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Financial Services Innovation Lab, Georgia Tech 19

PRM

Q2

A.J. Guido - Golden Tree Asset Management

Kim R. Payne

Did you open up any new Apartment Guides in the second quarter?

Not in the second quarter. In the first quarter, we launched the Greenville Apartment Guide.

HOME

Q4

Curtis Nagle

Judd Nystrom

So the first one, just curious if you could provide a little more color on what kind of list you're seen at basket from the addition of the credit card?

So the nice part is, as we launched this program in August and we're really pleased with the overall program it's very early is what we tell you. The enrollment is above expectations. What we're seeing as we see strength in younger and higher income shoppers. The basket size when you look at it despite the fact last year was only in for about five months. The basket has multiple times higher than what an average customer is which just give us excitement about the possibilities over time. The other program that we have that we're also very excited about is our Insider Perks program. We're at 1.4 million members. We ended the fiscal year at 1 million in only five months that average basket is also higher. So what we're focused on as we talked about driving all the organic metrics. We're focused on taking those members launching our CRM program which will be collecting data on, driving frequency and then you start mixing with higher baskets with those programs and then you start to see overall business continuing to grow. So the good news is as we're in the early innings and we're focused on continuing to execute against both these programs.

GME

Q3

Anthony C. Chukumba

Robert A. Lloyd

Okay, great. That's helpful. And then just one quick follow-up, sort of related, just to clarify the -- you're assuming 118 million diluted shares outstanding for Q4. So that essentially assumes that you don't repurchase any stock in Q4? Is that correct?

As is typical, when we give guidance, we base it on the share count that calculates off the quarter we just completed. So that's consistent, yes.

PLXS

Q1

Adam Tindle:

Todd Kelsey:

Right, that’s understandable. And just to clarify, does that also mean that operating margin would kind of stick in that 5% to 5.5% range that was guided to Q2?

Yes. it’s a little, it’s a bit uncertain, I mean, I think obviously, we’re targeting to be above the 5% range, but it’s a bit uncertain based on the revenue and the leverage that we get. So, it’s a little too early to call that one.

RDUS

Q4

Jessica Fye

Gary Hattersley

I wanted to ask a couple about the elacestrant study. Specifically, can you help us think about what you expect the mix of dealers' choice and the current therapies to be in that trial? And then your patients have seen Aromatase inhibitor early on, potentially a third and the second line, what do you expect them to be randomized to in the control arm of your study? And then in addition, I think you mentioned an interim look in that one. Can you talk about when you project that might occur from a timing standpoint or what number of patients or progression of events would be triggered -- would trigger that interim?

At this point, we're not providing guidance on the details of the study. That’s just something that we will do once the study is initiated in the second half of this year. But certainly when we look at the types of hormonal agents that are used in a late line setting, there are relatively small number of options; and of course, as I think we try to highlight with some of the data here and at San Antonio, when we look at the response rates and the PFS for those hormonal agents in a late line setting, I think we have a very good handle on how they perform and I think it makes us very encouraged that elacestrant really has the potential to perform very well against the comparator, but again we’ll provide more details when the study is initiated. We have guided that we are intending to perform an interim analysis. At this point, we're not providing any further detail around when that patent information may be available.

TAP

Q3

Mark Swartzberg

Stewart Lindening

That’s nice, but is there anything on top of that? Relative to the size of the operating income the interest expense is relatively small.

I can’t really give you guys any more details than that. I’m sorry.

PTEC

Q1

Eric Martinuzzi - Craig-Hallum

Woody Hobbs

Can you clarify that?

Not yet.

SWN

Q3

Hsulin Peng

Robert Craig Owen

Okay. And second question is G&A this quarter was really good. And I'm just wondering if you would think if this quarter run rate a good indication for future G&A expenses, or if there's something unusual this quarter that made it much lower.

Hi, this is Craig Owen. I’ll take that. The G&A, we did have a good quarter for G&A. I wouldn't expect that would be the go-forward run rate. I'd probably look at the year-to-date G&A, $0.25, $0.26 or a little bit higher. We had some benefits in the quarter and some nonrecurring items, nothing too substantial but the $0.21 we experienced in the quarter, probably not a good go-forward rate, more around $0.25, $0.26.

DOV

Q2

Nigel Coe

Unidentified Company Representative

Okay. And then the $0.03 net impact from synergies into the Q, you had mentioned though I think $0.02 of investments to achieve that. I mean how does that evolve, how is that $0.03 net evolved on over the balance of the year?

I think we have high confidence. I think we continue to see a little bit more challenging material prices than we anticipated as we made our statement early on. But we are not backing off of it.

NMRX

Q3

Matthew D. Ramsay

Richard A. Flynt

All right. I'll just sneak one more and if I could. Rick, you guys, talked in your prepared remarks about OpEx being flat or slightly up sequentially. Is that on an absolute basis or a percentage of revenue? Because it looks like revenue might be down a bit from the midpoint of your guidance.

That's on an absolute basis.

RRD

Q4

Charles Strauzer

Thomas J Quinlan

Tom, if you could, let's talk a little bit about the cost reduction efforts going into this year. And obviously, in the past few years or so, you've taken a significant amount of cost out, but a lot of that was driven by some fairly large acquisitions. Now absent those acquisitions, what gives you confidence you can find additional costs to take out, kind of offsetting those revenue declines?

Charlie, fair question. Let me go back a little bit to give you sort of a foundation from which -- why we think we can still do what we've continued to do since we've gotten here in 2004. There's a number of reasons to be optimistic about 2013. The U.S. economy's recovery seems to be getting stronger. The overall financial health of corporates continues to stabilize. There's a little bit more certainty in D.C. The housing market recovery is continuing. There's a low interest rate environment, and funds our available. Banks are lending. And the energy sector seems to be improving. But for us, the most optimistic reason for '13 is our plan and how we're continuing to transform RR Donnelley. We're selling more of the products and services in our portfolio to our customers, but we also are creating sound solutions to our customers that draw in more of the products and services in our portfolio. Along this communications management supply chain, there's content origination, content management and content delivery. We play a role in content origination with the capabilities that Helium brings to the platform, and we excel at content management and content delivery. We have the capabilities, credibility and capacity to be the primary player in the communication management services chain. We are continuing to go to market, as I said, to be multifaceted with the approach that we talked about, the 4 approach. We're focused on selling individual products and services across all verticals. We're leveraging the existing RR Donnelley platform to provide bundled solutions for current customers and prospects. We're delivering integrated solutions to target industry verticals, and the supply chain management opportunities that we talked about, I don't want anybody to lose focus on that. For both our existing and as well as new prospects, we will compete with external market players. We have grown the supply chain management significantly since the year-end 2010. Existing players in this area are facing challenges with the current business model, so there's a lot of opportunities there for us. All of this leads us to not to be solely dependent upon our long-run print products and gives us the ability to assist customers in their communication needs while we're lowering their overall cost and improving their customers' return on the spend. No question some long-run products are eroding, but at the same time, Charlie, these products and services, they're not going to go away. And we are participating in some of the things that we talked about that are asset-light. That wasn't the case a couple of years ago. What I talked about on the supply chain management side, what we're doing, those electronic devices didn't exist a couple of years ago. And we're doing about $0.5 billion in that area. So I think the long-run products are eroding, but they're not going away. That's going to help us. From an overall platform cost standpoint, what does this mean? We still have the ability to match costs to revenues. The transformation evolution of the business allows us to continue to take out costs to match revenues. What's interesting for me to see in the marketplace when other customers -- I'm sorry, other companies are talking about their cost-saving targets that they've achieved, they have achieved those targets, but they've seen those costs eaten up by a decline in their base business. Our platform is far from reaching that point, so I want to make sure that's emphasized today, that we've still got the ability to match costs to revenues in this platform as we continue to evolve.

VNRX

Q1

Jason McCarthy

Cameron Reynolds

Thank you. And then just one more, I would like to ask as it is been around seven months since you have started the beta launch, for Nu.Q Vet, can I talk see if you could talk a bit about, what you have learned so far in the Vet space and how you can take that and kind of apply it to more of the national launch later this year?

Yes, it is actually we have learned a huge amount. I’m really happy and glad that we did it the way we did. I’m very and learning also comes from the people. Dr. Tom Butera coming on board. He is a very well renowned executive in this space, and leaving Mars which is the biggest Vet company in the world and coming to ours, which I’m guessing we are probably one of the smallest really shows his faith in what we are doing. And he has been tremendously helpful in guiding us in some of these issues. But I can put to give some flavor, there is a huge amount of things to learn. Obviously, one very important factor is pricing. Obviously, we want to maximize the revenue. And so we, I think, on the national launch, we will be adjusting the price and you will see all of that, to really maximize the level. Packaging has been very important, the need to be on ice. Obviously, is a big difference in the amount of work required, if it is frozen, or at two degrees. Also, we have learned it is very good to ship a box to the vet, so they don’t have to limit the amount of work they have to do. Also, a lot of that, also just want to package it up and send it off to a centralized lab, there is two big companies or around the world, several big companies, which do that, if you are doing six other tests, it is sometimes users take an extra box. So I think that will be a big part of it. So we have looked at every single aspect, not the test itself, that is worked incredibly well. But just all those nuances are incredibly important to get right. And I think, as I have discussed, but I couldn’t reiterate enough, that what it is also done is proven that we have a product to the big vet companies and small vet companies. And I think we are in a really good position. Because, as far as we are aware, were there any real product out there that can show any real efficacy in cancer in dogs. And there are several big companies and several insurgents in the business, and there is only one of us. So I think puts us in a really good position. And it is I think it is very fair to say that taking this very seriously, we are in very serious discussions. And I think that is going to be a big part of the mix as well. But that is kind of what we wanted to do all along, I think providing a solution ourselves is a good way to move forward and prove it works and get it all fine tuned. But also, and this is true in the human space, but certainly also in the vet space. The companies have hundreds and hundreds of salespeople and reps worldwide. So I think that is going to be hopefully a big part of our mix as well. So all in all, I think it is been a really good process for us. And it should make a deal much smoother if we end up doing one with one of the majors, and also really smooth launch of our product nationally and internationally. Because we also expect to be launching internationally in Europe and Asia, in the coming quarters as well, because there is obviously a big need there as well.

HY

Q4

Mike Shlisky

Ken Schilling

That's great color. And perhaps the last one for me, if you have a bit lower tax rate in 2018 and hopefully, [indiscernible] cash flow in general from improving business trends, you know with these tax savings, with the ability to bring cash back to the United States, have you ever -- as to what you might do with any outsized cash flow going forward? Is there a way you can use it to kind of speed up the development with Nuvera at all perhaps, or is there a way to even do the kind of -- get that going faster, because I am getting the sense too, it's kind of like, maybe that there are some impatient investors out there? Thanks.

