Operator: Welcome to the Wabtec Second Quarter 2016 Earnings Release Conference Call. All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note this conference is being recorded. I would now like to turn the conference over to Tim Wesley. Mr. Wesley, please go ahead.

Tim Wesley: Thank you, Andrea. Hello, and good morning everybody. Welcome to our second quarter 2016 earnings conference call. Let me introduce the others here in the room with me, Al Neupaver, our Executive Chairman; Ray Betler; our President and CEO; our CFO, Pat Dugan; and our Corporate Controller, John Mastalerz. We'll make our normal prepared remarks, and then be happy to take your questions. Before starting the call we will make forward-looking statements. So please review today's press release for the appropriate disclaimers. Al?

Albert J. Neupaver: Thanks, Tim. Good morning, everyone. Despite some tough market conditions we had another good earnings performance in the second quarter, with earnings per share of $1. Excluding $0.05 per share of expenses related to our pending acquisition of Faiveley Transport, EPS would have been $1.05. In particular, our margin performance was strong. Despite a revenue drop of almost 15% we recorded an operating margin of 18.4%, the same as the year ago quarter, even including those Faiveley costs, this margin performance resulted mainly from our cost cutting actions and improved profitability in the Transit Group. As we've said before, we believe our diversified business model, combined with an aggressive approach in reducing cost, gives us the ability to manage through these cycles better than most. But we are not immune to changing market conditions. Thus, we are updating some of our assumptions and our guidance. Our full year earnings per share are now expected to be between $4 and $4.20. Revenues are now expected to be down about 10% for the year. The midpoint of the EPS range would be flat with last year's EPS. This guidance does not include cost for any further restructuring activities or expenses related to our pending acquisition of Faiveley Transport. I'll talk more about Faiveley in a minute. The guidance now assumes the following; revenues from train control equipment and related services, signaling that is, will be down about 20%, significantly lower than we expected. Rail traffic will be down 7% to 8% for the year, you may recall at the beginning of the year we were expecting traffic to be about flat. Deliveries of freight cars and locomotives will be slightly lower than expected. There will be no changes in foreign exchange rates from current levels. A tax rate of about 30% for the year. And we are assuming diluted shares outstanding of about 91 million for the year for EPS calculation purposes. Taking all of this into account, we expect our second half revenues and EPS to be similar to the first half of the year, including some normal third quarter seasonality. So clearly we are operating in a challenging environment, which means, we have to focus on controlling what we can, being disciplined when it comes to cost, and being focused on generating cash to invest in growth opportunities. During the second quarter, we continued to make progress on our planned acquisition of Faiveley Transport, a leading global provider of value-added integrated systems and services for the railway industry with annual sales of about $1.2 billion. We are working through the regulatory approval process, and currently expect to obtain competition authority approvals late in the third quarter, so we expect to close the acquisition in the fourth quarter. Of course we cannot predict with certainty the timing of our overall regulatory approval process. We do not expect at this time that any of the required remedies would be material from a financial perspective. This opportunity probably has the most compelling strategic rationale of any acquisition we've ever made. Faiveley has a rich tradition of innovation and excellence in the rail industry, with products such as high-speed brake systems, doors and HVAC equipment. This also gives us the chance to recombine the original WABCO Rail Brake division. As a result, we will be one of the world's largest public rail equipment companies with total revenues of about $4.5 billion in the worldwide freight rail and passenger transit industries. We share complementary geographies with minimal overlap, the acquisition further diversifies our end-market offerings, it extends our product and service capabilities, it enhances our technology and innovation initiatives, and expands our relationship with blue-chip global customers. All of this was with centered (06:22) synergies to drive growth. We expect long-term annual synergies of about €40 million to be achieved over the first few years, through enhanced revenue growth, supply chain efficiencies, operational efficiencies, and cost savings, and by leveraging our SG&A capabilities. The combined global scale in freight and transit rail equipment will help drive operational excellence. And we will improve our ability to offer safety, productivity, and efficiency enhancements to the global rail markets. Faiveley announced its full year results in May, and the results were positive. Sales growth of about 5% for the year, including 9% growth in their services or aftermarket business. Their adjusted operating profit was about 10%. This result was better than the prior year. They announced several significant new projects with their order book growing about 2%. It stands at about $1.8 billion. In Europe, they won brake system and door projects in France, Germany, and Belgium. In the Asia Pacific area, they booked orders for brakes, doors, and HVAC in India, and couplers and doors in Hong Kong. In the Americas, HVAC in the U.S. and doors in Brazil were added. So we're very excited about the future growth opportunities provided by this acquisition, and we're working hard to get it completed. In the meantime, we will remain focused on running our business. Ray, if you would, could you cover our current market and growth strategies, please?

