Good morning, and welcome to the Second Quarter Conference Call for Graco Inc. If you wish to access the replay for this call, you may do so by dialing 855 859 2056 within the United States or Canada. The dial-in number for international callers is (404) 537-3406. The conference ID number is 9785074. The replay will be available from -- through 2:00 p.m. Eastern Time, Thursday July 29th, 2021. Graco has additional information available in a PowerPoint slide presentation, which is Actual results may differ materially from those indicated as a result of various risk factors, including those identified in Item 1A of the company's 2020 annual report on Form 10-K and in Item 1A of the company's most recent quarterly report on Form 10-Q. These reports are available on the company's website at www.graco.com and the SEC's website at www.sec.gov. Forward-looking statements reflect management's current views and speak only as of the time they are made. The company undertakes no obligation to update these statements in light of new information or future events. I will now turn the conference over to Kathy Schoenrock, Executive Vice President, Corporate Controller. Thank you, Shannon. Good morning, everyone. I'm here this morning with Mark Sheahan and David Lowe. I will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion. Our conference call slides and our second quarter Form 10-Q are on our website and provide additional information on our quarter. Yesterday, Graco reported second quarter sales of $507 million, an increase of 38% from the second quarter of last year. The effect of currency translation added four percentage points of growth or approximately $12 million in the second quarter. Reported net earnings were $110 million for the quarter, or $0.63 per diluted share. After adjusting for the impact of excess tax benefits from stock option exercises, net earnings were $108 million or $0.62 per diluted share. Gross margin rates were up 220 basis points from the second quarter of last year as a favorable effect from realized pricing, increased factory volume, product and channel mix, and currency translation offset the unfavorable impact of higher product costs. Mix was favorable in the quarter due to the strong sales in the higher margin industrial segment. Supply chain constraints such as logistics capacity and component availability, had an unfavorable impact in the quarter and will likely persist for the rest of the year. On a sequential basis, gross margin rates were down 250 basis points as we saw cost pressures such as material, labor, freight, and volume-based costs increase throughout the quarter. The majority of these cost increase impact the contractor segment as that is our highest volume business. We also saw unfavorable mix on a sequential basis due to projects in Asia Pacific in the industrial segment. At current costs and volumes, we are estimating that realized price, strong factory performance, and current production activity will offset higher product costs on a full year basis. Our operating teams are working diligently to minimize the disruptions and have been effective at keeping pace with our incoming order rates. Operating expenses increased $27 million or 26% in the quarter. Sales and volume-based expenses increased $18 million against a very low comparable in the prior year. New product development and currency translation rates each increased operating expenses by $3 million. The adjusted tax rate for the quarter was 18%. Cash flows from operations are at $220 million for the year, compared to $143 million last year. This increase is due to the improvement in earnings in the quarter, partially offset by increases in accounts receivable and inventories that reflect the growth in business activity. Significant uses of cash are dividend payments of $63 million and capital expenditures of $55 million, including $21 million for facility expansion projects. A few comments as we look forward to the rest of the year. Based on current exchange rates, the full-year favorable effect of currency translation is estimated to be 2% on sales and 5% on earnings, with the most significant impact having occurred in the first half of the year. We expect unallocated corporate expense to be approximately $30 million and can vary by quarter. Our full-year adjusted tax rate is expected to be approximately 18%-19%. Capital expenditures are estimated to be $150 million, including $90 million for facility expansion projects. Finally, 2021 will be a 53-week year, with the extra week occurring in the fourth quarter. I'll turn the call over to Mark now for further segment and regional discussion. Thank you, Kathy, and good morning, everyone. All of my comments this morning will be on an organic constant currency basis. Sales in the second quarter grew by double digits in every segment and every region. Broad-based growth for the quarter and for the year continued in all major product categories, resulting in record quarterly sales and operating earnings. I would like to thank all of our employees, suppliers, and distributor partners who continue to work long hours keeping up with customer demand while navigating logistical and supply chain challenges. Growth in Contractor continues. This is its fourth consecutive quarter with near 30% sales growth. The residential construction and home improvement markets have been strong in North America. Demand