Good morning and welcome to the IDEXX Laboratories First Quarter 2017 Earnings Conference Call. As a reminder, today's conference is being recorded. Participating in the call this morning are Jon Ayers, Chief Executive Officer; Brian McKeon, Chief Financial Officer; and Kerry Bennett, Vice President, Investor Relations. IDEXX would like to preface the discussion today with a caution regarding forward-looking statements. Listeners are reminded that statements that members of IDEXX management may make on this call regarding IDEXX's future expectations, plans and prospects constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as expects, may, anticipates, intends, would, will, plans, believes, estimates, should, and similar words and expressions. Such statements include, but are not limited to, statements regarding management's expectations for financial results for future periods. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements, and the risks and uncertainties of such statements. All forward-looking statements are made as of today and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Also during this call we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles, or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in our earnings release, which can be found on our website, idexx.com. In reviewing our first quarter 2017 results, please note all references to growth and organic growth refer to growth compared to the equivalent period in 2016, unless otherwise noted. In order to allow broad participation in the Q&A, we ask that each participant limit his or her questions to one, with one follow-up if necessary. We appreciate you may have additional questions, please feel free to get back into the queue and if time permits, we'll take your additional questions. I would now like to turn the call over to Brian McKeon.

Thank you and good morning everyone. IDEXX's strong business momentum continued in Q1, driving excellent financial results. In terms of highlights, Q1 revenues were $462 million, reflecting organic growth of 11%, at the high-end of our expectations, supported by very strong 14% organic gains in CAG recurring diagnostic revenues. CAG recurring revenue gains reflected strong global growth across major modalities, including 15% consumable growth, 13% lab gains and 11% organic growth in rapid assay. We also delivered another strong quarter in terms of expanding our instrument base, with 2,340 premium analyzers placed globally, up 18% from prior year levels. Strong top line growth, better than expected operating margin performance, and $0.12 per share in benefit from the adoption of new accounting guidance related to tax benefits from share-based compensation, supported Q1 EPS of $0.77 per share or an increase of 53% on a constant dollar basis. Further adjusting for the impact of the new share-based compensation accounting guidance, comparable constant currency EPS growth was 29%. Reflecting our continued strong business trends, we're raising our full-year organic growth guidance by 0.5%, to 9.5% to 11%. Along with updated estimates for foreign exchange rates, which improved since our last call, this results in a reported revenue range of $1.925 billion to $1.950 billion for 2017, an increase of $15 million compared to our original guidance. We're increasing our EPS range by $0.10, to $2.95 to $3.11 per share, reflecting higher estimates for 2017 benefits associated with adoption of accounting guidance related to tax benefits from share-based compensation. Operating profit upside from our higher revenue outlook will be offset by incremental planned investments in our U.S. commercial capability, U.S. lab capacity and R&D, aligned with the significant opportunity we see to build on strong CAG growth trends and continue to deliver against our…

Thank you, Brian. We are indeed off to a great start to the year. I note the 14% constant currency growth of our CAG Diagnostics recurring revenues in Q1 which make up 72% of IDEXXs total revenues and is the core driver of not just revenue but profitability to IDEXX. This growth metric exceeded the 13% we achieved in Q4 2016, which itself was the highest growth quarter of 2016 and we had a strong compare in Q1 of 2016 in the U.S. if investors recall. We had strength in all global geographies and double-digit growth in all three modalities that contribute to these diagnostic recurring revenues; that is reference labs, instrument consumables, and rapid assay tests. So, a solid start to the year with good momentum, giving us confidence to increase IDEXX's 2017 organic growth guidance by 0.5%, to 9.5% to 11%. Let me turn to a few operational highlights in the quarter. Our international teams around the world continue to make huge progress placing our franchise Catalyst One chemistry analyzer in all geographies, generating 20% international VetLab consumable growth. This novel chemistry analyzer is high function and low cost. We believe there exists a long runway for instrument placements internationally. At the end of Q1, our active installed base of Catalysts outside North America has grown cumulatively to over 11,000 instruments and customers. And yet, we believe the potential number of additional customers is roughly five times that amount. And the number of companion animal practices is growing every year, so, many years of growth ahead for us. In addition, we are seeing very nice double-digit growth in our reference labs in our core markets of Europe, Australia and Japan. In many international markets, SDMA adoption and appreciation has been even quicker than the North American markets. While…

