Good morning, ladies and gentlemen, and welcome to the Owens & Minor First Quarter 2016 Financial Results Conference Call. My name is Candace and I will be your operator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference call. As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Miss Trudi Allcott. Please go ahead. Truitt Allcott - Director-Investor & Media Relations: Thank you, operator. Good morning, everyone, and welcome to the Owens & Minor First Quarter 2016 Earnings Call. I'm Trudi Allcott, and on behalf of the team, I'd like to read a Safe Harbor statement before we begin. Our comments today will be focused on financial results for the first quarter 2016 which are included in our press release. In our discussion today, we will reference certain non-GAAP financial measures. Information about these measures and reconciliations to GAAP financial measures included in our press release and in the supplemental information posted on our website. In the course of our discussion today we may make forward-looking statements. These statements are subject to risk and uncertainty that could cause actual results to differ materially from those projected. Please see our press release and our SEC filings for a full discussion of these risk factors. Participating on our call this morning are Cody Phipps, our President and CEO; Randy Meier, EVP and Chief Financial Officer and President of International; and Nick Pace, our General Counsel. Now I'd like to turn the call over to Cody Phipps who will start things off this morning. Cody? Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you, Trudi, and good…

Thank you. And our first question comes from Lisa Gill of JPMorgan. Your line is now open.

Thanks very much, and good morning. I just wanted to follow up on the customer loss for a minute. The party that won it had specifically talked about services, technology, improvement in efficiencies as well as complexities of navigating the relationship, not only in the hospital but post-acute, et cetera. Can you maybe just talk about, Cody, what you're seeing out in the marketplace right now as far as the renewals go? So is this a theme, or was this more specific to this one customer that they were looking for something specific and moved to a different party? Just trying to understand that, the competitive marketplace right now. Paul Cody Phipps - President, Chief Executive Officer & Director: Yeah. Yeah. Thanks, Lisa. First let me comment on this – on the customer loss, and then I'll get to your specific question. First, obviously, we were disappointed in this decision. This was a 15-year relationship with a major customer, and their RFP process spanned a pretty long time, probably 12 months to 18 months. At the same time, we had a lot of change going on with me coming on to the business and building a new team. So it was a long process. Quite frankly, I'm not sure we got to put our best foot forward in this process, but we respect their decision and we're going to move on. Let me address your specific question. I think – our value proposition is focused on attacking the enormous complexity in the healthcare value system through our services, through technology and through the processes that we bring to bear. So we believe in that pitch. We see it resonating with our customers and we actually renewed new contracts and won new business with that value proposition. So I think, to answer your question specifically, we think this is more of a one-customer issue and we think we're well-positioned to attack the same complexity that was talked about.

And then when you talk about the renewals this year, is there anything different as we think about those renewals? And how do you think about pricing right now in the marketplace? Is it more competitive than what you've seen historically, or would you characterize it as similar to what we've seen in the past? Paul Cody Phipps - President, Chief Executive Officer & Director: Well in – let me put it in perspective first. Most of our customer contracts are three-year to five-year contracts, so at any point in time we have 20% to 30% of our contracts up for renewal. So there's nothing new about that. And I would say we don't see anything abnormal. The healthcare environment remains a competitive environment. It's – especially for large customers, everybody wants to go after large customers. So it's kind of business as usual, but it's a competitive environment.

Okay. Great. I appreciate the comments. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you.

