Daniel C. Cataldo - Eaton Vance Corp. Thomas E. Faust, Jr. - Eaton Vance Corp. Laurie G. Hylton - Eaton Vance Corp.

William Raymond Katz - Citigroup Global Markets, Inc. Patrick Davitt - Autonomous Research US LP Daniel Thomas Fannon - Jefferies LLC Michael Carrier - Bank of America Merrill Lynch Brian Bedell - Deutsche Bank Securities, Inc. Chris Charles Shutler - William Blair & Co. LLC Kenneth B. Worthington - JPMorgan Securities LLC

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Eaton Vance Corp. First Fiscal Quarter Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Treasurer, Dan Cataldo, you may begin your conference. Daniel C. Cataldo - Eaton Vance Corp.: Thank you and welcome to our fiscal 2018 first quarter earnings call and webcast. Here this morning are Tom Faust, Chairman and CEO of Eaton Vance; and Laurie Hylton, our CFO. We will first comment on the quarter and then take your questions. The full earnings release and charts we will refer to during the call are available on our website, eatonvance.com, under the heading, Press Releases. Today's presentation contains forward-looking statements about our business and financial results. The actual results may differ materially from those projected due to risks and uncertainties in our business, including but not limited to those discussed in our SEC filings. These filings including our 2017 annual report and Form 10-K are available on our website upon request at no charge. I'll now turn the call over to Tom. Thomas E. Faust, Jr. - Eaton Vance Corp.: Thanks, Dan and good morning, everyone. Earlier this morning, we reported adjusted earnings per diluted share of $0.78 for the first quarter of our fiscal 2018, which is up 47% from the $0.53 that we reported in last year's first quarter, and also up 11% from $0.70 that we reported in the fourth quarter of last fiscal year. The nearly 50% year-over-year increase in adjusted earnings per diluted share reflects 29% higher operating income and the favorable effect on adjusted earnings of the reduction in the U.S. corporate income tax rate included in the Tax Cuts and Jobs Act enacted in December. As Laurie will discuss in more detail, our first quarter adjusted earnings per diluted share exceeded the $0.63 of U.S. GAAP earnings per diluted share we reported for the period, primarily to reflect the revaluation of previously booked deferred tax assets and liabilities as a result of the lower U.S. corporate tax rate, the tax expense we recognized on the deemed repatriation of foreign earnings not previously subject to U.S. tax as is required under the Tax Act, and the recognition of net excess tax benefit from stock-based compensation plans in connection with the exercise of employee stock options and the vesting of restricted stock awards during the period as newly adopted accounting guidance requires to be included now in GAAP earnings. First quarter adjusted earnings also reflect the add back of a onetime charge recognized during the period in connection with the expiration of our option to acquire an additional 26% ownership interest in our 46% owned affiliate Hexavest. We finished our first fiscal quarter with record managed assets and had record revenue and record adjusted earnings for the quarter as the strong business trends of fiscal 2017 continued into the first quarter of fiscal 2018. Ending assets under management at January 31 were $449.2 billion, up 24% from a year earlier and up 6% from the end of the previous quarter. We had positive net flows in each of our six investment mandate reporting categories; equity, fixed income, floating rate income, alternatives, portfolio implementation, and exposure management. And also across all four of our investment vehicle reporting categories; funds, institutional separate accounts, high net worth separate accounts, and retail managed accounts. Our net flows for the quarter were $7.1 billion, which represents 7% annualized internal growth in managed assets. Excluding our lower fee exposure management business, net inflows for the quarter were $5.6 billion, also equating to 7% annualized internal growth in managed assets. On the basis of growth in management fee revenue, our annualized internal growth rate for the quarter was 5%. Organic revenue growth as we define is the change in run rate management fee revenue resulting from net inflows and outflows, taking into account the fee rate applicable to each dollar in and out, and excluding the impact of market action in acquisitions. As we discussed in prior quarters, we believe an asset manager's organic growth is better captured by internal growth in fee revenue than by internal growth in managed assets. A key to our success in fiscal 2018 – into 2017 was growing our actively managed strategies at the same time, as our specialty passive strategies continue to demonstrate high growth. In breaking down our overall business into active and passive, we treat as passive our portfolio implementation and exposure management reporting categories, which are Parametric businesses, as well as EVM managed ladder bond strategies reported within fixed income and Calvert index strategies reported within equities. In the first quarter of fiscal 2018, our active strategies grew managed assets at a 5% annualized internal growth rate, while our specialty passive strategies increased managed assets at an 8% annualized internal rate. Net inflows into active strategies were driven by positive flows into EVM fixed income, alternatives, floating rate income, and equity strategies, as well as Calvert equity and fixed income. Parametric active strategy flows were modestly negative, as continued strong growth in defensive equity and other equity option strategies was offset by outflows from emerging market equity and alternatives. Among our specialty passive strategies, we continue to see strong demand for our laddered, municipal and corporate bonds separate accounts, which had net inflows of nearly $1.5 billion in the quarter. Also contributing to the quarter's 8% organic growth in specialty passive strategy managed assets were $1.8 billion of net inflows into Parametric's Custom Core equities. As we have previously described, we grouped EVM managed ladder bond separate accounts with Parametric's Custom Core equity separate accounts offered in retail and high net worth channels and call this combination Custom Beta. As shown on page 12 of the call slides, our managed assets and Custom Beta strategies ended the quarter at nearly $80 billion, up 15% for the quarter. The continued growth here highlights ongoing investor demand for access to passive exposures that are customized to meet individual preferences and needs. In the quarter, Parametric exposure management had net inflows of $1.5 billion, continuing this business's strong growth trend. Since entering the business through the purchase of the