Welcome to the STERIS Fiscal 2017 First 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.

Thank you, Alice, and good morning everyone. Joining us on today's call as usual we have Walt Rosebrough, our President and CEO, and Mike Tokich, our Senior Vice President, CFO and Treasurer. I have a few words of caution as usual before we open for comments from management. This webcast contains time-sensitive information and is accurate only as of today. Any redistribution, retransmission or rebroadcast of this call without the expressed written consent of STERIS is strictly prohibited. Some of the statements made during this review are or may be considered forward-looking statements. Many important factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation those risk factors described in STERIS Plc's, STERIS Corporation's and Synergy's previous securities filings. Many of these important factors are outside of STERIS' control. No assurances can be provided as to any results or the timing of any outcome regarding matters described in this webcast or otherwise. The company does not undertake to update or revise any forward-looking statements as a result of new information or future events or developments. STERIS Plc and STERIS Corporation SEC filings are available through the company and on our website. Adjusted earnings per diluted share, segment operating income, constant currency, organic revenues and free cash flow are non-GAAP measures that may be used from time to time during this call and should not be considered replacements for GAAP results. Non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information used by management and the board of directors in their financial analysis and operational decision-making. STERIS' adjusted earnings per diluted share and segment operating income exclude the amortization of intangible assets acquired in business combinations, acquisition-related transaction costs, integration costs related to acquisitions, and…

Thank you, Walt and Mike, for your comments. Alice, will you please give the instructions and we will get started with Q&A.

Thank you. Our first question is from Mr. Larry Keusch with Raymond James. Your line is open. Lawrence Keusch - Raymond James & Associates, Inc.: Thank you. Good morning, everyone. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Hey, Larry. Walter M. Rosebrough - President, Chief Executive Officer & Director: Good morning, Larry. Lawrence Keusch - Raymond James & Associates, Inc.: So Walt, I was hoping we'd get started on IMS and maybe give us some help understanding, you know, what you are seeing out there that led to the lower performance starting out the year. And then how are you thinking about, again, more from a revenue perspective through the year – I understand obviously that you are going to readjust your cost to be more consistent, but just any thoughts around that would be helpful. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Larry. We see this as a temporal issue, not any kind of a permanent issue, if you will. We have a natural growth rate. I mean the general growth rate of that business in total is roughly in line with healthcare. The question is how much business moves from hospitals doing it themselves or from the OEMs moving to third-party participants. And there we've seen double-digit kind of numbers. We expect to continue to see double-digit kind of numbers. But within that there's always some churn, some going to us from us to us from us. We actually ended last year stronger than we expected and so we had quite positive churn. We probably got a little more optimistic than we should about that. So we've had some negative churn now in this current timeframe. But in terms – and so it take some times to work through…

Thank you. Our next question is from Mr. Matt Mishan from KeyBanc. Your line is open.

Hey, guys. This is actually Aubrey on for Matt. Can you hear me okay? Walter M. Rosebrough - President, Chief Executive Officer & Director: Yes certainly, Aubrey.

Great. Thanks for taking the questions. First, I was hoping maybe you could talk a little bit about what else is going on in the rest of the HSS segment outside of IMS. I know you still have the Netherlands and UK-based linens business there as well as the outsourced central sterile processing. Are there any changes in what you're seeing across those businesses? Walter M. Rosebrough - President, Chief Executive Officer & Director: No. I think you may have meant the U.S. linens business because the UK business we sold. We do both have the U.S. and the Netherlands businesses. As we've mentioned in the past, those are relatively low-margin businesses. And so we haven't seen a significant change. As you noticed, they are still relatively low-margin, low-growth businesses and we haven't seen a change there. In the HSS business, again, that business is a profitable business in the UK and we're investing in other parts of the world to grow that business to duplicate the UK model, so again no change. We still have a lot of interest from customers who are talking to us about potential outsourcing in the U.S. But again, as we've said many, many times, it's going to take time for that to come to fruition and we do see it as a nascent business. We don't anticipate any significant revenue profitability in that business certainly in this year, and it's going to be a while before it becomes a material part of the total STERIS profitability map.