Raymond T. Betler: Thanks, Al. As Al stated, freight market conditions do remain very challenging, and we don't see much if any improvement this year. In NAFTA, freight rail was down more than 7% for the first half, with decreases in almost all commodities and intermodal. The freight comparisons will start to get easier in the second half, but that doesn't mean actual traffic will improve. So we will continue to monitor this trend very closely. As a result of this traffic decline, we're lowering our NAFTA assumption for freight cars and locomotives to about 60,000 cars and about 900 locomotives. Along with the decrease in traffic, these factors represent a headwind of about $200 million in revenue compared to 2015. And as a result, our Freight sales will be down for the year. Freight traffic in some of our global markets is also challenged, especially in the heavy haul mining countries. So some of these headwinds could represent secular trends in our markets and some may be recessionary. But either way, we have reacted and continued to react to these changes. Despite the current challenges, we believe the freight rail market around the world will grow over time, which is why we continue to increase our global footprint and our product offerings beyond our traditional NAFTA markets. Let's move to Transit. The transit markets remained stable both in the U.S. and abroad. In the first quarter of this year, ridership was slightly up in the U.S. and the UK, slightly down in Canada. This year, we're expecting North America transit car deliveries to be up about 4%, with bus deliveries about the same as last year. We have seen some transit projects delayed in recent quarters, and we expect some of them to start ramping up as we go through the year. Transit funding in the U.S. is projected to grow in the fiscal year 2016 as the federal government did finally pass a multi-year transportation bill, which included funding also for PTC for commuters. Due in part to the increased funding, we are seeing increased bidding activities for new projects that we expect will turn into orders over the next several years. Reflecting some of this activity, our Transit backlog has been near record high. U.S. projects include Boston, Chicago, New York, New Jersey. International projects, throughout Europe and Asia, and in Central and South America. The financial performance for our Transit segment has also been good this year, with increasing sales and profitability. In part, this performance has been driven by ongoing margin improvements in Fandstan (11:12) using the principles of WPS, of course, we will be applying those same principles throughout the integration process of Faiveley. As for the overall transit market, remember, just as with the freight market, we are focused on global growth and increasing our product offerings because the international markets are so much larger than NAFTA. PTC and signaling, I'd like to take a moment and give you an update on PTC and signaling because it's an important part of our long-term growth opportunities, but it's also the reason why our Freight revenues are down this year. As you know, our customers are working hard to implement PTC, the decreases in rail traffic have caused the railroads to reduce their CapEx budgets both in infrastructure and rolling stock. In addition, the deadline extension to at least 2018 has resulted in changes in the spending plans. As a result of these factors, we're seeing lower revenues in the PTC-related equipment and services mainly in the Freight Group. At the beginning of the year, we expected revenues from PTC and signaling to grow slightly this year, but now we expect a decrease of about 20%. In fact, of the revenue decrease in our Freight segment this quarter, about one-third was due to lower PTC and signaling sales. Long term, we expect PTC and signaling will be a growth business for Wabtec, and we continue to invest in building the aftermarket for products and services. In the meantime, we are booking new PTC projects, including the $21 million contract with Terminal Railroad Association, TRA (sic) [TRRA], of St. Louis. Wabtec, under that contract, will provide equipment for 17 locomotives for wayside and communications design for construction and training, and also systems integration. Cost reductions; before I discuss growth initiatives, I'd like to talk about our cost reduction programs, which have enabled us to maintain our margins despite a significant drop in sales. In this case, we have taken the following actions to control our cost and those things that we can. We've reduced total planned employment by more than 10% since the beginning of the year. We'll continue to adjust as necessary our head count going forward. We've cut discretionary costs both at the corporate level and throughout all business units. We've set more aggressive goals for activities associated with WPS including, lean supply chain management and quality initiatives. Due in part to these and other initiatives, our Transit Group profitability has improved in the first half of the year, and we are driving for further improvement over time. We continue to focus on growth and cash generation. In the quarter, we generated $134 million of cash flow from operations, compared to net income of $90 million, which is pretty good performance. Year-to-date, we have generated $209 million or 14% of revenues, which is also good performance. And we continue to focus in the second half of the year on cash generation. Our priorities to allocating free cash have not changed. Those are to fund internal growth programs, including product development and CapEx; to acquire, and we do have ample opportunities for acquisitions to deploy capital in this particular area; to return money to shareholders through a combination of dividends and stock buybacks. At our Annual Meeting in May, we increased our dividends for the sixth straight year, and we have about $216 million left on our $350 million buyback authorization. We remain focused on increasing free cash flow by managing costs, driving down working capital and controlling capital expenditures. Our growth strategies also remain the same. Those are to focus on global and market expansion, aftermarket expansion, new product technologies and acquisitions. So, let's talk about each of these. In the global market expansion area, for the quarter, sales outside of the U.S. were $385 million. We booked a follow-on order for draft gears for freight cars in India. We booked orders for brake equipment, including the ECP, for iron ore cars in Australia, and we booked an order for ECP on locomotives in South Africa. On the aftermarket expansion side, our aftermarket sales for the quarter were $445 million. We've won a multi-year order to provide the overhaul high-speed transit cars for our customer in the UK. In the new product area, we have many ongoing internal projects. TMX, the truck mounted braking assemblies for Russia, our bogie mounted brake systems for India, commuter locomotives in the Tier 4 emission requirements, new door actuators for subway cars, new rail track components for auto rack freight cars and Fandstan is developing fast-charging stations for hybrid and electric buses. On the acquisition side, our pipeline continues to be active. And we're pleased to announce the opportunities of Unitrac and Pride Bodies. We have other opportunities in the pipeline and, although we can't predict the timing, we expect to announce one in the very near future. On Unitrac and Pride Bodies, those acquisitions provide a variety of track-related products and services. They have combined annual sales of $45 million. Unitrac is a leading designer and manufacturer of railway track products such as turnouts, panels, and frogs, which customers include both short-line railroads as well as Class I, and also transit authorities through North America – throughout North America. Pride Body (sic) [Pride Bodies] equips rail and utility vehicles with custom rail gear, cranes, air systems and lighting equipment. The focus of these companies is infrastructure, which represents up to 70% of annual of rail growth CapEx. With these acquisitions, we now have more than $100 million of annual sales, in this particular market segment, and we intend to grow up from here. So, Pat, can you talk about some financial details on the second quarter, please?

