Good afternoon, ladies and gentlemen, and welcome to Masimo's Second Quarter 2015 Earnings Conference Call. The company's press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be question-and-answer session. I'm pleased to introduce Mr. Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations. Please go ahead. Eli Kammerman - VP-Business Development & Investor Relations: Thank you. Hello, everyone. Joining me today are Chairman and CEO, Joe Kiani; and Executive Vice President and CFO, Mark de Raad. This call will contain forward-looking statements, which reflects Masimo's current judgment, including certain of our expectations regarding fiscal 2015 financial performance. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Risk factors that could cause our actual results to differ materially from our projections and forecasts are discussed in detail in our SEC filings, including our most recent Form 10-K and Form 10-Q. You will find these in the investors section of our website. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP financial measure and a reconciliation of each non-GAAP financial measure to the most comparable GAAP financial measure can be found in our earnings press release. I'll now pass the call to Joe Kiani. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you, Eli. Good afternoon and thank you for joining us for Masimo's Second Quarter 2015 Earnings Call. I am happy to report that we once again exceeded our own performance targets for the quarter with healthy gains for product revenues, earnings per share, and record shipments of SET Pulse Oximeters and rainbow SET Pulse CO-Oximeters. For the second consecutive quarter, our product revenues rose by nearly 11%…

Thank you. And our first question comes from the line of Chris Lewis of ROTH Capital Partners. Your line is now open.

Hi, guys. Good afternoon. Thanks for taking the questions. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Chris.

I wanted to start on the core business, the SET business. I think the fourth consecutive quarter of double-digit year-over-year growth. Last quarter you had talked about a strong flu season which gave you a little boost. First, kind of a two-part question. Did that continue in the second quarter? And then I guess secondly, can you just elaborate on how much was driven of the core underlying SET strength was driven by the improved census versus share gain? Thanks. Joe E. Kiani - Chairman & Chief Executive Officer: Sure, Chris. I don't believe the flu season impacted us much in Q2. But we do believe that there was census increase and mainly due to – not required surgeries, but optional surgeries that I think were higher. And that also led to the mixed higher shift on adult sensor sales for us than the neonatal sensors. But I think that gain was only a fraction of the strength we saw in Q2. We think the bulk of the strength came not only from market share gains, but also the new way we have focused the sales force. So I think the combination of those two probably had more impact than census but obviously census created a strong wind in our back that helped our customers take better advantage of our technology.

Good. And then, Joe, you mentioned in your prepared remarks large scale sales opportunities in international markets, some sizable orders I think you mentioned there. Can you elaborate on those potential opportunities, potential timing? And have you assumed any of that coming through in the guidance? Joe E. Kiani - Chairman & Chief Executive Officer: Yes. Sure. We have recently won a large tender in the Middle East. However, because this is a new business for us, we decided not to put it in our guidance because it's a new business opportunity that we haven't had before, and we just wanted to see us getting the actual orders that come from winning this tender, delivering the product through our distributor and agents to the final customer before we further elaborated on it. But we are very happy with this wonderful new tender we won. It's across our entire product line. And assuming it all comes in, it will provide significant upside to our business over the next three quarters at least.

Okay. Just to dig a little deeper, would you be willing to quantify how much that would be for, potentially? Joe E. Kiani - Chairman & Chief Executive Officer: Given again that this is a new business for us, I prefer not to. As you know in the past we had tried to estimate some out-of-routine business for ourselves that didn't mature, so we decided to take the approach of we'll report it as we see it. So if you don't mind, in order not to create expectations that we possibly won't meet, I'd rather leave it for future. Hopefully we can talk about it post-Q3. And at that point, we will have had the experience to know what it truly is. And that's why we did not put it in our updated guidance.

