Welcome all to the STERIS fiscal 2016 Third Quarter Conference Call. All lines will remain in listen-only until the question-and-answer session. At that time, instructions will be given should you wish to participate. At the request of STERIS, today's call will be recorded for instant replay. I'd now like to introduce today's host, Julie Winter, Director of Investor Relations. Ma'am, you may begin.

Thank you, Ron and good morning, everyone. On today's call, we have Walter Rosebrough, our President and CEO and Michael Tokich, our Senior Vice-President, CFO and Treasurer, as usual. I do have a few extra words of caution before we open for comments from management. This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission or rebroadcast of this call without the expressed written consent of STERIS is strictly prohibited. Some of the statements made during this review are or may be considered forward-looking statements. Many important factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation, those risk factors described in STERIS Plc's, STERIS Corporation's and Synergy's previous securities filings. Many of these important factors are outside of STERIS' control. No assurances can be provided, as to any result or the timing of any outcome, regarding matters described in this webcast or otherwise. The company does not undertake to update or revise any forward-looking statements, as a result of new information or future events or developments. STERIS Plc and STERIS Corporation SEC filings are available through the company and on our website. Adjusted earnings per diluted share, segment operating income and free cash flow are non-GAAP measures that may use from time to time during this call and should not be considered replacements for GAAP results. Non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision making. STERIS' adjusted earnings per diluted share and the segment operating income exclude the amortization of intangible assets acquired in business combinations, acquisition-related transaction costs, integration costs related to acquisitions, and certain other unusual or non-recurring items.…

Thank you, Walt and Mike, for your comments. Ron, if you could please give the instructions for Q&A, we can open the lines for questions.

Thank you, speakers. Speakers, our first question is from Matthew Mishan with KeyBanc. Sir, your line is open.

Hey, good morning. Thank you very much. Good morning, Walt, Mike, Julie. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning, Matt. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Good morning, Matt.

Hey. I just wanted to start off with you've maintained your sales and EPS guidance versus your December call. I was hoping you can go through some of the puts and the takes to that guidance. Obviously, I think the quarter was a little bit better than I would have thought. And then you also have the impact of the pound, which I think is a little bit worse then you guys have previously forecasted? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yeah. I would say, Matt, the biggest change for us is the favorable tax rate. We were anticipating more of a normalized 25%-ish tax rate. We actually came in just under 22%, so that's about a $0.03 or $0.04 change. And as we talked about the – we did have the tax extenders in there, we also had some other favorable discrete item adjustments, such as Section 199 deductions, which we were not anticipating. So it is more, I guess of a timing issue, obviously third quarter came out higher than our expectations, but for the full-year, there is no change. Walter M. Rosebrough - President, Chief Executive Officer & Director: And Matt, I would say operationally, as you know we've been working to try to level our shipments throughout the course of the year. And we have been increasingly successfully doing that. And a couple of million dollars going either side of a particular shipping date can make a $1 million or $2 million swing. So we're not suggesting a significant variation for the total year.

Okay. And then as I look at your new business segments, and in particular the margins. I think the one major surprise for me was I think the strength in the Healthcare Products margin and maybe the lower margin in kind of Healthcare Specialty Service. And I think the one piece that is moving from one to another is the IMS piece, and it looks as – I think about a year or two ago you had been suggesting that that was going to be moving more towards company average. And it looks as if that was coming in a little bit below that, was that maybe more of a drag to your Healthcare margins over the last year, year-and-a-half than maybe we had thought? Walter M. Rosebrough - President, Chief Executive Officer & Director: No, Matt. I would say, two points on that, I guess. It's hard for me to know what you thought. But in terms of, I'll call it, over time, what has happened, there are two kind of significant moving parts, there is a lot of little ones, but two significant ones. There is about $50 million business that moved from Synergy's HSS business over to our Health Products business, the products business, that did not materially change the overall effects, so if anything, it would have averaged it down a little bit. And so we just had a very strong and continued strong period, if you will, on the Healthcare Products piece of the business, both the surgical and the IPT business had good solid capital shipments, which of course then covers more overhead, and they also had good margins in the consumable side of the business. So that was a – that's purely any differential you see there is purely better performance on an…

