Good morning, ladies and gentlemen, and welcome to the Henry Schein Third Quarter 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 call is being recorded. I would now like to introduce your host for today's call, Carolynne Borders, Henry Schein's Vice President of Investor Relations. Please go ahead, Carolynne.

Thank you, Chantelle, and thanks to each of you for joining us to discuss Henry Schein's results for the third quarter of 2017. With me on the call today are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein; and Steven Paladino, Executive Vice President and Chief Financial Officer. Before we begin, I would like to state that certain comments made during the call will include information that is forward-looking. As you know, risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements. As a result, the company's performance may materially differ from those expressed in or indicated by such forward-looking statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission. In addition, all comments about the markets we serve, including end market growth rates and market share are based upon the company's internal analysis and estimate. The contents of this conference call contain time-sensitive information that is accurate only as of the date of the live broadcast, November 6, 2017. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. I ask that during the Q&A portion, you limit yourself to a single question and a follow up before returning to the queue, allowing as many listeners as possible to ask a question within the one hour that we have allotted for the call. With that, I would like to turn the call over to Stanley Bergman.

Thank you, Carolynne, and good morning, everyone, and thank you for joining us. I'd like to start today's call by making a few high-level comments. Our sales results for the third quarter was solid overall and reflect continued success with our comprehensive offering of products and value-added services that drive internal growth bolstered by strategic acquisitions. This combination of internal growth and complementary acquisitions is at the heart of our business model. Third quarter sales growth was negatively impacted by the recent hurricanes in the U.S., as well as a difficult comparable in dental equipment sales. We have a track record – a solid track record, I might add, of gaining market share with the combination of internal sales growth and acquisition growth. Our normalized internal local currency growth has been in the range of 4% to 6% for the past 14 quarters, built on years of great success in internal local currency growth. This has been supplemented by approximately 1% to 5% of acquisition growth over the same period. So, the track record on sales is a good one, and we remain confident that we will continue to build on this track record. Steven will review our 2017 and 2018 guidance in a bit more detail later. During 2018 and beyond, we expect to continue to make progress with our focus on increasing sales of higher-margin products across all of our businesses, as well as improving operating efficiencies to achieve long-term EPS growth. We are confident and indeed excited about our long-term prospects, and believe we are very well positioned in the markets we serve to continue to increase market share through internal growth, supplemented by strategic acquisition, whilst increasing operating margin. Let me now ask Steven to review our financial results, and then I'll provide some additional commentary on our recent business performance and accomplishments. Steven?

Okay. Thank you, Stanley, and good morning to all. As we begin, let me first point out that all of our per share amounts that I will be discussing today reflect the 2-for-1 stock split that we recently completed. In addition, last year's Q3 2016 results include restructuring cost of $5.4 million pre-tax or $0.02 per diluted share. As Stanley mentioned, our 2017 third quarter results were negatively impacted by the recent hurricanes in the U.S., among other factors that I'll discuss in more detail in a moment. While it is difficult to quantify the precise impact, we estimate that the hurricanes negatively impacted our worldwide sales growth by approximately 30 basis points and negatively impacted our EPS by approximately $0.005. So, I'll also be discussing our results on an as-reported GAAP basis and also on a non-GAAP basis, and that non-GAAP basis excludes the prior-year restructuring cost. On year-to-date non-GAAP measure, the current year-to-date also excludes litigation settlement expense. We believe that the non-GAAP financial measures provide investors with useful information about the financial performance of our business. It enables the comparison of financial results between periods, where certain items may vary independent of business performance and allows for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for the corresponding GAAP measures. You could see in Exhibit C of this morning's earnings release a reconciliation as well as a reconciliation that's provided on our Investor Relations section of our website. So, turning to our results for the quarter. Our net sales for the quarter ended September 30, 2017, were $3.2 billion, reflecting a 10.3% increase compared with the third quarter of 2016. This…

Thank you, Steven. We believe Henry Schein serves the largest worldwide base of dental, animal health and medical office space practitioners, and we remain confident in our ability to continue to drive EPS growth through increased sales and margins complemented by operating efficiencies, driven through our unique infrastructure and strong value-added services offering. We have believed in the statement now for the 22 years that we've been a public company, and remain confident as ever that we as a company are well positioned to continue sales growth through internal local currency growth, coupled with synergistic acquisition growth. Excluding the impact of the hurricanes and the loss of the previously disclosed DSO contract, our internal growth in local currencies in the third quarter was 5.4%. We believe that that is at least 2 times, if not more, the market growth. We have a solid track record of gaining market share with normalized internal local currency growth, which has been in the range of 4% to 6% for the past 14 quarters. I started the call this way, and I'd like to stress this. And of course, even before that 14 – for the last 14 quarters, the track record has been outstanding. We remain confident that we can supplement our internal local currency growth with synergistic acquisitions. We have a policy of not talking about acquisitions specifically until the acquisition is closed. And so we do not want to count our chickens before they hatch, but we do have a decent pipeline of acquisitions, of M&A investments, and putting money to work – capital to work, so that we could increase our synergies over time and driving operating income, and so EPS growth. We have, as a priority, a plan to increase sales of higher-margin products, and so continue to drive…

Your first question will come from the line of Kevin Ellich with Craig-Hallum.