Patrick D. Dugan: Sure. Thanks, Ray. Sales for the second quarter were at $724 million, which is about 15% lower than last year's quarter. This decrease was due to the difficult market conditions, and especially on our Freight segment. Freight segment sales decreased 26% or about $145 million due to lower sales from PTC, Freight OEM, Freight aftermarket, and other Freight segment products. These sales were also reduced by FX by about $4 million, and acquisitions were positive, improving segment sales by $11 million. Transit segment sales actually increased, driven by organic sales growth of about $14 million, acquisitions of about $6 million, but that was offset by the negative effects of FX about $5 million. For the rest of 2016, we expect our Transit segment sale to grow and Freight segment sales to be down mainly due to reduced revenues from the train control-related equipment and services, lower than expected rail traffic volumes, and lower industry deliveries of new cars, and locomotives. When you look at our operating income for the quarter, it was about $133 million, or 18.4% of sales. In 2015, our second quarter operating margin was 18.4%. So despite the lower sales, we maintained our margin by reducing costs and by improving the profitability of our Transit Group. SG&A for 2016 second quarter was about $81 million, about $8 million lower than a year ago quarter, due mostly to cost reductions and lower sales. I also want to mention that included in the results is about $6.6 million of expenses related to the pending Faiveley acquisition, and about $1.4 million of expenses related to restructuring. So our adjusted operating margin, if you'd add this back, would be about 19.5%, which is a good result. Our engineering expense was up slightly, as we continue to invest in our product development. Interest expense for the quarter was $5 million, which is slightly higher than a year-ago quarter, due to our higher debt balance. Other expense and income, we had an expense of about $1.2 million in the quarter, mainly from non-cash foreign currency translations. A year-ago, we had expense of about $1.9 million for the same reasons. The effective tax rate for the quarter was 28.8% versus 32.3% in the year-ago quarter. Just a couple of comments on that rate. Our tax rate for the quarter reflected a change in our estimated effective tax rate for the full year. The profit mix of domestic versus international business is shifting to locations with lower tax rates, resulting in an improvement in overall tax expense. So the rate for the second quarter was adjusted accordingly. For the same reason, we are now assuming an effective tax rate of about 30% for the full year compared to our initial assumption of about 32%. I just want to remind you that this is always an annual forecast and the quarters will vary due to any change in our annual estimated effective tax rate and any timing of any discrete items. EPS for the quarter was $1 and, excluding $0.05 per diluted share for Faiveley-related expenses, we would have had an EPS of about $1.05. And just I'll remind you, for the first half, EPS was $2.02, excluding $0.08 per diluted share for Faiveley-related expenses. So, we would have had, on an adjusted basis, for the first half of the year EPS of $2.10. Our balance sheet remains strong and provides the financial capacity and flexibility to invest in our growth opportunities. We have an investment grade credit rating and our goal is to maintain it. Working capital at June 30, consisted of trade and unbilled receivables, of about $586 million, inventories of about $493 million, and payables of about $305 million. Cash on hand at June 30 was $303 million and that's mostly held outside the U.S. We compared that to the end of the first quarter at March 31, we had $263 million of cash. I will just point out that these balances do not include about $200 million of cash that we're holding in escrow related to the Faiveley transaction. Our debt at the end of the quarter at June 30 was $744 million compared to $802 million on March 31. Looking at our cash flows, cash from operations generated cash of about $134 million for the quarter, which is a really good performance. For the year, we continue to expect to generate more cash from operations and net income, that is always our goal. At this point, one thing here in the quarter – in the second quarter, we signed a new bank agreement that includes a $1.2 billion revolving credit facility and a $400 million term loan. The revolving credit facility has a five-year life and replaces our previous revolver of about $800 million. While the term loan has a three-year maturity, this agreement for the term loan and for the new revolver provides financing for the Faiveley acquisition and for continued investment in our growth initiatives, including other acquisitions. Just a few miscellaneous items, we always get asked about. Depreciation for the quarter was $11.4 million compared to $10.9 million in last year's quarter. Our amortization expense was $5.5 million compared to $5.2 million last year's quarter. And our CapEx expenditures were $10.6 million in the quarter versus $12.4 million in last year's quarter. Our estimate for CapEx for the full year is about $50 million. Looking at backlog, our June 30 backlog, multi-year backlog was $2 billion, slightly lower than the end of the first quarter. Our Transit segment backlog decreased to $1.4 billion, while Freight increased to $633 million. Our rolling 12-month backlog, which is a subset of the multi-year, was $1.3 billion, slightly down from the first quarter, Transit was $774 million and Freight was about $500 million. The total backlog figures don't include about $170 million of pending orders and contract options. We do not count them in the backlog until the customer exercises those orders. So with that, I'll turn it back over to Al.

Albert J. Neupaver: Thanks a lot, Pat. Once again, we had a good earnings performance in the second quarter. We were especially pleased with our margin performance and cash generation. We continue to face challenging market conditions, so thus we updated our assumptions and our financial guidance for the year, with EPS now expected to be between $4 and $4.20, and revenues now expected to be down about 10%. In this environment, we will stay focused on what we could control, our future long-term growth opportunities, managing our costs and generating cash. We are pleased with our strategic progress and the long-term growth opportunities we see, especially with the expected closing of the Faiveley Transport acquisition. With that, we'll be happy to answer your questions.

Operator: Our first question comes from Justin Long of Stephens. Go ahead.

Justin Long: Thanks, and good morning, guys.

Raymond T. Betler: Good morning, Justin.

Justin Long: I know it's early to look into 2017, but from a high level, do you think there is potential for the business to grow organically next year? I think a lot of people are just trying to gauge, if 2016 is the bottom in terms of the organic revenue pressure you are seeing across your business and you are seeing in Freight, so I'd love to just get your thoughts on that.

Albert J. Neupaver: Okay. Obviously, we can't provide guidance for 2017, but what we remain extremely excited about is our opportunities for growth. We've stated time and time again that we're focused on not just PTC hardware, but the entire PTC signaling opportunity that is extremely large and we're a small player in that right now. So, we think that the spending will continue and what we'll see growth in is the applications of enhancements, once someone has the computer on board, the locomotive now, you have to do something with it, and we're seeing a lot more activity. We're seeing international opportunities in train control. We're still moving ahead to get the implementation done for 2018, so that's one exciting area. The other area of growth that we're focused on is the international market areas, where we are a small player. When we look at our market and how many actual transit vehicles have built in the U.S., it's like 800 and some vehicles, I believe, right, Ray?

Raymond T. Betler: Yes.

Albert J. Neupaver: And on a global basis, we are talking about 22,000 vehicles and as we close the Faiveley acquisition, we're going to be in a position to really help our rate of growth in the international arena. And we also are seeing a lot more activity in the Transit area. And, Ray, maybe you could add a bit to that about the growth opportunities you just see in Transit in general globally.

Raymond T. Betler: Yes. So the spending, Justin, hasn't stopped in Transit. It's stronger in the U.S., North America, because it is long-term spending bill. So, incrementally, here it's stronger and orders are lumpy. As you know, they come in based on the funding, that's available in the long-term bid proposal process. But also around the world, the transit industry and the transit market continues to grow and we're going to be able to leverage now, through the Faiveley acquisition, in Europe, we'll be able to leverage the Asia Pacific region. There is a lot of Transit opportunities, as Al said, outside of North America. And there is growth in some of the market sectors outside of North America in the Freight area too. We're building a plant right now over in India, for an instance. So, we're picking up Freight business in India. We're picking up locomotive opportunities there. I mentioned that we just won ECP orders in Australia and South Africa. So, it's a tough situation, it's a tough market, but we definitely believe we can continue to grow, and on top of that, we are investing in new product development opportunities to be able to organically grow our business.

Albert J. Neupaver: And the other area of excitement or growth, as we look long-term, is the strength of our balance sheet, which – we are a proven acquirer, we find acquisitions, we do excellent due diligence, and those acquisitions we integrate. I think our track record in that area speaks for itself. So, you've got a lot of growth opportunities. Is the freight market and the commodity market is going to be under pressure going into 2017 and 2018? Without a doubt. And again, we really like to do is focus on what we can control, and that is investing in the long-term growth. Some of those – few areas that we just discussed, and we do that by reducing our costs, generating cash, and applying that cash in those areas.

