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, Clinicia, and thanks to each of you for joining us to discuss Henry Schein's results for the 2018 third quarter. 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 this 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 estimates. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 6, 2018. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Please limit yourself to a single question and a follow-up during Q&A to allow as many listeners as possible to ask a question within the one hour that we have allotted for this call. With that said, I would like to turn the call over to Stanley Bergman.

Good morning, everyone. Thank you, Carolynne, and thank you all for joining us this morning. We are pleased with our third quarter financial results which demonstrate, of course, continued solid growth in each of our business groups. We believe that the end markets we serve are stable, in fact, leading to improving and that we have continued to gain market share with our value-added solutions approach to servicing customers. And we believe that we continue to gain market share in all of our business units. We also are pleased with our progress relative to our long range long-term strategic goals with a balance of organic growth, resulting from our consultative approach and close relationship with our customers, augmented by growth from acquisitions. We have a focus on adding a greater proportion of higher margin products across our businesses and deepening the breadth of our value-added solutions across the globe. We are fulfilling these goals with our investment in higher margin dental specialties and software capabilities which we'll talk about more later in the call and, of course, very pleased to answer specific questions. So we continue to believe we have a healthy business. We are well positioned to take advantage of many opportunities we have for investing in long-term growth of the business. The strategic plan, we believe, is the most solid in all this time in Henry Schein's history. And we are confident that we will continue the track record of good planning, good execution as we enter into our 23rd year as a public company. So at this time, I'll ask Steve to review our financial results and to provide some further guidance on the numbers. And then I'll provide additional commentary on our recent business performance and our accomplishments. So, Steven, please.

Okay. Thank you, Stanley, and good morning to all. As we begin, I'd like to point out that I will be discussing our results as reported on a GAAP basis and also on a non-GAAP basis. Our Q3 2018 non-GAAP results exclude certain items that are detailed in Exhibit B of today's press release, which can be found and is available in the Investor Relations section of our website. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable the comparison of financial results between periods where certain items may vary independent of business performance and allow 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 corresponding GAAP measures. For a reconciliation of GAAP to non-GAAP, again you could see Exhibit B in today's earnings release, as well as it's included on the Investor Relations section of our website. So turning to our results. Our net sales for the quarter ended September 29, 2018, were $3.3 billion, reflecting a 3.8% increase compared with the third quarter of 2017 with internally generated sales growth in local currencies of 3.2%. When you also exclude the impact of certain products switching from direct sales to agency sales, our normalized internal sales growth in local currencies was 4.1%. You can see the details of our sales growth on Exhibit A of our earnings news release. On a GAAP basis, our operating margin for the quarter – our third quarter of 2018 was 5.1% and contracted by 170 basis points compared with the third quarter of 2017. However, on a non-GAAP basis, which excludes restructuring costs, transaction costs…

Thank you very much, Steven. Let's review some business highlights for our third quarter 2018. In Dental, we were pleased, actually very pleased with our 4.3% internal sales growth in local currencies in our North American dental consumable merchandise business. This is market driven by growth – this was driven by, to a large extent, market share gains. But the market is growing and actually we believe leading in a positive direction. So one could conclude in our view that the end markets are stable and generally healthy. Our mid-single digit North American dental equipment sales growth was driven by several manufacturers with strong growth in high-tech equipment sales. As Steven mentioned, we continue to see solid demand for the Dentsply Sirona equipment in North America and Europe and in particular in CAD/CAM. We're also seeing good growth with other manufacturing partners with digital prosthetics solutions as many clinics elect to purchase digital scanners to improve imaging accuracy and patient comfort. Sales of these products in North America grew by more than 50% during the third quarter. So, overall very, very pleased with our North American Dental business. As you may recall, in late September we announced investments in three implant companies Intra-Lock, Medentis Medical and Pro-Cam Implants with combined annual sales of approximately $45 million. Intra-Lock offers innovative dental restoration solutions including proprietary surface, connection, biomaterial and small diameter implant technologies, very important addition of products know-how to our overall implant business. With Medentis, we are expanding into the lower priced segment of the dental implant markets. And with our investment in Pro-Cam, CAMLOG's exclusive distributor in the Netherlands, we are strengthening our geographic footprint in Europe. These companies complement our existing solutions for implant based tooth replacement and are expected to broaden our geographic reach, add innovative technologies…

Your first question comes from Jeff Johnson with Baird.