Okay, got it. And then just last one, if you'd be able to just give a little bit more detail on how you're going to be offsetting that $0.05 headwind that you called out from a combination of the Linen sale, IMS, FX, etcetera, why you have confidence in reiterating your EPS guidance? Walter M. Rosebrough - President, Chief Executive Officer & Director: Yeah, well, first of all it's a range, not a number, and so we have a $0.15 range and it's a $0.05 headwind. So that certainly is encompassed in that kind of range. And obviously we didn't have our point forecast at where we are at the bottom of that range, the bottom number of that range. So that's one answer. And then the second answer is we do see strength in the North American capital – well, the North American operation in general in healthcare and in the global operations in both Life Science and AST. So we have some very strong positive feelings about that. The rest of the globe for healthcare is a little tough. And so we are just mixing and matching all those components. And at this point in time in the year we did not see it appropriate to change the range.

Got it. Thanks.

Thank you. Our next question comes from Mr. David Turkaly with JMP Securities. Your line is open.

Thanks. I know you mentioned on the Healthcare Products side the project again and obviously we see the increase in the backlog. I'm just curious do you expect that trend to continue throughout the year? And if so, yeah, just any color on why you think that is the case now. Walter M. Rosebrough - President, Chief Executive Officer & Director: The short answer is we're seeing real strength and we're not alone in that. The other guys in the capital business in North America are seeing real strength there in both orders and generally speaking in backlog. And we also have visibility in pipeline as we mentioned several times; usually three to six months of pretty clear visibility. Our pipeline looks the same as our orders, it's just strong in North America right now. That can always change, but at this point in time we're seeing real strength. And it's been double-digit kind of strength now for six or nine months and so – and it looks like the same kind of strength out in the future, so out in the future meaning six months out or nine months out. So it's a combination of replacement orders are staying strong and projects are increasing, and you put those together and you get some nice increases.

And then on the Life Science side I know you mentioned some easy comps but mid-teens organic growth. I guess just any color on sort of what your expectations are there and what's driving sort of that mid-teens organic growth. I know in the past there were some times in the past where that was a little slower. But I guess what are you seeing that can give you comfort that that can continue? Walter M. Rosebrough - President, Chief Executive Officer & Director: Yeah, I'm going to separate the capital piece from the rest, the consumables and service parts. On the capital side, that business has now been steady for five years maybe and our backlog is balanced between $40 million and $45 million roughly for five years. So I don't see any material long-term change there. Mix has changed and our willingness to accept no-profit business has changed. And so the profitability from that business has changed significantly for the good. Now when we look at the consumable side there are a couple pieces that make that up. First of all, our chemistry business has just been quite strong and we have a nice set of chemistries and we've mentioned that we've also added some chemistries to our portfolio. And so those are just picking up speed. So it's pure organic, growing business. We do think we're targeted at good spots, we're targeted at vaccines and biologics, which are nice growing pieces of the pharmaceutical business. So we're just targeting in the right spots and we have some nice products. So we have had good organic growth and we see that continuing. And then the acquisition of our barrier products, which was the company called GEPCO, which is also a consumable product in Life Science, have also been strong. They had good growth but we also have the ability to – they were essentially a U.S. company and so we have a global footprint in the sales force so we have the ability to move those products to global customers outside the United States. So it's a real opportunity for us to grow. So we just see very nice positive movement in Life Science and we continue to expect that on the consumables side of the business.

Thank you very much. Walter M. Rosebrough - President, Chief Executive Officer & Director: You bet.

Thank you. Our next question comes from Mr. Jason Rodgers with Great Lakes Review. Your line is open.

Yes, just wanted to follow up on the Life Science question. Didn't know that you are facing some tougher comps in the next few quarters here. Would you expect the growth rate to slow a little due to that or do you think some of the positive factors you mentioned will more than offset the comps? Walter M. Rosebrough - President, Chief Executive Officer & Director: On the consumable side, I think the comps are fine and the growth rates are fine. On the capital side, we had some really nice shipments I want to say in the mid part of last year. And so we will clearly not see these kind of growth rates going forward. I think to say the capital business is flat to slightly increasing is the right kind of general way to think about it for the year and for longer term. So it's not – I mean it's a 40% growth for this quarter but that was just because of easy comps and a strong quarter; that a long-term change.

And the Linen business that was sold, what was the expected operating profit for fiscal 2017 of that business?

We really haven't disclosed that, Jason. I mean we've disclosed the size of the business and been clear that the margins were better than segment average, kind of high-single-digits, and left it at that.

