Ladies and gentlemen, thank you for standing by. Welcome to the Actuant Corporation's Third Quarter's Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, Wednesday, June 26, 2019. It is now my pleasure to turn the conference over to Barb Bolens, Vice President, Corporate Strategy, Investor Relations, and Communications. Please go ahead, Ms. Bolens.

Thank you very much operator. Good morning everyone and thank you for joining us for Actuant's third quarter 2019 conference call. On the call today to present the Company's results are Randy Baker, Actuant's President and Chief Executive Officer; and Rick Dillon, Actuant's Chief Financial Officer. Also with us are Fab Rasetti, General Counsel and Bryan Johnson, Chief Accounting Officer. Our earnings release and slide presentation for today's call are available on our website at actuant.com in the Investors section. We are also recording this call and we will archive it on our website. Please go to Slide 2. During today's call, we will reference non-GAAP measures such as adjusted margins and adjusted earnings. You can find a reconciliation of non-GAAP measures to GAAP in the schedules to this morning's press release. We would also like to remind you that we will be making statements in today's call and presentation that are not historical facts and are considered forward-looking statements. We are making those statements pursuant to Safe Harbor provisions of Federal Securities Law. Please see our SEC filings for the risks and other factors that may cause actual results to differ materially from forecast, anticipated results, or other forward-looking statements. Consistent with how we have conducted prior calls, we ask that we follow our one question one follow-up practice in order to keep today's call to an hour and also allow us to address questions from as many participants as possible. Thank you for, in advance for your cooperation. As a reminder during the call and as in previous quarters we may refer to our Industrial Tools & Service segment as IT&S Tools or Enerpac, and our Engineered Components & Systems segment as EC&S or components. Now I will turn the call over to Randy. Randal W. Baker: Thanks Barb and good morning everybody. Today we are going to start on slide 3. Our third quarter was one of the best results in many years and I am very pleased with the performance of the businesses. But before I review the results I would like to provide an update on our strategy progress. Our initiatives to improve organic growth are paying off. The industrial tools and services segment grew by 8% in the quarter. This was a direct result of the efforts to improve our sales effectiveness and bring new products to the market. Our service sales grew at an impressive rate in the quarter which was benefiting from extended projects in the Mid-East and North Sea. As you recall, we announced restructuring program in our second quarter earnings call to improve efficiency, reduce our cost base, and prepare for the next phase of our strategy. The combination of Enerpac Hydratight and the corporate structure are the area of focus, which are well underway. We expect to see the benefits of our efforts as we enter our new fiscal year. From a capital deployment perspective, we are maintaining strict discipline relative to our strategy. Our top priority remains investing in organic growth efforts while maintaining a clear perspective on strategic acquisitions. We have built a good pipeline of prospective tool companies which will extend our existing product lines and provide new technology to Enerpac. From a portfolio perspective the Enerpac, I am sorry, the sale of the engineered components and systems segment is continuing, and we will provide more updates as they become available. Secondly, we have made decisions to retain the Cortland industrial rope and medical component business. We believe we can further improve and grow the company to maximize shareholder value. The industrial rope segment has the potential to serve a wider variety of customers through the utilization of the Enerpac channel, and the medical component business is growing fast with a very attractive profit margin. Now turning over to slide 4. As I mentioned earlier, we had a -- we are very pleased with the results in the third quarter. Core sales grew by 3% comprised of an outstanding result from Enerpac of 8% while moderate decline from EC&S segment of 2%. Adjusted operating profit grew by 18% driven by 280 basis points of margin expansion. As I have stated in the past, our target industrial tools and services operating leverage is between 35% and 45%, which was exceeded in the quarter. While EC&S sales declined in the quarter the team was able to expand margins through cost reduction and price realization. As a result, EPS grew by 15% in the quarter to $0.45 a share which was the top of our guidance range and the best earnings since 2015. From a financial leverage standpoint, we improved to 1.8, which is a substantial progress over prior year and places Actuant in a very healthy position. Overall, the third quarter was a great result and I'm proud of our global team for the efforts to deliver on the commitments and improve the company. Now turning over to slide 5, the third quarter was very active for new product launches and new platform wins. Enerpac tool launched nine new product families in the quarter and is now making great progress towards the 10% product development sales goal. The new E-Pulse Hydraulic Pump is a revolutionary design for all applications from lifting to bolting with a completely new drive system. The new E-Pulse pump provides a true competitive advantage and sets a new standard in the marketplace. Secondly our lifting group has released a highly creative Cube Jack system capable of 50 tons in a very compact design. This new system provides greater flexibility in a highly transportable package. On the engineered components and systems side, our team won 10 new product platforms in the quarter and has reached a new level of product vitality of greater than 15%. The new platform includes display systems, hydraulic tilt, and a new driveline application. Our push to have a higher degree of product vitality has lessened the impact of market cyclicality. Overall, we're very pleased with the progress of becoming a truly innovative company. So moving on to slide 6, our capital allocation priorities have not changed. We believe investment in ourselves to maximize organic growth is the highest priority. Secondly, as you noted from our improved financial leverage, we will continue to maintain a strong balance sheet and reduce debt. As I mentioned, strategic acquisitions which support our tool company strategy are our priority. However, our ability to acquire and operate to improve the value of the company must be maintained. We have built an active list of potential acquisitions which must meet our financial and operational hurdles including comparison with share repurchase. Additionally, all acquisitions must support the extension of our tool product line and provide technology which gives Enerpac a competitive advantage. I'm going to turn the call over to Rick now to go through the details on the quarter, and then I'll come back with a market update and guidance.