Justin Long: Okay. Great. That's all really helpful color. Secondly, you guys always talk about rail volume being the key indicator for your freight aftermarket business. But there are a lot of people that believe that business is more tied to the railcar build rate. So, I wanted to ask about the last time we saw the railcar build rate go from a peak of 75,000 or so in 2006 to a trough of around 20,000 or so in the recession. If you were to exclude acquisitions, how did your Freight aftermarket business performed over that time period from peak to trough?

Albert J. Neupaver: Yeah, I could only – I don't have the exact numbers in front of me. I could give you some generalities and maybe, in the meantime, we might be able to dig up some of the actual numbers. But generally, what we saw is, once that drop happened, we saw a bigger drop in the aftermarket at first, and then, it kind of equalized itself out over time. And we really experienced about a proportional drop in aftermarket freight as we did with – we saw on the volume change. And back then, we were looking at ton-miles. Now, we're looking at carloadings, which I think correspond pretty well. That was the general thing. The other thing that change it a little bit, as we said, we do have PTC sales, because they're going on to use locomotives in our aftermarket. And so, that impact like – in a quarter like this, has a greater impact on the initial quarter. But again, over time, we would expect that our volume changed due to – the volume changed, it caused a proportional drop in our aftermarket, where we'll see a bigger number at first, but over time, that's what we saw. Does that answer your question, Justin?

Justin Long: Yeah. I think it did. It would be helpful to have what that number was back during the recession just to understand, in a down – like what the downside scenario is for the Freight aftermarket business. That's all I'm really trying to get at.

Albert J. Neupaver: Yeah. Okay. One of the – we'll definitely get that information. We do not have that. I could talk in generalities, but I'd hate to give you the numbers if I don't – not accurate, okay?

Justin Long: Fair enough. That makes sense. And last one, I'll just sneak in quickly. We've seen some volatility in the price of steel and some other raw materials. And maybe this is for Pat, could you just remind us how much of your raw material costs are passed through from surcharges? I'm just curious how much of an impact this could be having on your margins.

Patrick D. Dugan: Well, we do a really good job of making sure that our – the surcharges that we get, we are able to pass on to our customers. Overall, I would say that raw steel and the impact of steel prices is not as significantly on us, as you might think. It really – we're buying components and parts that have value added, that's included in there already. So we haven't seen a whole lot of volatility there. We haven't been able to adjust in our pricing to our customers.

Justin Long: Okay. Great. I'll go ahead and pass it on. Thanks so much for the time.

Raymond T. Betler: Thanks, Justin.

Operator: Our next question is from Allison Poliniak from Wells Fargo. Go ahead.

Allison A. Poliniak-Cusic: Hi, guys. Good morning.

Raymond T. Betler: Good morning, Allison.

Allison A. Poliniak-Cusic: On Transit, Ray, I know you touched about Transit, the project backlog and the orders being a little bit lumpy. Could you maybe just talk to – I mean now that we had the funding, is this sort of – are you seeing sort of normal order and inquiry patterns right now, like you have relative to past cycles?

Raymond T. Betler: I think the overall opportunities right now, orders and backlog, it's a little bit higher than in the past. I think that it was difficult for people to do their planning and execution, when they had funding streams that were only committed about three months to six months out. So, there's more confidence and more activity right now in the market. These orders like, Chicago and Boston, LA will be next, New York is coming up with a big transit program, R211, that is in process, as we speak. So, it's pretty steady now, and I'd say, more so than in the past.

Allison A. Poliniak-Cusic: Great. And then, to follow on Justin's comment with the aftermarket and more on the OEM side, obviously, in a decelerating delivery environment there, you took down your assumptions for this year. Are you getting comfort with your visibility on how that deceleration is going to happen or is there a still little bit of lumpiness and uncertainty out there in that market?

Albert J. Neupaver: I think the only uncertainty is related to the economy. I think, if the general economy picks up and we don't go into a worst situation or some type of recessionary period, that has a different impact on what will happen next year. As you could see, there's already talk of some of the stuff stabilizing, but it's way too early to predict that. So if the economy hangs up, you wouldn't expect the deep frog. If the economy starts to falter, the car build and the volume will continue to decrease. I think we are in a situation where the railroads are trying to redefine themselves on what they move and how they move it. And I think the economy plays an awful big role in that. So it's really hard to predict where – we have to look forward and anticipate sometimes the worst situation, and control the things we can.

Allison A. Poliniak-Cusic: Great. And then, Al, you probably touched on require – I think, you were seeing those required remedies wouldn't be significant, are you talking like some product line divestitures? What do you think would be potentially required there?

Albert J. Neupaver: As part of the second phase or – in each case, the regulatory authorities take a look at where there might be overlaps in the business. And if there is an overlap, then they would ask if there'd be a remedy. I'm going to have to be very general in my answer, because we're still in that process, but those areas where we have had a discussion, I'll state again, they will have no material impact on our financial perspective, as it relates to the acquisition or our ongoing business.

Allison A. Poliniak-Cusic: Great. Thanks so much. That's helpful.

Albert J. Neupaver: Okay. Thanks.

Operator: Our next question comes from Scott Group from Wolfe Research. Go ahead.

Scott H. Group: Hey. Thanks. Morning, guys.

Albert J. Neupaver: Good morning, Scott.

Raymond T. Betler: Hey, Scott.

Scott H. Group: Can you give us what the PTC number was for the second quarter, if I missed it? And is your view on the size of the PTC opportunity changing in anyway or is this just a timing issue in your mind?

Albert J. Neupaver: Yeah. First of all, it's a timing issue. And we've said time and time again, the amount of money is going to have to be spend to implement PTC across the U.S. freight lines. And so, the money is going to be spend. It's a matter when it's actually spent, at least our portion. The first thing I want to reiterate is that the Class I railroads as well as the transit authorities continue to work extremely hard to get this implementation done by the 2018 period. And we said early in the year that they were assessing where they were going to put their expenditures in. Some of those areas where they've decided to change their expenditures for right now temporarily, are areas that impacted us. The one number that we've shared with you on an ongoing basis has been the PTC actual sales, and I think last quarter, we were talking about $85 million, and this quarter, it's $62 million. So, you have that kind of drop. If we look at signaling in total, there was only $85 million in total, so the signaling part added another $22 million or so to it. And when we talk about a 20% drop for the year, we're talking about PTC plus signaling. And signaling makes up probably, of the total amount, 20% to 25% of the total expenditures. If we just looked at PTC as we've traditionally categorized it, that would be down like 25%.

