Good morning. My name is Melissa and I will be your conference operator today. At this time, I would like to welcome everyone to the Sysco Reports Second Quarter Fiscal 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Mr. Neil Russell, Vice President of Investor Relations, you may begin your conference.

Thanks, Melissa. Good morning, everyone, and welcome to Sysco's second quarter fiscal 2016 earnings call. Joining me in Houston today are Bill DeLaney, Chief Executive Officer; Tom Bené, our President and Chief Operating Officer; and Joel Grade, our Chief Financial Officer. We welcome Tom to our quarterly calls and look forward to his comments in just a few minutes. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations or predictions of the future are forward-looking statements and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes but is not limited to risk factors contained in our Annual Report on Form 10-K for the year ended June 27, 2015, subsequent SEC filings, and in the news release issued earlier this morning. A copy of these materials can be found in the investors section at sysco.com or via Sysco's IR app. Non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the applicable GAAP measures are included at the end of the presentation slides. They can also be found in the investors section of our website. All comments about earnings per share refer to diluted earnings per share unless otherwise noted. To ensure that we have sufficient time to answer all questions, we would like to ask each participant to limit their time today to one question and one follow-up. At this time, I'd like to turn the call over to our Chief Executive Officer, Bill DeLaney. William J. DeLaney - Chief Executive Officer & Director: Thank you, Neil, and good morning, everyone. This morning Sysco…

We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Zack Fadem with Wells Fargo. Your line is open.

Hi, good morning. So, question on local cases. With local cases up about 3% in the quarter, I'm hoping you can provide some color here in terms of new customer growth versus higher share of wallet for existing customers? And over time, do you think you can grow local cases in excess of the market rate? William J. DeLaney - Chief Executive Officer & Director: Hey, Zack, it's Bill. I'll start and let Tom kind of give you some color from his perspective. We've historically been able to take share year-in and year-out and we do that both on the local side of the business as well as the corporate side of the business. So, yeah, I would expect that we would continue to take share. Obviously, what Joel referred to in his comments is we're trying to do that in a more disciplined way as we go forward here, so that we give more of a flow through to the bottom line. The way I would look at the local case growth is I talked about the lever of accelerated local case growth. The context there is we've had, I think, seven quarters in a row of local case growth, and the last few have been right around 2% or more. So that lever is relative to where we were in the last two years or three years or four years as we were going through a lot of our change and some pretty tough macro economics. So that 2% to 3% range, I think, is what we're targeting. I think there's going to be some quarters where we're at the lower end of that range and there will be some we're at the higher end of the range. I think 2% to 3% is very solid growth if you look at what the forecasts are for the industry. But I'll let Tom speak to generally where it's coming from. Thomas L. Bené - President & Chief Operating Officer: Yeah, thank you, Bill. I would just add we are seeing strong trends in restaurant traffic and restaurant sales, so that's certainly helping. But we're really focused on promotional activity that actually drives new business. And also, if you think about some of the tools that we shared at the Investor Day around how we improve our penetration, we are seeing improved penetration with our local customers, driven primarily by some of those initiatives, whether it's some of the local products I've been talking about, some of the innovation we've launched, or even some of the additional services we're providing those local customers. So we see good performance coming out of them from a variety of areas and believe we'll continue to see that kind of growth.

Great. And just, you had discussed a more rigorous process towards expense management. Joel, I'm hoping you can elaborate a little bit more on this in terms of potential focus areas and whether this would be above and beyond what you laid out at Investor Day. Joel T. Grade - Chief Financial Officer & Executive Vice President: Sure. So couple of comments on that. Number one, the way I think about those types of costs, and I think we've talked about this at other places, we think about it from the standpoint of processes, from people, from technologies, from the types of investments that we put into our company, again, in terms of how we think about prioritizing items. So in other words, one of the key things I called out in here is the ability to really prioritize and then focus on those spends that are going to drive the, again, ultimately what's better for our customers. And so I think the – some of those things that we put in place, for example, are different committees to review and focus on technology spend, for example, and the ways to have, again, a very tight process for making sure that we're focusing on those projects that drive, again, the best results primarily and focused on the customer. So, I would say, I mean, again, there's a lot of rigor around that. And in terms of your – second part of your question, again, all I can really say to that I think is that we certainly will continue to focus on driving that, certainly with the deflation we're experiencing and the fact that our gross profit dollars are harder to come by. That increased focus on expenses is important. And so, again, as I mentioned I think in my…