Thanks Randy and good morning everyone. So before we get into our third quarter report let's quickly look at the onetime items on slide 7. We recorded a net $9 million benefit from the impairment divestiture and other charges. $11 million of the benefit is related to the decision to retain the Cortland U.S. business including an accounting adjustment for certain translation losses and depreciation and amortization. This benefit is partially offset by divestiture costs related to the EC&S process. Tax reform and other charges relates to the acceleration of debt issuance costs and $3 million of additional tax expense related to the revaluation of certain tax credits as a result of law changes given tax reform. So let's get into our third quarter results as we turn to slide 8. Core sales increased 3%. This this was offset by the 6% impact of divestitures in the quarter and a 4% headwind from the stronger dollar. Adjusted operating profit showed continued year-over-year improvement, up 280 basis points with incremental profitability in both IT&S and EC&S. Our adjusted effective income tax rate was approximately 15% for the quarter in line with our expectations. Our full year effective tax rate is still expected to be approximately 20% and our fourth quarter rate is expected to be in the mid-to-upper 20s similar to our second quarter. Adjusted EPS for the second quarter was $0.45 compared to $0.39 last year and at the top end of our guidance range. If we turn to slide 9, total core sales at 3% was in line with our guidance in the mid single-digits range as continued strong growth of IT&S was partially offset by a sales decline of EC&S. IT&S segment sales continue to be strong with core sales up 8%, product sales continued to be solid and service growth in the Middle East and North Sea was much stronger than our expectations. In EC&S the modest decline in core sales resulted from reduced demand and off highway truck, North America and China while European truck is stable. I'll provide more color on core sales in a minute when we discuss the individual segment results. Turning to slide 10 for a summary of our top line performance, our 3% consolidated core sales growth was driven by a $9 million improvement from volume and price, IT&S volume grew by 9 million and it was partially offset by reduced EC&S volume. Currency headwinds reduced sales by approximately 11 million or 4% as did the net impact of acquisition and divestitures which was 20 million or 6%. Now let's look at both the adjusted operating profit and adjusted EBITDA on slide 11. Our trend of improving year-over-year operating profit margin has continued this quarter. Improvement from pricing actions and IT&S core volume increases provided the greatest positive impact in the quarter. An unfavorable product mix and under absorption in both segments was partially offset by the benefit of the elimination of the losses from the heavy lift products in the prior year. As was the case last quarter tariffs in the quarter were approximately 2 million and in line with our expectations. We continue to believe that our pricing actions were sufficient to cover commodity and other inflationary increases including tariffs but we are watching closely how the current trade and tariff discussions advance, any further tariff impacts would likely need to be covered in the form of surcharges. Our objective remains to prevent margin erosion due to inflationary cost pressures. And as expected SAE expenses also improved year-over-year primarily driven by reduced incentive compensation expense. Now move on to the segment details starting with the IT&S segment on slide 12. Core IT&S sales increased by 8% year-over-year which is the fifth consecutive quarter of consolidated core growth and the seventh consecutive quarter of core product sales growth in the segment. Core product sales were up mid single digits with substantially all regions experiencing growth then led by North America. This reflects the continued benefits of our investments in NPD and commercial effectiveness. The biggest driver of our growth in the quarter was the 23% core sales improvement in our service business specifically in the Middle East and North Sea. Third quarter is our seasonally strongest service quarter due to plant maintenance shutdowns. However the upside we experienced in the quarter was attributable to scope additions to a number of large plant shutdowns, emergency repairs, and higher work levels than normal during Ramadan. Incremental profit flowed