Good day, ladies and gentlemen, and welcome to the Campbell Soup Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I will now turn the call over to your host, Ken Gosnell. Please go ahead.

Thank you, Stephanie. Good morning, everyone. Welcome to the second quarter earnings call for Campbell Soup's fiscal 2016. With me here in New Jersey are Denise Morrison, President and CEO; Anthony DiSilvestro, CFO; and Blake MacMinn, Senior Manager Investor Relations. As usual, we've created slides to accompany our earnings presentation. You will find the slides posted on our website this morning at investor.campbellsoupcompany.com. This call is open to the media who participate in a listen-only mode. Today we'll make forward-looking statements, which reflect our current expectations. These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk. Please refer to slide two or our SEC filings for a list of factors that could cause our actual results to vary materially from those anticipated in forward-looking statements. Because we use non-GAAP measures, we have provided a reconciliation of these measures to the most directly comparable GAAP measure, which is included in our appendix. With that, let me turn the call over now to Denise. Denise M. Morrison - President, Chief Executive Officer & Director: Thank you, Ken. Good morning, everyone, and welcome to our second quarter earnings call. Today I'll share my perspective on our performance in the quarter and our progress on the strategic changes we've implemented at Campbell over the past year. Overall, I'm pleased with our results this quarter, but not satisfied with our sales performance. We delivered outstanding adjusted EBIT and EPS growth. I'm particularly happy with our continued gross margin expansion, improved execution from our supply chain team, and the progress we've made on our cost savings initiative. Organic sales for the quarter were comparable to a year ago, a bit below our expectations as our categories and geographies continue to face challenging conditions. As I discussed last week at CAGNY,…

Thanks, Anthony. We will now start our Q&A session. Since we have limited time, out of fairness, if you would, to other callers, please ask only one question at a time.

Our first question comes from Ken Goldman with JPMorgan. Your line is open.

Hi. Good morning. Denise M. Morrison - President, Chief Executive Officer & Director: Hi, Ken.

Denise, you talked about your desire to continue growing in emerging markets via M&A, and I think the phrase you used to describe the EM situation was, and correct me if I'm wrong, short-term volatility. I guess my question is how do we know? How are we confident that the issues are not permanent slowdowns over there? Because I'm trying to get a sense of Campbell's willingness maybe to spend on an asset in a geography less attractive than it once was versus your other M&A goal, which is faster growing domestic assets, right? I mean, some of these that have been sold lately, Vega I think is one of them, I would have thought Campbell might have been very interested in. Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. We expect that the emerging markets that we currently have footholds in, and that is China and in Southeast Asia, will continue to be viable markets for our business, particularly our Global Biscuits and Snacks business, which is growing, despite the fact that their overall growth rates are down, particularly in China. We do think that even though their growth rates have slowed, they're still growing faster than the domestic market. And we also know that 70% of the growth in the food industry is going to come from emerging markets over the next decade. So we believe we need to continue in a smart way to expand our geographic footprint. That said, we'll continue to look for smart M&A, both in emerging markets and also domestically in sync with our strategy.

Okay. Thank you very much.

Our next question comes from Chris Growe with Stifel. Your line is open. Denise M. Morrison - President, Chief Executive Officer & Director: Hi, Chris. Christopher Growe - Stifel, Nicolaus & Co., Inc.: Hi. Good morning. I just wanted to ask a question if I could in relation to – you've got a heavy degree of cost savings coming through and really influencing your gross margin. I guess, maybe two questions related to that. One is do you have, and if I missed this, excuse me, but gross margin guidance for the year? Now it looks like that's running well ahead of your expectations. And then in relation to that, you talked about increasing your marketing investments in the second half of the year. I had planned for you to do that anyway. Are you stepping those up? Are we seeing the investment levels increase from what you had assumed initially for the year? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Okay. So I'll take that one. I'll comment first on the gross margin comment. Yes, we are giving guidance on gross margin, and we expect 175 basis points of gross margin improvement for the year. So that implies about a flattish back half, but let me try to give you some more context on this one. I think if you go back to last fiscal year 2015, it really is a story of two halves. In the first half of last year, gross margin was down about 2 points, and in the second half of last year gross margin was up 1.4 points, as we took some pricing and improved our supply chain performance in the back half. So if you look at it on a two-year basis, both the first and second half of…

