Ladies and gentlemen, thank you for standing by. And welcome to the Q3 AMETEK earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. It is now my pleasure to introduce, Vice President, Investor Relations, Kevin Coleman.

Thank you, Andrew. Good morning. And thank you everyone for joining us for AMETEK’s third quarter 2020 earnings conference call. With me today are Dave Zapico, Chairman and Chief Executive Officer; and Bill Burke, Executive Vice President and Chief Financial Officer. AMETEK’s third quarter results were released earlier this morning and are available on market systems and in the Investors section of our website. This call is also being webcasted and can be accessed on our website. The webcast will be archived and made available on our site later today. During the course of today’s call, we will make forward-looking statements, which are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risks and uncertainties that may affect our future results is contained in AMETEK’s filings with the SEC, including in our 10-Q, which we file later today. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements. Any references made on this call to 2019 or 2020 results will be on an adjusted basis, excluding after-tax, acquisition-related intangible amortization, and also excluding the gain from the sale of Reading Alloys in the first quarter of 2020, and the realignment charge taken in the first quarter of 2020. Reconciliations between GAAP and adjusted measures can be found in our press release and on the Investors section of our webcast. We will begin today’s call with prepared remarks from Dave and Bill, and then open it up for questions. I will now turn the meeting over to Dave.