through on the solid product growth in North America and the significant service growth drove the 24% EBITDA margin and is a testament to the strength of our IT&S business and our opportunities to drive growth and profitability as we execute our strategy of becoming a pure play Premier Industrial Tool company. If you look at slide 13, before we move on to EC&S I want to spend a few minutes on the IT&S restructuring program as well as the drivers of the IT&S fourth quarter projections which Randy will cover shortly. As we mentioned earlier IT&S has begun to implement the restructuring program we announced earlier this quarter. The key areas of focus include repositioning our North American service business to align with our future growth strategy, specifically our service structure and resources will be focused on high value and added services -- high value added services such as joint integrity, specialty machining, and high margin bolting. We had built the service organization that not only focused on specialty service but also commodity type service which compressed historical profit margins. While we expect to see reduced service sales in North America in the near-term, we expect to see an immediate improvement in profitability. Our new operating structure will also allow us to put more focus on growing our product and rental products to both our service and distribution networks. As we invest in and grow our rental and specialty service business we will see incremental core sales and even greater profitability in the region. In addition as we finalize the integration of Enerpac and Hydratight our general IT&S structure will be a focus and may include the emphasis of certain product offerings that while small have negative impacts to our overall profitability. We continue to expect to achieve 12 million to 15 million of annual savings with onetime restructuring costs of 15 million to 20 million. We already discussed the 1 million of costs that came through in Q3 and the rest of the costs coming in Q4 in early 2020. With that as we look ahead to expectations for IT&S as we finish the year I thought it would be helpful to frame the impact on the quarter from normal seasonality as well as restructuring. In the fourth quarter from a product perspective our core true sales growth is expected to continue to be steady in the mid single digits supported by new product introductions. That will offset -- will be offset by roughly $3 million of heavy lift product sales that came through in Q4 of 2018 which will not repeat this year due to our focus on standard product offerings. Additionally as just discussed our restructuring activities focus on deemphasizing lower profit and unprofitable service product line -- service and product lines will result in some incremental near-term top line reductions. Q4 is our seasonally slowest service period due to our customers maintenance schedules. This combined with the completion of the large projects we saw scope expansions on earlier in the year will result in a decline in sales from the quarterly sequential trend this year. What this means for IT&S in the fourth quarter is the top line growth projection of 1% to 4%. Again while down from our run rate this year our expectations for quality growth in our core products and service business have not changed. However we will see some puts and takes as we execute our strategy on service and products going forward. Turning now to EC&S on slide 14. Core sales declined by 2% in the quarter. The divestiture of Cortland Fibron and Precision-Hayes reduced year-over-year sales by 21 million or 14% and the stronger dollar reduced sales by 3% resulting in an overall reduction of 19%. The core sales decline of 2% was the result of the challenges in the Ag market due to exceptionally cool and wet spring and its impact on the planting season as well as reductions in North America frac and China truck and as stated earlier European truck is stabilizing. Cortland U.S. sales were flat to prior year as ropes and cable sales were down year-over-year but that was offset by very solid growth in our medical business. Profit margins in the segment increased year-over-year primarily as a result of pricing, spin control, and a reduction incentive compensation expense. Given the expected market softness we'll be taking actions in Q4 within the EC&S business to reduce costs and drive efficiencies. We expect these restructuring actions to generate approximately 3 million in annual savings with a cost of