Your next question comes from the line of Stephen Grambling with Goldman Sachs. Your line is open. Stephen Grambling - Goldman Sachs & Co.: Hey, good morning. Thanks for taking the question. I guess just a follow-up on, I think there was a comment on deflation making gross profit dollars a little bit harder to come by, but it was also a gross margin benefit from a rate standpoint. Can you just elaborate on how deflation impacted the P&L as the quarter progressed? And if it's going to continue, do you anticipate any change in the way it impacts the business? William J. DeLaney - Chief Executive Officer & Director: Well, deflation impacts the P&L. I don't know that there was a big sequential impact, a lot of variable around the sequential impact as the quarter progressed. What we're saying is we saw a pickup from the first quarter to the second quarter, we're seeing some similar trends here in January. And we kind of felt mathematically that would begin the wrap. We began to see this, if you recall, back in March and then the fourth quarter of last year when the inflation fell off. So we thought just from a wrapping perspective that we would see a little more – little less deflation as we got into the second half of the fiscal year. And I would say what we're telling you today is it's still there and we probably will expect to see it at least through the end of the quarter. It affects you in different ways, obviously. On the positive side, generally when our costs go down, we are able to pass that along to our customers. And that's good for them, especially as they are dealing with some of their labor challenges. Your percentages…

Your next question comes from the line of Andrew Wolf with BB&T Capital Markets. Your line is open. Andrew Paul Wolf - BB&T Capital Markets: Hi, good morning and good quarter. Back to the gross profits. So, just sequentially, they grew better even as sales got worse because of accelerated deflation. So I've heard the explanations around mix and so forth, but at least from my view, it looks like the deflation is at least kind of benign. I mean I know it becomes a headwind. But is there some element to sticky pricing where when inflation was increasing the last three years, it's tougher distributors to pass that through all at once. And is there some element where to some degree it doesn't have to come down quite as fast or do you think everybody is just chasing the business and passing it through right away? William J. DeLaney - Chief Executive Officer & Director: Good morning, Andy, and thank you. You covered a lot there. Look, I think – as I said, I believe the deflation, as you look at gross margin, i.e., the percent to sales is clearly helping. However, as we've said very consistently over the years, it's not an ideal environment to be in. If you look at this business historically, our customers generally are able to pass along a couple of points of inflation to their consumers year-in and year-out, and they generally do. So to one of your points, what you're seeing here a little bit is some of the recovery, what we gave up. When we were dealing with 5 points to 6 points of inflation, you can only pass along so much of that so quickly and it's only appropriate to pass along so much of that so quickly. So when…

Your next question comes from the line of Edward Kelly with Credit Suisse. Your line is open. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning, guys. Congratulations on a nice quarter. William J. DeLaney - Chief Executive Officer & Director: Hey, Ed. Edward J. Kelly - Credit Suisse Securities (USA) LLC (Broker): Hey, Bill, can I just start with maybe a big picture question? So last quarter, you sort of walked us through how the underlying business was better than the bottom line results, so to show it, right? And that was, I think, more around like corporate costs and stuff. And now this quarter you've got, it's like your strongest EBIT growth quarter in sort of recent memory. Despite deflation, you've got case growth and better profit per case and lower expense per case that are all lining up. Do you feel that you've kind of reached that inflection point that you were hinting at last quarter? I guess what's the big picture takeaway from this quarter, if there is one at this point. William J. DeLaney - Chief Executive Officer & Director: Ed, I think it's a little bit like golf. We got a little bit more out of it this quarter than we did in the first quarter. I think when I talked about that first quarter, that's when we really talked more about the U.S. Broadline than we have in the past. I wanted you and the other investors to understand the quality of the underlying quarter. I think part of what we're seeing, we've done some work on this, is the trajectory of the corporate spend coming out of last year, coming out of the proposed merger that ultimately was terminated, we still had some – and we still do…

Your next question comes from the line of Meredith Adler with Barclays. Your line is open. Meredith Adler, your line is open. Your next question comes from the line of Kelly Bania with BMO capital. Your line is open.