in EMEA and Asia Pacific has accelerated, resulting in sales exceeding pre-pandemic levels. We are optimistic that incoming order rates will remain good in all regions during the second half of the year. However, from a growth rate perspective, our comparisons become much more difficult due to the large increases experienced in the second half of last year. The Industrial segment grew substantially during the quarter and for the year, with sales volume either near or exceeding pre-pandemic levels in all regions. Quoting activity increased throughout the quarter as many of our key end markets continued to recover. Incoming order rates remain elevated as the pace of business accelerates worldwide. Process segment sales grew 29% for the quarter and 17% for the year. Similar to Industrial, sales volumes were also either near or exceeding pre-pandemic levels in all regions, and market growth remains broad-based, with key product categories up for the quarter. The strong recovery in both our lubrication and process pump businesses drove sales and earnings growth for the quarter in the segment. Moving on to our outlook. We have reinitiated our revenue guidance for the full -year 2021 and are projecting mid to high teens revenue growth on an organic constant currency basis. Incoming orders continue to be robust in all regions, with the industrial and process segments now on a solid footing and should finish the year strong. Favorable operating conditions remain in Contractor. However, second-half comparisons are challenging. Operator, we're ready for questions. Thank you. The question and answer session will begin at this time. To ask a question you will need to press star then one on your telephone. To withdraw your question press the pound key. Your questions will be taken in the order that it is recieved. Please stand by for your first question. Our first question comes from Matt Summerville with D.A. Davidson. Please state your question. Thanks. Good morning. Morning, Matt. Given some of the supply chain concerns out there, Mark, are you seeing customer behavior indicative of over ordering, overstocking? Can you maybe speak to that? Also maybe comment on where exactly you have the largest supply chain-related bottlenecks right now, what your greatest areas of concern might be. Thank you. Matt, it's hard to say that there's none of that happening in terms of people ordering in advance and trying to get ahead of the curve. I would speculate that some of that is happening, but we haven't been able to quantify it. I don't think that's a real big concern for us. I think we're experiencing really the same things that all other industrial companies are experiencing. We haven't really seen anything with respect to Graco that's too dissimilar from what we're hearing from our competitors and what we're picking up from the channel partners that we deal with around the globe. We're having supply chain issues across the business, so I don't want to understate what's happening in terms of industrial and process. For sure, in the contractor business, where the demand, even out the door sales demand has still been very robust. That's an area where I think we've seen the most pressure year -to -date. The channel partners that we deal with, I think at this point, are still hoping to get their inventories up a little bit from where they are at today. As we're able to deliver more product to them, hopefully that situation gets better. Got it. Thank you. Yep. Our next question comes from Deane Dray with RBC Capital Markets. Please proceed with your question. Thank you. Good morning, everyone. Hi, Deane. Hey, would love to stay on this topic. We got the qualitative commentary that's helpful, but can you provide any specifics on input costs and broadly the price cost? You've always been good about getting price between 1.5% and 2%. How much of that has come through? How much of a headwind has higher input costs been in the quarter in terms of the margin impact this quarter? Yeah. I'll take a shot at it, and then Kathy and David are here as well, and they're welcome to join in. We are realizing price, Deane, I would say more or less in line with what we had expected to realize when we put our price increases through. Overall, I think as Kathy said, for the year, we expect that price costs were going to be in good shape. We're seeing the same cost pressures that everyone else is. They're coming everywhere. Steel, aluminum, copper, plastics. Those are key components in Graco products. Some of the components that we buy, also, like electronics and motors and engines and even subcontract premiums that we pay to folks that help us out when our demand spikes up, those are all much higher. Freight costs are higher as well. I think that as we head into the second half of the year, the real thing that we need to have happen is the continued strong business demand, and that's, right now, it appears to be the case. If there's a tick up or a tick down in our factory volumes, well then, costs could be not as big of an issue if it ticks up or it could be more of an issue if volumes tick down. We feel like we're in pretty good shape. I don't know if you guys have anything else you'd like to add. No, I think that summarizes it really well. Yeah, this is David Lowe. I would agree that I think the challenges that we have are manageable and that the areas of pressure are not