That's right, Al. I mean, we do have international operations prior to the tax act. We are planning prudently, as any U.S. company, to keep cash offshore, to the extent we generated our offshore. The other side of it though, is that we were investing offshore. So we bought Bolzoni, we have got Maximal teed up, and so a lot of our -- we aren't in the Apple situation, where we can bring sizable amounts of money back from overseas at this point, because we have deployed them. The tax rules of course are a little bit odd, in terms of what they consider cash, or including receivables in that calculation for the repatriation toll charge, and in doing so, that really expanded the amount of tax that we would have expected to have to pay on cash held offshore, because our cash number isn't really that large. Having said that, I think tax reform will help us a bit. But I wouldn't put a whole lot of stocking, that it's going to reduce our effective global rate substantially. It will make the U.S. more competitive, compared to the other places in the world that we participate in. Does that help you?

MPC

Q3

Justin S. Jenkins

Gary R. Heminger

Great. Just one from me today, and I think it piggybacks on your recent comment for MPLX, Gary. I guess with the, let's call it, carnage in the broader midstream space lately, if larger scale M&A opportunities emerge, would MPC be willing to consider waiving the IDRs ahead of the buying, if that were the case?

I'm not sure I heard the last part of your question correctly. Waiving the IDRs...

IM

Q2

Matthew Sheerin

Gregory M. Spierkel

Okay, so if you back that out your guidance still suggests that you are doing a little bit better than seasonal, it sounds like Europe is part of that because you are getting some market share back in Germany, does Asia continue to look strong for you going into the September quarter or is there some seasonality there?

It's Greg here, I would say Asia definitely is looking solid for rest of the record that we've had over the last three or four quarters which has been very healthy double digit growth that we believe is one that we can sustain, one because the market is doing well but two, as we feel very good about our performance there. The company has been I think growing significantly above market and there is nothing [indiscernible] healthy trajectory that we've had out of that region recently.

RAIL

Q4

Justin Long:

Theodore W. Baun:

Thanks. Good morning guys. I was wondering if you could talk about the marketing efforts for Shoals. I’m just curious how much of your efforts have been on the product development side versus going out in marketing these new products with some of the big customers and any detail you have on initial feedback from customers purchasing the railcars from this facility would be helpful as well.

Sure Justin, this is Ted. It’s an effort when we look to fill Shoals and develop products, it’s obviously outside sales, it’s marketing, and it’s a large part of engineering resources. So we’re moving ahead on all fronts. As we’ve said in the prepared remarks, it’s covered hopper cars, variety of different sizes, further intermodal flat cars they were looking to develop and ultimately put into that plant and I would say that customers have been very receptive to our design efforts, our end product and the prospects for the plant.

VCEL

Q3

Kevin DeGeeter

Dominick Colangelo

Maybe just one more quick follow-up question with regard to your comments on extended coverage for orthopedic surgeon. When you think about some of them are kind of call them mid-tier orthopedic surgeons by volume, sort of what’s the lower bound or how many cases given orthopedic surgeon needs to be seeing a month for to makes sense to allocate a MACI rep to be calling of them?

Yes, I don't know that we can answer the exact number of like cartilage repair that they do on a monthly basis. It's more about seeing the right mix of patients, our typical patient is 35 years old or typical physician is more sports injury associated and so I would say that the typical threshold for a physician if somebody can treat at least two of these patients annually, and from that they'll get biopsies, say from twice that number, two to three times that number of potential patients. So that is like – it's a continuous pool of patients that physician creates or thinking of the appropriate patient and applying MACI where [they tried] and typically that would be the lower threshold.

GIS

Q1

Ken Zaslow

Ken Powell

And Ken, to make it more mainstream like, one of your competitor did was a organic type of brand as well or like its good still have it panache of being focused on the organic channel and you are not trying to make it mainstream and make it more of General Mills’ type of product, is that fair?

Yeah. No. That’s very fair. We learn that lesson about 15 years ago, when we first acquired Small Planet Foods and we have -- we learned a tremendous amount from these various natural and organic companies that we’ve acquired over the years. We've been very good. I think about leaving them alone. Let them do that thing. We will retain Annie's headquarters in Berkeley. These are very talented people. They build a -- built a really good brand. And key is just to figure out where we have capabilities that can really help them and bring them those capabilities which they are actually eager to -- eager to have to accelerate the growth of this thing.

PM

Q1

Adam J. Spielman:

Jacek Olczak:

Thank you for taking the question. I'd just like to come back to the question about what's driving the much better than historic volumes in the European Union. And you've obviously mentioned four factors, but I'm just wondering – and you've said it's really impossible or hard to quantify the impact from migration. But I guess what I'm trying to ask is what the evidence is, how good the evidence is of the impact from reduced illicit and whether – and what sort of evidence you have, and whether you can quantify this in any way. And also quantify the impact of reduced headwind from E-Vapor.

Well, I think we get a better reading at the market or on the total region level when it comes to the illicit trade. I mean it's obviously always an estimate, well, because the methodologies were equally applied from year-on-year. I think we have a better comfort about saying that, yes, there is a contributions of the illicit trade. And that contributions goes in a, I guess, in a – well, it depends now versus what period, but you're talking about the few couple points of growth is coming from illicit trade. Now, you will have to zoom into Germany, which presumably has a much larger impact than, for example, UK when the illicit trade is still on the growth. Italy had good results. I mean, Southern Europe actually is doing better. As you know, the recent moves also over the last few months of some reinforcing the border controls or reintroducing, actually, the border controls in between that, some EU states, EU market and also outside, I mean, they clearly are another factor which also contributes to tightening the domestic tax paid market. I always give a example of Turkey, which I know is outside Europe, but Turkey has reduced illicit trade year-on-year by about 10 points, 11 points, which is about half. I mean Turkish market normally wouldn't be growing – or Turkish consumption, if you like, wouldn't be growing by 10% or 11%. We're talking about the industry tax paid volumes growing to this magnitude, and this is clearly the recovery coming from a 10 points, 11 points almost of the recovery from illicit trade. So, yes, you'll see the correlations. And – but I said to one of the questions earlier, it's more comfortable for us to talk about the illicit trade because there's quite a lot of data available or estimates available, and you can deduct with a high dose of a probability that this is a contributing factor. Immigration is more something which we hear about from a – reading the newspapers, et cetera. But clearly, there are movements in this location of population, immigrations, et cetera. In some places, I think they do have a factor, they do have an impact on the industry here.

BLDR

Q2

Kurt Yinger

Peter Jackson

Yes, good morning, and thanks for taking my questions. First, just on the pricing tools, are the benefits from those accruing to all categories more so on the commodity side? How should we kind of think about that?

We think it's pretty broad. Yes. I mean, we're our approach has been very market oriented. So market by market and we see it across the board. I mean, obviously commodities by very nature is more competitive, but we see it everywhere.

DTLK

Q2

Clinton Morrison

Gregory T. Barnum

So is it driven by the changes in your price as opposed to bigger all of a sudden drawing out a whole bunch more options? Is that what I’m hearing?

Well, it is due a little bit to both, yes. We grant options once a year, some were granted in the first quarter this year plus the stock price affects it too.

VRTV

Q4

John Dunigan

Stephen J. Smith

Okay. Thank you for clarifying that. And then, just my last one was and I apologize if I missed this, the total bad debt expense in 2018 versus 2017, was that year-over-year and do you expect that to get better or worse looking ahead to 2019?

Sure, John. So the total bad debt in 2018 was $27 million. The total bad debt in 2017 was $16 million. And it's hard to predict precisely where these accounts will end up during 2019. But, we're anticipating roughly the same level of activity in this category in 2019 is an 2018.

TAP

Q3

Mark Swartzberg

Kevin Boyce

Thanks. Kevin, I have a couple of questions relating to Canada. I’m trying to put the picture together, looking out beyond the next quarter. You’re seeing cross margins start to decline. You’re saying that pricing is picking up but the volume leverage is slowing down a bit, so is there any reason not to think gross margin will continue to be down year-on-year over the next few quarters given the relationship between price and the cost pressures? That’s a local currency question. Then I have another question when we bring that back into US dollars.

There are a number of things you’ve referred to. First, I think when you reflect on the third quarter it’s been a really strong volume quarter with some cost inflation issues. As you look at commodity prices there was a lag as commodity prices went up, and there will be a lag as commodity prices are coming down. There are a number of other factors in there. We’re very hopeful that this trend will continue and that we’ll benefit from that. That’s the first comment. I think in the very short term the question about volume and things is reflected in the first month of this quarter. As I said to Christine, there is some loading in Quebec on the price increase that I mentioned. That will work its way through, so I wouldn’t assume it’s necessarily going to be a flat quarter. We’re hopeful that it will be what it’s historically been at about 1%. Going forward, cogs in local currency will be our challenge in order to get to flat, but there’s some work ahead of us in order to be able to deliver on that. It’s a challenge we are taking on.

DELL

Q3

Ittai Kidron

Joseph M. Tucci

I wanted to focus on your fourth quarter commentary where you mentioned, correct me if I'm wrong, that you expect the third quarter trends just to continue but to be slightly below normal. Maybe incrementally, can you talk about what vertical are you seeing -- in what verticals you're seeing that slight incremental weakness that now leads you to believe you're not going to see the fourth quarter as you hope you would see?

Well, just to use a little prose, I do expect that we will see a budget flush, but what I try to be -- give you is -- I'm seeing, I think that our budget flush is likely to be real and meaningful, but perhaps slightly below what we've seen in other years, Q3 to Q4 growth. So I still think it will be fairly good. Within that, I mentioned areas to watch where public sector, what was happening in southern Europe, what was happening with commodity pricing. You go down that list, interestingly enough, in public sector, knock on wood, I know others are seeing it, but so far, we're not seeing this public-sector growth slow in the U.S. or in federal government. But we did see some public sector -- a little bit of public-sector slowdown in Europe. I had talked about southern Europe, certainly, that's something we continue to watch and how that impacts on the Eurozone. On the commodity front, you read what I read, again, that oil prices are down and most commodity prices are down also. So that doesn't seem to be too potential -- too big of a potential risk right at this point. The banking sector, everybody worries about, it's really interesting. We saw in the U.S. kind of a slow first half, but a resurgence in the second half of this year. In Europe, in some of the Eurozone banks, there was a little bit of softness in Q3, so we'll continue to watch that. So that's a pretty broad brush of what we're seeing. But overall, again, this slip back into prose, I do expect that we will see a budget flush that ends up being a little bit slower than normal.

DOV

Q2

Shannon O'Callaghan

Robert A. Livingston

Okay. Can you just give a little more of the color, I guess, on what's going on in product ID? I mean the organic growth of the whole segment was sort of flattish. I mean you called out Belvac, it's not that big a business, but it sounds like it's pretty challenged right now. How is how is product ID doing organically?

Organic growth for product ID in the second quarter was 4%. Most of that most of the organic growth, or most of the growth, I'm not sure I can split it regionally on organic growth, but most of the growth that we experienced in the second quarter was led by Europe, Latin America and Asia, and North America was a bit flat but organic growth for the quarter was 4%.

SXC

Q1

Tom Endel McConnon

Mark E. Newman

So that's $4 million incremental from the dropdown?

Correct.