former Clifton Group in December 2012, our exposure management AUM has increased from $32 billion to $90.5 billion, a near tripling in just over five years. Even at an average fee rate of just five basis points, this business is making a meaningful contribution to our earnings. Calvert branded strategies contributed nicely to the quarterly flow results, with almost $500 million in net inflows. The improving monthly trend of Calvert flow results, since we acquired this business at the end of 2016, is illustrated on page 11 of our call slides. Leading contributors to Calvert's positive net flows for the quarter included emerging market equity, core bond and Responsible Index strategies. Responsible investing continues to be a leading trend in asset management, appealing to the growing universe of investors who seek both positive financial returns and positive societal benefits from their investments. Since we acquired Calvert at the end of December 2016, total managed assets in Calvert strategies have grown from $11.9 billion to $14 billion, an increase of 18% in just 13 months. From an investment performance perspective, our story remains strong. At the end of January, we had 63 funds with overall Morningstar ratings of 4 or 5 stars for at least one class of shares, including 23 5-star rated funds. As shown on page 14 of our call slides, at the end of January, approximately half of our managed assets ranked in the top performance quartile of peer funds as categorized by Morningstar for the past one, three and five years was 63%, 77%, 76% and 77%, ranking in the top half of their Morningstar peers for their respective measurement periods. In a time of rising interest rates, it's certainly helpful for us that many of our top-rated and top performing funds are floating-rate or short duration income funds or absolute return strategies that are positioned as alternatives to traditional fixed income. At the end of January, we had three floating-rate funds, five short or ultra-short duration taxable income funds, and three short duration short-term or limited maturity municipal funds ranking 4 or 5 stars. As income investors seek protection from erosion of principal value and to achieve higher income levels, as interest rates move higher, we think we are well positioned for growth across this broad menu of high-performing income strategies with limited exposure to duration risk. Our global macro strategies, which constitute most of our alternatives reporting category continue to perform well and are also positioned to benefit from investors seeking alternatives to intermediate and long-term bonds. The two global macro funds we offer in the U.S., Global Macro Absolute Return and Global Macro Absolute Return Advantage have each had favorable returns versus their LIBOR benchmark over the past one, three, and five years, and are true alternative investments. With very low correlations versus equity and fixed income market returns, they don't perform at all like stocks and bonds, and have a history of low volatility. In the current environment of stressed equity valuations, increased market volatility and rising interest rates, these strategies are particularly appealing. In the first fiscal quarter, the five-star rated Eaton Vance Global Macro Absolute Return Advantage Fund was a top seller across our U.S. equity fund line-up, with inflows of over $900 million gross and nearly $800 million net, tops among all of the strategies that we offer as mutual funds in the U.S. With management fees of 90 basis points annually on incremental assets, GMARA as we call it internally, is also among the highest fee strategies that we offer. Growth prospects for GMARA and related strategies remain excellent. Let me finish with updates on two of our other important initiatives, our global expansion and NextShares. In the first quarter of fiscal 2018, we had net flows from clients outside the United States totaling $500 million, which equates to 8% annualized internal growth in managed assets. There were also two important strategic developments during the quarter relating to our multiyear effort to expand our international business. First on January 31, we announced the hiring of a five-person team that constituted the global fixed income group of the now former Oechsle Investment Advisors (sic) [Oechsle International Advisors]. Based in Frankfurt and led by Astrid Vogeler, the team has been integrated into Eaton Vance's Global Income Group and has a core global bond capability that we previously did not have. With $800 million in current assets under management, Astrid and her team have delivered strong returns versus benchmark over many years. The office they occupy now serves as home base for Eaton Vance in Continental Europe with our Frankfurt-based Business Development Director, Thomas Body, also working from the same location. Eaton Vance is now open for business with boots on the ground in Europe's largest economy and a historically strong market for income returns. Also in January, we moved into new office space in Tokyo to support continued growth of our business in Japan. The new office which can accommodate up to eight people gives us room to expand our physical presence in our largest international market. On NextShares, we continue to make progress on multiple fronts. As a reminder, NextShares are a new type of fund vehicle combining proprietary active management with the conveniences and potential performance and tax advantages of exchange traded products. Our NextShares Solutions subsidiary holds patents and other intellectual property rights related to NextShares and is seeking to commercialize them by entering into licensing and service agreements with fund companies. The first NextShares fund was launched on Nasdaq in February 2016. Today, there are 15 NextShares funds from seven different fund families that are listed for trading with two more funds from an additional sponsor expected to launch in March. The currently available NextShares funds cover a broad range of investment strategies, including U.S. and global equity, taxable and tax-free fixed income, and floating rate income. Managers represented include, in addition to Eaton Vance and Calvert, Brandes, Gabelli, Reinhart, Waddell & Reed and Oaktree and Wellington as subadvisors. On the distribution front, the main focus continues to be UBS, where NextShares officially launched on their brokerage and strategic advisor platforms on November 20 of last year. Sales to-date at UBS have been modest, constrained by the need for each and long strategy to clear UBS due diligence, a process that does not begin until a fund starts trading. With several of our most attractive strategies expected to clear due diligence and to become available for purchase within the next month, we expect the sales spigot to begin opening over the coming weeks. In launches