Good morning, and welcome to MSC Industrial Supply 2015 fourth quarter and full-year conference call. All participants will be in listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to John Chironna, Vice President of Investor Relations and Treasurer. Please go ahead. John G. Chironna - Treasurer & Vice President-Investor Relations: Thank you, Ed, and good morning, everyone. I'd like to welcome you to our fiscal 2015 fourth quarter and full-year 2015 conference call. I'd also like to apologize for the brief delay this morning. We did have quite a few callers and we wanted to wait until everybody was on the line. During today's call, we will refer to various financial and management data in the presentation slides that accompany our comments, as well as our operational specifics, both of which can be found on the investor relations section of our website. Let me reference our Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. Our comments on this call, as well as the supplemental information we are providing on the website, contain forward-looking statements within the meaning of the U.S. Securities laws, including guidance about expected future results, expectations regarding our ability to gain market share, and expected benefits from our investment and strategic plan. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements. Information about these risks is noted in our earnings press release and the risk factors in the MD&A sections of our latest annual report on Form 10-K filed with the SEC, as well as in our other SEC filings. These forward-looking statements are based on our current expectations and the company assumes no obligation to update these statements. Investors…

Thank you. We will now begin the question-and-answer session. Our first question comes from Matt Duncan of Stephens, Inc. Please go ahead.

Good morning, guys. Erik David Gershwind - President, Chief Executive Officer & Director: Hey, Matt. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: Hey, Matt.

Rustom, welcome. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: Thanks, Matt.

First question I have just, Erik, on sort of your end markets. Where are you seeing weakness, sort of, get worse than it has been? Where are things sequentially getting worse? Erik David Gershwind - President, Chief Executive Officer & Director: Matt, I would say the answer is more about where it's not getting worse. It'd be easier to find where it's not getting worse than where it is. Seriously, I think, we're seeing pretty much, with the exception of a couple of pockets that I mentioned, it's pretty broad based. It's particularly acute within our core metalworking-related markets, heavy equipment and machinery, primary metals guys, machine shops, and I would say, it's also more acute in the mid-size and small customers than it is at the larger customers. But, it's pretty broad-based everywhere. And it's just more acute in pockets.

Okay. So, I guess, keeping that in mind then what I'm trying to understand, the framework you guys have laid out for FY 2016 operating margin, sort of the low end-- the low end scenario is slightly negative sales growth. It sounds like that's where we are in October. Maybe November is more like a mid-single digit decline. So, how do we get back to sort of slightly negative from here? Just walk us through what you guys think the shape of the year is going to look like here. Erik David Gershwind - President, Chief Executive Officer & Director: Matt, so, I'll take this. I think the reality is, and let me be clear, Rustom made the point, our visibility is really low. So, it's tough for us to look out beyond a month, let alone a year. What I'll tell you is that we would characterize our fiscal quarter guidance, which was revenues between minus 2% and minus 4%. To us, that would fit into the slightly negative bucket. And that's about where we see things today. Should they get considerably worse, obviously, it would be outside of this framework. But, right now, with our limited visibility we have in front of us, we would put ourselves squarely in the lower left.

Totally understood. Okay, last thing. On the cost side, can you maybe give us a little more detail on, Rustom, what sort of things are you guys getting more aggressive on taking out on the cost side? And, can you quantify in dollar terms what the annual savings are from the more permanent actions that you're taking? Rustom F. Jilla - Chief Financial Officer & Executive Vice President: So, yes, we can. I won't quantify that, in dollar terms, what we're doing there. But I can certainly talk about what we're doing. We've got various freight initiatives, supplier cost reductions, a whole bunch of professional – of discretionary costs, things like professional fees, IT data cost savings, using virtual meetings, which actually not only sort of cutback on our travel and our T&E costs, but sort of enhance productivity, and some small head count reductions, just to name a few. Probably one to make the point, and there – and you can see that looking at our head count, right? You see that, in the quarter, we added roughly -- I'm rounding -- roughly 30 heads in sales, right? But our net sales head count overall is down 50. So, you can do the math on what we're doing there. Now, important to point out the team has been focusing on costs since earlier in the year, since earlier in 2015. But, in the last two months to three months, we've really ratcheted up our intensity. And the whole objective is to be able to grow EPS faster than sales in pretty much any environment. So, a great team effort, actually. People, I think, are with me, at this point, as well. People are rising to the occasion, as a team.