Thank you. And our first question will come from the line of Ryan Daniels with William Blair. Your line is open. Ryan S. Daniels - William Blair & Co. LLC: Yeah. Good morning, guys. Thanks for taking the question. Jon, one for you. Given the significant OUS opportunities, specifically with instruments that you discussed, can you talk a little bit more about the balance between investing more of the upside into the U.S. customer-facing organization and spending those dollars outside of the U.S.? And then, number two, I'm just curious if any of this is due to competitive actions in the U.S. market, or if it's more just the expected return on investment versus any externalities you're seeing?

Yeah. It's a wonderful situation, Ryan, because we really see attractive markets, of course, in the U.S. which is, by the way, two-thirds of global market today, as silly as that seems, for Companion Animal Diagnostics, and great opportunities really around the world. As you know, in international geographies, over the last several years, we have moved to more and more of a fully direct presence in many countries and roughly 70% of our Companion Animal revenues outside the U.S. are now sold through direct organizations and 30% through hybrid or distribution. We think at this point we're about at the right mix, but those have been some very significant investments. And now we're seeing the return on those investments. And they're led by – outside the U.S. They are led by just the exceptional opportunity we have for Catalyst placements and they're – it's a high growth, and I think we feel comfortable with the growth and investments we're making there. In the U.S. market, we're just seeing a tremendous response to our innovation portfolio. The U.S. market is a more sophisticated market. But it's shocking, Ryan. We estimate that only 7% of clinical visits, a chemistry panel, just a chemistry panel is run. Only 7%, and yet best practice, evidence-based medicine would suggest that preventive care, including routine wellness testing is really appropriate given we find things. So, that 7% is just a small fraction of where we think it could be. And the responses we're seeing to things like SDMA or SediVue, or now the incredible response to the SNAP Pro, which is primarily a U.S. market because, of course, it leverages the rapid assay behind, means that the constraint here is more customer presence. And so, based on the momentum we have in the U.S., we think that augmenting our investments here is going to help us support our 10%-plus organic growth of the company as a whole into future years.

Ryan, I'd just reinforce too. This is an investment that's based on an opportunity and a return from the opportunity. It's not a reaction to other dynamics. As you know, this is our core business. We know it well. And this is what we love to invest in, and when we see the opportunity for incremental growth and incremental return, we very much would like to invest towards that for – on an ongoing basis.

Yeah. It's just – kind of building on that comment, Ryan. We're not a company that makes a lot of acquisitions. I mean, we make acquisitions when they fit into our core strategy. We're very interested in it, but there's just not that many to do. So, our types of investments we're making are – they're more organic, but we think that has the best ROI. Ryan S. Daniels - William Blair & Co. LLC: Okay. That's helpful. And then one more follow-up. Could you talk a little bit more about instrument placements into competitive accounts you've made over the last one to two years. I know some of your competitors have talked about those opportunities reopening for them. So, I'm curious if you have data on retention for some of the accounts that you have displaced over the last year or two? Thank you.

Yeah. We measure the retention trends for our instrument customer base as a whole. And we've seen an improving trend in those retention levels for the consumables that come from our instrument customers and we're around – and that's improving every quarter, at low rates at this point. But we're at 98% retention. So, that's – and this quarter is a little better than last and last quarter is a little better than the quarter before. And so, we're pleased with that and...

Yeah. I'd expand beyond that to say it's not just instruments, it's across modalities. We're seeing improving retention trends in the U.S. in reference lab, consumables, rapid assay. And it's one of the things that's helping our underlying growth. It's also helping improve our underlying net price realization. It's a very positive trend and goes back to some of the comments we were making about the network effect that, as we're bringing together different instrument solutions through integrated systems architecture and have invested well above $100 million plus ahead of the industry on these types of initiatives over time, we're seeing the benefits of that. And, I think, that aids retention and will continue to aid retention going forward.

