Welcome to the STERIS fiscal 2016 second quarter conference call. All lines will remain in listen-only until the question-and-answer session. At that time instructions will be given should you wish to participate. At the request of STERIS, today's call will be recorded for instant replay. I'd now like to introduce today's host, Julie Winter, Director of Investor Relations. Ma'am, you may begin. Julie Winter - Director-Investor Relations & Head-Media Relations: Thank you, Olivia. Good morning, everyone. I have a few words of caution before we open for comments from management. This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission or rebroadcast of this call without the expressed written consent of STERIS Corporation is strictly prohibited. Some of the statements made during this review are or may be considered forward-looking statements. Our 10-K for fiscal 2015 and subsequent filings identify certain risk factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today. The company does not undertake to update or revise any forward-looking statements as a result of new information or future events or developments. Our SEC filings, including the 10-K, are available through the company and on our website. During the review. We will refer to non-GAAP financial measures to provide information pertinent to the underlying performance of our operations. These non-GAAP financial measures should not be considered separately from or as an alternative for, and should be read together with GAAP results. Tables reconciling these measures to the most comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of our website. One last reminder before we get started, because of our pending offer for Synergy, STERIS is bound by the UK Takeover Code, which…

The first question comes from Larry Keusch from Raymond James. Sir, you may proceed. Lawrence S. Keusch - Raymond James & Associates, Inc.: Thank you. Good morning, everyone. Walter, I'm wondering if we could just start with the backlog in Healthcare which, as you mentioned, was up 16%. Could you just walk us through where you're seeing the interest where your orders are coming in? I'm just trying to get a lay of the land out there what customers are focused in on right now. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Larry. Good to see you today. The first thing I would say is it's both Life Science and Healthcare, we've seen more strength and strength in backlog. And then in Healthcare, clearly it is the U.S or North American segment that is driving the increase in the backlog. We have seen pretty much across the board growth. Almost all of our major capital equipment areas have seen significant increases in backlog. And we are seeing a combination of the, I'll call it the project areas as well as the ongoing replacement areas. So, it's been kind of an across the board increase in orders that have resulted in greater backlog. Lawrence S. Keusch - Raymond James & Associates, Inc.: Okay, terrific, and then two other quick ones for you. First off on just sticking with Healthcare on the operating margin, which as you indicated was down 30 basis points year-over-year. I know that you said that there was some higher R&D and SG&A in there from the acquired businesses that impacted the margins. But, if you were to strip those out, could you give us some sense of again how those margins are trending. And I think you've had plans over time to try…

Our next question is from Dave Turkaly with JMP Securities. Sir, you may proceed.

Thanks. Just looking at the deals specifically Black Diamond and GEPCO, can you tell us – help us get an understanding of where they show up in the components of your Healthcare and your Life Science revenues based on the three components, where exactly that those numbers were? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Yeah, Dave. So if we start with GEPCO in Life Sciences that is contained 100% in our Consumables business. So, Life Sciences Consumables grew 32% for the quarter. And I'll bifurcate that factor, part of that was adding GEPCO in for the quarter, but part of it was very good organic growth from our base consumables, revenue in Life Sciences. And then Black Diamond, we consider that to be part of our Healthcare Capital Equipment. And that will be 100% in that number that we discussed in the quarter and going forward. Walter M. Rosebrough - President, Chief Executive Officer & Director: And Dave, I have to interject here because I started everybody up on the wrong path with our friends at GEPCO. It looks like GEPCO, G-E-P-C-O, but it's generally kind of pack. And so we have to get it – we have to retrain ourselves. My good friends at – after the call last quarter, my good friends at GEPCO told me I was pronouncing their name wrong. By the way, Rosebrough is not an easy one either, so I'm accustomed to it and we're going to try to move people to GEPCO.

People get Turkaly wrong a lot as well. In terms of – and, Walt, I'm going to fire one and just see. You may not be able to answer. But just curious given that the closing's Monday, we've talked about some pretty significant tax benefits. Can you guys even discuss sort of how quickly those come on? I mean is it immediate if it closes on Monday in terms of your fiscal third quarter. Would we see that drop immediately or is that something that takes time? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: Dave, that we anticipate getting that reduction in tax rate on our full fiscal year. But it is going to bleed in quarter by quarter for that full fiscal year. Well next year and 2017 obviously, yeah.