Jeff, are on the line? Jeff D. Johnson - Robert W. Baird & Co., Inc.: I am. Can you hear me okay, Carolynne?

Yes, now we hear you. Jeff D. Johnson - Robert W. Baird & Co., Inc.: Okay. I'm sorry about that. So a number of questions but let me just focus here on the Dental side and hope the others get picked up throughout the Q&A here. But Steve maybe you could flesh out just a little better what you're seeing in the Dental end market. And if you could provide any color on the specialty market versus the general consumable market, maybe the growth rate you saw in each of those, or in general commentary there that would be helpful.

Sure. I would say that when we look at the North American Dental market, we feel like the market is stable to improving. We saw a really nice consumable sales growth in our North American Dental side as well as very solid equipment sales growth. With respect to dental specialty, dental specialty did grow a bit faster than our overall sales growth for consumables in the mid-single digits. When we look at international, we did see internationally, at least this quarter, some softer markets, especially on the equipment side. We're not sure that it's really a trend. We just think sometimes the ebbs and flows of each quarter, it was just a soft equipment sales market. So we're hopeful that we'll see improvements in the fourth quarter when we see our strongest quarter. So overall, Dental, I'd tell you is stable to improving with the slight exception of international equipment sales. Jeff D. Johnson - Robert W. Baird & Co., Inc.: All right. That's helpful. And then maybe if I could follow-up just on the CAD/CAM comments you made on some of those big growth rates. I think last year you said in the third quarter that you saw very little impact in that quarter from your newest CAD/CAM relationship as you were just coming off that meeting in Vegas. So I guess my question is, once you anniversary now starting in fourth quarter kind of into a full relationship or a full year year-over-year relationship with your newest product there. How are you thinking about CAD/CAM growth versus DI growth? Just on a normalized basis kind of how do you see the growth in each of those technologies playing out over the next few years?

Well, we think there's going to be very strong growth in both categories. There are a big part of the market that wants full systems. But there's also part of the market that wants the digital impressioning today because they are transitioning and they can get into CAD/CAM at a lower price and then over time they can get the milling machine. So overall, we feel good about the overall CAD/CAM market for us. And we think it'll continue to be a nice grower for us. But clearly some of these growth rates are impacted by the fact that we took on the Dentsply Sirona CEREC line last year during Q3. Important also to note Jeff that we saw a reversal of digital imaging, we said last quarter that digital imaging was very soft. But this quarter we saw a rebound and we saw very strong growth in digital imaging also. Jeff D. Johnson - Robert W. Baird & Co., Inc.: Yeah. That's helpful. Thank you guys.

Your next question is from David Larsen with Leerink.

Hi. For the North America Dental growth rate of 4.7%, I mean, how sustainable are these trends? I mean, they seem very robust to me. What do you think is driving that? And then I'm sorry, I didn't catch the CAD/CAM year-over-year growth rate in the scanners or the CAD/CAM machines. What was that again please?

Sure. Overall CAD/CAM was over 40% growth in the quarter year-over-year. On consumables, David, again we think the market may have improved slightly, but it's slight improvement in the North American consumable market. And really as we've said in the conference call script, we believe that the bulk of the growth is really coming from us executing competition and growing our market share.