Okay. Very helpful. Thanks, guys. Erik David Gershwind - President, Chief Executive Officer & Director: Thanks, Matt.

Our next question comes from Ryan Merkel of William Blair. Please go ahead. Ryan J. Merkel - William Blair & Co. LLC: Hey, guys. Good morning. Erik David Gershwind - President, Chief Executive Officer & Director: Good morning, Ryan. Ryan J. Merkel - William Blair & Co. LLC: So, first question from me. Pretty impressed with gross margins. You stabilized that nicely. Just wondering what does the full year framework assume for gross margins? And then, second part of that question, what's the mix headwind you're expecting in fiscal 2016? Erik David Gershwind - President, Chief Executive Officer & Director: Yeah, Ryan, thanks. Look, I think you're pointing out something that Rustom and I are pleased with seeing the sequential stabilization in the face of what's really a difficult pricing environment. So, let me get right to the point. To your question, what's implicit in this framework, at least, particularly with where we are today, which is essentially getting nothing from price, would be modest gross margin declines over prior year. So, fiscal 2015 ended at 45.2%, contemplated here would be with no price, modest declines. And modest, to give you a feel, would be 50 basis points or less, would be modest. The formula, in terms of what you laid out, you touched on customer mix. Let me sort of pull back and tell you what I think the story – what's happening, in gross margins, we've a couple of headwinds right now. One is customer mix; two, supplier rebates, which we flagged on the last – probably not surprisingly, what we flagged on the last call as revenue growth decelerates; and the third would be competitive pricing environment, very typical as the demand environment gets worse we see a lot of pressure from the small – 70% of…

Our next question comes from Adam Uhlman of Cleveland Research. Please go ahead.

Hi, guys. Good morning. Erik David Gershwind - President, Chief Executive Officer & Director: Hey, Adam. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: Hey, Adam.

Hey, I have a question on the revenue trends for the quarter in the supplemental data. You guys do a great job of breaking it down by region and by customer category, and I guess I was surprised to see the pace of the slowdown was really led out on the West Coast where demand slowed the most and then when you split out the revenue growth by customer type, it was not the (32:17) non-manufacturing customers that – they are still growing pretty decently but slowed a lot from last quarter. And so I'm wondering if you could just break that down a bit more or any other granularity that you might have on what's happening with the West Coast and the non-manufacturing customer types. Erik David Gershwind - President, Chief Executive Officer & Director: Adam, I would tell you that – let me talk customer segment, first, manufacturing, non-manufacturing. What I would say there is both have slowed, but in terms of the absolute growth delta, you are right. Non-manufacturing slowed more. A couple of things, one is I feel it shows as a minus 1.8%. I feel quite good about our share gain performance in the manufacturing sector, because realize our manufacturing business is concentrated in highly metal working centric manufacturing market which has really been hit hard. So I think that's a really good result. I think that's one thing you are seeing. The other thing I'd call out is no question as the quarter progressed, the government which really had been, we have been talking for the past year, the government had been performing at very high rates, still low-double digits is what we described, but coming down through the quarter, and I think what you're seeing there is the debt ceiling issue trickling its way into government spending. So those are the two things I'd call out with respect to the segment. With respect to the – do you – sorry, John. John G. Chironna - Treasurer & Vice President-Investor Relations: No, I was just going to say, Adam, from a regional perspective, they all declined, with the exception of Northeast, which kind of held its strength there. Unless there is something specific, I would say why don't you get with me after the call and I can see if there is anything special going on in the West, why it came down more than the other regions.

Okay, got it. Erik David Gershwind - President, Chief Executive Officer & Director: Adam, the one thing I would add is, regardless of the region as broken out here, the one thing when you get under the covers that you see is any area, and how we define West I believe has some of those areas captured that had anything to do with oil and gas is down dramatically. So we see wide swings, even though these are kind of smoothed out averages in specific markets.

Okay, got you. Great. Thanks very much. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: You are welcome.