Thank you. And our next question comes from Robert Jones of Goldman Sachs. Your line is now open. Nathan Rich - Goldman Sachs & Co.: Hi. This is Nathan Rich in for Bob this morning. Just wanted to ask one follow-up off on the customer loss. Just curious to know if this has any impact on any of your existing GPO relationships? I'm not sure if any of those contracts have either volume or service levels that are embedded in them that this would impact? Richard A. Meier - Chief Financial Officer & Executive Vice President: Nathan, hi. This is Randy. We don't believe this is going to have any direct impact on any of our GPOs. Most of those volume-related issues are customer-specific in terms of how they get their pricing and the various discounts. As I'm sure many of you know, we've got our own GPO renewal cycle potentially kicking off towards the end of this year. Certainly with net assets being acquired, that may be postponed depending on where Vizient ends up and how they want to look at their aggregated relationship. So we're pretty comfortable that this isn't going to impact our relationships with the GPOs going forward. Nathan Rich - Goldman Sachs & Co.: Okay. Great. And then if I could turn to the new segment detail that you'll be giving us going forward, on the new CPS segment would you be able to give us a sense of how we should think about the growth rate and margin profile for that segment given we have the limited history that you shared with us today? Richard A. Meier - Chief Financial Officer & Executive Vice President: Sure. I think one of the reasons that we moved to the more segment orientation is what we characterized in our prepared remarks, is this is how we're operating our business going forward. Certainly at Investor Day when we characterized our initiatives, we talked about the Domestic business and the initiatives there and we looked at sort of the International segment and the CPS segment as opportunities to grow the business. We don't provide detail on terms (17:56) at a gross-margin level, but certainly from an operating-margin level we would expect that business to be a contributor to our growth. Obviously when we acquired these assets it was a higher-margin business and certainly accretive to our overall platform. And as we showed in this quarter the growth of the CPS business year-over-year and putting this business together with sort of Medical Action Arc Royal and our sourcing business, we think this is an opportunity to contribute to improving profitability and contributing to growth over the next couple of years. Nathan Rich - Goldman Sachs & Co.: Great. Thanks for the questions. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you.

Thank you. And your next question comes from Sean Dodge of Jefferies. Your line is now open.

Hi. Good morning. Thanks. So maybe staying on CPS for just a moment, on that revenue stream is there much seasonality to it? And, I would imagine it tends to be pretty highly recurring revenue? Richard A. Meier - Chief Financial Officer & Executive Vice President: Hi, Sean. This is Randy again. I wouldn't characterize the nature of the CPS business and our kitting, whether it's over in Europe or here in the United States, is really seasonal. I think it's very contract oriented. The contracts are similar to our distribution contracts. They usually run anywhere from two years to five years, so I think it is fairly consistent. The aspect of what we do in Europe and some of the business that we do on a fee-for-service basis directly for the manufacturer may be a little bit more seasonal than what we characterize as our provider-based business. But I think there's a certain amount of stability to the revenue streams moving forward here. On the portion of the business that's related to sourcing, the sourcing aspect may be slightly seasonal in terms of managing because we source not only for the CPS business, but we're sourcing for our private label business as well, and potentially some third-party customers, so there may be a little bit of seasonality based on our – the product or the end market sales related to that. But overall, I think you'll see this being a fairly consistent business throughout the year.

Okay. And then, Randy, you mentioned the growth rates and the margin profiles of that business being pretty attractive. How should we think about the runway left here in terms of either client adoption or maybe for those that have already adopted, like a penetration rate? How should we think about the amount of opportunity left in the CPS, maybe addressable market? Paul Cody Phipps - President, Chief Executive Officer & Director: One of the things I'd say, Sean, is we're excited about this business because it's directly linked to our overall value proposition of reducing complexity. So one of the things we're excited about is bundling the CPS capabilities with other services we offer for large IDNs to attack complexity. And in some ways, we think we're uniquely positioned to help bundle across manufacturer products and to address points of complexity in the hospital. So we're – we haven't broken out a specific penetration rate or growth rate yet, but we anticipate this will be a contributor to growth, and it'll be accretive to our margins.

All right. Then last one for me, the Domestic operating earnings improved year-over-year. You mentioned manufacturer price increases, or changes being a contributor here again. After the last couple of calls, I'd gotten a sense that those weren't going to be all that much of a factor going forward. Has your outlook for 2016, or even maybe longer-term for manufacturer price increases, changed at all? Paul Cody Phipps - President, Chief Executive Officer & Director: Yeah, Sean. That's a great question. I appreciate it, because it gives us an opportunity to give again a little bit of clarity around it. The first quarter historically is when we typically experience manufacturer price increases, and the performance and the contribution in this area this year was, again, slightly ahead of what we experienced last year. But in the time I've been here, this has been sort of in a reasonable range and it's typically a first quarter event. What we were alluding to last year is, there was a number of events where people had out-of-cycle price increases, and we experienced, almost on a quarterly basis, some benefit from manufacturer price increases. We don't see that as being as robust this year, and again, I think this – the first quarter is what I would characterize as a fairly normal event, slightly ahead of last year. It's the remaining of – remainder of the year, and the results we had last year, that we were trying to provide some clarity around, that that was probably not sustainable.