approximately 2 million. If we turn now to liquidity on slide 15 we generated 44 million of cash during the quarter in line with our seasonal patterns and our projected growth in cash in the third quarter. Working capital was positive year-over-year as the accounts receivable built at the end of Q2 was collected as expected and reduced inventory as well. In Q3 of 2018 we received a large tax refund of 17 million that did not repeat this year and resulted in a one of the larger year-over-year impacts to cash flow. We now have in effect full year cash flow to be in the range of 62 million to 70 million down from the previous guidance of 80 million to 85 million. The decrease is attributable to the anticipated cash restructuring costs in the fourth quarter, an effort to normalize inventories in our EC&S segment ahead of new platform launches, aggravated by the anticipated decline in sales in the fourth quarter. And the delay of one platform launch until fiscal 2020. We're also seeing incremental CAPEX including the acceleration of certain EC&S projects in anticipation of a divestiture. We ended the quarter with 200 million of cash on hand. During the quarter we've renegotiated our term loan and revolving credit facilities to provide greater flexibility in anticipation of an EC&S transaction and to support the execution of our strategic plan going forward. As we close the credit facility, our term loan balance was 200 million and we have since paid down an incremental 10 million with excess cash. Leverage measured by net debt to pro forma EBITDA took another step down and now sits at 1.8 times versus 2.6 times in Q3 of 2018. The combination of the reduction in leverage and the new credit facilities provides us with significant flexibility to execute on our strategic plan. With that I will turn the call back over to you Randy. Randal W. Baker: Thanks Rick. Let's move over to slide 16. General economic drivers remain largely unchanged from our second quarter. U.S. economic growth is flattening while euro area has experienced sequential decline. Our recent dealer visits have revealed a consistent message of continued growth in Industrial Tools segment driven by good retail activity. Our Enerpac dealers are reporting stable inventory conditions but are feeling the impact of pricing resulting from the ongoing tariff. Almost all of our 14 vertical markets are experiencing moderate growth which is projected to continue through the fourth quarter. Service activity continues to be strong in the Mideast and other energy markets. In the Off-Highway Mobile and Equipment market both Ag and construction equipment producers are balancing their wholesale to retail activity. As a result the new equipment production orders will decline through the fourth quarter but is expected to rebound quickly. Our highway sales in China have declined while the European truck market is more stable. Now turning over to slide 17, our core sales growth expectations for the full year have changed. We are increasing our outlook for industrial tools and service segment. The fourth quarter sales is projected to be in the 1% to 4% range and the full year projection is to be in the 6% to 7% range. This is a direct result of the stronger than expected service and the continued growth in the tools. Engineered components and systems is projected to decline in the fourth quarter by 7% to 11% and the full year is we'll see a decline of between 2% and 3%. The combination of increasing tools and service sales with the declining engineered component and system result in a full year core sales outlook of between 2% and 3%. Now moving on to slide 18 in the guidance. Full year guidance will be adjusted to 1,125 billion to 1,135 billion which reflects divestitures, currency impact in the lower EC&S sales. Conversely we are increasing our full year EPS range of between $1.15 and a $1.21 with an effective tax rate of approximately 20%. Free cash flow will decrease to 62 million to 70 million and for the fourth quarter we expect a range of 265 million to 275 million with an EPS of $0.25 to $0.31 per share. And before I turn it over to the operator I just want to reiterate that we are in the cusp of building one of the finest tool companies in the world. The company has proven a -- sales coverage, it can increase its product development and the results is creating a truly innovative and growing company and we are very, very proud to be part of that. So with that operator I am going to turn it over to you for questions.