Yeah. The other thing, Ryan, we're seeing is we've shared this metric from time to time, the percentage of our customers that we believe are loyal customers or significant customers for both our in-house and reference lab. And, I think, several years ago, we said that was in the high-30%s, 36% to 38%, depending on what year you picked. We're now at 47% of our customers who are loyal in one or the other or both of the in-house instrument and reference lab, are loyal in both. It's an interesting number because it has grown, but it's still below 50%, which just shows how much runway we have ahead to continue to build a complete diagnostic experience with our customers. Ryan S. Daniels - William Blair & Co. LLC: Great. Well, thank you for that. That's helpful color.

Thanks.

Thank you. Our next question comes from the line of Erin Wright with Credit Suisse. Your line is open.

Great. Thanks so much. You mentioned some underlying or better underlying margin improvement in your updated guidance net of the incremental investments that you're making. And is that just a function of the improved organic growth profile or is there other initiatives going on? And as we think about the longer term drivers of profit improvement, where do you see some of the more meaningful opportunities near-term? Thanks.

Yeah. Erin, in simple terms, I think we had obviously a great start to the year in the first quarter. And looking ahead, we do see some incremental benefit from the stronger organic growth profile that we've highlighted, which is offset by the $10 million of incremental investment that we're advancing. And the net of that is it's a bit better than where we were in our original guidance, and it's at the high-end of our long-term goals. I think our long-term goals are consistent with where we've been, which is we see the opportunity to sustain 50 to 100 basis points of annual margin improvement. We think the gross margin will be a key driver of that, aided by strong growth in recurring revenues, CAG Diagnostics revenues, as well as productivity in areas like our lab business, ongoing improvement there. And we think that we can also get operating expense leverage as we continue to invest against the long-term potential of this highly profitable and durable annuity that is at the core of our economic model. So, a similar long-term outlook and we're tracking really well this year as we position ourselves for that 10% plus organic revenue growth goal that we're hoping to continue to achieve.

And Erin, from a modality point of view, obviously, we've got volume leverage and productivity initiatives in our core reference lab networks around the world, the benefit from the double-digit growth we're seeing in the lab business. And on the VetLab side, obviously, the growth in the – that's a good business and the growth in the recurring revenues of VetLab consumables, both of those augmented by a couple percent price realization and effective management of costs are two of the big – I think between the two of those, it's easily over 60% of IDEXX's total revenues.

Excellent. Thanks. And you mentioned the 45 new reps, I think, you said and some new regions as well. What regions are you adding and how quickly should these reps fully ramp up based on the experience you've seen so far? And just that hybrid versus direct model in your other countries, are you expanding the direct effort elsewhere as well? Thanks.

Yes. Thank you. We go through a systematic process of looking at our account coverage around the country. And it's a pretty complicated process because you have to kind of redraw the lines. So, we see where we see the highest ROI. And some of that is in having fewer accounts per rep, so that reps can call on those accounts because that's what grows the revenues. And some of it is covering some of what we call the white space which is the – I don't know, roughly 5% or 6% of the country that we don't have direct account coverage because it's highly rural. We cover by phone, but now we're adding some account coverage. So, this is really the highest ROI places to make those investments. Those 45 reps are, of course, both sales and our field support organization, both of which are highly appreciated by the customers and help drive growth. It generally takes a quarter for them to get trained and get into those territories. I think they start generating a return after that quarter. So, we're really timing this so we're going to be in great shape for the fourth quarter of 2017, always an important instrument placement quarter. But they grow in productivity over time. You can just see what's happened, we did the expansion in the beginning of 2015, and we're still seeing productivity growth from that expansion in the first quarter of 2017. So, it's a – you get growth in productivity of those reps. With regard to your comments of international, we think we're about – right now in terms of the 70% direct and 30%, now 30%, many of those, we do have a strong in-country presence, but we also work with distribution. Sometimes they provide logistics or collections or sometimes there's a full presence. And supporting our distributors is – these are generally more emerging markets and – or places where it's just not – doesn't make sense to have a direct presence. So, I think we're going to, obviously, be continuing to grow appropriately our feet on the street internationally consistent with the revenue growth. But I don't see – I think we've made the shifts we want to make in fully direct now for all intents and purposes. I think we have the right mix right now.

Great. Thanks. Appreciate the color.