Okay, great. Thanks a lot. Walter M. Rosebrough - President, Chief Executive Officer & Director: You're welcome.

Our next question is from Matt Mishan from KeyBanc. Sir, you may proceed.

Good morning Walt, Mike, Julie. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning. Julie Winter - Director-Investor Relations & Head-Media Relations: Good morning.

Congratulations on nearing the goal on here on Synergy Health. I was just hoping if you could comment a little bit on how much interaction you've had with them through the FTC process, and how prepared you are from like day one to asses and integrate? Walter M. Rosebrough - President, Chief Executive Officer & Director: There's a mixed bag in terms of – there were a number of things that are inappropriate to discuss and/or do until we are one business. And so, even now there are things we cannot do it would be inappropriate to do until we are able to merge. Having said that, there are a lot of areas that are not I'll call it customer-focused areas, where we are able to do quite a bit. And so, we have done some work on that. We clearly had put that on hold the last nine months, 10 months, because of the uncertainty of when we would be able to come together or even whether we would be able to come together. So a number of things that would have been I'll call it strategically sensitive and/or customer interface sensitive, we put on hold. But we do have a fully-formed integration team, we do have a fully-formed plan, the integration teams I should say, they're multiple teams there's an overall – overarching team and a multiple team. We have those staffed. The ones that could meet earlier have been meeting earlier, the overarching steering committee has met. So we have, we're not letting grass grow underneath our feet in terms of the integration. It's going to be slower than it would've been by a year, but we don't expect it to be any slower than that.

Okay, great. And then on to the Healthcare backlog, it's nice to see it up. But I think the past couple of quarters, you've been telling us that don't necessarily focus on it as there has been some changes in the time it would take to get an order to delivery. And is that 16% more of a relevant number than it has been over the last couple of quarters? Walter M. Rosebrough - President, Chief Executive Officer & Director: I would answer a couple of issues. One issue is, we have worked to be able to get I'll call it order entry to delivery process quicker, and it's still – it remains quicker. That is still true and we want to make it even quicker. Having said that, if total volume, total business comes in faster than the plant is tuned to run even if the process is quicker, the plant is only tuned to run so fast. We can change that over time, but you cannot change it immediately. And in fact we don't want to change it immediately, because we want to run our plants as level load as possible. So we're not going to pick up there what we would call tag time or their process speed faster unless we are confident that the overall stream of orders is going to continue at a newer pace. So that's where you see the uptick in backlog is that our orders have actually come in stronger than our current pace. The third comment is we see shifting of project orders versus on-demand orders or replacement orders, if you will. And those shift around a little bit, so that changes. I do think that backlog will become increasingly less relevant to you guys for several reasons. It's not, A), just what we've talked about. It's not such a strong measure, although it is – we always like to see order rates coming in faster than shipment rates because that means we're growing, so that makes us happy. But also capital is becoming a smaller piece of our overall business. If you go back seven, eight years ago, capital was half the business or something like that. And now over 50% of our business will be in the service and consumables area, probably pushing two-thirds, if I remember right, when you put the two together. And so the modest variation – even though it may be a fairly significant variation in terms of percentage of backlog, that by definition is a lower variation in terms of total annual capital. And annual capital is a lower percentage of our total business. So backlog will become less relevant to you. It's still relevant to how we run the business, but less relevant from your financial forecasting, whereas if we were a 100% capital business you would be much more concerned about it.

That's helpful. And on the Consumables on the Healthcare side, I think you're coming off just extremely strong comps from last year. But last quarter you also mentioned that you had some distributor problems that you thought would resolve itself and you thought you'd see a little bit improvement. But the numbers came in a little bit lower sequentially. Are you still having distributor issues there? Walter M. Rosebrough - President, Chief Executive Officer & Director: I wouldn't have called them so much distributor issues, it's just a question of whether the distributors understood the demand pattern from the hospitals. So we weren't having that kind of distributor issue like they weren't doing their jobs. It was just it's increasingly hard for hospitals and thus distributors and thus us to forecast the seasonal demand pattern because the seasonal demand pattern is changing with the changing of insurance, deductibles, and all that driving people away from traditional seasonal patterns. So that was the issue, not an operational issue on the part of distributors. But we have seen a pickup of consumables, but we did have tough comps, particularly outside the United States. We had some very strong orders in the Middle East and I believe in Latin America, but I'm confident in the Middle East last year quarter two. And not only are we not seeing those strong orders, it's dipped. And so it's a particularly strong comp and then a weakness put on top of each other. Our North American business is looking still strong. And then you saw – I was really talking about Healthcare. The Life Science business as you see is strong.