Scott H. Group: Okay. That's helpful. And just if we are going to hit the deadline for end of 2018, would you think PTC sales are up, flat, or down next year?

Albert J. Neupaver: I would think they would up next year. And we're not giving guidance of any sorts, but I think the amount of work that has to be done in the Transit area, as well as the area that's been completed on the Freight lines, additional spending will be required. The other thing that will happen – and when I talk up, I'm talking about PTC plus signaling, not just PTC. And what you are seeing is a lot more of interest and effort in trying to add on enhancements to the onboard computer that we've talked about time and time again.

Scott H. Group: Okay. In terms of the remedies that you just talked about, and I know you don't want to – this is for Faiveley, and I know you don't want to get too specific. But when you say not significant, is there any way to kind of put some parameters on that, meaning it's no more than 5% of the revenue, 10% of the revenue? I'm just not really sure kind of how to even think about the scope of it?

Albert J. Neupaver: Yeah. I think the term I used was material, not material. It was – they're not material. And I think that financial people have a way of quantifying that, I'm not financial, so I won't quantify that, perhaps been sworn not to quantify, but we really can't give you a number, it's not material.

Scott H. Group: Okay. But so, we'll learn more, you think, by the end of the quarter, when we hear from the EC?

Albert J. Neupaver: Yeah. What we say, let me try to explain that. If there were remedies, okay, those remedies would have to be in place, and we are saying that we should have clearance to proceed with the closing, after all the remedies have been satisfied. And we think it could take into the fourth quarter to satisfy what remedies that we're discussing right now. So if we could move those up, once we get clearance, we would close then. But we're realistically trying to put arms right on the getting clearance, before the end of the third quarter and closing in the fourth quarter.

Scott H. Group: Okay. But, Al, are you still saying when, not if, with respect to Faiveley?

Albert J. Neupaver: Yeah, without a doubt.

Scott H. Group: Okay. Okay. And then just lastly, on the head count side, I think you said down 10% since the beginning of the year. If we need to, is there more that you could take out? I presume that, if railcar and locomotive deliveries are down again next year, is there more head count that can come out or is there a risk of that not being an opportunity?

Raymond T. Betler: Yeah, Scott, I think we have explained in the past that we have a contingency planning process that we use. So we anticipate as proactively as possible certain trends in the market and basically trigger our reductions not only in head count, but in other areas based on that assessment. So the answer is yes, there is further cuts that can be made, if we need to make them. We're obviously trying to balance a whole host of things where, (45:20) for instance, still not a lot of product development to build for future. So, we're sensitive about not cutting technical resources unless we absolutely have to, so, there is pluses and minuses and we've been very, very careful about what we do, but we've done it in a very proactive away at the same time.

Scott H. Group: Okay. Thank you, guys.

Raymond T. Betler: Okay. Thanks.

Operator: Our next question is from Jason Rodgers from Great Lakes Review. Please go ahead.

Jason A. Rodgers: Hi, guys.

Raymond T. Betler: Hi, Jason.

Jason A. Rodgers: Hello. Looks like you've picked up some ECP orders internationally. And just wondering if you could talk about your growth expectations there and perhaps with the level of sales you're generating currently from ECP.

Raymond T. Betler: So, the orders that we picked up for ECP, Jason, are in the double-digit millions of dollars and they're in countries that are – in markets that already deployed ECP. So, those countries, Australia and South Africa, they're not huge markets, but they're good, solid markets for ECP. And I don't anticipate any, in the short-term, any additional major ECP orders in those countries. But we are pretty successful. Those countries have majority of equipment that's already operated with ECP and any new (47:02) vehicles they put in place, they would utilize ECP. If your question is addressing the ECP opportunity in North America, I think we've stated previously that that's still under review by the authority, the federal government and we don't anticipate an impact from that or a final decision for the next couple of years.

Albert J. Neupaver: But if we look at that opportunity based on what we know and if the regulations that are in place right now went forward, we would expect definitely $300 million to $400 million worth of business in the future, next three years, five years or so.

Jason A. Rodgers: Okay. And then the cost savings, are you still projecting $30 million for the year, and of that, how much was realized in the quarter?

Patrick D. Dugan: Well, the $30 million is, I think we have no problems achieving that in the year. And I mean if you just look at the quarter, we've obviously been reducing costs in order to maintain our margins. And actually, when you add back the Faiveley costs, it's better operating margin than we have in the past quarters. But then – and then you look at the SG&A, since that SG&A number is down, and then if you annualize that, you get there. So, there is a – it's a continuous process. We're constantly looking at where our expectations are in the sales line and making sure that we adjust our variable costs and also on our fixed costs to the extent we can, or at discrete costs, where we can. And our goal is to continue to have that good margin performance even though you have the lower sales.

Jason A. Rodgers: And I apologize, if I missed it, but did you give what the total number of shares repurchased in the quarter and the amount spent or the average price paid?

Albert J. Neupaver: Yeah. We did not acquire any additional shares during the second quarter.

Jason A. Rodgers: And then, finally...

Albert J. Neupaver: We have about $216 million left on our authorization of $350 million, but nothing was purchased in the second quarter.

Jason A. Rodgers: And then, finally, what was the percent of change in revenues for the quarter outside the U.S.?

Albert J. Neupaver: Second quarter 2015 to 2016?

Jason A. Rodgers: Right.

Albert J. Neupaver: A drop of $18 million (49:49) on $400 million. So, what's that?

Patrick D. Dugan: About 4%.

Albert J. Neupaver: 4%.

Jason A. Rodgers: Thanks very much.

Albert J. Neupaver: Okay. Thank you.

Operator: Our next question is from Matt Brooklier from Longbow Research. Go ahead.

Matt S. Brooklier: Yeah, thanks. Good morning.

Raymond T. Betler: Good morning.

Matt S. Brooklier: So, I just had a follow on, some clarification in terms of your – the Freight revenue guidance and some of the color you've already provided. The $200 million revenue decline this year, that's solely within your OE business, that the railcar and locomotive side of your business?