Our next question comes from Robert McCarthy of Stifel. Please go ahead. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Good morning, everyone. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: Hey, Rob. Erik David Gershwind - President, Chief Executive Officer & Director: Hi, Rob. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yes, I guess just looking at some of your operational statistics, it looks like there was a slight sequential decline for total eComm, which is not surprising given the environment, and you look at the run rate flattening out. Maybe if you could just give some context around that to kind of start. Erik David Gershwind - President, Chief Executive Officer & Director: Rob, I think the highlight, the sequential decline in dollars, you're right, is more a function of environment. I think the bigger story on eComm and the way we gage progress is as a percentage of sales. And on a percentage of sales basis, eComm is up year-over-year and sequentially and it's actually really been one of our strong investment payback stories as we've flagged it as an area of investment. E-commerce, as we've described, encompasses a number of efforts, particularly the one I'd call out, we're really pleased with the performance of the website, MSCDirect, and the way that's working, a lot of the investments that we've made into functionality have worked out quite well in integrating into our customers. And so I think it's a really good story and I think the absolute dollars is just a function of the environment. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yes, and then just drilling into International & Other, obviously, I think the Canadian exposure is in there. But maybe just give some context around the sequential.…

Our next question comes from Ryan Cieslak of KeyBanc. Please go ahead.

Thanks. Good morning, guys. Erik David Gershwind - President, Chief Executive Officer & Director: Hi there.

I guess, first, I wanted to follow up on the operating margin expectations going into next year, and maybe if there is any way you could talk a little bit about or quantifying the actual headwind from some of the infrastructure investments you've made and what the headwind was, or maybe even directionally in 2015 how much of a headwind that actually was and how that's rolling off into fiscal 2016. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: If I followed that, I mean, there is pretty much no additional infrastructure investments that are flowing through into 2016, right? So whatever we had in terms of stepped up infrastructure spending, is now in the base. It's in the comparative period. So we are getting nothing from that. What the company has done is over several years, I mean, has continued to build up and enhance its capacities. The focus much more right now, in this period in time, is to continue to make investments but to make investments that we are funding by taking out costs. So, on a net basis, that's why you are looking at us sort of being fairly confident that we will see sequential cost reduction even in the quarter, despite continuing to invest. And that's why we see that quadrant in the top right, as Erik very nicely pointed out. I mean, the 13.7% op margins coming with the top right are better than what that environments would have suggested last year.

Rustom, is there a way of quantifying what the headwinds were in 2015 in terms of the infrastructure investments on margins? John G. Chironna - Treasurer & Vice President-Investor Relations: Ryan, this is John. I think we've said in the past that, between the Columbus CFC and the CFC down in Davidson that those are – if you went back to a point in time where you didn't have them at all, that would have been adding somewhere in $15 million to $20 million range of incremental cost. But, remember, this took place over a several year period. So if you're asking 2015 specifically over 2014, I'd have to go back and see what the timing was for those. But it was more from the CFC last year, because the CFC was done in 2014 or end of 2013. Does that help?

Okay. Yes. John G. Chironna - Treasurer & Vice President-Investor Relations: Okay.

That's fine. Maybe I could follow up with you offline. And then my second question is, I think last quarter you guys gave some nice color on CCSG with regard to some of the cross-selling initiatives that seem to be gaining traction. It sounds like the overall sales for that business was down. I think you said mid-single digits or so. But maybe talk a little bit about the traction you are seeing, or some of the results on the cross-selling with regard to CCSG. Erik David Gershwind - President, Chief Executive Officer & Director: Yes, Ryan, so, yes, we gave a little color this time that down mid-single digits. What I would tell you on CCSG, still highly confident in this business. It is a critical part of the MSC story and one we're investing in heavily. Obviously, I'd like to see the growth rate better and perform better. I think a big driver there has certainly been what's happening in the marketplace. Just like MSC, CCSG is being influenced by pretty much the same headwinds with the added impact of foreign exchange because of the Canadian exposure that MSC has lesser. Look, the three performance levers that we've called out, that continue to be area of focus are: number one, improving service, basic customer service, getting it to MSC levels of service; two, cross selling products; and then three, sales force retooling efforts. And what I would tell you, the color I'd offer there is on the service front, really pleased in the customer service experience and the metrics. I think we're doing a real nice job there. Cross-selling, as we've described, came out of the gates slowly and has picked up pace. And I expect it, based on the work being done, to continue picking up pace as we move through the year. And the third one, sales force retooling, is very much a work in process and I'm encouraged by what I'm seeing there as well.