BMY

Q1

Tim Anderson

Chris Boerner

Thank you. I have a kind of a higher-level question on the PD-1 space. Can you just talk about your longer-term view on whether price competition in this category is kind of imminent or eventually will happen in developed markets, both U.S. and Europe? The space is clearly getting more crowded, both domestically produced PD-1s, as well as those sourced from Chinese biopharma companies. And while price competition usually is not a winning strategy, it might be the only lever a lots of these other companies can pull, and I think at least in China as many have started to recognize the PD-1 category has become a commoditized class. So lots of folks are trying to figure out what precludes us from happening outside of China. Can you articulate your views here?

Yes. Thanks for the question, Tim. We, obviously, think about this quite a bit. As we think about the number of new PD-1 entrants in the market, we really look at it on two dimensions. First, there's the competitive impact of having additional players on the market. Frankly, that's an area that we pay attention to, but we're a little bit less concerned about. We have considerable resources focused on planning around competition. We have a good track record of competing in these markets. And while we are always a bit paranoid of potential new entrants, we feel very good about our ability to effectively manage competition. The second dimension that we look at is the one you're raising, which is the risk of commoditization of a market. And the way we look at that is commoditization, we think, requires two things: it requires a low-cost entrants, and it requires perceived interchangeability on the part of payers, providers and patients. The risk of both of these things coming together likely varies, we believe, by geography, healthcare system. It may be even by therapeutic setting, but we pay very close attention to this. In terms of the risk, we absolutely believe it's something that we need to stay on top of. It's, as you note, very dynamic. Currently, the areas where we see the greatest risk don't overlap with our largest markets, at least today. But we certainly have plans to address the risk as they become more tangible. The two things that I think we can continue to do that position us well against this threat are, first, continue to leverage the extremely broad data set that we have generated in I-O to ensure that treatment decisions continue to be clinically driven. And then, second, continue to rapidly bring new data and approvals to market, such that we're constantly pushing forward innovation and changing the standard of care. But this is an area that's very dynamic, and we're paying close attention to it.

GME

Q3

Arvind Bhatia

Michael P. Hogan

Just a couple of questions here, guys. One, I wanted to see if you could give us a sense of what you're seeing in tie ratios for the PlayStation 4 so far and maybe compare that to what you saw early on either for the 360 or the PlayStation 3. And then also, the 20% to 30% industry growth guidance you guys -- or not guidance but how you guys think about the industry for next year, is there any change in your thought process? Are you guys more comfortable with that kind of number as you now have more visibility? And then I have a follow-up.

Sure. So as you know, we have the category model that we updated periodically. The last iteration we had, we were projecting between 20% and 30% console category growth in the U.S. for next year, for 2014. The model's built from a number of different sources. It takes into account a lot of different variables. What I will say is that the limited amount of data that we have here because it hasn't been very long, is certainly positive and consistent with what our expectations are. At the time we built the model, we have projected a new console cycle that's slightly smaller than last one. We were being conservative to account for things like the effect that the Wii had in the last cycle, right? Just include things like handhelds and preowned and so on. So our category model right now we'll probably be updating it some time after the first of the year, but all the data we have right now is pretty consistent with what our expectations were 2 months ago.

BLDR

Q2

Alex Rygiel

Chad Crow

Could you add some color on your thoughts as to the weakness in the R&R market?

Well, it's unfortunately a trend we've been talking about for a few quarters, it's just largely, where we do most of our R&R is in the upper Midwest, which is still being hit from the tariff issues. Alaska, which is still struggling with the lower oil prices and into a lesser degree on the West Coast is our three pockets of R&R and really the hardest hit has been the upper Midwest for us.

TGX

Q4

Brett Rice - Janney Montgomery Scott

Your background comments on Core were very helpful and I appreciate them. I just want to make sure and I - understand - your shipping current unit volume on an prepayment basis and you still harbor hope by risking perhaps being an unsecured creditor by laying back if they were able to resolve the issue with the other party you mentioned briefly that ultimately we - the-the $2 million write off of a portion if not all will ultimately be collectable?

Yes Brett thanks for that question. I think you summarized it really well. We - under the terms of our agreement, orders that were on the books at the time the termination became effective we are required to fill and will do so. However, for orders passed that point we have agreed to fill those on a prepaid basis if they are coming from Core. Although we don't intend to do that for ever, it is a very limited transition period. So you are exactly right. And then the second part you actually explained very well, you are right we have two objectives. One; is to get paid and secondly is to retain all or as much of that TheraSeed volumes as we possibly can so, we are managing the process in such a way to give us the highest probability of achieving both. And I think that's what you stated in your question. And so your understanding is exactly right. I do want to point out that we have not given up any of our rights. And so, there is other actions obviously that we can take if and when we believe that time is appropriate, but right now we feel like the way we are managing through this process will give us the highest probability of achieving those two objectives.

ANET

Q1

Jeff Kvaal

Jayshree Ullal

Yes. I mean I think, Jeff, if you look at where we came out for the first quarter on revenue versus our guidance, so that it gives you some idea of the magnitude of that, right? I'm not going to try to do that from Q2 at this stage.

Yes. stage.

B

Q4

Edward Marshall

Christopher J. Stephens

But based on the revenue growth, based on the operating margin growth and if you kind of peel back the EPS assuming things are static from '12 to '13, it appears the number -- certainly the low end of the range is not even close. Is there something going on with the share count, the interest expense, the tax rate, something else that changes from '12 to '13 that we can kind of...

Yes, share count for purpose of planning, again, prior to the transaction, we don't expect that to significantly change much. Clearly, you've got the headwind of an incremental interest expense that's factored in given the leverage, again, before transaction. And then tax rate-wise, we do anticipate that to be more in the mid 20% aside from this transaction.

BJRI

Q2

William Slabaugh

Gregory Levin

Thank you. And curious also on the plans for cash, you mentioned the $91 million left on the buyback authorization, you have $23 million, I think, on the balance sheet not to be generating cash as well. Just given where valuation is, how aggressive can you plan to be on the buyback here?

Well we always, I think, look at our business, Will, and you hit it at the end there, on kind of an enterprise EBITDA and we have a, obviously, very solid and strong EBITDA of $136 million or so, I think I said, on a trailing 12-month. So, we have that pattern there, we'll probably deploy it accordingly going forward.

ICD

Q1

Kurt Hallead

Philip Choyce

Yeah, indeed. Appreciate the commentary, maybe just following-up on that line questioning. Specifically on the working capital front Phil. What kind of a cash contribution are you expecting on a full-year basis from working capital?

From -- as it goes down, yes, it's about -- I'd say each our operating rig is probably $600,000 to $700,000 of positive working capital. So you're going to harvest that much cash, say, as we go moving from the 17 rigs or so at the end of the quarter that we had operating down to the six rigs that we expect. I don't have to -- I've done the math exactly in front of me. But it would be something like that that we would -- that cash would come in the door.

ACAT

Q1

Joe Hovorka

Tim Delmore

Okay. But you don’t have those numbers?

No

LTRX

Q3

Mark Spiegel

Kurt Busch

So any color on your cutting expense I mean at this level of revenue, is that where that’s going to stay?

Right now Mark we’re working to grow revenue and control expenses as well as is working to improve margin. I mean as you saw we had a drop in margin this quarter. And all of those things will get us back to -- we’re working to get us back to cash breakeven, or get us back to the point where we were generating cash which we were doing in last fiscal year.

ENTR

Q4

Ruben Roy

Patrick Henry

I had a question sort of focused on Verizon, when you have other exciting ramps starting, but just when you talk about potentially seeing some sort of recovery end of Q1 maybe in Q2, can you elaborate a little bit on your assumptions there. Are you expecting some sort of bounce back in sub growth or just kind of a flat lining of the declines that we have been seeing, kind of what you're expecting?

Verizon's public comments have really been continue to focus on a million new – net new sub adds a year. So that would translate to about 250,000 a quarter. They did 300,000 per quarter in Q1 and Q2 last year and then they did I think 200,000 in Q3 and 150,000 in Q4. So, they ended up doing a million last year as well, but a little bit slow on the back half. I think with the promotions that they are running that say that they are getting initial success, I think it's trending more towards that kind of run rate type of a business, which should be somewhere between 200,000 and 250,000. As they have kind of gone through the slower period over the last couple of quarters, they have continued to order less and they are keeping inventory positions pretty tight. So there should be a spring back associated with that at some point. When accounting on that and our numbers that we provide for guidance for Q1, so if that happened in Q1, there could be some potential upside. But, assuming that they did get that kind of bounce back in Q1, we should see a Q2 bounce back pretty strong for us because there is not – like there is a ton of excess inventory in the channel and they continue to ratchet it down to kind of whatever the current run rate is.

ENTR

Q4

Sandy Harrison

Patrick Henry

Got you, thanks. And then kind of some of the things you are seeing in China in the c.LINK products, any sort of change in the dynamics of those markets in some of these newer technologies and then some of the broadband really start to reach 10-gig in the basement and other areas like that?

Most of the stuff we're seeing in China right now is that there is a commitment by the government to really try to strengthen the cable MSOs to be an alternative broadband access service provider to the major telcos. So, that kind of bodes well for what we are doing there. Coax is definitely the access solution of choice for the cable MSOs and there is a couple of different Ethernet-over-Coax technologies that are being trialed, our c.LINK access being one of those. And there is currently not really a bake-off, but kind of a technology comparison going on with the various different solutions. So, I think over the next year, we are going to see that play out, is that going to be a big opportunity for anybody and specifically is that going to be a big opportunity for Entropic. But it seems like we're doing all the right things that kind of position ourselves well for that market and (inaudible) for big revenue this year, but definitively it's like a call option where we're continuing to fund that activity to see if it could potentially get big.

B

Q4

Edward Marshall

Christopher J. Stephens

Yes. Guidance looks like right in line with what we were looking for in the operating profit, but EPS was a bit shy. Was there something going on in a tax or interest to changes next year? I mean, you are paying down some debt and I understand that's not in the number there, but...

Exactly. That's one caution and obviously, I wanted to give some color on guidance excluding the 2 announcements. But so given that, we wanted to at least profile out. I think the headwind of pension expense clearly was a drag on 2013 as we looked at that. But the rest of the business, that's how we're profiling out the year. And again, I would say just a little bit cautious on the aerospace aftermarket and outlook for 2013.

BLDR

Q3

Jay McCanless

Chad Crow

And then, just wanted to ask also, with the sharp drop in prices over the last couple of months, is this something where there is an inventory problem inside the industry that's working itself out? Or is this more dislocation from people being worried about whether housing starts keep growing. What do you guys think has caused this sharp decline over the last two months?

To some degree, I almost feel like we're victims of our own actions. I think as prices start to fall, everybody gets a little more cautious on buying. And so, all of a sudden, everybody's gone from, oh, I've got to buy to cover my position because prices are rising, to sitting on the sidelines and waiting to see where things stop falling. And so, in a sense, we all start acting in concert and it ends up – and I think that's part of the proble And I think at some point folks are going to say this thing's hit bottom and everybody is going to start buying again, and we all know what that's going to mean. It's going to mean prices are going to go up. So I think it's a lesser concern about – I mean there's seasonality involved for sure. But I think it's less a concern of the overall health of housing, as it is just people just trying to guess when the bottom is going to be.