like this one, success begets success. As sales begin to flow at UBS, the NextShares structure becomes increasingly attractive both to additional fund sponsors and to other broker dealers. As it has been throughout this initiative, our goal remains to position NextShares to become the fund vehicle of choice for active strategies and to use this innovation to help address the competitive imbalance that continues to exist between active and passive funds. That concludes my prepared remarks and I'll now turn the call over to Laurie. Laurie G. Hylton - Eaton Vance Corp.: Thank you and good morning. As Tom mentioned we're reporting adjusted earnings per diluted share of $0.78 for the first quarter of fiscal 2018, an increase of 47% from $0.53 of adjusted earnings per diluted share in the first quarter of fiscal 2017 and up 11% from $0.70 of adjusted earnings per diluted share reported in the fourth quarter fiscal 2017. As you can see in attachment to our press release, adjusted earnings differed from GAAP earnings in the first quarter of fiscal 2018 by $0.15 per diluted share, primarily reflecting the impact of tax law changes and the newly adopted accounting standard. Adjustments affecting our first quarter include $21.7 million revaluation of deferred tax amounts resulting from the new tax legislation enacted on December 22, 2017, $3 million of incremental tax expense also resulting from the December tax law changes related to the deemed repatriation of foreign earnings not previously subject to U.S. taxation, and then $11.9 million income tax benefit related to newly adopted accounting guidance addressing the treatment of stock-based compensation plans. This benefit, driven by the exercise of stock options and the vesting of restricted stock during the period, would have been recognized as an adjustment to equity rather than the income statement item under the previous accounting guidance. As a further adjustment to first quarter earnings, the company recognized a $6.5 million pre-tax loss, $5.7 million after-tax, in connection with the expiration during the period of our option to acquire an additional 26% ownership interest in our 49% owned affiliate Hexavest. Adjusted earnings per diluted share matched GAAP earnings per diluted share in the first quarter of fiscal 2017 and differed from GAAP earnings in the fourth quarter of fiscal 2017 by $0.01 per diluted share to reflect increases in the estimated redemption value of non-controlling interests in affiliates redeemable at other than fair value. As of January 31, 2018, all non-controlling interests in our affiliates are redeemable at fair value. Our operating income in the first quarter of fiscal 2018 was up 29% in the first quarter fiscal 2017 and down 2% sequentially. Our operating margin was 32.2% in the first quarter of fiscal 2018 versus 29.7% in the first quarter of fiscal 2017 and 34.1% in the fourth quarter of fiscal 2017. As reflected in the sequential comparison, first quarter results were impacted by the usual seasonal compensation pressures that I will discuss in a moment. Ending consolidated managed assets at January 31, 2018 reached a new record high of $449.2 billion, an increase of 24% over the past year, and up 6% from the prior quarter-end, driven by strong net flows and positive market returns. Average managed assets in the first quarter of fiscal 2018 increased 26% from the first quarter of fiscal 2017, driving a 19% increase in revenue. Revenue growth trailed growth in average managed assets year over year, primarily due to a decline in our average management fee rate from 35.1 basis points in the first quarter of fiscal 2017 to 33.7 basis points in the first quarter of fiscal 2018. This decline in our average management fee rate is primarily attributable to outsized growth of our lower fee exposure management portfolio implementation and bond laddered businesses. Average managed assets in the first quarter of fiscal 2018 increased 5% versus the fourth quarter of fiscal 2017, generating a 4% growth in revenue. Sequentially, our average management fee rate declined modestly from 33.9 basis points in the fourth quarter of fiscal 2017 to 33.7 basis points in the first quarter of fiscal 2018. Although strong flows into our lower fee strategies continue, net inflows into higher fee strategies helped mitigate the overall fee rate decline. Performance fees, which are excluded from the calculation of our average fee rates, reduced earnings by $0.5 million in the first quarter of fiscal 2018, contributed $200,000 to earnings in the first quarter of fiscal 2017 and reduced earnings by $300,000 in the fourth quarter of fiscal 2017. As Tom noted, we realized 5% annualized internal growth in management fees on 7% annualized internal growth in managed assets in the first quarter of fiscal 2018, compared to 7% annualized internal growth in management fees on 9% annualized internal growth and managed assets in the first quarter of last year. Our management fee and AUM internal growth rates in the first quarter of fiscal 2018 were largely consistent with the fourth quarter of last year when we had 5% annualized internal growth in management fees on 8% annualized internal growth in assets. We continue to be optimistic about our ability to continue this momentum through the balance of fiscal 2028. Turning to expenses, compensation expense in the first quarter of fiscal 2018 increased by 15% from the first quarter of fiscal 2017, reflecting increases in operating income-based bonus accruals driven by increased profitability, higher salaries and benefits associated with increases in head count and year-end merit adjustments, and higher stock-based compensation, all partially offset by a decrease in sales-based incentive accruals. Sequentially, compensation expense increased by approximately 10% from the fourth quarter fiscal 2017, reflecting higher stock-based compensation expense, higher sales-based incentive accruals driven by strong product sales, higher salaries and benefits driven by increases in head count, and several seasonal compensation factors, including fiscal year-end merit increases and calendar year employee benefit and payroll tax clock resets. In the first quarter of fiscal 2018, there's approximately $2.5 million of stock-based compensation expense that we would not anticipate seeing next quarter. On the flipside, we are increasing our annual 401(k) employee contribution match, which will result in an incremental expense of approximately $1.3 million next quarter. Non-compensation distribution related costs, including distribution and service fee expenses and the amortization of deferred sales commissions, increased 11% and 4% versus the first quarter of fiscal 2017 and the fourth quarter of fiscal 2017, respectively, primarily reflecting increases in intermediary marketing support payments mainly driven by