Good morning. Thanks for taking the questions. I guess, Steve, wanted to go back to your comments on gross margin. Could you quantify or give us a little bit more detail on the three factors that you laid out: the product mix; Dental specialty in European; Dental in Germany, and how much of an impact do you think that will have in 2018?

Yeah. Well, let me – we're not going to be very specific on that, but I would say that probably the largest impact was the European Dental business, which probably had the biggest impact in gross margins. I think it's important to note that we see that as something that as we continue to build out our value-added services in Europe that are not as advanced as we do have in the U.S. So, for example, in Germany, we don't have software solutions among other value-added services. So, we do think there's opportunity to improve those margins over time, and of course, we're looking at operating expense efficiencies also. So, that was probably the largest. The second largest was probably product mix, where product mix worked against us, where the fastest-growing businesses were the slowest margin. And then, even within Medical and Animal Health, we had some mix issues. Specifically in Medical, we have lower gross margins on flu vaccine versus a year ago. And the last was special markets or dental support organizations. But we mentioned that even though we're smaller in the current quarter, it will be a little bit larger in Q4 and into 2018 until those contracts annualize. We're also working at being more efficient to improve the profitability of those contracts over time, but that's still something we're working on.

And then, Steve, on the guidance for 2018, how much of an impact does the divestment of E4D – of your investment in E4D have on the EPS guidance?

Yeah. Really very little, because we picked up in the affiliate income our share of the gain or loss, but we'll continue to sell the E4D products and we would expect that sales would be still good. And remember, we only have a small interest of about 20% in E4D, so really not significant impact on the EPS.

Thank you.

Your next question will come from the line of Sarah James with Piper Jaffray. Sarah E. James - Piper Jaffray & Co.: Thank you. I appreciate the comments on the headwinds and tailwinds driving your 2018 guidance, but I wanted to clarify a few items. So, you said that you expect dental consumables to improve over time. Was that counted in 2018 guidance? Are you talking about longer term? Then, on DSO contracts, does your guidance assume any improvement in margins over the course of the contract? Thanks.

Yes. So, I'll comment on improving Dental markets. It was really a longer-term comment. We really have not factored that in at this time in 2018. So, we'll wait and see how that turns out, and if we see an improvement, then of course there'll be some upside. With respect to DSO contracts, we have initiatives where we think we can improve the profit – by the way, they're still profitable, so it's not like they're not profitable, but we do want to improve the profitability of DSO contracts. We're being a bit conservative there, because that's still work in process, so there's still some opportunity there in 2018 should we do better than what's in that guidance. Sarah E. James - Piper Jaffray & Co.: Thank you.

You're welcome.

Your next question comes from the line of Robert Jones with Goldman Sachs. Robert Patrick Jones - Goldman Sachs & Co. LLC: Hi. Great. Thanks for the questions. Just looking at the North American dental consumables in the quarter, it sounds like adjusting for the hurricane and the DSO loss, growth would have been closer to around 2.7%, somewhere in that neighborhood. I'm wondering, how would you guys characterize the health of the North American end market that you saw in the quarter? And then, if you could, I think last quarter you provided some helpful insight into the breakdown between price and volume within the growth you saw in North America dental consumables, that'd be helpful.

Yeah. I think that's the key question and I think the question that so many investors would like answer. It's very hard to give you a precise answer. Having said that, just attended the meeting of the American College of Prosthodontists, and the impression I get is that visits are stable; there are parts of the country a little bit ahead; we've seen a little bit increased number of procedures, but generally, I would say it's flat. Furthermore, I would say that inflation is very, very little. It is a little bit, but there's also a movement more towards generics, towards corporate brands, and I would say even in some areas, a movement towards lower-cost brands. So, overall, that would be – if that was the only change, all other things being equal, it would improve our margin. But generally, I would say the market is stable and in terms of units, and – there is a little bit of net price inflation, but not much because the price increase of the branded manufacturers are being mitigated by the use of corporate brand generics and lower-cost brands. So, I would say that the market is relatively stable. Longer term – and we are not contemplating this in our budgeting and in fact in our strategic plan for the next three years, because we'd rather be conservative – we're expecting the market in the U.S., in North America in terms of units to be stable with very slight increase in prices as some of the bigger customers move their volume towards more generic-type products, which is not bad from our margin point of view, but at least I think we need to be a little bit more conservative. Robert Patrick Jones - Goldman Sachs & Co. LLC: Got it. And I guess just, Steve, the company targets about 20 basis points of organic operating margin expansion each year. It looks like this year you're trending a little bit below that target. I guess, what's the impact of this year, and then how should we think about your ability to expand margins next year? What's reflected in the 2018 guidance closer to that 20 bps target?