Thank you very much. I'll jump back in the queue.

Our next question is from Ms. Erin Wilson with Bank of America. Ma'am, you may proceed.

Okay, thanks for taking my questions. On the Healthcare side, again on the Consumables portion, in the U.S., do you think that – I guess you alluded to some strength there. Is it reflective of broader procedure volume trends, or can you speak to the drivers behind that? Walter M. Rosebrough - President, Chief Executive Officer & Director: You are correct, Erin. Our U.S. business is driven and most of our business is driven by procedures, both the Isomedix business as well as the hospital business. And we do think procedures have been holding up vis-à-vis total hospital revenue. There's continued pressure to shorten length of stay. There's continued pressure to move patients from higher to lower acuity. But the procedures still need to be done in operating rooms or ambulatory surgery centers or endoscopy suites, and we continue to see procedure growth.

Okay, great. And what are you seeing right now in the competitive environment in the contract sterilization business in light of everything that has happened with Sterigenics and Nordion and how that landscape has changed since that deal was closed? Walter M. Rosebrough - President, Chief Executive Officer & Director: I don't know, Erin, that we've seen any significant differential really in the last five or six years. Clearly, we have good strong competitors in the business and clearly we will continue to. But both of us – or the industry, I should say, really the industry contracts typically for relatively long periods, and customers need to be very close to the sites that the sterilization occurs because often the cost of transportation is greater than the cost of sterilization. And so those factors continue as they have been. Obviously, we've seen growth in the underlying medical device business on a unit basis, which means by the way, the procedures that are driving those continue to grow. And we just haven't seen a significant variation across that. And really our combination with Synergy, upcoming combination, globalizes our business more nicely. And we think that's attractive and will be attractive to some of the more global medical device manufacturers, more as probably as a function of gaining business from their in-house because they can rely on us to back up and be global and have a single system, as well as from relatively smaller players around the globe who cannot service those global accounts. But in the end, it's a little like politics. Although the parties matter, all business is local.

All right, great. Thank you.

Our next question is from Mr. Chris Cooley with Stephens. Sir, you may proceed.

Thank you. And, Walt, congratulations to you and your team on finally persevering through on the Synergy deal. We look forward to seeing that, just two quick ones from me. Walter M. Rosebrough - President, Chief Executive Officer & Director: Thank you, Chris, for persevering through with us.

Happy to do so. Walter M. Rosebrough - President, Chief Executive Officer & Director: We know that it put a lot of pressure on you guys. The uncertainty is not helpful and those of you who stuck with us, and there are a number on the call, we really appreciate your efforts on our behalf.

Sure. It wasn't your guy's fault. Just two quick ones from me. When I think about the Life Sciences business, I understand the step-up there from GEPCO, I'll say it correctly hopefully here, was strong in the contribution there, but the organic revenue rate of 11% was stronger than what we've been seeing there. Can you just help us think obviously there is a little bit from the capital pull through, but help me think a little bit about what a normalized rate should be in that business if this changes kind of your thoughts for the underlying end markets for the Life Science piece? And then, I just have one quick follow-up. Thanks much. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Chris. Although Consumables are more – what's the right word – steady than Capital, there is variation. Again, it's still relatively speaking, a roughly smaller business. So, a couple of shipments can make a difference and customers do stockpile in that arena sometimes because, for example, they want to make sure their plants don't shut down because they don't have the appropriate chemistries available to work them. So, we do see a little bit of variation – cyclical variation. And we're not perceiving that being a significant change on our long-term forecast.

Okay, super. And maybe unfortunately that's the... Walter M. Rosebrough - President, Chief Executive Officer & Director: With the obvious success in GEPCO, which is a clear growth area for us.