unique to us. I guess the only thing I would add is our business model, as all of you know, is called a lower volume, high mix model, and with 65,000 SKUs or more. Our sourcing people and our manufacturing people are used to being, and have a lot of experience being nimble to meet the kind of service levels that we want to have. This is more challenging than usual, but not unknown to the organization. Got it. It doesn't sound like you've got a number that you'll share on what, if you roll up that input cost pressure, how much of that impacted margins this quarter? Not by the quarter. I think what we've said is for the full- year, we expect it to be a neutral at current volumes. Okay, good. All right. Second topic is just to get some further color if possible on the fall off in contractor on a monthly basis. It really does jump off the page at you. I also appreciate on a two-year stack, you're still up 30%, so there's still good underlying growth versus pre-COVID. Just characterize the monthly progression and what does that say about July? Yeah, I think when we look at what we're actually seeing for incoming orders from our customers that are coming into the factory, it's been pretty consistent through June and July so far from what we've experienced for the first part of the year. Obviously, the comps just get tough. That's why the percentages look funny. I think looking back at the schedule from second quarter last year, you see the point that Mark is making pretty dramatically. I don't have the chart in front of me now, but April and May were very soft, and then we saw a sharp, I think something like 25 or 26 percentage point in contractor revenue in the month of June last year. That's helpful. Just last, a comment for you. It's just great having you in the CEO seat. Well, I'll miss Pat, but nice transition and great to have you as CEO. Thanks. Well, thank you very much. Thank you. Our next question comes Andrew Buscaglia with Berenberg. Please state your question. Hey, guys. I wanted to follow up on that contractor question. Like Deane said, June really kind of decelerated there, is there anything going on with where June should have been maybe higher, but you're just having some trouble meeting that demand? I'm just trying to get a sense of going into July if those sales will go negative, albeit at very high levels. Yeah, I think that for the most part, what I said about the absolute level of orders coming into the shop have been pretty consistent, and our ability to get product out is constrained by some of the supply chain issues that we've talked about, and they have accelerated a bit. When you look at our ability to actually deliver, that's something that the team is working very hard on and I think is going to remain challenging. The encouraging thing, and the thing that we were probably the most concerned about going into the year was would we see a significant step down or a step down in orders coming from customers around the world as we sort of lap the pandemic spike that we had last year. As we sit here today, we have not seen that. That's really encouraging. Okay. Interesting. Yeah. Sticking with contractor, the margins obviously facing tough comps versus last year. You really called out more so these kind of adverse impacts in contractor versus the other segments. Is there something specific in contractor that's, I don't know, that's different from the other segments that's impacting those margins? This is Kathy. Our other segments are what we would really point to as our low volume businesses, high mix, low volume. In Contractor, that's the one business where we do have higher volumes, meaning higher quantities of units that are being sold. That's really the driver of the more significant impact in that business. Okay. Makes sense. Okay, thanks, guys. Yep. Thank you. Our next question, Connor Lynagh with Morgan Stanley. Please state your question. Yeah, thanks. Just wanted to stay on the topic of supply chain. It certainly seems like you've been building inventory. Obviously, you've also been seeing substantial growth in the business. Just curious how you would characterize it. Are you building excess buffer inventory that you expect to monetize later this year or next year? Is that just a function of the higher cost of inventory, or is there something else going on there? I think the inventory increase has been somewhat reflective of the business levels. Obviously as our industrial and process businesses picked up, compared to where they were at the beginning of the year or, let's say, in Q3 or Q4 when we were actually not seeing a lot of throughput in the factories and not producing goods, the inventory levels have come up from that standpoint. It feels to us like it's a natural increase. There isn't anything really funny going on there. Of course, we're trying to get ahead of the curve like everyone else when it comes to some of the key components that go into our products. I think we did a good job of that early on this year. Pre-buys in some of the categories that were mentioned to stay ahead of things. Given our cash position and ability to execute on those, I think that those decisions paid out well for us. Obviously, our inventory's high. We all know that, but we have really good levels of customer service and support, and it's needed, and there isn't really anything strange going on there from my view. Yeah, makes