Our next question comes from Robert Moskow with Credit Suisse. Your line is open. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Hi. Thank you. Hey, I wanted to... Denise M. Morrison - President, Chief Executive Officer & Director: Hi. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Hi. I wanted to ask about the declines in ready-to-serve. The first half of the year they were pretty steep, and it's been like that for a couple of years now. And I wanted to know, Denise, how are you going to balance the portfolio strategy kind of mandate to run soup for and to hold share? And also recognize that you might need to put more investment into ready-to-serve to kind of stem those declines. Do you need to fix the product or do you need to change something on the promotional strategy, which ended up causing some elasticities that were bigger than you thought? What do you think? Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. Well, first of all, when you step back, the entire wet soup category was down 3% and we were down 4%. And we were up in condensed by 2% and up in broth by 7%. In RTS, particularly in Chunky, is where we experienced our issue. And recall we did take net price realization. So that's a combination of pricing actions and also promotion actions. And that's not an easy one because you've got a marketplace where some of the marketplace is at high-low on promotions and some of it is EDLP. So finding that right rhythm is an important idea. The other thing is the competitive landscape. We have to take that into consideration as well. In the case of Chunky, we actually had a promotion on pack…

Our next question comes from Jason English with Goldman Sachs. Your line is open. Jason English - Goldman Sachs & Co.: Hey, good morning, folks. Denise M. Morrison - President, Chief Executive Officer & Director: Good morning. Jason English - Goldman Sachs & Co.: Thank you for the question. Congratulations again on a solid first half. Denise M. Morrison - President, Chief Executive Officer & Director: Thank you. Jason English - Goldman Sachs & Co.: You spent a fair amount of time, Denise, in your prepared remarks talking about some of the challenges in terms of finding growth in this portfolio, some of the innovation, and you talked a little bit about M&A. Can you delve a little bit deeper in terms of your appetite for M&A in your efforts to transform this portfolio? Is there an increased sense of urgency, given the organic challenges? And what are you seeing out there in the landscape in terms of quality assets at reasonable prices? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Yes, I'll start and then see where we go here. I think the first point to make is that we are confident that the portfolio today can deliver long-term sales in that 1% to 3% range on a currency neutral basis. And I think if you think about the portfolio roles that we've assigned to each of our divisions, Americas Simple Meals and Beverages, moderate growth, in line with the categories. We have a very good portfolio in Global Biscuits and Snacks; that should certainly be able to grow towards the high end of that range. And then C-Fresh, the performance of late has not been that great and there's some reasons for that and we're going to lap some of those reasons, so we do…

Our next question comes from David Driscoll with Citigroup. Your line is open. Denise M. Morrison - President, Chief Executive Officer & Director: Hi, David.

Hey, thank you. Good morning. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Hi, David.

Denise, I wanted to follow up. I think a couple of people have asked this question a little bit, but I want to try it slightly differently. Americas Simple Meals, what's kind of the volume outlook? I mean, clearly, you talked about the warm weather in the quarter. And then there's a much bigger picture issue here of just how you re-segmented the company and I want to call it kind of manage for cash, meaning that pricing is going to trump volume trends. But I was hoping you could kind of just talk about how, over the course of time, the volumes should trend within this segment? And just what's the strength of this concept that the company would accept better profits and maybe incur some negative volumes? Kind of what's the tolerance to accept an outcome like that? The margin performance in the quarter incredible in that segment and, obviously, you're being rewarded for it in the market today. But I would just like to hear your thoughts longer term. Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. Well, I think longer term we expect to strike the right balance of net price realization and volume. And we'd like to grow soup and Simple Meals modestly over time. That's in line with the expectations for those categories. So that portfolio role was thought through very carefully. And what we've learned over the years is, when we expect the categories to grow beyond what their portfolio momentum can do, we wind up spending inefficiently to get there. And so it's really an important idea to make sure that we are investing appropriately to be competitive in those categories and drive modest growth while we keep an eye on our margin expansion.

The one follow-up on this point, Denise, is simply that – I think you said yourself that pricing in the soup category, especially in RTS, has just not been there for, I think you said, a decade or some really long period of time. Why would it be natural to assume that the volume growth should be like the rest of the store, if in fact this category should be taking pricing to kind of catch up relative to what it hasn't done in this previous decade? Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. Well, I mean, each segment of the category has its competitive set, and we run the soup business as a portfolio. And so when you think about the pricing spectrum in the portfolio, it's all the way from value condensed through higher end Slow Kettle and even into higher than that end refrigerated soup and then mainstream pricing in between. And so actually we think that the price realization on RTS was an important idea in the portfolio management of the category and we saw positive results on the condensed soup line this quarter.