Right, and I don't mean this negatively, but it has been a year now effectively since you guys announced the Synergy deal. Would you mind just reminding us as we look forward to fiscal, into calendar 2016, some of the major drivers that you see for the combined entity that you'd highlighted at the time of the merger? Why this makes sense especially in this increasingly consolidating Healthcare environment? Thanks so much. Walter M. Rosebrough - President, Chief Executive Officer & Director: Gosh, Chris, it's been so long since we started. I've forgotten completely. I hope you're laughing.

I am. You could just make up whatever you want at this point. Walter M. Rosebrough - President, Chief Executive Officer & Director: It hasn't changed from the beginning and we don't expect it to change. We clearly have some cost synergies. You may remember we have two numbers out there $30 million to $40 million. We do think the higher side is the more likely side of that. And a lot of that is strictly what I'll call central office costs. One CEO and one CFO, one board of directors, and those kinds of things, there is a lot that we'll be purchasing broadly across the organization. We'll get a significant piece there. And then there are some areas where we will become more efficient either some redundant people although that – we think that's a relatively small number, actually quite a small number, but there will be some of that. And then the Synergy folks have done a very nice job of looking across their multiple plants on the AST business, what they call AST, what we call Isomedix. As they look across their plants and look to get everybody up to the same standard, learning from each other we've done the same. We know we will find out things that they do better than us and vice versa. And so, we expect to see some plant synergy improvements there. That's on the AST side. On the Healthcare side, we really expect that to be more of an upside revenue synergy approach, not an upside cost synergy approach, and that is – the Synergy folks run outsourced CSDs, Central Sterile Departments. One of our biggest customers single entity or type of customers are hospital CSDs. So we provide them capital equipment. We provide them consumables. We certainly would…

Super. Do you have time, can I squeeze one more in just very quickly? Just from a U.S. perspective, I know there is a little bit of angst by some preceding your earnings announcement today about just overall domestic volumes. And I know you – in a prior question you addressed the issue between census days versus actual procedure volume, but it looks like overall end market demand for capital whether it'd be through projects or replacement cycle is pretty strong and maybe building a little bit of momentum. Could you just maybe from a macro perspective talk about the domestic market environment, just kind of the sentiment at your end users or your customer base from a healthcare perspective? Thanks much. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure. And, Chris, I suspect I have to split it into the two components, the capital component and the consumable or procedural component. In the end, it's all driven by procedures, but the capital is driven more loosely if you will by procedures, it's driven by the health of the systems and their view of the future. As you have said, the capital side has been getting more robust serially for some decent amount of time now. You may recall that probably for two years or three years, we were saying that the capital business was stable and that might be up a percentage point or two or down a percentage point or two, but not diving and not roaring upward. Maybe about a year or so ago we started seeing more improvement than stable, and so more of a modest uptick in capital orders and in pipeline. We clearly now have seen for the last six months, seven months, eight months, even a little notch up from…

Thanks so much.

Our next question is from Mr. Jason Rodgers with Great Lakes Review. Sir, you may proceed.

Good morning. Julie Winter - Director-Investor Relations & Head-Media Relations: Good morning.

You talked about the capital equipment environment a little bit outside the United States. Would you say that the environment that Synergy Health operates in has become in that respect more challenging than when you originally announced the acquisition a year ago? Walter M. Rosebrough - President, Chief Executive Officer & Director: I'd guess I'd answer it twofold. In some sense it's more challenging on a dollar basis because of the currency change, although they are heavily on the pound and increasingly in the U.S. And so it's less of an issue than – on the one hand, the other currencies have fallen more. And secondly, but on the other hand they've grown more and continue to grow more in the U.S. So there's an offsetting balance there. But in terms of pure currency, yes, it's more challenging. On the other, it's not at all clear that challenging environments are good or bad for Synergy. They have very long-term contracts. But when things get challenging and there is capital constraint, that is a typical time to outsource what would otherwise be a large capital expenditure with a more known or more steady ongoing cost. So it's not at all clear to us that challenging environments are necessarily bad for Synergy's overall long-term growth rate. Now in the short term, it may put downward pressure on their very short-term efforts, but it may actually increase their possibilities in the long term would be my view.