sense. Just on that sort of low turn portions of the business, I guess what I'm wondering is, as we think about back half this year, or maybe it's 2022, basically, how long is the lag in most cases between your raw materials purchases and your sale? In other words, is there a margin pressure that we should think about in relation to that, or are you feeling good about where prices are versus where you purchase things? Yeah, I think we're pretty good. Our throughput is quick. For the most part, we don't let things sit around terribly long. As Kathy mentioned, I think in her opening comments, we have seen the impacts of the higher costs coming into the factory now that maybe we didn't see quite so much of in late last year and early this year. As we roll forward our forecast, and we kind of look at how we think the year's going to play out, we feel pretty good about where things will wind up. Yeah. I would just add to Mark and Kathy's comments that given the, I'll call it the Process and the Industrial divisions are skewed to the lower volume, higher mix, and with the, I'll call it the order trends that we see, the overall strength in those segments globally, it's very reasonable that we would be adding, getting ready to fulfill the demand that seems to be very evident in the business and sustainable. Very helpful. Thank you. Thank you. Our next question comes from Saree Boroditsky with Jefferies. Please state your question. Saree, your line is open. Please check your mute button. Hi, sorry about that. The outlook, which is almost all green, is one of the most bullish you've been certainly over the last several years. Given your positive outlook and expectation for incoming orders to continue to be robust and some of the supply chain issues you talked about, could you tell us how you're starting to think about 2022? I know it's early, but I think given everything, it would help us get a sense for demand profile from here. It's hard to know, but right now things look really good, and unless something changes in the world that we don't know about, I don't really see a major inflection up or down as we head into 2022. I think it should be a decent year. I would just add, yeah, as you well know, we're a pretty short-cycle business. We serve a lot of different industries, so it's hard to generalize, but when you read the macro picture in construction, certainly here in North America, and overall levels of economic activity, and despite maybe hiccups from time to time related to pandemic, factories are open. Salespeople are out in the market calling on customers like they were doing before those problems began. The overall feedback we get from the field is, as Mark alluded to, at least makes us feel very good as we look ahead, as far as we can look ahead. Thanks. Helpful. Just another question on Contractor. Obviously, margins took a step down versus the first quarter. It's pretty inconsistent with normal seasonality. It looks like you had some elevated expenses and earning-based incentives. Could you just provide some color on the performance there? How should we think about margin performance for the remainder of the year, given the more challenging top-line comparables in that segment? Yeah, I think that we tend to look at things maybe on a bit longer-term basis than what our quarterly results might show. There's always noise and volatility, but when I look at where they're at year to date, I feel pretty good about the absolute level of operating profit performance, and I think that they're set up for a good second half as long as the volumes continue to stay where they're at. For sure, when we started the year, none of us really knew, A, how strong the business would be and whether it would be sustained throughout the full -year. As we got through Q1 and then into Q2, it became more apparent to us that volumes are strong. We need to make sure that we're reflecting that in our variable costs and expenses, which include incentives and rebates and programs that we do with our key distributors around the world. As long as that kind of stays at the current pace, I think that we're in good shape, and we should be setting up for a pretty good second half of the year. Great. Thanks for taking my questions. Thank you. Our next question comes from Mike Halloran with Robert W. Baird. Please state your question. Hey, thanks everyone. Just following up on that then, Mark, when you're thinking about the back half of the year here, does the incentive comp then start normalizing a little bit as those comps start normalizing, which means that the run rate from the second quarter isn't quite accurate, but maybe the combined 1 Q, 2Q, as you flatten things out, that maybe is the better thought process to think about how back part of this year and into next year starts playing out on the margin profile and Contractor? I think we're in good shape right now as we sit here today. None of us really knows what volumes are going to be to be honest with you. As I think Pat once said, our crystal ball is like a bowling ball. We live and die by the weekly and monthly bookings and billings that are coming in. As we sit here right now and what we see coming in and how we feel about the business and where we're positioned, I do think that we're in good shape. Of course, what's going to happen now in the back half of the year in terms of a comparison to last year is