Hello, and welcome to BD's Third Fiscal Quarter 2018 Earnings Call. At the request of BD, today's call is being recorded. It will be available for replay through August 9, 2018, on the Investors page of the bd.com website or by phone at 1-800-585-8367 for domestic calls and area code 404-537-3406 for international calls using confirmation number 278 8137. I would like to inform all parties that your lines have been placed in a listen only mode until the question-and-answer segment. And beginning today's call is Ms. Monique Dolecki, Senior Vice President of Investor Relations. Ms. Dolecki, you may begin your conference. Monique N. Dolecki - Becton, Dickinson & Co.: Thank you, Crystal. Good morning, everyone, and thank you for joining us to review our third fiscal quarter results. As we referenced in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com. During today's call we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our third fiscal quarter press release and in the MD&A sections of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. Reconciliations to GAAP measures can be found in our press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the bd.com website. As previously disclosed in April 2018, the company divested its remaining interest in the Vyaire Medical joint venture. The company received gross cash proceeds of approximately $435 million and recognized a pre-tax gain on the sale of approximately $308 million. In addition, in the…

Thank you. The floor is now open for your questions Our first question comes from the line of David Lewis with Morgan Stanley. David Ryan Lewis - Morgan Stanley & Co. LLC: Good morning. Maybe one for Vince and then one for Tom. Vince, just want to focus on guidance into next quarter. So guidance for the year are very solid. Fourth quarter sort of implies acceleration to sort of 6.5% organic by our math. So are there any just sudden like momentum deceleration this quarter and some acceleration built into next quarter? Any timing issues that you sort of talk about as you roll into this quarter and to next quarter? And really just want to get you to express your confidence in getting to that next quarter number. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure. So I'd start out by saying, I'm very confident in our next quarter number. And yes, there were some things in this quarter, some timing issues in this quarter that did affect us. And I'll point them out to you. So number one of course was in the Surgery business, where you've got Progel in that comparison costing us about 25 basis points. Then we have about 25 basis points of Pharm Systems timing. We expect Pharm Systems to be very strong in the fourth quarter. And we expect in the Surgery business that you're going to see an acceleration in the Surgery business also in the fourth quarter. There was a little bit of kind of channel dynamics going on there in terms of the hurricane and what not. We see that reversing itself in the fourth quarter. And then timing of diabetes tenders, so that's about another 10 basis points. So if you do the math on all of…

Our next question comes from the line of Vijay Kumar with Evercore ISI.

Hey, guys. Congratulations on a really nice quarter here and thanks for taking my questions. So maybe I'll start off on that guidance question once. A really strong Q4. And it looks like most of this was strength in underlying business. Right? And I think most of us, the question is when you look at FY 2019, how should we be thinking about underlying trends in some of the business segments? Right? Are there any areas where you see some new products gaining momentum? Or any areas where comps might be an issue? Just any color on 2019 I think would be helpful. Vincent A. Forlenza - Becton, Dickinson & Co.: Well, I think you've got to look at 2018 and how we're doing across the entire company. It's very difficult for me to point to anything specifically. I think I just walked through good momentum across all three of the segments at the top line. That's the way I'm thinking about that. From a demand side, if I think about it from a regional standpoint, I think all the regions are doing well, whether it's Asia. We haven't talked about China yet, but China had a good quarter. Asia has done well. Latin America is doing well. Europe is strong. You're seeing strong momentum in both, in the developed markets. So it's difficult for me to call out anything in particular at this point in time. I'll refine that obviously when we get to our guidance. But I think you should look at the strength this year and use that as the basis. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. I would just add that we do obviously have a little bit of a headwind from the flu, because that was such a strong season for us. But we also have a little bit of a tailwind compare from the hurricane, which is a little bit smaller than that headwind, but roughly offset one another.