Yeah. So, for the current year, we will be below that 20 basis points target, and as I said for nine months we were, on a normalized basis, about 6 basis points. Typically, Q4 is a strong margin for us, because of strong sales of technology as well as equipment. So, there should be hopefully some upside there. I think – we still think that operating margin expansion is very doable for us. It may not be exactly 20 basis points, maybe a little bit below that for 2018, but we still feel like there's a lot of opportunity to be more efficient, leverage the infrastructure, et cetera, to achieve that, and it's important to our financial model to be able to achieve that. So, we're still calling for overall operating margin expansion. Robert Patrick Jones - Goldman Sachs & Co. LLC: Got it. Thanks so much.

Your next question will come from the line of Jeff Johnson with Baird. Jeffrey D. Johnson - Robert W. Baird & Co., Inc.: Thank you. Good morning, guys. So yeah, maybe one more follow-up question on guidance for next year, and then I do have a DSO question as well. But, Steve, on your tax rate guidance for next year, by my math, that's about $0.10 or so, about 2.5 points to EPS. Just want to confirm that that math year-over-year is at least ballpark accurate. And then, to the point you just made, it would seem to imply then that your guidance for next year on the operating margin line is flat to maybe up 10 basis points or so. Is that about ballpark accurate as well? Thanks.

Yeah. It depends on – I think your math is correct. It depends on where in that 1 percentage point to 2 percentage points we end up because as you could imagine, there are a lot of moving factors in an effective tax rate. And we still are trying to estimate for this stock-based compensation. We still have to estimate the number of shares that we'll vest next year, as well as what the stock price will be on that vesting date. So, there's a little bit of things beyond our control in order to be very precise on that. But yes, it is a significant headwind for us. With respect to overall margins – and I said on the last question that I think it will be a little bit lower than the 20 basis points. So that's in line with what you're saying. But we still expect to get overall margin expansion in 2018. Jeffrey D. Johnson - Robert W. Baird & Co., Inc.: All right. And then the follow-up on that and it's kind of tied to DSOs. I think we've all heard of one or two of the big renegotiations that have happened here recently. But what percentage of your DSO contracts are now locked in for maybe a multi-year basis or what are the odds that we get into 2018, and there's another kind of big round of renegotiations that we have to think about impacting as we go then into 2019? Just any comfort or any kind of color you can give us on where you are with your DSOs and how we should think about the next few years on a contractual basis.

Yeah. It's a good question, Jeff. So, we believe that at this point, all of our major DSOs have multi-year agreements. Yes, there are some smaller ones that are not multi-year at this point. But I think the risk is all behind us. I think the fact that all of the major ones now are tied up in long-term agreements, means that the risk, while – it's not that there's no risk going forward. It's really much smaller than before this.

Jeff, let me just add that I think it's becoming clearly understood amongst the DSO community, as well as the mid-market community that Henry Schein brings unique value not only on the supply chain side, but on the consulting side and increasingly on the software side. So, every now and again, every few years, we do have a loss of an account, so pick up multiple accounts in that period. So, I think this market is quite stable and we're enjoying very good relationships with our large accounts. I have to say I've spent time with a few of them recently and the feeling that Henry Schein provides, the value that they are seeking as they're growing their businesses is quite high. So, I think we're in pretty good shape.

Chantelle, we're ready for the next question.

Your next question will come from the line of Steve Beuchaw with Morgan Stanley. Steve C. Beuchaw - Morgan Stanley & Co. LLC: Hi. Good morning and thanks for the time here. Maybe first one for me is actually on Europe. I really appreciate the narrative that you just gave there on the DSO dynamics. It would be really helpful on the gross margin front if you could just expand a little bit on some of the earlier commentary on Europe and margins and help us understand how things are evolving there.

Well, so Europe, as people probably know, is still a market where there is still many, many smaller distributors out there. And, again, I think for us we feel like there's a big opportunity still in Europe, especially on the margin, even though the margin is contracting right now. But again, we need to continue to advance all of our value-added solutions in order to bring more value to our customers, so they're not focused on the price of that last product even though we intend to be very competitive. But we do more than just get products sufficiently to customers at a very good price. We want to show all the value-add that we need to get compensated for also. So, it's still a very small market. Most of the players are really just competing on price. They don't have the value-add. They don't have anything other than price and a little bit of relationship to compete on. So, over time, I think we'll have nice opportunities improving that. Steve C. Beuchaw - Morgan Stanley & Co. LLC: And then a quick follow-up for me is actually on U.S. dental equipment. I wonder if you could just talk about, given some of the changes that you've made both with regard to E4D and with regard to Dentsply Sirona, how you think about the trajectory of the U.S. dental equipment business within 2018. Thanks so much.