Okay. And then what has the market's response been to the deal with Vets First Choice and Animal Health? How do they view the transaction? Do they view it favorably or not? What do they expect to gain from it once the deal closes? Thanks

David, I think generally from customers I would say it's overwhelmingly positive. Sales force is excited. At the end of the day in the vets space, the big need is for compliance, in other words with prescriptions issued, in other words making sure prescriptions that are issued are actually used, making sure that prescriptions are renewed. And generally we believe that VFC solution is the best in the marketplace. There are others that have solutions, but no one has the comprehensive offering that they have combined with the practice management systems, the PIMS system. So generally I think it's very well-received. The morale in the company is quite good. It's a massive undertaking internally to separate these companies and specifically the infrastructure in Europe. We're making good progress. The filings have been made with the SEC which responded to first questions. We don't see really much of an issue. And I think generally this is a good strategy for overall Henry Schein. It allows us to focus on human and animal health. And I think for the Animal Health team it provides an opportunity to expand the value-added services in probably a very unique way. I think we have something here that's unique and actually needed by the marketplace both needed by the suppliers and the customers.

And I would just add on the Animal Health spin, we remain confident that the timing of the spin will be either late this year, very late this year or early in Q1. Again, we're making very good progress in filings and separation agreements and all of that. So everything seems to be on target at this point.

Okay. Thank you.

The next question is from John Kreger with William Blair. John C. Kreger - William Blair & Co. LLC: Hi. Thanks very much. Steve, I know you said that the VFC spin kind of prevents you from giving 2019 guidance at this point. But can you maybe just talk a little bit generally if you think about the Dental and Medical businesses in 2019? Would it be reasonable to expect higher or lower growth than what you're generating now? And any kind of early outlook on your ability to drive margin leverage next year in those two businesses? Thanks.

Yeah. There's really a lot of moving parts to providing guidance including the exact timing of the spin-off looking at the benefit that we will be receiving, we still haven't fully quantified all of our restructuring costs. There may be some offset in some stranded cost although we don't expect stranded cost to be material. We're still negotiating the TSAs, the Transitional Services Agreement with SpinCo. So that will have some impact. I would say though we still feel with all of those and that's why we elected not to provide guidance because we (39:53) providing guidance. If this happens this is our guidance. If this is the timing, this is our guidance. And we thought, it would be too confusing to do that. So we're just going to wait a little bit longer until there's more clarity on that. With respect to Dental and Medical, we still feel like the businesses are performing well. We feel like top line growth rates should be similar although we are looking at different initiatives as we've said a couple of times and ramping up growth in both our higher margin products and so things like the specialty businesses, things like technology and financial services. So the goal really is to get some margin expansion in next year's guidance. But again, it's premature and I don't want to give guidance before I'm giving guidance at this time.

But to just follow-up on Steven's point here. It is this gap period until everything is settled down. The big thing is that we don't know when it begins. And we kind of know how many months after it begins it ends. So we're in this period now where we are finalizing putting to bed all the key items in this spin and we just need to settle down for a quarter or two. And then, I think you will see pretty good results. At least, we expect good results from the focus on the human side, medical and dental, prevention and wellness all those areas that we've articulated adding to the value-added service component and of course the higher margin areas in Dental and Medical. And I think on the other side of the ledger the Vets First Choice team are really also poised for good growth. So overall we're very optimistic. John C. Kreger - William Blair & Co. LLC: That's helpful. Thanks. And maybe one quick follow-up. I believe the FTC hearing within Dental took place last month. Can you give us any update on what happened or maybe what the next steps will be in that dispute? Thank you.

Sure. Remember, there are no monetary damages being sought in the FTC dispute. The trial is still ongoing. It's hard to tell how long it will last, it could be weeks, it could be longer. But based on how the trial is going, we feel good about our comments that we feel like we've done nothing wrong. But we still have to wait through the process. John C. Kreger - William Blair & Co. LLC: Okay. Thank you.

Your next question is from Kevin Ellich with Craig-Hallum.