that CED, as we all know, ran really hot in the second half of the year. In terms of where their incentive accruals are and where the growth accruals are for our customers and those types of things, it's really going to depend on where their volume comes in. The other businesses are running hot. We are anticipating that people are going to get back on the road. They're going to start spending money. We're going to do trade shows again. There'll likely be some incremental spending in the back half in Process and Industrial that wasn't there. Those should all be justified by the level of business coming in. As long as we're seeing the kinds of orders and level of activity that we got going on right now, I think we're comfortable in spending those dollars. Thanks for that. A lot of moving pieces here. Comps are wonky, obviously, which almost make it seem like not real numbers. When you strip back the noise a little bit and you think about how sequential patterns have worked through the quarter and how you're envisioning things are working through the back half of the year on a sequential basis, when you think about the three segments, how would you compare that to what a normal seasonal curve would look like from an outlook perspective? Pretty in line? What kind of variances are you seeing? Anything along those lines? Yeah, I think pretty normal if you were to strip out all of the noise that's in there. Obviously, our outlook from a growth rate perspective, is probably stronger in the businesses that were weak last year versus what we might experience for CED. CED is really the only business that I would characterize as being seasonal. They typically do have their strongest quarters in Q2 and Q3 if you look back historically. At least as we sit here right now, like we said a couple of times, order rates look pretty decent and absolute demand sort of fits that overall pattern. On the other businesses, there isn't a ton of seasonality. It might be one or two percentage points if you went back historically and looked at how much Industrial contributed first half versus second half. Second half's a little bit stronger, but it's probably not worth even screwing around with the math. Last one from me, if you don't mind. The CapEx side, capital deployment side in general, how are you thinking about it? Obviously, CapEx seems like you pulled a little bit forward into the facility side. Any comment on that, and then also how you're thinking about the M&A outlook, just capital in general. All right. This is Dave, and I'll try to comment on both those topics. On the CapEx side, yes, the company, as you know, has been aggressively investing in really new facilities and plant and equipment to improve productivity, et cetera, for several years now. We announced our investment in a new manufacturing facility next to Rogers, Minnesota, and we're in the process of breaking ground on that, and we're hopeful that can all come together in the next 12-15 months. That is gonna be a very big investment for us and where most of the money that Kathy's talking about is going. Along with that, throughout the last year, all of the operations have continued to come forward with investment proposals that make sense, that have offer improvements to the business that generate ROIs that we feel are justifiable. Quite frankly, it's been a busy time reviewing all the proposals from the facilities. I think that what we're communicating is really consistent and bringing our expectations up to date. I guess I would add, switching gears to the M&A environment that you folks know a lot about, and I guess I've been involved in recently from the operating side. It's an extremely active market, as you're aware. There's lots of proposals floating through. Some smaller ones that we look at and act on an ongoing basis, and some bigger ones. I guess as a former operating person, I would say that the challenge to the current process is, of course, we're willing to move forward, but when we look at the processes, especially on the bigger transactions, they tend to be auction environments, which is usually a seller-friendly decision in the process. People expect to move very quickly, which is fine when we're familiar with the market. Maybe not so fine when we have to go to school and learn some things. I think lastly, we continue to be, I'll say, impressed by the multiples of some transactions that we see in the marketplace, and we understand the dynamics of the marketplace, cost of capital and so forth. Historically, we've been, I think, reasonably disciplined, and that's something that I would expect would continue to be the case. Well, great stuff. Appreciate the thorough answers, everyone. Take care. All right. Thanks, Mike. Our next question comes from Hammond with KeyBanc. Please state your question. Hey, good morning. Hey, Jeff. Just on the new segment reporting change, can you just help us understand better what's driving that strategically? I think you talked in the release about kind of lining up customers, distributors, et cetera, but maybe just expand on that change? Yeah, sure. We're really doing this to improve our ability to drive profitable organic growth. That's what it comes down to. When you look at the pieces here, the move really is combining our contractor-focused businesses all under the contractor group. Historically, some of that's resided in the industrial