Good day and welcome to the Anixter Second Quarter 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Lisa Meers for opening comments and remarks. Please begin when ready, Ms. Meers.

Sure. Thank you, Jennifer. Good morning, and thank you for joining us today for Anixter's second quarter 2016 earnings call. This morning Bob Eck, President and CEO; and Ted Dosch, Executive Vice President and CFO will review and discuss our second quarter financial results. After their remarks, we will open the line to take your questions. Before we begin, I want to remind everyone that we'll be making forward-looking statements in this presentation, which are subject to a number of factors that could cause Anixter's actual results to differ materially from what is indicated here. We do not undertake to update these statements and refer you to our SEC filings for more information. Today's earnings announcement includes both GAAP and non-GAAP financial results, the reconciliation of which is detailed in our earnings release and in the slides posted on our website. In conjunction with today's call, please find a supplemental slide presentation that further details the quarter available on our Investor Relations site, anixter.com/investor. Now, I'll turn the call over to Bob. Robert J. Eck - President, Chief Executive Officer & Director: Good morning, and thank you for joining us today for our second quarter 2016 earnings call. This morning I will discuss our second quarter performance, share my perspective on our end markets, update our progress with the Power Solutions integration and provide our outlook for the third quarter and full year 2016. I will then turn the call to Ted to detail our second quarter financial performance, and provide more detail on our outlook. As you saw from this morning's press release, we delivered earnings per diluted share of $0.62 on an adjusted basis which excludes $33.7 million of operating expense items that Ted will detail in his remarks. Earnings per diluted share of $1.32 compared to prior…

We'll go first to Shawn Harrison with Longbow Research.

Morning, everybody. Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Hi, Shawn. Robert J. Eck - President, Chief Executive Officer & Director: Morning, Shawn.

Bob, I'd like to, I guess, delve in a bit more into EES because your results of improving trends both sequentially and even kind of the commentary year-over-year runs counter to what may be considered now your more traditional industrial distribution peers, and so I was hoping you could maybe highlight where you're seeing the disconnect, obviously seeing their results versus your more positive results, particularly exiting the second quarter and into the second half? Robert J. Eck - President, Chief Executive Officer & Director: Yeah, Shawn, I think an important part of the improvement that we saw in the second quarter in the EES business does have to do with the Power Solutions acquisition. We said that the relevant part of that acquisition for our legacy wire cable business was broadening out this product portfolio, so that we could compete more effectively in the mid-size project space, that by having access to lighting, switch gear, transformers, a broader range of electrical bulks (34:00), that when you took our automation product set, you took our wire cable product set, you bundled it together, you had – we put ourselves in a more solid competitive position in that mid-size space. And that's I think exactly what's playing out in those improved results. We are definitely seeing ramp-up in sales of those products. And if I was going to call out some – a specific area where we're seeing – we're certainly seeing it in the general commercial construction space in some parts of our geography. But in addition, we're seeing it in Power in data centers. So electrical cable, switchgear, transformers in data centers, lighting in data centers which are all incremental new opportunities for us that came through the acquisition. So I think that's driving part of it. The other piece I don't want to lose sight of as well is our OEM business, and we think we're outperforming in OEM. And I think the right way to characterize it, we talk a lot about global accounts, and we talk about complex customers. And we do really well when we put our capabilities alongside a complex customer that has pretty demanding requirements, multiple sites, and, in many cases, multiple countries. And so I think if you take those together, that explains a lot of why we may be performing better than would be expected in the broader industrial market.

Did you see any of the slowdown exiting the quarter that they commented on in their business, or were you able to buck that trend as well? Robert J. Eck - President, Chief Executive Officer & Director: I'm sorry, who commented on?

Fastenal, Grainger, MSC, pick one of them. All of them saw slower June than May, and July hasn't started off well, but you're... Robert J. Eck - President, Chief Executive Officer & Director: No. We've, in fact, not seen that. Our trend would move the opposite direction; in fact, we strengthened through the quarter.