All right. And looking at your Healthcare Product revenue, what percent of that is outside the U.S. and how do the margins compare? Walter M. Rosebrough - President, Chief Executive Officer & Director: Well, Healthcare Products, again, it's more dominated in the U.S. because I don't know the number off the top of my head but it's small, so in the 15% to 20% kind of range. Mike is looking for it as we speak. And part of that is because there's a piece of that business that came from Synergy. I just don't happen – and it is predominately O-U.S., so I don't happen to have that number in my head. But the margins O-U.S. are somewhat different because we go through distributors. So we generally do not get the "sales" margin or distributor margin, but we do get the design and manufacturing margins, so that's the predominant difference. Now pricing outside the U.S. is typically a little bit higher because transportation and the distribution cost. I'll call it the end customer's price is typically higher because of those things. But we don't get the distribution margin and we often don't get the service that goes along with it like the installation; some of the services the distributor tends to do that. So at a high level that's the case on capital. On consumables they are roughly similar. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: And about 70% of our Healthcare Products revenues come outside the U.S.

All right. That's helpful. And finally... Walter M. Rosebrough - President, Chief Executive Officer & Director: No, inside the U.S. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Sorry, the other way. Inside, yes sorry. Walter M. Rosebrough - President, Chief Executive Officer & Director: Inside the U.S. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Inside the U.S., yes.

That's what I thought. And finally, any material change in anything outside the U.S. generally from hospitals, any improvements or deterioration in any regions of note? Walter M. Rosebrough - President, Chief Executive Officer & Director: I mean, all you have to do is ask what countries are experiencing fiscal difficulty because most countries outside the U.S. are, for lack of better terms, are largely national healthcare programs with government budgets. So all of the countries that are mineral-based or oil-based – all is a big word – but generally speaking those that are mineral-based or oil-based are having difficulty in their government budgets and as a result having difficulty in their healthcare budgets. So kind of off the top of my head in Latin America, Venezuela is just really, really challenged. Brazil is quite challenged. Moving to the Middle East, a big part of the Middle East, which was a very strong healthcare business, has slowed down significantly. And Saudi Arabia in particular, which was a very good healthcare business, has the dual challenge of the weaker oil prices as well as having to fund some war issues at the same time. So Saudi is particularly challenged, but much of the Middle East, the oil-based economies are challenged. We have seen actually a bit of a pick-up in Asia; not China per se, although we've actually kind of done nicely in China. It's a small business for us. But not so much China but the areas outside, so Southeast Asia has clearly been picking up for us but it's still challenged. In Australia, again, a mineral-based economy has been challenged for the last 12 or 18 months.

Thanks a lot. Walter M. Rosebrough - President, Chief Executive Officer & Director: You bet.

Thank you. Our next question comes from Mr. Chris Cooley with Stephens. Your line is open.

Good morning and thanks for taking the questions.

Good morning, Chris.

Hey, good morning. Could we start, Mike, just going back and looking at AST profit here in the quarter, a little bit stronger than what we were modeling there, in fact about 400 basis points stronger. I just want to get a better understanding. Is that as you're starting to get greater utilization of the increase that you've done in capacity, primarily in the U.S., margins are improving? Are you seeing any kind of cut to your raw material or I should say cobalt-60 costs? Or is it just maybe mix? I'm just trying to get a little bit better understanding of what's driving that level of profitability, and then I have a couple of quick follow-ups. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Yes certainly, Chris. So the 34% operating margin that you mentioned with AST, I mean a lot of that is, and then we've talked about this before, is we have a high fixed cost base and we did see exceptional volume increases this quarter. So that volume, once we cover the fixed costs, is extremely profitable for us and that is the major driver. On top of that, the integration with Synergy Health is actually moving along very nicely. So we probably get a little bit of a benefit there as we integrate our businesses, but I would say first and foremost it's the volume piece that is driving the large increase.

Okay. Walter M. Rosebrough - President, Chief Executive Officer & Director: And I would mention, Chris, we are bringing a number of plants online and when we're bringing plants online, it means the ones that are currently running are full. So we're running capacity-like numbers in a lot of places and that's a good time to be making some money. We would expect some averaging of that over time. We are trying to have them not come all at once, so we don't have this nice buildup and then a cliff, nice buildup and then a cliff. We are trying to even them out over periods of time. But there is some, if you look at a plant-by-plant basis, it does look like that. We're now getting to be good enough size. I mean we have 60 facilities roughly. So we are getting to be a large enough size that one or two facilities doesn't crush us, but you notice them when they come on board.