higher average managed assets and higher marketing and promotion costs. Fund-related expenses increased 37% and 21% versus the first quarter of fiscal 2017 and the fourth quarter of fiscal 2017, respectively, primarily reflecting increases in fund subsidies, higher sub-advisory fees paid, and an increase in fund expenses borne by the company on funds for which we earn an all-in fee. The year-over-year increase in fund subsidies is attributable primarily to the addition of the Calvert funds through the acquisition of the business assets of Calvert Investments at the end of calendar 2016. The sequential quarter increase was largely due to calendar year-end subsidy accrual adjustments and growth in assets and subsidized funds with expense cap. Other operating expenses were up 14% versus the first quarter fiscal 2017 and down 2% from the fourth quarter of last year. The year-over-year increase primarily reflects an increase in information technology spending, as well as higher travel, communications, professional services, facilities and other corporate expenses. The sequential decrease in other operating expenses primarily reflects lower professional services and travel expenses, partially offset by slightly higher information technology and other corporate expenses. We continue to spend approximately $2 million per quarter in connection with our NextShares initiative. Net gains and other investment income on seed capital investments were negligible in the first quarters of fiscal 2018 and fiscal 2017, and contributed $0.01 to earnings per diluted share in the fourth quarter of fiscal 2017. When quantifying the impact of our seed capital investments on earnings each quarter, we take into consideration our pro rata share of the gains, losses and other investment income earned on investments in sponsored products where they're accounted for as consolidated funds, separate accounts or equity method investments, as well as the gains and losses recognized on derivatives used to hedge those investments. We then report the per share impact net of income taxes and net income attributable to non-controlling interest. We continue to hedge the market exposures of our seed capital portfolio to the extent practicable to minimize the associated earnings volatility. Net gains and other investment income in the first quarter of fiscal 2018 includes the previously noted $6.5 million charge to reflect the expiration of the company's option to acquire an additional 26% ownership interest in Hexavest under the terms of the option agreement entered into when we acquired our initial 49% position in 2012. We add back this one-time change in calculating adjusted net income and adjusted earnings per diluted share for the quarter. Consolidated CLO activity contributed $1.6 million to non-operating income in the first quarter of fiscal 2018. Turning to taxes, our effective tax rate to the first quarter of fiscal 2018 was 36.3% versus 37.3% in the first quarter of fiscal 2017, and 36.5% in the fourth quarter of fiscal 2017. As we noted in the press release this morning, the company's income tax provision for the first quarter of fiscal 2018 includes a non-recurring charge of $24.7 million to reflect the estimated effect of the Tax Act. This non-recurring charge is based on current interpretation of the tax law changes, and includes $21.7 million from the revaluation of the company's deferred tax assets and liabilities, and $3 million for the deemed repatriation of foreign sourced net earnings, not previously subject to U.S. taxation. The increase in the company's effective tax rate for the first quarter of fiscal 2018 resulting from this charge was offset by an income tax benefit of $11.9 million related to the exercise of stock options, investing of restricted stock during the period, and the net income attributable to redeemable non-controlling interest and other beneficial interests, which is not taxable to the company. Excluding the non-recurring impact of the tax reform and the net excess tax benefits recognized in the first quarter in conjunction with the implementation of the new accounting guidance, our operating effective tax rate for the quarter would have been 26.7%. The accounting treatment of income taxes related to stock-based compensation that I noted previously may cause an appreciable level of volatility in our quarterly effective tax rate going forward, particularly in the first quarter of each year. Excluding the impact of future stock option exercises restricted share vesting associated with this new accounting guidance, we estimate that our quarterly effective tax rate for the balance of fiscal 2018 will range between 27% and 27.5%. Our full year fiscal 2018 effective tax rate will range between 29.25% and 29.75%, and our fiscal 2019 effective tax rate will range between 25% and 25.5%. Consistent with our method of calculating adjusted earnings for the first quarter, we expect to continue treating net excess tax benefits or expense from stock-based compensation plans recognized each quarter as an adjustment item. In other capital management activities, we repurchased 672,000 shares of nonvoting common stock for approximately $36.3 million in the first quarter of fiscal 2018. Our weighted average diluted shares outstanding increased 8% year-over-year and 4% sequentially to $123.9 million as of January 31, 2018. We finished our first fiscal quarter holding $740.4 million of cash, cash equivalents and short term debt securities and approximately $376.3 million in seed capital investment. In light of the recent tax legislation, capital management remains top of mind and we are actively considering our options as we think about how to best balance investing in our business and returning capital to shareholders. This concludes our prepared comments, and at this point, we'd like to take any questions you may have.