Thank you, Kevin, and good morning, everyone. AMETEK delivered a strong third quarter, despite ongoing challenges presented by the COVID-19 pandemic. While sales continue to be impacted by the pandemic, the demand environment shows solid improvements from the second quarter, as customers return to work and travel restrictions began to slowly ease. In addition, our businesses delivered outstanding operating performance, allowing us to expand margins, generate excellent cash flow and drive earnings ahead of our expectations. I would like to thank our employees who are managing exceptionally well through this pandemic, overcoming both personal and professional challenges to provide essential products and services to our customers. I continue to be impressed by the strength of our workforce and the dedication to our mission of solving our customer’s most complex challenges. We remain vigilant and focused on our employees’ safety. Our site and country level pandemic coordinators are doing an excellent job adapting to the shifting guidelines provided by the CDC and local health and safety agencies. The flexibility our teams have shown in implementing new processes and protocols to ensure a safe working environment has been excellent. Now let me turn to our results for the quarter. Third quarter sales were $1.13 billion, down 12% compared to the third quarter of 2019. Organic sales were down 14%. With the recent acquisitions contributing 5 points to growth, the divestiture of Reading Alloys a 3-point headwind, and foreign currency adding 1 point. As expected, our commercial aerospace business, which is less than 10% of the overall company, experienced the largest impact from COVID, with sales down approximately 35% versus the prior year. Our businesses continue to drive operational excellence initiatives to help mitigate demand weakness. These efforts lead to excellent operating results in the quarter. Third quarter operating income was $270 million and operating margins were a record 24%, up 40 basis points compared to last year’s third quarter, while decremental margins were an impressive 20% in the quarter. EBITDA in the third quarter was $332 million and EBITDA margins were a record 29.5%, up 210 basis points over last year’s comparable period. This led to earnings per diluted share of $1.01, down just 5% compared to the third quarter of 2019. Furthermore, our businesses generated a strong level of cash flow. Operating cash flow in the quarter was $310 million and free cash flow conversion was an impressive 146% of that income. Next, let me provide additional details at the operating group level. Our Electronic Instruments Group performed very well in the quarter, despite end-market weakness, delivering outstanding operating performance resulting in strong margin expansion. Sales in the third quarter for EIG were $748.4 million, down 8% from the comparable period in 2019. As expected, we saw solid and widespread sequential sales improvements from the second quarter. Organic sales were down 15% year-over-year, with the acquisitions of Gatan and IntelliPower contributing 6 points and foreign currency contributing 1 point. Commercial aerospace remains a key driver of organic sales weakness in EIG. EIG’s third quarter operating income was $203.7 million and operating margins were an impressive 27.2%, up 30 basis points compared to the same quarter last year. Our Electromechanical Group also saw sequential sales improvement and mitigated a weak demand environment with solid operating performance. EMG sales were $378.6 million, down 18% from last year’s third quarter, driven in part by the impact of the Reading Alloys divestiture. Organic sales were down 13%, with a divestiture of 8-point headwind, the acquisition of PDT adding 2 points, and foreign currency adding 1 point. Let me comment briefly on end-market dynamics for some of our businesses. Overall, we saw solid sequential sales improvements across all markets in the third quarter. We expect continued sequential improvements in the fourth quarter for all businesses other than commercial aerospace, where we expect largely flat conditions sequentially. Our strongest market remains defense, where we continue to be well-positioned with content across a wide range of important defense platforms. We are also very well-positioned with our medical and healthcare businesses. Although, they experienced a delay in the return of elective procedures during the third quarter, which offsets solid COVID-driven demand. Our most challenging market remains commercial aerospace; we remain cautious of a trajectory of recovery given the uncertainty caused by COVID-19. Given the uncertain and challenging end-market dynamics, our businesses remain highly focused on driving operational excellence initiatives, both structural and temporary, to manage topline weakness while ensuring we maintain our investments and key growth initiatives across the company. AMETEK’s asset-light operating model provides us with the flexibility to do both. Our ability to expand margins and generate strong levels of cash flow during this pandemic is evidence of the strength of our operating model. In the third quarter, we generated $70 million in total cost savings, which was at the high end of our expectations, with $40 million in structural savings and $30 million in temporary cost reduction savings. Looking ahead to the fourth quarter, we expect a slightly higher level of structural savings, while temporary savings will be reduced from the third quarter levels, as we add back additional temporary costs during the quarter. As a result, we expect approximately $55 million in our total cost savings in the fourth quarter, with $45 million in structural and $10 million in temporary cost savings. And for the full year, we expect approximately $230 million in total cost savings, with $140 million in structural savings and $90 million in temporary savings. Our businesses continue to implement new and innovative ways to reach our customers around the world in new markets. Through virtual meeting platforms, augmented reality product demonstrations and service, and enhanced digital marketing initiatives, our businesses have adapted quickly to the new landscape. Seeing our businesses adopt these new ways of doing business quickly and effectively has been very impressive. Our businesses are also collaborating across platforms. As an example, AMETEK Land and AMETEK Rauland recently partnered together to help support Rauland’s reopen schools safely campaign for their Telecenter U solution. Rauland is the leading provider of critical communications, workflow and safety solutions for hospitals and schools. Their Telecenter U solution connects classrooms and educational facilities to district offices for emergencies, event management and everyday communications. As I mentioned on our last earnings call, AMETEK Land, a leading manufacturer of non-contact temperature measurement solutions, recently developed their new VIRALERT 3 system for rapid detection of elevated skin temperatures at points of entry to various facilities, including schools. Through this collaborative effort, Rauland was able to incorporate Land’s VIRALERT 3 technology into their Telecenter U solution to help their customers safely reopen their schools by allowing for temperature screening of students and faculty. In return, AMETEK Land will reach thousands of new potential customers through Rauland’s well-established network of school districts. The result was a valuable solution for our customers. Congratulations to the AMETEK and the AMETEK Rauland team for the success on this project. We are also finding ways to support our customers through new product innovation. Throughout the pandemic, we continue to invest meaningfully in our research and development initiatives, and we are seeing great success from these efforts. Our Vitality Index, which measures the amount of sales generated from new products introduced during the last three years, was very strong at 25% in the quarter. During the quarter, Creaform, a worldwide leader in 3D measurement solutions, unveiled its R-Series 3D scanning solution that is designed for automated dimensional quality control applications. The suite of R-Series solutions includes the new robot-mounted MetraSCAN 3D scanner with CUBE-R, a turnkey industrial measuring cell that is designed to be integrated into factories for at-line inspections. Together, the solution provides customers with much faster cycle times, more accurate and repeatable results, higher resolution and operational simplicity, to increase productivity by measuring more dimensions on more parts without compromising on accuracy. Congratulations to the Creaform team for launching this outstanding new solution. Now shifting to acquisitions. While deal flow during the second quarter and third quarter has been impacted by the pandemic, we are starting to see a healthy pickup in activity. Our pipeline is strong and conversations with acquisition targets are accelerating. As Bill will highlight in a moment, over the last two quarters, we have further strengthened our balance sheet and liquidity position, and remain poised to deploy significant capital on strategic acquisitions. We will remain active, yet disciplined, in our acquisition process. We continue to focus on acquiring niche technology leaders with attractive growth profiles with opportunities for us to add value commercially and operationally. Now turning to our outlook for the remainder of the year. While the global economy continues to present challenges and uncertainties, visibility has improved across most markets. As a result, we are providing guidance for the fourth quarter. Overall sales in the fourth quarter are expected to be down high-single digits with a similar level of organic sales decline. Diluted earnings per share are expected to be in the range of $1 to $1.04, down 4% to 7% versus the prior year. Fourth quarter decremental margins are expected to remain solid in the low 20%s. To summarize, our businesses delivered a solid quarter in a difficult environment. AMETEK continues to manage this global crisis well to the proven strength of the AMETEK growth model and with a talented workforce. Our cost mitigation efforts have allowed the company to weather this ongoing storm and we are confident that we will overcome these challenges with a bright future. I will now turn it over to Bill Burke, who will cover some of the financial details for the quarter. Then we will be glad to take your questions.