Okay. That makes a ton of sense. And if I can just squeeze one follow-up question in on that one regarding the North Shore Supercenter, could you just remind us of the scale and the timing of that contract and the ramp there and are there costs associated with that contract ahead of the actual realization of sales? Walter M. Rosebrough - President, Chief Executive Officer & Director: Yeah, Matt, two things. First of all, orders of magnitude, I think, were public with a number of roughly $25 million a year, when you get into full run rate in that facility, that revenue, we have not yet started. So the number right now is zero. And as Adrian mentioned in our last meeting, we're looking to get that started sometime in this calendar year 2016. There have been, New York is fairly well known for tough place to do construction and there are commonly delays, and we have seen those delays, but nothing different than what Adrian talked about six weeks ago. In terms of costs, we are incurring costs as it relates to that as we speak. And so that's one of the investments that we are making.

All right. Thank you very much.

Speakers, our next question is coming from the line of Dave Turkaly with JMP Securities. Sir, your line is open.

Thank you. Just to go back to the comments on the gross margin side, if I could for a second. I mean, obviously, you've got a lot of moving parts, we know, you have more OUS mix now, but do we think kind of maybe 39%, 40%is a better estimate of what you're going to look like combined on a go forward basis or how should we think about that? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yeah, Dave, this is Mike. At this point, I would say it's too early to tell. We are still working on it, we've only had two months of mapping data coming over from Synergy. So we will provide more indication of guidance, once we have our full year plan we'll have a better idea of what that gross margin, if there is a change to that. But obviously, there is fluctuation between gross margin and SG&A, but again focus on EBIT margin. Again, we don't care where we get the benefit from, EBIT margin is really what our bottom line focus is.

Got you there. And then I guess secondly, 1% pricing gain is fairly rare, but I would be curious to know where you're seeing that? And I guess sort of if there is an update sort of on the overall environment out there on the Healthcare side, if that's where it's coming from, any thoughts on that moving forward? Thank you. Walter M. Rosebrough - President, Chief Executive Officer & Director: We had pricing pretty much across the board, I mean it's not like it was one spot that overwhelmed the others, so. And that order of magnitude any place between 0% on 1% is not a shocking number, that's kind of – if you look over long periods of time on a comparable product basis in Healthcare that tends to be a comparable product basis. And you get most of your pricing in new products and that doesn't show up, quote unquote, in pricing, that shows up in volume. So – on the Healthcare side. On the Life Sciences side, we do tend to see modest pricing – Life Sciences and I just want to say, we do tend to see modest price increases in line with inflation and of course right now inflation is 0.5% or whatever it is. So those kind of numbers are fairly routine.

Thank you.

Our next question is from Chris Cooley with Stephens. Sir, your line is open.

Thank you. I appreciate you taking the questions. Can you hear me okay? Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Chris. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning.

Good morning. Again, congrats on the quarter and I realize there a number of moving parts this quarter with the integration. Let me just maybe start on the cash flow to make sure we're all on the same page and correct there. The reduction in the credit guide, the $25 million there with an additional $85 million, if I'm looking back the numbers correctly here that you spent on expenses and the pension obligation. And then you had I believe the last quarter's call or the update call about $45 million to $50 million in planned expenditures, I think that now look closer to $100 million. So I just want to make sure I understand, what the incremental $50 million was that gets you on an adjusted basis back up to $200 million? I understand that the underlying business hasn't experienced any degradation there in its margin or profitability and the outlook is the same, just as we do these one-time add-backs, I just want to make sure we have the buckets correct. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yeah, Chris, there's two factors here. One, as we're looking – the $85 million is looking year-over-year decline. So, there is three, basically three large pieces there, one is the Synergy Health acquisition cost plus other acquisition costs. In addition to that we did have increased payout levels of our annual compensation, and then we did have a pension funding. So the total of those are about $85 million, if you look year-over-year. If you just look at our forecast, which is basically a stagnant number, our free cash flow forecast, as I stated earlier, the breakout was incorrect. We still anticipate about $200 million all-in free cash flow, but then the buckets on how we account for those, either from an acquisition or integration standpoint, we blew that split, if you will, last quarter and now we have the split correctly. That $155 million goes from $155 million to $100 million and the difference really is just additional costs, that we knew about, we just did not properly identify those in last call.