That's helpful, Chris. And just maybe one on margin. I think back, when you look back at when the Bard deal was announced, we had expected 500 basis points to 600 basis points of margin expansion. Given where we are in the cycle now, close to 300 bps of margin expansion, when you look at 2019 and 2020, we're still expecting 250 basis points to 300 basis points of margin expansion. One, is that correct? And second, when you think about your comments on FX benefiting margins this year, now how should we think about the interplay between FX and synergies for 2019? Thank you. Christopher R. Reidy - Becton, Dickinson & Co.: Sure. So you're absolutely right. We are delivering on the first piece of the margin improvement. Really the deal model assumptions that we laid out don't change. And so we're right in line with that, we're executing on that and delivering in 2018. And we would expect 2019 to be in line, as you laid that out. So that 500 basis points of improvement is what we had laid out. And we're delivering on that. If you look at the results this year, we were getting some benefit from FX. But it was above and beyond. So we delivered 410 basis points this quarter, for example, 340 basis points underlying and the rest coming from FX. So that's kind of like the icing on the cake was the FX piece. Going forward, obviously, we won't get that tailwind from FX. We'll have to watch the dollar, the euro, and some other currencies to see. So it might be a slight headwind going forward. We'll see how that plays out.

Thank you, guys. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. Thanks, Vijay.

Our next question comes from the line of Bob Hopkins with Bank of America.

Hello. Thanks very much for taking the question. Just wanted to address a couple quick things. First, and this is really big picture, but I was just wondering if you could talk a little bit about the global trade rhetoric that's going on over the last couple of months today? And how BD is positioned relative to what you know today about the numbers that are out there? Just I think a little bit of an update there would be welcome. Thank you. Vincent A. Forlenza - Becton, Dickinson & Co.: So I'll start out and maybe Chris will want to add a few things. Of course we, like everyone, are concerned about the global trade rhetoric of course, especially with China. Things with Europe seems to be calming down a bit. Tariffs for us this year are not material. It's a small number. It'll be a little bit of a headwind going into next year, as long as we stay where we are in terms of what's happening with China. Do you want to add anything else? Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. So just to be specific on that. In the fourth quarter, we got about $0.01 of impact from the tariffs as enacted now. And that's typically some electronic parts particularly related to our MMS and Biosciences businesses. So really de minimis, but about $0.01. That annualizes next year, so I think $0.04 next year or thereabouts, but not particularly meaningful. As it relates now, if you look at the next set of rounds, I think it's about the same. And we'll see if that happens at all. And they – constantly changing, so we'll watch that. But not particularly significant. Thomas Polen - Becton, Dickinson & Co.: Bob, this is Tom. Just maybe to add to the events in Chris's comments. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. Thomas Polen - Becton, Dickinson & Co.: Just one other thing to consider is we've had a very systematic strategy over the last couple years to migrate manufacturing for China in China. And so today over 50% of the BD Medical products that we sell in China are manufactured in China. That obviously is a (43:51) to the tariff. We've been doing that now in the Life Science. We've been very purposely moving products into China for China there. And we're now, as part of our integration work with Bard, we got a number of products already started under way to transition manufacturing again for China in China. So we see that as probably a position that we're maybe more advantaged than other companies within the sector that position us well from a tariff perspective. Vincent A. Forlenza - Becton, Dickinson & Co.: It gives us a very balanced global network with a lot of manufacturing in the U.S. but very balanced around the globe. Thomas Polen - Becton, Dickinson & Co.: Yeah.

Great. Very helpful. And then just quickly I wanted to kind of come back to something that a couple of people have asked about. But if you're commenting on exiting the year at over 7% growth, which is obviously very robust. And I know it's a little early to be talking about this. But just if you could at least talk qualitatively about the sustainability? Does that strength exiting the year suggest that there may be a little bit of upside to the kind of the LRP that you guys have been talking about? Or just a bunch of things coming together particularly in that fourth quarter? So it's really a question on sustainability. Vincent A. Forlenza - Becton, Dickinson & Co.: I'll let you. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. I think we feel really good about the way we're exiting the year. But I think there is some timing that we talked about that shows up in the fourth quarter. So it's early to be talking about next year at this point. But we feel like we're going in with strong momentum and executing on the range that we talked about at the time of the deal model. So more to come.