Thank you, Dave. I’d like to echo Dave’s comments on the quarter, as we saw outstanding operating performance driven by the tremendous efforts of our team in a very challenging economic environment. Let me provide some additional financial highlights for the quarter. Third quarter general and administrative expenses were down $4.5 million, compared to the same period of 2019, primarily due to lower compensation costs and other discretionary spending cuts. As a percentage of sales, general and administrative expenses were 1.5% of sales in the quarter, down from 1.7% last year. The effective tax rate in the third quarter was 17.5%, down from 19.5% in the same period last year. The lower tax rate in the quarter was due to returned provision adjustments and a lower tax rate on foreign earnings. For 2020, we now expect our effective tax rate to be between 19% and 19.5%, and as we have stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively from this full year estimated rate. Operating capital and working capital was an impressive 17% in the third quarter, down sequentially from the second quarter’s 19.6% on outstanding working capital management. Capital expenditures in the quarter were $10 million. We now expect full year capital expenditures to be approximately $80 million, which is $5 million higher than our full year expectations last quarter, as we are investing in incremental growth opportunities. Our full year capital expenditures estimate remains below our initial expectations to start the year of $100 million. Depreciation and amortization expense in the quarter was $63 million. For the full year, we expect depreciation and amortization to be approximately $255 million, which includes after-tax, acquisition-related intangible amortization of approximately $117 million or $0.51 per diluted share. Our businesses continue to generate strong levels of cash flow, despite the challenges presented by the pandemic. Operating cash flow in the quarter was $310 million, free cash flow was $300 million and free cash flow conversion was excellent at 146% of net income. Total debt at the end of the quarter was $2.8 billion, up slightly from $2.77 billion at the end of 2019 and down $68 million from the end of the second quarter. Offsetting this debt is cash and cash equivalents of $1.3 billion. Our gross debt-to-EBITDA ratio at the end of the third quarter was 2.1 times, as we are intentionally holding higher than normal cash balances. This was comfortably below our debt covenants of 3.5 times and our net debt-to-EBITDA ratio was 1.1 times at quarter end, which improved by 0.2 turns in the quarter. We remain well-positioned to manage this economic downturn with approximately $2.3 billion in liquidity to support our operations and growth initiatives. This includes approximately $1 billion in available revolver capacity. As we have highlighted on previous calls, AMETEK has a robust balance sheet with no material debt maturities due until 2023. In summary, our businesses continue to manage through the pandemic exceptionally well, delivering strong operating results and high levels of cash flow. The dedication of our world-class workforce to serving our essential customers has truly been impressive. We remain well-positioned to manage ongoing economic challenges while investing in our long-term growth initiatives.