Hi, good morning. Thanks for taking my question. Lots of questions on gross margin. But I was just curious, the factors that you called out, category management, local case growth, your private brand, deflation, is that order of magnitude the right way to think about it? I mean, do you kind of go item by item of those four factors and say here's kind of what the impact was? And just wondering if you're willing to share any more detail with us on those. William J. DeLaney - Chief Executive Officer & Director: Kelly, just to be clear. Is that the way we think about what?

The impact of those factors on gross margin. Category management, the local case growth, the private label penetration, and the deflation. William J. DeLaney - Chief Executive Officer & Director: Yeah, well, again, just for no other reason than to make me feel good, I think about gross margin, but I also think even more about gross profit dollars. So we're trying to address both here. You pay your bills with the dollars. I think on your point on the margin, certainly deflation of this magnitude is meaningful. It's impossible to quantify what that is, but we would be less than genuine if we didn't say that was contributing to some of the margin improvement. But I would quickly go to the other things we talked about here today, which is the importance of local case growth. Again, it doesn't have to be faster than the corporate. It just needs to be significant. The importance of growing the brand, and that's easier to do when you're growing your local cases. And the maturation of the category management work that we're doing, along with some of the work that Tom is continuing to develop here on revenue management. But I'll – you could talk to ten people or 100 people in Sysco and probably get a little bit different answer on that question. so I'll let Tom and Joel jump in here. Thomas L. Bené - President & Chief Operating Officer: Well, again, I think the question was really more around is the prioritization of that the way we look at it. I think we look at all of them coming together. At the end of the day, this local customer, if we are meeting or exceeding their needs, we're going to get the kind of growth that's required there. And…

Okay, that's very helpful. And then, I guess, in terms of expense growth, what was the impact of technology spend this quarter on your expenses. William J. DeLaney - Chief Executive Officer & Director: I don't think that we historically have really gotten that detail, Kelly. What I would tell you is we still have some expense growth here at the corporate side. It's planned. And virtually all of it's on the technology side.

Your next question comes from the line of Karen Short with Deutsche Bank. Your line is open.

Hi there. I don't know if this is something that you'd be prepared to answer, but it would help, just because if and when we do return to an inflationary environment, it's just something to keep in mind in terms of puts and takes on a gross margin. So I guess the question is what percent of your sales are priced at cost plus a percentage markup versus a cost plus fixed penny per case? Because obviously, I mean, in fixed penny per case customer, you're going to be benefiting in a deflationary environment from a gross margin perspective. William J. DeLaney - Chief Executive Officer & Director: Yeah, Karen, good morning. I would just say that you can presume that when we talk about our corporate customers, those large customers, those are all on some type of a cost contract. Some are markups, some are margin, some lines are done dollar per piece, whatever, dollar per pound. And on the local side, a lot of that is priced by the MA (45:36). Some of it is contractual, but we have and we don't plan on getting into a lot of detail on how we price customers.

Okay. And then I guess just switching gears, two questions. I guess the first is what do you kind of cut back on in terms of CapEx this year in terms of your coming in at the low end of the range? And then the second question I had is just obviously your stock is reacting to your strong results this morning. I'm just curious how you think about the remaining buyback in light of the fact that, obviously, stock was at a better entry point during the quarter than it is now? Joel T. Grade - Chief Financial Officer & Executive Vice President: So I'll take first one and then I'll maybe clarify your question on the second one. The first part of the CapEx, I don't know that I'd really think about it as something we're cutting back on. I think the way I would just say it is we target our CapEx spend. It's not based on some fixed number that we need to achieve or not achieve, but it's really truly driven by the needs of the business. And so I think the way I would just think about that is that as we've kind of talked about before, we have a pretty rigorous process in terms of identifying and prioritizing our capital spending needs. And I would just say it to you this way that the way we look at the required spend this year for what our business is needing just happens to fall near the lower end of that range. So again, I don't necessarily look at our target as something that we have to achieve our some number we have to get to. It's just based on the needs of our business and we have the ability to flex as it relates…

Your next question comes from the line of Mark Wiltamuth with Jefferies. Your line is open.