Thank you. Our next question will come from the line of Derik de Bruin with Bank of America Merrill Lynch. Your line is open.

Hi. Good morning.

Good morning.

Good morning.

So, I actually wanted to piggyback on Erin's question on the gross margin. I mean, certainly 150 basis points improvement, much better than we had thought in the quarter. Just kind of talk about pacings of the gross margin for the rest of the year and I guess full year expectations for where you think it'll end up?

Yeah. I think we are targeting continued gross margin improvement. I think that the investments that we're talking about will be relatively more in the OpEx line in terms of how they're going to flow through the year. So, I mentioned Q2, the net of that will be relatively flat and that is we will have some ramp in the OpEx and some of the lab capacity investments are impacting gross margin, but those, of course, will pay off for us, it's basically they will ramp. But I think you should expect a profile moving forward in the near term that is margin gains driven by on the gross margin line and where we're reinvesting that in OpEx just given the growth opportunity we see.

I guess, still, staying on – I guess, if you look at sort of the out year expectations on the business. I know you've guided to 50 to 100 basis points for the longer term model. Is there an opportunity to sort of have a bigger step change than that on a recurring basis? I mean can that go 50 basis points higher over time? Is that – would you need to see a better mix shift in that or just see more adoption of product? I'm just simply saying like is there an opportunity on the margin to see it sustainably go up another 50 or so basis points on an annual basis?

I think we will continue to drive gross margin improvement. That is a key part of our goals, and I think if we're successful growing the way we think we can on the recurring CAG side. That will aid that dynamic. I think we always have the choice to govern the pace of the investment that we're investing back in the business. And just building on Jon's earlier comments, I think we want to build this annuity as large as we can make it, and so I think we try to calibrate that expectation to invest in things like the international opportunity and growing the U.S. market where it makes sense and on balance we still think that 50 to 100 basis points is a – I think it's very much aligned with how we think about managing the business, Derik.

Yeah.

I think we can always change that dynamic over time, but I think given the growth opportunities that we see, the broad range of innovation we're bringing to the market that requires support, not just from commercial resources but from enabling information technology, we think that's a reasonable balance and outlook for the business. This is clearly a very powerful business model that has a lot of profit potential and – but we think we're balancing that in the right kind of ways.

It's a – building on Brian's comment, it's a virtual cycle, and we can really see that in play in our revised guidance in 2017. As Brian said, we raised the constant-currency operating margin expansion guidance for the year to the high end of our long term of 75 to 100 basis points, and yet that's with augmented investments which we think will help us with longer term growth of that very profitable recurring revenue, which itself will help us with margins.

Yeah.

So, it's a virtual cycle, and it's driven by an incredible technology portfolio that we have, that quite frankly just gets better and better. I mean, that's what's interesting is, it's gotten better and better over the last five years. Starting with the launch of really back to launch of ProCyte and then Catalyst One and SDMA and SediVue and there's a whole lot going on in the information technology side, and so, we're really in a – all supported by the fact that people love their pets and are underserved by the veterinary profession today, and meaning that as vets get better at communicating the value of the services that they provide, pet owners respond and that's a lot of what's behind our technology and our commercial investment. So, it's a virtual cycle and we have long-term goals, and we manage that year-by-year within those long-term goals.

Thank you very much.

Thank you. Our next question comes from the line of Jon Block with Stifel. Your line is open. Jonathan Block - Stifel, Nicolaus & Co., Inc.: Great. Thanks, guys. Good morning. Brian, I'll beat you up offline on how the out-year OpEx leverage isn't better than 50 to 100 bps. I'll focus on two other questions. Maybe the first one, on the reference lab, growth was really solid. The growth rate accelerated. I think the stacked growth was actually the strongest that I can see in my model looking back 10 years. So, Brian, can you revisit the international versus U.S. lab commentary? And then, Jon, if you can speak to the long-term opportunity within U.S. reference lab and if you see some opportunities for accelerated market share gains sort of in light of the recent acquisition of Antech by Banfield.

Yeah. Just on the performance, then I'll turn over to Jon, but we said it was 13% organic growth. It was actually a little bit higher than that, and it was comparable growth in U.S. and international markets. And to your point, Jon, I think we were up against some really strong compares. So, we agree that it was an excellent performance on the lab front, both U.S. and internationally.