Thank you, Bill. Andrew, we are ready to take questions.

Certainly. And our first question comes from the line of Matt Summerville with D.A. Davidson.

Good morning, Matt.

Hey, Dave. I was wondering if you can maybe start by doing your more detailed walkthrough on the businesses, please?

Sure. I will start with the process business. Overall sales for process were down mid-single digits in the quarter. We had the contributions from the Gatan acquisition, and they were offset by an organic sales decline, which was in line with AMETEK’s overall organic sales decline. We saw sequential improvements in sales during the quarter, with this improvement being widespread across our process businesses. Our CAMECA and ZYGO businesses had solid quarters, driven in part by their exposures to research and semiconductor markets. They did very well and we expect continued solid sequential improvements in sales for process during the fourth quarter.

Thanks, Dave. And then as my follow-up, can you comment on what your price realization was in Q3 and what you are looking for in terms of sourcing savings for the full year? Thank you.

Yeah. In terms of pricing, we are very pleased to see our pricing held up well. Q3 was similar to Q2. We achieved about 0.5 of price across our entire business. Total inflation and the impact of tariffs was about a point. So we had a positive spread of 50 basis points added to margins. Your second question was on sourcing savings; we consider that part of structural savings and it was about $60 million.

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

Yeah. The one point, though, to finish, it was $60 million for the year, to Matt. And go ahead, Deane.

Sure. Thanks. Good morning, everybody.

Hi.

It’s great to see you guys are back in the quarterly guidance business because that does speak to your earnings visibility. So, first question is, kind of related to this visibility; if you can take us through the cadence of the month in the quarter organically. Maybe how October month-to-date has looked and let’s start there, please?

Sure. In terms of orders in Q3, it was a pretty typical trend for us with September being the strongest month of the quarter. In fact, it was our strongest month since I believe February back in Q1, when we started to really feel the impact of the virus. In terms of sales, September was again our highest month of the quarter and the highest month of the year so far. And in terms of October, obviously, it is not completed yet, but it looks good. Orders are trending well and it is supportive of our guidance in Q4, which shows solid sequential improvement.

So did you see in the month that sequential improvement consistent through the quarter?

We saw sequential improvements in orders and sales. I believe August was a bit of an outlier, but August is always tricky for us. So in general, it was a trend upward with September the highest in both sales and in orders.

Great. And then just kind of bridge this, degree of confidence in the sequential improvement. How this translates into your confidence in restoring guidance?

Yeah. I think the confidence is really based on us becoming more confident with our ability to live with the virus and we have got visibility in our markets. We are seeing consistent improvement and consistent engagement with customers across all of our markets and we just got to the point where we were comfortable giving guidance. Our guidance range is a little bit wider than it typically is and that takes into account some of the uncertainty for the fourth quarter. But we just got comfortable because our businesses are operating in a good rhythm and it builds a level of confidence with us.

Great. Just one last question, not to oversimplify your mix, but regarding the businesses you highlighted in response to Matt's question, I want to focus on AMETEK and the strength of your medical and defense sectors, which appear to be the strongest. How did they perform collectively in the quarter? On the other hand, regarding the weaker segments, which are more secular and not due to execution, we understand that you outperformed many of your peers in the commercial business in this market. So, how did the medical and defense sectors perform compared to oil and gas and commercial aerospace?