Your first question comes from Bill Katz with Citigroup. Your line is open. William Raymond Katz - Citigroup Global Markets, Inc.: Okay. Thank you very much. Just maybe on the European opportunity, Tom, you sort of called out the new platform onboard. I was just sort of wondering from here what kind of growth has that platform has had, and maybe if you could flesh out maybe the opportunity in Japan a bit more? Thomas E. Faust, Jr. - Eaton Vance Corp.: Yes, so the business that we didn't acquire it, but I guess the word would be assumed at the end of January was about $800 million in assets. That asset number has been quite stable over time. The company that group was previously a part of called Oechsle Advisors did not have significant marketing resources and certainly didn't focus those resources on their fixed income team, despite the fact that they have an excellent record, they have a credible team and they're located in a market that's very much focused on fixed income investing. So, we think there is an opportunity there. We've heard that there's at least one opportunity that I know about that's come to my attention where we are responding to an RFP, but we're in the very early days there, we are just a few weeks into our ownership of that group. We think there should be an opportunity, but it's pretty hard to say exactly how big that will be. Somewhat surprisingly, most of the clients' assets for that team are actually in the U.S. So I think they have four current clients they have different institutions in different places, but two of those are in the U.S. and the biggest two clients they have are U.S. based. But it won't be a big contributor, we don't expect, to our organic growth over the balance of this year certainly. But we do think that both that team and the broader benefits to our global income strategy of having a base in Frankfurt on the continent of Europe and also having a sales presence there could and likely will prove valuable to us over time. But we will not be, I don't think, an overnight success in terms of growing the AUM of that business; that's not our expectation at this point anyway. In terms of Japan, I mean, I mentioned last call that I was over there for a couple of weeks back in November. We're certainly in a quite dynamic stage in the growth of our business there. We have approximately $10 billion in Japanese based client assets, continues to grow nicely. A good mix of major institutional assets and smaller type accounts, primarily focused on bank loans, but increasingly other income type strategies are represented in our portfolio there until about a year ago we had only a single investment employee based in Japan. Since then, we've added two more sales and client service oriented professionals with the expectation that, by the end of this year, we'll add probably two or three more in the office that we just opened I think at the end of January. But from the time I was there, it's very clear that Eaton Vance is well known and we're well respected as a credible quality income manager in the Japanese market with a long history of service and performance excellence for clients there, and certainly everybody associated with our efforts in Japan. I think that there we have a real opportunity to grow that business quite meaningfully over the balance of 2018 and really beyond that as we get even better known in the marketplace and as our product menu continues to grow from the initial base, which was almost exclusively bank loans, which we've – for which we've had Japanese based clients for something close to 20 years now. William Raymond Katz - Citigroup Global Markets, Inc.: Okay. That's great color. And then just a follow-up, Laurie, perhaps help maybe to guide what was the big increase in the share count sequentially, and then you just sort of mentioned your balancing sort of the plans on the other side of (32:21) U.S. tax front. Could you sort of give us a sense of how you're leaning and what's some of the areas where you either reinvest or return to capital might be? Laurie G. Hylton - Eaton Vance Corp.: Yes, I think in terms of the share count, Bill, the obviously run up in our stock price over the period contributed significantly. Using the treasury stock method, if you have a run up, it's going to increase your diluted share count. So you're seeing that there. We had obviously trended down a little bit in terms of our share repurchases last year. So, in terms of incremental dilution, we had some significant stock option exercises and restricted share vesting, and we were not necessarily offsetting all of that with share repurchases in the course of the year. So those two components combined increased the diluted share count. And in terms of our capital management, I think we like most companies in the industry are spending a lot of time thinking about that. I don't think that we're in a position at this point to lay out any definitive plans, but I will tell you that we'll probably be in a better position next quarter to have a more fulsome conversation about it. William Raymond Katz - Citigroup Global Markets, Inc.: Okay, thank you.

Your next question comes from Patrick Davitt with Autonomous Research. Your line is open. Patrick Davitt - Autonomous Research US LP: Hey, good morning. Thanks for taking my questions. We received quite a bit of concern around Parametric's enhanced alpha strategies through the February correction and volatility. So I've a few questions around that. One, how do you feel those strategies performed relative to client expectations? Two, what has been the experience with clients through that period in terms of stickiness of assets? And three, do you feel like the product is more or less marketable now that you have that data point in your back pocket? Thomas E. Faust, Jr. - Eaton Vance Corp.: So let's just be clear on what is you're asking about, you're talking about the Parametric Emerging Markets strategy? Patrick Davitt - Autonomous Research US LP: All the enhanced alpha stuff, yeah. Thomas E. Faust, Jr. - Eaton Vance Corp.: So what you mean by enhanced alpha stuff? So I just want to make sure I answer the right question. You're talking about emerging market equity or are you talking about defensive equity or volatility risk premium strategies? Patrick Davitt - Autonomous Research US LP: Like the volatility risk premium strategy, I'm sorry. Thomas E. Faust, Jr. - Eaton Vance Corp.: Yeah, okay so I'll focus on that. So the volatility risk premium strategy or sometimes called defensive equity or there is a mutual fund called Parametric Volatility Risk Premium Defensive Fund, but it's all variations on the same things. This is a strategy that is a volatility selling strategy. It is a hedge strategy in that the base portfolio is half invested in equities and half invested in cash instruments, I think in treasuries, that you can do it different ways. But that's how most of the assets are invested. And the way it's positioned is that you capture volatility risk premium, you're effectively a seller of insurance and capture that premium during periods of volatility like we had in early February. You will see a reduction in returns because you think of this as an insurance selling strategy. And so when there are more fires, there will be more claims to be paid. In this case, that gets reflected in a daily mark of the account assets. Performance was completely in line with expectations given the market environment. This is a rules based strategy. There were and I don't think will ever be significant surprises in how it performs. It's not a leverage strategy. In the worst case, it has an equity beta of 1 or approaching 1. So it's a strategy we like and certainly we have not heard about significant market concerns about how that strategy has performed in this environment. It has performed in line with expectations.