Understood. And then if you could just revisit healthcare capital, the growth in the backlog there again very briefly. Historically I think that's been about a 75%, 80% replacement, 20%, 25% new project build-type business. Could you just give us maybe a little bit more color there, and I apologize if I missed at the outset, in terms of that mix here the last several quarters? Because I know in your prepared remarks you mentioned greater growth in new project build. I am just trying to think about what that incremental growth is longer term potentially for both consumables and service as you pull out through the backlog. Walter M. Rosebrough - President, Chief Executive Officer & Director: Yeah, Chris, just Mike's looking for the number. But while he does, consumables aren't really impacted by that. There are sometimes, because we go through distribution, sometimes our distributors stock a little more, stock a little less, or the hospitals don't quite catch their seasonality correct. But that tends to be minor fluctuations. On the capital side, the 75-25 is roughly a good rule but we clearly – we had gone – it goes in cycles and we had been where replacement was the stronger piece a couple years ago. Projects have been picking up and they're continuing to pick up. So again, Mike's doing some math right now. I'll let him report it, but it's clearly picked up the last six months or eight months or so. And the outlook is also that way. There is more project kind of business out there. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Yeah, Chris, we've gone from roughly 70-30 replacement versus projects and we're more looking like closer to now 60-40. So we made a pretty substantial switch with the replacement versus the projects.

Okay. That's helpful. And then just lastly cash flow was strong, approximately $50 million in free here in the quarter. Can you just remind us if there's anything different in terms of the seasonality when we think about historically the way we saw corporate cash flow build through the course of the year now that this is going to be our first full year with Synergy? Thanks. Michael J. Tokich - Chief Financial Officer, Treasurer & Senior Vice President: Yeah, Chris, I would say that from a cash flow standpoint the seasonality will be tracking to income. And for the most part legacy STERIS has typically been more second-half weighted. Legacy Synergy has been pretty much even throughout the year. So I don't think it'll be that much of a directional change from what we've seen historically. Walter M. Rosebrough - President, Chief Executive Officer & Director: AST generally is a little, all things being equal, there's growth across, but all things being equal AST tends to be stronger in the first half and Synergy was more AST-oriented. And the rest of STERIS has tended to be a little more back half, particularly the capital side. So it kind of mixes and matches. I would still expect it to be, generally speaking, for seasonality to have a little stronger in the back half, A., just due to the growth in general, and B., because the back half tends to be a little more weighted, particularly on the capital side.

Understood. Thanks so much.

Thank you. Our next question comes from Mr. Larry Keusch with Raymond James. Your line is now open. Lawrence Keusch - Raymond James & Associates, Inc.: Hi. Thanks. Just one more for you guys. Walt and Mike, you sort of alluded to some of this through your comments, but could you talk a little bit about just how the integration of Synergy is going as you put those two businesses together? And then there was a little bit of confusion in last quarter's conference call as it related to the outlook for the cost synergies. I noticed that you indicated that you are looking for and still expecting $15 million for this year. But again help us think about the $40 million that you kind of initially targeted. Walter M. Rosebrough - President, Chief Executive Officer & Director: Sure, Larry. First, I would say there are basically three projects in this integration and each of the two major businesses that are integrated – the HSS/IMS business is one and the AST business from both sides, or formally Isomedix and AST business the other – the business integration for all intents and purposes is almost complete, that is the organization, structures and people and all those things. Those integration teams are down to just a few items, with the exception of the classic IT where we were trying to get on common systems and all that stuff, which is much more like the central office integration functions. But in terms of what I'll call the business salesforce, those kinds of things, we are coming into the home stretch if not in the home stretch, and it's gone nicely, just full stop nicely. The longer-term issues relate to systems, getting on common systems and getting on the back office people, whether that's…

Thank you. I show no other question at this time. I'll turn the call back for any closing remarks.

Thank you, Alice, and thank you everybody for joining us this morning. We'll talk to you again soon.

Thank you for participating. You may now disconnect.