Great. Thanks for taking the questions.

Our next question comes from the line of Isaac Ro with Goldman Sachs. Isaac Ro - Goldman Sachs & Co. LLC: Good morning, guys. Thanks very much. Just hoping you could talk a little bit more about U.S. surgical volume trend. Kind of curious what you saw in the quarter and what's baked into the guidance for the rest of the year? And the reason I ask is, it does look like across the industry things have gotten a little bit better. But maybe not to the degree you would hope for, given seasonality and just economic backdrop here. So be interested in your take on that dynamic. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. I'll just make an overall comment first and then I'll turn it over to Tom. But I don't think we've seen any real change in the surgical dynamics broadly across the product line, the legacy BD piece or the Bard piece, other than the little bit of confusion from the hurricane, which is kind of clouding things. But, Tom, is there anything else you want to add? Thomas Polen - Becton, Dickinson & Co.: Vince, I think you said it well. Vincent A. Forlenza - Becton, Dickinson & Co.: Okay. Thanks. Isaac Ro - Goldman Sachs & Co. LLC: Okay. Helpful. And then just a follow-up on the gross margin dynamic, just to continue on that topic. It'd be helpful if you could maybe deconstruct a little bit more some of the key drivers of improvement. You said to us you had multiple factors at play here. Trying to figure out which of those are likely to sustain on a sort of normalized basis if we put aside FX. Christopher R. Reidy - Becton, Dickinson & Co.: Sure. So we obviously get a nice lift from the mix with the Bard gross margins. And so that's about 300 basis points this particular quarter. For example, we had 100 basis points of improvement from synergies. And that was partially offset by headwinds from raw materials, about 30 bps, mostly resins, and pricing was about 20 bps thereabouts. Isaac Ro - Goldman Sachs & Co. LLC: Got it. Thank you very much.

Our next question comes from the line of Larry Biegelsen with Wells Fargo.

So good morning. Thanks for taking the question. One on Bard, one on some new – some products. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah.

So first on Bard. Any update on revenue synergies and tax synergies and timing and maybe just qualitatively the potential benefit? And then I had one follow-up. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. Tom will talk about the revenue synergies. I think we're feeling pretty good. Tom? Thomas Polen - Becton, Dickinson & Co.: Yeah. Hi, Larry. This is Tom. So we do continue to expect revenue synergies are going to be measurable starting in FY 2019 and larger than the CareFusion revenue synergies as we've shared in the past. More to come on specifically what those dollars are. I think we've always hinted that that would come as we give FY 2019 revenue guidance. And we expect that that's still the exact timing that we're on. But maybe the other things I could add is we've shared already that we're investing about $15 million this year towards revenue synergies. Most of that falling in SSG&A expenses as we're ramping up our efforts in a few areas, and those are around vascular access. So driving synergies across that broadened portfolio of PICCs, mid-lines, and catheters. And then that other major area is in Surgery, particularly the U.S. and Europe, where there was opportunities to double down the channel to leverage the biosurgery and the infection prevention platform. So those investments are rolling out. Actually Q3 was kind of the peak of those investments. Q4 will continue at a similar rate and then continue to roll into 2020. But we are seeing positive momentum. Vincent A. Forlenza - Becton, Dickinson & Co.: The only other thing I would add is that we have piloted the vascular access value proposition in a few accounts. And the response from the accounts has been excellent. We just saw that in the last couple of weeks. So we think we're on the right track here.