Understood. I appreciate that additional color. Walter M. Rosebrough - President, Chief Executive Officer & Director: On that, if you go back to the S-4, this is not a differential from what our original thinking was on Synergy. So I don't want anyone to think that it's a change in kind of our general thinking about the Synergy acquisition cost. The S-4 was roughly $75 million, I've forgotten the exact number, $74 million-something. And we ended up, we'll spend about $85 million, $15 million of that $10 million difference or more than all the difference is the FTC litigation cost. So we did spend about $15 million more on litigation costs than we thought. Obviously, we weren't expecting to litigate for a year. And then we had some savings actually on the rest of it. So we ended up being about $10 million over. So if you look at our anticipated integration and – acquisition and integration costs and combined, right now, we're thinking we would be roughly $10 million lower.

Money well spent on the litigation side there. Just one other final one for me, if you look at the Life Sciences segment, a little bit stronger than what we would have expected. Understood the consumables portion, but on the capital side, I was a little surprised by that. Can you just walk us through maybe what you're seeing right now on the Life Sciences front more from maybe a kind of 30,000-foot perspective. Thanks so much. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Chris. And I don't think, we're seeing any significant different view of the Life Science capital business than we've seen before that is, order patterns have been fairly consistent and our backlogs are fairly consistent, it's just when you look at any given quarter or any given month, since it tends – it's a small business that comes in relatively large chunks, it tends to be a little lumpier than the rest of our business. So we did have a – we've got a couple of nice quarters now in Life Science Capital. And we've been anticipating that we had – we were weak, six months or so ago, people were asking us why we were weak in Life Sciences, it's basically just the business is fairly steady. Now we have seen a pickup in our hydrogen peroxide product lines. And so we do see that favorably and that's a good profitable product for us, so that's part of the operating profit, operating margin improvement, both the volume coming through the plants as well as the mix to that kind of product line. But other than that that we should say – the other thing that comes through, obviously in total in Life Sciences is the GEPCO acquisition we did. And that is working just as we expected it to, which we expected a good performance and they're performing nicely. So that is pretty much as anticipated as well. But it's a nice pickup. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: And, Chris, just on a year-to-date basis through the third quarter, Life Sciences capital is up 4%, so as Walt said, we know this is a lumpy business, but 4% for the year is good.

Thank you so much.

Speakers, our next question is from Jason Rodgers with Great Lakes Review. Sir your line is open.

Hi, everyone. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Good morning.

Just a question Walt, it's always good to get your thoughts on the hospital spending outlook both in the U.S. and overseas, as well as the UK, areas you might be excited about as well as the areas of concern? Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure. I will start with North America since that's the one that gets the most attention I suppose and we have clearly seen, again, if you go back, we had a couple of years where we basically said it was flat and then maybe a year or so ago we said things looks like they're picking up and last quarter, we said they might be picking up a little better than we thought even or little more favorable, and I think that has continued. So we're seeing nice trends, we're not seeing 20% improvements in, I'll call it, long-term outlook, but clearly our order rates have been quite strong, last quarter quite strong this quarter. We had a good shipment quarter and yet we still increased the backlog. And kind of looking out forward, it still looks pretty similar. In terms of mix, which we're often asked about, I'll call it the replacement business versus the large order business or project business, we have – we kind of saw it moved back to the kind of the normal levels kind of 70-30, 70% being replacement. But we did have some exceptionally, some good strong orders in the month of December that are more project related, so our projects were up a bit. And I don't know the weighted average of, let's say, the last six months, but it have been running pretty much normal and we picked up a little bit in the month of December. So we'll see how…