Okay, great. And then, if I may, just really one last question. Vending seems to be adding some nice offset to some of the broader fundamental weakness we're seeing for you guys. I think you mentioned two percentage points or so this quarter. Is there something going on different with the way you guys are approaching the market with vending today than maybe where you were a couple years ago? Maybe just talk about the vending initiative that you guys have and what you expect from that from a sales growth standpoint into next year. John G. Chironna - Treasurer & Vice President-Investor Relations: Ryan, sure. So I would say vending, first of all, to take your last question first, we expect to be, and you hear as part of our investment program, and we expect it to be a continuing growth contributor. I would say our approach to vending has been more or less consistent since we started the initiative. And, for us, vending is really just a tool. It's a tool aimed at helping improve our customers' operations, streamlining inventories, improving their production process, speeding up cycle times, that's really our focus and vending is just a means to an end, if you will. And I think that's part of the reason why our focus has been pretty consistent, our approach has been pretty consistent, and why it's done well for us is it's been a means to an end. So, that's how I'd describe it and we expect it to be a continuing growth driver in the coming year.

Okay. Good luck guys, appreciate it. Erik David Gershwind - President, Chief Executive Officer & Director: Thank you, Ryan. John G. Chironna - Treasurer & Vice President-Investor Relations: Thank you.

Our next question comes from John Inch of Deutsche Bank, please go ahead.

Thank you. Good morning, everyone. Erik David Gershwind - President, Chief Executive Officer & Director: Hi, John. John G. Chironna - Treasurer & Vice President-Investor Relations: Hi, John.

Hey, Erik. If the current environment – it's obvious – based on the short cycle nature of your business, right, there's not a ton of visibility. So, I guess my question is if current environment is in the lower left quadrant, why isn't the lower left quadrant the midpoint of the framework? And I apologize if you answered that before, just – I mean, why would – you see my point, right? Because if you go back a year ago, the midpoint wasn't what you realized, you realized the lower left. So, now we're starting out with the thing at the lower left. Why not just present a framework that slides the cross-hairs into the 12.6%? I guess that's my first question. Erik David Gershwind - President, Chief Executive Officer & Director: John, what I would say is, right now, given the limited visibility, we wanted to start with a framework that contemplated where we are today, which is squarely in that minus 2% to minus 4% guide is what we would consider to be in that lower left box. Look, we're mindful that as we move through the year, the comps – even if average daily sales don't grow over time, the comps in the back half of the year, right now we're facing comps of relatively high growth comps during the first half of the fiscal, those declined. Could things get worse than they are today? Sure, they could. But given the limited visibility and given we wouldn't even – it would be tough to predict, we felt like this was the most appropriate way to outline the business. And I think the other point we wanted to make was that in most scenarios contemplated, given the cost reductions taken out, operating margins hold or under any growth scenario, they grow. Now, if things were to get worse, would the operating margins come down? Sure, but at the same time, we would really step up the cost take out.

Yeah, no that makes sense. Can I ask you, Erik, so the price environment contemplation has flat at sort of the down side. But if I remember correctly, I think you actually had negative price incurred in the first fiscal quarter of this past year. So, is there something that you're seeing in the environment that you believe can sustain a flat result? Because, I realize it's not apples-to-apples to Grainger, but they and others are actually incurring negative price. Maybe you could just address that point. Erik David Gershwind - President, Chief Executive Officer & Director: Yeah, John, so the reason we put the two price scenarios here, if you go back, you're absolutely, right, if you looked at our last year at the pricing contribution, we had quarters where I think this past quarter the price contribution was slightly up. We've had quarters where we were slightly down. To us, we would consider all of that to be flat, meaning around zero, not exactly zero, but roughly. So we've seen it now for several quarters in a row where it's been pretty much a consistent pattern of hovering around zero. We don't get too excited that it's plus this quarter and it was minus the quarter before. So that was why. So what we see today, that's been the pattern. We don't see anything radical changing. Again, could there be a case of significant deflation? Maybe. We don't see it today, which is why we didn't put it in the framework.

No, that's fair, although you did call out pretty significant sequential macro deterioration right from August through to October, and the 70% of the market cutting price. So in theory, right, that's not a dynamic that would have been in the past, but your point is well taken. At the end of the day, why forecast a bunch of stuff that you haven't really realized in the past I think is what more or less you're saying. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: That's right. Hey, John, it's Rustom, there's one more point to add there that if that really becomes such a strongly deflationary price reducing environment all around, well, that would also work for our inputs, right, for what we buy. But it's not going to be only price reductions on the selling end, so...