[Operator Instructions]. Our first question comes from the line Mig Dobre with R.W. Baird. Please proceed.

Good morning guys, it is Joe Grabowski on for Mig this morning.

Good morning.

Good morning. Could you maybe expand a little bit more on the decision to retain the remaining Cortland businesses and kind of what changed from maybe last quarter when those businesses were part of the businesses to be divested? Randal W. Baker: So as you know we have been preparing for the divestment process for a long time where we've created a component business comprised of the EC&S company; and separated from that, we sold PHI and the Cortland Fibron which was the offshore oil and gas division which was focused heavily on upstream which we know has been stressed and that was placed last year. So, the question is what about Cortland which is comprised of an industrial rope manufacturer and a very, very high-quality medical component manufacturer. As we look through that and its ability to grow margins to an accretion level greater than or equal to Enerpac, we found that that value and that creation possibility was there. So, what we wanted to do is to really bring that business back into the fold and then really proactively market the lifting assembly equipment back to Enerpac which we have already branded a significant number of our ropes and assemblies as an Enerpac product. And many of our distributors specialize in heavy lifting apparatus, whether it's cranes, spreading equipment, or shackles or other components, so it fits quite well with that. So, we believe we can create more shareholder value by growing that and then secondly by focusing on our med business which has an extraordinary margin profile. With the combination of those two things, we think we can build a very, very nice business.

Got it, okay, makes sense, thanks for the color. My follow up I guess, the EC&S core sales guidance down 7% to 11% in the fourth quarter, can you maybe break it down, give a little more thought on which end markets are driving that and maybe specifically within that wondering if you're seeing any strength in Ag-related businesses or maybe improvement in Ag-related businesses with the elevated corn prices we've seen recently? Thank you. Randal W. Baker: Okay, so covering the components of the EC&S in fourth quarter one of the primary drivers is one of our new platform wins, which is truck manufacturing in Europe has a one-quarter delay on the launch of a sizable piece of business. So, it is not a structural change to the business, it's the delay of the start of a major project which has a multi-year impact to the company. So that's painful, but it's part of being a component manufacturer, you could see differences in when the production changeovers for either model years or new product will launch and that's a big chunk of that. Secondly, we've seen softness in China, and so as we push harder to get more customers in China to offset that, we're going to see it in the short-term. On the Ag industry, as you know, I’ve spent a lot of time in the Ag industry and have a fairly good understanding of the dynamics, when you see major manufacturers constraining their wholesale plants and taking down their dealer stock, it creates a very, very nice environment in a very short period of time because the availability of product won't be there as we enter into the new fiscal year. So on the corn price if you look at the stock to use ratio and then you also think about what the lower planted acres and the lower yields due to the late start, it’s going to drive the corn price up. So certain farmers in certain parts of the United States are going to see a very high windfall on their corn price which should create some nice sales activity. So that's why we believe in the off-highway Ag market. The reset should be short lived because I can see great discipline from the three primary producers on constraining their inventory.

Got it, okay, thanks for taking my questions.

Thank you. Our next question comes from the line of Jeff Hammond with KeyBanc. Please proceed.

Hey, this is Trish on for Jeff. So looking at your fourth quarter guidance for IT&S up against tough tools comp and with the early completion of service projects last quarter can you talk more about where you're seeing strength and kind of what's driving the upgraded outlook for the segment? Randal W. Baker: For tools specifically?

Yeah, for IT&S. Randal W. Baker: Yeah, so as Rick mentioned, he walked through that in a lot of detail on one of the slides, but where the real strength continues is in our tool platforms, new product launches, very healthy 14 vertical markets that are still seeing nice growth dynamics. So, on the standard tool products, we still see really good things going forward. As you know a year ago we made a conscious decision to stop doing highly specialized and in many cases highly risky and low margin construction projects, many of them were large and many of them from a margin standpoint either lost money or had very low margin. We have consciously stopped that. So, in our fourth quarter, we anniversaried some of those projects; and so as Rick said, that's about $3 million take out on a year-over-year basis which mutes the overall product component of our IT&S outlook. But you still see nice growth rates from the composite number. And then on the service side, as Rick also mentioned, our service it has lumpy aspects to it. As we do larger projects the customer may time to time ask us to extend those projects and keep people on job sites. And that creates a nice windfall for us which we saw in Q3 and Q2 and which bumped that growth rate up significantly. So what we are guiding for our fourth quarter we think is a very, very stable number. It reflects the benefit of a great tool company, and as we raised the full-year guidance for the tool business, it reflects the full run rates from the full year. So, we are extraordinarily pleased with the 6% to 7% to 8% growth rate for the business. It far exceeded our expectations and when you see the EBITDA margin in the quarter of more than 24%, there are very few companies in the world that have that kind of a type of margin profile which again is why we are so thankful to have this quality of the business and why we're focusing on that for the future.