segment, and that has led to some overlap with regard to customers, salespeople, et cetera, and on the engineering front as well. We think putting the teams together is going to create some synergies and some better collaboration, and obviously both groups are important to us, but having them housed under one management team, I think is a good move. Then the other pieces that are also being combined, I guess, that weren't necessarily called out, but they're the ones that are left in the businesses after we pull out HPCF, are the advanced fluid dispense part of our industrial business, which is really our sealant adhesive, composite, electronics type business, along with our liquid finishing. Again, those two businesses, they really sell through common distributors. They have overlap on salespeople. The technical aspects of the product lines are actually quite similar, and the selling process is also similar. We think that putting those two groups together, again, will help us energize some organic growth and get some more leverage out of the growth that we do get. Okay, that's helpful. Just the second one. Industrial margins, I think, stepped down sequentially, and I think you talked about mix. Just as you kind of look at the regions and look at the type of projects that are coming in, how do you kind of see mix into the second half for Industrial? Thanks. The project business is good, the pipeline's solid. I would expect that we'll have more project business both being booked and hopefully build as we work our way through the year. A lot of times they are lower margin, but a lot of times they also carry some high margin Graco products in them, and then once they get installed, obviously you get the customers coming back for help, parts, accessories, new projects, things like that. It's a pretty healthy environment. Okay, great. Thanks, Mark. Yep. Thank you. Our next question comes from Bryan Blair, Oppenheimer. Please state your question. Thanks. Good morning, everyone. Hi, Bryan. Good morning. Somewhat of a follow-up on Matt's lead off question. We know through the cycle your parts and accessories mix is pretty consistent around 40%. Given the uniqueness of today's environment, the pervasive supply chain uncertainties, some of the order flow that's stemming from that, was that percentage notably different in the second quarter? No, it's the same. It's amazing how it hangs in there, but it's very consistent. Okay. That is very interesting. A follow-up higher level question. In terms of outlook, specifically for the contractor segment, your team has been bullish on the housing market for quite a while, and correct in that. Mark, you detailed all the favorable macro factors last quarter. Some of them were reiterated on this call. You even cited the Freddie Mac study of 3.8-plus million undersupply in housing, all very favorable. Wondering if anything that's taking place now, specifically in terms of affordability and literally the ability of the incremental buyer to move forward, whether that affects your team's outlook in that regard. Not at this point. It's definitely worth keeping an eye on. Obviously, it costs a heck of a lot more to build a house today than it did a year ago. Again, the macro dynamics are still fairly favorable, and we haven't really seen anything translate into activity with our paint contractors or the other parts of our business. As I said before, the incoming order rates still look good. Most of the painters that we talk to, they've got a good backlog of jobs. I was recently actually trying to get somebody to do some work at my place, and they're backlogged, and you just can't get good people. I think it's the same thing on the housing side. If you want to build a house now, you're looking out quite a ways. I believe there will be a break in some of the cost pressures that they're seeing for building materials, and I think you've already started to see a little bit of that. As we work our way through the year, hopefully that opens things up a little bit. We're still very bullish long term cyclically on that part of our business. Okay, excellent. One final one, if I can. David alluded to limited due diligence time on certain M&A prospects. With the vaccine rollout, the ability to travel, et cetera, is that leading to more activity in your funnel and perhaps pulling forward some prospects? I don't know that we've seen that. I think what David was alluding to, and he can give you more color if he wants, was we were seeing last year, during the pandemic, that you would have companies come to the front and no due diligence, no boots on the ground. It was all done virtually. Unless you were intimately familiar with their organization or the industry that they're in or the competitive nature of their business and all those things, it would be very difficult to probably get yourself comfortable with the kinds of premiums that were out there in the marketplace. I think going forward, as people get vaccinated and factories open up and companies are more welcoming, that should help the dynamic on the due diligence side going forward. David, you're welcome to comment. No, that's exactly what I was talking about. It's definitely one thing to assess a business that we have a high level of familiarity with. We know the products and the channel and so forth, and maybe in the cases of certain businesses, certainly maybe the bolt-on