That’s a great question. If we exclude the two most challenging markets, commercial aerospace and oil and gas, sales were down by about 10%. Additionally, our defense sector experienced strong growth in the third quarter, increasing in the mid-teens. Our healthcare segment saw a slight decline due to decreased hospital visits and surgical procedures related to COVID, which affected demand a bit. However, the combined performance of the defense and medical sectors was clearly our strongest, remaining relatively flat.

Terrific. And just a quick clarification, when you said flat for Q2 for aero, was that commercial aero and defense or was it combined?

So sequentially we are saying it’s going to be flat and that’s both for military and commercial aerospace.

Got it. That is really helpful. Thank you.

Thanks.

Thank you. And our next question comes from the line of Scott Graham with Rosenblatt Securities.

Hi, Scott.

Hey. Good morning. Well done again.

Thank you.

I do have a question first on, I think, an area that you might be most proud of this quarter, operating working capital. What did you do there to push that percentage down as much as you did? What happened?

The first comment is that one of the hallmarks of AMETEK is our focus on working capital. We believe it's essential to run businesses efficiently with working capital, and there are some elements that performed exceptionally well. I'll let Bill elaborate on that.

Our receivables performance has been outstanding. Our teams have done an excellent job of staying connected with our customers and managing payment collections. Our receivables are down to 46 days on a DSO basis, which is the best it has been in quite some time, thanks to the teams' efforts. Another challenge, particularly when sales were declining as sharply as they did earlier in the year, is adjusting the supply chains to match that level of demand, and they handled that very well too. You can see the impact of these efforts from the third quarter results. Altogether, these factors allowed us to lower our working capital percentage to 17%, and the teams have truly excelled in this area across the company.

That’s great. Thank you, Bill. Now here is another one. The $90 million of expected full-year temporary cost reductions, a lot of companies are saying, hey, not all of that comes back. What is your view on that for 2021 at this point? How much comes back? How much is maybe permanent?

The first point I would make is that the temporary cost savings will be at a run rate of about $10 million in the fourth quarter. The second point relates to next year. We have to sit down with all of our teams for our budgeting processes in November. It’s a comprehensive planning process for each business unit. They will examine growth in their markets, customer plans, competitive dynamics, investment opportunities, capital projects, and cost reductions. Part of that discussion will involve how quickly the temporary costs will return and what the year-over-year impact will be. At a high level, travel is part of this, and it is expected to return slowly throughout the year, although some costs have already been restored. Therefore, we do not have a detailed plan for next year since we have not started the budgeting process yet, but we will begin that in November. That’s my perspective on the matter.

Okay. Last question. Thank you for that. On the M&A pipeline, obviously, you have a much broader swath of businesses today than you did even two years or three years ago, particularly I look at Gatan and how you have gotten even more into the scientific markets. Could you give us something maybe a little bit more granular date on what you are looking for? And I know competitively you have got to be careful there. But I am assuming that medical, scientific/research would be really kind of at the top of the list for things you are looking for. Could you comment on that?

Yes, that is definitely a focus area for us. It's quite broad. As you know, we operate under a decentralized business model and we consolidate acquisition plans from our various businesses through an adjacency process. We are examining all aspects of our operations and have noticed an increase in opportunities and discussions. These could arise from any part of our business, but the area you mentioned is particularly intriguing to us. Now turning to our outlook for the remainder of the year. While the global economy continues to present challenges and uncertainties, visibility has improved across most markets. As a result, we are providing guidance for the fourth quarter. Overall sales in the fourth quarter are expected to be down high-single digits with a similar level of organic sales decline. Diluted earnings per share are expected to be in the range of $1 to $1.04, down 4% to 7% versus the prior year.

Hey. Good morning, guys.

Good morning, Andrew.

Good morning.

Just a couple of people actually asked me if we provided actual orders in the third quarter, which we usually do.

Yeah. I can do that. Our overall orders were minus 8%, our organic orders were minus 12%, and our book-to-bill was 1.01.