And, Chris, on the tax synergies? And just I'll ask the product question. So Lutonix BTK, still file by year-end 2018? Any update on the data presentation? And just lastly, TVA, the opportunity seems underappreciated to me. Any color on how big that could be? Thanks for taking the questions. Christopher R. Reidy - Becton, Dickinson & Co.: So I'll go with the tax rate first, and then I'll pass it over to Tom. It's still a little bit early on the tax synergies. And the reason for that, first of all, it's complicated. But it's, secondly, complicated by tax reform. And so there's a lot of folks that are helping us dive through that as we speak. So more to come in the future on that. I think we feel good about where the tax rate is now. We're looking at the low end of our range, so in that 17% kind of range of – the original range we gave was 17% to 19%. So we're looking pretty good from that standpoint. The one other point that I'd remind people is you do get a bit of a grow over next year, because of the tax on foreign earnings from tax reform kicks in next year. So we're getting a little benefit this year. And it erodes a little bit next year. But we're pretty confident that we can offset that. So just something to think about. And Tom. Thomas Polen - Becton, Dickinson & Co.: So, Larry, this is Tom on BTK and TVA. So BTK is right on track with what we had shared historically. We are right now finishing the six-month follow-up and preparing the submission of the PMA in Q1 of 2019. That's 100% on track. And we expect to be able to talk…

Thank you.

Our next question comes from the line of Robbie Marcus with JPMorgan.

Great. Thanks for taking the question. Vince, I was hoping you could talk about your Emerging Markets growth. 15% to 20% of the business, still growing pretty strong double digits there. How much of that is from the addition of the Bard business? How did Bard do versus Becton? And any color on the sustainability there? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. And so I would say it was very much where we expected it to be. So kind of if you backed up underlying Bard and underlying BD, we're very much in line with historical trends. China I think was around – all-in, around 13% or so. And the BD and Bard pieces were pretty much in line with what we expected. For me, the big bounce back has been in EMA year to date doing quite well. And then very good growth in Latin America. So I would say that from a revenue synergy standpoint, we're really in very, very early days. We're only two quarters into this, just training folks on that. So you're not seeing the revenue synergy piece of that yet. That's to come. Now the one place we're moving ahead that's not Emerging Markets, as Tom mentioned of course, is in Europe. We do have the sales force now in place on the Surgery side of things. So just getting started there basically this quarter. So more to come next year on revenue synergies. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. And, Robbie, this is Chris. I would add when you think about Emerging Markets growth, I would say Bard adds about 2% to Emerging Markets, which is in line with what we would've expected.

Great. Maybe as a follow-up for Tom, on the type 2 diabetes patch pump and the cannula, the infusion set with Medtronic. These are two that have significant potential. Can you give us any more in terms of the go-to-market strategy with the type 2 pump? Any details around the product or how it compares to some of the other patch pumps out there? And is there any ability or willingness to take this into the type 1 market? Thanks. Thomas Polen - Becton, Dickinson & Co.: Okay. Okay. Robbie. This is Tom. So for Swatch, we continue to be very excited about the potential of that product. And we continue to make good progress. We are progressing our clinical trials as we had shared in the past, including the – we've just completed the analysis of an in-human insulin fusion trial. And that went exactly to plan for us. It was very positive response from patients on its ease of use and overall performance. So right now we're actually preparing to start-up our next in-home safety trial, again using insulin. And we're making good progress overall, gearing up our manufacturing. We've moved that to our Ireland location, where that's going to be the permanent manufacturing location. And we're building our commercial plans at this point in time. So it has been designed specifically for type 2 patients, both from a feature set and extreme ease-of-use. Right? What really differentiates this product from other types of patch pumps we think are the extreme simplicity of the user interface on the digital side and on the hardware side. And so that we've designed to not necessarily have all the bells and whistles that someone with type 1 would want, but that's also allowed us to have a cost position that is…

That's great, thanks a lot.

Our next question comes from the line of Doug Schenkel with Cowen.

Hi. Good morning and thank you for taking my questions. Vincent A. Forlenza - Becton, Dickinson & Co.: Morning, Doug.

I want to ask a pricing question of Chris. But before we get there, a couple pump questions, different types of pumps. Vincent A. Forlenza - Becton, Dickinson & Co.: Sure.