Hi. Good morning. I wonder if you can give us an update on how things are going at SYGMA on improving profitability there? And also, just a little more detail on what you're talking about there for the fourth quarter comparisons, why fourth quarter is going to be a difficult comparison for you? William J. DeLaney - Chief Executive Officer & Director: I'll speak briefly and certainly let Tom give you a little more color. SYGMA, as we've said, is in somewhat of a turnaround mode and we are continuing to see some better trends there as it relates to the customer mix and the expense management and that kind of thing. I would tell you, there's still plenty of work to go there. But we're encouraged with the beginning some of trends that we're seeing, but we're not there yet. I'll let Tom take the rest of SYGMA and then I'll let Joel talk to you about the fourth quarter Thomas L. Bené - President & Chief Operating Officer: The only thing I'd add on SYGMA is we're very focused on specific customers and profitability, as well as improving our operational excellence in that business. And so, the combination of those two things is how we're going to improve and get this thing back on track. We've had, certainly over the last year, some challenges regarding drivers and driver retention, which is something that we've come out of and we're in a much better place now than we probably six months ago. But it's really those two areas. Making sure we've got the right customer mix and also that we're operating at the highest levels.

Okay. Joel T. Grade - Chief Financial Officer & Executive Vice President: Yeah, sure, Mark, it's Joel. The question on the fourth quarter. I think the comment there really relates to the fact that last year in the fourth quarter our adjusted operating income grew nearly 6% and certainly we picked up nearly $30 million of operating income from the prior year. And so I think the comment was really focused around the – again, I often talk about growth on top of growth, and certainly as I mentioned in my part of the script, I said we're certainly feel very good about how we're looking towards achieving our fiscal 2016 planned objectives. But, again, it's really more of a call out of the fact that the fourth quarter last year, we had quite a strong performance, and that's where the comparatives are up against what we're referring to.

Okay. Thank you.

Your next question comes from the Meredith Adler with Barclays. Your line is open.

Hi, this is Sean (50:50) on for Meredith. How's it going, guys? William J. DeLaney - Chief Executive Officer & Director: Good.

I have a question on lower commodity costs. And to what extent that's maybe resulting in restaurants, maybe investing some of that into being more promotional versus them using it to offset high labor expense? I think that's been somewhat of a driver of case growth to some extent. William J. DeLaney - Chief Executive Officer & Director: That would be hard for us to assess and probably not even appropriate. I think Tom sees more customers than I do, but I see a few, and I think this labor cost thing is at the top of mind for them right now. I know it's been the subject of some recent industry meetings. And I think that's where it's helping them. But, Tom, do you have anything to add to that? Thomas L. Bené - President & Chief Operating Officer: No, not really. I can't say there's a big theme around more promotional activity that I'm seeing. They have lots of concerns out there right now, not the least of which is the labor environment.

Sure. Makes sense. Another question I have too is just on the driver or maybe the drivers of non-Broadline inflation, just because it seems like there was deflation at Broadline at about negative 1.9%, which is approximately 80% of business. So I'm just wondering what's kind of driving the inflation for the remainder of the business? William J. DeLaney - Chief Executive Officer & Director: Well, I think what you're saying really is the deflation at the U.S. Broadline's driving the deflation. And some of our other businesses, to Karen's question on cost, SYGMA has more of the cost per piece, that type of fee, type of pricing, so that's not going to be impacted as much. Some of our other guest supply, different type of product line altogether, so Canada not as much. So I think all we're saying is the U.S. Broadline is 80% of our revenue stream, and that's where the bulk of the deflation is.