Got it. Understood. Thanks again. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you.

Thank you. And our next question comes from Dave Francis of RBC Capital Markets. Your line is now open.

Hi, Cody and Randy, thanks for the questions. A couple quickies. First, back to the client loss, and not to beat a dead horse, but wanted to kind of understand a little bit more the dynamic around the decision process there and, to the extent that you got feedback from that customer, can you share with us kind of what it was that drove their decision process toward a competitor of yours? And does that point you in the direction of something that is missing from an operational or service perspective that you guys need to address relative to the broader market? Paul Cody Phipps - President, Chief Executive Officer & Director: Yeah, Dave. Again, I want to be careful not to try to speak for the customer here. We're in the process of – and we're still getting feedback from them. But overall, again, we feel that our value proposition's very strong. We got very good feedback from them. I think the one area that we'd say our competitors have something that we don't is in the non-acute space. That's a known gap, and we're working hard to address that. So if there was one factor that I would say was a gap, it would be that. And we're working hard to address that. And again, we had a 15-year relationship with this customer, and so it was a long, lengthy process. So I'll leave it at that. I don't want to speak for them, and we're still in the process of getting that feedback. But specifically the one area, post-acute, is a known gap for us and we're working to address it.

Okay. And I guess as a quick follow-up, as you look at the financial impact on the bottom line relative to what you guys have communicated previously relative to the revenue impact, it seems to be a disproportionate impact flowing through the income statement. Is there – I guess, how are you addressing the revenue decrement from an internal expense perspective and managing better to the bottom line on that? Thanks. Richard A. Meier - Chief Financial Officer & Executive Vice President: Yeah, Dave. I think, whenever you lose a large customer, you sort of have to sit back and look at how it impacts the network and your sort of fixed cost overhead, and I think what we wanted to impart on our investors was, on an annualized basis, when you just separate the revenue and gross margin from the business, there's some variable costs that we know we can take out pretty directly, and sort of what is the net result that we're really going to have to address? And that's really what the $0.20 to $0.25 represents, if you just pulled that out of the business. I think what we've tried to communicate is, with the transformational agenda and the performance in the first quarter, we are well on our way to improving the overall productivity of the company. I think we demonstrated our ability to manage and transition large customers with what we did last year in the fourth quarter, and outperforming our fourth quarter expectations is evidence that we can manage these types of transitions fairly aggressively in a fairly short amount of time. But again, we wanted to give folks the deep impact and some of the headwinds that we would have that – and we're going to have to address going forward. We…

Thank you. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you, Dave.

Thank you. And our next question comes from Eric Coldwell of Baird. Your line is now open. Eric W. Coldwell - Robert W. Baird & Co., Inc. (Broker): Okay. Thanks, guys. First off, I just want to thank you for being so transparent with the events such as Kaiser. It's somewhat unusual, frankly, among my coverage list, and I really respect it. So thanks for the transparency. Paul Cody Phipps - President, Chief Executive Officer & Director: Thanks, Eric. Appreciate that. Eric W. Coldwell - Robert W. Baird & Co., Inc. (Broker): My first question is on price increases. In the drug industry, we've seen more out-of-cycle price increases over time. It's actually becoming the norm every month, and then especially in the summer. So when you say that 2015 manufacturer price increases aren't expected to repeat, is that because you know of very specific, unusual circumstances? Or is it because you're just not accustomed to it, so the assumption is, is that you go back to more of a historical pattern? Paul Cody Phipps - President, Chief Executive Officer & Director: Yeah, Eric. I think it's more the latter, and having come out of that industry, I think what we're trying to do is just say, look, these are not something you can forecast with any great regularity. I think the device and medical technology industry is sort of taking cues from the pharma business, and on a product or product category, considering out-of-cycle price increases with much more regularity. But as you know, simply just taking price increases doesn't automatically give us the benefit of a price increase. It's a little more complicated for us, and it depends on where our inventory levels are and a variety of other things. So I think out of caution, what we're…

Thank you. And our next question comes from David Larsen of Leerink Partners. Your line is now open.

Hi. Just, like, one more question on the Kaiser account. Was pharmaceutical distribution included in that bid? Paul Cody Phipps - President, Chief Executive Officer & Director: It was not, but obviously, that's going to be something that I'm sure was in consideration for the future. Our understanding is that that's a future event, but it was not part of this bid.