Albert J. Neupaver: The $200 million includes the whole headwind from the Freight market.

Patrick D. Dugan: But freight car and locomotive OEM, plus the impact of rail traffic.

Albert J. Neupaver: Right. So it is...

Matt S. Brooklier: Okay. So, that – the $200 million includes the impact on your aftermarket business?

Albert J. Neupaver: That's correct. That's correct.

Matt S. Brooklier: Okay. Okay. And then the rest of it is related to the decrease – I think the decrease in positive train control sales this year?

Raymond T. Betler: Yes.

Albert J. Neupaver: Yes.

Patrick D. Dugan: Yeah. You have – you have a number of factors. If you look at the Freight business itself, that's the $200 million. If you look at the train control, the 20% or so give you another $80 million or $100 million. You also have negativity from the industrial markets, but a lot of that – and the FX, but offsetting that is the Transit is up as well as our acquisition program. So, net-net, that's how you get to the down – 10% down.

Matt S. Brooklier: Okay. I just wanted to make sure I had heard correctly the components contributing to that.

Patrick D. Dugan: Right.

Matt S. Brooklier: And then, on the Freight side, you're expecting growth backing into that off of what you provided on the Freight side of things, it sounds like a kind of a middle-single digit revenue growth rate at Transit is a fair way to think about things?

Raymond T. Betler: It's a low – it's a low-single digit growth rate, yes.

Matt S. Brooklier: Okay. And then just back to PTC, you gave the total number revenue booked in the quarter, how does that – how does that breakout per Freight and Transit?

Raymond T. Betler: It's about – 75% of that was Freight, a little bit in international, the balance is Transit.

Matt S. Brooklier: Got you. Okay. Thank you for the time.

Albert J. Neupaver: Hey, thank you.

Operator: Our next question comes from Mike Baudendistel from Stifel. Go ahead.

Mike J. Baudendistel: Yeah. Great. Thank you. Just wanted to ask you on the margins, I mean those are holding up really well considering the Freight revenue decline, is there anything with mix sort of within the Freight segment that's supporting the margins? I mean, just intuitively you think of OEM revenue down and traffic-related business maybe down less, that's a positive to margin. Am I thinking about that right?

Albert J. Neupaver: Yeah. I think on the contrary, if you think about it, the train control business was down, which is a good margin business and aftermarket being down. So I think net-net, I think the group – Ray and his team did an excellent job of controlling cost and managing that margin. On the – we've always said that it's – our contribution margin on the way up is in the 20% to 22% range. And if we could manage to that level, then we're really controlling our cost and delivering. And we control – I think they controlled it to 18%. There the mix, I think went both ways. I really think that what you're seeing here is the impact of excellent execution for the quarter based on what they have, controlling the things that we can.

Mike J. Baudendistel: Okay. That's great. I also wanted to ask on – I think a little longer-term question on PTC. I mean, let's assume the PTC deadline for 2018 is fully met. I mean, after that point what do you think your PTC revenue is on a annual basis? Do you have any estimate for that?

Albert J. Neupaver: We don't have an exact estimate. We think that long term this is a growth business for us. And our focus would – from a PTC standpoint, we would have aftermarket enhancements directly related to PTC. We're also looking at a much larger market which is, say, train control and signaling market that we want to participate in a much larger way. So that business segment will continue to grow well into the future, and be a major segment for Wabtec in years to come.

Mike J. Baudendistel: Okay, great. And...

Raymond T. Betler: Mike, the number we've given out is 5% to 10% of the installed base. We expect in annuity on service agreements and everything else that Al talked about it on top of that. So we have a lot of product development in process to leverage the existing PTC installed base. And as you said, we're going to – we are expanding in the signaling area also. So, you can build out from what we've already communicated

Albert J. Neupaver: ...in your model.

Mike J. Baudendistel: Okay. Great. Thank you. And then just a quick one. And do you have any thoughts on the ECP mandate that's in the tank car regulations and whether that could be taken out, I realize (55:48) more headline risk than anything, but just any thoughts there?

Albert J. Neupaver: We really don't know. We know the value of ECP, we've talked about it, ECPs being used around the world, there is a lot of merit. People have chose to use it because of its merits and shorter stopping distance, safety related. They are getting productivity improvements. So as far as the regulation here, we'd rather not make any comments related to it. But I think if you look at the track record of its performance and what it's doing around the world and that continue to place orders. I think when you look at Australia, at some point – I think all of Australia will be equipped with ECP at some point; it's probably greater than 60% now. Is that right, Ray?

Raymond T. Betler: Yes.

Albert J. Neupaver: And South Africa as well. Saudi Arabia has ordered. So I think ECP will – it will take off in this country, it's just a matter of, again, when.

Mike J. Baudendistel: Okay. Great. Thanks very much.

Albert J. Neupaver: Thank you (56:55).

Operator: Our next question comes from Willard Milby from BB&T Capital Markets. Go ahead.

Willard P. Milby: Hey, good morning, everyone. I'm sorry if I missed it. But did you give a dollar value on the Faiveley impact?

Albert J. Neupaver: The dollar value on the Faiveley – the expenses...

Willard P. Milby: The $0.05, what was the dollar value on that?

Patrick D. Dugan: $6.6 million for the quarter.

Willard P. Milby: All right. And it was – as we kind of think about SG&A for the remainder of the year, I know someone mentioned that maybe annualizing the $80 million for the rest of the year will get you to that $30 million in savings numbers. Is that a good number to think about for SG&A as we look out in Q3 and Q4?

Patrick D. Dugan: Yeah. I think you're going to be in the – I think you're going to be – a conservative estimate would be about $78 million to $80 million of SG&A per quarter.

Willard P. Milby: All right. And as we kind of look at gross margin, cost of goods sold, we've kind of had eight quarters to nine quarters of cost of goods sold declines with a tick-up here in Q2. Do you have a sense of where that could be as we look out in Q3 and Q4? Is 67% a good number for cost of goods sold or rather 33% gross margin?

Albert J. Neupaver: Yeah. We really – one thing we continue to focus on is continuous improvement and obviously the gross margin. I think that we wouldn't expect the mix of business that we have now to change drastically. So I think one could probably be able to project some – similar to what we're doing.

Willard P. Milby: All right, great. And one last housekeeping thing. Did you give a Freight acquisition revenue number for this quarter?