I agree, there's an element of pass-through, right, is kind of what you're saying. Rustom F. Jilla - Chief Financial Officer & Executive Vice President: Yeah.

Hey, can I ask one more point. John Chironna has tried to explain this to me before, and I think he's done a good job, I'm a little thick. If you've got vending up 2% and the results are flat and you've got government up double-digit and you've got the national account still in positive, doesn't that suggest kind of the business is expanding, government and national accounts are down high single-digit or is that just not the way to think about it? Erik David Gershwind - President, Chief Executive Officer & Director: John, let me just step back, so there's a few different cuts that we take to our business, and I think part of the issue there is it's a bit of apples and oranges. So one cut would be by customer type, which we break out for you as national accounts, government and core. Another cut would be by channel: vending, non-vending; eCommerce, non-eCommerce. So the only chink in the armor and the logic there is, we have vending that's going into government accounts. So it's not quite as clean as splitting those apart. I think to your point what I would say is, if you take – so when we break out vending growth, remember what we're doing is describing the growth at customers that have vending machines. Okay, that's many, many thousands of customers, and what is true is those customers are adding 2 points to our growth rate. The overall growth was flat. So, yes, it would be fair to say that all non-vending customers were minus 2%. Yes, that would be correct, and I think from our perspective that's a function of what's happening particularly, for our core markets – they have been bad all over, but core metalworking markets, particularly acutely bad, but that's the story.

Yeah, and just last, do you feel vending can hold at the 2%? Because I think it's pretty impressive, I guess what I don't fully appreciate is why vending doesn't face some sort of, maybe not for MSC, but in general, right, because lots of distributors are introducing these machines and programs, why doesn't it face a limiting return if you sort of tap into all the customers that could theoretically adopt these things. So, do you think that 2% can still hold because it seems pretty impressive to me? Erik David Gershwind - President, Chief Executive Officer & Director: Thank you, John. Yes, we agree, I would say it's somewhat a function of what happens in the overall environment. So, if you think back a couple of quarters ago, we were talking about vending at 3 points or 4 points of contribution. Nothing's really changed in our execution of vending, it's really been a function of – so if the demand environment were to come down further, is it possible that the plus 2% comes down? It's possible. I think our execution though of the vending initiative has been strong and the other thing I'd say, John, in terms of runway is, I think there is still plenty of runway left. Somebody had asked the question, it was Ryan who asked the question earlier about vending, and one point I missed and this is more of a macro landscape change than an internal change, which is that vending is becoming a lot more ubiquitous in the market. And what I mean by that is, a few years ago we would be introducing the concept to our customers. That's no longer the case. I mean most customers are familiar with it. They may have a program in place with another distributor and they are looking to upgrade. So I think what that does is opens up the pool or runway. It's pretty broad now. So I do think the program has got a lot of legs.

Got it. Thanks much, appreciate it.

And our last question comes from David Manthey of Robert W. Baird. Please go ahead. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Good morning. Thank you. Erik David Gershwind - President, Chief Executive Officer & Director: Hi, David. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Good morning. First off, did you say low single digit increase in price in the big book? Did I catch that correctly? Erik David Gershwind - President, Chief Executive Officer & Director: Around 1%. So, I guess that would be very low single-digit, but around 1%, David. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): The lowest possible single digit. Second, I think in your matrix you are looking at flat to higher pricing generally, so I guess you are assuming that you are going to net that out fairly successfully in 2016. But I think you also mentioned that you are expecting more reductions in price from suppliers in coming quarters. I want to make sure I heard that right, and just how do I put those two pieces together? Rustom F. Jilla - Chief Financial Officer & Executive Vice President: So, David, yes. It's Rustom. Yes, we would be expecting and seeking supply and cost reductions as we move forward. We are initiating or continuing constructive dialogues with these suppliers. And, look, basically, the suppliers that see our value add as a driver of growth and brand building, they are investing in us and, obviously, getting strong focus for doing so. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. So your assumption is, you will be able to capture and maintain the pricing while you're getting concessions on the cost side? Erik David Gershwind - President, Chief Executive…

And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Erik David Gershwind - President, Chief Executive Officer & Director: Thank you, everyone, for joining us today. Our next earnings date is set for January 6, 2016, and we will look forward to speaking with you over the coming months. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.