All right. That was helpful. And just a question on R&D came in at the low 2% as a percent of sales. Is that about the level we should expect going forward or is that something you still have to finalize with your plan? Walter M. Rosebrough - President, Chief Executive Officer & Director: Well, we want to work on that, but you have to – I would say a couple of things. You may remember last quarter, you were asking us about R&D being above normal amounts, which hurt our operating income. And so as we've said before, sometimes R&D comes in lumps and as you're doing a project or building prototypes whatever, you can see $1 million or $2 million run through pretty quickly. So some of that is just temporal ,but the other thing that we have to consider is we're increasingly a service business and so we have that recurring revenue. So when you apply our R&D spend to our total revenue, it looks much different than our R&D spend to the specific revenue, the R&D is applied towards. So as you might expect the businesses like U.S. endoscopy that have a high concentration of new products and very medical device oriented in that and product development dependent. Their R&D spending is much more like what you would see in the other device sectors, in the high single-digits and sometimes in the low double-digit kind of numbers depending on what we have going on. Whereas on the service side, it is effectively zero. So at least at this time, that's how – we actually do R&D in service, but in service R&D, we don't capture it in that bucket, and that's something actually I do want to think through some, we may be able to – we want to think through how we do that, we may be able to give some guidance on that going forward, we'll see, but to the extent we do not capture it on our books as R&D, it just shows as expense.

Okay. And finally, where should we expect CapEx to end fiscal 2016 at and any early thoughts on fiscal 2017? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yeah. We have forecasted $135 million for the combined company for CapEx for fiscal year 2016, and then we will provide guidance in 2017 when we have our conference call in April or May.

Thanks a lot. Walter M. Rosebrough - President, Chief Executive Officer & Director: You're welcome.

Speakers, our next question is from Larry Keusch with Raymond James. Sir, your line is open. Lawrence Keusch - Raymond James & Associates, Inc.: Terrific. Good morning, everyone. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning, Larry. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Good morning, Larry. Lawrence Keusch - Raymond James & Associates, Inc.: So you know, I got a lot of questions coming into the quarter from investors relative to FX and it's not surprising that there is increased international exposure for you guys and the volatility of rate. So it might make sense just to again sort of provide some color on where your FX exposure is in terms of currencies and perhaps give us some thoughts on how you're thinking about FX into the balance of the year? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yes, certainly Larry, this is Mike. One of the issues that we definitely had is what we're comparing to, right. So our year-over-year comparison, as we anniversary the Synergy Health acquisition, our comparisons will get a little bit different and they will shift. And as I said earlier, that will cause our revenue to be more sensitive to fluctuations in currency than we are compared to legacy STERIS, but also cause our bottom line to be less sensitive to fluctuations in currency versus legacy STERIS. So once we get to that point, we will have a shift. That shift has already started, it just we don't have a comparison to measure against. Walter M. Rosebrough - President, Chief Executive Officer & Director: If you look it on an actual basis, Larry, our exposure is clearly relates to the UK pound because as we translate the pound base, because our…

Our next question is from Mitra Ramgopal with Sidoti. Sir, your line is open. Mitra Ramgopal - Sidoti & Co. LLC: Yes, hi good morning. First, I was just wondering if you can help us a little in terms of, as you look at cross selling opportunities now that you have combined with Synergy, are you seeing heightened customer interest and do you need to invest more, for example, in your sales force or you're pretty comfortable with where the levels are right now? Walter M. Rosebrough - President, Chief Executive Officer & Director: Yeah. I have to kind of – well, I guess I would ask a question. Mitra, are you talking mainly about the AST side or mainly about the Healthcare side? Mitra Ramgopal - Sidoti & Co. LLC: Actually both. Both. Thanks. Walter M. Rosebrough - President, Chief Executive Officer & Director: I should have just answered one and gone with it, right. Mitra Ramgopal - Sidoti & Co. LLC: I'm sorry. Walter M. Rosebrough - President, Chief Executive Officer & Director: Just kidding. On the AST side, we were very strong as was Synergy with the multinationals in this space. It does give them more opportunity to think about working with us in a more seamless fashion, so they're happy about that. We pretty much cover North America, and they pretty much cover Europe and Asia. So we don't see a requirement for expansion of sales force based on that; we think we're well-covered. If anything, there might be some modest synergies there, but nothing to – not a big number. You'd never notice, either direction. On the Healthcare side of the business, it's somewhat similar in that Synergy was clearly stronger in the UK market and other places in Europe and they had developed, were…

Speakers, I show no other questions at this time. I'll turn the call back for any closing remarks.

Thanks everybody for joining us today and for your continued support in STERIS. And we'll talk to you next quarter.