Understood. And if I could just sneak one more in. Mark, for you, product gross margins in the quarter little bit lighter than expected. You mentioned mix. Was there anything else going on there? And then I guess what gives you confidence that you can still get that 65% level for the year? Thanks. Mark P. de Raad - Executive Vice President & Chief Financial Officer: Sure. Yes. In addition to the product mix issue that we mentioned, it's really more of a – I'll call it an accounting-related topic in the second quarter. And fundamentally what happened was that we created actually more favorable results than we expected. But as you probably know, we're required to capitalize all those favorable, in our case, variances that we generated in the June month. And so those are now sitting on our balance sheet basically waiting to come into the P&L in the third quarter as the inventory to which those variances were related actually gets shipped. So that was one of the things that caused us – one of the additional things in addition to mix that caused the numbers to come down just a little bit. I mean frankly, we were looking for about 64.6%, so 64.2% is a little bit lighter. But when you think of the combination of both the mix and this sort of accounting-related booking of our variances, that really made up the impact. And that's one of the reasons, frankly, why we're optimistic about. We were optimistic before, about our improved product gross margins in Q3 and Q4. But this fact that we've got some favorable variances sitting on the balance sheet at the end of June actually helps us a little bit more in looking forward to Q3.

Got it. Thanks for the time and congrats on the quarter. Mark P. de Raad - Executive Vice President & Chief Financial Officer: Okay. Thanks, Chris. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you, Chris.

Thank you. Our next call or our next question comes from the line of Tao Levy of Wedbush. Your line is now open.

Hi, guys. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Tao.

Good afternoon. Hi. And so maybe we'll start with the base business that seems to be doing obviously really well. And I know you've talked about market share gains. But the strength the last couple of quarters, even excluding the flu season seems pretty remarkable. And at least my understanding of this business is you don't – any big win in a given quarter really doesn't translate into revenues for a few more quarters once you get the installations up and running. So the strength that you're seeing now, is that from sort of like a year ago type wins? And this is going to – you're going to have this pushing you for a few more quarters? Is that how we should think about it? Joe E. Kiani - Chairman & Chief Executive Officer: I think you're right, Tao, given our business model, it's not what we booked in Q2 that made a difference, but what we did in 2014 that makes a big difference. So as you know, this is the ninth consecutive quarter that we've shipped over 40,000 Masimo SET Pulse Oximeters and Rainbow SET Pulse CO-Oximeters. So that is a great wind in our bags. But I think the key may be, if you remember a year ago, we invested in the blood management team. And not only that helped us to assure that we were focusing on the opportunities for Rainbow like hemoglobin and PVI, but I believe it allowed our regular sales force to go back and focusing on our SET Pulse Oximetry and the rest of our business. Those two together, along with some new ways that we're compensating our sales force and reorganizing them, I believe has put a sharper focus on our core business, while helping us establish what we believe will be the future of our company.

Got you. And that's very helpful. And it's obviously great to see hemoglobin starting to pick up here. Was there any sort of like one-timish benefits there? Or was that mostly sensor, consumables, utilization-driven? Joe E. Kiani - Chairman & Chief Executive Officer: It was really both. We not only saw great adoption for the licenses this last quarter, but also we saw a similar growth in our consumables, the sensors. And then the growth from a parameter basis was across the whole business, from commercial business in the U.S. to outside the U.S. to Department of Defense business. So I think overall we didn't see any outliers, but some really encouraging adoptions by very, very influential institutions that should hopefully create a great solid future for us.

Got you. And then just lastly, I know you've referenced this a couple times, the final part of the 10-year plan. Can you just remind us what that final part entails? Joe E. Kiani - Chairman & Chief Executive Officer: Sure, sure. When we went public August 2007 eight years ago, we talked about how to really assure a plan that could be relied upon. We needed to invest in R&D with certain product categories that we thought we needed as well as the build-out of our infrastructure, so that hopefully within 10 years we're enjoying much better returns for our shareholders but one that can be sustained. So we're eight years into the 10-year plan. We have two years roughly remaining. To be fair, two-and-a-half years remaining, because that was an announcement we made in January of 2008 to our entire team. But yes, so we're at the tail end of it. We believe we're set for solid growth, especially in our earnings area, and with both value engineering, expense control as well as the benefit from a dozen products that we've introduced over the last 18 months, and of course some major categories of technologies that we introduced since our IPO like a non-invasive hemoglobin, PVI, RAM and so forth.