SPTN

Q4

Shane Higgins

David M Staples

Then switching over to cap ex, the $75 million to $80 million guidance, is that mostly for the remodels and rebannering that you’re doing? Could you just give us a little bit more color on that?

If you look at how we do that, slightly more than half typically goes, probably in the $45 million or so range goes into the retail group. The rest is spread out between distribution, and systems, and corporate. Then when you look at the majority of that $45 million, certainly a very significant component of that would go into the remodeling efforts.

AXAS

Q4

Welles W. Fitzpatrick

Geoffrey R. King

I know it's probably minutia, but just to get a number, the production on the May clearinghouse package, do you guys have a number on that?

For the March auction? 2.9 million.

QADA

Q3

 Brad [ph] with Stifel

Karl Lopker:

And Daniel, maybe just some quick high levels thoughts if you can around subscription as we think about fiscal '19 and sort of the sustainability of 30% plus growth?

At a high level, we're still are targeting to maintain growth at the 30% plus level. We are -- this quarter is the time where we have little bit of planning in terms of how we're going to achieve those but we are -- we feel that there is definitely room to continue that growth rate.

PM

Q3

David J. Adelman:

Hermann G. Waldemer:

Okay. And then lastly, Hermann, looking out now in the EU over the next several years, how comfortable -- how confident are you that you can grow your operating income in that market over time in light of the fact that presumably, there's going to be a difficult economic backdrop? There'll be, presumably, government austerity measures. The governments will certainly be looking to increase excise taxes as a source of revenue.

Okay. I mean, there are, of course, the markets that we know already, like Spain, which are already in difficulties as of today. However, there are a couple of positive aspects to the EU business, really, because you asked the question in a longer context, in a 2-, 3-year context. First, it is really encouraging to see that we see clearly moderating total market declines. So in the quarter or in also year-to-date, we talk about 3.6%, 3.7%. And actually, on a year-to-date basis, half of that is just Spain. So, i.e. all the other markets together are declining not even 2%. Germany is growing. France is stable, and Italy is almost stable. So that's pretty good. What will the austerity measures do? Well, the point really is what will unemployment do. We have seen that, of course, a steep increase in dramatic levels of unemployment, like in Spain, have an impact. I do not see Spain happening everywhere in Europe. This is very overdone. I don't think that's going to happen. So then on excise tax pressure, could be. Of course, I can't exclude it. But given the financing needs of those governments, I would rather see pressure on general VAT increases. In Europe, those could happen, of course, affecting all products, including our products. That being said, a VAT increase has always been manageable at the end of the day in the past. Why wouldn't we be able to manage it -- to manage through these occasions also going into the future.

ABC

Q4

Robert Patrick Jones:

Steven H. Collis

Thanks for the question. Steve, I appreciate your comments on how there are differences between the three wholesalers' mix of customers, but I think many of us have operated under the assumption that the market's very efficient, just given the consolidated nature of the wholesale channel. So just trying to get a little bit more comfort around how more severe pricing commentary from your peers – seemingly more severe pricing commentary from your peers, wouldn't eventually be a reality for everyone in the industry?

Yeah, I mean, we've got a lot of, we think, heavy lifting on our contracts behind us. We talk about – six months ago, I think we discussed this and we reflected in guidance, which we took very seriously. Of course, since then, the inflation rate in brands and deflation rate in generics has changed, but let me talk about it this way. I mean, my comments on – are I think very appropriate for AmerisourceBergen. I can't talk about the others, but we would say that the market is competitive but rational. It's always been that way. The environment is probably more challenging, and I think that's a function of customer consolidation. You've got a lot going on the M&A side with key provider customers coming together, key manufacturers coming together. Everyone is facing cost and efficiency challenges. And I would say our customers are more consolidated, more informed and have always been very sophisticated and quite adept at demanding value from us. And I think our industry has been responsive, and maybe we just haven't had as many tailwinds as we usually have, but I think the environment is essentially the same as it's been from a competitive perspective for many, many years. And we pointed in my script towards working within our customer base. So, I think that's a key point for us, and getting more compliance from those relationships. Tim, you want to add anything?

AAPL

Q2

Scott Craig

Tim Cook

Okay. And then just a follow up on the iPhone for Tim, perhaps, you guys started with Wal-Mart I think towards the end of December last quarter and your sales came in probably higher than most people thought. How much of an impact was Wal-Mart there and then what was the channel inventory in the iPhone as you exited the quarter? That’s it from me. Thanks.

In terms of Wal-Mart, and as you probably know, they’re a very key partner for us, relative to iPod and we did expand through them for iPhone coverage and we believe they do provide us extended reach in areas that we weren’t heading before. And we’re pleased with the results there thus far, but it’s in the early going and so there is not much to report there yet. In terms of total distribution across the world, we are selling iPhone now in over 50,000 storefronts in the 81 countries, so we have a sizeable presence and sizeable channel in the space. In terms of channel inventory, if you remember last time – last quarter, I told you that or implied that we had about 1.75 million units in inventory and to remind you in case you guys have forgotten, we are very conservative as to how we count inventory. For example, we count demos that aren’t sellable in inventory and we have about 100,000 of these 50,000 locations. We count units that are in transit from our factories to the carriers that are not physically available for sale and at the end of a quarter, at the end of the last quarter in particular that was around 100,000 units. So just to put your perspective – to put some context and perspective on now, we also in many cases count inventory all the way to the storefront. I think there are many people in the industry that that count units as sell through and seize to count channel inventory beyond the distribution center, it’s just not the way we look at it. We like to be very disciplined in this environment. So on your specific question, I’m not going to talk about weeks, because we don’t frankly have the experience headed into this quarter about the seasonality given this will be our first June quarter with a – with a sort of a worldwide spread. But we sold the channel inventory in the countries that we were in at the beginning of the December quarter fall by the end of the quarter. But with the countries that we added which I mentioned before, we added a net of around 80,000 units and so we ended at 1.83 million units. And again that includes all of those categories that I had mentioned earlier. Net-net, we’re very comfortable with the inventory and we have people running more of it.

EXPE

Q2

Andrew Boone

Peter Kern

Hi, guys. Thanks for taking my question. On marketing, on-brand spends specifically, can you talk about what brands and where you're investing? Is this supporting brands that are strengths or are you guys building brands And also, should we think of this as more of a permanent change to your marketing strategy, or has cancelation rates normalized? Are you guys going to shift to spend back to more high quality? Thank you.

Thanks, Andrew. I would say a couple of things. One, yes, we're investing in relative strength. So, for example, Vrbo has been an area of considerably increased investment, during the past several quarters. Other opportunities regionally where we've put money, whether that's in traditional brand spend or social or other things. So regional brands, in some cases, we've seen increases as well. I would say while we are leaning into that and we're leaning into our biggest brands, obviously, in strong markets like the U.S., we believe we can do a lot better in terms of brand messaging, getting cleaner on the brand propositions and, as I mentioned, getting all the brands to work together as a family of brands as opposed to a sort of traditional on most competitors. So, we think there's a lot of opportunities to not just spend on-brand with a bias towards brand-building, but spend that money more efficiently against even stronger, creative, and more efficient ways to build the brand. So, I think there's a lot of opportunities there. And yes, we intend to also grow in new geos as we refine our capabilities there. And pick markets where we are going to go on the offensive. And then I think as far as performance goes, I think what we're talking about when I say we have a bias towards brand building, is we want to build long-term relationships. But brand spends and performance work together. But stronger brands are better performing, your performance marketing is. And as long as performance marketing can return the kind of returns and bring us the kinds of customers, those that are sticky and build long-term value, we will spend into that and we will spend as much as that makes economic sense to do. So, I don't think it's an either-or question. It's a question of right now, having a bias again, towards that brand-building while we see how performance marketing shakes up. But as we get better, we believe we will be able to continue to invest in the performance market and more efficiently than we ever have, and bring the right kinds of customers with the backdrop of brand building that really creates sticky customers for the future. So, I think you'll see us do both. Don't exactly know where the ratios will bear out. We think the Company was over bias towards performance marketing because we just didn't have all the tools, we needed across the brand enterprise. But we think, now, we're in a much different place, so that's where we're going to go. Thank you, Andrew. I think we're at the end. So, I just want to say thank you, everybody. Thanks for your time and I hope we got all your questions answered and we'll speak to you in the quarter. Take care.

SYK

Q2

Lawrence Biegelsen

Kevin Lobo

Hi, good afternoon. Thanks for taking the question. Two robotic questions from me. First, on Mako, I'd love to hear about the OUS rollout, new geographies how that's going places like Japan, I think you're waiting for China, hopefully I don't have those two backwards and just color on the mix, US, OUS of Mako placements? And I had one follow up.

Yes, thanks, Larry. Certainly our OUS business has picked up. As you saw in the pandemic, the U.S. business continued very strong on Mako, but our OUS business did slow down and that's ramping back up again. We are fully operational with both Japan and China on all three applications, same with Brazil, as well as Russia. And so Japan is really starting to accelerate, which we're quite excited about. China has started. We still have, it's a little bit behind Japan. Brazil, we now have our first few sales in Brazil, so that's probably one of the later ones, and Russia as well. So we're in the early stages in those four markets and the demand is very high from surgeons, which is exciting. Brazil was delayed a little bit by COVID, but we are starting to build momentum there as well. So it's very exciting. The surgeons, it's kind of taking us back to when we launched Mako total knee here in the United States. There's high demand for it and you should expect strong performances in the quarters ahead.

NWSA

Q2

Jessica Reif Cohen:

Chase Carey:

Hi, I have two questions. One was just sort of a follow on to Michael question. Could you give me some color Chase on advertising really across the platforms? It sounds like there is strength pretty much on every platform in every market and I was just wondering if you can give us some color going into the March quarter? And then secondly can you talk to us about, just give us your views on TV Everywhere? Do you think it’s important for your channels to participate and where are you in deals?

On the advertising markets, it is really strong. I mean seriously TV is leading and I guess I would say National TV in particular. So when you look at the broadcast network and when I touched the scatter the Cable Networks and right now Cable, second half growth looks stronger than the first half growth. And so it is certainly very good. It is good in the station side. The comps get tougher in the station side. So year-on-year we’re not going to have the type of year-on-year growth in the second and the third quarter that we did in the first two. But it's really good solid growth and really across the broadcast platforms ad revenues, I mean across the newspaper be it both Dow Jones, UK, Australia are all up. They are not up like the TV business but it’s double-digit. But they’re, I think that they’re up and it’s getting to look pretty good. And obviously we have the Super Bowl on top of it falling in on Sunday.

GIS

Q1

Bryan Spillane

Ken Powell

But fair to say that as you described sort of changing merchandising tactics, it’s too address that specific dynamic, really trying to hold it on those -- generally inefficiencies and provide retailers with programs that should be more efficient and maybe take a higher priority?

Very much so and also just to highlight, it’s very much about that. It’s certainly not about depth of discount or anything like that. I mean, we think those are -- it’s not about going in that direction. It’s all about the execution of the entire program.