Albert J. Neupaver: Freight acquisition added $11 million, Transit was $6 million, for a total of $17 million.

Willard P. Milby: All right. Thanks very much. That's all from me.

Albert J. Neupaver: All right. Thanks.

Operator: Our next question is from Liam Burke with Wunderlich. Go ahead.

Liam D. Burke: Yes. Thank you. Good morning. You are able to cut SG&A as volumes came down, how much flexibility you have over time as volumes recover to be able to flex back up to support future growth?

Albert J. Neupaver: Yeah. Not all of the savings was in SG&A. SG&A was just one of the areas that we worked on. I think there is – Liam, there is always a point where you couldn't (59:37) taken away the fat first and then the muscle and then we get to the bone. And we – what we try to do is we balance our approach because we're not going to jeopardize our long-term growth potentials to meet some kind of small short-term objectives. So I think there is a balance between the two, and I think that Ray and the team have done a good job in balancing that. We've got a lot more to do and a lot more areas that we could focus on to continue to expand those margins. We're not down to the bone, and we just want to state that we have no intent to go that far. So there is a limit, but we're not close to it.

Liam D. Burke: Okay. Great. And on the signaling front, you've got lots of international opportunity. Do you have the portfolio in a place or it will be – do you need to make more acquisitions to be able to execute on the growth opportunities?

Raymond T. Betler: I think it will be both, Liam. We have products that we're developing. For instance, we're developing wireless crossing technology, we're developing a vital office system to expand our office in CAD (01:00:58) capabilities. We're developing things like digital compasses that can be applied in both sectors. But it's a huge market, and there is big players. So we don't want to get into a commoditized portion of the market where we're (01:01:18) trying to look for niche opportunities. And for that, we'll probably continue to look for specialty businesses and acquire those.

Liam D. Burke: Great. Thank you very much.

Tim Wesley: Thank you.

Operator: Our next question comes from Sam Eisner from Goldman Sachs. Go ahead.

Samuel H. Eisner: Yeah. Good morning, everyone. So just a quick question on the guidance here. So if I kind of take the midpoint of the guidance range of $4.10, I basically get to an EBIT decline for you guys of roughly $36 million, assuming the 30% tax rate. You've already recorded close to $30 million in the first half of the year. So I'm curious what are you implying in the guidance that gets better? Is it cost savings, is it that you're just lapping easier comps? If you can just help me understand why the decline is really abate in the back half of the year.

Patrick D. Dugan: Let me take a shot at that Sam. So in the guidance, in the $4 to $4.20, that assumes $2.10 in the first half, because remember that the guidance does not include Faiveley expenses. So we did a $1.05 in the first quarter, a $1.05 in the second quarter. And you're going to have to model the second half based on the guidance that we gave you.

Albert J. Neupaver: Yeah. And if you look at revenue, Sam, that's about $1.05 (01:02:52) billion and a $1.05 (01:02:53) billion. I see net income not – if it's balanced, it's going to be about the same. So we don't have the restructuring or Faiveley cost in the projection.

Patrick D. Dugan: For the second half.

Albert J. Neupaver: For the second half. It's in the first. So I think it's pretty much what we're seeing, other than we should see some seasonality in the third period – third quarter. We expect the year to basically be very similar first half, second half.

Samuel H. Eisner: Got it. That's helpful. If I – Pat, you were giving some of the numbers on the backlog there, you actually had positive – and I realized Freight and backlog, and order numbers are rather choppy here, but you had a positive book-to-bill 1.11, I believe, given the backlog number of $633 million. Can you perhaps comment – it did actually have sequential order growth, I mean you're still down year-on-year, but it was a positive book-to-bill for the first time in three quarters or four quarters here. So curious if there is any kind of color that you can give there.

Patrick D. Dugan: No, I think it's – I mean, it's obviously good news, but I don't think there is anything unusual there I want to call out and point towards. It just comes down to some of the timing on the orders, some international orders, and when we get to sign the purchase order or the contract, then we can count it on our backlog. An FX has a little bit of impact on it too. So there's a lot of things, that's nothing I want to call out and say or (01:04:29) point to.

Albert J. Neupaver: Yeah. When I look at the individual items in the group, there is nothing that stands, it's a little bit here, a little bit there, there's no big single items.

Samuel H. Eisner: Got it. And maybe if I can just sneak one more in here, about 11% of total revenue is United Kingdom-based. I know that you guys didn't really call it out, it doesn't really seem to be a theme this quarter across the companies have reported. But any comments on what you guys are seeing on the ground in the UK, and any potential impact of Brexit, just feel as though we should talk about it? Thanks.

Albert J. Neupaver: Yeah. We actually spent a good bit of time at the recent board meeting discussing that. I think, that right now it's a wait and see to what happens. We are not seeing any big difference in the business. What we are seeing is the impact of the exchange rate on translation. But we're not seeing any other impact from it. So we're very aware of areas that we need to focus on, and we'll continue to do that.

Samuel H. Eisner: Got it. Thanks so much.

Albert J. Neupaver: Thanks Sam.

Operator: Our next question comes from Tim Curro from Value Holdings. Go ahead.

Timothy Curro: Hi. A follow up regarding ECP. The FRA is positive as you alluded to, but the Association of American Railroads, including UP (01:06:00), they state that ECP is unreliable. What are you and the industry doing to prove that it is reliable?

Albert J. Neupaver: Yeah. Well, one thing I don't like to do on this call is get into a discussion related to what someone else said or didn't say. What I will give you is the facts about EPC. I think that my numbers are right, but I think that we have close to 30,000 units, 40,000 units operating around the world right now. And we have – I can't remember a warranty issue in the last two years, and even the warranty issues that we have was related to cross-talk between electronics that was immediately resolved, and it was a small issue within South Africa, and these companies continue to buy the systems, Ray gave you examples of both, I think, South Africa and Australia, where the orders were, Ray?

Raymond T. Betler: Right.

Albert J. Neupaver: If there was problems and they were unreliable, they sure as hell wouldn't be ordering them, but I don't know anything about what you said as far as the AAR and UP (01:07:18).

Timothy Curro: Okay. A follow up on PTC. Are you aware of an estimate about how much more the industry needs to spend on PTC to be compliant?