Yeah. The growth in reference lab is really three factors. One is that we're getting some price realization. Of course, everybody said, well, why did you offer SDMA at no incremental charge? Well, we did offer it at no incremental charge, but now the chemistry panel that all customers are getting is much higher value. And that allows us to realize price and realize some of that value in price. The second – and that's not a big number, as Brian said it was, I think, 3% in the quarter, 2% to 3% for the year. That's for all-U.S., but reference labs is a contributor to that, all-U.S. CAG recurring diagnostics. And second is that we are growing our customers that we have. They're growing. And sometimes, the customers don't give us all their lab business, but they're shifting more of their lab business to us. It's kind of hard for us to measure that. But we are growing our existing customers. Part of it is because they're adopting more testing. Maybe they're running more chemistry because it's a better case for preventative care. Maybe they are picking up a molecular diagnostics or fecal antigen that they previously were not – they were doing manually or just not doing at all. I mean, they're expanding their standard of care. And then the third is that we are adding customers and adding more customers at the same time that we're seeing improved retention rates with our existing customer base. Of course, all of that takes field presence to make that happen. It doesn't just happen. It happens because of our extraordinarily professional sales, professional service vets and the field support representatives that we have in the field that are the face of IDEXX to veterinary practices. And so, we think the…

Yeah. Well, I think what we saw is we have seen the tremendous response to our innovation in the field and yet we believe that the constraint here is time with customers. The more we call on customers the faster they grow. And so, it's a tough call. Okay. It's a tough call about when or where or what rate to make incremental investments but obviously we're able to do it and expand our operating margin target for the year which is good. I mean, we feel good about both of those. Where will that go going forward? It's a tough call. The other thing we have going on is we're continuing to see growth in productivity of our field professionals. I just want to correct you on one thing, the 435, those are only the people in the field calling on customers. They include sales reps, they include our field support representatives are highly valued and they include our professional service and veterinarians. They do not include people on the phone that are sales or support. They do not include managers. They're just field feet on the street. It's a very, very clean metric. And so, we think it's the right call. Given the incredible response we're seeing, I mean, the over 1,000 SNAP Pros and the momentum in that business, we actually ended the quarter with a backlog, that's just the number that we installed. That's just – I remember you asking me about SNAP Pros two years ago, why can't we have more SNAP Pro placements? Well, we got more SNAP Pro placements now. And look at the competitive Catalyst, 18% year-over-year growth in competitive and greenfield Catalyst placements. And look at the 14% EVI productivity. Part of that is coming from the maturation of the sales organization, and part of that's coming from enabling support. We're actually fully moved to a new CRM. We're leveraging the salesforce.com platform, fully implemented now in the U.S. field organization and highly leveraged by the incredible data that we have that helps the rep support the customer. I mean, they have incredible data at their fingertips now, real-time, that helps them engage in very substantive conversations with customers where they can act like true diagnostic consultants how to expand the testing. And because now they have these relationships because they have enough customers, they can call on the average customer 10 times over the course of the year. And that's what we achieved in 2016. We see nice – that combined with professionalism and the data that they have at their disposal on our innovation portfolio, we see nice returns on that. So, it's an art, but we're pleased to be able to do it and expand our constant currency operating margin target. Jonathan Block - Stifel, Nicolaus & Co., Inc.: Okay. Great. Thanks for your time, guys.

Thank you. Our next question will come from the line of Nicholas Jansen with Raymond James & Associates. Your line is open. Nicholas M. Jansen - Raymond James & Associates, Inc.: Hey. Congrats on another excellent quarter. I just wanted to talk a little bit more about the gross margin and particularly with the reference lab. The strength that you guys have noted in terms of kind of accelerating revenue growth there, I would assume that that has your – one of your highest incremental gross margins dropdown from an incremental test perspective. So, if I run the math, if one-third of your total revenue is coming from this highly incrementally profitable business, you can get to your 50 to 100 basis points of kind of margin target expansion just in that business alone almost. And so, I'm just trying to reconcile how we should be thinking about the rest of the business that's also growing double-digits, that's good margin, when we think about the long-term opportunity to expand beyond the 50 to 100 basis points that was reiterated today. Thanks.