Okay. And then as a follow-up on Power Solutions, EPS accretion declining $0.10 for the year, but the sales forecast didn't change, and if my math is right, the $5 million of synergies is about $0.10 of EPS. So I guess, Ted, walk me through it: if sales are unchanged for the full year forecast and you're getting a restructuring benefit, where does the $0.10 decline – where does that derive from? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Yes. The $0.10 decline is primarily from the lower Utility sales, but recognize the other part of the business, the C&I part, for the reasons Bob just commented on, we're seeing improvements. So the revenue is still within that range of what we had said last quarter of $1.45 billion to $1.50 billion. But it's a reduction in the projection for Utility partially offset by some improvement in the C&I low-voltage part which rolls up under EES.

That would imply there's a mix differential. I would have thought the Utility portion of the business maybe carried a lower EBIT margin than the C&I business? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: No, that's not the case of the business we acquired, but what's now – how we're growing the C&I business, it is now performing at a higher margin.

Okay, very helpful. I'll jump back in the queue. Thanks, Ted. Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Thanks.

We'll go next to Steven Fox with Cross Research.

Thanks. Good morning. Just first off on the charges in the quarter, can you go through what the cash impact was from all of those actions? And then related to that, in terms of the bad debt expense in Latin America, you probably don't want to tell us which customer, what the names of the customers were specifically, but can you give us a sense for what types of customers they were in terms of (38:07)? Robert J. Eck - President, Chief Executive Officer & Director: Yeah. In fact, maybe what we'll do, Steve, is I'll start the bad debt in Latin America thing, and then Ted can talk to the cash impact of the restructuring actions. And I have to tell you, Ted and I were both expecting you to ask us this question because in December when we had a bad debt charge in Latin America, you asked us about it, and we were pretty confident that we had taken the provision we required. What's happened, if you look across those economies, is a broad deterioration in the macro in Latin America. So I would say, more broadly recession-oriented than we've seen in the past, that we saw coming into the year. And so if you look at the types of customers, it's actually pretty broad-based. It ranges from alternative tel-com carriers to EPCs, where a parent has gone bankrupt and it affected the subs that were operating in Latin America. The parent is based in a different country. And some things that are probably more natural resource-driven. So, some – and I would say, and more disappointingly, some of those customers are continuing to operate. They're just refusing to pay their bills. So we have a lot of litigation going on right now in Latin America in…

Great. That's helpful. And then just, Bob, in terms of what you just talked about with Latin America, how does this sort of change your strategic view of the region? Especially given how the company has kind of moved to reduce its international exposure in the last year or so. Robert J. Eck - President, Chief Executive Officer & Director: Yeah, so Steve, let me take that in kind of two parts, and I'll start with whether we've strategically moved to reduce international exposure. I don't want to say we've done that. The Power Solutions acquisition and the Tri-Ed acquisition were North America-focused businesses. We're leveraging some of those capabilities outside North America, and I would say slowly, but we are leveraging those capabilities outside North America. So I would say it's more a byproduct of where the right acquisition targets were. We still think that strategically for us because the scale and scope of our global footprint and how we manage it is different than most of our competitors, we still view it as a strategic advantage, and I think frankly if you look at the growth in NSS in Europe, that's a clear example. I don't think anybody would be looking at organic growth in Europe and in, frankly, much of any business right now. And by the way, in fact, in the EES business being flat organically over that time period as well. So we aren't really trying to deemphasize the globe, but I will say in Latin America, we are looking at some of the smaller countries we've been in. We've actually pulled out of here in the last quarter. And from a revenue standpoint they're probably a rounding error in the scheme of things, but the intent is actually to take some cost structure out…

Great. I appreciate all the color. It's very helpful. Thank you.