Okay. That was easy. And then the second question, just I will ask on elective procedures. I think most of your competitors sort of said that elective surgery is back to 90%, 95% level pre-COVID. Has that been your experience and what are you seeing on elective procedures into Q4?

Yeah. I think elective procedures for us, we think it is going to stay at a reduced level until next year, as the feedback we are hearing from customers. So we think we will have another quarter in Q4 of some kind of reduced elective procedures and then it will recover next year. I anticipate they are working off backlog and there is less demand with COVID, so that market will correct itself as time goes on.

But your experience is consistent sort of with the data that I cited that your competitors are citing, right?

Yeah. I am not sure what our competitors have cited. But we are down a bit in numbers that you put out there 90% or 95% kind of makes sense.

Okay. And just to ask Ivana’s question in a slightly different way, on the way up as IP recovers, what kind of revenue leverage to IP should we be thinking for your portfolio ex aero and maybe ex healthcare?

Yeah. That’s something we are going to talk about with our businesses, but historically, AMETEK has recovered very well from significant downturns and we are seeing the improvement in Q3 versus Q2. We are anticipating seeing it in Q4 versus Q3, and historically, we have really performed well in upticks. So we have a mid and long cycle business and we are seeing good improvements. What you are seeing now is short cycle activities picking up, so that should bode well for the future. But we are going to go through our budgets and figure everything out.

Thank you so much.

Thank you, Andrew.

Hey. Good morning all. Maybe first question, just on defense and medical. First, on the defense side, very strong 2020 continues to look pretty good here. What is your visibility in that business next year based on wins or platforms you are on? Clearly, a tough comp, but can you see that growing still next year? And then on the medical side, any identifiable COVID-related opportunities that you could point to or even quantify that could pop up here over the coming months?

Yeah. The first question is, I’m really not going to comment on the military demand environment next year, but the spending pattern and those things are relatively healthy and we will see what the political environment brings. But usually those changes occur slowly over time. You think the overall spending environment will be supportive next year and our quoting activity shows that. In terms of COVID-related products, I mean, the first thing I pointed to is the land temperature measurement, where we are doing body temperature scanning. When I came into work today, I went through the land system. It’s very quick, easy, efficient and measures body temperature. The other things that are happening in our Automation business, there’s a lot of COVID testing devices that require sample automation, and the movement of samples very precisely through testing. The demand in that business is very strong. We are also seeing some demand for temporary setups in hospital-type situations with our Rauland Healthcare businesses. So we are really seeing some pockets of improved demand, and that’s built into the overall story.

Got it. That’s great. And then just in terms of the geographic complexion. Could you maybe give us a little more color, what sales or order rates? And then I am actually curious specific on Europe in October with the lockdown chatter and maybe even enactment was starting to percolate a little bit. Did you see a slowing kind of late in October in Europe? Thanks.

I will address the second question first. Our orders for October are very strong and align with our expectations, with no geographical issues currently. In the third quarter, we observed positive sequential trends across all regions, although Europe and the U.S. faced the most challenges. The U.S. experienced a decline of about 13% due to widespread weakness, while Europe saw a drop of 20%, also reflecting broad-based issues. Asia recorded a mid-single-digit decrease. However, we witnessed solid performance in emerging markets, particularly in China, which showed a positive growth of 3%. Overall, all regions improved sequentially.

Got it. Thanks, Dave. Appreciate it.

Thank you, Brett.

Thank you. Your next question comes from the line of Joe Giordano with Cowen.

Good morning. This is Robert covering for Joe today. I appreciate you taking my question. A lot has been discussed. I just have a quick question regarding the structural and variable costs for Q4. Is there a roughly even distribution between the EIG and EMG, and can you provide any details about that?

Yeah. Yes. It is. It is pretty well split between the two. So EIG is a little bit higher because of the relative size of it, but it is split based on volume.

Okay. Great. And then can you provide another update on Gatan’s performance so far and how that has been progressing versus expectations and synergies into next year?