Okay. And then, Cody, with regards to the long-term strategic objectives of Owens & Minor... Paul Cody Phipps - President, Chief Executive Officer & Director: Yes.

It sounds like post-acute is an area you'll focus on. How about pharma? Paul Cody Phipps - President, Chief Executive Officer & Director: We've got a strategy process underway right now, and I'm not ruling out anything, but I would say pharma would be a bit of a stretch for us right now, in the traditional sense. What I do see, though, is, as we think about how we attack complexity in large systems, there are very innovative services and solutions that we can provide in and around pharma, some of which are in place today, and I'm excited about them. But in the traditional sense of pharma, probably a long putt in our strategy.

Okay. And then, I see that D&A is not included on the P&L this quarter. Was any of that D&A re-classed into cost of goods, which put pressure on gross margin this quarter relative to previous quarters? Richard A. Meier - Chief Financial Officer & Executive Vice President: Yeah, Dave. I'll handle that. As part of the recasting of our segments, when we acquired our more manufacturing-oriented resources, in terms of Medical Action and Arc Royal, depreciation and amortization becomes part of cost of goods sold. So, as we move forward, it was certainly in those numbers in the right place last year, but with the segment changes, you're probably getting a little bit more visibility into that. But that did not have an impact on gross profit margin. It was appropriately categorized and classified in our income statement last year. But that sort of, we've recast the numbers a little bit, just to give people some greater visibility. So when you look at D&A, you have to not just look at what's in the income statement and the consolidated numbers, you've got to go to the cash flow statement to see the entire aggregated depreciation and amortization.

Okay. Great. And then, on the International side, the operating income looked actually very good to me, despite the decline in revenue. Can you maybe talk a bit about what drove that operating income expansion? And ,is this a pretty good run rate through the rest of 2016? Or could there even be some incremental improvements there? Paul Cody Phipps - President, Chief Executive Officer & Director: Well you know, we've been working on improving performance over in our International segment for a number of years. And I think it's the culmination of a lot of great work with the team over in Europe, and what they've done. As many of you know, we talked a lot last year about the transition of a number of customers, and particularly one large customer in the U.K. that was leaving, transition of a customer from a buy-sell to a more fee-for-service. And as we put in price increases last year, really getting much more to a market-oriented pricing, some customers exiting as well – to really position the business to return to growth and – as we look forward. So year-over-year, I think the revenue is down at the $4.3 million or so when you look at sort of an apples-to-apples basis. It's probably a reasonable place. But we would expect that business to start growing as we move forward. And in terms of the operating income, you know the European business is probably a little bit more seasonal, because of the nature of the vaccine business that we participate in, in a number of countries over there, so where we get sort of a third quarter and fourth quarter strength. Typically our weakest quarter is the first quarter. So you will see sort of an improvement throughout the years as we move forward. So the direct answer is, I wouldn't look at the first quarter as a run rate, because there's just a lot of things going on over there.

Okay. And then just one more, with that U.K. customer, when did that start to roll off? Is 1Q 2016 the first quarter's impact? And was it about $4 million in revenue in the quarter? Paul Cody Phipps - President, Chief Executive Officer & Director: It wasn't that large, but it was a fairly significant customer. They exited in July of last year.

Got you... Paul Cody Phipps - President, Chief Executive Officer & Director: So we've got one more quarter of having us to say the exit of the U.K. customer.

That's right. And then just one last one. For GPO renewals, I think that those will start in late 2016 again. Or are you largely through those? Paul Cody Phipps - President, Chief Executive Officer & Director: We have – the first one is scheduled to do that. Although with MedAssets and Novation getting together there is some discussion about whether or not they'll go just on the Novation schedule, which is later. But we're still anticipating that the MedAssets side will start this year. But there is a possibility that'll be delayed and just combined with the Novation and just do it as a Vizient contract.

Okay. Thanks very much. Appreciate it. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Phipps for closing remarks. Paul Cody Phipps - President, Chief Executive Officer & Director: Thank you, Candace. Thank you for participating in today's call. We're pleased with our results in the first quarter with solid revenue growth and adjusted earnings of $0.50 per share. Thank you again for joining us today. And we look forward to seeing you at our upcoming investor event.