AAPL

Q2

David Bailey

Peter Oppenheimer

And then did you say for the September quarter, the margins and gross margin might go down to around 30%, I was just wondering what the reasons you thought it might drop off again would be?

Well I am not giving guidance for the September quarter at this point. But in answer to Bill’s question, I said about 34 for the September quarter. We’ll – we’ll give you more of our thoughts in July on the September quarter.

BLDR

Q3

Timothy Daley

Chad Crow

Got it. That sounds positive. So, I guess and then my second question, thinking about – obviously there's been solid growth in the kind of selling locations and the number of sales associates that you guys have active. So, what was that number in this quarter and I guess how are you thinking about the continued growth in these metrics over the next year?

Well, for the year, we've probably added somewhere around 75 – or added or internally promoted around 75 sales folks. That's a gross number. We obviously have turnover. I don't have the net number handy. But, look, that's a big push of ours is really to put a focus on developing our sales force, developing our general managers and developing our employees overall. And so, that's going to continue to be a focus of ours.

GCI

Q3

Alexia Quadrani

Gracia C. Martore

Thank you and welcome back, Craig. My question is on the cost side -- if you could share with us what your preliminary thinking is on the costs for next year. Is the decline we saw in this quarter a good run-rate for next year? And did you have the furloughs? Did the furloughs continue into Q3 and what are your thoughts going forward? And maybe also touch on the newsprint -- have you stockpiled an above average amount given the possibility of some price increases ahead?

You know, Alexia, it’s a little early for us to comment on the cost side for next year. We are literally just beginning to look at the budgets that are bubbling up from our local units. What I will tell you is that a lot will depend on what the revenue outlook is for next year. I don’t think we assume that the revenue outlook next year is going to be quite as difficult as it was this year but we’ll have to take a look at that and then some of the expense initiatives that we’ve done are ongoing and permanent reductions. We’ll cycle some of those but then there have been new ones, obviously, in July and beyond that will benefit us well into next year. We did not do furloughs in the third quarter nor do we have plans to do furloughs in the fourth quarter, so that about $25 million of expense benefit that we received in the second quarter, and I guess it was about $20 million or so in the first quarter, did not repeat in the third quarter, nor will it repeat in the fourth quarter. On the newsprint side, I would say that we’ve always done a good job on the inventory management side and given where prices are buttressed by some black liquor tax credits that some of the newsprint companies have enjoyed, we certainly have added to our inventory levels, as have others, I’m sure, in the industry.

OCX

Q1

Ronald Andrews:

Doug Ross:

Yes, let me add to that, Lyndal, a little bit. Paul, one of the beauties of our opportunity with pharma is this longitudinal bio-bank that we have that follows patients with blood draws across time and looks at the progression of disease. And it’s kind of unheard of in our industry to have an active bio-bank. And Doug, I know you – this is one of the things that you mentioned a lot in terms of the value of what we bring to pharma. Maybe just a 30-second vignette on sort of why it’s so important to have this type of access to longitudinal patients that are being actively followed.

Yes. So the clinical indication here is the question of what do you do when you see a lung nodule in a patient for which the current clinical paradigm is pretty unclear. Do you stick a needle into the nodule and try and make a diagnosis of tumor versus benign or do you watch and wait and repeatedly scan them to figure out what to happen. And I believe the size of this bio-bank, 3,000 patients to date and growing, is unprecedented and it allows us not only to evaluate the current signature, the DX product that’s in clinical validation, but as we try and move to perhaps rule in test. It’s an amazing recourse for evaluating different technologies that can detect tumor in blood. So I’m very excited about the potential of that bio-bank not just because of the DX which we’ll get the results in June, but also as we move towards detecting tumors and partnering with other folks that may have technologies that may be useful in blood.

KLAC

Q4

Atif Malik

Richard P. Wallace

Okay. And then as a follow-up, can you talk about the action or the steps you're taking to combat ASML offering an on-board metrology and lithography, too, that can you talk about your historical relationship with Nikon and what you're planning to do in the future?

Well, we don't -- I guess, certainly from our customers, there's an interest as EUV pushes out to get more capability to be able to support the multi-patterning challenges with overlay. But -- and it's not just overlay, it's all the patterning challenges. So we have been pulled, I would say, by customers to support an initiative but what we're -- we talked about is 5D, which handles several discipline aspects of the patterning challenges. And that includes allowing our customers to interface with multiple suppliers of lithography but also looking at feedforward and feedback for match as well. So we're engaged with several customers on that, trying to support their efforts to get control of the -- of their litho strategy. And I think that, that includes support with other suppliers and I think of litho in particular. And so we're working those avenues. But there's a very active engagement by customers as they deal with the challenges on multi-patterning.

SYKE

Q1

Kevin McVeigh

Chuck Sykes

Great. Thanks. I wondered if you can give us a sense, Chuck, is any telco demand a function of the new iPhone 6 and EMV impacting called into the call center offers? Maybe just any other trends beyond just the seasonality or just projection of volume? Anything bigger driving those trends?

Yes. Kevin, there isn't an answer I can give you that I would say is a possible relationship. Certainly we are seeing advances in self-serve technologies and all but at the same time, we are seeing dramatic increases in the sheer quantity of interactions. So if you didn't self-serve capabilities, you would probably be real trouble trying to serve your clients. I think we all can intuitively understand that in our lives 10 years ago we had 1.7 devices per household Today it's 2.7 and it's continuing to grow. So the sheer quantity of interactions to anticipating to increase. And with that I think you are going to see advances in self-serve. The hard thing is, what's the impact on voice. And that's not a direct correlation. The things we do see more correlation on and I think this is somewhat intuitive. already of the billing changes, the intensity of the competition, that is a very, very direct strong correlation to our volumes. But the other thing, it's just a newness of new devices. When the first iPhone came out that was a very big paradigm shift. All of us who had consumers that get used to it. And then with hen that all of the changes in the billing plans. And billing has moved as we all know from voice to data. That too has been a learning curve for consumers. And even though every time I do technology, a new device comes it, it does increase volume. I don't think this is as much of a learning curve for us a consumers anymore. And I think we are getting more popular with the way the billing plans are set up too. So those are the things that we think are probably more fundamentally causing our clients to have to really fine tune their volume forecast. There is still big volume. It's still a lot of volume. It's a lot of people. And again, those things could end up changing. But that I think is what we are building into the formulas more.

AVNR

Q4

Ritu Baral

Dr. Joao Siffert

Got it. And what was your placebo assumption in this trial?

The assumption, it’s usually -- we look at treatment difference, right, not necessarily placebo assumption. You want all this to say that the active will be over the placebo. So pretty standard, usually a point to two points you can consider a successful trial. But even -- if you look at even other trials recently published, some times the difference between drug and placebo is like less than a point. This is in now zero to 10-point scale. So then depending if you can -- depending if you can power the study enough, you have to power for a relatively small difference especially in the more difficult types of pain trials like this one.

ENTR

Q4

Alex Gauna

Patrick Henry

Okay. And then if I could follow that of last one, you talked about a number of different moving pieces to seasonality and new product ramps for the June quarter. At this juncture, let's say holding Verizon steady and assuming no recovery, and I know you said you saw promising signs. With all the moving pieces, will you expect enough sequential June [ph] at this juncture?

We don't provide guidance more than one quarter out.

CMN

Q1

Thomas Gunderson

Craig A. Sheldon

Okay, thanks. And then, Craig, I loved the detail but then the more detail you get, the more questions you get. I still loved the detail. The tax rate, you explained, that was one of the things that you sort of highlighted in the press release and then you explained that and a lot of that is the non-tax-deductibility of the acquisition cost, but just to clarify, those acquisition costs for IMS came in Q1 because you book them and bill them when they happen not when the deal closes, is that right?

Yes, that is exactly right, and this is related to new accounting items from a few years back. So these acquisition costs now are, number one expensed and number two expensed as you incur them. So almost all the due diligence for that field occur in the first quarter because I think we closed the deal November 1. So that's exactly right. It was about $0.5 million of expenses, all non-deductible.

SYK

Q2

David

Kevin Lobo

Yes, thanks for taking the questions. This is David on for Mike. The first one is just on ASC, just given the different dynamic there maybe there's more critical when show plan. Does that ASC market need a separate sales force and strategy or do you think you can leverage the current sales network?

Yes, we have a very custom designed approach to selling to the ASCs. It is not something we have to elaborate on, on this call, but I would say it has required a different approach. And we're really excited about the way our offense is working in the market.

LAKE

Q2

Doug Ruth

Christopher Ryan

I understand. Now, for example, would there be any additional bird flu sales in the third quarter, or is that largely behind the company?

Well, that all depends. I mean, bird flu exits soon it disappears at a temperature of about 75 degrees. And we probably could anticipate, at least, $1 million of addition in the third quarter. But what happens is, when the temperature drops, bird flu can reappear. When the temperature generally goes above 75 degrees, it disappears, it kills the virus. So it sort of disappeared around May, June, and come Autumn, the temperatures goes down, it could reappear. But let me underscore the word could, we don’t know. And the thing that can happen is that, if it’s did live through the summer, because the oil inclines of Canada and those bird start migrating down to South America. We may not see it in the United States. We may see it in Mexico or Colombia next time around.

SANM

Q4

Bob Eulau

Got it. And then, I think you guys had – and maybe I didn’t hear this properly, but you mentioned you had a one-time benefit from a government incentive program in a foreign country. Was that on the interest income line, and could you quantify that number for us?

Yeah, it was in the other – we call it other income and expense line, which includes interest expense. And, yeah, that item was around $2 million.

GGG

Q1

John Franzreb

Jim Graner

Okay. And as far as free cash flow, I guess typically, Q1 is the weakest and Q2 and Q3 kind of builds up substantially. Use of the cash - would you prioritize the buyback - just to piggyback on the last question - the buybacks versus further debt reduction. Would you prioritize?

For sure, there won't be any further debt reduction. We have the private placements in place. We intend to keep those in place. That's $300 million, which is all outstanding today. So we're going to be generating some cash and to the extent that we don't have any near - or long-term acquisition opportunities, buybacks certainly come to the top of the list.

BMY

Q1

Greg Gilbert

Samit Hirawat

Thank you. On LAG-3, how are you thinking about the importance of biomarkers here? And what level of granularity should we expect around the data set of ASCO as it relates to LAG-3 positivity, etc.? And then, Giovanni, a different twist perhaps on the business question. When you took over a CEO, I imagine there was quite a sense of urgency to diversify the company. But with the steps you've already taken to do so, would it be fair to characterize your M&A strategy from here as more about enhancing existing franchises and less about diversification as a concept? Thanks.

Thanks, Greg. Thanks, Giovanni, and thanks, Greg, for the question as well. For LAG-3, obviously, I'll not get into the specifics of the data that we presented at ASCO. But certainly, some of the biomarker data will be included in the presentation. As you may recall from all the published literature around LAG-3 and in general, for I-Os, it's been a difficult exercise to get specificities around which biomarkers really dictate the activity of the medicines that we are testing and exploring. So we'll continue to get into that, into deeper details after the data are presented, but certainly looking forward to a better understanding of the overall landscape and as we look to the combinations and other indications as well.