Yeah. I do think we see good potential that flows from the incremental growth, as you point out. I think that the – that is offset to a degree by some of the investments that we're talking about and – which is supporting the long-term growth of the annuity. And on balance, we think that yields the outcome – the outlook for 75 to 100 bps is – of improvement this year is very reasonable in that context. And that's how we look at it kind of in an integrated way. So, I think we're acknowledging that there is good gross profit improvement potential, particularly for growing the recurring CAG modalities at a good rate. And we anticipate continuing to improve on the lab front as we grow. And so, I think we're aligned with that. It's just, it really comes back to, I think, fundamentally, how we are choosing to manage the business in the context of the growth potential that we see for the company. And we are going to balance margin improvement with reinvesting towards the long-term growth potential, and we think that's the way the company has been running for a long time very successfully. And we continue to see, particularly with the innovation pipeline that we have and the global market opportunity that continues to grow, a lot of opportunity to continue on that path. So, that's how we're choosing to manage the margin equation.

Yeah. Let me comment a little more about the lab. The lab is a very, very operationally intensive, hour-by-hour type of business, very different than our other businesses. And we are good, and we have the opportunity to get a lot better. And we are making systems and other types of investments that will be leverage-able over time. And it takes a while to roll those out in our different geographies. And we will get very good returns on that. Our primary goal here with the reference lab is to be able to serve the customer consistently and with quality. That is the number one thing that customers care about. They care about that before they care about an advanced test. So, that's table stakes. And so, we want to make sure that we are world-class in that capability. So, I would say with regard to the reference lab, we see long-term, very significant gross margin expansion in the reference lab, but it happens over time as we both get the leverage but also prioritize the customer experience.

I think Jon is making a very important point, just to give you a sense of maybe the tone of the business right now and how we're managing things. We're growing very, very quickly. So, to have the kind of consistent double-digit organic growth in our reference labs, to execute that well, our number one priority is to make sure that we have flawless turnaround times and the capacity to do everything that we need to do to support our customers. And it's not to say that we're not trying to improve as we grow, but that's our first priority and that's certainly where the business context is now. So, on balance, I think we've got a reasonable outlook and we'll continue to try to perform well and deliver against that.

And what it means is there's a lot of long-term runway. It means that the runway is there for many years to come. And it comes back to the enduring opportunity we see not only on the top-line growth but on the margin expansion. It's an enduring number. It may not be as much as you want in any one particular year but it has a long runway associated with it. Nicholas M. Jansen - Raymond James & Associates, Inc.: Thanks for the color. And then just quickly on the market stats. I know the industry faced a very challenging first quarter comparison, but the data you presented and certainly one of your largest peer also presented kind of a decel. And I'm just trying to – how do we think about, is this just a comp issue, or is there something perhaps a little bit going on in the end market after two or three years of pretty rapid growth off of the lows? Thanks.

I really appreciate that question, too, and we measure this with every data source that we can get our hands on, some of which are proprietary to our own systems, and some of which are external validations of all different kinds. And the net of that is we really do not see a change. We don't see a deceleration, we don't see an acceleration. We see the trends that we have seen over the last several years are intact, the same rate. I think the so called deceleration that you saw in Q1 was really a comp issue because, as Brian said, you take the average two year stack growth, it was 6.8%. So...

6.9%, actually.

6.9%. Yeah. So, I think that you take the two years, add them together, and divide by two. So, yeah, I think everything that tells us this is kind of steady as you go, 5.5% to 6.5% same-store sales growth market at the practice level – of course there's a little bit of net practice formation that adds to that, diagnostics is growing faster, all those things, but really kind of a steady – as far as we can tell, it's steady. Nicholas M. Jansen - Raymond James & Associates, Inc.: Thanks. Congrats again.

Thank you. Our next question will come from the line of Mark Massaro with Canaccord Genuity. Your line is open.

Hey, guys. Nice quarter and thanks for the questions. The first one is a two-parter, just to clarify on the investments you're making. The extra 45 people in the field, how many of those are going to the so-called white space versus going into an existing territory? And then the second part of that is on the lab capacity. How much of that is going to service existing products versus scaling for the future?