Okay, great and then just on EC&S given what you're seeing out of your end markets has that changed the way you're thinking about the sale process at all? Randal W. Baker: Could you repeat the question, I'm not sure -- I don't want to answer the wrong thing for you.

Yes, so just looking at EC&S given some of the softening end markets is that impacting how you're thinking about the sale at all? Randal W. Baker: Well no, we always have looked at this as a strategic move for the company. And as we said we haven't given a lot of information about the process and that's by design. But we're very, very committed to it. We know it's the right thing for our long-term improvement in the value of the company. From the EC&S standpoint the key elements of that business is we've done a great job of developing a new platform win rate that is far exceeding the past. And I think that's a tremendous element of the business because when you've got a product vitality north of 15% you're bringing in brand new customers every single order. It will lessen the impact of cyclicality and that's an important piece if you're going to be in the commodity industry. So we're still very committed to the process and we think it's the best long-term decision for the company.

Okay, great. Thanks guys.

Thank you. Our next question comes from the line of Ann Duignan with J.P. Morgan. Please proceed.

Hi, good morning, it is Ann Duignan here. A lot of my questions have been answered but maybe you talk a little bit but I think you mentioned that mix was a negative in both the segments, could you just expand on that?

I think from a IT&S perspective it is just the over weight of service in the quarter and really for the year versus our original guidance. From the EC&S perspective it's just specific products including some of the new products until we get to the appropriate run rate. So both of them experience a little bit of a mix drag versus the original guy.

Okay and then you talked about how services had surprised due to the upside, is there any risk that we've now just created more of a deep hole going into fiscal 2020 that based services some of the work was pull forward and that you have proper comps and no visibility, if you could just like talk about the outlet for service in 2019? Randal W. Baker: Yeah, I think that you're always going to have a lot of these spots within any fiscal year and service particularly when you have a large project build that you're on. They always do sort of reoccur. I mean in 2016 we saw some very big ones that were in the $20 million plus. Those are tough to reoccur but the ones that are of the medium size they can create a nice one following quarter but it's something that our teams are constantly pushing as part of once you get on a jobsite you want to try to sell your services going forward because the mobilization fees the customer has paid are already been paid. So there is a benefit to any side or transport terminal wherever we're doing the work. So I don't see it as a big problem going into next year. You may have some tough comps from quarter to quarter but we still see the focus on high quality and high margin service is the primary objective. And as you know our element of service in the tool group, in the Enerpac tool company is actually a relatively small piece of the overall picture. If you think about our product sales that is a very, very high percentage which also includes the rental business that we have. That's more than 80% of all the sales we do and that's why the margins are so spectacular when you have that type of a business. So I don't see it as a major problem for us Ann.

So you will see as we talked about -- as we start to deemphasize some of this commodity type service center the restructuring is around North America but the deemphasis is global. You will see some top line pressure but to Randy's point these weren't the kind of projects we saw in 2016, these were larger, longer tenured products that gave us some opportunities for upside. Then we will have projects like that and we normally do have projects like that just on planned maintenance and we expect that going forward. But our product and rental product growth will certainly outpace service and result in higher profitability going forward.