UHS

Q2

Gary Taylor

Steve Filton

Okay. I guess my last question is, can you talk a little bit about the length of stay pressure in RTC and any expectations of when that abate or is there a significant state where some policy changes might, anniversary or, when we should expect – or if we can expect reasonably that some of the length of stay pressure is going to ease?

Again, this is another dynamic that certainly has been present now for – I would say going on for a couple of years where we’ve seen – really since I think the recession began we’ve seen Medicaid programs through the country tighten up on both the rate of payment, which lots of companies discuss, but for us, in the behavioral division, also on utilization which really I think is most notably reflected in length of stay contraction. Actually I thought one of the encouraging, albeit mildly encouraging dynamics in Q2 was that, I thought that the length of stay reduction decelerated a little bit, but I think to your point Gary, and my sense is that just as we talked about rates, Medicaid rate reductions is decelerating in July of 2012, my sense is that length of stay contraction should respond the same way because it quite frankly is emblematic of the same sorts budgetary issues. But I think it remains to be seen. I don’t think we’ve bottomed out yet, but I think the hope is that we’ll at least start to see some deceleration or stabilization in that contraction.

ASEI

Q2

Edward Marshall

Kenneth J. Galaznik

Sure. And then as I look at the $0.5 million of sequential SG&A take-out, and I'm looking first quarter to second quarter, was there something that -- I didn't realize, did you trim some costs in the quarter? I mean, I know you added some headcount with some leadership, et cetera. But -- or was there something onetime that might have been in those numbers? I'm just kind of trying to get a feel for SG&A as we look forward.

We had some charges in the first quarter, more legal related, that we did not repeat in the second quarter. As I sit here right now, I can't think of anything else significant that would -- that'd be driving that.

DGII

Q3

Scott Searle

Ronald Konezny

Hey good afternoon, nice quarter, Gokul congratulations and welcome on board. Just quickly follow-up on the gross margin front, sounds like just some headwinds in terms of the manufacturing transition from Eden Prairie, but you know your supply chain as well, it sounds like that exits or it will continue into the September quarter, when do you see that starting to alleviate and how should we think about gross margins as we get into December into calendar 2019, what is the expectations we should get out a little bit.

We are really anticipating a more deliberate pace to it, that it’s not a step level if you will, but that will improve, none of us have probably the crystal ball to say what is going to happen within the supply chain as things rebalance, but history would say that things will rebalance, but we are being I guess very deliberate in having gross margin improve on a more gradual basis than say a step level basis.

LAKE

Q2

Peter Muckerman

Christopher Ryan

Right, and then lastly, just a comment I would make is, I get the impression that with all these, all this global warming that’s going on, I mean, it really does seem like there’s something amiss, there’s no question about it. I get the impression that Lakeland to a degree anyway might be kind of a beneficiary of that. I mean when you stop and look around these floods and these – all these, I mean, it’s just – it really is the crisis of the day. And I sometimes have to think that just because of the Internet and the media and everything, but I kind of think it’s not necessarily, it just seems like, I mean, there’s murders is happening, I guess, in Saudi Arabia. And it seems like it’s not a catastrophe yet, but they don’t have it under control either. So I don’t know, it’s just – it’s the crisis of the day seems to be the theme these days. So – but I think you guys are doing a great job and I’d say keep the momentum going. It’s awesome.

Yes, my only comment on that is it seems that a lot – we get a lot more hurricanes and they’re a lot more violent than they used to be. And when we have a big hurricane it really drives our sales.

GGG

Q1

Jim Giannakouros

Jim Graner

Got it, okay. And then on that mix, I mean, when historically we’ve talked about contractor margins and I know that it’s come from the investor base and us asking hey, can you get back to previous peak margins in contractor. But seeing that you are seeing a mix shift kind of headwind on the margin side there, one -- is the focus on the home center lower margin stuff, is that a strategic focus near term? If yes, why? And I guess second, how should we be thinking about the margin potential for the segment longer term?

So just a couple of additional points of clarification. Our pricing on the products is pretty equivalent - or it is equivalent between the home center channel and the paint channel is just that we sell more entry-level units in the home center channel. We sell similar products in the paint channel and they are priced the same. So our gross margins generally increase as the features and functionality of those units increase. So the other point I wanted to make that within the paint channel in North America we have always guided to the fact that when the construction market got healthier, we would sell more of the big units. And they are the percentage of sales in that channel, I’ll call it the largest units are increasing percentage wise at a faster rate than the middle and the lower priced units. So the mix is changing in the paint channel back to more normal. The comparable issue here is that the fact that we’ve launched more and more entry-level products and that’s changing our mix.

BMY

Q1

Chris Schott

Chris Boerner

Great. Thanks so much for the questions. Just two for me. The first one, in light of the 9ER study, can you talk about the RCC market and the opportunity you see for Opdivo Yervoy versus IO TKI combinations over time? And how you see Bristol positioning these two different frontline offerings they're going to have as you think about how you're going to position them relative to one another? My second question was on COVID and drug pricing. I think you mentioned some of these kind of macroeconomic factors, but when you think about high unemployment as well as growing budget deficits from government payers. How do you see that flowing through as you think about net pricing, looking out later this year and into 2021? Core of the question do you think it's likely that we're going to see some sort of incremental impact to pricing from what's occurring with COVID right now? Thank you so much.

Yeah, thanks for the question Chris. We're very excited about the data that we saw with 9ER. Maybe in answering your question, I'll start with just kind of an update on where we are with Opdivo plus Yervoy today in first line renal. If you go back a year, one of the things that we said when we first started to see the IO TKI data was that we anticipated that Opdivo plus Yervoy would remain a standard-of-care in first line. And that's precisely what's happened. And we think that's been driven primarily by the impressive long-term benefits that you have seen with Opdivo plus Yervoy. We just saw the 42 month OS update at ASCO GU, that OS was about 56% in the ITT population. And that's sort of been continued strong performance of Opdivo plus Yervoy in first line. Market share right now is between 30% and 35% overall. It's on the upper end of that range, when you look at the labeled indication that we have in intermediate core. We do get some non-promoted use in the favorable population, which is off label for us of about 15% Opdivo plus Yervoy use there. And we've also seen, that the majority of the use that existing IO plus TKI therapies have gotten in first line renal has largely been at the expense of TKI monotherapy. So Opdivo plus Yervoy has held up really well and in fact we've seen a bit of an uptick in Opdivo plus Yervoy over the last number of months. 9ER very exciting data, we're very happy to see both the OS and the PFS data that we saw there, also very encouraged by the safety profile for 9ER. In terms of how we're thinking about positioning it, still very early days and we're working through the data, but we think these data compete very well against the existing IO TKI therapies. As a result, we think there's an opportunity to drive share from existing IO TKI therapies. We also think that there's an opportunity to drive share from TKI monotherapy in spite of advances in first line renal TKI monotherapy is still about 20% to 25% of share, mostly in the favorable population. And with respect to favorable, we think there's an opportunity there for us as well since 9ER crossroads status and included that favorable population patient and now once approved, we'll have access to that population promotionally. Importantly, the last thing I would say is that once approved 9ER really does give us the opportunity to offer patients multiple IO modalities. We'll be the only company, frankly, to have dual IO, but also what we believe would be a best in class IO TKI offering. So very excited about the opportunity that 9ER offers us to help patients and provide another modality to those patients. And I think that there's a nice opportunity.

CTXS

Q3

Brad Reback

David Henshall

Great. Maybe touching some more in the calendar 2021 guide. I know there are a lot of moving parts are aligned. But any sense from a high level on the SSP contributions specifically be expected to grow in 2021 be flat, down anything would be helpful? Thanks.

Yeah. I think we consider it to be down and when you think about the hyperscalers we've been successful in moving them to longer term subscription contracts. That's been reflected in some of the mix over the last few quarters. We continue to expect to see the percentage of contribution, which is a 3% this quarter continued to decline as we have those larger hyperscaler providers go to subscription contracts and represent a smaller proportion of our revenue.

MPC

Q3

Paul Sankey

Gary R. Heminger

Right.

And we continue to illustrate it very, very well here. Again, in this quarter, Speedway had one of the best quarters – I think top three quarters that they've ever had. But, that makes up all the ratable movement that we go through our refining system in the Speedway, the value in certain markets that we can glean out of Speedway. So all-in-all, as we look at Speedway again as borne out in this quarter, very, very strong segment for us, and we continue to see that going forward. Asking as we complete this drop, where do we see things going? And I I've answered this a little bit earlier that retail and growth in our Midstream is going to continue to be front and center in our strategy. We think our base refining system is in very, very good shape, and as Ray mentioned, I think we're in very good shape to be able to handle the IMO and be a strong margin taker when this IMO comes to play. But we look at the organic side of MPLX as being a strong growth element, as well as we look at Speedway as being a strong growth element for our business. And if you look at MPLX historically, and now that we're coming to the end of the dropdowns, we have a very strong inventory of organic projects, but we're really – I've charged Mike with really increasing our third party business. And for MPLX not to be dependent on just the business coming from MPC, but other third party business. You look at the linkage that we have between Refining and Midstream and through MPLX, it's great linkage. I look at the assets that are now part of MPLX that were MarkWest and the linkage that we have there, we have great opportunities to be able to move the Northeast NGLs I think to the East Coast eventually. We have opportunities we believe when Buckeye reverses the Laurel Pipeline to be able to make some movements that will lower cost to consumers in the Pennsylvania and Eastern markets. That movement is all about lowering cost to consumers, which I think can be supplied from PAD 2. So, we have many opportunities that we're looking at with a very, very strong refining base underlying all of those opportunities.

BMY

Q1

Chris Schott

Chris Boerner

Great. Thanks so much. Just two questions here. Maybe first, just maybe elaborate a little bit more in terms of LAG-3 and its role in the market. I guess, should we be thinking about this combo mostly as a kind of monotherapy competitor? Or is this something that you think from an efficacy standpoint, can stand up against an Opdivo-Yervoy type of combo? And then, my second question was just a little bit more color on the Opdivo adjuvant launches. As we think about kind of treatment rates and development of these markets, just a little bit more color of how do we think about the esophageal and bladder kind of ramps as we think about kind of this year. So are these big 2021 events? Or is it just going to take a couple of years to really see the opportunity for those indications? Thanks so much.

Yeah, thanks for the question, Chris. So let me start with LAG-3. So first, let me say that we are very excited and pleased with the data readout that we've seen for the third I-O that we have from BMS. The results are very encouraging. And I think seeing an enhanced activity on top of Opdivo in melanoma, that's a pretty high bar. And so we're excited about the opportunity to bring this to patients. In terms of where it fits, you remember the current landscape of first-line melanoma, Opdivo-Yervoy represents about 35% to 40% of first-line melanoma. Approximately 30% of this market is still single-agent I-O, and you've got another 30% that is non-I-O. So we think there's a real clear opportunity here for us to drive the benefit of relatlimab plus OPDIVO into that population. There's clearly a continued unmet need with physicians looking for additional options that have a dual I-O-like effect, and we're looking forward to bringing that combination to patients as we work our way through the regulatory process. In terms of the adjuvant opportunities, again, this is going to be an important opportunity as we get into the latter half of this year. And certainly, as we look about -- look for the growth opportunities beyond 2021, you noted esophageal and the upcoming opportunity with bladder. We're very excited about those. With adjuvant esophageal, this is a substantial patient population with considerable unmet need. The treatment rates here are relatively low today, just given the lack of approved therapy. So we would anticipate that over time, we'll be able to drive utilization, both in terms of the patients who are being treated today, which is relatively small, and then, improve treatment rates over time, much the way we did, you'll recall, in adjuvant melanoma. And we would expect a similar dynamic to play out as we launch in bladder cancer as well. And so very excited about those opportunities and look forward to seeing those launches play out in the coming months.