We're quite optimistic, feel pretty good about the equipment market in the U.S., actually globally at the moment. I think there is a good movement towards dentists investing in their practices. In the traditional equipment area, I think, we're doing well with A-dec. I think Danaher, Midmark, other manufacturers, including Planmeca, I think, they've invested in their offerings, and these are well received by the customers on the traditional side, chairs, units, lights. On imaging, I think there is still a lot of momentum to adding the digital imaging into the practice, still some practices that don't have it and there are practices upgrading. And CAD/CAM is the area of great excitement. The scan-only, we continue to do well there. We have quite a large offering. These systems are, by and large, either integrated into Dentrix, Easy Dental, Ascend, college system, a dental school system, where they're about to be integrated. And I think there's huge opportunity there. And in the chairside units, I think full chairside, CAD/CAM, lots of excitement there. I think the Henry Schein salespeople add excitement to the marketplace, encouraging dentists to look at the full system, the addition of the Sirona line to us, the expansion of the offering by Planmeca, all of this adds excitement to the CAD/CAM chairside arena. And there's a lot of activity going on in the laboratory, as the laboratory moves from manual to digitalized dentistry. So, we remain quite optimistic about equipment. I believe Steven mentioned our pipeline is quite good going into the fourth quarter. I think last year, we had about 13% growth in the third quarter. So, if you average that out with now – with this past quarter, 6%, 7-or-so-percent growth is quite good. It's certainly more than the market is growing. We are excited about this area both from the interest of a dentist in equipment and equipment technology, and our ability to continue to grow market share tying that into our digital practice solutions platform as well.

And your final question will come from the line of Jon Block with Stifel. Jonathan David Block - Stifel, Nicolaus & Co., Inc.: Great. Thanks. Good morning, appreciate fitting me in. I'll ask maybe just one question with two parts. Steven, I may have missed this, but did you give any concrete numbers to sort of traditional consumable growth versus at a specialty? And then the second part would be Stanley, within traditional consumables, do you see an increased risk of, call it, a subset of these traditional consumables going to a pure online provider, possibly at slightly lower cost? Thanks, guys.

Yeah. So, on the first piece of your question, I didn't give specifics, but the specialty sales growth did grow faster. I think it was in the mid-single-digit range, I don't have the exact number in front of me, but somewhere in the mid-single digit range. So yes, it continue to grow faster than the core consumable number.

So, thank you, Steven. You're asking I think a very important question. On the digital standalone potential consumer distributors, there has always been and a price-driven components in dentistry. This has been the case for almost 40 years. Henry Schein built our initial business on coming out with a catalog, listing prices of all products, having those prices in stock and having great fulfillment. We were able to get to about 8% market share and could not go beyond that because dentist need much more than the consumable products at a discounted price if you will. So, two points. One is that there are several companies out there that started out as mail order, and moved to telesales, and now are digital platforms. We have interests in those companies throughout the world, including one in the U.S., the biggest. And these businesses grow, but didn't grow much differently to the traditional full service dealers in terms of consumable products. The key here is for us to continue to offer the value added services, so that our value mainly that of our field sales consulting force. Today, about 4,500 people around the world remains relevant and that the customers are prepared to pay and they pay some amount for those consultants to visit them, provide them the consulting advice on how to run the practice, on clinical efficiency, on quality of care, on simple business questions like where can I find somebody to help me run my office when I lost a general manager or lost somebody at the desk. I need to understand somebody who could help me use Dentrix. I need to find somebody who can help me do my marketing. All those kinds of things is a huge value in that. So, we believe that the value-added service…

Jon, let me just update the dental specialty growth. Actually, I looked at the number; it's a little bit higher on a global basis. I said mid-single digits, but on a global basis, it's almost 10%. So, I just wanted to update you on that. Jonathan David Block - Stifel, Nicolaus & Co., Inc.: Thanks, guys, for you time.

So thank you all for calling in, really remain excited about where we're heading. I think we need to continue to invest in the business, as I described. I think we will continue to do well in our basic consumable and equipment businesses, dental, medical, vet, dental laboratory, and I'm particularly excited with the opportunity of increasing our operating profits, as a result of the work we're doing in the specialty areas and in the practice solution software areas, of course, all the while increasing efficiency in the business, while providing the best of products at the best value offering to our customers. So, we remain very excited about where we're heading. Steven can be reached at 621-843-5915. Carolynne Borders can be reached at 631...

...390-8105.

And they're both heading out now to the investor conference in Arizona. And they're available if people have questions. So, thank you very much.

Thank you for joining us to discuss Henry Schein's results for the third quarter of 2017. You may now disconnect.