businesses to some degree, if they're familiar to us, the level of the compatibility of the acquired management maybe has a different level of importance. I was thinking of one specific case where we looked at an industry that potentially was of great excitement, but it was definitely outside of my competency, at least coming from the Industrial and the Process side of Graco. It was really going to be important to assess the compatibility and the staying power of the management group. There simply was no time for me to, in those circumstances, to go meet the people face-to-face and participate in any reasonable way on the timetable they were insisting that the process be conducted with. All makes sense. Very helpful color. Thanks again. Yep, thanks. Thank you. As a reminder, to ask a question, please press star, then one on your touchtone telephone. Our next question comes from Brett Kearney with Gabelli Funds. Please state your question. Hi, guys. Good morning. Thanks for taking my question. Yep, good morning. Just had one this morning, and you kind of covered it in your comments early on, Mark, the broad-based demand outlook. Just curious, aerospace in particular, if you could just remind what part of the business, I guess from a sales perspective, that accounts for today and whether that is included in kind of the growth profile outlook you have across the majority of the industrial businesses. Yeah, of course, we're in a lot of different end markets. Aerospace is definitely one of them, and that business has been soft as you might expect. It's in our industrial segment is really where we serve that industry. Primarily our liquid finishing group. I think also our adhesive group gets involved to a lesser degree there. Okay. The outlook going forward just kind of in line with the overall industrial segment? Well, I think that the outlook for aerospace is probably better today than it was a year ago with people getting back on airplanes and starting to place orders again. Again, I don't feel that it's a meaningful driver for Graco's business. It's one of many key markets that we participate in. Yeah, I guess the way I would say it, if I'm speculating about the intermediate term, I think Mark's point is when we look at the strength of, let's say, automotive manufacturing, the Tier 1s, farm construction equipment, the wood market, and so forth, on a relative basis, those carry a lot more weight than one single market space like aerospace. Yep, that's very helpful. Thanks so much. Great. Thank you. Our next question comes from Walter Liptak with Seaport Global Securities. Please state your question. Hi. Thanks. Good morning. All right, wanted to see if there was a way of talking about the project work as sort of longer cycle systems, and if during the quarter you saw more projects kind of entering into sort of quoting or project development? I'm trying to understand if these are longer cycle, is the stuff that you're working on that's longer cycles that ship in the second half, or are you starting to build out project work for 2022? Yeah, I think for sure our quote activity is way up from a year ago, and I'm talking mostly in industrial and process again, and also our powder coatings business, the Gema business, and it really depends on the type of project. Some of them, they lap over from one year to the next. The majority of them, they're probably three to six months in terms of the timing, and they haven't really gone through and done an analysis of how much is actually gonna bill in the back half of the year. I think the takeaway from our standpoint is that there's more people out there. They're looking to deploy capital. There's a lot more good projects out there, and we should see the benefit of that. Okay, how do you protect yourself with material inflation? Well, we- On those longer cycles? Yeah, we do a pretty good job of quoting and estimating, as you probably can imagine. To the extent that we've got components or things that we're concerned about, we'll either buy those ahead or we build in some of that pricing into our project business. Project business is a little bit different than our normal price increase, right? Our normal price increase that we do annually, that covers a lot of our standard components and those types of things. When you're doing a project, you do have a little bit more leeway in terms of building some of the price cushion in. Okay, got it. I've always thought of the project work as being high ROI, like so if a powder system or adhesive system or whatever goes in that the customer gets a payback in a year or two. With the price increases and inflation, is there a point at which the ROI has gone down enough where projects push out? Is there any concern about that? No, we haven't seen that. I would say that maybe offsetting the risk of that is that the things that a new system would help a manufacturer with, maybe in the area of labor savings and material savings, that's where inflation actually may help the ROI. All right. Okay, sounds good. Thank you. If there are no further questions, I will now turn the conference over to Mark Sheahan. All right. Well, thank you so much for participating in this conference call, and we'll see you on the road, or we'll talk to you next time. This concludes our conference for today. Thank you all for participating, and have a nice day. All parties may now disconnect.