Your next question comes from Dan Fannon with Jefferies. Your line is open. Daniel Thomas Fannon - Jefferies LLC: Thanks. I guess first on the expense outlook, if you could talk about I guess more on this past quarter the sequential pickup of what was seasonal versus the variable increase and just generally thinking about kind of the margin profile as we kind of look ahead, you gave a couple of the next quarter type of movements around the step-up and step-down around the 401(k) match and things. But just broadly thinking about, given the strength of asset growth through January, how you're thinking about kind of margin profile for next year? Laurie G. Hylton - Eaton Vance Corp.: Yeah, I think most of the comments we made they were forward-looking related, particularly the compensation and just to be clear, I think that we identified and have identified in the past roughly 40% of our compensation is variable. So that's going to move either in line with what's happening from an operating income perspective or in line with sales in terms of our compensation to our sales team. In terms of our fixed compensation, we've obviously seen some uptick in terms of our head count that drove our base increases and that's going to continue. The things that won't continue or won't continue that we saw in the first quarter would be the roughly $2.5 million of stock-based compensation that I highlighted in my comments and then the offset where we anticipate seeing the uptick in what otherwise would've been a drop off in our 401(k) match in the second quarter. But outside of that, I wouldn't anticipate seeing a lot of other seasonal adjustments on the comp side. I don't think that we're seeing anything significant in terms of the change in our operating model and I therefore would not anticipate seeing any significant moves in our operating margin moving into the next quarter. We always have this sort of downtick in the first quarter associated with these pressures that we've talked about and then we see things start to pick up as we move through the year. I don't see anything coming down the pike that's different. As we talked about, we're thinking about our capital management, may there be some incremental technology spend in the course of the year. There might be but it's not going to be significant in terms of moving the needle, in terms of our overall operating structure. Daniel Thomas Fannon - Jefferies LLC: Got it. And then just as a follow-up, Tom, you mentioned a number of key funds coming online for next years on the UBS platform. Can you maybe quantify that and think about or help us think about framing what that kind of opportunity could be over the next kind of 12 months? Thomas E. Faust, Jr. - Eaton Vance Corp.: Yeah, I certainly don't have numbers to share because we don't have any clear idea on how this is going to go. There are really two constraints on the growth of NextShares at UBS. One that I talked about is the one about products getting through their due diligence process and we think we're on the verge of a significantly – being in a significantly better position, meaning that several of the key strategies that we have strong hopes for in terms of sales potential. We expect to clear that due diligence process over the next month and that includes the Parametric floating rate strategy, I believe the – sorry, the Eaton Vance Floating Rate strategy. The Eaton Vance Oaktree Diversified Credit strategy, there's a Hartford Global Impact strategy that is managed by Wellington, that I know Hartford is pretty excited about and will be putting up some considerable market resources behind. So those are – we know those are close and we think that those products, plus things already available already through due diligence will be sufficient to get our sales force talking about NextShares and to get the sales force of Hartford and other firms that have NextShares represented, to have this be a key part of their focus within UBS and then we should see some sales results. In all cases, where a NextShares fund is offered alongside a similar strategy, the NextShares fund is less expensive both in terms of its expense ratio and in terms of its expected non-expense ratio, operating costs, so we expect to see better performance. Over time, we expect to see improved tax results of operating as exchange traded funds. So we think there's lots of reason for optimism, but it hasn't happened yet. The other thing that needs to happen to get a broader access at UBS and then ultimately to other places, within UBS today, we have access to the brokerage platform and one advisory program called Strategic Advisor. We do not have access to everything they do and that's for a technology reason. UBS is in middle of a pretty major technology upgrade where they're bringing in a new frontend system for their advisory platforms, and we have to fit the introduction of NextShares into the timing of that. And as that makes progress across UBS over the course of this year and as enhancements are made to that platform to incorporate NextShares, that further opens up the sales opportunity. But we're encouraged by our sales force's energy and enthusiasm and optimism that we can be successful here. We know other organizations similarly have sales forces that are very eager to get into UBS and start talking about NextShares. But as of this moment, we really don't have a lot to show for it, other than a lot of energy and a lot of excitement and a growing list of products that we think when you get in front of the right advisor and the right client, will prove to be quite compelling when offered as NextShares.

Your next question comes from Michael Carrier with Bank of America Merrill Lynch. Your line is open. Michael Carrier - Bank of America Merrill Lynch: Hey, thanks. Just a question on the flows, Tom, you mentioned, just how Eaton Vance is positioned in a rising rate backdrop and some of the products that are well-positioned. Just on the tax reform, any products that maybe you have seen demand, any shift there, I guess on a personal side the changes aren't as significant as the corporate side, but could you just – any change that you expect in some of the products that are tax efficient? Thomas E. Faust, Jr. - Eaton Vance Corp.: Yes, I think it's a little hard to say. I mean one thing that we speculated about during the quarter I think is probably everyone on the call is aware that, during November and December there was a proposal that would have – that was included in the Senate version of the bill that would have forced the use of FIFO, would have taken away taxpayers' ability to use so-called identified tax lot method and selecting the securities. And as people may know, that's an important part of the service offering of Parametric's Custom Core and related products offered by competitors, where you're trying to achieve returns that match a prescribed benchmark, but to exceed the returns on an after-tax basis through tax laws harvesting and other ongoing tax management techniques. We don't know this for a fact and can't confirm this, but we suspect that during the first quarter, our first fiscal quarter that is November-December period that there was a bit of a chilling of the market for those kinds of things just because there was so much focus and so much energy devoted to trying to figure out what was going to happen with the tax law and what that it implied for our clients and how these things would work, if the ability to use identified tax lot method went away. So one thing that we do see and that we can see it – we do expect and we see this somewhat in the numbers that we should see a month-to-month improvement in that business versus what we saw in the last couple of months of the year. We certainly saw an improving trend, January versus November and December in Parametric Custom Core, and also just for February that we've seen to-date that same trend has continued. So short-term, a positive tax reform in the way it turned out is taking away the uncertainty about whether or not this FIFO method was going to be required going forward. So that's the very short-term. Maybe on the longer term, I think the issue that perhaps you're focusing on is that, for high-income taxpayers in let's say coastal areas, certainly California and New York state, New York City as examples, tax rates didn't go down, they actually went up and that reflects both modest decreases in the top federal rate but importantly the loss of the federal deduction for state taxes paid or at least a limit on that. And we think over time, that will produce more demand for tax-managed equity strategies and also more demand for municipal income strategies in those markets. So we think investors are starting to figure this out. People tend to get most focused on taxes as we approach April 15 and certainly, we're using this time of year and the fact that there has been a change in the tax law as a catalyst to get in front of advisors to help them get their clients positioned appropriately for the new tax environment as it now exists. And historically, times of tax change almost regardless of the direction of change has been good