Albert J. Neupaver: Yeah. They've spent about $6 billion to-date, and they have to spend at least another $4 billion. I think that number could escalate and as it draws (01:07:43) out over time. But to give you a few statistics, they have about 38% of their route miles completed. So they still got a long way to go on the route miles, only 63% of their locomotives are compliant. A little more than half of their employees are trained right now. Their track side equipment is probably the area they are further along, and they have over 80% of that equipment, and they have also done okay with the base station radios. But that's just the freight lines. When you look at the transit authorities, we're probably only 30%, 40% complete on what needs to be done, and we're still working with transit authorities that haven't even started the effort yet. So there is a lot of work, a lot of expenditures that are going to happen in the next two-and-a-half years, three years.

Timothy Curro: Okay. Thanks.

Patrick D. Dugan: Thank you.

Timothy Curro: That was the sense I was getting, because I noticed last week, New York's MTA said that they were going to spend $1 billion on PTC, and apparently they hadn't even started.

Patrick D. Dugan: Yeah.

Raymond T. Betler: Well, it's started.

Patrick D. Dugan: Go ahead Ray. (01:08:55) talk about the project.

Raymond T. Betler: They've started this large project, the MTA commissioned three years, four years ago. But you got to remember that that's a huge property of MTA incorporates New York City Transit, Long Island Rail Road, Metro-North. So that just is an example of the revenue stream that's kind of go into this technology, and once it's installed, the ongoing opportunity to further support and enhance the technology. So it's a big mandate across the industry, and the transit authorities are definitely, as Al said, in a catch-up mode because they didn't have funding.

Timothy Curro: Okay. Yeah, the MTA said last week $1 billion in their upcoming five-year plan. It seems like most of that would have to be in the next two-and-a-half years in order to comply.

Raymond T. Betler: Yeah.

Timothy Curro: A couple of quick numbers questions, if I may. You mentioned the $1.4 million restructuring expense in the 2Q. Was there a number for the 1Q?

Patrick D. Dugan: Yeah. Give us a second.

Albert J. Neupaver: It was about – a little more (01:10:15 – 01:10:23).

Timothy Curro: Okay. And on the Faiveley, when you announced the deal, you stated that you assumed the acquisition revenue would be $1.2 billion, and you're still sticking with that number in spite of the industry weakness. Is that because of their strength and services in aftermarket or greater opportunities in transit or what?

Albert J. Neupaver: Yeah. (01:10:46) the Transit business on a global basis has been stable here in the U.S. as well as internationally. And if you remember when I spoke a little bit about their report that they gave out in May, they've actually grew last year, and the backlog has actually increased 2% over time. And that's because – and that's one of the reasons why we like our diversified business model, and that is that transit becomes counter cyclic to the freight market. When you have a recession, more money is spent on trying to energize economies around the world. There are stimulus packages accordingly. You know that the spending in China stopped, but they haven't stopped spending money on the infrastructure and transit projects.

Raymond T. Betler: And you have to keep in mind, Tim, 95% of Faiveley is transit, and even the point Sam Eisner asked about in the last question, there is so much complementarity with that business, we have for instance, a really strong position in the UK, Faiveley not so much. So they're strong in Europe, Asia Pacific. When you put the businesses together, the transit footprint, it's really strong.

Timothy Curro: Thank you very much.

Albert J. Neupaver: Thank you, Sam.

Operator: Our next question comes from Steve Barger from KeyBanc Capital Markets. Go ahead.

Steve Barger: Thanks for getting me in. Just a quick follow up on cost controls. Al, you said you're not up against the limit of what can be done so far. But you have been pretty aggressive in taking some cost actions. So going forward where do you go that will allow you to offset revenue declines in some of your high margin businesses?

Albert J. Neupaver: I think the one thing that we focus on and we do it every year is, first of all, you look at businesses that may not be performing to your expectations, and those businesses are in – and executing contingency plans. I'll ask Ray to talk about his approach on the contingency plan. But there is different phases, there is Phase 1, Phase 2, and all the way along the line you're taking actions not just from cutting heads, but you're talking about an increase in activity related to Wabtec Performance System. You're taking as much aggressiveness as you can on the sourcing basis. You're looking for pricing opportunities, the cost of poor quality, something that Ray introduced. So maybe you could expand on some of those, Ray.

Raymond T. Betler: Yeah. So Steve, in all of those areas we've – we told you a couple of years ago, we started put a really strong emphasis on car support quality, and as a result we're seeing improvements on the bottom line from less rework, retrofit warranty cards, as well as plus one-time issued some were definitely outperforming our supply management objective. So we have an objective every year for a combined QPS, WPS goals part of which are supply management. Headcount is a part of it, but it's not the only part where we're deriving better operational efficiencies and cost improvement in all discretionary areas.

Steve Barger: So when you talk about just your supply base as an example, are you getting actual price concessions from your suppliers for raw materials, or is there still work to do in terms of consolidating the buy to try and get volume discounts, or just, I guess, it's a tough environment out there, and it's surprising that you've been able to do such a great job. And now, you noted that you are doing it in ways that other companies can't. I'm just curious how much is left in terms of being able to drive those margins?

Raymond T. Betler: So as we book contracts we have an opportunity to outperform the supply management objectives we have in (01:15:12) or the ask/bid number. So the answer is yes. We're outperforming our own bid objectives that we have in projects as well as our product business and we outperformed in our overall supply management objective through the year. So it is nothing easy about it. It's day-to-day, it's difficult stuff, and everywhere an opportunity exists, we're trying to focus on it, identify it and obtain the optimized cost position in all areas of our business. When we go to put a new facility, for instance, in places like South Africa and places like India, we have costs in our projects to do that work, and to the extent that we can improve our overall performance, our cost objective, that's money in the bank. So we're doing it everywhere, same across the worldwide business.

Albert J. Neupaver: And the other thing that we look at and an area that gets a tremendous amount of focus is because we're active on acquisitions, that's really a lot of margin improvement comes from that. And if you look forward we talk about our €40 million of synergies, it is synergies with Faiveley. And if you take a look at what we did with Fandstan and the margin improvement there and the focus, we're going to do the same thing where we'll be focusing on a number of areas that provide that market margin improvement going forward.

Steve Barger: All right. Thanks for the time.

Albert J. Neupaver: Okay. Thanks.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tim Wesley for any closing remarks.

Tim Wesley: Okay. Thanks, Andrea, and thanks everybody for your attention on the call this morning. We will talk to you after the third quarter. Have a good day.

Raymond T. Betler: Thanks.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.