Your next question comes from the line of Vincent Sinisi with Morgan Stanley. Your line is open. Vincent J. Sinisi - Morgan Stanley & Co. LLC: Hey, great. Good morning, guys. Thanks very much for taking my question. Just wanted to circle back a second on deflation. Bill, you said earlier, I know that something to the effect of deflation, of course, remaining a headwind. You initially thought it might subside kind of in the back half of the year, but still kind of there. So just to clarify, are you guys thinking for the next quarter or two, that kind of very similar levels to what you are seeing today, which I guess is similar to the quarter that was just reported? Or do you think that it could get a bit more of a headwind before then moderating? William J. DeLaney - Chief Executive Officer & Director: Vinnie, I wish I knew. I think all we're signaling is we think it's going to be with us at least a quarter or two longer, at least. And it was almost two points in the U.S. Broadline this past quarter. I don't know that it's going to get a whole lot worse than that. We'll just have to see. But I think the real message, and let me be as clear as I can be, is that I think probably if I'd been talking to you, and I was six months ago, I would have thought by the fourth quarter we would've been back more to neutral, and that's really not our assessment right now. But I'm not necessarily saying it's going to get worse. I'm just saying that it's probably not going to get a whole lot better for another quarter or two. Vincent J. Sinisi - Morgan Stanley…

Your next question comes from the line of Ajay Jain with Pivotal Research Group. Your line is open.

Yeah, hi, thanks for taking my question. I was wondering if you could talk more specifically about the ongoing benefit from fuel in terms of the net benefit. If you can comment on the actual earnings impact in Q2 year-to-date and also your outlook for fuel, maybe in the back half of the year after you've netted out the hedges that you've got in place and along with the impact of lower spot prices. So any kind of quantification would be appreciated. Thanks. Joel T. Grade - Chief Financial Officer & Executive Vice President: Sure, I think from a quantity perspective, I mean, we look at that as a couple of pennies per case on the fuel side in terms of the impact on what that is. Obviously, as I talked about in my area, certainly we're taking advantage of the fuel prices where they are today, and buying. We typically have executed forward buys and we continue to do that. And in fact, we continue to increase the percentage of our fuel consumption that has really brought a head on. And so that's certainly something, again, that we see. And I – we're not in this thing in terms of kind of speculating on fuel prices. It's something we certainly take advantage of where we have an opportunity both from a cost certainty perspective and then what we feel is just a good solid fuel prices. So, again, as I mentioned in my script, we're certainly – a fairly sizable portion of the fuel we've bought forward for over the next year. And so certainly we anticipate some continued benefit there.

Okay. But on a year-to-date basis, how would you say the pennies per case improved and how does that translate into earnings? Joel T. Grade - Chief Financial Officer & Executive Vice President: Yeah, again, it's pretty consistent. Again, as I pointed out, we think of it as about a couple pennies per case, that's impacted overall.

Your next question comes from the line of John Heinbockel with Guggenheim Securities. Your line is open.

Hey, guys. So wanted to touch on private brand and gross. When you think about the ability to use the private brand portfolio to drive share. And I know there's a lot of things that you're offering to your customers, but just maybe isolate that one. How effective can that be at bringing on new customers? And I guess part of that is the inertia that they might have to the brands that they're using today. And do you think you're using those brands as effectively as you could? Are there things that can be done maybe a little bit differently to drive – to use those brands to drive some increased share gains? Any thoughts, particularly from Tom on that? Thomas L. Bené - President & Chief Operating Officer: So I would maybe reiterate a few comments I made and maybe add a few points. So the Sysco brand, if you think about the Sysco brand, it's a value for a couple of reasons. One, generally, the cost to our customers is a little less than some of the national brands. So there's a natural benefit for them. But more importantly, we're very focused on the quality of these items. And I had mentioned innovation. So we're always looking to ensure that the Sysco brand items are, in fact, not only value added, meaning they bring increased value to the customer, but that they're also driving kind of the base business components that these customers need. So I'd say, we're getting everything we can. I think we feel pretty good about where we're at today. We feel like certainly we're not out of runway. But I think the more we can continue to focus on quality products, bringing innovation to those items, and making sure that we keep them in front of our customers. And we use – I think we talked about it at the Investor Day, the business review process that we use. It's a great way for us to actually do cuttings of our products, allowing them to see Sysco brand and compare that to something else they might be using. And it's how we spend a lot of that time is to help those customers see the value that's there and the opportunity that they have to improve their overall profitability by using the brand.