UHS

Q2

Gary Taylor

Steve Filton

Are there – I guess in RTC, are there some hard stops or policy changes or this is just more active utilization management I guess for lack of a better word in terms of number of days, a state of allowance.

Yeah, I think much less than hard stops is just kind of a series of initiatives that different states take on in different ways trying to move these kids out sooner, move them into less intensive settings like group homes and stuff like that. So, those are the kinds of things you see as opposed to kind of – as again you described a hard stop where they just say absolutely not after 25 days or whatever the issue is, but it’s just a variety of initiatives. Interestingly, the admission growth level has not really changed, which sort of implies, and to some degree I think it’s remained pretty strong, which sort of implies that clinically the effort to get these kids out sooner in the end is not really meeting the overall objectives in that. They may just be returning to facilities because they’re not completing an effective course of treatment.

BLDR

Q3

Allen Baugh

Chad Crow

Correct. And then my last question then, and this sort of came up earlier, but if we had a no-inflation scenario that's not impacting your revenues, what kind of organic growth, real growth, does it take to leverage SG&A even just a little bit?

Yeah. I don't see the leverage of SG&A as really a step function. I see it more as linear, and every little bit of incremental volume we get helps. And as you know, it also helps the gross margin side of things as well with volume going through our plants. And historically speaking, the busier the builders are getting, the more they're building, the less focused they are on saving a nickel here and there and become much more focused on service. So, in my opinion, every little bit of volume helps.

FISV

Q4

Darrin Peller

Jeffery Yabuki

Yes, when do you see the concern by some of your clients abating, I guess, is really where I'm getting at. Where I'm going, I mean.

Yes, I mean, really, it's a rules question. Once there are rules, I think people will know what they can do and what they can't do. And when the Durbin rule, first cut of the rules, were introduced, I mean, there's been a lot of noise in the system obviously because of that. I think we have to get the proposed regulatory changes quantified and have people on -- and as soon as they understand them, I think people will move past. I think really the issue is understanding what is going to happen. If they were final, things would be a lot better, no matter what they are. They just need to be final, and people will move on.

ENTR

Q4

Hamed Khorsand

Patrick Henry

Okay. And as far as DIRECTV and MoCA, is DIRECTV rolling out MoCA enabled set-top boxes for all subscribers or the particular segment?

The boxes that they announced are in HD DVR and in HD clients. So it's really focused on the HD portion of the market where they are going to provide multi-room capability.

GLW

Q2

Steven Fox

James Flaws

One clarification and then one question on LCD glass. Just on the guidance you provided, you referenced year over year comparisons versus gross margins and expenses. Is that versus the restatements already provided, $0.29 and the 44% gross margins? Or is there something else that has to be restated out of that, as you also mentioned? And then secondly, just on the LCD glass, the two big dynamics seem to be China and average screen size increasing. Is there any sense for how much the China subsidies helped in terms of that 40% growth in the first half? And then in terms of average screen size increasing, you seem to be implying an acceleration in average screen size, even versus what you talked about at the analyst meeting. Any more color around how that’s helping, maybe in the second half of the year?

The screen size thing is becoming increasingly important. We really started seeing this large size impact start last year. We were uncertain whether it would continue to grow this year, but it definitely is, and seems to be accelerating. So you’re right about that. I think all of my statements on gross margin relate to our restated results from the prior year, and as I mentioned on our website we’ve done some updates on that, and many analysts asked us to do 2011 also. So we’re putting that on our website too.

HSY

Q3

Michael Lavery

Michele Buck

Okay, thanks. And I just want to follow-up on S'mores, I thought that your data analysis and insight there to push that the way that you did was interesting. As you're seeing cases rise again now, are you replicating that, are you seeing similar results, is there a S'mores surge we should expect and would it be right to assume that those Hershey milk chocolate bars are probably some of the highest margin ones that you have?

So, we have really expanded S'mores from, at one point, it was a very focused time of year to really capturing S'mores as a year around opportunity, especially if you think about how different weather is across the entire country. There are lots of opportunities to continue to expand that. So we're very focused on that. We're also very focused on the upcoming baking season, where we know that consumers will be spending time at home, it's already a natural baking season, and so we'll be looking to really optimize what we're able to drive leveraging insights around that season as well.

SYK

Q2

Joshua Jennings

Glenn Boehnlein

Thanks for that. Maybe one follow up may be for you and Glenn. Just as you're moving towards the anniversary of the Wright acquisition, and hopefully we're all moving towards more normalcy in 2022. We've had an operating margin expansion kind of in the range of 30 to 50 basis points and how should investors be thinking about these cost range programs have been played for the last couple years? And the amount of P&L leverage that Stryker can experience in future? Thanks. Thanks for taking the questions.

Yes, sure. I think first of all, as a baseline if you think about a normal operating margin that was acquired through Wright Medical was, it was significantly less than say Stryker's normal operating margin. So if you think what have we worked on during this integration period, it was really pulling Wright Medical up and trying to look for all the synergies that we had built into our model, so that we could drive better operating margins at Wright Medical. I think fast forwarding into next year and looking at where that might look on a combined basis, I think we'll get back to our normalized, up margin expansion of 30 to 50 basis points. But at this point, that's a little ways away, and we're not really necessarily guiding for 2022.

BLDR

Q2

John Baugh

Peter Jackson

Okay. So for near-term modeling purposes don't, units are still a pretty good predictor?

I mean, we've talked about, if you want to use a pointer to as a volume adjustment attributable to that, we don't think that sound reasonable, but it's tough to say that's the right number that we've got a lot of statistics for analytics to support that.

ASEI

Q2

Brian W. Ruttenbur

Kenneth J. Galaznik

Okay. But going forward, it's renewed for what, 1 month, 2 months? How long?

It's a year, Brian.

RRD

Q4

Scott Wipperman

Daniel N Leib

Just a couple here. The first is, Dan, with the $80 million payment that you're going to get from the international subsidiaries, I think that's down from $150 million you talked about last quarter. So I guess I was just trying to understand the difference. Also, if you could just let us know the timing of that, and has the total amount changed that you guys expect to get? And I got a couple of follow-ups.

Yes, sure. So the short answer, the total amount has not changed. The $80 million versus the $150 million is just reflective of where the cash was at the end of the year, so we actually had that $70 million loan back to the U.S. at the end of the year and -- or I should say, had $70 million, so it's just an incremental $80 million on top of that, so the $150 million is the $150 million, and the overall amount remains the near $500 million.

FISV

Q4

Greg Smith

Jeffery Yabuki

I know it's de minimis, the float income. I guess the question is, what's it going to take to actually move that? Is it going to take the Fed actually raising rates because you invest at all such short term? Is that the case?

That's correct, yes. So it's going to take exactly what you said.

POWL

Q4

Fred Buonocore CJS Securities:

Pat McDonald:

Any way to quantify the impact of the hurricane on orders?

That one is almost impossible.

NTCT

Q4

Mark Kelleher

Anil K. Singhal

Okay. And as a follow-up, that growth there seems to be offsetting some weakness at Fluke which is, if I understand is enterprise. Where are we with the Fluke transition? Is that still a headwind or has that bottomed out?

I think as we talked about, Mark, it has bottomed out now and I think we are beginning to see an uptick and we don't see any real impact on this – negative impact on this in the coming years.

UIS

Q1

Joseph Vafi

Peter Altabef

That's great. Sounds very, very promising, Peter. That's great. And then maybe Mike, welcome on board. Maybe just one quick one, I know, you're not doing cash flow guidance at this point. I know you're continuing to see good strength in new contract awards that probably have upfront capital requirements are. Is this kind of run rate on capital additions and CapEx? Is this - do we kind of expect this cadence for the rest of the year? I know, you've got longer term goals, but just trying to get a sense of CapEx over the next few quarters. Thanks.

And Joe, if I could just add a little more color to that as well. And Mike has been in the middle of this effort even before he moved into his new role. As you know there's the accounting side of CapEx is also the cash implications. And as we saw last year that we were becoming much more successful in signing new business, and sign some of that business was more cash intensive. In particular the public sector business. We began to revisit really hard, how we were financing some of this CapEx. So again there's a difference to what goes on your books and what doesn't go on your books. But from a cash standpoint, one of the efforts that we have underway for new deals is to bring in third-party cash financing much earlier in the process in a much we think more energetic way working with select partners to bring the cost of that cash down. And actually going back into some of those existing deals and refinancing some of the deals to be sold last year also to kind of increase cash flow. So, in addition to CapEx, where we're working really hard on the cash side.

SYKE

Q1

Adam Dahms

John Chapman

I am just curious how those three pieces play into the margin guidance?

Well, FX impact, as in terms of it doesn't impact our operating margin at all. EPS is impacted by $0.08 for the FX year-over-year.

UHS

Q2

Ralph Giacobbe

Steve Filton

Okay, great. That’s helpful. And then just the last one. I think there has been questions in the past on sort of the margin in EBITDA growth and behavioral and revenue trends have been higher. Revenue was obviously a little bit lower this quarter but you had better margins in growth. So I guess is that related CSI synergies incrementally coming on board or is it just more broad based maybe sustainability of that going forward?

You know, I think the answer is sort of two-fold. One, again as you alluded to Ralph is, I certainly think that we continue to improve the PSI legacy margins if you will, and in short order we are going to stop using that term. But, I also believe and we have made the case that if we are able to grow revenues by 4% or 5% in what amounts to a fixed or largely fixed and semi-fixed cost business we should be able to continue to expand margins. Again, I think you saw that in Q2, it’s not always absolutely linear. So there are some quarters in which revenue grew by a little bit more and margins didn’t increase quite as much, and in Q2 of this year revenue was a little more moderated but cost controls were better. In general, I think if we can have that 5% revenue growth that I have mentioned a few times on the call, we should continue to generate expanded margins in the behavioral business.

VRTV

Q4

Daniel Jacome

Mary A. Laschinger

No, that's very helpful. I appreciate it. I should have thought of that. My blunder. Thank you.

No problem. All right. So I think that's the end of our questions. So first of all, thank you, thank you for your questions. We're really pleased that the integration is now substantially complete and we are under way with the optimization efforts to really support our long-term strategy. In 2018, despite the complicated set of initiatives we completed, as well as the significant increases in bad debt we experienced, we did deliver on the adjusted EBITDA guidance provided at the beginning of the year. For 2019 and driven by our efficiencies, gained by the integration and now optimization, we expect to see an improvement in adjusted EBITDA and a significant improvement in our free cash flow profile. So again, thank you for joining us today and we look forward to speaking with you in May as we share our first quarter 2019 results. Have a great day.