So, Tom, maybe as a follow-up to just that last question. On the diabetes side, would you ever consider collaborating with a CGM company to automate insulin dependent – I'm sorry, insulin delivery in intensively managed patients who potentially could be using your pump? Thomas Polen - Becton, Dickinson & Co.: Yeah, Doug, this is Tom. So yes, we would over time certainly look at CGM being integrated into the algorithms and collaborating with those types of organizations. Yes.

Okay. Thank you for that. And then on the new Alaris pump, just want to talk about the sales strategy there. Is this largely replacing existing BD units? Or do you think with this you can get even more aggressive targeting competitive conversions? You've done an excellent job gaining share. I'm just wondering if this actually positions you even better? Thomas Polen - Becton, Dickinson & Co.: Yeah, Doug, let me turn that over to Alberto Mas, who has obviously taken over the Medical.

Okay. Yeah. That would be great. Alberto Mas - Becton, Dickinson & Co.: It certainly positions us better with the customer, because there's an enhanced connectivity, cybersecurity, alarms, and so on. So the features are more advanced. Where we're seeing most of our gains, if you like, in the marketplace is when we put together our complete portfolio around the – our HealthSight capabilities in data and analytics. And together – when we put together our Alaris platform together with our Pyxis and from dispensing all the way to med management. The other driver here is interoperability. It's a very important component of our strategy. We think that we're ahead from that perspective from the competition. And we have a track record of actually getting it implemented, which is a key component of interoperability.

Okay. Thank you for that, Alberto. And, Chris, just last one on pricing. You guys have done a great job over the last few years maintaining price. It does look like you've come under a little more pressure recently. I'm just wondering if there's anything more to talk about there? And looking ahead, how do we think about tariffs in the context of pricing moving forward? Christopher R. Reidy - Becton, Dickinson & Co.: Sure. So I would say that it's pretty much in line with what we expected. We went into this year, we mentioned we expected to see pressure. And we're seeing a little bit of pressure, so tens of basis points. And it's pretty consistent. We're taking some price in certain areas as you know. And in other areas we're bringing the pricing down. So not unlike what we've been doing over the last few years, and we've been holding that fairly steady. So it's very consistent with where we were. And as it relates to tariffs, it's very small for us. So we don't see any implication on pricing at this point.

Okay. Thanks, guys.

Our next question comes from the line of Bill Quirk with Piper Jaffray. William R. Quirk - Piper Jaffray & Co.: Great, thanks. Good morning, everybody. Vincent A. Forlenza - Becton, Dickinson & Co.: Good morning. Christopher R. Reidy - Becton, Dickinson & Co.: Morning. William R. Quirk - Piper Jaffray & Co.: So, Vince, you highlighted the TVA medical transaction. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. William R. Quirk - Piper Jaffray & Co.: How should we think about the pacing of capital deployment for additional M&A activity as compared to that reduction? Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. Sure. So number one, we are focused on debt reduction and meeting our commitment to get down to three times. And so – and we're on track to so far. So we're feeling good about that. But as we did our modeling and our planning, we didn't make allowance for tuck-in acquisitions. And just as we did under CareFusion, we did a few of them. When we tightened the screening and said, they have to be must-dos strategically. And of course we always have rigid criteria. But you should expect that we will continue to do plug-in acquisitions. But also at the same time meet those deleveraging goals. And that's on track so far. Christopher R. Reidy - Becton, Dickinson & Co.: Yeah. I feel really good about the fact that we're at 4.2 times already and also did very a very exciting acquisition like TVA and were able to do both. And it goes back to what Vince said, as we had planned to leave some room, because we knew we didn't want to be out of the tuck-in acquisition business. And so we were able to accomplish both. William R. Quirk - Piper Jaffray & Co.: Very good. And then, Tom, circling back to an earlier question, can you help us think a little bit about how you're thinking about the TVA Medical contribution here following the 1Q launch? Thomas Polen - Becton, Dickinson & Co.: Hey, Bill. This is Tom. So I don't think we certainly are giving any guidance by product line by quarter. But we would expect – obviously it's a new market that we're going to have to develop. And we think it'll over time become a meaningful contributor to the Peripheral Intervention business. But we don't comment much more than that by product line. William R. Quirk - Piper Jaffray & Co.: Okay. Got it. Thank you. Christopher R. Reidy - Becton, Dickinson & Co.: Just remember the old adage that this is a company built on singles. And so just keep that in perspective. William R. Quirk - Piper Jaffray & Co.: Got it. Thanks, Chris. Christopher R. Reidy - Becton, Dickinson & Co.: Okay.