for tax management and tax managed strategies, simply because it moves to the top of the mind of advisors and clients and changes in the tax law create new opportunities for potential tweaks to strategies that clients can use to enhance their returns. Michael Carrier - Bank of America Merrill Lynch: Good, that's helpful. And I just have a quick follow-up on Calvert. The progress there has been has been good. Just on, when we think about the growth going forward in the product offering, is it more demand by clients picking up as we see more and more interest in ESG, or is there more that you guys can be doing or are doing on the distribution front in terms of getting those products on platforms or new product offerings? Thomas E. Faust, Jr. - Eaton Vance Corp.: Yes, of course, those two are related. At firms where there is a major push relating to responsible investing, naturally it becomes easier to get strategies and funds onto platforms, so that has been a help, and we have seen some improvement there. I would say there may be three drivers of the growth of Calvert over the last year. The two you mentioned, which is general growing awareness and enthusiasm for responsible investing, that's one. Two, bringing the distribution resources of Eaton Vance to bear supporting Calvert. The third would be the investment performance component, which is that we have a number of high performing top rated funds under the Calvert banner, and that – as their performance has been strong, that drives flows in the same way that it does in other parts of the market. Perhaps there's somewhat less sensitivity among responsible investors to performance, but still performance matters in this space, and to the extent we have strong performance that affects flows. In fact, the top selling Calvert strategy has been their Emerging Markets Equity strategy, which no surprise it's been a very strong performer both in an absolute sense because emerging markets have been strong, but also particularly strong on a relative basis with a five-star rating by Morningstar. So we think we've got a long way to go. There are many opportunities, many different ways to apply Calvert's expertise in evaluating investments from an ESG perspective, their reputation as a leading brand and thought leader in this space. You may have seen a Barron's cover story two or three weeks ago that was ranking the 100 most responsible companies among public companies in the U.S. As noted in that article, that was all based on research done by Calvert. And so, there are – and also there was an article in Barron's this past week about different investors thinking differently about having gun manufacturers represented in their portfolios. The quote in that is from John Streur, CEO of Calvert. So they're very much – Calvert is very much in the conversation about responsible investing issues whether those be environmental issues, social issues or governance issues. And as these become increasingly important to a broader range of investors in the U.S., as they've long been in Europe, we expect that the value of this franchise for us to only grow.

Your next question comes from Brian Bedell with Deutsche Bank. Your line is open. Brian Bedell - Deutsche Bank Securities, Inc.: Great. Hi, folks. Thanks for taking my question. Maybe just to make sure I heard this correct on the tax reform side, I think Laurie did you say or maybe just reiterate the tax rate guidance for fiscal 2019, and then I think you said the impact of the stock option expensing is not in that tax rate and will be adjusted out, is that correct? Laurie G. Hylton - Eaton Vance Corp.: Correct. So, yes, we gave the guidance for 2019 at roughly 25% to 25.5%, and that's taking out all the noise associated with the fact that this year we obviously only got 0.833% of the benefit of the tax reform, because of our fiscal year. And when we are going to be presenting our earnings and will also get the same reconciliation for our effective tax rate. Those – the number that I gave for next year for the 25% to 25.5% excludes any anticipated impact of the stock-based compensation in the new accounting guidance. Brian Bedell - Deutsche Bank Securities, Inc.: Thank you, great. Thomas E. Faust, Jr. - Eaton Vance Corp.: So, Brian, we made the decision to exclude those adjustments in tax rate related to this new accounting guidance requiring these tax adjusted related to stock-based compensation plans to go through the income statement, probably for the reason that you're focusing on, which is both for modeling purposes and in terms of really thinking about the company's performance on a current basis, it's very hard to think about that as a measure of our current performance. What drives that in the short run is how does our stock do and how many employees choose to exercise options during a period, neither of which relates particularly to at least as I think about fundamentally how the business is doing. So we think we treat that both in the first quarter and planned on an ongoing basis as an adjustment to GAAP earnings. And then also, anything we're projecting in terms of future tax rates as Laurie said is backing that out or ignoring that both because we're not including it in adjusted earnings, but maybe more importantly because we don't really have any way of predicting either where our stock price is going to go or the rate at which employees are going to be exercising options. So it's kind of a necessary exclusion. Brian Bedell - Deutsche Bank Securities, Inc.: Okay, that makes sense. And just I guess philosophically, I know you're still working on the game plan for what to do from the incremental contribution from tax reform. But I guess philosophically if we continue to have a mid-single digit through a better type of organic fee revenue growth with say normal market returns, should we still be thinking of the operating margin outlook as one that's benefiting from scaling the business, and so continuous operating margin improvement on an annual basis? And if I could squeeze one more in there, just the driver of the alternative fee rate increase, was that all from Global Macro Absolute Return? Laurie G. Hylton - Eaton Vance Corp.: Probably the easiest to answer is the second question, which is yes. It was Global Macro... Thomas E. Faust, Jr. - Eaton Vance Corp.: Yeah, that category is very dominated by that one strategy. Laurie G. Hylton - Eaton Vance Corp.: Yeah. Thomas E. Faust, Jr. - Eaton Vance Corp.: And Global Macro Absolute Return Advantage is the higher fee relative to the category average. Laurie G. Hylton - Eaton Vance Corp.: Right. And I think in terms of operating margin, I think we continue to have this conversation obviously, but we do believe that there is opportunity for margin expansion over time. I think it's just a function quite frankly of what our product mix looks like and ultimately what is happening with the business in terms of sales. And we've got quality problems when we had periods of high sales that drives up our incentive compensation. But I think – at this point, we are not anticipating any seismic shift in the way that we think about our operating model. So I wouldn't say that I would give you any guidance and we would see any significant changes. Thomas E. Faust, Jr. - Eaton Vance Corp.: But as I understand the question, I think there's a – you're trying to relate the tax law changes to operating margins or – and I think maybe under that is are we expecting to spend away a lot of the tax benefit which would have an adverse effect on margins, or do we expect to see that competed away, that benefit of the tax or tax rate to be competed away, I suppose in a way that would hurt our revenues rather than our expenses. But we are certainly not expecting to see a lot of increases in expenses for the reason that our taxes went down. Laurie did mention an increase in employee benefit, which is our annual employee matching, which is a relatively small item, but meaningful to our employees and also marginally meaningful in terms of our overall cost structure. No doubt there will be other things that we'll be doing, but I don't think we will be relating decisions we make about technology or other spending items to the fact that we're paying lower tax rate on our earnings in the U.S. going forward. And in terms of the market impact of this, we're already in a quite competitive business with certainly ongoing fee pressures, but I would say that incrementally there are significant numbers of players in our business that do not see a meaningful cut in their tax rate. Not everyone that manages assets is a corporate tax payer, which is of course a lot of where the benefit of the U.S. tax increase – U.S. tax cut fell. We were in a position to benefit more than most for the reason that we paid a higher tax rate and had more of our earnings in the U.S. than most of our competitors. But again, I don't think people will be cutting fees or becoming more aggressive in their competitive posture, simply because the tax rate in the U.S. went down. That might happen, but I don't think it will be for the reason that the tax rates are now lower than they were last year.