Yeah. I mean, we met our year-one profitability target. So we are going to be reviewing that with our Board next week. We had a very good first year. The team did an excellent job. We were helped by COVID-related sales; about half of that business was life sciences, and we also announced the combining of our Gatan with our EDX business in a similar market, so we drove excellent synergy. It is all very positive, and the people of Gatan are very proud of that.

Good morning, guys.

Good morning, Andrew.

Good morning.

So, Dave, you talked about, you reinstated quarterly guidance, and you mentioned visibility getting a little bit better, which is interesting. Some companies aren’t willing to say that yet or hesitate into year-end still a lot of uncertainty. So I guess, where are you seeing across your space, where are you feeling more comfortable? Obviously in some areas like military spending, you kind of have better visibility all the time. But I guess where do you get more comfortable saying that, and maybe is this coming from some of the conversations you are having with some of your customers?

Yeah. That’s a great question, Andrew. And when you think about it, we are getting better at living with the virus. Our customers are getting better at living with the virus. Our suppliers are getting better at living with the virus. There is an uptick in cases, especially in Europe and the Western U.S. and we are watching that closely. But we expect to continue to run as an essential business, and our customers are essential customers and they are expecting to continue to run. So business activity levels are continuing to improve, and even in Europe when you see some increased lockdowns to certain degrees, essential businesses are still operating. So that is really the broader context that we used to reinstate guidance and talking with our teams; they are confident they can deliver the fourth quarter.

That's a valid point. You've mentioned some benefits from COVID and related products this quarter. It's quite complex, and I'm curious about how much of this demand you anticipate will carry into 2021. How would you differentiate between a temporary surge in demand for those products and a more lasting trend that could extend into next year and beyond?

Yeah. As I said, a couple of times, we are not going to talk about next year. We are going to work with our teams. But in general, we are seeing a pretty substantial improvement quarter-to-quarter and we will find out the details with our teams. But I would expect that improvement trend will continue into next year, and as I talked earlier on this call about AMETEK, typically has responded positively to a deep downturn. So we will find that all out. We don’t know about the timing and there may be some COVID-related demand that falls off. But there is also going to be some demand that was impacted by COVID that is going to improve. So we will figure that out during our budget process.

Hey, guys. Mike on for Allison. Thanks for the question.

Hi, Mike.

Hi.

I want to go back to the capital allocation discussion. So as you move into the heavy R&D industries with the bolt-on acquisitions from versus maybe more material and direct COGS industries. Is there any discussion on the way you approach and report gross margin, which I believe differs from your peers?

Yeah. Our cost of sales includes engineering, and that’s historically how we have done that, and we have not had a discussion recently about changing that.

Okay. Fair enough. And then I guess switching to some of your end markets. I believe you have an Automation & Engineered Solution platform that was approaching $1.5 billion prior to the downturn. So I was curious what a near-shoring or re-shoring kind of player theme would look like for you guys in the businesses that would be most impactful for?

Automation performed well in the third quarter, outpacing our Engineered Services business, and we observed strong demand, particularly in China. The product I mentioned earlier from Creaform is specifically designed for at-line metrology. Our Automation and Instrumentation divisions are well-prepared to thrive in an environment that features re-shoring. We offer numerous products that help our customers enhance the efficiency and productivity of their manufacturing processes, which aligns perfectly with our strengths.

Okay. And so is it fair to say that some of those businesses have a higher Vitality Index than maybe the Legacy AMETEK platform? I believe you said it was like 25% this quarter. Just is that where the R&D focus is now and going forward?

Yeah. I think the R&D focus is EIG-biased versus EMG and the Vitality Index is higher in those kinds of businesses. So that would be a correct view from your viewpoint.

Okay. Appreciate the time. I will pass it along.

Thank you.

Thank you.

Thank you, Andrew. And thank you everyone for joining our call today. And as a reminder, replay of the webcast can be accessed in the Investor section of ametek.com. Thanks and have a great day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.