Our next question comes from the line of Rich Newitter with Leerink Partners.

Hi. This is Jaime on for Rich. Thanks for taking my questions. I guess just following up kind of on capital deployment and M&A landscapes. Vincent A. Forlenza - Becton, Dickinson & Co.: Yes.

Kind of what (1:03:43) about size-wise for any potential tuck-ins? And (1:03:47) are you most focused on for areas where you feel that it would benefit from such a deal? Vincent A. Forlenza - Becton, Dickinson & Co.: Well, these are smaller transactions. You saw at TVA is kind of, they got the technology developed, they got an FDA approval. It wasn't a science project. It was a complete product. And in the Interventional segment, you see a lot of that. If you look back over our history, you saw us buying companies that were in the $50 million range. That sort of stuff. Smaller things is generally what we are talking about. A good example is FlowJo, a small software company. It enhances the growth rate. It's another single like Chris was saying. But really rounded out our solutions portfolio over there. Those kind of things is what we're talking about here.

Okay. Great. And then just a follow-up. I know you guys are commenting on how the Bard acquisition is going on track and progressing very well. Just a question that I had there. Is there any changes that have surprised you kind of either to the positive or negative since the deal has closed? If you could share any color there. Vincent A. Forlenza - Becton, Dickinson & Co.: Yeah. That's a good question. I think the interesting thing is that I don't think there has been any significant surprises in terms of when we step back and look at the fundamental assumptions that we had driving the acquisition, starting on the strategy side and how these things fit together. And then on the financial side, if there's been an upside it is how similar the cultures have been and how quickly the teams have come together. I'm delighted, as I mentioned in my remarks, to have several members now on my leadership team out of Bard. Not that I didn't think they were great people ahead of time. But the way this has come together, as I mentioned, from a cultural standpoint has been really good. So that has been fine. I think the differences between CareFusion and this one, CareFusion was put together through acquisition. It had a bunch of different cultures. And so we had to integrate a bunch of different cultures. And then you were integrating actually a bunch of different businesses. With Bard, it's one culture. Those run very decentralized. And so the integration challenge, the complexity in that integration challenge comes from the differences in the business units and the business systems across them. And of course, so that's just a different way of having opportunity and getting at the opportunities across the two businesses. But pretty much, that's it. Very happy with the way the integration is going. And thanks for the question.

Thanks.

At this time, there are no further questions. I will now turn the call back to Mr. Forlenza for closing remarks. Vincent A. Forlenza - Becton, Dickinson & Co.: Yes. Thank you very much for your participation. Just some final comments. As you saw in the quarter, the core BD performance is very strong and we see acceleration in the fourth quarter. I just mentioned that the Bard integration, the synergy capture, the base business performance is also right on track. Very, very happy about that. This year has been a very challenging year because of the amount of things that we have had on our plate. Integrating two businesses, as I said. We're in great shape on CareFusion, pretty much done with that. The Bard piece is going well. But of course we threw on top of that the hurricane and having to deal with that across both organizations. And I'm really proud of the way people have stepped up to those challenges. And at the end of the day, this is an organization that's come together quite nicely, that's working extremely hard to meet our own expectations and your expectations. So thank you very much. Christopher R. Reidy - Becton, Dickinson & Co.: Thanks, everyone.

Thank you. That does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.