Good morning. Thanks for taking the questions. Stan, I guess, wanted to go back to the strong high-tech dental equipment growth you're seeing in the U.S. Wondering what's really driving that. Is it really the interoperability of the equipment and the new product offering? And then how sustainable is that growth that we're seeing?

So it's a good question. And yes, you hit the nail on the head. I think – I don't want to go back to far in history but in 1990s we went to the dentists in this country and said what you want to do is put in a PC to help you run a more efficient practice. And we said to them about a decade later what you want to do is you want to put in electronic medical records to help you manage the clinical aspects of your practice more efficiently. And then, if you fast forward that and we went to the dentist about five or six years ago and said what you now want to do is digitalize your practice, change the flow so that you can replace analog with digital dentistry. And my view is that our discussions with the dentists have gained credibility and that more and more dentists are understanding the importance. Of course, we're working with a number of manufacturers in this area that are aligning with Sirona – Dentsply Sirona in advancing the idea of interoperable digitalization of the practice is gaining momentum. I still believe we're in early stages of this. I think, we'll gain even more momentum. First you've got the DI part that will continue to grow. And then the fully integrated system will also gain momentum. One area that I think is not necessarily always understood by investors is the fact that this same exercise is taking place in parallel in the dental labs. And so there's a lot of opportunity there in the dental labs for the digitalization of the labs, interoperability between the labs and the dentists. And this is all an area that Henry Schein One is significantly focused on. So I think the technology will advance. I think that the interoperability will advance. And the overall digital work stream will become far more understood, far simpler to use. And as with any technology advancement, will become part of the day-to-day operations of the practice. We're not there yet. And there's probably 70% of dentists that still haven't begun this journey. And we think we're in the right position to help dentists advance in this journey of interoperable digital dentistry. And are very, very excited that this is a key strategy that we've put in place in our last strategic plan. We executed well and think that there's a huge opportunity for this strategic plan of 2018, 2019 and 2020 to advance on the strategy. Very, very happy with our team and very happy with the attention we're getting in the marketplace, but actually think we're still pretty early in the game.

Okay. That's very helpful, Stan. And then just wanted to switch over to the Animal Health business, kind of, wrapping a question in for Steve. Wondering if you're seeing any increased competition from kind of the online retailers? And any changes from the manufacturers? And then on top of that, when you finish the Animal Health spin, can you remind us what the capital deployment strategy will be from the capital – the cash that you're going to get? What do you plan to do with it, Steve? Thanks.

Sure. So I would say that online players in Animal Health, as well as in other areas of our business, have been in the market. There really is no major changes in the market penetration. They still can't provide a lot of the services and value-add that we provide in Animal Health. So they're out there. But nothing really of a major change. Similarly with manufacturers, I would say that while sometimes manufacturers flip from agency to traditional and vice versa, other than that, really no major changes in the major manufacturers' plans on Animal Health. The last part of your question, so as part of the spin-off, SpinCo will pay a dividend of somewhere between $1 billion and $1.2 billion to Henry Schein. That dividend will be tax free for Henry Schein. So there is no taxes paid on it. We'll use that money initially to pay down our revolving credit facility. There are some restrictions on what can be done with the money immediately. But once we pay down our existing debt, then all those restrictions go away. And we can use it for any purpose. That dividend will allow Henry Schein to have a very strong balance sheet, probably slightly over one turn of debt to EBITDA. And our capital allocation strategy will remain consistent with what you've seen. We'll continue to look to grow the business through strategic acquisitions. And we'll continue to look at opportunities for buying back our stock to return cash on a tax-advantaged way back to our shareholders.

Sounds good. Thank you.

Your next question is from Jonathan Block with Stifel. Jonathan David Block - Stifel, Nicolaus & Co., Inc.: Hey, guys, good morning and thanks for taking the questions. Maybe the first one just to circle back to North American Dental, you guys have done a really good job accelerating the North American consumable number to 4-and-change the past couple quarters. Just looking forward, the comp gets more difficult entering 2019. Stanley or Steven, how do we think about that number longer term? I guess do you still think you've got the market share gains? And the market is on better footing where we can continue to see you post that 4% plus handle? Or is this somewhat the beneficiary of an easier comp that we've seen the past couple of quarters? And then I've got a follow-up.