All right. And then maybe for Bill, if you think about some bigger secular trends, right? So local, private brand, CatMan. I mean you would think, and I know this isn't fully built in your plan, but you would think that there may be a good chance here for secular gross margin rate to be up pretty consistently. Obviously, if the top line is healthy, GP dollars could grow at a nice rate, maybe even higher than what you've targeted over the last three. How do you think about that? William J. DeLaney - Chief Executive Officer & Director: I'm all for it, but it's a little early to make that call, I think, John. So I think your thinking always is logical. We're six months into this three-year plan. I would just reiterate some things we talked about in September. The overall industry, I would say, the overall environment and the outlook for our customers is better today than it was two years or three years ago. Now, it goes up and down by quarter. You can actually see in some of the stuff when the stock market goes down, some of the NRA numbers fall off the next month or next quarter, so. But I think if you look at it secularly and go back two years or three years, we're in a better place. So that's a positive. It's still incredibly an acutely competitive world out there, so we need to be very responsive to that. And I would just echo what I've been trying to articulate here over the last two years or three years, but in particular the last several months post the merger termination, we're extremely well positioned today because of all the work that we've done over the last two years, three years, four years on the commercial side to compete effectively, do the right thing by our customers, but also grow in a disciplined way, as Joel talks about and manage our margins. So, if you look at those four levers, we're talking about improving how we manage it. Ideally, we'll at least hold margin over the next two years or three years. Right now we're up. Hopefully, we will grow it, but I certainly feel we're much better positioned to manage it well than where we were two years, three years, four years ago.

Your next question comes from the line of John Ivankoe with JPMorgan. Your line is open.

Hi, thank you. At this point, just a quick one for me. A follow-up on the fuel question. I think you kind of have a cost of fuel that's both embedded in your cost of sales and your operating expenses. So correct me if I'm wrong about that. But my question was, your suppliers that deliver food to you, how much fuel savings maybe was embedded over the past couple of quarters and what you anticipate over the next couple of quarters just that their delivery costs are less to you and therefore your price of product could be lower and that could actually be helping your cost of goods told, if you thought about it in that way. William J. DeLaney - Chief Executive Officer & Director: Yes, it's a good question, John. What we're speaking to is really our outbound cost of fuel. It's a little harder and we really don't get into that level of detail in terms of our components of our cost of goods. But let me say it this way, lower fuel is good. Okay? It's generally good for multiple reasons. One, on the margin generally people get some more discretionary income and they'll spend it, historically spend it more going out to eat. Now, I will say this, we really haven't seen a lot of that until perhaps lately and we don't have a lot of hard data on that. So the most powerful thing on the fuel is to the extent it translates to greater discretionary income and the consumer uses it to go out to eat, that's a good thing for us. I haven't seen quite as much of that, but we're hopeful that we'll see more. But, no, you are absolutely right, it helps us on the cost of goods, and to Joel's point, it helps us on the outbound. We kind of weight average the outbound. So it's definitely a modest tailwind and we're taking advantage of it and hopefully it'll stay that way.

Thank you.

Your next question comes from the line of Greg Badishkanian. Your line is open.

Great. Thanks. Yeah, just a quick one. You mentioned that the competitive environment – or the environment is very competitive. And I'm just wondering has that changed any over the last few months? Is it pretty similar? Because obviously you picked up some share, so I'm just wondering if you've noticed any change there or who you think you're taking market share from? Is it broad-based or maybe there's a regional or more national players that you're taking that share from? William J. DeLaney - Chief Executive Officer & Director: What we've been able to grow is, as I said historically, take share for many years. And certainly we've got the local case growth moving again here the last several quarters. We don't have the data for 2015. My sense is we probably have taken some share. I think a lot of the larger multi-regionals are doing well. And so if I were to conjecture, which is always a dangerous thing on calls like this, my sense is that some of the better operative larger folks are taking share, and it may be coming from some of the smaller players. But the bottom line, I think, in this business is good operators are going to take share. Large, small, good restaurant operators are going to continue to grow and do well, whether they're independent or corporate owned. And so I think our overall point of view would be the competitive environment remains very acute. It remains very similar to what we've seen the last two years or three years. And the best operators, both in terms of the customer base as well as on the distribution side are going to do the best.

Great. Thank you. William J. DeLaney - Chief Executive Officer & Director: Thank you.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.