Your next question comes from Chris Shutler with William Blair. Your line is open. Chris Charles Shutler - William Blair & Co. LLC: Hi, guys, good afternoon. Just one quick one, thinking about M&A, please give us an update on your appetite right now to bring on new franchises, what asset classes, geographies are of interest, if any, and just any sense whether getting past tax reform with a little more market volatility here early this year, whether that's driving more sellers to explore other options? Thanks. Thomas E. Faust, Jr. - Eaton Vance Corp.: Yeah, so we're active in monitoring the acquisition market. I wouldn't say we're active in the acquisition market. Laurie and I field phone calls from investment bankers on a pretty regular basis. It feels like it's perhaps more of a seller's market than a buyer's market today, just based on what we hear as valuations on things that are out there. Thinking of ourselves more as a value buyer, that makes it perhaps less likely rather than more likely that we'll be stepping into major transactions this year. But we do monitor closely things that are happening. There are things that we've expressed interest in that invariably are going to go to other bidders that are perhaps willing to put a higher valuation or bid more aggressively or have more optimistic assumptions than we do. I think that's the way it should work. Acquisitions should go to the acquirer that provides the best fit and is willing to provide the highest valuation, in some cases, that will be in Vance. But in many cases, it will not be. So we look – we kick the tires a lot. Particular things that are interesting to us, we articulate our strategic priorities as including the one probably that fits best with an acquisition strategy is growing outside the United States, growing our global footprint. We're still, despite the accelerated growth we've seen in the last couple of years outside the United States, it still represents only about 7% of our revenues. So with the right cultural fit and at the right price, we would be interested in potentially doing an acquisition outside the United States. In terms of things here or specific asset classes, I don't – we don't feel like we have huge holes in our lineup. But certainly, we're interested in extending our reach into areas where we think we can compete effectively in investment strategies where we view alpha potential and also where we see a fit with our distribution capabilities and also with our investment culture. So we look, we talk and we certainly feel like we have the resources to be a significant player in this. And we talked about the financial flexibility we have as a result of our large cash and near cash position and our borrowing capabilities certainly. But we're not going to use that on a deal that we feel doesn't make sense for Eaton Vance. Chris Charles Shutler - William Blair & Co. LLC: All right, thanks Tom.

Your next question comes from Ken Worthington with JPMorgan. Your line is open. Kenneth B. Worthington - JPMorgan Securities LLC: Hi, good afternoon now. In the past, you've been skeptical of nontransparent ETFs getting approval. I guess are you still skeptical and if the nontransparent ETFs are approved, to what extent do you think there will be effective competitors given the challenges you saw securing ETMF distribution and getting people kind of comfortable with the new structure? Thomas E. Faust, Jr. - Eaton Vance Corp.: Yes, thanks, Ken. I continue to be skeptical that some or all of the ideas that have been put before the SEC are ultimately approvable. And then beyond that, I'm skeptical that they will be widely applicable across asset classes. To my knowledge, essentially all of the proposals if not all the proposals are focused on U.S. equities. That's potentially a big market, but there are lots of other things outside of U.S. equities. But, there are a lot of issues for the SEC to consider not only how these things will trade, but more broadly are they successful in protecting the confidentiality of funds portfolio information, which is a key objective of these types of funds, and do they raise other securities law and related issues. So, yes, I continue to be skeptical that there will be broad approval of so-called nontransparent active ETFs. Kenneth B. Worthington - JPMorgan Securities LLC: Okay. Great, thanks. And just quickly on Hexavest, you decided or noted to not exercise the option to buy more. Is Hexavest sort of now perpetually going to be a minority investment or is there opportunities in the future to kind of to reassess and maybe buy a greater stake? Thomas E. Faust, Jr. - Eaton Vance Corp.: Perpetually that seems like a long time to commit ourselves to, but there is – we have no option. This was a one-time option. We very much like our investment in Hexavest. But one of the things we like about it is the current ownership and governance model in which management, the people that run the company, the people that run the investment process, they own 51% and we own 49%. We are the distribution partner in all markets outside the United States. They distribute in Canada. They run the money. To us it seems like a better match after a lot of thought is for the team there to own 51% and us to own 49%. So that's where we've been. It's worked well. The business has grown under that structure. We like the way it works from a governance standpoint. And after much consideration, we concluded that we wanted to stay at 51%/49% as opposed to us move moving to a 75% position which was our option.

And this concludes the Q&A session for the conference. I'd now like to turn it back to Dan Cataldo for closing remarks. Daniel C. Cataldo - Eaton Vance Corp.: Great, thank you all for joining us this morning. We appreciate your ongoing interest in Eaton Vance, and look forward to reporting back to you towards the end of May. Thank you.

This concludes today's conference call. You may now disconnect.