I'm not sure if it's directly related to the easier comp. I mean every quarter is slightly different. But generally, we're feeling pretty good about the consumable side of our business. I think our model, as we discussed at length in the conference call, of value-added services are really helping the practitioner operate a better business, so that they can provide better clinical care works. The investment in our infrastructure, our e-commerce, Henry Schein One, and the training of our field sales consultants, all of that, I believe, adds to the value we bring to the marketplace and positions us to gain market share. So we can't obviously predict with precision each quarter going forward. But what I think we're pretty comfortable with is that the market is growing slightly. And that we will add to that market growth a couple of hundred basis points each year. And that's sort of been our position for a while. And we remain confident with that, both growing in the small practices, the medium-sized practices, and the large practices. Obviously, we're a bit more bullish – not a bit more, we're quite bullish on the specialty areas. Having said that, the specialty areas will not necessarily contribute to moving the needle significantly on sales, because it's relatively small compared to the entire consumable market but will drive margin as the specialty areas tend to be much more profitable and also will drive connectivity on the sale of equipment and software. So, I think to answer your question, we are quite bullish still on the consumable side, in general consumables. I think there's a big opportunity for us in the specialty areas. These two combined with the value-added services, I think, will increase our overall sales of consumables, equipment, and yes, margin. Jonathan David Block - Stifel, Nicolaus & Co., Inc.: That's a great color and actually a really good segue to my next one which is, you guys have talked recently about some of the company's initiatives for margin expansion. It looks like some of those may have already started to take hold. Your 3Q GMs were up versus the contraction we saw in the first part of the year. So Stanley, are we seeing that starting to flow through the P&L? Or the margin – the GM expansion that we saw specific to 3Q, is that more just the ebbs and the flows? I guess, are you feeling like some of the heavy lifting that the company started to do around gross margins are starting to take hold? Thanks, guys.

Yeah. I'm not sure if you could judge each quarter in a standalone segment. Having said that, we feel pretty comfortable that we will continue to drive gross margin, the Henry Schein One opportunity is helpful. The specialty areas are helpful. We made some acquisitions now, some one-time step-up in inventory. If once that flushes through, I think the specialty areas will show increase margin as well on a consistent basis. And so I think and, in general, we are managing our margins as carefully as possible as we have done. So this all adds to margin management. I think that you will see on the expense side also good management. Obviously, the restructuring is helping but at the same time we are investing in technology in the businesses. I don't think we are investing in massive ERP type investments. Having said that, there are parts in Europe, where we are standardizing systems. We are adding a CRM in North America, upgrading what we have. There's a lot of investment going into e-commerce, we're making – we believe we have a very good website already in most countries but we are investing in that area. We've put in a new equipment sales and service system, quite expensive. It's almost installed, very expensive in terms of P&L cost but I think will be very profitable over time as the efficiencies increase in our equipment sales and service network. And I think we will see some pay-off not only because the Henry Schein One margins are higher but because those margins increased as the cloud-based system becomes more popular. So I'm quite bullish about our margins, our gross margins and our ability to leverage a relatively fixed volume of business or a growing volume of business on the sales side with a relatively fixed cost infrastructure or reducing cost infrastructure. So you add all that stuff up and we remain quite comfortable that we can increase gross margins and operating margins. Taking all those factors into account. Jonathan David Block - Stifel, Nicolaus & Co., Inc.: Great. Thanks, gentlemen.

Your next question is from Steven Valiquette.