We'll go next to Charles Redding with BB&T Capital Markets. Charles Edgerton Redding - BB&T Capital Markets: Hi, good morning. Thanks for taking my call. Robert J. Eck - President, Chief Executive Officer & Director: Good morning, Charles. Charles Edgerton Redding - BB&T Capital Markets: Just a brief follow-up on the synergies within Power Solutions that you're set to escalate, what's been the biggest positive just over the last couple of quarters in terms of product integration and then what do you guys feel is the most significant remaining challenge here over the next couple of quarters? Robert J. Eck - President, Chief Executive Officer & Director: So I think, Charles, the success we've experienced so far has been largely in the switchgear, transformer, electrical bulk space as well as bringing more wire and cable with some of our contractor service supply chain, basically supply chain services targeted at the contractor market from legacy Anixter into legacy Power Solutions. And that we thought would be the quickest kind of cross-pollinating that we would do and that's in fact turned out to be the case. Where I think we have opportunity to accelerate and where we're probably a little bit – we're not completely thrilled with where we're at and you see that we made a leadership change in the business is that we should be doing a little bit more in Security and the Utility Power Solutions business. We have had a number of successes there. We've been in front of tens of customers with proposals and discussions about technology, and so we expect to see that accelerate as we go forward, but that's probably been the weaker synergy right now. And I think it's partly caught up in the fact that the investor in utilities have longer decision cycles and they're still working through meeting some of their NERC assessment requirements from which the Security opportunity will get created. Charles Edgerton Redding - BB&T Capital Markets: Got it. In terms of the growing backlog in Electrical, how should we think broadly about the margin profile here relative to the current 4%-plus? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Yeah. I think, Charles, that as we've talked in the last several quarters, at the gross margin level, we've had kind of a reset with the inclusion of the low-voltage business in that segment of ours. I would not expect to see any significant change to the gross margin as we move forward. The opportunity to grow the bottom line will come from even better operating expense leverage. That's what was the biggest driver of our EES margin improvement bottom line performance in this quarter and as this business continues to recover, both U.S., Canada and elsewhere will get even greater operating expense leverage there, and a large part of that, the majority of that will flow to the bottom line. Charles Edgerton Redding - BB&T Capital Markets: Great. Thanks, Ted.

We'll go next to Jeff Kessler with Imperial Capital.

Hi, guys. You talked about a pipeline that looked, and that sounded like it was improving. Could you go through where the pipeline does appear to be improving, and what the margin mix for that is? You've just obviously talked a little bit about one area, but if you could give a broader spectrum of what is going on with your discussions, and where you think you have the best chance of improving your close rates, and where those areas would impact margin? Robert J. Eck - President, Chief Executive Officer & Director: So, Jeff, we're seeing improving pipeline across all three businesses in North America, and for NSS and EES to some degree, seeing continued good pipeline in Europe, and in NSS Asia Pacific. Latin America we think will continue to be soft for a while. And EES Asia Pacific is a little bit soft right now as well. But it's a very small part of total business. So to say specifically where the pipeline is coming from, it's coming from data infrastructure both in the horizontal land space as well as data centers. And one of the things you probably heard in earlier calls in this earnings go-around is that Category 6A cable is growing as a percent of the total market. We're seeing the same thing in our product mix. And that's being driven a lot by wireless, and we think there is an increasing legs up in that for both wireless as well as PoE-based LED lighting. Security continues to have a strong backlog for us as kind of we're seeing strong backlog in EES in the complex OEMs which we've won some incremental of significant project volume there as well as in the Electrical business, the more construction-oriented part of the business in North America. So I guess when you sum all that up, actually it's pretty broad-based.

Okay. Just a housekeeping item, Mexico, is that considered Latin America or North America? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Yes, great question. We consider that Latin America.

Okay. Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: It has operating characteristics more like Latin America than like the U.S. and Canada and there's also by the way a lot of supplier commonality and customer commonality across Latin America that causes us to manage it in that way and not manage it as part of North America.