Thank you so much.

Our next question comes from John Baumgartner with Wells Fargo. Your line is open.

Good morning. Thanks for the question. Denise, I would like to come back to the ready-to-serve topic. You called out some of the elasticity impacts there in the quarter, but your price gap relative to your largest branded competitor, I think the widest it's been in a couple of years now. How impactful do you think that gap on the shelf has been to your volumes and might this be a situation where an increase in promo may end up being necessary to stabilize things? Thanks. Denise M. Morrison - President, Chief Executive Officer & Director: I do think that when we planned our net price realization for the year, we did not expect competition necessarily to follow. However, we did notice more of a gap, particularly on promotions than we had planned for. So we are course correcting accordingly.

I mean, is this a situation that we should think that it continues to weigh on (48:21) volume in the back half of the year as well? Denise M. Morrison - President, Chief Executive Officer & Director: Actually, we have a pretty robust plan starting in the latter part of quarter two in January and all through quarter three and we were very pleased with the results in January.

Okay. Great. Thanks, Denise.

Our next question comes from Alexia Howard with Bernstein. Your line is open. Alexia J. Howard - Sanford C. Bernstein & Co. LLC: Good morning, everyone. Denise M. Morrison - President, Chief Executive Officer & Director: Good morning. Alexia J. Howard - Sanford C. Bernstein & Co. LLC: Okay. Can I ask about the sales investment that I think looking at the press release it looks as though there might have been some cutbacks on the selling side of things, if marketing spending was up a bit? What are you doing there? I know that a few years ago you outsourced merchandising to Acosta. Do you have people in the source merchandising? What is your strategy? Pruning that, where are you heading? And maybe also just generally on the promotional spending. I know it's already come up, but are you in general trying to pull back on the trade promotion spending where it's inefficient and where is that likely to head over time? Thank you. Denise M. Morrison - President, Chief Executive Officer & Director: Okay. We did have higher advertising spending in the quarter and we continue to invest in advertising and brand building, and you'll see that continue into the second half. In terms of trade investment, again, we've focused on net price realization, which is the combination of pricing actions and promotion spending. We've created a Revenue Management group, which is working with Advanced Analytics to improve our effectiveness and make sure we take into consideration those programs that are working and not repeat those that aren't. So that's a change for us. And finally, we always are looking to invest our promotion investment with customers for a better return, so a better return for them and a better return for us. So, we are focused more on how we increase the quality of our spending. And basically, it's the combination of the ACT that we expect to be between 24% and 25% of sales. That hasn't changed. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Yeah. And the first part of your question on selling expense, selling expense is down, and we went through a pretty significant reorganization. As we redesigned the divisions, we also reduced some of the staffing levels in some of our sales organizations, which is coming through as well. Alexia J. Howard - Sanford C. Bernstein & Co. LLC: Thank you very much, I will pass it on.

Our next question comes from Matthew Grainger with Morgan Stanley. Your line is open. Matthew C. Grainger - Morgan Stanley & Co. LLC: Hi, good morning, thanks. Denise M. Morrison - President, Chief Executive Officer & Director: Hi, Matt. Matthew C. Grainger - Morgan Stanley & Co. LLC: Hi. I wanted to follow up on the gross margin expansion, from sort of a bigger picture standpoint. Given how significantly the magnitude of the upside has exceeded your original expectations this year, is it possible to talk a little bit more broadly about where you think gross margins can go over the next two to three years, given the continued flow through of cost savings and the mix impact between the segments? And is this accelerated growth in 2016 in any way a pull forward of some of the gross margin expansion, or I guess a reset that you hope to achieve over a multiyear period? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Yeah, I can take that one. I mean, certainly we are very pleased with the cost savings we have been able to achieve and our gross margin performance. And I think one way to look at that is we are planning to invest some of those savings, and we're going to start to see that in the second half in new product launches and key brands and longer term innovation ideas, capability building in areas like digital and e-commerce. That being said, we raised our savings target, so we think there's more savings to capture. That should benefit gross margin as well as our overhead costs, and I think that together with the role of Americas Simple Meals and Beverage targeting margin expansions, that we think there's enough funding there to do a couple…

Our next question comes from Jonathan Feeney with Athlos Research. Your line is open.