And just as a point of clarification could you just -- services at some point do you expect them to be margin neutral to the segments, can you ever get service margins to the same as product and I will leave it there? Thank you. Randal W. Baker: Yeah, service margins are always going to be a lower component of the things we do. But one of the elements of having a great service team in the field is they're your eyes and ears on the job sites that help you market your tools. These are rental or new equipment and so when we go to a job site we go with Enerpac tool and that is a great way to market the products that we intend to sell. Now for certain types of service and especially in joint integrity it is highly technical and it's a differentiator as a business. So we like that sort of thing, it will have higher margins because we provide more than just labor. But when it's pure labor for higher, you will never be able to get to the product sales.

Okay, perfect, thank you. I appreciate the color.

Thank you. Our next question comes from the line of Justin Bergner with G Research. Please proceed.

Good morning Randy, good morning Rick. My first question relates to free cash flow. Would you be able to bridge the old free cash flow guidance to the new free cash flow guidance across some of the major buckets you highlighted earlier in the call?

Wouldn’t be able to quantify those major buckets because we generally don’t but in terms of what's driving it as I said its restructuring costs which we've actually given what we anticipate in the fourth quarter by way of cash restructuring. There is a little bit of overall guidance, there's a little bit of CAPEX that is in anticipation of a divestiture maybe that weren't planned to be complete entirely in 2020. And then we had the inventory levels and so the EC&S inventory levels particularly are up and with the delay in the project and the CAPEX is primarily there.

Thank you, that's helpful. My second question relates to the restructuring detail you provided today. I'm just trying to clarify is that restructuring associated with the restructuring with IT&S becoming its own sort of independent business after the sale of EC&S or what you referred to on the last call was that actually not so much corporate restructuring but IT&S specific restructuring operations with a further plan to follow on removing overhead if and when you sell EC&S?

So, as we said in the last call it's a combination. First of all IT&S as a standalone company you got to see the line between what's corporate and what IT&S businesses were. And so we talked about earlier some of the North America service things that we're doing including infrastructure which would be in that corporate vein. And then we talked about some of the Enerpac Hydratight merger structural changes that we are doing. And again those in a standalone would fall in that corporate cost bucket. In addition to that like we talked about last quarter we're going -- we're in the process of continuing to evaluate our corporate organization in order to make sure we are efficient post transactions and that we have an overall cost that will allow us to sustain a 20% EBITDA margin for consolidated business. Of course that will require some of those costs will transform or reduce naturally with a transaction others will require action and as we get closer to a transaction and better clarity we will be announcing potentially future actions to achieve that goal.

Thank you Rick, I will hop back in the queue.

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

Good morning, this is the Jeff on for Deane. My question is given the recent volatility in oil prices could you comment on the toll segment sensitivity to oil and additionally could you just remind us the breakdown of upstream versus midstream and downstream exposure of the tool segments specifically? Randal W. Baker: Sure, the main thing with oil is that it is seeing multiple years of structural change and so for the North American onshore you can tell by the rig count have come down. And so the North American sales into onshore has definitely tempered a bit. and you can see that in our torque tension sales in North America. And I think a lot of our distributors would speak to that fact that they are seeing a slower sales activity or slowing sales activity. I think quite good that it's just not as booming as it was a year and a half ago. Offshore is primarily focused on maintenance of existing assets either in the Gulf or in the North Sea and has continued to be strong because they have to maintain those assets. Now if you're doing offshore drilling that's a totally different thing and we don't participate a lot in offshore drilling anymore by design. And then as I mentioned in Mid East it has been quite active. We've seen double-digit growth in service as well as some of our product sales categories in the Mid East have done quite well. So the volatility in the pricing does create some short-term change in how people think about investment in CAPEX but the beauty of where we play is mid to down and so we stay away from upstream particularly as I mentioned a couple of years ago we have consciously exited the upstream oil gas which includes well development and exploration. Because that's where that volatility in pricing becomes very dramatic to a company. So today we feel that the price where it's been sitting is conducive to good maintenance activity and it's good to investment in new tools. Many of those tool activities come as a general maintenance matters or purchase decisions. So it doesn't go in front of a CAPEX committee. So things have been quite good and I think it is going to stay that way for a while.

