play.

Nevertheless, thirdly and as I pointed out earlier on, Sun has still tremendous opportunities around the world. We still have a number of white spot areas we don’t touch today, even in the most significant emerging markets. In China, our market coverage has still significant room for improvement. India is the very same.

We hardly touch the OEM base in South East Asia. And if you follow the recent development over the last three years, I would say you see more and more OEMs moving south from China into countries like Vietnam, Indonesia and so forth. Sun has literally been not active in those areas.

So, we have tremendous opportunities in what I call white spots around the world. We have a fantastic brand, the quality product, a premium product with a tremendous market recognition around the world and we want to take advantage of those opportunities if we move forward from here.

So, there is still to answer your question, I still see significant growth potential around the world but comparing it to some of the years that we have enjoyed prior to the big economic crisis and also the early 2000 with tremendous growth rates.

I don’t think we'll see those growth rates again but we'll still see significant growth over the next five to 10 years..

Okay, thanks Wolfgang. Turning to Enovation. In late 2004, they filed an S1 and was or I guess prepared to come public.

What obviously they did not, what happened, any colour on that?.

Yes. I think what happened, it was 2014. You said -- and it was 2014. The company was preparing itself for going public. Now, if you look at the composition of the company, John, besides the power controls and the vehicle technology divisions that we are acquiring, we have two other lines of business and they are tied predominantly to the gas business..

Yes, right..

And the engine business. And I think in 2014, the timing was really unfortunately because this is when the energy markets started to decline significantly and I think that was the main reason why we aborted the ideal..

Okay. One of the, reading the S1, one of the things I sort of found interesting was coupled our comments and I don’t know I assume it was first of the pieces of business that you are acquiring, they used a term entrenched customer relationships deep collaboration with their customers, sell source.

I assume it's referring to the pieces of your business, those adjectives are referring to the pieces of the business that you're acquiring.

But am I correct in that?.

Yes. That assumption is good, correct, John. I can share with you into group, during the early stages of this process, if I said we need a very in-depth analysis and we were looking, I mean, in the first round we were looking at several 100s of potential candidates. Eventually we never we found to six companies.

But we, what we also did was an external customer survey to exactly find out what you are describing here, John. So, we did a very detailed survey by a third party that was looking at the differentiation and the competitive advantages innovation control. These two divisions of innovation controls world bring to the table.

And some of in the results were also positive and one of the results was because of their customising engineering capabilities. They are locking themselves into customer solutions and once being incumbent it's very difficult to basically push the company out. So, it supports exactly what you are describing..

Okay. And then, lastly, and I don’t think they broke it down in the S1 but I may be wrong but the pieces of the business that you're acquiring, what can you tell us about maybe the revenue growth of those segments maybe over the last three or four years. Have they've been and I know the natural gas business turned on and so on.

But the segments that you acquired, where they continuing to show growth in let's say the 2014, 2016 period?.

Well, first of all as I said, the gas and engine business is not part of the trend..

Right, correct me..

We were only looking at the vehicle technology line of business and the power controls. The vehicle technology line of business has had very high growth rates over the last six years because we compared exactly their growths to our growth here and if you go back to 2011, they have had tremendous growth.

I mean they pretty much formed that division at that point in time. Because two companies were merging in 2009 as I said earlier on. So, the vehicle technology activities in place were about seven to eight years. And they've shot up from zero to 35 million in business.

This year there has been less growth on the power control side over the last two years. And obviously I think the reasoning behind that is clear insight to construction, agriculture, it's tied to stationary equipment and some of those end markets obviously also suffer the decline where at least sluggish over the last two years.

But overall, in a nutshell if we look at both lines of business, the growth rate, the historic growth rates have been very impressive..

Okay. Thank you, Wolfgang..

Welcome, John..

And there's no further questions at this time. I will now turn the call back to management for any additional or closing remarks..

Before we move on to the closing remarks, we did receive a couple of questions via email. So, I'll read those out now.

The first question is "What assurance is can management give shareholders the Enovation Controls acquisition will bring the best of the creative talent pools in place to Sun, given at approximately half of the talent will remain with a newly formed company not owned by Sun?" I think there are a couple of statements we should make in terms of answering this question.

First of all, we check the organization and we did property diligence in great detail and look what the organization looked like end of last year and so forth.

Secondly, there are two locations, I mean, the carve out is relatively simple because the two lines of business that we acquire mainly housed in Tulsa, Oklahoma, whereas the gas and engine business is in San Antonio, Texas. So, from a location standpoint it was already relatively easy to carve out the businesses.

Last but not least as we pointed out earlier, there is no other one out in place over 27 months. Kennon Guglielmo will stay on there as the general manager of the business.

And last but not least, I want to point out is viewing the due diligence process and when we were narrowing down on potential targets for acquiring an electronics company, Sun will not just look at the TPI's of the company.

One very important factor was also the ownership of the company and where the ownership developed the business over the years in the likeness of Sun and this was one point that impress me personally the most I have to say.

I mean, these are people of very high integrity and if you look at their track record and what they've been doing over the last decade, it's quite impressive and you will see a lot of similarities to Sun, particularly I think to our late founder Bob Koski, they followed some of the very same principles in terms of dealing their people, with their suppliers and with their customers.

So, it's not just like the technology aspects and financial numbers where to our liking, I think it also has a lot to do that this is a company that has a similar value base then Sun Hydraulics.

The second question reads, "What protections does management have in place to prevent the human resource talent from leaving after the acquisition?" Okay, I think we again the due diligence, we did a thorough analysis and there were employment agreements in place with the expanded leadership group and the key people in the organization across the functional areas, including non-compete and non-solicitation.

So, I think we took all the necessary precautions that needed to be taken. That concludes our email questions. We would like to thank you for joining us on today's call. We apologize for the technical difficulties we experienced related to the webcast slide deck.

The slides will be made available shortly after the call on the Investor Relations section of our website at www.sunhydraulics.com. As a reminder, Sun is presenting at the Robert W. Baird Global Industrial Conference at Chicago tomorrow, November 9th, 2016.

Following the conference, we will post a copy of the presentation on the Investor Relation section of our website as well. We look forward to speaking with you again after a year-end release in late February. Thank you..

Ladies and gentlemen, it does conclude today's conference call. Thank you for your participation..