Thanks for taking the question. So you guys highlighted the deals for the dental implant manufacturing asset towards the end of the quarter. Just curious at a high level if Henry Schein overall is making any strategic effort to increase the manufacturing asset mix in Dental and/or Medical which may allow for just more pricing power versus peers, or do you just continue to look at each M&A opportunity on an individual basis without worrying too much about your distribution versus manufacturing mix? Thanks.

We have been very clear as to when we invest in manufacturing. Our focus has been primarily on the specialty areas where our manufacturers have not given us access to lines. We began this process 14 years ago with investing in CAMLOG in advancement of the investment in BioHorizons with some other equipment properties. Likewise on the orthodontic side and on the endodontic side. So there's lots and lots of opportunity on the specialty side in Dental. Similar opportunities although much earlier in the cycle on the Medical side. And those are the areas we plan on focusing on. We will continue to advance our private brand, our generics if you will, but we'll be very circumspect about how we do that. Bottom line is, we have adequate – more than adequate sourcing of products and manufacturers are tending to work with us where we can help them grow market share and where manufacturers work with us and they see the value, there is no real reason to vertically integrate. We'd rather have the manufacturers put the capital to use on the manufacturing and us advance the value-added services and market share for those manufacturers who want to work with us. Having said that, when we cannot access a product, we will make it, whether it's a dental chair that we couldn't access some years back and we brought to market a dental equipment offering. We sold the business. There was no need for that. We couldn't access scanners and digital equipment, aperture equipment. So invested in E4D when we took on the line, the Dentsply Sirona line, we were able to exit that market too. So generally it's a careful balancing of what we need, products we need with opportunities that manufacturers think to us, advancing our private brand with pricing is an issue. And so this is the kind of stuff we've been managing for decades and feel that we can balance the needs of everyone. Our goal is to help those manufacturers that want to work with us succeed and at the same time make sure that every product that dentist may need or physician may need is available through Henry Schein.

Okay. Just on the implant market overall right now, are you seeing big differences in growth rates in the market between the lower-priced generic implant growth versus the higher end branded? Is there a big dichotomy there right now in growth rates that you're seeing?

The lower priced is growing in terms of units. But the upper end is doing well. We think that the value upper end is where we need to be. I will say that there are parts of the world where growth is faster, certainly in Asia, the developing world and say in parts of Europe. But setting aside the geographic variations, I would say generally, the higher priced implants where there's a lot more R&D and service behind the product line those are generally doing well. But the clones and the generics are growing and in certain markets slightly more in terms of units. But overall, we believe the impact market, the bone regeneration market, the products around the implant and the equipment focused on the oral surgeon are all good markets and we are doing well. I believe we have the widest variety of products under one roof and we'll continue, I believe, to do very well in these markets. This is a carefully thought-through strategy. There's been building blocks that we've built on for over a decade and pretty comfortable with this marketplace with our management team, we believe we have an excellent management team in this space and continue to be very, very excited about the oral surgery space.

Okay. Great. Thanks.

And we have reached the allotted time for questions and answers. Speakers, do you have any closing remarks?

Thank you, operator. Thank you very much everybody for calling in. We remain very, very optimistic about the future of Henry Schein, the morale in the company is very good. We have been able once again to develop a very solid strategy for this strategic plan almost one-third of the way through the plan, made some very significant moves. The spin-off of VFC, the Henry Schein One creation, the investments in implants, efficiencies in our systems, adding appropriate senior management, middle management, entry level management where needed. I think the organization is finely tuned to continue to execute on our plans. And so we're very, very excited with where we are and where we're heading. If anybody has any questions, please feel free to reach out to Carolynne Borders and Investor Relations, 631-390-8105. If you want to speak with Steven, Carolynne can connect you through. So thank you very much. And I'm not sure if we're going to any more investor conferences this year, so.

We'll be at Credit Suisse on November 13.

So Credit Suisse November 13. And then we'll be on the West Coast in January. So thank you very much and appreciate your interest.

This concludes today's conference. You may now disconnect.