Okay. So, that's been a more stable part of the Latin American business? Robert J. Eck - President, Chief Executive Officer & Director: It has been historically. It's a little bit soft this year. We've seen a slowdown in industrial projects spend there. And if you think about PEMEX, PEMEX went in the market a year or two ago looking for outside investment for the first time, and they had four or five packages that they put out to bid for outside investors. And most of the packages got actually no response and got a response that they felt was inadequate on one of the packages. So PEMEX continues to be a drag on the Mexican economy. The other side though, is that in the OEM space, we're having actually growth in Mexico and some of that's automotive-driven as well as export into the U.S. But there's been a lot of automotive investment in Mexico, both in the north around Monterrey and also in the Bajío midland section and we're benefiting from some of that. The other thing we've seen though is a bit of a slowdown in the IT spend in Mexico and I think it's sort of an absorption phase. You kind of go through these IT spend surges that get absorbed and then you go into a lull and we think that's a bit of what we're seeing right now. We had some pretty strong project spend in network infrastructure in the past couple years and so we're in a bit of a lull there. The Security spend is going reasonably well.

Okay. And finally, Canadian oil and gas or oil and gas in general in North America, capital spending has obviously been down. But there seems to be talk about having the back half of this year show a better comparison than we've seen particularly in the first half of this year, year-over-year, which has been down or flat to down second half. Our analysts are talking about it being a little bit better. Are you having more discussions, and again, I get back to this pipeline discussion, having more discussions with oil and gas companies about what they are doing in the second half of this year? Robert J. Eck - President, Chief Executive Officer & Director: I'd be a little cautious about saying we're expecting a bump-up out of oil and gas CapEx in the second half of this year. As I'm sure, Jeff, you appreciate the oil and gas regions in North America aren't all created equal. I think Western Canada will continue to be soft for a while to commence one of the most expensive recovery areas. The Bakken Shale is more expensive than the Eagle Ford and Permian basement to do recovery. So as you look across those there has been more talk about drilling rigs being brought back online in Eagle Ford and Permian Basin. If that happens, we would expect to benefit somewhat from it. But that's not what we're thinking about on our backlog right now. We're still cautious about that.

Okay. And last question, as you know I always want to ask a Security question. Of the integration of Security or the use of Security in cross-selling into particularly into the Utility space, into this Power space, as you've noted several times it's been behind schedule. What are the things you're doing to get Security, besides impetus from NERC, to get Security to start ramping up a little bit quicker? Robert J. Eck - President, Chief Executive Officer & Director: Yes. So as I've referred to a couple of times, we made a leadership change in that business, and one of the things Ian is doing is driving a very specific strategy across IOU and separately across public power. The buying cycles are different, and some of our early wins – we actually have a mix of the early wins. We've got a couple of IOUs that we've been deeply embedded with that we've won some Security that are self-integrators. And it's more of a supply chain story. In the public power space, we've had a couple of wins now for substations that are sort of the model that would come out of those NERC regulations and actually ahead of the regulatory requirement. It's just utilities want to get ahead of it. And the public power sales cycle tends to be shorter than the IOU sales cycle, and part of it is they're not as complex. They don't have as many substations to deal with. And so that's why we've split our focus to have an IOU orientation and a public power orientation, and we're driving very specific sales management discipline around how we develop the opportunities and run those opportunities through to conclusion. And as we've said before, we've leveraged the resources from our Network & Security Solutions business…

And we'll go next to David Manthey with Robert W. Baird. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning, guys. Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Hi, David. Robert J. Eck - President, Chief Executive Officer & Director: Hi, David. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): First off, as it relates to the organic growth range for the year of minus 2% to plus 2%. It seems like since the last quarter, NSS fairly steady, ESS maybe gaining a little momentum, and PS might be worse than you thought. Is that the right assessment relative to your view last quarter? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Yes, I think that's right. We would have expected the Utility business to be a little bit more positive. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. And then the same thing by geography. I mean it seems like North America continues to be okay, and Europe kind of flattish, with rest of the world down. Relative to your expectations last quarter, is it safe to say that rest of the world is really the delta here on the downside and then just minor variances on the upside? Theodore A. Dosch - Chief Financial Officer & Executive VP-Finance: Yeah, particularly around Latin America softness, and Asia for EES. Europe actually is probably maybe marginally in line or maybe slightly ahead of where we thought it might be. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. And then as it relates to the Latin America bad debt provisions, why do you see that as an adjustment to the financials rather than an ongoing risk to the business? I…

This does conclude today's conference. We thank you for your participation.