It's mostly greater coverage in existing territories, and a small part of it is white space expansion. And the capacity is really to support the core lab, the existing products.

Great. That's helpful. And then, my second question is on the international launch of SediVue. Can you just speak to some of the opportunities and challenges? The number dipped a bit sequentially. My guess is that might be a timing issue because you have reiterated your goal for 2,000 for the full year. So, could you just speak to maybe how many placements were in North America versus international in the first quarter?

There were only 47 placements in international. So the bulk of that was North America placements. And just for clarity, Mark, we very consistently – if you go back over time and look at our premium instrument placements, Q1 is typically less than 20% of the full year number. And so that, it's very much aligned with our outlook for 2,000-plus placements. We feel we're right on track and it's very consistent seasonality that we've seen in our business for a number of years.

And what I would say about – we think in the near term, SediVue is mostly a North American product, a more sophisticated market and such, but the opportunity we have internationally is they could sell a SediVue or they could sell a Catalyst and get much higher consumables. So, our teams are still very focused on Catalyst placements, and that's higher economic value or ROI for them. So, SediVues are typically in the more sophisticated markets that are add-ons to existing customers, but I think you're going to – and we haven't completely rolled out SediVue internationally – it's going to occur over the course of the year. And so – but I think you're going to see it being mostly in the next couple of years, mostly a North American opportunity whereas Catalyst One is the international opportunity.

Great. Thank you.

Thank you.

Thank you. And our final question will come from the line of David Westenberg with C.L. King. Your line is open. David Westenberg - C.L. King & Associates, Inc.: All right. Hey. Thank you for squeezing me in, and happy Friday.

Thank you. Appreciate it. David Westenberg - C.L. King & Associates, Inc.: So, I'm going to stay away from the margin for you guys, and then just want to talk real quickly about capital deployment strategy. You've been buying back shares a lot in the last year, couple years. Is that still a primary focus in your capital deployment strategy?

Yes, we're comfortable. We've had a very successful program. We've bought back $3.2 billion worth of stock at an average price of $27 a share over time. So, this has been a long-term strategy that's had very good outcomes. We look at this on an ongoing basis. We try to understand our business strategy and the intrinsic value we see in the company, and to the degree that we have cash flow beyond the investments in the core business that we're generating, if we think there's value in share repurchases, we'll continue to allocate capital that way. That's been our past practice and we continue to have that level of confidence and that's what we were signaling today. David Westenberg - C.L. King & Associates, Inc.: Got you. All right. And then can you talk about, it looks like a little bit of a low volume quarter in terms of veterinary practice volumes, but reference lab and consumables were pretty – you had pretty much a blowout quarter there. Can you talk about how volumes correlate on a quarter-to-quarter basis with your consumable and reference lab businesses?

Well, as you can tell, it's not that great a correlation. I think, it's because we're expanding the diagnostic category; whereas, the clinic revenue is the entire revenue of the clinic of all customers, whether they are customers or not. Diagnostics is typically 15% of the total and a growing percent. So, there are going to be some disconnects between our innovation-based market expansion strategy in the diagnostics and software categories versus the entire practice revenue growth.

Yeah. When we report the market numbers, that's a same-store number for all sales in the clinic, and we believe diagnostics, itself, in the market is growing 1.5 to 2.5 points above that when you add in practice formation and our – the fact that diagnostics is growing quicker. And, of course, we're growing faster than market. So, I think those are the dynamics that contribute to the differences. David Westenberg - C.L. King & Associates, Inc.: Okay. Perfect. Have a good weekend.

Great. Thanks.

Okay. Thank you. I think that concludes the call. We appreciate all the questions. Again, I just want to thank everybody who dialed in And, again, congratulate our IDEXXers around the country and around the world for a great quarter and pursuit of the purpose to be a great company, that creates exceptional long-term value for our customers, employees and shareholders by enhancing the health and well-being of our pets, the people who love them, and livestock. Thank you very much. That closes the call.

Thank you. Ladies and gentlemen, that does conclude you conference call for today. Thank you for your participation and for using AT&T Executive TeleConference Service. You may now disconnect.