Okay. And then what would the new diluted share count for the combined company, what would that be when the deal is closed? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: That would be about 86 million shares once we combine.

Okay. And finally, the Life Science business had very strong operating margins in the quarter, and they've been running well above 20% for the last several quarters. Now with the addition of GEPCO, what would you say your long-term margin target is in the Life Science business, recognizing the lumpiness there? Walter M. Rosebrough - President, Chief Executive Officer & Director: I don't know that we have what I would call a long-term target for it. We tend not to like to go backwards. And so, as you say, we've popped above that 20% line for a while. So all things being equal, we would not like to go below it, but we are probably more focused on growing that business and growing the revenue and holding margins than we are in trying to increase those margins significantly. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: But, Jason, the 29.4% that we're at for the second quarter is not sustainable.

Okay, thank you.

Our next question is from Mr. Larry Keusch with Raymond James. Sir, you may proceed. Lawrence S. Keusch - Raymond James & Associates, Inc.: Okay, thanks for taking the follow-up, guys. Just two quick things, I guess perhaps for Mike. The free cash flow for the year, which was reduced from $155 million to $130 million, could you just walk through just the drivers of that reduction, that $25 million reduction? What's the bridge there? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: For the most part Larry, as we do with the EPS, we adjust the EPS out for, I'll call it, all the noise related to the acquisitions, the amortization, the integration expenses. Our free cash flow is still, I'll call it, an unadjusted number. So the big difference is all of the costs and the expenses that we are having and will have associated with the Synergy transaction. That is the big bulk of that difference. Another small piece of that is we did purchase annuities and have gotten out of the pension business. And we had to fully fund. It cost us about $5 million, which was a little bit about where we anticipated, but it is a little bit of a timing issue. We anticipated that later in the year. It happened earlier in the year. But the big bulk is the Synergy expenses. Lawrence S. Keusch - Raymond James & Associates, Inc.: Okay, that makes sense. Thanks for that. And then just quickly on your comments around the tax rate, which you indicated I think if I heard you correctly that 25% for the year – for fiscal 2017, it wouldn't go down on day one. So it'd be stepping down to get to that full-year level. So, does that not imply that your ending tax rate at the end of 2017 would actually be below a 25% rate? Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: We will provide more guidance surrounding that. Larry, at this point, I would say we know it's going be a stepwise fashion, but we will provide you when we provide full guidance for Synergy more detail around the taxes. I think that's the safest way to do it. Lawrence S. Keusch - Raymond James & Associates, Inc.: Okay, I appreciate it. Thank you.

Our next question is from Mr. Mitra Ramgopal from Sidoti. Sir, you may proceed. Mitra Ramgopal - Sidoti & Co. LLC: Most of my questions have been answered, but just a couple of quick ones. Mike, regarding the cash flow, I believe you said the plan is to aggressively pay down the debt. I was wondering if that precludes potential further share repurchases or annual hikes in the dividend. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior VP: We definitely want to – and we talked about our prioritization and we did have debt repayment, but we actually did, did increase our dividend in our first quarter from $0.23 to $0.25, and actually that we are at a normal course for payment in December at that $0.25. We will continue to look at making investments in our business from a capital expenditure standpoint, and again, control where we actually think the best value is from an internal viewpoint. M&A in the short run will probably be trumped a little bit by debt repayment, as we are going to step up to a 2.9 times debt-to-EBITDA, and we believe that it is more prudent in the short run to focus on debt repayment. And I would say share repurchases, Mitra are most likely not going to happen, that is obviously our lowest priority. And, I think debt payments would come on top of the share repurchases, at least in the next couple of quarters. Walter M. Rosebrough - President, Chief Executive Officer & Director: Short to intermediate term, I'm sure. And, Mike's got the priorities correct. Mitra Ramgopal - Sidoti & Co. LLC: Thanks. And then, quickly on the margin improvements, did you get any benefit in terms of synergies from the GEPCO and Black Diamond acquisitions and also…

I show no other questions at this time, I'll turn the call back for any closing remarks. . Julie Winter - Director-Investor Relations & Head-Media Relations: Great. Thank you, Olivia, and thank you everyone joining us. This concludes our second quarter call, and we'll talk to you again next time.