Hi, good morning. Thanks for the question. Just to clarify on the pacing of these cost savings, can you repeat where we are year-to-date against the $110 million to $120 million target and what sort of run rate you think you're on right now as far as achieving those in the second half of the year? And also a detail around that if you wouldn't mind. Could you give me a sense of how those split between cost of goods sold and what – marketing and selling and G&A and other expenses? Thanks. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: I'll take that one. So against the now $300 million target, we did $85 million last year, we did $30 million in the first quarter, and we did $50 million in the second quarter. So year-to-date, first half we're at $80 million against our incremental savings target this year of now $120 million to $140 million. So we're kind of two-thirds of the way into that. That $80 million comes from a combination of head count and non-head count, and that splits about evenly. In terms of P&L, it's about a third cost, two-thirds non-cost, and within the non-head count, it's – couple of examples of some of the big drivers would be travel and entertainment, non-working marketing, and on the cost side, some of our transportation cost savings initiative. We kind of redid our entire freight lane structure, and at the end of last year, we're seeing better rates. We're seeing almost no usage of the spot market. We're seeing better truck weights. We're seeing less miles. We're seeing less inter-plant shipments. So we're really seeing a lot of nice benefit on the transportation and warehousing side coming through too.

Would you say that was the biggest area that came in ahead of your plan? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: No, it's across the board. Each area is well ahead of what we initially or previously thought.

Okay. Thanks very much. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Sure.

Our next question comes from David Palmer with RBC Capital Markets. Your line is open.

Hi. A follow-up on the issue of reinvestment. You heard the surprise and kudos on the cost reduction at CAGNY, and there was also some curiosity in the crowd about what if reinvestment would work longer term? Today you're talking about marketing tactics with Chunky and the ramp up in marketing and promotion spending into the second half of the year. But, as you think long term, what are the things that you think will – what areas of reinvestment do you think you'll make in the core to change the trajectory of the core soup and other? Thanks. Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. It's a great question and it's always been our intention to spend back a portion of the cost savings that we're realizing for the long term health of the business. Let me give you some examples. In the Americas, even though we're managing Americas for modest growth and margin expansion, the Americas still has some pockets of full force growth businesses. And we will continue to invest, first of all, in the quality of our products and making sure that we are looking at ingredients and the quality against our purpose of real food that matters for life's moments. Second of all, we continue to invest in our sauces business, which is really healthy, and our broth business. And then finally, having made the acquisition of Plum Organics, we're incredibly pleased with the performance of that business, and see a lot of runway in the innovation pipeline to make smart investments and continue to cultivate relationships with Millennial parents. In the Global Biscuits and Snacks front, we are very committed to expanding the Kelsen business in China and beyond. We have plans for increasing our footprint of the Tim Tam brands, and as I mentioned, we are continuously working on product quality, for example, the investment we're making back in our shapes business. We are in the United States continuing to work on our Goldfish brand, and we believe there's more growth in that brand, particularly as we move into products in the health and well-being space. And then finally, C-Fresh is our full force growth, and we've been very pleased with the portfolio of brands and categories in the produce area and in the deli part of the perimeter, inclusive of our refrigerated soup, that between the beverages, the salad dressings, the hummus, the salsas and the soup, we have a lot to work with, and we have capabilities in each one of those categories in shelf stable that we can actually bring into the fresh space, and we have a very energized team across all three of these divisions to do so. So I think based on five years ago, we have a lot more to work with, and so making sure that we make smart investments and have a discipline about it is important, but we have a lot of places where we can put our dollars.

Very helpful. Thank you.

Our next question comes from Michael Lavery with CLSA. Your line is open.

Good morning. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Morning. Denise M. Morrison - President, Chief Executive Officer & Director: Hi.