Okay, great, that's very helpful and then just to follow-up, is there any intention to kind of focus your M&A activities outside of energy or is it kind of just a mix in the group kind of at the same percentage as your end markets? Randal W. Baker: Yeah, so just to clarify we won't focus any attention in the energy area for M&A. 100% of our activity for M&A is directed towards tool companies. As I mentioned before to a lot of our investors we look at several distinct categories of tools and ones that bring either a technology that we need for Enerpac or opens up a brand new market or a region that helps us grow as a tool company. So you can rest assured that our capital investment relative to M&A will be focused on developing a world class tool company and we will not deviate out of that. And as I mentioned in my commentary it will follow very strict guidelines on the quality of the company, the returns, how well can we own and operate it, and we will always compare it with the value of a share buyback rather than an investment in M&A. All those hurdles meeting the criteria then we proceed.

Fantastic, thank you.

Thank you. [Operator Instructions]. Our next question comes from the line of Stanley Elliott with Stifel. please proceed.

Hi, good morning. This is Brian Brophy on for Stanley. Had a question on IT&S, can you give us some more color on what's driving the strength in the Middle East? Randal W. Baker: Well there's a lot of assets in the Middle East. There are so many large refineries there that need to be maintained and the Mid East for us is broken into a couple of large markets. Obviously the traditional markets in Saudi, UAE, and areas where there's a lot of assets that are being maintained but also we're in the Caspian and North Africa and other places that typically as we characterize Middle East people don't think about. Casting has been quite good for us and as you remember we made an acquisition that extended what we do in service from not just joint integrity and pipeline services but also pipe prep and cleaning systems and services which added quite a bit of revenue to the region and also added what we do. So it's been quite good, double-digit growth. I think some of that may slow down because some of those things were project extensions from the sites we were already on but we're still projecting some pretty good activity going forward out there.

Excellent thanks and then on the incremental margins and that segment still pretty strong this quarter in spite of that service mix headwind, so if you could give us a little more color on what's driving that and given that you guys see service moderating a bit in the fourth quarter should we expect some improvement in incrementals in the fourth quarter and then help us -- remind us what a long-term normalized incremental margin for that business is? Thank you. Randal W. Baker: I'll do the reminder on the incremental margins and I'll turn it over to Rick to give you some detail on the composition. But 35% to 45% has always been our target for incremental margins or operating leverage for our tool Company which we have been able to operate in effect. In fact this quarter we blew through that number. It had to do with mix, it had to do with performance of the business but Rick maybe you can give us more detail on comp position.

Sure, so for the quarter it's primarily a result of even though the mix is heavy waited to service the regions for which that service occurred are definitely some of the more profitable service margins that we have overall. So that works for us, not having some of the project losses from last year also work for us, and we also have a good mix of products versus you remember last year we had strong product sales but a heavier waiting to bolting and some of our other products which were quite the same incremental margins.

Excellent, thank you. I will pass it on.

Thank you. Our next question is a follow up from the line of Justin Bergner with G. Research. Please proceed.

Thank you for the follow up. Are you currently seeing multiples for tools deal that could reach fruition that are low enough in sort of an expensive market to be superior to buying back your stock or are you sort of a wait and see mode as it relates to valuations you would want to pay for the deals that you are contemplating? Randal W. Baker: Multiples is something we really want talk about in a public environment because it's deal by deal specific quality. Companies are going to drive a little higher multiple and it's important to remember that as we evaluate our stock based on the base intrinsic value of the company we always evaluate that as the accretion rate of that stock versus what we're paying for and high quality companies are always going to have a nice accretion rate. So I always think about if you're in the market looking at a company, try to stay away from the proverbial fixer upper that there's either some sort of crazy hockey stick of sales growth that somehow is going to improve it or that the margin profile just doesn't match what we're trying to do. So those hurdles are pretty strict for us but we will always come back to our performance versus just investing in ourselves.

Thank you. Randal W. Baker: You're welcome.

Thank you. I am showing no further questions at this time. I will now turn the call back to yourself for any closing remarks. Randal W. Baker: Okay.

Thank you everybody. We appreciate your participation today and your support of Actuant. If you have follow up calls please give us -- please reach out and we will set one up for you. Thank you very much.

Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.