And so just what happens after this phase or this 10-year plan? What does that 15-year plan look like? Joe E. Kiani - Chairman & Chief Executive Officer: Well, one of the things that – where we are today, our infrastructure and our business, we obviously are doing our sound check to make sure we're ready for another 10 years. And we're certainly doing that for ourselves, but also recognizing at this stage of our company it's more appropriate to begin thinking three-year to five-year plans. So as we set out a new course, we believe we have to not think short-term quarterly, but not also think a decade either.

Perfect, great. Thank you very much, Joe. Good job, guys. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you. Thank you so much, Tao.

Thank you. And our next question comes from the line of Brian Weinstein of William Blair. Your line is now open. Brian D. Weinstein - William Blair & Co. LLC: Hey, guys. Thanks for taking the question. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Brian. Brian D. Weinstein - William Blair & Co. LLC: Hey, Joe. So I was wondering if you could comment a little bit on where you think your market share is today, and what percent of the market do you think that you're winning kind of on a current quarterly basis? And then where does that share get to over time? I think you guys are probably somewhere in the mid- to high-40%s at this point. But where do you guys think that that gets over time? Joe E. Kiani - Chairman & Chief Executive Officer: I dare not estimate that market share because I really don't know for sure. And when market share tests are done, you've got to hire economists and pay them a lot of money to figure it out. But what I can tell you is that for a long time we do estimate that we have been out-shipping all other pulse oximetry companies, including our main competitor, in terms of new shipments of pulse oximeters. And we also know that over the last decade where we've gained thousands of customers, we've lost less than a hundred. So our gain is probably – I don't know, I hate to again estimate that, but we don't lose much. We just keep gaining. But I think you can see it in the strength of our record number of 44,300 pulse oximeters and pulse CO-Oximeters we ship. And like even this last quarter we gained some notable institutions like Thomas Jefferson hospital…

Thank you. And our next question comes from the line of Alex Nowak of Piper Jaffray. Your line is now open. Alexander D. Nowak - Piper Jaffray & Co (Broker): Great. Good afternoon, everyone. How's it going? Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Alex. Alexander D. Nowak - Piper Jaffray & Co (Broker): So state budgets have generally improved over the last several years. I was just wondering, are you seeing this drive any type of uptake on the carbon monoxide side? And maybe if not, how should we expect this to play out over the next several years? Joe E. Kiani - Chairman & Chief Executive Officer: Well, you're right. With the improvement in tax collection by the cities and municipalities and the NFPA 1584 recommending CO monitoring, we should see an uptake on CO and we have. Clearly in this quarter we saw a nice increase in our carbon monoxide business, but the real growth potential hasn't yet been attained. We are working on some big opportunities worldwide, and we do hope that in the U.S. the fire departments and the EMS systems will start purchasing again. Because they were purchasing heavily at the beginning, then the financial crisis occurred, and they went into retreat mode, and we haven't yet still seen them come out strongly, and we hope that will happen. Alexander D. Nowak - Piper Jaffray & Co (Broker): All right. Great. Thanks for the information. And then I'm looking at Root. Is the uptake tracking in line with your internal projection since the launch? And how should we expect this to grow for the second half of 2015 and into 2016? And also any initial customer feedback on Root specifically? Joe E. Kiani - Chairman & Chief Executive Officer: Yes. The…

Thank you. And our final question comes from the line of Larry Keusch of Raymond James. Your line is now open. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Larry. Hello?

Larry, check your mute button. It looks like Larry may have removed himself from the queue. And I'm showing no further questions at this time. I'd like to turn the call over to Joe Kiani for further remarks. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you. Well, thank you all for joining us on this beautiful summer day. I wish you the rest of your summer to be enjoyable. We look forward to reporting our third quarter results. And thank you for your interest in Masimo.