I was wondering if you could just help me understand some of the cost savings breakdown a little bit further. You have your administrative expenses actually up 6% in the quarter and marketing down 5%, R&D it looks like down about 9%. I would have thought that with ZBB, maybe you would see something closer to the reverse. And so what's the right way to think about that? And then how do you also reconcile the savings on the cost of goods sold side? How much of that is coming from input costs versus cost savings? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: So, first on the admin expense. The primary driver of the increase is incentive compensation cost. Last year below target, this year above target. Ex-that, the admin would be down as a result of our cost savings initiative, so that's what you see on the P&L. Inside of costs, the inflation on input cost was about flat compared to year ago. So it was neither a help nor a hindrance on gross margin, but it's certainly been more modest than it's been. And in costs, what you're seeing is a few different things coming out of the supply chain and kind of breaking down into three chunks. One is it's just better supply chain performance. And what we mean by that is that the plants are operating at higher efficiency levels, our customer service levels are back above our targets, and as a result, we see lower inter-plant shipments. We see fewer less-than-truckload shipments, so we have better weights. We actually have less miles. So that's all kind of within how we're operating. And then we have a portion of our cost savings initiative that's coming through, and this is primarily in the area of transportation and the fact that we reworked our entire transportation network last year. So we re-contracted it, we have increased the committed carrier capacity. At the same time, we've achieved lower rates, and as a result of our service levels being where they are, we really had almost zero use of the spot market so that that's a premium cost we had last year, we don't have this year. And the third bucket is what we call productivity, where we have specific action supply chain is taking to generate cost savings. And couple of examples within that would be the capacity additions in Bolthouse Farms and in our U.S. broth business have allowed us to repatriate production from co-packers, so we're seeing that benefit come through. The other one is our soup common platform initiative, which we're also seeing benefit on the P&L. And lastly, warehousing capacity, we've made some investments in our own internal warehousing so we've reduced several lines on third-party warehouses and some of those cost reductions are coming through as well.

That's helpful. Thanks. And then just a quick follow-up on the marketing and R&D. How much of the change is pacing versus how much is driven by head count or more permanent reductions? Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: I don't have that number off the top of my head here. I mean, certainly we are seeing fairly significant savings in nonworking marketing coming through that line. And as Denise said, advertising and consumer spending is actually up in the quarter, but you see marketing expense on the P&L and we don't see it's (1:03:41) within selling and marketing is down, and that's primarily driven by all the work we've done on the cost savings side, both head count and some of our other nonworking marketing expenses. Denise M. Morrison - President, Chief Executive Officer & Director: Yeah. And on the subject of R&D, because we continue to emphasize improving our innovation, we have brought in strong leadership. In our redesign, our product development is embedded in the business divisions with strong support from the center, so we believe we have a very aligned organization to be more agile and more responsive in the marketplace.

Okay. Thank you very much. Anthony P. DiSilvestro - Chief Financial Officer & Senior Vice President: Sure.

Our final question comes from Erin Lash with Morningstar. Your line is open.

Thank you. Denise M. Morrison - President, Chief Executive Officer & Director: Hi, Erin.

Hi, thank you for taking my question. I was hoping you could just provide a little bit more detail surrounding the relationship with retailers and how those conversations are going as you're working to improve the efficiency of your trade and marketing spending. Obviously, retailers are dependent on leading brands to drive store traffic and so – and obviously, you highlighted the competitive dynamics being extremely intense over the course of the call, so I was just kind of wondering how those discussions are kind of progressing and trending? Denise M. Morrison - President, Chief Executive Officer & Director: Right. We engage with our retailers on joint business planning where we will work with them on understanding their goals and working on plans that deliver on their goals and our goals, and then set expectations and the appropriate spending to achieve those expectations. And then there's a very rigorous process along the way to engage them with what's working and what isn't working, so there's course correcting, et cetera. So we're really positive about the relationships that we have in order to plan and execute the business. We're very engaged with retailers on revitalizing the center-store. It has been sluggish and it is a major source of profit for retailers, and we believe that we've got the portfolio that not only can jazz the center-store, but it also toggles into the perimeter as well, because many of our brands in the center-store are used in conjunction with products that consumers will buy in the perimeter as well. So we continue to work with them on those kinds of goals. And they are mutual goals. So the way we look at our trade is as an investment where we hope to continue to build a return on that investment by good planning with retailers.

Thank you. That's very helpful.

All right. Thank you, everyone, for joining our second quarter earnings call and webcast. A full replay will be available about two hours after the call concludes by going online or calling 1-703-925-2533. The access code is 1668326. You have until March the 10th at midnight, at which we point we move our earnings call strictly to the website, investor.campbellsoupcompany.com under News & Events – just click on the webcast. If you have further questions, please call me, Ken, at 856-342-6081. If you are a reporter with questions, please call Carla Burigatto, Director of External Communications, at 856-342-3737. This concludes today's program. Thank you.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect, and everyone have a great day.