GERN

Q3

Unknown Analyst

Stephen M. Kelsey

That's part of the question, yes. And is it -- does every patient get measured?

Well, okay. So firstly, when we started the study, we did pre-specify in the protocol that we would be looking at outcome by pre-study tumor telomere length, but we did not mandate that every patient who wished to enroll in the study submit a tumor sample. So it turns out as is traditional for these types of studies that just over half of the patients in the lung cancer study had tissue for evaluation and around 2/3 of the breast cancer patients had tissue for evaluation. So that's the first sort of cut of the data. The second thing is the method by which telomere length is traditionally measured. We were the first people to turn that assay into something that could be performed on formalin-fixed paraffin embedded tumor tissue. Plenty of people have measured telomere length by a variety of techniques. But we actually turned the -- we set up a PCR-based assay that can measure it on formalin-fixed paraffin embedded tissue and again we presented that at the AACR earlier this year. The assay, as a research-grade assay, is reasonably robust. The coefficient of variation for the measurement of any individual patient's telomere length is probably 10% to 15% in either direction. And of course, that will result, for any given cut-off of telomere length, will result in a misclassification of 10% to 15% of the patients, but we will finish up the analyses and we'll be presenting the data at a scientific meeting probably sometime next year.

TWI

Q4

Larry De Maria

Paul G. Reitz

Right, so essentially it’s probably a bit higher. Okay. Thanks. Can we narrow that 108 to 144 down a bit or can you maybe help us provide some kind of a bridge to get to the mid or upper end of their, considering obviously we’re starting at a much lower base?

At this point, it’s early in the year. What we’re looking at it from our team’s perspective is that we’re comfortable with the outlook we put out there. We see the path on how to get there is really kind of how we talked about 2017 results is spread across all the business units and segments within our company. So the bridge is not simply just take A plus B and you get C. You’re getting revenue gains, you’re getting some margin improvements, you’re getting cost cuts, you’re reducing SG&A. And so – again, it’s really a broad based improvement. So what we’re looking at is again the overall forecast and the overall picture for 2018 supports the outlook that we put out there. As far as narrowing it down that’s something that as the year progresses, we could look at doing that. But for today and for announcing the 2017 results, we just keep the 2018 outlook as is.

RAIL

Q4

Michael W. Gallo:

Charles F. Avery:

I was going to say, just as a follow up on that first part, should we expect then more when you look at the way the backlog looks today and the production runs that we should see perhaps gross margin is at a more similar level what you saw in the third quarter obviously getting better as revenues move up?

Again without giving specific financial guidance, margins probably go back to where we are seeing more of where they have in the past, but again that depends on the current mix that’s out there. Remember, in 2014 as Ted said, half of the backlog is our rebuilt which have a lower revenue number, but I got the same kind of margin percentage, the margin dollar could be lower.

MPC

Q3

Paul Sankey

Gary R. Heminger

You figured I was in Australia sipping something good, well, I don't know about that. I'm in midtown and I'm drinking coffee. Gary, to look back just to go over the not spinning Speedway. It was interesting that you guys gave a – I think it was a synergy number, but there was a sort of a benefit number associated with retaining Speedway. Long term, I think you've absolutely made the right decision to do what I think other companies are doing in terms of retaining control of gasoline distribution. Could you just talk a little bit more about that number that you gave, how the committee came up with that, and what goes into it? That was question one. Question two is a bit of a follow-up to Doug's, but I was wondering if you could – you're relatively very quickly going to get through this dropdown process, where do you see MPC going strategically from that point? One thing that you could talk a little bit about maybe is 2018 CapEx, but also where you see the long-term strategy development from this newly-shaped company? Thank you.

Right, Paul. And if you go back to Speedway, and you're right, we did publish a number of $270 million to $390 million per year, and then – that range is what we see as the integration value.

AXGN

Q2

Dave Turkaly

Karen Zaderej

Thanks. Just quickly back, I want to follow-up on the agencies, the 19. Can you give us a broad estimate of how many people are working at those places today? And then it sounds like I know that number has been fairly consistent, so this wasn't anything that came up with sort of new early ones that were more recently added, but maybe it sounds like the splitting of the territory is the same thing that caused disruption -- in the direct might have caused some disruption there, is that the right way to think about it?

So, in the last question, no, the distraction actually I think was external to us. Our solution was to split the territories. When you -- all of these, I think -- what do I see, all of these agencies have multiple people in them that carry our products, but they range in size quite a bit. Some of them are small and with only two sales associates and they can be as high as more than 10 to 12 associates carrying our product. They also have quite a bit of variation in geography. Some of them are -- really a few cities and others have multiple states. And so what our plan is to continue to look at these and will they perform and do a great job and continue to drive the kind of growth that a direct rep does. I'm very happy to work with them. Where they don't hit their quota and they underperform or get distracted with other aspects of their business or are worth hiring new people and get distracted, then our drive is to say that they may not be able to carry our products. And we are very upfront with them about that. It says it's all about hitting the number. And I think they understand that's their job. And they have a relationship. And we have an good enough communications channel that we can continue to talk to them to say well if you see something coming, then we'll go ahead and trade it out. I mean that's what our goal is to end these things in a smooth transition for the people that are their customers as well as our customers. Remember they are calling these customers for other products as well and they don't want to leave them high and dry. So, we have a good win-win to try and do an effective transition in that case.

NMBL

Q3

Rajesh Ghai

Suresh Vasudevan

Thanks. So Suresh, if I back out your Fibre Channel business from the rest of the business, iSCSI, I noticed that for the last three or four quarter's [as soon as you] [ph] started shipping fiber channel, the iSCSI contribution has kind of plateaued in the high-50s. I recognized your explanation around commercial enterprise, but it appears as if most of your growth going forward is likely to come from Fibre Channel and the iSCSI market has kind of reached a level where you potentially cannot grow going forward. Is that a fair characterization, or why not?

Yeah. Rajesh I’ll go back to what I said, really there are two things going on. One, as we shifted some investment towards going after both large enterprises and larger deployments across our customer base, that’s come at the cost of investments in our traditional midsize enterprise customer base. And that's really where iSCSI was particularly strong. And so you would -- as I've said in the past, the mix of protocol is as much a reflection of our sales capacity investments as a reflection on the market. And so as I described our one of our corrective actions being focused on reinvesting in commercial that's really aimed at making sure we get midsize customers back and that tends to be more dominated by iSCSI as a protocol.

ODP

Q3

Bradley Thomas:

Michael Newman:

Mike, can you give us an update on what you think for CapEx this year? And perhaps, an early sense for 2011?

Yes, probably, the lower end of the previous range that we've given on CapEx, $170 million to $180 million. As we go forward, we're looking probably -- we've just finished our strategic plan. We're looking at CapEx probably consistent with DNA, in the $210 million to $220 million range. We talked earlier in the discussion about touching our old format stores. We want to take 400 old format stores and put them in the new M format. That will be a significant CapEx driver, going forward. And we're also looking at a common systems platform for Europe, going forward. So those will be two things that we're looking at that'll drive the business. And given where we are, with liquidity, cash flow -- I'm particularly pleased with the third quarter cash flow. That's probably the long and short of CapEx guidance from where we sit today.

SMCI

Q3

Mark Kelleher

Howard Hideshima

Okay, great. Thanks for taking the question. I'm just going to continue right on with that line of thought there. If we take the 2 points and put it back and let's say we didn't have the hard disk drive problem, we'd still be down about 200 basis points from last year. And we had Romleys ramping up. We had a much better utilization of the Taiwan manufacturing facility. I would imagine those two things would be helping. So I'm just trying to figure out where the steady state gross margin number should be? I mean are we now looking at 15%, 16% as the number? And can you still get back to the high-teens where you thought you could get maybe six months ago?

Let me take, Mark. So if we go back to prior to let's say all of those hard disk drive, memory stuff happening, probably about three quarters ago, you will see that we were probably about 16% to 17% as far as the gross margin is concerned. And so in prior quarter – in the June quarter, we said that of that 1.5% decline, majority of that was caused by the hard disk drive and memory and then this quarter I have said that over 2% basically has been caused by the hard disk drive and memory. So you will see a total of around approximately at least 3% caused by hard disk drives and memory over the last couple of quarters, right? As we work our way through the agreements and improve our vendor relationships and work it, we're hopeful that we can get that back so that – again we can get back to that place where we started off about six months ago, nine months ago back to the 16% to 17%. And then you are right. We do have the other things that should be adding to our gross margins which is the Romley launch coming on board and that's increasing our Taiwan facility utilization and then also obviously increasing our product mix with servers and software and support services. So those things are still working and they're going on. I think we just need to work our way through the hard disk drives and memory.

TTC

Q3

Mark

Michael Hoffman

I guess, first question, can you just revisit inventory and can you give us – I think your previous expectation was, it would be worked down by the end of 2011. How do you sit today, how do you think inventory will look at the end of the year, and then I guess – go ahead and answer that question first?

Well, certainly, Mother Nature has not – plays a role, has not cooperated, since we talked on our last call in May to the degree we would have hoped. That's certainly a part of it. So we didn't work it off quite as fast as we would have liked. So it will be up, and I think, when we talk about inventory, we put this into kind of our working capital context, and as you've seen we worked very hard to drive our working capital down as a percent of sales when we look at this on an average basis, and like we talked with you, because of the nature of our business with a couple of big quarters and a couple of relatively smaller quarters, we tend to want to look at the year and want to look at the year from a working capital standpoint. So, all-in, and inventories plays a significant role in that, we ended last year on an average working capital of 13.9%. That will be up closer to 15%; still good and still very much in with how we talked about, how we’re going to manage working capital. So, it’s not – it didn’t work out quite as fast, particularly on the Residential side as we would have hoped, but it’s I would characterize not a – we don’t consider it a problem, because it feels a bit of an opportunity. Then, as I said on the remarks, field inventory, well, up a little bit, particularly because we shipped in snow, but riders are up a little bit, and it is mostly on the Residential side. All-in, field inventory is still in very good shape. So, we think, it’s manageable.

HSY

Q3

Alexia Howard

Michele Buck

Hi there, can I just talk about the C-store channel specifically. It's obviously been under pressure because of the pandemic, but I imagine that there have been some sequential improvement in there. Could you maybe just give us some numbers about how that channel is recovering?

Absolutely. So as you said, we've continued to see strength in food and mass in dollar as consumers eat more at home. The C-store class did see a bit of recovery in the third quarter, so we saw the business grow in the low-single-digits in the third quarter, which is definitely an improvement versus those early pandemic trends. It did then slow a little bit, as summer ended and those summer road trips decreased with kids going back to school. Our business has tracked pretty much in line with the channel and significantly ahead of the category. So we have share gains of about 120 basis points in Q3 in that channel. So, seeing some rebounds and some recovery versus where it was in the past, as people are out about a little bit more than they were.